PEGASYSTEMS INC

The Compensation Committee of our Board of Directors determines the compensation of our executive officers and oversees the compensation programs offered to our executives and employees. Although our Compensation Committee makes the final decisions about executive compensation, it also takes into account the views of our Chief Executive Officer, who makes initial recommendations with respect to the compensation of executive officers other than himself. Other employees of Company also participate in the preparation of materials presented to or requested by our Compensation Committee for use and consideration at its meetings.

The Compensation Committee did not engage an outside compensation consultant in 2025.

Compensation Philosophy

The objective of our executive compensation program is to align executive compensation with the achievement of our strategic and financial goals. The program focuses on long-term indicators of the underlying success of our business, rather than on ancillary indicators such as our stock price or earnings per share that may be influenced by other factors and may not necessarily demonstrate the underlying success of our business. Our compensation philosophy is built upon external competitiveness, principles of internal equity with respect to each executive’s role relative to others within the Company, recognition of performance against short and long-term goals, and the sharing of success. Therefore, our compensation program is primarily focused on internal and external benchmarking, and the level of attainment of target goals, most of which are shared goals relating to our overall performance.

Our compensation program is designed to reward superior performance by our executive officers. In measuring the contribution of the executive officers to Pegasystems, the Compensation Committee considers their performance relative to the applicable unit goals such as license signings, profit margins, additional financial metrics, and other specific objectives set by management. While compensation surveys are useful guides for comparative purposes, the Compensation Committee believes that a successful compensation program also requires the application of judgment and subjective determinations of individual and company performance. Therefore, the Compensation Committee applies its judgment when reconciling the program’s objectives with the realities of retaining valued employees.

Competitive Compensation Program

In making compensation decisions, management and the Compensation Committee consider the competitiveness of our executive officers’ compensation by comparing each element of compensation against compensation data from a peer group of the business-to-business software companies listed below, which the Compensation Committee believes compete with us for executive talent and that have similar present or projected revenue, are in a comparable industry, and/or are within our geographic market. The Compensation Committee also considers data from published compensation surveys including the Radford McLagan Compensation Database. In general, the Compensation Committee targets total compensation of our executive officers at above the median as compared to our peer group companies and compensation surveys. We used the companies listed below as our peer group for reviewing and evaluating our 2025 executive compensation program: