Alan Trefler
PEGASYSTEMSAbout Alan Trefler
Founder of Pegasystems, Chairman and Chief Executive Officer since 1983; age 69; B.A. in economics and computer science from Dartmouth College . Pega’s 2024 operating performance included ACV growth of 9% (11% constant currency), free cash flow of $338.214 million (+68% YoY), and backlog growth of 11% (14% constant currency), reflecting progress on Rule of 40 objectives used in executive pay design . Trefler is a controlling shareholder with 46.8% beneficial ownership, aligning interests but concentrating voting power .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Pegasystems Inc. | Founder, Chairman & Chief Executive Officer | 1983–Present | Combined Chair/CEO leadership; guided four decades of growth and strategy . |
| TMI Systems Corporation | Manager, electronic funds transfer product | Pre-1983 | Early financial-technology product leadership . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Trefler Foundation | Trustee | Not disclosed | Shares voting and dispositive control over 62,000 PEGA shares held by the foundation; no pecuniary interest disclosed for these shares . |
| Alan N. Trefler Grantor Retained Annuity Trusts (I/II 2023; I/II 2024) | Sole Trustee | 2023–2024 | Significant PEGA shareholdings managed via GRATs (5,067,271; 2,190,736; 7,500,000; 6,000,000 shares, respectively) . |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 495,000 | 495,000 | 571,731 (pro‑rated; base increased to $600,000 effective 4/1/2024) |
| Target Bonus (% of base) | — (not disclosed) | — (not disclosed) | 100% of earned base salary |
| Actual Bonus Paid ($, CICP) | 445,500 | 495,000 | 600,319 |
Notes:
- 2024 CICP funding set at 105% for executive officers; CEO bonus aligned with funding outcome .
Performance Compensation
| Component | Metric(s) | Weight | Target/Scale | 2024 Actual | Payout/Vesting |
|---|---|---|---|---|---|
| Annual cash bonus (CICP) | Corporate Performance Target: 75% Rule of 40 (ACV growth + FCF margin); 25% strategic initiatives | 100% | Full achievement at Rule of 40 ≥39; threshold funding <70% = 0% pool; above-target deemed 107.5% potential | Funding set at 105% for executive officers | CEO cash bonus $600,319 |
| 2024 Performance Stock Options (PSOs) | Rule of 40 (2024, 25% tranche); Rule of 40 and ACV Growth (2025, 75% tranche) | N/A | 2024 scale (100% at ≥39); 2025 scale up to 180% at higher Rule of 40/ACV growth levels | 2024 metrics achieved 100% → first 25% tranche vested | 25% vests at 1-year; up to 180% of the 75% tranche can vest at 2 years, unmet forfeited |
| Equity cadence (time-based) | Stock options and RSUs | N/A | Typical 4-year vest for periodic grants | Used alongside PSOs to balance retention and alignment | Time-based options/RSUs vest over 4 years |
CEO-specific equity mix: In 2024, the Compensation Committee granted Trefler 100% stock options (no PSOs) valued at $6.5 million, reflecting leadership and relatively low cash compensation .
Equity Grants (CEO)
| Grant date | Instrument | Quantity | Exercise Price | Vesting | Grant-date Fair Value ($) | |---|---:|---:|---|---:| | 3/5/2024 | Stock options | 251,257 | $62.10 | Four-year schedule (25% at year 1, then quarterly) | 6,499,454 |
Additional CEO outstanding awards at 12/31/2024 include earlier option grants at strikes $47.27–$130.45 with remaining unvested portions; RSUs outstanding of 1,393 and 6,244 units are also listed for prior grants .
Equity Ownership & Alignment
| As-of date | Total Beneficial Ownership (shares) | % of Outstanding | Shares Acquirable within 60 days | Pledged/Margined Shares | Notes |
|---|---|---|---|---|---|
| Jan 31, 2025 | 40,528,582 | 46.8% | 762,786 | 4,616,577 | Includes direct (17,340,286), GRATs (2023 I: 5,067,271; 2023 II: 2,190,736; 2024 I: 7,500,000; 2024 II: 6,000,000), an irrevocable trust (1,605,503), and Trefler Foundation (62,000) . |
Stock ownership guidelines and policies:
- CEO stock ownership guideline: 3x annual base salary; directors: 3x cash retainer; CEO direct reports: 1x salary. Unvested awards excluded; 5-year compliance window; retain 50% of net shares until met; Company states all directors/officers have satisfied or are within phase-in .
- Hedging prohibited; Board reviews pledged/margined shares; ESPP shares may not be pledged for one year post-acquisition .
Employment Terms
| Provision | Terms |
|---|---|
| Base salary (2024) | Increased to $600,000 effective April 1, 2024 |
| Change-in-control treatment | Under the 2004 Long-Term Incentive Plan, upon a sale of the Company, the Board (by majority independent directors) may have equity awards assumed, accelerated, cancelled, or substituted at its discretion . |
| Clawback | Compensation recovery policy adopted in 2023 per SEC Rule 10D‑1 and Nasdaq listing standards (mandatory recovery of erroneously awarded incentive‑based compensation) . |
| Other policies | No hedging; stock pledging reviewed; insider trading policy on file; stock ownership guidelines (see above) . |
Note: The proxy discloses severance/change-in-control specifics for certain other executives (e.g., Stillwell, Higgins), but not for Mr. Trefler .
Board Governance
- Board/role: Founder; Chairman and CEO since inception in 1983; only employee-director; not a member of any committees .
- Independence: All non-employee directors determined independent; Trefler is not independent (CEO) .
- Leadership structure: Combined Chair/CEO; no Lead Independent Director; Board cites cohesion and founder continuity as rationale .
- Board activity: 9 meetings in 2024; each director attended at least 75% of Board/committee meetings; executive sessions of non‑employee directors held periodically; all then‑current directors attended 2024 AGM .
- Committees: Audit (Chair: Christopher Lafond; includes Risk Sub‑Committee formed Feb 2025), Compensation (Chair: Sharon Rowlands), Nominating & Corporate Governance (Chair: Larry Weber) .
- Director compensation: Trefler receives no additional pay for Board service as an employee-director .
Director Compensation (Alan Trefler)
- Employee-director; receives no Board retainers or equity awarded for director service .
Compensation & Incentives Detail (multi-year CEO snapshot)
| Component | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | 495,000 | 495,000 | 571,731 |
| Option Awards ($) | 6,499,058 | 4,550,006 | 6,499,454 |
| RSU Awards ($) | — | — | — |
| Non‑Equity Incentive (CICP) ($) | 445,500 | 495,000 | 600,319 |
| All Other Comp ($) | 9,150 | 9,900 | 10,350 |
| Total ($) | 7,448,708 | 5,549,906 | 7,681,854 |
Compensation Peer Group (for benchmarking)
- Atlassian; Dynatrace; Fair Isaac; Guidewire; MongoDB; Okta; PTC; Twilio; Veeva Systems .
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑Pay: 93% approval at 2024 annual meeting; program maintained on same principles for 2024 and beyond .
- Investor outreach: Ongoing quarterly engagement, annual investor session around PegaWorld; focus on Top 100 active holders (~87% of active institutional basic shares as of 12/31/2024) .
Related Party Transactions and Conflicts
- No related‑party transactions >$120,000 in 2024; Alan’s brother Leon serves as Chief of Clients and Markets; Board policy governs related‑person transactions .
- Shares pledged or held in margin accounts by Trefler total 4,616,577 (risk indicator) .
Risk Indicators & Red Flags
- Pledging/margin: 4.62 million shares pledged/margined; Board reviews but no outright ban—potential forced‑sale risk if collateral calls occur .
- Concentrated control/independence: Combined Chair/CEO, no Lead Independent Director, and 46.8% ownership concentrates control, offset by independent committees .
- Clawback and no‑hedging mitigate incentive risk; performance equity tied to Rule of 40 and ACV growth .
Employment & Contracts (context for others; retention lens)
- Select executives have severance and change‑in‑control protections (e.g., Stillwell: up to 12 months salary; equity acceleration upon sale+termination) underscoring overall retention framework; CEO‑specific severance not disclosed .
Investment Implications
- Alignment: Extremely high insider ownership (46.8%) aligns CEO with long‑term value creation but concentrates control and reduces float; pledging exposure is a governance and liquidity overhang to monitor .
- Incentive quality: Cash bonus and PSOs are anchored to balanced growth/profit (Rule of 40) and ACV growth, which is investor‑friendly; 2024 funding at 105% and PSO achievement at 100% first‑year tranche reflect strong execution on internal metrics .
- Pay mix and dilution: CEO cash comp is modest versus equity emphasis (options only in 2024), which restrains cash burn but contributes to option overhang; equity plan share reserve remains limited (3.846 million available as of 12/31/2024), warranting dilution vigilance as growth equity continues .
- Governance watch‑items: Combined Chair/CEO with no Lead Independent Director and a family executive on management raise independence optics; counterbalanced by fully independent key committees, a robust clawback, and no‑hedging policy .
- Performance lens: ACV and free cash flow momentum (68% FCF increase) support the current pay‑for‑performance framework; sustained delivery against Rule of 40 and ACV growth is the key lever for future vesting and compensation outcomes .