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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

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PTC Inc.

(Name of Registrant as Specified In Its Charter)
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NOTICE OF 2022 ANNUAL
MEETING OF STOCKHOLDERS

NOTICE OF 2021 ANNUALMonday, MEETING OF STOCKHOLDERS

Wednesday, February 10, 2021January 31, 2022

8:00 a.m.12:30 p.m. Eastern Standard Time

PTC Inc. 121 Seaport Boulevard Boston, MA 02210

Matters to be Voted on at the Meeting

Proposals to be Voted on at the Annual MeetingProposal 1		Board Recommendation
Elect eight directors to serve until the 20222023 Annual Meeting of Stockholders.		✓ FOR
✓The Board of Directors recommends a vote FOR All Nominees

Proposal 2 Advisory vote to approve the compensation of our named executive officers (say-on-pay).		✓ FOR
✓The Board of Directors recommends that you vote FOR the approval of the compensation of our named executive officers as disclosed in COMPENSATION DISCUSSION AND ANALYSIS and the tables and related disclosures contained in EXECUTIVE COMPENSATION.

Proposal 3 Advisory vote to confirm the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current fiscal year.
	✓ FORThe Board of Directors recommends that you vote FOR the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2022.

Other matters that are properly brought before the meeting may also be considered.

Stockholders at the close of business on December 14, 20202, 2021 are entitled to vote.

Please vote your shares before the meeting, even if you plan to attend the meeting.

Your broker will not be able to vote your shares on the election of directors or the say-on-pay proposal unless you have given your broker specific instructions to do so.

By Order of the Board of Directors

AARON C. VON STAATS
Secretary

Boston, Massachusetts
December 29, 202020, 2021

		Important Notice of the Internet Availability of Proxy Materials
		The Proxy Statement and our 20202021 Annual Report are available to stockholders at www.proxyvote.com.

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Despite the challenges posed by the Covid-19 pandemic, overOver the past year we again executed well well against our strategic initiatives, establishing a solid foundation for the future.

DEAR FELLOW STOCKHOLDERS,

This past year challenged us, our customers and our partners as we dramatically shifted the way we work and navigated the disruption and uncertainty created by the Covid-19 pandemic.

Our Response to the PandemicFinancial and Operating Performance

Through the leadership of our executive team, PTC was able to successfully respond quickly and nimbly to the challenges we, our customers and partners faced.

Support for our Employees. We transitioned our entire workforce to work from home by mid-March and supported our employees with policies and programs as many were called upon to support remote education or other challenges related to the pandemic. We prudently managed our workforce throughout the year, enabling us to retain and motivate our employees without lay-offs, furloughs or pay reductions.

Support for our Customers, Partners and other Stakeholders.

⬢	We supported our customers as they moved to remote working environments, diagnosing issues, providing solutions and offering temporary no-cost licensing options.
⬢	We provided “white glove” support to our many medical device and health-tech customers who were on the front lines in the fight against the pandemic.
⬢	We made our Vuforia® Chalk augmented reality remote support and collaboration technology available for free to our customers and partners.
⬢	We made our eLearning suite available for free to all customers so their employees could upskill their capabilities and return to work with greater proficiency and capability.
⬢	We provided our professional services to our customers remotely, where possible, to support their implementation and upgrade timelines.
⬢	We made our Onshape® SaaS CAD solution available for free to high-schools and universities to enable them to offer their students a solution for remote learning.
⬢	We transitioned our LiveWorx® innovation event to a virtual-only event and made it free for all.

	+14% ARR OVER 2019
	+16% REVENUE OVER 2019
	+26% RECURRING REVENUE OVER 2019
	$234M CASH FLOW FROM OPERATIONS
	$214M FREE CASH FLOW
	+582% EPS OVER 2019
	+57% NON-GAAP EPS OVER 2019
	+161% 5-YEAR TSR
	+47% 3-YEAR TSR
	+21% 1-YEAR TSR

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LETTER FROM OUR CHAIRMAN

Our Performance

Notwithstanding the pandemic, which struck five months intoperformance in 2021 reflects strong execution. We delivered our fiscalfourth consecutive year we managed to deliver solidof double-digit organic ARR (Annual Run Rate) growth, while also delivering operating results and continued to create value for stockholders. We faced significant challenges associated with generating new sales of our solutions to customers due to the onsite nature of sales calls and the onsite project scoping and implementation required. We also faced challenges due to the macroeconomic uncertainty created by the pandemic, in which customers were unable to reliably forecast their needs or performance. Against this backdrop, we delivered increases in ARR, revenue and recurring revenue, generated meaningful cash flow growth of 58% and continued to create value for our stockholders.

Given our execution in 2020, we believe the company is well-positioned for the future.

free cash flow growth of 61%.

You can find additional information about our business performance for the year in our Annual Report to Stockholders, which accompanies this proxy statement.

Our Initiatives to Increase Board Diversity
As we’ve discussed with many of our stockholders, we’ve been focused on increasing racial and ethnic diversity on the Board of Directors.

As part of our ongoing Board refreshment process, we were running two director searches in 2021, with a focus on adding racial or ethnic diversity to the Board. We required that all candidate pools presented to the Board include at least two candidates that were ethnically or racially diverse, in addition to meeting the other search criteria. We amended our Corporate Governance Guidelines in 2021 to expressly add racial, ethnic, and LGBTQ+ diversity as an important consideration when evaluating director candidates. Later in 2021, in response to stockholder feedback, we also amended our Nominating Committee Charter to expressly add those same aspects of diversity as an important consideration in the selection of director candidates, and to expressly commit to using the “Rooney Rule” in candidate searches – which approach we had informally been using as part of all our recent searches. Through these measures, we hope to be able to add a director with racial or ethnic diversity in the next year.

In 2020, we hired our first Chief Diversity and Inclusion Officer to drive our diversity and inclusion initiatives and have implemented initiatives to identify, attract and retain employees that are underrepresented minorities.

In 2021, we retained a consultant to help us develop an appropriate process to collect and track relevant information for our community engagement and environmental programs that will enable us to develop appropriate goals and track progress against those goals that we can share. We also intend to conduct an ESG materiality analysis to enable us to address those items that are most material to us and our stakeholders.

We describe these initiatives measures further in Corporate Sustainability and Responsibility below.

Looking to the Future
Given our execution in 2021 and the steps we are taking to increase diversity on the Board and in the company and to advance our ESG initiatives, we believe the company is well-positioned for the future.

We thank you for your continued support of PTC.

Sincerely,

ROBERT SCHECHTER
Chairman of the Board

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2021 STOCKHOLDER ENGAGEMENT

We engaged with stockholders in Fall 2021. The conversations included corporate governance matters, including our executive compensation program. Robert Schechter, Chairman of the Board, Mark Benjamin, Chair of the Compensation Committee, and Janice Chaffin, Chair of the Corporate Governance, Cybersecurity and Nominating Committees, participated in a number of these discussions. Other participants from the company included our Investor Relations representatives, our General Counsel, our Corporate & Securities Counsel, and a senior member of our Compensation group.

For our engagement, we targeted all investors holding at least 0.75% of our outstanding stock, and additional investors in our Top 50 investors that we knew had voted against our 2021 Say-on-Pay proposal.

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2021 STOCKHOLDER ENGAGEMENT

This summary highlights information contained elsewhere in this proxy statement and does not contain all the information you should consider. You should read the entire proxy statement before voting.

See the Letter from the Chairman of the Board on page 3 for highlights of PTC’s 2020 performance.

All references to 2020 and 2019 refer to PTC’s fiscal years ended September 30, 2020 and 2019, respectively, unless otherwise indicated.

Matters to be Voted on at the Meeting

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CORPORATE SUSTAINABILITY AND RESPONSIBILITY

We recognize the close connection between our success and our ability to make a positive impact on our customers, our employees, and our communities. Giving back to communities, embracing a culture of diversity, equity, and inclusion, and practicing sound ethics aren’t just the right thing to do. These efforts help make us an employer of choice, differentiate our brand, and support profitable and responsible growth. You can read about our Corporate Social Responsibility initiatives at PROXY STATEMENT SUMMARYptc.com/en/about/corporate-social-responsibility

Director Nominees. We expect to release our Corporate Social Responsibility Report for FY20 and FY21 in the coming months and to make it available there. The reference to our Corporate Social Responsibility Report and our website are not intended to incorporate information in that report or on our website into this Proxy Statement by reference.

		TenureCommunity Engagement					Diversity
		Newer Directors (0 to 5 years) - 3					Diverse - 3 A diverse person is either female or an underrepresented minority or LGBTQ+.
		Medium Tenured Directors (6 to 12 years) - 4
		Longer-Tenured Directors (over 12 years) - 1
		Independence
		Independent - 7
		Non-Independent – 1

6    Our Commitment

We are committed to creating a better reality by providing financial grants to organizations with charitable and social missions and by supporting employees in their efforts to give back to the community.

Why It’s Important

PTC is part of our communities. It is where our employees, customers, suppliers, and partners live and work. Supporting the growth of strong, resilient communities helps us and, we believe, inspires others to make the world a better place.

Our Approach

The PTC Foundation focuses on charitable giving in STEM and Education and in the communities where PTC employees, partners and stakeholders are located.

We also provide direct support to STEM and educational institutions and initiatives with in-kind donations, and provide our employees with paid time off to volunteer with charitable organizations and community initiatives.

Diversity, Equity & Inclusion

Our Commitment

DEI is critical to how we think about our employee culture, our engagement with our customers and partners, and the communities in which we work and live.

Our definition of “diversity” is intentionally broad and includes many groups, united by purpose. Our common goal is to drive meaningful change and to create an environment where all employees can succeed personally and professionally. We are also committed to embedding equity into every part of the organization, promoting an innovative, inclusive forward-thinking culture, and building high-performing teams.

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PROXY STATEMENT SUMMARYCORPORATE SUSTAINABILITY AND RESPONSIBILITY

Why It’s Important

Our future performance is dependent on our ability to attract, develop, and retain a diverse workforce of talented and engaged employees who believe in the purpose of PTC.

Our Approach

We have a history of working to attract a wide diversity of people from different backgrounds, cultures, education experiences, and religions because we know that a workforce that reflects the diversity of our customers and communities will bring more innovative thinking and better ideas and solutions to our business.

Formalize Our Commitment. In 2020, like many organizations, we realized we needed to accelerate our progress. We created a formal DEI team and appointed our first Chief Diversity Officer to examine the full scope of the talent management process with a specific focus on underrepresented groups (URGs) in the tech industry, including people of color, women, and members of the LGBTQIAP+ community.

Enhance Our Strategy and Talent Practices. In 2020, working with a consultant, we conducted a baseline assessment of our DEI policies, practices, and programs. The results are informing our strategy and talent practices as we embed DEI principles into how we attract, select, retain, and develop talent.

Build Accountability. We are working to establish goals and metrics to hold ourselves accountable and have invested in technology tools to track our diverse talent pipeline, hiring slates, and hiring conversions.

Environmental Sustainability

Our Commitment

We are committed to addressing our environmental impact and to providing solutions to our customers that enable them to transform their businesses and operations to reduce their environmental impact and that of their customers.

Why It’s Important

Climate change is real, and we all have a role to play in addressing and seeking to mitigate our climate impacts. As a software company, our environmental impact is relatively significantly lighter than the customers we serve and results mainly from our offices and our employees.

Our Approach

Address Our Direct Impacts

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CORPORATE SUSTAINABILITY AND RESPONSIBILITY

Support Our Customers’ Digital Transformation Initiatives

We are committed to driving innovation and creating products that help our customers improve productivity and reduce costs and help them achieve their own sustainability goals and those of their customers.

Our software products enable companies to design, manufacture, and service their products in ways that lower their physical environmental impact by saving energy, reducing materials usage and waste, and increasing efficiency. Our augmented reality software enables our customers to service their products and train their employees in more sustainable ways by enabling them to remotely service their products and to train their employees more efficiently, including remotely, enabling them to make processes more efficient and to reduce travel. We are exploring ways to capture and report the efficiencies and reductions in environmental impact realized by our customers through the use of our software.

Cybersecurity and Data Privacy

Our Commitment

have implemented and continue to implement measures intended to maintain the security and integrity of our products, source code and IT systems and are committed to collecting, processing, and protecting our information and that of our customers, employees and partners in compliance with applicable laws and regulations.

Why It’s Important

The potential for a security breach or system disruption has significantly increased over time as the scope, number, intensity and sophistication of attempted cyberattacks and cyber intrusions have increased. 

Our Approach

Cybersecurity

Cybersecurity is a risk area with oversight at the highest levels of the organization, including the Executive level and Board.

The Cybersecurity program is constantly under review as we are always adapting to new threats and maturing the program. As a matrixed cybersecurity organization, we have adopted the “Three Lines of Defense Model” to effectively address Cybersecurity Risk Management, Controls and Assurance. The overall operational program is led by a cross functional Cybersecurity Strategy Council led by the office of Cyber Risk Management that reports to our Chief Compliance Officer. The Council is supported by a qualified team of security professionals and key business stakeholders from all key functions including Products, IT Infrastructure, SaaS and Cloud. The Cybersecurity Risk and Privacy teams are supported from an Assurance perspective by our Internal Audit Teams. All Cybersecurity, Risk and Internal Audit functions report periodically to the PTC Executive Leadership Team and the Cybersecurity Committee of the Board.

As part of the program, we regularly train our employees on cybersecurity risks and our policies and practices designed to address to those risks.

Data Privacy

We understand the importance of protecting personal information. We have adopted a robust Privacy Policy that covers how we process any personal data we collect through our website and in connection with managing our workforce and conducting our business.

We also maintain a comprehensive written information security plan for the protection of personal and proprietary information. The security plan includes policies and procedures for accessing, collecting, storing, using, transmitting, and protecting personal information.

In addition, all employees receive information security training annually.

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CORPORATE SUSTAINABILITY AND RESPONSIBILITY

Corporate Governance Highlights

	Board Independence			Board and Committee Practices
⬢Independent and Diverse Board of Directors ⬢Independent Board Chair ⬢Independent Audit, Compensation, and GovernanceNominating Committee Chairs ⬢Independent Audit, Compensation, and GovernanceNominating Committees			⬢Regular Executive Sessions of Independent Directors ⬢Annual Board and Director Evaluations ⬢Comprehensive Risk Management Oversight ⬢CEO and Management Succession Planning

	Stockholder Rights			Stock Governance
⬢Annual Election of All Directors ⬢Annual Say-on-Pay Vote ⬢No Supermajority Voting Requirements ⬢Stockholder Right to Call a Special Meeting ⬢Majority Voting Policy for Uncontested Director Elections ⬢No Poison Pill			⬢Robust Stock Ownership Requirements for Directors and Executive Officers ⬢No Hedging or Pledging of Stock by Directors, Executives or Employees ⬢No Payment or Accumulation of Dividends or Dividend Equivalents on Options or Unvested Shares

Compensation Practices

⬢Pay-for-Performance Compensation ⬢Half Our Executives’ Annual Target Compensation is Performance-Based ⬢Independent Compensation Consultant ⬢All Executives are Employed “At Will” ⬢“"Double-Trigger” Change in Control Agreements ⬢No Excise Tax Gross-Ups ⬢Compensation Clawback Policy ⬢No Perquisites or Supplemental Retirement Benefits ⬢Performance-Based Incentive Plan Earnings are Capped ⬢Tally Sheets Reviewed Annually ⬢Annual Risk Assessment of Pay Programs

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PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this proxy statement and does not contain all the information you should consider. You should read the entire proxy statement before voting.

See the Letter from the Chairman of the Board on page 3 for highlights of PTC’s 2021 performance.

All references to 2021 and 2020 refer to PTC’s fiscal years ended September 30, 2021 and 2020, respectively, unless otherwise indicated.

Matters to be Voted on at the Meeting

		Proposal 1 Elect eight directors to serve until the 2023 Annual Meeting of Stockholders.
		The Board of Directors recommends a vote FOR All Nominees
		Proposal 2 Advisory vote to approve the compensation of our named executive officers (say-on-pay).
		The Board of Directors recommends that you vote FOR the approval of the compensation of our named executive officers as disclosed in COMPENSATION DISCUSSION AND ANALYSIS and the tables and related disclosures contained in EXECUTIVE COMPENSATION.
		Proposal 3 Advisory vote to confirm the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current fiscal year.
		The Board of Directors recommends that you vote FOR the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2022.

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PROXY STATEMENT SUMMARY

Director Nominees

Tenure		Independence
Shorter – Tenured Directors (0 – 4 years) – 3		Independent – 7
Medium – Tenured Directors (5 – 11 years) – 2		Non-Independent – 1
Longer – Tenured Directors (12+ years) – 3

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PROXY STATEMENT SUMMARY

Executive Compensation Highlights

Alignment of Our CEO with Our Future

A Decade as Our CEO

Jim Heppelmann has led PTC as our CEO since 2010. Over the past decade, under his leadership, PTC has transformed into a leading industrial software company – expanding the markets we serve, modernizing our business model, and transforming our culture.

Technology Vision Creates a Leading Industrial Software Company

Focus on Creating Stockholder Value with Long-Term Strategies

Retention Arrangement to Extend Tenure

Given his continued vision and proven ability to drive value for customers and stockholders, in September 2020, we entered into a new employment arrangement with Jim designed to extend his decade-long tenure and lead us through the next stage of our evolution and transformation. The new arrangement includes a three-year executive agreement and a performance-based equity grant that supports our growth and profitability objectives through September 2023. The retention arrangement and rationale are discussed further in Compensation Discussion and Analysis – Letter from the Compensation Committee and 2020 CEO Compensation Decisions.

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Alignment of Pay and Performance

FIVE-YEAR CEO TOTAL REALIZED PAY VS RELATIVE TSR		FIVE-YEAR NEO TOTAL REALIZED PAY VS RELATIVE TSR

Alignment of Executives and Stockholders

2020 Stockholder Engagement

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PROXY STATEMENT SUMMARY

Topics Discussed with Investors were Primarily Those Below

2020 PricewaterhouseCoopers LLP Services and Fees

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Corporate Responsibility

We recognize the close connection between our success and our ability to make a positive impact on our customers, our employees and the planet. Giving back to communities, embracing a culture of diversity and inclusion, sustaining the environment, and practicing sound ethics aren’t just the right thing to do. These efforts help make us an employer of choice, differentiate our brand, and support profitable and responsible growth. You can read our annual Corporate Social Responsibility Report and about our Corporate Social Responsibility initiatives at ptc.com/en/about/corporate-social-responsibility. The reference to our Corporate Social Responsibility Report and our website are not intended to incorporate information in that report or on our website into this Proxy Statement by reference.

			Community Engagement
			⬢We engage in the global community and support our employees that do so as well. ⬢In 2018, we founded the PTC Charitable Foundation to bring together our giving initiatives under one umbrella. The Foundation supports important educational initiatives, including the For Inspiration and Recognition of Technology (FIRST) program, which engages children from kindergarten through high school worldwide in research and robotics programs, the City Year program in Boston, which pairs Americorps members to support local middle and high school students, and Citizen Schools, which partners with underserved middle schools that need additional support and resources. ⬢We support other educational institutions with in-kind software donations. ⬢Finally, we support our employees’ engagement by matching our employees’ charitable donations through the Foundation and providing our employees with paid time off to volunteer with charitable organizations and community initiatives.
			Inclusion & Diversity
			⬢We have prioritized inclusion and diversity (I&D) as part of our corporate-wide strategic goals. Strategies we’ve taken to create and sustain a more inclusive and diverse environment include: hiring a dedicated head of I&D; expanding our recruiting efforts at schools and job fairs focused on minorities and other diversity dimensions; and launching, expanding and supporting our Employee Resource Groups—groups of PTC employees that voluntarily join together based on shared characteristics, life experiences, or interest around particular activities. ⬢We seek employees with diverse backgrounds and insights and are committed to creating a culture of innovation and inspiration where all employees feel a sense of ownership and pride in our success. ⬢PTC was named a Top Place to Work in Massachusetts by The Boston Globe in 2020, 2019, 2018 and 2017.
			Environmental Sustainability
			⬢As a company that operates globally, we seek to reduce and mitigate our environmental impact through our sustainability initiatives. ⬢Our sustainability initiatives include recycling programs, energy and resource conservation programs, and public transportation support programs. ⬢Our new world headquarters building in the Boston Seaport has received LEED Gold certification.

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INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

DATE Wednesday,Monday, February 10, 2021January 31, 2022

TIME 8:00 a.m.12:30 p.m. Eastern Standard Time

PLACE PTC Inc. 121 Seaport Boulevard Boston, MA 02210

20202022 Annual Meeting of Stockholders

Proposals to be Voted Onon at the Meeting

How You May Vote

All stockholders as of December 14, 20202, 2021 have the right to attend and vote at the Annual Meeting of Stockholders. You may vote by proxy before the meeting. You may attend the meeting even if you have voted by proxy before the meeting. In order to establish a quorum and to facilitate the tabulation of votes, please vote before the meeting, even if you plan to attend the meeting.

We made this proxy statement available to stockholders on December 29, 2020.20, 2021.

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		Proposal 1 ELECTION OF DIRECTORS
		The Board is elected by the stockholders to represent and protect their interest in PTC. The Board selects and oversees the members of senior management, who are responsible for conducting the business of PTC. All director nominees are current directors of the company. Information about each of the director nominees, including their qualifications, skills and experience that led the Corporate GovernanceNominating Committee and the Board to conclude that the director should serve as a director of the company, is discussed below. Information about their PTC stock ownership is set forth in INFORMATION ABOUT PTC COMMON STOCK OWNERSHIP – Stock Owned by Directors and Officers. ✓ The Board of Directors recommends that you vote FOR the election of all director nominees.

SummarySnapshot of QualificationsBoard Composition

Qualifications, Skills and Experience

The Nominees have a good balance of the qualifications, skills and experience that the Corporate Governance Committee and the Board have identified as contributing to the effectiveness of the Board.

Leadership Supermajority is Independent		Strategy Tenure is Well-Balanced		Global		Financial	Software Industry	Manufacturing	Marketing	Research & Development Gender is Diverse
Independent – 7		0 – 4 Years – 3		Women – 2
8/8	8/8	8/8	7/8	6/8	5/8	5/8	5/8

Supermajority is Independent

Tenure is Well Balanced

Board is Diverse

Independent - 7

Newer Directors (0 to 5 years) - 4

Diverse - 3 A diverse person is either female or an underrepresented minority or LGBTQ+.

Not Independent – 1

5 – 11 Years – 2

Men – 6

Medium Tenured Directors (6 to 12 years) - 3

12+ Years – 3

Longer-Tenured Directors (over 12 years) - 1

Stockholder Interests are Protected Seven of the eight director nominees, including our Board chairman, are independent. Our President and CEO is not independent. An independent board ensures that the directors exercise independent judgment, are willing to question management and are best suited to represent and protect the interests of stockholders.

Stockholders Benefit from Effective Board Refreshment The Corporate Governance Committee and the Board strivestrives to achieve a balance of service on the Board through a mix of new members and perspectives and members with longer tenure with institutional knowledge.

Our President and CEO has served on the Board for over 12 years.

Stockholders Benefit from Existence of Diverse Views Of our eight directors, two are women and one other is an underrepresented minority or LGBTQ+.women. This composition ensuresprovides a diverse set of viewpoints and experiences that we believe benefits stockholders. Effective February 8, 2022, Ms. Michal Katz will join the Board. Ms. Katz is considered independent – increasing both gender diversity and the supermajority of independent directors on the Board.

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PROPOSAL 1: ELECTION OF DIRECTORS

Specific Qualifications, Skills and Experience of the STRONG AND EFFECTIVE BOARD DUE TO GOOD BALANCE OF QUALIFICATIONS, SKILLS, AND EXPERIENCE

Leadership

Strategy

Global

Financial

Software Industry

Manufacturing

Marketing

R&D

Mark Benjamin

Janice Chaffin

James Heppelmann

Klaus Hoehn

Paul Lacy

Corinna Lathan

Blake Moret

Robert Schechter

Total

8

8

8

7

6

5

5

4

Board Diversity

The Committee believes that certain qualifications,Nominating Committee’s mandate is to create and maintain a Board with a diversity of skills and experience should be representedattributes that is aligned with PTC’s current and anticipated future strategic needs. The Board and Nominating Committee value diversity and believe that diversity among the directors as to personal and professional experiences, opinions, perspectives, and backgrounds, including diversity with respect to race, ethnicity, gender, age, cultural backgrounds, sexual identity, and gender orientation is desirable. Entering 2021, our Board had eight members – three of which were diverse, with two directors that were women and one director identifying as LGBTQ+. One of those directors resigned in mid-2021, leaving only gender diversity on the Board.

The Board currently had two director searches open in 2021 and actively sought diverse candidates by requiring that all slates of proposed candidates include at least two racially and/or ethnically diverse candidates and opening the aperture to identify candidates that might not otherwise be identified. We had success with this approach previously when we were seeking to add women to the Board by expanding the searches to include leaders of significant business units within public companies and reaching into academia, leading to the selections of Janice Chaffin and Cori Lathan, respectively. Effective February 8, 2022, Ms. Michal Katz will join the Board. We hope to add a racially or ethnically diverse director to the Board within the next year as described below, although not every membera result of the Board must possess all such qualifications, skills and experience to be considered capableremaining open director search.

BOARD DIVERSITY MATRIX (AS OF DECEMBER 15, 2021)

Total Number of making valuable contributions to the Board.Directors: 8

		Female      Male      Non-Binary      Did Not Disclose Gender Part I: Gender Identity Directors 2 6 — —   Part II: Demographic Background African American or Black — — — — Alaskan Native or Native American — — — — Asian — — — — Hispanic or Latinx — — — — Native Hawaiian or Pacific Islander — — — — White 2 6 — — Two or More Races or Ethnicities — — — — LGBTQ+ — Did Not Disclose Demographic Background — Leadership Our business is complex and evolving rapidly. Individuals who have led companies or operating business units of significant size have proven leadership experience in developing and advancing a vision and making executive-level decisions.
		Strategy Our success depends on successful development and execution of our corporate strategy, including successful selection and execution of strategic alliances and acquisitions.
		Global We are a global company, with approximately 45% of our software revenue coming from the Americas, 35% from Europe and 20% from the Asia-Pacific region. Global experience enhances understanding of the complexities and issues associated with running a global business and the challenges we face.
		Financial Our business and financial model is complex and multinational. Individuals with financial expertise are able to identify and understand the issues associated with our business and financial model.
		Software Industry We are an enterprise software company. Those with enterprise software experience are better able to understand the risks and opportunities facing our business.
		Manufacturing We primarily serve companies in the manufacturing industry. Understanding of this industry enhances understanding of how we can best address the needs of our customers.
		Marketing Our business depends on successfully creating awareness of our products and entering new markets. Persons with marketing experience can help us identify ways to do so successfully.
		Research and Development Our business depends on the success of our research and development efforts to develop our products and expand our offerings. Experience in this area enhances understanding of the challenges we face and best practices.

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PROPOSAL 1: ELECTION OF DIRECTORS

Director Nominees

Independence of Our Directors

Our Board of Directors has determined that all the director nominees, other than Mr. Heppelmann, our President and Chief Executive Officer, are independent under applicable Nasdaq rules. None of the independent directors, to our knowledge, has any business, financial, familyfamilial, or other type of relationship with PTC or its management that would impact the director’s independence.

MARK BENJAMIN Director Since 2021 Age 51 Board Committees Compensation (Chair) Cybersecurity Other Public Company Boards ⬢ Nuance Communications, Inc.	Key Qualifications: ⬢Extensive leadership experience with large global technology companies, including Nuance Communications, NCR Corporation, and ADP. ⬢Extensive experience advancing growth initiatives related to cloud, SaaS, mobile, big data, and IoT solutions. Career Highlights: ⬢Chief Executive Officer, Nuance Communications, Inc., a global software company that provides speech recognition solutions powered by artificial intelligence, April 2018 – Present ⬢President and Chief Operating Officer of NCR Corporation, a provider of enterprise software, hardware and services, from October 2016 to March 2018 ⬢Over 20 years in various leadership positions at Automatic Data Processing, Inc. (ADP), a provider of human resources management software and services, including as President of Global Enterprise Solutions from July 2013 to October 2016. Education: ⬢Bachelor’s degree in international finance and marketing from the University of Miami. Skills and Attributes:
		Leadership		Strategy		Global		Financial
		Software Industry		Marketing

JANICE CHAFFIN Director Since 2013 Age 6667 Board Committees CompensationCybersecurity (Chair), Corporate Governance Strategic Partnerships Oversight(Chair) Nominating (Chair) Other Public Company Boards ⬢Informatica Inc. ⬢Synopsys, Inc. ⬢Electronics for Imaging Inc. (2018-2019)(2018 – 2019) ⬢International Game Technology (2010-2015) ⬢Informatica Corporation (2001-2008)(2010 – 2015)	Key Qualifications: ⬢Significant leadership experience with large global technology companies. ⬢Financial and accounting expertise as a result of her positions at Symantec Corporation and Hewlett-Packard Company and her service on the Audit Committees of Synopsys, International Game Technology and Informatica. ⬢Completed the requirementsSignificant expertise in corporate governance due to becomeher being a NACD Fellow infrom 2015 – 2022, the highest credential level of credentialing for corporate directors and corporate governance professionals by the National Association of Corporate Directors. ⬢To become a NACD Fellow, Ms. Chaffin demonstrated knowledgeRegular speaker on the topic of Diversity, Equity, and Inclusion at the leading trends and practices that define exemplary corporate governance today and committed to developing professional insights through a comprehensive programAnderson School of ongoing study.Management at the University of California, Los Angeles. Career Highlights: ⬢Group President, Consumer Business Unit, Symantec, a global leader in providing cybersecurity solutions, April 2007 – March 2013 ⬢Chief Marketing Officer, Symantec, 2003-20072003 – 2007 ⬢Spent over twentyOver 20 years at Hewlett-Packard Company, in management and marketing leadership positions. Education: ⬢Bachelor of Arts – University of California, San Diego ⬢Master of Business Administration – University of California, Los Angeles Skills and Attributes:
		Leadership		Strategy		Global		Financial
		Software Industry		Marketing

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PROPOSAL 1: ELECTION OF DIRECTORS

	PHILLIP FERNANDEZ Director Since 2016 Age 60 Board Committees Corporate Governance (Chair), Audit Other Public Company Boards ⬢Yext, Inc. (November 2016 – June 2019) ⬢Marketo, Inc. (January 2006 – August 2016) ⬢Tibco Software, Inc. (June 2014 – December 2014)		Key Qualifications: ⬢Demonstrated leadership experience as a result of his service at Marketo, Inc. and at Epiphany, Inc. ⬢Significant marketing experience through his role at Marketo, Inc. ⬢Well-known writer and speaker on topics related to digital marketing, marketing automation, big data, and entrepreneurialism, and is the author of Revenue Disruption: Game-Changing Sales and Marketing Strategies to Accelerate Growth (Wiley, 2012). Career Highlights: ⬢Venture Partner, Shasta Ventures, a venture capital firm, January 2017 – January 2018 ⬢Founder, Marketo, Inc., a global digital marketing software company ⬢Chief Executive Officer and President, Marketo, Inc., January 2006 – August 2016 ⬢President and Chief Operating Officer, Epiphany, Inc., a marketing software company, July 2003 – September 2005 Education: ⬢Bachelor of Arts in History – Stanford University Skills and Attributes:
				Leadership		Strategy		Global		Financial
				Software Industry		Marketing		Research and Development

JAMES HEPPELMANN Director Since 2008 Age 5657 Board Committees None Other Public Company Boards ⬢Sensata Technologies Holding plc ⬢Agile Growth Corp., a special purchase acquisition company		Key Qualifications: ⬢Significant leadership experience in the enterprise software industry as a result of his positions at PTC Inc. and his position at Windchill Technology, Inc., where he was the founder and President before its acquisition by PTC. ⬢Extensive knowledge of PTC’s history, technologies and the markets in which PTC operates. ⬢Financial and marketing expertise as a result of his positions as Chief Executive Officer, Chief Operating Officer and Chief Product Officer of PTC. ⬢Technology and research and development expertise as a result of his positions as Chief Product Officer and Chief Technology Officer, and at Windchill Technology, Inc. Career Highlights: ⬢President and Chief Executive Officer, PTC, October 2010 – presentPresent ⬢President and Chief Operating Officer, PTC, March 2009 – September 2010 ⬢Executive Vice President and Chief Product Officer, PTC, February 2003 – February 2009 ⬢Executive Vice President, Software Solutions, and Chief Technology Officer, PTC, June 2001 – January 2003 ⬢Joined PTC in 1998 Education: ⬢Bachelor’s degree in Mechanical Engineering – University of Minnesota Skills and Attributes:
			Leadership		Strategy		Global		Financial
			Software Industry		Manufacturing		Marketing		Research and Development

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PROPOSAL 1: ELECTION OF DIRECTORS

KLAUS HOEHN Director Since 2015 Age 6970 Board Committees Corporate Governance Nominating	Key Qualifications: ⬢Extensive knowledge of manufacturing and the markets in which PTC operates, as well as extensive knowledge of PTC software, including as a user of PTC software. ⬢His experience at Deere, a customer of PTC, makes him uniquely qualified to serve as the “voice of the customer” on the Board. ⬢Technology and research and development expertise as a result of his positions at Deere, including his role that included corporate-level responsibility for directing advanced technology development and engineering services that support worldwide agricultural, construction, and commercial and consumer equipment design and manufacturing. Career Highlights: ⬢Senior Advisor, Innovation and Technology, to the Office of the Chairman, Deere & Company, November 2018 – December 2020 ⬢Vice President, Advanced Technology and Engineering, Deere & Company, January 2006 – November 2018 ⬢JoinedOver 12 years’ earlier experience at Deere & Company in 1992 and has served in severalvarious engineering and product development roles at the companyroles. Education: ⬢Bachelor’s degree in Mechanical and Agricultural Engineering – Rostock University, Germany ⬢Master’s degree in Mechanical and Agricultural Engineering – Rostock University, Germany ⬢Doctorate degree in Mechanical and Agricultural Engineering – Rostock University, Germany Skills and Attributes:
		Leadership		Strategy		Global		Manufacturing
		Research and Development

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PROPOSAL 1: ELECTION OF DIRECTORS

PAUL LACY Director Since 2009 Age 7374 Board Committees Audit (Chair), Compensation Corporate Governance Nominating	Key Qualifications: ⬢Extensive financial accounting and manufacturing expertise as a result of his positions at Kronos. ⬢During his tenure at Kronos, Kronos grew from a $26 million hardware company into a $662 million public global enterprise software company. ⬢Significant leadership and public company software experience as a result of his positions at Kronos Incorporated. Career Highlights: ⬢President, Kronos Incorporated, a global enterprise software company, May 2006 – June 2008 ⬢President, Chief Financial and Administrative Officer, Kronos Incorporated, November 2005 – April 2006.2006 ⬢Executive Vice President and Chief Financial and Administrative Officer, Kronos Incorporated, April 2002 – October 2005.2005 Education: ⬢Bachelor of Science in Accounting – Boston College ⬢Juris Doctor – Boston College School of Law School Skills and Attributes:
		Leadership		Strategy		Global		Financial
		Software Industry		ManufacturingMarketing

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PROPOSAL 1: ELECTION OF DIRECTORS

CORINNA LATHAN Director Since 2017 Age 5354 Board Committees Audit Cybersecurity	Key Qualifications: ⬢Extensive experience as a leader and technology innovator as a result of her work at AnthroTronixAnthroTronix. ⬢Deep expertise in human-technology interfaces for robotics and mobile technology platformsplatforms. ⬢Significant experience and expertise in augmented reality and other technologies enable her to help us advance our Internet of Things strategy.technologies. Career Highlights: ⬢Chief Executive Officer, Co-Founder and Chair of the Board, AnthroTronix, Inc., a biomedical engineering research and development company that creates diverse products in robotics, digital health, wearable technology, and augmented reality, July 1999 – Present.Present ⬢Associate Professor of Biomedical Engineering, The Catholic University of America ⬢Adjunct Associate Professor of Aerospace Engineering, University of Maryland, College Park Education: ⬢Bachelor of Arts degree in Biopsychology and Mathematics – Swarthmore College ⬢S.M. in Aeronautics and Astronautics – MIT ⬢Ph.D. in Neuroscience -– MIT Skills and Attributes:
		Leadership		Strategy		Global		Financial
		Software Industry		Research and Development

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PROPOSAL 1: ELECTION OF DIRECTORS

	BLAKE MORET Director Since 2018 Age 5859 Board Committees Corporate Governance Strategic Partnerships Oversight Other Public Company Boards ⬢Rockwell Automation, Inc.		Key Qualifications: ⬢Appointed to the Board in connection with the formation of the strategic alliance between PTC and Rockwell Automation and Rockwell Automation’s purchase of $1 Billion of PTC stock in July 2018. In connection with those transactions, we agreed to appoint to the Board and to the Corporate Governance Committee an individual proposed by Rockwell Automation and reasonably acceptable to us. ⬢Rockwell Automation designated Mr. Moret as the initialits designee. UnderTransactions between Rockwell Automation and PTC under the strategic alliance transactions between the parties dodid not constitute a significant portion of either PTC’s or Rockwell Automation’scompany’s annual revenue for 2020.2021. ⬢Significant leadership experience in factory automation and the factory automation market to the Board as a result of his experience at Rockwell Automation, an area that is a significant focus of our digital transformation for industrial enterprises strategy. Independence Considerations: ⬢We have concluded that Mr. Moret qualifies as an independent director under the applicable Nasdaq rules. In reaching this conclusion, we considered the fact that Mr. Moret continued to meet the objective independence standard under the applicable Nasdaq rules, that Rockwell Automation’s interests are aligned with those of stockholders generally, that transactions between the parties under the strategic alliance are not expected to be a material percentage of annual revenue in 2021,2022, that Mr. Moret does not have any other relationship with us that would compromise his independence, and that, as with all directors, if a matter arises that poses a potential conflict of interest, Mr. Moret would be excluded from consideration of that particular matter. Career Highlights: ⬢President and Chief Executive Officer, Rockwell Automation, Inc., a company focused on industrial automation and information, July 2016 – Present ⬢Chairman of the Board, Rockwell Automation, Inc., January 2018 – Present ⬢Senior Vice President, Control Products and Solutions, Rockwell Automation, Inc., April 2011 – July 2016 ⬢Has been withOver 20 years’ earlier experience at Rockwell Automation for over 32 years, during which he served in various roles, including leadership roles in the marketing, solutions, services, and product groups. Education: ⬢Bachelor’s degree in Mechanical Engineering – Georgia Institute of Technology Skills and Attributes:
				Leadership		Strategy		Global		Financial
				Manufacturing		Marketing

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PROPOSAL 1: ELECTION OF DIRECTORS

	ROBERT SCHECHTER Chairman of the Board Director Since 2009 Age 7273 Board Committees Audit, Compensation Strategic Partnerships Oversight Other Public Company Boards ⬢Mimecast Limited ⬢Telaria, Inc. (2013-2019) (2013 – 2019) ⬢EXA Corporation (2012 (2012 – 2017) ⬢Unica Corporation (2005 - (2005 – 2010) ⬢Soapstone Networks, Inc. (2003 -– 2009)		Key Qualifications: ⬢Significant financial and accounting expertise as a result of his experience at Coopers & Lybrand, LLP, an independent accounting firm, and his positions at NMS Communications Corporation and at Lotus Development Corporation, where he was the Chief Financial Officer. ⬢Relevant knowledge of the manufacturing market and process [throughthrough his position at NMS Communications Corporation]Corporation. ⬢Marketing experience as well as technology and research and development expertise as a result of his position as Senior Vice President at Lotus Development Corporation, where he was responsible for all sales, marketing, customer service and product development outside North AmericaAmerica. Career Highlights: ⬢Chief Executive Officer, NMS Communications Corporation, a global provider of hardware and software solutions for the communications industry, 1995 – 2008 ⬢Senior Vice President, International Operations, Lotus Development Corporation, 1990 -– 1994 ⬢Chief Financial Officer, Lotus Development Corporation, 1987 – 1990 ⬢Partner, Chair of Northeast Region High Tech Practice, Coopers & Lybrand, LLP, 1973 – 1987 Education: ⬢Bachelor of Science – Rensselaer Polytechnic Institute ⬢Master of Business Administration -– Wharton School of the University of Pennsylvania Skills and Attributes:
				Leadership		Strategy		Global		Financial
				Software Industry		Manufacturing		Marketing		Research and Development

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CORPORATE GOVERNANCE

Board Leadership Structure

Our Board is led by an independent Chairman, Mr. Schechter. We believe this Board leadership structure serves the company and our stockholders well by providing independent leadership of the Board. If we were to decide that combining the Chairman and CEO positions would better serve the company and our stockholders, our policy is to have a Lead Independent Director.

Board and Committee Meetings; Attendance at the Annual Meeting

The Board and committees hold regularly scheduled meetings over the course of the year and hold additional meetings as necessary. The Board met tenseven times in 2020.2021. All directors attended 100%at least 86% of meetings of the Board and the committees on which he or shethe director served in 2020.2021, with all directors attending 100% of such meetings other than Mr. Benjamin and Mr. Moret, each of whom missed one special Board meeting due to prior commitments.

We expect that each director will attend the Annual Meeting of Stockholders each year. All directors attended the 20202021 Annual Meeting of Stockholders.

Director Election Process and Voting Standard

All directors stand for election each year. Directors are elected by a plurality of votes received. We maintain a Majority Voting Policy for uncontested director elections that requires a director who does not receive a majority of the votes cast for his or her proposed election to promptly tender his or her resignation from the Board. The Corporate Governance Committee will consider the resignation and recommend to the Board whether to accept the resignation. The Board will use its best efforts to act on the resignation and publicly disclose its decision and its rationale within 90 days following certification of the election results. The director tendering the resignation may not participate in the decisions of the Corporate Governance Committee or the Board that concern the resignation.

Board Evaluation Process

The Board conducts an annual evaluation process, which is facilitated by a third-party once every three years.

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CORPORATE GOVERNANCE

Director Nominations and Board Refreshment Process

The Corporate GovernanceNominating Committee is responsible for identifying and evaluating nominees for director and for recommending to the Board a slate of nominees for election at each Annual Meeting of Stockholders. Candidates may be suggested by directors, management, stockholders, or a search firm retained by the Committee. Stockholders may nominate candidates for Board membership. in accordance with the procedures described in STOCKHOLDER PROPOSALS AND NOMINATIONS. Candidates properly nominated by stockholders will be given the same consideration as other proposed candidates.

The Corporate GovernanceNominating Committee considers the Board’s composition, including the alignment of the skills and attributes to determine whether they are alignedprofessional experience of the directors with our long-term strategy.strategy and the Board’s gender, racial, ethnic, and LGBTQ+ diversity. The Corporate GovernanceNominating Committee evaluates candidates against the standards and qualifications set forth in our Corporate Governance Guidelines and the Nominating Committee Charter as well as other relevant factors, including the candidate’s potential contributionsto add gender, racial, ethnic, or LGBTQ+ diversity to the Board.

Our typical search process involves the steps described below.

Commitment to Diversity

The Board and the Nominating Committee are committed to increasing diversity on the Board. The Board initially focused on increasing gender diversity on the Board and successfully identified and recruited two women, both of whom serve on the Board today. The Board has turned its attention to increasing other elements of diversity, including racial, ethnic and LGBTQ+ diversity. Our initiatives and efforts to increase racial, ethnic, and LGBTQ+ diversity on the Board are described above in LETTER FROM OUR CHAIRMAN and PROPOSAL 1: ELECTION OF DIRECTORS – Board Diversity.

Qualifications Required of All Directors

The Nominating Committee considers each candidate’s character and professional ethics, judgment, leadership experience, business experience and acumen, familiarity with relevant industry issues, national and international experience and such other relevant skills and experience as may contribute to the Board’s effectiveness and PTC’s success. In addition, all candidates must be able to dedicate sufficient time and resources for the diligent performance of the duties required of a member of the Board and must not hold positions or interests that conflict with their responsibilities to PTC. Candidates must also comply with any other minimum qualifications for either individual directors or the Board under applicable laws or regulations. The Committee will also consider whether the candidate is independent of PTC as at least a majority of members of the Board must qualify as independent in accordance with Nasdaq independence rules.

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CORPORATE GOVERNANCE

Board Risk Oversight

The Board and the relevant committees review with PTC’s management the risk management practices for which they have oversight responsibility. Since overseeing risk is an ongoing process and inherent in PTC’s strategic decisions, the Board and the relevant committees do not view risk in isolation but discuss risk throughout the year in relation to ongoing operations and proposed actions and initiatives.

Given the importance of oversight of the Company’s management of its cybersecurity risks, including the responsibilities associated with maintaining privacy of personal information, the Board created the Cybersecurity Committee in 2021 to oversee those risks. Ms. Chaffin, who held leadership positions at Symantec Corporation – a leading global cybersecurity company – in her career, was appointed Chair of the Committee.

Board of Directors Ultimate responsibility for risk management oversight and oversees risk management of risks not addressed by a committee.committee, including ESG risks and initiatives.
Audit ⬢Financial Condition and Debt ⬢Accounting and Financial Reporting ⬢Cybersecurity and IT Programs ⬢Compliance Programs ⬢Taxes ⬢Related Party Transactions	Compensation & People Overall ⬢Executive Compensation Policies, Programs and Practices ⬢Human Capital Management, including Diversity and Inclusion Initiatives	Corporate Governance ⬢Corporate Governance Policies ⬢CEO Succession Planning ⬢Composition of the Board Committees ⬢Director Evaluation and Nominations ⬢Director Compensation ⬢ESG risks and initiatives not addressed by other committees	Strategic Partnerships OversightCybersecurity Implementation ⬢Cybersecurity and Operation of Significant Strategic Relationships IT Programs	Covid-19 Crisis OversightNominating Oversight ⬢Board Refreshment ⬢Director Nominations ⬢Composition of the Company’s Response to the Covid-19 Crisis Board
			Temporary Committee Q2’20 & Q3’20Established June 2021

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CORPORATE GOVERNANCE

The Committees of the Board

The Board has fourfive standing committees: Audit, Compensation & People, Corporate Governance, Cybersecurity, and the Strategic Partnerships Oversight Committee.Nominating. Each of the committees acts under a written charter, all of which are available on the Investor Relations page of our website at www.ptc.com.www.ptc.com. Mr. Heppelmann, our CEO, does not serve on any committee.

During 2020, we also established the Covid-19 Crisis Oversight Committee to oversee the company’s response to the Covid-19 pandemic. The committee operated in the second and third quarters and was disbanded as the company’s response to the pandemic and related operating changes matured.

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CORPORATE GOVERNANCE

	Committee Chair: Paul Lacy	Committee Members: Phillip Fernandez Corinna Lathan Robert Schechter

⬢	All committeeCommittee members are “independent directors” under both SEC rules and the Nasdaq Stock Market listing requirements.
⬢	No Committee member has ever been an employee of PTC or any of its subsidiaries.
⬢	The Board of Directors has determined that Mr. Lacy and Mr. Schechter qualify as Audit Committee Financial Experts as defined by the SEC.

COMPENSATION AND PEOPLE COMMITTEE
	Committee Chair: Mark Benjamin	Committee Members: Janice Chaffin Paul Lacy Robert Schechter

Responsibilities

⬢	Establishes the compensation levels for our executive officers.
⬢	Oversees our employee compensation programs, including the corporate bonus programs.
⬢	Sets performance goals for compensation of executive officers and evaluates performance against those goals.
⬢	Oversees our equity compensation plans.
⬢	Oversees our people management programs and initiatives.

May engage compensation consultants or other advisors to provide information and advice to the Committee.

Independence

⬢	All Committee members are “independent directors” under The Nasdaq Stock Market listing rules.

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CORPORATE GOVERNANCE

			CORPORATE GOVERNANCE COMMITTEE
COMPENSATION COMMITTEE

Committee Chair: Janice Chaffin

Committee Members: Klaus Hoehn Paul Lacy Robert SchechterBlake Moret

Responsibilities

⬢	Develops and recommends policies and processes regarding corporate governance.
Responsibilities ⬢Establishes the compensation levels	Maintains a CEO succession plan to ensure continuity of leadership for our executive officers. PTC.
⬢Oversees our employee compensation programs, including the corporate bonus programs. ⬢Sets performance goals for compensation of executive officers and evaluates performance against those goals. ⬢Oversees our equity compensation plans. May engage compensation consultants or other advisors to provide information and advice	Makes recommendations to the Committee. Independence Board about the composition of committees of the Board.
⬢	Reviews and makes recommendations to the Board with respect to director compensation.

Independence

⬢	All Committee members are “independent directors” under The Nasdaq Stock Market listing rules.

			CYBERSECURITY COMMITTEE
CORPORATE GOVERNANCE COMMITTEE

Committee Chair: Phillip FernandezJanice Chaffin

Committee Members: Mark Benjamin Corinna Lathan

Responsibilities

⬢	Oversees the Company’s cybersecurity and IT programs.

Independence

⬢	All Committee members are “independent directors” under The Nasdaq Stock Market listing rules.

NOMINATING COMMITTEE
	Committee Chair: Janice Chaffin	Committee Members: Klaus Hoehn Paul Lacy Blake Moret

Responsibilities

Responsibilities ⬢Develops and recommends policies and processes regarding corporate governance. ⬢Maintains a CEO succession plan to ensure continuity of leadership for PTC. ⬢	Oversees the director recruitment process, including the assessment of qualifications and skills sought in new directors and the retention of search firms to assist in the identification of potential candidates.
⬢	Reviews the composition of the Board and makes recommendations regarding nominees for election to the Board.

Independence

⬢Makes recommendations to the Board about the composition of committees of the Board. ⬢Reviews and makes recommendations to the Board with respect to director compensation. Independence ⬢

All Committee members are “independent directors” under The Nasdaq Stock Market listing rules.

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CORPORATE GOVERNANCE

STRATEGIC PARTNERSHIPS OVERSIGHT COMMITTEE

	Committee Chair: Robert Schechter	Committee Members: Janice Chaffin Blake Moret
Responsibilities ⬢Oversee the implementation and operation of significant strategic relationships entered into by the company. Independence ⬢All Committee members are “independent directors” under The Nasdaq Stock Market listing rules.

Director and Executive Officer Stock Ownership Requirements

Because we believe our directors’ and executives’ interests are more aligned with those of our stockholders if they are stockholders themselves, our directors and executive officers are required to hold a significant amount of our stock. Options and unvested equity are not counted toward the holding requirement.

	Directors	Chief Executive Officer	Other Executive Officers
5x Annual Board Cash Retainer				Chief Executive Officer6x 5x Annual Salary			Other Executive Officers 3x Annual Salary		All our directors and officers meet their stock ownership requirements.

Our Director Stock Ownership Policy and our Executive Officer Stock Ownership Policy are available on the Investor Relations page of our website at www.ptc.com.www.ptc.com.

No Hedging or Pledging of PTC Equity

In order to ensure members of the Board of Directors and our executives and employees are aligned with the interests of our stockholders, our Trading in Company Securities Policy prohibits the hedging of PTC stock or equity by directors, executives and employees and transactions in derivative securities whose value is tied to that of PTC stock (including puts, calls and listed options). The Policy also prohibits the pledging of PTC stock or equity by directors, executives and employees and short sales of PTC stock.

Director Election Process and Voting Standard

All directors stand for election each year. Directors are elected by a plurality of votes received. However, we maintain a Majority Voting Policy for uncontested director elections that requires a director who does not receive a majority of the votes cast for his or her proposed election to promptly tender his or her resignation from the Board. The Corporate Governance Committee will consider the resignation and recommend to the Board whether to accept the resignation. The Board will use its best efforts to act on the resignation and publicly disclose its decision and its rationale within 90 days following certification of the election results. The director who tenders his or her resignation may not participate in the decisions of the Corporate Governance Committee or the Board that concern the resignation.

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CORPORATE GOVERNANCE

Director Nominations

The Corporate Governance Committee is responsible for identifying and evaluating nominees for director and for recommending to the Board a slate of nominees for election at each Annual Meeting of Stockholders. Candidates may be suggested by directors, management, stockholders or a search firm retained by the Committee. Stockholders that wish to nominate a candidate may do so in accordance with the procedures described in STOCKHOLDER PROPOSALS AND NOMINATIONS. Candidates properly nominated by stockholders will be given the same consideration as other proposed candidates.

Director Qualifications and Diversity

The Corporate Governance Committee’s mandate is to create and maintain a Board with a diversity of skills and attributes that is aligned with PTC’s current and anticipated future strategic needs. Beyond a few general requirements, the Corporate Governance Committee does not rely on a fixed set of qualifications for director nominees but considers the composition of the Board and the experience and skills each director nominee brings to the Board.

The Corporate Governance Committee values diversity and believes that diversity among the directors as to personal and professional experiences, opinions, perspectives and backgrounds, as well as diversity with respect to race, ethnicity, gender, age and cultural backgrounds, is desirable. The Committee does not maintain a diversity policy but seeks to achieve diversity through its thoughtful selection of qualified candidates.

Qualifications Required of All Directors

The Corporate Governance Committee considers each candidate’s character and professional ethics, judgment, leadership experience, business experience and acumen, familiarity with relevant industry issues, national and international experience and such other relevant skills and experience as may contribute to the Board’s effectiveness and PTC’s success. In addition, all candidates must be able to dedicate sufficient time and resources for the diligent performance of the duties required of a member of the Board of Directors and must not hold positions or interests that conflict with their responsibilities to PTC. Candidates must also comply with any other minimum qualifications for either individual directors or the Board under applicable laws or regulations. The Committee will also consider whether the candidate is independent of PTC as at least a majority of members of the Board of Directors must qualify as independent in accordance with Nasdaq independence rules.

Communications with the Board

Stockholders may send communications to the Board of Directors at: Board of Directors, PTC Inc., c/o General Counsel and Secretary, 121 Seaport Boulevard, Boston, Massachusetts 02210.

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DIRECTOR COMPENSATION

DIRECTOR COMPENSATION

We pay our non-employee directors a mix of cash and equity compensation. The amounts established for the annual Board and committee cash and equity retainers for the most recent year are shown in the table below. No fees arewere paid for service on the Strategic Partnerships Oversight Committee.Cybersecurity Committee as it was established late in 2021. The retainers are the only compensation paid for service as a director; we do not pay meeting fees for attendance at board or committee meetings.

		Annual Cash Retainer			Annual Equity Retainer			Committee Chair Retainer			Committee Member Retainer					Annual Cash Retainer			Annual Equity Retainer			Committee Chair Retainer			Committee Member Retainer
Chairman of the Board		$	125,000		$	300,000										$	125,000		$	300,000
Other Directors		$	60,000		$	250,000										$	60,000		$	250,000
Audit Committee								$	30,000		$	15,000										$	30,000		$	15,000
Compensation Committee								$	25,000		$	12,500										$	25,000		$	12,500
Corporate Governance Committee								$	15,000		$	7,500										$	15,000		$	7,500
Strategic Partnerships Oversight Committee								$	—		$	—
Cybersecurity Committee																						$	—		$	—
Nominating Committee																						$	5,000		$	2,500

Director Compensation Process and Decisions

The Board establishes the annual compensation for the directors at the meeting of the Board of Directors held directly after the Annual Meeting of Stockholders. In setting such compensation, the Board considers the recommendation of the Corporate Governance Committee. In making its recommendation for 2020,2021, the Corporate Governance Committee considered a competitive assessment of the directors’ compensation with that of our compensation peer group (described in COMPENSATION DISCUSSION AND ANALYSIS) and reviewed each element of compensation to determine whether the compensation is competitive and reasonable for the services provided by the directors. Based on that review, no changes were made to our directors’ compensation for 2020.2021.

We provide a higher annual retainer for service as the Chairman of the Board given the additional work required by that position, but do not pay a committee chair retainer to the Chairman of the Board for service as the Chair of any committee. We provide different retainers for the Chairs and members of the various committees based on the anticipated level of work required with respect to the position and the committee.

We also believe that providing a majority of our directors’ annual retainer compensation in the form of equity rather than cash serves to further align the interests of our directors with our stockholders as they become stockholders themselves.

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DIRECTOR COMPENSATION

20202021 Director Compensation

The amounts shown in the Fees Earned or Paid in Cash column of the table are each director’s annual board and committee retainer fees. The amounts shown in the Stock Awards column of the table are the value of the restricted stock unit (RSU)equity awards (RSUs) made to the directors during the year.

Name(1)		Fees Earned			Stock Awards (#)		Stock Awards ($)(2)(3)			Total ($)			Fees Earned or Paid in Cash ($)			Stock Awards (#)		Stock Awards ($)(4)(5)			Total ($)
Robert Schechter Chairman of the Board		$	152,500		3,439		$	299,950		$	452,450		$	152,500		2,072		$	299,881		$	452,381
Mark Benjamin(2)													$	34,167		4,318		$	624,944		$	659,111
Janice Chaffin		$	92,500		2,866		$	249,973		$	342,473		$	92,500		1,727		$	249,949		$	342,449
Phillip Fernandez		$	82,500		2,866		$	249,973		$	332,473
Phillip Fernandez(3)													$	76,667		1,727		$	482,541		$	559,208
Klaus Hoehn		$	68,750		2,866		$	249,973		$	318,723		$	68,750		1,727		$	249,949		$	318,699
Paul Lacy		$	111,500		2,866		$	249,973		$	361,473		$	111,250		1,727		$	249,949		$	361,199
Corinna Lathan		$	75,000		2,866		$	249,973		$	324,973		$	75,000		1,727		$	249,949		$	324,949
Blake Moret		$	67,500		2,866		$	249,973		$	317,473		$	67,500		1,727		$	249,949		$	317,449
Donald Grierson(4)		$	46,250		—		$	—		$	46,250

(1)	As an employee of PTC, Mr. Heppelmann, our President and Chief Executive Officer, receives no compensation for his service as a director, and accordingly, is not shown in the Director Compensation Table.
(2)	Mr. Benjamin joined the Board on February 10, 2021. His Stock Awards reflect his annual equity grant of 1,727 RSUs and his new director grant of 2,591 RSUs. His new director grant vests in two equal installments on February 10, 2022 and February 10, 2023.
(3)	Mr. Fernandez resigned from the Board effective June 16, 2021. His Stock Awards reflect his annual equity grant of 1,727 RSUs and the value of the acceleration of that grant upon his resignation.
(4)	Grant date fair value of restricted stock units granted on February 12, 2020.10, 2021. The grant date fair value is equal to the number of RSUs granted multiplied by the closing price of our common stock on the NASDAQ Stock Market on the grant date, $87.22$144.73 per share.
(3)(5)	The number of outstanding RSUs held by each director as of September 30, 20202021 is shown in the table below. No director held options.

	Name		Restricted Stock Units
	Robert Schechter		3,4392,072
Mark Benjamin		4,318
Janice Chaffin		2,8661,727
	Phillip Fernandez		2,866—
	Klaus Hoehn		2,8661,727
	Paul Lacy		2,8661,727
	Corinna Lathan		2,8661,727
	Blake Moret		2,8661,727

(4) PTC Inc. - 2022 Proxy Statement

Mr. Grierson retired from the Board on February 12, 2020.

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

		JAMES HEPPELMANN Information about Jim Heppelmann is provided in “Director Nominees” above.
		KRISTIAN TALVITIE Executive Vice President, Chief Financial Officer Age 5051 Kristian joined PTC as our Chief Financial Officer in May 2019. Before that, Kristian was the Chief Financial Officer of Syncsort Incorporated, a private software company specializing in Big Data, high speed sorting products and data integration software and services from October 2018 through May 2019. He served as Chief Financial Officer of Sovos Compliance, LLC, a private SaaS software company specializing in tax compliance software from July 2016 to October 2018, and served as the Corporate Vice President, Finance of PTC from July 2013 to July 2016 and as the Senior Vice President, Financial Planning and Analysis and Investor Relations of PTC from November 2010 to July 2013.
		TROY RICHARDSON Executive Vice President, Chief Operating Officer Digital Thread Business Age 5859 Troy joined PTC in November 2020 as our Chief Operating Officer. In October 2021, he was promoted to President, Digital Thread Business. Troy previously served as the Senior Vice President, Head of Global Sales for DXC Technology, a $20 Billion leading IT services company, from July 2019 to November 2020. Before that, he served as the Senior Vice President, General Manager, Enterprise and Cloud Applications for DXC from April 2017 to July 2019; General Manager, Global Sales Leader for CSC, an information and technology services company, from December 2015 to April 2017; and Senior Vice President, Strategic Alliances for Oracle Corporation from May 2014 to December 2015. Before that, Mr. Richardson held management positions at SAP, Hewlett-Packard, Novell, NCR and IBM.
		EDUARDA CAMACHOMICHAEL DITULLIO Executive Vice President, Chief Customer Officer Velocity Business Age 4854 Eduarda has been our Executive Vice President, Chief Customer Officer since December 2019. Before that, she served as our Divisional Vice President, Customer Success from April 2018 to November 2019, our Senior Vice President, Customer Success from December 2017 to March 2018, and our Senior Vice President, Global Services from July 2016 to November 2017. Before that, she served in various positions in our Global Services organization. Eduarda joined PTC in 1997.

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS

		MICHAEL DITULLIO Executive Vice President, Sales Age 53 Mike has been our Executive Vice President, Sales,SaaS Business, since November 2015.January 2021. Before that MikeMr. DiTullio served in various positions in our Sales organization.organization, including as Executive Vice President, Global Sales from November 2015 to January 2021. Mike joined PTC in 1999.
		KATHLEEN MITFORD Executive Vice President, Chief Strategy Officer Age 48 Kathleen became our Executive Vice President, Chief Strategy Officer, in January 2020. Kathleen previously was Executive Vice President, Products from February 2018 to December 2020. Before that, Kathleen was our Executive Vice President, Products and Market Strategy from October 2017 to February 2018; Executive Vice President, Segments from February 2017 to October 2017; Corporate Vice President, Corporate Strategy from July 2014 to February 2017. Before that, she served in various roles in our product, market and corporate strategy groups. Kathleen joined PTC in 2006.
		AARON VON STAATS Executive Vice President, General Counsel and Secretary Age 5556 Aaron has served as our General Counsel and Secretary since 2003. Before that, he served in other roles in the company’s Legal group. Aaron joined PTC in 1997.
		KEVIN WRENN Executive Vice President, Products Age 55 Kevin became our Executive Vice President, Products, in January 2020. Kevin previously served as our Divisional General Manager, PLM Segment, from October 2014 to December 2019. Before that, he held various positions in a number of organizations within PTC. Kevin joined PTC in 1995.

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		Proposal 2
	ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
This advisory vote on the compensation of our Chief Executive Officer and our other executive officers named in the Summary Compensation Table (our “named executive officers”) gives stockholders the opportunity to express their views on our named executive officers’ compensation. This “say-on-pay” vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers. Additional information about their compensation is discussed in COMPENSATION DISCUSSION AND ANALYSIS and in EXECUTIVE COMPENSATION. ✓
The Board of Directors recommends that you vote FOR the approval of the compensation of our named executive officers as disclosed in COMPENSATION DISCUSSION AND ANALYSIS and the tables and related disclosures contained in EXECUTIVE COMPENSATION.

Summary of Our Compensation Practices

Our compensation programs are designed to pay for performance. A significant portion of the compensation of our named executive officers is comprised of performance-based pay. For 2020,2021, 51% of our CEO’s target compensation was performance-based and 49%50% of our other named executive officers’ target compensation was performance-based.

As shown in the pay and performance alignment charts in COMPENSATION DISCUSSION AND ANALYSIS, our executives’ pay and the Company’scompany’s performance are aligned.

Our compensation programs are designed to align our executives’ interests with our stockholders’ interests.In addition to weighting our executives’ compensation to performance-based pay, approximately 40%a substantial portion of their compensation is in the form of equity (RSUs) that vests over three years. Moreover, ourOur executives are also subject to substantialrobust stock ownership requirements and to clawback of incentiveperformance-based compensation in certain circumstances. These elements serve to align our executives’ interests with those of our stockholders in the long-term value of PTC.

Our compensation programs are developed by independent directors advised by an independent consultant.Our Compensation Committee is comprised only of independent directors and retains an independent compensation consultant to advise it on appropriate compensation practices.

Effect of Say-on-Pay Vote

This say-on-pay vote, which is required by Section 14A of the Securities Exchange Act of 1934, is advisory only and is not binding on the company, the Compensation Committee, or our Board of Directors. Although the vote is advisory, we, our Compensation Committee, and our Board of Directors value the opinions of our stockholders and will consider the outcome of this vote when establishing future compensation for our executive officers. We hold such a vote each year.

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COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION DISCUSSION AND ANALYSIS

Letter from the Compensation Committee

Dear Fellow Stockholders:

We are committedIn the past three years, stockholder support for PTC’s say-on-pay advisory vote has been below desired levels, including less than majority support in 2019 and 2021. Through our shareholder engagement efforts, we heard that the lower levels of support were primarily attributable to overseeingan off-cycle performance-based retention equity award granted to our CEO. The award was originally made in June 2018 and was subsequently cancelled and replaced in September 2020 due to failure of the designoriginal award to continue to provide retentive and implementation of executive compensation that is oriented toward pay-for-performance and aligns our executives’ interests withincentive value following strategy shifts over those of stockholders. While we maintain a pay-for-performance orientation designed to incent executives to execute our short- and long-term strategies, the compensation we pay to executives must also be sufficient to attract and retain qualified, high-performing executives. We believe our executive compensation programsyears and the decisions we have made for FY20 effectively balance these considerations.

Effecteffect of the Covid-19 Pandemic. The 2020 fiscal year, which began on October 1, 2019 and ended on September 30, 2020, was significantly impacted by the Covid-19 pandemic. For the first five months, the company was executing well and on-track to achieve or overachieve several of the performance measures underlying our performance-based compensation plans, and, for the second seven months, the company, due to the leadership shown by the executives, continued to execute well, but performance against several compensation performance measures was impeded, significantly in some respects, by the pandemic.

Public and private sector policies and initiatives implemented to reduce the transmission of Covid-19, such as the imposition of travel restrictions, temporary business and plant closures, social distancing, and the adoption of remote working, significantly disrupted our and our customers’ and our prospects’ operations. Accordingly, we faced, and continue to face, challenges associated with conducting in-person sales meetings and on-premise project scoping and implementation activities necessary for new license and implementation sales. In addition, the global macroeconomic uncertainty caused by the pandemic challenged, and continues to challenge, the ability of our customers to forecast business needs and prospects. These factors caused customers and prospects to defer new software purchases and deployments and to reduce the number of licenses they renewed. As a result, new software orders declined in the high single digits in FY20 compared to FY19. Churn (licenses that are not renewed) increased to 8.6% in FY20 from 7.4% in FY19. Despite these challenges, the company delivered solid performance with increases of 14% and 16% in ARR and revenue, respectively, in FY20 over FY19, increases of 582% and 57% in GAAP and non-GAAP EPS, respectively, in FY20 over FY19, and $234 million in cash flow from operations and $214 million of free cash flow in FY20.

Compensation Decisions. Given the unprecedented impact of theCOVID-19 pandemic on our businessbusiness. The rationale for the replacement award was explained most recently in our Proxy Statement filed in December 2020, as the replacement award was a component of the decisions made with respect to our CEO’s FY20 compensation and particularly,was subject to last year’s say-on-pay vote.

In response to the performance measures under our incentive planslow level of support for last year’s say-pay vote, we undertook an extensive stockholder engagement effort in the Fall of 2021. The Compensation Discussion and performance-based equity,Analysis below discusses the incentiveextent of those engagement efforts, the feedback we received from stockholders, and the actions we have taken when structuring FY22 compensation plans. We have endeavored to be responsive to stockholders. Our executive officers’ compensation for our namedFY21 did not include any special or off-cycle awards and no such awards are currently contemplated. In response to stockholder feedback disfavoring the use of special or off-cycle awards, we commit that we will not make additional special or off-cycle awards to executive officers absent compelling circumstances where the compensation objectives cannot be achieved through our annual compensation programs. Also, in direct response to stockholder feedback, we have changed the structure of our annual long-term incentive awards for FY22 to add a three-year performance period, with no annual performance periods or vesting opportunities, for the relative TSR performance-based RSUs. The Compensation Discussion and other employees was materially adversely impacted for FY20. Further, our earlier strategic decision to further invest to drive top line growth while balancing our cash flow objectives also adversely affected our executives’ outstanding performance-based compensation that was tied solely to free cash flow. Accordingly, as described furtherAnalysis below in FY20 Performance-Based Compensation Decisions,discusses these matters further.

At the Compensation Committee exercised discretion in determining attainment of certain FY20 performance-based compensation plans and adjusted future performance targets. These compensation decisions for FY20 considered the disruptive nature and effect of the pandemicsame time, based on our business, the success of our executives in managing and navigating the pandemic environment, the leadership shown by our executives in supporting our customers, employees and other stakeholders, the evolution of the company’s strategic goals, and the demand environment for high-performing executives and employees.

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We particularly want to explain the significant performance-based retention grant made to Mr. Heppelmann in September 2020. This grant supersedes a similar grant we made to Mr. Heppelmann in 2018 tied to FY21, FY22 and FY23 free cash flow performance targets. We made the 2018 grant because we regarded retaining Mr. Heppelmann as essential to the company’s ability to achieve those performance targets and deliver the expected increase in stockholder value. Our view of the necessity of retaining Mr. Heppelmann to drive stockholder value has not changed. However, the company’s business and strategy has evolved since mid-2018 and requires continued investment to develop and add compelling and competitive solutions to the product portfolio, which we expect will ultimately create greater stockholder value. This shift in strategy compromised the company’s ability to achieve the FY21, FY22 and FY23 performance targets, causing both the incentive value and the retentive value of the 2018 grant to decline. The pandemic further eroded the incentive and retentive value as it compromised the company’s ability to generate the sales and revenue required to achieve the free cash flow targets underlying the 2018 grant. Accordingly, after considering the likelihood of achieving the performance targets, we concluded that the grant had lost its incentive and retentive value. Becausediscussions with stockholders, we believe that it is in the best interests of the company and stockholders to retain Mr. Heppelmann, and to incent him to focus on the two measures we regard as being essential to drive future stockholder value – ARR and free cash flow – we cancelled the 2018 grant and, with the advice and assistancea substantial majority of our independentstockholders support our core annual compensation consultant, developed the new grant thatprograms, which are heavily weighted toward performance-based pay and which received support at an over 90% level in 2017 and 2018. Our compensation decisions in FY21 reflect these core programs and we believe achieves those ends. The new grant performance measures are tied 50% to ARR and 50% to free cash flow, with the ARR measure focusing Mr. Heppelmann on generating recurring revenue from new and existing customers and the free cash flow measure focusing Mr. Heppelmann on growing free cash flow, which our stockholders have indicated is important to them.

While we understand that the value of the new grant is significant, it is performance-based and requires the company to grow free cash flow and ARR in each of FY21, FY22 and FY23. We believehopeful that stockholders will benefit relative to the valueagain endorse those programs by voting in favor of the grant if the company achieves those performance goals. And we believe that Mr. Heppelmann’s demonstrated leadership and vision over the course of his ten-year tenure enhance the company’s ability to achieve those performance goals. Since becoming CEO in FY10, Mr. Heppelmann has transformed the company from a slow-growth company with low margins to a market-leading company with high-growth opportunities, higher and improving margins, and an almost 100% recurring revenue base. We believe his continued commitment to driving sustainable and profitable long-term growth will continue to create stockholder value. Moreover, we believe that an unplanned departure by Mr. Heppelmann would cause significant disruption to the company and its business and adversely impact stockholder value.

While the new grant is intended to retain and incent Mr. Heppelmann over the next three years, we, and the full Board, recognize the length of Mr. Heppelmann’s tenure and have developed a succession plan that can be implemented to ensure a smooth transition of leadership should the need arise. Because we may wish or need to implement a succession plan before 2023, we included provisions in Mr. Heppelmann’s newthis year’s advisory vote on executive agreement designed to enable the execution of a succession plan without creating a conflict of interest with Mr. Heppelmann and to ensure his full support for any such succession.

Finally, we regard the performance-based retention grant as outside Mr. Heppelmann’s annual compensation and do not plan to make such grants on a regular basis.

We believe the decisions we have made are in the best interests for stockholders as they compensate the executives appropriately for their leadership and performance in FY20, compensate the executives competitively in a competitive market for senior software executives enabling us to retain them, and create alignment of the executives with our strategic initiatives that we believe will generate long-term value for stockholders.compensation.

We hope this has been helpful and thank you for your investment in PTC and your continued support.

Respectfully,

The Compensation CommitteeTHE COMPENSATION COMMITTEE
Mark Benjamin, Janice Chaffin, Paul Lacy and Robert Schechter

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COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Philosophy & Practices

Our executive compensation programs are designed to attract, motivate, and retain our executives.

We Pay for Performance

We have a pay-for-performance philosophy for executive compensation and emphasize performance-based compensation tied to strategic initiatives designed to create long-term stockholder value. We believe that equity incentives that vest over multiple years provide an important motivational and retentive aspect to the executives’ overall compensation and align our executives’ interest in the long-term performance of PTC with that of our stockholders. Accordingly, a substantial portion of our executives’ compensation consists of performance-based and service-based RSUs that vest over multiple years.

Despite the challenges we faced due to the Covid-19 pandemic, ourOur results for FY20FY21 reflect the continued successful execution of strategic plan to increase the growth of our business transformationportfolio of recurring revenue contracts (Annual Run Rate or ARR) and to a subscription company with expanding margins.increase our free cash flow.

LONG-TERM PAY AND PERFORMANCE ALIGNMENT

Our performance over the past several years reflects the success and efficacy of aligning executive compensation with our strategic plan. This pay-for-performance approach has resulted in pay and performance alignment and will continue to be the centerpiece of our executive compensation programs.

5-YEAR CEO TOTAL REALIZED PAY VS RELATIVE TSR		5-YEAR NEO TOTAL REALIZED PAY VS RELATIVE TSR
Performance Rank		Performance Rank

We are Responsive to Stockholders

We have made significant changes to our executive compensation programs over recent years in response to say-on-pay votes, comments from stockholders and changes toevolving perceived best practices. Those changes included:

⬢●	Adopting separate performance measures for our annual incentive bonus and our performance-based equity;
⬢●	Introducing multiple performance periods for our long-term performance-based equity;equity, which previously had been structured with a one-year performance period for the first year, with subsequent service-based vesting over the remaining two years;
⬢●	Adopting multiple performance measures and adding a relative performance measure for our long-term performance-based equity – 50% tied to an operating measure and 50% tied to relative TSR;

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⬢●	Eliminating the “catch-up” provision for outstanding performance-based equity (other than the 2020 rTSR performance-based equity),so that equity not earned for the CEO retention award, and for FY21 performance-based equity.a performance period is forfeited;
⬢●	Effective in FY22, eliminating annual performance periods and vesting in our long-term relative TSR performance-based equity so that the relative TSR equity has a three-year performance period with performance measurement, with cliff vesting and forfeiture at the end of the three-year performance period if performance targets are not achieved;
●	Adopting a clawback policy;
●	Eliminating all single-trigger vesting and tax gross-ups in connection with a change in control; and
●	Reducing the post-change in control protection period in our executive agreements from three years to two years.

362021 Stockholder Engagement on Executive Compensation

In response to low support reflected in last year’s say-on-pay vote, we engaged with a significant number of stockholders in Fall 2021. A member of our board of directors (either our Chairman of the Board, Robert Schechter, who is also a member of the Compensation Committee, Mark Benjamin, Chair of the Compensation Committee, or Janice Chaffin, Chair of the Nominating and Corporate Governance Committees and former Chair and current member of the Compensation Committee) participated in the majority of these discussions. Other participants from the company included our Investor Relations professionals, our General Counsel, our Senior Vice President, Corporate & Securities Counsel, and a senior member of our Compensation team.

Fall 2021 Stockholder Engagement
Investors Contacted	Discussions Held
37	15
Investors	Investors
64.8%	28.8%
Outstanding Shares	Outstanding Shares

What We Heard and Our Responses

What We Heard		Our Response
Stockholders who voted against say on pay in 2021 indicated that they disfavored our use of a performance-based incentive and retention equity award to our CEO in 2020 outside our annual compensation program. However, stockholders generally were willing to look past that award and focus on our compensation program for FY21 and beyond.		We understand that stockholders disfavor special or off-cycle awards. Our executive officers’ FY21 compensation did not include any such awards, and no such future awards are currently contemplated. In response to stockholder feedback, we commit that we will not make special or off-cycle awards to executive officers except in extraordinary circumstances where the compensation objectives cannot be addressed through our annual compensation program.

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⬢

Eliminating Some, but not all, single-triggerstockholders indicated a preference for 3-year cliff vesting for performance-based equity, rather than our existing structure of three-year performance-based awards with interim annual performance measurement and tax gross-ups in connection withvesting opportunities. Given that we had received similar feedback previously, we solicited feedback on a proposed change in control; and

⬢

Reducingthat would move the post-change in control protection period from three yearsrelative TSR portion (50%) of our long-term equity to two years.

As a result, stockholders approved our say-on-pay proposals in 2017 and 2018 at the 90%+ level. However, in 2019 and 2020, stockholder support for our say-on-pay proposals was significantly lower. Accordingly, given these disappointing results, we engaged with stockholders in connection with each of the 2019 and 2020 votes and again the Fall of 2020 to understand our stockholders’ views on our executive pay program and, particularly, in the Fall of 2020, the decisions we made in September 2020 with respect to outstanding performance-based compensation.

2020 Stockholder Engagement on Executive Compensation

We engaged with a significant number of stockholders in both the Spring and Fall of 2020. Our Chairman of the Board, Robert Schechter, who is also a member of the Compensation Committee, participated in some of these discussions. Other participants from the company included our Investor Relations professionals and our General Counsel and/or our Senior Vice President, Corporate & Securities Counsel.

In-Season Engagement
Investors Contacted	Discussions Held
25 Investors	13 Investors
66% Outstanding Shares	48% Outstanding Shares

What We Heard and Our Responses

⬢	Stockholders were pleased with the addition of the rTSRa single three-year performance measure, with no interim performance measure or vesting opportunities. Stockholders welcomed and endorsed this proposed change.			As part of our effort to balance this mixed investor feedback and our belief that the annual measurement period and vesting is an important feature, the two halves of our executives’ FY22 long-term performance-based equity will have different measurement periods. As discussed with stockholders, for FY20.
	⬢	We included an rTSR performance measure in the FY21 performance-based equity.

⬢	Stockholders continued to disfavor the “catch-up” featureFY22 half of theour executives’ FY22 long-term performance-based equity in which amounts not earned foris tied to a relative TSR performance measure with one three-year performance measure, eliminating annual performance measures and vesting. For the first or second performance period could be earned forother half tied to free cash flow, we retained the third performance period.
	⬢	When we modified the outstanding performance-based equity awards in September 2020, we removed the “catch-up” feature of those awardsannual measurement and executives forfeitedvesting, with equity not earned for FY20 and prior periods under the applicable award.
	⬢	We did not include the “catch-up” featurea period forfeited in the long-term performance-based retention award made toaccordance with our CEO in September 2020.
	⬢	We did not include the “catch-up” feature in the FY21 long-term performance-based equity granted to executives.

⬢	Stockholders continued to disfavor the interim annual earning opportunities in the long-term performance-based equity.
	⬢	We considered whether to remove the annual earning opportunities but decided to retain those opportunities given the incentive aspect of those opportunities that we believe increase the likelihood that the year three targets will be achieved, benefiting all stockholders. With the removal of the “catch-up” feature, amounts not earned for year one or two are forfeited, so the executives do suffer for non-achievement in those years, even if the year three targets are achieved.

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Fall 2020 Engagement
Investors Contacted	Discussions Held
12 Investors	5 Investors
41% Outstanding Shares	12.5% Outstanding Shares

What We Heard

⬢	Stockholders generally understood and were comfortable with the decisions we made with respect to performance-based compensation for FY20 and future periods under outstanding performance-based equity, although some reserved judgment until they had an opportunity to review this proxy statement.
⬢	Stockholders were pleased with the elimination of the “catch-up” feature in 2020 in response to stockholder feedback. In addition, consistent with our commitment not to issue any special or off-cycle awards, we did not implement any “bridging” awards or other compensation to mitigate the impact of the change to a single, three-year measurement and vesting for the fact that it was not included in the long-term performance-based retention award made to our CEO in September 2020.relative TSR awards.
⬢	Some stockholders Stockholders expressed concern about the new long-term performance-based retention award made toa wide variety of different perspectives on our CEO in September 2020, primarily about the fact that it was incremental to our annualexecutive compensation program anddesign and/or disclosure, with no significant overlap or consensus among the stockholders’ perspectives about how acquisitions in the period were handled.
⬢	Some stockholders expressed concern about the three-year term of the executive agreement we entered into with our CEO in September 2020 as partother elements of our retention program forexecutive compensation program.		These varied perspectives have been shared with the Compensation Committee and will be considered by the Committee as it continues to design and evolve our CEO and the treatment of outstanding equity under that agreement in connection with a termination without cause or a resignation at the request of the Board in connection with a Board-sponsored CEO succession plan.executive compensation program.

How We Think about the CEOChanges to FY22 Performance-Based Retention Award and Executive AgreementCompensation Structure

We believeAs noted above, the FY22 relative TSR performance-based retention award provides a compelling incentiveRSUs will be subject to Mr. Heppelmann to remainone three-year performance period with PTC and continue to drive achievement of our strategic initiatives beyond that which is provided by ourno annual pay programs. We believe this type of additional incentive award is an effective way to drive value for stockholders and have successfully used such an incentive award in the past to drive significant stockholder value. We made such an award to Mr. Heppelmann upon his becoming CEO in 2010 to drive dramatic improvement in earnings over a five-year period and such improvement increased stockholder value significantly. We believe that if the ARR and cash flow performance measures under the award are achieved, stockholders will benefit significantly as well.

Under the award, acquisitions made in a performance-year are not counted when determining achievement ofmeasurement periods or vesting. Accordingly, the performance measuresperiod for these RSUs will be from October 1, 2021 – September 30, 2024, with the period, while they are counted in later performance periods because any growth in later periods is considered organic. We believe this approach,September 30, 2021 weighted average stock price used as the elimination of the catch-up provision, and the oversight provided by our Board of Directors effectively negates the risk of pursuing an acquisition solelybase value for the purpose of achievingdetermining whether absolute TSR was positive (that is, whether the weighted average stock price determined for September 30, 2024 is more than the weighted average stock price determined for September 30, 2021). The weighted average stock price is determined using a performance measure in a30-day weighted average for the applicable period while enabling us to continue to pursue our strategy to grow our technology portfolio through strategic acquisitions.

We believe that the three-year termending on September 30. In recognition of the Executive Agreement supportsfact that PTC was added to the intent ofS&P 500 in August 2021, the retention award by providing assurance to Mr. Heppelmann that heFY22 relative TSR RSUs will haveuse the opportunity to earnS&P 500 Software & Services Index, excluding five services companies included in the retention award, but enablesIndex, plus compensation peer group companies not included in the company to execute a succession plan or otherwise make a change in leadership.Index as the comparison group.

We intend to continue to engage with stockholders about our executive compensation programs to ensure we understand and consider their views.

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COMPENSATION DISCUSSION AND ANALYSIS

20202021 Compensation Design

Our executives’ 20202021 target compensation consisted of the compensation elements shown below. We believe these components provide an appropriate mix of fixed compensation and at-risk compensation that promotes short-term and long-term performance and rewards our executives appropriately for their performance. With this mix, we provide a competitive base salary and service-based equity that vests over multiple years while providing our executives the opportunity to earn additional compensation through short-term and long-term performance-based incentives designed to drive company performance and create long-term stockholder value. Because a significant portion of our executives’ target compensation is performance-based, actual compensation earned can differ significantly from target compensation.

FY202021 Target Compensation

Target Compensation			Compensation Elements
CEO		NEO
				Base Salary ProvideProvides a base level of competitive cash compensation.
				Annual Corporate Incentive Plan FocusFocuses executives on achieving specific performance goals tied to PTC’s annual business plan.

Performance Measures
		Net New ACV				ARR Growth          Non-GAAP Operating Expense

								Long-Term Incentives ⬢FocusFocuses executives on achieving performance goals to drive PTC’s long-term success. ⬢Discourages short-term risk taking and aligns long-term management goals with long-term interests of stockholders.
					PSUsPerformance - Based RSUs (50%)				RSUs (50%)
				ARRAdjusted Free Cash Flow over FY19Annual growth for each of FY21, FY22, FY23	Relative TSR from FY20 for each of FY20, FY21, FY22, (25%)FY23		rTSR for each of FY20, FY21, FY22 (25%)		Vest in three equal installments in November 2020, 2021, 2022 and 20222023
						RSUs not earned for a period are forfeited. Ultimate realized value depends on stock price performance.

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COMPENSATION DISCUSSION AND ANALYSIS

FY202021 Performance-Based Compensation

The performance measures we develop and use for our performance-based compensation are designed to drive and measure our performance against our short-term and long-term business plans and objectives and create value for our stockholders.

Alignment of Corporate Strategy and 2021 Performance-Based Compensation

Strategic Goal	Compensation Plan and Performance Measure
Increase Recurring Revenue	Annual Corporate Incentive Plan
	New Annual Contract Value Long-Term Performance-Based Equity ARR Growth in ARR
Expand Operating Margins	Annual Corporate Incentive Plan
	Non-GAAP Operating Expense
Increase Free Cash Flow	Long-Term Performance-Based Equity
	Adjusted Free Cash Flow
Increase Shareholder Value	Long-Term Performance-Based Equity
	Relative TSR

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COMPENSATION DISCUSSION AND ANALYSIS

Overview of Performance-Based Compensation DecisionsDesign and Percentage Earned for FY21

Performance-based compensation decisions for FY20 included decisions related to compensation established at the beginning of our FY20executives for FY21 includes an annual corporate incentive plan and performance-based RSUs granted for FY19, FY20 and relatedFY21 that were eligible to outstanding long-term performance-based equity developedvest in FY21 if and issuedto the extent the performance measures for FY18 and FY19 with FY20 and/or FY21 performance periods.

PERFORMANCE-BASED COMPENSATION FOR FY20were achieved.

Component		FY20FY21 Performance Measure(1)		Threshold		Target		% Determined Earned
Annual Corporate Incentive Plan	ARR Growth		111.2%
	(amounts in millions)	Non-GAAP Operating Expense
AnnualFY21 Long-Term Incentive PlanPerformance-Based RSUs		Net New ACVAdjusted Free Cash Flow Growth		200%
	Relative TSR over 2020		65%
	Non-GAAP Operating Expense					128.57%
FY20 Long-Term PSUs (1st Tranche)Performance-Based RSUs		ARR Growth		145.28%
	Relative TSR over 2019		62.5%
	Relative TSR		25th Percentile		50th Percentile		120%159.26%
FY19 Long-Term PSUs (2nd Tranche)Performance-Based RSUs		Adjusted Free Cash Flow Growth				50%200%
FY18 Long-TermCEO Retention PSUs (3rd Tranche)Performance-Based RSUs		New ACVARR Growth		107.26%
	Adjusted Free Cash Flow Growth		58%

(1)	Our New ACVARR, non-GAAP operating expense, and ARR performance measures are described on Appendix A; our non-GAAP adjusted free cash flow and operating expense performance measures are described and, as applicable, reconciled to GAAP results on Appendix A.

Annual Corporate Incentive Plan

The annual Corporate Incentive Plan is intended to focus our executives and other employees on achieving performance goals tied to our annual business plan. The 2021 Corporate Incentive Plan had two performance measures, which were designed to align our executives and other employees with our strategic goals of driving top line growth and cash flow by increasing recurring revenue and expanding operating margins.

We selected ARR as a performance measure as it represents the value of our portfolio of recurring revenue contracts at a given point in time – in this case, the end of each of FY21 and FY20. We use ARR rather than revenue or recurring revenue given the revenue recognition required for on-premise subscription companies – which requires that a substantial portion of the subscription value be recognized up front when the subscription contract is booked, with the remainder being recognized ratably over the term of the subscription contract. We use ARR as a performance measure to ultimately drive recurring revenue as it provides a better line of sight to the recurring revenue potential of our portfolio.

We selected non-GAAP operating expense as the other performance measure as it provides a readily understandable line of sight for employees to measure and control spending, which is expected to ultimately contribute to cash flow growth – a measure on which our investors are focused.

The following table summarizes the performance measures for the Corporate Incentive Plan for FY21 and achievement under the plan.

FY21 Annual Corporate Incentive Plan Design and Achievement

Performance Measure		Weight		Threshold (% Earned)1		Target (100% Earned)		Upside (% Earned)1		Achievement		Earned
Organic ARR Growth over FY202		2/3		8%		10%		16%		12%		111.2%
Non-GAAP Operating Expense3		1/3		$849		$829		$809		$816

1	50% and 150% of the ARR Growth portion could be earned for threshold and upside achievement, respectively. 90% and 105% of the Non-GAAP Operating Expense portion could be earned for threshold and upside achievement, respectively. Accordingly, the aggregate upside earning potential was 135%.
2	ARR grew 14% (11% in constant currency) for FY20 over FY19.
3	Dollar amounts in millions. Non-GAAP operating expense for FY20 was $1,035 million. The threshold, target, and upside targets represent significant decreases of approximately 18%, 20%, and 22%, respectively, in non-GAAP operating expense compared to FY20.

PTC Inc. - 2022 Proxy Statement     4037

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COMPENSATION DISCUSSION AND ANALYSIS

Long-Term Performance-Based Equity

Annual performance-based compensation for our executives includes long-term performance-based RSUs that are eligible to vest in three substantially equal annual tranches if and to the extent the performance measures for the applicable year are achieved. Accordingly, performance-based RSUs granted for FY19, FY20 and FY21 were outstanding and eligible to be earned for FY21.

The annual performance measures for each grant are set on the grant date – that is, the grants are not structured such that the Compensation Committee sets targets annually while the grant is outstanding. So, for example, for FY21, the performance measures for each of FY21, FY22 and FY23 were set in November 2020, near the beginning of FY21. For these grants using operating performance measures (rather than relative TSR), the annual targets require absolute performance above the prior year’s operating performance.

FY21 Performance-Based RSUs

The FY21 performance-based RSUs used two performance measures – Adjusted Free Cash Flow (AFCF) and relative TSR – to align our executives with our strategic goals of increasing cash flow and total shareholder return. One-half of the target performance-based RSUs was tied to the achievement of the AFCF measure and one-half was tied to the achievement of the relative TSR measure. Performance-based RSUs not earned for a period are forfeited.

We used a free cash flow measure and a relative TSR measure as free cash flow is a measure that is important to our stockholders, upon which our company is valued, and that, ultimately, is expected to increase long-term stockholder returns.

The comparison group of companies for the FY21 relative TSR performance-based RSUs is the S&P 400 Software and Services Index plus any compensation peer group companies not included in that index.

FY21 PERFORMANCE-BASED RSU DESIGN AND ACHIEVEMENT FOR FY21

Performance Measure		Weight		Threshold (25% Earned)		Target  (100% Earned)		Upside   (200% Earned)		Achievement		Earned
AFCF Growth over FY20		50%		10%		25%		40%		45%		200%

Performance Measure

Weight

Threshold (50% Earned)

Target (100% Earned)

Interim Upside (150% Earned)

Upside (200% Earned)

Achievement

Earned

Relative TSR vs. FY201

50%

25th Percentile

50th Percentile

75th Percentile

90th Percentile

64th Percentile

128.57%

1

For each performance period, if the weighted average PTC stock price as of September 30, 2020 is higher than the weighted average PTC stock price at the end of the period (that is, absolute TSR is negative), the maximum number of RSUs that can be earned for the period is 100% of the Target RSUs for the period even if relative TSR is achieved above the 50th percentile. The stock price value is determined using a 30-day weighted average for the applicable period ending on September 30.

CEO Performance-Based Retention RSUs

The CEO performance-based retention RSUs issued in FY20 used two performance measures – ARR and AFCF – to align our CEO with our strategic goals of increasing recurring revenue and free cash flow. One-half of the target performance-based RSUs was tied to the achievement of the ARR measure and one half was tied to the AFCF measures. Performance-based RSUs not earned for a period are forfeited. FY21 was the first performance measurement period under this award.

CEO PERFORMANCE-BASED RETENTION RSU ACHIEVEMENT FOR FY21

Performance Measure		Weight		Threshold (50% Earned)		Target (100% Earned)		Upside (110% Earned)		Achievement		Earned
ARR Growth over FY20		50%		8%		10%		14%		12%		107.26%
AFCF Growth over FY20		50%		10%		25%		40%		45%

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COMPENSATION DISCUSSION AND ANALYSIS

Annual Incentive Plan

The annual Corporate Incentive Plan is intended to focus our employees (including our executive officers) on achieving performance goals tied to our annual business plan. The FY20 Corporate Incentive Plan had two performance measures, which were designed to align our employees with our strategic goals of increasing recurring revenuePrior Period Performance-Based Equity Design and expanding operating margins.

Under the plan, Net New ACV was weighted 2/3 and Non-GAAP Operating Expense was weighted 1/3. For each of the performance measures, 50% of the portion of the target bonus attributable to such performance measure would be earned upon achievement of the threshold, 100% upon achievement of the target, and up to 150%Achievement for performance above the target. Considering the weighting between the performance measures, the total upside opportunity was 135% of the employee’s target bonus.

As described above in the LETTER FROM THE COMPENSATION COMMITTEE, the COVID-19 pandemic had a significant impact on our ability to generate Net New ACV, with no time for the company to rebound given the macroeconomic headwinds that persisted through the end of the fiscal year. For reference, new ACV declined in the high single digits in FY20 compared to FY19. As a result, the Compensation Committee determined to measure performance of this metric ratably using the five months pre-pandemic and the seven months post-pandemic.

The Compensation Committee did not make any adjustment to the measurement of Non-GAAP Operating Expense as the COVID-19 pandemic did not adversely impact the company’s ability to manage operating expenses and that measure was achieved above the upside target.

For the period from October 1, 2019 through February 29, 2020, the weighted achievement forecast under the Corporate Incentive Plan was 108.4% of target, and for the remainder of the fiscal year, the weighted achievement forecast was 35.0% of target, which resulted in a weighted payout of 65.0% for all employees (including our executive officers) participating in the plan.

The following table summarizes the performance measures for the Corporate Incentive Plan for FY20 and achievement under the plan.

FY20 CORPORATE INCENTIVE PLAN

				Threshold (50% Earned)			Target (100% Earned)			Upside (135% Earned)			Pre-Covid Forecast Achievement			Actual Achievement			Determined Earned
Performance Measure		Weight											(in millions)
Net New ACV		2/3		$	150		$	170		$	190			$175			$120		65%
Non-GAAP Operating Expense		1/3		$	790		$	780		$	770			$780			$741
		Weighted Average Forecast Achievement												108.4%			35%

Long-Term Performance-Based Equity

Annual performance-based compensation for our executives includes a long-term performance-based RSU grant that is eligible to vest in three substantially equal tranches if and to the extent the performance measures for the applicable year are achieved. Accordingly, PSUs granted for FY18, FY19 and FY20 were outstanding and eligible to be earned based on FY20 achievement under the applicable performance measures, which differed among the years.

Under all the grants, 50% of the PSUs eligible to be earned for a period would vest on achievement of the threshold and the full 100% eligible for a period would vest on achievement of the target. Additional PSUs could be earned up to 200% of the target PSUs eligible to be earned for a period for performance above the target (so, if 3,000 PSUs were granted, 1,000 could be earned for each year of the three-year performance cycle, and up to an additional 1,000 PSUs could be earned for each period). As granted, PSUs not earned for either of the first two years could be earned in the last year of the performance cycle if the intended long-term increase in the relevant performance measures is achieved, but in no event could the aggregate number of PSUs earned for all three periods exceed the total number of PSUs eligible to be earned multiplied by the achievement level in the final year (referred to as the “catch-up provision”).

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COMPENSATION DISCUSSION AND ANALYSISFY21

In its deliberations regarding these awards over the course of four meetings in September 2020, the Compensation Committee, with the assistance of its independent compensation consultant, considered each award on a holistic basis, including the impact of the COVID-19 pandemic on the tranche of each award eligible to vest based on FY20 achievement, the evolution of the Company’s strategic goals and the impact of those changes on attainment of prior period awards, the overall achievement by the executives of the applicable performance measures through the three-year performance cycle to date, and the incentive and retention objectives of the awards with respect to any remaining performance periods.

FY20 PSUsPerformance-Based RSUs

The FY20 PSUs granted in November 2019performance-based RSUs used two performance measures (ARR– ARR and relative TSR), which were designedTSR – to align our executives with our strategic goals of increasing recurring revenue and total shareholder return. One-half of the target PSUsperformance-based RSUs was tied to the achievement of eachthe ARR measure and one half was tied to the relative TSR measure. ARR RSUs not earned for a period are forfeited; relative TSR RSUs not earned for a period may be earned for the third period (FY22). This “catch-up” feature is not included in the FY21 or FY22 relative TSR performance-based RSUs.

As the FY20 relative TSR performance-based RSUs are in the second year of the ARR andthree-year performance period, the measurement period for relative TSR measures.

DETERMINATION OF FY20 ACHIEVEMENT
ARR PSUs. As described above in LETTER FROM THE COMPENSATION COMMITTEE, the COVID-19 pandemic had a significant impact on ARR, particularly with respect to the ability to generate increases in ARR from new ACV, with no time for the company to rebound given the macroeconomic headwinds that persisted through the end of the fiscal year. As a result, the Compensation Committee determined to measure performance of this metric ratably based on the same methodology used for the annual Corporate Incentive Plan.

For the periodwas two years – from October 1, 2019 through February 29, 2020, forecast achievementto September 30, 2021. The comparison group of companies for the FY20 relative TSR performance-based RSUs is the S&P 400 Software and Services Index plus any compensation peer group companies not included in that index.

FY20 PERFORMANCE-BASED RSU ACHIEVEMENT FOR FY21

Performance Measure		Weight		Threshold (50% Earned)		Target (100% Earned)		Upside (200% Earned)		Achievement		Earned
ARR Growth over FY20		50%		8%		10%		14%		12%		145.28%

Performance Measure	Weight	Threshold (50% Earned)	Target (100% Earned)	Interim Upside (150% Earned)	Upside (200% Earned)	Achievement	Earned
Relative TSR vs. FY191	50%	25th Percentile	50th Percentile	75th Percentile	90th Percentile	78th Percentile	159.26%

1

If the PTC weighted average stock price as of September 30, 2019 was higher than the PTC weighted average stock price as of September 30, 2021 (that is, absolute TSR was negative), the maximum number of RSUs that could be earned for FY21 was 100% of the Target RSUs for FY21 even if relative TSR was achieved above the 50th percentile. The weighted average stock price is determined using a 30-day weighted average for the applicable period ending on September 30.

FY20 Performance-Based RSU Achievement for FY20

For FY20, the first performance period under these RSUs, the ARR performance measure under the FY20 PSUs was 150% of target,earned at 62.5% and for the remainder of the fiscal year, forecast achievement was 0% of target. As a result, 62.5% of the PSUs tied to achievement of ARR in the first year of the performance cycle were earned on a weighted average basis.

Relative TSR PSUs. The Compensation Committee did not make any adjustment to the measurement of relative TSR for FY20, as the COVID-19 pandemic did not impact our total shareholder return on a relative basis. As a result, 120% of the PSUs tied to achievement of relative TSR in the first year of the performance cycle were earned.

Accordingly, the total achievement for the FY20 PSUs was 91.25% when considering achievement under both measures.

FY20 LONG-TERM PERFORMANCE-BASED RSUs

Performance Measure

Threshold (50% Earned)

Target (100% Earned)

Upside (135% Earned)

Pre-Covid Forecast Achievement

Actual Achievement

Determined Earned

Total Earned

Weight

($ in millions)

91.25%

ARR

50%

$1,245

$1,275

$1,305

$1,290

$1,236

62.5%

Forecast Achievement ARR

150%

0%

Relative TSR

50%

25th

50th

90th

N/A

60th

120%

Percentile

Percentile

Percentile

Percentile

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COMPENSATION DISCUSSION AND ANALYSIS

REALIGNMENT OF FY21 AND FY22 ARR PERFORMANCE MEASURES
The Compensation Committee also recognized that the ARR performance measures used for the FY20 PSUs no longer reflected our business plan given the impact of the COVID-19 pandemic on our business and the resulting change in the base for measuring ARR growth. As a result, the ARR metrics that had been set in November 2019 for FY21 and FY22 and were based on a compound annual growth rate no longer aligned our executives with, nor incentivized execution of, the expected ARR growth coming out of FY20. The Compensation Committee therefore determined to adjust downward the threshold and target ARR metrics for FY21 and FY22 and to change from a compound annual growth rate to an annual growth rate given the uncertainty in forecasting the macroeconomic environment and performance opportunities. The Committee believes these adjustments establish appropriate growth incentives and executive alignment coming out of FY20. The Compensation Committee believes that the adjusted targets, requiring growth from year to year, remain challenging but achievable through strong operating performance.

⬢

In approving these adjustments, the Compensation Committee determined to remove the catch-up provision for these awards given the adjustment to the ARR metrics and in response to feedback previously received from shareholders, and also considered that the upside potential for the FY20 PSUs for each of FY21 and FY22 was capped at 200% of the target PSUs for the period, which would avoid the potential risk of outsized payouts in FY21 and FY22.

⬢	Accordingly, the executives forfeited the 37.5% of the unearned ARR PSUs for FY20 and will forfeit unearned PSUs for each of FY21 and FY22.

The Compensation Committee did not make any changes to the relative TSR performance measures for FY21 and FY22.measure was earned at 120%.

FY19 PSUsPerformance-Based RSUs

The FY19 PSUs granted in November 2018performance-based RSUs used an Adjusted Free Cash Flowone performance measure which was designed– AFCF – to align our executives with our long-term strategic goal of increasing free cash flow. The Adjusted Free Cash Flow targets setPerformance-based RSUs not earned for FY19, FY20 and FY21 increased each year based on a compound annual growth rate.

⬢	Based on the Adjusted Free Cash Flow performance measure for FY20, no portion of the PSUs was forecast to be earned for FY20.

DETERMINATION OF FY20 ACHIEVEMENT
The Committee determined that, by the end of FY20, thethis final performance targets had fallen out of alignment with the company’s business plan. After considering this misalignment, the impact of the COVID-19 pandemic, investments in ARR growth and in the company’s SaaS strategy, and changes in certain business policies on the company’s free cash flow, and the retention and motivational aspects of the awards, the Compensation Committee determined that it was appropriate to deem the FY19 PSUs eligible to vest for FY20 at the threshold attainment level of 50%.period would have been forfeited.

FY19 LONG-TERM PERFORMANCE-BASED RSUsRSU ACHIEVEMENT FOR FY21

				Threshold (50% Earned)			Target (100% Earned)			Upside (200% Earned)			Actual			Total Vested
Performance Measure		Weight						($ in millions)								50%		Threshold (25% Earned)		Target (100% Earned)		Upside (200% Earned)		Achievement		Earned
Adjusted Free Cash Flow		100%		$	365		$	430		$	475		$	265
AFCF Growth over FY20																		10%		25%		40%		45%		200%

Overall Achievement for FY19 Performance-Based RSUs

Earned for FY19		Earned for FY20		Earned for FY21		Aggregate Earned for FY19 – FY21
59.33%		50%		200%		103.11%

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COMPENSATION DISCUSSION AND ANALYSIS

REALIGNMENT OF FY21 PERFORMANCE MEASURES
The Compensation Committee further recognized that, because the Adjusted Free Cash Flow performance measures for FY21, the final year of the award, did not reflect our current business plan, the FY19 PSUs no longer aligned our executive leadership with, nor incentivized execution of, the strategic business decisions made by our Board of Directors and management coming out of FY20. The Compensation Committee therefore determined to adjust downward the threshold and target Adjusted Free Cash Flow metrics for FY21 to better align those measures with the company’s plan and reduced the amount that could be earned upon achievement of threshold from 50% to 25% given the lower threshold. The Compensation Committee believes that the adjusted target, reflecting growth over FY20 Adjusted Free Cash Flow, remains challenging but achievable through strong operating performance.

⬢

In approving this adjustment, the Compensation Committee determined to remove the catch-up provision for the FY19 PSUs given the adjustment to performance measure and in response to feedback previously received from shareholders and also considered that the upside potential for the FY19 PSUs for FY21 was capped at 200% of the target RSUs remaining under the award for FY21, which would avoid the potential risk of an out-sized payout in FY21.

⬢	Accordingly, the executives forfeited the 40.7% of the PSUs not earned for the FY19 period (achievement for FY19 was 59.3%) and the 50% of the PSUs not earned for FY20.

FY18 PSUs

The PSUs granted in November 2017 used a new software subscription ACV performance measure, which was designed to align our executives with our strategic goal of increasing subscription revenue and recurring revenue.

DETERMINATION OF FY20 ACHIEVEMENT
With respect to the FY18 PSUs, the Compensation Committee determined that it was appropriate to vest the final tranche of the FY18 PSUs at 58% based on forecast achievement of the New ACV performance metric as of the end of the five-month period in FY20 preceding the COVID-19-pandemic given the timing and disproportionate impact of the pandemic relative to the end of the performance cycle for this award, with the COVID-19 pandemic significantly impacting the last seven months of this three-year award.

⬢	In making this determination, the Compensation Committee considered that the executives will have earned 71% of the total number of target shares subject to these awards over the three-year performance cycle.

FY18 LONG-TERM PERFORMANCE-BASED RSUs

Performance Measure		Weight		Threshold (50% Earned)			Target (100% Earned)			Upside (135% Earned)			Pre-Covid Forecast Achievement			Actual Achievement			Determined Earned
		(in millions)
New ACV		100%			$220			$250			$263			$224			$200		58%
		Forecast Achievement												58%			0%

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COMPENSATION DISCUSSION AND ANALYSIS

20202021 CEO Compensation Decisions

JAMES HEPPELMANN President and Chief Executive Officer
	Mr. Heppelmann has been our President and CEO since 2010, during which time he has transformed the company into a dynamic force supporting the digital transformations of industrial enterprises. When establishing his compensation for FY20,2021, we evaluated his compensation against our compensation peer group as to individual elements and as to total target compensation and his performance. Given his compensation relative to his peers, and changes made to his compensation in 2020, we made no changes to his annual compensation for 2021.	FY21 TARGET TOTAL COMPENSATION

2021 NEO Compensation Decisions

KRISTIAN TALVITIE Executive Vice President, Chief Financial Officer
	Mr. Talvitie has been our Chief Financial Officer since May 2019. When establishing his compensation for 2021, we evaluated his compensation against our compensation peer group as to individual elements and as to total target compensation and his performance to determine whether to make any additional changes to his target compensation for FY20.2021. Given his performance,the fact that we increased his compensation relative to his peers, and the increasecompetitive levels in May 2020, we made no changes to his compensation in FY19, we decided no change in his annual compensation was warranted. At the end of FY20, the Compensation Committee, with the assistance of its independent compensation consultant, reviewed a long-term performance-based equity award made to Mr. Heppelmann in 2018 and addressed that award as described below.for 2021.	FY20FY21 TARGET ANNUAL COMPENSATION

CEO Long-Term Performance-Based Retention Award

The 2018 long-term performance-based RSU award was tied to achievement of the Adjusted Free Cash Flow targets that we publicly announced in June 2018. The Compensation Committee selected Adjusted Free Cash Flow as the performance measure under this grant to align to our long-range plan and given the importance of this performance measure to our shareholders and the expected increase in the valuation of the company that achievement of those measures would drive. The RSUs would become eligible to vest in three equal tranches for FY21, FY22 and FY23 if and to the extent the performance measure for the period was met. RSUs not earned for FY21 or FY22 could be earned for FY23 (the “catch-up” feature).

As part of its consideration of modifications to the outstanding performance-based equity awards described above to better align our executives with, and incentivize the execution of, our strategic business plan, the Compensation Committee, with the assistance of its independent compensation consultant, also reviewed the terms of this award. In doing so, the Compensation Committee recognized that this award was not aligned with the company’s focus on recurring revenue, nor did it reflect the company’s current plan with respect to free cash flow. In addition, the award had lost its retentive effect. As a result, the Compensation Committee developed a new retention and performance-based compensation program for Mr. Heppelmann, which included entering into a new, three-year executive agreement with Mr. Heppelmann and canceling the 2018 award and issuing a new performance-based award aligned with the Company’s current business strategy. The new performance-based award consists of 400,040 RSUs (the same number as had been issued for the 2018 award) with a grant date value of $32 million. One-third of the RSUs granted are eligible to be earned for each of the FY21, FY22 and FY23 performance periods. RSUs not earned for a period are forfeited.

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COMPENSATION DISCUSSION AND ANALYSIS

The new performance-based award:

⬢	Adds an ARR performance measure (weighted at 50%) for each of FY21, FY22 and FY23, which supports the company’s emphasis on increasing recurring revenue due to the shift to a subscription business model;
⬢	Aligns the existing Adjusted Free Cash Flow measures (weighted at 50%) for FY21, FY22 and FY23 to the company’s current plan, which takes into account investments in ARR growth and our SaaS strategy, changes in certain business policies, the impact of the COVID-19 pandemic on our recurring revenue, and the negative effect of those items on our free cash flow;
⬢	Contains an upside feature, capped at 10%, aimed to incent performance beyond targeted performance; and
⬢	Does not contain the catch-up feature that had been included in the 2018 award as some shareholders had expressed concern with that feature.

The performance measures require a percentage increase in ARR and adjusted free cash flow over the amount achieved in the preceding year. The Compensation Committee believes that the new targets are challenging but achievable through strong operating performance.

We believe that this new performance award provides a compelling retention incentive for Mr. Heppelmann to remain with the company and aligns with the interests of stockholders in retaining and incentivizing Mr. Heppelmann to drive achievement of our long-range plan and outstanding results for our shareholders.

CEO Executive Agreement

The new Executive Agreement with Mr. Heppelmann has a three-year term that expires on September 30, 2023 and provides certain compensation and employment protections to Mr. Heppelmann. The Executive Agreement replaces the similar one-year agreement that the Company had with Mr. Heppelmann. To further motivate and retain Mr. Heppelmann, in addition to the compensation and protections that were included in the prior agreement, the new Executive Agreement provides that, upon termination of Mr. Heppelmann’s employment (i) by the Company without cause, (ii) by Mr. Heppelmann due to the failure of the Company to maintain him in the position of Chief Executive Officer of the Company, or (iii) as a result of his resignation upon the request of the Board in connection with a Board-approved succession plan resulting in the appointment of a new Chief Executive Officer, all service-based equity held by him will vest and the performance measures applicable to any performance-based equity held by him will be deemed to have been met at the target level and vest. To receive the payments and benefits under the Executive Agreement, Mr. Heppelmann must execute a release of claims in favor of the Company and continue to comply with the terms of his Non-Disclosure, Non-Competition and Invention Agreement with the Company. The Executive Agreement is discussed in greater detail below under Severance and Change in Control Arrangements and Executive Compensation – Potential Payments upon Termination or Change in Control.

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COMPENSATION DISCUSSION AND ANALYSIS

2020 NEO Compensation Decisions

KRISTIAN TALVITIE  Executive Vice President, Chief Financial Officer

Mr. Talvitie joined PTC in May 2019. Accordingly, when setting his compensation for FY20, we maintained his salary and target bonus at the levels set then, but increased his target annual equity by $500,000 for FY20 given his performance and his compensation relative to his peers. We reviewed his target compensation again in May 2020 after he had a year in the role. Given his performance, his compensation relative to his peers, and the retention risk associated with demand for experienced subscription-software CFOs, we increased his base salary to $500,000 and his target annual incentive bonus to $500,000. We also increased his target equity to $3,250,000.

FY20 TARGET ANNUALTOTAL COMPENSATION

			TROY RICHARDSON President, Digital Thread Business
MICHAEL DITULLIO  Executive Vice President, Sales

Mr. DiTullio has servedRichardson joined PTC in November 2020 as our Executive ViceChief Operating Officer. He was promoted to President, SalesDigital Thread Business in November 2021. His 2021 compensation was established in connection with his employment offer and Corporate Marketing since November 2015. Hisincludes our standard compensation established for FY20 reflects his tenure and performance in the role and iselements that are competitive with peerthe market for his position and other compensation designed to compensate him for the role.lost compensation opportunities at his prior employer. During the year, given the effect of the Covid-19 pandemic on our businessThose additional lost compensation elements, which are not reflected in his 2021 Target Compensation, were a $500,000 sign-on bonus, which amount was recoverable if he terminated his employment before his first anniversary, and his success in pivoting the sales team to remote selling and continuing to successfully pursue sales opportunities, and the demand for successful sales leaders, we made a retentionservice-based RSU grant valued at $1$2.6 million, to Mr. DiTulliowhich vests in May 2020, which RSUs vest in three-substantiallythree equal annual installments over three years if he remains with us.years.

FY20FY21 TARGET ANNUALTOTAL COMPENSATION

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			MICHAEL DITULLIO President, Velocity Business
KATHLEEN MITFORD  Mr. DiTullio has served in many senior Sales leadership roles since 2015. In February 2020, he was named the Executive Vice President Chief Strategy Officer

Ms. Mitford was promoted to Executive Vice President, Chief Strategy Officer in January 2020. Previously, she served as Executive Vice President, Products and her compensation for FY20 was established for that role.of our SaaS Businesses. Given herhis performance in thatthe role in FY19 and herour desire to maintain compensation relative to her peers,parity with the market, we increased herhis salary by 6% and his target annual incentive bonus from $300,000 to $350,000by 21% for FY20. Upon her promotion to Chief Strategy Officer, we reevaluated her compensation and decided an increase was warranted given the increase in responsibility. Accordingly, we increased her salary to $415,000 and her annual equity compensation by $160,000. 2021.

FY20FY21 TARGET ANNUAL TOTAL COMPENSATION

AARON VON STAATS Executive Vice President, General Counsel

We evaluated Mr. von Staats’Staats has served as our General Counsel since 2003. When establishing his compensation for 2021, we evaluated his compensation against our compensation peer group as to individual elements and as to total target compensation and his performance. Given his performance and the compensation benchmark, we increased his salary for 2021 by 7% to determine whetherbring his salary closer to make any additional changesthe market median.

FY21 TARGET TOTAL COMPENSATION

KATHLEEN MITFORD Former Executive Vice President, Chief Strategy Officer

Ms. Mitford served as our Executive Vice President, Chief Strategy Officer through May 2021, when she resigned to hispursue another career opportunity.. When establishing her compensation for 2021, we evaluated her compensation against our compensation peer group as to individual elements and as to total target compensation for FY20. As hisand her performance. Given her performance and the competitive benchmark, we increased her long-term equity opportunity by 13%, resulting in 2021 target compensation remained competitive, we did not make any changes to his compensation for FY20.of salary of $415,000, an incentive bonus of $350,000, and service-based RSUs and performance-based RSUs of $1,125,000 each.

FY20 TARGET ANNUAL COMPENSATION

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COMPENSATION DISCUSSION AND ANALYSIS

How We Set Executive Compensation

The Compensation Committee, which is comprised entirely of independent directors, establishes, and reviews the compensation for our executive officers annually.

Independent Compensation Consultant

The Committee engaged Pearl Meyer & Partners, LLC as its independent compensation consultant for 2020.2021. The Committee assessed the independence of Pearl Meyer and determined that Pearl Meyer is independent of PTC and has no relationships that could create a conflict of interest with PTC. As part of its assessment, the Committee considered the fact that Pearl Meyer provides no other services to PTC and consults with PTC’s management only as necessary to provide the services described below.

Pearl Meyer provides a range of services to the Committee to support the Committee in fulfilling its responsibilities, including providing legislative and regulatory updates, peer group compensation data, advice on the structure and competitiveness of our compensation programs, and advice on the consistency of our programs with our executive compensation philosophy. Pearl Meyer attends Committee meetings, reviews compensation data with the Committee, and participates in discussions regarding executive compensation issues. The Committee meets with Pearl Meyer with and without PTC management present.

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COMPENSATION DISCUSSION AND ANALYSISPearl Meyer was paid $270,204 for services to the Compensation Committee in 2021. No other compensation was paid to Pearl Meyer in 2021.

Consultation with Management

Members of management, including our Chief Executive Officer, participate in Committee meetings as requested by the Committee to discuss the materials provided, including recommendations on executive pay, competitive market practices and performance measures. Although the members of management provide their views, decisions on executive compensation are made solely by the Committee and, in the case of the Chief Executive Officer’s compensation, without the presence of the Chief Executive Officer.

Compensation Committee Calendar

NovemberQ1		Q2		Q3		Q4
⬢Determine achievement under prior period performance-based compensation. ⬢Review pay-for-performance alignment. ⬢Establish performance-based compensation plans for current year. ⬢Make annual performance-based and service-based equity awards. ⬢Review Compensation Discussion and Analysis. ⬢Review equity use and forecast expense.
February		⬢Review annual say-on-pay vote results and proxy advisor recommendations. ⬢Review in-season stockholder engagement results. ⬢Review compliance with director and executive stock ownership requirements. ⬢Review Compensation Committee Charter.
May		⬢Review and establish compensation peer group for upcoming year. ⬢Review peer group executive compensation practices. ⬢Review executive agreements.agreements and change-in-control arrangements.
September		⬢Review competitive assessment of executive compensation. ⬢Review pay-for-performance analysis. ⬢Review annual risk assessment of compensation practices. ⬢Establish executive compensation for year beginning October 1. ⬢Review independence and retention of independent compensation consultant.

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COMPENSATION DISCUSSION AND ANALYSIS

Determination of the Total Amount of Compensation

We make decisions regarding the amount and mix of compensation for our executives based on:

⬢	Objective data provided by Pearl Meyer & Partners (we refer to this as the “competitive analysis”);
⬢	Analysis of the scope of each executive’s responsibilities; and
⬢	Internal pay equity among the executives.

⬢Objective data provided by Pearl Meyer & Partners (the “competitive analysis”);

⬢Analysis of the scope of each executive’s responsibilities; and

⬢Internal pay equity among the executives. 

We use the competitive analysis to assess our executives’ compensation against the compensation paid to executives in similar positions in the peer group to ensure that the compensation we pay is competitive and fair to our executives and to our stockholders. We generally target compensation opportunities for our executives at the median of the market as an initial benchmark. While we use the competitive analysis as a starting point, we also consider the qualitative dimensions of an executive’s role, internal pay equity among our executives and tenure in the position when setting our executives’ compensation as we do not believe an external benchmark should be the only determinant of compensation.

Competitive Analysis (Benchmarking)

The peer group used for the 2021 competitive analysis consists of 1615 publicly-traded U.S. software companies, most of which are in the enterprise software space, that have revenues and market capitalizations in a range we believe is appropriate. We target companies with revenue within an approximately 0.5x to 2x2.5x multiple of PTC’s revenue and an approximately 0.5x to 3x4.0x multiple of PTC’s market capitalization. However, we may include companies with revenue and/or market capitalizations outside these parameters if there is strong product and/or service similarity. We believe this group represents the competition for executive talent in our industry. We review the peer group annually to ensure that the companies in the peer group remain relevant and provide meaningful compensation comparisons.

The 2020 peer group consisted of the companies listed below. The 2020 peer group differed from the 2019 peer group due to the removal of Red Hat Inc. due to its acquisition, and the addition of Blackbaud, Inc., which is smaller than PTC on both a revenue and market capitalization basis, to balance that removal.

2020 PEER GROUP

2021 Peer Group(1)
Akamai Technologies, Inc.	J2 Global, Inc.
ANSYS, Inc.	Nuance Communications, Inc.	16 Publicly-Traded U.S. Software Companies
			ANSYS, Inc.			Open Text Corporation
			Autodesk, Inc.			PegasystemsPaycom Software, Inc.
Black Knight, Inc.	Proofpoint, Inc.
Blackbaud, Inc.				ServiceNow,Real Page, Inc.
			Cadence Design Systems, Inc.	ServiceNow, Inc.
Citrix Systems, Inc.	Splunk Inc.
Fair Isaac Corporation

Citrix Systems, Inc.15

PUBLICLY-TRADED U.S. SOFTWARE COMPANIES

(1)	The 2021 peer group differed from the 2020 peer group as described below.

Removed	Removed	Added
Due to the acquisition of each by private equity firms.	Due to lack of business model comparability as we pivot to SaaS solutions for our products.	Due to their business model comparability as we pivot to SaaS solutions for our products.
LogMeIn, Inc. The Ultimate Software Company	Open Text Corporation Pegasystems Inc. SS&C Technologies Holdings Inc.
		Fair Isaac Corporation			Synopsys Inc.
		LogMeIn, Black Knight, Inc.			The Ultimate J2 Global, Inc. Paycom Software, Group, Inc. Proofpoint, Inc. RealPage, Inc.

Survey Data

We also use survey data for additional perspective. For 2020, we used the Radford Global Technology survey. PTC participates in this survey and believes that it represents a good cross-section of the software industry and that the data is appropriate to PTC. The survey representedInc. - 2022 Proxy Statement     40 43software companies with median revenue of $1.49 billion.

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COMPENSATION DISCUSSION AND ANALYSIS

Other Important Elements of Our Compensation Program

Compensation Clawback Policy

We maintain an executive compensation recoupmentclawback policy that is intended to enable us to recover incentiveperformance-based compensation paid to an executive officer if such compensation is subsequentlylater determined to have been unearned due to a restatement of our financial results for the performance period as a result ofdue to the misconduct of the executive officer. The Executive Compensation Recoupment Policy is available in the Corporate Governance section of the Investor Relations page of our website at www.ptc.com.www.ptc.com.

Stock Ownership Requirements

Our executives are required to attain and maintain stock ownership levels of our common stock (options and unvested equity are not counted). For our CEO, that amount iswas 5x his annual salary for FY21 (6x for FY22), and for our other executive officers, that amount is 3x their respective annual salaries. All our executives metmeet their respective stock ownership requirements.

No Hedging or Pledging of PTC Stock

In order to ensure members of our Board of Directors and our executives and employees are aligned with the interests of our stockholders, our Trading in Company Securities Policy prohibits the hedging of PTC stock or equity by directors, executives and employees and transactions in derivative securities whose value is tied to that of PTC stock (including puts, calls and listed options). The Policy also prohibits the pledging of PTC stock or equity by directors, executives and employees and short sales of PTC stock.

Severance and Change in Control Arrangements

Agreements and Conditions

We maintain severance and change in control arrangements with our executives. The agreements require the executive to execute a non-compete agreement with PTC and to execute a general release of claims as a condition to receiving severance benefits. As described above in 2020 CEO Compensation Decisions, theOur agreement with our CEO has a three-year term that expires on September 30, 2023. Each of the other named executive officers’ agreements has a one-year term and renews automatically for successive one-year terms if the Compensation Committee does not terminate the agreement. The agreements are described in more detail under Potential Payments upon Termination or Change in Control.

Annual Review

The Compensation Committee reviews these agreements each year to determine if these agreements should be maintained, modified or terminated. For 2020, the Committee reviewed current market practices and the terms of the agreements with the Committee’s compensation consultant. Based on this review, the Committee decided that it was appropriate to maintain the agreements. As described above in 2020 CEO Compensation Decisions, the Committee designed a new retention program for Mr. Heppelmann in September 2020 and the company entered into a new executive agreement with Mr. Heppelmann at that time.

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Rationale

The Committee believes that these agreements are important motivational and retention tools because, in a time of continuing consolidation in our industry and increased competition for executive talent, they provide a measure of earnings security by offering income protection in the form of severance and continued benefits if the executive’s employment is terminated without cause, economic protection for the executive’s family if the executive becomes disabled or dies, and additional protections in connection with a change in control of PTC.

The Committee believes that providing severance to PTC employees, including executives, is an appropriate bridge to subsequent employment if the person’s employment is terminated without cause. This is particularly so for executive-level positions for which the opportunities are typically more limited, and the job search lead time is longer. The agreements also benefit PTC by enabling executives to remain focused on PTC’s business in uncertain times without the distraction of potential job loss.

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COMPENSATION DISCUSSION AND ANALYSIS

The Committee believes these agreements are even more important in the context of a change in control as it believes they will motivate and encourage the executives to be receptive to potential strategic transactions that are in the best interest of stockholders, even if the executive faces potential job loss. The agreements for our executives have “double triggers” before vesting of any equity is accelerated, so that no equity is accelerated upon a change in control but is accelerated only if the executive is terminated in connection with a change in control. The Committee believes this benefits PTC and any potential acquirer because it enables PTC to retain and motivate the executive while a potential change in control is pending, provides an acquirer with the ability to retain desired executives using existing equity incentives, and does not provide a one-time benefit to the executive that could undermine those efforts.

Periodic Review

The Compensation Committee reviews these agreements each year for the executive officers other than the CEO and, in light of the three-year term of the agreement with the CEO, periodically for the CEO, to determine if these agreements should be maintained, modified, or terminated. For 2021, the Committee reviewed current market practices and the terms of the executives’ agreements (other than the CEO agreement) with the Committee’s compensation consultant. Based on this review, the Committee decided that it was appropriate to maintain the agreements.

Timing of Equity Grants

We do not time grants either to take advantage of a depressed stock price or an anticipated increase in stock price and have limited the amount of discretion that can be exercised in connection with the timing of awards. We generally make awards only on pre-determined dates to ensure that awards cannot be timed to take advantage of material non-public information. Typically, our annual executive awards are made in November after public release of the previous fiscal year’s financial results, annual awards to our Board of Directors are made on the day of the annual stockholders’ meeting, and awards to our employees are made in November and June.May.

Awards to executive officers may be made only by the Compensation Committee. Other employee awards may be made by either the Compensation Committee or by our Chief Executive Officer pursuant to delegated authority. The Compensation Committee generally makes awards only at Committee meetings and generally does not make awards in trading blackout periods (the prophylactic period encompassing the last three weeks of each fiscal quarter through 24 hours after the earnings for that quarter are announced) unless special circumstances exist, such as a new hire or a contractual commitment. Our Chief Executive Officer may make awards only on the 15^th of the month (or the next succeeding business day if the 15th 15^th is not a business day), other than in the months of January, April, July and October because the 15^th of each of those months falls in a blackout period after the end of the quarter before results are announced, and only up to established values set by the Compensation Committee.

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COMPENSATION DISCUSSION AND ANALYSIS

Consideration of Stock-Based Compensation Expense and Dilution

We consider the stock-based compensation expense and dilution (burn rate) associated with equity awards to executives as we develop our overall equity compensation program. The expense associated with the equity awards is equal to the fair value of the equity issued and is amortized over the vesting period of the award. We monitor this expense and dilution to stockholders as we develop our plans and strive to maintain a program that balances the goals of our equity program with the expense and dilution associated with the program. For FY20,FY21, stock-based compensation expense as a percentage of our market capitalization and dilution were both at or below the 5040^th percentile.

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Annual Assessment of Risks Associated with Our Compensation Programs

We assess our compensation plans and programs for employees, including our executives, annually to ensure alignment of the various plans and programs with our business plan and to evaluate the potential risks associated with those plans and programs. For 2020,2021, the Compensation Committee retained Pearl Meyer & Partners, the Compensation Committee’s independent compensation consultant, to assist the Committee in assessing those risks. Based on this assessment, the Compensation Committee concluded that the company’s compensation plans and programs do not create risks that are reasonably likely to have a material adverse effect on PTC.

The Compensation Committee regularly considers the risks associated with executive compensation and corporate incentive plans when designing such plans. The elements described below with respect to such plans and programs have generally been implemented by or at the direction of the Compensation Committee and were considered when assessing the riskrisks associated with our compensation programs:

⬢	A detailed planning process with Compensation Committee or executive oversight exists for all compensation programs;
⬢	The proportion of an employee’s performance-based pay increases as the responsibility and potential impact of the employee’s position increases, which structure is in line with market practices;
⬢	We set performance goals that we believe are reasonable considering past performance and market conditions;
⬢	We use performance measures that are designed to support our long-term financial goals, rather than changing measures to take advantage of changing market conditions;
⬢	We use different performance measures for our annual incentive plans and our long-term incentive plans;
⬢	Our executives’ long-term equity awards are split 50/50 between service-based and performance-based long-term equity to balance the risk associated with performance-based equity with retention provided by service-based equity;
⬢	Our long-term performance-based equity containscontained performance measures for each of the three years of the term of the award;
⬢	We use restricted stock units rather than stock options for equity awards because restricted stock units retain value even if the stock price declines so that employees are less likely to take unreasonable risks to get, or keep, options “in-the-money”;
⬢	We use service-based vesting over three years for our long-term equity awards to ensure our employees’ interests are aligned with those of our stockholders for the long-term performance of PTC;

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⬢	Assuming achievement of at least a minimum level of performance, payouts under our performance-based plans result in some compensation at levels below full target achievement, rather than an “all-or-nothing” approach;
⬢	Upside earning opportunity in our annual cash compensation plans is limited. In addition,and our performance-based equity plans areis capped at a level commensurate with the industry.industry;
⬢	All organizationsfunctions have a component of their leadership incentive plans tied to overall PTC performance to ensure cross-functional alignment with PTC’s business plan;
⬢	Our executive stock ownership policy requires our executives to hold a substantial amount of stock (options and unvested equity do not count), which aligns an appropriate portion of their personal wealth to the long-term performance of PTC;
⬢	Our compensation clawback policy enables us to recover incentive compensation paid to an executive officer if it is subsequentlylater determined not to have been earned due to restatement of prior period financial results due to misconduct of the executive officer, thus reducing any incentive to engage in misconduct to meet financial targets.targets; and
⬢	We maintain effective controls and procedures to ensure that amounts are earned and paid in accordance with our plans and programs.

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee

Mark Benjamin, Chair
Janice Chaffin Chair
Paul Lacy
Robert Schechter

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EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The discussion, table and footnotes below describe the total compensation for FY20FY21 for our named executive officers (our Chief Executive Officer, our Chief Financial Officer, and our three other most highly compensated executive officers).

As described in COMPENSATION DISCUSSION AND ANALYSIS above and reflected in the Summary Compensation Table below, we pay these executive officers a mix of cash and equity compensation. Our target annual compensation consists of a base salary, an incentive plan bonus (Non-Equity Incentive Plan Compensation), and annual long-term equity compensation (Stock Awards) consisting of restricted stock units (RSUs) (50% of which are performance based and 50% of which are service based) that are eligible to vest over three years from the date of grant. Additional equity compensation (Stock Awards) may also include as it does for FY18 and FY20, retention or special purpose grants and as it does for FY20, the value of any grant modifications.

We do not provide these executives with pensions or the ability to defer compensation or any perquisites. Amounts shown in the All Other Compensation column reflect the matching cash contribution under our 401(k) Savings Plan for those participating in the plan and for Mr. DiTullio, theany additional items described.described in the footnotes.

Summary Compensation Table

Name and Principal Position		Year		Salary ($)			Bonus ($)				Stock Awards ($)(1)				Non-Equity Incentive Plan Compensation ($)(2)			All Other Compensation ($)(3)			Total ($)			Total without Retention Awards or Modifications			Year		Salary ($)				Bonus ($)			Stock Awards ($)(1)				Non-Equity Incentive Plan Compensation ($)(2)			All Other Compensation ($)(3)			Total ($)
James Heppelmann President and Chief Executive Officer		2020		$	800,000		$	—			$	45,844,743	(4)		$	650,000		$	8,550		$	47,303,293		$	11,626,535		2021		$	800,000			—			$	11,127,621			$	1,112,000		$	8,754		$	13,048,375
		2019		$	800,000		$	—			$	9,199,893			$	976,062		$	8,550		$	10,984,505		$	10,984,505		2020		$	800,000			—			$	45,844,743	(4)		$	650,000		$	8,550		$	47,303,293
		2018		$	800,000		$	—			$	48,199,913	(5)		$	961,000		$	8,250		$	49,969,163		$	9,969,163		2019		$	800,000			—			$	9,199,893			$	976,062		$	8,550		$	10,984,505
Kristian Talvitie EVP, Chief Financial Officer		2020		$	444,423		$	—			$	4,274,256			$	268,125		$	8,550		$	4,995,354		$	4,328,926		2021		$	500,000			—			$	3,616,415			$	556,000		$	8,700		$	4,681,115
		2019		$	148,442		$	200,000	(6)		$	2,234,913			$	142,401		$	—		$	2,725,756		$	2,725,756		2020		$	444,423			—			$	4,274,256			$	268,125		$	8,550		$	4,995,354
Michael DiTullio EVP, Sales		2020		$	400,000		$	—			$	4,702,975			$	227,500		$	10,980		$	5,341,454		$	3,401,414
Kathleen Mitford EVP, Chief Strategy Officer		2020		$	403,923		$	—			$	2,760,359			$	227,500		$	8,729		$	3,400,511		$	2,826,391
		2019		$	375,000		$	—			$	1,824,852			$	292,804		$	8,435		$	2,501,091		$	2,501,091
		2018		$	355,385		$	—			$	1,769,419			$	248,258		$	9,138		$	2,382,200		$	2,382,200
Kristian Talvitie EVP, Chief Financial Officer																											2019		$	148,442		$	200,000	(5)		$	2,234,913			$	142,401			—		$	2,725,756
																											2021		$	424,231			—			$	3,338,170			$	472,600		$	9,522		$	4,244,523
																											2020		$	400,000			—			$	4,702,975			$	227,500		$	10,980		$	5,341,454
Troy Richardson President, Digital Thread Business																											2021		$	528,846		$	500,000	(5)		$	5,997,323			$	607,430		$	94,000		$	7,227,599
Aaron von Staats EVP, General Counsel		2020		$	375,000		$	—			$	2,623,641			$	227,500		$	8,400		$	3,234,541		$	2,572,587		2021		$	399,231			—			$	1,974,936			$	388,500		$	9,029		$	2,771,696
		2019		$	375,000		$	—			$	1,774,943			$	341,629		$	8,371		$	2,499,943		$	2,499,943		2020		$	375,000			—			$	2,623,641			$	227,500		$	8,400		$	3,234,541
Aaron von Staats EVP, General Counsel																											2019		$	375,000			—			$	1,774,943			$	341,629		$	8,371		$	2,499,943
																											2021		$	271,346			—			$	2,503,732			$	0		$	48,505		$	2,823,583
																											2020		$	403,923			—			$	2,760,359			$	227,500		$	8,729		$	3,400,511
Kathleen Mitford Former EVP, Chief Strategy Officer																											2019		$	375,000			—			$	1,824,852			$	292,804		$	8,435		$	2,501,091

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(1)

Aggregate grant date fair value of awards. Assumptions made in the valuation of these awards are described in Note 12 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.2021. For service-based RSUs, the grant date fair value is equal to the number of RSUs granted multiplied by the closing price of our stock on the Nasdaq Stock Market on the grant date. For performance basedperformance-based RSUs other than rTSRrelative TSR (rTSR) RSUs, the grant date fair value is equal to the number of RSUs granted multiplied by the closing price of our stock on the Nasdaq Stock Market on the grant date, assuming achievement at 100%; the maximum potential value of the annual performance-based RSUs is 200% of the target RSUs granted; for the CEO retention RSUs granted in 2020, the maximum potential value is 110% of the target RSUs granted. For performance-based rTSR RSUs, the value is determined using a Monte Carlo methodology that considers the probability of achievement of the performance measures at the time of grant. The amounts also include modification values of $3,561,547 for Mr. Heppelmann; $666,428 for Mr. Talvitie; $940,044 for Mr. DiTullio; $574,120 for Ms. Mitford; and $661,954 for Mr. von Staats.

Named Executive Officer		Number of 2020 Target Performance- Based RSUs		Maximum Value of Performance-Based RSUs based on Closing Price on Grant Date			Maximum Number of Performance-Based Retention RSUs		Maximum Value of Performance-Based Retention RSUs Based on Closing Price on Grant Date
James Heppelmann		61,266		$	9,199,703		440,044		$	35,326,732
Kristian Talvitie		21,944		$	3,249,506
Michael DiTullio		16,648		$	2,499,864
Kathleen Mitford		13,080		$	1,984,509
Aaron von Staats		11,820		$	1,774,891

Named Executive Officer	Number of 2021 Target Performance-Based RSUs		Maximum Value of Performance-Based RSUs based on Closing Price on Grant Date
James Heppelmann	52,808		$	10,469,714
Kristian Talvitie	17,162		$	3,402,538
Michael DiTullio	15,842		$	3,140,835
Troy Richardson	15,842		$	3,140,885
Aaron von Staats	9,372		$	1,858,093
Kathleen Mitford	11,882		$	2,355,725

(2)	For 2020 and 2019,all years, these amounts were paid in shares of PTC common stock, with the number granted determined by dividing the amount earned by the closing price of a share of PTC common stock on November 15, 2021, November 12, 2020 and November 15, 2019, respectively.
(3)	Amounts shown are matching contributions under PTC’s 401(k) Savings Plan and, for each of Mr. Heppelmann and Mr. DiTullio, include imputed non-U.S. income$54 of taxable prize income. Additionally, for Mr. DiTullio, foreign tax and foreign tax equalization payments of $2,430.$768; for Ms. Mitford, an accrued vacation payout of $31,923; and, for Mr. Richardson, relocation amounts of $94,000 associated with his relocation from Atlanta to Boston.
(4)	Includes the $32 million grant date value of a performance-based retention equity award with free cash flow and ARR performance measures for 2021, 2022 and 2023. This award and the rationale for the award are describedgrant is discussed above in Letter from the Compensation Committee and 2020 CEO Compensation Decisions.LETTER FROM THE COMPENSATION COMMITTEE.
(5)	Includes the $40 million grant date value of long-term performance-based equity award with performance measures for 2021, 2022 and 2023. This grant was forfeited in September 2020.
(6)	Sign-on bonus paid upon hire to compensate him for unvested compensation left behind at his prior employer to join PTC.

Grants of Plan-Based Awards

As discussed in COMPENSATION DISCUSSION AND ANALYSIS above, we tie a substantial portion of our executives’ compensation to PTC’s performance through plan-based awards. For 2020,2021, these awards consisted of:

⬢	An annual incentive plan (Non-Equity Incentive Plan Awards),
⬢	Performance-based RSUs that vest to the extent earned in each of the three performance periods over three years (Equity Incentive Plan Awards), and
⬢	Service-based RSUs that vest over three years (Other Stock Awards).

We describe our compensation decisions for 2020,2021, including the rationale for these awards and the performance measures, in COMPENSATION DISCUSSION AND ANALYSIS above.

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20202021 GRANTS OF PLAN-BASED AWARDS

					Estimated Possible Payouts Under Non-Equity Incentive Plan Awards									Estimated Possible Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Securities Underlying Stock or Units (#)		Grant Date Fair Value of Stock Awards(1) ($)
Name		Grant Date			Threshold ($)			Target ($)			Maximum ($)			Threshold (#)		Target (#)		Maximum (#)
James Heppelmann President, Chief Executive Officer		11/21/2019	(2)		$	633,000		$	1,000,000		$	1,350,000
		11/21/2019	(3)											15,317		30,633		61,266				$	2,299,926
		11/21/2019	(4)											15,317		30,633		61,266				$	3,268,133
		11/21/2019	(5)																	61,267		$	4,599,926
		9/24/2020	(6)											150,015		400,040		440,044				$	32,115,211
Kristian Talvite Executive Vice President, Chief Financial Officer		11/21/2019	(2)		$	221,550		$	350,000		$	472,500
		11/21/2019	(3)											4,553		9,106		18,212				$	683,678
		11/21/2019	(4)											4,553		9,106		18,212				$	971,477
		11/21/2019	(5)																	18,213		$	1,367,432
		5/18/2020	(2)		$	39,563		$	62,500		$	125,000
		5/18/2020	(3)											933		1,866		3,732				$	128,698
		5/18/2020	(4)											933		1,866		3,732				$	199,077
		5/18/2020	(5)																	3,733		$	257,465
Michael DiTullio Executive Vice President, Sales		11/21/2019	(2)		$	221,550		$	350,000		$	472,500
		11/21/2019	(3)											4,162		8,324		16,648				$	624,966
		11/21/2019	(4)											4,162		8,324		16,648				$	888,037
		11/21/2019	(5)																	16,648		$	1,249,932
		5/18/2020	(7)																	14,499		$	999,996
Kathleen Mitford Executive Vice President, Chief Strategy Officer		11/21/2019	(2)		$	221,550		$	350,000		$	472,500
		11/21/2019	(3)											3,038		6,076		12,152				$	456,186
		11/21/2019	(4)											3,038		6,076		12,152				$	648,216
		11/21/2019	(5)																	12,153		$	912,447
		2/11/2020	(3)											232		464		928					39,941
		2/11/2020	(4)											232		464		928				$	49,480
		2/11/2020	(5)																	929		$	79,968
Aaron von Staats Executive Vice President, General Counsel		11/21/2019	(2)		$	221,550		$	350,000		$	472,500										$
		11/21/2019	(3)											2,955		5,910		11,820				$	443,723
		11/21/2019	(4)											2,955		5,910		11,820				$	630,518
		11/21/2019	(5)																	11,820		$	887,446

			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards								Estimated Possible Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Securities Underlying Stock or Units (#)		Grant Date Fair Value of Stock Awards(1) ($)
Name	Grant Date		Threshold ($)		Target ($)			Maximum ($)			Threshold (#)		Target (#)		Maximum (#)
James Heppelmann President, Chief Executive Officer	11/17/2020(2)		$633,000		$	1,000,000		$	1,350,000
	11/17/2020(3)										6,601		26,404		52,808				$	2,617,429
	11/17/2020(4)										13,202		26,404		52,808				$	3,275,236
	11/17/2020(5)										-						52,809		$	5,234,956
Kristian Talvitie Executive Vice President, Chief Financial Officer	11/17/2020(2)		$316,500		$	500,000		$	675,000
	11/17/2020(3)										2,145		8,581		17,162				$	850,635
	11/17/2020(4)										4,291		8,581		17,162				$	1,064,412
	11/17/2020(5)																17,163		$	1,701,368
Michael DiTullio President, Velocity Business	11/17/2020(2)		$269,025		$	425,000		$	573,750
	11/17/2020(3)										1,980		7,921		15,842				$	785,209
	11/17/2020(4)										3,961		7,921		15,842				$	982,544
	11/17/2020(5)																15,842		$	1,570,417
Troy Richardson President, Digital Thread Business	11/17/2020(2)		$329,687		$	520,833		$	703,125
	11/17/2020(3)										1,980		7,921		15,842				$	785,209
	11/17/2020(4)										3,961		7,921		15,842				$	982,544
	11/17/2020(5)																15,842		$	1,570,417
	11/16/2020(5)																26,390		$	2,599,943
Aaron von Staats Executive Vice President, General Counsel	11/17/2020(2)		$221,550		$	350,000		$	472,500										$
	11/17/2020(3)										1,172		4,686		9,372				$	464,523
	11/17/2020(4)										2,343		4,686		9,372				$	581,267
	11/17/2020(5)																9,373		$	929,145
Kathleen Mitford Former Executive Vice President, Chief Strategy Officer	11/17/2020(2)		$221,550		$	350,000		$	472,500
	11/17/2020(3)										1,485		5,941		11,882				$	588,931
	11/17/2020(4)										2,971		5,941		11,882				$	736,938
	11/17/2020(5)																11,882		$	1,177,863

(1)	For all RSUs other than the rTSR RSUs, the grant date fair value was calculated by multiplying the number of RSUs granted by the closing price of a share of our common stock on the Nasdaq Stock Market on the grant date and applying the likelihood of any performance measures being achieved. For the rTSR RSUs, the grant date fair value was determined using a Monte Carlo valuation.
(2)	Awards under our annual incentive plan. 65% of the Target value was earned for 2020. Amounts earned were paid in common stock on November 12, 2020,15, 2021, with the number of shares issued calculated by dividing the amount earned by the closing share price on that date.
(3)	Performance-based RSUs eligible to vest over three years to the extent the ARR performance measures are met for each of 2020, 2021 and 2022. Only one-third of the RSUs granted are eligible to be earned for each of 2020, 2021 and 2022. 62.5% of the RSUs for 2020 were earned and vested. The 37.5% of RSUs unearned for 2020 were forfeited.
(4)	Performance-based RSUs eligible to vest over three years to the extent the TSR performance measures are met for each of 2020, 2021 and 2022. Only one-third of the RSUs granted are eligible to be earned for each of 2020, 2021 and 2022. 120% of the RSUs for 2020 were earned and vested.

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(5)	Service-based RSUs that vest over three years. One third of these RSUs vested on November 15, 2020 and the remaining two-thirds will vest in substantially equal installments on November 15, 2021 and November 15, 2022.
(6)	Performance-based retention RSUs that are eligible to vest to the extent the ARR and adjusted free cash flowAFCF performance measures are met for each of 2021, 2022 and 2023. Only one-third of the RSUs granted are eligible to be earned for each of 2021, 2022 and 2023. RSUs not earned forin a performance periodyear are forfeited.
(7)(4)	Performance-based RSUs eligible to vest over three years to the extent the TSR performance measures are met for each of 2021, 2022 and 2023. Only one-third of the RSUs granted are eligible to be earned for each of 2021, 2022 and 2023. RSUs not earned in a year are forfeited.
(5)	Service-based retention RSUs that vest over three years. TheOne third of these RSUs vested on November 15, 2021 and the remaining two-thirds will vest in two substantially equal installments on MayNovember 15, 2021, 2022 and November 15, 2023.

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Outstanding Equity Awards at Fiscal Year-End

The following table shows the equity awards held by each named executive officer as of September 30, 2020. 2021.

The equity awards in the table are restricted stock units granted in 20182019 through 2020.2021.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

		Stock Awards
								Equity Incentive Plan Awards
		Number of Shares or Units of Stock That Have Not Vested (#)(1)			Market Value of Shares or Units of Stock That Have Not Vested ($)(2)			Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)			Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)
James Heppelmann President and Chief Executive Officer		21,380	(4)		$	1,768,554		12,400	(7)		$	1,025,728
		36,006	(5)		$	2,978,416		27,004	(8)		$	2,233,771
		61,267	(6)		$	5,068,006		26,803	(9)		$	2,217,144
								30,633	(10)		$	2,533,962
								400,040	(11)		$	33,091,309
Kristian Talvitie Executive Vice President, Chief Financial Officer		8,556	(5)		$	707,752		6,417	(8)		$	530,814
		21,946	(6)		$	1,815,373		9,599	(9)		$	794,029
								10,972	(10)		$	907,604
Michael DiTullio Executive Vice President, Sales		5,214	(4)		$	431,302		3,024	(7)		$	250,145
		2,302	(12)		$	190,421		7,338	(8)		$	606,999
		9,784	(5)		$	809,332		7,283	(9)		$	602,450
		16,648	(6)		$	1,377,123		8,324	(10)		$	688,561
		14,499	(13)		$	1,199,357
Kathleen Mitford Executive Vice President, Chief Strategy Officer		1,303	(4)		$	107,784		755	(7)		$	62,454
		5,127	(12)		$	424,105		5,356	(8)		$	443,048
		7,142	(5)		$	590,786		5,721	(9)		$	473,241
		12,153	(6)		$	1,005,296		6,540	(10)		$	540,989
		929	(6)		$	76,847
Aaron von Staats Executive Vice President, General Counsel		3,585	(4)		$	296,551		2,079	(7)		$	171,975
		6,946	(5)		$	574,573		5,209	(8)		$	430,888
		11,820	(6)		$	977,750		5,171	(9)		$	427,745
								5,910	(10)		$	488,875

Footnotes to Outstanding Equity Awards at Fiscal Year End Table

	Stock Awards
							Equity Incentive Plan Awards
	Number of Shares or Units of Stock That Have Not Vested (#)(1)			Market Value of Shares or Units of Stock That Have Not Vested ($)(2)			Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)			Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)
James Heppelmann President and Chief Executive Officer	18,003	(4)		$	2,156,579		18,003	(7)		$	2,156,579
	40,844	(5)		$	4,892,703		20,422	(8)		$	2,446,351
	52,809	(6)		$	6,325,990		28,591	(9)		$	3,424,916
							26,404	(10)		$	3,162,935
							26,404	(11)		$	3,162,935
							400,040	(12)		$	47,920,792
Kristian Talvitie Executive Vice President, Chief Financial Officer	4,278	(4)		$	512,462		4,278	(7)		$	512,462
	14,630	(5)		$	1,752,528		7,314	(8)		$	876,144
	17,163	(6)		$	2,055,956		10,241	(9)		$	1,226,769
							8,581	(10)		$	1,027,918
							8,581	(11)		$	1,027,918
Michael DiTullio President, Velocity Business	4,892	(4)		$	586,013		4,892	(7)		$	586,013
	11,098	(5)		$	1,329,429		5,549	(8)		$	664,715
	9,666	(13)		$	1,157,890		7,769	(9)		$	930,649
	15,842	(6)		$	1,897,713		7,921	(10)		$	948,857
							7,921	(11)		$	948,857
Troy Richardson President, Digital Thread Business	42,232	(6)		$	5,058,971		7,921	(10)		$	948,857
							7,921	(11)		$	948,857
Aaron von Staats Executive Vice President, General Counsel	3,473	(4)		$	416,031		3,473	(7)		$	416,031
	7,880	(5)		$	943,945		3,940	(8)		$	471,973
	9,373	(6)		$	1,122,792		5,516	(9)		$	660,762
							4,686	(10)		$	561,336
							4,686	(11)		$	561,336
Kathleen Mitford Former Executive Vice President, Chief Strategy Officer	—				—		—				—

(1)	The unvested restricted stock unit (RSU) awards shown in this column are subject to service-based vesting.
(2)	The market value of unvested RSUs was calculated as of September 30, 20202021 based on the closing price of a share of our common stock on the NASDAQ Global Select Market on September 30, 20202021 of $82.72.$119.79.
(3)	The unvested RSUs shown in this column are subject to performance-based vesting.
(4)	FY18 FY19 service-based RSUs that vested on November 15, 2020.2021.
(5)	FY20 service-based RSUs that vest in two equal installments on November 15, 2021 and 2022.

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(5)	FY19 service-based RSUs with that vest in two equal installments on November 15, 2020 and 2021.
(6)	FY20 FY21 service-based RSUs that vest in three substantially equal installments on November 15, 2020, 2021, 2022 and 2022.2023.
(7)	FY18 FY19 performance-based RSUs that vested on November 15, 2020.2021.
(8)	FY19 performance-based RSUs that vest to the extent earned on November 15, 2020 and 2021.
(9)	FY20 performance-based ARR RSUs that vest to the extent earned on the later of each of November 15, 2020, 2021 and 2022.2022 and the date the Compensation Committee determines the amount earned for the applicable year.
(10)(9)	FY20 performance-based TSRrTSR RSUs that vest to the extent earned on the later of each of November 15, 2020, 2021 and 2022.2022 and the date the Compensation Committee determines the amount earned for the applicable year.
(10)	FY21 performance-based AFCF RSUs that vest to the extent earned on the later of each of November 15, 2021, 2022 and 2023 and the date the Compensation Committee determines the amount earned for the applicable year.
(11)	FY21 performance-based rTSR RSUs that vest to the extent earned on the later of each of November 15, 2021, 2022 and 2023 and the date the Compensation Committee determines the amount earned for the applicable year.
(12)	Performance-based retention RSUs that vest to the extent earned on the later of each of November 15, 2021, 2022 and 2023.
(12)	Service-based RSUs that vest on March 15, 2021.2023 and the date the Compensation Committee determines the amount earned for the applicable year.
(13)	Service-based retention RSUs that vest in three substantiallytwo equal installments on May 15, 2021, 2022 and 2023.

Option Exercises and Stock Vested

The following table shows the value realized by executive officers upon vesting of restricted stock units during 2020. 2021.

None of the named executive officers owned or exercised options in 2020.2021.

		Stock Awards
Name		Number of Shares Acquired on Vesting		Value Realized on Vesting
Jim Heppelmann		152,337		$	11,286,648
President and Chief Executive Officer
Kristian Talvitie		8,738		$	647,398
Executive Vice President, Chief Financial Officer
Michael DiTullio		33,134		$	2,414,107
Executive Vice President, Sales
Kathleen Mitford		19,890		$	1,382,782
Executive Vice President, Strategy
Aaron von Staats		26,222		$	1,942,788
Executive Vice President, General Counsel

		Grant Date Share Value			Vest Date		Vest Date Share Value			James Heppelmann		Kristian Talvitie		Michael DiTullio		Kathleen Mitford		Aaron von Staats
Grant Date										#RSUs		#RSUs		#RSUs		#RSUs		#RSUs
10/31/2016		$	47.44		11/15/2019		$	74.09		75,900				9,993		2,459		10,278
11/15/2017		$	63.92		11/15/2019		$	74.09		34,579				8,434		2,108		5,798
2/28/2017		$	53.89		11/15/2019		$	74.09								554
3/7/2018		$	79.63		3/15/2020		$	56.37						2,302		5,128
11/14/2018		$	85.17		11/15/2019		$	74.09		28,684				7,794		5,689		5,535
5/15/2019		$	87.07		11/15/2019		$	74.09				6,816
11/15/2019		$	74.09		11/15/2019		$	74.09		13,174		1,922		4,611		3,952		4,611

	Stock Awards
Name	Number of Shares Acquired on Vesting		Value Realized on Vesting
Jim Heppelmann	99,841		$	9,705,544
President and Chief Executive Officer
Kristian Talvitie	20,407		$	1,983,764
Executive Vice President, Chief Financial Officer
Michael DiTullio	33,325		$	3,485,016
President, Velocity Business
Troy Richardson	—			—
President, Digital Thread Business
Aaron von Staats	18,408		$	1,789,442
Executive Vice President, General Counsel
Kathleen Mitford	20,881		$	2,234,307
Former Executive Vice President, Strategy

Grant Date	Grant Date Share Value	Vest Date	Vest Date Share Value			James Heppelmann		Kristian Talvitie		Michael DiTullio		Aaron von Staats		Kathleen Mitford
						# RSUs		# RSUs		# RSUs		# RSUs		# RSUs
11/15/2017	$63.92	11/15/2020	$	97.21		33,780				8,238		5,664		2,058
03/07/2018	$79.63	03/15/2021	$	137.09						2,302				5,127
11/14/2018	$85.17	11/15/2020	$	97.21		27,004				7,338		5,209		5,356
05/15/2019	$87.07	11/15/2020	$	97.21				6,417
11/21/2019	$75.08	11/15/2020	$	97.21		39,057		11,611		10,614		7,535		7,748
02/11/2020	$86.08	11/15/2020	$	97.21										592
05/18/2020	$68.97	11/15/2020	$	97.21				2,379
05/18/2020	$68.97	05/15/2021	$	129.01						4,833

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Potential Payments upon Termination or Change in Control

We have agreements with our executive officers that provide the benefits described below in connection with certain terminations or a change in control of PTC. We describe our reasons for providing these benefits in COMPENSATION DISCUSSION AND ANALYSIS — Severance and Change in Control Arrangements.

To receive the payments and benefits described below, the executive must execute a release of claims against PTC. The executive also must continue to comply with the material terms of the agreement and the terms of the executive’s Non-Disclosure, Non-Competition and Invention Agreement with PTC, which remains in effect after the termination of the executive’s employment.

SUMMARY OF EXECUTIVE AGREEMENT TERMS REGARDING COMPENSATION ON
CHANGE-IN-CONTROL AND CERTAIN TERMINATIONS

		Event or Circumstances of Termination or Event										Event or Circumstances of Termination or Event
Name		Termination without Cause or Voluntary Resignation at the Request of the Board		Termination for Cause or Other Voluntary Resignation		Change in Control		Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control(1)		Disability or Death		Termination without Cause or Voluntary Resignation at the Request of the Board		Termination for Cause or Other Voluntary Resignation		Change in Control		Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control(1)		Disability or Death
James Heppelmann
President & Chief Executive Officer
James Heppelmann President & Chief Executive Officer
Base Salary		2×		—		—		3×		—		2x		—		—		3x		—
Target Bonus		2×		—		—		3×		—		2x		—		—		3x		—
Pro-Rated Target Bonus		—		—		1× Pro-Rated		—		—		—		—		1x Pro-Rated		—		—
Accelerated Equity		100%		—		—		100%		100% at Target		100%		—		—		100%		100% at Target
Benefits Continuation(2)		2×		—		—		2×		—		2x		—		—		2x		—
Payment Term		2 Years				Upon Event		Upon Event		Upon Event		2 Years				Upon Event		Upon Event		Upon Event
Gross-Up Payment		—		—		—		—		—		—		—		—		—		—
All Other Named Executive Officers Kristian Talvitie Michael DiTullio Kathleen Mitford Aaron von Staats
All Other Named Executive Officers
Kristian Talvitie Troy Richardson Michael DiTullio Aaron von Staats												Termination without Cause		Termination for Cause or Voluntary Resignation		Change in Control		Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control(1)		Disability or Death
Base Salary		1×		—		—		1×		—		1x		—		—		1x		—
Target Bonus		1×		—		—		1×		—		1x		—		—		1x		—
Pro-Rated Target Bonus		—		—		1× Pro-Rated		—		—		—		—		1x Pro-Rated		—		—
Accelerated Equity		—		—		—		100%		100% at Target		—		—		—		100%		100% at Target
Benefits Continuation(2)		1×		—		—		1×		—		1x		—		—		1x		—
Payment Term		Upon Event				Upon Event		Upon Event		Upon Event		Upon Event				Upon Event		Upon Event		Upon Event
Gross-Up Payment		—		—		—		—		—		—		—		—		—		—

(1)	Accelerated at greater of Target and estimated achievement at the time of the change in control.
(2)	Continued participation in PTC’s medical, dental, vision and basic life insurance benefit plans or payment in lieu thereof if such participation is not permissible until the executive becomes eligible for such benefits under another employer’s plans.

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EXECUTIVE COMPENSATION

POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL HAD A TERMINATION EVENT OR A
CHANGE-IN-CONTROL OCCURRED ON SEPTEMBER 30, 20202021

		Event or Circumstances of Termination															Event or Circumstances of Termination
Name		Termination without Cause or Voluntary Resignation at the Request of the Board in Connection with CEO Succession			Termination for Cause or Voluntary Resignation			Change in Control			Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control(1)			Disability or Death(1)			Termination without Cause or Voluntary Resignation at the Request of the Board in Connection with CEO Succession			Termination for Cause or Other Voluntary Resignation			Change in Control			Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control			Disability or Death
James Heppelmann
President & Chief Executive Officer
James Heppelmann President & Chief Executive Officer
Base Salary		$	1,600,000			—			—		$	2,400,000			—		$	1,600,000			—			—		$	2,400,000			—
Target Bonus		$	2,000,000			—			—		$	3,000,000			—		$	2,000,000			—			—		$	3,000,000			—
Pro-Rated Target Bonus			—			—		$	1,000,000			—			—			—			—		$	1,000,000			—			—
Accelerated Equity		$	50,916,890			—					$	50,916,890		$	50,916,890
Accelerated Equity(1)																	$	75,649,781			—			—		$	75,649,781		$	75,649,781
Benefits Continuation		$	132,720			—			—		$	132,720			—		$	133,540			—			—		$	133,540			—
Total		$	54,649,610		$	0		$	1,000,000		$	56,449,610		$	50,916,890		$	79,383,321		$	0		$	1,000,000		$	81,183,321		$	75,649,781
Kristian Talvitie
Executive Vice President, Chief Financial Officer
Base Salary		$	500,000			—			—		$	500,000			—
Target Bonus		$	500,000			—			—		$	500,000			—
Pro-Rated Target Bonus			—			—		$	500,000			—			—
Accelerated Equity						—			—		$	4,755,573		$	4,755,573
Benefits Continuation		$	54,573			—			—		$	54,573			—
Total		$	1,054,573		$	0		$	500,000		$	5,810,146		$	4,755,573
Michael DiTullio
Executive Vice President, Sales and Corporate Marketing
Base Salary		$	415,000			—			—		$	415,000			—
Target Bonus		$	350,000			—			—		$	350,000			—
Pro-Rated Target Bonus			—			—		$	350,000			—			—
Accelerated Equity						—					$	6,155,692		$	6,155,692
Benefits Continuation		$	43,740			—			—		$	43,740			—
Total		$	808,740		$	0		$	350,000		$	6,964,432		$	6,155,692
Kathleen Mitford
Executive Vice President, Chief Strategy Officer
Base Salary		$	415,000			—			—		$	415,000			—
Target Bonus		$	350,000			—			—		$	350,000			—
Pro-Rated Target Bonus			—			—		$	350,000			—			—
Accelerated Equity						—					$	3,724,551		$	3,724,551
Benefits Continuation		$	47,841			—			—		$	47,841			—
Total		$	812,841		$	0		$	350,000		$	4,537,392		$	3,724,551
Aaron von Staats
Executive Vice President, General Counsel
Base Salary		$	375,000			—			—		$	375,000			—
Target Bonus		$	350,000			—			—		$	350,000			—
Pro-Rated Target Bonus			—			—		$	350,000			—			—
Accelerated Equity						—			—		$	3,368,358			3,368,358
Benefits Continuation		$	56,400			—			—		$	56,400			—
Total		$	781,400		$	0		$	350,000		$	4,149,759		$	3,368,358

		Event or Circumstances of Termination
Name		Termination without Cause			Termination for Cause or Voluntary Resignation			Change in Control			Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control			Disability or Death
Kristian Talvitie Executive Vice President, Chief Financial Officer
Base Salary		$	500,000			—			—		$	500,000			—
Target Bonus		$	500,000			—			—		$	500,000			—
Pro-Rated Target Bonus			—			—		$	500,000			—			—
Accelerated Equity(1)			—			—			—		$	8,992,156		$	8,992,156
Benefits Continuation		$	54,369			—			—		$	54,369			—
Total		$	1,054,369		$	0		$	500,000		$	10,046,525		$	8,992,156
Troy Richardson President, Digital Thread Business
Base Salary		$	625,000			—			—		$	625,000			—
Target Bonus		$	625,000			—			—		$	625,000			—
Pro-Rated Target Bonus			—			—		$	625,000			—			—
Accelerated Equity(1)			—			—			—		$	6,956,684		$	6,956,684
Benefits Continuation		$	58,252			—			—		$	58,252			—
Total		$	1,308,252		$	0		$	625,000		$	8,264,936		$	6,956,684

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EXECUTIVE COMPENSATION

		Event or Circumstances of Termination
Name		Termination without Cause			Termination for Cause or Voluntary Resignation			Change in Control			Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control			Disability or Death
Michael DiTullio President, Velocity Business
Base Salary		$	425,000			—			—		$	415,000			—
Target Bonus		$	425,000			—			—		$	425,000			—
Pro-Rated Target Bonus			—			—		$	425,000			—			—
Accelerated Equity(1)			—			—			—		$	9,050,135		$	9,050,135
Benefits Continuation		$	55,570			—			—		$	55,570			—
Total		$	905,570		$	0		$	425,000		$	9,945,704		$	9,050,135
Aaron von Staats Executive Vice President, General Counsel
Base Salary		$	400,000			—			—		$	400,000			—
Target Bonus		$	350,000			—			—		$	350,000			—
Pro-Rated Target Bonus			—			—		$	350,000			—			—
Accelerated Equity(1)			—			—			—		$	5,154,204		$	5,154,204
Benefits Continuation		$	56,752			—			—		$	56,752			—
Total		$	806,752		$	0		$	350,000		$	5,960,956		$	5,154,204

(1)	Equity is valued based on a closing stock price of $82.72$119.79 on September 30, 2020.2021.

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CEO PAY RATIO

CEO PAY RATIO

The Dodd-Frank Act requires us to disclose the annual total compensation of our median paid employee, the annual total compensation of our CEO and the ratio between the two. We identified our median employee using a consistently applied compensation measure (CACM) approximating total direct compensation (base salary + short-term incentive target + long-term incentive target) for 20202021 for each of our worldwide employees as of October 5, 2020 (five21, 2021 (20 days after the close of our 20202021 fiscal year), excluding our CEO. We did not exclude any portion of our total worldwide employee population from this analysis. We applied the CACM in accordance with the applicable rules governing inclusion of part-time and temporary employees and prohibiting annualization of seasonal or temporary contracts. All employee compensation was converted to the U.S. dollar equivalent based on applicable exchange rates for the period as of the date on which the worldwide employee data was collected. After identifying the median employee using this methodology, we calculated the annual total compensation for this employee using the same methodology we used for our CEO set forth in the 20202021 Summary Compensation Table in this proxy statement.

We determined that the total annual compensation for our CEO for 20202021 was $47,303,293$13,048,375 and the total annual compensation of our median employee for 20202021 was $90,863,$109,266.38, resulting in a ratio of 521:1. If the value of the performance-based retention award granted in September 2020 and the value of modifications associated with outstanding performance-based equity awards are excluded from our CEO’s compensation, as we do not consider them to be part of his annual compensation, our CEO’s compensation would have been $11,626,535, resulting in a ratio of 128:119:1.

To put these ratiosthis ratio into context, we note that we have a worldwide employee population, with approximately 65% of our employees located outside the U.S. where the competitive amounts we pay differ by country and region. The competitive compensation rates we pay in those countries significantly impact the pay ratio.

We also note that the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have a different geographic distribution of employees, different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.

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		Proposal 3 ADVISORY VOTE TO CONFIRM THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FY212022
		We are asking stockholders to confirm the Audit Committee’s selection of PricewaterhouseCoopers LLP, a registered public accounting firm, as PTC’s independent registered public accounting firm for the fiscal year ending September 30, 2021.2022. Although stockholder confirmation of the selection of PricewaterhouseCoopers LLP is not required by law or our by-laws, and this vote is only advisory, the Board believes that it is advisable to give stockholders an opportunity to provide guidance on this selection. If this confirmation is not received, the Board will request that the Audit Committee reconsider its selection of PricewaterhouseCoopers LLP. ✓ The Board of Directors recommends that you vote FOR the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021.2022.

Engagement of Independent Auditor and Approval of Professional Services and Fees

The Audit Committee is responsible for the engagement of our independent auditor and for approving, in advance, all audit services and permitted non-audit services to be provided by the independent auditor. The Audit Committee has adopted a policy for the engagement of the independent auditor that is intended to maintain the independent auditor’s independence from PTC. In adopting the policy, the Audit Committee considered the various services that the independent auditor has historically performed or may be asked to perform in the future.

The policy, which is reviewed and re-adopted at least annually by the Audit Committee:

⬢	Approves the performance by the independent auditor of certain types of services (principally audit-related and tax), subject to restrictions in some cases, based on the Audit Committee’s determination that engaging the auditor for such services would not be likely to impair the independent auditor’s independence from PTC;
⬢	Requires that management obtain the specific prior approval of the Audit Committee for each engagement of the independent auditor to perform other types of permitted services;
⬢	Prohibits the performance by the independent auditor of certain types of services due to the likelihood that its independence would be impaired; and
⬢	Sets an aggregate expenditure limitation on fees for approved services and provides for fee caps on certain categories of approved services that may not be exceeded without the prior approval of the Audit Committee.

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PROPOSAL 3: ADVISORY VOTE TO CONFIRM THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FY21

Any approval required under the policy must be given by the Audit Committee, by the Chairman of the Audit Committee in office at the time, or by any other Audit Committee member to whom the Audit Committee has delegated that authority. The Audit Committee does not delegate its responsibilities to approve services performed by the independent auditor to any member of management.

The standard applied by the Audit Committee in determining whether to grant approval of any engagement of the independent auditor is whether the services to be performed, the compensation to be paid therefor and other related factors are consistent with the independent auditor’s independence under guidelines of the Securities and Exchange Commission, the Public Company Accounting Oversight Board, and applicable professional standards.

The Audit Committee considers:

⬢	Whether the work product is likely to be subject to, or implicated in, audit procedures during the audit of PTC’s financial statements;
⬢	Whether the independent auditor would be functioning in the role of management or in an advocacy role;
⬢	Whether performance of the service by the independent auditor would enhance PTC’s ability to manage or control risk or improve audit quality;
⬢	Whether performance of the service by the independent auditor would increase efficiency because of the auditor’s familiarity with PTC’s business, personnel, culture, systems, risk profile and other factors; and
⬢	Whether the amount of fees involved, or the proportion of the total fees payable for tax and other non-audit services, would tend to reduce the independent auditor’s ability to exercise independent judgment in performing the audit.

PricewaterhouseCoopers LLP Professional Services and Fees

The table below shows the fees we paid for professional services rendered by PricewaterhouseCoopers LLP for 20202021 and 2019.2020. All the fees disclosed below were pre-approved by the Audit Committee in accordance with the policy described above.

PRICEWATERHOUSECOOPERS LLP SERVICES AND FEES

Type of Professional Service		2020			2019			2021			2020
Audit Fees		$	2,813,068		$	2,511,658		$	2,846,229		$	2,813,068
Audit-Related Fees(1)		$	221,580		$	174,811		$	31,417		$	221,580
Tax Fees(2)		$	2,002,587		$	1,442,007		$	2,264,445		$	2,002,587
All Other Fees(3)		$	2,700		$	2,700		$	900		$	2,700

(1)	Consists principally of2020 fees are primarily related to the comfort letter for our debt issuance in FY20.2020.
(2)	Consists principally of fees related to tax compliance, tax planning and tax advice services, and tax compliance services related to PTC’s expatriate employees (including assistance with individual tax compliance that PTC provides as a benefit to these employees) as follows:

	Type of Tax Service		2020			2019
	Tax compliance and preparation services (comprised of preparation of original and		$	581,063		$	486,360
	amended tax returns, claims for refunds, and tax payment planning services)
	Tax compliance services related to PTC’s expatriate employees		$	11,493		$	---
	Other tax services, including tax planning and advice services and assistance with tax audits		$	1,410,031		$	955,707
	Total		$	2,002,587		$	1,442,007

	Type of Tax Service		2021			2020
	Tax compliance and preparation services (comprised of preparation of
	original and amended tax returns, claims for refunds, and tax payment
	planning services)		$	564,445		$	581,063
	Tax compliance services related to PTC’s expatriate employees		$	0		$	11,493
	Other tax services, including tax planning and advice services and assistance with tax audits		$	1,700,000		$	1,410,031
	Total		$	2,264,445		$	2,002,587

(3)	Consists of fees for accounting research and compliance software.

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PROPOSAL 3: ADVISORY VOTE TO CONFIRM THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FY21

Report of the Audit Committee

The Audit Committee:

⬢	Reviewed and discussed the audited financial statements for FY20FY21 with management and with PricewaterhouseCoopers LLP;
⬢	Discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board;
⬢	Discussed with PricewaterhouseCoopers LLP its independence from PTC and its management, including the matters in the letter and written disclosures received from PricewaterhouseCoopers LLP as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence; and
⬢	Considered whether the independent auditor’s provision of the non-audit related services to PTC that are described above is compatible with maintaining independence.

Based on the Audit Committee’s review and discussions with management and PricewaterhouseCoopers LLP and the Audit Committee’s review of the independent auditor’s report, to the Committee, theAudit Committee recommended to the Board of Directors that the audited financial statements be included in PTC’s Annual Report on Form 10-K for the year ended

September 30, 20202021 filed with the Securities and Exchange Commission.

Audit Committee

Paul Lacy, Chair
Phillip Fernandez
Corinna Lathan
Robert Schechter

Attendance at the Annual Meeting

Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they so desire and will also be available to respond to appropriate questions from stockholders.

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INFORMATION ABOUT PTC COMMON STOCK OWNERSHIP

INFORMATION ABOUT PTC COMMON STOCK OWNERSHIP

Stockholders that Own at least 5% of PTC

The following table shows all persons we believe to be beneficial owners of more than 5% of PTC common stock as of November 30, 2020.2021. “Beneficial owners” of PTC common stock are those who have the power to vote or to sell that stock. Our information is based in part on reports filed with the Securities and Exchange Commission (SEC) by the firms listed in the table below. If you wish, you may obtain these reports from the SEC.

Stockholder		Number of Shares Beneficially Owned(1)			Percentage of Common Stock Outstanding(2)			Number of Shares Beneficially Owned(1)			Percentage of Common Stock Outstanding(2)
BlackRock, Inc.								14,176,314	(3)		12.03	%
55 East 52nd Street		11,910,555	(3)		10.21	%
New York, NY 10022
The Vanguard Group
100 Vanguard Boulevard								11,714,644	(4)		9.94	%
Malvern, PA 19355
Rockwell Automation, Inc.
1201 South Second Street		10,582,010	(4)		9.07	%		10,582,010	(5)		8.98	%
Milwaukee, WI 53204
The Vanguard Group
100 Vanguard Boulevard		9,875,382	(5)		8.46	%
Malvern, PA 19355

(1)	Shares beneficially owned based on information available to us and applicable regulations. This does not constitute an admission by any stockholder that such stockholder beneficially owns the shares listed.
(2)	For purposes of determining the percentage of common stock outstanding, the number of shares deemed outstanding consists of the 116,662,768117,871,903 shares outstanding as of November 30, 2020.2021.
(3)	As reported on Schedule 13G filed February 3, 2020,January 27, 2021, BlackRock, Inc. is a parent holding company that has beneficial ownership of the shares reported through its subsidiaries. BlackRock has sole voting power over 11,024,95613,396,970 of such shares and sole dispositive power over all 11,910,55514,176,314 shares.
(4)	As reported on Schedule 13D13G filed May 10, 2021, The Vanguard Group is an investment adviser that has shared voting power over 204,320 of such shares, sole dispositive power over 11,243,666 of such shares and shared dispositive power over 470,978 of such shares.
(5)	As reported on Schedule 13D/A filed on July 30, 2018,November 8, 2021, Rockwell Automation Inc. has sole voting and dispositive power over all 10,582,010 shares.
(5)	As reported on Schedule 13G filed February 10, 2020, The Vanguard Group is an investment adviser that has sole voting power over 85,454 of such shares, shared voting power over 28,099 of such shares, sole dispositive power over 9,772,519 of such shares and shared dispositive power over 102,863 of such shares.

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INFORMATION ABOUT PTC COMMON STOCK OWNERSHIP

Stock Owned by Directors and Officers

The following table shows the PTC common stock beneficially owned by PTC’s current directors and named executive officers, as well as all current directors and executive officers as a group, as of November 30, 2020.2021.

Director or Executive Officer		Number of Shares Beneficially Owned(1)			Percentage of Common Stock Outstanding(2)			Number of Shares Beneficially Owned(1)			Percentage of Common Stock Outstanding(2)
Mark Benjamin								—			—
Janice Chaffin		47,562			0.04	%		50,428			0.04%
Phillip Fernandez		20,304			0.02	%
Klaus Hoehn		30,903			0.03	%		33,769			0.03%
Paul Lacy		66,462			0.06	%		64,828			0.05%
Corinna Lathan		5,297			0.00	%		7,017			0.01%
Blake Moret		10,590,241	(3)		9.08	%		10,593,107	(3)		8.99%
Robert Schechter		65,076			0.06	%		62,765			0.05%
James Heppelmann		703,904			0.60	%		898,096			0.76%
Kristian Talvitie		29,968			0.03	%		66,369			0.06%
Michael DiTullio		43,463			0.04	%		86,593			0.07%
Kathleen Mitford		38,508			0.03	%
Troy Richardson								49,949			0.04%
Aaron von Staats		27,414			0.02	%		48,609			0.04%
All directors, nominees for director, and current executive officers as a group (15 persons)		11,690,365	(3)		0.96	%
All directors, nominees for director, and current executive officers								11,961,530	(3)		10.15%
as a group (12 persons)

(1)	Shares beneficially owned based on information available to us and applicable regulations. This does not constitute an admission by any stockholder that such stockholder beneficially owns the shares listed. Unless otherwise indicated, each stockholder has sole voting and investment power over the shares listed.
(2)	For purposes of determining the percentage of common stock outstanding held by any person, the number of shares deemed outstanding consists of the 116,662,768117,871,903 shares outstanding as of November 30, 2020,2021, and any shares subject to RSUs held by the person that vest on or before January 30, 2020.29, 2022.
(3)	10,582,010 of the shares shown are held directly by Rockwell Automation, Inc. Mr. Moret is the Chief Executive Officer and Chairman of the Board of Directors of Rockwell Automation and, in these capacities, may be deemed to share voting and dispositive power with respect to the securities held by Rockwell Automation. Mr. Moret disclaims beneficial ownership of the securities held by Rockwell Automation, and the inclusion of these securities in this proxy statement shall not be deemed an admission by Mr. Moret of beneficial ownership of these shares for any purpose.

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TRANSACTIONS WITH RELATED PERSONS

TRANSACTIONS WITH RELATED PERSONS

Review of Transactions with Related Persons

We have a written policy regarding the review, approval and ratification of transactions involving related persons. Related persons include our directors, executive officers and persons or entities that beneficially own more than 5% of our outstanding common stock and their respective immediate family members as defined in applicable SEC regulations. Our Audit Committee is responsible for reviewing and approving or ratifying any related party transaction exceeding a specified threshold (unless such transaction involves the compensation of an executive officer whose compensation is reviewed and approved by the Compensation Committee). In reviewing such transactions, the Audit Committee considers whether:

⬢	the transaction has an appropriate business purpose,
⬢	the terms of the transaction are not less favorable to PTC than those that could be obtained from an unrelated third party,
⬢	it is necessary or desirable for PTC to enter into the transaction at that time,
⬢	the amount of consideration to be paid or received by PTC is appropriate, and
⬢	entering into the transaction with the related person rather than an independent third party is desirable.

All related person transactions described below were reviewed and approved by the Audit Committee or the Compensation Committee in accordance with such policy.

Transactions with Related Persons

Howard Heppelmann, our General Manager, Smart Connected Operations, Solutions, is the brother of James Heppelmann, our President and Chief Executive Officer. Howard Heppelmann is not an executive officer of PTC. For 2020, Mr. Heppelmann2021, he earned a salary of $280,000 and a performance bonus of $92,625,$158,460, and was granted $299,990$290,000 worth of service-based RSUs, for 2020, which RSUs vest in three substantially equal installments in November 2020, 2021, 2022 and 20222023 if he meets the applicable service criteria. The amounts paid were commensurate with those of his peers.

Maximo Albea Rodriguez, a Principal Consultant in our Professional Services group, is the husband of Eduarda Camacho, who was our Executive Vice President and Chief Customer Officer.Officer through July 2021. For 2020,2021, Mr. Rodriguez earned a salary of $117,827,$118,500, a performance bonus of $11,397, and commissions of $14,888,$25,926, and was granted $19,933$25,000 service-based RSUs, which RSUs vest in three substantially equal installments in June 2021,May 2022, 2023 and 20232024 if he meets the applicable service criteria. The amounts paid were commensurate with those of his peers.

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STOCK PERFORMANCE GRAPH

The Stock Performance Graph below compares the cumulative stockholder return on our common stock from September 30, 2015 to September 30, 2020 with the cumulative return over the same period of:

⬢	the S&P 500 Index,
⬢	the NASDAQ Composite Index, and
⬢	the NASDAQ Computer & Data Processing Index.

The Stock Performance Graph assumes that the value of the investment in PTC common stock and each of the comparison groups was $100 on September 30, 2015 and assumes the reinvestment of dividends. We have never declared a cash dividend on our common stock.

The stock price performance depicted in the graph below is not necessarily indicative of future price performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*STOCKHOLDER PROPOSALS AND NOMINATIONS

among PTC INC, the S&P 500 Index, the NASDAQ Composite Index and the NASDAQ Computer & Data Processing Index

*	$100 invested on 9/30/15 in stock or index, including reinvestment of dividends. Fiscal year ending September 30.

		9/30/2015			9/30/2016			9/30/2017			9/30/2018			9/30/2019			9/30/2020
PTC INC.		$	100.00		$	139.60		$	177.32		$	334.56		$	214.81		$	260.62
S&P 500		$	100.00		$	115.43		$	136.91		$	161.43		$	168.30		$	193.80
NASDAQ Composite		$	100.00		$	116.42		$	144.00		$	180.24		$	181.19		$	255.40
NASDAQ Computer & Data Processing		$	100.00		$	127.45		$	164.74		$	213.16		$	225.69		$	320.39

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STOCKHOLDER PROPOSALS AND NOMINATIONS

How to Submit a Proposal

We plan to hold the 20222023 Annual Meeting of Stockholders on February 9, 2022.16, 2023. If you wish to nominate a person for election as a director or make another proposal for consideration at the 20222023 Annual Meeting, you must give written notice to us between August 31, 202122, 2022 and September 30, 2021,21, 2022, including the information required by our by-laws. The information required by our by-laws with respect to director nominations is described below.

In accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, some proposals may be included in our proxy statement and proxy card. If you desire that such a proposal be included in our proxy statement and proxy card, you must give written notice to us no later than August 31, 2021.22, 2022.

Your written proposal must be sent to:		AaronAARON C. von StaatsVON STAATS
		Secretary
		PTC Inc.
		121 Seaport Boulevard Boston, Massachusetts 02210

In order to limit controversy as to the date on which PTC receives a proposal, you should submit your proposal by Certified Mail-Return Receipt Requested.

Information to be Provided in Connection with Director Nominations

If you wish to recommend a person for election as a director, your proposal should include the information described below and a brief statement describing the reasons you believe the person would be an effective director for PTC.

Candidates recommended by stockholders are reviewed in the same manner and using the same general criteria as candidates recommended by the Nominating Committee and/or the Board.

Information about the Director Nominee

You must provide the following information about the director nominee:

⬢	theThe name, age, and business and residence addresses of the person,
⬢	theThe principal occupation or employment of the person for the past five years, as well as information about any other board of directors and board committee on which the person has served during that period,
⬢	theThe number of shares of PTC stock, if any, beneficially owned by the person,
⬢	whetherWhether or not the person is currently “independent” from PTC under the independence standards of the NASDAQ Stock Market and all facts that currently prevent the person from being independent under such standards, if applicable, and
⬢	anyAny other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.

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STOCKHOLDER PROPOSALS AND NOMINATIONS

Information about the Nominating Stockholder

You must provide the following information about yourself:

⬢	yourYour name and record address and the name and address of the beneficial owner of our shares, if any, on whose behalf the proposal is made,
⬢	aA description of all familial, compensatory, financial and/or other relationships, arrangements and transactions, existing at any time within the preceding three years or currently proposed, between the director nominee and you or the beneficial owner of our shares on whose behalf the proposal is made, if any, or any of your or their respective affiliates and associates, and
⬢	theThe details of all the following that are held and/or beneficially owned, directly or indirectly, including through any entity, by you and by such beneficial owner, if any:

⬢	theThe number of shares of PTC stock,
⬢	anyAny option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to PTC stock or with a value derived in whole or in part from the value of PTC stock, whether or not such instrument or right is subject to settlement in PTC stock or otherwise (a “derivative instrument”) and any other direct or indirect opportunity of any such person to profit or share in any profit derived from any increase or decrease in the value of PTC stock,
⬢	anyAny proxy, contract, arrangement, understanding, or relationship pursuant to which you or such other beneficial owner, if any, has a right to vote any shares of PTC stock,
⬢	anyAny short interest in PTC stock (that is, if you directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, could profit or share in any profit derived from any decrease in the value of PTC stock),
⬢	anyAny rights to dividends on PTC stock that are separated or separable from PTC stock, and
⬢	anyAny performance-related fees (other than an asset-based fee) that you or such beneficial owner, if any, is entitled to, based on any increase or decrease in the value of PTC stock or derivative instruments, if any, as of the date of your notice, including without limitation any such interest held by members of your immediate family sharing the same household.

The Nominating Committee may require any proposed nominee to furnish such other information as it may reasonably require to determine the proposed nominee’s eligibility, or lack thereof, to serve as a director of PTC.

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ADDITIONAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

ADDITIONAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Proposals to Be Voted on at the Meeting and Voting Standard

Proposal		Board Recommendation		Vote Required(1)		Broker Discretionary Voting Allowed
Elect eight directors to serve until the 20222023 Annual Meeting of Stockholders.		✓FOR		Plurality(2)		No
Advisory vote to approve the compensation of our named executive officers (say-on-pay).		✓FOR		Majority Votes Cast		No
Advisory vote to confirm the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current fiscal year.		✓FOR		Majority Votes Cast		Yes

(1)

Plurality means that the nominees for director receiving the greatest number of votes will be elected. Majority means that a proposal that receives an affirmative majority of the votes cast will be approved. Broker Discretionary Voting occurs when a broker does not receive voting instructions from the beneficial owner and votes those shares in its discretion on any proposal on which it is permitted to vote.

(2)

PTC has a majority voting policy under which a director who receives more “Withhold” votes than “For” votes is required to tender his or her resignation and the board is required to evaluate the proposed resignation and announce its decision with respect to such resignation.

Effect of Abstentions and Broker Non-Votes

If you abstain from voting on any of the proposals, or if your broker or bank does not vote on any proposal because it has not received instructions from you and is not permitted to vote in its discretion (a broker non-vote), it will not count as a vote for or against any proposal.

Voting by Proxy

You may vote by proxy using the Internet by following the instructions on your notice or proxy card. If you requested a printed set of materials, you may also vote by telephone or by mail by following the instructions on the proxy card.

Voting methods differ depending on whether you are a registered stockholder (that is, you hold your stock in your own name) or you hold your shares in “street name” (that is, in the name of a brokerage firm or bank that holds your securities account). In either case, you must follow the procedures described on your notice or proxy card.

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ADDITIONAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

When you vote, you are giving your “proxy” to the individuals we have designated to vote your shares at the meeting as you direct. If you do not make specific choices, they will vote your shares in accordance with the Board’s recommendations as set forth above. If any matter not listed in the Notice of Meeting is properly presented at the Annual Meeting, they will vote your shares in accordance with their best judgment. As of the date hereof, we knew of no matters that needed to be acted on at the meeting other than as discussed in this proxy statement.

Whether you plan to attend the Annual Meeting or not, we encourage you to vote promptly. Voting promptly will not affect your right to attend the Annual Meeting. If you wish to vote at the Annual Meeting despite having voted previously, you may do so by following the procedure described below under Revoking Your Proxy and How You May Vote in Person.

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ADDITIONAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Revoking Your Proxy

You may change your vote after you have voted as described below.

If you hold your shares in “street name” (that is, you hold your shares through a bank or a brokerage account, as most people do), you must follow the procedures required by the brokerage firm or bank through which you hold your shares to revoke your proxy. You should contact that firm or bank directly for more information on those procedures.

If you are a registered stockholder (that is, you hold your shares directly and not through a bank or brokerage account), you may revoke your proxy by following any of these procedures:

⬢	Vote again using the same method you used to vote your shares (which will supersede your earlier vote);
⬢	Send a letter revoking your proxy to PTC’s Secretary at the address indicated under “Stockholder Proposals and Nominations;” or
⬢	Attend the Annual Meeting, notify us in writing that you are revoking your proxy and vote in person.

Confidentiality of Voting and Tabulation of the Votes

We keep all the proxies, ballots and voting tabulations confidential. Broadridge Financial Solutions, Inc. acts as tabulator and will forward to management any written comments that you make on the proxy card without providing your name.

Announcement of Voting Results

We will provide the voting results in a Current Report on Form 8-K filed with the Securities and Exchange Commission within four business days after the Annual Meeting.

Costs of Soliciting Proxies

PTC will pay all the costs of soliciting proxies. In addition to mailing the notices and providing these proxy materials, our directors and employees may solicit proxies by telephone, fax or other electronic means of communication, or in person. Okapi Partners LLC is assisting us with the solicitation of proxies for a fee of $15,000, plus customary disbursements. We will reimburse banks, brokers, nominees, and other fiduciaries for the expenses they incur in forwarding the proxy materials to you.

Questions

If you have any questions about the Annual Meeting or your ownership of PTC Inc. - 2021 Proxy Statementcommon stock, please contact PTC Investor Relations by telephone at (781) 370-5000 or email at 73IR@ptc.com.

By Order of the Board of Directors,

AARON C. VON STAATS
Secretary
December 20, 2021

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ADDITIONAL INFORMATION ABOUT THEOBTAINING A COPY OF OUR ANNUAL MEETING AND VOTING

Obtaining a Copy of Our Annual Report on FormREPORT ON FORM 10-K

A copy of our Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the year ended September 30, 2020,2021, was made available with this proxy statement. You may obtain another copy of our Annual Report on Form 10-K free of charge on our website at www.ptc.com or by contacting PTC Investor Relations at:at:

Investor Relations
PTC Inc.	Phone: (781) 370-5000
121 Seaport Boulevard	Email: ir@ptc.cominvestor@ptc.com
Boston, MA 02210

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If you have any questions about the Annual Meeting or your ownershipTable of PTC common stock, please contact PTC Investor Relations by telephone at (781) 370-5000 or email at IR@ptc.com.

By Order of the Board of Directors,

AARON C. VON STAATS
ContentsSecretary
December 29, 2020

74DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Exchange Act requires that our executive officers and directors and other persons who beneficially own more than 10% of a registered class of our equity securities file with the SEC reports of ownership and reports of changes in ownership of shares and other equity securities. Such executive officers and directors and other persons who beneficially own more than 10% of a registered class of our equity securities are required by the SEC to furnish us with copies of all such ownership reports filed by such reporting persons.

Based solely on our review of such reports furnished to us or written representations provided to us by the reporting persons, we believe that all applicable ownership reporting requirements were complied with in the year ended September 30, 2021, except that one Form 4, covering four equity grants made on November 16 and November 17, 2020, was filed late by Mr. Richardson due to a minor delay obtaining EDGAR filing codes due the COVID-19 pandemic, and one Form 5 covering two small family gifts was filed late by Mr. Lacy due to an internal clerical error.

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APPENDIX A

Operating MeasuresBY-LAW AMENDMENT

ACV AND NET NEW ACVOverview

ACV isOn June 24, 2021, the total valueBoard of a renewable customer contract divided byDirectors amended PTC’s Amended and Restated By-Laws to provide that, unless PTC consents in writing to the termselection of an alternative forum, the federal district courts of the contract (in days), multipliedUnited States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.

Reason for Amendment

In March 2018, the Supreme Court ruled that certain class actions under the U.S. securities laws related to securities offerings may be brought in state court and are not removable to federal court. This upended the common understanding that such claims could be removed to federal court and adjudicated under well-established and consistent jurisprudence. As such, this enabled putative class-action plaintiffs to avoid federal court and pursue such claims in state court, introducing the well-recognized perils associated with forum-shopping and inconsistent, unpredictable standards across multiple jurisdictions that potentially require companies to defend multiple lawsuits on the same matter in multiple jurisdictions at unnecessary expense to companies with unpredictable outcomes. The amendment does not deprive putative class action plaintiffs of remedies for alleged securities laws violations, it merely enables the company to remove such actions to federal court and be subject to established and consistent standards. This is expected to benefit stockholders by 365.reducing litigation costs and enabling informed and fair settlements of those types of securities claims.

Net New ACV is New ACV generatedBy-Law Amendment

The amendment added the following language to Section 5.9 of PTC’s Amended and Restated By-Laws:

“Unless the corporation consents in writing to the fiscal year lessselection of an alternative forum, the ACVfederal district courts of contracts that churn during the fiscal year.United States of America shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Section 5.9.”

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APPENDIX A

Operating Measure

ARR

ARR (Annual Run Rate) represents the annual value of our portfolio of active renewable customer contracts as of the end of the reporting period, including subscription software, cloud, and support contracts. ARR includes IoT and AR orders placed under our Strategic Alliance Agreement with Rockwell Automation and includes orders placed to satisfy contractual quarterly minimum commitments. ARR is adjusted to eliminate the effect of the Arena acquisition and foreign exchange rates over the course of the year.

We believe ARR is a valuable operating metric to measure the health of a subscription business because it captures expected subscription and support cash generation from new customers, existing customer renewals and expansions, and includes the impact of churn, which reflects gross churn, offset by the impact of any pricing increases.

Because this measure represents the annual value of renewable customer contracts as of the end of a reporting period, ARR does not represent revenue for any particular period or remaining revenue that will be recognized in future periods.

Non-GAAP Financial Measures

FREE CASH FLOW

Free cash flow is cash flow from operations less capital expenditures. Free cash flow is not a measure of cash available for discretionary expenditures.

NON-GAAP EPS

Non-GAAP EPS excludes the effect of the following items: fair value of acquired deferred revenue, fair value adjustment to deferred services cost, stock-based compensation, amortization of acquired intangible assets, acquisition-related and other transactional charges included in general and administrative costs, restructuring and other charges, debt early redemption premium and write-off of issuance costs associated with the extinguished debt and income tax adjustments.

Additional information about the items we exclude from our non-GAAP financial measures and the reasons we exclude them can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measuresof our Annual Report on Form 10-K for the fiscal year ended September 30, 2020,2021, which accompanies this proxy statement.

Non-GAAP Financial Measures used under Our Executives’ Performance-Based Compensation

We use non-GAAP operating expense and adjusted free cash flow as performance measures because these measures exclude items that are not, in our view, indicative of our core operating results or that are not easily predictable for future periods.

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APPENDIX A

ADJUSTED FREE CASH FLOW

Adjusted free cash flow is net cash provided by operations less capital expenditures, restructuring payments, and acquisition-related payments, and application of a restructuring adjustment, foreign exchange rate adjustment, and a tax addback adjustment to eliminate the effect of restructuring payments, foreign exchange rates, and certain tax payments over the course of the year. Adjusted free cash flow is not a measure of cash available for discretionary expenditures.

NON-GAAP OPERATING EXPENSE

Non-GAAP operating expense excludes stock-based compensation expense, acquisition-related costs and other transactional expenses, restructuring and other charges (net) and amortization of acquired intangible assets, and application of a foreign exchange rate adjustment, Arena acquisition adjustment, and an add back expense from over-achievement of commissions and the Corporate Incentive Plan to eliminate the effect of foreign exchange rates, the Arena acquisition, and the overage in commissions and bonus expense due to overachievement of targets over the course of the year.

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APPENDIX A

Reconciliation of GAAP Results to Non-GAAP Financial Measures

		FY20				FY19
		(amounts in millions, except per-share amounts)
Cash Flow from Operations		$	233.8			$	285.1
Capital Expenditures			(20.2	)			(64.4	)
Free Cash Flow		$	213.6			$	220.7
Restructuring Payments			42.0				24.7
Acquisition-related Payments			9.6				—
Adjusted Free Cash Flow		$	265.2			$	245.5
Foreign Exchange Rate Adjustment			—				2.5
Adjusted Free Cash Flow for FY19 PSUs		$	265.2			$	248.0
GAAP Operating Expense		$	913.3			$	867.2
Stock-based compensation			(101.2	)			(74.5	)
Amortization of acquired intangible assets			(28.7	)			(23.8	)
Acquisition-related and other transactional charges included in general and administrative expenses			(8.6	)			(3.1	)
Restructuring and other charges, net			(32.7	)			(51.1	)
Non-GAAP Operating Expense		$	742.1			$	714.7
Foreign Exchange Rate Adjustment			(1.5	)
Non-GAAP Operating Expense for FY20 CIP		$	740.6
GAAP diluted earnings (loss) per share		$	1.12			$	(0.23	)
Fair value adjustment of acquired deferred revenue			—				0.01
Stock-based compensation			0.99				0.73
Total amortization of acquired intangible assets			0.48				0.43
Acquisition-related and other transactional charges included in general and administrative expenses			0.07				0.03
Restructuring and other charges, net			0.28				0.43
Non-operating charges			0.16				—
Income tax adjustments			(0.54	)			0.25
Non-GAAP diluted earnings per share		$	2.57			$	1.64

		FY20			FY21
ARR as reported		$	1,270		$	1,475
Foreign exchange rate adjustment			—			5
Exclusion of impact of Arena acquisition			—			(59	)
Adjusted ARR for FY21 CIP, FY21 PSUs, and CEO PSUs		$	1,270		$	1,420

					Growth
ARR growth as reported						16%
Foreign exchange rate growth adjustment						0%
Exclusion of impact of Arena acquisition on growth						-5%
Adjusted ARR growth for FY21 CIP, FY20 PSUs, and CEO PSUs						12%

					FY21
GAAP operating expense					$	1,055
Stock-based compensation						(158	)
Amortization of acquired intangible assets						(29	)
Acquisition-related and other transactional charges						(15	)
Restructuring and other charges, net						(2	)
Non-GAAP operating expense					$	851
Foreign exchange rate adjustment						(6	)
Acquisition of Arena						(21	)
Add back expense from over-achievement of commission and CIP						(8	)
Adjusted non-GAAP operating expense for FY21 CIP					$	816

		FY20				FY21
Cash from operations		$	234			$	369
Capital expenditures			(20	)			(25	)
Free cash flow		$	214			$	344
Impact of restructuring payments			42				15
Foreign exchange rate adjustment			—				(6	)
Non-ordinary course tax addback			—				18
Adjusted free cash flow for FY19 PSUs, FY21 PSUs, and CEO PSUs		$	256			$	370

						Growth
Free cash flow growth						61%
Restructuring payments growth adjustment						-22%
Foreign exchange rate growth adjustment						-3%
Non-ordinary course tax addback growth adjustment						8%
Adjusted free cash flow growth for FY19 PSUs, FY21 PSUs, and CEO PSUs						45%

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REDUCING THE ENVIRONMENTAL IMPACT OF OUR SOLICITATIONS

REDUCING THE ENVIRONMENTAL IMPACT OF OUR SOLICITATIONS

Electronic Delivery of Proxy Materials

We began providing proxy materials electronically to our stockholders in connection with our 2008 Annual Meeting of Stockholders and provide printed proxy materials only to stockholders that request them. This has reduced the number of proxy statements and Annual Reports on Form 10-K that are printed and mailed each year from 43,000 copies of each document in 2007 to approximately 2,000 copies of each document each year.

If you currently receive printed copies of our proxy materials and you would like to reduce the environmental impact associated with printing and mailing future proxy materials to you, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the Internet voting instructions on your notice or proxy card and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

Materials Sent to Stockholders Sharing the Same Surname and Address

Stockholders holding their shares in a brokerage account or bank account that share the same surname and address generally receive only one copy of the notice or materials. This practice conserves natural resources and reduces duplicate mailings and associated printing and postage costs. If you would like to receive a separate copy of the notice, our annual report and/or proxy statement, as applicable, or to receive separate copies of future mailings, please submit your request to the address or phone number that appears on your notice or proxy card. We will deliver such additional copies promptly upon receipt of such request. Stockholders receiving multiple copies at the same address may request that they receive only one. To do so, please submit your request to the address or phone number that appears on your notice or proxy card.

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PTC INC.
121 SEAPORT BOULEVARD
BOSTON, MA 02210

SCAN TO VIEW MATERIALS & VOTE

VOTE BY INTERNET - www.proxyvote.com
www.proxyvote.com or scan the QR Barcode above

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the website and followFollow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by usour company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D28131-P45432D62952-P62918	KEEP THIS PORTION FOR YOUR RECORDS
	DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

PTC INC.							For All		Withhold All		For All Except
	The Board of Directors recommends you vote FOR ALL nominees:
	Vote on Directors						☐		☐		☐
	1.	Elect eight directors to serve until the 2022 Annual Meeting of Stockholders.
		Nominees:
		01)	Janice Chaffin	05)	Paul Lacy
		02)	Phillip Fernandez	06)	Corinna Lathan
		03)	James Heppelmann	07)	Blake Moret
		04)	Klaus Hoehn	08)	Robert Schechter

PTC INC.							For All		Withhold All		For All Except
	The Board of Directors recommends you vote FOR ALL nominees:
	Vote on Directors						☐		☐		☐
	1.	Elect eight directors to serve until the 2023 Annual Meeting of Stockholders.
		Nominees:
		01)	Mark Benjamin	05)	Paul Lacy
		02)	Janice Chaffin	06)	Corinna Lathan
		03)	James Heppelmann	07)	Blake Moret
		04)	Klaus Hoehn	08)	Robert Schechter

To withhold authority to vote for any individual nominee(s), mark “For"For All Except”Except" and write the number(s) of the nominee(s) on the line below.

	Vote on Proposals
	The Board of Directors recommends you vote FOR the following proposals:					For		Against		Abstain
	2.	Advisory vote to approve the compensation of our named executive officers (say-on-pay).				☐		☐		☐
	3.	Advisory vote to confirm the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current fiscal year.				☐		☐		☐

		Yes		No
	Please indicate if you plan to attend this meeting.	☐		☐
	Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

	Signature [PLEASE SIGN WITHIN BOX]	Date		Signature (Joint Owners)	Date

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.

 

 

 

 

D28132-P45432D62953-P62918

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

PTC INC.

PROXY FOR THE 20212022 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON FEBRUARY 10, 2021JANUARY 31, 2022

The undersigned, revoking all prior proxies, hereby appoints Aaron von Staats and Catherine Gorecki, or either of them acting singly, as proxies, each with the power to appoint a substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of the ballot, all of the shares of common stock of PTC Inc. ("PTC") that the undersigned is entitled, if personally present, to vote at the 20212022 Annual Meeting of Stockholders to be held at 8:00 a.m.12:30 p.m., local time, on Wednesday, February 10, 2021Monday, January 31, 2022 at PTC Inc., 121 Seaport Boulevard, Boston, MA 02210, and any adjournment or postponement thereof.

You may vote at the Annual Meeting if you were a PTC stockholder at the close of business on December 14, 2020.2, 2021. Your attendance at the Annual Meeting will not be deemed to revoke this proxy unless you revoke this proxy in writing and vote in person at the Annual Meeting. Along with this proxy, we are sending you Notice of the Annual Meeting and the related Proxy Statement, as well as our Annual Report to Stockholders, including our Annual Report on Form 10-K with our financial statements, for the year ended September 30, 2020.2021.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF THE SIGNED PROXY IS RETURNED BUT NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE SIDE AND FOR PROPOSALS 2 AND 3. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

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