HUBSPOT INC

Base Salaries

Base salaries for our named executive officers were established initially at the time the individual was hired, taking into account competitive market data provided by the Compensation Committee’s compensation consultant, if applicable, and internal pay parity considerations, as well as the individual’s qualifications and experience. The base salaries of our named executive officers are reviewed by our CEO and are approved annually by the Compensation Committee. Adjustments to base salaries are also based on:

•

Each named executive officer’s position, level of responsibility, and seniority.

•

The relative ease or difficulty of replacing the individual with a well-qualified person and the number of well-qualified candidates available to assume the individual’s role.

•

Internal parity among our executive officers.

The Compensation Committee does not assign a specific weight to any single factor in making decisions regarding base salary adjustments.

In January 2023, after reviewing the base salaries of our named executive officers compared to similarly situated executives at the companies in our compensation peer group and the relevant compensation survey data, assessing both company and individual performance in 2022, as well as reviewing internal parity among our named executive officers, the Compensation Committee made adjustments to Ms. Bueker’s base salary. As Ms. Harvey Dawson joined the company in November 2022, her base salary did not change for 2023. As they did in 2022, Ms. Rangan and Messrs. Halligan and Shah each requested that their respective base salaries be maintained at $1 for 2023.

The following table sets forth the base salaries for our named executive officers for fiscal 2022 and 2023:

(1)

Ms. Bueker’s base salary change was effective as of February 1, 2023.

Annual Cash Bonuses

We provide annual performance-based cash bonus opportunities linked to the achievement of pre-established corporate performance goals under our Management Cash Incentive Bonus Plan (the “Bonus Plan”) to our named executive officers. The Compensation Committee believes that the annual performance measures used in the Bonus Plan contribute to driving long-term stockholder value, play an important role in influencing executive performance, and are an important element of our executive compensation program to help attract, motivate, reward, and retain our executive officers and other employees.

Under the Bonus Plan, each year (generally during January) the Compensation Committee approves company-wide performance objectives, which serve as the basis for determining the eligibility for, and amount of, bonuses to be paid under the Bonus Plan. Typically, performance under the Bonus Plan is measured as of June 30th and December 31st each year. After the end of each six-month period, the Compensation Committee reviews our actual achievement against the target levels for the pre-established performance measures and determines the bonuses, if any, to be paid under the Bonus Plan. The Compensation Committee may increase or decrease awards under the Bonus Plan in its discretion

2024 PROXY STATEMENT |HubSpot, Inc. 30 based on factors the Compensation Committee deems appropriate. Bonus payments are made semi-annually shortly after bonus payments are approved by the Compensation Committee.

2023 Target Annual Cash Bonus Opportunities. To establish our named executive officers’ individual target annual cash bonus opportunities (expressed as a percentage of base salary), the Compensation Committee considers competitive market data prepared by its compensation consultant, and the level, position, objectives, and scope of responsibility of each executive officer, as well as considerations of internal parity among similarly situated executives.

In January 2023, based on its review of our executive compensation program, competitive market data, and the other factors described above, the Compensation Committee approved the following target annual cash bonus opportunities for our named executive officers, which remained unchanged from 2022 levels. As in 2022, Ms. Rangan and Messrs. Halligan and Shah forwent any annual cash bonuses under the Bonus Plan for 2023.

The following table sets forth the target annual cash bonus opportunities for our named executive officers under our Bonus Plan for 2023:

(1)

Target annual cash bonus opportunities were effective as of January 1, 2023.

2023 Annual Cash Bonus Performance Measures. For 2023, the Compensation Committee selected the following two performance measures: (1) annual recurring revenue (“ARR”) install base and (2) non-GAAP operating income (loss) as the measures for the Bonus Plan. Performance was measured on a cumulative basis biannually as of June 30, 2023 and December 31, 2023. The performance measures were weighted as follows: 70% for ARR and 30% for non-GAAP operating income (loss).

For purposes of the Bonus Plan, we define “ARR” as the annual value of our customer subscription contracts as of the specified point in time, excluding any commissions owed to our partners. For each Hub, this is the sum of customer ARR for the Starter, Basic, Professional and Enterprise subscriptions, plus applicable contacts (marketing only), Seats, or Add-Ons (e.g., reporting or ads). For multi-product customers, their ARR is distributed across based on the value of each SKU/Hub for which they pay. In 2022, we began including our payments revenue run rate, defined as, on an annualized basis, the trailing three months of payments revenue, into the annual value of our customer subscription contracts. ARR can differ from revenue due to several factors. ARR is converted into U.S. dollars at fixed rates that are held consistent over time and may vary from those used for revenue or deferred revenue. ARR excludes any impact for bad debt and partner commissions (as noted above) and also differs from revenue due to timing of revenue recognition. We define “non-GAAP operating income (loss)” as operating income (loss), calculated in accordance with GAAP, excluding our stock-based compensation expense, the amortization of acquired intangibles, acquisition-related expenses, gains (losses) on the termination of operation leases, loss on disposal of fixed assets, and restructuring charges. The GAAP financial measure most directly comparable to each of these non-GAAP financial measures, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are attached to this proxy as Appendix A.

2023 Annual Cash Bonus Performance Targets, Achievement, and Payout. The Compensation Committee believes the target levels for the Bonus Plan performance measures should be rigorous and challenging. The Compensation Committee establishes target levels it believes are necessary to provide a competitive overall compensation package in light of each named executive officer’s base salary and to motivate our named executive officers to achieve a targeted level of growth and profitability.

For ARR, the Compensation Committee established payout levels for 50% (minimum payout), 75%, 100% (target payout), 125%, 150%, 175%, and 200% (maximum payout) achievement, with a sliding scale applied between each payout level. In 2023, the minimum threshold was returned to 50% from a 40% minimum threshold for 2022 to remain consistent with the operating profit scale.

2024 PROXY STATEMENT |HubSpot, Inc. 31

For non-GAAP operating income (loss), the Compensation Committee established payout levels for 50% (minimum payout), 75%, and 100% (target/maximum payout) achievement, with a sliding scale applied between each payout level.

Due to the weighting of each performance measure (70% for ARR and 30% for non-GAAP operating income (loss)), the maximum payout was 170% of a named executive officer’s target annual cash bonus opportunity:

(70% ARR * 200% Maximum) PLUS (30% non-GAAP operating income (loss) * 100% Maximum)

EQUALS 170% of Target Annual Cash Bonus Opportunity

The table below shows our 2023 ARR and non-GAAP operating income target levels compared to our actual results and related achievement:

For the six-month period ended June 30, 2023, we recorded ARR install base of $2.210 billion, which was below the targeted ARR performance level of $2.244 billion. As a result, the payout associated with ARR was 66.2% of target. Our non-GAAP operating income was above the target level of $101.6 million. As a result, the payout associated with non-GAAP operating income was 100% of target (the maximum payout). Based on the weighting of the performance measures, the payout for the first half of 2023 was equal to 76.2% of the target annual cash bonus opportunity for that six-month period.

For the six-month period ended December 31, 2023, we recorded ARR install base of $2.442 billion, which was below the targeted ARR performance level of $2.539 billion. As a result, the payout associated with ARR was 56.1% of target. Our non-GAAP operating income exceeded the target level of $272.6 million. As a result, the payout associated with non-GAAP operating income was 100.0% of target (the maximum payout). Based on the weighting of the performance measures, the payout for the second half of 2023 was equal to 69.2% of the target cash bonus opportunity for that six-month period.

The above-referenced performance targets should not be interpreted as a prediction of how we will perform in future periods. As described below, the purpose of these objectives was to establish a method for determining the payment of annual cash bonuses.

Accordingly, the annual cash bonuses paid to our named executive officers for 2023 under the Bonus Plan are set forth in the table below.

(1)

The amounts in this column represent the 2023 total bonus payment as a percentage of the named executive officer’s 2023 target bonus opportunity for 2023. Ms. Bueker received an increase in base salary that was effective as of February 1, 2023 and her 2023 total bonus payments were calculated on a pro rata basis using her base salary in effect during the relevant periods.

(2)

In 2023, Ms. Rangan and Messrs. Halligan and Shah forwent any cash bonus payments under the Bonus Plan.

2024 PROXY STATEMENT |HubSpot, Inc. 32

Long-Term Incentive Compensation

The Compensation Committee grants long-term incentive compensation in the form of equity awards to our executive officers, including our named executive officers, on an annual basis, generally in the first quarter of the year. In determining the size of equity awards for our named executive officers, the Compensation Committee reviews competitive market data provided by its compensation consultant and grants awards intended to be competitive with the prevailing market practice. In addition to the competitive market data, the Compensation Committee also considers a number of other factors, including the recommendations of our CEO (except with respect to her own equity awards), the company’s overall performance, the individual executive officer’s performance, the relative ease or difficulty of replacing the executive officer with a well-qualified person and the number of well-qualified candidates available to assume the executive officer’s role, the amount of equity previously awarded to the executive officer as well as the portion of previously awarded equity that remains unvested, and the company’s annual equity burn rate. The Compensation Committee also considers the appropriateness of various equity vehicles, as well as overall program costs (which includes both stockholder dilution and compensation expense), when evaluating the long-term compensation mix. All equity awards are approved by the Compensation Committee.

Stock Options. We grant stock options to our executive officers to align their interests with those of our stockholders and as an incentive to remain with us. The Compensation Committee believes that options to purchase shares of our common stock, with an exercise price equal to the market price of our common stock on the date of grant, are inherently performance-based and are an effective tool to motivate our executive officers to build stockholder value and reinforce our position as a growth company. With stock options, our executive officers can realize value only to the extent that the market price of our common stock increases during the period that the option is outstanding, which provides a strong incentive to our executive officers to increase stockholder value. Further, because these options typically vest over a four-year period, they incentivize our executive officers to build value that can be sustained over time.

Restricted Stock Unit Awards. We also grant RSU awards to our executive officers and other employees. RSU awards align the interests of our executive officers and other employees with those of our stockholders and help manage the dilutive effect of our equity compensation program. Our RSU awards are subject to time-based vesting. Because RSU awards have value to the recipient even in the absence of stock price appreciation, RSU awards help us retain and incentivize employees during periods of market volatility, and also result in our granting fewer shares of common stock than through stock options of equivalent grant date fair value. Our RSU awards typically vest over a four-year period, and we believe that, like stock options, they help incentivize our executive officers to build value that can be sustained over time.

Performance Stock Unit Awards. In 2023, we introduced PSU awards and granted PSUs to Mmes. Rangan and Bueker and Messrs. Halligan and Shah. PSU awards align the interests of our executive officers with those of our stockholders and incentivize the achievement of pre-defined financial performance metrics intended to drive the growth of our business and long-term stockholder value. PSU awards help us retain and incentivize employees and align with our pay for performance strategy as they are earned and vest only if we achieve specified performance metrics intended to drive the growth of our business. We believe that, like stock options, they help incentivize our executive officers to build value that can be sustained over time. One-third of the earned PSUs vest upon the Compensation Committee’s certification of the performance goal following the completion of the applicable performance period, and the remaining 2/3 of earned PSUs vest quarterly over the remaining two years, subject to the named executive officer’s continued employment through such vesting date.

Approved Equity Award Value and Calculation of Shares. The Compensation Committee typically approves an overall intended target value to be awarded to each executive officer after considering the factors described above. Once the equity award value has been determined, the number of RSUs to be granted and the target number of PSUs are each calculated using the average per share closing price of our common stock on the NYSE over the 30 trading days up to and including the date of grant. In the case of PSUs, the final payout is based on the Compensation Committee’s certification of the achievement of the performance goal, as described below. In the case of options, the number of underlying shares granted is based on the 30 trading day trailing average fair value (Black-Scholes value) as of the date of grant. As a result, the intended target value of an equity awards approved by the Compensation Committee may differ from the grant date fair values of the stock option, RSU, and PSU awards as computed in accordance with ASC Topic 718, which are shown in the 2023 Summary Compensation Table.

2023 Equity Awards. In February 2023, after considering the factors described above, the Compensation Committee approved annual equity award values for each named executive officer, except for Ms. Harvey Dawson. The mix for these annual equity awards would consist of 50% PSU awards, 37.5% RSU awards, and 12.5% stock options, based on the

2024 PROXY STATEMENT |HubSpot, Inc. 33 value of the awards calculated as described above. The RSUs and stock options vest quarterly over four years, subject to continued employment through the vesting date. The PSUs are described further below.

In connection with the hiring of Ms. Harvey Dawson and effective as of January 3, 2023, the Compensation Committee approved new hire and sign-on awards for Ms. Harvey Dawson, who joined the company on November 14, 2022. Ms. Harvey Dawson’s new hire award consisted of 75% RSUs and 25% options, in each case vesting over four years, with 25% vesting on May 1, 2023 and then in equal quarterly installments thereafter. Her sign-on award consisted of 100% RSUs, vesting over two years from November 1, 2022 with 25% vesting on May 1, 2023 and the remaining 75% vesting in equal quarterly installments thereafter. The vesting of each award is subject to continued employment through the vesting date.

The 2023 PSU awards are earned based on the achievement of a Revenue CC growth metric over the one-year performance period from January 1, 2023 through December 31, 2023. Revenue CC growth measures, year-over-year, the percentage increase in Revenue CC, which is defined as revenue as reported in accordance with GAAP for the applicable year, adjusted for the impact of foreign exchange rates. The 2023 Revenue CC metric was established based on internal operating targets, industry data, and peer group data. For achievement below threshold, no shares would be earned. For achievement at the threshold (20% Revenue CC growth), target (25% Revenue CC growth), and maximum (30% Revenue CC growth or higher) levels, each executive officer would earn 50%, 100%, or 150% of his or her target award, respectively. For performance achievement between threshold, target, and maximum amounts, the number of shares earned would be interpolated, and no more than 150% of the target award could be earned.

In February 2024, the Compensation Committee certified that the level of achievement of Revenue CC growth for the 2023 PSUs was 25.03%, resulting in 100.3% of the target number of the PSUs being earned. In certifying the level of achievement of Revenue CC growth for fiscal year 2023, the Committee determined to exclude revenues from Clearbit, which we acquired in December of 2023.

The table below shows the intended equity award value approved for our named executive officers and the resulting number of RSUs actually awarded, the number of PSUs actually awarded, and shares underlying stock options actually awarded. We note, however, that the reported values in our 2023 Summary Compensation Table may differ from the values reflected below due to fluctuations in our stock price prior to the actual grant date.

(1)

Represents the award values approved by the Compensation Committee. The grant date fair value of the stock option, PSU and RSU awards, as computed in accordance with ASC Topic 718, is reported in the 2023 Summary Compensation Table.

(2)

Represents the resulting number of shares underlying the earned PSUs determined following the Compensation Committee’s certification of the level of achievement of the performance goal for the PSUs. The target number of shares underlying the PSUs was as follows: Ms. Rangan: 33,714; Ms. Bueker: 11,004; Mr. Halligan: 7,221; and Mr. Shah, 6,189.

(3)

Represents Ms. Harvey Dawson’s new hire equity award, comprised of 75% RSUs and 25% options, and her sign-on equity award, comprised of RSUs, each granted effective as of January 3, 2023 in connection with her joining the company in November 2022.