Kenneth Stillwell
PEGASYSTEMSAbout Kenneth Stillwell
Kenneth Stillwell (age 54) is Pegasystems’ Chief Operating Officer and Chief Financial Officer; he joined Pega in July 2016 and was promoted to COO in April 2021. He holds a B.S. in business/economics from the University of Pittsburgh, an M.S. in accounting and finance from the University of South Carolina, and is a CPA . Pega’s 2024 performance metrics underpinning executive pay emphasized Rule of 40 (ACV growth + free cash flow margin); the company delivered ACV of $1.372B (+9% YoY; +11% constant currency) and free cash flow of $338.2M (+68% YoY) . Shareholders approved say‑on‑pay with strong support (2025: 73,516K for vs 1,777K against; 2024: 84% approval) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Dynatrace | Senior Vice President & CFO | — | Finance leadership at a digital performance management leader |
| SOVOS | EVP & CFO | — | Scaled financial operations for a compliance SaaS provider |
| PTC | Division CFO | — | Business unit finance for a public software vendor |
External Roles
- No external directorships or outside roles disclosed for Mr. Stillwell in the proxy statements reviewed .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary (USD) | $516,306 | $530,000 | $544,615 (pro‑rated; increased to $550,000 effective Apr 1, 2024) |
| Target Bonus (% of Earned Salary) | 60% (CPO ref; Stillwell 2022 % not separately stated in 2024 proxy, see 2023 row) | 70% | 80% |
| 2025 Target Bonus (% of Earned Salary) | — | — | 90% (set for 2025 plan) |
| Actual Cash Bonus Paid (CICP) | $174,577 | $185,500 | $247,721 (elected to take 50% of target as RSUs) |
| All Other Compensation (401k/benefits) | $9,150 | $9,900 | $10,350 |
Performance Compensation
| Component | Metric & Weighting | Target/Scale | Actual/Payout | Vesting Terms |
|---|---|---|---|---|
| Executive Incentive Plan (CICP) | Corporate Performance Target: 75% Rule of 40 (ACV growth + FCF margin); 25% strategic initiatives | Threshold funding at 70%; design allowed up to 107.5% if exceeded | Board set 2024 Funding Percentage for executive officers at 105% | Annual cash/RSUs; executives may elect 50% of target in RSUs vesting at 1 year |
| 2024 PSOs (Performance Stock Options) | FY2024: Rule of 40 scale (25% tranche); FY2025: ACV Growth + Rule of 40 scale (75% tranche) | FY2024 scale (100% at 39+): 39+=100%; 38+=95%; 37+=85%; 36+=70%; 35+=50%; <35=0 | Company achieved 100% of 2024 performance metrics; 25% tranche vested at 1-year | 25% eligible to vest at 1 year; 75% eligible at 2 years (max up to 180% at top metrics) |
2025 PSO FY2025 Achievement Scale (select outcomes) :
| ACV Growth | Rule of 40 | FY2025 Vesting % (second-year tranche) |
|---|---|---|
| 10% | 80 | 60% |
| 12% | 100 | 100% |
| 15% | 160 | 160% |
Equity Awards (2024 grant detail)
| Grant Type | Grant Date | Units/Options | Exercise Price | Grant Date Fair Value |
|---|---|---|---|---|
| RSUs (Periodic) | Mar 5, 2024 | 35,218 | — | $2,177,881 |
| Stock Options (Time‑based) | Mar 5, 2024 | 70,436 | $62.10 | $1,822,020 |
| PSOs (Performance) | Mar 5, 2024 | 40,000 target | $62.10 | $983,797 (max $1,574,075) |
| RSUs (CICP election) | Mar 5, 2024 | 3,522 | — | $218,294 |
Multi‑year total equity comp and options (from Summary Compensation Table):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock Awards (USD) | $2,197,143 | $2,181,866 | $2,396,175 |
| Option Awards (USD) | $6,663,138 | $1,539,691 | $2,805,817 |
Vesting schedules and mechanics:
- Periodic RSUs/Options typically vest over 4 years; options commonly in equal quarterly installments after initial cliff .
- PSOs vest 25% after 1 year and 75% after 2 years, subject to Rule of 40/ACV performance; any unearned portion forfeited .
- Net settlement feature for Section 16 officers allows shares withheld to cover exercise cost/taxes (reduces shares issued; may lessen open-market selling pressure) .
Equity Ownership & Alignment
| As of | Shares Owned | Shares Acquirable within 60 Days | Total Beneficial Ownership | % of Shares Outstanding |
|---|---|---|---|---|
| Jan 31, 2024 | 24,535 | 288,523 | 313,058 | <1% (asterisk per table) |
| Jan 31, 2025 | 16,466 | 374,037 | 390,503 | <1% (asterisk per table) |
Ownership guidelines and pledging/hedging:
- Stock ownership guidelines require CEO direct reports to hold stock equal to 1x annual base salary; until compliant, retain 50% of net shares vesting; unvested awards don’t count. Company reports all directors/officers are compliant or within phase‑in period .
- Hedging transactions are prohibited; Board reviews pledged/margined shares by insiders; no pledging disclosed for Mr. Stillwell in ownership tables .
Selected outstanding awards at FY2024 YE (illustrative):
- Unvested RSUs and market values shown in proxy across multiple tranches (e.g., 23,494 units; $2,189,641; 35,218 units; $3,282,318; 3,522 units; $328,250) .
- Unexercisable options include 70,436 at $62.10 (2024 grant) and prior grants (e.g., 61,326 at $47.27) .
Change‑of‑Control (double‑trigger) potential values (as of Dec 31, 2024):
| Scenario | RSUs Value | Stock Options In‑the‑Money Value |
|---|---|---|
| Sale of Company + termination of employment | $7,119,734 | Up to $14,160,520 (excluding OTM options; based on $93.20 close) |
Insider selling pressure indicators:
- 2023 RSUs vested: 17,775 ($859,020); options exercised: none (Stillwell) .
- 2024 PSO first‑year tranche vested at 100% achievement (potential incremental option liquidity on anniversary dates) .
Employment Terms
- Severance: If terminated without cause, severance equals 6 months of then‑current base salary plus 1 additional month per year of service (max 12 months). As of 12/31/2024, a without‑cause termination would have paid $550,000 .
- Change‑of‑Control: Upon sale of the company and termination of employment (double trigger), all unvested RSUs and stock options vest immediately (see potential values above) .
- Clawback: Compensation recovery policy adopted in 2023 (SEC Rule 10D‑1; Nasdaq listing standards) mandates recovery of erroneously awarded incentive pay after restatements .
- Other policies/perquisites: Health, dental, vision, life, AD&D, disability; 401(k) match 50% of contributions up to 6% of salary; no deferred compensation; UK plan not applicable to Stillwell; long‑term care insurance premiums noted in program scope .
- Insider trading: Hedging prohibited; governance includes stock ownership and retention policies .
Compensation Structure Analysis
- Cash vs equity mix: Stillwell’s 2024 comp emphasized equity ($2.40M RSUs; $2.81M options) with smaller cash bonus ($247.7K), reinforcing long‑term alignment .
- Metric stringency: The executive plan is anchored to Rule of 40 and strategic initiatives; 2024 plan funding set at 105% by the Board despite design allowing up to 107.5%—demonstrates discretion and governance oversight .
- PSO design: Two‑year PSO with capped upside (max 180%) linked to ACV growth and Rule of 40 in 2025, directly tying value creation to topline and cash metrics .
- Peer benchmarking: 2025 peers include Atlassian, Dynatrace, Fair Isaac, Guidewire, MongoDB, Okta, PTC, Twilio, Veeva; target total cash typically set between 50th–75th percentile (CEO exception) .
Say‑on‑Pay & Shareholder Feedback
- 2025 say‑on‑pay: 73,515,763 for; 1,776,719 against; 48,273 abstain; 5,265,439 non‑votes .
- 2024 say‑on‑pay approval: 84% support; program continued under same principles following shareholder feedback .
- Ongoing engagement: Focus on top institutional holders via quarterly outreach and annual investor sessions .
Investment Implications
- Alignment: High equity weight and PSO design tied to Rule of 40/ACV strengthen pay‑for‑performance alignment; ownership guidelines and hedging prohibitions reduce misalignment risk .
- Retention & pressure: PSO and RSU vesting schedules create periodic liquidity events; net settlement reduces open‑market selling, but vesting cadence still adds supply over time; no Stillwell pledging disclosed .
- Change‑of‑control economics: Double‑trigger full acceleration is standard but can be value‑significant (RSUs ~$7.1M; options up to ~$14.2M at 12/31/2024), implying potential dilution/overhang considerations in strategic scenarios .
- Execution risk: Funding based on Rule of 40 requires sustained ACV growth and free cash flow discipline; 2024 delivery was strong (+11% ACV constant currency; FCF +68%), but upside in PSOs depends on maintaining these metrics through 2025 .