Document

DEF 14A 1 proxy2021.htm DEF 14A -2021 Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. )

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

Upland Software, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Upland Software, Inc.

401 Congress Avenue, Suite 1850

Austin, Texas 78701

April 30, 2021

Dear Stockholder:

You are cordially invited to attend our 2021 Annual Meeting of Stockholders. The Annual Meeting of Stockholders will be held at 401 Congress Avenue, Suite 1850, Austin, Texas 78701 on Wednesday, June 9, 2021, at 11:00 a.m. Central Daylight Time (the "Annual Meeting").

The formal notice of the 2021 Annual Meeting of Stockholders and the Proxy Statement have been made a part of this invitation.

Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. After reading the Proxy Statement, please promptly vote and submit your proxy by dating, signing, and returning the enclosed proxy card in the enclosed postage-prepaid envelope. For your convenience, you may also vote via the Internet or by telephone. Instructions are located on the accompanying proxy card.

Your shares cannot be voted unless you submit your proxy, vote by telephone, mail or via the Internet, or attend the Annual Meeting.

The Board and management look forward to your participation at the Annual Meeting.


			Sincerely,

			Kin Gill
			Executive Vice President, Chief Legal Officer and Secretary

Upland Software, Inc.

401 Congress Avenue, Suite 1850

Austin, Texas 78701

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on June 9, 2021

To the Stockholders of Upland Software, Inc.:

The Annual Meeting of Stockholders for Upland Software, Inc. ("Upland," "we," "us," or the "Company") will be held at 401 Congress Avenue, Suite 1850, Austin, Texas 78701 on June 9, 2021 at 11:00 a.m. Central Daylight Time (the "Annual Meeting"), to consider the following matters:

1. (Proposal One) To elect two Class I directors (Proposal One);

2. (Proposal Two) To ratify the selection of Ernst & Young, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal Two);

3. (Proposal Three) To vote on an advisory basis to approve the compensation of our named executive officers; and

4. To transact such other business as may properly come before the annual meeting or any adjournments or postponements thereof.

Do to the continuing concerns regarding the novel coronavirus (COVID-19) outbreak, and in compliance with Austin Public Health, masks will be required when attending the Annual Meeting.

Our board of directors (the "Board") has fixed the close of business on April 20, 2021, as the record date for determining holders of our common stock entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements thereof. A complete list of such stockholders will be available for examination at our offices in Austin, Texas, during normal business hours for a period of ten days prior to the Annual Meeting. This Notice of 2021 Annual Meeting of Stockholders and accompanying Proxy Statement are being distributed or made available to stockholders beginning on or about April 30, 2021.

It is important that your shares are represented at this Annual Meeting. Even if you plan to attend the Annual Meeting, we hope that you will promptly vote and submit your proxy by dating, signing, and returning the enclosed proxy card or submitting your voting instruction via the Internet or telephone This will not limit your rights to attend or vote at the Annual Meeting.


			By Order of the Board of Directors

			John T. McDonald
			Chief Executive Officer and Chairman

ATTENDING THE ANNUAL MEETING

You do not need to attend to vote. You may vote by submitting a proxy card in advance or by telephone or the Internet.

If you wish to attend the meeting:

•Due to the continuing concerns regarding the novel coronavirus (COVID-19) outbreak, and in compliance with Austin Public Health, masks will be required when attending the meeting.

•Door open at 10:30 AM Central Daylight Time

•The meeting starts at 11:00 am Central Daylight Time.

•All stockholders and proxy holders must register at the reception desk and provide evidence of ownership as of the record date, and only such persons will be permitted to enter the room and attend the meeting.

•The meeting will follow the agenda and rules of conduct provided to all stockholders and proxy holders upon entering the meeting.

•Subject to meeting rules, only stockholders of record or their proxy holders will be allowed to address the meeting and only after having been recognized. All questions and comments must be directed to the chairman of the meeting.

•The purpose and order of the meeting will be strictly observed, and the chairman’s or secretary’s determinations in that regard will be final, including any postponements or adjournments of the meeting.

•Media will not be allowed to attend the meeting. The taking of photographs and the use of audio and video recording devices will not be allowed.

QUESTIONS


For Questions Regarding:			Contact
The Annual Meeting			Upland Software, Inc. - Investor Relations (512) 960-1031
Stock ownership for registered holders			Broadridge Corporate Issuer Solutions, Inc. P.O. Box 1342 Brentwood, NY 11717 shareholder@broadridge.com (866) 321-8022 (within the U.S. and Canada) or (720) 378-5956 (worldwide)
Stock ownership for beneficial owners			Please contact your broker, bank or other nominee
Voting for registered holders			Broadridge Corporate Issuer Solutions, Inc. P.O. Box 1342 Brentwood, NY 11717 shareholder@broadridge.com (866) 321-8022 (within the U.S. and Canada) or (720) 378-5956 (worldwide)
Voting for beneficial owners			Please contact your broker, bank or other nominee

iii

TABLE OF CONTENTS


Proxy Statement and Information on Voting			1
Proposal One: Election of Directors			4
Directors and Corporate Governance			5
Director Compensation			11
Executive Officers			14
Security Ownership of Certain Beneficial Owners and Management			14
Delinquent Section 16(a) Reports			16
Certain Relationships and Related Party Transactions			16
Executive Compensation			18
Compensation Disclosure and Analysis			18
2020 Summary Compensation Table Summary Compensation Table			26
Grant of Plan-Based Award Table for the Fiscal Year 2020			27
2020 Outstanding Equity at Fiscal Year-end			28
Option Exercises and Restricted Stock or Restricted Stock Unit Vesting During Fiscal Year 2020			28
Executive Employment and Other Arrangements			29
Potential Payments upon Termination or Change-in-Control			30
CEO Pay Ratio			32
Equity Compensation Plan Information			32
Audit Committee Report			34
Proposal Two: Ratification of Selection of Independent Registered Public Accounting Firm			35
Proposal Three: Advisory Vote to Approve the Compensation of our Named Executive Officers			35
Other Matters			36
Stockholders Sharing the Same Last Name and Address			37


Record Date						April 20, 2021
Quorum						A majority of shares outstanding on the record date must be present in person or by proxy to constitute a quorum at the Annual Meeting. Abstentions and any broker non-votes will be counted toward fulfillment of quorum requirements. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner.
Shares Outstanding						There were 30,099,717 shares of common stock outstanding as of April 20, 2021.
Inspector of Election						A representative from Broadridge Financial Solutions, Inc. will serve as the inspector of election.
Voting by Proxy						Stockholders of record on the Record Date may submit their proxy on the Internet, by phone, or by mail.
Appointment of Proxy Holders						The Board asks you to appoint Michael D. Hill and Kin Gill as your proxy holders to vote your shares at the Annual Meeting. You may make this appointment by voting the enclosed proxy card or by using one of the voting methods described below.
Voting Instructions; Voting at the Meeting						We encourage stockholders to vote in advance of the Annual Meeting, even if they plan to attend the meeting. Stockholders can vote in person during the meeting. Stockholders of record (those whose shares are registered directly in their name with Upland’s transfer agent, Broadridge) who attend the Annual Meeting in person may obtain a ballot from the inspector of election. Beneficial owners whose shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization and who attend the Annual Meeting in person must obtain a proxy from their broker, bank, or other nominee prior to the date of the Annual Meeting and present it to the inspector of election with their ballot. Voting in person during the meeting will replace any previous votes.
Voting Instructions; Voting by Proxy						All shares represented by valid proxies received prior to the meeting will be voted and, where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder’s instructions. If you are a stockholder of record and you indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board or you sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the meeting.


Voting Instructions; What Happens if no Voting Instructions are Provided						If on the Record Date your shares were held in an account at a brokerage firm or other agent, then you are the beneficial owner of shares held in "street name" and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. If you do not provide instructions for voting the shares that you beneficially own, your custodian will not be permitted to vote your shares with respect to "non-discretionary" items, which includes all matters on the agenda other than the ratification of the appointment of the independent registered public accountants. This is generally referred to as a "broker non-vote." We urge you to provide voting instructions to your broker or agent to vote your shares. A number of brokers and banks enable beneficial holders to give voting instructions via telephone or the Internet. Please refer to the voting instructions provided by your bank or broker. You are also invited to attend the meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you provide a valid proxy from your broker or other agent.
Routine and Non-Routine Matters						Proposal One, the election of the Class I directors and Proposal Three, advisory vote on named executive officer compensation, are each considered a non-routine matter under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and, therefore, broker non-votes may exist in connection with Proposals One and Three. Proposal Two, the ratification of the appointment of Ernst & Young, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, is a matter considered routine under applicable rules. A broker or other nominee may generally vote on routine matters, and, therefore, no broker non-votes are expected to exist in connection with Proposal Two.
Votes Required; Effect of Broker Non-Votes and Abstentions						Each holder of shares of our common stock outstanding on the record date is entitled to one vote for each share of common stock held as of the record date. With respect to Proposal One, the director nominees are elected by a plurality of the voting power of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting. Therefore, the two nominees receiving the most "FOR" votes will be elected as directors to serve until the third annual meeting of stockholders following their election. For Proposal One, stockholders may not cumulate votes in the election of the directors. Abstentions and broker non-votes will have no effect on the outcome of the vote. The ratification of our independent registered public accountants in Proposal Two requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. Abstentions are treated as shares present and entitled to vote for purposes of such proposal and, therefore, will have the same effect as a vote "AGAINST" the proposal. Proposal Two is a routine matter and no broker non-votes are expected to exist in connection with Proposal Two. Proposal Three, the advisory vote to approve executive compensation, requires the approval of a majority of the shares represented in person or by proxy and entitled to vote at the Annual Meeting. For purposes of Proposal Three, abstentions are treated as shares represented in person or by proxy and entitled to vote at the Annual Meeting and, therefore, will have the same effect as a vote "AGAINST" the proposal. Broker non-votes will have no effect on the outcome of the vote. However, because Proposal Three is an advisory vote, the result will not be binding on the Company or our Board. The Board, the compensation committee and/or another committee of the Board will consider the outcome of the vote when establishing or modifying the compensation of our named executive officers and determining how often the Company should submit to the stockholders an advisory vote to approve the compensation of our named executive officers included in our proxy statement.
Changing Your Vote						Stockholders of record may revoke their proxy at any time before the polls close by submitting a later-dated vote in person at the Annual Meeting, via the Internet, by telephone, by mail, or by delivering instructions to our Corporate Secretary before the Annual Meeting. If you hold shares through a broker, bank, or other nominee, you may revoke any prior voting instructions by contacting that firm.
Voting Results						We will announce preliminary results at the Annual Meeting. We will report final results at www.uplandsoftware.com and in a filing with the U.S. Securities and Exchange Commission (the "SEC") on Form 8-K, which we are required to file with the SEC within four business days following the Annual Meeting.


Independence •The Board currently has 5 members, 4 of whom are independent. •There are three standing committees made up entirely of independent directors. •Independent directors regularly meet without management present with the Lead Independent Director presiding.
Board Practices •The Board and its standing committees perform self-evaluations on an annual basis. •Each standing committee operates under a committee charter. •The Board oversees risk management practices. •The Board regularly receives information concerning, and provides input on, succession planning. •The Board has adopted an insider trading policy, a related person policy, corporate governance guidelines, and a code of business conduct and ethics.
Leadership Structure •The Board leadership structure consists of a Chairman, a Lead Independent Director and committee chairs.


Name	Position with Upland	Age as of the Annual Meeting	Director Since
Stephen E. Courter	Director	66	2014
David D. May	Lead Independent Director	58	2016
John T. (Jack) McDonald	Director, Chief Executive Officer and Chairman	57	2010
Joe Ross	Director	52	2017
Teresa Miles Walsh	Director	57	2020


Committee	Chairperson Fee		Member Fee
Audit Committee	$	20,000	$	10,000
Compensation Committee	$	12,000	$	5,000
Nominating and Governance Committee	$	7,500	$	2,500


Name of Director	Fees Earned or Paid in Cash		Restricted Stock Units(1)		Stock Options	All Other Compensation	Total
Stephen E. Courter(2)	$	53,334	$	175,007	—	—	$	228,341
Rodney C. Favaron	$	6,250	$	—	—	—	$	6,250
David D. May(2)	$	77,085	$	175,007	—	—	$	252,092
Joe Ross(2)	$	31,251	$	175,007	—	—	$	206,258
Teresa Miles Walsh(2)	$	33,334	$	257,722	—	—	$	291,056


Name of Director	Unvested Restricted Stock Units	Outstanding Option Awards
Stephen E. Courter	2,284	37,941
David D. May	2,284	24,809
Joe Ross	2,284	18,414
Teresa Miles Walsh	3,091	—


	Amount and Nature of Beneficial Ownership
Name and Address of Beneficial Owner	Shares of Common Stock Beneficially Owned	Percentage of Common Stock Outstanding
5% or Greater Stockholders:
Entities affiliated with ESW Capital LLC(1)	1,803,574	6.0	%
Entities affiliated with BlackRock, Inc.(2)	1,820,921	6.1	%
CDAM (UK) Limited(3)	1,559,164	5.2	%
Named Executive Officers, Nominees and Directors:
John T. (Jack) McDonald(4)	1,379,221	4.6	%
Rodney Favaron(5)	52,370	*
Timothy Mattox(6)	318,756	1.1	%
Michael D. Hill(7)	141,869	*
Stephen E. Courter(8)	51,783	*
David D. May(9)	78,408	*
Joe Ross(10)	49,121	*
Teresa Miles Walsh(11)	6,652	*
All executive officers and directors as a group (8 persons)	2,078,180	6.9	%


Name						Office
John T. (Jack) McDonald						Chief Executive Officer and Chairman of the Board
Rodney Favaron						President(1)
Timothy W. Mattox(2)						Former Co-President and Chief Operating Officer
Michael D. Hill						Chief Financial Officer and Treasurer


	2020			2019			Year over Year Change
Adjusted EBITDA							21%
TSR(1)							29%
CEO Total Direct Compensation							(9)%
Reported Earned Base Salary	$	325,000		$	325,000
Reported Earned Bonus	$	266,013		$	1,056,250
Target LTI Value	$	5,500,000	(2)	$	5,347,269	(3)
Total	$	6,091,013		$	6,728,489


What We Do			What We Do Not Do
☑ Rigorous, objective performance goals with aggressive bonus targets			☒ No “golden parachute” gross-ups
☑ Limited perquisites			☒ No hedging/pledging/short sales of company stock
☑ Competitive stock ownership guidelines			☒ No options/SARs granted below FMV
☑ Clawback policy covering performance-based incentive awards			☒ No repricing of options without shareholder approval
☑ Double-trigger and Retention-oriented CIC provisions			☒ No excessive severance
☑ Independent compensation consultant and Board Compensation Committee			☒No guaranteed salary increases, bonuses, or long-term incentive awards
☑ Annual risk assessment of compensation policies and programs


			Base Salary
Mr. McDonald			$325,000
Mr. Mattox			$325,000
Mr. Favaron			$325,000
Mr. Hill			$270,000


	Target Bonus Percent of Base Salary	Bonus Attributable to Corporate Bonus Plan	Percentage Attributable to M&A Bonus Plan
Mr. McDonald	200%	25%	75%
Mr. Mattox	150%	50%	50%
Mr. Favaron	100%	50%	50%
Mr. Hill	125%	50%	50%


	2020 Bonus Targets			2020 Bonus Actuals
	Corporate Bonus	M&A Bonus	Total	Corporate Bonus	M&A Bonus	Total
Mr. McDonald	$162,500	$487,500	$650,000	$46,638	$219,375	$266,013
Mr. Favaron(1)	$135,417	$135,417	$270,834	$38,709	$60,694	$99,403
Mr. Mattox	$243,750	$243,750	$487,500	$69,956	$109,688	$179,644
Mr. Hill	$168,750	$168,750	$337,500	$48,431	$75,938	$124,369


	RSUs	PSUs
Mr. McDonald	66,297	66,297
Mr. Favaron	150,000	—
Mr. Mattox	150,000	—
Mr. Hill	75,000	—


Position	Multiple of Salary	Years of Service
CEO	6	7
Other named executive officers	4	7


Peer Group Symbol						Peer Group Name
EPAY						Bottomline Technologies, Inc.
EGHT						8X8, Inc.
QADA						QAD Inc.
BNFT						Benefitfocus, Inc.
WK						Workiva Inc.
YEXT						Yext, Inc.
LPSN						LivePerson, Inc.
SPSC						SPS Commerce, Inc.
INST						Instructure, Inc.
PRO						PROS Holdings, Inc.
MOBL						MobileIron, Inc.
AGYS						Agilsys, Inc.
ZIXI						Zix Corporation
MODN						Model N, Inc.
AMSW.A						American Software, Inc.


Name and Principal Position	Year	Salary		Bonus	Stock Awards(1)		Non-Equity Incentive Plan Compensation			All Other Compensation			Total
John T. (Jack) McDonald	2020	$	325,000	—	$	8,035,196	$	266,013	(2)	—			$	8,626,209
Chief Executive Officer and Chairman	2019	$	325,000	—	$	6,183,000	$	1,056,250	(2)	—			$	7,564,250
	2018	$	325,000	—	$	5,124,620	$	387,549	(2)	—			$	5,837,169

Timothy W. Mattox	2020	$	325,000	—	$	6,222,000	$	179,644	(3)	—			$	6,726,644
Former co-President and Chief Operating Officer	2019	$	325,000	—	$	5,152,500	$	609,375	(3)	—			$	6,086,875
	2018	$	325,000	—	$	3,008,555	$	387,549	(3)	—			$	3,721,104

Rodney C. Favaron	2020	$	270,833	—	$	5,836,500	$	99,403	(4)	$	6,250	(6)	$	6,212,986
President

Michael D. Hill	2020	$	270,000	—	$	3,111,000	$	124,369	(5)	—			$	3,505,369
Chief Financial Officer and Treasurer	2019	$	270,000	—	$	2,576,250	$	421,875	(5)	—			$	3,268,125
	2018	$	270,000	—	$	2,058,485	$	321,963	(5)	—			$	2,650,448


		Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)				All Other Stock Awards: Number of Shares of Stock or Units (#)		Grant Date Fair Value of Stock Awards(2) ($)
Name	Grant Date	Threshold ($)	Target ($)		Maximum ($)
John T. (Jack) McDonald	02/24/2020		$	650,000
						66,297	(3)	$	5,285,197
	02/24/2020					66,297	(4)	$	2,750,000

Timothy W. Mattox	02/24/2020		$	487,500
	02/24/2020					150,000	(4)	$	6,222,000

Rodney C. Favaron	03/01/2020		$	270,833
	03/01/2020					150,000	(5)	$	5,836,500

Michael D. Hill	02/24/2020		$	337,500
	02/24/2020					75,000	(4)	$	3,111,000


	Option Awards					Stock Awards
	Number of Securities Underlying Unexercised Options		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not Vested (1) ($)
Name	Exercisable	Unexercisable
John T. (Jack) McDonald						60,000	(2)	$	2,753,400
						44,198	(3)	$	2,028,246
						66,297	(4)	$	3,042,369

Timothy W. Mattox	19,724	—	$	8.72	9/2/2024
						50,000	(5)	$	2,294,500
						100,000	(6)	$	4,589,000

Rodney C. Favaron	6,525	—	$	23.60	8/8/2027
						100,005	(7)	$	4,589,229

Michael D. Hill
						25,000	(8)	$	1,147,250
						50,000	(9)	$	2,294,500


	Option Awards			Stock Award
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
John T. (Jack) McDonald	—	—		141,433	$	4,926,476
Timothy W. Mattox	—	—		134,834	$	4,696,604
Rodney C. Favaron	31,416	$	1,213,385	50,589	$	2,312,607
Michael D. Hill	4,297	$	118,593	73,834	$	2,571,822


Name	Severance Payments upon Termination without Cause or Resignation for Good Reason(1)		Acceleration of Equity Awards upon Termination without Cause or Resignation for Good Reason in Connection with a Change of Control		Acceleration of Equity Awards upon Termination without Cause or Resignation for Good Reason	Acceleration of Equity Awards upon Death or Disability
John T. (Jack) McDonald	$	1,000,930	$	7,824,016	—	$	7,824,016
Timothy W. Mattox	$	831,346	$	6,883,500	—	$	6,883,500
Rodney C. Favaron	$	673,272	$	4,589,229	—	$	4,589,229
Michael D. Hill	$	621,110	$	3,441,750	—	$	3,441,750


	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column) (1)
Equity compensation plans approved by stockholders	264,002	$	8.93	588,742
Equity compensation plans not approved by stockholders	—	—		—
Total equity compensation plans	264,002	$	8.93	588,742


	Ernst & Young, LLP
	2020		2019
Audit Fees (1)	$	1,655,000	$	1,739,249
Audit-Related Fees(2)	116,000		96,000
Tax Fees	185,713		—
All Other Fees	—		—
Total	$	1,956,713	$	1,835,249

SEC Form DEF 14A filed by Upland Software, Inc.