COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the compensation program for certain of our executive officers (the “Named Executive Officers” or “NEOs”) and provides an overview of our executive compensation philosophy, objectives, policies and practices. It also describes how and why the Compensation Committee made specific decisions relative to Named Executive Officer compensation, including the objectives and key factors considered in determining 20192020 compensation and summarizes 20202021 approved compensation.
20192020 Business Highlights
Tyler continues to strengthen its position as a leading provider of software and related services for the public sector. In 2019,2020, we continued to produceproduced strong financial results and steady growth,despite the impact of COVID-19, particularly with respect to recurring revenues,operating profit, while improving our competitive position and investingcontinuing to invest in product development.development and diversified revenue sources, including our virtual court product and payment-based revenues. In terms of financial results, we achieved record highs in revenues and cash flows from operations.the following:
For the year ended December 31, 2019:2020:
Tyler achieved record annual Generally Accepted Accounting Principles (“GAAP”) revenue of $1.086$1.117 billion, a 163 percent increase over 2018;2019;
Recurring revenues increased 2017 percent over 20182020 to $727$818 million, and comprised approximately 6773 percent of our total revenues in 2019;2020;
GAAP earnings per diluted share decreased 0.6increased 28 percent to $3.65$4.69 in 2019,2020, and non-GAAP earnings per diluted share increased 104 percent to $5.30;$5.52;
We generated a record $255$355 million in cash provided by operations during the year, and ended the year with total cash and investments of $314$758 million and no debt;
We generated a record Adjusted EBITDA of $303$326 million;
In 2019 we signed over 1,100 new software arrangements, a 44% increase over 2018: and
We closed the year with record backlog of $1.46$1.59 billion, up nearly 179.4 percent from 2018.2019.
Our executive officers, along with our entire team, were focused on leading our business and clients through the impact of COVID-19 and also delivered on strategic objectives and key initiatives during 2019.2020. In addition to strong financial results, 2019operating profit, 2020 achievements included:
Continued progress in achieving our Connected Communities vision with multi-product sales and the signing of aour continuing strategic collaboration agreement with Amazon Web Services;
Completed three acquisitions, increasingShifted to a virtual delivery model and rapidly deployed a virtual court product to continue to support our footprintcurrent and future clients in the federal spacepublic sector;
Provided enhanced COVID-19 benefits to employees and strengthening our local government and courts and justice offerings;
Recognizedrecognized as a “Best Place to Work” for several Tyler offices;
Ranked by Forbes on its “Best Employers for Diversity” list for the firstsecond time as well as Forbes’Government Technology Magazine's “GovTech Top 100” list of “America’s Best Midsize Employers” for the secondfifth time.
2019 Executive Compensation SummaryCOVID-19 ImpactThe leadership transitionOur team moved to remote work in March 2020, pivoting rapidly to develop for, sell to, implement and support our public sector clients during the pandemic. Key highlights of Mr. Marrour response to Executive Chairman of the Board and Mr. MooreCOVID-19 are summarized below. Unless noted otherwise, these practices were applied to Chief Executive Officer began in May 2018 and continued through 2019. Key compensation highlights forall team members, including our Named Executive Officers, are as follows:
Each Named Executive OfficerJob Security. We committed to no layoffs related to COVID-19. In 2020, we grew our workforce by 160 FTEs as we continued to meet the needs of our public sector clients virtually.
Health Benefits. We enhanced mental health benefits and resources, covered telehealth visits 100% for medical and mental health services, and provided full coverage for all COVID-19 testing and treatment under all Company medical plans at no cost to employees and their dependents.
Paid Leave. We introduced an additional paid time-off benefit (CTO) which was used in addition to our existing paid time off program, by employees awaiting test results, diagnosed with COVID-19, or unable to perform their duties from home, whether due to COVID-19, the nature of their work in a Tyler office, or a client request. In 2020, team members utilized over 21,000 hours of CTO paid time-off benefits in addition to existing sick and vacation time provided.
Compensation. Our employees received a base salary increasemerit increases in 2020 as budgeted. Staff incentives are paid based on achievement of 3%. Mr. Marr’s 3% increase followed a 30% decrease in his pay in 2018 to reflect his transition to the role of Executive Chairman;
No changescorporate and divisional goals, which were made to short-term incentive target levels for 2019; and
The number of stock options granted to Mr. Marr was reduced 39%, from 22,500 stock options in 2018 to 13,750 in 2019. Option grants to Mr. Moore and Mr. Miller remained unchanged from 2018 grant levels.impacted by COVID-19. Staff bonuses were paid as