OPEN TEXT CORP 10-K

Item 9A. Controls and Procedures (A) Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Annual Report on Form 10-K, our management, with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) promulgated under the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act were recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that information required to be disclosed by us in the reports we file under the Exchange Act (according to Rule 13(a)-15(e)) is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. (B) Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (ICFR), as such term is defined in Exchange Act Rule 13a-15(f). ICFR is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. ICFR includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorizations of our management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements. Our management assessed our ICFR as of June 30, 2023, the end of our most recent fiscal year. In making our assessment, our management used the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our management has excluded the ICFR of Micro Focus, which we acquired on January 31, 2023 as discussed in Note 19 “Acquisitions” to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. Total revenues subject to Micro Focus’ ICFR represented 21.8% of our consolidated total revenues for the fiscal year ended June 30, 2023. Total assets subject to Micro Focus’ ICFR represented 47.6% of our consolidated total assets as of June 30, 2023 (of which $6.8 billion, or 39.6% of our consolidated total assets, represents Micro Focus’ goodwill and net intangible assets subject to our internal control over financial reporting as of June 30, 2023). Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of ICFR for a period of up to one year following an acquisition while integrating the acquired company. Based on the results of our evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our ICFR was effective as of June 30, 2023. The results of our management’s assessment were reviewed with our Audit Committee and the conclusion that our ICFR was effective as of June 30, 2023 has been audited by KPMG LLP, our independent registered public accounting firm, as stated in their report which is included in Part IV, Item 15 of this Annual Report. Our management, including the Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls or our ICFR will prevent or detect all error or all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control 88 Table of Contents system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any evaluation of prospective control effectiveness, with respect to future periods, is subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. (C) Attestation Report of the Independent Registered Public Accounting Firm KPMG LLP, our independent registered public accounting firm, has issued a report under Public Company Accounting Oversight Board Auditing Standards AS 2201 on the effectiveness of our ICFR. See Part IV, Item 15 of this Annual Report on Form 10-K. (D) Changes in Internal Control over Financial Reporting (ICFR) Based on the evaluation completed by our management, in which our Chief Executive Officer and Chief Financial Officer participated, our management has concluded that, except as noted above with respect to the acquisition of Micro Focus, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Rule 10b5-1 Trading Plans During the three months ended June 30, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. 89 Table of Contents Part III Item 10. Directors, Executive Officers and Corporate Governance The following table sets forth certain information as to our directors and executive officers as of August 3, 2023. Name Age Office and Position Currently Held With Company Mark J. Barrenechea 58 Vice Chair, Chief Executive Officer and Chief Technology Officer, Director Madhu Ranganathan 59 Executive Vice President, Chief Financial Officer Michael Acedo 42 Executive Vice President, Chief Legal Officer & Corporate Secretary Cosmin Balota 49 Senior Vice President, Chief Accounting Officer Prentiss Donohue 53 Executive Vice President, Cybersecurity Sales Paul Duggan 48 Executive Vice President, Chief Customer Officer Simon Harrison 53 Executive Vice President, Enterprise Sales Muhi Majzoub 63 Executive Vice President, Chief Product Officer James McGourlay 54 Executive Vice President, International Sales Renee McKenzie 48 Executive Vice President, Chief Information Officer Sandy Ono 41 Executive Vice President, Chief Marketing Officer Douglas M. Parker 52 Executive Vice President, Corporate Development Paul Rodgers 60 Executive Vice President, Sales Operations Brian Sweeney 59 Executive Vice President, Chief Human Resources Officer P. Thomas Jenkins 63 Chairman of the Board Randy Fowlie (2)(3) 63 Director Major General David Fraser (3) 66 Director Gail E. Hamilton (1) 73 Director Robert Hau (2) 57 Director Ann M. Powell (1) 57 Director Stephen J. Sadler 72 Director Michael Slaunwhite (1)(3) 62 Director Katharine B. Stevenson (2) 61 Director Deborah Weinstein (1)(3) 63 Director _______________________________ (1) Member of the Compensation Committee. (2) Member of the Audit Committee. (3) Member of the Corporate Governance and Nominating Committee. Mark J. Barrenechea Mr. Barrenechea joined OpenText in January 2012 as the President and Chief Executive Officer. In January 2016, Mr. Barrenechea took on the role of Chief Technology Officer, while remaining the Company’s Chief Executive Officer. In September 2017, Mr. Barrenechea was appointed Vice Chair, in addition to remaining the Chief Executive Officer and Chief Technology Officer. Before joining OpenText, Mr. Barrenechea was President and Chief Executive Officer of Silicon Graphics International Corporation (SGI), where he also served as a member of the Board. During Mr. Barrenechea’s tenure at SGI, he led strategy and execution, which included transformative acquisition of assets, as well as penetrating diverse new markets and geographic regions. Mr. Barrenechea also served as a director of SGI from 2006 to 2012. Prior to SGI, Mr. Barrenechea served as Executive Vice President and CTO for CA, Inc. (CA), (formerly Computer Associates International, Inc.) from 2003 to 2006 and was a member of the executive management team. Before going to CA, Mr. Barrenechea was the Senior Vice President of Applications Development at Oracle Corporation from 1997 to 2003, managing a multi-thousand person global team while serving as a member of the executive management team. From 1994 to 1997, Mr. Barrenechea served as Vice President of Development at Scopus, a software applications company. Prior to Scopus, Mr. Barrenechea was the Vice President of Development at Tesseract, where he was responsible for reshaping the company’s line of CRM and human capital management software. Mr. Barrenechea serves as a member of the Board and Audit Committee Chair of Dick’s Sporting Goods and is also on the Board of Directors of the Leukemia & Lymphoma Society. In the past five years, Mr. Barrenechea also served as a director of Hamilton Insurance Group and as a board member of Avery Dennison Corporation. Mr. Barrenechea holds a 90 Table of Contents Bachelor of Science degree in computer science from Saint Michael’s College. He has been the recipient of many awards, including the 2011 Best Large Company CEO from the San Francisco Business Times and 2015 Results-Oriented CEO of the year by CEO World Awards. Mr. Barrenechea has authored several books including The Intelligent and Connected Enterprise, The Golden Age of Innovation, Digital Manufacturing, Digital Financial Services, On Digital, Digital: Disrupt or Die, eGovernment or Out of Government, Enterprise Information Management: The Next Generation of Enterprise Software, Versant . He has also written a number of whitepapers, such as The Resilient Organization: COVID-19 and New Ways to Work, The Cloud: Destination for Innovation, Security: Creating Trust in a Zero Trust World and The Information Advantage . Madhu Ranganathan Ms. Ranganathan joined OpenText as Executive Vice President, Chief Financial Officer in April 2018. With more than 25 years of financial leadership experience, Ms. Ranganathan most recently served as the Chief Financial Officer for [24]7.ai from June 2008 to March 2018. Ms. Ranganathan also held senior financial roles at Rackable Systems from December 2005 to May 2008, Redback Networks from August 2002 to November 2005, and Backweb Technologies from December 1996 to January 2000. She also has public accounting experience with PricewaterhouseCoopers LLC. Ms. Ranganathan currently serves as a Board Member for the Bank of Montreal and Akamai Technologies. In past years she served as a Board Member of ServiceSource and Watermark, a Bay Area organization focused on professional development for women. Ms. Ranganathan holds an MBA in Finance from the University of Massachusetts, is a member of the AICPA and a Chartered Accountant (India). Michael Acedo Mr. Acedo was appointed Chief Legal Officer and Corporate Secretary in January 2022, and became Executive Vice President, Chief Legal Officer and Corporate Secretary in August 2022. Since joining OpenText in 2014, Mr. Acedo has held various increasingly senior legal roles, primarily supporting corporate governance, external reporting, investor relations, Corporate Citizenship, capital markets, corporate communications, government relations, and merger and acquisitions matters and, most recently, as the Vice President, General Counsel–Corporate & Corporate Secretary. Mr. Acedo is responsible for leading the global legal organization, including the Office of the Chief Compliance Officer and the Corporate Secretarial department. Prior to joining OpenText, Mr. Acedo practiced corporate and securities law, with a concentration on international capital markets and merger and acquisitions transactions, at the global law firm, Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Acedo holds a Law Degree from The University of Western Ontario, Canada (including Law exchange at Hong Kong University) and a B.A. (Honours) from The University of Toronto, and is a member of the New York State Bar Association and a Foreign Legal Consultant with the Law Society of Ontario. Cosmin Balota Mr. Balota has served as the Company’s Senior Vice President and Chief Accounting Officer since December 2022. Prior to this, Mr. Balota served as Vice President, Accounting and Reporting from August 2020 to December 2022 and Vice President, Corporate Accounting from January 2019 to August 2020. Mr. Balota has over 25 years of experience in various U.S., Canadian and international finance and accounting roles where he has been responsible for external reporting, corporate accounting, controllership, mergers & acquisitions, and financial planning & analysis. Prior to joining OpenText, Mr. Balota served as Vice President, Corporate Finance at Enercare Inc. from January 2017 to December 2018, along with other finance leadership positions from April 2012 to January 2017. He also held various increasingly senior finance, accounting, and audit positions from October 1998 to April 2012 at Expedia Group, The Globe and Mail, and Deloitte. Mr. Balota is a Chartered Professional Accountant (CPA, CA) in Canada and holds a Bachelor of Arts (Honours) degree in Chartered Accountancy Studies and a Master of Accounting degree from The University of Waterloo. Prentiss Donohue Mr. Donohue has served as Executive Vice President of Cybersecurity Sales since January 2023. Prior to this role, Mr. Donohue served as Executive Vice President of Small and Medium-sized Business and Consumer (SMB/C) Sales from December 2020 to January 2023, Senior Vice President, Portfolio Group from January 2019 to December 2020 and as Senior Vice President of Professional Services from April 2016 to January 2019. He brings over 20 years of experience in support and services management. Prior to joining OpenText, Mr. Donohue served as Group Vice President and General Manager of Advanced Customer Services for Oracle Corporation from January 2010 to March 2016, where he was responsible for driving Oracle’s innovative software, systems and cloud services. From April 1998 to December 2010, Mr. Donohue worked at Sun Microsystems in various leadership roles, including in Managed Services Management and Corporate Marketing. Mr. Donohue served on the board of directors of Summit Charter School until May 2016. Mr. Donohue holds a BA from the University of Colorado and has completed executive leadership programs at the University of Michigan’s Ross School of Business and the University of Hong Kong. 91 Table of Contents Paul Duggan Mr. Duggan has served as Executive Vice President, Chief Customer Officer since January 2023. Prior to this role, Mr. Duggan served as Executive Vice President, Worldwide Renewals from July 2021 to January 2023 and as Senior Vice President, Revenue Operations from January 2017 to July 2021. He is responsible for operations across sales, professional services, business networks and customer support. Prior to joining OpenText, Mr. Duggan held various roles at Oracle Corporation, including Group Vice President of Support Renewal Sales, North America from December 1999 to January 2017. Previously, Mr. Duggan served on the advisory board for the Technology Services Industry Association from 2016 to 2017. He has completed executive leadership programs at the University of Michigan Ross School of Business and IESE Business School in Barcelona, Spain. Simon Harrison Mr. Harrison has served as the Company’s Executive Vice President of Enterprise Sales since March 2021. Prior to this, Mr. Harrison, who joined the Company through its acquisition of IXOS AG, has held a number of senior leadership roles, including serving as its Executive Vice President, Worldwide Sales from October 2017 to March 2021 , Senior Vice President of Enterprise Sales from 2015 to 2017, Senior Vice President of Fast Growth Markets from 2014 to 2015 and as the Company’s Senior Vice President of Sales for the EMEA region from 2012 to 2014. Mr. Harrison holds an honors degree in Computer Science from Leeds University. Muhi Majzoub Mr. Majzoub has served as Executive Vice President, Chief Product Officer since September 2019. Prior to this role, Mr. Majzoub served as Executive Vice President, Engineering from January 2016 to September 2019 and as Senior Vice President, Engineering from June 2012 to January 2016. Mr. Majzoub is responsible for managing product development cycles, global development organization and driving internal operations and development processes. Mr. Majzoub is a seasoned enterprise software technology executive having recently served as Head of Products for NorthgateArinso, a private company that provides global Human Resources software and services. Prior to this, Mr. Majzoub was Senior Vice President of Product Development for CA, Technologies from June 2004 to July 2010. Mr. Majzoub also worked for several years as Vice President for Product Development at Oracle Corporation from January 1989 to June 2004. Mr. Majzoub attended San Francisco State University. James McGourlay Mr. McGourlay has served as Executive Vice President, International Sales since July 2021. Prior to this, Mr. McGourlay was the Company’s Executive Vice President, Customer Operations from October 2017 to July 2021, Senior Vice President of Global Technical Services from May 2015 to October 2017 and Senior Vice President of Worldwide Customer Service from February 2012 to May 2015. Mr. McGourlay joined OpenText in 1997 and held progressive positions in information technology, technical support, product support and special projects, including, Director, Customer Service and Vice President, Customer Service. Renee McKenzie Ms. McKenzie has served as Executive Vice President, Chief Information Officer since August 2022. Prior to this, Ms. McKenzie was the Senior Vice President, Chief Information Officer for OpenText from April 2021 to August 2022. Ms. McKenzie joined the Company in 2004 and has held a number of positions within the Company, including Vice President, Enterprise Business Systems from 2015 to 2021. Ms. McKenzie holds a Master’s Degree in Business Administration and a Bachelor’s Degree in Biology & Psychology from Dalhousie University in Halifax, Nova Scotia, Canada. 92 Table of Contents Sandy Ono Ms. Ono joined OpenText as Executive Vice President and Chief Marketing Officer in January 2022. Ms. Ono is responsible for driving marketing and communications worldwide, from brand to demand, to deliver growth for the Company. Prior to joining OpenText, Ms. Ono was Vice President, Growth Marketing at Hewlett Packard Enterprise from 2015 to 2022 and in the Strategy & Operations practice at Deloitte Consulting from 2003 to 2015. Ms. Ono has a bachelor’s degree in business administration and rhetoric from UC Berkeley, and her MBA from the Wharton School of Business. Douglas M. Parker Mr. Parker has served as the Company’s Executive Vice President, Corporate Development since January 2022. Prior to this, Mr. Parker was the Company’s Senior Vice President, Corporate Development from October 2019 to January 2022. From January 2018 to October 2019, Mr. Parker served as President & Chief Executive Officer of Quarterhill Inc., focused on the acquisition, management and growth of companies in dedicated technology areas. Mr. Parker previously served as Senior Vice President, Corporate Development of OpenText from 2015 to 2017. Prior to this role, Mr. Parker held the position of Vice President, General Counsel & Assistant Secretary from 2009 to 2015, where he was responsible for a variety of corporate legal, litigation management and governance activities. Mr. Parker also served as Executive Sponsor to OpenText Brazil operations in 2014. Prior to joining OpenText, Mr. Parker worked for Nortel Networks Corporation in a variety of senior legal roles, including Managing Attorney, where he was responsible for the company’s global M&A legal function from 2006 to 2009. Mr. Parker holds an Executive Masters of Business Administration from the Richard Ivey School of Business, the University of Western Ontario, a Bachelor of Laws degree from Queen’s University, and a Bachelor of Arts (Honors) degree from Trinity College, the University of Toronto. Paul Rodgers Mr. Rodgers joined OpenText as Executive Vice President, Sales Operations in January 2023. Prior to joining the Company, Mr. Rodgers served as the Business Operations and Integration lead for Micro Focus from April 2018 to January 2023, where he was responsible for overseeing the successful integrations resulting from Micro Focus’ merger and acquisition activity. Mr. Rodgers joined Micro Focus in April 2008 as the Group Human Resources Director, and prior to joining Micro Focus, Mr. Rodgers spent 17 years with IBM and four years as Managing Director of a successful Executive Human Resources consultancy business. Brian Sweeney Mr. Sweeney joined OpenText as Chief Human Resources Officer in October 2018. He has over 25 years of experience as a Human Resource (HR) leader in high growth, global technology businesses, and professional services consulting. He has led organizational growth and transformation initiatives, including international expansion, M&A, global talent management, compensation and benefits, employee engagement, communication and cultural transformation. Prior to joining OpenText, Mr. Sweeney worked at Amgen Inc. from 2003 to 2018, where he served in various HR leadership roles, including Global VP of HR, Head of HR for Global R&D and VP of International Human Resources. Prior to this, Mr. Sweeney worked at Dell, where he served as Director of Worldwide Compensation and Benefits from 1993 to 1997 and HR Director from 1997 to 2001. From 1989 to 1992, Mr. Sweeney was a Human Resource consultant at AON Hewitt Associates, working across multiple client industry sectors in the practice areas of employee benefits and executive compensation. Earlier in his professional career, Mr. Sweeney worked in corporate sales and sales management for Steelcase, Inc. Mr. Sweeney holds an MBA from the University of Michigan and a Bachelor’s degree in Sociology from Vanderbilt University. 93 Table of Contents P. Thomas Jenkins Mr. Jenkins is Chair of the Board of OpenText. From 1994 to 2005, Mr. Jenkins was President, then Chief Executive Officer and then from 2005 to 2013, Chief Strategy Officer of OpenText. Mr. Jenkins has served as a Director of OpenText since 1994 and as its Chairman since 1998. Mr. Jenkins has also served as a board member of Manulife Financial Corporation, Thomson Reuters Inc. and TransAlta Corporation. He was also past Chair of the Ontario Global 100 (OG100), past Canadian Co-Chair of the Atlantik Bruecke and past Chair of the World Wide Web Foundation, a Commissioner of the Tri-Lateral Commission. He was the tenth Chancellor of the University of Waterloo and was the Chair of the National Research Council of Canada (NRC). Mr. Jenkins received an M.B.A. from Schulich School of Business at York University, an M.A.Sc. from the University of Toronto and a B.Eng. & Mgt. from McMaster University. Mr. Jenkins has received honorary doctorates from six universities. He is a member of the Waterloo Region Entrepreneur Hall of Fame, a Companion of the Canadian Business Hall of Fame and recipient of the Ontario Entrepreneur of the Year award, the McMaster Engineering L.W. Shemilt Distinguished Alumni Award and the Schulich School of Business Outstanding Executive Leadership award. He is a Fellow of the Canadian Academy of Engineering (FCAE). Mr. Jenkins was awarded the Canadian Forces Decoration (CD), the Queen’s Diamond Jubilee Medal (QJDM) and the Cross of the Order of Merit of the Federal Republic of Germany. Mr. Jenkins is an Officer of the Order of Canada (OC). Randy Fowlie Mr. Fowlie has served as a director of OpenText since March 1998. From December 2010 to April 2017, Mr. Fowlie was the President and CEO of RDM Corporation, a leading provider of specialized hardware and software solutions in the electronic payment industry. Mr. Fowlie operated a consulting practice from July 2006 to December 2010. From January 2005 until July 2006, Mr. Fowlie held the position of Vice President and General Manager, Digital Media, of Harris Corporation, formerly Leitch Technology Corporation (Leitch), a company that was engaged in the manufacturing of audio and video infrastructure products for the professional broadcast and video industry. From June 1999 to January 2005, Mr. Fowlie held the position of Chief Operating Officer and Chief Financial Officer of Inscriber Technology Corporation (Inscriber), a software company providing products to the broadcast and video industry. From February 1998 to June 1999, Mr. Fowlie was the Chief Financial Officer of Inscriber. Inscriber was acquired by Leitch in January 2005. Prior to working at Inscriber Mr. Fowlie was a partner with KPMG LLP, Chartered Accountants, where he worked from 1984 to February 1998. Mr. Fowlie received a B.B.A.(Honours) from Wilfrid Laurier University and is a Chartered Professional Accountant. Mr. Fowlie is also a director of InvestorCom Inc. and Sapphire Digital Health Solutions Inc., both privately held companies. In the last five years, Mr. Fowlie also served as a director of Dye & Durham Limited (TSX: DND) a leading provider of cloud-based software and technology solutions for legal and business professionals. Major General David Fraser Major-General (Ret.) David Fraser has served as a director of OpenText since September 2018. Mr. Fraser is the President of Aegis Six Corporation of Toronto. Mr. Fraser was commissioned as an Infantry Officer following graduation from Carleton University with a Bachelor of Arts in 1980. He served in various command and staff positions in the Princess Patricia’s Canadian Light Infantry from platoon to Division throughout his 30 year career. Most notable, he commanded the NATO coalition in southern Afghanistan in 2006. He is a graduate of the Canadian Forces Command and Staff College in Toronto, holds a Master’s of Management and Policy and is a graduate of the United States Capstone Program (Executive School for generals). His honors and awards including the Commander of Military Merit, the Canadian Meritorious Service Cross, the Meritorious Service Medal, the United States Legion of Honor and Bronze Star (for service in Afghanistan), and leadership recognition awards from the Netherlands, Poland, and NATO. He is the recipient of the Vimy award for contributions to leadership and international affairs and the Atlantic Council Award for international leadership. Upon his departure from the military, Mr. Fraser joined the private sector and, along with his partners, created Blue Goose Pure Foods. Mr. Fraser joined INKAS® Armored Vehicle Manufacturing as their Chief Operating Officer in 2015 until 2017. In 2016, he founded Aegis Six Corporation, which aims at addressing the needs of capacity building abroad and for the private sector within Canada. Mr. Fraser currently works with the Bank of Montreal on their Canadian Defence Community Banking Program, serves as a director of Antoxa Corp. and the Canadian Forces College Foundation and is a member of The Prince’s Charities Advisory Council. In the last five years, Mr. Fraser was also a member of the Conference of Defence Association board and was a director of Route1 Inc.. Mr. Fraser is also a mentor at the Ivey Business School and is the co-author of Operation Medusa, The Furious Battle that Saved Afghanistan from the Taliban . 94 Table of Contents Gail E. Hamilton Ms. Hamilton has served as a director of OpenText since December 2006. Ms. Hamilton previously led a team of over 2,000 employees worldwide as Executive Vice President at Symantec Corp (Symantec), an infrastructure software company, and had “P&L” responsibility for their global services and support business. While leading Symantec’s $2 billion enterprise and consumer business, Ms. Hamilton helped steer the company through an aggressive acquisition strategy. In 2003, Information Security magazine recognized Ms. Hamilton as one of the “20 Women Luminaries” shaping the security industry. Ms. Hamilton has over 20 years of experience growing leading technology and services businesses in the enterprise market. She has extensive management experience at Compaq and Hewlett Packard, as well as Microtec Research. Ms. Hamilton received both a BSEE from the University of Colorado and an MSEE from Stanford University. Currently, Ms. Hamilton is also a director of Arrow Electronics. Ms. Hamilton also served as a director of Ixia and Westmoreland Coal Company. She was named as one of WomenInc.’s 2018 Most Influential Corporate Board Directors. Robert Hau Mr. Hau has served as a director of OpenText since September 2020. He is the Chief Financial Officer and Treasurer at Fiserv, Inc., and provides oversight for all financial functions of the company. Mr. Hau has nearly 30 years of experience in business and financial leadership roles. Prior to joining Fiserv, he was Executive Vice President and Chief Financial Officer of TE Connectivity Ltd. from 2012 to 2016, where he was responsible for developing and implementing financial strategy, as well as creating the financial infrastructure necessary to drive the company’s financial direction, vision and compliance initiatives. Previously, Mr. Hau served as Chief Financial Officer for Lennox International Inc. Mr. Hau also spent 22 years at Honeywell International Inc. in a variety of progressive financial and operations leadership roles, including serving as Chief Financial Officer of its Aerospace Business Group, Specialty Materials Business Group and Aerospace Electronic Systems Unit. Mr. Hau holds a Master’s degree in business administration from the USC Marshall School of Business and a Bachelor’s degree in business administration from Marquette University. Ann M. Powell Ms. Powell has served as a director of OpenText since June 2021. She is the EVP, Global Chief Human Resource Officer for Bristol Myers Squibb (BMS) whose mission is to discover, develop and deliver innovative medicines that help patients prevail over serious diseases. With a focus on business performance, Ms. Powell leads efforts to drive the corporation’s global people strategy, empowering the company’s current and future workforce and building a healthy culture focused on serving patients and communities. Ms. Powell works across the enterprise to support BMS’s commitment to creating an energizing work experience and a culture that is powerfully diverse and globally inclusive. Ms. Powell’s industry experience and expertise lie in executive compensation, global leadership development, change management, global diversity and inclusion, training design and delivery, recruitment and placement, labour relations, mergers and acquisitions, divestitures and green field start-ups. With a career spanning both international and domestic assignments, Ms. Powell has held leadership roles of increasing responsibility within the gas, chemical and pharmaceutical industries, including Dow Chemical and Wyeth Pharmaceuticals. Prior to joining BMS in 2013, Ms. Powell was the Chief Human Resources Officer for Shire Pharmaceuticals. Ms. Powell holds a B.S. degree from Iowa State University, a Master’s degree in Industrial Relations, University of Minnesota, and is certified as a Senior Professional in Human Resources (SPHR®) . Stephen J. Sadler Mr. Sadler has served as a director of OpenText since September 1997. From April 2000 to present, Mr. Sadler has served as the Chairman and CEO of Enghouse Systems Limited, a publicly traded software company that provides enterprise software solutions focusing on remote work, contact centers, visual computing and communications for next generation software defined networks. Mr. Sadler was previously Chief Financial Officer, President and Chief Executive Officer of GEAC Computer Corporation Ltd. (GEAC). Prior to Mr. Sadler’s involvement with GEAC, he held executive positions with Phillips Electronics Limited and Loblaws Companies Limited, and was Chairman of Helix Investments (Canada) Inc. Currently, Mr. Sadler is a director of Enghouse Systems Limited. Mr. Sadler has a Business and Security Valuation certificate from Canadian Association of Business Valuators, holds a B.A. Sc. (Honours) in Industrial Engineering and an M.B.A. (Dean’s List) from York University. He is also a Chartered Professional Accountant. 95 Table of Contents Michael Slaunwhite Mr. Slaunwhite has served as a director of OpenText since March 1998. Mr. Slaunwhite also previously served on the board of Vector Talent Holdings, L.P., the parent holding company of Saba Software from 2017 to December 2020. Previously, Mr. Slaunwhite also served as Chairman of the Board of Saba Software. Prior to his appointment at Vector Talent Holdings, Mr. Slaunwhite served as CEO and Chairman of Halogen Software Inc. from 2000 to August 2006, as President and Chairman from 1995 to 2000, and as a Director and Chairman from 1995 up to its acquisition by Vector Talent Holdings in 2017. From 1994 to 1995, Mr. Slaunwhite was an independent consultant to a number of companies, assisting them with strategic and financing plans. Mr. Slaunwhite was the Chief Financial Officer of Corel Corporation from 1988 to 1993. Mr. Slaunwhite holds a B.A. Commerce (Honours) from Carleton University . Katharine B. Stevenson Ms. Stevenson has served as a director of OpenText since December 2008. She has extensive corporate governance experience, having served on numerous public company and not-for-profit boards in Canada and the US over the past two decades, where she has consistently assumed leadership roles. Ms. Stevenson is the Chair of the Board of the Canadian Imperial Bank of Commerce (CIBC). Ms. Stevenson also serves on the board of Unity Health Toronto. Ms. Stevenson has previously served as a director of Capital Power Corporation and CAE Inc. She was previously a financial executive in the telecommunications and banking sectors. Ms. Stevenson holds a B.A. ( Magna Cum Laude ) from Harvard University. She is certified with the professional designation ICD.D. granted by the Institute of Corporate Directors (ICD). In June 2023, Ms. Stevenson received an honorary doctorate from Carleton University. Ms. Stevenson has been named one of the Top 100 Most Powerful Women in Canada. Deborah Weinstein Ms. Weinstein has served as a director of OpenText since December 2009. Ms. Weinstein is a co-founder and partner of LaBarge Weinstein LLP, a business law firm based in Ottawa, Ontario, since 1997. Ms. Weinstein’s legal practice specializes in corporate finance, securities law, mergers and acquisitions and business law representation of public and private companies, primarily in knowledge-based growth industries. Prior to founding LaBarge Weinstein LLP, Ms. Weinstein was a partner of the law firm Blake, Cassels & Graydon LLP, where she practiced from 1990 to 1997 in Ottawa, and in Toronto from 1985 to 1987. Ms. Weinstein also serves on a number of not-for-profit boards. Ms. Weinstein has been recognized by Martindale-Hubbell (U.S.) with the highest possible rating in both Legal Ability and Ethical Standards. As well LaBarge Weinstein has been recognized by Canadian Lawyer as one of the Top 10 Corporate Boutiques. Ms. Weinstein holds an LL.B. from Osgoode Hall Law School of York University. Involvement in Certain Legal Proceedings None of our directors or executive officers have been involved in any events during the past ten years that would require disclosure under Item 401(f) of Regulation S-K. Audit Committee The Audit Committee currently consists of three directors, Mr. Fowlie (Chair), Mr. Hau and Ms. Stevenson, all of whom have been determined by the Board of Directors to be independent as that term is defined in NASDAQ Rule 5605(a)(2) and in Rule 10A-3 promulgated by the SEC under the Exchange Act, and within the meaning of our director independence standards and those of any exchange, quotation system or market upon which our securities are traded. The responsibilities, mandate and operation of the Audit Committee are set out in the Audit Committee Charter, a copy of which is available on the Company’s website, investors.opentext.com under the Corporate Governance section. The Board of Directors has determined that Mr. Fowlie qualifies as an “audit committee financial expert” as such term is defined in SEC Regulation S-K, Item 407(d)(5)(ii). Code of Business Conduct and Ethics We have a Code of Business Conduct and Ethics (the Ethics Code) that applies to all of our directors, officers and employees. The Ethics Code incorporates our guidelines designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, and compliance with all applicable laws and regulations. The Ethics Code also incorporates our expectations of our employees that enable us to provide full, fair, accurate, timely and understandable disclosure in our filings with the SEC and other public communications. 96 Table of Contents The full text of the Ethics Code is published on our web site at investors.opentext.com under the Corporate Governance section. If we make any substantive amendments to the Ethics Code or grant any waiver, including any implicit waiver, from a provision of the Ethics Code to our Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer, we will disclose the nature of the amendment or waiver on our website at investors.opentext.com or on a Current Report on Form 8-K. Board Diversity and Term Limits The Company, including the Corporate Governance and Nominating Committee, views diversity in a broad context and considers a variety of factors when assessing nominees for the Board. The Company has established a Board Diversity Policy recognizing that a Board made up of highly qualified directors from diverse backgrounds, including diversity of gender, age, race, sexual orientation, religion, ethnicity and geographic representation, is important. In reference to the disclosure requirements under the CBCA, the Company has not adopted a written policy that specifically relates to the identification and nomination of women, aboriginal peoples in Canada, persons with disabilities and members of visible minorities (collectively, the Designated Groups) for election as directors. As discussed above, the Board Diversity Policy of the Company includes consideration of broader categories of diversity beyond those of the Designated Groups but which encompass the Designated Groups and which the Board of Directors considers to be better aligned to achieve the range of perspectives, experience and expertise required by the Company. For each of the four Designated Groups, the Company has not established a specific target number or percentage, nor a specific target date by which to achieve a specific target number or percentage of members of each Designated Groups on the Board, as we consider a multitude of factors, including skills, experience, expertise, character and the Company’s objective and challenges at the time in determining the best nominee at such time. As of the date of this Annual Report on Form 10-K, there are currently four women on the Board which represents approximately 36% of the current Board, and 44% of the current independent Board members. One director self-identified to the Company as a person with disabilities. The Company has not set term limits for independent directors because it values the cumulative experience and comprehensive knowledge of the Company that long serving directors possess. The Company does not have a director retirement policy, however, the Corporate Governance and Nominating Committee considers the results of its director assessment process in determining the nominees to be put forward. In conducting director evaluations and nominations, the Corporate Governance and Nominating Committee considers the composition of the Board and whether there is a need to include nominees with different skills, experiences and perspectives on the Board. This flexible approach allows the Company to consider each director individually as well as the Board composition generally to determine if the appropriate balance is being achieved. The onboarding of three new directors since 2018 demonstrates the Company’s focus on this approach. The table below reports self-identified diversity statistics for the Board as required by NASDAQ Rule 5606. Board Diversity Matrix Country of Principal Executive Offices Canada Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No As of June 30, 2023 As of June 30, 2022 Total Number of Directors 11 12 Gender Identity Female Male Non-Binary Did Not Disclose Gender Female Male Non-Binary Did Not Disclose Gender Directors 4 5 0 2 4 6 0 2 Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 1 LGBTQ+ 0 0 Did Not Disclose Demographic Background 2 3 97 Table of Contents Diversity in Executive Officer Positions The Company is committed to a diverse and inclusive workplace, including advancing women to executive officer positions. The Company has adopted a formal written Global Employment Equity and Diversity Policy which expresses its commitment to fostering a diverse and inclusive workplace for all employees, regardless of culture, national origin, race, color, gender, gender identification, sexual orientation, family status, age, veteran status, disability, or religion, or other basis. A principal objective of our Global Employment Equity and Diversity Policy is to support and monitor the identification, development and retention of diverse employees, including gender diversity at executive and leadership positions. We will continue to develop a sustainable culture of equity, diversity and inclusion that provides all employees an opportunity to excel, and strive to present diverse slates of candidates for all our roles and mandate it for our senior leader positions. At the executive officer level, we consider a multitude of factors, including skills, experience, expertise, character and the Company’s objectives and challenges at the time in determining the best appointment at such time. To advance equity, diversity and inclusion, we have committed to have, by 2030, a majority of ethnically diverse staff, with a 50/50 gender representation in key roles and 40% women in leadership positions at all management levels. The Company currently has one woman as a Named Executive Officer (20%) and three women as executive officers part of the executive leadership team (ELT) (23%), while approximately 16% of existing positions on the senior leadership team (SLT), exclusive of our ELT, are held by women. 40% of ELT and SLT members are based outside of North America. Within North America, 16% of the ELT/SLT members are visible minorities. Item 11. Executive Compensation TALENT AND COMPENSATION COMMITTEE REPORT Our Talent and Compensation Committee of Open Text’s board of directors (the Talent and Compensation Committee, the Compensation Committee or the Committee) has reviewed and discussed with our management the following Compensation Discussion and Analysis (CD&A). Based on this review and discussion, our Talent and Compensation Committee has recommended to the Board that the following CD&A be included in our Annual Report on Form 10-K for Fiscal 2023. This report is provided by the following independent directors, who comprise our Compensation Committee: Michael Slaunwhite (Chair), Gail E. Hamilton, Ann M. Powell, Deborah Weinstein. To the extent that this Annual Report on Form 10-K has been or will be specifically incorporated by reference into any filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (Exchange Act), this “Compensation Committee Report” shall not be deemed “soliciting materials”, unless specifically otherwise provided in any such filing. COMPENSATION DISCUSSION AND ANALYSIS The following discussion and analysis of compensation arrangements of the following individuals for the fiscal year which ended on June 30, 2023 (Fiscal 2023), should be read together with the compensation tables and related disclosures set forth below: (i) our principal executive officer, (ii) our principal financial officer, and (iii) our three most highly compensated executive officers, other than our principal executive officer and principal financial officer (collectively, the Named Executive Officers). This discussion contains forward-looking statements that are based on our current plans, considerations, expectations and projections regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from the various planned programs summarized in this discussion. Executive Summary Despite the prior five years having averaged greater than 90% shareholder support, at our last annual meeting of shareholders held on September 15, 2022, our advisory vote on our approach to executive compensation for Fiscal 2022 received the support of 45% of the shareholder votes cast. The results of the vote are not acceptable to our Compensation Committee and were not taken lightly, and we acknowledge the votes cast by shareholders in this regard. In full collaboration with our Board, throughout Fiscal 2023, management and, in certain instances, our Board Chair and Compensation Committee Chair, directly engaged with our U.S., Canadian and global shareholders as well as leading corporate governance organizations to discuss, among other things, their feedback regarding our approach to executive compensation overall. See “Shareholder Engagement and Say on Pay” for an overview of our shareholder outreach and feedback channels. Our Committee considered the vote result and the feedback we received from shareholders as it evaluated the design of our executive compensation program for Fiscal 2023. See “Summary of Key Fiscal 2023 Considerations” for details of key considerations and our response to shareholder feedback. 98 Table of Contents On August 25, 2022, we announced our acquisition of all of the issued and to be issued share capital of Micro Focus for a total purchase price of $6.2 billion, inclusive of Micro Focus’ cash and repayment of Micro Focus’ outstanding indebtedness, subject to final adjustments (the Micro Focus Acquisition). The Micro Focus Acquisition significantly expands our scope and size by adding substantial assets and operations to our existing business. As a result of the Micro Focus Acquisition, we possess one of the largest global customer bases and broadest solution suites in enterprise software. For the year ended June 30, 2023, the combined company generated approximately $4.5 billion in revenue, approximately $150.6 million in net income and approximately $1.5 billion in Adjusted EBITDA. See Part II, Item 7 “Use of Non-GAAP Financial Measures” of the Annual Report on Form 10-K for definitions and reconciliations of GAAP-based measures to Non-GAAP-based measures. As of June 30, 2023, we employed a total of approximately 24,100 individuals, of which approximately 9,700 joined our workforce as part of the Micro Focus Acquisition. Given the significance of the Micro Focus Acquisition, our approach to Executive Compensation in Fiscal 2023 included adjustments to our existing compensation programs to reflect the added complexity and larger scale resulting from the acquisition, in combination with feedback from our engagement with shareholders. On January 31, 2023, we completed the acquisition. Following the acquisition of Micro Focus, our CEO and other Named Executive Officers have had the responsibility to lead the combined organization, which includes accountability for a more diverse geographical footprint and a company with significantly larger revenues and greater scale. To address this unique transition year, we adjusted our approach to executive compensation to ensure: (1) appointment and retention of a qualified executive team to lead the combined organization with a strong alignment to long term shareholder value; (2) clear line of sight to achievement of the performance objectives set for stand-alone OpenText operations (which excludes the results from the Micro Focus Acquisition); and (3) immediate post-close actions to ensure customer and revenue retention across the Micro Focus business within the first five months of the acquisition (from the January 31, 2023 acquisition close date to the end of Fiscal 2023). 99 Table of Contents Summary of Key Fiscal 2023 Considerations In the discussions that were held with our shareholders prior to and following our September 2022 annual meeting of shareholders, feedback generally supported the design of our executive compensation program, including that we continue to increase the proportion of our executive officers’ compensation that is “at risk”, in line with our peers. The table below outlines the areas of specific feedback and topics discussed during our shareholder engagement efforts and how we responded, informed by such feedback. What We Heard How We Responded and Rationale Ensure relevant peer group and pay position • The Fiscal 2023 compensation of the CEO and other Named Executive Officers was set based on an industry peer group of organizations of a similar size, scope and geographic reach. In setting Fiscal 2023 compensation, which occurred in July 2022, the peer group was the same from Fiscal 2022. CEO target cash and total direct compensation was aligned based on the median of the peer group. • In April 2023, our peer group was updated to reflect the new size and scope of our operations resulting from the Micro Focus Acquisition. The new peer group, comprised of primarily U.S.-based companies, is designed to reflect competitors for executive talent in our industry and our focus on geographic markets outside of Canada. A number of proxy advisors compare us to primarily Canadian companies, which does not reflect where we recruit for executive talent, nor does it represent who we benchmark against for compensation practices and competitive pay levels. Executives must have relevant experience with complex enterprise delivery of cloud-based products and be able to mobilize delivery across global operations - requiring experience in both the global commercial and compliance context. As such, our recruitment of qualified executive talent does not come from adjacent industries such as telecommunications or from firms with a primarily domestic or North American footprint. • Our new peer group is not aspirational. Our revenue is near the 75 th percentile of our new peer group, with the CEO’s total direct compensation remaining at the median of the peer group. To align with the market for talented software executives as evidenced by independent data from the updated peer group, effective April 1, 2023, Named Executive Officers (other than the CEO) were provided base salary increases between 9% and 18%, which is reflective of our larger revenue base that has grown 28% year-over-year, from $3.5 billion in Fiscal 2022 to $4.5 billion in Fiscal 2023, largely due to the impact of the Micro Focus Acquisition. Despite the significant revenue growth, there was no base salary adjustment for the CEO. • In order to reflect the increased size and scope of the roles of our executives due to leading a significantly larger, combined organization, and in order to focus and reward management on the attainment and sustainability of Micro Focus revenue for the first five month “stub” period from February 1, 2023 to June 30, 2023, specific incentive plans to align with our business objectives were put in place. The Named Executive Officers target short-term incentive opportunity increased year-over-year, where in each case, the incremental increase was directly tied to attaining certain revenue thresholds for Micro Focus’ operations during the balance of Fiscal 2023. See “Micro Focus Special Performance Incentive Plan (MF SPIP).” Even after incorporating these adjustments to short-term incentive opportunity, the pay position of the CEO’s target total compensation remained at market median (as compared to our peers), and the pay position of all other Named Executive Officers' target total compensation remained below median. 100 Table of Contents What We Heard How We Responded and Rationale Demonstrate pay-for-performance linkages • The pay program, with pay levels set to industry peer group practices, is designed to ensure that Named Executive Officer compensation aligns with our shareholders’ interests and supports our business objectives. Our compensation philosophy is that the realizable pay of the CEO and other Named Executive Officers be: ◦ Directly correlated to total shareholder return; and ◦ Aligned with the realizable pay earned by our peers for similar relative shareholder return. • The assessment of realizable CEO pay relative to our peers can be found on page 112 and confirms that, over the past three years, CEO realizable pay aligned with our relative total shareholder return (Relative TSR) performance (i.e., the amount of compensation actually paid to the CEO was at a percentile that was similar to the Company's Relative TSR for the same period). 101 Table of Contents What We Heard How We Responded and Rationale CEO Pay Appears High Relative to Other Named Executive Officers • We recognize the importance of providing a clear rationale of how Named Executive Officer pay levels are set, including the careful consideration of both our external market peer group position and internal equity. • Among our peer group, the CEO pay ratio as compared to the average compensation of its other named executive officers was 3.2x, with the highest ratio amongst our peers at 5.9x. In comparison, our CEO pay ratio as compared to the average compensation of our other Named Executive Officers was 4.7x, due to the fact that our CEO serves in a dual capacity as CEO and Chief Technology Officer (CTO). None of our peers had its CEO serve in a dual operating capacity with such a high level of responsibility and personal contribution. The Board believes this distinction is important, as it means that this role is accountable for the long-term strategy and success of the business overall, as CEO, as well as technology innovation, development strategy and long-term innovation roadmap, as CTO. The Board believes our CEO pay ratio as compared to other Named Executive Officers should reflect these above-average accountabilities. • Prior to setting executive compensation, the Compensation Committee considered internal pay equity and determined that, given the dual responsibilities, the ratio of the CEO’s pay to that of our other Named Executive Officers is appropriate. As the CEO and CTO roles are individually significant, the Board believes the compensation awarded should reflect leadership in these critical areas that would typically be handled by two individuals. Notwithstanding that, to ensure internal pay equity and reflect the increasing role scope and accountabilities, our Named Executive Officers’ have received base salary increases over the past two years, while the CEO base salary has remained constant over the same period. Use of and insufficient rationale for one time stock awards • In recognition of the requirement to complete the Micro Focus Acquisition and achieve integration targets over the longer term with strong alignment to shareholder returns, one-time stock options with stock price growth performance conditions were awarded to the CEO in August 2022, after the announcement of the Micro Focus Acquisition but prior to our last annual meeting of shareholders. One-time stock options were also granted to our other Named Executive Officers in November 2022. All stock option grants have a four-year vesting horizon and do not begin vesting until year two. These awards were granted to the Named Executive Officers to align executive compensation directly to the integration and longer term success of the Micro Focus Acquisition. With these one-time awards, at least 80% of our Named Executive Officers’ compensation is directly tied to company share growth appreciation – ensuring appropriate pay for performance, retention of key executives, and alignment with the annual compensation positioning relative our peers. • The use of these one-time awards in Fiscal 2023 was to drive and reward growth related to the integration of the large-scale Micro Focus Acquisition and are not intended to be adopted as a go-forward compensation process. • Specifically, Fiscal 2024 long-term incentive awards will be delivered through the annual LTIP program without any one-time awards. Further, the annual LTIP in Fiscal 2024 will include a revised Relative TSR measured against the NASDAQ Composite Index for our performance share unit program, given the significance of the Micro Focus Acquisition. 102 Table of Contents What We Heard How We Responded and Rationale Fiscal 2023 Short-Term Incentive Performance Metric Target Setting Below Prior Year Actual Results • Under the Annual Worldwide Short-Term Incentive Plan for Fiscal 2023, revenue targets were set at $3.558 billion, 1.8% above Fiscal 2022 actual results. • The worldwide adjusted operating income (AOI), as defined in “Compensation Discussion and Analysis - Our Compensation Program - Short-Term Incentives,” target was set at $1.13 billion, which was 4.0% lower than Fiscal 2022 actual results to reflect a planned $80 million investment in Research and Development and Sales and Marketing that we expect will drive organic growth under our long-term strategic plan. This strategic investment increased expenses and resulted in a reduced AOI target, which the AOI target would have been flat compared to the prior year actual results if not for such investment (excludes foreign currency effect). The Fiscal 2024 AOI target, excluding any results from Micro Focus, has been set higher than the Fiscal 2023 actual results to reflect an increase in organic growth and a reduction in expenses. • Further, the payout of short-term incentives in Fiscal 2023 was 93% of target based on worldwide revenue and AOI, which is a considerable reduction from the 200% target short-term incentive payout under the Fiscal 2022 Short-Term Incentive plan. Importance of Micro Focus Acquisition and shareholder value • Integration of the Micro Focus Acquisition highlighted the following needs: (1) Retention of a qualified executive team to lead the combined organization with a strong alignment to long-term shareholder value – including the provision of one-time stock option grants in consideration of an appropriate mix of awards in favor of long-term incentives. (2) Clear line of sight to achievement of the performance objectives set for stand-alone OpenText operations, excluding the impact of the Micro Focus Acquisition (before the incremental revenue and operating profit attributed to the Micro Focus Acquisition) to maintain a focus on OpenText organic revenue growth and efficient operations. (3) Implementing immediate post-close actions to ensure customer and revenue retention across the Micro Focus business within the first five months of the acquisition – through the use of a supplemental short-term incentive plan tied to the achievement of Micro Focus planned revenue target for the period from February 1, 2023 to June 30, 2023. 103 Table of Contents Compensation Governance Best Practices Our approach to executive pay is guided by the following compensation governance best practices: What We Do What We Don’t Do P Balance among short- and long-term incentives, cash and equity and fixed and variable pay. O Overemphasize any single performance metric. P Link a significant amount (at least 80%) of target Named Executive Officer pay to company performance. O Use an aspirational peer group of significantly larger companies. P Cap short-term incentive plans at 200% of target. O Replace underwater options. P Use multiple types of equity awards to balance risk and reward. O Grant in-the-money stock options with an exercise price below the fair market value on the grant date. P Maintain overlapping performance periods for long-term incentives. O Guarantee a minimum level of vesting for long-term incentives. P Compare executive compensation and company performance to relevant peer group companies considering our industry scope and geographic footprint. O Guarantee annual base salary increases. O Provide discretionary bonuses. P Require executives to meet minimum stock ownership requirements. O Provide supplemental executive retirement plans. P Maintain a compensation claw back policy to recapture unearned incentive pay. O Provide single-trigger change in control benefits. P Provide only limited perquisites. O Apply pay policies or practices that pose a material adverse risk to the Company. P Retain an independent compensation consultant. P Conduct an annual shareholder say-on-pay advisory vote. Overview of Compensation Program Determining the compensation of our Named Executive Officers is the responsibility of the Compensation Committee alone, or in certain circumstances, in consultation with the Board. The Compensation Committee ensures compensation decisions are in line with our goal to provide total compensation to our Named Executive Officers that (i) is fair, reasonable and consistent with our compensation philosophy to achieve our short-term and long-term business goals, and (ii) is market competitive. The Named Executive Officers who are the subject of this CD&A are: • Mark J. Barrenechea - Vice Chair, Chief Executive Officer and Chief Technology Officer (CEO) • Madhu Ranganathan - Executive Vice President and Chief Financial Officer (CFO) • Simon Harrison - Executive Vice President, Enterprise Sales • Muhi Majzoub - Executive Vice President, Chief Product Officer • Paul Duggan - Executive Vice President, Chief Customer Officer Shareholder Engagement and Say-on-Pay We have a longstanding practice of proactive shareholder engagement every quarter, during both the proxy season and non-quiet periods, to address investor questions and concerns and encourage their feedback on a variety of topics such as company performance, executive compensation, and environmental, social and governance issues. These meetings are primarily attended by members of management, including some led by our CEO, CFO and Investor Relations team, as well as members of our Board from time to time. Throughout Fiscal 2023, we met or initiated contact with shareholders representing 64% of our outstanding shares and all of our top 25 shareholders that actively manage assets. 104 Table of Contents At our last annual meeting of shareholders held on September 15, 2022, for the first time in our history, we did not receive a favorable result for our approach to executive compensation. This result is not acceptable to the Compensation Committee and is not aligned with our previous historical support for our approach to executive compensation, which in the prior five years had averaged greater than 90% support. While our shareholders understood the design of our executive compensation program, and were generally supportive that we continue to increase the proportion of our executive officers’ compensation that is “at risk” in line with our peers, a number of key areas of discussion throughout Fiscal 2023 included: (1) peer group selection; (2) demonstration of the pay-for-performance linkages in our programs, particularly with respect to CEO pay; (3) ratio of CEO compensation as compared to other Named Executive Officer’s pay; (4) use of one-time awards; (5) Fiscal 2022 short-term incentive metric targets set below previous year actual results; and (6) aligning compensation with the achievement of stated goals for the Micro Focus transaction, particularly given the size, complexity and importance of the transaction and need to deliver sustainable shareholder value through a successful integration. The CEO’s compensation plan is structured to align with long-term shareholder return, to reward outstanding performance, provide incentives for continued long-term sustainable growth, accomplish the Board’s retention objectives and reflect the dual responsibilities of our CEO who serves as both our CEO and CTO. In reviewing executive compensation, the Compensation Committee benchmarks against U.S. software and technology companies with a global presence, and not Canadian companies, for a variety of reasons including that greater than 95% of our revenues are outside of Canada and most of the executive leadership team are based in the U.S. where we primarily recruit for executive talent. Specifically, all Named Executive Officers, including our CEO, and a majority of our other executive leadership team members are located in the highly competitive Silicon Valley — a key market for multi-national executive talent in the software and technology industry — which has higher pay levels than the limited market for software and technology executives in Canada. Our executive compensation benchmarking, like that of our direct competitors, is focused on the compensation practices of U.S.-based peer companies, as we generally recruit from U.S.-based competitors for executive leadership talent. Compensation for executive talent in Canada, and in adjacent sectors such as telecommunications, do not reflect the same level of competitiveness as among our Company and its peers. The Board believes that our CEO and other Named Executive Officer’s total compensation is reasonable relative to comparable U.S. software and technology companies with a global presence. See “Compensation Philosophy and Objectives” for our benchmarking practices. Further, the peer group was updated in April 2023 to reflect the Company’s increased size and scope following completion of the Micro Focus Acquisition. See “Peer Group” for our peer group, including our CEO’s relative target pay positioning for Fiscal 2023. CEO’s in our peer group were paid an average of 3.2x the average of the other named executive officers, with the highest ratio amongst our peers at 5.9x. In comparison, our CEO is paid 4.7x the average of our other Named Executive Officers because he serves in a dual capacity as CEO and CTO. Among our peer group, none of our peers had its CEO serve in a dual capacity. The Board believes this distinction is important, as it means that this role is accountable for the long-term strategy and success of the business overall, as CEO, as well as technology innovation, development strategy and long-term innovation roadmap, as CTO. As the CEO and CTO roles are individually significant, the Board believes the compensation awarded should reflect leadership in these critical areas that would typically be handled by two senior officers. Further, the Board believes that our CEO’s extensive experience and expertise in the information management and cloud computing industry makes him uniquely positioned to provide leadership in this dual capacity. We considered and evaluated the feedback received from our shareholders in the context of the enlarged organization as a result of the Micro Focus Acquisition and its impact on executive compensation. See “Summary of Key Fiscal 2023 Considerations” for details of decisions made in this transition year. We value the input of our shareholders and will continue to engage with our shareholders to consider their views expressed through our annual Say-on-Pay voting process. 105 Table of Contents Compensation Philosophy and Objectives We believe that compensation plays an important role in achieving short and long-term business objectives that ultimately drives business success in alignment with long-term shareholder value creation. Our compensation philosophy is based on three fundamental principles: The objectives of our compensation program are to: l Strong link to business strategy - Our short and long-term goals are reflected in our overall compensation program. l Attract and retain highly qualified executive officers who have a history of proven success. l Pay for performance - We aim to reward sustained company performance by aligning a significant portion of total compensation to our financial results and strategic objectives. We believe compensation should fluctuate with financial performance and accordingly, we structure total compensation to be at or above our peer group median when our financial performance exceeds our target performance and likewise, we structure total compensation to be below our peer group median if our financial performance falls below our targets. See “Aligning CEO Pay with Shareholders’ Interests.” l Align the interests of executive officers with our shareholders' interests and with the execution of our business strategy by evaluating executive performance on the basis of key financial metrics which we believe closely correlate to long-term shareholder value. l Motivate and reward our high-caliber executive team through competitive pay practices and an appropriate mix of short and long-term incentives. l Market relevant - Our compensation program provides market competitive pay in terms of value and structure in order to retain talent who are performing according to their objectives and to attract new talent of the highest caliber. We use market data of similarly sized U.S. software and technology companies with a global presence, rather than Canadian companies, for a variety of reasons including that greater than 95% of our revenues are outside of Canada, all of our Named Executive Officers and most of the executive leadership team are based in the U.S., and we generally recruit from U.S.-based competitors for executive leadership talent. We aim to position our executive officers’ compensation targets at the median in relation to our peer group, however, actual pay depends on the performance of the executive officers and the Company. l Tie compensation awards directly to key financial metrics with evaluations based on achieving and overachieving predetermined objectives. Our reward package is based primarily on results achieved by the Company as a whole. The Compensation Committee has the flexibility to exercise discretion to ensure total compensation appropriately reflects performance. The Compensation Committee rarely exercises this discretion. Competitive Compensation Aggregate compensation for each Named Executive Officer is designed to be market competitive. The Compensation Committee researches and refers to the compensation practices of similarly-situated companies in determining our compensation policy. Although the Compensation Committee reviews each element of compensation for market competitiveness and may weigh a particular element more heavily than another based on our Named Executive Officer’s role within the Company, the focus remains on being competitive in the market with respect to total compensation. In particular, we are a global cloud software company with greater than 95% of our revenues outside of Canada, including 56% of our revenues in the U.S. All of our Named Executive Officers, including our CEO, and a majority of our executive leadership team are located in the highly competitive Silicon Valley — a key market for multi-national executive talent in the software and technology industry. Our executive compensation benchmarking, like that of our direct competitors, is focused on the compensation practices of U.S.-based peer companies, as we generally recruit from U.S.-based competitors for executive leadership talent. Executive talent from Canada and adjacent sectors such as telecommunications is not viewed as reflecting the 106 Table of Contents same competition for company talent. See “Peer Group” for details of OpenText’s profile relative to the selected peer group as well as the relative peer group pay positioning of the CEO and Named Executive Officers, respectively. The Compensation Committee recognizes that, while executive compensation levels in the United States are higher than the market for compensation in Canada, recruiting talent from this area is critical for our success. Attracting and retaining talent with the highest level of industry expertise is a key part of the Company’s business and strategy, and therefore our compensation practices must align with market expectations where the industry skills reside. Further, the Compensation Committee also acknowledges that paying U.S. market compensation to U.S. executives in U.S. dollars may result in higher relative compensation compared to other Canadian companies. Converting amounts paid to U.S.-based executives in U.S. dollars to Canadian dollars further inflates the compensation in Canadian dollars if analyzed against other Canadian companies. Despite the elevated compensation relative to Canadian companies, the Compensation Committee believes that the Company’s pay practice of paying according to each executive’s local market serves the long-term interests of our shareholders and enhances our ability to find appropriate leadership talent. Peer Group The Compensation Committee periodically reviews market data related to compensation levels and programs at comparable peer companies. Our peer group consists of companies in the software and technology industry. The peer group is reviewed annually. In July 2022, when setting compensation for Fiscal 2023, no new companies were added to or removed from our peer group. In April 2023, in line with our key metrics considered for our peer group, which included an increase in revenue, market capitalization, number of employees and net income as a result of the Micro Focus Acquisition, we updated our peer group to reflect our new size and scope of our operations. Below are our peer groups used to set Fiscal 2023 pay and changes made to reflect the addition of the Micro Focus organization, as well as the criteria considered in establishing the peer groups. General Description Criteria Considered Peer Group used in July 2022 to set Fiscal 2023 Compensation Program Peer Group Updated as of April 2023 based on Company Size and Scope including the Impact of the Micro Focus Acquisition Global software and service providers that are similar in size, business complexity, and scope of operations to us. Key metrics considered include revenue, market capitalization, number of employees, and net income. Generally, organizations within our peer group are in a similar software/technology industry with similar revenues, market size and number of employees. Akamai Technology, Inc. Amdocs Ltd. Autodesk, Inc. Avaya Inc. Broadridge Financial Solutions, Inc. Cadence Design Systems, Inc. CDK Global LLC Check Point Software Technologies Ltd. Citrix Systems, Inc. NetApp, Inc. Pitney Bowes Inc. Palo Alto Networks, Inc. Sabre Corporation SS&C Technologies, Inc. Synopsys, Inc. Teradata Corporation Akamai Technology, Inc. Amdocs Ltd. Autodesk, Inc. Broadridge Financial Solutions, Inc. Cadence Design Systems, Inc. CGI Inc. DXC Technology Company Euronet Worldwide, Inc. Fortinet, Inc. Gartner Inc. Gen Digital Inc. GoDaddy Inc. NCR Corporation NetApp, Inc. Palo Alto Networks, Inc. Paychex Inc. Roper Technologies Inc. Splunk Inc. SS&C Technologies, Inc. Synopsys, Inc. Workday, Inc. OpenText revenues and operating income are positioned at the 75 th and 25 th percentiles, respectively, compared to the updated peer group as of April 2023. Following the adoption of our updated peer group, our CEO’s target pay positioning was aligned closer to the market median as summarized in the following table: Position to Market Median of July 2022 Peer Group Position to Market Median of Peer Group Updated Effective April 2023 Total Target Cash Compensation Total Target Direct Compensation Total Target Cash Compensation Total Target Direct Compensation CEO 50 th Percentile 50 th -75 th Percentile 50 th Percentile 50 th Percentile 107 Table of Contents Compensation Oversight Process Role of Compensation Committee The Compensation Committee has responsibility for the oversight of executive compensation within the terms and conditions of our various compensation plans. The Compensation Committee approves the compensation of our executive officers, with the exception of our CEO. Compensation decisions for our executive officers consider, among other things, performance goals, base salary, bonuses, executive benefits, short-term incentives and long-term incentives. The Compensation Committee also considers the input of the CEO with respect to his direct reports. The Compensation Committee considers CEO compensation without the CEO present and makes recommendations to the Board for approval. The Compensation Committee reviews and recommends for approval all equity awards related to executive compensation prior to final approval by the Board. Further, the Compensation Committee supports the Board with respect to succession and development of our executive officers; reports to the Board on human resources matters including reviewing and discussing the progress of our equity, diversity and inclusion efforts across our global talent; provides input on human capital disclosures; and reviews our approach to retirement programs. The Board, the Compensation Committee, and our management have instituted a set of detailed policies and procedures to evaluate the performance of each of our Named Executive Officers which help determine the amount of the short-term incentives and long-term incentives to award to each Named Executive Officer. The performance of each of our Named Executive Officers, other than our CEO, is assessed by our CEO in his capacity as the direct supervisor of the other Named Executive Officers. The performance of our CEO is assessed by the Board (excluding the CEO). The Board conducts discussions and makes decisions with respect to the performance of our CEO in special sessions from which management and the CEO is absent. The Compensation Committee considers previous compensation awards, competitive market practice, the impact of tax and accounting treatments, applicable regulatory requirements, any material acquisitions closed during the year and the results of the most recent shareholder advisory vote on executive compensation when approving compensation programs. See “Shareholder Engagement and Say-on-Pay.” During Fiscal 2023, the Committee’s work included the following: • Executive Compensation Review - The Compensation Committee continually reviews compensation practices and policies with respect to our senior management team against similar-sized software and technology companies with a global presence, in order to allow us to place our compensation practices for these positions in a market context. This benchmarking may include a review of base salary, short-term incentives and long-term incentives. • Long-Term Incentive Plan - The Compensation Committee reviewed semi-annual analysis provided by Mercer Canada Limited (Mercer) related to performance under all outstanding Performance Share Unit Programs (for details on the programs, refer to the section titled “Long Term Incentives”). Although the Compensation Committee has responsibility for decisions on executive compensation, it may consider input from management, analysis provided by the compensation consultant, as well as other factors that the Committee considers appropriate. Compensation Consultant NASDAQ standards require compensation committees to have certain responsibilities and authority regarding the retention, oversight and funding of committees’ advisors and perform an evaluation of each advisor’s independence, taking into consideration all factors relevant to that person’s independence from management. NASDAQ standards also require that such rights and responsibilities be enumerated in the compensation committee’s charter. While, as a foreign private issuer under the U.S. federal securities laws, we are exempt from these rules, nonetheless, our Compensation Committee has the sole authority to retain and terminate outside consultants. From time to time, the Compensation Committee seeks the advice of an outside compensation consultant to provide assistance and guidance on compensation issues. The compensation consultant may provide the Compensation Committee with relevant information pertaining to market compensation levels, alternative compensation plan designs, market trends and best practices and may assist the Compensation Committee with respect to determining the appropriate benchmarks for each Named Executive Officer’s compensation. In Fiscal 2023, the Compensation Committee retained Frederic W. Cook & Co., Inc. (FW Cook), an independent consulting firm specializing in executive compensation consulting. During Fiscal 2023, the Chairman and members of the Compensation Committee held discussions from time to time with representatives of FW Cook in connection with compensation market practices, and potential impacts on Company’s financial performance. FW Cook reviewed relevant information and industry benchmarks on matters relating to CEO and executive officer compensation. In addition, in Fiscal 2023, management engaged AON Consulting, Inc. (AON), an independent consulting firm, to review our peer group and supply 108 Table of Contents market data to assist in the evaluation of our approach to executive and director compensation. For further information, see “Compensation Philosophy and Objectives.” The Compensation Committee met six times during Fiscal 2023. Management assisted in the coordination and preparation of the meeting agenda and materials for each meeting. The agenda is reviewed and approved by the Chairman of the Compensation Committee. The meeting materials are generally posted and made available to the other Committee members and invitees, if any, for review approximately one week in advance of each meeting. Following each meeting, the Compensation Committee reported items that it, in its determination, considered noteworthy to the Board. Compensation Decisions for Fiscal 2023 Our compensation philosophy is to consider market data and the relative position of total compensation for our Named Executive Officers. Most executive compensation decisions were made in the first quarter of Fiscal 2023, at which time the Compensation Committee considered performance, size, pay amounts, and incentive design relative to our peer group. The Performance Share Unit Plan awards granted in 2019, which vested in September 2022, were measured against the constituents of the S&P MidCap400 Software and Services Index. Absolute TSR for the measurement period was negative 9%, which was 32 nd percentile TSR performance, above the peer group’s 25 th percentile TSR performance of negative 19% and below the median TSR of +17%. The Committee reviewed these results and concluded that the formulaic payout factor was 64% of target, based on a linear interpolation applied between the 25 th and 50 th percentiles as applied according to the plan’s payout table. The below-target funding combined with the reduction in share price for the period aligned with the 2019 Performance Share Unit Plan’s objective of aligning actual executive compensation with our shareholders’ experience. During Fiscal 2023, our CEO was not provided any adjustment to base salary despite having had no increase in base salary for the past five fiscal years. Other Named Executive Officers were provided with adjustments to their base salary and short-term incentive targets based on market data following the increase in scope of their roles upon close of the Micro Focus Acquisition. The short-term target incentive opportunity for all Named Executive Officers was adjusted on a pro-rated basis to reflect the increase in responsibilities of leading the larger, integrated organization, including for our CEO. To ensure an appropriate portion of our Named Executive Officers pay is “at risk” in alignment with our selected peer group, and with the advice of our external compensation consultant, for Fiscal 2023 we increased the long-term incentive targets of our Named Executive Officers (excluding our CEO), a component of total compensation where we have historically lagged the market. For our CEO, the long-term incentive target remains unchanged year-over-year. Similar to previous years, the Compensation Committee considered this increase to the long-term incentive compensation of our other Named Executive Officers appropriate in light of the need to retain high-quality leadership to drive our growth strategy, our historical strong performance relative to our peers and the positive future trajectory of the Company. Further, prior to setting executive compensation, the Compensation Committee considered internal pay equity and determined that, given the dual responsibilities of being both CEO and CTO, the ratio of the CEO’s pay to that of our other Named Executive Officers is appropriate. Aligning CEO Pay with Shareholders’ Interests We look at pay for performance from different perspectives to ensure there is strong alignment between what our executive officers earn and our TSR. A realized and realizable pay analysis shows the actual value of compensation awarded to our CEO in each of the last five fiscal years as of June 30, 2023 relative to the amount reported. This analysis also compares the actual value to the CEO for each $100 of compensation awarded each fiscal year to the value earned by shareholders over the same period. We have indexed these values at $100 to provide a meaningful comparison. The graphic and table below illustrate that the actual value of CEO compensation is aligned with the experience of shareholders because CEO realized and realizable compensation directly correlates to TSR performance. This analysis shows 109 Table of Contents that the executive compensation program has performed as intended, reinforcing accountability as the actual value (realized and realizable) for each fiscal year fluctuates with our share performance. Fiscal year Total direct compensation awarded (1) Actual value (realized and realizable) at June 30, 2023 (2) Period Value of $100 CEO (3) Shareholders (4) 2019 $ 8,082,359 $ 9,857,985 July 1, 2018 to June 30, 2023 $ 121.97 $ 130.37 2020 $ 9,702,562 $ 6,277,263 July 1, 2019 to June 30, 2023 $ 64.70 $ 109.52 2021 $ 20,930,804 $ 8,608,640 July 1, 2020 to June 30, 2023 $ 41.13 $ 104.45 2022 $ 15,920,496 $ 9,789,848 July 1, 2021 to June 30, 2023 $ 61.49 $ 86.05 2023 $ 23,227,232 $ 14,663,667 July 1, 2022 to June 30, 2023 $ 63.13 $ 113.46 _________________________ (1) Includes salary, short-term incentive, stock awards and option awards, as reported in the summary compensation table each year. For Fiscal 2021 and Fiscal 2023, the value of performance stock options included in total direct compensation awarded represents the grant date fair value as calculated in accordance with ASC Topic 718 as reported in the Summary Compensation Table for the applicable year. (2) Represents the actual value to the CEO of compensation awarded each year, realized between grant and June 30, 2023 or still realizable on June 30, 2023. Realized value includes cash compensation paid for the fiscal year, including salary, short-term incentive (earned for the fiscal year but paid in the following fiscal year), payouts of RSUs and PSUs that have vested, and gains realized from stock options exercised. Realizable value includes the value of RSUs and PSUs that have not vested, and outstanding stock options that were in-the-money. (3) Represents the actual value (realized and realizable) to the CEO for each $100 of total direct compensation awarded for each fiscal year. (4) Represents the cumulative value for each of the periods noted of a $100 investment in common shares made on the first trading day of the period, assuming dividends are reinvested. Further, the value that our executives realize from our long-term incentive programs is a key driver of the pay for performance relationship. The table below illustrates the difference in actual value (realized and realizable) and the grant date fair value of stock and option awards as reported in the summary compensation table each year. The actual value (realized and realizable) received by our CEO has been 46% lower than the grant date fair value of stock and option awards reported in the summary compensation table over the last five fiscal years. 110 Table of Contents Grant date Number of stock awards (1) Number of option awards (1) Exercise price of options Grant date fair value reported (2) Actual value (realized and realizable) at June 30, 2023 (3) August 6, 2018 — 161,040 $ 39.27 $ 1,407,800 $ 367,171 August 6, 2018 111,960 — $ — $ 3,693,934 $ 6,510,189 August 5, 2019 — 273,010 $ 38.76 $ 1,751,342 $ 761,698 August 5, 2019 124,410 — $ — $ 4,970,594 $ 2,534,939 August 10, 2020 — 213,680 $ 45.81 $ 1,750,993 $ — August 10, 2020 — 750,000 (4) $ 45.81 $ 7,635,000 $ — August 10, 2020 174,810 — $ — $ 8,991,036 $ 6,054,865 August 9, 2021 — 256,410 $ 52.62 $ 2,499,173 $ — August 9, 2021 144,160 — $ — $ 9,621,323 $ 5,989,848 August 8, 2022 — 306,370 $ 39.09 $ 2,499,263 $ 753,670 August 8, 2022 184,770 — $ — $ 9,189,844 $ 7,677,194 August 29, 2022 — 1,000,000 (4) $ 31.89 $ 8,090,000 $ 2,784,679 Total (Reported vs. Actual Value) $ 62,100,302 $ 33,434,253 ________________________ (1) Number of stock and option awards reported in the Grants of Plan-Based Awards table relating to Fiscal 2019 to Fiscal 2023. PSUs are reported at target. All option awards granted remain outstanding and have not been exercised for value. (2) The amount recognized as the aggregate grant date fair value of equity-based compensation awards, as calculated in accordance with ASC Topic 718 for the fiscal year in which the awards were granted, as reported in the summary compensation table for the applicable year. (3) Based upon the closing price for the Company’s Common Shares as traded on the NASDAQ on June 30, 2023 of $41.55. (4) In Fiscal 2021 and Fiscal 2023, Mr. Barrenechea was granted performance stock options with vesting subject to certain performance conditions. The amount in the table represents the grant date fair value as calculated in accordance with ASC Topic 718 for the fiscal year in which the awards were granted, as reported in the summary compensation table for the applicable year. The actual value of the performance stock options represents the number of performance stock options that have vested as of June 30, 2023, that have achieved certain performance criteria as discussed in “Long-Term Equity Grants to CEO” below. 111 Table of Contents Realizable Pay Analysis Relative to Peers The following graph demonstrates the degree of alignment between our CEO realizable pay and OpenText TSR over the last three years relative to our current industry peer group. Companies that fall within the diagonal bar are generally viewed as peers having pay for performance alignment. Over the three-year period, our CEO realizable pay was aligned with TSR in the bottom quartile (and below all but three of our 21 peers), positioning our CEO within the zone of realizable alignment. This demonstrates the effectiveness of the pay for performance design of our executive compensation program as per plan design to recognize relative TSR performance. The realizable pay analysis compares our relative TSR performance for the period of June 30, 2020 to June 30, 2023 to our current peer group for the same period, using publicly disclosed information. Realizable pay uses the values included in “Aligning CEO Pay with Shareholders’ Interests” table above. Our Compensation Program We believe that transparent, objective and easily verifiable corporate goals play an important role in creating and maintaining an effective compensation strategy for our Named Executive Officers. Our objective is to facilitate an increase in shareholder value, over the longer term, through the achievement of these corporate goals under the leadership of our Named Executive Officers working in conjunction with all of our valued employees. We use a combination of fixed and variable compensation to motivate our executive officers to achieve our corporate goals. For Fiscal 2023, the basic components of our executive officer compensation program were: • Fixed pay; • Short-term incentives; and • Long-term incentives. To ensure alignment of the interests of our executive officers with the interests of our shareholders, our executive officers have a significant proportion of compensation “at risk.” Compensation that is “at risk” means compensation that may or may not be paid to an executive officer depending on whether the Company and such executive officer is able to meet or exceed applicable performance targets. Short-term incentives and long-term incentives meet this definition of compensation which is at risk, and long-term incentives are an additional incentive used to promote the creation of longer-term shareholder value. In general, the greater the executive officer’s influence upon our financial or operational results, the higher is the “at risk” portion of the executive officer’s compensation. The Board and the Compensation Committee have broad discretion to make positive or negative adjustments if it considers them to be reasonably appropriate. Discretion may, from time to time, be applied in order to avoid unintended windfalls or penalties for plan participants. Events that might warrant such discretionary adjustments include, but are not limited to, terrorism, political unrest, war, pandemics and natural disasters. No such discretion was applied to the variable cash incentive payouts nor long-term incentive payouts during Fiscal 2023. 112 Table of Contents The Compensation Committee annually considers the percentage of each Named Executive Officer’s total compensation that is “at risk” depending on the Named Executive Officer’s responsibilities and objectives. The chart below provides the approximate percentage of target total compensation, reflective of the compensation adjustments discussed above, provided to each Named Executive Officer that was either fixed pay or “at risk” for Fiscal 2023: Named Executive Officer Fixed Pay Percentage (“Not At Risk”) Short-Term Incentive Percentage (at 100% target) (“At Risk”) Long-Term Incentive Percentage (at 100% target) (“At Risk”) Mark J. Barrenechea 8% 11% 81% Madhu Ranganathan 19% 19% 62% Simon Harrison 22% 21% 57% Muhi Majzoub 22% 21% 57% Paul Duggan 27% 26% 47% Fixed Pay Fixed pay includes: • Base salary; • Perquisites; and • Other benefits. Base Salary The base salary review for each Named Executive Officer considers factors such as current competitive market conditions and the individual’s particular skills (such as leadership ability and management effectiveness, experience, responsibility and proven or expected performance). The Compensation Committee obtains information regarding competitive market conditions through the assistance of management and our compensation consultants. For details on our benchmarking process, see “Competitive Compensation” and “Peer Group” above. Perquisites Our Named Executive Officers receive a minimal amount of non-cash compensation in the form of executive perquisites. In order to remain competitive in the marketplace, our Named Executive Officers are entitled to some limited benefits that are not otherwise available to all of our employees, including: • An annual executive medical physical examination; and • An annual allowance to reimburse expenses to a pre-defined maximum related to financial planning, tax preparation or club memberships. Other Benefits We provide various employee benefit programs on the same terms to all employees, including our Named Executive Officers, such as, but not limited to: • Medical health insurance; • Dental insurance; • Life insurance; and • Tax-based retirement savings plans matching contributions. Short-Term Incentives In Fiscal 2023, all of our Named Executive Officers participated in our short-term incentive plan, which is designed to motivate achievement of our short-term corporate goals. These short-term corporate goals are typically derived from our annual business plan which is prepared by management and approved by the Board at the start of the fiscal year. Awards made under the short-term incentive plan are made using cash only. The amount of the short-term incentive payable to each Named Executive Officer, in general, is based on the attainment of pre-established quantitative corporate objectives related to improving shareholder and company value, as applicable, which 113 Table of Contents are reviewed and approved by the Compensation Committee and the Board. Mr. Barrenechea, Mrs. Ranganathan and Mr. Majzoub’s objectives consist of worldwide revenues, AOI and the MF SPIP. Worldwide revenues are derived from the “Total Revenues” line of our audited income statement with certain adjustments relating to the aging of accounts receivable. Worldwide revenues are an important metric for measuring our growth and profitability to help us to assess our Named Executive Officers’ performance. AOI, which is intended to reflect the operational effectiveness of our leadership by showing our ability to generate profits from our operational activities, is calculated as total revenues less the total cost of revenues and operating expenses excluding amortization of intangible assets, special charges and stock-based compensation expense. AOI is also adjusted to remove the impact of foreign exchange. Due to his responsibilities as Executive Vice President, Enterprise Sales, Mr. Harrison’s objectives consist of enterprise license revenue, first year maintenance (FYM), cloud new contract value (NCV), Enterprise professional services revenue (PS) primarily within North America and EMEA and AOI and MF SPIP. Enterprise license revenues are a component of “License” revenue line of our audited income statement. FYM is allocated for the first annual term of maintenance as invoiced for new license deals, which is a component of our “Customer support” revenue line of our audited income statement. NCV is the total projected commissionable incremental revenue in a signed and written agreement between the Company and its customer. It represents the minimum amount of new revenue that we expect to receive from a contract. For the purposes of calculating the achievement of this performance objective, we consider only NCV that is derived from new business. Enterprise PS revenues are a component of our “Professional Services and Other” line of our audited income statement. In Fiscal 2023, Mr. Duggan held the role of Executive Vice President, Worldwide Renewals from July 2022 through December 2022. Due to his responsibilities in this role, Mr. Duggan’s objectives consisted of team cloud revenue and customer support revenue and AOI for this time period. Mr. Duggan transitioned to the role of Executive Vice President, Chief Customer Officer in January 2023. Due to his responsibilities as Executive Vice President, Chief Customer Officer, Mr. Duggan’s objectives changed and consist of team cloud revenue, customer support revenue, and the addition of enterprise professional services revenue (PS) and AOI. Team cloud revenues are a component of “Cloud services and subscriptions” revenue line of our audited income statement and customer support revenues are a component of our “Customer support” revenue line of our audited income statement, and enterprise professional services revenues are a component of our “Professional Services” revenue line of our audited income statement. Mr. Duggan objectives also included the MF SPIP. For Fiscal 2023, the following table illustrates the total short-term target awards, excluding the MF SPIP, for each Named Executive Officer, along with the associated weighting of the related performance measures. Named Executive Officer Total Target Award Worldwide Revenues Enterprise License, FYM, NCV and PS Revenue Team Cloud, Customer Support and PS Revenue Worldwide Adjusted Operating Income Mark J. Barrenechea $ 1,425,000 50% N/A N/A 50% Madhu Ranganathan $ 660,000 50% N/A N/A 50% Simon Harrison $ 550,000 N/A 70% N/A 30% Muhi Majzoub $ 550,000 50% N/A N/A 50% Paul Duggan $ 550,000 N/A N/A 70% (1) 30% _______________________________ (1) Mr. Duggan transitioned from the role of Executive Vice President, Worldwide Renewals to Executive Vice President, Chief Customer Officer in January 2023. For Fiscal 2023, team cloud and customer support revenue were performance measures from July 2022 through December 2022 and team cloud, customer support and PS revenue were performance measures from January 2023 through June 2023. Therefore, total short-term awards were prorated in accordance with the associated weighting in the table above. For the short-term incentive award amounts that would be earned at each of threshold, target and maximum levels of performance, see “Grants of Plan-Based Awards for Fiscal 2023” below. 114 Table of Contents For each performance measure noted above, the Compensation Committee approves the total target award eligible to be earned by a Named Executive Officer, and the Board applies a threshold and target level of performance. Where applicable, the Board also applies an objective formula for determining the percentage payout under awards for levels of performance above and below threshold and target. To the extent the performance goal is exceeded, the award will be proportionately greater. The threshold and target levels and payout formula are set forth below as well as actual performance and payouts as a percentage of targets achieved in Fiscal 2023. The Fiscal 2023 performance goal for worldwide adjusted operating income was set slightly below actual performance in Fiscal 2022 as a result of our long-term strategic plan to increase organic growth through an $80 million investment in research and development and sales and marketing. Without this strategic investment, which increased expenses and resulted in a reduction in the AOI target, the AOI goal would have been flat compared to the prior year actual results (excluding foreign currency headwinds for revenue). The table below illustrates the percentage of the target awards paid to our Named Executive Officers in accordance with our actual results achieved during Fiscal 2023, with pre-established plan adjustments to remove the impact of foreign exchange as compared to plan (i.e. use of budgeted foreign exchange rates), which are outside of the control of the executives. Objectives (in millions) Threshold Target Target Fiscal 2023 Actual % Target Actually Achieved % of Payment per Fiscal 2023 Payout Table Worldwide Revenues $ 3,202 $ 3,558 $ 3,532 99 % 85 % Enterprise License, FYM, NCV and PS Revenue $ 968 $ 1,076 $ 964 90 % 15 % Team Cloud, Customer Support and PS Revenue $ 2,495 $ 2,772 $ 2,804 101 % 158 % Worldwide Adjusted Operating Income (1) $ 1,017 $ 1,130 $ 1,128 100 % 100 % ______________________________ (1) This is a non-GAAP measure, calculated as total revenues less the total cost of revenues and operating expenses excluding amortization of intangible assets, special charges and stock-based compensation expense. In Fiscal 2023, we achieved 99% of our worldwide revenue target; 90% of our enterprise license, FYM, NCV and PS revenue; 101% of our team cloud, customer support and PS revenue; and 100% of our AOI target. The table below illustrates under the “% Attainment” column that an achievement of 99% of target for the worldwide revenue performance criteria results in an award payment of 85% of the target award amount; an achievement of 90% of target for the enterprise license, FYM, NCV and PS revenue performance criteria results in an award payment of 15% of the target award amount; an achievement of 101% of target for the team cloud, customer support and PS revenue performance criteria results in an award payment of 158%; and an achievement of 100% of target for the AOI performance criterion results in an award payment of 100% of the target award amount. Our short-term incentive payout structure illustrated below is asymmetrical with the maximum attainment of 102%, resulting in a 200% payout, because this provides an incentive for significant revenue and AOI growth for the Company. For example, in Fiscal 2023, if revenues and AOI achieved the maximum attainment of 102%, it would have equated to $3.7 million in additional short-term incentive payouts for our CEO and other Named Executive Officers but would have also resulted in approximately an additional $71 million in revenues and $23 million in AOI for OpenText and its shareholders. Worldwide Revenues, Enterprise License, FYM, NCV and PS Revenue, Team Cloud and Customer Support Revenue, Team Cloud, Customer Support, and PS Revenue and Worldwide Adjusted Operating Income - Attainment and Corresponding Payment % Attainment % Payment % Attainment % Payment 0 - 89% —% 100.0% 100% 90 - 91% 15% 100.5% 125% 92 - 93% 40% 101.0% 150% 94 - 95% 55% 101.5% 175% 96 - 97% 70% 102% and above 200% cap 98 - 99% 85% Formula: Actual / Target = % of Attainment (Linear x25 for every 0.5% over 100%) 115 Table of Contents The actual short-term incentive award earned by each Named Executive Officer for Fiscal 2023 was determined in accordance with the formulas described above and reflects the strong performance levels achieved by the Company in Fiscal 2023 related to this “at risk” compensation component. We have set forth below for each Named Executive Officer the award amount actually paid for Fiscal 2023, and the percentage of target award amount reflected by the actual award paid, broken out by performance measure as follows: Mark J. Barrenechea Performance Measure: Payable at Target Payable at Threshold Actual Payable ($) Actual Payable (% of Target) Worldwide Revenues $ 712,500 $ 106,875 $ 605,625 85 % Worldwide Adjusted Operating Income $ 712,500 $ 106,875 $ 712,500 100 % Total $ 1,425,000 $ 213,750 $ 1,318,125 93 % Madhu Ranganathan Performance Measure: Payable at Target Payable at Threshold Actual Payable ($) Actual Payable (% of Target) Worldwide Revenues $ 330,000 $ 49,500 $ 280,500 85 % Worldwide Adjusted Operating Income $ 330,000 $ 49,500 $ 330,000 100 % Total $ 660,000 $ 99,000 $ 610,500 93 % Simon Harrison Performance Measure: Payable at Target Payable at Threshold Actual Payable ($) Actual Payable (% of Target) Enterprise License, FYM, NCV and PS Revenue $ 385,000 $ 57,750 $ 57,750 15 % Worldwide Adjusted Operating Income $ 165,000 $ 24,750 $ 165,000 100 % Total $ 550,000 $ 82,500 $ 222,750 41 % Muhi Majzoub Performance Measure: Payable at Target Payable at Threshold Actual Payable ($) Actual Payable (% of Target) Worldwide Revenues $ 275,000 $ 41,250 $ 233,750 85 % Worldwide Adjusted Operating Income $ 275,000 $ 41,250 $ 275,000 100 % Total $ 550,000 $ 82,500 $ 508,750 93 % Paul Duggan Performance Measure: Payable at Target Payable at Threshold Actual Payable ($) Actual Payable (% of Target) Team Cloud, Customer Support and PS Revenue $ 385,000 $ 57,750 $ 608,300 158 % Worldwide Adjusted Operating Income $ 165,000 $ 24,750 $ 165,000 100 % Total $ 550,000 $ 82,500 $ 773,300 141 % Micro Focus Special Performance Incentive Plan (MF SPIP) The Fiscal 2023 short-term incentive plan performance results and targets discussed above excluded the Micro Focus results for the five-month period from February 2023 to June 2023. No adjustment was made to the expected performance of stand-alone OpenText operations. This was to ensure line of sight to achievement and measurement of the performance objectives set for the OpenText operations, excluding the impact of the acquisition for the fiscal year commencing July 1, 2022. 116 Table of Contents The MF SPIP was added to our compensation program to account for the Micro Focus Acquisition on January 31, 2023. Our CEO and other Named Executive Officers increased their responsibilities while leading the larger, integrated Company after the acquisition, so their short-term target incentives relating to Micro Focus revenues for the last five months ending June 30, 2023 were adjusted. The core worldwide incentive plan in place prior to the acquisition focused on metrics attributable to OpenText stand-alone operations, so an incremental incentive plan was introduced with a new measure tied to the immediate five-month stabilization of Micro Focus revenues for the period of February 1, 2023 to June 30, 2023. This met the total company objectives of continued focus on delivering on the OpenText business objectives for the year while also delivering on the Micro Focus integration plan and Micro Focus customer retention. The MF SPIP is tied to Micro Focus revenues, which is included in the “Total Revenues” line of our audited income statement with certain adjustments relating to the aging of accounts receivable. This is an important metric for measuring the stabilization of Micro Focus revenues. The Committee approved this program to pay $1.6 million in bonuses to our Named Executive Officers for achieving the goal of between $864 million and $944 million in Micro Focus revenue (96% and 104.9%, respectively, of $900 million target). We achieved $978 million in Micro Focus revenues, equating to 108.6% of target, which resulted in a total of $3.2 million in bonuses paid under the MF SPIP (200% payout). This recognized the short-term business objective of stabilizing Micro Focus’ revenue and acknowledged the increased scope of the roles of the Named Executive Officers who assumed additional accountability for the combined OpenText and Micro Focus organizations. The amount of the MF SPIP payable to each Named Executive Officer, in general, is based on the attainment of pre-established quantitative corporate objectives which were reviewed and approved by the Compensation Committee and the Board. The table below illustrates the percentage of the target awards related to the MF SPIP paid to our Named Executive Officers in accordance with our actual results achieved during Fiscal 2023, with adjustments to remove the impact of foreign exchange as compared to budgeted rates, which are outside of the control of the executives. Objective (in millions) Threshold Target Target Fiscal 2023 Actual % Target Actually Achieved % of Payment per Fiscal 2023 Payout Table FY23 Micro Focus Revenues for the five months ended June 30, 2023 $ 846 $ 900 $ 978 109 % 200 % In Fiscal 2023, we achieved 108.6% of our MF SPIP target. The table below illustrates under the “% Attainment” column that an achievement of 108.6% of target for the MF SPIP performance criteria results in an award payment of 200% of the target award amount. FY23 Micro Focus Special Performance Incentive Plan % Attainment % Payment 0 - 93.9% —% 94.0 - 95.9% 50% 96.0 - 104.9% 100% 105.0 - 106.9% 150% 107% and above 200% cap Formula: Actual / Target = % of Attainment For Fiscal 2023, the following table illustrates the MF SPIP award amount actually paid and the percentage of target award amount represented by the actual award paid for each Named Executive Officer. Named Executive Officer Payable at Target Payable at Threshold Actual Payable ($) Actual Payable (% of Target) Mark J. Barrenechea $ 590,000 $ 295,000 $ 1,180,000 200 % Madhu Ranganathan $ 250,000 $ 125,000 $ 500,000 200 % Simon Harrison $ 250,000 $ 125,000 $ 500,000 200 % Muhi Majzoub $ 250,000 $ 125,000 $ 500,000 200 % Paul Duggan $ 250,000 $ 125,000 $ 500,000 200 % 117 Table of Contents Long-Term Incentives As with many North American software and technology companies, we have a general practice of granting variable long-term incentives to executive officers, including our Named Executive Officers. Our long-term incentives represent a significant proportion of our Named Executive Officers’ total compensation, and its purpose is two-fold: (i) as a component of a competitive compensation package; and (ii) to align the interests of our Named Executive Officers with the interests of our shareholders. The target value of the annual grants are consistent with competitive market practice, set to ensure that annual total direct target compensation package is appropriately positioned relative to our industry peer group for each Named Executive Officers. Grant amounts take into account the desired pay mix, competitive positioning and internal equity across our Named Executive Officers. Vesting occurs over time, to ensure alignment with our performance over the longer term. Usually, a very high percentage of the long-term incentive is “at risk” indicating we will not provide any compensation to the executive unless shareholders have received a positive return. Long-Term Incentive Plans (LTIP) - General We incentivize our executive officers, including our Named Executive Officers, in part, with long-term compensation pursuant to our LTIP. For each LTIP grant, a target value is established by the Compensation Committee for each Named Executive Officer, except for the CEO , whose target value is established by the Board, based on competitive market practice and by the respective Named Executive Officer’s ability to influence financial or operational performance. The performance goals and the weightings of performance goals under each LTIP are first recommended by the Compensation Committee and then approved by the Board. Grants are generally made annually and are comprised of the components outlined in the table below. No dividends were paid or accrued on PSUs or RSUs for grants made prior to Fiscal 2023. For grants made during or after Fiscal 2023, when cash dividends are paid by the Company on outstanding Common Shares, the Company will credit additional dividend equivalent PSUs and RSUs to the participant’s account. Dividend equivalent PSUs and RSUs will be subject to the same terms and conditions as the granted PSUs or RSUs, as applicable, and vest and are settled at the same time and in the same form as the PSUs or RSUs to which such dividend equivalent PSUs or RSUs relate. 118 Table of Contents Vehicle % of Total LTIP Description Vesting Payout Performance Share Units (PSUs) 50% of LTIP target award value The value of each PSU is equivalent to one Common Share. The number of PSUs granted is determined by converting the dollar value of the target award to PSUs, based on an average share price determined at time of Board grant. The number of PSUs to vest will be based on the Company’s relative TSR at the end of a three-year period as compared to the TSR of companies comprising the performance peer group. For Fiscal 2023, Relative TSR was measured against the constituents of the S&P MidCap400 Software and Services Index and for Fiscal 2024, Relative TSR will be measured against the constituents of the NASDAQ Composite Index. Cliff vesting in the third year following the determination by the Board that the performance criteria have been met. Once vested, units will be settled in either Common Shares or cash, at the discretion of the Board. We expect to settle these awards in Common Shares. Restricted Share Units (RSUs) 25% of LTIP target award value The value of each RSU is equivalent to one Common Share. The number of RSUs granted is determined by converting the dollar value of the target award to RSUs, based on an average share price determined at time of Board grant. Cliff vesting, generally three years after grant date. Once vested, units will be settled in either Common Shares or cash, at the discretion of the Board. We expect to settle these awards in Common Shares. Stock Options 25% of LTIP target award value The dollar value of the target award is converted to a number of options using a Black-Scholes model. The exercise price is equal to the closing price of our Common Shares on the trading day preceding the date of grant. Vesting is typically 25% on each of the first four anniversaries of grant date. Options expire seven years after the grant date. Once vested, participants may exercise options for Common Shares. Payouts under LTIP grants: • May be subject to certain limitations in the event of early termination of employment or change in control of the Company; and • Are subject to mandatory repayment or “claw-back” in the event of fraud, willful misconduct or gross negligence by an employee, including a Named Executive Officer, affecting the financial performance or financial statements of the Company or the price of our Common Shares. LTIP Grants made in Fiscal 2023 under the LTIP were granted on August 8, 2022 with the goal of measuring performance over a three-year period (from July 1, 2022 to September 15, 2025). The table below illustrates the target value of each element under the LTIP for each Named Executive Officer. Named Executive Officer Performance Share Units Value Restricted Share Units Value Stock Options Value Total Mark J. Barrenechea $ 5,000,000 $ 2,500,000 $ 2,500,000 $ 10,000,000 Madhu Ranganathan $ 1,100,000 $ 550,000 $ 550,000 $ 2,200,000 Simon Harrison $ 742,500 $ 371,250 $ 371,250 $ 1,485,000 Muhi Majzoub $ 742,500 $ 371,250 $ 371,250 $ 1,485,000 Paul Duggan $ 500,000 $ 250,000 $ 250,000 $ 1,000,000 The LTIP is an annual program. For details of our previous LTIPs, see Item 11 of our Annual Report on Form 10-K for the relevant year. 119 Table of Contents LTIP - PSUs With respect to our PSUs, we used relative TSR to benchmark the Company’s performance against the performance of the corporations comprising the constituents of the S&P Mid Cap 400 Software & Services Index for the Fiscal 2023 award. The S&P Mid Cap 400 Software & Services Index is comprised of a subset of software and services companies of the S&P Mid Cap 400, which consists of 400 U.S. public companies with market capitalization of $1.4 billion to $17.8 billion and is a measure of the performance of mid-sized companies. Relative TSR is the sole measure for each Named Executive Officer’s performance over the relevant three-year period with respect to PSUs. PSUs granted for Fiscal 2024 will include a Relative TSR metric as part of their long-term incentive plan design. Relative TSR will be calculated in comparison to the NASDAQ Composite Index which correlates better to our own market movement. The NASDAQ Composite Index will replace the previous index for the Fiscal 2024 grant. This change reflects our new size and scope of operations as a result of the Micro Focus Acquisition while providing for a larger peer group reflecting a wide range of shareholder alternatives for investment choices. If the Company’s cumulative Relative TSR, compared to the cumulative TSR of the Index is: Then the percentage of the PSU target award that will be paid out will be: Below 25 th percentile 0% 25 th percentile 50% 50 th percentile 100% 80 th percentile 200% Any target percentile achieved between 25 th and 80 th percentile will be interpolated to determine a payout that can range from 50% to 200% of the target award. External benchmarking shows that the threshold of the 25 th percentile with a 50% payout, is the majority practice among our peer group. The amounts that may be realized for PSU awards are as follows, calculated based on the market price of our Common Shares on the NASDAQ as of June 30, 2023, and applied to the number of PSUs granted to the Named Executive Officers on August 8, 2022, based on the levels of achievement disclosed above. See “Grants of Plan-Based Awards in Fiscal 2023” for the number of PSUs granted in Fiscal 2023. LTIP PSUs value as of June 30, 2023 Named Executive Officer 50% Payout 100% Payout 200% Payout Mark J. Barrenechea $ 2,635,579 $ 5,271,158 $ 10,542,316 Madhu Ranganathan $ 579,831 $ 1,159,661 $ 2,319,322 Simon Harrison $ 391,339 $ 782,677 $ 1,565,354 Muhi Majzoub $ 391,339 $ 782,677 $ 1,565,354 Paul Duggan $ 263,593 $ 527,186 $ 1,054,372 LTIP - RSUs RSUs vest after three years and do not have any specific performance-based vesting criteria. Provided the eligible employee remains employed throughout the vesting period, all RSUs granted will become vested RSUs at the end of the three year period. The following RSU award values have been calculated based on the market price of our Common Shares on the NASDAQ as of June 30, 2023, and applied to the number of RSUs granted to the Named Executive Officers on August 8, 2022. See “Grants of Plan-Based Awards in Fiscal 2023” for the number of RSUs granted in Fiscal 2023. LTIP RSUs Named Executive Officer Value as of June 30, 2023 Mark J. Barrenechea $ 2,635,558 Madhu Ranganathan $ 579,830 Simon Harrison $ 391,567 Muhi Majzoub $ 391,567 Paul Duggan $ 263,593 120 Table of Contents LTIP - Stock Options The stock options granted in connection with the annual LTIP program vest over four years, do not have any specific performance-based vesting criteria and, if not exercised, expire after seven years. Our Named Executive Officers will realize value on these stock options only if there is future OpenText share price appreciation from the date of grant. For a discussion of the assumptions used in the valuation of stock options, see Note 13 “Share Capital, Option Plans and Share-based Payments” to our Notes to Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K. With respect to stock option grants, the Board will determine the following, based upon the recommendation of the Compensation Committee: the executive officers entitled to participate in our stock option plan, the number of options to be granted, and any other material terms and conditions of the stock option grant. All stock option grants, whether part of the LTIP or granted separately for new hires, promotions, retention or other reasons, are governed by our stock option plans. In addition, grants and exercises of stock options are subject to our Insider Trading Policy. For details of our Insider Trading Policy, see “Other Information with Respect to Our Compensation Program - Insider Trading Policy” below. Other Long-Term Equity Grants In Fiscal 2023, we made a grant of stock options to our Named Executive Officers (excluding our CEO - see “ Long-Term Equity Grants to CEO ”), following the announcement of the Micro Focus Acquisition. The stock option grants have a four-year vesting horizon and do not begin vesting until year two. With the increased size of the organization, which includes the Named Executive Officers leading a larger combined OpenText organization for their respective functions, the objective of the one-time grants was to retain and engage the leadership team to successfully integrate Micro Focus and execute on the combined company’s operational goals over the next two to four years in order to achieve sustainable growth and long-term shareholder value. Long-Term Equity Grants to CEO In connection with the Compensation Committee’s review of competitive compensation and the review of Mr. Barrenechea’s performance, as discussed earlier under “ Compensation Decisions for Fiscal 2023 ”, on August 29, 2022, Mr. Barrenechea was awarded a grant of performance stock options with an exercise price of $31.89, a seven-year term, and vesting subject to certain performance conditions provided that Mr. Barrenechea remains an employee. The grant was made after the announcement of the Micro Focus Acquisition and was in recognition of the size, importance and need to achieve the stated benefits and synergies associated with the transaction. These performance options will vest based on the extent to which the average closing price (ACP) of the Common Shares on the NASDAQ for the trading days in any fiscal quarter commencing October 1, 2022, prior to the expiration of the options, exceeds the exercise price by a specified percentage or greater (subject to a linear interpolation for quarterly ACP between the performance levels outlined below). Absolute share growth at target performance ($44.65 reflecting an increase of 40%) will result in 500,000 options vesting, with no options vesting below threshold performance ($38.27 reflecting an increase of 20%) and 1,000,000 options vesting if maximum performance is achieved ($51.02 reflecting an increase of 60%). No more than 1,000,000 performance options (2x target) may vest under the award. ACP Increase (%) Illustrative ACP ($) Aggregate Number of Options to Vest Threshold (20%) $38.27 200,000 30% $41.46 350,000 Target (40%) $44.65 500,000 50% $47.84 750,000 Maximum (60%) $51.02 1,000,000 To the extent that any performance options vest during the first five-year period, the options (or the underlying Common Shares upon exercise) must be held by Mr. Barrenechea until the earlier of the fifth anniversary of the date of grant and the date he ceases to be an employee. Any performance options that vest may be exercised by Mr. Barrenechea during this five-year period, provided that the Common Shares acquired on exercise, net of a number of Common Shares that may be sold by Mr. Barrenechea to fund the exercise price and any income taxes payable as a result of such exercise, must be held by Mr. Barrenechea for this same period. Executive Change in Control and Severance Benefits Our severance benefit agreements are designed to provide reasonable compensation to departing senior executive officers under certain circumstances. While we do not believe that the severance benefits would be a determinative factor in a senior 121 Table of Contents executive’s decision to join or remain with the Company, the absence of such benefits, we believe, would present a distinct competitive disadvantage in the market for talented executive officers. Furthermore, we believe that it is important to set forth the benefits payable in triggering circumstances in advance to avoid future disputes or litigation. The severance benefits we offer to our senior executive officers are competitive with similarly-situated individuals and companies. We have structured our senior executive officers’ change in control benefits as “double trigger” benefits, meaning that the benefits are paid only in the event of, first, a change in control transaction, and second, a change in relationship between the Company and the senior executive officer within one year after the transaction. These benefits attempt to provide an incentive to our senior executive officers to remain employed with the Company in the event of such a transaction. Other Information with Respect to Our Compensation Program Pension Plans We do not provide pension benefits or any non-qualified deferred compensation to any of our Named Executive Officers. Share Ownership Guidelines We currently have equity ownership guidelines (Share Ownership Guidelines), the objective of which is to encourage our senior management, including our Named Executive Officers, and our directors to buy and hold Common Shares in the Company based upon an investment target. We believe that the Share Ownership Guidelines help align the financial interests of our senior management team and directors with the financial interests of our shareholders. The equity ownership levels are as follows: CEO 4x base salary Other senior management 1x base salary Non-management director 5x annual retainer For purposes of the Share Ownership Guidelines, individuals are deemed to hold all securities over which he or she is the registered or beneficial owner thereof under the rules of Section 13(d) of the Exchange Act through any contract, arrangement, understanding, relationship or otherwise in which such person has or shares: • voting power which includes the power to vote, or to direct the voting of, such security; and/or • investment power which includes the power to dispose, or to direct the disposition of, such security. Also, Common Shares will be valued at the greater of their book value (i.e., purchase price) or the current market value. On an annual basis, the Compensation Committee reviews the recommended ownership levels under the Share Ownership Guidelines and the compliance by our executive officers and directors with the Share Ownership Guidelines. The Board originally implemented the Share Ownership Guidelines in October 2009 and recommends that equity ownership levels be achieved within five years of becoming a member of the executive leadership team, including Named Executive Officers. The Board also recommends that the executive leadership team retain their ownership levels for as long as they remain members of the executive leadership team. Named Executive Officers Named Executive Officers may achieve these Share Ownership Guidelines through the exercise of stock option awards, Common Shares received as a result of vested RSUs or PSUs, purchases under the OpenText Employee Stock Purchase Plan (ESPP), through open market purchases made in compliance with applicable securities laws or through any equity plan(s) we may adopt from time to time providing for the acquisition of Common Shares. Until the Share Ownership Guidelines are met, it is recommended that a Named Executive Officer retain a portion of any stock option exercise or LTIP award in Common Shares to contribute to the achievement of the Share Ownership Guidelines. Common Shares issuable pursuant to the unexercised options are not counted towards meeting the equity ownership target. All Named Executive Officers had complied with the Share Ownership Guidelines for Fiscal 2023. However, due to increases in responsibilities and related compensation in Fiscal 2023, Mr. Duggan is currently below the requirements of the Share Ownership Guidelines and expects to be compliant in Fiscal 2024. Directors With respect to non-management directors, both Common Shares and deferred stock units (DSUs) are counted towards the achievement of the Share Ownership Guidelines. The Company currently has a Directors’ Deferred Share Unit Plan (DSU Plan), whereby any non-management director of the Company may elect to defer all or part of his or her retainer and/or fees in the form of common stock equivalents. As of the date of this Annual Report on Form 10-K, all non-management directors, have 122 Table of Contents exceeded the Share Ownership Guidelines applicable to them, which is five times their annual retainer. For further details, see the table below titled “Director Compensation for Fiscal 2023.” Insider Trading Policy All of our employees, officers and directors, including our Named Executive Officers, are required to comply with our Insider Trading Policy. Our Insider Trading Policy prohibits the purchase, sale or trade of our securities with the knowledge of material inside information. In addition, our Insider Trading Policy prohibits our employees, officers and directors, including our Named Executive Officers, from, directly or indirectly, short selling any security of the Company or entering into any other arrangement that results in a gain only if the value of the Company’s securities decline in the future, selling a “call option” giving the holder an option to purchase securities of the Company, or buying a “put option” giving the holder an option to sell securities of the Company. The definition of “trading in securities” includes any derivatives-based, monetization, non-recourse loan or similar arrangement that changes the insider’s economic exposure to or interest in securities of the Company and which may not necessarily involve a sale. All grants of stock options are subject to our Insider Trading Policy and as a result, stock options may not be granted during the “blackout” period beginning on the fifteenth day of the last month of each quarter and ending at the beginning of the second trading day following the date on which the Company’s quarterly or annual financial results, as applicable, have been publicly released. If the Board approves the issuance of stock options during the blackout period, these stock options are not granted until the blackout period is over. The price at which stock options are granted is not less than the closing price of the Company’s Common Shares on the trading day for the NASDAQ market immediately preceding the applicable grant date. Summary Compensation Table The following table sets forth summary information concerning the annual compensation of our Named Executive Officers. All numbers are rounded to the nearest dollar or whole share. Fiscal Year Salary ($) (1) Bonus ($) (2) Stock Awards ($) (3) Option Awards ($) (4) Non-Equity Incentive Plan Compensation ($) (1)(5) All Other Compensation ($) (6) Total ($) Mark J. Barrenechea 2023 $ 950,000 — $ 9,189,844 $ 10,589,263 $ 2,498,125 $ 21,050 (7) $ 23,248,282 Vice Chair, Chief Executive Officer and Chief Technology Officer 2022 $ 950,000 — $ 9,621,323 $ 2,499,173 $ 2,850,000 $ 16,947 (8) $ 15,937,443 2021 $ 890,625 — $ 8,991,036 $ 9,385,993 $ 1,663,150 $ 31,825 (8) $ 20,962,629 Madhu Ranganathan 2023 $ 688,750 — $ 2,021,796 $ 1,588,832 $ 1,110,500 $ — (9) $ 5,409,878 Executive Vice President and Chief Financial Officer 2022 $ 600,000 — $ 1,924,114 $ 499,815 $ 1,200,000 $ — (8) $ 4,223,929 2021 $ 468,750 — $ 1,765,137 $ 1,319,658 $ 937,534 $ — (8) $ 4,491,079 Simon Harrison 2023 $ 575,000 — $ 1,364,721 $ 1,410,180 $ 722,750 $ 304,118 (10) $ 4,376,769 Executive Vice President, Enterprise Sales 2022 $ 500,000 — $ 1,298,676 $ 337,434 $ 1,000,000 $ 304,118 (10) $ 3,440,228 2021 $ 421,875 — $ 1,415,475 $ 1,140,192 $ 844,239 $ 304,118 (10) $ 4,125,899 Muhi Majzoub 2023 $ 562,500 — $ 1,364,721 $ 1,410,180 $ 1,008,750 $ 4,329 (11) $ 4,350,480 Executive Vice President, Chief Product Officer 2022 $ 500,000 — $ 1,298,676 $ 337,434 $ 1,000,000 $ 4,995 (8) $ 3,141,105 2021 $ 398,437 — $ 1,377,238 $ 1,087,917 $ 796,904 $ — (8) $ 3,660,496 Paul Duggan 2023 $ 575,000 — $ 919,134 $ 1,288,957 $ 1,273,300 $ 10,110 (12) $ 4,066,501 Executive Vice President, Chief Customer Officer 2022 N/A N/A N/A N/A N/A N/A (13) N/A 2021 N/A N/A N/A N/A N/A N/A (13) N/A ___________________________________ (1) Amounts reflect Fiscal 2021 COVID-19 compensation adjustments, which included a base salary reduction for each of the Named Executive Officers effective May 15, 2020, and the subsequent restoration of those adjustments which became effective December 1, 2020. See Item 11 of our Annual Report on Form 10-K for Fiscal 2021 for further details on our COVID-19 compensation adjustments. (2) Amounts set forth in this column for Fiscal 2021 represent a special performance bonus, approved by the Board, equal to an amount equal to the reductions in their Fiscal 2020 salary and annual incentive payout made pursuant to the previously disclosed COVID-19 compensation adjustments. A special performance bonus was paid in September 2020; however, as it related to performance in Fiscal 2020, the bonus received by each of the Named Executive Officers was included in Fiscal 2020. (3) The amounts set forth in this column represent the aggregate grant date fair value, as computed in accordance with ASC Topic 718 “Compensation-Stock Compensation” (Topic 718). Grant date fair value may vary from the target value indicated in the table set forth above in the section “LTIP.” For a discussion of the assumptions used in these valuations, see Note 13 “Share Capital, Option Plans and Share-based Payments” to our Notes to Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K. For the maximum value that may be received under the PSU 123 Table of Contents awards granted in Fiscal 2023 by each Named Executive Officer, see the “Maximum” column under “Estimated Future Payouts under Equity Incentive Plan Awards” under the “Grants of Plan-Based Awards in Fiscal 2023” table below. (4) Amounts set forth in this column represent the amount recognized as the aggregate grant date fair value of stock option awards, as calculated in accordance with Topic 718 for the fiscal year in which the awards were granted. In all cases, these amounts do not reflect whether the recipient has actually realized a financial benefit from the exercise of the awards. The performance options granted to Mr. Barrenechea in Fiscal 2021 and Fiscal 2023 have been reflected and valued here, assuming all performance conditions are satisfied. Please also see “Long-Term Equity Grants to CEO” and “Grants of Plan-Based Awards in Fiscal 2023” for details of target performance value and vesting. For a discussion of the assumptions used in this valuation, see Note 13 “Share Capital, Option Plans and Share-based Payments” to our Notes to Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K. (5) The amounts set forth in this column for Fiscal 2023 represent payments under the short-term incentive plan based on actual performance achieved. (6) Except as otherwise indicated the amounts in “All Other Compensation” primarily include (i) medical examinations and (ii) tax preparation and financial advisory fees paid. “All Other Compensation” does not include benefits received by the Named Executive Officers which are generally available to all our salaried employees. (7) Represents amounts we paid, reimbursed or attributed for international tax and financial planning and travel related items. (8) For details of the amounts of fees or expenses we paid or reimbursed please refer to Summary Compensation Table in Item 11 of our Annual Report on Form 10-K for the corresponding fiscal years ended June 30, 2022 and June 30, 2021. (9) The total value of all perquisites and personal benefits for this Named Executive Officer was less than $10,000, and, therefore, excluded. (10) Represents amounts we paid or reimbursed for housing allowance inclusive of a related tax gross-up amount of $160,118, $160,118 and $160,118 for the fiscal years ended June 30, 2023, 2022 and 2021, respectively. (11) Represents amounts we paid or reimbursed for tax, financial, and estate planning. (12) Represents amounts we paid or reimbursed for medical examinations and life insurance. (13) The executive officer was not a Named Executive Officer during the fiscal year, and therefore compensation details have been excluded. Grants of Plan-Based Awards in Fiscal 2023 The following table sets forth certain information concerning grants of awards made to each Named Executive Officer during Fiscal 2023. Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) All Other Option Awards: Number of Securities Underlying (2) Exercise or Base Price of Option Awards Grant Date Fair Value of Options (3) Name Grant Date Threshold ($) Target ($) Maximum ($) Options (#) ($/share) Awards ($) Mark J. Barrenechea August 8, 2022 $ 508,750 $ 2,015,000 $ 4,030,000 306,370 $ 39.09 $ 2,499,263 August 29, 2022 1,000,000 (6) $ 31.89 $ 8,090,000 Madhu Ranganathan August 8, 2022 $ 224,000 $ 910,000 $ 1,820,000 67,400 $ 39.09 $ 549,826 November 7, 2022 180,000 $ 26.81 $ 1,039,006 Simon Harrison August 8, 2022 $ 207,500 $ 800,000 $ 1,600,000 45,500 $ 39.09 $ 371,174 November 7, 2022 180,000 $ 26.81 $ 1,039,006 Muhi Majzoub August 8, 2022 $ 207,500 $ 800,000 $ 1,600,000 45,500 $ 39.09 $ 371,174 November 7, 2022 180,000 $ 26.81 $ 1,039,006 Paul Duggan August 8, 2022 $ 207,500 $ 800,000 $ 1,600,000 30,640 $ 39.09 $ 249,951 November 7, 2022 180,000 $ 26.81 $ 1,039,006 Estimated Future Payouts Under Equity Incentive Plan Awards (4) All Other Stock Awards: Number of Securities Underlying (5) Grant Date Fair Value of Stock (3) Name Grant Date Threshold (#) Target (#) Maximum (#) Stock (#) Awards ($) Mark J. Barrenechea August 8, 2022 61,590 123,180 246,360 61,590 $ 9,189,844 Madhu Ranganathan August 8, 2022 13,550 27,100 54,200 13,550 $ 2,021,796 Simon Harrison August 8, 2022 9,145 18,290 36,580 9,150 $ 1,364,721 Muhi Majzoub August 8, 2022 9,145 18,290 36,580 9,150 $ 1,364,721 Paul Duggan August 8, 2022 6,160 12,320 24,640 6,160 $ 919,134 124 Table of Contents ____________________________ (1) Represents the threshold, target and maximum estimated payouts under our short-term incentive plan for Fiscal 2023. For further information, see “Compensation Discussion and Analysis - Our Compensation Program - Short-Term Incentives” above. (2) For further information regarding our options granting procedures, see “Compensation Discussion and Analysis - Our Compensation Program - Long-Term Incentives” above. (3) Amounts set forth in this column represent the amount recognized as the aggregate grant date fair value of equity-based compensation awards, as calculated in accordance with ASC Topic 718 for the fiscal year in which the awards were granted. In all cases, these amounts do not reflect whether the recipient has actually realized a financial benefit from the exercise of the awards. For a discussion of the assumptions used in this valuation, see Note 13 “Share Capital, Option Plans and Share-based Payments” to our Notes to Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K. (4) Represents the threshold, target and maximum estimated payouts under our LTIP PSUs for all Named Executive Officers. For further information, see “Compensation Discussion and Analysis - Our Compensation Program - Long-Term Incentives - LTIP” and Compensation Discussion and Analysis - Our Compensation Program - Long-Term Incentives - Long-Term Equity Grants to CEO” above. (5) Represents the estimated payouts under our LTIP RSUs. For further information, see “Compensation Discussion and Analysis - Our Compensation Program - Long-Term Incentives - LTIP” above . (6) Amount consists of the performance option award. The threshold, target and maximum estimated payout for the performance options reflect the vesting of 200,000, 500,000 and 1,000,000 options, respectively. The value of the performance option at the date of grant was as set forth herein, assuming the highest level of the performance condition is satisfied. Outstanding Equity Awards at End of Fiscal 2023 The following table sets forth certain information regarding outstanding equity awards held by each Named Executive Officer as of June 30, 2023. Option Awards (1) Stock Awards Name Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Non- exercisable Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) (2) Market Value of Shares or Units of Stock That Have Not Vested ($) (2) Equity Incentive Plan Awards: Number of unearned shares, units or other rights that have not vested (#) (3) Equity Incentive Plan Awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (3) Mark J. Barrenechea June 1, 2017 200,000 — $ 32.63 June 1, 2024 June 1, 2017 324,255 — $ 32.63 June 1, 2024 August 7, 2017 189,180 — $ 34.49 August 7, 2024 August 6, 2018 161,040 — $ 39.27 August 6, 2025 August 5, 2019 204,758 68,252 $ 38.76 August 5, 2026 August 10, 2020 106,840 106,840 $ 45.81 August 10, 2027 August 10, 2020 — 750,000 $ 45.81 August 10, 2027 August 9, 2021 64,103 192,307 $ 52.62 August 9, 2028 August 8, 2022 — 306,370 $ 39.09 August 8, 2029 August 29, 2022 288,269 711,731 $ 31.89 August 29, 2029 August 10, 2020 98,270 $ 4,083,119 August 10, 2020 76,540 $ 3,180,237 August 9, 2021 48,050 $ 1,996,478 August 9, 2021 96,110 $ 3,993,371 August 8, 2022 63,431 $ 2,635,572 August 8, 2022 126,863 $ 5,271,144 Madhu Ranganathan May 11, 2018 220,132 — $ 34.71 May 11, 2025 August 6, 2018 28,600 — $ 39.27 August 6, 2025 August 5, 2019 32,175 10,725 $ 38.76 August 5, 2026 August 10, 2020 50,974 104,080 $ 45.81 August 10, 2027 August 9, 2021 12,820 38,460 $ 52.62 August 9, 2028 125 Table of Contents August 8, 2022 — 67,400 $ 39.09 August 8, 2029 November 7, 2022 — 180,000 $ 26.81 November 7, 2029 August 10, 2020 10,983 $ 456,344 August 10, 2020 17,490 $ 726,710 August 9, 2021 9,610 $ 399,296 August 9, 2021 19,220 $ 798,591 August 8, 2022 13,955 $ 579,834 August 8, 2022 27,910 $ 1,159,669 Simon Harrison November 6, 2017 40,000 — $ 34.48 November 6, 2024 August 6, 2018 12,510 — $ 39.27 August 6, 2025 August 5, 2019 14,625 4,875 $ 38.76 August 5, 2026 August 10, 2020 42,978 90,774 $ 45.81 August 10, 2027 August 9, 2021 8,655 25,965 $ 52.62 August 9, 2028 August 8, 2022 — 45,500 $ 39.09 August 8, 2029 November 7, 2022 — 180,000 $ 26.81 November 7, 2029 August 10, 2020 8,839 $ 367,260 August 10, 2020 13,670 $ 567,989 August 9, 2021 6,490 $ 269,660 August 9, 2021 12,970 $ 538,904 August 8, 2022 9,424 $ 391,549 August 8, 2022 18,837 $ 782,670 Muhi Majzoub July 29, 2016 32,560 — $ 29.75 July 29, 2023 August 7, 2017 36,960 — $ 34.49 August 7, 2024 August 6, 2018 31,460 — $ 39.27 August 6, 2025 May 7, 2019 60,000 15,000 $ 40.20 May 7, 2026 August 5, 2019 32,175 10,725 $ 38.76 August 5, 2026 August 10, 2020 41,267 86,405 $ 45.81 August 10, 2027 August 9, 2021 8,655 25,965 $ 52.62 August 9, 2028 August 8, 2022 — 45,500 $ 39.09 August 8, 2029 November 7, 2022 — 180,000 $ 26.81 November 7, 2029 August 10, 2020 8,598 $ 357,247 August 10, 2020 13,390 $ 556,355 August 9, 2021 6,490 $ 269,660 August 9, 2021 12,970 $ 538,904 August 8, 2022 9,424 $ 391,549 August 8, 2022 18,837 $ 782,670 Paul Duggan August 6, 2018 2,502 — $ 39.27 August 6, 2025 May 7, 2019 30,000 15,000 $ 40.20 May 7, 2026 August 5, 2019 4,875 4,875 $ 38.76 August 5, 2026 August 10, 2020 12,237 32,893 $ 45.81 August 10, 2027 August 9, 2021 4,808 14,422 $ 52.62 August 9, 2028 August 8, 2022 — 30,640 $ 39.09 August 8, 2029 November 7, 2022 — 180,000 $ 26.81 November 7, 2029 August 10, 2020 3,438 $ 142,849 August 10, 2020 5,470 $ 227,279 August 9, 2021 3,600 $ 149,580 August 9, 2021 7,210 $ 299,576 August 8, 2022 6,344 $ 263,600 August 8, 2022 12,688 $ 527,200 ______________________________ (1) Options in the table above vest annually over a period of 4 years starting from the date of grant, with the exception of (i) options granted to certain of our executive officers on August 10, 2020 in recognition of their service which vest annually over a 5 year period, with the first vesting date being two years from the date of grant, (ii) options granted to certain of our executive officers on November 7, 2022 in recognition of their services which vest annually over a 4 year period, with the first vesting date being two years from the date of grant, and (iii) 750,000 performance options granted to the CEO in Fiscal 2021 and 1,000,000 performance options granted to the CEO in Fiscal 2023 both of which vest subject to the satisfaction of certain performance criteria. For additional detail, see “Compensation Discussion and Analysis - Our Compensation Program - Long- 126 Table of Contents Term Incentives - Long-Term Grants to CEO”, Item 11 of our Annual Report on Form 10-K for Fiscal 2021 and “Compensation Discussion and Analysis - Our Compensation Program - Long-Term Incentives - Long-Term Grants to CEO” above. (2) Represents each Named Executive Officer’s target number of RSUs granted pursuant to our LTIP program, and other non-LTIP related RSUs, which vest upon the schedules described above in “Compensation Discussion and Analysis - Our Compensation Program - Long Term Incentives.” These amounts illustrate the market value as of June 30, 2023, based upon the closing price for the Company’s Common Shares as traded on the NASDAQ on such date of $41.55. (3) Represents each Named Executive Officer’s target number of PSUs granted pursuant to our LTIP program, which vest upon the schedules described above in “Compensation Discussion and Analysis - Our Compensation Program - Long Term Incentives.” These amounts illustrate the market value as of June 30, 2023, based upon the closing price for the Company’s Common Shares as traded on the NASDAQ on such date of $41.55. As of June 30, 2023, options to purchase an aggregate of 12,219,439 Common Shares had been previously granted and are outstanding under our stock option plans, of which 4,292,254 Common Shares were vested. Options to purchase an additional 5,950,832 Common Shares remain available for issuance pursuant to our stock option plans. Our outstanding options pool represents 4.5% of the Common Shares issued and outstanding as of June 30, 2023. During Fiscal 2023, the Company granted options to purchase 4,964,650 Common Shares or 1.8% of the Common Shares issued and outstanding as of June 30, 2023. Option Exercises and Stock Vested in Fiscal 2023 The following table sets forth certain details with respect to each of the Named Executive Officers concerning the exercise of stock options and vesting of stock in Fiscal 2023: Option Awards Stock Awards (3) Name Number of Shares Acquired on Exercise (#) Value Realized on Exercise (1) ($) Number of Shares Acquired on Vesting (#) Value Realized on Vesting (2) ($) Mark J. Barrenechea — $ — 94,552 $ 2,534,939 Madhu Ranganathan — $ — 17,091 $ 482,806 Simon Harrison — $ — 8,758 $ 256,941 Muhi Majzoub 37,840 $ 252,412 16,756 $ 470,133 Paul Duggan — $ — 7,457 $ 207,724 _______________________________ (1) “Value realized on exercise” is the excess of the market price, at date of exercise, of the shares underlying the options over the exercise price of the options. (2) “Value realized on vesting” is the market price of the underlying Common Shares on the vesting date. (3) Relates to the vesting of PSUs and RSUs under our LTIP program. Potential Payments Upon Termination or Change in Control We have entered into employment contracts with each of our Named Executive Officers. These contracts may require us to make certain types of payments and provide certain types of benefits to the Named Executive Officers upon the occurrence of any of these events: • If the Named Executive Officer is terminated without cause; and • If there is a change in control in the ownership of the Company and subsequent to the change in control, there is a change in the relationship between the Company and the Named Executive Officer. When determining the amounts and the type of compensation and benefits to provide in the event of a termination or change in control described above, we considered available information with respect to amounts payable to similarly situated officers of our peer groups and the position held by the Named Executive Officer within the Company. The amounts payable upon termination or change in control represent the amounts determined by the Company and are not the result of any individual negotiations between us and any of our Named Executive Officers. Our employment agreements with our Named Executive Officers are similar in structure, terms and conditions, with the key exception of the amount of severance payments, which is determined by the position held by the Named Executive Officer. Details are set out below of each of their potential payments upon a termination by the Company without cause and upon a change in control event where there is a subsequent change in the relationship between the Company and the Named Executive Officer. 127 Table of Contents Termination Without Cause If the Named Executive Officer is terminated without cause, we may be obligated to make payments or provide benefits to the Named Executive Officer. A termination without cause means a termination of a Named Executive Officer for any reason other than the following, each of which provides “cause” for termination: • The failure by the Named Executive Officer to attempt in good faith to perform his duties, other than as a result of a physical or mental illness or injury; • The Named Executive Officer’s willful misconduct or gross negligence of a material nature in connection with the performance of his duties which is or could reasonably be expected to be injurious to the Company; • The breach by the Named Executive Officer of his fiduciary duty or duty of loyalty to the Company; • The Named Executive Officer’s intentional and unauthorized removal, use or disclosure of information relating to the Company, including customer information, which is injurious to the Company or its customers; • The willful performance by the Named Executive Officer of any act of dishonesty or willful misappropriation of funds or property of the Company or its affiliates; • The indictment of the Named Executive Officer or a plea of guilty or nolo contender to a felony or other serious crime involving moral turpitude; • The material breach by the Named Executive Officer of any obligation material to his employment relationship with the Company; or • The material breach by the Named Executive Officer of the Company’s policies and procedures which breach causes or could reasonably be expected to cause harm to the Company; provided that in certain of the circumstances listed above, OpenText has given the Named Executive Officer reasonable notice of the reason for termination as well as a reasonable opportunity to correct the circumstances giving rise to the termination. Change in Control If there is a change in control of the Company and within one year of such change in control event, there is a change in the relationship between the Company and the Named Executive Officer without the Named Executive Officer’s written consent, we may be obligated to provide payments or benefits to the Named Executive Officer, unless such a change is in connection with the termination of the Named Executive Officer either for cause or due to the death or disability of the Named Executive Officer. A change in control includes the following events: • The sale, lease, exchange or other transfer, in one transaction or a series of related transactions, of all or substantially all of the Company’s assets; • The approval by the holders of Common Shares of any plan or proposal for the liquidation or dissolution of the Company; • Any transaction in which any person or group acquires ownership of more than 50% of outstanding Common Shares; or • Any transaction in which a majority of the Board is replaced over a twelve-month period and such replacement of the Board was not approved by a majority of the Board still in office at the beginning of such period. Examples of a change in the relationship between the Named Executive Officer and the Company where payments or benefits may be triggered following a change in control event include: • A material diminution in the duties and responsibilities of the Named Executive Officer, other than (a) a change arising solely out of the Company becoming part of a larger organization following the change in control event or any related change in the reporting hierarchy or (b) a reorganization of the Company resulting in similar changes to the duties and responsibilities of similarly situated executive officers; • A material reduction to the Named Executive Officer’s compensation, other than a similar reduction to the compensation of similarly situated executive officers; • A relocation of the Named Executive Officer’s primary work location by more than fifty miles; • A reduction in the title or position of the Named Executive Officer, other than (a) a change arising solely out of the Company becoming part of a larger organization following the change in control event or any related change in the reporting hierarchy or (b) a reorganization of the Company resulting in similar changes to the titles or positions of similarly situated executive officers. 128 Table of Contents None of our Named Executive Officers are entitled to the payments or benefits described below, or any other payments or benefits, solely upon a change in control where there is no change to the Named Executive Officer’s relationship with the Company. Amounts Payable Upon Termination or Change in Control Pursuant to our employment agreements with our Named Executive Officers and the terms of our LTIP, each Named Executive Officer’s entitlement upon termination of employment without cause or following a change in the Named Executive Officer’s relationship with the Company, both absent a change in control event and within twelve months of a change in control event, are set forth below. No Change in Control No change in control Base Short term incentives (1) LTIP (2) Options (3) Employee and Medical Benefits (4) Mark J. Barrenechea Termination without cause or Change in relationship 24 months 24 months Prorated Vested 24 months (5) Madhu Ranganathan Termination without cause or Change in relationship 12 months 12 months Prorated Vested 12 months Simon Harrison Termination without cause or Change in relationship 12 months 12 months Prorated Vested 12 months Muhi Majzoub Termination without cause or Change in relationship 12 months 12 months Prorated Vested 12 months Paul Duggan Termination without cause or Change in relationship 12 months 12 months Prorated Vested 12 months ____________________________ (1) Assuming 100% achievement of the expected targets for the fiscal year in which the triggering event occurred. (2) LTIP amounts are prorated for the number of months of participation at termination date in the applicable 38-month performance period. If the termination date is before the commencement of the 19th month of the performance period, a prorated LTIP will not be paid. (3) Already vested as of termination date with no acceleration of unvested options. For a period of 90 days following the termination date, the Named Executive Officer has the right to exercise all options which have vested as of the date of termination. (4) Employee and medical benefits provided to each Named Executive Officer immediately prior to the occurrence of the trigger event. (5) In accordance with the terms of his employment agreement, as amended, Mr. Barrenechea is entitled to participate until the age of 65 in healthcare benefits substantially similar to what he currently receives as Vice Chair, Chief Executive Officer and Chief Technology Officer of the Company. These benefits will be provided at the cost of the Company, provided that Mr. Barrenechea continues to be responsible for funding an amount that is equal to his employee contribution as Vice Chair, Chief Executive Officer and Chief Technology Officer, unless he becomes employed elsewhere, at which point this benefit will terminate. In the event that the employee or company contribution funding increases, Mr. Barrenechea would be responsible for that increase. Within 12 Months of a Change in Control Within 12 Months of a Change in Control Base Short term incentives (1) LTIP Options (2) Employee and Medical Benefits (3) Mark J. Barrenechea Termination without cause or Change in relationship 24 months 24 months 100% Vested 100% Vested 24 months (4) Madhu Ranganathan Termination without cause or Change in relationship 24 months 24 months 100% Vested 100% Vested 24 months Simon Harrison Termination without cause or Change in relationship 12 months 12 months 100% Vested 100% Vested 12 months Muhi Majzoub Termination without cause or Change in relationship 24 months 24 months 100% Vested 100% Vested 24 months Paul Duggan Termination without cause or Change in relationship 12 months 12 months 100% Vested 100% Vested 12 months _____________________________ (1) Assuming 100% achievement of the expected targets for the fiscal year in which the triggering event occurred. (2) For a period of 90 days following the termination date, the Named Executive Officer has the right to exercise all options which are deemed to have vested as of the date of termination. 129 Table of Contents (3) Employee and medical benefits provided to each Named Executive Officer immediately prior to the occurrence of the trigger event. (4) In accordance with the terms of his employment agreement, as amended, Mr. Barrenechea is entitled to participate until the age of 65 in healthcare benefits substantially similar to what he currently receives as Vice Chair, Chief Executive Officer and Chief Technology Officer of the Company. These benefits will be provided at the cost of the Company, provided that Mr. Barrenechea continues to be responsible for funding an amount that is equal to his employee contribution as Vice Chair, Chief Executive Officer and Chief Technology Officer, unless he becomes employed elsewhere, at which point this benefit will terminate. In the event that the employee or company contribution funding increases, Mr. Barrenechea would be responsible for that increase. In addition to the information identified above, each Named Executive Officer is entitled to all accrued payments up to the date of termination, including all earned but unpaid short-term incentive amounts and earned but unsettled LTIP. Except as otherwise required by law, we are required to make all these payments and provide these benefits over a period of 12 months or 24 months, depending on the Named Executive Officer’s entitlement and the circumstances which triggered our obligation to make such payments and provide such benefits, from the date of the event which triggered our obligation. With respect to payments to Mr. Barrenechea, the Company intends to make all required payments to Mr. Barrenechea no later than two and a half months after the end of the later of the fiscal year or calendar year in which the payments are no longer subject to a substantial risk of forfeiture . In return for receiving the payments and the benefits described above, each Named Executive Officer must comply with certain obligations in favor of the Company, including a non-disparagement obligation. Also, each Named Executive Officer is bound by a confidentiality and non-solicitation agreement where the non-solicitation obligation lasts six months from the date of termination of his employment. Any breach by a Named Executive Officer of any provision of his contractual agreements may only be waived upon the review and approval of the Board. Quantitative Estimates of Payments upon Termination or Change in Control Further information regarding payments to our Named Executive Officers in the event of a termination or a change in control may be found in the table below. This table sets forth the estimated amount of payments and other benefits each Named Executive Officer would be entitled to receive upon the occurrence of the indicated event, assuming that the event occurred on June 30, 2023. Amounts (i) potentially payable under plans which are generally available to all salaried employees, such as life and disability insurance, and (ii) earned but unpaid, in both cases, are excluded from the table. The values related to vesting of stock options and awards are based upon the fair market value of our Common Shares of $41.55 per share as reported on the NASDAQ on June 30, 2023, the last trading day of our fiscal year. The other material assumptions made with respect to the numbers reported in the table below are: • The salary and incentive payments are calculated based on the amounts of salary, incentive and benefit payments which were payable to each Named Executive Officer as of June 30, 2023; and • Payments under the LTIPs are calculated as though 100% of outstanding LTIP awards have vested with respect to a termination without cause or change in relationship following a change in control event, and as though a pro-rated amount have vested with respect to no change in control event. Actual payments made at any future date may vary, including the amount the Named Executive Officer would have accrued under the applicable benefit or compensation plan as well as the price of our Common Shares. Named Executive Officer Salary ($) Short-term Incentive Payment ($) Gain on Vesting of LTIP and Non-LTIP RSUs ($) Gain on Vesting of Stock Options ($) Employee Benefits ($) Total ($) Mark J. Barrenechea Termination Without Cause / Change in Relationship with no Change in Control $ 1,900,000 $ 2,850,000 $ 10,798,442 $ — $ 42,099 (1) $ 15,590,541 Termination Without Cause / Change in Relationship, within 12 months following a Change in Control $ 1,900,000 $ 2,850,000 $ 21,159,919 $ 944,093 $ 42,099 $ 26,896,111 Madhu Ranganathan Termination Without Cause / Change in Relationship with no Change in Control $ 688,750 $ 660,000 $ 1,883,208 $ — $ — $ 3,231,958 130 Table of Contents Termination Without Cause / Change in Relationship, within 12 months following a Change in Control $ 1,377,500 $ 1,320,000 $ 4,120,430 $ 2,848,927 $ — $ 9,666,857 Simon Harrison Termination Without Cause / Change in Relationship with no Change in Control $ 575,000 $ 550,000 $ 1,402,055 $ — $ 152,059 $ 2,679,114 Termination Without Cause / Change in Relationship, within 12 months following a Change in Control $ 575,000 $ 550,000 $ 2,918,057 $ 2,778,731 $ 152,059 $ 6,973,847 Muhi Majzoub Termination Without Cause / Change in Relationship with no Change in Control $ 562,500 $ 550,000 $ 1,381,259 $ — $ 4,329 $ 2,498,088 Termination Without Cause / Change in Relationship, within 12 months following a Change in Control $ 1,125,000 $ 1,100,000 $ 2,896,409 $ 2,815,303 $ 8,657 $ 7,945,369 Paul Duggan Termination Without Cause / Change in Relationship with no Change in Control $ 575,000 $ 550,000 $ 636,060 $ — $ 10,110 $ 1,771,170 Termination Without Cause / Change in Relationship, within 12 months following a Change in Control $ 575,000 $ 550,000 $ 1,610,063 $ 2,762,426 $ 10,110 $ 5,507,599 _____________________________ (1) In accordance with the terms of his employment agreement, as amended, Mr. Barrenechea is entitled to participate until the age of 65 in healthcare benefits substantially similar to what he currently receives as Chief Executive Officer of the Company. These benefits will be provided at the cost of the Company, provided that Mr. Barrenechea continues to be responsible for funding an amount that is equal to his employee contribution as Chief Executive Officer, unless he becomes employed elsewhere, at which point this benefit will terminate. In the event that the employee or company contribution funding increases, Mr. Barrenechea would be responsible for that increase . 131 Table of Contents Director Compensation for Fiscal 2023 The following table sets forth summary information concerning the annual compensation received by each of the non-management directors of OpenText for the fiscal year ended June 30, 2023. Fees Earned or Paid in Cash (1) ($) Stock Awards (2) ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) P. Thomas Jenkins (3) $ 200,000 $ 461,675 $ — $ — $ — $ 661,675 Randy Fowlie (4) $ 84,500 $ 407,331 $ — $ — $ — $ 491,831 David Fraser (5) $ 75,000 $ 295,888 $ — $ — $ — $ 370,888 Gail E. Hamilton (6) $ 90,000 $ 345,559 $ — $ — $ — $ 435,559 Robert Hau (7) $ 100,000 $ 267,321 $ — $ — $ — $ 367,321 Ann M. Powell (8) $ 90,000 $ 262,678 $ — $ — $ — $ 352,678 Stephen J. Sadler (9) $ — $ 445,805 $ — $ — $ 334,695 (14) $ 780,500 Harmit Singh (10) $ 6,250 $ 14,535 $ — $ — $ — $ 20,785 Michael Slaunwhite (11) $ 1,850 $ 501,517 $ — $ — $ — $ 503,367 Katharine B. Stevenson (12) $ — $ 469,825 $ — $ — $ — $ 469,825 Deborah Weinstein (13) $ 24,750 $ 468,109 $ — $ — $ — $ 492,859 ______________________________ (1) Non-management directors may elect to defer all or a portion of their retainer and/or fees in the form of Common Share equivalent units under our Directors’ Deferred Share Unit Plan (DSU Plan) based on the value of the Company’s shares as of the date fees would otherwise be paid. The DSU Plan, originally effective February 2, 2010, and amended and restated in October 2018, is available to any non-management director of the Company and is designed to promote greater alignment of long-term interests between directors of the Company and its shareholders. DSUs granted as compensation for directors’ fees vest immediately whereas the annual DSU grant vests at the Company’s next annual general meeting. No DSUs are payable by the Company until the director ceases to be a member of the Board. (2) The amounts set forth in this column represents the amount recognized as the aggregate grant date fair value of equity-based compensation awards, inclusive of DSU dividend equivalents, as calculated in accordance with ASC Topic 718. These amounts do not reflect whether the recipient has actually realized a financial benefit from the awards. For a discussion of the assumptions used in this valuation, see Note 13 “Share Capital, Option Plans and Share-based Payments” to our consolidated financial statements. In Fiscal 2023, Messrs. Jenkins, Fowlie, Fraser, Hau, Sadler, Singh and Slaunwhite and Mses. Hamilton, Powell, Stevenson and Weinstein received 15,609, 13,797, 10,210, 9,358, 15,150, 512, 16,795, 11,735, 9,217, 15,856, and 15,770 DSUs, respectively. (3) As of June 30, 2023, Mr. Jenkins holds 151,162 DSUs. Mr. Jenkins serves as Chairman of the Board. (4) As of June 30, 2023, Mr. Fowlie holds 127,953 DSUs. (5) As of June 30, 2023, Mr. Fraser holds 35,703 DSUs. (6) As of June 30, 2023, Ms. Hamilton holds 102,273 DSUs. (7) As of June 30, 2023, Mr. Hau holds 20,371 DSUs. (8) As of June 30, 2023, Ms. Powell holds 15,502 DSUs. (9) As of June 30, 2023, Mr. Sadler holds 125,209 DSUs. (10) Mr. Singh retired from the Board effective September 15, 2022. (11) As of June 30, 2023, Mr. Slaunwhite holds 147,961 DSUs. (12) As of June 30, 2023, Ms. Stevenson holds 126,494 DSUs. (13) As of June 30, 2023, Ms. Weinstein holds 141,940 DSUs. (14) During Fiscal 2023, Mr. Sadler received $334,695 in consulting fees, paid or payable in cash, for assistance with acquisition-related business activities. Mr. Sadler abstained from voting on all transactions from which he would potentially derive consulting fees. 132 Table of Contents The Board sets the level of compensation for directors, based on the recommendations of the Corporate Governance and Nominating Committee. From time to time, the Corporate Governance and Nominating Committee reviews the amount and form of compensation paid to directors, having regard to the workload and responsibilities involved in being an effective director, and benchmarked against director compensation for comparable companies. The committee’s review may be conducted with the assistance of outside consultants. Directors who are salaried officers or employees receive no compensation for serving as directors. Mr. Barrenechea was the only employee director in Fiscal 2023. The material terms of our director compensation arrangements are as follows : Description Amount and Frequency of Payment Annual Chairman retainer fee payable to the Chairman of the Board $200,000 per year payable following our Annual General Meeting Annual retainer fee payable to each non-management director $75,000 per director payable following our Annual General Meeting Annual Audit Committee retainer fee payable to each member of the Audit Committee $25,000 per year payable at $6,250 at the beginning of each quarterly period. Annual Audit Committee Chair retainer fee payable to the Chair of the Audit Committee $10,000 per year payable at $2,500 at the beginning of each quarterly period. Annual Compensation Committee retainer fee payable to each member of the Compensation Committee $15,000 per year payable at $3,750 at the beginning of each quarterly period. Annual Compensation Committee Chair retainer fee payable to the Chair of the Compensation Committee $10,000 per year payable at $2,500 at the beginning of each quarterly period. Annual Corporate Governance & Nominating Committee retainer fee payable to each member of the Corporate Governance & Nominating Committee $10,000 per year payable at $2,500 at the beginning of each quarterly period. Annual Corporate Governance & Nominating Committee Chair retainer fee payable to the Chair of the Corporate Governance & Nominating Committee $8,000 per year payable at $2,000 at the beginning of each quarterly period. Excess travel fee payable to each non-management director attending a meeting who travels more than six hours $2,000 per meeting when applicable The Board has adopted a DSU Plan which is available to any non-management director of the Company. In Fiscal 2023, certain directors elected to receive DSUs instead of a cash payment for their directors’ fees. In addition to the scheduled fee arrangements set forth in the table above, whether paid in cash or DSUs, non-management directors also receive an annual DSU grant representing the long-term component of their compensation. The amount of the annual DSU grant is discretionary; however, historically, the amount of this grant has been determined and updated on a periodic basis with the assistance of the Compensation Committee and the compensation consultant and benchmarked against director compensation for comparable companies. For Fiscal 2023, the annual DSU grant was approximately $250,000 for each non-management director and approximately $320,000 for the Chairman of the Board. DSUs granted as compensation for directors’ fees vest immediately whereas the annual DSU grant vests at the Company’s next annual general meeting. No DSUs are payable by the Company until the director ceases to be a member of the Board. As with its employees, the Company believes that granting compensation to directors in the form of equity, such as DSUs, promotes a greater alignment of long-term interests between directors of the Company and the shareholders of the Company and since Fiscal 2013 the Company has taken the position that non-management directors will receive DSUs instead of stock options where granting of equity awards is appropriate. All non-management directors have exceeded the Share Ownership Guidelines applicable to them, which is five times their annual retainer. For further details of our Share Ownership Guidelines as they relate to directors, see “Share Ownership Guidelines” above. The Company does not have a retirement policy for its directors; however, the Company does review its director performance annually as part of its governance process. 133 Table of Contents Compensation Committee Interlocks and Insider Participation The members of our Compensation Committee consist of Mr. Slaunwhite (Chair) and Mses. Hamilton, Powell and Weinstein. None of the members of the Compensation Committee have been or are an officer or employee of the Company, or any of our subsidiaries, or had any relationship requiring disclosure herein. None of our executive officers served as a member of the compensation committee of another entity (or other committee of the board of directors performing equivalent functions, or in the absence of any such committee, the entire board of directors) one of whose executive officers served as a director of ours. Board’s Role in Risk Oversight The Board has overall responsibility for risk oversight. The Board is responsible for overseeing management’s implementation and operation of enterprise risk management, either directly or through its committees, which shall report to the Board with respect to risk oversight undertaken in accordance with their respective charters. At least annually, the Board shall review reports provided by management on the risks inherent in the business of the Company (including appropriate crisis preparedness, business continuity, information system controls, cybersecurity and disaster recovery plans), the appropriate degree of risk mitigation and risk control, overall compliance with and the effectiveness of the Company’s risk management policies, and residual risks remaining after implementation of risk controls. In addition, each committee reviews and reports to the Board on risk oversight matters, as described below. The Audit Committee oversees risks related to our accounting, financial statements and financial reporting process. On a quarterly basis, the Audit Committee also reviews reports provided by management on the risks inherent in the business of the Company, including those related to cybersecurity and disaster recovery plans, and reports to the Board with respect to risk oversight undertaken. The Compensation Committee oversees risks which may be associated with our compensation policies, practices and programs, in particular with respect to our executive officers. The Compensation Committee assesses such risks with the review and assistance of the Company’s management and the Compensation Committee’s external compensation consultants. The Corporate Governance and Nominating Committee monitors risk and potential risks with respect to the effectiveness of the Board, and considers aspects such as director succession, Board composition and the principal policies that guide the Company’s overall corporate governance. The members of each of the Audit Committee, Compensation Committee, and the Corporate Governance and Nominating Committee are all “independent” directors within the meaning ascribed to it in Multilateral Instrument 52-110- Audit Committees as well as the listing standards of NASDAQ, and, in the case of the Audit Committee, the additional independence requirements set out by the SEC. All of our directors are kept informed of our business through open discussions with our management team, including our CEO, who serves on our Board. The Board also receives documents, such as quarterly and periodic management reports and financial statements, as well our directors have access to all books, records and reports upon request, and members of management are available at all times to answer any questions which Board members may have. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth certain information as of June 30, 2023 regarding Common Shares beneficially owned by the following persons or companies: (i) each person or company known by us to be the beneficial owner of approximately 5% or more of our outstanding Common Shares, (ii) each director of our Company, (iii) each Named Executive Officer, and (iv) all directors and executive officers as a group. Except as otherwise indicated, we believe that the beneficial owners of the Common Shares listed below have sole investment and voting power with respect to such Common Shares, subject to community property laws where applicable. The number and percentage of shares beneficially owned as exhibited in Item 12 is based on filings made in accordance with the rules of the SEC and is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting or investment power and also any shares of Common Shares underlying options or warrants that are exercisable by that person within 60 days of June 30, 2023. Unless otherwise indicated, the address of each person or entity named in the table is “care of” Open Text Corporation, 275 Frank Tompa Drive, Waterloo, Ontario, Canada N2L 0A1. 134 Table of Contents Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Common Shares Outstanding Jarislowsky, Fraser Ltd. (1) 1010 Sherbrooke St. West, Montreal QC H3A 2R7 16,804,467 6.20% Harris Associates LP (1) 111 South Wacker Drive, Chicago, IL 60606 14,572,307 5.38% P. Thomas Jenkins (2) 3,428,647 * Mark J. Barrenechea (3) 2,913,517 * Michael Slaunwhite (4) 1,082,270 * Stephen J. Sadler (5) 463,866 * Madhu Ranganathan (6) 451,870 * Muhi Majzoub (7) 403,525 * Randy Fowlie (8) 313,610 * Simon Harrison (9) 203,540 * Deborah Weinstein (10) 153,097 * Katharine B. Stevenson (11) 143,281 * Gail E. Hamilton (12) 93,440 * Paul Duggan (13) 92,790 * David Fraser (14) 27,037 * Robert Hau (15) 11,528 * Ann M. Powell (16) 6,659 * All executive officers and directors as a group (17) 10,244,832 3.73% ______________________ * Less than 2% (1) Information regarding the shares outstanding is based on information filed in Schedule 13G, 13F, or Schedule 13G/A with the SEC. The percentage of Common Shares outstanding is calculated using the total shares outstanding as of June 30, 2023. (2) Includes 3,288,804 Common Shares owned and 139,843 deferred stock units (DSUs) which are exercisable. (3) Includes 1,112,704 Common Shares owned, 1,538,445 options which are exercisable and 262,368 options which will become exercisable within 60 days of June 30, 2023. (4) Includes 943,152 Common Shares owned and 139,118 DSUs which are exercisable. (5) Includes 347,500 Common Shares owned and 116,366 DSUs which are exercisable. (6) Includes 28,010 Common Shares owned, 344,701 options which are exercisable and 79,159 options which will become exercisable within 60 days of June 30, 2023. (7) Includes 97,775 Common Shares owned, 243,077 options which are exercisable and 62,673 options which will become exercisable within 60 days of June 30, 2023. (8) Includes 194,500 Common Shares owned and 119,110 DSUs which are exercisable. (9) Includes 26,429 Common Shares owned, 118,768 options which are exercisable and 58,343 options which will become exercisable within 60 days of June 30, 2023. (10) Includes 20,000 Common Shares owned and 133,097 DSUs which are exercisable. (11) Includes 25,630 Common Shares owned and 117,651 DSUs which are exercisable. (12) Includes 10 Common Shares owned and 93,430 DSUs which are exercisable. (13) Includes 8,789 Common Shares owned, 54,422 options which are exercisable and 29,579 options which will become exercisable within 60 days of June 30, 2023. (14) Includes 177 Common Shares owned and 26,860 DSUs which are exercisable. (15) Includes 11,528 DSUs which are exercisable. (16) Includes 6,659 DSUs which are exercisable. (17) Includes 6,152,996 Common Shares owned, 2,563,831 options which are exercisable, 624,343 options which will become exercisable within 60 days of June 30, 2023, and 903,662 DSUs which are exercisable. 135 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The following table sets forth summary information relating to our various stock compensation plans as of June 30, 2023: 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 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: 12,219,439 $38.44 5,950,832 Equity compensation plans not approved by security holders: Under deferred stock unit awards 994,568 N/A — Under performance stock unit awards 1,013,385 N/A — Under restricted stock unit awards 774,360 N/A — Total 15,001,752 5,950,832 For more information regarding stock compensation plans, please refer to Note 13 “Share Capital, Option Plans and Share-based Payments” to our Consolidated Financial Statements within this Annual Report on Form 10-K. Item 13. Certain Relationships and Related Transactions, and Director Independence Related Transactions Policy and Director Independence We have adopted a written policy that all transactional agreements between us and our officers, directors and affiliates will be first approved by a majority of the independent directors. Once these agreements are approved, payments made pursuant to the agreements are approved by the members of our Audit Committee. Our procedure regarding the approval of any related party transaction is that the material facts of such transaction shall be reviewed by the independent members of our Audit Committee and the transaction approved by a majority of the independent members of our Audit Committee. The Audit Committee reviews all transactions wherein we are, or will be a participant and any related party has or will have a direct or indirect interest. In determining whether to approve a related party transaction, the Audit Committee generally takes into account, among other facts it deems appropriate: whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; the extent and nature of the related person’s interest in the transaction; the benefits to the company of the proposed transaction; if applicable, the effects on a director’s independence; and if applicable, the availability of other sources of comparable services or products. The Board has determined that all directors, except Messrs. Barrenechea and Sadler, meet the independence requirements under the NASDAQ Listing Rules and qualify as “independent directors” under those Listing Rules. Mr. Barrenechea is not considered independent by virtue of being our Vice Chair, Chief Executive Officer and Chief Technology Officer. See “Transactions with Related Persons” below with respect to payments made to Mr. Sadler. Each of the members of our Compensation Committee, Audit Committee and Corporate Governance and Nominating Committee is an independent director. Transactions With Related Persons One of our directors, Mr. Sadler, received consulting fees for assistance with acquisition-related business activities pursuant to a consulting agreement with the Company. Mr. Sadler’s consulting agreement, which was adopted by way of Board resolution effective July 1, 2011, is for an indefinite period. The material terms of the agreement are as follows: Mr. Sadler is paid at the rate of Canadian dollars (CAD) $450 per hour for services relating to his consulting agreement. In addition, he is eligible to receive a bonus fee equivalent to 1.0% of the acquired company’s revenues, up to CAD $10.0 million in revenue, plus an additional amount of 0.5% of the acquired company’s revenues above CAD $10.0 million. The total bonus fee payable, for any given fiscal year, is subject to an annual limit of CAD $450,000 per single acquisition and an aggregate annual limit of CAD $980,000. The acquired company’s revenues, for this purpose, is equal to the acquired company’s revenues for the 12 months prior to the date of acquisition. During Fiscal 2023, Mr. Sadler received CAD $0.5 million in consulting fees from OpenText (equivalent to $0.3 million USD), for assistance with acquisition-related business activities. Mr. Sadler abstained from voting on all transactions from which he would potentially derive consulting fees. Additionally, Mr. Sadler has direct or indirect control over a material interest in Enghouse Systems Limited ,a publicly traded software company, and its subsidiaries. 136 Table of Contents OpenText entered into product supply and license agreements to purchase certain software licenses from Enghouse Systems Limited and its subsidiaries, under which the company makes payments in the normal course of business. During Fiscal 2023, OpenText paid $2.1 million under such agreements. Item 14. Principal Accountant Fees and Services The aggregate fees for professional services rendered by our independent registered public accounting firm, KPMG LLP, for Fiscal 2023 and Fiscal 2022 were: Year ended June 30, (In thousands) 2023 2022 Audit fees (1) $ 14,546 $ 6,622 Audit-related fees (2) 113 72 Tax fees (3) — — All other fees (4) — — Total $ 14,659 $ 6,694 ____________________________________ (1) Audit fees were primarily for professional services rendered for (a) the annual audits of our consolidated financial statements and the accompanying attestation report regarding our ICFR contained in our Annual Report on Form 10-K, (b) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q, (c) audit services related to mergers and acquisitions, (d) fees associated with non-periodic securities filings, and (e) annual statutory audits where applicable. The increase in 2023 as compared to 2022 is primarily due to the Micro Focus Acquisition, including audit procedures over (a) the opening balance sheet and purchase equation, (b) the results of operations from the date of acquisition to year end, and (c) Micro Focus statutory audits. (2) Audit related fees were primarily for assurance and related services, such as IT assurance engagements and accounting research services. (3) Tax fees were for services related to tax compliance, including the preparation of tax returns, tax planning and tax advice. (4) All other fees consist of fees for services other than the services reported in audit fees, audit-related fees, and tax fees. OpenText’s Audit Committee has established a policy of reviewing, in advance, and either approving or not approving, all audit, audit-related, tax and other non-audit services that our independent registered public accounting firm provides to us. This policy requires that all services received from our independent registered public accounting firm be approved in advance by the Audit Committee or a delegate of the Audit Committee. The Audit Committee has delegated the pre-approval responsibility to the Chair of the Audit Committee. All services that KPMG LLP provided to us in Fiscal 2023 and Fiscal 2022 have been pre-approved by the Audit Committee. The Audit Committee has determined that the provision of the services as set out above is compatible with the maintaining of KPMG LLP’s independence in the conduct of its auditing functions. Audit services representing approximately $0.01 million were provided by KPMG LLP for which the foregoing pre-approval procedures were waived pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X. 137 Table of Contents Part IV Item 15. Exhibits and Financial Statement Schedules (a) Financial Statements and Schedules Index to Consolidated Financial Statements and Supplementary Data (Item 8) Page Number Report of Independent Registered Public Accounting Firm (KPMG LLP, Toronto, Canada, Auditor Firm ID: 85 ) 142 Report of Independent Registered Public Accounting Firm 144 Consolidated Balance Sheets 145 Consolidated Statements of Income 146 Consolidated Statements of Comprehensive Income 147 Consolidated Statements of Shareholders’ Equity 148 Consolidated Statements of Cash Flows 149 Notes to Consolidated Financial Statements 151 (b) The following documents are filed as a part of this report: 1) Consolidated financial statements and Reports of Independent Registered Public Accounting Firm and the related notes thereto are included in Part II, Item 8. 2) Valuation and Qualifying Accounts; see Note 4 “Allowance for Credit Losses” and Note 15 “Income Taxes” in the Notes to Consolidated Financial Statements included in Part II, Item 8. 3) Exhibits: The following exhibits are filed as part of this Annual Report on Form 10-K or are incorporated by reference to exhibits previously filed with the SEC. Exhibits not incorporated by reference to a prior filing are designated by a cross (+); all exhibits not so designated are incorporated by reference to a prior filing as indicated. Management contracts relating to compensatory plans or arrangements are designated by a star (*). Exhibit Number Description Report or Registration Statement Exhibit Reference 2.1 Agreement and Plan of Merger, dated November 10, 2019, by and among Open Text Corporation, Coral Merger Sub Inc. and Carbonite, Inc . Company’s Form 8-K, filed November 12, 2019 Exhibit 2.1 2. 2 Rule 2.7 Announcement, dated August 25, 2022. Company’s Form 8-K/A, filed August 29, 2022 Exhibit 2.1 3.1 Articles of Amalgamation of the Company Company’s registration statement on Form F-1, filed November 1, 1995, or Amendments 1, 2 or 3 thereto (filed December 28, 1995, January 22, 1996 and January 23, 1996, respectively) 3.2 Articles of Amendment of the Company Company’s registration statement on Form F-1, filed November 1, 1995, or Amendments 1, 2 or 3 thereto (filed December 28, 1995, January 22, 1996 and January 23, 1996, respectively) 3.3 Articles of Amendment of the Company Company’s registration statement on Form F-1, filed November 1, 1995, or Amendments 1, 2 or 3 thereto (filed December 28, 1995, January 22, 1996 and January 23, 1996, respectively) 3.4 Articles of Amalgamation of the Company Company’s registration statement on Form F-1, filed November 1, 1995, or Amendments 1, 2 or 3 thereto (filed December 28, 1995, January 22, 1996 and January 23, 1996, respectively) 3.5 Articles of Amalgamation of the Company, dated July 1, 2001 Company’s Form 10-K, filed September 28, 2001 3.6 Articles of Amalgamation of the Company, dated July 1, 2002 Company’s Form 10-K, filed September 28, 2002 Exhibit 3.10 3.7 Articles of Amalgamation of the Company, dated July 1, 2003 Company’s Form 10-K, filed September 29, 2003 Exhibit 3.11 138 Table of Contents 3.8 Articles of Amalgamation of the Company, dated July 1, 2004 Company’s Form 10-K, filed September 13, 2004 Exhibit 3.12 3.9 Articles of Amalgamation of the Company, dated July 1, 2005 Company’s Form 10-K, filed September 27, 2005 Exhibit 3.13 3.10 Articles of Continuance of the Company, dated December 29, 2005 Company’s Form 10-Q, filed February 3, 2006 Exhibit 3.1 3.11 By-Law 1 of Open Text Corporation Company’s Form 8-K, filed September 26, 2013 Exhibit 3.1 4.1 Description of the Registrant ’ s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 Company’s Form 10-K, filed August 1, 2019 Exhibit 4.1 4.2 Form of Common Share Certificate Company’s registration statement on Form F-1 (Registration Number 33-98858), filed November 1, 1995, or Amendments 1, 2 or 3 thereto (filed December 28, 1995, January 22, 1996 and January 23, 1996, respectively) 4. 3 Indenture, dated as of February 18, 2020, between Open Text Corporation and the Bank of NY Mellon, as U.S. Trustee, and BNY Trust Company of Canada, as Canadian trustee Company’s Form 8-K filed February 18, 2020 Exhibit 4.1 4. 4 Indenture, dated as of February 18, 2020, between Open Text Holdings, Inc. and the Bank of NY Mellon, as U.S. Trustee, and BNY Trust Company of Canada, as Canadian trustee Company’s Form 8-K filed February 18, 2020 Exhibit 4.3 4. 5 Indenture governing the Company ’ s 3.875% Senior Notes due 2029, dated as of November 24, 2021, among the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S. trustee, and BNY Trust Company of Canada, as Canadian trustee . Company’s Form 8-K filed November 24, 2021 Exhibit 4.1 4. 6 Indenture governing OTHI ’ s 4.125% Senior Notes due 2031, dated as of November 24, 2021, among OTHI, the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S. trustee, and BNY Trust Company of Canada, as Canadian trustee. Company’s Form 8-K filed November 24, 2021 Exhibit 4.3 4.7 Amended and Restated Shareholder Rights Plan Agreement between Open Text Corporation and Computershare Investor Services, Inc. dated September 15, 2022. Company’s Form 8-K, filed September 15, 2022 Exhibit 4.1 4.8 Form of Common Share Certificate Company’s Form 10-Q, filed November 3, 2022 4 .9 Indenture governing the Company’s 6.90% senior secured notes due 2027, dated as of December 1, 2022, among the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S. trustee and Notes collateral agent, and BNY Trust Company of Canada, as Canadian trustee. Company’s Form 8-K, filed December 1, 2022 Exhibit 4.1 10.1* 1998 Stock Option Plan Company’s Form 10-K filed August 20, 1999 10.2* Form of Indemnity Agreement between the Company and certain of its officers dated September 7, 2006 Company’s Form 10-K filed September 12, 2006 Exhibit 10.26 10.3* Consulting Agreement between Steven Sadler and SJS Advisors Inc. and the Company, dated May 3, 2005 Company’s Form 10-K filed August 26, 2008 Exhibit 10.28 10.4* OpenText Corporation Directors ’ Deferred Share Unit Plan, as amended and restated October 30, 2018 Company’s Form 10-Q filed January 31, 2019 Exhibit 10.1 10.5 Amended and Restated Credit Agreement among Open Text Corporation and certain of its subsidiaries, the Lenders, Barclays Bank PLC, Royal Bank of Canada, Barclays Capital and RBC Capital Markets, dated as of November 9, 2011 Company’s Form 8-K filed November 9, 2011 Exhibit 99.1 10.6* OpenText Corporation Long-Term Incentive Plan 2015 for eligible employees, effective October 3, 2012 Company’s Form 10-Q filed November 1, 2012 Exhibit 10.2 10.7* Employment Agreement, dated October 30, 2012 between Mark Barrenechea and the Company Company’s Form 10-Q filed November 1, 2012 Exhibit 10.3 10.8* Amendment No. 1 to the Employment Agreement between Mark J. Barrenechea and the Company dated January 24, 2013 (amending the Employment Agreement between Mark J. Barrenechea and the Company dated October 30, 2012) Company’s Form 10-Q filed January 25, 2013 Exhibit 10.3 10.9* Employment Agreement, as of December 19, 2012, between Gordon A. Davies and the Company Company’s Form 10-K filed August 1, 2013 Exhibit 10.20 10.10 First Amendment to Amended and Restated Credit Agreement and Amended and Restated Security and Pledge Agreement, dated as of December 16, 2013, between Open Text ULC, as term borrower, Open Text ULC, Open Text Inc. and Open Text Corporation, as revolving credit borrowers, the domestic guarantors party thereto, each of the lenders party thereto, Barclays Bank PLC, as sole administrative agent and collateral agent, and Royal Bank of Canada, as documentary credit lender Company’s Form 8-K filed December 20, 2013 Exhibit 10.1 10.11 Credit Agreement, dated as of January 16, 2014, among Open Text Corporation, as guarantor, Ocelot Merger Sub, Inc., which on January 16, 2014 merged with and into GXS Group, Inc. which survived such merger, as borrower, the other domestic guarantors party thereto, the lenders named therein, as lenders, Barclays Bank PLC, as sole administrative agent and collateral agent, and with Barclays and RBC Capital Markets, as lead arrangers and joint bookrunners Company’s Form 8-K filed January 16, 2014 Exhibit 10.1 139 Table of Contents 10.12 Second Amendment to Amended and Restated Credit Agreement, dated as of December 22, 2014, between Open Text ULC, as term borrower, Open Text ULC, Open Text Holdings, Inc. and Open Text Corporation, as revolving credit borrowers, the domestic guarantors party thereto, each of the lenders party thereto, Barclays Bank PLC, as sole administrative agent and collateral agent, and Royal Bank of Canada, as documentary credit lender Company’s Form 8-K filed December 23, 2014 Exhibit 10.1 10.13* Employment Agreement, dated November 30, 2012, between Muhi Majzoub and the Company Company’s Form 10-K filed July 31, 2014 Exhibit 10.20 10.14* Amendment No. 2 to the Employment Agreement between Mark J. Barrenechea and the Company dated July 30, 2014 (amending the Employment Agreement between Mark J. Barrenechea and the Company dated October 30, 2012) Company’s Form 10-K filed July 31, 2014 Exhibit 10.23 10.15 Repricing Amendment and Amendment No. 2 dated as of February 22, 2017 to Credit Agreement, by and among Open Text Corporation, as guarantor, Open Text GXS ULC, as borrower, the other guarantors party thereto, each of the lenders party thereto and Barclays Bank PLC, as administrative agent Company’s Form 8-K filed February 22, 2017 Exhibit 10.1 10.16 Amendment No. 3 to Second Amended and Restated Credit Agreement, dated as of May 5, 2017, among Open Text ULC, Open Text Holdings, Inc. and Open Text Corporation, as borrowers, the guarantors party thereto, each of the lenders party thereto, and Barclays Bank PLC, as sole administrative agent and collateral agent Company’s Form 10-Q filed May 8, 2017 Exhibit 10.2 10.17* Amendment No. 3 to the Employment Agreement between Mark J. Barrenechea and the Company dated June 1, 2017 (amending the Employment Agreement between Mark J. Barrenechea and the Company dated October 30, 2012) Company’s Form 8-K filed June 6, 2017 Exhibit 10.1 10.18 Amendment No. 4 to Second Amended and Restated Credit Agreement, dated as of September 6, 2017, among Open Text ULC, Open Text Holdings, Inc. and Open Text Corporation, as borrowers, the guarantors party thereto, each of the lenders party thereto, and Barclays Bank PLC, as sole administrative agent and collateral agent Company’s Form 10-Q filed November 2, 2017 Exhibit 10.1 10.19* Employment Agreement, dated January 30, 2018, among the Company, Open Text Inc. and Madhu Ranganathan Company’s Form 8-K filed February 1, 2018 Exhibit 10.1 10.20 Amended and Restated Credit Agreement dated as of May 30, 2018, by and among Open Text Corporation, as borrower, the guarantors party thereto, each of the lenders party thereto and Barclays Bank PLC, as administrative agent and collateral agent Company’s Form 8-K filed May 30, 2018 Exhibit 10.1 10.21 Third Amended and Restated Credit Agreement dated as of May 30, 2018, by and among Open Text ULC, Open Text Holdings, Inc. and Open Text Corporation, as borrowers, the guarantors party thereto, each of the lenders party thereto, Barclays Bank PLC, as administrative agent, collateral agent and swing line lender and Royal Bank of Canada as documentary credit lender Company’s Form 8-K filed May 30, 2018 Exhibit 10.2 10.22* Employment Agreement, dated October 1, 2017, between Simon (Ted) Harrison and the Company Company’s Form 10-K filed August 2, 2018 Exhibit 10.31 10.23 Fourth Amended and Restated Credit Agreement dated as of October 31, 2019, by and among Open Text ULC, Open Text Holdings, Inc. and Open Text Corporation, as borrowers, the guarantors party thereto, each of the lenders party thereto, Barclays Bank PLC, as administrative agent, collateral agent and swing line lender and Royal Bank of Canada as documentary credit lender Company’s Form 8-K filed November 5, 2019 Exhibit 10.1 10.24* Amendment No. 4 to the Employment Agreement between Mark J. Barrenechea and the Company dated August 14, 2020 (amending the Employment Agreement between Mark J. Barrenechea and the Company dated October 30, 2012, as amended) Company’s Form 8-K filed August 14, 2020 Exhibit 10.1 10.25 Open Text Corporation 2004 Stock Option Plan, as amended and restated on September 14, 2020 Company’s Registration Statement on Form S-8 filed September 30, 2020 Exhibit 4.1 10.26 Open Text Corporation 2004 Employee Stock Purchase Plan, as amended and restated on September 14, 2020 Company’s Registration Statement on Form S-8 filed September 30, 2020 Exhibit 4.2 10. 27 Bridge Loan Agreement, dated August 25, 2022, by and between the Company, the guarantors party thereto, Barclays Bank PLC, as administrative agent, and certain financial institution parties thereto. Company’s Form 8-K, filed August 25, 2022 Exhibit 10.3 10. 28 Co-operation Agreement, dated August 25, 2022, by and between the Company, Bidco and Micro Focus International plc. Company’s Form 8-K/A, filed August 29, 2022 Exhibit 10.1 10. 29 Term Loan Credit Agreement, dated August 25, 2022, by and between the Company, the guarantors party thereto, Barclays Bank PLC, as administrative agent, and certain financial institution parties thereto. Company’s Form 8-K/A, filed August 29, 2022 Exhibit 10.2 10. 30 First Amendment to Credit Agreement, dated December 1, 2022, by and among the Company, the guarantors party thereto, Barclays Bank PLC, as administrative agent and collateral agent, and certain financial institution parties thereto. Company’s Form 8-K, filed December 1, 2022 Exhibit 10.1 10.31 Amendment No. 1 to Amended and Restated Credit Agreement dated June 6, 2023, by and among Open Text Corporation, as borrower, the guarantors party thereto, each of the lenders party thereto and Barclays Bank PLC, as administrative agent and collateral agent. 10.32 Amendment No. 1 to Fourth Amended and Restated Credit Agreement dated as of June 6, 2023, by and among Open Text ULC, Open Text Holdings, Inc. and Open Text Corporation, as borrowers, the guarantors party thereto, each of the lenders party thereto, Barclays Bank PLC, as administrative agent, collateral agent and swing line lender and Royal Bank of Canada as documentary credit lender. 21.1+ List of the Company ’ s Subsidiaries 23.1+ Consent of Independent Registered Public Accounting Firm 31.1+ Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 140 Table of Contents 31.2+ Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1+ Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2+ Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS+ XBRL instance document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH+ Inline XBRL taxonomy extension schema 101.CAL+ Inline XBRL taxonomy extension calculation linkbase 101.DEF+ Inline XBRL taxonomy extension definition linkbase 101.LAB+ Inline XBRL taxonomy extension label linkbase 101.PRE+ Inline XBRL taxonomy extension presentation 141 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Open Text Corporation Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Open Text Corporation (the Company) as of June 30, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three‑year period ended June 30, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three‑year period ended June 30, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated August 2, 2023 , expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Evaluation of the determination of standalone selling prices of revenue performance obligations for customer contracts with a software license As discussed in Note 2 and Note 3 to the consolidated financial statements, the Company generally sells or licenses its software in combination with other products and services such as customer support and professional services. The accounting for customer contracts with a software license requires an allocation of the transaction price to each distinct performance obligation based on the determination of the standalone selling price (SSP). SSP for a performance obligation in a customer contract is an estimate of the price that would be charged for the specific product or service if it was sold separately in similar circumstances and to similar customers. This estimate determines the allocation of the transaction price and affects the amount and timing of revenue recognized for each performance obligation in a customer contract. SSP is estimated based on the impact of geographic or regional specific factors, profit objectives and pricing practices for different performance obligations. We identified the evaluation of the determination of the SSP of revenue performance obligations for customer contracts with a software license as a critical audit matter. A higher degree of auditor judgment was required to evaluate the approach and the significant assumptions, including the basis for stratification, used to establish SSP for each performance obligation which could be offered in a customer contract. The primary procedures we performed to address this critical audit matter included the following. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue process, including controls over the approach and the significant assumptions used to determine SSP for identified performance obligations in customer contracts which include a software license. We evaluated the approach used to determine SSP based on current pricing patterns in 142 Table of Contents relevant customer contracts, historical analysis of renewal contract pricing completed by the Company and pricing practices observed in the industry. We inspected a selection of contracts from the SSP population and compared attributes such as price and employee consultant level to historical information. Assessment of uncertain tax positions As discussed in Note 2, Note 14 and Note 15 to the consolidated financial statements, the Company has recognized uncertain tax positions including associated interest and penalties. The Company’s tax positions are subject to audit by local taxing authorities across multiple global subsidiaries and the resolution of such audits may span multiple years. Tax law is complex and often subject to varied interpretations. Accordingly, the ultimate outcome with respect to taxes the Company may owe may differ from the amounts recognized. We identified the assessment of uncertain tax positions as a critical audit matter. The assessment of tax exposures and the ultimate resolution of uncertain tax positions requires a higher degree of auditor judgment in evaluating the Company’s interpretation of, and compliance with, tax law globally across multiple jurisdictions. The primary procedures we performed to address this critical audit matter included the following. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to assess uncertain tax positions, including controls related to the interpretation of tax law and identification of uncertain tax positions, the evaluation of which of the Company’s tax positions may not be sustained upon audit and the estimation of exposures associated with uncertain tax positions. We involved domestic and international tax professionals with specialized skills and knowledge who assisted in assessing filed tax positions and transfer pricing studies, and evaluating the Company’s interpretation of tax law and its assessment of certain tax uncertainties and expected outcomes, including, if applicable, the measurement thereof, by reading advice obtained from the Company’s external specialists and correspondence with taxation authorities. Business combination - Valuation of acquired intangible assets As discussed in Note 19 to the consolidated financial statements, on January 31, 2023, the Company acquired 100% of the outstanding shares of Micro Focus International plc (Micro Focus) for $6.2 billion. The Company identified customer relationships and internally developed technology as acquired intangible assets and have determined the fair value of the customer relationships and internally developed technology to be $2.162 billion and $1.392 billion, respectively. As discussed in note 2 to the consolidated financial statements, the Company estimated the fair value of the identified intangible assets acquired in the business combination based on the income approach. The Company used the multi-period excess earnings methodology for customer relationships and the relief from royalty method for internally developed technology. These valuation approaches involve significant subjectivity and estimation uncertainty, including the use of assumptions related to the future revenues attributable to the acquired customer relationships and to the internally developed technology asset, and discount rates. We identified the valuation of customer relationships and internally developed technology acquired in the business combination with Micro Focus as a critical audit matter. Significant auditor judgment and attention was required due to the significant measurement uncertainty in the assumptions related to future revenues attributable to the acquired customer relationships and to the internally developed technology asset, and discount rates used to determine the fair value. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s valuation of customer relationships and internally developed technology. This included controls related to management’s determination of the assumptions identified above. We evaluated the future revenues attributable to the acquired customer relationships and to the internally developed technology asset by comparing the forecasted revenues to the historical performance of the acquired business. We involved valuation professionals with specialized skills and knowledge to assess the methodology applied in estimating the fair value of the identified intangible assets and assist in evaluating the discount rates by comparing the inputs to the discount rates to publicly available data for comparable entities and assessing the resulting discount rate. /s/ KPMG LLP Chartered Professional Accountants, Licensed Public Accountants We have served as the Company’s auditor since 2001. Toronto, Canada August 2, 2023 143 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Open Text Corporation: Opinion on Internal Control Over Financial Reporting We have audited Open Text Corporation’s internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, Open Text Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated August 2, 2023 expressed an unqualified opinion on those consolidated financial statements. The Company acquired Micro Focus International plc (Micro Focus) on January 31, 2023, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2023, Micro Focus’ internal control over financial reporting associated with 21.8% of consolidated total revenues and 47.6% of consolidated total assets (of which $6.8 billion, or 39.6% of consolidated total assets, represents goodwill and net intangible assets that are included within the scope of management’s assessment of internal control over financial reporting as of June 30, 2023) included in the consolidated financial statements of the Company as of and for the year ended June 30, 2023. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Micro Focus. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in this Annual Report on Form 10-K. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Chartered Professional Accountants, Licensed Public Accountants Toronto, Canada August 2, 2023 144 Table of Contents OPEN TEXT CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data) June 30, 2023 June 30, 2022 ASSETS Cash and cash equivalents $ 1,231,625 $ 1,693,741 Accounts receivable trade, net of allowance for credit losses of $ 13,828 as of June 30, 2023 and $ 16,473 as of June 30, 2022 (Note 4) 682,517 426,652 Contract assets (Note 3) 71,196 26,167 Income taxes recoverable (Note 15) 68,161 18,255 Prepaid expenses and other current assets (Note 9) 221,732 120,552 Total current assets 2,275,231 2,285,367 Property and equipment (Note 5) 356,904 244,709 Operating lease right of use assets (Note 6) 285,723 198,132 Long-term contract assets (Note 3) 64,553 19,719 Goodwill (Note 7) 8,662,603 5,244,653 Acquired intangible assets (Note 8) 4,080,879 1,075,208 Deferred tax assets (Note 15) 926,719 810,154 Other assets (Note 9) 342,318 256,987 Long-term income taxes recoverable (Note 15) 94,270 44,044 Total assets $ 17,089,200 $ 10,178,973 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities (Note 10) $ 996,261 $ 448,607 Current portion of long-term debt (Note 11) 320,850 10,000 Operating lease liabilities (Note 6) 91,425 56,380 Deferred revenues (Note 3) 1,721,781 902,202 Income taxes payable (Note 15) 89,297 51,069 Total current liabilities 3,219,614 1,468,258 Long-term liabilities: Accrued liabilities (Note 10) 51,961 18,208 Pension liability (Note 12) 126,312 60,951 Long-term debt (Note 11) 8,562,096 4,209,567 Long-term operating lease liabilities (Note 6) 271,579 198,695 Long-term deferred revenues (Note 3) 217,771 91,144 Long-term income taxes payable (Note 15) 193,808 34,003 Deferred tax liabilities (Note 15) 423,955 65,887 Total long-term liabilities 9,847,482 4,678,455 Shareholders’ equity: Share capital and additional paid-in capital (Note 13) 270,902,571 and 269,522,639 Common Shares issued and outstanding at June 30, 2023 and June 30, 2022, respectively; authorized Common Shares: unlimited 2,176,947 2,038,674 Accumulated other comprehensive income (loss) (Note 21) ( 53,559 ) ( 7,659 ) Retained earnings 2,048,984 2,160,069 Treasury stock, at cost ( 3,536,375 and 3,706,420 shares at June 30, 2023 and June 30, 2022, respectively) ( 151,597 ) ( 159,966 ) Total OpenText shareholders’ equity 4,020,775 4,031,118 Non-controlling interests 1,329 1,142 Total shareholders’ equity 4,022,104 4,032,260 Total liabilities and shareholders’ equity $ 17,089,200 $ 10,178,973 Guarantees and contingencies (Note 14) Related party transactions (Note 25) Subsequent events (Note 26) See accompanying Notes to Consolidated Financial Statements 145 Table of Contents OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands of U.S. dollars, except share and per share data) Year Ended June 30, 2023 2022 2021 Revenues (Note 3): Cloud services and subscriptions $ 1,700,433 $ 1,535,017 $ 1,407,445 Customer support 1,915,020 1,330,965 1,334,062 License 539,026 358,351 384,711 Professional service and other 330,501 269,511 259,897 Total revenues 4,484,980 3,493,844 3,386,115 Cost of revenues: Cloud services and subscriptions 590,165 511,713 481,818 Customer support 209,705 121,485 122,753 License 16,645 13,501 13,916 Professional service and other 276,888 216,895 197,183 Amortization of acquired technology-based intangible assets (Note 8) 223,184 198,607 218,796 Total cost of revenues 1,316,587 1,062,201 1,034,466 Gross profit 3,168,393 2,431,643 2,351,649 Operating expenses: Research and development 680,587 440,448 421,447 Sales and marketing 948,598 677,118 622,221 General and administrative 419,590 317,085 263,521 Depreciation 107,761 88,241 85,265 Amortization of acquired customer-based intangible assets (Note 8) 326,406 217,105 216,544 Special charges (recoveries) (Note 18) 169,159 46,873 1,748 Total operating expenses 2,652,101 1,786,870 1,610,746 Income from operations 516,292 644,773 740,903 Other income (expense), net (Note 23) 34,469 29,118 61,434 Interest and other related expense, net ( 329,428 ) ( 157,880 ) ( 151,567 ) Income before income taxes 221,333 516,011 650,770 Provision for income taxes (Note 15) 70,767 118,752 339,906 Net income $ 150,566 $ 397,259 $ 310,864 Net (income) attributable to non-controlling interests ( 187 ) ( 169 ) ( 192 ) Net income attributable to OpenText $ 150,379 $ 397,090 $ 310,672 Earnings per share—basic attributable to OpenText (Note 24) $ 0.56 $ 1.46 $ 1.14 Earnings per share—diluted attributable to OpenText (Note 24) $ 0.56 $ 1.46 $ 1.14 Weighted average number of Common Shares outstanding—basic (in ‘000’s) 270,299 271,271 272,533 Weighted average number of Common Shares outstanding—diluted (in ‘000’s) 270,451 271,909 273,479 See accompanying Notes to Consolidated Financial Statements 146 Table of Contents OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands of U.S. dollars) Year Ended June 30, 2023 2022 2021 Net income $ 150,566 $ 397,259 $ 310,864 Other comprehensive income (loss)—net of tax: Net foreign currency translation adjustments ( 40,798 ) ( 78,724 ) 42,440 Unrealized gain (loss) on cash flow hedges: Unrealized gain (loss) - net of tax (1) ( 941 ) ( 1,859 ) 4,246 (Gain) loss reclassified into net income - net of tax (2) 2,721 373 ( 3,280 ) Unrealized gain (loss) on available-for-sale financial assets: Unrealized gain (loss) - net of tax (3) ( 602 ) — — Actuarial gain (loss) relating to defined benefit pension plans: Actuarial gain (loss) - net of tax (4) ( 6,605 ) 5,595 3,987 Amortization of actuarial (gain) loss into net income - net of tax (5) 325 718 1,020 Total other comprehensive income (loss), net ( 45,900 ) ( 73,897 ) 48,413 Total comprehensive income 104,666 323,362 359,277 Comprehensive income attributable to non - controlling interests ( 187 ) ( 169 ) ( 192 ) Total comprehensive income attributable to OpenText $ 104,479 $ 323,193 $ 359,085 ______________________________ (1) Net of tax expense (recovery) of ($ 339 ), ($ 671 ), and $ 1,532 for the year ended June 30, 2023, 2022 and 2021, respectively. (2) Net of tax expense (recovery) of $ 981 , $ 134 , and ($ 1,182 ) for the year ended June 30, 2023, 2022 and 2021, respectively. (3) Net of tax expense (recovery) of $ 159 , $ — , and $ — for the year ended June 30, 2023, 2022, and 2021, respectively. (4) Net of tax expense (recovery) of ($ 1,961 ), $ 1,866 and $ 990 for the year ended June 30, 2023, 2022 and 2021, respectively. (5) Net of tax expense (recovery) of $ 143 , $ 290 and $ 379 for the year ended June 30, 2023, 2022 and 2021, respectively. See accompanying Notes to Consolidated Financial Statements 147 Table of Contents OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands of U.S. dollars and shares) Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non-Controlling Interests Total Shares Amount Shares Amount Balance as of June 30, 2020 271,863 $ 1,851,777 ( 622 ) $ ( 23,608 ) $ 2,159,396 $ 17,825 $ 1,319 $ 4,006,709 Adoption of ASU 2016-13 - cumulative effect, net — — — — ( 2,450 ) — — ( 2,450 ) Issuance of Common Shares Under employee stock option plans 1,605 49,565 — — — — — 49,565 Under employee stock purchase plans 573 22,307 193 6,690 — — — 28,997 Share-based compensation — 51,969 — — — — — 51,969 Purchase of treasury stock — — ( 1,455 ) ( 64,847 ) — — — ( 64,847 ) Issuance of treasury stock — ( 12,379 ) 316 12,379 — — — — Repurchase of Common Shares ( 2,500 ) ( 15,475 ) — — ( 103,630 ) — — ( 119,105 ) Dividends declared ($ 0.7770 per Common Share) — — — — ( 210,662 ) — — ( 210,662 ) Other comprehensive income (loss) - net — — — — — 48,413 — 48,413 Non-controlling interest — — — — — — — — Net income — — — — 310,672 — 192 310,864 Balance as of June 30, 2021 271,541 $ 1,947,764 ( 1,568 ) $ ( 69,386 ) $ 2,153,326 $ 66,238 $ 1,511 $ 4,099,453 Issuance of Common Shares Under employee stock option plans 950 32,714 — — — — — 32,714 Under employee stock purchase plans 842 33,806 — — — — — 33,806 Share-based compensation — 69,556 — — — — — 69,556 Purchase of treasury stock — — ( 2,630 ) ( 111,593 ) — — — ( 111,593 ) Issuance of treasury stock — ( 21,013 ) 492 21,013 — — — — Repurchase of Common Shares ( 3,810 ) ( 24,295 ) — — ( 152,692 ) — — ( 176,987 ) Dividends declared ($ 0.8836 per Common Share) — — — — ( 237,655 ) — — ( 237,655 ) Other comprehensive income (loss) - net — — — — — ( 73,897 ) — ( 73,897 ) Distribution to non-controlling interest — 142 — — — — ( 538 ) ( 396 ) Net income — — — — 397,090 — 169 397,259 Balance as of June 30, 2022 269,523 $ 2,038,674 ( 3,706 ) $ ( 159,966 ) $ 2,160,069 $ ( 7,659 ) $ 1,142 $ 4,032,260 Issuance of Common Shares Under employee stock option plans 245 7,830 — — — — — 7,830 Under employee stock purchase plans 1,135 31,679 — — — — — 31,679 Share-based compensation — 130,119 — — — — — 130,119 Purchase of treasury stock — — ( 521 ) ( 21,919 ) — — — ( 21,919 ) Issuance of treasury stock — ( 31,355 ) 691 30,288 — — — ( 1,067 ) Dividends declared ($ 0.9720 per Common Share) — — — — ( 261,464 ) — — ( 261,464 ) Other comprehensive income (loss) - net — — — — — ( 45,900 ) — ( 45,900 ) Net income — — — — 150,379 — 187 150,566 Balance as of June 30, 2023 270,903 $ 2,176,947 ( 3,536 ) $ ( 151,597 ) $ 2,048,984 $ ( 53,559 ) $ 1,329 $ 4,022,104 148 Table of Contents OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) Year Ended June 30, 2023 2022 2021 Cash flows from operating activities: Net income $ 150,566 $ 397,259 $ 310,864 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangible assets 657,351 503,953 520,605 Share-based compensation expense 130,302 69,556 51,969 Pension expense 9,207 6,606 6,616 Amortization of debt discount and issuance costs 16,753 5,422 4,548 Write-off of right of use assets 9,626 17,707 — Loss on extinguishment of debt 8,152 27,413 — Loss on sale and write down of property and equipment 2,331 294 2,771 Deferred taxes ( 149,560 ) ( 36,088 ) 73,039 Share in net (income) loss of equity investees 23,077 ( 58,702 ) ( 62,897 ) Changes in financial instruments 128,841 — — Changes in operating assets and liabilities: Accounts receivable 168,604 81,841 60,954 Contract assets ( 73,539 ) ( 37,966 ) ( 39,333 ) Prepaid expenses and other current assets ( 23,035 ) ( 13,954 ) 37,733 Income taxes 14,948 34,589 ( 140,763 ) Accounts payable and accrued liabilities ( 127,092 ) ( 24,177 ) 26,088 Deferred revenue ( 128,395 ) ( 5,236 ) 39,295 Other assets ( 11,297 ) 17,297 11,914 Operating lease assets and liabilities, net ( 27,635 ) ( 4,004 ) ( 27,283 ) Net cash provided by operating activities 779,205 981,810 876,120 Cash flows from investing activities: Additions of property and equipment ( 123,832 ) ( 93,109 ) ( 63,675 ) Purchase of Micro Focus, net of cash acquired ( 5,657,963 ) — — Purchase of Zix Corporation, net of cash acquired — ( 856,175 ) — Purchase of Bricata Inc. — ( 17,753 ) — Purchase of XMedius — — 444 Purchase of Dynamic Solutions Group Inc. — — ( 971 ) Realized gain on financial instruments 131,248 — — Other investing activities ( 873 ) ( 3,922 ) ( 4,568 ) Net cash used in investing activities ( 5,651,420 ) ( 970,959 ) ( 68,770 ) Cash flows from financing activities: Proceeds from issuance of Common Shares from exercise of stock options and ESPP 39,331 67,215 80,067 Proceeds from long-term debt and Revolver 4,927,450 1,500,000 — Repayment of long-term debt and Revolver ( 202,926 ) ( 860,000 ) ( 610,000 ) Debt extinguishment costs — ( 24,969 ) — Debt issuance costs ( 77,899 ) ( 17,159 ) — Repurchase of Common Shares — ( 176,987 ) ( 119,105 ) Purchase of treasury stock ( 21,919 ) ( 111,593 ) ( 64,847 ) Distribution to non-controlling interest — ( 396 ) — Payments of dividends to shareholders ( 259,549 ) ( 237,655 ) ( 210,662 ) Other financing activities ( 1,435 ) — — Net cash provided by (used in) financing activities 4,403,053 138,456 ( 924,547 ) Foreign exchange gain (loss) on cash held in foreign currencies 7,203 ( 63,196 ) 29,734 Increase (decrease) in cash, cash equivalents and restricted cash during the year ( 461,959 ) 86,111 ( 87,463 ) Cash, cash equivalents and restricted cash at beginning of the year 1,695,911 1,609,800 1,697,263 Cash, cash equivalents and restricted cash at end of the year $ 1,233,952 $ 1,695,911 $ 1,609,800 149 Table of Contents OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) Reconciliation of cash, cash equivalents and restricted cash: June 30, 2023 June 30, 2022 June 30, 2021 Cash and cash equivalents $ 1,231,625 $ 1,693,741 $ 1,607,306 Restricted cash (1) 2,327 2,170 2,494 Total cash, cash equivalents and restricted cash $ 1,233,952 $ 1,695,911 $ 1,609,800 _________________________________ (1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets (Note 9). Supplemental cash flow disclosures (Note 6 and Note 22) See accompanying Notes to Consolidated Financial Statements 150 Table of Contents OPEN TEXT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended June 30, 2023 (Tabular amounts in thousands of U.S. dollars, except share and per share data) NOTE 1— BASIS OF PRESENTATION The accompanying Consolidated Financial Statements include the accounts of Open Text Corporation and our subsidiaries, collectively referred to as “OpenText” or the “Company.” We wholly own all of our subsidiaries with the exception of Open Text South Africa Proprietary Ltd. (OT South Africa), which as of June 30, 2023, was 70 % owned by OpenText. All intercompany balances and transactions have been eliminated. Previously, our ownership in EC1 Pte. Ltd. (GXS Singapore) was 81 %. During the first quarter of Fiscal 2022 (as defined below), we made a final cash distribution of $ 0.4 million to the non-controlling interest holder in GXS Singapore as part of the process to liquidate the subsidiary. During Fiscal 2022, the liquidation of GXS Singapore was completed. The following Fiscal Year terms are used throughout this Annual Report on Form 10-K: Fiscal Year Beginning Date Ending Date Fiscal 2025 July 1, 2024 June 30, 2025 Fiscal 2024 July 1, 2023 June 30, 2024 Fiscal 2023 July 1, 2022 June 30, 2023 Fiscal 2022 July 1, 2021 June 30, 2022 Fiscal 2021 July 1, 2020 June 30, 2021 Fiscal 2020 July 1, 2019 June 30, 2020 Fiscal 2019 July 1, 2018 June 30, 2019 Fiscal 2018 July 1, 2017 June 30, 2018 Fiscal 2017 July 1, 2016 June 30, 2017 Fiscal 2016 July 1, 2015 June 30, 2016 Fiscal 2015 July 1, 2014 June 30, 2015 Fiscal 2014 July 1, 2013 June 30, 2014 Fiscal 2013 July 1, 2012 June 30, 2013 Fiscal 2012 July 1, 2011 June 30, 2012 These Consolidated Financial Statements are expressed in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The information furnished reflects all adjustments necessary for a fair presentation of the results for the periods presented and includes the consolidated financial results of Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus), with effect from February 1, 2023 (see below and Note 19 “Acquisitions”). Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make certain estimates, judgments and assumptions that affect the amounts reported in the Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, key estimates, judgments and assumptions include those related to: (i) revenue recognition, (ii) accounting for income taxes, (iii) testing of goodwill for impairment, (iv) the valuation of acquired intangible assets, (v) the valuation of long-lived assets, (vi) the recognition of contingencies, (vii) restructuring accruals, (viii) acquisition accruals and pre-acquisition contingencies, (ix) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plans, (x) the valuation of pension obligations and pension assets, (xi) the valuation of available-for-sale investments and (xii) the valuation of derivative instruments. 151 Table of Contents Acquisition of Micro Focus On January 31, 2023, we acquired all of the issued and to be issued share capital of Micro Focus (the Micro Focus Acquisition) for a total purchase price of $ 6.2 billion, inclusive of Micro Focus’ cash and repayment of Micro Focus’ outstanding indebtedness, subject to final adjustments. In connection with the financing of the Micro Focus Acquisition, concurrent with the announcement of the acquisition on August 25, 2022, the Company entered into the Acquisition Term Loan and Bridge Loan (each as defined below) as well as certain derivative transactions. On December 1, 2022, the Company issued and sold $ 1.0 billion in aggregate principal amount of 6.90 % Senior Secured Notes due 2027 (Senior Secured Notes 2027), amended the Acquisition Term Loan and terminated the Bridge Loan. On January 31, 2023, we drew down the entire aggregate principal amount of $ 3.585 billion of the Acquisition Term Loan, net of original issuance discount and other fees, and drew down $ 450 million under the Revolver (as defined below). We used these proceeds and cash on hand to fund the purchase price consideration and repayment of Micro Focus’ outstanding indebtedness. In conjunction with the closing of the Micro Focus Acquisition, the deal-contingent forward contracts and non-contingent forward contract, as described in Note 17 “Derivative Instruments and Hedging Activities,” were settled. NOTE 2— ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS Accounting Policies Cash and cash equivalents Cash and cash equivalents include balances with banks as well as deposits that have original terms to maturity of three months or less. Cash equivalents are recorded at cost and typically consist of term deposits, commercial paper, certificates of deposit and short-term interest-bearing investment-grade securities of major banks in the countries in which we operate. Accounts Receivable and Allowance for Credit Losses From time to time, we may sell certain accounts receivable to a financial institution on a non-recourse basis for cash, less a discount. Proceeds from the sale of receivables approximate their discounted book value and are included in operating cash flows on the Consolidated Statement of Cash Flows. In accordance with ASC Topic 326, “Financial Instruments - Credit Losses” (Topic 326), we recognize expected credit losses for accounts receivable and contract assets based on lifetime expected losses. We recognize a loss allowance using a collective assessment for accounts receivable, including contract assets, with similar risk characteristics based on historical credit loss experience, adjusted for forward-looking factors specific to the debtors and economic environment. We continue to maintain an allowance for 100% of all accounts deemed to be uncollectible. Customer creditworthiness is evaluated prior to order fulfillment and based on evaluations, we adjust our credit limit to the respective customer. In addition to these evaluations, we conduct on-going credit evaluations of our customers’ payment history and current creditworthiness. To date, the actual losses have been within our expectations. No single customer accounted for more than 10% of the accounts receivable balance as of June 30, 2023 and 2022, respectively. Property and equipment Property and equipment are stated at the lower of cost or net realizable value and shown net of depreciation which is computed on a straight-line basis over the estimated useful lives of the related assets. Gains and losses on asset disposals are taken into income in the year of disposition. Fully depreciated property and equipment are retired from the Consolidated Balance Sheets when they are no longer in use. Please see the “Impairment of long-lived assets” section below for policy on property and equipment impairments. The following represents the estimated useful lives of property and equipment as of June 30, 2023: Furniture, equipment and other 5 to 15 years Computer hardware 3 to 5 years Computer software 3 to 7 years Capitalized software development costs 3 to 5 years Leasehold improvements Lesser of the lease term or 5 years Building 40 years 152 Table of Contents Capitalized Software We capitalize software development costs in accordance with ASC Topic 350-40, “Internal-Use Software.” We capitalize costs for software to be used internally when we enter the application development stage. This occurs when we complete the preliminary project stage, management authorizes and commits to funding the project, and it is feasible that the project will be completed, and the software will perform the intended function. We cease to capitalize costs related to a software project when it enters the post-implementation and operation stage. If different determinations are made with respect to the state of development of a software project, then the amount capitalized and the amount charged to expense for that project could differ materially. Costs capitalized during the application development stage consist of payroll and related costs for employees who are directly associated with, and who devote time directly to, a project to develop software for internal use. We also capitalize the direct costs of materials and services, which generally includes outside contractors, and interest. We do not capitalize any general and administrative or overhead costs or costs incurred during the application development stage related to training or data conversion costs. Costs related to upgrades and enhancements to internal-use software, if those upgrades and enhancements result in additional functionality, are capitalized. If upgrades and enhancements do not result in additional functionality, those costs are expensed as incurred. If different determinations are made with respect to whether upgrades or enhancements to software projects would result in additional functionality, then the amount capitalized and the amount charged to expense for that project could differ materially. We amortize capitalized costs with respect to development projects for internal-use software when the software is ready for use. The capitalized software development costs are generally amortized using the straight-line method over a 3 to 5 year period. In determining and reassessing the estimated useful life over which the cost incurred for the software should be amortized, we consider the effects of obsolescence, technology, competition and other economic factors. If different determinations are made with respect to the estimated useful life of the software, the amount of amortization charged in a particular period could differ materially. As of June 30, 2023 and 2022 our capitalized software development costs were $ 216.8 million and $ 149.1 million, respectively. Our additions, relating to capitalized software development costs, incurred during Fiscal 2023 and Fiscal 2022 were $ 18.3 million and $ 18.2 million, respectively. Leases We enter into operating leases, both domestically and internationally, for certain facilities, automobiles, data centers and equipment for use in the ordinary course of business. During Fiscal 2023, as part of the Micro Focus Acquisition, we acquired certain finance leases primarily comprised of equipment leases, all of which are sublet. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. In accordance with ASC Topic 842, “Leases” (Topic 842), we account for a contract as a lease when we have the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits. We determine the initial classification and measurement of our right of use (ROU) assets and lease liabilities at the lease commencement date and thereafter if modified. ROU assets represent our right to control the underlying assets under lease, and the lease liability is our obligation to make the lease payments related to the underlying assets under lease, over the contractual term. ROU assets and lease liabilities are recognized on the Consolidated Balance Sheets based on the present value of future minimum lease payments to be made over the lease term. When available, we will use the rate implicit in the lease to discount lease payments to present value. However, real estate leases generally do not provide a readily determinable implicit rate, therefore, we must estimate our incremental borrowing rate to discount the lease payments. We estimate our incremental borrowing rate based on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located. The ROU asset equals the lease liability, adjusted for any initial direct costs, prepaid rent and lease incentives on initial recognition. Fixed lease costs are included in the recognition of ROU assets and lease liabilities. Variable lease costs are not included in the measurement of the lease liability. These variable lease payments are recognized in the Consolidated Statements of Income in the period in which the obligation for those payments is incurred. Lease expense for minimum lease payments continues to be recognized in the Consolidated Statements of Income on a straight-line basis over the lease term. We have not elected the practical expedient to combine lease and non-lease components in the determination of lease costs for our facility leases. For all other asset classes, we have elected the practical expedient to combine the lease and the non-lease components. The lease liability includes lease payments related to options to extend or renew the lease term only if we are reasonably certain we will exercise those options. Our leases typically do not contain any material residual value guarantees or restrictive covenants. In certain circumstances, we sublease all or a portion of a leased facility to various other companies through a sublease agreement. 153 Table of Contents Business combinations We apply the provisions of ASC Topic 805, “Business Combinations” (Topic 805), in the accounting for our acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities, including contingent consideration where applicable, assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement, particularly since these assumptions and estimates are based in part on historical experience and information obtained from the management of the acquired companies. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill in the period identified. Furthermore, when valuing certain intangible assets that we have acquired, critical estimates may be made relating to, but not limited to: (i) future expected cash flows from software license sales, cloud SaaS, “desktop as a service” (DaaS) and PaaS contracts, support agreements, consulting agreements and other customer contracts (ii) the acquired company’s technology and competitive position, as well as assumptions about the period of time that the acquired technology will continue to be used in the combined company’s product portfolio, and (iii) discount rates. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded to our Consolidated Statements of Income. For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the purchase price allocation and, if so, to determine the estimated amounts. If we determine that a pre-acquisition contingency (non-income tax related) is probable in nature and estimable as of the acquisition date, we record our best estimate for such a contingency as a part of the preliminary purchase price allocation. We often continue to gather information and evaluate our pre-acquisition contingencies throughout the measurement period and if we make changes to the amounts recorded or if we identify additional pre-acquisition contingencies during the measurement period, such amounts will be included in the purchase price allocation during the measurement period and, subsequently, in our results of operations. Uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We review these items during the measurement period as we continue to actively seek and collect information relating to facts and circumstances that existed at the acquisition date. Changes to these uncertain tax positions and tax related valuation allowances made subsequent to the measurement period, or if they relate to facts and circumstances that did not exist at the acquisition date, are recorded in the “Provision for (recovery of) income taxes” line of our Consolidated Statements of Income. Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. The carrying amount of goodwill is periodically reviewed for impairment (at a minimum annually) and whenever events or changes in circumstances indicate that the carrying value of this asset may not be recoverable. Our operations are analyzed by management and our chief operating decision maker (CODM) as being part of a single industry segment: the design, development, marketing and sales of Information Management software and solutions. Therefore, our goodwill impairment assessment is based on the allocation of goodwill to a single reporting unit. We perform a qualitative assessment to test our reporting unit’s goodwill for impairment. Based on our qualitative assessment, if we determine that the fair value of our reporting unit is more likely than not (i.e., a likelihood of more than 50 percent) to be less than its carrying amount, the quantitative assessment of the impairment test is performed. In the quantitative assessment, we compare the fair value of our reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not considered impaired and we are not required to perform further testing. If the carrying value of the net assets of our reporting unit exceeds its fair value, then an impairment loss equal to the difference, but not exceeding the total carrying value of goodwill allocated to the reporting unit, would be recorded. Our annual impairment analysis of goodwill was performed as of April 1, 2023. Our qualitative assessment indicated that there were no indications of impairment and therefore there was no impairment of goodwill required to be recorded for Fiscal 2023 ( no impairments were recorded for Fiscal 2022 and Fiscal 2021, respectively). 154 Table of Contents Acquired intangibles Acquired intangibles consist of acquired technology and customer relationships associated with various acquisitions. Acquired technology is initially recorded at fair value based on the present value of the estimated net future income-producing capabilities of software products acquired on acquisitions. We amortize acquired technology over its estimated useful life on a straight-line basis. Customer relationships represent relationships that we have with customers of the acquired companies and are either based upon contractual or legal rights or are considered separable; that is, capable of being separated from the acquired entity and being sold, transferred, licensed, rented or exchanged. These customer relationships are initially recorded at their fair value based on the present value of expected future cash flows. We amortize customer relationships on a straight-line basis over their estimated useful lives. We continually evaluate the remaining estimated useful life of our intangible assets being amortized to determine whether events and circumstances warrant a revision to the remaining period of amortization. Impairment of long-lived assets We account for the impairment and disposition of long-lived assets in accordance with ASC Topic 360, “Property, Plant, and Equipment” (Topic 360). We test long-lived assets or asset groups, such as property and equipment, ROU assets and definite lived intangible assets, for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed of before the end of its estimated useful life. Recoverability is assessed based on comparing the carrying amount of the asset to the aggregate pre-tax undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group. Impairment is recognized when the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. The impairment loss, if any, is measured as the amount by which the carrying amount exceeds fair value, which for this purpose is based upon the discounted projected future cash flows of the asset or asset group. We have no t recorded any significant impairment charges for long-lived assets during Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. Derivative financial instruments We use derivative financial instruments to manage foreign currency rate risk. We account for these instruments in accordance with ASC Topic 815, “Derivatives and Hedging” (Topic 815), which requires that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value as of the reporting date. Topic 815 also requires that changes in our derivative financial instruments’ fair values be recognized in earnings; unless specific hedge accounting and documentation criteria are met (i.e., the instruments are accounted for as hedges). We recorded the effective portions of the gain or loss on derivative financial instruments that were designated as cash flow hedges in “Accumulated other comprehensive income (loss),” net of tax, in our accompanying Consolidated Balance Sheets. Any ineffective or excluded portion of a designated cash flow hedge, if applicable, was recognized in our Consolidated Statements of Income. In Fiscal 2023, we entered into certain derivative financial instruments, a portion of which were designated as a net investment hedge. In accordance with Topic 815, we recorded the effective portion of the gain or loss on derivative financial instruments that were designated as a net investment hedge within our currency translation adjustment component of “Accumulated other comprehensive income (loss),” in our accompanying Consolidated Balance Sheets. Any ineffective or excluded portion of our net investment hedge, if applicable, is recognized in “Interest and other related expense, net” of our Consolidated Statements of Income. See Note 17 “Derivative Instruments and Hedging Activities” for more details. Asset retirement obligations We account for asset retirement obligations in accordance with ASC Topic 410, “Asset Retirement and Environmental Obligations” (Topic 410), which applies to certain obligations associated with “leasehold improvements” within our leased office facilities. Topic 410 requires that a liability be initially recognized for the estimated fair value of the obligation when it is incurred. The associated asset retirement cost is capitalized as part of the carrying amount of the long-lived asset and depreciated over the remaining life of the underlying asset and the associated liability is accreted to the estimated fair value of the obligation at the settlement date through periodic accretion charges which are generally recorded within “General and administrative” expense in our Consolidated Statements of Income. When the obligation is settled, any difference between the final cost and the recorded amount is recognized as income or loss on settlement in our Consolidated Statements of Income. 155 Table of Contents Revenue recognition In accordance with ASC Topic 606, we account for a customer contract when we obtain written approval, the contract is committed, the rights of the parties, including the payment terms, are identified, the contract has commercial substance and consideration is probable of collection. Revenue is recognized when, or as, control of a promised product or service is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for our products and services (at its transaction price). Estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based on readily available information, which may include historical, current and forecasted information, taking into consideration the type of customer, the type of transaction and specific facts and circumstances of each arrangement. We report revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue producing transactions. We have four revenue streams: cloud services and subscriptions, customer support, license, and professional service and other. Cloud services and subscriptions revenue Cloud services and subscriptions revenue are from hosting arrangements where in connection with the licensing of software, the end user does not take possession of the software, as well as from end-to-end fully outsourced B2B integration solutions to our customers (collectively referred to as cloud arrangements). The software application resides on our hardware or that of a third party, and the customer accesses and uses the software on an as-needed basis. Our cloud arrangements can be broadly categorized as PaaS, SaaS, cloud subscriptions and managed services. PaaS/ SaaS/ Cloud Subscriptions (collectively referred to here as cloud-based solutions): We offer cloud-based solutions that provide customers the right to access our software through the internet. Our cloud-based solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. These services are made available to the customer continuously throughout the contractual period. However, the extent to which the customer uses the services may vary at the customer’s discretion. The payment for cloud-based solutions may be received either at inception of the arrangement, or over the term of the arrangement. These cloud-based solutions are considered to have a single performance obligation where the customer simultaneously receives and consumes the benefit, and as such we recognize revenue for these cloud-based solutions ratably over the term of the contractual agreement. For example, revenue related to cloud-based solutions that are provided on a usage basis, such as the number of users, is recognized based on a customer’s utilization of the services in a given period. Additionally, a software license is present in a cloud-based solutions arrangement if all of the following criteria are met: (i) The customer has the contractual right to take possession of the software at any time without significant penalty; and (ii) It is feasible for the customer to host the software independent of us. In these cases where a software license is present in a cloud-based solutions arrangement it is assessed to determine if it is distinct from the cloud-based solutions arrangement. The revenue allocated to the distinct software license would be recognized at the point in time the software license is transferred to the customer, whereas the revenue allocated to the hosting performance obligation would be recognized ratably on a monthly basis over the contractual term unless evidence suggests that revenue is earned, or obligations are fulfilled in a different pattern over the contractual term of the arrangement. Managed services: We provide comprehensive B2B process outsourcing services for all day-to-day operations of a customers’ B2B integration program. Customers using these managed services are not permitted to take possession of our software and the contract is for a defined period, where customers pay a monthly or quarterly fee. Our performance obligation is satisfied as we provide services of operating and managing a customer’s EDI environment. Revenue relating to these services is recognized using an output method based on the expected level of service we will provide over the term of the contract. In connection with cloud subscription and managed service contracts, we often agree to perform a variety of services before the customer goes live, such as, converting and migrating customer data, building interfaces and providing training. These services are considered an outsourced suite of professional services which can involve certain project-based activities. These services can be provided at the initiation of a contract, during the implementation or on an ongoing basis as part of the customer life cycle. These services can be charged separately on a fixed fee or time and materials basis, or the costs associated may be recovered as part of the ongoing cloud subscription or managed services fee. These outsourced professional services are considered to be distinct from the ongoing hosting services and represent a separate performance obligation within our cloud subscription or managed services arrangements. The obligation to provide outsourced professional services is satisfied over time, with the customer simultaneously receiving and consuming the benefits as we satisfy our performance obligations. For 156 Table of Contents outsourced professional services, we recognize revenue by measuring progress toward the satisfaction of our performance obligation. Progress for services that are contracted for a fixed price is generally measured based on hours incurred as a portion of total estimated hours. As a practical expedient, when we invoice a customer at an amount that corresponds directly with the value to the customer of our performance to date, we recognize revenue at that amount. Customer support revenue Customer support revenue is associated with perpetual, term license and off-cloud subscription arrangements. As customer support is not critical to the customer’s ability to derive benefit from its right to use our software, customer support is considered as a distinct performance obligation when sold together in a bundled arrangement along with the software. Customer support consists primarily of technical support and the provision of unspecified updates and upgrades on a when-and-if-available basis. Customer support for perpetual licenses is renewable, generally on an annual basis, at the option of the customer. Customer support for term and subscription licenses is renewable concurrently with such licenses for the same duration of time. Payments for customer support are generally made at the inception of the contract term or in installments over the term of the maintenance period. Our customer support team is ready to provide these maintenance services, as needed, to the customer during the contract term. As the elements of customer support are delivered concurrently and have the same pattern of transfer, customer support is accounted for as a single performance obligation. The customer benefits evenly throughout the contract period from the guarantee that the customer support resources and personnel will be available to them, and that any unspecified upgrades or unspecified future products developed by us will be made available. Revenue for customer support is recognized ratably over the contract period based on the start and end dates of the maintenance term, in line with how we believe services are provided. License revenue Our license revenue can be broadly categorized as perpetual licenses, term licenses and subscription licenses, all of which are deployed on the customer’s premises (off-cloud). Perpetual licenses: We sell perpetual licenses which provide customers the right to use software for an indefinite period of time in exchange for a one-time license fee, which is generally paid at contract inception. Our perpetual licenses provide a right to use IP that is functional in nature and have significant stand-alone functionality. Accordingly, for perpetual licenses of functional IP, revenue is recognized at the point-in-time when control has been transferred to the customer, which normally occurs once software activation keys have been made available for download. Term licenses and Subscription licenses: We sell both term and subscription licenses which provide customers the right to use software for a specified period in exchange for a fee, which may be paid at contract inception or paid in installments over the period of the contract. Like perpetual licenses, both our term licenses and subscription licenses are functional IP that have significant stand-alone functionality. Accordingly, for both term and subscription licenses, revenue is recognized at the point-in-time when the customer is able to use and benefit from the software, which is normally once software activation keys have been made available for download at the commencement of the term. Professional service and other revenue Our professional services, when offered along with software licenses, consists primarily of technical services and training services. Technical services may include installation, customization, implementation or consulting services. Training services may include access to online modules or delivering a training package customized to the customer’s needs. At the customer’s discretion, we may offer one, all, or a mix of these services. Payment for professional services is generally a fixed fee or is a fee based on time and materials. Professional services can be arranged in the same contract as the software license or in a separate contract. As our professional services do not significantly change the functionality of the license and our customers can benefit from our professional services on their own or together with other readily available resources, we consider professional services as distinct within the context of the contract. Professional service revenue is recognized over time so long as: (i) the customer simultaneously receives and consumes the benefits as we perform them, (ii) our performance creates or enhances an asset the customer controls as we perform, and (iii) our performance does not create an asset with alternative use and we have enforceable right to payment. If all the above criteria are met, we use an input-based measure of progress for recognizing professional service revenue. For example, we may consider total labour hours incurred compared to total expected labour hours. As a practical expedient, when we invoice a customer at an amount that corresponds directly with the value to the customer of our performance to date, we will recognize revenue at that amount. 157 Table of Contents Material rights To the extent that we grant our customer an option to acquire additional products or services in one of our arrangements, we will account for the option as a distinct performance obligation in the contract only if the option provides a material right to the customer that the customer would not receive without entering into the contract. For example, if we give the customer an option to acquire additional goods or services in the future at a price that is significantly lower than the current price, this would be a material right as it allows the customer to, in effect, pay in advance for the option to purchase future products or services. If a material right exists in one of our contracts, then revenue allocated to the option is deferred and we would recognize revenue only when those future products or services are transferred or when the option expires. Based on history, our contracts do not typically contain material rights and when they do, the material right is not significant to our Consolidated Financial Statements. Arrangements with multiple performance obligations Our contracts generally contain more than one of the products and services listed above. Determining whether goods and services are considered distinct performance obligations that should be accounted for separately or as a single performance obligation may require judgment, specifically when assessing whether both of the following two criteria are met: • the customer can benefit from the product or service either on its own or together with other resources that are readily available to the customer; and • our promise to transfer the product or service to the customer is separately identifiable from other promises in the contract. If these criteria are not met, we determine an appropriate measure of progress based on the nature of our overall promise for the single performance obligation. If these criteria are met, each product or service is separately accounted for as a distinct performance obligation and the total transaction price is allocated to each performance obligation on a relative SSP basis. Standalone selling price The SSP reflects the price we would charge for a specific product or service if it were sold separately in similar circumstances and to similar customers. In most cases we can establish the SSP based on observable data. We typically establish a narrow SSP range for our products and services and assess this range on a periodic basis or when material changes in facts and circumstances warrant a review. If the SSP is not directly observable, then we estimate the amount using either the expected cost plus a margin or residual approach. Estimating SSP requires judgment that could impact the amount and timing of revenue recognized. SSP is a formal process whereby management considers multiple factors including, but not limited to, geographic or regional specific factors, competitive positioning, internal costs, profit objectives, and pricing practices. Transaction Price Allocation In bundled arrangements, where we have more than one distinct performance obligation, we must allocate the transaction price to each performance obligation based on its relative SSP. However, in certain bundled arrangements, the SSP may not always be directly observable. For instance, in bundled arrangements with license and customer support, we allocate the transaction price between the license and customer support performance obligations using the residual approach because we have determined that the SSP for licenses in these arrangements are highly variable. We use the residual approach only for our license arrangements. When the SSP is observable but contractual pricing does not fall within our established SSP range, then an adjustment is required, and we will allocate the transaction price between license and customer support based on the relative SSP established for the respective performance obligations. When two or more contracts are entered into at or near the same time with the same customer, we evaluate the facts and circumstances associated with the negotiation of those contracts. Where the contracts are negotiated as a package, we will account for them as a single arrangement and allocate the consideration for the combined contracts among the performance obligations accordingly. Sales to resellers We execute certain sales contracts through resellers, distributors and channel partners (collectively referred to as resellers). Typically, we conclude that the resellers are Open Text customers in our reseller agreements. The resellers have control over the pricing, service and products prior to being transferred to the end customer. We also assess the creditworthiness of each reseller and if they are newly formed, undercapitalized or in financial difficulty, we defer any revenues expected to 158 Table of Contents emanate from such reseller and recognize revenue only when cash is received, and all other revenue recognition criteria under ASC Topic 606 are met. Rights of return and other incentives We do not generally offer rights of return or any other incentives such as concessions, product rotation, or price protection and, therefore, do not provide for or make estimates of rights of return and similar incentives. However, we do offer consumers who purchase certain of our products online directly from us an unconditional full 70-day money-back guarantee. Distributors and resellers are also permitted to return the consumer products, subject to certain limitations. Revenue is reduced for such rights based on the estimate of future returns originating from contractual agreements with these customers. Additionally, in some contracts, however, discounts may be offered to the customer for future software purchases and other additional products or services. Such arrangements grant the customer an option to acquire additional goods or services in the future at a discount and therefore are evaluated under guidance related to “material rights” as discussed above. Other policies Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days of the invoice date. In certain arrangements, we will receive payment from a customer either before or after the performance obligation to which the invoice relates has been satisfied. As a practical expedient, we do not account for significant financing components if the period between when we transfer the promised good or service to the customer and when the customer pays for the product or service will be one year or less. On that basis, our contracts for license and maintenance typically do not contain a significant financing component, however, in determining the transaction price we consider whether we need to adjust the promised consideration for the effects of the time value of money if the timing of payments provides either the customer or OpenText with a significant benefit of financing. Our managed services contracts may not include an upfront charge for outsourced professional services performed as part of an implementation and are recovered through an ongoing fee. Therefore, these contracts may be expected to have a financing component associated with revenue being recognized in advance of billings. We may modify contracts to offer customers additional products or services. The additional products and services will be considered distinct from those products or services transferred to the customer before the modification and will be accounted for as a separate contract. We evaluate whether the price for the additional products and services reflects the SSP adjusted as appropriate for facts and circumstances applicable to that contract. In determining whether an adjustment is appropriate, we evaluate whether the incremental consideration is consistent with the prices previously paid by the customer or similar customers. Certain of our subscription services and product support arrangements generally contain performance response time guarantees. For subscription services arrangements, we estimate variable consideration using a portfolio approach because performance penalties are tied to standard response time requirements. For product support arrangements, we estimate variable consideration on a contract basis because such arrangements are customer-specific. For both subscription services and product support arrangements, we use an expected value approach to estimate variable consideration based on historical business practices and current and future performance expectations to determine the likelihood of incurring penalties. Performance Obligations A summary of our typical performance obligations and when the obligations are satisfied are as follows: Performance Obligation When Performance Obligation is Typically Satisfied Cloud services and subscriptions revenue: Outsourced Professional Services Managed Services / Ongoing Hosting / SaaS As the services are provided (over time) Over the contract term, beginning on the date that service is made available (i.e., “Go live”) to the customer (over time) Customer support revenue: When and if available updates and upgrades and technical support Ratable over the course of the service term (over time) License revenue: Software licenses (Perpetual, Term, Subscription) When software activation keys have been made available for download (point in time) Professional service and other revenue: Professional services As the services are provided (over time) 159 Table of Contents Incremental Costs of Obtaining a Contract with a Customer Incremental costs of obtaining a contract include only those costs that we incur to obtain a contract that we would not have incurred if the contract had not been obtained, such as sales commissions. We have determined that certain of our commission programs meet the requirements to be capitalized. Some commission programs are not subject to capitalization as the commission expense is paid and recognized as the related revenue is recognized. In assessing costs to obtain a contract, we apply a practical expedient that allows us to assess our incremental costs on a portfolio of contracts with similar characteristics instead of assessing the incremental costs on each individual contract. We do not expect the financial statement effects of applying this practical expedient to the portfolio of contracts to be materially different than if we were to apply the standard to each individual contract. We pay commissions on the sale of new customer contracts as well as for renewals of existing contracts to the extent the renewals generate incremental revenue. Commissions paid on renewal contracts are limited to the incremental new revenue and therefore these payments are not commensurate with the commission paid on the original sale. We allocate commission costs to the performance obligations in an arrangement consistent with the allocation of the transaction price. Commissions allocated to the license performance obligation are expensed at the time the license revenue is recognized. Commissions allocated to professional service performance obligations are expensed as incurred, as these contracts are generally for one year or less and we apply a practical expedient to expense costs as incurred if the amortization period would have been one year or less. Commissions allocated to maintenance, managed services, on-going hosting arrangements or other recurring services, are capitalized and amortized consistent with the pattern of transfer to the customer of the services over the period expected to benefit from the commission payment. As commissions paid on renewals are not commensurate with the original sale, the period of benefit considers anticipated renewals. The benefit period is estimated to be approximately six years which is based on our customer contracts and the estimated life of our technology. Expenses for incremental costs associated with obtaining a contract are recorded within “Sales and marketing” expense in the Consolidated Statements of Income. Our short-term capitalized costs to obtain a contract are included in “Prepaid expenses and other current assets”, while our long-term capitalized costs to obtain a contract are included in “Other assets” on our Consolidated Balance Sheets. Research and development costs Research and development costs internally incurred in creating computer software to be sold, licensed or otherwise marketed are expensed as incurred unless they meet the criteria for deferral and amortization, as described in ASC Topic 985-20, “Costs of Software to be Sold, Leased, or Marketed” (Topic 985-20). In accordance with Topic 985-20, costs related to research, design and development of products are charged to expense as incurred and capitalized between the dates that the product is considered to be technologically feasible and is considered to be ready for general release to customers. In our historical experience, the dates relating to the achievement of technological feasibility and general release of the product have substantially coincided. In addition, no significant costs are incurred subsequent to the establishment of technological feasibility. As a result, we do not capitalize any research and development costs relating to internally developed software to be sold, licensed or otherwise marketed. Advertising Expenses Advertising costs, which include digital advertising, marketing programs and other promotional costs, are expensed as incurred. Advertising expenses incurred in Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $ 73.8 million, $ 59.6 million and $ 52.9 million, respectively. Income taxes We account for income taxes in accordance with ASC Topic 740, “Income Taxes” (Topic 740). Deferred tax assets and liabilities arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the Consolidated Financial Statements that will result in taxable or deductible amounts in future years. These temporary differences are measured using enacted tax rates. A valuation allowance is recorded to reduce deferred tax assets to the extent that we consider it is more likely than not that a deferred tax asset will not be realized. In determining the valuation allowance, we consider factors such as the reversal of deferred income tax liabilities, projected taxable income, and the character of income tax assets and tax planning strategies. A change to these factors could impact the estimated valuation allowance and income tax expense. We account for our uncertain tax provisions by using a two-step approach. The first step is to evaluate the tax position for recognition by determining if the weight of the available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained on audit, including the resolution of related appeals or litigation processes, if any. The second step is to measure the appropriate amount of the benefit to recognize. The amount of benefit to recognize is 160 Table of Contents measured as the maximum amount which is more likely than not to be realized. The tax position is derecognized when it is no longer more likely than not that the position will be sustained on audit. On subsequent recognition and measurement, the maximum amount which is more likely than not to be recognized at each reporting date will represent the Company’s best estimate, given the information available at the reporting date, although the outcome of the tax position is not absolute or final. We recognize both accrued interest and penalties related to liabilities for income taxes within the “Provision for (recovery of) income taxes” line of our Consolidated Statements of Income (see Note 15 “Income Taxes” for more details). Equity investments We invest in investment funds in which we are a limited partner. Our interests in each of these investees range from 4 % to below 20 %. These investments are accounted for using the equity method. Our share of net income or losses based on our interest in these investments, which approximates fair value, is recorded as a component of “Other income (expense), net” in our Consolidated Statements of Income (see Note 23 “Other Income (Expense), Net” for more details). Fair value of financial instruments Carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable (trade and accrued liabilities) approximate the fair value due to the relatively short period of time between origination of the instruments and their expected realization. The fair value of our Senior Notes is determined based on observable market prices and categorized as a Level 2 measurement. The carrying value of our other long-term debt facilities approximates the fair value since the interest rate is at market. We apply the provisions of ASC Topic 820, “Fair Value Measurement” (Topic 820), to our available-for-sale financial assets and derivative financial instruments that we are required to carry at fair value pursuant to other accounting standards (see Note 16 “Fair Value Measurement” for more details). Foreign currency Our Consolidated Financial Statements are presented in U.S. dollars. In general, the functional currency of our subsidiaries is the local currency. For each subsidiary, assets and liabilities denominated in foreign currencies are translated into U.S dollars at the exchange rates in effect at the balance sheet dates and revenues and expenses are translated at the average exchange rates prevailing during the previous month of the transaction. The effect of foreign currency translation adjustments are recorded as a component of “Accumulated other comprehensive income (loss).” Transactional foreign currency gains (losses) included in the Consolidated Statements of Income under the line item “Other income (expense), net” for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were $ 56.6 million, $( 2.7 ) million, and $( 1.3 ) million, respectively. Restructuring charges We record restructuring charges relating to contractual lease obligations, not accounted for under Topic 842, and other exit costs in accordance with ASC Topic 420, “Exit or Disposal Cost Obligations” (Topic 420). Topic 420 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at its fair value in the period in which the liability is incurred. In order to incur a liability pursuant to Topic 420, our management must have established and approved a plan of restructuring in sufficient detail. A liability for a cost associated with involuntary termination benefits is recorded when benefits have been communicated and a liability for a cost to terminate an operating lease or other contract is incurred, when the contract has been terminated in accordance with the contract terms or we have ceased using the right conveyed by the contract, such as vacating a leased facility not accounted for under Topic 842. The recognition of restructuring charges requires us to make certain judgments regarding the nature, timing and amount associated with the planned restructuring activities, including estimating sub-lease income and the net recoverable amount of equipment to be disposed of. At the end of each reporting period, we evaluate the appropriateness of the remaining accrued balances (see Note 18 “Special Charges (Recoveries)” for more details). Loss Contingencies We are currently involved in various claims and legal proceedings. Quarterly, we review the status of each significant legal matter and evaluate such matters to determine how they should be treated for accounting and disclosure purposes in accordance with the requirements of ASC Topic 450-20, “Loss Contingencies” (Topic 450-20). Specifically, this evaluation process includes the centralized tracking and itemization of the status of all our disputes and litigation items, discussing the nature of any litigation and claim, including any dispute or claim that is reasonably likely to result in litigation, with relevant 161 Table of Contents internal and external counsel, and assessing the progress of each matter in light of its merits and our experience with similar proceedings under similar circumstances. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss in accordance with Topic 450-20. As of the date of this Annual Report on Form 10-K, the aggregate of such accrued liabilities was not material to our consolidated financial position or results of operations and we do not believe as of the date of this filing that it is reasonably possible that a loss exceeding the amounts already recognized will be incurred that would be material to our consolidated financial position or results of operations. As described more fully below, we are unable at this time to estimate a possible loss or range of losses in respect of certain disclosed matters (see Note 14 “Guarantees and Contingencies” for more details). Net income per share Basic net income per share is computed using the weighted average number of Common Shares outstanding including contingently issuable shares where the contingency has been resolved. Diluted net income per share is computed using the weighted average number of Common Shares and stock equivalents outstanding using the treasury stock method during the year. For periods in which we incur a net loss, our outstanding Common Share equivalents are not included in the calculation of diluted earnings (loss) per share as their effect is antidilutive. Accordingly, basic and diluted net loss per share for those periods are identical. See Note 24 “Earnings Per Share” for more details. Share-based payment We measure share-based compensation costs, in accordance with ASC Topic 718, “Compensation - Stock Compensation” (Topic 718) on the grant date, based on the calculated fair value of the award. We have elected to treat awards with graded vesting as a single award when estimating fair value. Compensation cost is recognized on a straight-line basis over the employee requisite service period, which in our circumstances is the stated vesting period of the award, provided that total compensation cost recognized at least equals the pro-rata value of the award that has vested. Compensation cost is initially based on the estimated number of options for which the requisite service is expected to be rendered. This estimate is adjusted in the period once actual forfeitures are known (see Note 13 “Share Capital, Option Plans and Share-based Payments” for more details). Accounting for Pensions, post-retirement and post-employment benefits Pension expense is accounted for in accordance with ASC Topic 715, “Compensation-Retirement Benefits” (Topic 715). Pension expense consists of actuarially computed costs of pension benefits in respect of the current year of service, imputed returns on plan assets (for funded plans), imputed interest on pension obligations and amortization of actuarial gain/loss. The expected costs of post-retirement benefits, other than pensions, are accrued in the Consolidated Financial Statements based upon actuarial methods and assumptions. The over-funded or under-funded status of defined benefit pension and other post-retirement plans are recognized as an asset or a liability (with the offset to “Accumulated other comprehensive income (loss)”, net of tax, within “Shareholders’ equity”), respectively, on the Consolidated Balance Sheets. Actuarial gains or losses in excess of the greater of (i) 10% of the projected benefit obligation, or (ii) 10% of the plan assets, are recognized as a component of “Other Comprehensive Income (Loss), net” and subsequently amortized as a component of net periodic benefit costs over the weighted average of future working life of the plan’s active employees. See Note 12 “Pension Plans and Other Post Retirement Benefits” for more details. Accounting Pronouncements Adopted in Fiscal 2023 Reference Rate Reform In March 2020, the Financial Accounting Standards Board (FASB) issued ASU No. 2020-04 “Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In Fiscal 2023, we adopted this ASU and applied the optional practical expedients relating to contract modifications as a result of the transition away from London Interbank Offer Rate (LIBOR). In the fourth quarter of Fiscal 2023, the Company’s debt instruments that referenced LIBOR were amended to replace the benchmark rate with the Secured Overnight Financing Rate (SOFR) in anticipation of the termination of published LIBOR rates. The adoption did not have a material impact on our Consolidated Financial Statements and related disclosures. See Note 11 “Long-Term Debt” for more details. 162 Table of Contents NOTE 3— REVENUES Disaggregation of Revenue We have four revenue streams: cloud services and subscriptions, customer support, license, and professional service and other. The following tables disaggregate our revenue by significant geographic area, based on the location of our direct end customer, by type of performance obligation and timing of revenue recognition for the periods indicated: Year Ended June 30, 2023 2022 2021 Total Revenues by Geography: Americas (1) $ 2,785,003 $ 2,187,629 $ 2,069,083 EMEA (2) 1,310,016 1,026,201 1,031,607 Asia Pacific (3) 389,961 280,014 285,425 Total revenues $ 4,484,980 $ 3,493,844 $ 3,386,115 Total Revenues by Type of Performance Obligation: Recurring revenues (4) Cloud services and subscriptions revenue $ 1,700,433 $ 1,535,017 $ 1,407,445 Customer support revenue 1,915,020 1,330,965 1,334,062 Total recurring revenues $ 3,615,453 $ 2,865,982 $ 2,741,507 License revenue (perpetual, term and subscriptions) 539,026 358,351 384,711 Professional service and other revenue 330,501 269,511 259,897 Total revenues $ 4,484,980 $ 3,493,844 $ 3,386,115 Total Revenues by Timing of Revenue Recognition: Point in time $ 539,026 $ 358,351 $ 384,711 Over time (including professional service and other revenue) $ 3,945,954 $ 3,135,493 $ 3,001,404 Total revenues $ 4,484,980 $ 3,493,844 $ 3,386,115 ___________________________ (1) Americas consists of countries in North, Central and South America. (2) EMEA consists of countries in Europe, the Middle East and Africa. (3) Asia Pacific primarily consists of Japan, Australia, China, Korea, Philippines, Singapore, India and New Zealand. (4) Recurring revenue is defined as the sum of Cloud services and subscriptions revenue and Customer support revenue. Contract Balances A contract asset, net of allowance for credit losses, will be recorded if we have recognized revenue but do not have an unconditional right to the related consideration from the customer. For example, this will be the case if implementation services offered in a cloud arrangement are identified as a separate performance obligation and are provided to a customer prior to us being able to bill the customer. In addition, a contract asset may arise in relation to subscription licenses if the license revenue that is recognized upfront exceeds the amount that we are able to invoice the customer at that time. Contract assets are reclassified to accounts receivable when the rights become unconditional. 163 Table of Contents The balance for our contract assets and contract liabilities (i.e., deferred revenues) for the periods indicated below were as follows: As of June 30, 2023 (1) As of June 30, 2022 Short-term contract assets $ 71,196 $ 26,167 Long-term contract assets $ 64,553 $ 19,719 Short-term deferred revenues $ 1,721,781 $ 902,202 Long-term deferred revenues $ 217,771 $ 91,144 _______________________________ (1) As of June 30, 2023, the deferred revenue and contract assets balances related to the Micro Focus Acquisition are $ 930.9 million and $ 87.7 million, respectively. The difference in the opening and closing balances of our contract assets and deferred revenues primarily results from the Micro Focus Acquisition and from the timing difference between our performance and customer payments. We fulfill our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. During the year ended June 30, 2023, we reclassified $ 61.9 million (year ended June 30, 2022 - $ 37.1 million) of contract assets to receivables as a result of the right to the transaction consideration becoming unconditional. During the year ended June 30, 2023, 2022 and 2021 respectively, there was no significant impairment loss recognized related to contract assets. We recognize deferred revenue when we have received consideration, or an amount of consideration is due from the customer for future obligations to transfer products or services. Our deferred revenues primarily relate to cloud services and customer support agreements which have been paid for by customers prior to the performance of those services. The amount of revenue that was recognized during the year ended June 30, 2023 that was included in the deferred revenue balances at June 30, 2022 was $ 887 million (year ended June 30, 2022 and 2021 —$ 843 million and $ 811 million, respectively). Incremental Costs of Obtaining a Contract with a Customer Incremental costs of obtaining a contract include only those costs that we incur to obtain a contract that we would not have incurred if the contract had not been obtained, such as sales commissions. The following table summarizes the changes in total capitalized costs to obtain a contract, since June 30, 2020: Capitalized costs to obtain a contract as of June 30, 2020 $ 61,163 New capitalized costs incurred 32,202 Amortization of capitalized costs ( 21,960 ) Adjustments on account of foreign exchange 1,495 Capitalized costs to obtain a contract as of June 30, 2021 72,900 New capitalized costs incurred 39,852 Amortization of capitalized costs ( 26,255 ) Adjustments on account of foreign exchange ( 3,935 ) Capitalized costs to obtain a contract as of June 30, 2022 82,562 New capitalized costs incurred 47,305 Amortization of capitalized costs ( 33,269 ) Impact of foreign exchange rate changes 609 Capitalized costs to obtain a contract as of June 30, 2023 $ 97,207 During the year ended June 30, 2023, 2022 and 2021 respectively, there was no significant impairment loss recognized related to capitalized costs to obtain a contract. Refer to Note 9 “Prepaid Expenses and Other Assets” for additional information on incremental costs of obtaining a contract. Transaction Price Allocated to the Remaining Performance Obligations As of June 30, 2023, approximately $ 2.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts. We expect to recognize approximately 47 % of this amount over the next 12 months and the remaining balance substantially over the next three years thereafter. We apply the practical expedient and do not disclose performance obligations that have original expected durations of one year or less. Refer to Note 2 “Accounting Policies and Recent Accounting Pronouncements” for additional information on our revenue policy. 164 Table of Contents NOTE 4— ALLOWANCE FOR CREDIT LOSSES The following illustrates the activity in our allowance for credit losses on accounts receivable: Balance as of June 30, 2020 $ 20,906 Adoption of ASC Topic 326 - cumulative effect 3,025 Credit loss expense 7,132 Write-off /adjustments ( 8,912 ) Balance as of June 30, 2021 $ 22,151 Credit loss expense (recovery) ( 1,913 ) Write-off /adjustments ( 3,765 ) Balance as of June 30, 2022 $ 16,473 Credit loss expense (recovery) ( 2,007 ) Write-off / adjustments ( 638 ) Balance as of June 30, 2023 $ 13,828 Included in accounts receivable are unbilled receivables in the amount of $ 66.5 million as of June 30, 2023 (June 30, 2022—$ 47.9 million). As of June 30, 2023, we have an allowance for credit losses of $ 0.3 million for contract assets (June 30, 2022—$ 0.7 million). For additional information on contract assets please see Note 3 “Revenues.” NOTE 5— PROPERTY AND EQUIPMENT As of June 30, 2023 Cost Accumulated Depreciation Net Computer hardware $ 386,400 $ ( 254,131 ) $ 132,269 Computer software 178,899 ( 135,123 ) 43,776 Capitalized software development costs 216,762 ( 122,730 ) 94,032 Leasehold improvements 123,607 ( 94,721 ) 28,886 Land and buildings 62,041 ( 18,020 ) 44,021 Furniture, equipment and other 55,741 ( 41,821 ) 13,920 Total $ 1,023,450 $ ( 666,546 ) $ 356,904 As of June 30, 2022 Cost Accumulated Depreciation Net Computer hardware $ 332,462 $ ( 226,341 ) $ 106,121 Computer software 142,094 ( 117,026 ) 25,068 Capitalized software development costs 149,053 ( 101,874 ) 47,179 Leasehold improvements 107,739 ( 86,514 ) 21,225 Land and buildings 49,011 ( 16,633 ) 32,378 Furniture, equipment and other 52,381 ( 39,643 ) 12,738 Total $ 832,740 $ ( 588,031 ) $ 244,709 165 Table of Contents NOTE 6— LEASES We enter into operating leases, both domestically and internationally, for certain facilities, automobiles, data centers and equipment for use in the ordinary course of business. The duration of the majority of these leases generally ranges from 1 to 10 years, some of which include options to extend for an additional 3 to 5 years after the initial term. Additionally, the land upon which our headquarters in Waterloo, Ontario, Canada is located is leased from the University of Waterloo for a period of 49 years beginning in December 2005, with an option to renew for an additional term of 49 years. Leases with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheets. As part of the Micro Focus Acquisition, we acquired $ 165.1 million of operating lease liabilities along with the respective right of use assets and $ 13.0 million of finance lease liabilities along with the respective finance lease receivable. The finance lease liabilities are comprised of equipment lease arrangements with an average duration of 4 to 5 years of which all are currently being sublet. The following illustrates the Consolidated Balance Sheets information related to leases: As of June 30, 2023 As of June 30, 2022 Operating Leases Balance Sheet Location Operating lease right of use assets Operating lease right of use assets $ 285,723 $ 198,132 Operating lease liabilities (current) Operating lease liabilities $ 91,425 $ 56,380 Operating lease liabilities (noncurrent) Long-term operating lease liabilities 271,579 198,695 Total operating lease liabilities $ 363,004 $ 255,075 Finance Leases Finance lease receivables (current) Prepaid expenses and other current assets $ 6,362 $ — Finance lease receivables (noncurrent) Other assets 5,515 — Total finance lease receivables $ 11,877 $ — Finance lease liabilities (current) Accounts payable and accrued liabilities $ 5,281 $ — Finance lease liabilities (noncurrent) Accrued liabilities 5,500 — Total finance lease liabilities $ 10,781 $ — The weighted average remaining lease term and discount rate for the periods indicated below were as follows: As of June 30, 2023 As of June 30, 2022 Weighted-average remaining lease term Operating leases 5.62 years 6.13 years Finance leases 2.40 years 0 years Weighted-average discount rate Operating leases 4.66 % 2.95 % Finance leases 5.60 % — % Lease Costs and Other Information The following illustrates the various components of lease costs for the period indicated: Year Ended June 30, 2023 2022 2021 Operating lease cost $ 72,977 $ 62,401 $ 63,068 Short-term lease cost 4,195 687 881 Variable lease cost 3,488 2,694 2,754 Sublease income ( 12,518 ) ( 10,008 ) ( 6,469 ) Total lease cost $ 68,142 $ 55,774 $ 60,234 166 Table of Contents Supplemental Cash Flow Information The following table presents supplemental information relating to cash flows arising from lease transactions. Cash payments made for variable lease costs and short-term leases are not included in the measurement of lease liabilities, and, as such, are excluded from the amounts below: Year Ended June 30, 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating leases $ 93,556 $ 70,611 $ 72,871 Finance leases $ 2,473 $ — $ — Right of use assets obtained in exchange for new lease liabilities: Operating leases (1) (2) (3) $ 29,551 $ 39,155 $ 82,718 ___________________________ (1) The year ended June 30, 2023 excludes the impact of $ 129.7 million of right of use assets obtained through the Micro Focus Acquisition. See Note 19 “Acquisitions” for further details including the finalization of the purchase price allocation for the Micro Focus Acquisition. (2) The year ended June 30, 2022 excludes the impact of $ 8.1 million of right of use assets obtained through the acquisition of Zix Corporation. See Note 19 “Acquisitions” for further details including expected finalization of preliminary purchase price allocation. (3) The year ended June 30, 2021 excludes the release of $ 22.6 million of lease liabilities relating to office space that was abandoned during the fourth quarter of Fiscal 2020 and was subsequently early terminated or assigned to a third party. These recoveries were recorded in “Special charges (recoveries)” in the Consolidated Statements of Income. Please see Note 18 “Special Charges (Recoveries).” Maturity of Lease Liabilities The following table presents the future minimum lease payments under our lease liabilities as of June 30, 2023: Fiscal years ending June 30, Operating Leases Finance Leases 2024 $ 105,685 $ 5,712 2025 83,123 3,370 2026 60,939 1,941 2027 50,605 459 2028 39,662 — Thereafter 71,380 — Total lease payments $ 411,394 $ 11,482 Less: Imputed interest ( 48,390 ) ( 701 ) Total $ 363,004 $ 10,781 Operating lease maturity amounts included in the table above do not include sublease income expected to be received under our various sublease agreements with third parties. Under the agreements initiated with third parties, we expect to receive sublease income of $ 12.8 million in Fiscal 2024 and $ 34.1 million thereafter. 167 Table of Contents NOTE 7— GOODWILL Goodwill is recorded when the consideration paid for an acquisition of a business exceeds the fair value of identifiable net tangible and intangible assets. The following table summarizes the changes in goodwill: Balance as of June 30, 2021 $ 4,691,673 Acquisition of Zix Corporation (Note 19) 581,032 Acquisition of Bricata Inc. (Note 19) 9,643 Impact of foreign exchange rate changes ( 37,695 ) Balance as of June 30, 2022 5,244,653 Acquisition of Micro Focus (Note 19) 3,417,635 Acquisition of Zix Corporation (Note 19) (1) 4,878 Impact of foreign exchange rate changes ( 4,563 ) Balance as of June 30, 2023 $ 8,662,603 ______________________ (1) Adjustments relating to open measurement period. NOTE 8— ACQUIRED INTANGIBLE ASSETS As of June 30, 2023 Cost Accumulated Amortization Net Technology assets (1) $ 1,815,260 $ ( 385,868 ) $ 1,429,392 Customer assets (1) 3,691,252 ( 1,039,765 ) 2,651,487 Total $ 5,506,512 $ ( 1,425,633 ) $ 4,080,879 As of June 30, 2022 Cost Accumulated Amortization Net Technology assets $ 999,032 $ ( 738,710 ) $ 260,322 Customer assets 1,595,219 ( 780,333 ) 814,886 Total $ 2,594,251 $ ( 1,519,043 ) $ 1,075,208 ______________________ (1) The balances as of June 30, 2023 include $ 1.4 billion of technology assets and $ 2.2 billion of customer assets acquired through the Micro Focus Acquisition. See Note 19 “Acquisitions” for further details including the finalization of the purchase price allocation for the Micro Focus Acquisition. Where applicable, the above balances as of June 30, 2023 have been reduced to reflect the impact of intangible assets where the gross cost has become fully amortized during the year ended June 30, 2023. The impact of this resulted in a reduction of $ 578 million to technology assets and accumulated amortization and $ 69 million to customer assets and accumulated amortization. The weighted average amortization periods for acquired technology and customer intangible assets are approximately six years and eight years , respectively. The following table shows the estimated future amortization expense for the fiscal years indicated. This calculation assumes no future adjustments to acquired intangible assets: Fiscal years ending June 30, 2024 $ 753,128 2025 642,147 2026 598,872 2027 528,820 2028 505,047 2029 and Thereafter 1,052,865 Total $ 4,080,879 168 Table of Contents NOTE 9— PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other current assets: As of June 30, 2023 As of June 30, 2022 Deposits and restricted cash $ 2,621 $ 6,300 Capitalized costs to obtain a contract 39,685 27,077 Short-term prepaid expenses and other current assets 175,879 87,175 Derivative asset (1) 3,547 — Total $ 221,732 $ 120,552 ______________________________ (1) Represents the asset related to our derivative instrument activity (see Note 17 “Derivative Instruments and Hedging Activities”). Other assets: As of June 30, 2023 As of June 30, 2022 Deposits and restricted cash $ 20,418 $ 6,462 Capitalized costs to obtain a contract 57,522 55,484 Investments 147,974 173,205 Available-for-sale financial assets 39,858 — Long-term prepaid expenses and other long-term assets 76,546 21,836 Total $ 342,318 $ 256,987 Deposits and restricted cash primarily relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of certain contractual-based agreements. Capitalized costs to obtain a contract relate to incremental costs of obtaining a contract, such as sales commissions, which are eligible for capitalization on contracts to the extent that such costs are expected to be recovered (see Note 3 “Revenues”). Investments relate to certain investment funds in which we are a limited partner. Our interests in each of these investees range from 4 % to below 20 %. These investments are accounted for using the equity method. Our share of net income or losses based on our interest in these investments, which approximates fair value and subject to volatility based on market trends and business conditions, is recorded as a component of Other income (expense), net in our Consolidated Statements of Income (see Note 23 “Other Income (Expense), Net”). During the year ended June 30, 2023, our share of income (loss) from these investments was $( 23.1 ) million (year ended June 30, 2022 and 2021 — $ 58.7 million and $ 62.9 million, respectively). As part of the Micro Focus Acquisition, we acquired the rights to certain available-for-sale financial assets. A portion of the available-for-sale financial assets relate to contractual arrangements under insurance policies held by the Company with guaranteed interest rates that are utilized to meet certain pension and post retirement obligations but do not meet the definition of a plan asset. The remaining portion of available-for-sale financial assets are primarily comprised of various debt and equity funds, which are valued utilizing market quotes provided by our third-party custodian. These arrangements are treated as available-for-sale financial assets measured at fair value quarterly (see Note 16 “Fair Value Measurement”) with unrealized gains and losses recorded within “Other Comprehensive Income (Loss) Net” (see Note 20 “Accumulated Other Comprehensive Income (Loss)”). Prepaid expenses and other assets, both short-term and long-term, include advance payments on licenses that are being amortized over the applicable terms of the licenses and other miscellaneous assets. 169 Table of Contents NOTE 10— ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities: As of June 30, 2023 As of June 30, 2022 Accounts payable—trade $ 162,720 $ 113,978 Accrued salaries, incentives and commissions 333,543 193,421 Accrued liabilities 239,817 80,672 Accrued sales and other tax liabilities 25,439 20,423 Derivative liability (1) 161,191 892 Accrued interest on long-term debt 37,563 31,813 Amounts payable in respect of restructuring and other special charges 30,073 3,589 Asset retirement obligations 5,915 3,819 Total $ 996,261 $ 448,607 ______________________________ (1) Represents the liability related to our derivative instrument activity (see Note 17 “Derivative Instruments and Hedging Activities”) . Long-term accrued liabilities: As of June 30, 2023 As of June 30, 2022 Amounts payable in respect of restructuring and other special charges $ 8,875 $ 5,702 Other accrued liabilities 17,749 563 Asset retirement obligations 25,337 11,943 Total $ 51,961 $ 18,208 Asset retirement obligations We are required to return certain of our leased facilities to their original state at the conclusion of our lease. As of June 30, 2023, the present value of this obligation was $ 31.3 million (June 30, 2022—$ 15.8 million), with an undiscounted value of $ 35.0 million (June 30, 2022—$ 16.4 million). As of June 30, 2023, the present value of this obligation and the undiscounted value related to the Micro Focus Acquisition was $ 11.8 million and $ 14.1 million, respectively. 170 Table of Contents NOTE 11— LONG-TERM DEBT As of June 30, 2023 As of June 30, 2022 Total debt Senior Notes 2031 $ 650,000 $ 650,000 Senior Notes 2030 900,000 900,000 Senior Notes 2029 850,000 850,000 Senior Notes 2028 900,000 900,000 Senior Secured Notes 2027 1,000,000 — Term Loan B 947,500 957,500 Acquisition Term Loan 3,567,075 — Revolver 275,000 — Total principal payments due 9,089,575 4,257,500 Unamortized debt discount and issuance costs (1) ( 206,629 ) ( 37,933 ) Total amount outstanding 8,882,946 4,219,567 Less: Current portion of long-term debt Term Loan B 10,000 10,000 Acquisition Term Loan 35,850 — Revolver 275,000 — Total current portion of long-term debt 320,850 10,000 Non-current portion of long-term debt $ 8,562,096 $ 4,209,567 ___________________________ (1) During the year ended June 30, 2023, we recorded $ 185.6 million of debt discount and issuance costs, relating to the issuance of Senior Secured Notes 2027 and Acquisition Term Loan. Included in this amount was $ 107.6 million of original issue discount fees related to the Acquisition Term Loan. Senior Unsecured Fixed Rate Notes Senior Notes 2031 On November 24, 2021, OpenText Holdings, Inc. a wholly-owned indirect subsidiary of the Company, issued $ 650 million in aggregate principal amount of 4.125 % Senior Notes due 2031 guaranteed by the Company (Senior Notes 2031) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (Securities Act), and to certain non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes 2031 bear interest at a rate of 4.125 % per annum, payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2022. Senior Notes 2031 will mature on December 1, 2031, unless earlier redeemed, in accordance with their terms, or repurchased. For the year ended June 30, 2023, we recorded interest expense of $ 26.8 million relating to Senior Notes 2031 (year ended June 30, 2022 and 2021—$ 16.1 million and nil , respectively) Senior Notes 2030 On February 18, 2020, OpenText Holdings, Inc. a wholly-owned indirect subsidiary of the Company, issued $ 900 million in aggregate principal amount of 4.125 % Senior Notes due 2030 guaranteed by the Company (Senior Notes 2030) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes 2030 bear interest at a rate of 4.125 % per annum, payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2020. Senior Notes 2030 will mature on February 15, 2030, unless earlier redeemed, in accordance with their terms, or repurchased. For the year ended June 30, 2023, we recorded interest expense of $ 37.1 million relating to Senior Notes 2030 (year ended June 30, 2022 and 2021—$ 37.1 million and $ 37.0 million, respectively). 171 Table of Contents Senior Notes 2029 On November 24, 2021, we issued $ 850 million in aggregate principal amount of 3.875 % Senior Notes due 2029 (Senior Notes 2029) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes 2029 bear interest at a rate of 3.875 % per annum, payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2022. Senior Notes 2029 will mature on December 1, 2029, unless earlier redeemed, in accordance with their terms, or repurchased. For the year ended June 30, 2023, we recorded interest expense of $ 32.9 million relating to Senior Notes 2029 (year ended June 30, 2022 and 2021—$ 19.8 million and nil , respectively). Senior Notes 2028 On February 18, 2020, we issued $ 900 million in aggregate principal amount of 3.875 % Senior Notes due 2028 (Senior Notes 2028, and together with the Senior Notes 2031, Senior Notes 2030, Senior Notes 2029, and Senior Notes 2027, the Senior Notes) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes 2028 bear interest at a rate of 3.875 % per annum, payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2020. Senior Notes 2028 will mature on February 15, 2028, unless earlier redeemed, in accordance with their terms, or repurchased. For the year ended June 30, 2023, we recorded interest expense of $ 34.9 million relating to Senior Notes 2028 (year ended June 30, 2022 and 2021—$ 34.9 million and $ 34.8 million, respectively). Senior Notes 2026 On May 31, 2016, we issued $ 600 million in aggregate principal amount of 5.875 % Senior Notes due 2026 (Senior Notes 2026) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes 2026 had interest at a rate of 5.875 % per annum, payable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2016. Senior Notes 2026 would have matured on June 1, 2026. On December 20, 2016, we issued an additional $ 250 million in aggregate principal amount by reopening our Senior Notes 2026 at an issue price of 102.75 %. The additional notes had identical terms, were fungible with and were a part of a single series with the previously issued $ 600 million aggregate principal amount of Senior Notes 2026. The outstanding aggregate principal amount of Senior Notes 2026, after taking into consideration the additional issuance, was $ 850 million as of December 9, 2021. On December 9, 2021, we redeemed Senior Notes 2026 in full at a price equal to 102.9375 % of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date. A portion of the net proceeds from the offerings of Senior Notes 2029 and Senior Notes 2031 was used to redeem Senior Notes 2026. Upon redemption, Senior Notes 2026 were cancelled and any obligation thereunder was extinguished. The resulting loss of $ 27.4 million, consisting of $ 25.0 million relating to the early termination call premium, $ 6.2 million relating to unamortized debt issuance costs and $( 3.8 ) million relating to unamortized premium, has been recorded as a component of Other income (expense), net in our Consolidated Statements of Income. See Note 23 “Other Income (Expense), Net.” For the year ended June 30, 2023, we did not record any interest expense relating to Senior Notes 2026 (year ended June 30, 2022 and 2021—$ 21.9 million and $ 49.9 million, respectively). Senior Secured Fixed Rate Notes Senior Secured Notes 2027 On December 1, 2022, we issued $ 1 billion in aggregate principal amount of Senior Secured Notes 2027 in connection with the financing of the Micro Focus Acquisition in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Secured Notes 2027 bear interest at a rate of 6.90 % per annum, payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2023. Senior Secured Notes 2027 will mature on December 1, 2027, unless earlier redeemed, in accordance with their terms, or repurchased. 172 Table of Contents The Senior Secured Notes 2027 are guaranteed on a senior secured basis by certain of the Company’s subsidiaries, and are secured with the same priority as the Company’s senior credit facilities. The Senior Secured Notes 2027 and the related guarantees are effectively senior to all of the Company’s and the guarantors’ senior unsecured debt to the extent of the value of the Collateral (as defined in the 2027 Indenture) and are structurally subordinated to all existing and future liabilities of each of the Company’s existing and future subsidiaries that do not guarantee the Senior Secured Notes 2027. As of June 30, 2023, the Senior Secured Notes 2027 bear an effective interest rate of 7.39 %. The effective interest rate includes interest expense of $ 40.3 million and amortization of debt discount and issuance costs of $ 1.5 million. For the year ended June 30, 2023, we recorded interest expense of $ 40.3 million, relating to Senior Secured Notes 2027 (year ended June 30, 2022 and 2021— nil , respectively). Term Loan B On May 30, 2018, we refinanced our existing term loan facility, by entering into a new $ 1 billion term loan facility (Term Loan B), whereby we borrowed $ 1 billion on that day and repaid in full the loans under our prior $ 800 million term loan facility originally entered into on January 16, 2014. Borrowings under Term Loan B are secured by a first charge over substantially all of our assets on a pari passu basis with the Revolver (as defined below), Acquisition Term Loan (as defined below) and Senior Secured Notes 2027. On June 6, 2023, we amended the Term Loan B to replace the LIBOR benchmark rate applicable to borrowings under Term Loan B with a SOFR benchmark rate. Term Loan B has a seven-year term, maturing in May 2025, and repayments made under Term Loan B are equal to 0.25 % of the principal amount in equal quarterly installments for the life of Term Loan B, with the remainder due at maturity. Borrowings under the Term Loan B currently bear a floating rate of interest equal to Term SOFR plus the SOFR Adjustment (as defined in the Term Loan B) and applicable margin of 1.75 %. As of June 30, 2023, the outstanding balance on the Term Loan B bears an interest rate of 6.90 %. As of June 30, 2023, the Term Loan B bears an effective interest rate of 7.19 %. The effective interest rate includes interest expense of $ 54.0 million and amortization of debt discount and issuance costs of $ 1.6 million. Under Term Loan B, we must maintain a “consolidated net leverage” ratio of no more than 4.00 :1.00 at the end of each financial quarter. Consolidated net leverage ratio is defined for this purpose as the proportion of our total debt reduced by unrestricted cash, including guarantees and letters of credit, over our trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges. As of June 30, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.49 :1.00. For the year ended June 30, 2023, we recorded interest expense of $ 54.0 million relating to Term Loan B (year ended June 30, 2022 and 2021—$ 19.7 million and $ 18.6 million, respectively). Revolver On October 31, 2019, we amended our committed revolving credit facility (the Revolver) to increase the total commitments under the Revolver from $ 450 million to $ 750 million as well as to extend the maturity from May 5, 2022 to October 31, 2024. Borrowings under the Revolver are secured by a first charge over substantially all of our assets, on a pari passu basis with Term Loan B, the Acquisition Term Loan and Senior Secured Notes 2027. On June 6, 2023, we entered into an amendment to replace the LIBOR benchmark rate applicable to borrowings under the Revolver with a SOFR benchmark rate. The Revolver has no fixed repayment date prior to the end of the term. Borrowings under the Revolver currently bear interest per annum at a floating rate of interest equal to Term SOFR plus the SOFR Adjustment (as defined in the Revolver) and a fixed margin dependent on our consolidated net leverage ratio ranging from 1.25 % to 1.75 %. As of June 30, 2023, the outstanding balance on the Revolver bears an interest rate of 6.91 %. As of June 30, 2023, we had $ 275 million outstanding balance under the Revolver (June 30, 2022— nil ). For the year ended June 30, 2023, we recorded interest expense of $ 10.1 million relating to the Revolver (year ended June 30, 2022 and 2021— nil and $ 3.6 million, respectively, relating to amounts previously drawn). In July 2023, the Company subsequently repaid $ 175 million drawn under the Revolver. Acquisition Term Loan On December 1, 2022, we amended our first lien term loan facility (the Acquisition Term Loan), dated as of August 25, 2022, to increase the aggregate commitments under the senior secured delayed-draw term loan facility from an aggregate principal amount of $ 2.585 billion to an aggregate principal amount of $ 3.585 billion. During the third quarter of Fiscal 2023, the Company drew down $ 3.585 billion from the Acquisition Term Loan, net of original issuance discount of 3 % and other fees (see Note 19 “Acquisitions” for more details). 173 Table of Contents The Acquisition Term Loan has a seven-year term from the date of funding, and repayments under the Acquisition Term Loan are equal to 0.25 % of the principal amount in equal quarterly installments for the life of the Acquisition Term Loan, with the remainder due at maturity. Borrowings under the Acquisition Term Loan currently bear a floating rate of interest equal to Term SOFR plus the SOFR Adjustment (as defined in the Acquisition Term Loan) and applicable margin of 3.50 %. As of June 30, 2023, the outstanding balance on the Acquisition Term Loan bears an interest rate of 8.75 %. As of June 30, 2023, the Acquisition Term Loan bears an effective interest rate of 9.85 %. The effective interest rate includes interest expense of $ 125.7 million and amortization of debt discount and issuance costs of $ 9.3 million. The Acquisition Term Loan has incremental facility capacity of (i) $ 250 million plus (ii) additional amounts, subject to meeting a “consolidated senior secured net leverage” ratio not exceeding 2.75 :1.00, in each case subject to certain conditions. Consolidated senior secured net leverage ratio is defined for this purpose as the proportion of the Company’s total debt reduced by unrestricted cash, including guarantees and letters of credit, that is secured by the Company’s or any of the Company’s subsidiaries’ assets, over the Company’s trailing four financial quarter net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges. Under the Acquisition Term Loan, we must maintain a “consolidated net leverage” ratio of no more than 4.50 :1.00 at the end of each financial quarter. Consolidated net leverage ratio is defined for this purpose as the proportion of the Company’s total debt reduced by unrestricted cash, including guarantees and letters of credit, over the Company’s trailing four financial quarter net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges as defined in the Acquisition Term Loan. As of June 30, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.49 :1.00. The Acquisition Term Loan is unconditionally guaranteed by certain subsidiary guarantors, as defined in the Acquisition Term Loan, and is secured by a first charge on substantially all of the assets of the Company and the subsidiary guarantors on a pari passu basis with the Revolver, Term Loan B and the Senior Secured Notes 2027. For the year ended June 30, 2023, we recorded interest expense of $ 125.7 million relating to the Acquisition Term Loan (year ended June 30, 2022 and 2021— nil , respectively). Bridge Loan On August 25, 2022, we entered into a bridge loan agreement (Bridge Loan) which provided for commitments of up to $ 2.0 billion to finance a portion of the repayment of Micro Focus’ existing debt. On December 1, 2022, we entered into an amendment to the Bridge Loan that reallocated commitments under the Bridge Loan to the Acquisition Term Loan. In connection with the amendment to the Bridge Loan and the receipt of proceeds from the issuance of the Senior Secured Notes 2027, all remaining commitments under the Bridge Loan were reduced to zero and the Bridge Loan was terminated, which resulted in a loss on debt extinguishment of $ 8.2 million relating to unamortized debt issuance costs (see Note 22 “Other Income (Expense), Net” for more details) . For the year ended June 30, 2023, we did not have any borrowings or record any interest expense relating to the Bridge Loan (year ended June 30, 2022— nil ). Debt Issuance Costs Debt issuance costs relate primarily to costs incurred for the purpose of obtaining our credit facilities and issuing our Senior Notes and are being amortized through interest expense over the respective terms of the Senior Notes, Term Loan B and Acquisition Term Loan using the effective interest method and straight-line method for the Revolver. 174 Table of Contents NOTE 12— PENSION PLANS AND OTHER POST RETIREMENT BENEFITS Defined Benefit Plans The Company has 52 pension and other post retirement plans in multiple countries, including 38 defined benefit and other post retirement benefit plans which were assumed as part of the Micro Focus Acquisition (see Note 19 “Acquisitions” for more details). All of our pension and other post retirement plans are located outside of Canada and the United States. The plans are primarily located in Germany, which, as of June 30, 2023, make up approximately 64 % of the total net benefit pension obligations. Our defined benefit pension plans include a mix of final salary type plans which provide for retirement, old age, disability and survivor’s benefits. Final salary type pension plans provide benefits to members either in the form of a lump sum payment or a guaranteed level of pension payable for life in the case of retirement, disability and death. Benefits under our final salary type plans are generally based on the participant’s age, compensation and years of service as well as the social security ceiling and other factors. Many of these plans are closed to new members. The net periodic costs of these plans are determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. Other post-retirement plans include statutory plans that offer termination, indemnity or other end of service benefits. Many of these plans were assumed through our acquisitions or are required by local regulatory and statutory requirements. All of our defined benefit and other post retirement plans are included in the aggregate projected benefit obligation within “Pension liability” on our Consolidated Balance Sheets. The Company does not intend to make any cash contributions to any defined benefit pension or post-retirement plans unless required by the local regulatory or statutory requirements. For the year ended June 30, 2023, we made cash contributions of $ 6.5 million (year ended June 30, 2022 and 2021—$ 3.7 million and $ 2.6 million, respectively). For Fiscal 2024, we expect to make cash contributions of $ 9.7 million to our defined benefit plans. As part of the Micro Focus Acquisition (see Note 19 “Acquisitions” for more details), we assumed a total of 38 defined benefit plans, all located outside of Canada and the United States. As of June 30, 2023, these assumed plans carried a net liability of $ 56.6 million and are funded at 73 % of the defined benefit obligations. Plan assets that partially fund these assumed defined benefit obligations are primarily classified within Level 1 and Level 2 of the fair value hierarchy and consist primarily of investments in equity and debt funds. Plan assets exclude insurance contracts with guaranteed interest rates classified as Level 3 available-for-sale financial assets of $ 24.6 million that do not meet the definition of a qualifying insurance policy, as they have not been pledged to the defined benefit and other post retirement plans (see Note 16 “Fair Value Measurement” for more details). As of June 30, 2023, the fair value of these acquired plan assets was $ 155.3 million. The following tables provides the details of the funded status of our defined benefit pension and other post-retirement plans: As of June 30, 2023 As of June 30, 2022 Plan assets $ 208,363 $ 52,111 Projected benefit obligations ( 339,179 ) ( 115,591 ) Funded status $ ( 130,816 ) $ ( 63,480 ) The following tables provides details of the net benefit obligations of our defined benefit pension and other post-retirement plans: As of June 30, 2023 As of June 30, 2022 Current portion of benefit obligation (1) $ 4,504 $ 2,529 Non-current portion of benefit obligation 126,312 60,951 Total $ 130,816 $ 63,480 ____________________________ (1) The current portion of the benefit obligation has been included within “Accrued salaries, incentives and commissions,” all within “Accounts payable and accrued liabilities” in the Consolidated Balance Sheets (see Note 10 “Accounts Payable and Accrued Liabilities”). 175 Table of Contents The following tables provides the details of the change in the benefit obligation and plan assets for the periods indicated: As of June 30, 2023 As of June 30, 2022 Benefit obligation—beginning of fiscal year $ 115,591 $ 141,698 Service cost 6,921 4,404 Interest cost 7,091 2,271 Benefits paid ( 3,293 ) ( 5,079 ) Company contributions 20 2 Employee contributions 1,393 50 Plan settlement ( 2,789 ) — Plan amendment ( 221 ) — Net transfers 205,556 — Actuarial (gain) loss 6,199 ( 19,649 ) Foreign exchange (gain) loss 2,711 ( 8,106 ) Benefit obligation—end of period 339,179 115,591 Less: Current portion 4,504 2,529 Non-current portion of benefit obligation $ 334,675 $ 113,062 As of June 30, 2023 As of June 30, 2022 Plan assets—beginning of fiscal year $ 52,111 $ 60,379 Benefit payments from plan assets ( 325 ) ( 2,436 ) Expected return on plan assets 5,502 1,299 Return on plan assets ( 3,174 ) ( 7,859 ) Company contributions 3,522 1,034 Employee contributions 1,515 50 Net transfers 150,058 — Plan Settlement ( 2,789 ) — Foreign exchange (gain) loss 1,943 ( 356 ) Plan assets—end of period $ 208,363 $ 52,111 The following table provides details of net pension expense for the periods indicated: Year Ended June 30, Pension expense: 2023 2022 2021 Service cost $ 6,921 $ 4,404 $ 3,693 Interest cost 7,091 2,271 1,733 Expected return of plan assets ( 5,502 ) ( 1,299 ) ( 214 ) Amortization of actuarial (gains) losses 246 1,008 1,399 Settlement cost 451 — — Net pension expense $ 9,207 $ 6,384 $ 6,611 Service-related net periodic pension costs are recorded within operating expense and all other non-service related net periodic pension costs are classified under “Interest and other related expense, net” on our Consolidated Statements of Income. The following table provides details of amounts recognized in Other Comprehensive Income: Year Ended June 30, 2023 2022 2021 Net actuarial gain (loss) $ ( 9,017 ) $ 7,461 $ 4,978 Amortization of actuarial loss (gain) 246 1,008 1,399 Settlement cost and plan amendments 673 — — Total recognized in other comprehensive income $ ( 8,098 ) $ 8,469 $ 6,377 176 Table of Contents The following table provides details of the plan assets measured at fair value presented by asset category and fair value hierarchy for the periods indicated: As of June 30, 2023 As of June 30, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash $ 2,924 $ — $ — $ 2,924 $ 2 $ — $ — $ 2 Debt funds 73,053 14,765 — 87,818 15,869 — — 15,869 Equity funds 66,975 5,745 — 72,720 10,414 — — 10,414 Real estate funds 235 72 6,420 6,727 — — — — Other 9,497 26,625 2,052 38,174 — 24,805 1,021 25,826 Total $ 152,684 $ 47,207 $ 8,472 $ 208,363 $ 26,285 $ 24,805 $ 1,021 $ 52,111 The Company’s investment objective with respect to its defined benefit plan assets is to achieve an optimal rate of return over the long term while managing an appropriate level of risk to meet adequate future benefit obligations. Plan assets are managed by investment fiduciaries that determine the appropriate asset allocation, risk tolerance, fund diversification and investment strategies to achieve the long term investment objectives of the plan assets. In determining the fair value of the defined benefit obligations as of June 30, 2023 and 2022, we used the following weighted-average key assumptions: Year Ended June 30, 2023 2022 Assumptions: Salary increases 2.9 % 2.7 % Pension increases 2.1 % 2.0 % Discount rate 3.9 % 3.6 % Expected return on plan assets 5.8 % 3.3 % Normal retirement age 64 65 Anticipated pension payments under the defined benefit plans for the fiscal years indicated below are as follows: Fiscal years ending June 30, 2024 $ 13,115 2025 13,221 2026 14,258 2027 16,146 2028 17,745 2029 to 2033 102,196 Total $ 176,681 Defined Contribution Plans The Company has various defined contribution retirement plans around the world covering many of its employees. Under these plans, employees can contribute a portion of their salary to the plan and the Company makes minimum non-elective contributions, discretionary contributions, and matching contributions, depending on the terms of the specific plan. The majority of the plans are primarily located in Canada, the United States, the United Kingdom and Germany. For the year ended June 30, 2023, we made contributions of $ 40.0 million relating to the defined contribution retirement plans (year ended June 30, 2022 and 2021—$ 24.0 million and $ 16.4 million, respectively). NOTE 13— SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS Cash Dividends For the year ended June 30, 2023, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $ 0.9720 per Common Share in the aggregate amount of $ 259.5 million, which we paid during the same period (year ended June 30, 2022 and 2021—$ 0.8836 and $ 0.7770 per Common Share, respectively, in the aggregate amount of $ 237.7 million and $ 210.7 million, respectively). 177 Table of Contents Share Capital Our authorized share capital includes an unlimited number of Common Shares and an unlimited number of Preference Shares. No Preference Shares have been issued. Treasury Stock From time to time we may provide funds to an independent agent to facilitate repurchases of our Common Shares in connection with the settlement of awards under the Long-Term Incentive Plans (LTIP) or other plans. During the year ended June 30, 2023, we repurchased 521,136 Common Shares on the open market at a cost of $ 21.9 million for potential settlement of awards under “Long-Term Incentive Plans” and “Restricted Share Units” or other plans as described below (year ended June 30, 2022 and 2021— 2,630,000 and 1,455,088 Common Shares, respectively, at a cost of $ 111.6 million and $ 64.8 million, respectively). During the year ended June 30, 2023, we delivered to eligible participants 691,181 Common Shares that were purchased in the open market in connection with the settlement of awards and other plans (year ended June 30, 2022 and 2021— 491,244 and 509,721 Common Shares, respectively). Share Repurchase Plan On November 4, 2021, the Board authorized a share repurchase plan (Fiscal 2022 Repurchase Plan), pursuant to which we were authorized to purchase in open market transactions, from time to time over the 12-month period commencing November 12, 2021, up to an aggregate of $ 350 million of our Common Shares. During the year ended June 30, 2023, we did not repurchase and cancel any Common Shares (year ended June 30, 2022— 3,809,559 Common Shares for $ 177.0 million). Share-Based Payments Share-based compensation expense for the periods indicated below is detailed as follows: Year Ended June 30, 2023 2022 2021 Stock options $ 20,144 $ 17,091 $ 15,639 Performance Share Units (issued under LTIP) 18,631 13,844 9,898 Restricted Share Units (issued under LTIP) 9,762 7,799 7,358 Restricted Share Units (other) 72,149 20,859 10,561 Deferred Share Units (directors) 4,036 3,993 3,396 Employee Stock Purchase Plan 5,580 5,970 5,117 Total share-based compensation expense $ 130,302 $ 69,556 $ 51,969 No cash was used by us to settle equity instruments granted under share-based compensation arrangements in any of the periods presented. We have not capitalized any share-based compensation costs as part of the cost of an asset in any of the periods presented. A summary of unrecognized compensation cost for unvested shared-based payment awards is as follows: As of June 30, 2023 Unrecognized Compensation Cost Weighted Average Recognition Period (years) Stock Options (issued under Stock Option Plans) $ 47,731 2.5 Performance Share Units (issued under LTIP) 27,797 1.8 Restricted Share Units (issued under LTIP) 14,038 1.9 Restricted Share Units (other) 108,956 1.5 Total unrecognized share-based compensation cost $ 198,522 178 Table of Contents Stock Option Plans A summary of stock options outstanding under our 2004 Stock Option Plan is set forth below. 2004 Stock Option Plan Date of inception Oct-04 Eligibility Eligible employees, as determined by the Board of Directors Options granted to date 45,866,567 Options exercised to date ( 21,993,009 ) Options cancelled to date ( 11,654,119 ) Options outstanding 12,219,439 Options available for issuance 5,950,832 Termination grace periods Immediately “for cause”; 90 days for any other reason; 180 days due to death Vesting schedule 25 % per year, unless otherwise specified Exercise price range $ 26.81 - $ 52.62 Expiration dates 7/29/2023 - 5/08/2030 Our stock options generally vest over four years and expire between seven and ten years from the date of the grant. Currently we also have options outstanding that vest over five years , as well as options outstanding that vest based on meeting certain market conditions. The exercise price of all our options is set at an amount that is not less than the closing price of our Common Shares on the NASDAQ on the trading day immediately preceding the applicable grant date. We estimate the fair value of stock options using the Black-Scholes option-pricing model or, where appropriate, the Monte Carlo pricing model, consistent with the provisions of ASC Topic 718, “Compensation—Stock Compensation” (Topic 718) and SEC Staff Accounting Bulletin No. 107. The option-pricing models require input of subjective assumptions, including the estimated life of the option and the expected volatility of the underlying stock over the estimated life of the option. We use historical volatility as a basis for projecting the expected volatility of the underlying stock and estimate the expected life of our stock options based upon historical data. We believe that the valuation techniques and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair value of our stock option grants. Estimates of fair value are not intended, however, to predict actual future events or the value ultimately realized by employees who receive equity awards. A summary of activity under our stock option plans for the year ended June 30, 2023 is as follows: Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($’000’s) Outstanding at June 30, 2022 8,820,662 $ 42.74 4.68 $ 7,111 Granted 4,964,650 31.29 Exercised ( 245,235 ) 31.93 Forfeited or expired ( 1,320,638 ) 41.52 Outstanding at June 30, 2023 12,219,439 $ 38.44 4.68 $ 62,473 Exercisable at June 30, 2023 4,292,254 $ 39.30 3.09 $ 16,497 179 Table of Contents For the periods indicated, the weighted-average fair value of options and weighted-average assumptions estimated under the Black-Scholes option-pricing model were as follows: Year Ended June 30, 2023 2022 2021 Weighted–average fair value of options granted $ 6.75 $ 9.02 $ 8.45 Weighted-average assumptions used: Expected volatility 28.73 % 26.39 % 26.26 % Risk–free interest rate 3.98 % 1.15 % 0.24 % Expected dividend yield 3.07 % 1.78 % 1.55 % Expected life (in years) 4.20 4.15 4.59 Forfeiture rate (based on historical rates) 7 % 7 % 7 % Average exercise share price $ 31.13 $ 48.20 $ 45.76 Performance Options During the year ended June 30, 2023, we granted 1,000,000 performance options (year ended June 30, 2022 and 2021— nil and 750,000 performance options, respectively). For the periods in which performance options were granted, as indicated, the weighted-average fair value of performance options and weighted-average assumptions estimated under the Monte Carlo pricing model were as follows: Year Ended June 30, 2023 2022 2021 Weighted–average fair value of options granted $ 8.09 $ — $ 10.18 Derived service period (in years) 1.70 0.00 1.80 Weighted-average assumptions used: Expected volatility 26.00 % — % 28.00 % Risk–free interest rate 3.21 % — % 0.42 % Expected dividend yield 2.00 % — % 1.70 % Average exercise share price $ 31.89 $ — $ 45.81 Summary of Stock Options and Performance Options The aggregate intrinsic value of options exercised during the year ended June 30, 2023 was $ 1.8 million (year ended June 30, 2022 and 2021—$ 17.0 million and $ 25.0 million, respectively). For the year ended June 30, 2023, cash in the amount of $ 7.8 million was received as the result of the exercise of options granted under share-based payment arrangements (year ended June 30, 2022 and 2021—$ 32.7 million and $ 49.6 million, respectively). The tax benefit realized by us during the year ended June 30, 2023 from the exercise of options eligible for a tax deduction was $ 0.3 million (year ended June 30, 2022 and 2021—$ 2.8 million and $ 2.3 million, respectively). Long-Term Incentive Plans We incentivize certain eligible employees, in part, with long-term compensation pursuant to our LTIP. The LTIP is a rolling three-year program that grants eligible employees a certain number of target Performance Share Units (PSUs) and/or Restricted Share Units (RSUs). Target PSUs become vested upon the achievement of certain financial and/or operational performance criteria (the Performance Conditions) that are determined at the time of the grant. RSUs become vested when an eligible employee remains employed throughout the vesting period. For the year ended June 30, 2023, we settled LTIP awards that vested by delivering to eligible participants 290,971 Common Shares that were purchased in the open market at a cost of $ 12.7 million. PSUs and RSUs granted under the LTIP have been measured at fair value as of the effective date, consistent with ASC Topic 718, and will be charged to share-based compensation expense over the remaining life of the plan. We estimate the fair value of PSUs using the Monte Carlo pricing model and RSUs have been valued based upon their grant date fair value. Beginning in Fiscal 2023 certain PSU and RSU grants were eligible to receive dividend equivalent units that vest under the same conditions as the underlying grants. 180 Table of Contents Performance Share Units (Issued Under LTIP) A summary of activity under our performance share units issued under long-term incentive plans for the year ended June 30, 2023 is as follows: Units Weighted-Average Grant Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($’000’s) Outstanding at June 30, 2022 812,937 $ 61.29 1.89 $ 30,762 Granted (1) 539,911 54.38 Vested (1) ( 224,593 ) 41.75 Forfeited or expired ( 114,870 ) 62.80 Outstanding at June 30, 2023 1,013,385 $ 61.64 1.75 $ 42,106 __________________________ (1) Performance share units are earned based on market conditions and the actual number of performance units earned, if any, is dependent upon performance and may range from 0 to 200 percent. For the periods indicated, the weighted-average fair value of PSUs issued under LTIP, and weighted-average assumptions estimated under the Monte Carlo pricing model were as follows: Year Ended June 30, 2023 2022 2021 Weighted–average fair value of performance share units granted $ 43.10 - $ 55.06 $ 69.78 - $ 75.15 $ 44.56 - $ 61.67 Weighted-average assumptions used: Expected volatility 29.00 % 28.00 % 28.00 % Risk–free interest rate 3.13 % - 3.39 % 0.45 % - 0.71 % 0.15 % - 0.24 % Expected dividend yield 0.0 % 1.7 % - 1.8 % 1.7 % Expected life (in years) 3.11 3.10 3.09 Forfeiture rate (based on historical rates) 7 % 7 % 7 % Weighted–average fair value of performance share units vested $ 41.75 $ 30.39 $ 25.76 Aggregate intrinsic value of performance share units vested ($ in ‘000’s) $ 6,216 $ 10,370 $ 4,286 Restricted Share Units (Issued Under LTIP) A summary of activity under our restricted share units issued under long-term incentive plans for the year ended June 30, 2023 is as follows: Units Weighted-Average Grant Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($’000’s) Outstanding at June 30, 2022 611,743 $ 44.14 1.62 $ 23,148 Granted 404,880 38.82 Vested ( 147,223 ) 36.83 Forfeited or expired ( 95,040 ) 43.32 Outstanding at June 30, 2023 774,360 $ 42.83 1.68 $ 32,175 For the periods indicated, the weighted-average fair value and aggregate intrinsic value of RSUs (issued under LTIP) were as follows: Year Ended June 30, 2023 2022 2021 Weighted–average fair value of restricted share units granted $ 38.82 $ 49.91 $ 43.39 Weighted–average fair value of restricted share units vested $ 36.83 $ 37.36 $ 32.93 Aggregate intrinsic value of restricted share units vested ($ in 000’s) $ 3,947 $ 9,139 $ 7,832 181 Table of Contents Restricted Share Units (Other) In addition to the grants made in connection with the LTIP plans discussed above, from time to time, we may grant RSUs to certain employees in accordance with employment and other non-LTIP related agreements. During the year ended June 30, 2023, we granted RSUs through a special one-time grant for development, engagement and long-term retention to certain of our non-executive employees. RSUs (other) vest in tranches over a specified contract date, typically two or three years from the respective date of grants. A summary of activity under our RSUs (other) issued for the year ended June 30, 2023 is as follows: Units Weighted-Average Grant Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($’000’s) Outstanding at June 30, 2022 2,593,707 $ 44.90 2.86 $ 98,146 Granted 3,493,488 30.46 Vested ( 400,210 ) 36.33 Forfeited or expired ( 376,390 ) 41.91 Outstanding at June 30, 2023 5,310,595 $ 36.43 1.97 $ 220,655 For the periods indicated, the weighted-average fair value and intrinsic value of RSUs (other) were as follows: Year Ended June 30, 2023 2022 2021 Weighted–average fair value of restricted share units granted $ 30.46 $ 44.81 $ 45.73 Weighted–average fair value of restricted share units vested $ 36.33 $ 45.73 $ — Aggregate intrinsic value of restricted share units vested ($ in 000’s) $ 15,755 $ 7,406 $ — During the year ended June 30, 2023, we delivered to eligible participants 400,210 Common Shares that were purchased in the open market in connection with the settlement of vested RSUs, at a cost of $ 17.6 million (year ended June 30, 2022 and 2021— 141,452 and zero Common Shares, respectively, with a cost of $ 5.9 million and nil ). Deferred Share Units (DSUs) The deferred share units are granted to certain non-employee directors. DSUs are issued under our Deferred Share Unit Plan. DSUs granted as compensation for director fees vest immediately, whereas all other DSUs granted vest at our next annual general meeting following the granting of the DSUs. No DSUs are payable by us until the director ceases to be a member of the Board. A summary of activity under our deferred share units issued for the year ended June 30, 2023 is as follows: Units Weighted-Average Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($’000’s) Outstanding at June 30, 2022 (1) 885,701 $ 31.49 0.36 $ 33,515 Granted (2) 139,140 29.72 Settled ( 30,273 ) $ 40.46 Outstanding at June 30, 2023 (2) 994,568 $ 29.98 0.36 $ 41,324 ______________________ 182 Table of Contents (1) Includes 55,520 unvested DSUs. (2) Includes 90,906 unvested DSUs. For the periods indicated, the weighted-average fair value and intrinsic value of DSUs were as follows: Year Ended June 30, 2023 2022 2021 Weighted–average fair value of deferred share units granted $ 29.72 $ 50.04 $ 40.15 Weighted–average fair value of deferred share units vested $ 32.44 $ 41.24 $ 41.48 Aggregate intrinsic value of deferred share units vested ($ in 000’s) $ 1,565 $ 4,133 $ 3,109 During the year ended June 30, 2023, we settled 30,273 DSUs at a cost of $ 1.1 million (year ended June 30, 2022 and 2021— nil and 23,640 Common Shares, respectively, with a cost of nil and $ 1.1 million, respectively). Employee Stock Purchase Plan (ESPP) Our ESPP offers employees the opportunity to purchase our Common Shares at a purchase price discount of 15 %. During the year ended June 30, 2023, 1,089,120 Common Shares were eligible for issuance to employees enrolled in the ESPP (year ended June 30, 2022 and 2021— 931,036 and 769,031 Common Shares, respectively). During the year ended June 30, 2023, cash in the amount of $ 31.0 million was received from employees relating to the ESPP (year ended June 30, 2022 and 2021—$ 34.5 million and $ 30.5 million, respectively). NOTE 14— GUARANTEES AND CONTINGENCIES We have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows: Payments due between Total July 1, 2023 - June 30, 2024 July 1, 2024 - June 30, 2026 July 1, 2026 - June 30, 2028 July 1, 2028 and beyond Long-term debt obligations (1) $ 12,424,286 $ 648,414 $ 2,373,260 $ 2,948,038 $ 6,454,574 Purchase obligations for contracts not accounted for as lease obligations (2) 176,440 52,588 108,346 15,506 — $ 12,600,726 $ 701,002 $ 2,481,606 $ 2,963,544 $ 6,454,574 _______________________________________ (1) Includes interest up to maturity and principal payments. Please see Note 11 “Long-Term Debt” for more details. (2) For contractual obligations relating to leases and purchase obligations accounted for under ASC Topic 842, please see Note 6 “Leases.” Guarantees and Indemnifications We have entered into customer agreements which may include provisions to indemnify our customers against third party claims that our software products or services infringe certain third-party intellectual property rights and for liabilities related to a breach of our confidentiality obligations. We have not made any material payments in relation to such indemnification provisions and have not accrued any liabilities related to these indemnification provisions in our Consolidated Financial Statements. Occasionally, we enter into financial guarantees with third parties in the ordinary course of our business, including, among others, guarantees relating to taxes and letters of credit on behalf of parties with whom we conduct business. Such agreements have not had a material effect on our results of operations, financial position or cash flows. Litigation We are currently involved in various claims and legal proceedings. Quarterly, we review the status of each significant legal matter and evaluate such matters to determine how they should be treated for accounting and disclosure purposes in accordance with the requirements of ASC Topic 450-20 “Loss Contingencies” (Topic 450-20). Specifically, this evaluation process includes the centralized tracking and itemization of the status of all our disputes and litigation items, discussing the nature of any litigation and claim, including any dispute or claim 183 Table of Contents that is reasonably likely to result in litigation, with relevant internal and external counsel, and assessing the progress of each matter in light of its merits and our experience with similar proceedings under similar circumstances. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss in accordance with Topic 450-20. As of the date of this Annual Report on Form 10-K, the aggregate of such accrued liabilities was not material to our consolidated financial position or results of operations and we do not believe as of the date of this filing that it is reasonably possible that a loss exceeding the amounts already recognized will be incurred that would be material to our consolidated financial position or results of operations. As described more fully below, we are unable at this time to estimate a possible loss or range of losses in respect of certain disclosed matters. Contingencies CRA Matter As part of its ongoing audit of our Canadian tax returns, the Canada Revenue Agency (CRA) has disputed our transfer pricing methodology used for certain intercompany transactions with our international subsidiaries and has issued notices of reassessment for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016. Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of June 30, 2023, in connection with the CRA’s reassessments for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, to be limited to penalties, interest and provincial taxes that may be due of approximately $ 76 million. As of June 30, 2023, we have provisionally paid approximately $ 33 million in order to fully preserve our rights to object to the CRA’s audit positions, being the minimum payment required under Canadian legislation while the matter is in dispute. This amount is recorded within “Long-term income taxes recoverable” on the Consolidated Balance Sheets as of June 30, 2023. The notices of reassessment for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 would, as drafted, increase our taxable income by approximately $ 90 million to $ 100 million for each of those years, as well as impose a 10 % penalty on the proposed adjustment to income. Audits by the CRA of our tax returns for fiscal years prior to Fiscal 2012 have been completed with no reassessment of our income tax liability. We strongly disagree with the CRA’s positions and believe the reassessments of Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 (including any penalties) are without merit, and we are continuing to contest these reassessments. On June 30, 2022, we filed a notice of appeal with the Tax Court of Canada seeking to reverse all such reassessments (including penalties) in full and the customary court process is ongoing. Even if we are unsuccessful in challenging the CRA’s reassessments to increase our taxable income for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, we have elective deductions available for those years (including carry-backs from later years) that would offset such increased amounts so that no additional cash tax would be payable, exclusive of any assessed penalties and interest, as described above. The CRA has audited Fiscal 2017 and Fiscal 2018 on a basis that we strongly disagree with and are contesting. The focus of the CRA audit has been the valuation of certain intellectual property and goodwill when one of our subsidiaries continued into Canada from Luxembourg in July 2016. In accordance with applicable rules, these assets were recognized for tax purposes at fair market value as of that time, which value was supported by an expert valuation prepared by an independent leading accounting and advisory firm. CRA’s position for Fiscal 2017 and Fiscal 2018 relies in significant part on the application of its positions regarding our transfer pricing methodology that are the basis for its reassessment of our fiscal years 2012 to 2016 described above, and that we believe are without merit. Other aspects of CRA’s position for Fiscal 2017 and Fiscal 2018 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position. The CRA issued notices of reassessment in respect of Fiscal 2017 and Fiscal 2018 on a basis consistent with its proposal to reduce the available depreciable basis of these assets in Canada. On April 19, 2022, we filed our notice of objection regarding the reassessment in respect of Fiscal 2017 and on March 15, 2023, we filed our notice of objection regarding the reassessment in respect of Fiscal 2018. If we are ultimately unsuccessful in defending our position, the estimated impact of the proposed adjustment could result in us recording an income tax expense, with no immediate cash payment, to reduce the stated value of our deferred tax assets of up to approximately $ 470 million. Any such income tax expense could also have a corresponding cash tax impact that would primarily occur over a period of several future years based upon annual income realization in Canada. We strongly disagree with the CRA’s position for Fiscal 2017 and Fiscal 2018 and intend to vigorously defend our original filing position. We are not required to provisionally pay any cash amounts to the CRA as a result of the reassessment in respect of Fiscal 2017 and Fiscal 2018 due to the utilization of available tax attributes; however, to the extent the CRA reassesses subsequent fiscal years on a similar basis, we expect to make certain minimum payments required under Canadian legislation, which may need to be provisionally made starting in Fiscal 2024 while the matter is in dispute. We will continue to vigorously contest the adjustments to our taxable income and any penalty and interest assessments, as well as any reduction to the basis of our depreciable property. We are confident that our original tax filing positions were 184 Table of Contents appropriate. Accordingly, as of the date of this Annual Report on Form 10-K, we have not recorded any accruals in respect of these reassessments or proposed reassessment in our Consolidated Financial Statements. The CRA is auditing Fiscal 2019, and may reassess Fiscal 2019 on a similar basis as Fiscal 2017 and Fiscal 2018. The CRA is also in preliminary stages of auditing Fiscal 2020. Carbonite Class Action Complaint On August 1, 2019, prior to our acquisition of Carbonite, a purported stockholder of Carbonite filed a putative class action complaint against Carbonite, its former Chief Executive Officer, Mohamad S. Ali, and its former Chief Financial Officer, Anthony Folger, in the United States District Court for the District of Massachusetts captioned Ruben A. Luna, Individually and on Behalf of All Others Similarly Situated v. Carbonite, Inc., Mohamad S. Ali, and Anthony Folger (No. 1:19-cv-11662-LTS) (the Luna Complaint). The complaint alleges violations of the federal securities laws under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The complaint generally alleges that the defendants made materially false and misleading statements in connection with Carbonite’s Server Backup VM Edition, and seeks, among other things, the designation of the action as a class action, an award of unspecified compensatory damages, costs and expenses, including counsel fees and expert fees, and other relief as the court deems appropriate. On August 23, 2019, a nearly identical complaint was filed in the same court captioned William Feng, Individually and on Behalf of All Others Similarly Situated v. Carbonite, Inc., Mohamad S. Ali, and Anthony Folger (No. 1:19- cv-11808-LTS) (together with the Luna Complaint, the Securities Actions). On November 21, 2019, the district court consolidated the Securities Actions, appointed a lead plaintiff, and designated a lead counsel. On January 15, 2020, the lead plaintiff filed a consolidated amended complaint generally making the same allegations and seeking the same relief as the complaint filed on August 1, 2019. The defendants moved to dismiss the Securities Actions on March 10, 2020. On October 22, 2020, the district court granted with prejudice the defendants’ motion to dismiss the Securities Actions. On November 20, 2020, the lead plaintiff filed a notice of appeal to the United States Court of Appeals for the First Circuit. On December 21, 2021, the United States Court of Appeals for the First Circuit issued a decision reversing and remanding the Securities Actions to the district court for further proceedings. The parties have completed discovery and defendants have filed a motion for summary judgment. The defendants remain confident in their position, believe the Securities Actions are without merit, and will continue to vigorously defend the matter. Carbonite vs Realtime Data On February 27, 2017, before our acquisition of Carbonite, a non-practicing entity named Realtime Data LLC (Realtime Data) filed a lawsuit against Carbonite in the U.S. District Court for the Eastern District of Texas captioned Realtime Data LLC v. Carbonite, Inc. et al (No 6:17-cv-00121-RWS-JDL). Therein, it alleged that certain of Carbonite’s cloud storage services infringe upon certain patents held by Realtime Data. Realtime Data’s complaint against Carbonite sought damages in an unspecified amount and injunctive relief. On December 19, 2017, the U.S. District Court for the Eastern District of Texas transferred the case to the U.S. District Court for the District of Massachusetts (No. 1:17-cv-12499). Realtime Data has also filed numerous other patent suits on the same asserted patents against other companies. After a stay pending appeal in one of those suits, on January 21, 2021, the district court held a hearing to construe the claims of the asserted patents. As to the fourth patent asserted against Carbonite, on September 24, 2019, the U.S. Patent & Trademark Office Patent Trial and Appeal Board invalidated certain claims of that patent, including certain claims that had been asserted against Carbonite. The parties then jointly stipulated to dismiss that patent from this action. On August 23, 2021, in one of the suits against other companies, the District of Delaware (No. 1:17-cv-800), held all of the patents asserted against Carbonite to be invalid. Realtime Data has appealed that decision to the U.S. Court of Appeals for the Federal Circuit. We continue to vigorously defend the matter, and the U.S. District Court for the District of Massachusetts has issued a claim construction order. We have not accrued a loss contingency related to this matter because litigation related to a non-practicing entity is inherently unpredictable. Although a loss is reasonably possible, an unfavorable outcome is not considered by management to be probable at this time and we remain unable to reasonably estimate a possible loss or range of loss associated with this litigation. Other Matters Please also see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K for Fiscal 2023, as well as Note 15 “Income Taxes” related to certain historical matters arising prior to the Micro Focus Acquisition. 185 Table of Contents NOTE 15— INCOME TAXES Our effective tax rate represents the net effect of the mix of income earned in various tax jurisdictions that are subject to a wide range of income tax rates. The effective tax rate increased to a provision of 32.0 % for the year ended June 30, 2023, compared to a provision of 23.0 % for the year ended June 30, 2022. Tax expense decreased from $ 118.8 million during the year ended June 30, 2022 to $ 70.8 million during the year ended June 30, 2023. The increase in the effective tax rate was driven by increases in withholding taxes, changes in valuation allowance, permanent differences related to foreign source income inclusions, and the impact of internal reorganizations, partially offset by lower pretax income, tax credits and permanent adjustments related to the preferential tax treatment of the mark-to-market gains on derivatives. The tax rate for the year ended June 30, 2022 varied from the statutory rate due favorable permanent adjustments related to excess share-based compensation deductions, tax credits, and the reduction in the accrual on unremitted foreign earnings, partially offset by the impact of internal reorganizations and an increase in unrecognized tax benefits. A reconciliation of the combined Canadian federal and provincial income tax rate with our effective income tax rate is as follows: Year Ended June 30, 2023 2022 2021 Expected statutory rate 26.50 % 26.50 % 26.50 % Expected provision for income taxes $ 58,653 $ 136,743 $ 172,454 Effect of foreign tax rate differences ( 17,502 ) ( 4,578 ) ( 4,309 ) Change in valuation allowance 16,218 ( 2,444 ) ( 5,900 ) Effect of permanent differences 17,281 ( 12,710 ) ( 1,885 ) Effect of changes in unrecognized tax benefits 857 8,130 ( 86,170 ) Effect of withholding taxes 12,464 6,617 8,500 Effect of tax credits ( 45,596 ) ( 12,330 ) ( 16,086 ) Effect of accrual for undistributed earnings 5,804 ( 6,343 ) 3,209 Effect of US BEAT 6,854 — 7,967 Effect of IRS Settlement — — 300,460 Impact of internal reorganizations 8,822 13,077 ( 33,676 ) Other items 6,912 ( 7,410 ) ( 4,658 ) Provision for income taxes $ 70,767 $ 118,752 $ 339,906 The following is a geographical breakdown of income before the provision for income taxes: Year Ended June 30, 2023 2022 2021 Domestic income (loss) 300,437 435,355 462,315 Foreign income (loss) ( 79,104 ) 80,656 188,455 Income before income taxes $ 221,333 $ 516,011 $ 650,770 186 Table of Contents The provision for (recovery of) income taxes consisted of the following: Year Ended June 30, 2023 2022 2021 Current income taxes (recoveries): Domestic 15,619 17,428 310,615 Foreign 204,708 137,412 ( 43,748 ) Total current income taxes (recoveries) 220,327 154,840 266,867 Deferred income taxes (recoveries): Domestic 17,461 54,867 111,232 Foreign ( 167,021 ) ( 90,955 ) ( 38,193 ) Total deferred income taxes (recoveries) ( 149,560 ) ( 36,088 ) 73,039 Provision for income taxes $ 70,767 $ 118,752 $ 339,906 The primary components of the deferred tax assets and liabilities are as follows, for the periods indicated below: As of June 30, 2023 2022 Deferred tax assets Non-capital loss carryforwards $ 754,852 $ 207,631 Capital loss carryforwards 13,512 — Interest expense carryforwards 156,832 — Capitalized scientific research and development expenses 343,308 121,771 Depreciation and amortization — 314,168 Restructuring costs and other reserves 34,357 19,561 Capitalized inventory and intangible expenses 52,345 43,129 Tax credits 171,536 126,920 Lease liabilities 48,378 40,486 Deferred revenue 90,312 9,288 Share-based compensation 37,692 29,239 Derivatives 42,716 — Other 50,272 30,540 Total deferred tax asset $ 1,796,112 $ 942,733 Valuation allowance ( 605,926 ) ( 73,965 ) Deferred tax liabilities Depreciation and amortization ( 546,024 ) — Right of use assets ( 31,933 ) ( 31,452 ) Other ( 109,465 ) ( 93,049 ) Deferred tax liabilities $ ( 687,422 ) $ ( 124,501 ) Net deferred tax asset $ 502,764 $ 744,267 Comprised of: Long-term assets 926,719 810,154 Long-term liabilities ( 423,955 ) ( 65,887 ) Net deferred tax asset $ 502,764 $ 744,267 As of June 30, 2023, we have $ 364.2 million of domestic non-capital loss carryforwards. In addition, we have $ 3.0 billion of foreign non-capital loss carryforwards, which includes $ 372.1 million of U.S. state loss carryforwards. $ 476.3 million of the foreign non-capital loss carryforwards have no expiry date, which includes $ 12.8 million of U.S. state loss carryforwards. The remainder of the domestic and foreign losses expire between 2024 and 2043. In addition, investment tax credits of $ 74.1 million will expire between 2028 and 2043. 187 Table of Contents We believe that sufficient uncertainty exists regarding the realization of certain deferred tax assets that a valuation allowance is required. We continue to evaluate our taxable position quarterly and consider factors by taxing jurisdiction, including but not limited to factors such as estimated taxable income, any historical experience of losses for tax purposes and the future growth of OpenText. As of June 30, 2023 and 2022, the Company had a valuation allowance on its domestic and foreign deferred tax assets of $ 605.9 million and $ 74.0 million, respectively. The balance at June 30, 2023 consisted of $ 8.7 million and $ 597.2 million against the Company’s domestic and foreign deferred tax assets, respectively, which, the Company believes, are more likely than not to be utilized in future years. The valuation allowance increased in Fiscal 2023 by $ 532.0 million primarily related to the Micro Focus Acquisition, which has significant losses that cannot be benefited. The aggregate changes in the balance of our gross unrecognized tax benefits (including interest and penalties) were as follows: Unrecognized tax benefits as of June 30, 2021 $ 36,749 Increases on account of current year positions 206 Increases on account of prior year positions 27,398 Decreases on account of prior year positions ( 694 ) Decreases due to settlements with tax authorities ( 3,830 ) Decreases due to lapses of statutes of limitations ( 5,703 ) Unrecognized tax benefits as of June 30, 2022 $ 54,126 Increases on account of current year positions 8,118 Increases on account of prior year positions (1) 138,062 Decreases on account of prior year positions ( 2,086 ) Decreases due to settlements with tax authorities ( 4,485 ) Decreases due to lapses of statutes of limitations ( 15,007 ) Unrecognized tax benefits as of June 30, 2023 $ 178,728 __________________________________ (1) The increase in unrecognized tax benefits is primarily driven by the assumption of unrecognized tax benefits related to the Micro Focus Acquisition. Included in the above tabular reconciliation are unrecognized tax benefits of $ 66.1 million as of June 30, 2023 (June 30, 2022—$ 23.4 million) relating to tax attributes in which the unrecognized tax benefit has been recorded as a reduction to the deferred tax asset. The net unrecognized tax benefit excluding these deferred tax assets is $ 112.6 million as of June 30, 2023 (June 30, 2022—$ 30.7 million). We recognize interest expense and penalties related to income tax matters in income tax expense. For the year ended June 30, 2023, 2022 and 2021, respectively, we recognized the following amounts as income tax-related interest expense and penalties: Year Ended June 30, 2023 2022 2021 Interest expense (income) $ ( 1,922 ) $ 419 $ 44,657 Penalties expense ( 21 ) 1,739 1,125 Total $ ( 1,943 ) $ 2,158 $ 45,782 The following amounts have been accrued on account of income tax-related interest expense and penalties: As of June 30, 2023 As of June 30, 2022 Interest expense accrued (1) $ 10,187 $ 4,821 Penalties accrued (1) $ 3,332 $ 3,569 __________________________________ (1) These balances are primarily included within “Long-term income taxes payable” within the Consolidated Balance Sheets. We believe that it is reasonably possible that the gross unrecognized tax benefits, as of June 30, 2023, could decrease tax expense in the next 12 months by $ 9.9 million, relating primarily to the expiration of competent authority relief and tax years becoming statute barred for purposes of future tax examinations by local taxing jurisdictions. 188 Table of Contents We are subject to income tax audits in all major taxing jurisdictions in which we operate. Our four most significant tax jurisdictions are Canada, the United States, United Kingdom and Germany. Our tax filings remain subject to audits by applicable tax authorities for a certain length of time following the tax year to which those filings relate. We currently have income tax audits open in Canada, the United States, the United Kingdom, Germany and other immaterial jurisdictions. The earliest fiscal years open for examination are 2012 for Canada, 2018 for the United States, 2015 for the United Kingdom and 2016 for Germany. On a quarterly basis we assess the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income and other taxes. Statements regarding the Canada audits are included in Note 14 “Guarantees and Contingencies.” The timing of the resolution of income tax audits is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next 12 months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax audits in one or more jurisdictions. These assessments or settlements may or may not result in changes to our contingencies related to positions on tax filings. The actual amount of any change could vary significantly depending on the ultimate timing and nature of any settlements. We cannot currently provide an estimate of the range of possible outcomes. For more information relating to certain income tax audits, please refer to Note 14 “Guarantees and Contingencies.” As of June 30, 2023, we have recognized a provision of $ 28.3 million (June 30, 2022—$ 15.1 million) in respect of deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries and planned periodic repatriations from certain German subsidiaries, that will be subject to withholding taxes upon distribution. We have not provided for additional foreign withholding taxes or deferred income tax liabilities related to undistributed earnings of all other non-Canadian subsidiaries, since such earnings are considered permanently invested in those subsidiaries or are not subject to withholding taxes. It is not practicable to reasonably estimate the amount of additional deferred income tax liabilities or foreign withholding taxes that may be payable should these earnings be distributed in the future. On December 21, 2020, we entered into a closing agreement with the IRS resolving all of the proposed adjustments to our taxable income for Fiscal 2010 and Fiscal 2012. As a result, we recorded charges of $ 300.5 million during the year ended June 30, 2021 to “Provision for income taxes.” We believe the IRS Settlement to be in the best interest of all stakeholders, as it closes all past, present and future items related to this matter. The IRS Settlement provides finality to this longstanding matter. State Aid Matter In April 2019, the European Commission published its final decision on its State Aid investigation into the UK’s “Financing Company Partial Exemption” legislation and concluded that part of the legislation was in breach of EU State Aid rules. The UK government and certain UK-based international companies, supported by Micro Focus, appealed to the General Court of the Court of Justice of the European Union (General Court of the CJEU) against the decision. In February 2021, Micro Focus received and settled GBP denominated State Aid charging notices issued by HM Revenue and Customs, following the requirement for the UK government to start collection proceedings. As a result, Micro Focus recorded a long-term income tax receivable of $ 43.2 million. This reflects the payment that was made following the final decision published by the European Commission on its State Aid investigation into the UK’s ‘Financing Company Partial Exemption’ legislation. Based on management’s assessment of the value of the underlying tax benefit under dispute, and as supported by external professional advice, Micro Focus believed they had no liability in respect of these matters and therefore no tax charge was recorded. On June 8, 2022, the General Court of the CJEU found in favor of the European Commission’s decision that the UK’s ‘Financing Company Partial Exemption’ legislation is in breach of EU State Aid rules. The UK Government and UK-based international companies, supported by Micro Focus, lodged an appeal against the judgement with the CJEU. Micro Focus previously received and settled State Aid charging notices from HM Revenue and Customs (including historic interest) and given that an appeal would be expected to take more than a year, a long-term income tax recoverable continues to be recognized as part of non-current tangible assets as of June 30, 2023, in the preliminary purchase price allocation relating to the Micro Focus Acquisition, as described in Note 19 “Acquisitions.” 189 Table of Contents NOTE 16— FAIR VALUE MEASUREMENT ASC Topic 820 “Fair Value Measurement” (Topic 820) defines fair value, establishes a framework for measuring fair value, and addresses disclosure requirements for fair value measurements. Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value, in this context, should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including our own credit risk. In addition to defining fair value and addressing disclosure requirements, Topic 820 establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: • Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. • Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. 190 Table of Contents Financial Assets and Liabilities Measured at Fair Value: Our cash and cash equivalents, along with our accounts receivable and accounts payable and accrued liabilities balances, are measured and recognized in our Consolidated Financial Statements at an amount that approximates the fair value (a Level 2 measurement) due to their short maturities. The carrying value of our other long-term debt facilities approximates the fair value since the interest rate is at market. See Note 11 “Long-Term Debt” for further details. The following table summarizes the fair value of the Company’s financial instruments as of June 30, 2023 and 2022: Fair Value Fair Value Hierarchy June 30, 2023 June 30, 2022 Assets: Available-for-sale financial assets (Note 9) Level 2 $ 15,231 $ — Available-for-sale financial assets (Note 9) Level 3 $ 24,627 $ — Derivative asset (Note 17) Level 2 $ 3,547 $ — Liabilities: Derivative liability (Note 17) Level 2 $ ( 161,191 ) $ ( 892 ) Senior Notes (Note 11) (1) Level 2 $ ( 3,827,888 ) $ ( 2,835,810 ) __________________________________ (1) Senior Notes are presented within the Consolidated Balance Sheets at amortized cost. See Note 11 “Long-Term Debt” for further details. Changes in Level 3 Fair Value Measurements The following table provides a reconciliation of changes in the fair value of our Level 3 deal-contingent foreign currency forward contracts and available-for-sale financial assets between June 30, 2022 and June 30, 2023. Deal-contingent foreign currency forward contracts Available-for-sale financial assets Balance as of June 30, 2022 $ — $ — Gain (loss) recognized in income 9,354 209 Purchases — 24,418 Settlements ( 9,354 ) — Balance as of June 30, 2023 $ — $ 24,627 Our derivative liabilities and our derivative assets are classified as Level 2 and are comprised of foreign currency forward and swap contracts. Our valuation techniques used to measure the fair values of the derivative instruments, the counterparty to which has high credit ratings, were derived from pricing models including discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data, as no quoted market prices exist for these instruments. Our discounted cash flow techniques use observable market inputs, such as, where applicable, foreign currency spot and forward rates. As part of the Micro Focus Acquisition, we acquired the rights to certain available-for-sale financial assets which are classified as Level 2 and Level 3. Our Level 2 available-for-sale financial assets are comprised primarily of various debt and equity funds, which are valued utilizing market quotes provided by our third-party custodian. Our Level 3 available-for-sale financial assets are comprised of insurance contracts which are valued by an external insurance expert by applying a discount rate to the future cash flows and taking into account the fixed interest rate, mortality rates and term of the insurance contracts. Please see Note 9 “Prepaid Expenses and Other Assets” for further details. If applicable, we will recognize transfers between levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. During the year ended June 30, 2023 and 2022, respectively, we did not have any transfers between Level 1, Level 2 or Level 3. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We measure certain assets and liabilities at fair value on a nonrecurring basis. These assets and liabilities are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the year ended June 30, 2023 and 2022, respectively, no indications of impairments were identified and therefore no fair value measurements were required. 191 Table of Contents NOTE 17— DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Non-designated Hedges In connection with the Micro Focus Acquisition, in August 2022, we entered into certain derivative transactions to meet certain foreign currency obligations under UK cash confirmation requirements related to the purchase price of the Micro Focus Acquisition, mitigate the risk of foreign currency appreciation in the GBP denominated purchase price and mitigate the risk of foreign currency appreciation in the EUR denominated existing debt held by Micro Focus. We entered into the following derivatives: (i) three deal-contingent forward contracts, (ii) a non-contingent forward contract, and (iii) EUR/USD cross currency swaps. The deal-contingent forward contracts had an aggregate notional amount of £ 1.475 billion. The non-contingent forward contract had a notional amount of £ 350 million. The cross currency swaps are comprised of 5-year EUR/USD cross currency swa