Efstathios Kouninis
PEGASYSTEMSAbout Efstathios Kouninis
Efstathios (Stathis) Kouninis, 63, is Senior Vice President of Finance, Chief Accounting Officer, and Treasurer at Pegasystems (PEGA). He joined Pega in April 2008 as VP Finance, was appointed CAO in May 2008, Treasurer in January 2014, and promoted to SVP Finance effective April 1, 2024. He previously served as CFO/Treasurer at Tasker Products (2006–2008) and on SEC staff in Corp Fin (2004–2006). He holds a B.S. (UMass), a post-baccalaureate in accounting, and an M.S. in taxation (Bentley) . Company performance relevant to 2024 executive pay metrics: ACV grew 9% YoY (11% cc), Pega Cloud ACV +18% YoY, and free cash flow was $338.2M (+68% YoY) . In 2025, management reiterated a Rule-of-40+ orientation with potential to achieve “Rule of 50” over time and a buyback-forward capital allocation stance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Pegasystems | SVP Finance; CAO; Treasurer | 2008–present (SVP since Apr 1, 2024; CAO since May 2008; Treasurer since Jan 2014) | Leads accounting, reporting, and treasury; promotion signals elevated finance leadership during ACV/FCF-led strategy |
| Tasker Products Corp. | CFO & Treasurer | 2006–2008 | Public-company finance leadership prior to Pega tenure |
| U.S. SEC (Corp Fin) | Staff, Division of Corporation Finance | 2004–2006 | Regulatory review experience; reinforces reporting/controls credibility |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| U.S. SEC (government) | Staff, Division of Corporation Finance | 2004–2006 | Policy/regulatory perspective valuable for financial reporting rigor |
Fixed Compensation
Pega discloses detailed compensation only for Named Executive Officers (NEOs). Mr. Kouninis is an executive officer but not listed among the 2024 NEOs (Trefler, Stillwell, Akgonul, Higgins, Leon Trefler); therefore, his individual base salary/bonus amounts are not disclosed in the proxy’s compensation tables .
Performance Compensation
Executive officers are governed by the Corporate Incentive Compensation Plan (CICP) and equity programs that emphasize Rule of 40 execution and ACV growth.
- CICP structure (executive officers): 75% weight on corporate financial goals (Rule of 40 = ACV growth + FCF margin; full achievement at ≥39%); 25% on Board-approved strategic initiatives; threshold funding at 70%; Board set 2024 Funding Percentage for executive officers at 105% .
- Performance Stock Options (PSOs): Two-year program; 25% tranche eligible at 1-year based on Rule-of-40 progress; 75% tranche at 2-years based on Rule-of-40 and 2025 ACV growth; 2024 achievement was 100% (25% tranche vested) .
| Metric/Instrument | Weighting | Target/Scale | Actual 2024 | Payout Mechanism | Vesting |
|---|---|---|---|---|---|
| CICP – Rule of 40 (ACV growth + FCF margin) | 75% | Full at ≥39% | Achieved within Corporate Performance Target; Board Funding % = 105% | Plan funded at 105% for execs | Cash; executives may elect 50% of target as RSUs vesting at 1 year |
| CICP – Strategic Initiatives | 25% | Board-approved initiatives | Included in Corporate Performance Target | Included in plan funding | Cash or elective RSUs (as above) |
| 2023 PSOs | N/A | Rule-of-40 thresholds (25% yr1; 75% yr2) | 100% of 2024 metrics achieved | 25% tranche yr1 vested; 75% tranche vested at yr2 on 2024 achievement | Options; 2-year performance schedule |
| 2024 PSOs | N/A | FY24 scale (Rule-of-40); FY25 scale blends Rule-of-40 and ACV growth; max 180% on yr2 | 100% FY24; 25% tranche vested | Year-2 payout depends on 2025 Rule-of-40 and ACV growth | Options; 2-year performance schedule |
Equity Ownership & Alignment
| Policy/Mechanism | Requirement / Practice | Compliance / Notes |
|---|---|---|
| Stock ownership guidelines | CEO: 3x salary; CEO’s executive direct reports: 1x salary; Directors: 3x cash retainer; unvested awards excluded; 50% net-share retention until compliant | “Each of our directors and officers has satisfied the applicable minimum share ownership level or is within the applicable phase-in period” |
| ESPP holding | ESPP shares may not be sold/pledged/transferred for 1 year post-purchase | Reinforces holding behavior |
| No hedging policy | Hedging and short sales prohibited for directors and employees (incl. execs) | Reduces misalignment risk |
| Compensation recovery (clawback) | Mandatory clawback policy adopted in 2023 per SEC Rule 10D-1/Nasdaq | Applies to covered officers, including principal accounting officer roles |
| Pledging oversight | Board reviews pledged/margined shares; disclosed pledging pertains to CEO (4.62M shares as of Jan 31, 2025) | No specific pledge disclosure for Mr. Kouninis; company monitors pledging risk |
Vesting schedules used across executive grants (varies by award/grant year):
- Time-based options: many legacy grants vest 20% after 1 year, remainder quarterly over 4 years (5-year schedule) . Some time-based options/RSUs vest on 4-year (25% after 1 year, then quarterly) or 3-year schedules; certain options/RSUs vest in equal quarterly installments over 4 years .
- RSU elections under CICP: if elected, 50% of target incentive is delivered as RSUs vesting 100% at 1 year (subject to plan funding and good-standing conditions) .
Employment Terms
| Term | Details |
|---|---|
| Roles and tenure | Joined Pega April 2008 (VP Finance); CAO since May 2008; Treasurer since Jan 2014; promoted to SVP Finance Apr 1, 2024 |
| Severance / CIC | No individual severance/CIC agreement is disclosed for Mr. Kouninis in the proxy. Under the 2004 LTIP, upon a “sale of Pegasystems,” the Board (independent directors) may provide for assumption, acceleration, substitution, or cancellation of awards; the Board applied similar constructs to NEOs’ awards . |
| Clawback, hedging, trading | Company-wide insider trading policy; no hedging; Dodd-Frank-compliant clawback policy adopted in 2023 . |
Company Performance Context (relevant to pay metrics and signals)
| Metric | 2023 | 2024 | YoY |
|---|---|---|---|
| ACV (constant currency) ($B) | $1.255 | $1.395 | +11% |
| ACV ($B) | $1.255 | $1.372 | +9% |
| Pega Cloud ACV ($000s) | $552,998 | $652,443 | +18% |
| Free Cash Flow ($000s) | $201,004 | $338,214 | +68% |
Additional 2025 developments impacting equity/insider-supply dynamics:
- Stock split: two-for-one forward split effected via stock dividend on June 20, 2025; all share/per-share amounts recast .
- Buybacks: authorization increased to $810M; 8.7M shares repurchased for $393.2M in 9M’25 (avg $44.97); $347.3M remaining authorization at 9/30/25 .
- Convertible notes: 0.75% due March 1, 2025; repaid at maturity (removed overhang) .
- Management commentary: free cash flow margin guided ~26% near term; longer-term target of 35–40% FCF margin and “Rule of 50” ambition; buybacks prioritized over M&A at current multiples .
Compensation Committee and Peer Benchmarking (for context)
- Compensation Committee chaired by Sharon Rowlands; met 6x in 2024 .
- Peer benchmarking emphasizes B2B software firms with ~$1.5–$3.0B revenue; peer set included Atlassian, Dynatrace, FICO, Guidewire, MongoDB, Okta, PTC, Twilio, Veeva .
- Say-on-Pay: 93% approval at 2024 meeting .
Investment Implications
- Pay-for-performance alignment: Executive bonuses and PSOs pivot on Rule-of-40 outcomes and ACV growth, aligning compensation with profitable subscription growth and FCF conversion. 2024 plan funding at 105% and 100% PSO achievement underscores a tight linkage between payout and performance .
- Retention and selling pressure: Standard 1-year RSU (for CICP elections), 2-year PSOs, and 3–5-year vesting schedules create predictable vesting events that can concentrate insider liquidity windows; ESPP one-year holding and net-share retention requirements temper near-term selling .
- Alignment and control environment: CAO’s SEC background plus clawback/no-hedging policies and share ownership guidelines support strong governance and financial reporting rigor—favorable for risk-adjusted execution of the Rule-of-40 playbook .
- Dilution vs. buybacks: Expanded repurchase authorization and active buybacks help offset equity-based compensation dilution, a positive backdrop for per-share FCF growth as management targets higher margins over time .
Note: Individual compensation, ownership levels, option holdings, pledging status, and severance terms for Mr. Kouninis are not itemized in the proxy, as he is not a 2024 NEO. Where applicable, company-wide policies and program mechanics are presented as they apply to executive officers, including the principal accounting officer .