Vertex (VERX) DEF 14ADefinitive proxy

PROXY STATEMENT

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Information Concerning Voting and Solicitation

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Vertex, Inc. (the “Board”) of proxies to be voted at our Annual Meeting of Stockholders to be held on June 12, 2024 (the "Annual Meeting"), at 9:00 a.m. EDT, and at any continuation, postponement, or adjournment of the Annual Meeting. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. In order to attend the Annual Meeting, you must register at www.proxydocs.com/verx. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the Annual Meeting and to vote and submit questions during the Annual Meeting. As part of the registration process, you must enter the control number located on your proxy card, voting instruction form, or Notice of Internet Availability. If you are a beneficial owner of shares registered in the name of a broker, bank or other nominee, you will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process.

Holders of record of outstanding shares of capital stock, composed of Class A Common Stock and Class B Common Stock, at the close of business on April 17, 2024 (the "Record Date"), will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement, or adjournment of the Annual Meeting, and will vote together as a single class on all matters presented at the Annual Meeting. Each share of our Class A Common Stock entitles its holders to one vote per share on all matters presented to our stockholders at the Annual Meeting. Our Class B Common Stock entitles its holders to ten (10) votes per share on all matters presented to a vote of our stockholders at the Annual Meeting. At the close of business on the Record Date, there were 62,450,392 shares of Class A Common Stock, and 92,661,000 shares of Class B Common Stock issued and outstanding and entitled to vote at the Annual Meeting, representing 6.3% and 93.7% of the combined voting power of our Common Stock, respectively.

This Proxy Statement will be released on or about April 29, 2024 to our stockholders on the Record Date.

In this Proxy Statement, "we," "us," "our," the "Company," and "Vertex" refer to Vertex, Inc., and, unless otherwise stated, all of its subsidiaries.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON WEDNESDAY, JUNE 12, 2024.

This Proxy Statement is available at www.proxydocs.com/verx.

Why you received the Notice of Internet Availability of this Proxy Statement. You are viewing or have received these proxy materials because Vertex’s Board is soliciting your proxy to vote your shares at the Annual Meeting. This Proxy Statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission (the "SEC") and that is designed to assist you in voting your shares.

Printed Copies of Our Proxy Materials. If you received printed copies of our proxy materials, then instructions regarding how you can vote are contained on the proxy card included in the materials.

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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF STOCKHOLDERS

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WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?

The Record Date for the Annual Meeting is April 17, 2024. You are entitled to vote at the Annual Meeting only if you were a stockholder of record at the close of business on that date, or if you hold a valid proxy for the Annual Meeting. You will need to obtain your own Internet access if you choose to attend the Annual Meeting and/or vote over the Internet. Each share of our Class A Common Stock entitles its holders to one (1) vote per share on all matters presented to our stockholders at the Annual Meeting. Each share of our Class B Common Stock entitles its holders to ten (10) votes on all matters presented to our stockholders at the Annual Meeting.

WHAT IS THE DIFFERENCE BETWEEN BEING A "RECORD HOLDER" AND HOLDING SHARES IN "STREET NAME"?

A record holder holds shares in his or her name. Shares held in "street name" means shares that are held in the name of a bank or broker on a person’s behalf.

AM I ENTITLED TO VOTE IF MY SHARES ARE HELD IN "STREET NAME"?

Yes. If your shares are held by a bank or a broker, you are considered the "beneficial owner" of those shares held in "street name." If your shares are held in street name, our proxy materials are being provided to you by your bank or broker, along with a voting instruction card if you received printed copies of our proxy materials. As the beneficial owner, you have the right to direct your bank or broker how to vote your shares, and the bank or broker is required to vote your shares in accordance with your instructions. If you have not received information on how to attend the Annual Meeting, you should contact your bank or broker to obtain your control number or otherwise vote through the bank or broker.

HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?

A quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, present electronically or represented by proxy, of the holders of a majority in voting power of Common Stock issued and outstanding and entitled to vote on the Record Date will constitute a quorum.

WHO CAN ATTEND THE 2024 ANNUAL MEETING OF STOCKHOLDERS?

You may attend the Annual Meeting only if you are a Vertex stockholder who is entitled to vote at the Annual Meeting, or if you hold a valid proxy for the Annual Meeting. The Annual Meeting will be held entirely online to allow greater participation. In order to attend the Annual Meeting, you must register at www.proxydocs.com/VERX. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the Annual Meeting and to vote and submit questions during the Annual Meeting. As part of the registration process, you must enter the control number located on your proxy card, voting instruction form, or Notice of Internet Availability. If you are a beneficial owner of shares registered in the name of a broker, bank or other nominee, you will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process.

WHY A VIRTUAL MEETING?

We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for us and our stockholders. We believe the virtual meeting will enable increased stockholder attendance and participation since stockholders can participate from any location around the world.

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WHAT IF DURING THE CHECK-IN TIME OR DURING THE ANNUAL MEETING I HAVE TECHNICAL DIFFICULTIES OR TROUBLE ACCESSING THE VIRTUAL MEETING WEBSITE?

We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you are having trouble registering online, please use the link “Having trouble registering” at the bottom of the registration page to access the FAQ or email DSMSupport@mediantonline.com.

WHAT IF A QUORUM IS NOT PRESENT AT THE ANNUAL MEETING?

If a quorum is not present at the scheduled time of the Annual Meeting, then either (i) the chairperson of the Annual Meeting or (ii) a majority in voting power of the stockholders entitled to vote at the Annual Meeting, present electronically or represented by proxy, may adjourn the Annual Meeting until a quorum is present or represented.

WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE INTERNET NOTICE OR MORE THAN ONE SET OF PROXY MATERIALS?

It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Internet Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating and returning the enclosed proxy card in the enclosed envelope.

HOW DO I VOTE?

We recommend that stockholders vote by proxy even if they plan to participate in the Annual Meeting and vote electronically during the meeting. If you are a stockholder of record, there are three ways to vote by proxy:

Internet and telephone voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., EDT, on June 11, 2024. In order to attend the Annual Meeting, you must register at www.proxydocs.com/verx. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the Annual Meeting and to vote and submit questions during the Annual Meeting. As part of the registration process, you must enter the control number located on your proxy card, voting instruction form, or Notice of Internet Availability. If you are a beneficial owner of shares registered in the name of a broker, bank or other nominee, you will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process.

The Annual Meeting webcast will begin promptly at 9:00 a.m. EDT, on June 12, 2024.

If your shares are held in street name through a bank or broker, you will receive instructions on how to vote from the bank or broker. You must follow their instructions in order for your shares to be voted. Internet and telephone voting also may be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you would like to vote your shares at the Annual Meeting, you may register to participate and enter the appropriate password included in the voting instruction card provided to you by your bank or broker. If you hold your shares in street name and you do not receive an appropriate password, you may need to log in to your bank or broker’s website and select the stockholder communications mailbox to access the Annual Meeting and vote. Instructions should also be provided on the voting instruction card provided by your bank or broker.

CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY?

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Yes.

If you are a registered stockholder, you may revoke your proxy and change your vote by:

Your most recent proxy card or Internet or telephone proxy is the one that is counted. Your virtual attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote electronically during the Annual Meeting.

If your shares are held in street name, you may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you may vote electronically during the Annual Meeting.

WHO WILL COUNT THE VOTES?

A representative of Equiniti Trust Company, our inspector of election, will tabulate and certify the votes.

WHAT IF I DO NOT SPECIFY HOW MY SHARES ARE TO BE VOTED?

If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board. The Board’s recommendations are indicated in the Proxy Summary section of this Proxy Statement, as well as with the description of each proposal in this Proxy Statement.

WILL ANY OTHER BUSINESS BE CONDUCTED AT THE ANNUAL MEETING?

We know of no other business that will be presented at the Annual Meeting. If any other matter properly comes before the stockholders for a vote at the Annual Meeting, however, the proxy holders named on the Company’s proxy card will vote your shares in accordance with their best judgment.

HOW MANY VOTES ARE REQUIRED FOR THE APPROVAL OF THE PROPOSALS TO BE VOTED UPON AND HOW WILL ABSTENTIONS AND BROKER NON-VOTES BE TREATED?

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WHAT IS AN ABSTENTION AND HOW WILL VOTES WITHHELD AND ABSTENTIONS BE TREATED?

A "vote withheld," in the case of the proposal regarding the election of directors, or an "abstention," in the case of the proposal regarding the ratification of our independent registered public accounting firm, advisory vote to approve our named executive officer compensation and advisory vote to approve the preferred frequency of votes on the compensation of our named executive officers represents a stockholder’s affirmative choice to decline to vote on a proposal. Votes withheld and abstentions are counted as present and entitled to vote for purposes of determining a quorum. Votes withheld have no effect on Proposal 1. Abstentions have no effect on Proposal 2, Proposal 3, and Proposal 4.

WHAT ARE BROKER NON-VOTES AND DO THEY COUNT FOR DETERMINING A QUORUM?

Generally, broker non-votes occur when shares held by a broker in "street name" for a beneficial owner are not voted with respect to a particular proposal because the broker (i) has not received voting instructions from the beneficial owner and (ii) lacks discretionary voting power to vote those shares. A broker is entitled to vote shares held for a beneficial owner on routine matters, such as the ratification of the appointment of Crowe LLP as our independent registered public accounting firm, without instructions from the beneficial owner of those shares. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on non-routine matters, such as the election of directors. Broker non-votes count for purposes of determining whether a quorum is present.

Brokerage firms or other nominees may not vote your shares on Proposal 1, Proposal 3 or Proposal 4 in the absence of your specific instructions as to how to vote. We encourage you to provide instructions to your brokerage firm or other nominee regarding the voting of your shares.  If you do not instruct your brokerage firm or other nominee how to vote with respect to Proposal 1, Proposal 3 or Proposal 4, your brokerage firm or other nominee may not vote with respect to these proposals and your vote will be counted as a “broker/nominee non-vote.” “Broker/nominee non-votes” are non-votes by a brokerage firm or other nominee for shares held in a client’s account for which the brokerage firm or other nominee does not have discretionary authority to vote on a particular matter and has not received instructions from the client. How we treat broker/nominee non-votes is separately described in the table above.

WHERE CAN I FIND THE VOTING RESULTS OF THE 2024 ANNUAL MEETING OF STOCKHOLDERS?

We plan to announce preliminary voting results at the Annual Meeting and we will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC shortly after the Annual Meeting.

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WHAT IS THE SAY-ON-PAY VOTE?

The Say-on-Pay vote is an advisory vote by our stockholders whereby the stockholders can either endorse or not endorse our system of compensating our executive officers. While the Say-on-Pay vote is not binding on the Board, the Board intends to take the vote into consideration in making future compensation awards to our executive officers. We may also use the Say-on-Pay vote to engage stockholders in a dialogue regarding our system of compensating its executive officers.

PROPOSALS TO BE VOTED ON

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Proposal 1: Election of Directors

Our Board, after consultation with the Nominating and Governance Committee, has nominated Amanda Westphal Radcliffe, Stefanie Westphal Thompson, and Bradley Gayton as Class I Director nominees to be elected to hold office until the annual meeting of stockholders to be held in 2027 and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.  Kevin Robert will retire as a director effective June 12, 2024, after the Annual Meeting.  A replacement director for Mr. Robert has not been identified but will be appointed at such time as is appropriate.

The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the three nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors. Votes withheld and broker non-votes will have no effect on the outcome of the vote on this proposal.

Our Board currently consists of eight members, which includes one employee director, our President and Chief Executive Officer, David DeStefano. Our Amended and Restated Certificate of Incorporation (“Charter”) and Amended and Restated Bylaws (“Bylaws”) provide that the authorized number of directors shall be fixed from time to time by a resolution of the majority of our Board. Our current non-employee directors are:

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Our Board is divided into three staggered classes of directors of the same or nearly the same number. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the directors will expire upon the election and qualification of successor directors at the annual meeting of stockholders to be held during the years 2024 for the Class I Directors, 2025 for the Class II Directors and 2026 for the Class III Directors.

Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class shall consist of one-third of the directors. The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the shares of Common Stock represented by the proxy for the election as Class I Directors the persons whose names and biographies appear below. All of the persons whose names and biographies appear below are currently serving as our directors. In the event any of the nominees should become unable to serve or for good cause will not serve as a director, it is intended that votes will be cast for a substitute nominee designated by the Board or the Board may elect to reduce its size. The Board has no reason to believe the nominees named below will be unable to serve if elected. Each of the nominees has consented to being named in this Proxy Statement and to serve if elected.

Nominees for Class I Directors

The nominees for Class I Directors are as follows:

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The following sets forth the names and biographical summaries as of the Records Date of the individuals who are our nominees for election as directors of the Company, all of whom are current directors of the Company.

Amanda Westphal Radcliffe has served on our Board since 1993. Prior to joining our Board, Ms. Radcliffe served in a variety of roles at the Company, from technical software instructor, to finance, production, and middle market product teams. Prior to joining the Company, she was a Managing Director at Rosenbluth International, since acquired by American Express. Ms. Radcliffe is Chair of the Children’s Hospital of Philadelphia Foundation Board of Advisors, President of the Neurodiversity Employment Network of Philadelphia, and serves on the St. Joe’s University Kinney Center for Autism Education and Support Advisory Board. Ms. Radcliffe is Chair Emeritus of the Drexel University, A.J. Drexel Autism Institute Board, and Chair Emeritus of Breastcancer.org. Ms. Radcliffe is also a member of the Philadelphia Chapter of Women Corporate Directors and the National Association of Corporate Directors (“NACD”). Ms. Radcliffe holds a BA from Moravian University. We believe that Ms. Radcliffe is qualified to serve on our Board because of her extensive knowledge of our Company and our business derived from her longtime service with the Company.

Stefanie Westphal Thompson has served on our Board since 1993. She joined the Company in 1991 and has served in a variety of roles, including Treasurer. Prior to joining the Company, Ms. Thompson was a Vice President at Chemical Bank (now part of Chase), where she specialized in managing the banking relationship for middle market companies. Ms. Thompson sat on Bryn Mawr Hospital’s Foundation Board for eight years, serving as Head of their Trustee Committee and as Vice-Chair. Ms. Thompson also served on the Board of the Agnes Irwin School in Rosemont, Pennsylvania, for ten years, heading its Trustees Committee. Ms. Thompson earned an MBA in Finance from Fordham University and has a dual BA in Engineering and Economics from Lafayette College. We believe that Ms. Thompson is qualified to serve on our Board because of her corporate finance experience as well as her knowledge of our Company and our business derived from her longtime service with the Company.

Bradley Gayton joined our Board in 2021. Mr. Gayton previously served as the Senior Vice President, General Counsel of the Coca-Cola Company. Prior to joining The Coca-Cola Company, Mr. Gayton spent 29 years in various leadership positions at Ford Motor Company and most recently as Group Vice President, Chief Administrative Officer and General Counsel. Mr. Gayton has deep experience in law, governance, tax and technology. He brings a global perspective in terms of the tax obligations for multinational enterprises and has experience in developing solutions through organizational innovation. While at Ford, he led explorations to see how artificial intelligence could be used for different business applications and collaborated with Vertex on the company’s tax compliance solutions worldwide. Mr. Gayton has a BS in Business Administration from the State University of New York at Buffalo, School of Management in 1986 and a JD from the State University of New York at Buffalo, Law School. We believe Mr. Gayton is qualified to serve on our Board because of his expertise in the legal field and his significant public company experience.

Ms. Radcliffe and Ms. Thompson are siblings. In connection with the initial public offering (“IPO”) of our Class A Common Stock in July 2020, we entered into a Stockholders’ Agreement with Amanda Westphal Radcliffe, Stefanie Westphal Thompson and Jeffrey Westphal, with Ms. Radcliffe and Ms. Thompson serving as members of our Board, and their affiliated trust entities and family members (the “Stockholders’ Agreement”). Under the Stockholders’ Agreement, Mr. Westphal nominated Bradley Gayton and Ms. Radcliffe and Ms. Thompson nominated themselves, and were elected to our Board as Class I Directors at the Vertex 2021 Annual Meeting. There are no other family relationships among any of our other executive officers or directors.

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A VOTE IS REQUIRED FOR THIS PROPOSAL. This proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the three nominees receiving the highest number of affirmative “FOR” votes will be elected as directors. Votes withheld and broker non-votes will have no effect on the outcome of the vote on this proposal.

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RECOMMENDATION OF THE BOARD:

The Board unanimously recommends a vote

FOR the election of Amanda Westphal Radcliffe,

Stefanie Westphal Thompson, and Bradley Gayton.

Continuing Members of the Board

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Class II Directors (terms to expire at the 2025 Annual Meeting)

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The current members of the Board who are Class II Directors are as follows:

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The principal occupations and business experience, for at least the past five years, of each Class II Director are as follows:

Philip Saunders joined our Board in June 2022. Mr. Saunders is the Chief Executive Officer of Relativity since December 2022.  He was recently the Chief Executive Officer and member of the board of directors of Cornerstone On-Demand, a market leading talent management Software as a Service (SaaS) company. Mr. Saunders successfully implemented a company transformation initiative resulting in a return to growth, expansion of profitability, and increased customer retention. Mr. Saunders ultimately executed a successful sales process of the company via a public-to-private transaction in October 2021 with the acquisition by Clearlake Capital.  This followed Cornerstone’s acquisition in April 2020 of Saba Software, Inc., where Mr. Saunders was a member of Saba’s board of directors, and served as Chief Executive Officer, where he was responsible for leading the transformation of the business, executed on multiple acquisitions, and accelerated growth and EBITDA expansion. Prior to joining Saba in 2015, Mr. Saunders was President and a member of the board of directors of SafeNet, Inc. (acquired by Gemalto N.V). Mr. Saunders holds an MBA with an International Finance concentration from Seton Hall University’s W. Paul Stillman School of Business. Mr. Saunders has been recognized by Comparably as one of the top 100 Best CEO’s in 2021. We believe that Mr. Saunders is qualified to serve on our Board because of his intimate knowledge of the global Software and SaaS markets by virtue of his multiple roles as Chief Executive Officer of various software companies, operational expertise, and industry knowledge and experience.

J. Richard Stamm joined our Board in January 2019. Prior to joining our Board, Mr. Stamm was a partner with PwC for 30 years, during which time he served a long list of domestic and international clients and held numerous leadership positions. Over the final 12 years of his career with PwC, Mr. Stamm was the firm’s Vice Chairman and U.S. Tax Leader, and then progressed to PwC’s Vice Chairman of Global Tax. Mr. Stamm is Vice President and Chief Financial Officer of Stamm Development Group LLC, a Philadelphia and South Florida area real-estate developer. Mr. Stamm is a member emeritus of the Board of Advisors for the Leventhal School of Accounting at the University of Southern California and was formerly a member of the Boards of Germantown Academy and Lycoming College. Mr. Stamm received a BA in Accounting from Lycoming College. We believe that Mr. Stamm is qualified to serve on our Board because of his significant industry and corporate finance experience.

Class III Directors (terms to expire at the 2026 Annual Meeting)

The current members of the Board who are Class III Directors are as follows:

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The principal occupations and business experience, for at least the past five years, of each Class III Director are as follows:

Eric Andersen joined our Board in January 2008 and currently serves as lead director. He has over 25 years of consulting and management experience at IBM, PricewaterhouseCoopers LLP (“PwC”), and PwC Consulting. His last 15 years have been spent in private equity. He is currently a part-time operating partner at Peak Equity (“Peak”), a Philadelphia-based private equity firm focused on lower middle market enterprise software. In addition, he is serving as an Adjunct Professor at the Villanova School of Business. Prior to joining Peak, Mr. Andersen was a partner at Milestone Partners, a Philadelphia-based private equity firm and he was a managing director at Silver Lake Partners, a technology-focused private equity firm based in New York. During his tenures with PwC, PwC Consulting, and IBM, Mr. Andersen was a senior partner and senior executive leading several businesses in the United States and Asia as well as globally. Mr. Andersen is currently Chairman of the Board of American Public Education Inc., a publicly traded online higher education company where he is also a member of the management development and compensation committee. Mr. Andersen holds an MBA from the Wharton School at the University of Pennsylvania and a BS from Bucknell University. We believe that Mr. Andersen is qualified to serve on our Board because of his extensive experience in building and leading companies, as well as his public company experience and significant operational and strategic expertise.

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David DeStefano became our President and Chief Executive Officer in November 2016, joined our Board in 2016 and was appointed Chairperson of our Board in 2020. Between 2015 and 2016 he was an Executive Vice President and a member of the Company’s Executive Council, which monitored our long-term strategic and financial viability, corporate brand, and culture. Mr. DeStefano previously served as our Vice President, Chief Financial Officer and Executive Vice President. Prior to joining the Company, Mr. DeStefano was Principal and Vice President at The Mid Atlantic Companies Ltd. Mr. DeStefano is also on the Advisory Board for Corporate Social Responsibility at the Satell Institute and is on the Board of Trustees of the Joseph Fund in Camden, New Jersey. Mr. DeStefano received a BS in Finance from Lehigh University. We believe that Mr. DeStefano is qualified to serve on our Board because of the perspective and experience he brings as our Chief Executive Officer and his knowledge of our Company and our business.

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Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

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Our Audit Committee has appointed Crowe LLP as our independent registered public accounting firm (“Independent Auditor”) for the fiscal year ending December 31, 2024. Our Board has directed that this appointment be submitted to our stockholders for ratification. Although ratification of our appointment of Crowe LLP is not required, we value the opinions of our stockholders and believe that stockholder ratification of our appointment is a good corporate governance practice.

On April 16, 2024, our Audit Committee approved the engagement of Crowe LLP as the Company’s Independent Auditor to serve as our Independent Auditor for the fiscal year ended December 31, 2024. Neither Crowe LLP nor any of its members has any direct or indirect financial interest in or any connection with us in any capacity other than as our auditors, providing audit and non-audit related services. A representative of Crowe LLP is expected to attend the Annual Meeting, have an opportunity to make a statement if he or she desires to do so, and be available to respond to appropriate questions from stockholders.

In the event that the appointment of Crowe LLP is not ratified by the stockholders, the Audit Committee will consider this fact when it appoints the Independent Auditors for the fiscal year ending December 31, 2025. Even if the appointment of Crowe LLP is ratified, the Audit Committee retains the discretion to appoint a different Independent Auditor at any time if it determines that such a change is in the interests of Vertex.

Independent Auditor Fees and Other Matters

Set forth below are the fees paid to our Independent Auditor, Crowe LLP, for the fiscal years ended December 31, 2023 and 2022:

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Audit Fees

Audit fees consist of fees for the audit of our consolidated financial statements, the review of the unaudited interim financial statements included in our quarterly reports on Form 10-Q and other professional services provided in connection with statutory and regulatory filings or engagements. For fiscal year 2023, the audit fees also include the evaluation and reporting on the effectiveness of the Company’s internal controls over financial reporting.

Audit-Related Fees

There were no audit-related fees paid to Crowe in 2023 or in 2022.

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Tax Fees

There were no tax fees paid to Crowe in 2023 or in 2022.

All Other Fees

Other fees paid to Crowe in 2023 and 2022 pertained to services provided in connection with the audit of the Company’s 401(k) plan.

Audit Committee Pre-Approval Policy and Procedures

Our Audit Committee’s charter provides that the Audit Committee, or the chair of the Audit Committee, must pre-approve any audit, audit related, non-audit, or tax services provided to us by our Independent Auditor, unless the engagement is entered into pursuant to appropriate pre-approval policies established by the Audit Committee or if the service falls within available exceptions under SEC rules. Without limiting the foregoing, the Audit Committee may delegate authority to one or more independent members of the Audit Committee to grant pre-approvals of audit and permitted non-audit services, and any such pre-approvals must be presented to the full Audit Committee at its next scheduled meeting.

Report of the Audit Committee of the Board of Directors

The Audit Committee has evaluated Vertex’s audited financial statements for the fiscal year ended December 31, 2023, and has discussed these financial statements with management and our Independent Auditor. The Audit Committee also discussed with our Independent Auditor the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight

Board (“PCAOB”) and the SEC. The Audit Committee also received written disclosures and the letter from our Independent Auditor required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with our Independent Auditor their independence.

Based on its discussions with management and the Independent Auditor, and its review of the representations and information provided by management and the Independent Auditor, the Audit Committee recommended to the Board that the audited financial statements be included in Vertex’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

J. Richard Stamm

Kevin Robert

Philip Saunders

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A VOTE IS REQUIRED FOR THIS PROPOSAL.  This proposal requires the approval of the affirmative vote of the holders of a majority in voting power of the votes cast. Abstentions will have no effect on the proposal. Because brokers have discretionary authority to vote on the ratification of the appointment of Crowe LLP, we do not expect any broker non-votes in connection with this proposal.

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RECOMMENDATION OF THE BOARD:

The Board unanimously recommends a vote

FOR the ratification of the appointment of Crowe LLP as our Independent Auditor

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Proposal 3: Advisory Vote to Approve our Named Executive Officer Compensation

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Background. Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a publicly held company is required to submit to its stockholders a nonbinding advisory vote to approve the compensation of its named executive officers, commonly known as a “Say-on-Pay” proposal.

Say-on-Pay Proposal. This proposal affords our stockholders the opportunity to submit a nonbinding advisory vote on our named executive officer compensation. The Compensation Discussion and Analysis section, the tabular disclosure regarding our named executive officer compensation and the related disclosure in this Proxy Statement describe our named executive officer compensation and the compensation decisions made by our management and our Human Capital Committee of the Board with respect to our named executive officers. This proposal is not intended to address any specific element of compensation of our named executive officers as described in this Proxy Statement, but the compensation of our named executive officers in general. Our Board requests that each stockholder cast a nonbinding advisory vote to adopt the following resolution:

RESOLVED, that, the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby approved.

Effect of the Proposal. The Say-on-Pay proposal is nonbinding and advisory. Our stockholders’ approval or disapproval of this proposal will not require our Board, our management development teams, and Human Capital Committee or our management to take any action regarding our executive compensation practices.

A VOTE IS REQUIRED FOR THIS PROPOSAL. This proposal requires the approval of the affirmative vote of the holders of a majority in voting power of the votes cast. Abstentions and broker non-votes will have no effect on the proposal.

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RECOMMENDATION OF THE BOARD:

The Board unanimously recommends a vote

FOR the approval, on an advisory basis, of the compensation of our named executive officers.

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Proposal 4: Advisory Vote to Approve the Preferred Frequency of Future Advisory Votes on the Compensation of our Named Executive Officers

Background of this Proposal. Section 14A of the Exchange Act also requires a publicly held company to hold, no less frequently than every six years, a nonbinding advisory stockholder vote with respect to the preferred frequency of the vote on subsequent Say-on-Pay proposals. Publicly held companies must give stockholders the choice of whether to cast a nonbinding advisory vote on the Say-on-Pay proposal every year, every other year or every third year, which we refer to as the “Say-When-on-Pay” proposal. SEC rules require that:

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Say-When-on-Pay Proposal. This proposal affords our stockholders the opportunity to submit a nonbinding advisory vote on how often we should include a Say-on-Pay proposal in our proxy materials for future annual stockholder meetings (or special stockholder meetings for which we must include executive compensation information in the proxy statement for that meeting). Under this proposal, stockholders may vote to have the Say-on-Pay proposal every year, every two years or every three years or abstain from voting. Stockholders are not voting to approve or disapprove the recommendation of our Board that we hold an annual vote on the Say-on-Pay proposal. We believe that giving our stockholders the right to cast an advisory vote every three years on our executive compensation is the optimal interval for our Company to conduct and respond to Say-on-Pay votes as a triennial vote will provide the Company with the time to thoughtfully consider the results of the Say-on-Pay vote and to conduct a meaningful and detailed review of its pay practices in response. Additionally, our compensation programs do not change significantly from year to year, and we seek consistency in such programs from one year to the next.

Effect of the Proposal. Our Board and its Human Capital Committee value the opinions of our stockholders in this matter and, to the extent there is any significant vote in favor of one frequency over the other options, our Board will consider the stockholders’ preferences and evaluate any appropriate next steps. However, because this Say-When-on-Pay proposal is nonbinding our Board may decide it is in the best interests of the Company and our stockholders to hold a nonbinding advisory vote on the Say-on-Pay proposal more or less frequently than the option preferred by our stockholders.

A VOTE IS REQUIRED FOR THIS PROPOSAL. The option among every year, every two years or every three years that receives a majority of the votes cast on the matter will be the preferred frequency selected by our stockholders. In the event that no option receives a majority of the votes cast, the Company will consider the option that receives the most votes to be the option recommended by stockholders. Abstentions and broker non-votes will have no effect on the proposal.

RECOMMENDATION OF THE BOARD:

The Board unanimously recommends a vote for the option of

EVERY THREE YEARS as the preferred frequency of future advisory votes

on the compensation of our named executive officers.

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CORPORATE GOVERNANCE

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Board of Directors

Our Board sets high standards for Vertex’s employees, officers, and directors.  Implicit in this philosophy is the importance of sound corporate governance. It is the duty of the Board to serve as a prudent fiduciary for stockholders and oversees material business matters, such as strategy, risk, and ethical behavior.

Independence

Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that Eric Andersen, Bradley Gayton, Kevin Robert, Philip Saunders, J. Richard Stamm, Stefanie Thompson, and Amanda Radcliffe, representing seven of our eight directors, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is "independent" as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the Nasdaq Global Market (“Nasdaq”). In making this determination, our Board considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. Our Audit Committee, Human Capital Committee, and Nominating and Governance Committee are independent. Environmental, social, and governance issues are overseen by the Nominating and Governance Committee, and risk issues are overseen by the Audit Committee. Our Board believes that the current composition provides effective oversight of the Company on behalf of our stockholders.

Corporate Policies

Our Board has adopted Corporate Governance Guidelines, a Code of Ethics and Conduct, Insider Trading Compliance Policy, Whistleblower Policy, and charters for our Nominating and Governance Committee, Audit Committee and Human Capital Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of Vertex.  

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Insider Trading/Anti-Hedging Policy

The Insider Trading Compliance Policy applies to all our directors, officers and employees. The policy prohibits our directors, officers and employees and any entities they control from engaging in any hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involving the Company’s equity securities.

Code of Ethics and Conduct

The Code of Ethics and Conduct contains the ethical principles by which our directors, officers and employees are expected to conduct themselves when carrying out their duties and responsibilities. Annually, all employees are required to review and attest to their compliance with our Code of Ethics and Conduct. A copy of our Code of Ethics and Conduct is available on our website at http://ir.vertexinc.com. We will provide a copy of our Code of Ethics and Conduct to any person, without charge, upon request, by writing to, Vertex, Inc., 2301 Renaissance Blvd., King of Prussia, PA 19406 Attn: Legal (telephone number (800) 355-3500). We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Ethics and Conduct by posting such information on our website at www.vertexinc.com.

Policy for Recovery of Erroneously Awarded Compensation

At a regularly scheduled board meeting, our Board adopted a Policy for Recovery of Erroneously Awarded Compensation (“Clawback Policy”) in July 2023. Our Clawback Policy is in accordance with Rule 10D-1 of the Exchange Act and the corresponding listing standards of Nasdaq (together, the “Clawback Rules”). Pursuant to the Clawback Policy, and subject to certain limited exceptions in the Clawback Rules, in certain events where we are required to restate our financial statements, we are required to recoup erroneously awarded incentive-based compensation (as defined in the Clawback Policy) paid to any current or former executive officer during the three completed fiscal years immediately prior to the date the accounting restatement was required. The amount recoverable is the amount of any incentive-based compensation received by the executive officer based on the financial statements prior to the restatement that exceeds the amount that such executive officer would have received had the incentive-based compensation been determined based on the financial restatement.

Stock Ownership Policy

The Stock Ownership Policy was adopted by the Board on December 7, 2022, and requires certain officers of the Company, including the named executive officers, to maintain a level of beneficial ownership of the Company’s Common Stock (“Minimum Ownership”) to ensure investment in the performance of the Company and to align the interests of those officers with the interest of the Company’s stockholders.  Under the policy, all covered executives are required to obtain by the later of June 1, 2024 or the fifth anniversary such officer becomes subject to this policy, and thereafter maintain, the corresponding

Minimum Ownership assigned to such executive.  The Chief Executive Officer is required to maintain a Minimum Ownership of four times their annual salary and all other officers subject to the policy are required to maintain a Minimum Ownership of one- and one-half times their annual salary.

Board Leadership Structure and Role in Risk Oversight

Our Board exercises its discretion in combining or separating the roles of Chairperson of the Board and Chief Executive Officer as it deems appropriate in light of prevailing circumstances. We believe that we, like many U.S. companies, are well-served by a flexible leadership structure. Currently, the roles are combined, with Mr. DeStefano serving as Chairperson of the Board and Chief Executive Officer. Our Board has determined that combining the roles of Chairperson of the Board and Chief Executive Officer is best for our Company and its stockholders at this time because it promotes unified leadership by Mr. DeStefano and allows for a single, clear focus for management to execute the Company’s strategy and business plans. Our Board is comprised of individuals with extensive experience in finance, the technology industry and public company management. For these reasons and because of the strong leadership of Mr. DeStefano as Chairperson of the Board and Chief Executive Officer, our Board has concluded that our current leadership structure is appropriate at this time. However, our Board will continue to consider whether the positions of Chairperson of the Board and Chief Executive Officer should be separated or combined at any given time as part of our succession planning process.

Our Corporate Governance Guidelines provide that, if the Chairperson of the Board is also our Chief Executive Officer or is a director that does not otherwise qualify as an independent director, the independent directors may elect a lead director whose responsibilities include presiding over all meetings of the Board at which the Chairperson is not present, including any executive sessions of the non-management directors; approving meeting schedules and agendas; and acting as the liaison between the independent directors and the Chairperson of the Board, as appropriate. The full list of responsibilities of our lead director may be found in our Corporate Governance Guidelines. Our current lead independent director is Eric Andersen.

Risk assessment and oversight are an integral part of our governance and management processes. Our management is responsible for our day-to-day risk management activities. Our Board oversees the implementation of risk mitigation strategies by management and encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks we face, including cybersecurity risks. Throughout the year, senior management reviews these risks with the Board at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks. Our Board is apprised of particular risk management matters in connection with its general oversight and approval of corporate matters and significant transactions. Our Board administers this oversight function, including the oversight of cybersecurity risks, directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas of oversight. In addition, Board members receive presentations on cybersecurity topics from our General Counsel, internal security staff, or external experts as a part of the Board’s continuing education. The Board does not believe that its role in the oversight of our risks affects the Board’s leadership structure.

Attendance By Members of the Board at Meetings

There were six (6) meetings of the Board during the fiscal year ended December 31, 2023. During the fiscal year ended December 31, 2023, each director attended at least 75% of the aggregate of (i) all meetings of the Board and (ii) all meetings of the committees on which the director served during the period in which he or she served as a director.

Under our Corporate Governance Guidelines, which are available on our website at http://ir.vertexinc.com, a director is expected to spend the time and effort necessary to properly discharge his or her responsibilities. Accordingly, a director is expected to regularly prepare for and attend meetings of the Board and all committees on which the director sits (including separate meetings of the independent directors), with the understanding that, on occasion, a director may be unable to attend a meeting. A director who is unable to attend a meeting of the Board or a committee of the Board is expected to notify the Chairperson of the Board or the Chairperson of the appropriate committee in advance of such meeting, and, whenever possible, participate in such meeting via teleconference in the case of an in-person meeting. We do not maintain a formal policy regarding director attendance at our annual meetings; however, it is expected that, absent compelling circumstances, directors will attend. All our directors attended last year’s annual meeting.

Executive Sessions

Our non-employee directors meet in regularly scheduled executive sessions. Such meetings are presided over by our lead independent director.

Committees of the Board

Our Board has established three standing committees: an Audit Committee, a Human Capital Committee and a Nominating and Governance Committee, each of which operates under a written charter that has been approved by our Board. The committee charters are available on our website at http://ir.vertexinc.com. The members of each of the committees are set forth below:

Audit Committee

Members

J. Richard Stamm (Chair)

Bradley Gayton

Philip Saunders

Kevin Robert

Bradley Gayton was appointed as a member of the Audit Committee effective February 22, 2024, and will serve in such capacity until his respective successor shall be duly appointed and qualified, or until his earlier death, resignation or removal.

Our Audit Committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements, and performs the following functions:

The composition of our Audit Committee complies with all applicable SEC and Nasdaq rules, including the requirement that at least one member of the Audit Committee have accounting or related financial management experience. All four members of the Audit Committee are considered to be independent directors. J. Richard Stamm qualifies as an "Audit Committee financial expert," as such term is defined in Item 407(d)(5) of Regulation S-K. The Audit Committee conducted ten (10) meetings in 2023.

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Human Capital Committee

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Members

Eric Andersen (Chair)

J. Richard Stamm

Philip Saunders

Bradley Gayton

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Our Human Capital Committee reviews and recommends policy relating to compensation and benefits of our officers and employees, and performs the following functions:

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The composition of our Human Capital Committee complies with all applicable SEC and Nasdaq rules. The Human Capital Committee conducted six (6) meetings in 2023.

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Nominating and Governance Committee

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Members

Kevin Robert (Chair)

Amanda W. Radcliffe

Eric Andersen

Bradley Gayton

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The Nominating and Governance Committee:

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The composition of our Nominating and Governance Committee complies with all applicable SEC and Nasdaq rules. The Nominating and Governance Committee conducted six (6) meetings in 2023.

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Human Capital Committee Interlocks and Insider Participation

None of the members of our Human Capital Committee is, nor has at any time during the past year been, one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee, an equivalent committee, or any other relevant committee, of any entity that has one or more executive officers serving on our Board or Human Capital Committee.

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Director Candidates

The Nominating and Governance Committee is responsible for identifying and reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board, subject to any obligations and procedures governing the nomination of directors to the Board that may be included in the Stockholders’ Agreement and any other stockholders’ agreement to which we are a party.

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To facilitate the search process for director candidates, the Nominating and Governance Committee may solicit our current directors and executives for the names of potentially qualified candidates or may ask directors and executives to pursue their own business contacts for the names of potentially qualified candidates. The Nominating and Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates or consider director candidates recommended by our stockholders. Once potential candidates are identified, the Nominating and Governance Committee reviews the backgrounds of those candidates, evaluates candidates’ independence from us and potential conflicts of interest, and determines whether candidates meet the qualifications desired by the Nominating and Governance Committee of candidates for election as director.

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In accordance with our Corporate Governance Guidelines, in evaluating the suitability of individual candidates, the Nominating and Governance Committee will consider minimum individual qualifications, including a high level of personal and professional integrity, strong ethics and values and the ability to make mature business judgments and all other factors it considers appropriate, which may include experience in corporate management, experience as a board member of other public companies, relevant professional or academic experience, leadership skills, financial and accounting background, executive compensation background and whether the candidate has the time required to fully participate as a director of the Company. Our Corporate Governance Guidelines provide that the Board should monitor the mix of specific experience, qualifications, and skills of its directors in order to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure. Our Nominating and Governance Committee has a formal policy with respect to diversity and believes that our Board, taken as a whole, should embody diverse skills, experiences, backgrounds, races and genders.

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Stockholders may recommend individuals to the Nominating and Governance Committee for consideration as potential director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to the Nominating and Governance Committee, c/o Secretary, Vertex, Inc., 2301 Renaissance Blvd., King of Prussia, PA 19406. In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating and Governance Committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.

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Sustainability

We are committed to reducing our carbon footprint as much as possible. By transitioning to a hybrid, work-from-home environment and utilizing cloud services, we have already made significant progress. 

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Philanthropy and Social Impact

Giving back to our communities is core to who we are and has been a source of pride for our Company for over 40 years. In 2023, our employees had opportunities at work to volunteer and get involved, including but not limited to:

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Diversity, Equity, Inclusion & Belonging

We believe in a culture where all employees feel included. Diversity of our people, thoughts, and opinions is valued and embraced. A key area of focus and a priority is to provide purposeful opportunities for our employees to feel heard and we hold ourselves accountable for making Vertex a place where all employees can thrive as their authentic selves. 

Our focus on Diversity, Equity, Inclusion and Belonging (“DEI&B”) is about more than just our Company’s passion to cultivate our culture of respect for all people; it is critical to our success as a company. DEI&B has data-driven links to increased business performance and success and is embedded in our mission, values and enterprise objectives. We seek to attract, nurture, develop, and retain world class talent where every employee is valued, included, engaged and has a sense of belonging. One of our most popular programs in this area are our Business Resource Groups (“BRGs”).

Vertex’s Business Resource Groups (BRGs)

Inspired by employee feedback, BRGs are employee-led teams of individuals with shared experiences and common interests. BRGs help underrepresented communities create inclusive environments where they can thrive in the workplace, alongside allies. They also drive cross-functional, lateral connections across our global employee base. Our BRGs are global, open to everyone, and employee-led with executive sponsorship.

Security and Data Privacy

Customers use our solutions within their critical infrastructure, and they want to confirm we have the tools, technologies, processes, and controls in place to protect their data. Where appropriate, we provide our customers with independent third-party audit reports, such as Service Organization Control (“SOC”) 1 and SOC 2, as well as certifications to ISO 27001. Our top priority is keeping our customers’ data secure. We employ rigorous security measures at the organizational, architectural, and operational levels to support the safety of our customers’ data, applications, and infrastructure remain safe. 

Our cybersecurity risk management initiative is a cornerstone of our information security program, which includes a cross-functional management team with representatives from Legal, Enterprise Risk Management, Information Security, Information Technology, and Engineering. The cybersecurity risk management work is directed by the Enterprise Risk Management Team in collaboration with the Information Security Team and is intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our information security program includes a cybersecurity incident response plan and playbook.

Additionally, our customers’ privacy is crucial. We strongly support regulations that protect the cross-border transfer of personal data.  Privacy protections are also important to the individuals within our customers’ organizations, and we help customers meet their own General Data Protection Regulation compliance requirements through the maintenance of rigorous technical and organizational measures.

Talent, Culture and Safety

As a customer-first driven organization with a core focus on the well-being of our team, we nurture our culture by providing competitive compensation and benefits to our employees, including:

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We also provide wellness resources for employee mental wellbeing, including live seminars with wellness professionals.  

Stockholders’ Agreement

In connection with our IPO in July 2020, we entered into the Stockholders’ Agreement with Amanda Westphal Radcliffe, Stefanie Westphal Thompson and Jeffrey Westphal, with Ms. Radcliffe and Ms. Thompson each serving as a member of our Board, and their affiliated trust entities and family members. For so long as Ms. Radcliffe, Ms. Thompson or Mr. Westphal, in each case together with his or her children and related trusts, owns at least five percent of our outstanding Common Stock, he or she each shall be entitled to designate one individual, including themselves, for nomination to our Board, and we will be required to use our best efforts to include the designee in the slate of nominees recommended to our stockholders for election as a director at the next annual or special meeting of stockholders. At any general or special meetings of the stockholders involving the election of directors, each stockholder party to the Stockholders’ Agreement must vote, or provide written consent on behalf of, all of his or her shares of Common Stock in favor of each individual nominated by the parties to the Stockholders’ Agreement. For all matters other than the election of directors, voting shall be discretionary at the option of each stockholder.

Controlled Company Exemption

The parties to the Stockholders’ Agreement have more than 50% of the voting power for the election of directors, and, as a result, we are considered a "controlled company" for the purposes of the Nasdaq listing requirements. As such, we qualify for exemptions from certain corporate governance requirements, including that a majority of our Board consists of "independent directors”, as defined under the Nasdaq rules. In addition, we are not required to have a Nominating and Governance Committee or Human Capital Committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities or to conduct annual performance evaluations of the Nominating and Governance and Human Capital Committees. We currently do not rely on the exemption from the requirement to have a Nominating and Governance Committee composed entirely of independent directors, but in the future, we may elect to rely on such exemption and/or other available exemptions. Accordingly, if we rely on these exemptions, our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. If at any time we cease to be a "controlled company" under the rules of Nasdaq, our Board intends to take all action necessary to comply with the Nasdaq corporate governance rules.

Communications from Interested Parties

Anyone who would like to communicate with, or otherwise make his or her concerns known directly to the Board, the chairperson of any of the Audit, Nominating and Governance, and Human Capital Committees, or to the independent directors as a group, may do so

by addressing such communications or concerns to the Secretary of the Company, 2301 Renaissance Blvd., King of Prussia, PA 19406, who will forward such communications to the appropriate party. Such communications may be done confidentially or anonymously.

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Executive Officers

The following table identifies our current executive officers:

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David DeStefano became our President and Chief Executive Officer in November 2016, joined our Board in 2016 and was appointed Chairperson of our Board in 2020. Between 2015 and 2016 he was an Executive Vice President and a member of the Company’s Executive Council, which monitored our long-term strategic and financial viability, corporate brand, and culture. Mr. DeStefano previously served as our Vice President, Chief Financial Officer and Executive Vice President. Prior to joining the Company, Mr. DeStefano was Principal and Vice President at The Mid-Atlantic Companies, Ltd. Mr. DeStefano is also on the Advisory Board for Corporate Social Responsibility at the Satell Institute and is on the Board of Trustees of the Joseph Fund in Camden, New Jersey. Mr. DeStefano received a BS in Finance from Lehigh University.

John Schwab became our Chief Financial Officer in 2020. Prior to joining the Company, Mr. Schwab served as Chief Financial Officer of Flagship Credit Acceptance from 2015 until 2019. Mr. Schwab began his career in assurance services at Arthur Andersen LLP. Mr. Schwab received a BS in Accounting from LaSalle University.

Bryan Rowland became our General Counsel in 2017. Prior to joining the Company, Mr. Rowland held various roles at Checkpoint Systems from 2005 to 2016, including serving as Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary from 2014 to 2016. Mr. Rowland received a BA in Psychology and Philosophy from Towson University and a Juris Doctorate degree from Villanova University Charles Widger School of Law.

Term of Executive Officers: Each executive officer is appointed and serves at the discretion of the Board and holds office until his or her successor is elected and qualified, or until his or her earlier resignation or removal.

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COMPENSATION DISCUSSION AND ANALYSIS

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EXECUTIVE COMPENSATION

In this Compensation Discussion and Analysis (“CD&A”) set forth below, we provide an overview and analysis of the compensation awarded to or earned by our named executive officers identified in the Summary Compensation Table below during fiscal 2023, including the elements of our compensation program for named executive officers, material compensation decisions made under that program for fiscal 2023 and the material factors considered in making those decisions.  Our named executive officers for the year ended December 31, 2023, which consist of our principal executive officer, our principal financial officer and our other most highly compensated executive officer for fiscal year 2023 (collectively, the “named executive officers” or “NEOs”) are:  

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The roles and responsibilities of the Human Capital Committee and the Board in determining the compensation for our CEO and the other named executive officers is described below in “Determination of Compensation”.

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This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt following this Proxy Statement may differ materially from currently planned programs as summarized in this discussion.

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Executive Summary/Fiscal Year 2023 Highlights

The growth of our business and our future success depend on many factors and our executive compensation program is designed to further growth and meet our strategic goals and to deliver pay in accordance with corporate and individual performance rewarding superior performance and providing consequences for under performance. We believe that the compensation of our named executive officers for fiscal year 2023 was aligned with the Company’s performance during the year. In fiscal year 2023, we achieved revenue growth of 16.4% year-over-year. That growth is primarily driven by our 15.7% increase year over year of software subscriptions revenue.  We attribute this growth to our market leadership, strength of our brand, and the durability of our business. The durability of our business relies on our executive leadership and their compensation is based on the achievement of our organizational and strategic goals.  As such, we engage in an enterprise-wide exercise, led by our executive leadership, to align our corporate strategic goals to the goals of our various business teams and to each individual employee. There have been no material changes to this process in 2023.

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Executive Compensation Philosophy and Objectives

Our executive compensation program is designed to attract, retain and reward high caliber leaders who create an inclusive and diverse environment and are deemed critical to our success. The program seeks to align executive compensation with our short-and long-term objectives, financial performance and stockholder priorities. Our compensation objectives are designed to support these goals by:  

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In keeping with our role as a publicly-held company, we maintain a commitment to strong corporate governance in connection with our named executive officer compensation arrangements where our Human Capital Committee works with management to develop and maintain compensation frameworks that are appropriate and competitive for a public company, including, but not limited to, regularly reviewing best practices in executive compensation and governance. Our Human Capital Committee works with our independent consultant, Aon’s Human Capital Solutions practice, a division of Aon plc (“AON”) to formalize our compensation philosophy and implement compensation arrangements that reflect that philosophy.

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Below are highlights of what we do and what we do not do:

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Stockholder Advisory Vote on Executive Compensation

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As required by Section 14A(a)(1) of the Exchange Act, in Proposal 3 of this Proxy Statement we are requesting that our stockholders vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” vote, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. Our Board and the Human Capital Committee will consider the outcome of the Say-on-Pay vote, as well as feedback received from our stockholders, when making compensation decisions for our named executive officers in the future.

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Determination of Compensation

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Role of Board /Human Capital Committee/Executive Officers

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During fiscal 2023, our Board, with respect to our CEO, and our Human Capital Committee, with respect to each other named executive officer was responsible for designing and administering executive compensation programs with respect to our named executive officers. In each case the Human Capital Committee took into account recommendations from AON, and the compensation arrangements were also influenced by a variety of factors, including the relevant experience of the individual, competitive standards of pay, business conditions and performance.

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Our CEO made recommendations to the Board and the Human Capital Committee to assist in determining fiscal 2023 compensation levels (except with respect to his compensation). While the Board and the Human Capital Committee utilized this information, the ultimate decisions regarding fiscal 2023 executive compensation were made by the Board and the Human Capital Committee in its own independent judgment.

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Role of Compensation Consultant

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When making compensation decisions in fiscal 2023, our Human Capital Committee considered advice and data provided by AON for guidance regarding our executive compensation program and how our compensation practices compare to the compensation practices of other peer companies. The Human Capital Committee analyzed a comparative framework of external market data comprised of both specific peers in the software and services industry with similar business and financial profiles as us, as well as size-appropriate comparisons in the software product services and tech industry. The Human Capital Committee analyzed the public company market data for executive compensation as a general indicator of relevant market conditions and pay practices, focusing on revenue, market capitalization, industry and talent competitors. In particular, the Human Capital Committee reviewed compensation data from the following peer group as a reference source, developed in consultation with AON:

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The Human Capital Committee reviewed our named executive officer compensation against this peer group to ensure that our named executive officer compensation is competitive and sufficient to recruit and retain our named executive officers.  

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The Board has evaluated AON’s independence pursuant to the requirements of Nasdaq and SEC rules and has determined that AON does not have any conflicts of interest in advising the Board.

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Our Human Capital Committee expects to periodically review and update this peer group and to utilize AON for benchmarking certain levels of executive compensation, obtaining a general understanding of current compensation practices, and peer group analysis in determining and developing compensation packages for our named executive officers.

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Elements of Our Executive Compensation Program

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Historically, and for fiscal 2023, our executive compensation program consisted of the following elements, each established as part of our program in order to achieve the compensation objective specified below:

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Base Salaries

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The base salaries of our named executive officers are an important part of their total compensation package, and are intended to reflect their respective positions, duties and responsibilities. Base salary is a visible and stable fixed component of our compensation program.  Base salaries for our named executive officers were initially established through a general review of compensation market data and are reflective of individual performance, time in role, scope of responsibility, leadership skills and experience at the time an executive was hired. Our Human Capital Committee reviews the annual base salaries of each of our named executive officers periodically, referring generally to the 50th percentile of similar positions at our peer group of companies. If no similar positions are included in our peer group of companies, general market surveys are used when adjusting annual base salaries. The surveys provide general market data that is used as one of many reference points in determining the annual base salaries but are not used to benchmark annual base salaries for our named executive officers.

In early 2023, the Human Capital Committee approved base salary increases for our NEOs ranging from 3% to 4%, including 3% for our CEO, as set forth in the table below. We intend to continue to evaluate the mix of base salary, short-term incentive compensation and long-term incentive compensation to appropriately align the interests of our named executive officers with those of our stockholders.

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Cash-Based Incentive Compensation

We maintain an annual bonus plan (the “Organizational Bonus Plan”), which is designed to motivate and reward our employees, including our executives and named executive officers, for achievements relative to financial, non-financial and individual performance goals. Under the Organizational Bonus Plan, our named executive officers are eligible to earn cash bonuses based on the executive’s bonus target and the achievement of pre-established company and individual performance goals.  Our named executive officers’ target annual bonuses for 2023, expressed as a percentage of base salary, are set forth below.

Named Executive Officer Target Percentage

David DeStefano. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 %

John Schwab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 %

Bryan Rowland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40%

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For 2023, financial performance accounted for 80% of the bonus opportunity for each of our named executive officers and was based on achievements relative to our three most important financial metrics (revenue, pre-tax net income and adjusted cash from operations) against the annual budgeted amounts for the year. Achievement against certain non-financial targets accounted for the remaining 20% of the bonus opportunity for each of our named executive officers and generally related to the achievement of key strategic objectives, as described below.

Financial performance metrics were set early in 2023 at threshold, target and high levels and results are interpolated between these levels. The percentage of target earned for each performance level is as follows: threshold (25%), target (100%), and maximum (200%). There is no bonus earned for a particular metric if performance is below threshold, and budgeted pre-tax net income must be achieved at a minimum of 85% before any payment is available under the Organizational Bonus Plan. If this minimum performance threshold is not achieved, there will be no bonus payment from the Organizational Bonus Plan, irrespective of individual performance achievement or other financial objective achievement. Bonuses are capped at the maximum level. The chart below shows Company performance metrics for 2023 at the threshold, target, and maximum levels as well as the Company’s actual results for 2023, which were determined by the Human Capital Committee in February 2024.

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With respect to the non-financial goals, the Human Capital Committee agreed with management’s assessment that (i) the ERP and Existing Solution Improvement metrics were achieved; (ii) 4 of the 5 metrics for the Talent Quotient goal were met or exceeded, and the 5^th metric was only missed by 1%, resulting in 99% achievement for this goal; and (iii) the New Solution Launch goal was not fully achieved due to factors outside of the Company’s control, resulting in partial achievement for this goal.

For purposes of the Organizational Bonus Plan, “pre-tax net income” is calculated by adding back to net income the income tax benefit or expense, stock-based compensation expense and bonus expense and “adjusted cash from operations” is calculated by adding back to net cash from operations the costs of capital software additions and purchases of property and equipment. Based on the recommendation of management, the Human Capital Committee used its discretion to further adjust results for these metrics to exclude certain severance and acquisition costs and accounts receivable that were not considered when setting the 2023 budget targets.

Individual performance also factors into the calculation of the bonus payment for our named executive officers under the Organizational Bonus Plan.  The named executive officers are rated based on their achievement of individual performance goals.  Based on the individual rating, the amount otherwise earned based on the achievement of company financial and non-financial metrics discussed above may be increased  to 110% or decreased to 0%.  The “Distinguished Performer” rating results in 110% of the earned bonus amount being paid and the “Successful Performer” rating results in no adjustment such that 100% of the earned bonus amount is paid. An individual rating of “Developing Performer” results in a reduced earned bonus amount with a discretionary adjustment of between 0% and 95%.  An individual receiving an “Unsuccessful Performer” rating is ineligible to receive a bonus payment. Each of our named executive officers received a rating of “Distinguished Performer” for 2023. The individual goals reflect our strategic and nonfinancial goals.

2023 individual goals for Mr. DeStefano, Mr. Schwab, and Mr. Rowland were aligned with the Company’s goals to accelerate growth, scale and operate with excellence, deliver differentiated value to our customers, and power our culture and talent for growth.  

Mr. DeStefano exceeded performance expectations with outstanding leadership and was rated a distinguished performer.  Accomplishments include acceleration of strategic and innovation initiatives, surpassing financial targets, navigation of internal / external stakeholders associated with extraordinarily complex and compressed acquisition project, advanced strategic partnerships, enhanced customer relationships, implementation of critical ERP systems, strengthened organizational capability, recruitment and development of critical talent at all levels, and increased employee engagement across the enterprise.

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Mr. Schwab exceeded performance expectations with excellent leadership and was rated a distinguished performer.  Accomplishments include exceeding operational metrics, advancement of cost control measures, management of financing / diligence associated with extraordinarily complex and compressed acquisition project, implementation of critical ERP systems, strengthened sales partnership, streamlined contract management, enhanced customer data / reporting, and increased investor / analyst confidence.

Mr. Rowland exceeded performance expectations with strong leadership and was rated a distinguished performer.  Accomplishments include driving partnership opportunities, navigation of legal / financing negotiations associated with extraordinarily complex and compressed acquisition project, streamlined contract management, advanced risk mitigation practices, strengthened cybersecurity readiness, reduced potential legal liabilities.

In February 2024, our Human Capital Committee assessed achievement against the financial and non-financial metrics described above and the Board approved funding the bonus pool at 99.33% of the targeted Organizational Bonus Plan opportunity for 2023.  Since each of our named executive officers was rated a Distinguished Performer for 2023, an additional 10% was added to each named executive officer’s bonus resulting in a bonus payout of 109.26% of target.

The actual annual cash bonuses awarded to each named executive officer for 2023 performance are set forth in the Summary Compensation Table on page 31 in the column entitled "Non-Equity Incentive Plan Compensation."

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Equity-Based Compensation

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We view equity-based compensation as a critical component of our balanced total compensation program.  Equity-based compensation creates an ownership culture among our employees that provides an incentive to contribute to the continued growth and development of our business and aligns interest of executives with those of our stockholders.

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Consistent with our compensation strategy, we provide our named executive officers with long-term incentive compensation to support a long-term focus that aligns the interests of our executives and stockholders. On the effective date of our IPO, we adopted the 2020 Incentive Award Plan (the “2020 Plan”), which provides for the award of stock appreciation rights (“SARs”) stock options (“options”), restricted stock awards (“RSAs”), and restricted stock units (“RSUs”).  Each equity award is granted upon Board approval and is governed by the 2020 Plan and an award agreement, which specifies the vesting provisions and other rights and obligations applicable to each specific grant.  AON and our Human Capital Committee periodically review our equity plan design with respect to the mix of equity awards granted and the vesting provisions.

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During 2023, we awarded RSUs to our named executive officers as the long-term incentive component of our compensation program. Messrs. DeStefano, Schwab and Rowland were awarded the following RSUs on February 23, 2023:

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The RSUs vest in substantially equal installments on each of the first four anniversaries of the grant date.

Other Benefits

Perquisites

Other than the supplemental insurance benefits described below, our named executive officers generally do not receive any additional perquisites or supplemental benefits and we do not provide any tax “gross ups” to our named executive officers.

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Health and Welfare Benefits

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All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including, medical, dental, and vision benefits; medical and dependent care flexible spending accounts; health savings accounts, short-term and long-term disability insurance; and life/accidental death and disability insurance.

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Our named executive officers are provided with a combination of supplemental term life/AD&D insurance with a guaranteed issue face amount of $750,000 and supplemental individual long-term disability insurance, which when combined with the disability coverage provided under our group long-term disability insurance plan, provides the named executive officer with disability income equal to an amount up to 75% of the named executive officer’s pre-disability total compensation.

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We believe the benefits described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.

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Retirement Benefits

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We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax, Roth, and after-tax basis, through contributions to the 401(k) plan. Currently, we match 100% of pre-tax and Roth contributions made by participants in the 401(k) plan up to 6% of a participant’s eligible compensation, excluding age 50+ catch up contributions. These matching contributions are immediately 100% vested. We believe providing a vehicle for tax-deferred retirement savings through our 401(k) plan, and making matching contributions, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.

Employment and Severance Arrangements

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In connection with our IPO we entered into amended and restated employment agreements with each of our named executive officers.  The material terms and conditions of each such agreement is set forth below.

Salary; Bonus

The employment agreements entitle the executives to annual base salaries and eligibility to earn discretionary bonuses under our annual cash bonus plans. See “2023 Salaries” and “Cash-Based Incentive Compensation” above for additional information regarding the base salaries and bonus opportunities of our named executive officers for 2023.

Term

The initial term of Mr. DeStefano’s employment agreement expired in 2023 and automatically renews for successive two-year periods, unless 60 days’ prior notice of non-renewal is given by either party. The employment agreements for Mr. Rowland and Mr. Schwab are for indefinite terms.

Severance

If we terminate a named executive officer without cause, or the executive resigns for good reason, subject to the executive timely executing a release of claims, the executive is entitled to receive (i) base salary continuation for 12 months (or 24 months for Mr. DeStefano) and (ii) direct payment of, or additional cash payments equal to, the premiums for continued health coverage for up to 18 months. Mr. DeStefano is also entitled to an additional lump sum payment equal to 12 months of health coverage premiums in the event he has not become eligible for health insurance coverage from a subsequent employer by the date that is 15 months following such termination of employment.

The receipt of severance payments and benefits for the named executive officers is also subject to the executive’s continued compliance with certain restrictive covenants and confidentiality obligations, as described below under “Restrictive Covenants.” In the event of a material breach of such covenants, subject to certain cure rights, the executive’s right to receive any of the severance payments or benefits described above will cease, and the executive will be obligated to repay to the Company any such payments or benefits previously paid.

Each of our named executive officers is entitled to 30 days’ notice, or pay in lieu of notice, in the event we terminate the executive for any reason other than cause.

For purposes of the employment agreements, “cause” generally means, subject to certain notice and cure rights, the executive’s (i) material breach of the employment agreement; (ii) repeated failure to perform duties to the Company or any subsidiary; (iii) willful misconduct that is materially injurious to the Company or any subsidiary (or for Mr. Schwab or Mr. Rowland, willful misconduct or

gross negligence with regard to the Company, any subsidiary or their business, assets or employees); (iv) dishonesty, unethical, fraudulent or similar misconduct in connection with the executive’s employment or service; (v) use of non-prescription controlled substances, misuse of prescription drugs, or habitual intoxication during work hours; (vi) indictment for any felony that has or is reasonably likely to cause material adverse consequences to the Company, its businesses or prospects; (vii) conviction, guilty plea or plea of nolo contendere to a felony or any crime involving fraud, dishonesty or moral turpitude; (viii) material violation of any Company policy; or (ix) refusal to follow any reasonable and lawful direction of the Board or any person to whom the executive reports, if applicable.

For purposes of the employment agreement, “good reason” is generally defined to mean, subject to certain notice and cure rights, (i) the Company’s material breach of the employment agreement, (ii) the material diminution of the executive’s duties, (iii) a material decrease in the executive’s annual base salary, or (iv) any relocation of the executive’s principal office by more than fifty (50) miles.

Restrictive Covenants

Pursuant to their employment agreements, the executives have agreed to refrain from competing with us or soliciting our employees, customers, clients or prospects, in each case, while employed and following termination of employment for a period of 24 months for Mr. DeStefano or 12 months for Mr. Rowland and Mr. Schwab. During the applicable restricted period, the executives are also obligated to disclose to us certain business opportunities that relate to the business of the Company, its subsidiaries or affiliates. The executives are also bound by certain confidentiality and assignment of inventions obligations.

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See “—Potential Payments Upon Termination or Change in Control” for information regarding benefits under the employment agreements.

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Tax Considerations

As a general matter, our Board of Directors review and consider the various tax and accounting implications of compensation programs we utilize.

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Section 409A.  The Human Capital Committee takes into account whether components of the compensation for our executive officers will be adversely impacted by the penalty tax imposed by Section 409A of the Code and aims to structure these components to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences.

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Section 162(m). Section 162(m) of the Code disallows a tax deduction to public companies for compensation in excess of $1 million paid to “covered employees”, which generally includes all named executive officers. While the Human Capital Committee may take the deductibility of compensation into account when making compensation decisions, the Human Capital Committee will award compensation that it determines to be consistent with the goals of our executive compensation program even if such compensation is not deductible by us.

Compensation and Risk Management

Our Human Capital Committee and our management team each play a role in evaluating and mitigating potential risks associated with our compensation programs, policies and practices in consultation with AON. AON performed a compensation risk assessment on Vertex’s 2023 executive compensation program and concluded that the compensation program did not promote excessive risk-taking behavior by executive officers of the Company, nor did it create risks that are reasonably likely to have a material adverse effect on us.

The risk assessment process includes a review of program policies and practices; analysis to identify risks and risk controls related to our compensation programs; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward, the effectiveness of our risk controls and the impacts of our compensation programs and their risks to our strategy.  Although we periodically review all compensation programs, we focus on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout.  In relation to this, we believe that our incentive compensation arrangements provide incentives that do not encourage risk taking beyond our ability to effectively identify and manage significant risks and are compatible with effective internal controls and our risk management practices.

The Human Capital Committee monitors our compensation programs on an annual basis and expects to make modifications as necessary to address any changes in our business or risk profile.

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Report of the Human Capital Committee of the Board of Directors

The Human Capital Committee has reviewed and discussed this CD&A with Company management. Based on this review and discussion, the Human Capital Committee recommended to the Board, and the Board approved, that the CD&A be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, 2023.

Respectfully submitted by the members of the Human Capital Committee of the Board:

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Eric Andersen (Chair)

J. Richard Stamm

Philip Saunders

Bradley Gayton

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Grants of Plan-Based Awards in Fiscal 2023

The following table provides supplemental information relating to grants of plan-based awards made during fiscal 2023 to help explain information provided above in our Summary Compensation Table.  This table presents information regarding all grants of plan-based awards occurring during fiscal 2023.

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Option Exercises and Stock Vested in Fiscal 2023

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(1) For option awards, the value realized on exercise is calculated by multiplying (i) the number of shares exercised by (ii) the difference between the closing price of the Company’s Common Stock on the date of exercise and the exercise price of the option. For restricted stock and RSUs, the value realized on vesting is determined by multiplying the shares vested by the closing prices of the Company’s Common Stock on the applicable dates of vesting.

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Potential Payments Upon Termination or Change in Control

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In this section, we describe payments that may be made to our named executive officers upon several events of termination, assuming the termination event occurred on the last day of fiscal 2023.

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We have entered into employment agreements with each named executive officer that provide for potential payments upon a qualifying termination of employment.  See “Employment and Severance Arrangements” above for additional information.

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The following table summarizes the payments that would be made to our named executive officers upon the occurrence of certain qualifying terminations of employment, in any case, occurring on the last day of fiscal 2023. Amounts shown do not include (i) accrued but unpaid base salary through the date of termination, or (ii) other benefits earned or accrued by the named executive officer during his employment that are available to all salaried employees, such as accrued vacation, and assume that any successor company in a change in control assumed or substituted awards for any outstanding awards under the existing equity plan.  Our named executive officers are not entitled to any additional or enhanced compensation or benefits in connection with a change in control or qualifying termination of employment that occurs in connection with a change in control.

(1) Amounts shown represent cash severance payments payable upon the named executive officer’s termination without cause or resignation for good reason, and also include 30 days of pay in lieu of notice.

(2) Amount shown is based on the closing price of our Class A Common Stock of $26.94 per share on December 29, 2023 (the last trading day of 2023).

(3) Amounts shown represent premiums for continued health coverage for up to 18 months (or 30 months for Mr. DeStefano).

(4) Pursuant to each named executive officer’s equity award agreements, upon the executive’s termination due to retirement, the executive’s outstanding and unvested options will vest in full and a pro-rated portion of the executive’s RSUs will vest. For purposes of the equity award agreements, “Retirement” means a participant’s voluntary termination of service on or after the date on which the participant attains age 55 and has completed a minimum of 15 years of service with the Company. Only Mr. DeStefano was retirement eligible as of December 31, 2023.

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CEO Pay Ratio Disclosure

Under SEC rules, we are required to calculate and disclose the median of the annual total compensation of all of our employees other than our CEO, the annual total compensation of our CEO and the ratio of the median of the annual total compensation of all our employees as compared to the annual total compensation of our CEO (“CEO Pay Ratio”).  We consider the pay ratio specified herein to be a reasonable estimate calculated in a manner intended to be consistent with Item 402(u) of Regulation S-K.

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To identify our median employee in 2023, we used the following methodology:

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We calculated the median employee’s annual total compensation in the same manner as the named executive officers in the “2023 Summary Compensation Table” on page 31.

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Pay versus Performance

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In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and non-PEO named executive officers (“Non-PEO NEO”) and Company performance for the fiscal years listed below. The Human Capital Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.

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1. David DeStefano was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.

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2.  The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s named executive officers. These amounts reflect the 2023 Summary Compensation Table Total with certain adjustments as described in footnote 3 below.

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3.  Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the 2023 Summary Compensation Table.

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The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:

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