Freshworks to cancel CEO Girish Mathrubootham’s performance award of 60 lakh shares

Software-as-a-service (SaaS) firm Freshworks has decided to cancel Chief Executive Officer (CEO) Girish Mathrubootham’s performance-based stock unit award of 60 lakh shares owing to stock price hurdles, the company said in an SEC filing on Saturday. It has also decided to grant him an annual long-term equity incentive award in 2024.

The CEO PRSU—which stands for performance-based restricted stock unit—is a set of multi-year retention incentives meant to reward the chief executive for aligning business objectives with long-term stakeholder value creation. In 2021, the company’s board granted the award worth 60 lakh shares to Mathrubootham with vesting contingent upon achievement of both time- and performance-based conditions.

The board noted that the stock price hurdles were too far ahead of the current stock price for the CEO PRSU award to have the retention value expected at the time the award was granted, as a result of macroeconomic conditions that are “entirely outside the control of the company’s leadership”, according to the regulatory filing.

“... In determining to cancel Mr Mathrubootham’s CEO PRSU award and grant him an annual long-term equity incentive award in 2024, the Board and the Committee considered the fact that the long-term equity incentive program is an investment the Company has asked of its stockholders. However, the Board and the Committee also considered the fact that, as a result of macroeconomic conditions that are entirely outside the control of the company’s leadership team, the stock price hurdles were too far ahead of the current stock price for the CEO PRSU award to have the retention value expected at the time the award was granted,” the filing said.

However, Mathrubootham is entitled to an annual long-term equity incentive award with a fair value of $19 million, the NASDAQ-listed company said.

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The board also approved an annual incentive worth $15 million to Dennis Woodside, President of Freshworks, and $6 million to Chief Financial Officer Tyler Sloat, according to the filing. Chief Product Officer Srinivasagopalan Ramamurthy is entitled to a yearly incentive award of $6 million.

Under this structure, 30% of each executive’s incentive will be awarded as PRSUs, which will be determined based on the company’s achievement of the revenue and free cash flow targets, the filing said.