sdgr-20230426

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. )


Filed by the Registrant			x			Filed by a Party other than the Registrant			o

Check the appropriate box:


o			Preliminary Proxy Statement
o			Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x			Definitive Proxy Statement
o			Definitive Additional Materials
o			Soliciting Material Pursuant to §240.14a-12

SCHRÖDINGER, INC.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check all boxes that apply):


x			No fee required
o			Fee paid previously with preliminary materials
o			Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

1540 Broadway, 24th Floor

New York, New York 10036

NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on Thursday, June 15, 2023

Dear Stockholders:

You are cordially invited to virtually attend the 2023 annual meeting of stockholders, or the Annual Meeting, of Schrödinger, Inc. The Annual Meeting will be held via the Internet at a virtual audio web conference at www.virtualshareholdermeeting.com/SDGR2023 on Thursday, June 15, 2023, at 10:00 a.m., Eastern time.

At the Annual Meeting, the stockholders will consider and vote on the following matters:

1.Election of three Class III directors, Richard A. Friesner, Rosana Kapeller-Libermann and Gary Sender, each to serve for a three-year term expiring at the 2026 annual meeting of stockholders and until his or her respective successor has been duly elected and qualified;

2.Approval of an advisory vote on executive compensation;

3.Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and

4.Transaction of any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof.

Our Annual Meeting will be a “virtual meeting” of stockholders, which will be conducted exclusively via the Internet at a virtual web conference. There will not be a physical meeting location, and stockholders will not be able to attend the Annual Meeting in person. This means that you can attend the Annual Meeting online, vote your shares during the online meeting and submit questions during the online meeting. We believe that hosting a “virtual meeting” will enable greater stockholder attendance and participation from any location around the world.

You can find more information, including the nominees for director, in the proxy statement for the Annual Meeting, which is available for viewing, printing and downloading at www.proxyvote.com. The board of directors recommends that you vote “FOR” each of the Class III directors (Proposal No. 1), “FOR” the approval of the advisory vote on executive compensation, commonly referred to as the “say-on-pay” vote (Proposal No. 2), and “FOR” the ratification of the appointment of our independent registered public accounting firm (Proposal No. 3) as outlined in the attached proxy statement.

We are pleased to comply with the rules of the Securities and Exchange Commission that allow companies to distribute their proxy materials over the Internet under the “notice and access” approach. As a result, we plan to send to our stockholders a Notice of Internet Availability of Proxy Materials, or the Notice of Availability, instead of a paper copy of the proxy statement and our annual report for the fiscal year ended December 31, 2022, or the 2022 Annual Report. We plan to mail the Notice of Availability on or about April 27, 2023, and the Notice of Availability contains instructions on how to access our proxy materials over the Internet. The Notice of Availability also contains instructions on how each of our stockholders can request a paper copy of our proxy materials, including the proxy statement, our 2022 Annual Report, and a form of proxy card.

Stockholders of record at the close of business on April 19, 2023, the record date for the Annual Meeting, are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.

Your vote is important to us regardless of the number of shares you own. Whether or not you expect to virtually attend the Annual Meeting online, please vote your shares to ensure your representation and the presence of a quorum at the Annual Meeting. If you are a stockholder of record, you may vote your shares by proxy prior to the Annual Meeting on the Internet by visiting www.proxyvote.com, by telephone by calling 1-800-690-6903 and following the recorded instructions, or by completing, signing, dating, and returning a proxy card. If you mail your proxy card or vote by telephone or the Internet and then decide to attend the Annual Meeting and vote your shares online during the Annual Meeting, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the proxy statement.

If your shares are held in “street name,” that is, held for your account by a bank, broker or other nominee, you will receive instructions from the bank, broker or other nominee that you must follow for your shares to be voted.

If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor:

Georgeson LLC

1290 Avenue of the Americas, 9th Floor, New York, NY 10104

(800) 561-3947 (toll-free in North America)

+1 (781) 575-2137 (outside of North America)

A complete list of registered stockholders will be available to stockholders of record for examination at 1540 Broadway, 24th Floor, New York, New York 10036 during the 10-day period ending on the day before the Annual Meeting. Further information about how to attend the Annual Meeting online, vote your shares and submit questions is included in the accompanying proxy statement.


			By Order of the Board of Directors,
			/s/ Yvonne Tran

			Yvonne Tran Chief Legal Officer and Corporate Secretary

New York, New York April 27, 2023

Important Notice Regarding Internet Availability of Proxy Materials for the 2023 Annual Meeting of Stockholders to be held on June 15, 2023: The attached proxy statement and our 2022 annual report to stockholders, which includes our annual report on Form 10-K for the fiscal year ended December 31, 2022, are available for viewing, printing and downloading at www.proxyvote.com. These documents are also available to any stockholder who wishes to receive a paper copy upon written request to Schrödinger, Inc., 1540 Broadway, 24th Floor, New York, New York 10036, Attention: Investor Relations. The proxy statement and our annual report on Form 10-K for the fiscal year ended December 31, 2022 are also available on the SEC’s website at http://www.sec.gov.

TABLE OF CONTENTS


INFORMATION CONCERNING SOLICITATION AND VOTING			1
IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING			2
PROPOSAL NO. 1—ELECTION OF THREE CLASS II I DIRECTORS			8
PROPOSAL NO. 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION			13
PROPOSAL NO. 3 —RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 202 3			14
CORPORATE GOVERNANCE			15
EXECUTIVE AND DIRECTOR COMPENSATION			24
EXECUTIVE COMPENSATION TABLES			44
TRANSACTIONS WITH RELATED PERSONS			62
PRINCIPAL STOCKHOLDERS			65
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS			68
STOCKHOLDER PROPOSALS FOR OUR 202 4 ANNUAL MEETING OF STOCKHOLDERS			69
STOCKHOLDERS SHARING THE SAME ADDRESS			70
OTHER MATTERS			71

Schrodinger Logo_Horizontal_Color_RGB-3599x705-a1ae66a.jpg

1540 Broadway, 24th Floor

New York, New York 10036

(212) 295-5800

PROXY STATEMENT

2023 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on Thursday, June 15, 2023

INFORMATION CONCERNING SOLICITATION AND VOTING

This proxy statement contains information about the Annual Meeting of Stockholders of Schrödinger, Inc., or the Annual Meeting, to be held on Thursday, June 15, 2023, at 10:00 a.m., Eastern time. The Annual Meeting will be held via the Internet at www.virtualshareholdermeeting.com/SDGR2023. There will not be a physical meeting location, and stockholders will not be able to attend the Annual Meeting in person. Further information about how to attend the Annual Meeting online is included in this proxy statement.

The board of directors of Schrödinger, Inc. is using this proxy statement to solicit proxies for use at the Annual Meeting and at any adjournment or postponement of that meeting. In this proxy statement, unless expressly stated otherwise or the context otherwise requires, references to “Schrödinger,” “the Company,” “we,” “us,” “our” and similar terms refer to Schrödinger, Inc. References to our website are inactive textual references only and the contents of our website are not incorporated by reference into this proxy statement.

All properly submitted proxies will be voted in accordance with the instructions contained in those proxies. If no instructions are specified, the shares represented by the proxies will be voted in accordance with the recommendations of our board of directors.

Instead of mailing a paper copy of our proxy materials to all of our stockholders, we are providing access to our proxy materials over the Internet under the Securities and Exchange Commission’s “notice and access” rules. As a result, we are mailing to our stockholders a Notice of Internet Availability of Proxy Materials, or the Notice of Availability, instead of a paper copy of this proxy statement and our annual report for the fiscal year ended December 31, 2022, or the 2022 Annual Report. We plan to mail the Notice of Availability on or about April 27, 2023, and the Notice of Availability contains instructions on how to access our proxy materials over the Internet. The Notice of Availability also contains instructions on how each of our stockholders can request a paper copy of our proxy materials, including this proxy statement, our 2022 Annual Report, and a form of proxy card.

Important Notice Regarding the Availability of Proxy Materials for

the Annual Meeting of Stockholders to be Held on June 15, 2023:

This proxy statement and our 2022 Annual Report are

available for viewing, printing and downloading at www.proxyvote.com.

A copy of our annual report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission, or SEC, except for exhibits, will be furnished without charge to any stockholder upon written request Schrödinger, Inc., 1540 Broadway, 24th Floor, New York, New York 10036, Attention: Investor Relations. This proxy statement and our annual report on Form 10-K for the fiscal year ended December 31, 2022 are also available on the SEC’s website at http://www.sec.gov.

IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Q: What is the Purpose of the Annual Meeting?

A: At the Annual Meeting, our stockholders will consider and vote on the following matters:

2.Approval of an advisory vote on executive compensation;

3.Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and

4.Transaction of any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof.

As of the date of this proxy statement, we are not aware of any business to come before the meeting other than the first three items noted above.

Q: How Does the Board of Directors Recommend that I Vote on the Proposals?

A: Our board of directors unanimously recommends that you vote:

FOR the election of the three nominees to serve as Class III directors on our board of directors, each for a three-year term expiring at the 2026 annual meeting of stockholders and until his or her respective successor has been duly elected and qualified;

FOR the approval of the advisory vote on executive compensation; and

FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023.

How Can I Access the Proxy Materials?

The proxy materials, including this proxy statement, a proxy card and our 2022 Annual Report are available for viewing, printing and downloading on the Internet at www.proxyvote.com. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting paper materials in the Notice of Availability.

Q: Who Can Vote at the Annual Meeting?

A: Only stockholders at the close of business on the record date of April 19, 2023 are entitled to receive notice of the Annual Meeting and to vote the shares of our common stock and/or limited common stock that they held on that date. As of April 19, 2023, there were 62,365,703 shares of our common stock issued and outstanding and 9,164,193 shares of our limited common stock issued and outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting. Each share of limited common stock is entitled to one vote on each matter properly brought before the Annual Meeting, except for the election or removal of directors. Accordingly, each share of limited common stock is not entitled to vote on Proposal No. 1, but may vote on Proposal No. 2 and Proposal No. 3.

Q: What is the Difference Between a “Stockholder of Record” and a Beneficial Owner of Shares Held in “Street Name”?

A: Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are considered the “stockholder of record” of those shares. In this case, your Notice of Availability has been sent to you directly by us. You may vote your shares by proxy prior to the Annual Meeting by following the instructions contained in the Notice of Availability and in the section titled “How Do I Vote?” below.

Beneficial Owner of Shares Held in Street Name. If your shares are held by a bank, broker or other nominee, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, your Notice of Availability will be sent to you by that organization. The organization holding your shares is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization as to how to vote the shares held in your account by following the instructions contained on the voting instruction form provided to you by that organization.

Q: Why is the Annual Meeting a Virtual, Online Meeting?

A: We believe that hosting a virtual meeting will facilitate stockholder attendance and participation at our Annual Meeting by enabling stockholders to participate from any location around the world. Our virtual meeting will be governed by our Rules of Conduct and Procedures which will be posted and accessible during the Annual Meeting at www.virtualshareholdermeeting.com/SDGR2023. We have designed the virtual annual meeting to provide stockholders with the same rights and opportunities to participate as stockholders would have had at an in-person meeting, including the right to vote and ask questions through the virtual meeting platform.

Q: How Do I Virtually Attend the Annual Meeting?

A: The Annual Meeting will be a virtual meeting and you may not attend in person. The Annual Meeting will start at 10:00 a.m., Eastern time, on June 15, 2023. You may log on to the virtual meeting at www.virtualshareholdermeeting.com/SDGR2023 starting 30 minutes before it begins. We will have technicians standing by and ready to assist you with any technical difficulties you may have accessing the virtual meeting starting at 9:45 a.m., Eastern time, on June 15, 2023. If you encounter any difficulties accessing the virtual Annual Meeting, please contact technical support by following the instructions and technical support contact information, which will be provided to you at the virtual meeting website listed above.

Q: How Do I Vote?

A: If you are the stockholder of record of your shares, you can vote your shares by proxy prior to the Annual Meeting or online during the Annual Meeting. If you choose to vote by proxy prior to the Annual Meeting, you may do so by telephone, via the Internet or by mail as follows:

•By Telephone Prior to the Annual Meeting. You may transmit your proxy over the phone by calling 1-800-690-6903 and following the instructions provided in the Notice of Availability and on the proxy card. You will need to have your Notice of Availability or proxy card in hand when you call.

•Via the Internet Prior to the Annual Meeting. You may transmit your proxy via the Internet by following the instructions provided in the Notice of Availability and on the proxy card. You will need to have your Notice of Availability or proxy card in hand when you access the website. The website for voting is available at www.proxyvote.com.

•By Mail Prior to the Annual Meeting. If you requested printed copies of proxy materials, you may vote by mailing your proxy card as described in the proxy materials.

Telephone and Internet voting for stockholders of record will be available until 11:59 p.m. Eastern time on June 14, 2023, and mailed proxy cards must be received by 11:59 p.m. Eastern time on June 14, 2023, in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended.

If you choose to vote online during the Annual Meeting, you may vote your shares electronically while virtually attending the Annual Meeting by following the instructions found on your Notice of Availability, proxy card and/or voting instruction form. If you vote by proxy prior to the Annual Meeting and choose to attend the Annual Meeting online, there is no need to vote again during the Annual Meeting unless you wish to change your vote.

If your shares are held in street name, your bank, broker or other nominee is required to vote the shares it holds on your behalf according to your instructions. The proxy materials, as well as voting and revocation instructions, will be forwarded to you by the bank, broker or other nominee that holds your shares. In order to vote your shares you will need to follow the instructions that your bank, broker or other nominee provides you. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the bank,

broker or other nominee that holds your shares. Therefore, we urge you to carefully review and follow the voting instruction form and any other materials that you receive from that organization.

Even if you plan to attend the Annual Meeting online, we urge you to vote your shares by proxy in advance of the Annual Meeting so that, if you become unable to attend the Annual Meeting, your shares will be voted as directed by you.

Q: Can I Vote My Shares by Filling Out and Returning the Notice of Internet Availability of Proxy Materials?

A: No. The Notice of Availability and proxy card contain instructions on how to vote by proxy via the Internet, by telephone, by requesting and returning a paper proxy card, or by voting online while virtually attending the Annual Meeting.

Q: How Do I Submit a Question for the Annual Meeting?

A: Questions may be submitted prior to the Annual Meeting at www.proxyvote.com or you may submit questions in real time during the Annual Meeting using our Annual Meeting platform at www.virtualshareholdermeeting.com/SDGR2023. Our virtual meeting will be governed by our Rules of Conduct and Procedures which will be posted and accessible during the Annual Meeting at www.virtualshareholdermeeting.com/SDGR2023. The Rules of Conduct and Procedures will address the ability of stockholders to ask questions during the meeting, including rules on permissible topics, and rules for how questions and comments will be recognized and disclosed to meeting participants. We will answer appropriate questions that are pertinent to the matters to be voted on by the stockholders at the Annual Meeting. Because time is limited at the Annual Meeting, we may not be able to answer all questions that are submitted. If there are any matters of individual concern to a stockholder and not of general concern to all stockholders, or if a question was not otherwise answered, such matters may be raised separately after the Annual Meeting by contacting Investor Relations at ir@schrodinger.com. To promote fairness and the efficient use of our resources and to address all stockholder questions, we will limit each stockholder to two questions, which should each be succinct and should cover only one topic. Questions from multiple stockholders on the same topic or that are otherwise related may be grouped, summarized, and answered together.

Q: May I See a List of Stockholders Entitled to Vote as of the Record Date?

A: A list of stockholders as of the close of business on the record date will be available for examination by the stockholders for any purpose germane to the Annual Meeting for a period of 10 days ending on June 14, 2023 at 1540 Broadway, 24th Floor, New York, New York 10036.

Q: How Many Shares Must Be Represented to Have a Quorum and Hold an Annual Meeting of Stockholders?

A: A quorum of stockholders is necessary to hold a valid meeting. Our amended and restated bylaws provide that a quorum will exist if stockholders holding a majority in voting power of the shares of capital stock issued and outstanding and entitled to vote at the meeting are present at the meeting in person, present by means of remote communication or represented by proxy. Where a separate vote by a class of capital stock is required by law or our restated certificate of incorporation, the holders of a majority in voting power of the shares of such class of the capital stock issued and outstanding and entitled to vote on such matter, present in person, present by means of remote communication or represented by proxy, shall constitute a quorum entitled to take action with respect to the vote on such matter. Shares present virtually during the Annual Meeting will be considered shares present by means of remote communication at the Annual Meeting. Our board of directors has authorized the means of remote communication by which we plan to conduct the Annual Meeting. If a quorum is not present, we expect to adjourn the Annual Meeting until a quorum is obtained.

Abstentions and broker non-votes count as present for establishing a quorum but will not be counted as votes cast. Broker non-votes occur when your bank, broker or other nominee submits a proxy for your shares (because the bank, broker or other nominee has received instructions from you on one or more proposals, but not all proposals, or has not received instructions from you but is entitled to vote on a particular “discretionary” matter) but does not indicate a vote for a particular proposal because the bank, broker or other nominee either does not have the authority to vote on that proposal and has not received voting instructions from you or has discretionary authority but chooses not to exercise it.

Q: What Ballot Measures are Considered “Discretionary” versus “Non-Discretionary”?

A: The election of directors (Proposal No. 1) and the advisory vote on executive compensation (Proposal No. 2) are matters considered non-discretionary under applicable rules. A bank, broker or other nominee cannot vote without instructions on non-discretionary matters, and therefore there may be broker non-votes on Proposal Nos. 1 and 2.

The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 (Proposal No. 3) is a matter considered discretionary under applicable rules. A bank, broker or other nominee generally may exercise discretionary authority and vote on discretionary matters if no voting instructions have been provided. Therefore, if your shares are held in “street name,” your bank, your broker or other nominee may exercise discretionary authority to vote on Proposal No. 3 in the absence of voting instructions from you. If they exercise this discretionary authority, no broker non-votes are expected in connection with Proposal No. 3.

Q: What Vote is Required to Approve Each Proposal?

A: A nominee will be elected as a director in an uncontested election if the votes cast “for” such nominee’s election by the stockholders entitled to vote exceed the votes cast “against” the nominee’s election (Proposal No. 1). Stockholders are not entitled to vote any shares of limited common stock in an election of directors. Abstentions and broker non-votes will not be counted as votes “for” or “against” such nominee’s election. Accordingly, abstentions and broker non-votes will have no effect on the voting on Proposal No. 1.

The affirmative vote of the holders of shares of capital stock having a majority in voting power of the votes cast by the holders of all of the shares present or represented by proxy and voted “for” or “against” such matter will be required for: approval of the advisory vote on executive compensation (Proposal No. 2) and the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 (Proposal No. 3). Abstentions and broker non-votes will not be counted as votes cast or voted on Proposal Nos. 2 and 3. Accordingly, abstentions and broker non-votes will have no effect on the voting on Proposal Nos. 2 and 3.

As described in more detail in Proposal No. 2, because this proposal is non-binding, our board of directors may decide that it is in our and our stockholders’ best interests to compensate our named executive officers in an amount or manner that differs from that which is approved by our stockholders.

Q: What Happens if an Incumbent Director Nominee Fails to Receive More “For” Votes than “Against” Votes in an Uncontested Election?

A: Under our majority vote standard for the election of directors, the votes cast “for” a nominee must exceed the votes cast “against” that nominee. Our Corporate Governance Guidelines set forth a process that takes effect if an incumbent director nominee receives more “against” votes than “for” votes in an uncontested election. Upon such an occurrence, the affected director is expected, promptly following certification of the stockholder vote, to submit to the board of directors his or her offer to resign from the board. Such incumbent director shall continue to serve as a director while our nominating and corporate governance committee decides whether to accept or reject the resignation offer. The nominating and corporate governance committee will promptly consider the resignation offer submitted by such incumbent director and recommend to the board of directors the action to be taken with respect to such resignation offer. Such action may range from accepting the resignation, to maintaining such incumbent director but addressing what the nominating and corporate governance committee believes to be the underlying cause of the votes “against” the director, to resolving that such incumbent director will not be re-nominated for election in the future, to rejecting the resignation, to such other action that the nominating and corporate governance committee determines to be in the best interests of our company and our stockholders. In reaching its recommendation, the nominating and corporate governance committee will consider all factors it deems relevant. The board of directors will then act on the nominating and corporate governance committee’s recommendation, considering the factors considered by the nominating and corporate governance committee and such additional factors the board of directors believes to be relevant. After the board’s determination, we will promptly publicly disclose the board’s decision regarding the action to be taken with respect to such incumbent director’s resignation. If the board’s decision is to not accept the resignation, such disclosure will include the reasons for not accepting the resignation. If the director’s resignation is accepted, then the board of directors may fill the resulting vacancy in accordance with our amended and restated bylaws or may decrease the size of our board of directors. Our Corporate Governance Guidelines are posted on our website at www.schrodinger.com.

Q: Can I Revoke My Proxy and Can I Change My Vote?

A: If you are a stockholder of record, you may revoke your proxy before the vote is taken at the Annual Meeting:

•by submitting by submitting a new proxy with a later date before the applicable deadline either signed and returned by mail or transmitted using the telephone or Internet voting procedures described in the “How Do I Vote?” section above;

•by voting online at the Annual Meeting using the procedures described in the “How Do I Vote?” section above; or

•by filing a written revocation with our corporate secretary.

If your shares are held in “street name,” you may submit new voting instructions by contacting your bank, broker or other nominee holding your shares. You may also vote online during the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions.

Your virtual attendance at the Annual Meeting, without voting online during the Annual Meeting, will not automatically revoke your proxy.

Q: How Are the Votes Counted?

A: Votes cast online during the Annual Meeting or by proxy by mail, via the Internet or by telephone will be tabulated by the inspector of election appointed for the Annual Meeting, who will also determine whether a quorum is present.

Q: What are the Costs of Proxy Solicitation?

A: We will bear the costs of soliciting proxies. Our directors, officers and regular employees, without additional remuneration, may solicit proxies by mail, telephone, facsimile, email, personal interviews and other means.

We have retained Georgeson LLC, a proxy solicitation firm, or the Proxy Solicitor, to solicit proxies in connection with the Annual Meeting at a cost of approximately $15,000, plus reimbursement of certain expenses and fees for additional services requested. We will also indemnify the Proxy Solicitor against losses arising out of its provisions of these services on our behalf. Proxies will be solicited by the Proxy Solicitor by mail, telephone, e-mail and in person.

Q: Where Can I Find the Voting Results?

A: We plan to announce preliminary voting results at the Annual Meeting and will publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Annual Meeting.

Cautionary Note Regarding Forward-Looking Statements

This proxy statement contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those regarding our plans, strategies and expectations for our business and the potential benefits of our strategic plans and focus. Statements including words such as “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and statements in the future tense are forward-looking statements. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the company and on assumptions the company has made. Actual results may differ materially from those described in these forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and important factors that are beyond our control, including the demand for our software platform, our ability to further develop our computational platform, our reliance upon third-party providers of cloud-based infrastructure to host our software solutions, factors adversely affecting the life sciences industry, fluctuations in the value of the U.S. dollar and foreign currencies, our reliance upon third-party drug discovery collaborators, the uncertainties inherent in drug development and commercialization, such as the conduct of research activities and the timing of and our ability to initiate and complete preclinical studies and clinical trials, whether results from preclinical studies will be predictive of the results of later preclinical studies and clinical trials, uncertainties associated with the regulatory review of investigational new drug submissions, clinical trials and applications for marketing approvals, the ability to retain and hire key personnel and the direct and indirect impacts of the ongoing COVID-19 pandemic on our business and other risks

detailed under the caption “Risk Factors” in our Securities and Exchange Commission filings and reports, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on February 28, 2023, as well as our future filings and reports. Any forward-looking statements contained in this proxy statement speak only as of the date hereof. Except as required by law, we undertake no duty or obligation to update any forward-looking statements contained in this proxy statement as a result of new information, future events, changes in expectations or otherwise.

PROPOSAL NO. 1—ELECTION OF THREE CLASS III DIRECTORS

Our board of directors currently consists of nine members. In accordance with the terms of our restated certificate of incorporation, our board of directors is divided into three classes (Class I, Class II and Class III), with members of each class serving staggered three-year terms. The members of the classes are divided as follows:

•the Class I directors are Ramy Farid, Gary Ginsberg and Arun Oberoi, and their term expires at the annual meeting of stockholders to be held in 2024;

•the Class II directors are Jeffrey Chodakewitz, Michael Lynton and Nancy A. Thornberry, and their term expires at the annual meeting of stockholders to be held in 2025; and

•the Class III directors are Richard A. Friesner, Rosana Kapeller-Libermann and Gary Sender, and their term expires at the Annual Meeting.

Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

Our restated certificate of incorporation provides that the authorized number of directors may be changed only by resolution of our board of directors. Our restated certificate of incorporation also provides that our directors may be removed only for cause and only by the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of common stock, and that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office. Upon the recommendation of our nominating and corporate governance committee, our board of directors has nominated Richard A. Friesner, Rosana Kapeller-Libermann and Gary Sender, for election as Class III directors at the Annual Meeting. Dr. Friesner, Dr. Kapeller-Libermann and Mr. Sender are all presently directors, and have indicated a willingness to continue to serve as directors, if elected.

If no contrary indication is made, proxies are to be voted for Dr. Friesner, Dr. Kapeller-Libermann and Mr. Sender, or in the event that Dr. Friesner, Dr. Kapeller-Libermann or Mr. Sender is not a candidate or is unable to serve as a director at the time of the election (which is not currently expected), for any nominee who is designated by our board of directors to fill the vacancy.

Our Corporate Governance Guidelines provide that the value of diversity should be considered and that director nominees should represent a diverse array of personal and professional characteristics, backgrounds, experiences and skills, including gender, racial or ethnic identity, international experience and/or expertise in a particular discipline or field. Our priority in selection of board members is identification of members who will further the interests of our stockholders through their established records of professional accomplishment, the ability to contribute positively to the collaborative culture among our board members, knowledge of our business, understanding of the competitive landscape in which we operate and adherence to high ethical standards. In addition, as further described under “Executive Summary — Election of Directors Vote Support,” we regularly solicit feedback from our stockholders, and our nominating and corporate governance committee, together with senior management, consider board, governance and related matters raised by our stockholders during our engagements to ensure that we are identifying and nominating directors who, among other things, have demonstrated business acumen and have a commitment to understanding our industry and company. Certain individual qualifications and skills of our directors that contribute to our board of directors’ effectiveness as a whole are described in the following paragraphs.

Nominees for Election as Class III Directors

Biographical information as of April 15, 2023, including principal occupation and business experience during the last five years, for our nominees for election as Class III directors at the Annual Meeting is set forth below.

Richard A. Friesner, Ph.D., age 70, has served as a member of our board of directors since August 1990, when he co-founded us. Dr. Friesner is currently the William P. Schweitzer professor of chemistry at Columbia University, the principal investigator of the Friesner Research Group, a research laboratory within the Department of Chemistry at Columbia University, and he has served as a professor of chemistry at Columbia University since September 1990. Dr. Friesner is a Fellow of the American Academy of Sciences and a member of the National Academy of Sciences. Dr. Friesner received a B.S. in Chemistry from the University of Chicago and a Ph.D. in Chemistry from the University of

California, Berkeley. We believe that Dr. Friesner’s extensive experience in theoretical chemistry and his extensive knowledge of our company since inception, as well as his distinguished scientific record, qualifies him to serve on our board of directors.

Rosana Kapeller-Libermann, M.D., Ph.D., age 59, has served as a member of our board of directors since January 2019. Dr. Kapeller-Libermann has served as president and chief executive officer of Rome Therapeutics, Inc., a therapeutics company, since April 2019. She has also served as an entrepreneur in residence at GV, a venture capital investment arm of Alphabet Inc. since November 2018. Prior to that, Dr. Kapeller-Libermann served as founding chief scientific officer of Nimbus Therapeutics, or Nimbus, a biotechnology company, from February 2010 to March 2018. Prior to joining Nimbus, she served as vice president of research at Aileron Therapeutics, Inc., a biopharmaceutical company, from August 2005 to September 2009. Dr. Kapeller-Libermann received an M.D. from Universidade do Estado do Rio de Janeiro and a Ph.D. in Molecular and Cellular Physiology from Tufts University. We believe Dr. Kapeller-Libermann’s scientific experience in the field of drug discovery and extensive experience working with life sciences companies qualifies her to serve on our board of directors.

Gary Sender, age 61, has served as a member of our board of directors since July 2019. Mr. Sender previously served as chief financial officer of Nabriva Therapeutics plc, or Nabriva, a publicly traded biopharmaceutical company, from May 2016 to March 2021. Prior to joining Nabriva, Mr. Sender served as chief financial officer and executive vice president at Synergy Pharmaceuticals Inc., or Synergy, a publicly traded biopharmaceutical company, from November 2015 to May 2016. Prior to joining Synergy, from August 2009 to June 2015, Mr. Sender served as senior vice president, finance at Shire plc., or Shire, a biopharmaceutical company since acquired by Takeda Pharmaceutical Company Limited. Prior to joining Shire, Mr. Sender served as founding chief financial officer of Tengion, Inc., a regenerative medicine company, from August 2004 to July 2009. Mr. Sender currently serves on the board of directors of Harmony BioSciences Holdings, Inc., a publicly traded pharmaceutical company, and iBio, Inc., a publicly traded biotechnology company. Mr. Sender also spent over 15 years in several leadership roles within Merck & Co., Inc., a pharmaceutical company. Mr. Sender received a B.S. in Finance from Boston University and an M.B.A. from Carnegie-Mellon University. We believe Mr. Sender’s extensive experience in the life sciences industry, and in particular his financial acumen, qualifies him to serve on our board of directors.

The board of directors recommends voting “FOR” the election of Richard A. Friesner, Rosana Kapeller-Libermann and Gary Sender as Class III directors for a three-year term ending at the annual meeting of stockholders to be held in 2026.

Directors Continuing in Office

Biographical information as of April 15, 2023, including principal occupation and business experience during the last five years, for our directors continuing in office after the Annual Meeting is set forth below.

Class I Directors (Term Expires at 2024 Annual Meeting of Stockholders)

Ramy Farid, Ph.D., age 58, has served as our president since January 2008, our chief executive officer since January 2017 and as a member of our board of directors since December 2012. Dr. Farid has been with our company for over 20 years and served as senior vice president from January 2005 to December 2007, vice president, scientific development and product management from January 2003 to December 2004 and product manager from January 2002 to December 2002. Dr. Farid serves on the board of directors of multiple biotechnology companies co-founded by us, and previously served on the board of directors of Morphic Holding, Inc., a biotechnology company. Prior to joining our company, Dr. Farid was an assistant professor in the Chemistry Department at Rutgers University. Dr. Farid received a B.S. in Chemistry from the University of Rochester and a Ph.D. from the California Institute of Technology, and he was a National Institutes of Health postdoctoral fellow in the Department of Biochemistry and Biophysics at the University of Pennsylvania. Dr. Farid currently serves on the board of directors of Structure Therapeutics, Inc., a publicly traded biopharmaceutical company. We believe that Dr. Farid’s extensive knowledge of our company and current role as our president and chief executive officer qualifies him to serve on our board of directors.

Gary Ginsberg, age 60, has served as a member of our board of directors since April 2020. Mr. Ginsberg served as the senior vice president and global head of communications at SoftBank Group Corp., or Softbank, an investment bank from November 2018 until December 2020. Before joining SoftBank, Mr. Ginsberg served as executive vice president of corporate marketing and communications at Time Warner Inc., a media company, from February 2010 to August 2018. Prior to that, Mr. Ginsberg spent 11 years at News Corporation, a media company, most recently as executive vice

president of global marketing and corporate affairs and a member of the office of the chairman. Mr. Ginsberg currently serves on the board of directors of Townsquare Media, Inc., a publicly traded media company. Mr. Ginsberg also served on the board of directors of Synacor, Inc. from January 2012 to June 2020. Mr. Ginsberg received an A.B. in History from Brown University and a J.D. from Columbia University School of Law. We believe that Mr. Ginsberg’s business and leadership experience qualifies to him to serve on our board of directors.

Arun Oberoi, age 69, has served as a member of our board of directors since May 2022. Mr. Oberoi served as the executive vice president of global sales and services from April 2012 to August 2021 at Red Hat, Inc., a provider of enterprise open-source software solutions, which was acquired by International Business Machines Corporation, or IBM, in July 2019. Prior to that, from December 2010 to January 2012, Mr. Oberoi served as president and chief executive officer of Viridity Software, Inc., a data center infrastructure management company. From March 2008 to June 2010, Mr. Oberoi served as chief executive officer of Aveksa, Inc., an access governance and management software company. From January 2004 to February 2006, Mr. Oberoi was executive vice president of global sales and technical services at Micromuse, Inc., or Micromuse, a provider of network and service management solutions. Micromuse was acquired by IBM in February 2006, where Mr. Oberoi subsequently served as vice president within IBM Tivoli until March 2008. Prior to joining Micromuse, Mr. Oberoi held a series of senior executive positions at Hewlett-Packard Company from August 1997 until December 2003, including as vice president and general manager, worldwide corporate accounts and industries, sales and marketing. Mr. Oberoi serves on the board of directors of Proofpoint, Inc., an enterprise security company, and Talend S.A., an open source integration software provider, which are both portfolio companies of Thoma Bravo, L.P., and Deeplite, Inc., a provider of intelligent AI optimization software. He has also served as an advisor at Paymentus, Inc., an electronic billing and payment vendor, in a consulting capacity since January 2022. Mr. Oberoi received a B.A. from the University of Delhi and an M.B.A. from Northwestern University. We believe that Mr. Oberoi’s enterprise software, technology and business leadership experience qualifies him to serve on our board of directors.

Class II Directors (Term Expires at 2025 Annual Meeting of Stockholders)

Jeffrey Chodakewitz, M.D., age 67, has served as a member of our board of directors since April 2020. Dr. Chodakewitz served as senior advisor to Blackstone Life Sciences, a life sciences fund, from March 2019 to January 2022. Before joining Blackstone Lifesciences, Dr. Chodakewitz served as executive vice president, clinical medicine and external innovation, at Vertex Pharmaceuticals Incorporated, or Vertex, a publicly traded pharmaceutical company, from April 2018 to March 2019. Dr. Chodakewitz served as executive vice president, global medicines development and medical affairs, and chief medical officer of Vertex from October 2014 to March 2018. Dr. Chodakewitz served as senior vice president and chief medical officer of Vertex from January 2014 to October 2014. Prior to joining Vertex, Dr. Chodakewitz spent over 20 years at Merck & Co., Inc., a pharmaceutical company, where he held a variety of roles including vice president of clinical research—infectious diseases & vaccines, vice president of clinical pharmacology/early stage development, senior vice president of late stage development, and senior vice president of global scientific strategy (infectious diseases, respiratory/immunology). Dr. Chodakewitz currently serves on the board of directors of Adicet Bio, Inc. (formerly known as resTORbio, Inc.), a publicly traded biopharmaceutical company, Freeline Therapeutics Holdings plc, a publicly traded biopharmaceutical company, and Praxis Precision Medicines, Inc., a publicly traded biotechnology company. Dr. Chodakewitz also served as a member of the board of directors of Tetraphase Pharmaceuticals, Inc., a then publicly-traded biopharmaceutical company, from June 2014 to July 2020. Dr. Chodakewitz received a B.S. in Biochemistry from Yale University and an M.D. from the Yale University School of Medicine. We believe that Dr. Chodakewitz’s experience with pharmaceutical and biotechnology companies qualifies him to serve on our board of directors.

Michael Lynton, age 63, has served as a member of our board of directors since January 2018 and chairman of our board of directors since October 2018. Mr. Lynton served as chief executive officer of Sony Entertainment Inc., an international entertainment company, from April 2012 to August 2017, as chairman and chief executive officer of Sony Pictures Entertainment Inc., from January 2004 to May 2017 and as chief executive officer of Sony Corporation of America, from March 2012 to August 2017. Mr. Lynton currently serves as chairman of the board of directors of Snap Inc., a publicly traded technology company, and Warner Music Group Corp., a publicly traded media company, and as a member of the board of directors of Ares Management Corporation, a publicly traded, global alternative asset manager, and The Boston Beer Company, Inc., a publicly traded beverage company. In March 2023, Mr. Lynton informed The Boston Beer Company, Inc. of his intention not to stand for reelection at their 2023 annual meeting of stockholders. Mr. Lynton also served as a member of the board of directors of Pandora Media, Inc. from August 2017 to February 2019, and as a member of the board of directors of Pearson plc., a publicly traded publishing and education company, from February 2018 to June 2021. Mr. Lynton received a B.A. in History and Literature from Harvard College and an M.B.A. from Harvard Business School. We believe that Mr. Lynton’s public company board and management experience and his extensive business and leadership experience qualifies him to serve as chairman of our board of directors.

Nancy A. Thornberry, age 66, has served as a member of our board of directors since September 2019. Ms. Thornberry has served as chair, R&D of Kallyope, Inc., or Kallyope, a biotechnology company, since October 2021, and previously she served as chief executive officer of Kallyope from November 2015 to October 2021. Between August 2013 and October 2015, Ms. Thornberry was self-employed as a consultant to companies in the biotechnology and pharmaceutical industries. Prior to that, Ms. Thornberry spent over 30 years at Merck & Co., Inc., a pharmaceutical company, where she held a variety of positions including senior vice president and franchise head, diabetes and endocrinology, from April 2011 to July 2013, senior vice president and franchise head, diabetes and obesity, from September 2009 to April 2011, vice president, worldwide basic research head, diabetes and obesity, from February 2007 to September 2009 and executive director, metabolic disorders, from 2004 to February 2007, among other positions. Ms. Thornberry currently serves on the board of directors of Denali Therapeutics Inc., a publicly traded biopharmaceutical company. Ms. Thornberry received a B.S. in Chemistry and Biology from Muhlenberg College. We believe Ms. Thornberry’s scientific background and experience in the life sciences industry qualifies her to serve on our board of directors.

Executive Officers Who Are Not Directors

Biographical information as of April 15, 2023 for our executive officers who are not directors is listed below.

Robert Abel, Ph.D., age 41, has served as our executive vice president, chief computational scientist, and head of modeling R&D since March 2021. Dr. Abel has been with our company for over 10 years and previously served as our executive vice president, science, from January 2020 to March 2021, senior vice president, science, from April 2017 to December 2019, vice president, scientific development from January 2014 to April 2017, director of structure-based science from January 2011 to December 2013, senior principal scientist and product manager from January 2010 to December 2010 and senior scientist from March 2009 to December 2009. Dr. Abel received a B.S. in Chemistry from the University of Florida and a Ph.D. in Chemical Physics from Columbia University. In graduate school, Dr. Abel was a National Science Foundation Graduate Research Fellow and a Department of Homeland Security Research Fellow and worked from May 2005 to August 2005 at Los Alamos National Laboratory under the auspices of the DHS Research Fellowship.

Karen Akinsanya, Ph.D., age 55, has served as our president, R&D therapeutics since February 2022 and previously served as our executive vice president, chief biomedical scientist, head of discovery R&D from January 2020 to February 2022 and as our senior vice president and chief biomedical scientist from April 2018 to December 2019. Dr. Akinsanya spent 12 years at Merck & Co., Inc., or Merck, a pharmaceutical company, where she held a variety of positions across Merck Research Labs, including associate vice president, early scientific assessment lead, business development & licensing from December 2013 to July 2017, collaboration lead and executive director, cardiovascular research from January 2010 to December 2013, and associate director, clinical pharmacology from October 2005 to December 2009. Prior to Merck, Dr. Akinsanya held a number of roles in drug discovery at Ferring Pharmaceuticals in the United Kingdom and the United States from 1997 to 2005. In 2007, Dr. Akinsanya founded Envision Science Group LLC, or Envision, a translational science consulting company, where she currently serves as president. Dr. Akinsanya provided consulting services on behalf of Envision to companies in the pharmaceutical industry between July 2017 and April 2018. Dr. Akinsanya currently serves on the board of directors of Nautilus Biotechnology, Inc., a publicly traded biotechnology company. Dr. Akinsanya received a B.Sc. in Biochemistry from Queen Mary College, University of London, a Ph.D. in Endocrine Physiology from the Imperial College and completed postdoctoral studies at the Ludwig Institute for Cancer Research, University College, London.

Patrick Lorton, age 39, has served as our executive vice president and chief technology officer since March 2021. Mr. Lorton has been with our company for over 15 years and previously served as our senior vice president and chief technology officer from April 2017 to March 2021, vice president of engineering from January 2016 to April 2017, director of software engineering from January 2015 to January 2016, associate director of software engineering from December 2012 to January 2015, project leader from January 2011 to December 2012 and scientific developer from September 2006 to December 2012. Prior to joining our company, Mr. Lorton served as a chemistry research assistant from December 2005 to September 2006 and a computer science research assistant from August 2004 to July 2006 at Indiana University Bloomington. Mr. Lorton received a B.S. in Computer Science and a B.A. in Mathematics and Chemistry from Indiana University Bloomington.

Geoffrey Porges, age 62, has served as our executive vice president and chief financial officer since August 2022. Dr. Porges previously served as vice chairman of SVB Securities LLC (formerly known as SVB Leerink), the investment banking subsidiary of SVB Financial Group, or SVB Securities, and as venture partner of SVB Capital, the private equity arm of SVB Financial Group, in each case, from January 2022 to August 2022. Prior to his role as vice chairman, Dr. Porges held positions of increasing responsibility at SVB Securities, including serving as senior managing director from

February 2019 to January 2022 and as senior biopharmaceuticals analyst and director of therapeutics research from November 2015 to February 2019. Prior to joining SVB Securities, Dr. Porges spent 13 years at Alliance Bernstein, an investment management firm, most recently serving as managing director. Prior to joining Alliance Bernstein, Dr. Porges was chief operating officer and head of health, medical and biotechnologies programs at BTG Plc, a pharmaceutical company, from 1999 to 2002 and was a member of the board of directors of Acambis plc from 2001 to 2003. Dr. Porges received a Bachelor of Medicine and a Bachelor of Surgery from the University of Sydney and an M.B.A. from Harvard Business School.

Yvonne Tran, age 52, has served as our executive vice president and chief legal officer since April 2017, and previously served as our general counsel from April 2010 to April 2017. Prior to joining our company, Ms. Tran previously served as senior corporate counsel at Oracle America, Inc., or Oracle, a technology company, from January 2008 to April 2010. Prior to joining Oracle, Ms. Tran served as outside legal consultant from January 2006 to January 2008 and deputy general counsel from April 2000 to January 2006 at DoubleClick, Inc., an advertising technology company since acquired by Google LLC. Ms. Tran received a B.A. in Molecular Biophysics and Biochemistry from Yale University and a J.D. from the University of Virginia School of Law.

PROPOSAL NO. 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act. At the 2022 annual meeting of stockholders, stockholders approved, on an advisory basis, an annual advisory vote on the compensation of our named executive officers. In accordance with the results of this vote, the Board determined to implement an advisory vote on the compensation of our named executive officers every year.

Our executive compensation program is designed to attract, motivate, and retain our executive officers, who are critical to our success. Under this program, our named executive officers are rewarded for the achievement of our short- and long-term strategic and financial goals and for driving corporate financial performance and stability. The program contains elements of cash and equity-based compensation and is designed to align the interests of our executive officers with those of our stockholders.

The section of this proxy statement titled “Executive and Director Compensation” beginning on page 24, including “Compensation Discussion and Analysis,” describes in detail our executive compensation program, including the updates we made to the program to incorporate additional performance-based equity awards to our executives starting in the fiscal year ending December 31, 2023, and the decisions made by our compensation committee and our board of directors with respect to the fiscal year ended December 31, 2022. Highlights of our executive compensation program include the following:

•Using a performance-based annual cash incentive program to link executive compensation to the achievement of long-term and short-term company goals;

•Setting challenging short-term goals for our cash incentive program;

•Providing a significant portion of our executive compensation in the form of equity with time-based vesting;

•Using market data from our peer group to set competitive compensation levels; and

•Maintaining stock ownership guidelines for our executives and non-employee directors.

As we describe in greater detail in the “Compensation Discussion and Analysis” section of this proxy statement, our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the interests of our executive officers with our stockholders. The board of directors and compensation committee believe this link between compensation and the achievement of our short- and long-term strategic and financial goals has helped drive our performance over time. At the same time, we believe our program does not encourage excessive risk-taking by management.

Our board of directors is asking stockholders to approve a non-binding advisory vote on the following resolution:

RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the “Compensation Discussion and Analysis”, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.

As an advisory vote, this proposal is not binding. The outcome of this advisory vote does not overrule any decision by the Company or the board of directors (or any committee thereof), create or imply any change to the fiduciary duties of the Company or the board of directors (or any committee thereof), or create or imply any additional fiduciary duties for the Company or the board of directors (or any committee thereof). However, our compensation committee and board of directors value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

The board of directors recommends that stockholders vote to approve the compensation of our named executive officers by voting “FOR” this proposal.

PROPOSAL NO. 3—RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023

Our stockholders are being asked to ratify the appointment by the audit committee of the board of directors of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. KPMG LLP has served as our independent registered public accounting firm since 2010.

The audit committee is solely responsible for selecting our independent registered public accounting firm for the fiscal year ending December 31, 2023. Stockholder approval is not required to appoint KPMG LLP as our independent registered public accounting firm. However, the board of directors believes that submitting the appointment of KPMG LLP to the stockholders for ratification is good corporate governance. If the stockholders do not ratify this appointment, the audit committee will reconsider whether to retain KPMG LLP. If the selection of KPMG LLP is ratified, the audit committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interest of our company and our stockholders.

A representative of KPMG LLP is expected to virtually attend the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and is expected to be available to respond to appropriate questions from our stockholders.

We incurred the following fees from KPMG LLP for the audit of the consolidated financial statements and for other services provided during the years ended December 31, 2022 and 2021.


Fee Category	2022		2021
Audit fees (1)	$	1,713,950	$	1,421,000
Audit-related fees	—		—
Tax fees (2)	377,705		574,159
All other fees	—		—

Total fees	$	2,091,655	$	1,995,159

(1)“Audit fees” consist of professional services provided by KPMG LLP in connection with the integrated audit of our annual consolidated financial statements and the review of our unaudited quarterly consolidated financial statements in 2022 and 2021.

(2)“Tax fees” consist primarily of professional services provided by KPMG LLP that encompass a variety of permissible tax services, including federal and state tax compliance services, technical tax advice related to federal and state income tax matters, assistance with sales tax, and other tax consulting matters.

Audit Committee Pre-Approval Policy and Procedures

Our audit committee has adopted policies and procedures relating to the approval of all audit and other permitted non-audit services provided to us by our independent registered public accounting firm. These policies provide that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by our audit committee or the engagement to render the service is entered into pursuant to the pre-approval procedure.

From time to time, our audit committee may pre-approve services that are expected to be provided to us by our independent registered public accounting firm during the next 12 months. These services may include audit services, audit-related services, tax services and other permissible non-audit services. Our independent registered public accounting firm and senior management will periodically report to the audit committee regarding the extent of services provided by our independent registered public accounting firm.

During our 2022 and 2021 fiscal years, no services were provided to us by KPMG LLP other than in accordance with the pre-approval policies and procedures described above.

The board of directors recommends voting “FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023.

CORPORATE GOVERNANCE

Director Nomination Process

Our nominating and corporate governance committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our board, and recommending the persons to be nominated for election as directors, except where we are legally required by contract, law or otherwise to provide third parties with the right to nominate director candidates.

The process followed by our nominating and corporate governance committee to identify and evaluate director candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the committee and our board. While there are no specific minimum qualifications for a committee-recommended nominee to our board of directors, the qualifications, qualities and skills that our nominating and corporate governance committee believes must be met by a committee-recommended nominee for a position on our board of directors are as follows:

•Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.

•Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to our current and long-term objectives and should be willing and able to contribute positively to our decision-making process.

•Nominees should have a commitment to understand our company and our industry and to regularly attend and participate in meetings of our board of directors and its committees.

•Nominees should have the interest and ability to understand the sometimes conflicting interests of our various constituencies, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders.

•Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all of our stockholders and to fulfill the responsibilities of a director.

•Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law. The value of diversity on our board of directors is considered. Nominees should represent a diverse array of personal and professional characteristics, backgrounds, experiences and skills including gender, racial or ethnic identity, international experience and/or expertise in a particular discipline or field.

•Nominees should normally be able to serve for at least five years before reaching the age of 75.

The nominating and corporate governance committee may use a third-party search firm in those situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate.

Stockholders may recommend individuals to the nominating and corporate governance committee for consideration as potential director candidates. Any such proposals should be submitted to our corporate secretary at our principal executive offices and should include appropriate biographical and background material to allow the nominating and corporate governance committee to properly evaluate the potential director candidate and the number of shares of our stock beneficially owned by the stockholder proposing the candidate. The specific requirements for the information that is required to be provided for such recommendations to be considered for an annual meeting are specified in our amended and restated bylaws and must be received by us no later than the date referenced below under the heading “Stockholder Proposals for our 2024 Annual Meeting of Stockholders.”

Assuming that biographical and background material has been provided on a timely basis, any recommendations received from stockholders will be evaluated in the same manner as potential nominees proposed by the nominating and corporate governance committee. If our board of directors decides to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included on our proxy card for the next annual meeting.

Director Independence

Applicable Nasdaq rules require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under applicable Nasdaq rules, a director will only qualify as an “independent director” if, among other things, in the opinion of the listed company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In order to be considered independent for purposes of Rule 10C-1, the board must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (1) the source of compensation of the director, including any consulting advisory or other compensatory fee paid by such company to the director; and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates.

In March 2023, our board of directors undertook a review of the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that each of our directors, with the exception of Dr. Farid and Dr. Friesner, is an “independent director” as defined under applicable Nasdaq rules. In making such determinations, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances that our board of directors deemed relevant in determining his or her independence, including the beneficial ownership of our capital stock by each non-employee director. Dr. Farid is not an independent director under these rules because he is our president and chief executive officer, and Dr. Friesner is not an independent director under these rules because he has received more than $120,000 in consulting fees from us during a 12-month period within the last three years. See “Transactions with Related Persons” for more information regarding Dr. Friesner.

There are no family relationships among any of our directors or executive officers.

Board Committees

Our board of directors has established an audit committee, a compensation committee, a nominating and corporate governance committee and a drug discovery committee. Each of the audit committee, compensation committee, nominating and corporate governance committee and drug discovery committee operates under a charter, and each such committee reviews its respective charter at least annually. A current copy of the charter for each of the audit committee, the compensation committee, the nominating and corporate governance committee and the drug discovery committee is posted on the “Corporate Governance” section of the “Investors & Media” section of our website, which is located at www.schrodinger.com. Our board of directors also appoints from time to time ad hoc committees to address specific matters.

Audit Committee

The members of our audit committee are Gary Sender, Gary Ginsberg, Michael Lynton, and Arun Oberoi. Gary Sender serves as chair of the audit committee. Arun Oberoi was elected to our audit committee in May 2022. Our audit committee met five times during 2022. Our audit committee’s responsibilities include:

•appointing, approving the compensation of, and assessing the independence of our registered public accounting firm;

•overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from that firm;

•reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures;

•monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;

•discussing our risk identification, risk assessment and risk management policies, including coordinating the board of directors’ oversight of major financial risk exposures and risks relating to data privacy and cybersecurity;

•establishing procedures for the receipt and retention of accounting related complaints and concerns;

•meeting independently with our internal auditing staff, if any, our independent registered public accounting firm and management;

•reviewing and approving or ratifying any related person transactions; and

•preparing the audit committee report required by Securities and Exchange Commission, or SEC, rules.

All audit and non-audit services to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee.

Our board of directors has determined that Gary Sender is an “audit committee financial expert” as defined in applicable SEC rules and that each of the members of our audit committee possesses the financial sophistication required for audit committee members under Nasdaq rules. We believe that the composition of our audit committee meets the requirements for independence under current Nasdaq and SEC rules and regulations.

Compensation Committee

The members of our compensation committee are Gary Sender, Gary Ginsberg and Rosana Kapeller-Libermann. Gary Sender serves as chair of the compensation committee. Prior to the reconstitution of our compensation committee in October 2022, the members of our compensation committee were Gary Sender, Rosana Kapeller-Libermann and Nancy A. Thornberry, with Gary Sender serving as chair. Our compensation committee met seven times during 2022. Our compensation committee’s responsibilities include:

•reviewing and approving, or making recommendations to our board of directors with respect to, the compensation of our chief executive officer and our other executive officers;

•overseeing an evaluation of our senior executives;

•overseeing and administering our cash and equity incentive plans;

•reviewing and making recommendations to our board of directors with respect to director compensation;

•reviewing and making recommendations to our board of directors with respect to management succession planning at the request of our board of directors;

•reviewing and discussing annually with management our “Compensation Discussion and Analysis” disclosure;

•overseeing our human capital management strategy and practices, including talent acquisition and retention, diversity and pay equity practices;

•reviewing our equity ownership guidelines for directors and executives and overseeing compliance with such guidelines; and

•preparing the compensation committee report.

We believe that the composition of our compensation committee meets the requirements for independence under current Nasdaq and SEC rules and regulations.

Under its charter, the compensation committee may form, and delegate authority to, subcommittees, consisting of independent directors, as it deems appropriate. In addition, under its charter, the compensation committee may delegate to one or more executive officers the power to grant options or other stock awards pursuant to our 2021 Inducement Equity Incentive Plan and our 2022 Equity Incentive Plan, or the 2022 Plan, to employees who are not directors or executive officers of our company. During 2022, the compensation committee did not delegate authority to such subcommittees or executive officers.

Nominating and Corporate Governance Committee

The members of our nominating and corporate governance committee are Michael Lynton, Jeffrey Chodakewitz, and Nancy A. Thornberry. Michael Lynton serves as chair of the nominating and corporate governance committee. Our nominating and corporate governance committee met two times during 2022. Our nominating and corporate governance committee’s responsibilities include:

•recommending to our board of directors the persons to be nominated for election as directors and to each of our board’s committees;

•reviewing and making recommendations to our board of directors with respect to our board leadership structure;

•developing and recommending to our board of directors corporate governance principles;

•overseeing an annual evaluation of our board of directors; and

•reviewing and making recommendations to our board of directors with respect to our environmental, social and governance policies and practices, including with respect to corporate sustainability efforts and diversity, equity and inclusion, or DEI, issues.

We believe that the composition of our nominating and corporate governance committee meets the requirements for independence under current Nasdaq and SEC rules and regulations.

Drug Discovery Committee

The members of our drug discovery committee are Jeffrey Chodakewitz, Rosana Kapeller-Libermann, and Nancy A. Thornberry. Jeffrey Chodakewitz serves as chair of the drug discovery committee. The drug discovery committee assists our board’s oversight of our drug discovery and research activities and assists us in evaluating related issues. Our drug discovery committee met four times during 2022. Our drug discovery committee’s responsibilities include:

•reviewing, evaluating, and advising our board of directors and management regarding our long-term strategic goals and objectives and the quality and direction of our research and development programs;

•monitoring and evaluating trends in research and development, and advising our board of directors and management on such trends;

•reviewing, evaluating, and advising our board of directors and management on significant drug discovery and development transactions;

•regularly reviewing our research and development pipeline;

•assisting our board of directors with its oversight responsibility for enterprise risk management in areas affecting our drug discovery research and development; and

•reviewing such other topics as delegated to the committee from time to time by our board of directors.

Compensation Committee Interlocks and Insider Participation

The directors who served as members of our compensation committee at any point during the year ended December 31, 2022 were Gary Sender, Gary Ginsberg, Rosana Kapeller-Libermann and Nancy A. Thornberry. None of our executive officers serves, or in the past year has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or our compensation committee. None of the members of our compensation committee is, or has ever been, an officer or employee of our company.

Board of Director Meetings and Attendance

Our board of directors recognizes the importance of director attendance at board and committee meetings. The full board of directors met five times during 2022. During 2022, each member of the board of directors attended in person or participated in 75% or more of the aggregate of (i) the total number of meetings held by the board of directors (during the period that such person served as a director) and (ii) the total number of meetings held by all committees of the board of directors on which such person served (during the periods that such person served).

Director Attendance at Annual Meeting of Stockholders

Our corporate governance guidelines provide that directors are responsible for attending the annual meeting of stockholders. Each then-serving member of the board of directors attended the 2022 annual meeting of stockholders.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the code on the “Corporate Governance” section of the “Investors & Media” section of our website, which is located at www.schrodinger.com. In addition, we intend to post on our website all disclosures that are required by law or Nasdaq listing standards concerning any amendments to, or waivers from, any provision of the code.

Corporate Governance Guidelines

Our board of directors has adopted corporate governance guidelines to assist the board of directors in the exercise of its duties and responsibilities and to serve the best interests of our company and our stockholders. These guidelines provide that:

•the principal responsibility of our board of directors is to oversee our management;

•a majority of the members of the board of directors must be independent directors, unless otherwise permitted by Nasdaq rules;

•the independent directors meet in executive session at least twice a year;

•directors have full and free access to management and, as necessary, independent advisors;

•new directors participate in an orientation program and all directors are expected to participate in continuing director education on an ongoing basis; and

•our nominating and corporate governance committee will oversee an annual self-evaluation of the board to determine whether it and its committees are functioning effectively.

A copy of the corporate governance guidelines is available on the “Corporate Governance” section of the “Investors & Media” section of our website, which is located at www.schrodinger.com.

Board Leadership Structure and Oversight of Risk

Our corporate governance guidelines provide that the nominating and corporate governance committee shall periodically assess the board of directors’ leadership structure, including whether the offices of chief executive officer and chairman of the board of directors should be separate. Our guidelines provide the board of directors with flexibility to determine whether the two roles should be combined or separated based upon our needs and the board of directors’ assessment of its leadership from time to time. We do not currently have a lead independent director because the chairman of our board of directors is independent within the meaning of the Nasdaq listing rules.

We currently separate the roles of chief executive officer and chairman of the board of directors. Our president and chief executive officer is responsible for setting the strategic direction for our company and the day-to-day leadership and performance of our company, while the chairman of our board of directors presides over meetings of the board of directors, including executive sessions of the board of directors, and performs oversight responsibilities. Separating the duties of the chairman from the duties of the chief executive officer allows our chief executive officer to focus on our day-to-day business, while allowing the chairman to lead the board of directors in its fundamental role of providing advice to and independent oversight of management. Specifically, our chairman runs meetings of our independent directors, assists with developing the board’s meeting agendas facilitates communications between management and the board of directors and assists with other corporate governance matters. Our board of directors believes that this structure ensures a greater role for the independent directors in the oversight of our company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our board of directors. Our board of directors believes its administration of its risk oversight function has not affected its leadership structure. Our board of directors believes that we have an appropriate leadership structure for us at this time which demonstrates our commitment to good corporate governance. Although the roles of chairman and chief executive officer are currently separate, our nominating and corporate governance committee and board of directors believe it is appropriate for our chief executive officer to serve as a member of our board of directors.

Risk is inherent with every business and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022. Our board of directors is actively involved in oversight of risks that could affect us. Our board of directors oversees our risk management processes directly and through its committees. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Our management is responsible for risk management on a day-to-day basis and our board of directors and its committees oversee the risk management activities of management. Our board of directors satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within our company.

Our audit committee oversees risk management activities related to financial controls and legal, cybersecurity, data privacy and compliance risks. Oversight by the audit committee includes direct communication with our external auditors. Our compensation committee oversees risk management activities relating to our compensation policies and practices and assesses whether any of our compensation policies or programs has the potential to encourage excessive risk-taking. Our compensation committee also oversees risk management activities relating to management succession planning and our human capital management strategy and practices. Oversight by the compensation committee includes direct communication with our compensation consultants. Our nominating and corporate governance committee oversees risk management activities relating to board and committee composition and our corporate responsibility and sustainability efforts. Our drug discovery committee assists our board of directors in its oversight of our drug discovery and research activities, including having oversight responsibility for enterprise risk management in areas affecting our drug discovery research and development. In addition, members of our senior management team attend our board meetings quarterly and are available to address any questions or concerns raised by the board on risk management and any other matters. Our board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and oversight.

Hedging, Pledging and Margin Accounts

Our insider trading policy expressly prohibits short sales and derivative transactions of our stock by our directors, named executive officers and other employees, including short sales “against the box”; purchases or sales of puts, calls or other derivative securities based on the company’s securities; and purchases of financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of company securities.

In addition, our insider trading policy generally prohibits our directors, named executive officers and other employees from purchasing our securities on margin, borrowing against company securities held in a margin account, or pledging our securities as collateral for a loan. However, an exception may be granted in extraordinary situations where a person wishes to pledge company securities as collateral for a loan (other than a margin loan) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. Any exception must be approved by our chief financial officer or chief legal officer or, in the case of a director or executive officer, by our audit committee. Other than the 373,450 shares of our common stock pledged by Dr. Friesner as collateral for a loan, no director, named executive officer or other employees have pledged any shares of our common stock. Prior to approving the pledge by Dr. Friesner, our audit committee considered that (1) Dr. Friesner’s pledge of our shares was not designed to shift or hedge any economic risk associated with his ownership of our common stock, (2) the total number of shares of common stock pledged as collateral for the loan constituted less than 1.0% of our total outstanding shares as the time of the pledge, (3) the amount of the pledged shares was considerably lower than the average daily and weekly trading volume of our common stock, (4) the amount of the contemplated $2.0 million loan relative to the market value of the pledged shares of common stock and (5) Dr. Friesner’s representation that he has the financial capacity to repay the borrowed amount under the loan without resort to the pledged shares. Our audit committee also routinely reviews Dr. Friesner’s pledge of our shares to assess whether such pledge poses an undue risk to the company based on the above factors.

Our Commitment to Environmental, Social, and Governance Matters

We are committed to embedding a long-term, formal Environmental, Social and Governance, or ESG, strategy within our business, a commitment we refer to as Corporate Sustainability. We believe that a commitment to Corporate Sustainability is integral to our mission to improving human health and quality of life. This commitment requires us to be responsive to ESG-related matters that impact both us and our stakeholders, including the communities in which we operate. We expect to continue to focus on the ESG issues that we have identified as most important to our company, our business and our stakeholders, including, among other things, risk mitigation, impact creation and measurement, and increasing corporate transparency.

More information about our ESG initiatives can be found in Part I, Item 1. Business — Human Capital of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 28, 2023, and in our Corporate Sustainability Report, available on the “Corporate Sustainability” section of our website, which is located at www.schrodinger.com.

Board Diversity Matrix

In accordance with Nasdaq’s Board Diversity Rule, we have elected to include our board diversity matrix in this proxy statement as set forth below:


Board Diversity Matrix (as of April 27, 2023)
Board Size:
Total Number of Directors	9
Gender:	Female	Male	Non-Binary	Did Not Disclose Gender
Directors	2	7	—	—
Number of Directors who Identify in any of the Categories Below:
African American or Black	—	—	—	—
Alaskan Native or Native American	—	—	—	—
Asian	—	1	—	—
Hispanic or Latinx	—	—	—	—
Native Hawaiian or Pacific Islander	—	—	—	—
White	2	6	—	—
Two or More Races or Ethnicities	—	—	—	—
LGBTQ+	—
Did Not Disclose Demographic Background	—

As part of any director nominee search, our nominating and corporate governance committee is committed to seeking out highly qualified director candidates who represent a diverse array of personal and professional characteristics, backgrounds, experiences and skills including gender, racial or ethnic identity, international experience and/or expertise in a particular discipline or field.

Communication with Our Directors

Any interested party with concerns about our company may report such concerns to the board of directors, or the chairman of our board of directors, or otherwise the chair of the nominating and corporate governance committee, by submitting a written communication to the attention of such director at the following address:

Schrödinger, Inc.

1540 Broadway, 24th Floor

New York, NY 10036

Attention: Board of Directors

You may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer, supplier, or other interested party.

A copy of any such written communication may also be forwarded to our legal counsel and a copy of such communication may be retained for a reasonable period of time. The director may discuss the matter with our legal counsel, with independent advisors, with non-management directors, or with our management, or may take other action or no action as the director determines in good faith using reasonable judgment and discretion.

Communications may be forwarded to all directors if they relate to important substantive matters and include suggestions or comments that may be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances, and matters as to which we tend to receive repetitive or duplicative communications.

The audit committee oversees the procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by

employees of concerns regarding questionable accounting, or auditing matters. Concerns regarding questionable accounting or auditing matters or complaints regarding accounting, internal accounting controls or auditing matters may be submitted to our chief legal officer or our chief financial officer at 1540 Broadway, 24th Floor, New York, New York 10036 or via the toll-free telephone number +1 844 440-0049.

EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Introduction

Our compensation committee is responsible for reviewing and overseeing our executive compensation policies and programs. Our compensation committee reviews and determines the compensation of our executive officers and makes recommendations to the board of directors with respect to the compensation of our chief executive officer. This section discusses the principles underlying our compensation committee’s policies and decisions with respect to the compensation of our named executive officers. Our named executive officers for the fiscal year ended December 31, 2022 were:

•Ramy Farid, our president and chief executive officer;

•Geoffrey Porges, our executive vice president, chief financial officer;1

•Jenny Herman, our senior vice president, finance and corporate controller;2

•Joel Lebowitz, our former chief financial officer;3

•Karen Akinsanya, our president of R&D, therapeutics;

•Robert Abel, our executive vice president, chief computational scientist and head of modeling R&D; and

•Yvonne Tran, our executive vice president, chief legal officer.

Executive Summary

Schrödinger’s Business

We are transforming the way therapeutics and materials are discovered. Our differentiated, physics-based computational platform enables discovery of high-quality, novel molecules for drug development and materials applications more rapidly and at lower cost compared to traditional methods. Our software platform is licensed by biopharmaceutical and industrial companies, academic institutions, and government laboratories around the world. We are applying our computational platform to discover and advance a broad pipeline of development programs in collaboration with leading biopharmaceutical companies. In addition, we use our platform to advance a pipeline of partnered and wholly-owned drug discovery programs, which we refer to collectively as our proprietary drug discovery programs.

2022 Highlights and 2023 Strategic Actions and Focus

We had strong results in 2022 and look forward to carrying that momentum through 2023. Our key successes since January 2022 include:

•Generated 2022 total revenue of $181.0 million, up 31 percent over 2021

•Generated 2022 software revenue of $135.6 million, up 20 percent over 2021

1 On August 16, 2022, the Board appointed Dr. Porges as executive vice president and chief financial officer, effective upon the commencement of his employment with the Company on August 18, 2022.

2 On December 18, 2021, the Board appointed Ms. Herman as the interim principal financial officer, effective as of March 1, 2022. She served as interim principal financial officer until Dr. Porges was appointed on August 18, 2022.

3 Mr. Lebowitz retired as our chief financial officer, effective as of February 28, 2022. After his retirement, Mr. Lebowitz continued to assist us under the terms of a consulting agreement. For a description of the consulting agreement with Joel Lebowitz, see “—Employment Agreements and Other Arrangements” below.

•Increased our software customer base and ended 2022 with 1,748 active customers, up 6 percent over 20214

•Drove increased adoption of our software by our largest customers, as evidenced by the $46.5 million annual contract value, or ACV, of our top 10 customers, up 36 percent over 20215

•Generated 2022 drug discovery revenue of $45.4 million, up 84 percent over 2021

•Advanced multiple programs into preclinical and clinical development, and currently have a total of nine collaborative programs in the clinic

•Ended the year with 15 ongoing collaborative and partnered programs eligible for royalties

•Initiated a Phase 1 clinical trial of SGR-1505, our MALT1 inhibitor, in patients with relapsed or refractory B-cell lymphomas

•Continued advancing SGR-2921, our CDC7 inhibitor, through investigational new drug, or IND, enabling studies, and presented new preclinical data on SGR-2921 at the American Society of Hematology 2022 Annual Meeting

•Selected SGR-3515 as our development candidate for our WEE1 inhibitor program and initiated IND-enabling studies

•Acquired and integrated XTAL BioStructures, Inc., enabling us to pursue scientific advancements in the field of structural biology and enhance our ability to produce high quality target structures for drug discovery

•Received a total of $147.1 million in cash distributions from Nimbus Therapeutics, LLC, or Nimbus, in connection with Takeda Pharmaceuticals Company Limited’s acquisition of Nimbus Lakshmi, Inc., a wholly-owned subsidiary of Nimbus, and its tyrosine kinase 2 (TYK2) inhibitor, on account of our equity stake in Nimbus

•Structure Therapeutics, Inc., our collaborator in which we hold an equity stake, completed an initial public offering for gross proceeds of $185.3 million

•Published 22 peer-reviewed papers across life sciences and materials science in 2022 and co-authored a manuscript describing how our predictive computational methods accelerated Nimbus’s discovery of potent, selective TYK2 inhibitors, underscoring our continued scientific advances

•Expanded our presence in India and South Korea to strengthen global expansion efforts, enhance competitive positioning and support both life science and materials sciences customers in the region

•Published our inaugural Corporate Sustainability Report and continued our investment and focus on ESG matters

Stockholder Engagement and Say-on-Pay Vote Support

Our compensation committee strives to ensure that our executive compensation program aligns with the interest of our stockholders and adheres to our pay-for-performance philosophy. In May and June 2022 ahead of our 2022 annual meeting of stockholders, we solicited feedback from institutional investors then-representing approximately 49% of our outstanding shares of common stock on a variety of executive compensation, corporate governance and other issues that

4 We define an active customer as a customer that had an ACV of at least $1,000 in the fiscal year.

5 We track the ACV for each of our customers. With respect to contracts that have a duration of one year or less, or contracts of more than one year in duration that are billed annually, we define ACV as the contract value billed during the applicable period. For contracts with a duration of more than one year that are billed upfront, ACV in each period represents the total billed contract value divided by the term.

may impact our business, and we ultimately spoke with six institutional investors then-representing approximately 29% of our outstanding shares of common stock. Our executive compensation program received very strong stockholder support at our 2022 annual meeting of stockholders, including the support of over 92% of votes cast on the non-binding advisory vote on the compensation of our named executive officers, commonly referred to as a “say-on-pay” vote. While this vote is a non-binding advisory vote, our compensation committee and board of directors take the voting results into account in determining the compensation of our named executive officers. Between October 2022 and January 2023, we reached out to institutional investors then-representing approximately 59% of our outstanding shares of common stock to understand any concerns about our executive compensation program, and we ultimately spoke with three institutional investors then-representing approximately 15% of our outstanding shares of common stock. Participants in these discussions included our chief legal officer, our chief human resources officer, our senior vice president, finance and corporate controller, our head of corporate sustainability, our senior vice president, investor relations and corporate communications, and members of our internal legal team.

Over the course of several months, senior management, our compensation committee and Aon’s Human Capital Solutions practice, a division of Aon plc, or Aon, our compensation committee’s independent consultant, analyzed and discussed what was learned during our stockholder outreach process. In general, we learned that, while we received strong support for our executive compensation program at the 2022 annual meeting of stockholders, certain institutional investors noted they would prefer to see some compensation-related issues addressed in the near future. Compensation-related issues raised during our stockholder outreach process primarily related to (i) the large increase in executive compensation, in particular to our chief executive officer, from 2020 to 2021 and (ii) investor preference for the use of performance-based equity awards. Below are selected highlights from this process:


What We Heard			What We’ve Done
Stock options with time-based vesting conditions are not sufficiently performance-driven, as stock prices may be influenced by trends within a company’s given industry			In 2022, we worked with our compensation consultant and our compensation committee to restructure our executive compensation program to include performance-based equity awards in order to better adhere to our pay-for-performance philosophy. In August 2022, in connection with the commencement of his employment, our chief financial officer was granted a combination of performance-based restricted stock unit awards, or PRSUs, and option awards. In February 2023, our chief executive officer, our chief financial officer and our president, R&D therapeutics, who are our three most highly compensated named executive officers, were each granted a combination of PRSUs and option awards for his or her performance during 2022. Furthermore, in the case of our chief executive officer, a portion of such option awards had an exercise price equal to 110% of the closing price of our common stock on the date of grant, which we refer to as the premium-priced options.
The amount of compensation for our named executive officers, in particular, our chief executive officer, was large in 2021			Equity grants to our named executive officers, in particular to our chief executive officer, in 2021, 2022 and 2023 were reflective of market and peer practices. In January 2023, our compensation committee approved a smaller increase to annual base salaries for our named executive officers, in particular our chief executive officer, from 2022 to 2023, as compared to the increases from 2020 to 2021 and from 2021 to 2022.

Election of Directors Vote Support

Our nominating and corporate governance committee is committed to identifying and nominating directors to serve on our board of directors who, among other things, have demonstrated business acumen, have a commitment to understanding our industry and company and to regularly attending and participating in meetings of the board of directors and its committees, and who adhere to high ethical standards. Our nominating and corporate governance committee is also

committed to regularly considering governance and related matters raised by our stockholders during our engagements to determine what further actions, if any, should be taken in the best interest of our company and its stockholders.

At our 2022 annual meeting of stockholders, we received relatively low support for the election of our Class II directors. Approximately 76% of votes cast supported the election of each of Jeffrey Chodakewitz and Nancy A. Thornberry, and approximately 70% of votes cast supported the election of Michael Lynton.

In May and June 2022 ahead of our 2022 annual meeting of stockholders, and between October 2022 and January 2023, we solicited feedback from institutional investors as discussed above under “ —Stockholder Engagement and Say-on-Pay Vote Support. The governance and related topics discussed with such institutional investors included board composition and structure, executive compensation, and our corporate sustainability and ESG strategy.

Over the course of several months, senior management and our nominating and corporate governance committee analyzed and discussed what was learned in this stockholder outreach process. In general, we learned that the relatively low level of support for our election of directors proposal last year was primarily related to the number of other public company boards on which our directors served. Below are selected highlights from this process:


What We Heard			What We’ve Done
Ahead of the 2022 annual meeting of stockholders, Class II director and chairman of the board of directors, Michael Lynton was overboarded, according to certain stockholder governance and voting policies.			We met with Mr. Lynton to discuss his board commitments, and Mr. Lynton committed to reducing, within one year of the 2022 annual meeting of stockholders, the number of other public company boards of directors on which he serves to no more than three. In March 2023, Mr. Lynton informed The Boston Beer Company, Inc. of his intention not to stand for reelection at their 2023 annual meeting of stockholders, and following such meeting, Mr. Lynton will serve on three other public company boards, in addition to serving on our board of directors.
Preference for removing the classified structure of our board of directors.			We periodically discuss our classified board structure with our nominating and corporate governance committee and our board of directors to determine whether or when we should no longer have a classified board of directors. From these discussions, we have determined that maintaining a classified board structure is reflective of peer and industry practice for newly public companies in order to maintain stability of the board during the first few years following the initial public offering. We will continue to discuss this topic with our nominating and corporate governance committee and our board of directors to determine whether or when a change would be in the best interest of our company and our stockholders.
Requests for updates on our Corporate Sustainability and ESG efforts.			We have discussed with stockholders the status of our double materiality assessment, pursuant to which we worked to determine the ESG-related topics most important to our company and our stakeholders, and which serves as the basis for our data-driven Corporate Sustainability strategy. We have provided updates to stockholders regarding our board and committee oversight of ESG matters, including the formal delegation of authority from our board to our nominating and corporate governance committee of oversight of our ESG efforts. We published our inaugural Corporate Sustainability report in April 2023.

We intend to continue our stockholder outreach following the filing of this proxy statement with the SEC, to seek support for our annual meeting proposals and to solicit additional feedback regarding governance, compensation and other matters of importance to our stockholders. We view this outreach effort as a valuable opportunity to discuss measures that are

important to our stockholders. We also intend to continue our stockholder engagement efforts following the Annual Meeting regardless of the vote results on the proposals included herein.

2022 Pay Outcomes and Decisions

The following summarizes the key decisions made with respect to compensation for our named executive officers during the 2022 fiscal year.

•Our compensation committee made adjustments to base salaries based on competitiveness to the external market and individual scope of responsibility and performance.

•Based on our strong performance achievement as described under “2022 Highlights and 2023 Strategic Actions and Focus” above, short-term annual performance-based cash incentives were paid out at 96% of target.

•To ensure alignment of the interests of our named executive officers with those of our stockholders, annual equity awards were made in the form of stock options, with vesting based on continued service, the value of which depends on the performance of our common stock price and which the compensation committee considers performance-related, particularly for a newly public company. The equity award made to our chief financial officer in connection with the commencement of his employment included PRSUs.

Compensation Objectives and Philosophy

To foster the future success of the company, our compensation committee rewards our executive officers in a manner that reinforces our pay-for-performance philosophy. Our compensation committee has designed our compensation program to align executive interests with our strategic objectives for growth and with the interests of our stockholders and to attract, retain and motivate employees whose performance is expected to drive long-term stockholder value. Our compensation committee is committed to ensuring that a substantial portion of our executive compensation is “at risk” and “variable”.

(*) In addition to time-based options, we granted PRSUs to Dr. Porges, our chief financial officer, in connection with the commencement of his employment in 2022. As of the grant date, the performance conditions for the PRSUs granted to Dr. Porges were considered not probable of occurring and, as a result, the aggregate fair value of those PRSUs, for purposes of this graphic, is $0.

Overview of Our Compensation Programs

The key elements of our executive compensation programs include the following:


Compensation Element	Purpose	Features	Risk Level
Base salary	To attract and retain highly skilled executives	Fixed component of pay to provide financial stability, based on responsibilities, experience, expertise and individual contributions	Not at risk
Annual performance-based cash incentive	To promote and reward the achievement of our key short-term strategic and corporate performance goals; to motivate and attract executives	Variable, performance-based compensation linked to achievement of annual quantitative and qualitative company performance goals	At risk, short-term incentive
Long-term equity incentive awards	To focus executives on long-term performance and further align their interests to that of our stockholders; to promote retention; to reward outstanding company and individual performance	Stock options subject to multi-year vesting based on continued service, the value of which depends on the performance of our common stock price, in order to directly align executive interests with those of our stockholders over the longer-term In 2023, we introduced PRSUs for our chief executive officer, chief financial officer and president, R&D therapeutics, premium-priced stock options for our chief executive officer, and restricted stock units subject to multi-year vesting based on continued service for all of our other executives.	At risk, long-term incentive

We consider increases in base salary based upon an assessment of each executive’s performance, skill, knowledge and scope of responsibilities, and an assessment of competitive market data based on our peer group that is approved by the compensation committee.

Focusing on pay-for-performance, our 2022 performance-based cash incentive program was designed to reward achievements for 2022 as measured against pre-established quantitative and qualitative company performance goals.

We typically make equity grants to each of our executive officers upon commencement of employment and annually in conjunction with our review of their individual performance and competitive market data based on our approved peer group. We have historically provided a significant portion of our executive compensation in the form of stock options, including in 2022. In 2022, we also granted PRSUs in connection with the commencement of employment of our chief financial officer. Starting in 2023, we also provide a significant portion of our annual executive compensation in the form of restricted stock units, or RSUs, and PRSUs.

We believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture, and help align the interests of our executives and our stockholders. Accordingly, we believe equity compensation is a crucial component of any competitive executive compensation package as it directly ties our executives’ success to that of our stockholders and, because we grant a portion of the equity compensation in the form of stock options,

including a premium-priced option granted to our chief executive officer in 2023, such awards result in a potential payout only if there is an appreciation of our stock price following the date of grant.

The mix of compensation components is designed to reward annual performance against corporate goals and drive long-term company performance and create stockholder value. The compensation committee generally established overall target compensation for our executive officers near the 50th percentile of compensation paid to similarly situated executives of companies in our peer group. Competitive market positioning is only one of a multitude of factors that our compensation committee considers in making compensation decisions. As described below under “Role of Our Compensation Committee and Management in Setting Executive Compensation,” other factors considered by our compensation committee include individual performance, potential, criticality to the business, and internal equity.

In addition to our direct compensation elements, the following features of our compensation program are designed to align the interests of our executives with those of our stockholders and to follow market best practices:


What We Do		What We Don’t Do
☑	Use market data from an industry-specific peer group to set competitive compensation levels	☒	Allow hedging of equity
☑	Deliver executive compensation primarily through performance-based pay	☒	Permit re-pricing of stock options without stockholder approval
☑	Set challenging short-term incentive corporate goals	☒	Provide supplemental executive retirement plans
☑	Offer market-competitive benefits for executives that are consistent with those offered to the rest of our employees	☒	Provide tax gross-up payments for any change-of-control payments
☑	Cap payouts at 150% of target for our PRSUs	☒	Provide perquisites
☑	Maintain stock ownership guidelines applicable to our senior executive officers and non-employee directors	☒	Guarantee annual salary increases or annual equity grants
☑	Hold annual stockholder advisory say-on-pay votes	☒	Include an evergreen provision in our 2022 Equity Incentive Plan
☑	Double-trigger arrangements upon a change of control
☑	Undertake active stockholder engagement efforts
☑	Consult with an independent compensation consultant on compensation levels and practices

Chief Executive Officer Compensation

We believe the target compensation mix provided to our chief executive officer in 2022 focused on our long-term success and was aligned with the long-term interests of our stockholders, in accordance with our compensation philosophy.

The graphic below illustrates the target mix of compensation elements among base salary, annual performance-based cash incentive award, and long-term equity incentive awards that vest over multiple years for our chief executive officer in 2022. Approximately 83.3% of the target compensation mix was at-risk. Approximately 73.7% of the target compensation mix consisted of long-term incentive compensation in the form of stock options that vest over multiple years.

Reflecting the strong alignment between pay and performance over the last year, our chief executive officer’s total realizable pay in the year ended December 31, 2022, represented by his actual salary and annual incentive earned, is approximately 26.3% of the total compensation disclosed in the Summary Compensation Table below on page 44. Approximately 73.7% of Dr. Farid’s 2022 total compensation as reported in the Summary Compensation Table on page 44 of this proxy statement relates to stock options granted in 2022 which vest over a four-year period. For more information on total compensation of Dr. Farid as calculated under SEC rules, see the Summary Compensation Table on page 44. This discussion of realizable pay is not a substitute for the total compensation of Dr. Farid as reported in the Summary Compensation Table.

Role of Our Compensation Committee and Management in Setting Executive Compensation

Our compensation committee reviews and oversees our executive compensation policies and programs. Our compensation committee reviews and determines the compensation of our executive officers, including the named executive officers, and makes recommendations to the board of directors with respect to the compensation of our chief executive officer. In connection with this process, the compensation committee evaluates the total mix of compensation vehicles to align each with our business goals and strategy. Our compensation committee believes that executive pay decisions require consideration of a multitude of relevant factors that may vary from year to year. In making executive compensation decisions, our compensation committee generally takes into consideration the factors listed below:

•corporate performance, business needs and business impact;

•each named executive officer’s individual performance, experience, job function, change in position or responsibilities, and expected future roles, responsibilities and contributions to our company;

•internal pay equity among named executive officers and positions;

•the need to attract new talent to our executive team and retain existing talent in a highly competitive industry and geographic region;

•a range of market data reference points as described below under “Defining and Comparing Compensation to Market Benchmarks”;

•the total compensation cost and stockholder dilution from executive compensation actions;

•trends and compensation paid to similarly situated officers within our market;

•recommendations of the outside, independent compensation consultant;

•a review of a named executive officer’s total targeted and historical compensation and equity ownership;

•our chief executive officer’s recommendations (with respect to executive officers other than himself), based on his direct knowledge of the performance by our named executive officers; and

•evolving best practices in compensation and governance.

The evaluation of our executive officers is based in part on our overall corporate performance against annual corporate performance goals, which are related to financial and operational measures and objectives. The annual corporate performance goals are proposed by our executive team, discussed with the board of directors and approved by the compensation committee early each year, as discussed in more detail below. These annual corporate performance goals are designed to tie to the company’s overall corporate objectives. After the end of each year, our compensation committee determines overall corporate performance against these predetermined corporate performance goals.

As a part of determining our executive officers’ compensation, our compensation committee receives recommendations from our chief executive officer (except with respect to his own performance and compensation). In making his recommendations for executive officers other than himself, the chief executive officer receives input from our human resources department and has access to various third-party compensation surveys and compensation data provided by the independent compensation consultant to the compensation committee, as described below. While the chief executive officer discusses his recommendations for the other executive officers with the compensation committee, he does not participate in the deliberations concerning his own compensation.

Our chief executive officer’s annual base salary and his annual performance-based cash incentive award is approved by our board of directors, based upon the recommendation of our compensation committee. Either our compensation committee or our board of directors approves annual equity awards to our executive officers, including our chief executive officer.

Annual base salaries, annual performance-based cash incentive awards for prior year performance and annual equity awards are generally determined in the first quarter of each year.

Our compensation committee may also review the compensation of our executive officers throughout the course of the year, including in connection with promotions or other special circumstances that our compensation committee determines to be appropriate.

Role of the Independent Compensation Consultant

Since 2018, our compensation committee has retained Aon as its independent compensation consultant, to provide comparative data on executive compensation and director compensation practices in our industry and to advise on our executive compensation program generally. The compensation committee annually evaluates its engagement of compensation consultants, and selected Aon to advise with respect to compensation matters based on Aon’s industry experience and reputation, which our compensation committee concluded gave Aon useful context and knowledge to advise it.

During 2022, our compensation committee directly retained Aon to advise the compensation committee on our compensation program for executive officers and directors. As part of its services, Aon provided the compensation committee with publicly available compensation data from a peer group of similarly situated publicly traded companies. Aon provided guidance to the compensation committee with respect to the amount and form of executive and director compensation, design of the global long-term incentive program and an overview of the latest trends in executive compensation. Following our stockholder engagement, which took place in May and June 2022 and between October 2022 and January 2023, Aon discussed with our compensation committee and our senior management the results of our stockholder outreach process and made recommendations as to actions that could be taken in response to the concerns raised. Although our compensation committee considers the advice and guidance of Aon as to our executive compensation program and our director compensation program, our compensation committee ultimately makes its own determinations about these matters. In the future, we expect that our compensation committee will continue to engage independent compensation consultants to provide additional guidance on our executive compensation programs and to conduct further competitive benchmarking against a peer group of publicly traded companies.

Aon was retained exclusively by the compensation committee and has not been retained by management to perform any work for the company other than projects performed at the direction of the compensation committee.

The compensation committee reviewed information regarding the independence and potential conflicts of interest of Aon, taking into account, among other things, the factors set forth in the Nasdaq listing standards. Based on such review, the compensation committee concluded that the engagement of Aon did not raise any conflict of interest.

Defining and Comparing Compensation to Market Benchmarks

The compensation committee uses competitive compensation data from an annual total compensation study of peer companies, compiled by Aon, to help inform its decisions about overall compensation opportunities and specific compensation elements.

In evaluating the total compensation of our named executive officers, our compensation committee, using information provided by Aon, establishes a peer group of publicly traded companies in the life sciences and software industries.

For purposes of executive and director compensation decisions for 2022, in August 2021, our compensation committee, with the advice of Aon, selected our peer group for 2022, or our 2022 peer group, seeking to have an equal balance of smaller and larger companies by market capitalization and size. The selection criteria for inclusion in the 2022 peer group included:

•A majority of biotechnology companies (including biopharmaceuticals, medical devices and diagnostics companies), supplemented by software technology peers, that had:

•Annual revenues of $50 million to $500 million (to exclude mature, commercial companies);

•A market capitalization of approximately one-third to three times our market capitalization at the time of review;

•Headcount of one-third to three times our projected headcount for the end of 2021, which resulted in a range of approximately 200 to 2,000 employees in size; and

•An initial public offering within the last five years.

In addition, in establishing the peer group for the following compensation cycle, the compensation committee reviews the current peer group with a view to preserve continuity in peer group from year to year, despite the inherent volatility in market capitalization and size of companies in our industries, and to address acquisition activity. For the purposes of determining the 2023 peer group, which the compensation committee used to inform, in part, executive and director compensation levels for 2023, the selection criteria were substantially the same as the criteria for the 2022 peer group, however the market capitalization range was adjusted downward to reflect our lower market capitalization at the time of review in August 2022.

With reference to these metrics, the compensation committee established the following peer groups for 2022 and 2023 as set forth in the following table:


Peer Group Company	2022 Peer Group	2023 Peer Group
Life Sciences Peers
Acceleron Pharma Inc.*	X
Adaptive Biotechnologies Corp.	X	X
Agios Pharmaceuticals, Inc.	X	X
Allogene Therapeutics, Inc.	X	X
bluebird bio, Inc.*	X
Blueprint Medicines Corp.	X	X
BridgeBio Pharma, Inc.	X	X
CRISPR Therapeutics AG	X	X
Deciphera Pharmaceuticals, Inc.	X	X
Denali Therapeutics Inc.	X	X
Fate Therapeutics, Inc.		X*
Ginkgo Bioworks Holdings, Inc.	X	X
Halozyme Therapeutics, Inc.	X	X
Inspire Medical Systems, Inc.		X*
Reata Pharmaceuticals Inc.	X	X
Recursion Pharmaceuticals, Inc.	X	X
Twist Bioscience Corp.	X	X
Software Peers
Certara, Inc.	X	X
Yext, Inc.	X	X
Varonis Systems Inc.	X	X
Zuora Inc.	X	X

* Acceleron Pharma Inc. was removed from the 2023 peer group because it was acquired by Merck & Co., Inc. in November 2021, and bluebird bio, Inc. was removed from the 2023 peer group because its market capitalization and revenue range fell below the selection range at the time the 2023 peer group was approved. All additions to the 2023 peer group were to maintain a balance of selection criteria while maintaining a robust sample size of companies.

This market data was used as a reference point, in addition to other factors, in setting our named executive officer’s compensation in 2022. Since we operate in a technically advanced environment, the competition for experienced and talented executives is high. Our compensation committee’s general aim is for compensation to remain competitive with the market. In 2022, our compensation committee generally targeted total compensation for our executive officers at approximately the 50th percentile of the market data.

Competitive market positioning is only one of a multitude of factors, as described above under “Role of Our Compensation Committee and Management in Setting Executive Compensation,” that our compensation committee considers in making compensation decisions, including individual performance and potential, criticality to the business, and internal equity.

Base Salary

We provide base salaries to our named executive officers to compensate them with a fair and competitive base level of compensation for services rendered during the year. None of our named executive officers is party to an employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary. On an annual basis, our compensation committee determines (or recommends, in the case of the chief executive officer) the base salary for each executive officer, including our named executive officers, based on the executive officer’s performance, skills, knowledge and the responsibilities required of our executive officers. In addition, our compensation committee

reviews and considers the level of base salary paid by companies in our peer group for similar positions. Any changes in base salary made as part of the annual review process are typically effective at the beginning of the fiscal year.

Our compensation committee's annual assessment of our named executive officers’ base salaries takes into consideration our objective to retain highly qualified executives, to motivate them to achieve our business goals, and to reward them for the achievement of short- and long-term performance.

At the beginning of 2022, our compensation committee reviewed the compensation of our chief executive officer and each of our other named executive officers. With respect to Dr. Farid, our compensation committee recommended, and our board of directors approved, an increase in his annual base salary from $620,000 to $651,000 for 2022. This determination was based on his critical role at our company and overall company performance.

The compensation committee also approved merit increases in base salary for each of our other named executive officers serving at that time, based on overall company performance (with the input of our chief executive officer), expected roles and responsibilities for 2022, the market conditions and a comparison of their base salaries to the market median base salaries of similarly situated executive officers in our 2022 peer group.

The table below sets forth the adjustments to the base salary for 2022, in dollars and as a percentage, for each of our named executive officers.


Name	2021 Base Salary	2022 Base Salary		Increase(%)
Ramy Farid	$620,000	$651,000		5.0%
Geoffrey Porges	N/A	$580,000		N/A
Jenny Herman	$317,500	$384,167	(1)	21.0%
Joel Lebowitz	$410,000	$430,000		4.9%
Karen Akinsanya	$460,000	$520,000	(2)	13.0%
Robert Abel	$356,000	$374,000		5.1%
Yvonne Tran	$453,000	$475,000		4.9%

(1)During the periods from January 1, 2022 through February 28, 2022 and from September 16, 2022 through December 31, 2022, Ms. Herman’s annualized base salary was $330,000. During the period from March 1, 2022 through September 15, 2022, Ms. Herman’s annualized base salary was $430,000. The increase in Ms. Herman’s base salary during this period was in part due to her additional responsibilities when she served as our interim principal financial officer from March 1, 2022 through August 18, 2022. The amount in the table above reflects the salary earned by Ms. Herman in 2022.

(2)On January 6, 2022, our compensation committee approved an increase in Dr. Akinsanya’s base salary to $483,000. On February 16, 2022, Dr. Akinsanya was appointed as President of R&D, Therapeutics. In connection with such appointment, our compensation committee approved an increase in her base salary from $483,000 to $520,000, effective as of February 16, 2022.

Annual Performance-based Cash Incentive. In August 2019, our board of directors adopted our Senior Executive Incentive Compensation Plan. The Senior Executive Incentive Compensation Plan provides for cash incentive payments to be made to certain eligible executive officers, including our named executive officers, based upon the attainment of performance targets established by our compensation committee, which are related to financial and operational measures or objectives with respect to our company. Each executive officer who is selected to participate in the plan has an annual targeted bonus opportunity based on a percentage of salary, but payments under this plan may be higher or lower than the executive’s target bonus opportunity, depending upon our performance. This plan is designed to motivate our executive officers to achieve annual goals based on financial and operating performance objectives.

Our compensation committee administers the Senior Executive Cash Incentive Plan, selects the eligible executive officers, and selects the corporate performance goals.

Cash awards paid under the Senior Executive Incentive Compensation Plan are based upon formulas that tie such cash awards to performance targets under the corporate performance goals. The formulas are adopted annually by the compensation committee and communicated to each executive officer at the beginning of each year. The level of

achievement of the corporate performance goals will be determined by the compensation committee. If the corporate performance goals are met, payments are made as soon as practicable following the determination by the compensation committee (or the board of directors, upon the recommendation of the compensation committee, in the case of the chief executive officer) of the cash award payable to each executive officer. Subject to the compensation committee’s discretion to pay a pro-rated cash award under limited circumstances, each executive officer must be employed by us on the date the cash award is payable in order to be eligible to receive the cash payment. Our board of directors or the compensation committee may amend or terminate the Senior Executive Incentive Compensation Plan at any time for any reason.

The table below summarizes the predetermined 2022 corporate performance goals, the relative weighting for each corporate performance goal and level of performance achievement for each goal as approved by the compensation committee.

Certain of these corporate performance goals include highly sensitive and competitive data, including preclinical, clinical, regulatory, technical, operational and financial targets. We do not disclose the specific portions of these goals because we believe that such disclosure would result in competitive harm to us. Revealing certain elements of these goals could potentially reveal insights about our preclinical, clinical, regulatory, financial and strategic plans or objectives that our competitors or potential collaborators could use against us.

Based on the assessments and calculations described below, our compensation committee determined that the 2022 corporate performance goals were achieved at an overall level of 96% of target.


2022 Corporate Goals Achievement	Relative Weighting	Percentage Performance Achievement	Weighted Performance
Achieve financial goals
•Achieve software sales booking target	10%	93.2%	9.3%
•Achieve drug discovery revenue target of $45 million	10%	100%	10%
•Remain within board-approved 2022 annual operating plan budget	10%	110%	11%
Advance science and technology underlying computational platform
•Increase the number and types of discovery targets our platform can prosecute	10%	100%	10%
•Improve the effectiveness and efficiency with which our platform can prosecute targets	10%	100%	10%
•Expand the applicability of our platform to high-value adjacent areas	10%	100%	10%
Advance collaborative and wholly-owned programs
•Initiate Phase 1 clinical trial on MALT1 program	7.5%	100%	7.5%
•Complete GLP-toxicology studies and submit pre-IND meeting request for CDC7 program	7.5%	100%	7.5%
•Achieve validated hit series on additional new wholly-owned programs	7.5%	100%	7.5%
•Enter into new materials discovery collaborations	7.5%	70%	5.3%
Achieve communication and leadership goals
•Execute corporate affairs, investor relations and marketing plans to raise awareness of Schrödinger to software customers, investors, media, potential partners and potential employees; execute on ESG/DEI strategy	5%	100%	5%
•Hire additional key, strategic personnel	5%	50%	2.5%
Approved 2022 Corporate Performance Goal Achievement Level	100%		96%

In order to arrive at the overall level of 2022 corporate performance goal achievement, our compensation committee determined the percentage of performance achievement for each goal and then multiplied that percentage of achievement by such goal’s relative weighting to arrive at the weighted performance for each goal. Our compensation committee then

added the weighted performance percentages together to determine our overall 2022 corporate performance goal achievement level of 96% of target.

In determining the overall level of achievement, our compensation committee made the following assessments:

•Achieve financial goals – Assessment of 30.3%, out of a targeted weighting of 30%, was based largely on achievement slightly below target of bookings for our software business, achievement at target of revenue for our drug discovery business, and achievement above target with respect to operating within our board-approved 2022 annual operating plan budget.

•Advance science and technology underlying computational platform – Assessment of 30%, out of a targeted weighting of 30%, was based on achievement at target with respect to our ability to increase the number and types of discovery targets our platform can prosecute, improve the effectiveness and efficiency with which our platform can prosecute targets, and expand the applicability of our platform to high-value adjacent areas. In particular, we made progress in advancing our absolute protein-ligand binding free energy perturbation technology, which could improve the hit rates in virtual screening. Additionally, we improved our technologies for computationally enabling structure-based drug design for targets with limited structural biology support, including integrating de novo protein and structure prediction methods. Furthermore, we also successfully integrated in-house structural biology capabilities to enable challenging targets for which methods such as de novo structure prediction may not be feasible.

•Advance collaborative and wholly-owned programs – Assessment of 27.8%, out of a targeted weighting of 30% was based largely on performance at target with respect to our ability to meet specified milestones for our wholly-owned programs, which was partially offset by performance below target with respect to establishing new materials science collaborations.

•Achieve communication and leadership goals – Assessment of 7.5%, out of a targeted weighting of 10%, was based on performance at target with respect to executing on corporate affairs, investor relations, marketing plans and our ESG/DEI strategy and performance under target with respect to hiring key, additional strategic personnel. In particular, we made significant progress on our inaugural Corporate Sustainability Report, which we recently published.

The table below shows each named executive officer’s target cash incentive award under the Senior Executive Incentive Compensation Plan as a percentage of the named executive officer’s annual base salary in 2022, the cash target incentive award opportunity in dollars for 2022 and the actual cash incentive awards paid to our named executive officers for 2022 performance, which were paid in January 2023, as well as the actual 2022 cash incentive award payment as a percentage of the 2022 target cash incentive award opportunity.


Name	2022 Target Incentive Award (% of 2022 Base Salary)	2022 Target Incentive Award Opportunity ($)	2022 Actual Incentive Award ($)(1)	2022 Actual Incentive Award (% of 2022 Target Incentive Award Opportunity)
Ramy Farid	60%	$390,600	$374,976	96%
Geoffrey Porges(2)	50%	$108,055	$102,970	96%
Jenny Herman(3)	40%	$132,000	$126,720	96%
Joel Lebowitz(4)	N/A	N/A	N/A	N/A
Karen Akinsanya	50%	$260,000	$249,600	96%
Robert Abel	40%	$149,600	$143,616	96%
Yvonne Tran	40%	$190,000	$182,400	96%

(1)Under the Senior Executive Incentive Compensation Plan, the actual cash incentive awards were determined for 2022 by multiplying the target incentive award opportunity for each named executive officer by 96%, which is the overall achievement level of the corporate performance goals as determined by our compensation committee.

(2)Dr. Porges’ cash incentive award payment was prorated for the period he served in 2022.

(3)Following Mr. Lebowitz’s retirement, Ms. Herman served as our interim principal financial officer, effective as of March 1, 2022, until Dr. Porges was appointed as our chief financial officer, effective as of August 18, 2022.

(4)Mr. Lebowitz retired effective as of February 28, 2022.

In March 2023, the compensation committee determined the performance goals that will be used to assess corporate performance in 2023. Cash incentive awards under the 2023 annual incentive program will be determined in substantially the same manner as under the 2022 annual incentive program.

Equity Incentives

Although we do not have a formal policy with respect to the grant of equity incentive awards to our named executive officers, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture, help to align the interests of our named executive officers and our stockholders and provide competitive levels of executive compensation. We believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our named executive officers to remain in our employment during the vesting period. We also believe that equity awards with performance-based vesting conditions further align executive interests with those of our stockholders. The market for qualified and talented executives in the industry in which we operate is highly competitive, and we compete for talent with many companies that have greater resources than we do. As such, we believe equity compensation is a crucial component of any competitive executive compensation package we offer.

Our compensation committee or our board of directors typically makes equity grants to our named executive officers upon commencement of employment and annually at the beginning of the year in conjunction with our review of their individual performance and competitive market data based on our approved peer group. The size of equity awards varies among our executive officers based on their positions, competitive market data, and annual performance assessments. None of our executive officers is party to an employment agreement that provides for the automatic grant of equity awards.

The options that we grant to our named executive officers typically vest and become exercisable as to 25% of the shares underlying the option on the first anniversary of the vesting commencement date and as to an additional 2.0833% of the original number of shares underlying the option monthly thereafter. Vesting rights cease upon termination of employment and exercise rights for previously vested stock options cease shortly after termination of employment, though exercisability is extended in the case of death or disability. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including no voting rights and no right to receive dividends or dividend equivalents. The term of options we have granted to our named executive officers is ten years.

All stock options granted (other than the premium-priced stock options granted to our chief executive officer in 2023) have exercise prices equal to the fair market value of our common stock on the date of grant, which is typically the date that either our compensation committee or our board of directors approves such award. The exercise prices are determined by reference to the closing market price of our common stock on the Nasdaq Global Select Market on the date of grant, so that the recipient will not realize any value from his or her options unless our stock price increases above the stock price on the date of grant. Accordingly, this portion of our named executive officers’ compensation is at risk and is directly aligned with stockholder value creation.

As part of the ongoing review of our compensation strategy and practices, the compensation committee determines the appropriate mix of the type of equity awards and the size of the award, based in part on recommendations from Aon. The compensation committee may approve different award types in the future as part of the overall compensation strategy.

In connection with the annual review of our named executive officers’ compensation and consistent with our compensation philosophy, in February 2022, our compensation committee granted options to purchase shares of our common stock to our named executive officers, in the amounts set forth in the table below, each at an exercise price of $27.76 per share. These option grants were based on the named executive officer’s level of responsibility within our company, equity ownership in relation to the peer group benchmark data, and the compensation committee’s assessment

of the named executive officer’s individual performance (with input from our board of directors, in the case of our chief executive officer) and our overall company performance, in each case without reference to any specific metric.


Name			2022 Option Awards (#) (1)
Ramy Farid			215,000
Geoffrey Porges(2)			—
Jenny Herman(3)			30,000
Joel Lebowitz(4)			—
Karen Akinsanya			80,000
Robert Abel			70,000
Yvonne Tran			60,000

(1)These options vested as to 25% of the original number of shares underlying the options on February 9, 2023, and vest in equal monthly installments for the remaining shares through February 9, 2026.

(2)Dr. Porges was appointed as our chief financial officer, effective as of August 18, 2022. In connection with the commencement of his employment, he was granted options and PRSUs, as more fully described below.

(4)Mr. Lebowitz retired as our chief financial officer, effective as of February 28, 2022.

The grant date fair values of the stock options granted to our named executive officers in 2022 and shown in the Summary Compensation Table and the Grants of Plan-Based Awards for 2022 table below were determined in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718. The compensation committee’s overall philosophy is to award equity that takes into account individual performance, potential, criticality to the business, internal equity and relative alignment to the peer group median. The stock options granted are reflective of that philosophy and our strong performance for 2021.

Effective as of August 18, 2022, our compensation committee granted Dr. Porges a stock option to purchase 180,000 shares of our common stock, at an exercise price per share equal to $28.55. The option vests as to 25% of the shares underlying the option on August 18, 2023 and, as to the remaining shares, monthly thereafter until the August 18, 2026, subject to continued service. In addition, our compensation committee also granted Dr. Porges PRSUs with respect to 90,000 shares of our common stock. Each PRSU represents a contingent right to receive one share of our common stock upon the achievement of specified performance goals related to financial performance, investor engagement and business development and subject to continued service. The option and the PRSUs were granted pursuant to our 2021 Inducement Equity Incentive Plan, as amended, as an inducement material to Dr. Porges’ acceptance of employment with us in accordance with Nasdaq Listing Rule 5635(c)(4).

2023 Executive Compensation Decisions

In 2023, we restructured our executive compensation program, and we introduced PRSUs for certain of our named executive officers to further adhere to our pay for performance philosophy. In 2023, we granted PRSUs to each of our chief executive officer, our chief financial officer and our president, R&D therapeutics that vest as to the percentage assigned to each of three evenly weighted financial, business and software performance metrics, as measured at the end of the measurement period ending on December 31, 2025, upon certification by our compensation committee of achievement of the applicable performance metrics. The level of achievement of the PRSUs provide for a threshold (50%) payout, a target (100%) payout, and a maximum (150%) payout depending upon the level of performance achieved. We also granted options with time-based vesting conditions to our continuing named executive officers, which for our chief executive officer included a premium-priced option with an exercise price equal to 110% of the closing price of our common stock on the date of grant. The target aggregate grant value for the PRSUs and the premium-priced options granted to our chief executive officer in 2023 is expected to equal at least 50% of the total value of the long-term equity incentive award granted to Dr. Farid.

In addition, we granted RSUs to our named executive officers (other than our chief executive officer, chief financial officer and our president, R&D therapeutics), which vest in equal annual installments over a period of four years, subject to continued service to the company. Vesting rights cease upon termination of service. Prior to the vesting of an RSU, the

holder has no rights as a stockholder with respect to the shares subject to such RSU, including no voting rights and no right to receive dividends or dividend equivalents.

In January 2023, our compensation committee (or our board of directors, in the case of our chief executive officer) approved 2023 base salaries and target cash incentive percentages for 2023, and in February 2023, our compensation committee approved (with input from our board of directors, in the case of our chief executive officer) annual equity awards for our named executive officers. The table below sets forth the 2023 compensation levels for each of our named executive officers.

Name

2023 Base Salary (1)

Base Salary Increase
over 2022 (%)

SEC Form DEF 14A filed by Schrodinger Inc.