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[  ], 2023

To Our Stockholders:

You are cordially invited to attend the 2023 Annual Meeting of Stockholders of Upwork Inc., which we refer to as the Annual Meeting. The meeting will be held exclusively online via live webcast on Friday, June 9, 2023, at 8:00 a.m. Pacific Time. The meeting can be accessed by visiting www.virtualshareholdermeeting.com/UPWK2023, where you will be able to listen to the meeting live, submit questions, and vote online. We believe the virtual format makes it easier for stockholders to attend and participate fully and equally in the Annual Meeting. This approach also lowers costs, enables participation from our global community, and aligns with our broader sustainability goals.

The matters expected to be acted upon at the Annual Meeting are described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. The Annual Meeting materials include the notice, Proxy Statement, and annual report to stockholders, each of which has been furnished to you over the internet or, if you have requested a paper copy of the materials, by mail.

Your vote is important. Whether or not you plan to attend the Annual Meeting, please cast your vote as soon as possible by internet, by telephone, or if you received a paper copy of the meeting materials by mail, by completing and returning the enclosed proxy card or voting instruction form in the postage-prepaid envelope to ensure that your shares will be represented. Your vote by written proxy will ensure your representation at the Annual Meeting regardless of whether or not you attend the meeting. Returning the proxy does not affect your right to attend and to vote your shares at the Annual Meeting.

Sincerely,

 

Thomas Layton

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON FRIDAY, JUNE 9, 2023: THE PROXY STATEMENT AND ANNUAL REPORT ARE AVAILABLE AT

www.proxyvote.com

This Proxy Statement for the Annual Meeting, which we refer to as this Proxy Statement, includes forward-looking statements. All statements contained in this Proxy Statement, other than statements of historical fact, are forward-looking statements. These statements are based on current expectations, estimates, and projections about our industry, management’s beliefs, and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance or events and are subject to risks, assumptions, estimates, and uncertainties that are difficult to predict. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and our subsequently filed Quarterly Reports on Form 10-Q.

 

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. References to our website in this Proxy Statement are not intended to function as hyperlinks, and the information contained on our website is not intended to be incorporated into this Proxy Statement. In this Proxy Statement, we refer to Upwork Inc. as “Upwork,” the “Company,” “we,” “us,” or “our.”

Our mission is to create economic opportunities so people have better lives. We operate the world’s largest work marketplace that connects businesses with independent talent from across the globe, as measured by gross services volume, which we refer to as GSV.¹

In 2022, we generated strong operational and financial results while advancing valuable strategic initiatives. Key business highlights include:

We monitor GSV as a key financial and operational metric to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. GSV is an important metric because it represents the amount of business transacted through our work marketplace. Moreover, we believe revenue is the primary measure of the performance of our business, as it provides comparability against competitors and is aligned to our strategic focus on growth objectives.

 

 

Our board of directors and executive management team value feedback from our stockholders. In addition to our normal-course investor relations activities, we regularly engage with our stockholders on topics including our strategy, the composition of the board of directors, corporate governance, and environmental, social, and governance, which we refer to as ESG, practices. In response to the decline in support for our Say-on-Pay vote at our 2022 annual meeting of stockholders, our board of directors and management team led a dedicated effort in the second half of 2022 to engage with our largest stockholders to discuss topics related to our executive compensation program in addition to our regular engagement topics.

We contacted stockholders representing approximately 43% of our shares outstanding and engaged in discussions with stockholders representing approximately 23% of our shares outstanding. Members of our board of directors, including the chairs of the compensation committee and the audit, risk and compliance committee, which we refer to as our audit committee, and management team participated in these engagements and used feedback heard from stockholders as a key input in deliberations on our strategy, governance, executive compensation, risk management, and ESG priorities. Key themes from our engagement with stockholders and the actions our board of directors took in response include:

Our mission is to create economic opportunities so people have better lives. We seek to do what is right for our business, stakeholders, and planet. Our ESG key focus areas include the following five priorities where we believe we have the greatest potential to drive positive impact:

For more information on our ESG programs and performance, see our 2022 Impact Report, published in April 2023, which is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub. The information contained in our 2022 Impact Report is not intended to be incorporated into this Proxy Statement.

Our executive compensation philosophy is to provide a competitive compensation program that attracts and retains talented executives, including our Named Executive Officers, whom we identify in the “Compensation Discussion and Analysis” section below, and to motivate and reward them to meet or exceed our short-term and long-term strategic objectives while simultaneously creating sustainable long-term value for our stockholders. We strive to create an executive compensation program that is competitive, rewards achievement of our strategic objectives, and aligns our executives’ interests with those of our stockholders.

We are committed to effective corporate governance that promotes the long-term interests of our stockholders and strengthens the accountability of our board of directors and management. As we continue to mature as a public company, we are committed to evolving our corporate governance practices in line with our growth. Our board of directors takes a thoughtful approach to our governance structure, regularly assessing a range of factors, including regular stockholder input and feedback. Our board of directors carefully considers each of our corporate governance practices to ensure they are aligned with our state of maturity as a company and the best interests of our stockholders. Key elements include the following:

Our board of directors conducts an annual self-evaluation process, which is used, in part, to assess the current composition of the board of directors and its committees relative to the evolving needs of the business. This exercise is conducted with the goal of ensuring we have developed and maintain a diverse, experienced, and highly qualified board of directors that is representative of our key stakeholders and well positioned to oversee corporate strategy and culture. As part of the evaluation and refreshment process, our board of directors has added two new independent directors since our initial public offering in 2018: Leela Srinivasan and Anilu Vazquez-Ubarri, in addition to Ms. Brown, who joined our board of directors when she became our President and Chief Executive Officer.

The charts below provide information regarding the tenure and age distribution of our board of directors (as of March 31, 2023).

 

We are committed to creating a diverse and inclusive culture, which starts at the top with our board of directors. Four of our eight directors are women, two directors self-identify as being racially or ethnically diverse, and one director self-identifies as LGBTQ+. All of our directors bring unique experiences and backgrounds to Upwork.

Friday, June 9, 2023

Online at www.virtualshareholdermeeting.com/UPWK2023.

There is no physical location for the Annual Meeting.

April 10, 2023, which we refer to as the Record Date.

Only stockholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting and any adjournments thereof.

We are pleased to invite you to participate in our Annual Meeting, which will be conducted exclusively online at www.virtualshareholdermeeting.com/UPWK2023. Please see “Important Information About the Annual Meeting” for additional information.

The Annual Meeting will begin promptly at 8:00 a.m. Pacific Time. The virtual meeting room will open at 7:45 a.m. Pacific Time for registration.

Your vote is very important to us. Please act as soon as possible to vote your shares, even if you plan to participate in the Annual Meeting. For specific instructions on how to vote your shares, please see “Frequently Asked Questions–Voting Information” beginning on page 90 of this Proxy Statement.

This notice of the Annual Meeting, Proxy Statement, and form of proxy are being distributed and made available on or about April [ ], 2023.

Whether or not you plan to attend the Annual Meeting, we encourage you to vote and submit your proxy through the internet or by telephone or to request and submit your proxy card as soon as possible, so that your shares may be represented at the meeting.

PRELIMINARY PROXY STATEMENT DATED APRIL 18, 2023

SUBJECT TO COMPLETION

Our Annual Meeting will be conducted online only, via live webcast. Stockholders will be able to access the meeting live by visiting www.virtualshareholdermeeting.com/UPWK2023.

We have conducted efficient and effective virtual meetings since 2019. We intend to continue to ensure that our stockholders are afforded the same rights and opportunities to participate virtually as they would at an in-person meeting. We believe the virtual format makes it easier for stockholders to attend and participate fully and equally in the Annual Meeting. Our virtual meeting format helps us engage with all stockholders regardless of size, resources, or physical location, saves us and stockholders time and money, and reduces our environmental impact.

We are strongly committed to good corporate governance practices. These practices provide an important framework within which our board of directors and management can pursue our strategic objectives for the benefit of our stockholders.

Our board of directors has adopted Corporate Governance Guidelines that set forth expectations for directors, director independence standards, board committee structure and functions, and other policies for the governance of our company. Our Corporate Governance Guidelines are available in the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking “Documents & Charters” in the “Governance” section of our website. Our nominating and governance committee reviews the Corporate Governance Guidelines annually, and changes are recommended to our board of directors as warranted.

Our Corporate Governance Guidelines provide that our board of directors shall be free to choose its chairperson in any way that it considers in the best interests of our company, and that the nominating and governance committee periodically considers the leadership structure of our board of directors and makes such recommendations to our board of directors with respect thereto as appropriate. Our board of directors believes it is important to have flexibility in selecting the chairperson of the board of directors and our board leadership structure. Any changes to the leadership structure of our board of directors, if made, will be promptly disclosed in the “Investor Relations” section of our website and will be reflected in our proxy materials for the next annual meeting of stockholders. In making leadership structure determinations, the board of directors considers many factors, including the specific needs of the business and what is in the best interests of our stockholders. Our board of directors, in its sole discretion, may seek input from our stockholders on the leadership structure of the board of directors.

Currently, the positions of chairperson and chief executive officer are held by different individuals. Thomas Layton is the chairperson of our board of directors. Mr. Layton has served as a member of our board of directors and chairperson since our inception. Our board of directors believes that Mr. Layton’s historical knowledge, operational expertise, and extensive leadership experience, including serving as the chairperson of our board of directors since our inception, make him well qualified to serve as chairperson of our board of directors.

Our Corporate Governance Guidelines also provide that, when the positions of chairperson and chief executive officer are held by the same person, the independent directors may designate a “lead independent director.” In cases in which the chairperson and chief executive officer are the same person and a lead independent director has been designated, the chairperson schedules and sets the agenda for meetings of our board of directors in consultation with the lead independent director, and the chairperson, or if the chairperson is not present, the lead independent director, chairs such meetings. The responsibilities of the lead independent director include: calling meetings of the independent directors; presiding at executive sessions of independent directors; serving as principal liaison between the chairperson and the independent directors; disseminating information to the rest of our board of directors; being available under appropriate circumstances for communication with stockholders; providing leadership to the board of directors if circumstances arise in which the role of chief executive officer and chairperson may be, or may be perceived to be, in conflict, and performing such other functions and responsibilities as requested by our board of directors from time to time. Mr. Layton is an independent director, and accordingly, our board of directors has not designated a lead independent director.

Our board of directors, as a whole, has responsibility for risk oversight, although the committees of our board of directors oversee and review risk areas that are particularly relevant to them. The risk oversight responsibility of our board of directors and its committees is supported by our management reporting processes, which are designed to provide visibility to our board of directors and to our personnel who are responsible for risk assessment and information about the identification, assessment, and management of critical risks and management’s risk-mitigation strategies. Our board of directors and its committees engage, as appropriate, external advisors and experts to assist in anticipating future threats and trends and assessing our risk environment. Areas of focus include, among others, competitive, economic, operational, financial

(accounting, credit, investment, liquidity, and tax), legal, regulatory, cybersecurity, privacy, compliance, and reputational risks. Our board of directors reviews strategic and operational risk in the context of memorandums distributed prior to, and discussions, question-and-answer sessions, and reports from the management team at, each regular board meeting; receives reports on all significant committee activities at each regular board meeting; and evaluates the risks inherent in significant transactions. Risk mitigation efforts are then reported by management to the audit committee or board of directors throughout the year. Our audit committee assists our board of directors in fulfilling its oversight responsibilities with respect to risk management.

Each committee of our board of directors meets with key management personnel and representatives of outside advisors to oversee risks associated with their respective principal areas of focus.

We believe this division of responsibilities is an effective approach for addressing the risks we face and that our board leadership structure supports this approach.

Securing the information of our users, team members, vendors, and other third parties is important to us. We have adopted physical, technological, and administrative controls on data security and have a defined procedure for data incident detection, containment, response, and remediation. While everyone at our company plays a part in managing these risks, oversight responsibility is shared by our board of directors, our audit committee, and management.

Our Chief Information Security Officer provides regular cybersecurity updates in the form of written reports and presentations to our audit committee at quarterly meetings and to the full board of directors annually. Our audit committee regularly reviews metrics about cyber threat response preparedness, program maturity milestones, risk mitigation status, and the current and emerging threat landscape. Additionally, we leverage the National Institute of Standards and Technology security framework to drive strategic direction and maturity improvement and engage third-party security experts for risk assessments and program enhancements. We are ISO certified in Information Security Management Systems, an internationally recognized certification that is independently audited by a third party.

Our amended and restated bylaws provide for a majority voting standard for uncontested elections of directors and require that stockholder director nominations include a written statement as to whether the nominee intends to tender an irrevocable resignation upon such nominee’s election or re-election. The majority voting standard provides that, in uncontested director elections, a director nominee will be elected only if the number of votes cast “FOR” the nominee exceeds the number of votes cast “AGAINST” the nominee. In addition, our Corporate Governance Guidelines require each incumbent nominee to submit an irrevocable contingent resignation letter prior to the annual meeting of stockholders in which such election is to take place. This addresses the “holdover” director situation under the Delaware General Corporation Law, which we refer to as the DGCL, pursuant to which a director remains on the board of directors until such director’s successor is elected and qualified. Such resignation becomes effective only upon (i) such nominee’s failure to receive the requisite number of votes for re-election at any future meeting at which such person would face re-election and (ii) our board of directors’ acceptance of such resignation. If the nominee does not receive the requisite number of votes for re-election, our nominating and governance committee will make a recommendation to our board of directors as to whether to accept or reject the resignation, or whether other action should be taken. Our board of directors will act on the nominating and governance committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results.

The listing rules of Nasdaq generally require that a majority of the members of a listed company’s board of directors be independent. In addition, the listing rules generally require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and governance committees be independent.

In addition, audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or be an affiliated person of the listed company or any of its subsidiaries.

Our board of directors conducts an annual review of the independence of our directors. In its most recent review, our board of directors determined that Thomas Layton, Gregory C. Gretsch, Kevin Harvey, Elizabeth Nelson, Leela Srinivasan, Gary Steele, and Anilu Vazquez-Ubarri, representing seven of our eight directors, are “independent directors,” as defined under the applicable listing standards of Nasdaq and the applicable rules and regulations promulgated by the SEC. Our board of directors has also determined that all members of our audit committee, compensation committee, and nominating and governance committee are independent and satisfy the relevant Nasdaq and SEC independence requirements for such committees.

Our board of directors has established an audit committee, a compensation committee, and a nominating and governance committee. The composition and responsibilities of each committee are described below. Each of these committees has a written charter approved by our board of directors. Copies of the charters for each committee are available in the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking on “Documents & Charters” in the “Governance” section of our website.

  Chair

  Member

  Financial Expert

Our audit committee is composed of Ms. Nelson, who is the chairperson of the committee, Mr. Gretsch, and Ms. Srinivasan. Each member of our audit committee is independent under the current Nasdaq listing standards and SEC rules and regulations. Each member of our audit committee is financially literate as required by the current Nasdaq listing standards. In addition, our board of directors has determined that Ms. Nelson and Mr. Gretsch both satisfy the requirements for an “audit committee financial expert” as defined in SEC rules and regulations. This designation does not impose any duties, obligations, or liabilities that are greater than those generally imposed on members of our audit committee and our board of directors. Our audit committee is responsible for, among other things:

Our compensation committee is composed of Mr. Gretsch, who is the chairperson of the committee, Mr. Steele, and Ms. Vazquez-Ubarri. The composition of our compensation committee meets the requirements for independence under current Nasdaq listing standards and SEC rules and regulations. Each member of this committee is a non-employee director, as defined in SEC rules and regulations. Our compensation committee is responsible for, among other things:

Our nominating and governance committee is composed of Mr. Layton, who is the chairperson of the committee, Mr. Harvey, and Ms. Nelson. The composition of our nominating and governance committee meets the requirements for independence under current Nasdaq listing standards. Our nominating and governance committee is responsible for, among other things:

Our board of directors recognizes that one of its most important duties is its oversight of succession planning for our Chief Executive Officer. Our board of directors has delegated primary oversight responsibility for succession planning for our Chief Executive Officer to the compensation committee and the chairperson of our board of directors. Our Chief Executive Officer is responsible for identifying, evaluating, and selecting potential successors for our Chief Executive Officer’s direct reports. Our board of directors continues to regularly evaluate its succession planning to ensure that we are well positioned to continue to execute on our corporate strategy.

Our board of directors actively oversees management’s establishment and execution of corporate strategy, including major business and organizational initiatives, annual budget and long-term strategic plans, capital allocation priorities, potential corporate development opportunities, and risk management. At its regularly scheduled meetings and throughout the year, our board of directors receives information and formal updates from our management and actively engages with the senior leadership team with respect to our corporate

strategy. Our board of directors’ diverse skill set and experience enhances our board of directors’ ability to support management in the execution and evaluation of our corporate strategy. The independent members of our board of directors also hold regularly scheduled executive sessions at which strategy is discussed.

The members of our compensation committee during 2022 were Mr. Gretsch, Ms. Nelson (until April 2022), Mr. Steele, and Ms. Vazquez-Ubarri (beginning April 2022). None of the members of our compensation committee in 2022 were at any time an officer or employee of ours or any of our subsidiaries, and none had or have any relationships with us that are required to be disclosed under Item 404 of Regulation S-K. During 2022, none of our executive officers served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our board of directors or compensation committee.

Our board of directors and its committees meet regularly throughout the year, and also hold special meetings and act by written consent from time to time. During 2022, our board of directors met six times and also acted by unanimous written consent. During 2022, each member of our board of directors attended at least 75% of the aggregate of all meetings of our board of directors and of all meetings of committees of our board of directors on which such member served that were held during the period in which such director served. The non-employee directors meet in regularly scheduled executive sessions without management to promote open and honest discussion. During 2022, our audit committee met eight times, our compensation committee met six times, and our nominating and governance committee met two times, and each committee also acted by unanimous written consent.

Our policy is to invite and encourage each member of our board of directors to be present at our annual meetings of stockholders. All members of our board of directors attended our 2022 annual meeting of stockholders in their capacity as directors of our company.

Stockholders and interested parties who wish to communicate with our board of directors, non-management members of our board of directors as a group, a committee of our board of directors, or a specific member of our board of directors (including our chairperson) may do so by letters addressed to the attention of our Corporate Secretary.

All communications are reviewed by the Corporate Secretary and provided to the members of our board of directors as appropriate. Sales materials, abusive, threatening, or otherwise inappropriate materials, and items unrelated to the duties and responsibilities of our board of directors will not be provided to directors.

The mailing address for these communications is:

Upwork Inc.

c/o Corporate Secretary

655 Montgomery Street, Suite 490, Department 17022

San Francisco, CA 94111-2676

We have adopted a Code of Business Conduct and Ethics that applies to all the members of our board of directors, officers, and employees. Our Code of Business Conduct and Ethics is posted in the “Investor Relations” section of our website, which is located at investors.upwork.com under “Documents & Charters” in the “Governance” section of our website. We intend to satisfy the disclosure requirement under applicable SEC and Nasdaq disclosure requirements regarding amendments to, or waivers of, a provision of our Code of Business Conduct and Ethics by posting such information on our website at the address and location specified above.

Our mission is to create economic opportunities so people have better lives. We do this by removing friction in the labor market, allowing clients to hire independent talent, and helping global independent talent find better opportunities than those available in their local job markets. We believe that operating in a responsible and sustainable way will drive long-term value creation, and we are committed to managing our ESG risks and opportunities.

To help identify ESG-related topics that are most important to our business and stakeholders, we conducted our first ESG materiality assessment in 2020 and will be updating the assessment in 2023. These assessments help us identify, assess, and prioritize sustainability topics that impact Upwork’s enterprise value as well as those that affect society at large. In addition to assessing the perceptions of key stakeholders, including employees, executives, stockholders, talent, and clients, the 2023 assessment will also measure the degree to which ESG topics have or are expected to financially and strategically impact Upwork.

We are committed to continued engagement with our key stakeholders going forward and ensuring our practices and disclosures align with evolving ESG-related priorities.

The following table sets forth the key focus areas for our ESG strategy and our notable ESG accomplishments in 2022:

For more information on our ESG programs and performance, including our ESG materiality assessment, see our 2022 Impact Report, published in April 2023, which is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub. The information contained in our 2022 Impact Report is not intended to be incorporated into this Proxy Statement.

Board oversight of our ESG strategy and performance starts with our nominating and governance committee, which oversees our overall ESG performance and provides input on our management of material ESG risks and opportunities, ESG reporting, and progress against ESG targets.

Our ESG Program Office, which comprises our ESG Senior Program Manager and other members of the legal department, focuses on engaging key stakeholders and strengthening our ESG performance. Our ESG Program Office briefs the nominating and governance committee at least biannually, which then updates the full board of directors on ESG matters on a biannual basis.

In 2022, we continued to convene members of our ESG Task Force, a committee made up of senior leaders and subject matter experts across Upwork, to proactively manage the key ESG topics identified in our 2020 ESG materiality assessment. Additionally, our ESG Task Force has begun the process of assessing matters for our 2023 ESG materiality assessment. Through our ongoing stockholder engagement efforts, we have also engaged with many institutional investors to understand their ESG priorities and share information about our ESG programs.

Our board of directors recognizes the critical importance of our team and the necessity to ensure a diverse, inclusive, and creative work environment that is centered around a values-based culture. Our board of directors meets regularly with management to discuss issues impacting our team members and ways to support our workforce. Our focus on culture comes from our board of directors and flows throughout our company. In evaluating our Chief Executive Officer and management team, emphasis is put on their contributions to our overall culture.

Our mission—to create economic opportunities so people have better lives—is integral to our culture and how we build amazing teams and products to lead our industry. We enable remote work not only through our work marketplace for our users but also for our own team members for whom we are proud to offer a remote-first work model, which has environmental, as well as other, benefits. Our team consists of corporate employees, independent talent we engage through our work marketplace, and advisors. Our team members are distributed around the world, and while we have corporate offices, we do not solely rely on in-person collaboration. Our team works with a variety of tools and has adopted practices to ensure all voices are heard, innovation is fostered, and results are achieved. Our hybrid team, and its belief in our mission, values, and vision, is critical to our success. With the consistent investment in the development of our team and our commitment to diversity, inclusion, and belonging, we cultivate an environment where people are able to be themselves at work and perform to the best of their abilities.

Our mission not only drives the creation and continuous development of our work marketplace; it is also integral to how we engage our employees and our approach to creating and fostering an inclusive environment that promotes and encourages diversity, inclusion, belonging, career development, and wellness. As of December 31, 2022, we had approximately 850 employees, and throughout 2022, we engaged approximately 1,950 independent team members through our work marketplace to provide services to us on a variety of internal projects. We believe the positive relationship between us and our team members and our unique, strong culture differentiate us and are key drivers of our business success.

We view belonging as a feeling, inclusion as a practice, and diversity as an outcome.

We foster belonging through our Upwork Belonging Communities—groups that build empathy and promote inclusive skill-building. We cultivate inclusion by equipping managers with tools to effectively build and lead amazing and inclusive teams that amplify team members’ voices. Additionally, we practice multidimensional compensation and mobility reviews during our semi-annual employee performance evaluation process. This is led by a cross-functional team of human resource and legal leaders to help ensure we are fair in our rewards and recognition strategy. To bolster our diversity, inclusion, and belonging efforts, we also conduct an internal review to facilitate equity in internal mobility practices throughout our company as an ongoing priority. Diversity, inclusion, and belonging is a journey, not a destination, and, as such, we will continue to explore ways to cultivate an inclusive culture where every team member belongs.

As an organization built on talent and skills development, we understand the value of providing our employees with ongoing professional development and leadership opportunities so that they can advance their careers. Led by our dedicated learning and development team, we offer our team members an array of learning and development opportunities, including a variety of training sessions and workshops.

We strive to offer market-competitive compensation and benefits to attract and retain employees for the long term. We engage compensation consultants to benchmark our employee compensation with external sources to ensure fair and equitable pay practices. We provide total rewards that attract and retain world-class employees through a total compensation package that includes equity-based awards to align employee compensation with stockholder interests. Knowing our employees have diverse needs and life priorities, we also provide comprehensive benefits and services to those eligible, which include core benefits such as medical, dental, vision, and disability insurance, in addition to benefits tailored to the specific needs of our employees, such as mental health, fertility, family back-up care, and adoption support. We offer a health savings account with company contributions, family and medical leave, flexible working schedules, paid holidays and flexible vacation policies. We sponsor a 401(k) plan that includes a matching contribution, offer financial coaching through a third-party provider, and maintain an employee stock purchase plan that enables eligible employees to purchase shares of our stock at a discount through payroll deductions.

We engage our workforce in meaningful ways and take timely action in response to their feedback. Research into workforce experience begins during onboarding and is sustained throughout a team member’s tenure at Upwork. This “life cycle” approach to workforce research affords our senior leadership and human resources team members ongoing and real-time insight into critical moments of worker experience and productivity. The collection of such data allows leadership, line managers, and our human resources team to identify successes and opportunities at myriad levels, including for individual team members, company-wide programs, and larger organizational units. Over time, the aggregation and analysis of such data enables us to optimize for those workforce factors that drive crucial people and business outcomes.

Employee safety and wellbeing is of paramount importance to us. We provide productivity and collaboration tools and resources for employees, including training and tool kits to help leaders effectively lead and manage remote teams. In addition, we promote programs to support our employees’ physical, financial, and mental wellbeing. For example, we regularly conduct internal surveys to assess the wellbeing and needs of our employees, and we offer employee assistance and mindfulness programs to help employees and their families manage anxiety, stress, sleep, and overall wellbeing. Additionally, we believe that our employees are at their best when they take the time to recharge. In order to encourage our employees to recharge and make their wellbeing a priority, we provide unlimited paid time off in addition to our company-recognized holidays.

Section 16(a) of the Exchange Act requires our directors, executive officers, and any persons who own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Based solely on our review of the forms filed with the SEC and written representations from our directors and executive officers, we believe that all Section 16(a) filing requirements were timely met in the year ended December 31, 2022, with the following exceptions: (i) Ms. Brown filed a Form 4 on February 23, 2022 that inadvertently omitted the grant of 121,765 restricted stock units, which was corrected with the filing of an amended Form 4 on February 24, 2022; (ii) Mr. Gilpin filed a Form 4 on February 23, 2022 that inadvertently omitted the grant of 62,785 restricted stock units, which was corrected with the filing of an amended Form 4 on February 24, 2022; and (iii) Mr. McCombs filed a Form 4 on February 23, 2022 that inadvertently omitted the grant of 114,155 restricted stock units, which was corrected with the filing of an amended Form 4 on February 24, 2022.

Candidates for nomination to our board of directors are selected by our board of directors based on the recommendation of our nominating and governance committee in accordance with the committee’s charter, our restated certificate of incorporation and amended and restated bylaws, our Corporate Governance Guidelines, and the criteria approved by our board of directors regarding director candidate qualifications. In identifying and recommending candidates for nomination, the nominating and governance committee considers candidates recommended by directors, officers, employees, stockholders, and others, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions, and interviews with selected candidates as appropriate, and the committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. With respect to disclosure requirements, nominees for director nominated by a third party are not expected to provide additional disclosure compared to nominees for director nominated by the nominating and governance committee.

Stockholders wishing to recommend candidates for consideration by our nominating and governance committee should submit their recommendations to the attention of the Corporate Secretary at our mailing address contained elsewhere in this Proxy Statement. Information regarding the process for submitting stockholder nominations for candidates for membership on our board of directors is set forth below under “Frequently Asked Questions.”

With the goal of developing a diverse, experienced, and highly qualified board of directors, our nominating and governance committee is responsible for developing and recommending to our board of directors the desired qualifications, expertise, and characteristics of members of our board of directors, including any specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership on our board of directors and any specific qualities or skills that the committee believes are necessary for one or more of the members of our board of directors to possess.

Because the identification, evaluation, and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors and will be significantly influenced by the particular needs of our board of directors from time to time, our board of directors has not adopted a specific set of minimum qualifications, qualities, or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory, and Nasdaq listing requirements and the provisions of our restated certificate of incorporation, our amended and restated bylaws, our Corporate Governance Guidelines, and the charters of the committees of our board of directors. In addition, neither our board of directors nor our nominating and governance committee has a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, the nominating and governance committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, diversity, skills, financial and other expertise, breadth of experience, knowledge about our business or industry, and ability to devote adequate time and effort to responsibilities of our board of directors in the context of its existing composition. Through the nomination process, our nominating and governance committee seeks to promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds, and other characteristics that are expected to contribute to our board of directors’ overall effectiveness. The brief biographical description of each director set forth in Proposal 1 below includes the primary individual experience, qualifications, attributes, and skills of each of our directors that led to the conclusion that each director should serve as a member of our board of directors at this time.

We conduct an annual self-evaluation process for our board of directors and its committees. As part of this process, each member of our board of directors individually meets with outside counsel to discuss their assessment of the performance of the board of directors and its committees, their own performance, and the performance of fellow members of the board of directors. The chairperson of our board of directors shares feedback received with individual members of the board of directors, with the nominating and governance committee, and with the full board of directors. Our board of directors then reviews and discusses the feedback.

Our board evaluation process is used:

Our board of directors currently consists of eight directors and is divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Directors in Class II will stand for election at the Annual Meeting. The terms of office of directors in Class III and Class I do not expire until the annual meetings of stockholders held in 2024 and 2025, respectively. At the recommendation of our nominating and governance committee, our board of directors proposes that each of the Class II nominees named below, each of whom is currently serving as a director in Class II, be elected as a Class II director for a three-year term expiring at the 2026 annual meeting of stockholders and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation, disqualification, or removal.

We have a majority voting standard for uncontested elections of directors, which means that to be elected, a director nominee must receive a majority of the votes cast. This means the number of shares voted “FOR” a director nominee must exceed the votes cast “AGAINST” that nominee (with “abstentions” and “broker non-votes” not counted as a vote cast either “FOR” or “AGAINST” that director’s election). If any nominee for any reason is unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might determine. Each nominee has consented to being named in this Proxy Statement and to serve if elected. Proxies may not be voted for more than two directors. Stockholders may not cumulate votes for the election of directors.

The nominees and their age, occupation, and length of service on our board of directors as of March 31, 2023, are provided in the table below and in the additional biographical descriptions set forth in the text below the table.

The directors who are serving terms that end following the Annual Meeting and their age, occupation, and length of service on our board of directors as of March 31, 2023, are provided in the table below and in the additional biographical descriptions set forth in the text below the table.

Our board of directors comprises a diverse mix of directors with complementary expertise, experience, and attributes, as summarized in the table below. Our directors may also have experience or attributes in addition to what is reflected in the table below.

 

 

We believe that our current board of directors’ composition represents an effective balance with respect to director tenure and age. Recent director additions provide our board of directors with fresh perspectives and diverse experiences, while directors with longer tenure provide continuity and valuable insight into our business and strategy. The matrix above and charts below provide information regarding the tenure and age distribution of our board of directors (as of March 31, 2023).

We are committed to creating a diverse and inclusive culture, which starts at the top with our board of directors. Four of our eight directors are women, two directors self-identify as being racially or ethnically diverse, and one director self-identifies as LGBTQ+. All of our directors bring unique experiences and backgrounds to Upwork.

 

The following table provides information for 2022 regarding all compensation awarded to, earned by, or paid to each person who served as a director for some portion or all of 2022, other than Ms. Brown, our President and Chief Executive Officer. Ms. Brown is not included in the table below as she is an employee and received no additional compensation for her service as a director during 2022. The compensation received by Ms. Brown as an employee is shown in the “Executive Compensation—2022 Summary Compensation Table” below.

In order to remain competitive in an increasingly challenging landscape for recruitment of non-employee directors, our board of directors approved an amended and restated non-employee director compensation program in April 2022. Under such amended and restated non-employee director compensation program, non-employee directors were entitled to receive an increase in the amount of certain compensation. The following changes were made to the program: (i) an increase to the Annual Award (as defined below) from $170,000 to $185,000, (ii) an increase to the Chairperson Fee (as defined below) from $40,000 to $60,000, and (iii) an increase in the following annual committee chair and member fees: (A) audit committee chair fee from $20,000 to $35,000 and audit committee member fee from $10,000 to $17,500, (B) compensation committee member fee from $6,500 to $7,500, and (C) nominating and governance committee chair fee from $8,000 to $8,500 and nominating and governance committee member fee from $4,000 to $4,300. Our current amended and restated non-employee director compensation program is as follows:

Upon initial appointment or election to our board of directors, each new non-employee director appointed or elected to our board of directors will be granted RSUs under our 2018 Equity Incentive Plan, which we refer to as the 2018 Plan, with a total value of $400,000 based on a 30-day trailing average trading price, which we refer to as the Initial Award. The grant date fair value of the Initial Award shall not exceed $1,000,000 in a calendar year when combined with the aggregate grant date fair value of any other equity award(s) and cash compensation received by such non-employee director for service on our board of directors for such calendar year.

The Initial Award will be granted effective on the date of the non-employee director’s initial appointment or election to our board of directors, which we refer to as the Initial Award Grant Date.

The Initial Award will vest with respect to one-third of the total number of RSUs subject to the Initial Award each year beginning with the date that is the one-year anniversary of the Initial Award Grant Date, in each case, so long as the non-employee director continues to provide services as a non-employee director to us through such date. The final annual installment of the Initial Award will fully vest on the earlier of (i) the date immediately prior to our annual meeting of stockholders in the last full year of the vesting of the Initial Award and (ii) the date that is the last day of the last full year of the vesting of such grant, in each case, so long as the non-employee director continues to provide services as a non-employee director to us through such date.

The Initial Award will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).

Each non-employee director will automatically be entitled to an annual award of a $185,000 cash payment or RSUs with a total value of $185,000 based on a 30-day trailing average trading price, which we refer to as the Annual Award. The Annual Award will be payable in the form of RSUs or, at a non-employee director’s election, in cash.

The initial Annual Award, to the extent payable in RSUs and consistent with the applicable election made, will be granted automatically on the date of the non-employee director’s initial appointment or election to our board of directors, which we refer to as the Initial Annual Award Grant Date, and will be pro-rated for partial quarters served. Subsequently, the Annual Award, to the extent payable in RSUs, will be granted automatically on the date of our annual meeting of stockholders for each year thereafter, which we refer to as the Annual Award Grant Date.

The Annual Award will fully vest, or in the case of cash will be paid, on the earlier of (i) the date immediately prior to our next annual meeting of stockholders and (ii) the date that is one year following the Initial Annual Award Grant Date or Annual Award Grant Date, as the case may be, so long as the non-employee director continues to provide services as a non-employee director to us through such date. The Annual Award will be paid, in the case of cash, or settled, in the case of RSUs, in the same calendar year in which the Annual Award vests.

The Annual Award (regardless of the form of payment) will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).

Annual compensation payable to (i) each non-employee director as a general board service fee is $55,000, which we refer to as the General Board Service Fee, (ii) the non-executive chairperson as a chairperson fee is $60,000, which we refer to as the Chairperson Fee, and (iii) the lead independent director as a lead independent director fee is $15,000, we refer to each fee in clauses (i)-(iii), as a Fee, each of which is pro-rated for partial quarters served and payable in cash or, at a non-employee director’s election, in the form of RSUs.

If the non-employee director elects to receive the Fee in cash, which we refer to as the Fee (Cash), it will be paid quarterly in arrears (with the first such payment in any event occurring on the last day of the first calendar quarter following the date of the director’s appointment or election to our board of directors), in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

If the non-employee director elects to receive the Fee in RSUs, which we refer to as the Fee (RSU), the initial Fee (RSU) will be granted automatically on the date of the director’s initial appointment or election to our board of directors and each subsequent Fee (RSU) will be granted automatically on the date of our annual meeting of stockholders for each year thereafter. The number of shares subject to the applicable Fee (RSU) will be based on a 30-day trailing average trading price (which will be pro-rated for partial quarters served in the relevant capacity). The Fee (RSU) will vest and settle quarterly (with the first such vesting and settlement date occurring on the last day of the first calendar quarter following the date of the non-employee director’s appointment or election to our board of directors), in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

The Fee (regardless of the form of payment) will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).

The final quarterly installment of each Fee (Cash) or Fee (RSU), as applicable, will fully vest on the earlier of (i) the date immediately prior to our next annual meeting of stockholders and (ii) the date that is the last day of the last full quarter of the vesting of such grant, in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

In addition to the General Board Service Fee, each non-employee director is entitled to receive additional annual cash compensation for committee membership as follows:

Chairs of our committees receive the cash compensation designated above for chairs in lieu of the non-chair member cash compensation.

The cash compensation designated above will be paid quarterly in arrears, for so long as the non-employee director continues to provide services in the applicable non-employee director capacity to us through such date, and will be pro-rated for partial quarters served. The final quarterly installment of each such annual fee will be paid on the earliest of (i) the date of our next annual meeting of stockholders, (ii) the date immediately prior to our next annual meeting of stockholders if the applicable non-employee director’s service as a director ends at such meeting due to the director’s failure to be re-elected or the director not standing for re-election, and (iii) the date that is the last day of the last full quarter of such installment, in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

Our audit committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm to perform the audits of our consolidated financial statements and our internal control over financial reporting for the year ending December 31, 2023, and recommends that stockholders vote for ratification of such selection. The ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2023, requires the affirmative vote of a majority of the voting power of the shares present or represented by proxy at the Annual Meeting and voting affirmatively or negatively on the proposal. In the event that PricewaterhouseCoopers LLP is not ratified by our stockholders, the audit committee will review its future selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Further, the audit committee may select a different independent registered public accounting firm at any time if, in the committee’s sole discretion, the committee determines that such a change would be in the best interests of our company and stockholders.

PricewaterhouseCoopers LLP audited our consolidated financial statements and our internal control over financial reporting for the year ended December 31, 2022. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting, and they will be given an opportunity to make a statement at the Annual Meeting if they desire to do so and will be available to respond to appropriate questions.

We regularly review the services and fees from our independent registered public accounting firm. These services and fees are also reviewed with our audit committee annually. In accordance with standard policy, PricewaterhouseCoopers LLP periodically rotates the individuals who are responsible for our audit.

In addition to performing the audit of our consolidated financial statements and our internal control over financial reporting, PricewaterhouseCoopers LLP provided various other services during the years ended December 31, 2021 and 2022. Our audit committee has determined that PricewaterhouseCoopers LLP’s provision of these services, which are described below, does not impair PricewaterhouseCoopers LLP’s independence from us. During the years ended December 31, 2021 and 2022, fees for services provided by PricewaterhouseCoopers LLP were as follows (in thousands):

Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm, the scope of services provided by the independent registered public accounting firm, and the fees for the services to be performed. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.

All of the services relating to the fees described in the table above were approved by our audit committee.

OUR BOARD OF DIRECTORS AND AUDIT COMMITTEE RECOMMEND A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2023.

In accordance with Section 14A of the Exchange Act, we are providing stockholders with an opportunity to make a non-binding advisory vote on the compensation of our Named Executive Officers. This non-binding advisory vote is commonly referred to as a Say-on-Pay vote. The non-binding advisory vote on the compensation of our Named Executive Officers, as disclosed in this Proxy Statement, will be determined by the vote of a majority of the voting power of the shares present or represented at the Annual Meeting and voting affirmatively or negatively on the proposal.

Stockholders are urged to read the “Executive Compensation” section of this Proxy Statement, which discusses how our executive compensation policies and procedures implement our compensation philosophy and contains tabular information and narrative discussion about the compensation of our Named Executive Officers. Our compensation committee and our board of directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving our goals. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of the Named Executive Officers, as disclosed in the Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion, and the other related disclosures.”

As an advisory vote, this proposal is not binding. However, our board of directors and compensation committee, which is responsible for designing and administering our executive compensation program, value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers.

We are proposing to amend and restate our current restated certificate of incorporation to make the changes described below.

Section 102(b)(7) of the DGCL was amended effective August 1, 2022 to permit a Delaware corporation’s certificate of incorporation to include a provision that limits or eliminates (i.e., exculpates) the monetary liability of certain officers for breaches of the fiduciary duty of care as officers in certain actions. This exculpation would not protect officers from liability for breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Nor would this exculpation shield such officers from liability for claims brought by or in the right of the corporation, such as derivative claims. In addition, only certain officers may be exculpated from liability: (i) a corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer, or chief accounting officer; (ii) an individual identified in public filings as one of the most highly compensated executive officers of the corporation; and (iii) an individual who, by written agreement with the corporation, has consented to be identified as an officer for purposes of Delaware’s long-arm jurisdiction statute. The amendment to our current restated certificate of incorporation proposed in this Proposal 4 would eliminate the liability of these statutorily defined officers as described above, but the amendment will not have retroactive effect and will not apply to any act or omission occurring prior to the effectiveness of the amendment. The amendment is not being proposed in response to any specific resignation, threat of resignation, or refusal to serve by any officer.

Our board of directors believes it is necessary to provide protection to officers to the fullest extent permitted by law in order to attract and retain highly qualified senior leadership. The nature of the role of directors and officers often requires them to make decisions on crucial matters in time-sensitive situations, which can create substantial risk of investigations, claims, actions, suits, or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests. We expect competitor companies will likely adopt exculpation clauses that limit the personal liability of officers in their charters, and failing to obtain approval of the Restated Certificate of Incorporation could negatively affect our ability to recruit and retain high-caliber officer candidates. This protection has long been afforded to directors, and our board of directors believes that extending similar exculpation to its officers is fair and in the best interests of our company and our stockholders.

In addition to the changes to permit officer exculpation described above, the amendment would make technical and administrative changes to the choice of forum provision in our current restated certificate of incorporation in order to (i) clarify that the federal district court for the District of Delaware shall be the sole and exclusive forum for certain claims in the event the Court of Chancery does not have jurisdiction, (ii) add a provision that all “internal corporate claims” (as defined in Section 115 of the DGCL) be brought exclusively in Delaware courts, and (iii) clarify that we shall be entitled to equitable relief to enforce the choice of forum provision.

Our board of directors has unanimously approved the Restated Certificate of Incorporation, in the form attached to this proxy statement as Appendix A-1, and recommends that our stockholders vote “FOR” the approval of the Restated Certificate of Incorporation. For convenience of reference, a copy of the Restated Certificate of Incorporation showing the changes from our current restated certificate of incorporation, with deleted text shown in strikethrough and added or moved text shown as underlined, is attached to this proxy statement as Appendix A-2.

The affirmative vote of the holders of a majority of the outstanding shares of our capital stock entitled to vote generally in the election of directors is required to approve the Restated Certificate of Incorporation. Shares that are voted “abstain” are treated the same as shares voting “against” this proposal.

If our stockholders approve the Restated Certificate of Incorporation, our board of directors has authorized our officers to file the Restated Certificate of Incorporation with the Delaware Secretary of State, to become effective upon acceptance by the Delaware Secretary of State. Our board of directors intends to have that filing made if, and as soon as practicable after, this proposal is approved at this annual meeting. However, even if our stockholders adopt the Restated Certificate of Incorporation, our board of directors may abandon the Restated Certificate of Incorporation without further stockholder action prior to the effectiveness of the filing of the Restated Certificate of Incorporation with the Delaware Secretary of State and, if abandoned, the Restated Certificate of Incorporation will not become effective. If the board of directors abandons the Restated Certificate of Incorporation, it will publicly disclose that fact and the reason for its determination.

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 31, 2023, by:

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole dispositive power with respect to all shares beneficially owned, subject to applicable community property laws.

Applicable percentage ownership is based on 133,464,264 shares of our common stock outstanding as of March 31, 2023. The table below does not include Ms. Gessert, as her employment with the Company began after March 31, 2023. Shares of our common stock subject to stock options that are exercisable as of and within 60 days of March 31, 2023, or RSUs that may vest and settle within 60 days of March 31, 2023, are deemed to be outstanding and to be beneficially owned by the person holding the stock options or RSUs for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities listed in the table below is c/o Upwork Inc., 475 Brannan Street, Suite 430, San Francisco, California 94107.

The names, ages, and positions of our executive officers and key employees as of March 31, 2023 (except as otherwise indicated) are shown below.

Our board of directors chooses executive officers, who then serve at the discretion of our board of directors. There is no family relationship between any of the directors or executive officers and any of our other directors or executive officers.

For information regarding Ms. Brown, please refer to Proposal 1 above.

This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 2022 and provides an overview of our executive compensation philosophy, including our principal compensation policies and practices. In addition, it analyzes how and why the compensation committee of our board of directors made the specific compensation decisions for our principal executive officer, our former principal financial officer, and the executive officer (other than our principal executive officer and former principal financial officer) who was our most highly compensated executive officer at the end of 2022, whom we refer to collectively as our Named Executive Officers.

For 2022, our Named Executive Officers were:

Mr. McCombs’s final day as our Chief Financial Officer was December 31, 2022. On September 21, 2022, we entered into a Transition and Separation Agreement with Mr. McCombs, which is described in more detail below.

We operate the world’s largest work marketplace that connects businesses with independent talent from across the globe, as measured by GSV. During the year ended December 31, 2022, our work marketplace enabled $4.1 billion of GSV. We serve as a powerful discovery engine for talent, helping independent professionals and agencies find rewarding, engaging, and flexible work, as well as market their services and build their book of business. Talent benefit from access to quality clients and secure and timely payments while enjoying the freedom to run their own businesses, create their own schedules, and work from their preferred locations. Moreover, talent have real-time visibility into opportunities that are in high demand so that they can invest their time and focus on developing sought-after skills. For clients, our work marketplace provides fast, secure, and efficient access to high-quality talent with more than 10,000 skills across more than 125 categories.

Talent includes independent professionals and agencies of varying sizes and is an increasingly sought-after, critical, and expanding segment of the global workforce.

In 2022, we generated strong operational and financial results while advancing valuable strategic initiatives. Key business highlights from 2022 include:

We monitor GSV as a key financial and operational metric to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. GSV is an important metric because it represents the amount of business transacted through our work marketplace. Moreover, we believe revenue is the primary measure of the performance of our business, as it provides comparability against competitors and is aligned to our strategic focus on growth objectives.

 

 

Generally, our executive compensation program consists of three principal elements—annual base salary, annual bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards:

We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The compensation committee evaluates our executive compensation program on at least an annual basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. The following summarizes our executive compensation and related policies and practices:

At our 2022 annual meeting of stockholders, we held a non-binding, advisory Say-on-Pay vote on the compensation of our 2021 Named Executive Officers. Approximately 70.9% of the votes cast (for and against) approved our Say-on-Pay proposal for the 2021 fiscal year. Our board of directors noted that stockholder support for such Say-on-Pay vote was substantially lower than the 96.3% support for the Say-on-Pay vote at our annual meeting of stockholders in 2021.

In response to the decline in support, our board of directors and management team led a dedicated effort in the second half of 2022 to engage with our largest stockholders to discuss topics related to our executive compensation program and their votes on our Say-on-Pay proposal. Our strategy, the composition of the board of directors, corporate governance, and environmental and social practices were also discussed.

The compensation committee chair and the audit committee chair participated in select meetings and engaged directly with stockholders about the foregoing topics. A summary of such stockholder outreach and engagement efforts is included in the graphic below.

 

Overall, the feedback we heard from our stockholders was supportive of our broad executive compensation practices and such stockholders did not request any significant changes to our ongoing compensation program. Nearly all of the stockholders with which we spoke that voted against our Say-on-Pay proposal in 2022 attributed their votes to the CEO Performance Award that the compensation committee granted in 2021. A summary of the CEO Performance Award can be found under the heading “Chief Executive Officer Performance Award” in our 2022 proxy statement filed with the SEC on April 19, 2022. However, most stockholders noted that they understood and supported the compensation committee’s rationale for the award: to retain and motivate our CEO amid a very competitive market for executive talent in the technology industry. Furthermore, stockholders recognized the performance criteria associated with the CEO Performance Award were very rigorous and that the award would result in realized compensation for our CEO only if stockholders also realized significant value in the form of stock price appreciation. Stockholders were clear that they did not expect us to revisit or revise the CEO Performance Award; however, some stockholders inquired about whether this type of award would be granted as a regular feature of our ordinary-course executive compensation program, noting their general opposition to one-time awards and their expectation that they be used only in rare circumstances where the compensation committee has a compelling rationale.

Stockholders also expressed support for our increase in the percentage allocation of PSU awards in our long-term incentive compensation program in 2022. This change had been made, in part, in response to stockholder feedback.

In February 2023, the compensation committee increased the percentage allocation of PSUs that comprise Mr. Gilpin’s long-term incentive compensation opportunity. The compensation committee believes this helps incentivize long-term value creation and strong financial performance and further align Mr. Gilpin’s compensation with the interests of our stockholders. Beginning in 2023, all of our Named Executive Officers' target PSU allocations will make up at least half of their overall goal long-term incentive opportunity.

Our board of directors and the compensation committee will continue to consider the result of the Say-on-Pay vote, as well as feedback received throughout the year, when making compensation decisions for our Named Executive Officers, as we value our stockholders’ opinions. In addition, consistent with the recommendation of our board of directors and the preference of our stockholders as reflected in the non-binding, advisory vote on the frequency of future Say-on-Pay votes held at our 2020 annual meeting of stockholders, we intend to hold a Say-on-Pay vote every year. This policy will remain in effect until the next stockholder vote on the frequency of non-binding, advisory votes on the compensation of our Named Executive Officers, which is expected to be held at the 2026 annual meeting of stockholders.

Our executive compensation philosophy is to provide a competitive compensation program that attracts and retains talented executives, including our Named Executive Officers, and to motivate and reward them to meet or exceed our short-term and long-term strategic objectives while simultaneously creating sustainable long-term value for our stockholders. We strive to create an executive compensation program that is competitive, rewards achievement of our strategic objectives, and aligns our executives’ interests with those of our stockholders. Consistent with this philosophy, we designed our executive compensation program to achieve the following primary objectives:

We structure the annual compensation of our Named Executive Officers using three principal elements: annual base salary, annual performance bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards. We design our executive compensation program to balance the goals of attracting, motivating, rewarding, and retaining our Named Executive Officers with the goal of promoting the interests of our stockholders by aligning the interests of our Named Executive Officers and stockholders and linking pay with performance. We therefore seek to ensure that a meaningful portion of our Named Executive Officers’ annual target total direct compensation opportunity is “at-risk” and variable in nature.

To date, we have emphasized variable “at-risk” compensation through two separate compensation elements. First, we provide the opportunity to earn short-term incentives, either through participation in our annual performance bonus plan or, in the case of Mr. Gilpin, a sales compensation plan. The annual performance bonus plan provides payments if our Named Executive Officers produce short-term results that meet or exceed certain pre-established annual financial targets in effect as determined from time to time by us and approved by the compensation committee. The sales compensation plan for Mr. Gilpin provides payments as described in “Sales Compensation Plan for Mr. Gilpin” below. In addition, we grant PSU awards and RSU awards to our Named Executive Officers, the value of which depends on both our short-term and long-term financial performance, which influences the value of our common stock, thereby incentivizing our Named Executive Officers to build sustainable long-term value for the benefit of our stockholders.

Through the use of these variable pay elements, a substantial portion of our Named Executive Officers’ annual target total direct compensation varies based on our performance, with the value ultimately received subject to variability above or below target levels commensurate with our actual performance. We believe this compensation program design provides balanced incentives for our Named Executive Officers to meet our business objectives and drive long-term growth. The compensation committee aims to maintain an appropriate “pay-for-performance” alignment with an emphasis on long-term stockholder value creation.

We have not adopted policies or established guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. As our needs evolve and as circumstances require, we intend to reevaluate our executive compensation philosophy, primary objectives, and program design.

Finally, we use equity incentives as part of our broad-based compensation program to foster a culture of ownership and shared success among our employees. Please see page 49 of our 2022 Impact Report, which

is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub, for details regarding the distribution of equity incentives and stock ownership across our employee base. The information contained in our 2022 Impact Report is not intended to be incorporated into this Proxy Statement.

The compensation committee has the overall responsibility for overseeing our compensation and benefits plans, policies, and practices generally and with respect to our Named Executive Officers.

In carrying out its responsibilities, the compensation committee evaluates our compensation policies and practices for alignment with our executive compensation philosophy, develops compensation-related strategies, makes decisions that it believes further our philosophy and/or align with compensation best practices, and reviews the performance of our Named Executive Officers when making decisions about their compensation.

Each year, the compensation committee conducts an evaluation of our executive compensation program to determine if any changes are appropriate. The compensation committee also conducts an annual review of the compensation arrangements of our Named Executive Officers, typically during the first quarter of the fiscal year. The compensation committee’s authority, duties, and responsibilities are further described in its charter, which is reviewed annually by the compensation committee and revised as warranted. The charter is available in the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking on “Documents & Charters” in the “Governance” section of the website.

In making its decisions, including with respect to the compensation of our Named Executive Officers, the compensation committee retains a compensation consultant (as described in “Role of Compensation Consultant” below) to provide support in its review and assessment of our executive compensation program.

Typically, during the first quarter of the fiscal year or more frequently as warranted, the compensation committee reviews the annual base salary levels, annual performance bonus opportunities, and long-term incentive compensation opportunities of our Named Executive Officers and all related performance criteria. Adjustments are generally effective at the beginning of the fiscal year or at the time of a promotion, as the case may be.

The compensation committee does not establish a specific target for formulating the target total direct compensation opportunities of our Named Executive Officers. Instead, in consultation with its compensation consultant, Compensia, Inc., which we refer to as Compensia, the compensation committee weighs various considerations, including the following:

These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each Named Executive Officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable.

The compensation committee does not engage in formal benchmarking against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation decisions with respect to our Named Executive Officers. The compensation committee believes that overreliance on benchmarking can result in compensation that is unrelated to the value actually delivered by our Named Executive Officers because compensation benchmarking does not take into account the specific performance of the Named Executive Officers or our relative size and performance.

Instead, in making its determinations, and in consultation with the compensation consultant, the compensation committee reviews compensation information for a representative group of peer companies to the extent that the executive positions at these companies are considered comparable to our executive officers’ positions and informative of the competitive environment. The compensation committee also reviews broad-based compensation surveys to understand market compensation levels. These principles and processes apply to both cash and equity-based compensation awards granted under our executive compensation program.

In discharging its responsibilities, the compensation committee works with members of our management, including our CEO. Our management assists the compensation committee by providing information on corporate and individual performance and management’s perspective on compensation matters. The compensation committee solicits and reviews our CEO’s proposals with respect to program structures, as

well as our CEO’s recommendations for adjustments to annual cash compensation, long-term incentive compensation opportunities, and other compensation-related matters for our Named Executive Officers (except with respect to her own compensation) based on our CEO’s evaluation of their performance for the prior year.

At the beginning of each year, our CEO reviews the performance of our other Named Executive Officers based on their overall performance and performance against business objectives established for them for the prior year and then shares these evaluations with, and makes recommendations to, the compensation committee for each element of compensation as described above. The annual business objectives for each Named Executive Officer are developed through mutual discussion and agreement between our CEO and the Named Executive Officers and are also reviewed with our board of directors.

The compensation committee reviews and discusses our CEO’s recommendations and considers them as one factor in determining and approving our Named Executive Officers’ compensation. Our CEO also attends meetings of the board of directors and the compensation committee at which executive compensation matters are addressed, except for discussions involving her own compensation.

The compensation committee believes that peer group comparisons are useful guides to measure the competitiveness of our executive compensation program and related policies and practices. To assess our executive compensation against the competitive market, the compensation committee reviews and considers the compensation levels and practices of a select group of peer companies.

This compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, and industry focus. The competitive data drawn from this compensation peer group is only one of several factors that the compensation committee considers, however, in making its compensation decisions for our Named Executive Officers.

In February 2022, the compensation committee used the compensation peer group set forth below to analyze the compensation of our then-Named Executive Officers and make its initial compensation decisions for the year. This compensation peer group, which was developed in July 2021 with the assistance of Compensia after conducting a thorough review of our then-compensation peer group, was comprised of publicly traded technology companies against which we compete for executive talent. In evaluating the companies comprising the compensation peer group, Compensia specifically considered and weighed the following primary criteria, among other factors:

As a result, the compensation committee approved an updated compensation peer group consisting of the following companies:

Seven companies, Benefitfocus, Cars.com, EverQuote, Quotient Technology, The RealReal, TrueCar, and Yext, were removed from our compensation peer group because their market capitalization was no longer within our targeted market capitalization range; two companies, Eventbrite and TechTarget, were removed because their revenue was no longer within our targeted revenue range; and one company, Pluralsight, was removed because it had been acquired. The following 11 companies were added to our peer group on the basis of their similarity to us in size, revenue, market capitalization, and industry sector: Alteryx, Anaplan, Asana, BlackLine, Chegg, Everbridge, Fastly, Paylocity, Q2 Holdings, Revolve Group, and Smartsheet.

The compensation committee used data drawn from the companies in our compensation peer group, as well as data from a custom data cut of 68 U.S.-based software companies with revenues ranging from approximately $200 million to approximately $810 million and market capitalizations ranging from approximately $2.2 billion to approximately $20.1 billion (including peer company participants) drawn from the Radford Global Technology Survey database, to evaluate the competitive market when determining the total direct compensation packages for our Named Executive Officers, including annual base salary, target annual performance bonus opportunities, and long-term incentive compensation opportunities. All of the compensation peer group companies that participate in the Radford Global Technology survey were included in the custom data cut.

This compensation peer group was used by the compensation committee for most of 2022 as a reference for understanding the competitive market for executive positions in our industry sector.

The compensation committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.

The compensation committee engages an external compensation consultant to assist it by providing information, analysis, market compensation data, and other advice for our executive compensation program and the decisions resulting from its annual executive compensation review. The compensation consultant reports directly to the compensation committee and its chair and serves at the discretion of the compensation committee, which reviews the engagement annually.

In 2022, the compensation committee again engaged Compensia to serve as its compensation consultant to advise on executive compensation matters.

During 2022, Compensia attended the meetings of the compensation committee (both with and without management present) as requested and provided various services, which included the following:

The terms of Compensia’s engagement include reporting directly to the compensation committee chair. Compensia also coordinated with our management for data collection and job matching for our executives. In 2022, Compensia did not provide any other services to us.

The compensation committee has evaluated its relationship with Compensia to ensure that it believes that such firm is independent from management. This review process included a review of the services that Compensia provided, the quality of those services, and the fees associated with the services provided during 2022. Based on this review, as well as consideration of the factors affecting independence set forth in Exchange Act Rule 10C-1(b)(4), Rule 5605(d)(3)(D) of the Nasdaq Marketplace Rules, and such other factors as were deemed relevant under the circumstances, the compensation committee evaluated Compensia’s independence and determined that no conflict of interest has arisen as a result of the work performed by Compensia.

Annual base salary represents the fixed portion of the compensation of our Named Executive Officers and is an important element of compensation intended to attract and retain highly talented individuals. Generally, we use base salary to provide each Named Executive Officer with a specified level of cash compensation during the year with the expectation that he or she will perform his or her responsibilities to the best of his or her ability and in our best interests.

Generally, we establish the initial base salaries of our Named Executive Officers through arm’s-length negotiation at the time of hire, taking into account the individual’s position, qualifications, experience, competitive market data, and the base salaries of our other executive officers. Thereafter, the compensation committee reviews the base salaries of our Named Executive Officers each year as part of its annual compensation review, with input from our CEO (except with respect to her own base salary) and Compensia, and makes adjustments as it determines to be reasonable and necessary to reflect the scope of a Named Executive Officer’s performance, individual contributions and responsibilities, position in the case of a promotion, target total direct compensation opportunity, and market conditions.

In February 2022, the compensation committee reviewed the annual base salaries of our then-Named Executive Officers after considering a competitive market analysis prepared by Compensia and the recommendations of our CEO (except with respect to her own base salary), as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Following this review, the compensation committee increased the annual base salary of each of our then-Named Executive Officers, largely in recognition of the highly competitive and challenging marketplace for skilled and seasoned executive officers.

Our then-Named Executive Officers’ base salaries were as follows:

The 2022 Base Salary rates set forth in the table above were determined in February 2022 but retroactively effective January 1, 2022.

The base salaries paid to our Named Executive Officers during 2022 are set forth in the “2022 Summary Compensation Table” below.

We use an annual performance bonus plan to motivate our employees, including our Named Executive Officers (other than Mr. Gilpin, our Chief Sales Officer, who participates in a separate sales compensation plan described in “Sales Compensation Plan for Mr. Gilpin” below), to achieve our annual business goals as reflected in our annual operating plan. Typically, our board of directors or the compensation committee approves our annual bonus plan, including the performance criteria, during the first quarter of the year. In February 2022, the compensation committee approved the 2022 performance criteria, bonus pool, and other terms under our annual performance bonus plan, the Upwork Inc. Performance Bonus Plan, which we refer to as the 2022 Performance Bonus Plan, to provide annual bonus awards for our employees, including certain of our Named Executive Officers, and set the target annual bonus opportunities for the members of our leadership team, including our Named Executive Officers, who were participants in the 2022 Performance Bonus Plan.

The compensation committee served as the administrator of the 2022 Performance Bonus Plan. Our board of directors and the compensation committee have the authority to amend or terminate the plan at any time and for any reason, provided that any amendment, suspension, or termination of the plan will not, without a participant’s consent, alter or impair any rights or obligations under any earned award of such participant.

In February 2022, the compensation committee reviewed the target annual bonus opportunities of our Named Executive Officers who were participants in the 2022 Performance Bonus Plan after considering a competitive market analysis prepared by Compensia and the recommendations of our CEO (except with respect to her own target annual bonus opportunity), as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Following this review, the compensation committee determined to maintain the percentage target annual bonus opportunities of our Named Executive Officers at their 2021 levels. Recognizing that the combination of maintaining Named Executive Officer 2021 target annual bonus opportunity percentages and increasing base salaries positioned Named Executive Officer target total cash compensation opportunities at levels that were in the top quartile of the competitive marketplace, the compensation committee determined that this result was appropriate given the highly competitive and challenging marketplace for skilled and seasoned executive officers.

Our Named Executive Officers’ target annual bonus opportunities (other than Mr. Gilpin), as determined in February 2022, were as follows:

These target annual bonus opportunities were effective January 1, 2022.

In February 2022, the compensation committee selected Compensation Program Revenue as the performance measure for the 2022 Performance Bonus Plan. For this purpose, “Compensation Program Revenue” meant the sum of (i) our “managed services revenue” for the fiscal year ending December 31, 2022, which we refer to as the Performance Period, less the “costs of talent services to deliver managed services” for the Performance Period plus (ii) “marketplace revenue” for the Performance Period, in each case as reported in our Annual Report on Form 10-K filed with the SEC for our fiscal year ending December 31, 2022. The computation of the Compensation Program Revenue target achievement was to be determined in our sole discretion, as approved by the compensation committee. We used Compensation Program Revenue as the performance measure for the 2022 Performance Bonus Plan to account for clients that may switch mid-year to utilizing our managed services offering so that the achievement of bonus opportunities under our bonus plan are not impacted by the differing GAAP reporting standards for our marketplace offering, which are reported on a “net” basis under GAAP, and our managed services offering, which are reported on a “gross” basis under GAAP. As a result, participants are not able to achieve performance levels under the 2022 Performance Bonus Plan solely as a result of a client changing from our marketplace offering to managed services offerings mid-year.

Compensation Program Revenue is not a financial measure prepared in accordance with generally accepted accounting principles, which we refer to as GAAP. For more information on how we compute this non-GAAP financial measure and a reconciliation to the most directly comparable financial measure prepared in accordance with GAAP, please refer to “Appendix B: Reconciliation of Non-GAAP Financial Measures” in this Proxy Statement.

The compensation committee consistently reviews an array of potential performance measures to determine the appropriate metrics to drive and evaluate the strategic success of our business. The compensation committee selected Compensation Program Revenue as the sole performance measure for the 2022 Performance Bonus Plan because, in its view, it was most consistent with our near-term objective of driving

revenue growth. In 2021, we used revenue as the sole performance measure for our bonus plan because revenue growth was the primary focus of our 2021 annual operating plan. Similarly, the compensation committee believed that our Compensation Program Revenue performance alone would be the best indicator of our successful execution of our business plan in 2022. For purposes of the 2022 Performance Bonus Plan, the compensation committee set the following performance levels for our Compensation Program Revenue performance for 2022:

The target level for Compensation Program Revenue under the 2022 Performance Bonus Plan was greater than the Compensation Program Revenue earned for the prior fiscal year and represented an aggressive level of performance that the compensation committee believed our management team could achieve with diligent effort in the then-existing business environment. Further, the threshold performance level for the 2022 Performance Bonus Plan represented approximately a 14% year-over-year Compensation Program Revenue growth figure, which the compensation committee determined was appropriate for there to be any payout under the 2022 Performance Bonus Plan.

In the event of an acquisition the bonus payout percentage was to be determined using the most recent Compensation Program Revenue forecast for 2022, as approved by our board of directors, and the amount of the bonus was to be pro-rated based on the amount of base salary actually paid to a particular participant between the first date of fiscal year 2022 and the date of the acquisition.

The following formula was used to calculate the annual bonuses paid to participants under the 2022 Performance Bonus Plan:

For purposes of the 2022 Performance Bonus Plan:

In February 2023, the compensation committee approved annual bonus awards to the participants in the 2022 Performance Bonus Plan, including our then-Named Executive Officers (other than Mr. Gilpin). Based on the 2022 performance criteria established by the compensation committee in February 2022, the compensation committee determined we achieved Compensation Program Revenue of $580.6 million, which was adversely affected by Russia’s invasion of Ukraine and our resulting decision to cease operations in Russia and Belarus early in the year, contributing to a Revenue Achievement Percentage of 84%. While this impact to our Compensation Program Revenue was significant and outside of management’s control, the compensation committee determined not to adjust the Compensation Program Revenue performance criteria under the 2022 Performance Bonus Plan or otherwise adjust the payments under the 2022 Performance Bonus Plan. Based on this Revenue Achievement Percentage, the following bonus was payable to Ms. Brown, who was our only Named Executive Officer who was a participant in the 2022 Performance Bonus Plan at the time the annual bonus awards were paid. Mr. Gilpin was not a participant in the 2022 Performance Bonus Plan as he participates in a separate sales compensation plan, which is described below, and Mr. McCombs was not eligible to receive an annual bonus award because his final day as our Chief Financial Officer was December 31, 2022, which was prior to the date on which the annual bonus awards were paid.

As our Chief Sales Officer, Mr. Gilpin’s annual cash incentive for 2022 was based on his ability to manage our sales organization to (i) achieve our annual enterprise revenue quota and reward him for growing our enterprise accounts for the year and (ii) achieve our annual enterprise sales quota and reward him for our sales team’s enterprise bookings efforts for the year. Each of these performance incentives was weighted 50% for purposes of Mr. Gilpin’s 2022 annual cash incentive. In 2022, Mr. Gilpin’s target annual cash incentive opportunity was $412,000, which was equal to 100% of his 2022 annual base salary. In addition, each performance incentive included an additional multiplier if either enterprise revenue or enterprise bookings for the year exceeded his annual quota.

We are not disclosing the target level for our annual enterprise revenue quota and annual enterprise bookings quota because we believe to do so would be competitively harmful, as it would give our competitors valuable insight into our strategic and financial planning processes. However, the target performance level for each performance incentive was increased from the target performance level from the prior year, was greater than our actual performance in the prior year, and represented an aggressive level of performance that we believed Mr. Gilpin and our sales organization could achieve with diligent effort.

For purposes of his annual cash incentive, Mr. Gilpin’s payments were calculated based on the total revenue attributable to his enterprise accounts compared to the applicable year-to-date quota and the total enterprise bookings compared to the applicable year-to-date quota. For this purpose, achievement of the quota for each quarterly measurement period (ending March 31, June 30, September 30, and December 31, 2022, respectively) meant the enterprise revenue or enterprise bookings actually attributable to the period calculated as a percentage of the quota for the period. Mr. Gilpin’s year-to-date total quota attainment was required to be greater than 50% in order to be eligible for payment. For example, if the enterprise revenue quota for the period was $1,000 and we achieved enterprise revenue for the period of $610, Mr. Gilpin would be considered to have achieved 61% of his quota. The same formula was applicable to his annual enterprise bookings quota.

In addition, in the event that the sales organization exceeded our annual enterprise revenue quota or annual enterprise bookings quota, as the case may be, in addition to his quarterly cash incentive payment, Mr. Gilpin was eligible to receive an additional payment equal to ten times (10x) attainment over the quota for the applicable annual enterprise revenue or enterprise bookings quota, as the case may be, for each performance incentive, which we refer to as the Accelerated Payment. There was no cap on the Accelerated Payment (which was payable after the end of the year) in addition to the quarterly cash incentive payments. Further, in the event that the sales organization attained between 50% and 100% of our annual enterprise revenue quota or annual enterprise bookings quota, as the case may be, Mr. Gilpin’s payment was subject to a decelerator equal to two times (2x) of each dollar not generated toward the applicable annual enterprise revenue or enterprise bookings quota, as the case may be.

In 2022, Mr. Gilpin earned an annual cash incentive payment under his sales compensation plan in the aggregate amount of $269,568, based on our actual total enterprise revenue performance and our actual enterprise bookings performance as measured against our enterprise revenue and enterprise bookings quotas for 2022. Mr. Gilpin’s annual cash incentive payment equaled approximately 65% of his 2022 target annual cash incentive opportunity.

The annual bonuses and sales compensation awarded to our Named Executive Officers for 2022 are set forth in the “2022 Summary Compensation Table” below.

We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. We use equity awards to incentivize and reward our Named Executive Officers for long-term corporate performance based on the value of our common stock and, thereby, to align the interests of our Named Executive Officers with those of our stockholders. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our Named Executive Officers to create long-term value for our stockholders. Equity awards also help us retain and reward qualified executives in a competitive market. Typically, we have granted equity awards to our Named Executive Officers as part of the compensation committee’s annual review of our executive compensation program.

For 2022, the compensation committee sought to retain, motivate, and reward our Named Executive Officers for long-term increases in the value of our common stock and, thereby, to align their interests with those of our stockholders, using both RSU awards with time-based vesting requirements that may be settled for shares of our common stock and PSU awards with performance-based vesting requirements and time-based vesting requirements that, if earned, may be settled for shares of our common stock. We grant RSU awards because they enable us to incentivize and retain our Named Executive Officers using fewer shares of our common stock than would be necessary if we used stock options and because they have value to the recipient even in the absence of stock price appreciation. In 2022, we also granted PSU awards to our Named Executive Officers to enable them to earn shares of our common stock based on certain pre-established Compensation Program Revenue targets in respect of our year ended December 31, 2022, as described below in the section titled “February 2022 Equity Awards,” as well as continued service.

To date, the compensation committee has not applied a rigid formula in determining the size and form of the equity awards to be granted to our Named Executive Officers. Instead, in making these decisions, the

compensation committee has exercised its judgment as to the amount and form of the awards. The compensation committee considers the retention value of the equity compensation held by the Named Executive Officer, the cash compensation received by the Named Executive Officer, a competitive market analysis prepared by Compensia, the recommendations of our CEO (except with respect to her own equity awards), the amount of equity compensation held by the Named Executive Officer (including the current economic value of his or her unvested equity and the ability of these unvested holdings to satisfy our retention objectives), as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Based upon these factors, the compensation committee has exercised its judgment to determine the size of each award at levels it considered appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value.

In February 2022, the compensation committee approved long-term incentive compensation opportunities in the form of equity awards for our Named Executive Officers in amounts that it considered to be consistent with our compensation philosophy and desired market positioning. The number of shares of our common stock subject to the RSU awards and the target number of shares subject to the PSU awards granted to our Named Executive Officers (viewed in the aggregate by value) was determined by the compensation committee based on its consideration of the factors described above. In 2022, the target number of PSUs comprised 60% of the total long-term incentive compensation opportunity of our Chief Executive Officer and 40% of the total long-term incentive compensation opportunities of Messrs. McCombs and Gilpin.

The equity awards granted to our Named Executive Officers in February 2022 were as follows:

RSU Awards. The RSU awards will vest in equal installments of 1/16^th of the award on each quarterly anniversary of the vesting commencement date, February 18, 2022, subject to the Named Executive Officer’s continuous service with us on each applicable vesting date, as described in the applicable restricted stock unit award agreement, such that the RSU award will vest in full on February 18, 2026. The RSU awards are subject to acceleration as described in “Potential Payments upon Termination or Change in Control” below.

PSU Awards. The PSU awards have both a performance-based vesting requirement and a time-based vesting requirement. The number of PSUs that could become subject to each award, which we refer to as the Earned PSUs, were to be earned subject to the achievement of certain pre-established Compensation Program Revenue targets in respect of the Performance Period. Following the Performance Period, all Earned PSUs were then subject to an additional time-based vesting requirement, such that the Earned PSUs would be settled only to the extent vested in accordance with the time-based vesting requirement described below.

The various performance levels for our 2022 Compensation Program Revenue and the number of PSUs earned at each performance level were as follows:

Between Compensation Program Revenues of $538,600,000 and $638,600,000, the number of Earned PSUs were to be determined on a straight-line basis.

For purposes of the PSU awards, “Compensation Program Revenue” meant the sum of (i) our “managed services revenue” for the Performance Period, less the “costs of talent services to deliver managed services” for the Performance Period plus (ii) “marketplace revenue” for the Performance Period, in each case as reported in our Annual Report on Form 10-K filed with the SEC for our fiscal year ending December 31, 2022. This is the same definition of “Compensation Program Revenue” as used to determine bonuses under our 2022 Performance Bonus Plan, as described above. The computation of the Compensation Program Revenue target achievement was to be determined in our sole discretion, as approved by the compensation committee.

Compensation Program Revenue is not a financial measure prepared in accordance with GAAP. For more information on how we compute this non-GAAP financial measure and a reconciliation to the most directly comparable financial measure prepared in accordance with GAAP, please refer to “Appendix B: Reconciliation of Non-GAAP Financial Measures” in this Proxy Statement.

Under the time-based vesting requirement, 25% of the Earned PSUs vest on the one-year anniversary of the February 18, 2022 vesting commencement date and thereafter an additional 1/16^th of the Earned PSUs vest on each quarterly anniversary thereafter, subject to the Named Executive Officer’s continuous service with us on each applicable vesting date. In the aggregate, the Performance Period and the time-based vesting requirement require four years of service for the Earned PSUs to vest fully.

On February 18, 2023, which we refer to as the Certification Date, the compensation committee determined and certified in writing that we had attained Compensation Program Revenue for 2022 in the amount of $580.6 million (as calculated consistently with the terms of the PSU awards in the manner described above), which was adversely affected by Russia’s invasion of Ukraine and our resulting decision to cease operations in Russia and Belarus early in the year. Based on such Compensation Program Revenue performance, 84% of the target PSUs were eligible to become Earned PSUs. Each then-Named Executive Officer earned the number of Earned PSUs set forth next to their name in the following table, with 25% of such Earned PSUs vesting and being settled in the number of shares of our common stock set forth next to their name in February 2023:

Each Named Executive Officer was required to be in continuous service with us on the Certification Date in order for his or her PSUs to become Earned PSUs. If their service terminated for any reason prior to the Certification Date, all such PSUs would be forfeited, as was the case for Mr. McCombs.

With respect to the PSUs granted to Ms. Brown, the acceleration provisions set forth in her Severance Agreement (as defined below) do not apply to the PSUs. However, in the event of a termination of Ms. Brown’s employment either by us without “cause” or a resignation of Ms. Brown for “good reason,” the time-based vesting requirement described above will accelerate in a manner consistent with the acceleration provisions set forth in her Severance Agreement (as described in “Potential Payments upon Termination or Change in Control” below).

With respect to the PSUs granted to Mr. Gilpin, the acceleration provisions set forth in his Severance Agreement do not apply. However, in the event of a termination of Mr. Gilpin’s employment either by us without “cause” or a resignation by Mr. Gilpin for “good reason” within 12 months following or within three months preceding a “change in control” of the company, the time-based vesting requirement described above will accelerate in a manner consistent with the acceleration provisions set forth in his Severance Agreement (as described in “Potential Payments upon Termination or Change in Control” below).

Russia’s invasion of Ukraine had a significant impact on our workforce. Upwork has historically engaged independent talent from Ukraine, Russia, and Belarus on our work marketplace to perform services for us. The invasion created an immediate threat to the lives and safety of many of these individuals and their families. The danger, dislocation, and disruption experienced by our colleagues required our senior leaders to take extraordinary steps to serve and support our workforce and deliver business continuity, including assisting and paying for team members to relocate out of the impacted region.

In recognition of their extraordinary leadership in navigating the crisis resulting from Russia’s invasion of Ukraine and its impact on our workforce, in July 2022, at the recommendation of Ms. Brown, the compensation committee approved long-term incentive compensation opportunities in the form of one-time RSU awards with a value of $250,000 each to the members of our leadership team, including Messrs. McCombs and Gilpin (but not Ms. Brown), and granted them effective August 18, 2022. The number of shares of our common stock subject to these RSU awards was determined by dividing $250,000 by the average of the closing sale prices of our common stock as quoted on the Nasdaq Global Market for the 30 calendar days ending on the last trading day immediately preceding August 18, 2022, the date of grant of the RSU awards.

The equity awards granted to our Named Executive Officers on August 18, 2022 were as follows:

The RSU awards vest in equal installments of 25% of the award on each quarterly anniversary of the vesting commencement date, August 18, 2022, subject to the Named Executive Officer’s continuous service with us on each applicable vesting date, as described in the applicable restricted stock unit award agreement, such that the RSU award will vest in full on the first anniversary of the vesting commencement date. The RSU awards are subject to acceleration as described in “Potential Payments upon Termination or Change in Control” below.

The unvested portion of the RSU awards are subject to forfeiture upon the recipient’s termination of service with Upwork. Mr. McCombs forfeited 9,129 shares subject to his RSU award upon his separation from Upwork on December 31, 2022.

The equity awards granted to our Named Executive Officers during 2022 are set forth in the “2022 Summary Compensation Table” and the “2022 Grants of Plan-Based Awards Table” below.

To incentivize long-term value creation and strong financial performance, to further align the interests of our Named Executive Officers with those of our stockholders, and to promote retention of our Named Executive Officers, the compensation committee determined that the target number of PSUs granted in 2023 to our Named Executive Officers should represent at least half of their total target long-term incentive opportunity. As a result, in February 2023, the compensation committee increased the percentage allocation of PSUs that comprise Mr. Gilpin’s long-term incentive opportunity. Accordingly, the target number of PSUs granted to Mr. Gilpin in 2023 will comprise 50% of his total target long-term incentive opportunity, increased from 40% in 2022. Ms. Brown’s target number of PSUs granted in 2023 will remain 60% of her total target long-term incentive opportunity.

Our Named Executive Officers are eligible to participate in the same employee benefit plans, and generally on the same terms and conditions, as all other U.S. full-time employees. These benefits include medical, dental, and vision insurance, business travel insurance, an employee assistance program, mental health benefits, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, commuter benefits, and reimbursement for mobile phone coverage.

We also sponsor a Section 401(k) retirement plan, which we refer to as the Section 401(k) Plan, that provides eligible employees, including our Named Executive Officers, with an opportunity to save for retirement on a tax-advantaged basis. U.S. employees who have attained at least 18 years of age are generally eligible to participate in the Section 401(k) Plan as of the first day of the calendar month. Participants may make pre-tax or post-tax contributions to the Section 401(k) Plan, subject to the statutorily prescribed annual limits on contributions under the Internal Revenue Code, which we refer to as the Code. Currently, we match 50% of a participant’s contributions to the Section 401(k) Plan in cash, subject to an annual maximum limit of $5,000 per employee. An employee’s interest in our match of a participant’s contributions is 100% vested after one year of service. An employee’s interest in his or her pre-tax or post-tax deferrals is 100% vested when contributed.

We design and adjust our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices.

Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our Named Executive Officers except as generally made available to our employees or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2022, none of our Named Executive Officers received perquisites or other personal benefits that were, in the aggregate, equal to $10,000 or more for any individual.

We entered into written employment offer letters with each of our Named Executive Officers when they joined us, which employment offer letters were amended and restated in May 2018, in the case of Ms. Brown and Mr. Gilpin. Subsequently, Ms. Brown executed an addendum to her amended and restated employment offer letter to reflect her promotion to Chief Marketing and Product Officer effective April 1, 2019, and thereafter entered into an amended and restated offer letter dated December 8, 2019, to reflect the terms of her employment as our President and Chief Executive Officer effective January 1, 2020. Mr. McCombs entered into a written employment offer letter in July 2020 prior to joining us in August 2020. Collectively, these amended and restated offer letters and Mr. McCombs’s employment offer letter are referred to in this section as the Offer Letters. We believe that these arrangements were necessary to secure the continued service of these individuals in a highly competitive job market.

Each of these Offer Letters provides for “at will” employment (meaning that either we or the Named Executive Officer may terminate the employment relationship at any time with or without cause and with or without notice) and generally sets forth the Named Executive Officer’s then-current annual base salary, eligibility for participation in our annual performance bonus plan, and eligibility to participate in our employee benefit plans, including our health insurance plan and disability insurance plan, as established from time to time. In addition, by executing an Offer Letter, each of Ms. Brown and Mr. Gilpin reaffirmed the terms and conditions of the employee invention assignment and confidentiality agreement and the employee dispute resolution agreement that she or he had previously entered into with us. Mr. McCombs also entered into an employee invention assignment and confidentiality agreement and an employee dispute resolution agreement with us when he accepted his Offer Letter.

These Offer Letters also provide that each Named Executive Officer will be eligible to enter into a change in control and severance agreement, which we refer to as a Severance Agreement, based on his or her position within our company. These agreements specify the severance payments and benefits that he or she will be eligible to receive in connection with certain terminations of employment from our company. These post-employment compensation arrangements are discussed in “Post-Employment Compensation” below.

For detailed descriptions of the employment arrangements with our Named Executive Officers, see “Potential Payments upon Termination or Change in Control” below.

We have entered into a Severance Agreement with each of our Named Executive Officers, which provides for certain protections in the event of certain involuntary terminations of employment, including a termination of employment in connection with a change in control, in exchange for a general release of claims and compliance with a non-disparagement covenant for a period of 24 months following separation from us. Each Severance Agreement is in effect for three years, with automatic renewals for new three-year periods unless notice is given by us to the Named Executive Officer three months prior to the date on which the agreement would otherwise renew.

We believe these Severance Agreements provide reasonable compensation in the form of severance pay and certain limited benefits to the Named Executive Officer if he or she leaves our employ under certain circumstances to facilitate his or her transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing Named Executive Officer to sign a separation and release agreement in a form prescribed by us providing for a general release of all claims as a condition to receiving post-employment compensation payments or benefits. We believe that these agreements help maintain our Named Executive Officers’ continued focus on their assigned duties to maximize stockholder value if there is a potential change in control transaction and mitigate the risk of subsequent disputes or litigation. The terms and conditions of these agreements were approved by our board of directors after an analysis of competitive market data in consultation with Compensia.

Under the Severance Agreements, all payments and benefits in the event of a change in control are payable only if there is a connected loss of employment by a Named Executive Officer (a so-called “double-trigger” arrangement). We use this double-trigger arrangement to protect against the loss of retention value following a change in control and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.

In the event of a change in control, to the extent Section 280G or 4999 of the Code is applicable to a Named Executive Officer, such individual is entitled to receive either a:

We are not obligated to provide excise tax payments, which we refer to as gross-ups, to any of our executive officers, including our Named Executive Officers.

We believe that having in place reasonable and competitive post-employment compensation arrangements, including in the event of a qualifying termination in connection with or within specified periods before or after a change in control, are essential to attracting and retaining highly qualified executive officers. The compensation committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining our Named Executive Officers’ compensation. We do believe, however, that these arrangements are necessary to offer competitive compensation packages.

In September 2022, Mr. McCombs, our former Chief Financial Officer, was notified that he was being terminated from his position. In order to facilitate a smooth transition of his responsibilities, Mr. McCombs continued service as our Chief Financial Officer through December 31, 2022, which we refer to as the Separation Date. On September 21, 2022, we entered into a transition and separation agreement with Mr. McCombs, which we refer to as the McCombs Transition Agreement. The amounts payable thereunder were generally consistent with Mr. McCombs’s offer letter and Severance Agreement that Mr. McCombs executed when he joined Upwork. The McCombs Transition Agreement set forth the terms of his continued service to us through the Separation Date as well as his severance compensation and certain releases and covenants that the compensation committee believed were valuable to Upwork. Pursuant to the McCombs Transition Agreement, subject to his execution of an effective general release and waiver of claims and covenant not to sue, Mr. McCombs became entitled to certain payments and benefits, including (i) a lump sum payment equal to six months of his annual base salary, (ii) vesting of a certain RSU award as described in greater detail below, and (iii) the full amount of insurance premium payments to continue health benefits, for him and his covered dependents under COBRA, through the earlier of (A) the effective date on which he became covered by a substantially equivalent health insurance plan of a subsequent employer, (B) six months following the Separation Date, and (C) the date he was no longer eligible for COBRA benefits.

As of the date of the McCombs Transition Agreement, and consistent with the terms of his offer letter, the RSU award granted to Mr. McCombs pursuant to the Restricted Stock Unit Award Agreement dated August 4, 2020, which we refer to as the Initial RSU Award, was deemed vested with respect to 137,174 shares of our common stock. Further, upon execution of the McCombs Transition Agreement and contingent upon his remaining continuously employed with us through November 18, 2022 and delivery of an effective general release and waiver of claims and covenant not to sue executed no earlier than the Separation Date, the Initial RSU Award was deemed vested with respect to an additional 17,146 shares of our common stock. The deemed vesting of the 137,174 shares upon execution of the McCombs Transition Agreement and the additional 17,146 shares following November 18, 2022 were consistent with the terms of Mr. McCombs’s offer letter, which provided for such vesting of the Initial RSU Award after one year if Mr. McCombs were to be terminated without cause or resigned for good reason. Pursuant to the McCombs Transition Agreement, Mr. McCombs was not eligible to receive an annual bonus or any other incentive compensation, including under the terms of our 2022 Performance Bonus Plan. The foregoing description of the McCombs Transition Agreement is qualified in its entirety by reference to the full text of the McCombs Transition Agreement, which is filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC for the quarterly period ended September 30, 2022.

For detailed descriptions of the post-employment compensation arrangements with our Named Executive Officers, as well as an estimate of the potential payments and benefits payable thereunder, see “Potential Payments upon Termination or Change in Control” below.

Our Named Executive Officers have each entered into agreements containing confidentiality, non-competition, and non-solicitation covenants. Under these agreements, our Named Executive Officers have agreed to refrain from (i) disclosing our proprietary information in perpetuity, (ii) competing with us or soliciting our clients or customers during the period of their employment, and (iii) soliciting our employees or consultants for a period of 12 months following the termination of their employment.

Our Stock Ownership Guidelines are designed to encourage our Chief Executive Officer and other executive officers and members of our board of directors to achieve and maintain a meaningful ownership stake in our company that aligns their interests with those of our stockholders and promotes a long-term perspective in managing our company. In April 2022, we amended our Stock Ownership Guidelines to remove vested stock options from counting toward satisfaction of such guidelines.

Our CEO and other executive officers and the members of our board of directors are expected to accumulate shares of our common stock toward target ownership levels that are based on a multiple of their respective base salary or annual retainer, as the case may be. If any of our executive officers or the members of our board of directors have not satisfied these ownership levels, the Stock Ownership Guidelines require that they retain ownership of shares according to the retention ratio described below. Currently, the market value of the qualifying shares that each executive officer or member of our board of directors is required to own is as follows:

The minimum level of ownership is expected to be achieved within five years of the date the applicable individual becomes covered by the Stock Ownership Guidelines, and each such individual is expected to continuously hold a sufficient number of shares of our common stock to satisfy the ownership level thereafter for the duration the individual is covered by the Stock Ownership Guidelines. Compliance is evaluated by the compensation committee annually, as of fiscal year-end each year. As of December 31, 2022, each of our executive officers, including our Named Executive Officers, and members of our board of directors was either in compliance with the applicable ownership levels required by the Stock Ownership Guidelines or had not been covered by the Stock Ownership Guidelines for five years.

If, following the compliance deadline, an individual covered by the Stock Ownership Guidelines has not satisfied the applicable ownership level called for by the Stock Ownership Guidelines, then he or she must retain ownership of shares based on a retention ratio that is equal to 50% of the “net profit shares” as follows: each time he or she exercises a stock option, vests in a restricted stock award, or has an RSU award settled for shares of our common stock, he or she is expected to retain 50% of the shares remaining after payment of the option exercise price and taxes owed upon exercise, 50% of the newly vested shares of restricted stock after the payment of applicable taxes, and 50% of the shares received on settlement of the RSU award after the payment of applicable taxes, in each case until the ownership level called for by the Stock Ownership Guidelines is met.

We maintain a compensation recoupment and forfeiture policy, which we refer to as our Clawback Policy, covering all employees who are officers for purposes of Section 16 of the Exchange Act, including current and former Section 16 executive officers, each of whom we refer to as a Covered Officer, and which applies to their incentive-based cash compensation and performance-based equity awards.

If incentive-based cash compensation or performance-based equity awards are granted or received by a Covered Officer that are predicated upon us achieving certain financial results, and if the quarterly or annual financial statements (whether audited or unaudited) are adjusted or restated to correct one or more errors that have a material impact on our financial statements and our board of directors determines that a Covered Officer engaged in fraud or intentional misconduct that materially contributed to the need for such adjustment or restatement, then we may recoup or require forfeiture of any such amounts or any portion of such amounts that are in excess of any compensation that would have been earned by such Covered Officer based upon the adjusted or restated financial results in the event of any adjustment or restatement of our financial statements during the three-year period preceding the date on which we determined, or if later first disclosed, that we are or will be preparing an adjustment or restatement.

In determining whether to require recoupment or forfeiture and, if so, the amount of such recoupment or forfeiture, the compensation committee or our board of directors will take into account such factors as it deems appropriate, including, without limitation, the requirements of applicable law, and stock exchange

listing requirements, the extent to which the current or former executive officer participated in or otherwise bore responsibility for the facts and circumstances giving rise to the adjustment or restatement, and such other factors as it may deem appropriate under the circumstances. Any recoupment or forfeiture of such amounts will be publicly disclosed to the extent the compensation committee or our board of directors determines such disclosure is appropriate or otherwise as required by applicable law.

We intend to adopt a general compensation recovery policy (or modify our existing Clawback Policy) covering our short-term and long-term incentive award plans and arrangements in compliance with the listing standards adopted by The Nasdaq Stock Market LLC prior to the date that we are required to do so.

Under our Insider Trading Policy, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from engaging in hedging or monetization transactions involving our securities, such as zero-cost collars and forward sale contracts, and may not contribute our securities to exchange funds that could be interpreted as having the effect of hedging in our securities. Further, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from engaging in transactions involving options or other derivative securities on our securities, such as puts and calls, whether on an exchange or in any other market and from engaging in short sales of our securities, including short sales “against the box.”

Also, under our Insider Trading Policy, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from using or pledging our securities as collateral in a margin account or as collateral for a loan unless the pledge has been approved by the designated compliance administrator pursuant to the Insider Trading Policy, which approval is limited to situations where the subject individual has demonstrated the financial capacity to repay the loan without resorting to the pledged securities.

Certain of our executive officers and non-employee directors have adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the executive officer or non-employee director when entering into the plan, without further direction from them. The executive officer or non-employee director may amend or terminate the plan in specified circumstances. In 2023, we revised our Insider Trading Policy to ensure that Rule 10b5-1 plans entered into by our executive officers, non-employee directors, and other employees are eligible for an affirmative defense in accordance with new SEC rules regarding Rule 10b5-1 plans.

The compensation committee takes the applicable tax and accounting requirements into consideration in designing and overseeing our executive compensation program.

Section 162(m) of the Code disallows public companies a tax deduction for federal income tax purposes for remuneration in excess of $1 million paid to certain current and former executive officers who are “covered employees.” The Tax Cuts and Jobs Act of 2017 repealed exceptions to the deductibility limit that were previously available for “performance-based compensation,” including equity awards, effective for taxable years after December 31, 2017, subject to certain grandfathering rules.

While the compensation committee considers the deductibility of awards as one factor in determining executive compensation, our compensation committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by us for tax purposes. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) beyond the control of the compensation committee, no assurances can be given that any compensation paid by us will be deductible under Section 162(m) even if so intended.

The compensation committee considers accounting implications when designing compensation plans and arrangements for our executive officers and other employees. Chief among these is ASC Topic 718, the standard that governs the accounting treatment of certain stock-based compensation. Among other things, ASC Topic 718 requires us to record a compensation expense in our income statement for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and, in most cases, will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule). This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.

The compensation committee, with the assistance of Compensia, periodically reviews our various compensation programs and related policies and practices and believes that the mix and design of the elements of such programs do not encourage our employees, including our executive officers, to take, or reward our employees for taking, inappropriate or excessive risks and accordingly are not reasonably likely to have a material adverse effect on us. In particular, in conducting our review, we consider compensation program attributes that help to mitigate risk, including:

This report of the compensation committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, which we refer to as the Securities Act, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.

Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Compensation Committee

Gregory C. Gretsch, Chair

Gary Steele

The following table provides information concerning compensation awarded to, earned by, or paid to each of our Named Executive Officers for all services rendered in all capacities during 2020, 2021, and 2022: