Nasdaq-listed Freshworks’ board said the decision was taken in the backdrop of the macroeconomic headwinds that have created challenges for the company’s stock price.
“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 company said in the filing with the US Securities and Exchange Commission (SEC) on February 16.
These performance-based restricted stock units were awarded to Mathrubootham in 2021. It was tied to achievement of various stock price hurdle requirements. This included the requirement of having the company’s stock price average around $200 before January 2029.
Mathrubootham, though, has now been allotted stock awards valued at $19 million. The founder also continues to hold the 3 million restricted stock units to vest over four years for taking the company public in 2021.
Freshworks’ board also approved stock awards to the software startup’s top deck, including president Dennis Woodside, chief financial officer Tyler Sloat, and chief product officer Srinivasagopalan Ramamurthy.
Discover the stories of your interest
Woodside has been granted stock awards worth $15 million, while Sloat and Ramamurthy have been awarded stocks worth $10 million and $6 million, respectively.Almost 70% of the new stock awards for the management will be vested over four years, and the rest will be vested based on the company’s performance in terms of revenue and free cash flow targets.
News website The Arc first wrote about the development on Saturday.
Earlier this month, Freshworks reported a net loss of $28 million for the fourth quarter compared with $55.4 million loss a year earlier. Revenue increased by 20% year-on-year to $160.1 million.
For the year ended December 31, Freshworks posted an operating profit, the first since its US listing, of $44.5 million. This excludes certain non-cash expenses such as stock-based compensation, employer payroll taxes and amortisation of acquired intangibles. Its loss for the year narrowed to $137 million from $232 million in 2022.