Freshworks board cancels CEO Girish Matrubhootham’s performance award of 6 million stock unit

Freshworks has attributed the revision in Mathrubootham's share-based incentives to macroeconomic conditions beyond the control of the company's leadership. These conditions have made it challenging to achieve certain milestones on the public markets, thereby diminishing the intended retention value of the CEO's performance restricted stock units.

SaaS (Software as a Service) company Freshworks on Saturday, February 17, announced a revision in the stock-based compensation for its top executives, including CEO Girish Mathrubootham and President Dennis Woodside.

The board of Freshworks has decided to cancel a performance-based award of 6 million shares initially allocated to CEO Girish Mathrubootham during the company's public offering in September 2021. The original plan outlined the distribution of these incentives in tranches until 2029, contingent upon the achievement of share price milestones ranging from $70 to $200.

However, with the current state of the market, where Freshworks' shares are hovering around $20, significantly below the debut price of $36, the board has reevaluated the stock award. The company's market capitalisation has dropped to $6 billion from the IPO-time figure of $10 billion.

Freshworks has attributed the revision in Mathrubootham's share-based incentives to macroeconomic conditions beyond the control of the company's leadership. These conditions have made it challenging to achieve certain milestones on the public markets, thereby diminishing the intended retention value of the CEO's performance restricted stock units. In light of this, Mathrubootham has now been given stock units valued at $19 million.

Other key executives are also receiving revised stock grants, with President Dennis Woodside receiving grants of $15 million, CFO Tyler Sloat receiving $10 million, and Chief Product Officer Srinivas Ramamurthy receiving $6 million.

Woodside, who previously served as the COO of Dropbox and held senior executive roles at Google, joined Freshworks in September 2022 and now serves on the board. His initial stock unit allocation was $40 million.

The new stock awards for the management team are structured in two parts: approximately 70% will vest over the next four years, while the remaining portion is tied to financial targets for 2024.

Despite the adjustments in executive compensation, Freshworks reported positive financial results last week, with revenues increasing by 20% to $596 million, and net losses narrowing by 40% to $137 million in the calendar year 2023. The company had initially projected revenues of $703.5 million and a net income of $52 million for the period.