Jeff Cotten
PROS HoldingsAbout Jeff Cotten
Jeff Cotten, 47, became President, CEO, and a Class III director of PROS on June 2, 2025; he previously served as Chairman and CEO at Alvaria (2022–2024), CEO at Tenfold (2019–2021), and President/CRO at Rackspace, overseeing a >$2B business . He holds a Master of Engineering from Southern Methodist University and a BA in Computer Science from the University of Texas at Austin . PROS’ recent performance context: FY2024 revenue grew 9% to $330.4M with subscription revenue +14% and improved free cash flow; MSUs for NEOs vest on relative TSR vs Russell 2000 and none were earned for the 2022 grant, with 2023 tracking ~3% and 2024 at 0% as of 12/31/24 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Alvaria, Inc. | Chairman; CEO | Chairman since 2024; CEO 2022–2024 | Led CX/WEM transformation; culture and operational excellence |
| Tenfold | Chief Executive Officer | 2019–2021 | Scaled VC-backed SaaS; growth-focused transformation |
| Rackspace | President; Chief Revenue Officer; senior leadership | ~10 years | Ran global operations for >$2B business; enterprise sales build; international ops |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Alvaria, Inc. | Chairman of the Board | 2024–present | Chair role following CEO tenure |
| EDS (Electronic Data Systems) | Early career | — | Entry into enterprise technology |
Fixed Compensation
| Component | Amount | Notes |
|---|---|---|
| Base Salary | $555,000 per year | Per Executive Employment Agreement dated April 28, 2025 |
| Target Annual Bonus | 100% of base salary | CEO eligible under Company bonus plan; plan authorized by Board |
| Director Compensation | None (as employee director) | No additional compensation for board service |
Performance Compensation
| Metric | Weighting | Target | Actual | Payout | Vesting/Mechanics |
|---|---|---|---|---|---|
| Total Revenue (2024 NEO Plan) | 50% | $338.0M | $330.4M | 66% of target | Annual cash incentive; Minimum EBITDA threshold $17.5M applied in 2024 |
| Free Cash Flow (2024 NEO Plan) | 50% | $29.0M | $26.2M | 66% of target | Annual cash incentive; minimum EBITDA threshold applied in 2024 |
| 2025 NEO Plan Key Metrics | — | — | — | — | Continues emphasis on total revenue and free cash flow; Minimum EBITDA threshold removed in 2025 |
| Market Stock Units (MSUs) | — | Relative TSR vs Russell 2000 | — | 0–200% of target based on out/under-performance | 3-year performance period; 2024 grant targets +5% outperformance for 100% earn; 35% underperformance → 0%; cap at +45% → 200% |
Notes:
- 2024 NEO plan performance and payout reflect company results before Cotten’s tenure; 2025 plan applies to his term .
- PROS uses MSUs as 40% and RSUs as 60% of NEO equity mix; RSUs typically vest 25% at 1-year then 6.25% quarterly over three years; MSUs vest after the 3-year period if earned .
Equity Ownership & Alignment
- Initial beneficial ownership: Form 3 filed June 3, 2025 indicates “No securities are beneficially owned” at start of tenure .
- Stock ownership guidelines: CEO must hold shares worth ≥6× base salary; new NEOs have 5 years to achieve compliance; anti-hedging, anti-short, and anti-pledging policies apply to all directors and employees .
- Equity plan capacity and dilution: 2017 Plan amendments proposed and supplemented in 2025 increased authorized shares by 3,000,000 and extended plan term to May 8, 2035; removed outdated per-employee annual grant limits previously tied to Section 162(m) .
| Ownership Snapshot | As of | Value/Count |
|---|---|---|
| Beneficially owned shares | 06/03/2025 | 0 (per Form 3) |
| CEO ownership guideline | Ongoing | 6× base salary; 5-year compliance window |
| Hedging/Pledging | Policy | Prohibited; margin pledging prohibited |
Employment Terms
| Term | Base Case Severance | Change-in-Control (CIC) Severance | Other Key Provisions |
|---|---|---|---|
| Trigger | Without cause or for good reason | Without cause or resignation for good reason within 3 months before or 12 months after CIC | Non-compete and non-solicit during employment and for 12 months post-termination |
| Cash | 12 months base salary | 150% of annual salary | |
| Bonus | Pro rata bonus for year of termination | Pro rata bonus; plus 150% of bonus at 100% targets | |
| Health Benefits | 12× monthly cost | 18× monthly cost | |
| Equity | Acceleration of equity that would vest before first anniversary of termination | Acceleration of equity that would vest post-termination; if CIC occurs on or before 12/31/2025, only 50% of such equity accelerates | |
| Good Reason Amendment | — | Closing of 2025 merger deemed Good Reason (material diminution) | First Amendment to Agreement (10/23/2025) |
Board Governance
- Board service: Class III director; initial term expires at the 2028 annual meeting; employee director (non-independent) and receives no director fees .
- Board structure: Independent non-executive Chairman (William Russell); all committees comprise independent directors; CEO is not expected to serve on standing committees .
- Policies: Clawback policy for incentive compensation; deep governance practices and strong stock ownership guidelines .
Company Performance Context
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Revenues ($USD) | $252,424,000 | $251,423,000 | $276,137,000 | $303,708,000 | $330,372,000 |
| EBITDA ($USD) | -$51,746,000* | -$59,897,000* | -$61,576,000* | -$39,895,000* | -$10,719,000* |
- Values retrieved from S&P Global.
Additional context: Pay-versus-performance shows PROS cumulative TSR value of a $100 investment at $37 in 2024 vs $65 in 2023; CEO “Compensation Actually Paid” fell sharply in 2024 consistent with stock performance and performance-based mix .
Risk Indicators & Red Flags
- Initial zero ownership may indicate near-term alignment ramp-up needed; ownership guideline requires 6× salary within 5 years .
- CIC amendment (Oct 2025) hardwires “Good Reason” at merger closing, increasing probability of severance payments in a transaction scenario .
- No Rule 10b5-1 trading arrangements adopted or terminated by directors/officers in Q3 2025; no Form 4s found for Cotten, implying limited insider selling pressure to date .
Compensation Committee & Peer Group
- Independent CLD Committee uses FW Cook; emphasizes pay-for-performance; peer groups refreshed annually (2025 peer group includes BigCommerce, BlackLine, Couchbase, JFrog, MeridianLink, Phreesia, SolarWinds, Sprout Social, Workiva, Zuora, etc.) .
- The company does not target a specific percentile; 2024 say-on-pay support was 98% .
Investment Implications
- Strong pay-for-performance architecture aligns Cotten’s realized compensation with TSR and profitable growth via MSUs and revenue/FCF bonus metrics; initial zero ownership plus strict anti-hedging/pledging and 6× salary guideline suggests increasing “skin in the game” over the next 5 years .
- CIC protections and the October 2025 “Good Reason” amendment create clear severance economics in a transaction, potentially influencing management’s negotiation stance; note partial equity acceleration if CIC occurs on/before 12/31/2025 (50% cap) .
- Operational backdrop shows multi-year revenue growth and improved free cash flow, but TSR headwinds constrained MSU payouts; monitoring 2025 bonus target setting and subsequent equity grants to Cotten will be key for assessing retention risk and near-term selling pressure (no Form 4s to date) .