Kerim Akgonul
PEGASYSTEMSAbout Kerim Akgonul
Kerim Akgonul, age 54, is Pegasystems’ Chief Product Officer (CPO). He joined Pega in 1992, served as SVP of Engineering from 2014–2021, and became CPO in April 2021; he holds a B.S. in mathematics and computer science from Indiana University of Pennsylvania . Company performance under his CPO tenure includes achieving Rule of 40 status in 2024 and delivering ACV growth of 9% (11% constant currency), total revenue of $1,497M (+5% y/y), and record free cash flow of $338M, with 2025 guidance for 12% ACV growth, $455M cash from operations, and $440M free cash flow .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Pegasystems | SVP Engineering | 2014–2021 | Led engineering for platform/product evolution; precursor to CPO role |
| Pegasystems | Various software development/managerial roles | 1992–2014 | Nearly three decades of product development and management |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| None disclosed | — | — | — |
Fixed Compensation
| Year | Base Salary (USD) | Notes |
|---|---|---|
| 2024 | $463,154 | Pro-rated due to increase effective Apr 1, 2024; annualized base set to $468,000 |
| 2023 | $450,000 | — |
| 2022 | $444,016 | Pro-rated due to prior changes |
Performance Compensation
- Program architecture: Corporate Incentive Compensation Plan (CICP) funds bonuses based on a Corporate Performance Target comprising 75% financial goals (Rule of 40: ACV growth + free cash flow margin; 2024 full achievement at ≥39%) and 25% strategic initiatives; threshold funding at 70% .
- 2024 funding: Board set Executive Funding Percentage at 105% (up to 107.5% if exceeded) .
- Akgonul’s 2024 target bonus: 75% of earned base salary .
| Metric | Weighting | Target | Actual/Outcome | Payout Basis | Vesting/Settlement |
|---|---|---|---|---|---|
| Rule of 40 (ACV growth + FCF margin) | 75% | Full at ≥39% | Company achieved 100% metrics; became Rule of 40 company | Plan funded at 105% | Cash or RSUs (one-year vest if elected) |
| Strategic Initiatives | 25% | Board-approved annual initiatives | Included in Corporate Performance Target | Plan funded at 105% | Cash or RSUs (one-year vest if elected) |
| 2024 CICP—Akgonul Actual Cash Bonus | — | — | $203,901 non-equity bonus reported ; cash portion $204,000 with 50% RSU election | Based on funding and individual assessment | RSU election vests 1-year; grant at 85% of stock price |
Equity Incentives (design and 2024 grants)
- Time-based RSUs and options plus performance-based stock options (PSOs); PSOs vest contingent on performance over two years .
- 2023 PSOs: 25% vested at year 1 (achieved), 75% vested at year 2 (achieved 100% of 2024 targets) .
- 2024 PSOs: 25% eligible at year 1 (achieved 100% for 2024), 75% eligible at year 2 with scaling up to 180% based on 2025 ACV growth and Rule of 40 (achievement scale 10–15% ACV growth across R40 thresholds) .
| Grant (3/5/2024) | Instrument | Count | Exercise Price | Vesting |
|---|---|---|---|---|
| Periodic RSUs | RSU | 17,609 | — | 4-year time-based |
| Periodic Options | Stock Options | 35,218 | $62.10 | 4-year time-based |
| Performance Options (PSOs) | Stock Options | 30,000 (target) | $62.10 | 2-year; 25% yr1 (2024 scale); up to 180% yr2 (2025 ACV/R40 scale) |
| CICP RSUs (50% election) | RSU | 2,564 | — | 1-year vest if plan funded |
Equity Ownership & Alignment
| Date | Shares Owned | Shares Acquirable within 60 Days | Total Beneficial Ownership | % of Outstanding |
|---|---|---|---|---|
| Jan 31, 2025 | 52,054 | 287,765 | 339,819 | <1% |
| Jan 31, 2024 | 53,092 | 188,773 | 241,865 | <1% |
- Stock ownership guidelines: CEO direct reports must own 1x base salary; 50% of net shares retained until compliance; 5-year phase-in; currently all directors/officers satisfied or in phase-in .
- Hedging prohibited; compensation recovery (clawback) policy adopted in 2023 under SEC Rule 10D-1/Nasdaq standards .
- Pledging: Proxy discloses pledged shares for CEO Alan Trefler; no pledging disclosed for Akgonul .
Outstanding Awards Snapshot (12/31/2024)
Selected Akgonul positions:
- Options outstanding include tranches at $44.30 (exercisable 15,534), $58.95, $64.35, $90.05, $130.45, $85.40, $52.47, $33.90, $47.27, and $62.10 across various grant years and schedules .
- Unvested RSUs noted in table include 334, 1,153, 5,289, 10,253, 2,564 (CICP), and 17,609 (periodic) shares with market values based on $93.20 price .
Employment Terms
- No individual severance or change-of-control agreement disclosed for Akgonul in proxy; general plan terms under the 2004 Long-Term Incentive Plan permit Board to accelerate, assume, substitute, or cancel awards upon a sale of the company .
- CICP RSU elections vest only if plan funding threshold met and executive remains in good standing .
Performance & Track Record
- 2024 outcomes: ACV $1,372M (+9% y/y; +11% constant currency), total revenue $1,497M (+5%), GAAP net income $99M, free cash flow $338M (+68% y/y); Pega Cloud ACV +18% .
- Company also reported backlog of $1,623M (+11% y/y; +14% constant currency) .
- Say-on-pay approval: 93% at 2024 Annual Meeting .
Compensation Peer Group (Benchmarking)
- 2024 peer group used for benchmarking (50th–75th percentile cash comp target for most roles): Atlassian, Dynatrace, Fair Isaac, Guidewire, MongoDB, Okta, PTC, Twilio, Veeva .
- Prior-year peer set included Guidewire, PTC, Splunk, Fair Isaac, Verint .
Vesting Schedules and Insider Selling Pressure
- PSOs: two-year performance vesting; 2023 PSOs fully earned over two years (25% yr1, 75% yr2); 2024 PSOs earned 25% at yr1, second-year vesting subject to 2025 ACV/R40 scale (up to 180%) .
- Recent Form 4 activity (2025):
- Oct 24–28, 2025: Akgonul exercised options totaling 70,000 shares at strikes of $26.24, $29.48, $32.18, and $16.95 (code M); 47,692 shares disposed as tax withholding (code F); beneficial ownership reported at 113,688 shares post-transactions .
- Article coverage references additional option exercises and net share dispositions (withholding), implying episodic selling tied to vesting/exercise rather than open-market liquidity events .
Governance, Clawbacks, and Alignment Policies
- No hedging policy for all directors and employees, including executive officers .
- Compensation recovery (clawback) policy complies with SEC Rule 10D-1 and Nasdaq; mandatory recovery of erroneously awarded incentive compensation upon restatement .
- Ownership guidelines and retention requirements (CEO 3x salary; CEO direct reports 1x salary; directors 3x retainer; retain 50% of net shares until compliant) .
Multi-Year Compensation (Akgonul)
| Year | Salary (USD) | Stock Awards (USD) | Option Awards (USD) | Non-Equity Incentive Comp (USD) | All Other (USD) | Total (USD) |
|---|---|---|---|---|---|---|
| 2024 | $463,154 | $1,247,858 | $1,648,857 | $203,901 | $10,350 | $3,574,120 |
| 2023 | $450,000 | $1,015,747 | $908,114 | $135,000 | $9,900 | $2,518,761 |
| 2022 | $444,016 | $1,150,976 | $3,177,303 | $124,357 | $9,150 | $4,905,802 |
Employment Terms (Severance and Change-of-Control)
| Term | Provision | Source |
|---|---|---|
| Individual severance/CIC | Not specifically disclosed for Akgonul | |
| Equity treatment upon sale | Board may accelerate/assume/substitute/cancel awards under 2004 LTIP | |
| Clawback | Mandatory recovery policy adopted; applies to incentive comp |
Investment Implications
- Pay-for-performance alignment appears robust: 2024 CICP funding at 105% was driven by Rule of 40 and strategic execution; Akgonul’s target bonus structure (75% of salary) and election to receive 50% in RSUs signals long-term alignment with shareholders .
- Retention risk looks contained given significant outstanding equity (time-based and performance-based) with explicit vesting gates tied to Rule of 40 and ACV growth; recent Form 4s show net share dispositions largely for tax withholding on exercises, not persistent open-market selling .
- Governance controls (no hedging, clawbacks, ownership guidelines) and broad equity participation underscore alignment; no pledging disclosed for Akgonul, mitigating leverage-related red flags .
- Performance backdrop is constructive: ACV up 9% in 2024 (11% cc), FCF $338M, with higher 2025 cash flow guidance; execution on Pega Cloud and GenAI initiatives supports product-led growth under the CPO’s remit .