Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of December 31, 2024. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2024.
Management’s report on and changes in internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the framework in the updated Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) on May 14, 2013.
Based on this evaluation, management has concluded that (i) our internal control over financial reporting was effective as of December 31, 2024 and (ii) no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) occurred during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Deloitte & Touche LLP, our independent registered public accounting firm which also audited our consolidated financial statements, has issued an attestation report on our internal control over financial reporting, which is included in Item 8 “Financial Statements and Supplementary Data”.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 and non-rule 10b5-1 trading arrangements
On November 6, 2024 , Alan Trefler , our Chief Executive Officer , entered into a trading plan that provides for the sale of 630,000 shares of our common stock. The plan will terminate on January 22, 2026 , subject to early termination for certain specified events set forth in the plan.
On November 25, 2024 , Rifat Kerim Akgonul , our Chief Product Officer , entered into a trading plan that provides for the sale of 18,000 shares of our common stock. The plan will terminate on March 31, 2026 , subject to early termination for certain specified events set forth in the plan.
On November 26, 2024 , Leon Trefler , our Chief of Clients and Markets, entered into a trading plan that provides for the sale of 8,198 shares of our common stock. The plan will terminate on December 31, 2025 , subject to early termination for certain specified events set forth in the plan.
Proposed Stock Split
On February 12, 2025, our Board approved a two-for-one forward stock split of our common stock, to be effected as a stock dividend. Effectiveness of the stock split is subject to approval by our stockholders at our June 17, 2025 annual meeting of stockholders of a proportionate increase in our authorized shares of common stock. Our financial results in this Annual Report do not include any impact of the stock split.
Credit Facility
Effective as of February 4, 2025, we entered into an amendment to our $100 million senior secured revolving credit agreement with PNC Bank, National Association which extends the expiration date of the Credit Facility to February 4, 2027. The description contained herein is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.23 to this Annual Report on Form 10-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except as set forth below, information required by this item is incorporated herein by reference from the information contained in our proxy statement for our 2025 annual stockholders meeting (the “2025 proxy statement”) under the headings Executive Compensation, Election of Directors, Corporate Governance, Executive Officers, Insider Trading Policies and Procedures , and Delinquent Section 16(a) Reports, which will be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year.
We have adopted a written code of conduct that applies to our Board of Directors and employees, including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. A copy of our code of conduct can be found on our website, www.pega.com. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K and the applicable NASDAQ Global Select Market rules by posting such information on our website.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference from the information contained in the 2025 proxy statement under the headings “Director Compensation”, “Compensation Discussion and Analysis”, and “Executive Compensation” and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference from the information contained in the 2025 proxy statement under the headings “Executive Compensation”, “Equity Compensation Plan Information”, and “Security Ownership of Certain Beneficial Owners and Management”, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference from the information contained in the 2025 proxy statement under the headings “Certain Relationships and Related Transactions” and “Determination of Independence” and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated herein by reference from the information contained in the 2025 proxy statement under the heading “Independent Registered Public Accounting Firm Fees and Services” and is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following are filed as part of this Annual Report:
(1) Financial Statements
The following consolidated financial statements are included in Item 8:
Page
Report of Independent Registered Public Accounting Firm 36
Consolidated Balance Sheets as of December 31, 2024 and 2023
38
Consolidated Statements of Operations for the years ended December 31, 2024, 2023, and 2022
39
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024, 2023, and 2022
40
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023, and 2022
41
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022
42
(b) Exhibits
Exhibit
No. Description Incorporation by Reference Filed
Herewith
Form Location Filing Date
3.1 Restated Articles of Organization of the Registrant and Amendments thereto
10-Q 3.1 11/4/14
3.2 Amended and Restated Bylaws of Pegasystems Inc
8-K 3.2 6/15/20
4.1 Specimen Certificate Representing the Common Stock
S-1 4.1 6/19/96
4.2 Indenture, dated as of February 24, 2020, between Pegasystems Inc. and U.S. Bank National Association, as trustee
8-K 4.1 2/24/20
4.3 Form of certificate representing the 0.75% Convertible Senior Notes due 2025
8-K Exhibit A to 4.1 2/24/20
4.4 Description of Common Stock
10-K 4.2 2/12/20
10.1 2004 Long-Term Incentive Plan (as amended and restated) ++
DEF 14A
Appendix A to 2023 Proxy Statement
4/28/23
10.2 Restricted Stock Unit Sub-Plan of the Registrant’s 2004 Long-Term Incentive Plan for French Participants ++
DEF 14A Appendix B to 2016 Proxy Statement 4/18/16
10.3 2006 Employee Stock Purchase Plan, as amended on June 20, 2023 ++
DEF 14A
Appendix B to 2023 Proxy Statement
4/28/23
10.4 Form of Employee Stock Option Agreement, as amended ++
10-Q 10.3 5/10/17
10.5 Form of Global Stock Option Agreement ++
10-K 10.5 2/17/21
10.6 Form of Restricted Stock Unit Agreement, as amended ++
10-Q 10.4 5/10/17
10.7 Form of Global Restricted Stock Unit Agreement ++
10-K 10.7 2/17/21
10.8 Form of Non-Employee Director Stock Option Agreement ++
10-Q 10.2 10/29/04
10.9 Form of Director Indemnification Agreement ++
8-K 99.1 4/11/05
10.10 Offer Letter between the Registrant and Kenneth Stillwell dated June 1, 2016 ++
8-K 99.1 6/14/16
10.11 Offer Letter between the Registrant and John Higgins executed December 13, 2020 ++
10-Q
10.3
4/26/23
10.12 C ompensation P rogram for non-employee members of the Registrant ’ s B oard of Directors ++
X
10.13 202 3 Section 16 Officers/FLT Member Corporate Incentive Compensation Plan ++
8-K 99.1 2/13/23
10.14 202 4 Section 16 Officers/FLT Member Corporate Incentive Compensation Plan ++
8-K 99.1 2/12/24
10.15 Credit Agreement dated as of November 5, 2019 with PNC Bank, National Association
10-Q 10.1 11/7/19
10.16 Amendment to Loan Documents, dated February 18, 2020, between Pegasystems Inc. and PNC Bank, National Association
8-K 10.3 2/24/20
10.17 Amendment 2 to Loan Documents, dated July 22, 2020, between Pegasystems Inc. and PNC Bank, National Association
10-Q 10.2 7/28/20
69
Exhibit
No. Description Incorporation by Reference Filed
Herewith
Form Location Filing Date
10.18**
Amendment to Loan Documents, dated as of September 30, 2020, between Pegasystems Inc. and PNC Bank, National Association
10-Q 10.3 10/28/20
10.19 Fourth Amendment to Loan Documents, dated as of March 31, 2022, between Pegasystems Inc. and PNC Bank, National Association
10-Q 10.1 3/31/22
10.20 Fifth Amendment to Loan Documents, dated as of July 25, 2022, between Pegasystems Inc. and PNC Bank, National Association
10-Q 10.1 7/27/22
10.21 Sixth Amendment to Loan Documents, dated as of March 31, 2023, between Pegasystems Inc. and PNC Bank, National Association
10-Q
10.1
4/26/23
10.22 Seventh Amendment to Loan Documents, dated as of April 2 3, 202 4 , between Pegasystems Inc. and PNC Bank, National Association
10-Q
10.1
4/24/24
10.23 Ei ghth Amendment to Loan Documents, dated as of Fe bruary 7 , 2025 a n d effect ive as of February 4, 2025 , between Pegasystems Inc. and PNC Bank, National Association
X
10.24 Fee Letter, dated as of March 31, 2023, for Senior Credit Facility
10-Q
10.2
4/26/23
10.25 Form of Side Letter to Base Call Option Transaction
10-Q 10.1 10/28/20
10.26 Form of Side Letter to Additional Call Option Transaction
10-Q 10.2 10/28/20
10.27 Form of Confirmation of Base Call Option Transaction
8-K 10.1 2/24/20
10.28 Form of Confirmation of Additional Call Option Transaction
8-K 10.2 2/24/20
10.29 Sublease, dated March 31, 2021 for Office Space at One Main Street, Cambridge, MA
10-Q 10.1 7/28/21
10.30 Lease between Pegasystems Inc. and 275 Wyman LLC**
8-K 10.1 7/9/21
19.1
Pegasystems Inc. Insider Trading Policy
X
21.1
Subsidiaries of the Registrant.
X
23.1
Consent of Independent Registered Public Accounting Firm—Deloitte & Touche LLP.
X
31.1
Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 of the Chief Executive Officer.
X
31.2
Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 of the Chief Financial Officer.
X
32
Certification pursuant to 18 U.S.C. Section 1350 of the Chief Executive Officer and the Chief Financial Officer.
+
97.1
Pegasystems Inc. Compensation Recovery Policy
10-K
97.1
2/14/24
101.INS Inline 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. X
101.SCH Inline XBRL Taxonomy Extension Schema Document. X
101.CAL Inline XBRL Taxonomy Calculation Linkbase Document. X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X
101.LAB Inline XBRL Taxonomy Label Linkbase Document. X
101.PRE Inline XBRL Taxonomy Presentation Linkbase Document. X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X
+ Indicates that the exhibit is being furnished with this report and is not filed as a part of it.
++ Management contracts and compensatory plans or arrangements required to be filed pursuant to Item 15(b) of Form 10-K.
** Certain portions of this exhibit are considered confidential and have been omitted as allowed under SEC rules and regulations
(c) Financial Statement Schedules
All financial statement schedules are omitted because the required information is not present or not present in sufficient amounts to require submission of the schedule or because the information is reflected in the consolidated financial statements or notes thereto.
ITEM 16. FORM 10-K SUMMARY
Omitted at Registrant’s option.
70
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Pegasystems Inc.
Date:
February 12, 2025 By: /s/ KENNETH STILLWELL
Kenneth Stillwell
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below on February 12, 2025 by the following persons on behalf of the Registrant and in the capacities indicated.
Signature Title
/s/ ALAN TREFLER
Chairman and Chief Executive Officer
(Principal Executive Officer)
Alan Trefler
/s/ KENNETH STILLWELL Chief Operating Officer and Chief Financial Officer
Kenneth Stillwell
(Principal Financial Officer)
/s/ EFSTATHIOS KOUNINIS Chief Accounting Officer, Senior Vice President, and Treasurer
(Principal Accounting Officer)
Efstathios Kouninis
/s/ ROHIT GHAI
Director
Rohit Ghai
/s/ PETER GYENES Director
Peter Gyenes
/s/ RICHARD JONES Director
Richard Jones
/s/ CHRISTOPHER LAFOND Director
Christopher Lafond
/s/ DIANNE LEDINGHAM Director
Dianne Ledingham
/s/ SHARON ROWLANDS Director
Sharon Rowlands
/s/ LARRY WEBER
Director
Larry Weber
71