•reviewing our policies, programs and initiatives focusing on diversity and inclusion with respect to our leadership and workforce; and
•such other matters that are specifically designated to the compensation, diversity and inclusion committeeour Compensation Committee by our Board from time to time.
Our Compensation Committee also has the authority, in its sole discretion, to retain or obtain the advice of a compensation consultant, legal counsel or other adviser as it deems appropriate to assist with the execution of its duties and responsibilities as set forth above and in its charter.
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 2023, our last completed fiscal year, each of Mr. Baird, Ms. Coleman and Ms. Leondakis served on our Compensation Committee. During our last completed fiscal year, none of our executive officers served on the board of directors from time to time.or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee, and no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company.
Corporate Governance and Nominating Committee
Our corporate governance and nominating committee
(our "Corporate Governance Committee") consists of
Chip Baird, Niki Leondakis and Carol Melton,
Michael Kumin and Chip Baird, with Mr. Baird
currently serving as chair. Our
board of directorsBoard has determined that each member of our
corporate governance and nominating committeeCorporate Governance Committee is independent under the applicable Nasdaq listing standards.
Specific responsibilities of our
corporate governance and nominating committeeCorporate Governance Committee include:
•identifying and evaluating candidates, including the nomination of incumbent directors for reelection and nominees recommended by stockholders, to serve on our board of directors;
Board;
•reviewing periodically the Company’s policies, programs and initiatives focusing on social responsibility, including environmental and sustainability and social and human rights matters, and providing recommendations to management;
•considering and making recommendations to our board of directorsBoard regarding changes to the size and composition of our board of directors;Board;
•considering and making recommendations to our board of directorsBoard regarding the composition and chairmanshipchairs of the committees of our board of directors;
Board;•establishing procedures to exercise oversight of, and oversee the performance evaluation process of, our board of directorsBoard and management;
•overseeing periodic evaluations of the performance of the boardour Board and of the board’sour Board’s committees;
•instituting plans or programs for the continuing education of our board of directorsBoard and orientation of new directors;
•developing and making recommendations to our board of directorsBoard regarding corporate governance guidelines and matters;matters and
monitoring compliance with such guidelines; and•such other matters that are specifically designated to the corporate governance and nominating committeeour Corporate Governance Committee by our board of directorsBoard from time to time.
In the process of identifying, screening and recommending director candidates to theour full board of directors,Board, our corporate governance and nominating committeeCorporate Governance Committee takes into consideration the needs of the board of directorsour Board and the qualifications of the candidates, such as their general understanding of various business disciplines and the Company’s business environment, their educational and professional background, analytical ability, independence,
diversity of experience and viewpoints and their willingness to devote adequate time to boardBoard duties. The board of directorsOur Board evaluates each individual in the context of the board of directorsour Board as a whole with the objective of retaining a group that is best equipped to help ensure that the long-term interests of
the stockholders are served. When searching for new directors, the corporate governance and nominating committeeour Corporate Governance Committee will actively seek out women and individuals from minority groups to include in the pool from which nominees for the board of directorsour Board are chosen. The corporate governance and nominating committeeOur Corporate Governance Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.
The corporate governance and nominating committee
Our Corporate Governance Committee will consider director candidates recommended by stockholders on the same basis
thatas it evaluates other nominees
for director.to serve on our Board. In doing so,
the corporate governance and nominating committeeour Corporate Governance Committee will evaluate director candidates in light of several factors, including the general criteria outlined above. Our Amended and Restated Bylaws
(our “Bylaws”) provide that any stockholder of record entitled to vote for the election of directors at the applicable meeting of stockholders may nominate persons for election to our
board of directors,Board, if such stockholder complies with the applicable notice procedures, which are
referenceddescribed in
the section named “Questions and Answers” under “When are stockholder proposals due for next year’s annual meeting of the stockholders?”
under “Questions and Answers” on page 61 of this proxy statement.
Meetings of
theOur Board
of DirectorsOur
board of directorsBoard held
10seven meetings during the year ended December 31,
2020.2023, in addition to the 15 committee meetings described above. During
2020,2023, each person currently serving as a director attended at least 75% of the aggregate of the total number of meetings of
the board of directorsour Board and each committee of which he or she was a member. Each director is also encouraged and expected to attend the Company’s
annual meeting. All of our directors attended the 2020 annual meeting of stockholders.Annual Meeting.
Board Leadership Structure
As outlined in our corporate governance guidelines
the board of directors(our “Corporate Governance Guidelines”), our Board will determine its leadership structure in a manner that it determines to be in the best interests of the Company and its stockholders from time to time in its judgment. If the Chair of
the board of directorsour Board is not independent, the
non-employee directors of
the board of directorsour Board will elect a Lead Independent Director who will lead executive sessions of
the board of directors,our Board, have authority to call meetings of the independent directors and engage with the
boardChair of
director’s Chairour Board and CEO to set
board of directorsBoard meeting agendas, among other responsibilities.
Julie Wainwright
John Koryl serves as both our Chief Executive OfficerCEO and the Chairas a member of our board of directors. The board of directorsBoard. Our Board believes that having our CEO serve as a member of the combination of these two rolesBoard is appropriate at this time for the Company, particularly as it supports more consistent communication and coordination throughout the organization, enhancing the effectiveness of our corporate strategy. The board of directorsOur Board believes that robust, independent board of directorsBoard oversight is essential, and the appointment of Michael KuminMs. Katz as an empowered Lead Independent Directorour independent Board Chairperson in February 2024 supports that important objective.
Corporate Governance Guidelines
Our board of directorsBoard has adopted corporate governance guidelines,Corporate Governance Guidelines, which provide the framework for our corporate governance along with our Amended and Restated Certificate of Incorporation Amended and Restated(our “Charter”), Bylaws, committee charters and other key governance practices and policies. Our corporate governance guidelinesCorporate Governance Guidelines cover a wide range of subjects, including the conduct of boardBoard meetings, independence and selection of directors, boardBoard membership criteria and boardBoard committee composition. The corporate governance guidelinesOur Corporate Governance Guidelines can be accessed on our website at https://investor.therealreal.com.
Our Board recognizes the value feedbackof regular, two-way dialogue with our stockholders. Feedback from our stockholders. This past year,stockholders is integral to our Board’s decision-making process and, accordingly, in late 2023 and early 2024 we invited 48our largest stockholders who represent more than 70%represented approximately 50% of our institutional shares outstanding at the time of our outreach to engage with us. We ultimately held meetings with one quarter of those stockholders representing roughly 16%approximately 20% of institutionalour shares then outstanding. One topic that several
During these discussions, we gained valuable input from our stockholders suggested we reconsider ison matters including our current plurality voting standard for director elections, which the corporate governance practices, executive compensation program and nominating committee will carefully evaluate overapproaches to sustainability, risk oversight and human capital management. Feedback from our stockholders was shared with our Board and directly informed our implementation of several key governance enhancements in recent years, including our continuation of the next year. performance-based restricted stock unit program in 2023 and 2024 and progress on our corporate governance commitments made in 2022, including this year’s proposal to begin the declassification process of our Board.
The changes we implemented in 2023 are discussed in greater detail under “Compensation Discussion and Analysis” and “Board Declassification and Supermajority Sunset Commitments” later in this proxy statement. Please also see “Compensation Discussion and Analysis” for a detailed discussion of stockholder feedback related to our 2023 Say-On-Pay Vote.
We
look forwardplan to
engagingcontinue our stockholder engagement program under our Board’s oversight to further enhance and deepen our relationships with
moreour stockholders,
and hearing their perspectives on this and other topics overespecially as we continue enhancing the
coming year.Company’s governance practices.
Any stockholder or other interested party who wishes to communicate with our board of directorsBoard or any individual director may send written communications to our board of directorsBoard or such director c/o Corporate Secretary, The RealReal, Inc., 55 Francisco Street, Suite 600,150, San Francisco, CA 94133, or via email to ir@therealreal.com.ir@therealreal.com. The communication must include the stockholder’s name, address and an indication that the person is our stockholder. The Corporate Secretary will review any communications received from stockholders and will forward such communications to the appropriate director or directors, or committee of our board of directors,Board, based on the subject matter.
Stock Ownership by Directors
and Executives
Our board of directorsBoard believes that an ownership stake in the Company strengthens the alignment of interests between directors, executives, and stockholders. Accordingly, each director is requiredAs discussed below, in November 2021, we expanded our stock ownership guidelines to own common stock (or equivalents) having a value of at least fiveinclude our executives:
| | | | | |
| Position | Minimum Stock Ownership |
| |
| Non-Employee Directors | 5 times annual cash retainer |
| CEO | 5 times base salary |
| Other Executives* | 3 times base salary |
* Defined as the annual retainer fee, withinCEO’s direct reports
Newly appointed directors or executives have five years
from the time they are elected, appointed or promoted (or five years from November 2021, in the case of
becoming a director.then-current directors and executives) to meet these guidelines. In the event that
the annuala director’s cash retainer
fee is increased, directorsor an executive’s base salary increases, he or she will have one year
from the date of the base salary increase to meet the
newincreased ownership guidelines. Our
board of directorsBoard will evaluate whether exceptions should be made for any director
or executive on whom these guidelines would impose a financial hardship.
Oversight of Environmental, Social
and Governance (“ESG”)
OversightInitiatives
We are committed to conducting business in an environmentally sustainable and socially responsible manner, and to managing the risks and opportunities that arise
from ESG issues. We believe that operating in a socially responsible and sustainable manner will drive long-term value creation for our companythe Company and its stockholders.
In 2019, the Companywe launched a new initiative to enhance ESG policies and disclosures informed by the Sustainability Accounting Standards Board (SASB)(“SASB”) industry-specific disclosure guidelines. In 2020,Since then, our management has reviewed and updated various ESG policies and processes, which can be located on the
investor relations page of our website at https://investor.therealreal.com/social-impact.Our most recent SASB reporting can also be found on the investor relations page of our website. We are committed to extending the lifecycle of luxury goods by promoting their recirculation, rather than creating waste. In this way, sustainability is woven into the fabric of our business, and we hope to create a more sustainable future for fashion. Additionally, we believe a growing awareness of the reduced environmental impact of recirculating luxury goods compared to the production of new products significantly contributes to the appeal of consigning and purchasing on our online marketplace.
As we move forward, we strive to continuously review our sustainability commitments, strategies and priorities. Recent sustainability efforts include:
•Fair Condition Program. This new program has enabled us to offer more secondhand, luxury items and has the effect of increasing the total number of consigned items in the circular economy. To aid buyers in assessing the condition of items in our online marketplace, we assign items a condition level. In the first quarter of 2022, we began accepting items in “fair” condition, which tend to be listed at more accessible price points given their level of wear. In 2023, demand for items in fair condition remained strong.
•Sustainability Task Force. In 2020, we formed a cross-functional Sustainability Task Force to identify projects throughout the organization that have the potential to reduce our environmental impact. The corporate governanceSustainability Task Force prioritizes high impact projects and nominatingaims to embed a focus on sustainability across the organization. In early 2022, we reorganized the Sustainability Task Force into several individual working groups so we could concentrate our efforts on specific, meaningful projects, including preferred materials, transportation optimization, employee travel, employee experience and waste. In 2023, the Sustainability Task Force focused on reducing energy expenditures and limiting use of packaging materials. Throughout 2022 and 2023, members of the Sustainability Task Force provided periodic updates to our executives and the Corporate Governance and Nominating Committee of the Board of Directors on our progress toward achieving our goals and initiatives.
•Sustainability Calculator. In 2018, we launched our Sustainability Calculator on National Consignment Day as a tool to quantify the positive impact consignment has on the planet. We developed the Sustainability Calculator to measure the greenhouse gas emissions and water footprint reduction of consignment as compared to producing new products.
•National Consignment Day. We founded National Consignment Day as a national recognition day that occurs on the first Monday of October. National Consignment Day celebrates the positive impact consigning has on the environment.
•Carbon Neutral Pledge. In November 2019, we were the first company to take the pledge in the CEO Carbon Neutral Challenge issued by the CEO of Gucci. We pledged to be carbon neutral in 2021, and we reached that goal in 2020 (Scope 1, Scope 2 and certain Scope 3 emissions). Our path to carbon neutrality included implementing reductions and annually offsetting emissions that cannot be eliminated.
•United Nations Climate Change’s Fashion Industry Charter for Climate Action. In April 2019, we became the first company in the resale industry to join the United Nations Climate Change’s Fashion Industry Charter for Climate Action, which aims to limit global warming within the fashion industry and inspire climate action. The charter endeavors to achieve a 50% reduction in carbon emissions in the fashion industry by 2030 and net zero emissions by 2050.
•ReCollections. Through our ReCollection program, we transform unwearable or damaged items into unique, premium luxury upcycled items. In 2023 and early 2024, we partnered with the Fashion Institute of Technology ("FIT"). As part of a design and upcycling competition, we asked eight FIT students to create one-of-a-kind coats from otherwise unwearable or damaged items. The reimagined and upcycled coats were debuted and sold in January 2024.
Committee Oversight
Our Board and committees provide oversight on ESG matters. As noted above and in the committee will becharters:
•Our Compensation Committee is responsible for overseeingreviewing and recommending to our Board compensation plans, policies and programs intended to attract, retain and appropriately reward employees, as well as providing oversight of the Company’s policies, programs and initiatives focusing on diversity and inclusion.
•Our Corporate Governance Committee provides oversight of the Company’s policies, programs and initiatives focusing on social responsibility, including environmental and sustainability and social and human rights matters.
•Our Audit Committee works closely with our management to discuss current and emerging ESG processes, policies,risks and performance,what steps management is taking to manage and making recommendationsreduce the Company’s exposure to such risks, and reviews the full boardCompany’s public filings containing disclosure on these topics.
Oversight of directors.Human Capital
The actions of these committees and the work of our Board and management seek to attract, retain and develop a diverse and inclusive workforce that is motivated to achieve the Company’s business objectives. To satisfy these oversight responsibilities,
the corporate governance and nominating committee willour committees receive regular updates from management on progress and strategy.
Recent enhancements include the following: environmental management system (EMS), human rights policy, climate change policy, diversity and inclusion policy, environmental policy, energy, water, waste policy, greenhouse gas (GHG) emissions and ESG performance metrics.
Oversight of Human Capital
Our employees are guided by our mission to empower consignors and buyers to extend the life cycle of luxury goods. We have an incredibly diverse global community, and we aim to reflect that diversity within our team. We believe diversity and inclusion foster a collaborative culture, which fuels our ability to innovate as we work to create a more sustainable future. We proactively seek feedback and guidance from our employees, whom we see as our partners in building a strong organizational culture.
We work to inspire and empower our employees to think creatively and authentically, share their ideas, bring their whole selves to work, and strive for greatness every day. We are proud to have a diverse team, and we recognize
that there is opportunity for us to continue improving representation, particularly among our senior leadership. We support and celebrate
all diversity, and are committed to providing an equal employment opportunity regardless of race, color, ancestry, religion, sex, national origin, sexual orientation, age, citizenship, marital status, disability, gender identity or expression, or
Veteranveteran status. Below is a breakdown of how our team self-identifies as of December 31,
2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | All | | Corporate | | Management | | Executives | | Board |
| | | | | |
Black | | 14% | | 5% | | 8% | | — | | 20% |
| | | | | |
Hispanic/Latinix | | 23% | | 12% | | 15% | | — | | — |
| | | | | |
Asian | | 12% | | 20% | | 9% | | 29% | | — |
| | | | | |
White | | 37% | | 47% | | 55% | | 71% | | 80% |
| | | | | |
Female | | 68% | | 60% | | 65% | | 57% | | 60%* |
* | Includes Karen Katz who joined our board of directors on February 17, 2021.
|
2023 (table does not reflect, of the total individuals surveyed, approximately 9% who chose not to self-identify, approximately 1% who identified as Native American, and approximately 1% who identified as Hawaiian or Pacific Islander):
| | | | | | | | | | | | | | | | | |
| All | Corporate | Management | Executives | Board |
| | | | | |
| | | | | |
| Black | 15% | 13% | 7% | — | 13% |
| Hispanic/Latinix | 31% | 16% | 16% | 4% | — |
| Asian | 7% | 12% | 11% | 11% | — |
| Two or More Races | 4% | 6% | 4% | 4% | — |
| White | 33% | 42% | 50% | 63% | 87% |
| Female | 66% | 67% | 62% | 48% | 50% |
DEI Vision and Strategy. We believe that creating a more sustainable future by growing the circular economy requires us to bring different perspectives. We believe that a more sustainable future is an equitable one, and that growing the circular economy requires us to unlock the power of differences and solve problems together in new and meaningful ways. We aim to design an equitable future through our four-pillar strategy: People, Culture, Commerce and Community. We are committed to building a strong culture of trust, safety, collaboration and belonging to fuel our purpose, people and performance. Since introducing our diversity, equity and inclusion (“DEI”) vision and strategy in 2021, we have hiredtaken meaningful action to follow through on those commitments, keeping our employees' voices at the center of our work, and taking a headrenewed look at our strategy to ensure continued alignment with our mission. We continue to assess self-reporting options that reflect our diverse workforce and encourage our employees to share how they self-identify, including gender
identity, LGBTQ identity, veteran status, and disability status. Since introducing the ability for our employees to share pronouns across our technologies, approximately 62% of Diversity, Equityour total employee population has chosen to share their pronouns as of December 31, 2023 in support of allyship and Inclusion, formed a Diversity Task Force and established and invested ingender inclusion.
Employee Resource Groups. Our Employee Resource Groups (“ERGs”) help to engage employees and advance inclusion and belonging through opportunities for education, awareness, development, community and social connection. Since forming in 2020, our six ERGs have continued to mature and progress into impactful communities that strengthen our culture. In 2023, we are creating structureswelcomed the addition of our seventh ERG, Real Chaverim, a space for our Jewish community and policies that empowerallies to share knowledge and experiences. In 2023, ERG membership and participation remained strong with over 1,000 employees participating in programs focused on leadership, culture, well-being, mental health, and community impact. Our groups collaborated to host compelling conversations with diverse thought leaders and experts, test hybrid and location specific approaches for reaching our distributed workforce, and led several local service projects in our authentication centers during Earth Month in April with community partners.
Culture. In 2023, we conducted our annual employee engagement survey to better understand employees’ sentiment across a range of topics and factors; management, teamwork, alignment, enablement and inclusion were among our top scoring factors. In 2023, our engagement efforts focused on well-being, leadership, communication, and inclusion. In 2023, we continued to roll out our DEI learning platform throughout our businesses in 2023, expanding access to individual contributors and enabling more employees to formbuild and participate in these criticaldevelop inclusive leadership skills through self-paced learning to better serve our people, buyers, consignors and communities. We have delivered training on Managing BiasAs part of our work to nearly all managersbuild a culture of people, whichtrust, we will continue to deliver to new managers. We have also invested in a proactive tool that encouragesencourage employees to reportshare real-time feedback on culture, bias, discrimination and harassment, or behavior that does not reflect our values and provide feedback on culture, as well aspolicies through our company-wide employee reporting tool.
The RealReal, Inc. Foundation. The RealReal, Inc. Foundation was founded at the time of our initial public offering in 2019 with the aim of advancing equity in the retentioncommunities in which we operate through access to education. Since its formation, the foundation has provided annual college scholarships and advancement of our BIPOC talent through differentiated leadership development programs.In addition, our board of directors believes that in order to fulfill its overall fiduciary responsibility to stockholderssupported numerous community organizations, including the Success Bound Youth Leadership Academy, the Secaucus Youth Alliance, Enterprise for Youth, Friendly House, Education Forward Arizona and the Company, it must maintainVirgil Abloh™ "Post-Modern" Scholarship Fund, which aims to preserve his vision for a strategic composition that includes the experience, qualifications, skills,more diverse and diversity needed for each member of the board of directors to complement the others.equitable fashion industry.
Director Refreshment. When searching for new directors, theour board of directors actively seekshas committed to maintain its diversity. Asincluding in any pool of December 31, 2020, fivedirector candidates for consideration highly qualified candidates who would bring racial, ethnic, and/or gender diversity our board of our nine board members were female, and two of our nine members represented a minority group.directors if chosen.
Talent Development and Training
We believe that the training and development of our employees is critical to our long-term success. We offer a variety of employee training programs in addition to the DEI programs discussed above, including onboarding, technical skills training, product and services training, and managerial
soft skills training. These programs include training specific to each of our business functions, enabling us to provide our consignors and buyers with a consistent luxury experience. For example, we support our sales professionals by providing a 10-daythree-week virtual onboarding sequence conducted through peer-to-peer, facilitated and self-learning sessions, followed by continuous professional development programs. Our authentication team receives training depending on one of five levels. Entry level authenticators receive a minimum of 40 hours of training, while our expert authenticators receive a minimum of ten months training. In 2020,2023, we also deliveredprovided a Manager Development Series to all people managers acrossin retail, sales and operations.
Our authentication teams receive training based on expertise level. Entry-level authenticators receive approximately 40 to 80 hours of training depending on their specialty in fashion or fine jewelry. Progression through the
organizationauthentication training program is an additional minimum of 80 hours of training and
offeredat least three months per level. Training hours and tenure increase with expertise, with a
Leadership Development Program to our people managers atGraduate Gemologist certification from GIA required in the
director and above levels.As a valued memberhighest levels of our team, eachspecialty in fine jewelry.
Each employee receives training appropriate to the scope and nature of their role. Our Fair Labor Standards Act-exempt employees receive an annual performance review and our people managers have quarterly
meetings with their employees to address performance and
development.development, as appropriate. As a part of our onboarding program, we have developed an engagement monitoring plan for our employees in the form of personal
check-ins and questionnaires.
This past summer we launched our first employee engagement survey. All of our employees were offered an opportunity to participate, of which 75% submitted a response. The survey consisted of 50 questions on which employees were asked to indicate their level of agreement with a statement based on a five-point scale from Strongly Agree to Strongly Disagree and five free-text questions to which employees were asked to write a response. The responses returned an overall favorable engagement score of 66%, 23% neutral and 11% unfavorable. Our senior leaders built department-level action plans in 2020 that focus on employee engagement.
Health, Safety and Wellness
We are committed to ensuring the health and safety of all employees and require compliance with all applicable local laws and regulations governing working conditions, working hours, fair wages, and compensation.
We recognize that in addition to minimizing work-related injuries and illness, a safe and healthy work environment supports employee retention and morale and enhances the quality of products and services. We treat all applicable health and safety regulations as a minimum standard as we are committed to high standards for our working environments that protect the well-being of all employees. We encourage consultation and cooperation between management and employees in developing occupational health and safety mechanisms through ongoing dialogue. We expect senior management to integrate health and safety mechanisms in
all business activities and monitor the program’s effectiveness.
In response to the COVID-19 pandemic,2022, we implemented changes that we consider to be in the best interest ofREAL Respect program, which provides community guidelines for our employees, as well asconsignors and buyers aimed toward creating a positive and safe experience for all. In 2023, we launched TRR Secure, a smartphone security app that enables field employees to discreetly contact emergency services via multiple channels if they are in a situation that makes them feel uneasy, unsafe or uncomfortable
We continued to focus on employees’ overall well-being in 2023 through a range of programs that support access to care, along with resources and tools to address the communities in which we
operate,following pillars of wellness: physical, mental/emotional, financial, and which comply with government regulations. We have implemented additional safety measures for employees continuing critical on-site work. We believe we have been able to preserve our business continuity without sacrificing our commitment to keeping our employees safe during the COVID-19 pandemic.
Most importantly, we recognize the importance of supporting our employee’s overall well-being. To that end, we invested in new company-paid benefit programs in 2020, including parent programs to support both birth and non-birth parents.
community.
Succession planning is another critical human capital issue.
As part of the annual executive officer evaluation process, the compensation, diversity and inclusion committee worksOur Compensation Committee is responsible for working with
theour CEO to plan for the succession of
theour CEO and other senior executive officers, as well as to develop plans for interim or emergency succession for
theour CEO and other senior executive officers in the event of retirement or an unexpected occurrence.
Management succession planning may be reviewed more frequently by the board of directors as it deems appropriate.
Evaluations of
theOur Board, Committees and Directors
The board of directors
Our Board evaluates its performance and the performance of its committees and individual directors on an annual basis through an evaluation process administered by our
corporate governance and nominating committee. The board of directorsCorporate Governance Committee. Our Board discusses each evaluation to determine what, if any, actions should be taken to improve the effectiveness of
the boardour Board, of
directors, any committee thereof or of the directors.
Code of Ethics and Business Conduct
Our board of directorsBoard has adopted a code of ethics and business conduct (the “code(our "Code of conduct”Conduct"), which establishes the standards of ethical conduct applicable to all of our directors, officers, employees and senior financial officers. A copy of our codeCode of conductConduct is posted on the investor relations page of our website at https://investor.therealreal.com. In addition, we intend to post on our website all disclosures that are required by law or the Nasdaq listing standards concerning any amendments to, or waivers from, any provision of the codeCode of conduct.Conduct.
Role of
theOur Board in Risk Oversight
One of the key functions of our board of directorsBoard is informed oversight of our risk management process. The board of directorsOur Board does not have a standing risk management committee, but rather administers this oversight function directly through the board of directorsour Board as a whole, as well as through its standing committees that address risks inherent in their respective areas of oversight. In particular, our board of directorsBoard is responsible for monitoring and assessing strategic risk exposure. Our
audit committee Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including
guidelines and policies to govern the process by which risk assessment and management is undertaken.
The audit committeeOur Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight of the performance of our external audit function.
Further, our Audit Committee provides oversight and engages with our Chief Technology and Product Officer and head of cybersecurity regarding risk management of cybersecurity issues. Our
corporate governance and nominating committeeCorporate Governance Committee monitors the effectiveness of our
corporate governance guidelines.Corporate Governance Guidelines and provides oversight of the Company’s policies, programs and initiatives focusing on social responsibility, including environmental, sustainability, social and human rights matters. Our
compensation, diversity and inclusion committeeCompensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
COVID-19
In connection with the onset of the COVID-19 pandemic, the board of directors has been receiving updates on the Company’s management of the COVID-19 crisis
Cybersecurity
Risk Management and discussing such updates, including with regard to the Company’s operations, financial positionStrategy
We have developed processes for assessing, identifying and
liquidity, communications strategy and employee matters, health and safety, among other items.Cybersecurity
We are committed to respecting and protecting the privacy of our clients. We recognize that our clients have a legitimate expectation of privacy when they do business with us. We deploy considerable resources to protect client data and privacy because our business depends on our clients’ trust.
We do not sell customer data. Our revenue comesmanaging material risks from the sale of goods and services, not our customers’ information or advertising. We recognize that there is a cost and risk associated with every piece of data our customers entrust us with, so we take measures to minimize what is collected to only what we need to provide a great experience and meet our legal and regulatory requirements. Our privacy policy details what data we collect on our website and apps and how we use that data in compliance with California Consumer Privacy Act and General Data Protection Regulation.
Our security and privacy protocols integrate technical, administrative, and physical access control measures to protect the confidentiality and integrity of client and company data. We employ privacy and data protection policies and procedures internally and with our third-party vendors and service providers to govern the collection, storage, access, use, and disclosure of information.cybersecurity threats. We review our security plans and strategies as threats and conditions evolve. The audit committeefollowing is a summary of our cybersecurity risk management and strategy processes:
Enterprise Risk Management: Our enterprise risk management program includes management of material risks from cybersecurity threats alongside other Company risks as part of our overall risk assessment process. In 2023, our Internal Audit team completed an Enterprise Risk Assessment to identify and prioritize the most critical risks that could impact our ability to achieve our business priorities and make risk-informed strategic decisions. With management’s input, our Board and Internal Audit team have identified cybersecurity as one of the risks that merits the highest level of prioritization. Informed by this designation, our Internal Audit team tracks cybersecurity key indicators and engages in discussions on the status, priorities and impact of cybersecurity risk response plans; reports key information to management throughout the year to inform decision making; and reports to the Audit Committee on a quarterly basis and to the full Board on the results and progress of the risk mitigation process.
In addition, we employ a range of tools and services to inform our assessment, identification and management of material risks from cybersecurity threats, which include from time to time:
•monitoring emerging data protection laws, including the California Consumer Privacy Act and the General Data Protection Regulation, and implementing responsive changes to our processes;
•undertaking periodic reviews of our policies and statements related to cybersecurity;
•conducting cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data;
•conducting phishing email simulations for employees and contractors with access to corporate email systems;
•requiring employees, as well as third-parties who provide services on our behalf, to treat information and data with care; and
•conducting tabletop exercises to simulate a response to a cybersecurity incident and using the findings to improve our processes and technologies.
Incident Response Team and Outside Resources: We have formed an Incident Response Team that monitors and mitigates material risks from cybersecurity threats. This team is composed of members from the information security, engineering and legal teams. The Incident Response Team and our internal legal team work in tandem to estimate the severity and materiality of a cybersecurity incident, create a response plan and inform other stakeholders as appropriate, including the Audit Committee or the full Board. In addition, we engage several third party service providers to monitor cybersecurity threats in the market more broadly, including in relation to phishing, data leaks on the dark web, firewalls, code security and endpoint protection. To identify risks from cybersecurity threats associated with these third-party service providers, we conduct pre-contract screening and due diligence and post-contract monitoring.
Cybersecurity Task Force: We have formed a cross-functional Cybersecurity Task Force that focuses on long-term cybersecurity strategy. The Cybersecurity Task Force is composed of members from the information security, engineering and legal teams and reports to our Chief Technology and Product Officer. The Cybersecurity Task Force meets periodically to discuss developments and best practices in cybersecurity incident response. In addition, the Cybersecurity Task Force reviews the business impact and severity of potential cybersecurity incidents, as reported by our automated systems, utilization of the bug bounty program, and public reports on the threat landscape.
For a discussion of whether and how any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company, including our business strategy and results of operations, see “Risk Factors – Risks Related to Data Security, Privacy and Fraud” in our Annual Report for fiscal year ended December 31, 2023.
In the three most recently completed fiscal years, we have not experienced any material cybersecurity incidents, and the expenses we have incurred from cybersecurity incidents were immaterial. This includes penalties and settlements, of which there were none.
Corporate Governance
Our Board of Directors provides oversight of risks from cybersecurity threats, in coordination with our Audit Committee and management team. The following is a summary of our governance processes related to cybersecurity risk management:
Board: Our full Board receives biannual updates on cybersecurity from our Chief Technology and Product Officer (the “CTPO”) or head of cybersecurity (the “CISO”) to, among other items, review cybersecurity incidents, review key metrics on our cybersecurity program and related risk management programs, and discuss our cybersecurity programs and goals. Our Board also regularly reviews cyber-related risks as part of our enterprise risk management program on a quarterly basis and receives updates from our Internal Audit team on the results of the risk monitoring and mitigation process, as described in more detail above.
Audit Committee: Our Audit Committee provides additional oversight of material risks from cybersecurity threats and engages regularly with our Chief Information Security OfficerCTPO or CISO regarding risk management of cybersecurity issues and to discuss potential updates to the Company’s cybersecurity risk management.management program, including as a result of any Cybersecurity Task Force findings. The Audit Committee receives a quarterly report from the Company’s cybersecurity team, which includes the CTPO, CISO, and members of the information security team, that summarizes progress on cyber-related key performance indicators, including product security, cloud security, risk and compliance, identity issues, and cyber defense. The Audit Committee updates the full Board on matters relating to material cybersecurity risks at least quarterly.
Management: Our CTPO is responsible for assessing and managing the Company’s material risks from cybersecurity threats, and our CISO reports directly to our CTPO regarding such threats. Our CTPO is informed about and monitors the prevention, detection, mitigation and remediation or cybersecurity incidents through the management of and participation in the Company’s Internal Audit team, Incident Response Team and Cybersecurity Task Force, as described above. As discussed above, our CTPO or CISO reports biannually to the full Board and quarterly to the Audit Committee about risks from cybersecurity threats among other cybersecurity related matters. To the extent a material cybersecurity incident occurs, our CTPO and broader management team would inform the chair of our Audit Committee of the nature, scope and impact of the incident, and involve the other members of the Audit Committee or the full Board as necessary to evaluate the risks and determine next steps. Our CTPO has served in this role since 2023 and has more than 20 years of experience in various senior leadership roles involving managing cybersecurity and compliance teams, including as Head of Tech and Digital at Lovevery and as Chief Technology and Product Officer at Zulilly.
Current Classified Board
of Directorsand Corporate Governance Roadmap
Current Board Structure
Our
board of directorsBoard is divided into three classes of directors that serve staggered three-year terms. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose term is then expiring. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.
Each
director’sdirector's term continues until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Our
AmendedCharter and
Restated Certificate of Incorporation and Amended and Restated Bylaws authorize only our
board of directorsBoard to fill
any vacancies on our
board of directors.Board. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of
one-third of the
directors.The boardtotal number of directors of our Board.
Board Declassification and Supermajority Sunset Commitments
We completed our initial public offering in 2019. Our Board believes that a classified board structure promotes board continuity and stability, encourages directors to take a long-term perspective and reduces the
Company’sCompany's vulnerability to coercive takeover tactics.
However, as our Company matures, our Board recognizes that our corporate governance practices should mature as well.
The Company is committed to creating a roadmap for corporate governance best practices over the next several years. In creating this roadmap, our Board seeks to balance the challenges faced by the Company, in particular as it navigates its path to profitability, against the need for the Company to improve its corporate governance practices and eventually achieve best practices.
Following consideration of our current governance structure and strong governance practices, as well as feedback received from our stockholders, and upon the recommendation of our Corporate Governance Committee, in 2022 our Board committed to the following next steps for our corporate governance roadmap:
1.Submitting for stockholder vote at its 2024 Annual Meeting a management proposal to amend the Company’s Charter to declassify our Board, which, if approved, would begin the declassification process at the 2025 Annual Meeting (please see Proposal Four in this proxy statement for additional information); and
2.Submitting for stockholder vote at its 2026 Annual Meeting a management proposal to amend the Company’s Charter to remove supermajority vote requirements.
Our Board has committed to recommending a “FOR” vote for each of the above management proposals. Our Corporate Governance Committee believes that the above steps allow the Company to progress towards corporate governance best practices on a reasonable timeline. We received positive support on these commitments from the vast majority of stockholders with whom we met as part of our 2023-2024 investor outreach.
Our common stock is listed on
The Nasdaq Global Select Market.Nasdaq. Under the Nasdaq
listing rules, independent directors must comprise a majority of a listed company’s
board of directors.board. In addition, Nasdaq requires that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of that 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.
Additionally, compensation committee members must not have a relationship with us that is material to the director’s ability to be independent from management in connection with the duties of a compensation committee member.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or be an affiliated person of the listed company or any of its subsidiaries.
Our board of directorsBoard has undertaken a review of the independence of each director and considered whether each director has a material relationship with us that could
compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our board of directorsBoard has determined that, with the exception of our Chief Executive Officer, Julie Wainwright,CEO, each member of our board of directorsBoard is an “independent director” as defined under the applicable rules and regulations of the SEC and the Nasdaq listing rules. In making these determinations, our board of directorsBoard reviewed and discussed information provided by the directors and by us with regard to each director’s business and personal activities and relationships as they may relate to us and our management, including the beneficial ownership of our common stock by each non-employee director and the transactions involving them described in the section titled “Certain Relationships and Related Party Transactions.”
Prohibition on Hedging and Pledging of Company Securities
The Company has a policy that prohibits officers, non-employee directors and employees from engaging in hedging transactions, such as the purchase or sale of puts or calls, or the use of any other derivative instruments. Officers, non-employee directors and employees of the Company are also prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan without the approval of our Board.
Board Diversity Disclosure
The following sets forth our Board Diversity Disclosure in accordance with Nasdaq Listing Rule 5606(a), as reported by the boardmembers of directors. In 2019,our Board as of March 31, 2024:
Board Diversity Matrix for 2024
Total Number of Directors: 8
(as of March 31, 2024)
| | | | | | | | | | | | | | |
| Female | Male | Non-Binary | Did Not Disclose Gender |
| | | | |
| | | | |
| Part 1: Gender Identity |
| Directors | 4 | 4 | — | — |
| Part II: Demographic Background |
| African American or Black | 1 | — | — | — |
| Alaskan Native or Native American | — | — | — | — |
| Asian | — | — | — | — |
| Hispanic or Latinx | — | — | — | — |
| Native Hawaiian or Pacific Islander | — | — | — | — |
| White | 7 | — | — | — |
| Two or More Races or Ethnicities | — | — | — | — |
| LGBTQ+ | — | — | — | — |
| Did Not Disclose Demographic Background | — | — | — | — |
For 2023 information, please refer to our Board Diversity Disclosure contained on page 19 of our 2023 Proxy Statement, filed with the
board of directors approved the pledge of shares of common stock as collateral to secure personal indebtedness by Julie Wainwright. The indebtedness to which this pledge relates contains customary terms and conditions and does not shift or hedge any economic risk or secure a bet against our shares of common stock. As of the date of this proxy statement, Ms. Wainwright has pledged 1,700,000 shares of common stock against this indebtedness, representing 27.25% of her total holdings including options.SEC on April 28, 2023.
Information About Our Executive Officers
The following table sets forth information with respect to our executive officers as of the date of this proxy statement:
| | | | | | | | |
| | |
Name | | | Age | | | Position(s) |
| | |
Julie Wainwright
John Koryl | | | 64 | | 53 | Chief Executive Officer and ChairDirector |
| | |
Rati Sahi Levesque* Levesque | | | 40 | | 43 | President and Chief Operating Officer |
| Ajay Gopal | | |
Matt Gustke
| | | 47 | | 49 | Chief Financial Officer |
| | |
Todd Suko | | | 54 | | 57 | Chief Legal Officer and Secretary |
| Luke Friang | 53 | Chief Technology and Product Officer |
Arnie Katz
Chatelle Lynch | | | 41 | | 47 | Chief Product and TechnologyPeople Officer |
* | Rati Sahi Levesque was promoted to President of the Company on February 17, 2021. Ms. Levesque has served as the Company’s Chief Operating Officer since April 2019 and will remain in that role.
|
Additional biographical descriptions of the executive officers are set forth in the text below. A description of the business experience of Julie WainwrightJohn Koryl is provided above under the section “Continuing Directors - Directors—Class III Directors”.
Directors.”
Rati Sahi Levesque was appointed as our President in February 2021 and has served as our Chief Operating Officer since April 2019. Ms. Sahi Levesque previouslyalso served as our Co-Interim Chief Executive Officer from June 7, 2022 through February 5, 2023. Ms. Sahi Levesque served as our Chief Merchant from May 2012 to March 2019 and before that as our Director of Merchandise from May 2011 to May 2012. Prior to joining The RealReal, Ms. Levesque was the owner of Anica Boutique, a brick and mortar and online clothing boutique,store, from June 2005 to May 2011. Ms. Levesque holds a B.S. in Business Management Economics from the University of California, Santa Cruz.Matt Gustke
Ajay Gopalhas served as our Chief Financial Officer since April 2013. Prior to joining The RealReal,March 2024. Previously, Mr. GustkeGopal served as the Chief Financial Officer of Outside Interactive, Inc. from December 2020 to March 2024. Prior to that, Mr. Gopal served as Chief Financial Officer of Good Eggs, Inc. from July 2019 to December 2020, of Helix, Inc. from July 2018 to July 2019, and Head of StrategyStubHub from April 2013 to June 2018. Prior to these roles, Mr. Gopal held senior roles at StubHub, an online ticket exchange companyeBay, Inc. and subsidiary of eBay, an online marketplace and payments company, from January 2010 to April 2013.numerous management roles with GE HealthCare Technologies, Inc. Mr. GustkeGopal holds a B.S. in Finance and EntrepreneurialMaster of Management Studies degree from the Wharton School at the UniversityBirla Institute of Pennsylvania.Technology and Science.
Todd Suko has served as our Chief Legal Officer and Secretary since May 2020. Mr. Suko also served as our Interim Chief Financial Officer from February 1, 2024 through March 17, 2024. Previously, Mr. Suko served as Chief Financial and Legal Officer at OneMarket Limited from November 2017 to May 2020. Prior to joining OneMarket, Mr. Suko was at Harman International Industries, Inc. from September 2008 to June 2017, where he oversaw all legal affairs in his role as Executive Vice President and General Counsel. Mr. Suko previously served as Vice President, General Counsel and Secretary at UAP Holding Corp. from February 2001 to August 2008, overseeing its environmental health and safety and transportation functions. Earlier, Mr. Suko was in private practice at McKenna & Cuneo, LLP from September 1996 to January 2001. Mr. Suko earned his undergraduate and law degrees from the University of Virginia. He also served as an aviator in the United States Navy and retired as a Commander in the Navy Reserve.Arnie Katz
Luke Frianghas served as our Chief ProductTechnology and TechnologyProduct Officer since January 2021.2023. Previously, Mr. KatzFriang served as the Head of Tech & Digital at Lovevery from June 2021 to December 2022 and was an original member of Zulily's executive team and served as Zulily’s Chief Technology and Product Officer from February 2011 to January 2021, Mr. Friang has deep e-commerce and retail domain experience, with more than 20 years of senior leadership experience across companies including Eddie Bauer, Spiegel, Costco and Walgreens. Mr. Friang studied business administration, computer sciences, and Internet technology at Edmonds Junior College and North Seattle College.
Chatelle Lynch has served as our Chief People Officer since December 2023. Previously, Ms. Lynch served as Chief People Officer at McAfee from April 2005 to February 2011, where she oversaw the people team, facilities and corporate and executive communications. From February 2011 (when McAfee was acquired by Intel and later renamed Intel Security) to April 2017, Ms. Lynch served as Head of Human Resources for Intel Security. From April 2017 (when Intel Security was spun out from Intel and renamed McAfee) to November 2022, Ms. Lynch served as the Chief ProductPeople Officer of McAfee. Prior to McAfee/Intel Security, Ms. Lynch held leadership positions at Fluor Corporation, specializing in human resources and Technology Officer for StubHubcompensation. Ms. Lynch holds two bachelor’s degrees from May 2019 to June 2020, where he helped with the sale out of eBay and modernized the company’s architecture. From February 2017 to April 2019, Mr. Katz served as VP, eCommerce Technology for Walmart’s International business, working to accelerate growth across online grocery, general merchandise, fashion and financial services platformsDeakin University in three countries. From January 2015 to February 2017, Mr. Katz served as Senior Director, Customer Experience & Innovation, helping to build Walmart.com’s US online grocery business from the ground up. Mr. Katz holds an M.B.A. from the University of Virginia’s Darden Graduate School of Business Administration.Melbourne.
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31,
20212024
Our
board of directorsBoard and
the audit committeeAudit Committee are asking our stockholders to ratify the appointment by
the audit committeeour Audit Committee of KPMG LLP (“
KPMG”KPMG”)
, as the independent
registered public accounting firm to conduct the audit of our financial statements
and effectiveness of internal control over financial reporting for the fiscal year ending December 31,
2021.2024. Stockholder ratification of such selection is not required by our
Amended and Restated Bylaws or any other applicable legal requirement. However, our
board of directorsBoard is submitting the selection of KPMG to our stockholders for ratification as a matter of good corporate governance.
In the event our stockholders fail to ratify the selection,
the audit committeeour Audit Committee will reconsider whether or not to continue to retain KPMG for the fiscal year ending December 31,
2021.2024. Even if the selection is ratified,
the audit committeeour Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if
the audit committeeour Audit Committee believes that such a change should be made.
KPMG has audited our financial statements since 2013. A representative of KPMG is expected to be present at the Annual Meeting and will have the opportunity to make a statement if he or she desires to do so and is expected to be available to respond to appropriate stockholder questions.
Principal Accountant Fees and Services
We were billed by KPMG
infor the years ended December 31,
20202023 and
20192022 as follows:
| | | | | | | | |
| Years Ended December 31 |
| | |
| | |
| 2023 ($) | 2022 ($) |
| | |
| Audit fees | 2,578,000 | 2,807,000 |
| Audit-related fees | — | — |
| Tax fees | — | — |
| All other fees | — | — |
| Total fees | 2,578,000 | 2,807,000 |
| | | | | | | | |
| | | 2020 | | | 2019 | |
| | |
Audit fees | | $ | 3,423,000 | | | $ | 2,688,655 | |
| | |
Audit-related fees | | | — | | | | — | |
| | |
Tax fees | | | — | | | | — | |
| | |
All other fees | | | — | | | | — | |
| | |
Total fees | | $ | 3,423,000 | | | $ | 2,688,655 | |
Audit fees above are professional services associated with the annual audit of our financial statements, the annual audit of our internal control over financial reporting, review of interim financial statements, and professional consultations with respect to accounting issues directly related to the financial
statement audit. Fees in 2019 also consisted of professional services rendered in connection with the filing of our registration statements, including our Registration Statement on Form S-1 related to our IPO in June 2019. There were no Audit-related fees, Tax fees, or All other fees billed by KPMG infor the years ended December 31, 20202023 and 2019.
2022.
Determination of Independence
In considering the nature of the services provided by our independent registered public accounting firm,
the audit committeeour Audit Committee determined that such services are compatible with the provision of independent audit services.
The audit committeeOur Audit Committee discussed these services with our independent registered public accounting firm and our management to determine that they are permitted under the rules and regulations concerning auditor independence.
Additional information concerning
the audit committeeour Audit Committee and its activities can be found in the
following sections
of this proxy statement:named “Board Committees – Audit Committee” and “Report of the Audit Committee.”
According to policies adopted by
the audit committeeour Audit Committee and ratified by our
board of directors,Board, to ensure compliance with the SEC’s rules regarding auditor independence, all audit and
non-audit services to be provided by our independent registered public accounting firm must be
pre-approved by
the audit committee. The audit committee has established a general pre-approval policy for certain audit and non-audit services, up to a specified amount for each identified service that may be provided by the independent auditors.The audit committeeour Audit Committee.
Our Audit Committee approved all services provided by KPMG during the years ended December 31,
20202023 and
2019. The audit committee2022. Our Audit Committee has considered the nature and amount of the fees billed by KPMG and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining KPMG’s independence.
Recommendation of Our Board
of Directors and Audit Committee
OUR BOARD OF DIRECTORS AND OUR AUDIT COMMITTEE UNANIMOUSLY RECOMMEND THAT OUR STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.2024.
Report of the Audit Committee
The
audit committeeAudit Committee oversees our independent registered public accounting firm and assists our
board of directorsBoard in fulfilling its oversight responsibilities on matters relating to the integrity of our financial statements, our compliance with legal and regulatory requirements and the independent registered public accounting firm’s qualifications and independence by meeting regularly with the independent registered public accounting firm and financial management personnel. Management is responsible for the preparation, presentation and integrity of our financial statements.
In fulfilling its oversight responsibilities, the
audit committee:Audit Committee:•reviewed and discussed our financial statements as of and for the fiscal year ended December 31, 20202023 with management and KPMG;
•discussed with KPMG the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC;
•received the written disclosures and the letter from KPMG required by the applicable requirements of the Public Company Accounting Oversight Board;PCAOB; and
•discussed the independence of KPMG with that firm.
Based on the
audit committee’sAudit Committee’s review and discussions noted above, the
audit committeeAudit Committee recommended to our
board of directors,Board, and our
board of directorsBoard approved, that the audited financial statements be included in our Annual Report on Form
10-K for the fiscal year ended December 31,
20202023 for filing with the SEC. The
audit committeeAudit Committee also appointed KPMG as our independent registered public accounting firm for
the fiscal year ending December 31,
2021.2024.Submitted by the Audit Committee of our Board:
Robert Krolik, Chair
Karen Katz
James Miller
PROPOSAL THREE
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
In accordance with SEC rules, we are providing our stockholders with the opportunity to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement.
This proposal, commonly referred to as the “say-on-pay” vote, gives our stockholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and our executive compensation philosophy, objectives and program, as described in this proxy statement. Accordingly, we ask our stockholders to approve the compensation of our named executive officers as disclosed in this proxy statement, including in the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosure, by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the stockholders of The RealReal, Inc. approve, on a non-binding advisory basis, the compensation paid to the named executive officers, as disclosed in the proxy statement for the 2024 Annual Meeting, including in the Compensation Discussion and Analysis, compensation tables and narrative discussion.”
This proposal will be decided by a majority of the votes cast. This means that this proposal will be approved on an advisory basis if the number of votes cast “FOR” the proposal exceeds the number of votes cast “AGAINST” the proposal. An abstention will have the same effect as a vote “AGAINST” Proposal Three.
As an advisory vote, the result will not be binding on our Board or Compensation Committee. The say-on-pay vote will, however, provide us with important feedback from our stockholders about our executive compensation philosophy, objectives and program. Our Board and Compensation Committee value the opinions of our stockholders and expect to take into account the outcome of the vote when considering future executive compensation decisions and when evaluating our executive compensation program.
Recommendation of Our Board and Compensation Committee
OUR BOARD AND OUR COMPENSATION COMMITTEE UNANIMOUSLY RECOMMEND THAT OUR STOCKHOLDERS VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCUSSED IN THIS PROXY STATEMENT.
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
The focus of this Compensation Discussion and Analysis (“CD&A”) is on the Company’s compensation philosophies and programs for our named executive officers (our “NEOs”) for 2023:
•John Koryl, Chief Executive Officer and Director;(1)
•Rati Sahi Levesque, President and Chief Operating Officer; Co-Interim Chief Executive Officer from June 7, 2022 to February 5, 2023;
•Robert Julian, Former Chief Financial Officer; Co-Interim Chief Executive Officer from June 7, 2022 to February 5, 2023;(2)
•Todd Suko,(2) Chief Legal Officer and Secretary; Interim Chief Financial Officer from February 1, 2024 to March 17, 2024; and
•Luke Friang, Chief Technology and Product Officer.(3)
(1) John Koryl was appointed as our Chief Executive Officer and member of our Board effective February 6, 2023.
(2) Mr. Julian transitioned from our Chief Financial Officer to an executive advisor on January 31, 2024. Mr. Julian is expected to provide limited consulting services to the Company following his termination of employment on January 31, 2024 through June 30, 2024. Mr. Suko served as Interim Chief Financial Officer from February 1, 2024 to March 17, 2024, and Ajay Gopal joined us as Chief Financial Officer on March 18, 2024. See “—Our New Chief Financial Officer” section below for a description of his new hire compensation package.
(3) Mr. Friang was appointed as our Chief Technology and Product Officer effective January 16, 2023.
2023 Financial and Business Highlights
In 2023, we delivered strong financial and operational results. We executed on our strategy to re-focus our efforts on generating profitable supply and further refined our growth model. As part of these efforts, we reduced company-owned inventory, overhauled our consignor commission structure, and revamped our approach to sales and marketing. Highlights from 2023 include:
•For the full year 2023, Net Loss was $168 million compared to $196 million in 2022, and our gross margin expanded over 1,000 basis points compared to the full year 2022.
•For the fourth quarter 2023, and for the first time since our IPO in 2019, we reported a full quarter of positive Adjusted EBITDA and positive free cash flow.
•We invested in automation and artificial intelligence, including in automating the picking and packing of items in our authentication centers. These changes have begun to make an impact; for the second half of 2023, Operations and Technology operating expense as a percent of revenue declined 250 basis points compared to the second half of 2022.
In addition, in February 2024 we announced a reworking of our capital structure, creating substantial runway and capital structure flexibility to execute on our strategic vision. We entered into private, separately negotiated debt exchange transactions with certain holders of our 3.00% Convertible Senior Notes due 2025 and our 1.00% Convertible Senior Notes due 2028, which reduced our total indebtedness by more than $17 million. Also in February 2024, Karen Katz was appointed Chairperson of our Board, and in March 2024, Ajay Gopal joined the Company as our new Chief Financial Officer.
We believe we are on the right track and have strong momentum in the business. We have made significant changes to our strategy and tactics, added new talented leadership, and are executing on our strategy to drive profitable growth.
COMPENSATION DISCUSSION AND ANALYSIS
2023 Say-On-Pay Vote and Executive Compensation Updates
In 2023, we held our second non-binding advisory vote on the compensation of our NEOs (a “Say-on-Pay” vote), and we received approximately 91% support from our investors. Following this vote, we conducted an extensive engagement campaign with our stockholders, which we describe in detail below.
The Company qualifies as a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K, and is permitted to provide scaled compensation disclosure as a result. However, we have chosen not to avail ourselves of the scaled disclosure and to provide fulsome disclosure in this CD&A and the compensation tables that follow.
Our Approach
Our Board recognizes the value of regular, two-way dialogue with our stockholders. Feedback from our stockholders is integral to our Board’s decision-making process, and, accordingly, in late 2023 and early 2024 we invited our largest stockholders who represented approximately 50% of our shares outstanding at the time of our outreach to engage with us. We ultimately held meetings with stockholders representing approximately 20% of our shares then outstanding.
During these discussions, we gained valuable input from our stockholders on matters including our corporate governance practices, executive compensation program and approaches to sustainability, risk oversight and human capital management. A summary of the key themes follows below.
Key Themes
Our stockholders were generally pleased with the design of our executive compensation program, and in particular, with the continued incorporation of performance-based awards in our long-term incentive program. A summary of this feedback and the Company’s response follows:
| | | | | | | | | | | | | | |
| What We Heard | | What We Did |
| Topic | | Feedback | | Changes for 2022-2023 |
| | | | |
Submitted by | | | | |
Long-Term Incentive
Awards | | Stockholders emphasized the audit committeeimportance of long-term incentive (“LTI”) compensation, and performance-based LTI awards in particular. They were supportive of the continuation of our boardperformance-based restricted stock unit (“PSU”) program in 2023, which began in 2022. | | Based on the positive feedback we received from our stockholders regarding our PSU program, we continued our PSU program in 2024 for certain of directors:our NEOs and other executives. |
| | | | |
Robert Krolik, Chair
Niki Leondakis
James Miller
| | | | |
Chief Executive Officer Compensation | | Stockholders were generally supportive of the new hire LTI awards granted to our Chief Executive Officer (“CEO”) in 2023, particularly with respect to the PSUs subject to stock price hurdles. | | Our Compensation Committee took this feedback into account when designing the compensation program for our new Chief Financial Officer (“CFO”), Ajay Gopal, in 2024. PSUs comprise over 40% of the target value of his LTI awards, and the PSUs vest subject to stock price hurdles to align directly with our stockholders’ interests. For more information, see “—Our New Chief Financial Officer” section below. |
| | | | |
| | | | |
Program
Design
Generally | | In general, stockholders were pleased with the overall design and framework of our executive compensation program. Stockholders acknowledged that the Company had taken steps necessary to address their pre-2023 concerns, particularly with granting our first PSU awards in 2022 and continuing our PSU award program in 2023 and 2024. | | We plan to continue stockholder outreach on an annual basis in order to ensure alignment between our executive compensation programs and stockholder interests. |
PROPOSAL THREE
ADVISORY VOTE ON FREQUENCY OF SAY-ON-PAY VOTES
Under the Dodd-Frank Wall Street Reform
COMPENSATION DISCUSSION AND ANALYSIS
Our Board and
Consumer Protection Act, and Section 14A of the Exchange Act, the Company’s stockholders are entitled to vote to approve, on an advisory basis, the frequency with which the advisory vote to approve the compensation of the Company’s named executive officers should be held, which we refer to as the “say-on-frequency” vote. We refer to the advisory vote approving the compensation of the Company’s named executive officers as the “say-on-pay” vote.With the say-on-frequency vote, stockholders may vote to have the say-on-pay vote every year, every two years, or every three years, or abstain from voting. After careful consideration, the board of directors has determined that an advisory say-on-pay vote that occurs every year is the most appropriate policy for the Company at this time, so that our stockholders may annually express their views on our executive compensation program.
Because the vote is advisory, it is not binding on our board of directors or the Company. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and our board of directors and, accordingly, our board of directors and the compensation, diversity and inclusion committeeCompensation Committee intend to consider the results of thisthe 2024 Say-on-Pay vote, as well as future advisory votes and other stockholder feedback, in making determinations in the future regarding the frequency of the say-on-pay vote.
The say-on-frequency vote will be determined by a plurality of votes. This means that the option for holding a say-on-pay vote (every year, every two years, or every three years), which receives the greatest number of votes will be considered the preferred frequency of our stockholders.
Unless our board of directors decides to modify its policy regarding the frequency of soliciting say-on-frequency votes, the next scheduled say-on-frequency vote will be at the 2027 annual meeting of stockholders. We will hold the first say-on-pay vote at the 2022 annual meeting of stockholders.
Recommendation of Our Board of Directors
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE, ON AN ADVISORY BASIS, TO HOLD SAY-ON-PAY VOTES EVERY 1 YEAR (AS OPPOSED TO EVERY 2 YEARS OR EVERY 3 YEARS).
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
This Compensation Discussion and Analysis (“CD&A”) provides context for the policies and decisions underlying the compensation reported in the executive compensation tables included in this proxy statement for our named executive officers (“NEOs”) for 2020.
2020 Financial and Business Highlights – Impact of the COVID-19 Pandemic
In March 2020, the World Health Organization categorized the outbreak of a novel coronavirus (COVID-19) as a pandemic. The COVID-19 pandemic adversely impacted our business operations and results of operations in 2020. In the second quarter of 2020, our operations in the Company’s authentication centers were initially limited in accordance with shelter-in-place orders resulting in our operations being below full capacity and our retail stores and luxury consignment offices were temporarily closed for varying periods of time. In addition, our in-person white glove consignment appointments were temporarily suspended and augmented with virtual appointments. However, during the second half of 2020, our operations capacity was no longer limited and our retail stores were approved to resume limited openings.
At the beginning of the pandemic, our gross merchandise value (“GMV”) was significantly impacted due to adverse impacts of the COVID-19 pandemic on our business. When many shelter-in-place directives went into effect in March 2020, and continuing through mid-April 2020, GMV declined approximately 45% year over year. The rates of decline in GMV have since improved. For the three months ended June 30, 2020, the decrease in GMV was 20% compared to the same period last year. GMV continued to recover such that the year over year decreases were 3% and 1% for the three months ended September 30, 2020, and December 31, 2020, respectively, compared to the same periods last year.
For more information on the impacts the evolving COVID-19 pandemic has had on our business, please refer to our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q.
2020 Executive Compensation Design
In response to the COVID-19 pandemic, we took the following actions connected toevaluating our executive compensation programs:
Rescindedprogram and making its executive base salary increases that had been approved in February 2020
compensation decisions.Eliminated the 2020 Annual Cash Incentive Bonus, which impacted all employees at the level of vice-president and above, including our NEOs
Our Executive Compensation Philosophy
Through our pay-for-performance philosophy, our primary objective is to create value for our stockholders on a consistent and long-term basis. Our Compensation Committee believes our executive compensation program is designed to reward our executive team in alignment with our business objectives and long-term stockholder interests. Additionally, as detailed further in the section named “Corporate Governance – Oversight of Environmental, Social and Governance (“ESG”) Initiatives,” we believe it is critical for the interests of our executives to be aligned with our values, which guide how we lead, collaborate and drive results.
We operate a highly complex business in a highly competitive and rapidly evolving market. Ourmarket, and our ability to compete and succeed in our market is directly correlated to our ability to recruit, incentivize,motivate and retain talented individualstop talent. Our headquarters are located in the areasSan Francisco Bay Area, where competition for leadership talent is especially intense, and the cost of product development, sales, marketing,living is high. To succeed in achieving our business objectives, we are focused on retaining and generalattracting experienced leaders. Our Compensation Committee balances this focus with our stockholders’ interests to ensure that compensation is tightly correlated to long-term, sustained performance. To accomplish this, we believe our compensation packages must have components that executives can understand, are competitive against alternatives and administrative functions. Theappropriately reward strong performance.
Our executive compensation policies and practices support good governance and discourage excessive risk-taking. Our Compensation
Diversity and Inclusion Committee
of our board of directors (the “Committee”) believes thatevaluates our executive compensation program
on an ongoing basis to ensure that it is
designed to attract, retain and reward executive officers in alignmentconsistent with our
business objectivesshort-term and long-term
stockholder interests.Additionally, as detailed further ingoals. In addition to the section “Corporate Governance – Oversightpolicies discussed above, the following is a checklist of Human Capital”, we believe it is critical for our executive interests to be aligned with our values, which guide how we lead, collaboratepolicies and drive results.
practices: | | | | | | | | |
| What We Do | | What We Don’t Do |
| | |
| | |
•Pay for performance: A significant portion of NEO compensation is tied to the Company’s financial performance and the performance of the Company’s stock price. •Multiple performance metrics: The annual cash bonus program and the LTI program use multiple performance metrics between the two programs. This approach discourages excessive risk-taking by removing any incentive to focus on a single performance goal to the detriment of the Company. •Engagement of independent advisor: Our Compensation Committee directly retains an independent compensation consultant to advise on the Company’s executive compensation program and practices. •Independent Compensation Committee: Our Compensation Committee consists solely of independent directors. •"Double trigger” arrangements: The equity awards held by our NEOs require both a change in control of the Company and a qualifying termination of employment for vesting to fully accelerate. | | •No guaranteed incentive bonuses: We do not provide guaranteed incentive bonuses to any of our NEOs. •No enhanced benefits or excessive perquisites: The Company does not maintain enhanced health benefits for its NEOs and does not permit excessive perquisites. •No tax gross-ups: No tax gross-ups are paid to cover personal income taxes or excise taxes that pertain to executive or severance payments or benefits. •No executive retirement plans: We do not offer retirement arrangements for our NEOs that are different from those offered to our other employees. •No “single trigger” acceleration: We do not provide cash severance or automatic full vesting of equity awards based solely upon a change in control of the Company. |
Introduction
This section provides a discussion of the compensation paid or awarded to our NEOs.
For 2020, our named executive officers were:
Julie Wainwright, Chief Executive Officer;
COMPENSATION DISCUSSION AND ANALYSIS
Rati Sahi Levesque, President and Chief Operating Officer;
Matt Gustke, Chief Financial Officer;
Todd Suko, Chief Legal Officer and Secretary; and
Fredrik Bjôrk, (former) Chief Technology Officer;
Ms. Levesque was promoted to President of the Company on February 17, 2021. Ms. Levesque has served as the Company’s Chief Operating Officer since April 2019 and will remain in that role. Mr. Suko joined the Company on May 1, 2020. Mr. Bjôrk resigned as the Company’s Chief Technology Officer on December 31, 2020.
This CD&A is presented as follows:
Elements of our 2020Our 2023 Compensation Program
2020 Compensation Decisions
Severance and Change-of-Control
Elements of our 2020 Compensation Program
For 2020,2023, the material elements of our executive compensation program were base salary, annual cash bonuses and equity-basedLTI compensation in the form of RSUs. Atboth time-based restricted stock unit (“RSU”) awards and PSU awards. “At risk,” incentive-based compensation in the form of an annual cash bonus and equity-based compensation is a significant portionrepresents the majority of the overalleach NEO’s total target direct compensation paid to each executive officer.
mix. | | | | | | | | | | | | | | |
| Elements of Pay | | Structure | | Highlights |
| | | | |
| | | | |
Elements of Pay
| | | | Structure
| | | | Highlights
|
| | | | | | | | |
Base Salary | | | | •Fixed Compensationcompensation •Attract and retain executivesNEOs in the short-term | | | | •Established consideringin line with competitive market levels •Aligned to scale, scope and complexity of role |
| | | | | | | | |
Annual Incentive
Bonuses
| | | | | |
Annual Cash
Bonuses | | •Incentivize and reward achievement against strategic business goals and objectives in short-term | | | | •Incentive plan funding measured against challenging metrics of Adjusted EBITDA and, for GMV, gross margin and quantitative and qualitativecertain NEOs as described below, individual performancegoals |
| | | | | | | | |
Long-Term
Incentives
| | | | | |
Long-Term
Incentive Compensation | | •Attract and retain executivesNEOs in the long-term •Motivate and reward achievement of long-term companyCompany financial and operational goals •Directly align interests with stockholders | | | | • Four-yearRSU awards granted to our NEOs in 2022 with four-year vesting •PSUs granted to our NEOs with cliff vesting applies to all RSU awardsor significant service vesting conditions • AwardedGranted at market-competitivecompetitive market levels |
Base salaries provide a level of fixed compensation sufficient to attract and retain a
high-qualityhigh-performing leadership team, when considered in combination with the other
componentselements of our executive compensation program. The relative levels of base salary for our NEOs are established after considering market-competitive levels and are intended to reflect each
executive officer’sNEO’s scope of
responsibility and accountability.responsibility.
Annual Cash
Incentive Bonuses
Short-term incentive compensation is paid to executives through
Annual cash bonuses may be earned by our NEOs under our annual cash
incentive bonus
plan toprogram. In support
of our
pay-for-performance philosophy. This annual cash compensation“pay-for-performance” philosophy, this program is designed to motivate and reward
executivesour NEOs based on their achievement of performance goals established by our
board of directors at the beginning ofBoard each fiscal year.
The payment of
Long-Term Incentive Compensation
Equity awards under the 2020 annual cash incentiveour LTI program applicable to the NEOs was subject to the attainment of a number of goals relating to our
performance. Specifically, as approved by the board of directors, 50% of the cash incentive opportunity was based on the attainment of GMV goals, 30% was based on gross margin goals and 20% was based on individual performance goals. Achievement of individual performance goals is based on the assessment of each individual’s contributions to achieving business objectives established for the fiscal year.
Equity Compensation
Equity compensation isare a key componentelement of our executive compensation program, thatwhich is designed to further align the interests of our executive officersNEOs with the long-term interests of our stockholders and to motivate our leadership team onNEOs to achieve our long-term company performance.business objectives. A significant portion of the total target direct compensation forof each NEO is provided in the form of RSUs vesting over four years,RSU and PSU awards, the value of which fluctuates directly with our stock price performance.
2023 Compensation Decisions
Executive Pay Mix
For 2023, a significant portion of our total target NEO compensation — base salary, target bonus and 2023 equity award value — consisted of variable, “at-risk” compensation, comprising 81% of Mr. Koryl’s total target compensation and 65% on average for our other NEOs (excluding the values of any special one-time bonuses).
COMPENSATION DISCUSSION AND ANALYSIS
Base Salary
In February 2023, our Compensation Committee reviewed the annual base salaries of our existing NEOs after considering a competitive market analysis prepared by its independent compensation consultant, Compensia. Our Compensation Committee relied primarily on compensation peer group data drawn from peer company proxy statements, and in cases where this peer group data was limited for a particular NEO position, custom compensation survey data was used to supplement the peer group data, as necessary. In addition, our Compensation Committee considered each NEO’s roles and responsibilities with the Company.
In light of their strong performance in leading the company during their tenure as Co-Interim CEOs, and in support of their efforts to transition the Company under its new CEO, our Compensation Committee determined it appropriate to increase the base salaries of Ms. Sahi Leveseque and Mr. Julian, as set forth below, effective in April 2023. Mr. Suko’s base salary was increased to $400,000 to more appropriately align with our competitive market data, effective in April 2023. Additionally, in light of his increased responsibilities overseeing the Company’s Internal Audit department, Mr. Suko’s base salary was further increased to $450,000 effective in October 2023. A summary of our NEOs’ base salaries at the end of 2022 and 2023 are set forth below:
| | | | | | | | | | | |
| NEO | 2022 Base Salary ($) | 2023 Base Salary ($) | Percentage Increase |
| | | |
| John Koryl | — | 700,000 | — |
| Rati Sahi Levesque | 425,000 | 475,000 | 11.8% |
| Robert Julian | 425,000 | 475,000 | 11.8% |
| Todd Suko | 345,000 | 450,000 | 30.4% |
| Luke Friang | — | 415,000 | — |
Annual Cash Bonuses
2023 Target Cash Bonus Opportunities
In February 2023, our Compensation Committee reviewed the target annual cash bonus opportunities of our existing NEOs after considering a competitive market analysis prepared by Compensia. Similar to its review of base salary materials, our Compensation Committee relied primarily on compensation peer group data drawn from peer company proxy statements, and in cases where this peer group data was limited for a particular NEO position, custom compensation survey data was used to supplement the peer group data, as necessary. In addition, our Compensation Committee considered each NEO’s roles and responsibilities with the Company.
Given the strong focus on achieving challenging profitability-based metrics for 2023, our Compensation Committee determined to increase 2023 target bonuses (compared to 2022) for Ms. Sahi Levesque and Messrs. Julian and Suko to further incentivize these executives toward achievement against these goals. These target annual cash bonus opportunities were expressed as a percentage of base salary, as follows:
| | | | | |
| NEO | 2023 Target Bonus as Percentage of Base Salary |
| |
John Koryl(1) | 100% |
| Rati Sahi Levesque | 75% |
Robert Julian(2) | 75% |
| Todd Suko | 50% |
Luke Friang(1) | 50% |
COMPENSATION DISCUSSION AND ANALYSIS
(1) 2023 annual bonuses for Messrs. Koryl and Friang were prorated based on their February 6, 2023 and January 16, 2023 start dates, respectively.
(2) Pursuant to the terms of his Transition and Separation Agreement, Mr. Julian was entitled to a full-year 2023 annual bonus based on actual performance.
2023 Annual Cash Bonus Design
Consistent with prior years, executives were eligible to achieve 0 to 200% of their target bonus with respect to the Company’s financial metrics on a full year basis. For the first time, the Committee determined to establish an additional midyear milestone payment as part of our 2023 annual bonus program. This decision was driven by the Committee’s concerns around retention of our executive team and our broader employee base during the new CEO transition.
The midyear milestone payment portion of the 2023 annual bonus was made following the completion of the second quarter and based on Adjusted EBITDA achievement for the six-month period ended June 30, 2023. The midyear milestone bonus could be earned up to a maximum of 100% target achievement and prorated for the first half of the year (January 1, 2023 to June 30, 2023). The full-year bonus payment portion of the 2023 annual bonus was made following completion of the fourth quarter and was based on Adjusted EBITDA achievement for the full year (January 1, 2023 to December 31, 2023). The full-year bonus payments could be earned up to a maximum of 200% with respect to the Company’s financial metrics achievement, less the value of the applicable executive’s midyear milestone payment. Additionally, an alternative stretch goal was established to incentivize management to exit 2023 profitably by measuring Adjusted EBITDA in the fourth quarter of 2023. The plan provided that no payment above target could be earned for the full-year bonus payment if the midyear milestone achievement fell below threshold.
For 2024, the Committee determined to return to an annual bonus plan with a single, year-end payment.
2023 Annual Cash Bonus Metrics
The Committee determined that Adjusted EBITDA would be the most appropriate metric for our 2023 annual bonus program because it captures both profitability progress and the impact of strategic efforts made during the year (e.g., our real estate reduction plan and the resulting restructuring charges). Additionally, this metric reflects the shift in the Company’s business model to re-focus our efforts on generating profitable supply and creating efficiencies. As part of this strategic shift and in an effort to achieve higher margins, the Company decided to de-emphasize certain types of less profitable transactions, thus purposefully impacting overall gross merchandise value and revenue growth in pursuit of an improved profitability profile. Specifically, the company purposefully slowed growth in Direct, wherein the company sells inventory that it owns and carries on its balance sheet, and limited consignment transactions involving certain lower value items. The Committee recognized that such growth metrics, which had been used in prior year annual bonus programs, were not the main drivers for the 2023 fiscal year and determined they should therefore be omitted from the 2023 annual bonus program.
The 2023 annual cash bonus opportunities for our NEOs were based on the following metrics:
| | | | | | | | |
| Bonus Metrics | | Description |
| | |
| | |
| | |
| | |
Adjusted EBITDA
| | Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our business strategies and for business planning purposes. |
| | |
| | |
| Individual Goals (Messrs. Suko and Friang) | | Individual performance goals were established based on key objectives in support of the Company’s strategic goals and budget achievement for the applicable team. |
To more closely align our annual bonus program with stockholder interests, and given the significant impact their roles have on the financial performance of the Company, in 2022 the Compensation Committee
COMPENSATION DISCUSSION AND ANALYSIS
eliminated the individual performance goals metric for our CEO, President and Chief Operating Officer, and Chief Financial Officer. Our Compensation Committee continued this practice in 2023; the 2023 annual bonus metric for Messrs. Koryl and Julian and Ms. Sahi Levesque was completely based on Adjusted EBITDA. The 2023 annual bonus metrics for Messrs. Suko and Friang were Adjusted EBITDA and individual performance goals, weighted 80/20. The individual performance component could be earned up to a maximum of 100% achievement. The individual performance goals were established by the CEO in the beginning of 2023 based on operating budget, management of department fees, and leadership contributions to the executive team. The Compensation Committee determined the individual performance goal components for Messrs. Suko and Friang were met at target.
Our NEOs were eligible to earn 0% to 100% of their midyear milestone bonus for 2023 with respect to the Adjusted EBITDA metric, measured as of June 30, 2023, as follows (subject to straight-line interpolation for performance achievement between threshold and target):
Midyear Milestone 2023 Adjusted EBITDA Metrics
| | | | | | | | | | | |
| Bonus Metric | < Threshold
(0% Payment) | Threshold
(50% Payment) | Target
(100% Payment) |
| | | |
| Adjusted EBITDA ($ mm) | < -64.0 | -64 | -60 or > |
(1) With respect to the non-GAAP measure of Adjusted EBITDA, reference is made to the “Adjusted EBITDA Reconciliation” under Part I, Item 2, of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2023. The performance levels were measured as of the six-month period ended June 30, 2023.
Our NEOs were eligible to earn 0% to 200% of their full-year bonus for 2023 with respect to the Adjusted EBITDA metric, measured as of December 31, 2023, as follows (subject to straight-line interpolation for performance achievement between threshold and stretch):
Full-Year 2023 Adjusted EBITDA Metrics
| | | | | | | | | | | | | | | | | |
| Bonus Metric | < Threshold
(0% Payment) | Threshold
(50% Payment) | Target
(100% Payment) | Max (150% Payment) | Stretch or > (200% Payment) |
| | | | | |
| Adjusted EBITDA ($ mm) | < -80 | -80 | -70 | -60 | -50 or >; Alternatively, Positive Q4 Adjusted EBITDA |
(1) With respect to the non-GAAP measure of Adjusted EBITDA, reference is made to the “Adjusted EBITDA Reconciliation” under Part II, Item 7, of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2023. Performance levels were measured on a full-year basis as of December 31, 2023, and the alternative stretch goal of fourth quarter Adjusted EBITDA positivity was measured on a quarterly basis.
2023 Annual Cash Bonus Achievement
In August 2023 and in March 2024, our Board certified the following performance results for the midyear milestone bonus and full year bonus, respectively, which resulted in the pay-out percentages summarized below:
| | | | | | | | | | | |
| Bonus Metrics | Adjusted EBITDA Results ($ mm) | Level
Achievement | Percentage
Payment by Metric |
| | | |
Adjusted EBITDA(1) | | | |
Midyear Milestone Bonus(2) | -49.6 | Target | 100% |
Full-Year Bonus(3) | +1.4 | Stretch | 200% |
Individual Goals (Messrs. Suko and Friang) | — | Target | 100% |
COMPENSATION DISCUSSION AND ANALYSIS
(1) With respect to the non-GAAP measure of Adjusted EBITDA, reference is made to the “Adjusted EBITDA Reconciliation” under Part I, Item 2, of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2023, with respect to the midyear milestone bonus, and under Part II, Item 7, of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2023, with respect to the full-year bonus.
(2) Reflects Adjusted EBITDA results for the six-month period ended June 30, 2023.
(3) Reflects Adjusted EBITDA results for the fourth quarter of 2023.
The following table summarizes the midyear milestone and full year bonus payouts for each NEO:
| | | | | | | | | | | |
| NEO | Midyear Milestone Bonus ($) | Full Year Bonus ($) | Total 2023 Bonus Payment ($) |
| | | |
| | | |
John Koryl(1) | 278,082 | 983,836 | 1,261,918 |
| Rati Sahi Levesque | 167,106 | 526,284 | 693,390 |
Robert Julian(2) | 167,106 | 526,284 | 693,390 |
| Todd Suko | 92,171 | 262,984 | 355,155 |
Luke Friang(1) | 94,370 | 263,781 | 358,151 |
(1) 2023 annual bonuses for Messrs. Koryl and Friang were prorated based on their February 6, 2023 and January 16, 2023 start dates, respectively.
(2) Pursuant to the terms of his Transition and Separation Agreement, Mr. Julian was entitled to the full year bonus for 2023 based on actual performance.
Long-Term Incentive Compensation
Our Philosophy
A significant portion of our NEOs’ total target direct compensation is delivered through equity awards. The Company’s 2019 Equity Incentive Plan was designed to assist the Company in attracting, retaining and motivating executive officers and other key employees, and to align the interests of the officers and other key employees with those of our stockholders. In 2023, LTI compensation was provided in the form of RSU and PSU awards. Each unit granted pursuant to an RSU or PSU award represents a contingent right to receive one share of our common stock for each unit that vests. Our Compensation Committee believes that RSU awards appropriately align executive interests with long-term stockholder value creation, and enhance retention for key executives. In addition, PSU awards provide further incentive for our executive team to execute on strategic initiatives in order to accomplish and exceed our long-term business goals.
2023 RSU Awards
Our Compensation Committee typically grants annual RSU awards to our NEOs and other senior executives in the first fiscal quarter each year. At its February 2023 meeting, our Compensation Committee reviewed the value of annual RSU awards for each NEO after considering a competitive market analysis prepared by Compensia, along with other factors that included the value of outstanding and unvested equity awards for each NEO and internal leveling among other executive officers.
In March 2023, our Board granted RSUs to Ms. Sahi Levesque and Messrs. Julian and Suko, which vest in 12 substantially equal quarterly installments, subject to the applicable NEO’s continuous service as of each vesting date and subject to acceleration upon certain events. Messrs. Koryl and Friang were granted inducement RSU awards in March 2023 pursuant to the terms of their respective offer letters, which vest 25% on the first anniversary of the vesting commencement date and in 12 equal quarterly installments thereafter, subject to the applicable NEO’s continuous service as of each vesting date and subject to acceleration upon certain events.
The following table sets forth the number of units and the grant date fair value of the RSU awards granted to our NEOs during 2023:
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | |
| Named Executive Officer | Total Number
of RSUs
(#) | Grant Date Fair Value
of RSUs
($) |
| | |
| | |
John Koryl(1) | 1,250,000 | 2,037,500 |
| Rati Sahi Levesque | 350,000 | 570,500 |
| Robert Julian | 350,000 | 570,500 |
| Todd Suko | 210,000 | 342,300 |
Luke Friang(1) | 325,000 | 529,750 |
(1) The RSU awards granted to Messrs. Koryl and Friang were granted as a material inducement to their employment and were approved by the Company’s Board of Directors, in accordance with Nasdaq Listing Rule 5635(c)(4). These awards were granted outside of the Company’s equity incentive plans. All other RSUs granted to our NEOs were granted under the Company’s 2019 Equity Incentive Plan.
2023 PSU Awards
In 2022, in response to feedback we received from our stockholders, and aligned with best practices, the Company introduced PSU awards under the Company’s LTI program to further align executive compensation with the Company’s financial performance and to promote executive retention. Our Board made its initial grant of PSU awards to our NEOs in February 2022, and our Board continued the PSU program in March 2023. To further align our NEOs’ compensation with the interests of our stockholders, the PSU metrics for the 2023 PSU awards were stock price hurdles.
Target Value of 2023 PSUs
The target value of the 2023 PSU awards (calculated based on the Company’s closing stock price on the date of grant) comprised 55% of the value of the 2023 LTI compensation awards for Mr. Koryl, and 30% for Ms. Levesque and Messrs. Julian and Suko. Mr. Friang’s new hire LTI award was comprised only of RSUs. Mr. Koryl was granted an inducement PSU award pursuant to the terms of his offer letter.
| | | | | | | | |
| Named Executive Officer | Total Number of PSUs (#)1 | Grant Date Fair Value of PSUs ($)2 |
| | |
| | |
| John Koryl | 1,500,000 | 208,500 |
| Rati Sahi Levesque | 150,000 | 69,500 |
| Robert Julian | 150,000 | 69,500 |
| Todd Suko | 90,000 | 41,700 |
| Luke Friang | — | — |
(1) Represents that total number of PSUs that may be earned by each NEO if all service and performance conditions are satisfied.
(2) PSU values are computed in accordance with Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), and excluding estimated forfeitures, based on the probable performance outcome using a Monte Carlo valuation (threshold).
Performance and Service Conditions of 2023 PSUs
The 2023 PSU awards are eligible to vest over a five-year performance period based on (a) each NEO’s continuous employment with the Company through the applicable service period and (b) the Company’s stock price achievement, as summarized below:
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | | | | |
Tranche(1) | PSUs Eligible to Vest(2) | Service Condition(3) | Performance Condition(4) |
| | | |
| | | |
| 1 | See below. | 12 months | $5.00 |
| 2 | See below. | 24 months | $7.50 |
| 3 | See below. | 36 months | $10.00 |
| 4 | See below. | 48 months | $15.00 |
(1) The 2023 PSUs will vest on the first date on which both the service condition and performance condition are achieved for the applicable PSU tranche (referred to herein as “time-vesting” and “performance-vesting”, respectively) during the performance period.
(2) See the “2023 PSUs Eligible to Vest” table below for the PSUs eligible to vest for each tranche for each NEO.
(3) Each NEO must be continuously employed by the Company from the vesting commencement date through the service period set forth above for the applicable PSU tranche to time-vest; provided that the service condition will be deemed satisfied (a) upon the consummation of a “change in control” (as defined in the Company’s standard severance and change in control agreement) in which the PSUs are not assumed or substituted or (b) upon his termination without “cause” or resignation with “good reason” (in each case, as defined in the Company’s standard severance and change in control agreement) (i) within the three-month period prior to a change in control or (ii) following a change in control through the 48-month anniversary of the vesting commencement date. As summarized below, only Mr. Koryl’s 2023 PSU award contains a fourth tranche with a $15.00 stock price hurdle and related 48-month continuous service requirement.
(4) The Company must achieve the stock prices set forth above during the performance period for the applicable 2023 PSU tranche to performance-vest. Stock price performance will be measured based on the 60-day volume-weighted average price of one share of the Company’s common stock registered on Nasdaq, as well as on the last trading day prior to the occurrence of a change in control. As summarized below, only Mr. Koryl’s 2023 PSU award contains a fourth tranche with a $15.00 stock price hurdle and related 48-month continuous service requirement.
2023 PSUs Eligible to Vest
The following table sets forth the number of PSUs subject to the 2023 PSU awards granted to our NEOs assuming performance achievement of each tranche:
| | | | | | | | | | | | | | |
| Named Executive Officer | Tranche 1 $5.00 Stock Price Number of PSUs Eligible to Performance Vest (#) | Tranche 2 $7.50 Stock Price Number of PSUs Eligible to Performance Vest (#) | Tranche 3 $10.00 Stock Price Number of PSUs Eligible to Performance Vest (#) | Tranche 4 $15.00 Stock Price Number of PSUs Eligible to Performance Vest (#) |
| | | | |
| | | | |
John Koryl(1) | 150,000 | 300,000 | 350,000 | 700,000 |
| Rati Sahi Levesque | 50,000 | 50,000 | 50,000 | — |
| Robert Julian | 50,000 | 50,000 | 50,000 | — |
| Todd Suko | 30,000 | 30,000 | 30,000 | — |
| Luke Friang | — | — | — | — |
(1) The PSU award granted to Mr. Koryl was granted as a material inducement to his employment and was approved by the Company’s Board of Directors, in accordance with Nasdaq Listing Rule 5635(c)(4). This award was granted outside of the Company’s equity incentive plans. All other PSUs granted to our NEOs were granted under the Company’s 2019 Equity Incentive Plan.
2023 PSU Award Achievement
Neither the service-based nor the performance-based vesting conditions were met during 2023, and, as a result, no 2023 PSUs became vested during 2023.
2022 PSU Award Achievement
The 2022 PSU awards granted to Ms. Sahi Levesque and Messrs. Julian and Suko are eligible to (a) performance-vest over the three-year performance period, subject to annual gross merchandise value (“GMV”) and Adjusted EBITDA targets for each year of the performance period, and (b) service-vest at the
COMPENSATION DISCUSSION AND ANALYSIS
end of a three-year service period, subject to the applicable executive’s continued service through the service vesting date.
Ms. Sahi Levesque and Messrs. Julian and Suko were eligible to earn 0% to 150% of the PSU tranche with respect to the following GMV and Adjusted EBITDA metrics for 2023:
| | | | | | | | | | | | | | |
| PSU Metrics | < Threshold
($) | Threshold ($) | Target
($) | Max or >
($) |
| | | | |
| GMV | < 2,800,000 | 2,800,000 | 2,890,000 | 2,980,000 or > |
| Adjusted EBITDA | < -50,000,000 | -50,000,000 | -35,000,000 | -20,000,000 or > |
In March 2024, our Board certified the following performance results for 2023 for the performance-vesting component of the 2022 PSUs, which resulted in zero PSUs of the 2023 PSU tranche vesting based on performance for 2023:
| | | | | | | | |
| PSU Metrics | 2023 Results ($) | PSU Achievement |
| | |
| GMV | 1,726,000 | | Below Threshold |
| Adjusted EBITDA | -55,600,000 | | Below Threshold |
2024 PSU Awards
In 2024, the Company continued to grant PSU awards under the Company’s LTI program. The 2024 PSU awards will vest in one tranche based on the achievement of both a time-based vesting condition and a performance-based vesting condition as of fiscal year end 2026 tied to the achievement of specified free cash flow metrics. The Compensation Committee believes that the 2024 PSU award design will further align executive compensation to the Company’s financial performance and interests of our stockholders as well as continue to promote executive retention. Our board granted 2024 PSU awards to Ms. Sahi Levesque and Mr. Suko in March 2024, in addition to 2024 RSU awards.
Other Benefits
and Perquisites
We maintain a qualified Section 401(k) retirement savings plan, which allows participants to defer from 0% to 100% of their cash compensation up to the maximum amount allowed under Internal Revenue Service guidelines. We may make discretionary matching and profit-sharing contributions to the plan. Participants are always vested in their contributions to the plan. Participants vest in their company matching and profit-sharing contributions under a one-year to four-year graded vesting schedule.
2020 Compensation Decisions
Executive Pay Mix
For 2020, a significant portion of our executive compensation consisted of variable, at-risk compensation and long-term incentives. As illustrated below, 93% of CEO compensation was comprised of variable compensation elements, and 90% of our other NEOs’ overall compensation, on average, comprised variable compensation elements.
Base Salary
Prior to 2020, the base salaries for Ms. Wainwright, Ms. Levesque, Mr. Gustke, Mr. Suko, and Mr. Bjôrk were set at $365,000, $325,000, 325,000, $325,000 and $295,000, respectively.
In February 2020, the Committee approved base salary increases for each of our NEOs, as our base salary levels were not viewed as market competitive, because they ranged from below the 25th percentile to the 30th percentile against our proxy peer group. One pay period after becoming effective, however, these base salary increases were pulled back in response to the COVID-19 pandemic. Therefore, all base salaries remain unchanged from the prior year. Mr. Suko joined the Company as Chief Legal Officer and Secretary in May 2020.
Please see the “Salary” column in the Summary Compensation Table for the base salary amounts earned by each NEO for 2020, 2019 and 2018.
Annual Cash Incentive Bonuses
In February 2020, the board of directors established the cash incentive targets for Ms. Wainwright, Mr. Gustke, Mr. Bjôrk, and Ms. Levesque in the annual cash incentive program. Ms. Wainwright had a 2020 target cash incentive equal to 50% of base salary. Each of our other NEOs, including Mr. Suko who joined in May 2020, had a cash incentive target equal to 40% of base salary.
In response to the COVID-19 pandemic, our annual cash inventive bonus for our executives, including our NEOs, was eliminated for 2020. We believe this decision to align executive interests with our long-term recovery strategy was more important than adjusting our 2020 metrics downward to reflect the business impacts.
Therefore, no payouts were made under our annual cash incentive program.
Equity Compensation
In 2020, equity compensation was provided in the form of RSUs, which were granted on February 20, 2020 for Ms. Wainwright, Ms. Levesque and Mr. Bjôrk, April 24, 2020 for Mr. Gustke and May 5, 2020 for Mr. Suko. The RSUs, other than those awarded for Mr. Suko, vest in 16 substantially equal quarterly installments, subject to the NEO’s continuous service as of each vesting date and subject to acceleration upon certain events. Mr. Suko’s RSUs vest 25% on the first anniversary of the vesting commencement date and in 12 substantially equal quarterly installments thereafter, subject to Mr. Suko’s continuous service as of each vesting date and subject to acceleration upon certain events. The Committee believes that RSUs appropriately manage dilution to existing investors and align our executive officers’ interests with long-term stockholder value creation as RSUs become more valuable as our stock price increases. The following table sets forth the grant date fair value of RSUs, computed in accordance with ASC 718, granted to the NEOs during 2020:
| | | | |
| |
| Named Executive Officer | | RSUs | |
| |
Julie Wainwright | | $ | 4,878,042 | |
| |
Rati Sahi Levesque | | $ | 1,951,217 | |
| |
Matt Gustke | | $ | 1,465,950 | |
| |
Todd Suko | | $ | 3,333,000 | |
| |
Fredrik Bjôrk | | $ | 1,951,217 | |
Other Benefits
In 2020,2023, we matched up to 25% of employee elective deferrals under our 401(k) savings plan, up to a maximum of $1,000 per employee, and did not make any profit-sharing contributions.
Peer Group
Participants are always vested in their contributions to the plan, and participants vest in their Company matching and profit-sharing contributions under a one-year to four-year graded vesting schedule. The Company does not maintain enhanced health benefits for its executives. In addition, the Company does not permit excessive perquisites.
New Executives and Special Cash Bonuses
Our New Chief Executive Officer
In connection with his appointment as our Chief Executive Officer on February 6, 2023, the Company and Mr. Koryl entered into an Offer Letter, dated as of January 24, 2023, which sets forth his initial base salary, target annual cash bonus opportunity, a recommendation to our Board for the grant of a long-term incentive compensation awards in the form of RSUs and PSUs, employee benefits according to our applicable Company policy and benefit plans, and a one-time sign-on bonus.
Pursuant to his offer letter with the Company, Mr. Koryl is entitled to (a) an annual base salary of $700,000, (b) a target bonus opportunity of 100% of base salary (prorated for 2023), and (c) a one-time sign-on bonus of $300,000, payable on the first regularly scheduled pay date following Mr. Koryl’s start date with the Company.
COMPENSATION DISCUSSION AND ANALYSIS
If Mr. Koryl is terminated by the Company for “cause” or resigns from the Company without “good reason” (as defined in the offer letter) (i) on or prior to February 6, 2024, he is required to repay the entire sign-on bonus or (ii) between February 6, 2024 and February 6, 2025, he is required to repay one-half of the sign-on bonus. Mr. Koryl is also eligible for severance at the CEO level under the Company’s standard severance and change in control agreement.
In addition, in March 2023 the Company granted Mr. Koryl two inducement equity awards in accordance with the terms of his offer letter of 1,250,000 RSUs and 1,500,000 PSUs as described above under “2023 RSU Awards” and “2023 PSU Awards."
Our New Chief Technology and Product Officer
In connection with his appointment as our Chief Technology and Product Officer on January 16, 2023, the Company entered into an offer letter with Luke Friang on November 16, 2022, which provides for (a) an annual base salary of $415,000, (b) a target bonus opportunity of 50% of base salary (prorated for 2023), and (c) a one-time sign-on bonus of $520,000, of which (i) one half is payable on the first regularly scheduled pay date following Mr. Friang’s start date with the Company and (ii) one half is payable on the first regularly scheduled pay date following the first anniversary of Mr. Friang’s start date with the Company, in each case, subject to his continuous employment with the Company through each such date. This sign-on bonus was intended to compensate Mr. Friang for the value of the equity awards and cash bonuses that Mr. Friang would forfeit upon leaving his previous employer. If Mr. Friang resigns from the Company or is terminated by the Company for “cause” (as defined in the offer letter) prior to January 16, 2025, he is required to repay one-half of the sign-on bonus. In accordance with the terms of his offer letter, in March 2023 the Company granted Mr. Friang an inducement equity award of 325,000 RSUs as described above under “2023 RSU Awards.” Mr. Friang is also eligible for severance under the Company’s standard severance and change in control agreement.
Our New Chief Financial Officer (as of March 2024)
Ajay Gopal was appointed as our new CFO on March 18, 2024. Our Compensation Committee has established a proxy peer group to be used in determining marketreviewed the various elements of Mr. Gopal’s new hire compensation package and considered the competitiveness of the offer, the timeliness of the appointment given our prior CFO’s departure in January 2024, and alignment with our stockholders’ interests. In its deliberations, our Compensation Committee worked closely with Compensia to understand current market practice in similar situations, including among companies in our compensation programs. The Committee will evaluate this peer group ongroup. After significant deliberation and arms-length negotiations, the Company and Mr. Gopal entered into an Offer Letter, dated as of February 19, 2024, which sets forth his initial base salary, target annual cash bonus opportunity, a recommendation to our Board for the grant of a LTI compensation awards in the form of RSUs and PSUs, employee benefits according to our applicable Company policy and benefit plans, and a one-time sign-on bonus.
Pursuant to his offer letter with the Company, Mr. Gopal is entitled to (a) an annual basisbase salary of $500,000, (b) a target bonus opportunity of 75% of base salary (prorated for 2024), and (c) a one-time sign-on bonus of $300,000, payable on the first regularly scheduled pay date following Mr. Gopal’s start date with the Company. This sign-on bonus was intended to ensure his ability to start with the companies selected remain appropriate.
The following list comprises our peer groupCompany as early as possible by compensating Mr. Gopal for 2020:
a portion of the value of the equity awards and cash bonuses that Mr. Gopal would forfeit upon leaving his previous employer. If Mr. Gopal is terminated by the Company for “cause” or resigns from the Company without “good reason” (as defined in the offer letter) (i) on or prior to March 18, 2025, he is required to repay the entire sign-on bonus or (ii) between March 18, 2025 and March 18, 2026, he is required to repay one-half of the sign-on bonus. Mr. Gopal is also eligible for severance at the non-CEO level under the Company’s standard severance and change in control agreement.In addition, in March 2024 the Company granted Mr. Gopal two inducement equity awards in accordance with the terms of his offer letter: (a) 700,000 RSUs, which will vest 25% on the first anniversary of the vesting commencement date and in 12 substantially equal quarterly installments thereafter, subject to Mr. Gopal’s continuous service with the Company through the applicable vesting date; and (b) 550,000 PSUs, which will be eligible to vest over a four-year performance period based on (i) Mr. Gopal’s continuous service with the Company and (ii) the Company’s stock price achievement, as summarized below:
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | |
PSUs Eligible to Vest (1) | Service Condition(2) | Performance Condition(3) |
| | |
| 100,000 | 12 months | $5.00 |
| 100,000 | 24 months | $7.50 |
| 150,000 | 36 months | $10.00 |
| 200,000 | 48 months | $15.00 |
| | | | | | |
|
Our 2020 Peer Group |
Appian | | Box | | Care.com | | CarGurus |
| | | |
Cars.com | | Etsy | | Eventbrite | | Everquote |
| | | |
Farfetch | | Glu Mobile | | Grubhub | | LendingClub |
| | | |
Quotent Technology | | Redfin | | Shutterstock | | Stamps.com |
| | | |
Stitch Fix | | The Rubicon Project | | TrueCar | | Upwork |
(1) The 2024 PSUs will vest on the first date on which both the service condition and performance condition are achieved for the applicable PSU tranche (referred to herein as “time-vesting” and “performance-vesting”, respectively) during the performance period.
(2) Mr. Gopal must be continuously employed by the Company from the vesting commencement date through the service period set forth above for the applicable PSU tranche to time-vest; provided that the service condition will be deemed satisfied (a) upon the consummation of a “change in control” (as defined in the Company’s standard severance and change in control agreement) in which the 2024 PSUs are not assumed or substituted or (b) upon his termination without “cause” or resignation with “good reason” (in each case, as defined in the Company’s standard severance and change in control agreement) (i) within the three-month period prior to a change in control or (ii) following guiding criteriaa change in control through the 48-month anniversary of the vesting commencement date.
(3) The Company must achieve the stock prices set forth above during the performance period for the applicable PSU tranche to performance-vest. Stock price performance will be measured based on the 60-day volume-weighted average price of one share of the Company’s common stock registered on Nasdaq, as well as on the last trading day prior to the occurrence of a change in control.
Special Retention Bonuses to Ms. Sahi Levesque and Mr. Julian
Ms. Sahi Levesque and Mr. Julian served as Co-Interim CEOs from June 2022 until Mr. Koryl’s start date in February 2023. Once Mr. Koryl was usedhired as our new CEO, it became clear to our Compensation Committee that the retention of Ms. Sahi Levesque and Mr. Julian during this transitional period was a critical business need and that special retention awards to Ms. Sahi Levesque and Mr. Julian were therefore appropriate. Mr. Koryl was learning our complex and unique business model, and looked to Ms. Sahi Levesque and Mr. Julian for continuity and guidance during this transition.
The Committee also carefully considered the appropriate form of the special retention awards. The Committee reviewed each executive’s 2023 target total direct compensation, equity holdings in
establishingthe Company (including unvested LTI awards), our
peer group: | | | | |
| | |
Industry | | | | • Internet and direct marketing;
• Interactive media and services; software;
• Other industry connected to retail, or consumer discretionary, with a focus on internet and direct marketing.
|
| | | | |
| | |
Revenue | | | | Prior four quarter revenue in range of 0.5x – 2.0x to the company. |
| | | | |
| | |
Market Capitalization | | | | Market capitalization range of 0.25x to 4.0x to the company. |
| | | | |
| | |
Geography | | | | Companies who may compete for executive talent in the San Francisco Bay Area. |
For roles whereburn-rate, our peer group data is limited,stock price at the time of grant, and the shares available for grant under our 2019 EIP. Based on these factors, and the goal of immediate retention, the Committee also reviewed an evenly-weighted blenddetermined that cash awards with a service-based condition were appropriate.
To that end, in February 2023, the Company entered into letter agreements (“Special Award Letters”) with each of
our proxy peer group dataMs. Sahi Levesque and
supplemental market data from Radford composedMr. Julian, pursuant to which each executive is eligible to receive a one-time, special cash bonus in the amount of
participating peer companies$250,000. Under the Special Award Letters, the cash bonuses became payable subject to the applicable Executive’s continued employment with the Company through December 31, 2023 and
relevant industries.certain qualifying termination protections.These bonuses were paid to Ms. Sahi Levesque and Mr. Julian in January 2024, in accordance with the terms of the Special Award Letters. Ms. Sahi Levesque and Mr. Julian were previously granted cash bonuses in 2022 as compensation for their Co-Interim CEO roles and to incentivize their retention until a new CEO was hired.
Role of
theOur Compensation
Diversity and Inclusion Committee
The
Our Compensation Committee meets regularly with management and in executive session without members of management present to make decisions on our executive compensation programs and on the compensation of our CEO and other executives. In making executive compensation decisions, theour Compensation Committee reviews a variety of market data and information, including company,Company, compensation peer group, and relevant industry information, and considers the recommendations of its independent compensation consultant, Compensia. The chair of theour Compensation Committee reports the actions of theour Compensation Committee to our board of directorsBoard at each regular meeting. TheWith respect to our CEO’s compensation, our Compensation Committee makes recommendations to the independent members of our Board for their review and approval.
COMPENSATION DISCUSSION AND ANALYSIS
Our Compensation Committee’s responsibilities include, among other
things, reviewing and approving (or making recommendations to the board of directors,our Board, as applicable, regarding)applicable):
•overall compensation strategy;
•amounts and form of executive compensation, including base salary, incentive compensationannual cash bonuses and equity-based compensation;
LTI awards;•goals and objectives to be considered in determining the compensation of the CEO and other executive officers;
NEOs;•annual and long-term incentiveLTI plans and benefit plans;
board•Board compensation for the non-employee members of directors’ compensation;
our Board;•annual proxy disclosure and CD&A disclosure; and
•our compensation peer group.
Compensation Peer Group
Our Compensation Committee has established a compensation peer group that it uses as a reference in understanding the market competitiveness of our executive compensation programs. Our Compensation Committee evaluates this peer group on an annual basis to ensure that the companies selected remain appropriate.
The following companies comprised our compensation peer group for 2023:
| | | | | | | | | | | |
| 2023 Compensation Peer Group |
| | | |
| a.k.a. Brands Holdings | EverQuote | Poshmark | ThredUp |
| Brilliant Earth Group | Movado Group | Purple Innovation | Tilly’s |
| CarParts.com | PetMed Express | Quotient Technology | TrueCar |
| Cars.com | Polished.com | Rent the Runway | |
| Eventbrite | Porch Group | Stitch Fix | |
The following guiding criteria was used in establishing our compensation peer group:
| | | | | | | | |
| | |
| Industry | | •Internet and direct marketing retail •Interactive media and services; software •Other industry connected to retail, or consumer discretionary, with a focus on internet and direct marketing |
|
| | |
| Revenue | | •Prior four quarters’ revenue in range of 0.4x to 2.5x to the Company |
|
| | |
| Market Capitalization | | •Market capitalization range of 0.2x to 5.0x to the Company |
|
| | |
| Other Factors | | •Positive growth •Similar post-IPO maturation •Companies who may compete for executive talent in the San Francisco Bay Area
|
Certain of our peer companies from 2022 were removed from our 2023 peer group due to revenue or market capitalization growth exceeding our criteria. Peer companies that were added to our 2023 peer group were selected based on the criteria described above.
COMPENSATION DISCUSSION AND ANALYSIS
For executive positions where our compensation peer group data is limited, our Compensation Committee also reviewed survey data from Radford comprised of participating peer companies and other financially relevant industry competitors.
Role of the Independent Compensation Consultant
In connection with our IPO,
Since 2019, Compensia has been engaged as the
Committee engaged with Compensia, an independent
executive compensation
consultant. In 2020, Compensia assisted in an evaluationconsultant of our
post-offering executive compensation program, which resulted in us granting RSUs as a component of our equity-based compensation in lieu of stock options. TheCompensation Committee. Our Compensation Committee has analyzed
under the applicable SEC rules and the relevant Nasdaq listing standards whether the work of Compensia as a compensation consultant raises any conflict of interest and has determined that the work of Compensia has not created any conflict of interest.
Compensia reviews and advises on all principal aspects of
theour executive compensation program. Its main responsibilities include:
•providing independent advice to theour Compensation Committee on current trends and best practices in compensation design and program alternatives, and advisesadvising on plans or practices that may improve the effectiveness of our compensation program;
•providing and discussing compensation peer group and broad compensation survey data for competitive comparisons and, based on this information, offeringpreparing independent recommendationsanalyses on NEO compensation, including the CEO and newly hired executives;
•reviewing our equity plan and assessing total stockshare usage relative to our peers;
•reviewing the CD&A and other compensation-related disclosures in our proxy statements;
•offering recommendations, insights and perspectives on compensation-related matters; and
•assisting theour Compensation Committee in designing executive compensation programs that are competitive and aligningalign the interests of our executives with those of our stockholders.
Our CEO is present at
Compensation Committee meetings, except when
the committeeour Compensation Committee is in executive session or when
herthe CEO’s own compensation is being discussed.
With regard to executive compensation, our CEO provides heran evaluation of each executive officer’sNEO’s performance to theour Compensation Committee and makes recommendations with respect to base salary, target annual cash bonus opportunities and target incentives, and equity awardsLTI compensation for each of her direct reports. These recommendations are made after considering thecompetitive market data drawn from our compensation peer group and other relevant data, andsources, as well as each executive’s responsibilities and impact to the organization. This recommendation isWhile these recommendations are considered by our Compensation Committee, the members of our Compensation Committee which makes itsmake their own determinations.
determinations in light of their individual experience, knowledge of the Company, knowledge of the competitive market, knowledge of each executive and exercise of business judgment.
Employment, Severance and
Change-of-ControlExecutive Severance Benefits
Change in Control Agreements
The Company has not entered into formal employment agreements with any of our NEOs. In
2020,May 2021, our Board approved a form severance and change in control agreement for our executives,
were not eligible for any contractual severance benefits upon terminationwhich each of
their employment.Equity Awards
Eachour NEOs has entered into. For a description of these agreements, please see the section named “Compensation Tables – Potential Payments Upon Termination or a Change in Control.”
Clawback Policy
In July 2023, our Compensation Committee adopted a new clawback policy intended to comply with the requirements of Rule 10D-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the corresponding listing standards, of the
equity awards held byNasdaq Stock Market, and which superseded our
NEOs contain a provision for accelerated vesting of 50% ofprevious clawback policy that was originally adopted in November 2021. Under the
outstanding unvested options and/or RSUs held byclawback policy, the
NEO as of the termination dateCompany must recover incentive-based compensation from executive officers in the event
the Company is required to prepare an
executive’s employment is terminated without cause oraccounting restatement due to
good reason on or within 12 months following a change in control (or, for options granted under our 2011 Equity Incentive Plan, a stock sale). In addition, the initial RSU award granted to Mr. Suko in connection with his commencementmaterial noncompliance of
employment with the Company
provided for accelerated vesting of 25% of his initial RSU award if his employment was terminated without cause or he resigned for good reason priorwith any financial reporting requirement under the securities laws (including any required accounting restatement to
May 20, 2021.2021 Severance and Change-of-Control Agreements
The Committee intends to approve severance and change-of-control agreements for our NEOs, which will provide for certain payments and benefits upon a termination of employment without cause or a resignation for good reason both within and outside of a change-of-control transaction context.
We believe these compensation arrangements are necessary to meet our objectives to:
correct an attract and retain top executive talent;
ensure our executives remain objective and dedicated
COMPENSATION DISCUSSION AND ANALYSIS
error in previously issued financial statements that is material to the Company’s strategic objectives; and
facilitatepreviously issued financial statements, or that would result in a smooth transition should a changematerial misstatement if the error were corrected in the current period or left uncorrected in the current period). The clawback policy requires the Company to recover reasonably promptly the amount of control occur.
incentive compensation received by executive officers that exceeds the incentive compensation that would have been received taking into account the accounting restatement, regardless of whether the restatement is due to any fault or misconduct on the part of the officer.The executive severance plan and change-of-control agreements reflecting these provisions have not yet been executed. No other employment agreements or arrangements are in place for any of our executives.
COMPENSATION DISCUSSION AND ANALYSIS
Report of the Compensation, Diversity and Inclusion Committee
The
Compensation Committee has reviewed and discussed the CD&A with the Company’s management. Based on this review and discussion, the
Compensation Committee recommended to our
board of directorsBoard that the CD&A be included in this Proxy Statement.
The
Submitted by the Compensation, Diversity and
Inclusion Committee
| | | | | | | | |
Michael Kumin (Chair) | | Chip Baird | | Caretha Coleman |
of our Board:Chip Baird
Niki Leondakis
2023 Summary Compensation Table
The following table
showsprovides information
regardingon the compensation of our
named executive officersNEOs for services performed in each of the last three
or fewer fiscal
years. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | | Salary ($)(1) | | | Stock Awards ($)(2) | | | Option
Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | All Other Compensation ($)(5) | | | Total ($) | |
| | | | | | | |
Julie Wainwright | | | 2020 | | | $ | 365,769 | | | $ | 4,878,042 | | | | — | | | | — | | | $ | 1,000 | | | $ | 5,244,811 | |
Chief Executive | | | 2019 | | | $ | 365,000 | | | $ | 2,479,000 | | | $ | 2,018,998 | | | $ | 107,675 | | | $ | 1,000 | | | $ | 4,971,673 | |
Officer | | | 2018 | | | $ | 362,365 | | | | — | | | | — | | | $ | 172,119 | | | $ | 1,000 | | | $ | 535,484 | |
| | | | | | | |
Rati Sahi Levesque | | | 2020 | | | $ | 325,385 | | | $ | 1,951,217 | | | | — | | | | — | | | $ | 1,000 | | | $ | 2,277,602 | |
Chief Operating | | | 2019 | | | $ | 316,923 | | | $ | 991,600 | | | $ | 807,597 | | | $ | 89,700 | | | $ | 1,000 | | | $ | 2,206,820 | |
Officer and President | | | 2018 | | | $ | 292,673 | | | | — | | | $ | 471,775 | | | $ | 108,037 | | | $ | 1,000 | | | $ | 873,485 | |
| | | | | | | |
Matt Gustke | | | 2020 | | | $ | 325,385 | | | $ | 1,465,950 | | | | — | | | | — | | | $ | 1,000 | | | $ | 1,792,335 | |
Chief Financial Officer | | | 2019 | | | $ | 325,000 | | | $ | 495,800 | | | $ | 403,804 | | | $ | 76,700 | | | $ | 1,000 | | | $ | 1,302,403 | |
| | | 2018 | | | $ | 321,750 | | | | | | | $ | 283,065 | | | $ | 120,868 | | | $ | 1,000 | | | $ | 726,683 | |
| | | | | | | |
Todd Suko(6) | | | 2020 | | | $ | 213,750 | | | $ | 3,333,000 | | | | — | | | | — | | | $ | 1,000 | | | $ | 3,547,750 | |
Chief Legal Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
and Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Fredrik Bjôrk | | | 2020 | | | $ | 295,769 | | | $ | 1,951,217 | | | | — | | | | — | | | $ | 1,000 | | | $ | 2,247,986 | |
(Former) Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and
Principal Position |
Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total
($) | |
| | | | | | | | | | |
| | | | | | | | | | |
| John Koryl(6) Chief Executive Officer | 2023 | 619,231 | 300,000 | 2,246,000 | — | 1,261,918 | 1,000 | 4,428,149 | |
| 2022 | — | — | — | — | — | — | — | |
| 2021 | — | — | — | — | — | — | — | |
| | | | | | | | | | |
| Rati Sahi Levesque(6) President and Chief Operating Officer | 2023 | 461,539 | 250,000 | 640,000 | — | 693,390 | 1,000 | 2,045,929 | |
| 2022 | 417,308 | 250,000 | 2,577,977 | — | — | 1,000 | 3,246,285 | |
| 2021 | 367,308 | — | 3,846,366 | — | 112,435 | 1,000 | 4,327,109 | |
| | | | | | | | | | |
| Robert Julian(6) Chief Financial Officer | 2023 | 461,539 | 250,000 | 640,000 | — | 693,390 | 1,000 | 2,045,929 | |
| 2022 | 425,000 | 1,000,000 | 644,494 | — | — | 1,000 | 2,070,494 | |
| 2021 | 99,712 | 750,000 | 7,308,250 | — | 32,470 | 123 | 8,190,309 | |
| | | | | | | | | | |
| Todd Suko(6) Chief Legal Officer and Secretary | 2023 | 392,885 | — | 384,000 | — | 355,155 | 1,000 | 1,133,040 | |
| 2022 | 341,923 | 150,000 | 1,321,168 | — | 27,378 | 1,000 | 1,841,469 | |
| 2021 | 325,000 | | 1,414,130 | — | 79,456 | 1,000 | 1,819,586 | |
| | | | | | | | | | |
| Luke Friang(6) Chief Technology and Product Officer | 2023 | 391,058 | 260,000 | 529,750 | — | 358,151 | 1,000 | 1,539,959 | |
| 2022 | — | — | — | — | — | — | — | |
| 2021 | — | — | — | — | — | — | — | |
| | | | | | | | | | |
(1) | Amounts reported in this column reflect the base salaries earned during the applicable year. For all NEOs except Mr. Suko, these amounts reflect one pay period in which base salary increases were effective before such base salary increases were rescinded in response to the COVID-19 pandemic.
| |
(2) | Amounts reported in this column reflect the aggregate grant date fair value of RSUs awarded in 2020 and 2019, computed in accordance with ASC 718 based on the Company’s stock price on the date of grant.
|
(3) | Amounts reported in this column reflect the aggregate grant date fair value of stock options awarded in 2020 and 2019, computed in accordance with ASC 718. See Note 10 to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of the relevant assumptions used in calculating these amounts.
|
(4) | Amounts reported in this column for each named executive officer represent payouts under our annual cash bonus program for the applicable year.
|
(5) | Amounts reported in this column reflect 401(k) contributions received by each named executive officer.
|
(6) | Mr. Suko commenced employment with the Company on May 1, 2020.
|
(1) Amounts reported in this column reflect the base salaries earned during the applicable year.
(2) Amounts reported in this column reflect cash bonuses earned during the applicable year, as discussed in footnote (7).
(3) Amounts reported in this column reflect the aggregate of (a) the grant date fair value of RSU awards granted in 2023, 2022 and 2021, computed in accordance with Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), and excluding estimated forfeitures, based on the Company’s stock price on the date of grant and (b) the grant date fair value of 2023 PSU awards granted in 2023, computed in accordance with FASB ASC Topic 718, and excluding estimate forfeitures, based on the probable performance outcome using a Monte Carlo valuation (threshold). The grant date fair value of the 2023 PSU awards if maximum performance is achieved (i.e., all performance metrics are met and all tranches vest) is as follows for Mr. Koryl, Ms. Sahi Levesque, and Messrs. Julian and Suko, respectively: $2,445,000, $244,500, $244,500, and $146,700.
(4) Amounts reported in this column represent the payments earned under our annual cash bonus program for the applicable year.
(5) Amounts reported in this column reflect Section 401(k) matching contributions earned by each NEO.
(6) 2023 Koryl Sign-on Bonus: Pursuant to the terms of Mr. Koryl’s offer letter, entered into with the Company on January 25, 2023, Mr. Koryl was entitled to receive a one-time sign-on bonus of $300,000, payable on the first regularly scheduled pay date following his start date with the Company, subject to certain repayment conditions. This bonus payment is reflected under “Bonus” for 2023.
2023 Special Bonuses: In connection with Mr. Koryl’s onboarding as our CEO, Ms. Sahi Levesque and Mr. Julian were each granted special cash bonuses in the amount of $250,000, respectively, which become payable within 15 days following December 31, 2023, subject to the applicable executive’s continued employment with the Company through such date. These bonus payments are reflected under “Bonus” for 2023, and were paid out in January 2024 in accordance with their terms.
2023 Friang Sign-On Bonus: Pursuant to the terms of Mr. Friang’s offer letter, entered into with the Company on November 16, 2022, Mr. Friang was entitled to receive a $520,000 sign-on bonus, payable in two equal installments, the first of which is due within 30 days of his start date (which was earned in 2023) and the second of which comes due on the first anniversary of his start date (which was earned in 2024), in each case, subject to Mr. Friang’s continued employment through each applicable payment date and certain repayment conditions. The first installment of Mr. Friang’s sign-on bonus is reflected under “Bonus” for 2023, and was paid out in January 2023 in accordance with its terms.
2022 Special Bonuses: In connection with our former CEO Julie Wainwright’s transition from CEO and Board Chair to an executive advisor on June 7, 2022, Ms. Sahi Levesque and Messrs. Julian and Suko were each granted special cash bonuses in the amounts of $250,000, $250,000 and $150,000, respectively, which become payable within 15 days following the earlier of (a) the nine-month anniversary of June 7, 2022 (i.e., March 7, 2023) or (b) the three-month anniversary of the date on which the Company’s new permanent CEO commences employment with the Company (the “Award Date”), subject to the applicable executive’s continued employment with the Company through the Award Date. These bonus payments are reflected under “Bonus” for 2022, and were paid out in March 2023 in accordance with their terms.
2022 and 2021 Julian Sign-On Bonuses: Pursuant to the terms of Mr. Julian’s offer letter, entered into with the Company on
September 15, 2021, Mr. Julian was entitled to receive (a) a $500,000 relocation bonus, payable within the first 30 days of his start date with the Company (which was earned in 2021), and (b) a $1,000,000 sign-on bonus, payable in four quarterly installments over the first 12 months of employment (of which $250,000 was earned in 2021 and $750,000 was earned in 2022), in each case, subject to Mr. Julian’s continued employment through each applicable payment date and certain repayment conditions. These bonus payments are reflected under “Bonus” for 2022 and 2021, respectively.
2023 Grants of Plan-Based Awards
for 2020Table
The following table provides information on plan-based awards made in
20202023 to each of
theour NEOs:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards (1) | | | Estimated Future Payouts
Under Equity Incentive Plan
Awards | | | All Other
Stock
Awards:
Number of Shares of
Restricted
Stock
Units (#) (2) | | | Grant
Date Fair
Value of
Restricted
Stock
Units (3) | |
| Name | | Award
Type | | Grant
Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | |
| | | | | | | | | | |
Julie Wainwright | | Cash
Incentive | | | N/A | | | | — | | | | 182,500 | | | | 182,500 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | RSU | | | 2/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 312,695 | | | $ | 4,878,042 | |
| | | | | | | | | | |
Rati Sahi Levesque | | Cash
Incentive | | | N/A | | | | — | | | | 130,000 | | | | 130,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | RSU | | | 2/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 125,078 | | | $ | 1,951,217 | |
| | | | | | | | | | |
Matt Gustke | | Cash
Incentive | | | N/A | | | | — | | | | 130,000 | | | | 130,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | RSU | | | 4/24/2020 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 145,000 | | | $ | 1,465,950 | |
| | | | | | | | | | |
Todd Suko | | Cash
Incentive | | | N/A | | | | — | | | | 86,667 | | | | 86,667 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | RSU | | | 5/5/2020 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 275,000 | | | $ | 3,333,000 | |
| | | | | | | | | | |
Fredrik Bjôrk | | Cash
Incentive | | | N/A | | | | — | | | | 118,000 | | | | 118,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | RSU | | | 2/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 125,078 | | | $ | 1,951,217 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | All other stock awards: Number of shares of stock or units (#)(3) |
Grant date fair value of stock and option awards ($)(4) | |
| Name | Award Type | Grant
Date | Threshold
($) | Target
($) | Maximum
($) | | Threshold
(#) | Target
(#) | Maximum
(#) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| John Koryl | Cash
Bonus | — | 315,479 | 630,959 | 1,261,918 | | — | — | — | — | — | |
| RSU | 3/3/2023 | — | — | — | | — | — | — | 1,250,000 | 2,037,500 | |
| PSU | 3/3/2023 | — | — | — | | 150,000 | 1,500,000 | — | — | 208,500 | |
| | | | | | | | | | | | |
| Rati Sahi Levesque | Cash
Bonus | — | 173,348 | 346,695 | 693,390 | | — | — | — | — | — | |
| RSU | 3/3/2023 | — | — | — | | — | — | — | 350,000 | 570,500 | |
| PSU | 3/3/2023 | — | — | — | | 50,000 | 150,000 | — | — | 69,500 | |
| | | | | | | | | | | | |
| Robert Julian | Cash
Bonus | — | 173,348 | 346,695 | 693,390 | | — | — | — | — | — | |
| RSU | 3/3/2023 | — | — | — | | — | — | — | 350,000 | 570,500 | |
| PSU | 3/3/2023 | — | — | — | | 50,000 | 150,000 | — | — | 69,500 | |
| | | | | | | | | | | | |
| Todd Suko | Cash
Bonus | — | 118,385 | 197,308 | 355,155 | | — | — | — | — | — | |
| RSU | 3/3/2023 | — | — | — | | — | — | — | 210,000 | 342,300 | |
| PSU | 3/3/2023 | — | — | — | | 30,000 | 90,000 | — | — | 41,700 | |
| | | | | | | | | | | | |
| Luke Friang | Cash
Bonus | — | 118,384 | 198,973 | 358,151 | | — | — | — | — | — | |
| RSU | 3/3/2023 | — | — | — | | — | — | — | 325,000 | 529,750 | |
| | | | | | | | | | | | |
(1) | These columns represent the potential awards under our annual incentive plan for fiscal 2020 as further discussed in “—Compensation Discussion and Analysis—Annual Cash Incentive”. Mr. Suko’s potential award under our annual cash incentive plan was pro-rated based on his start date with the Company on May 1, 2020. None of our NEOs received payouts under our annual cash incentive program for 2020.
| |
(2) | Each RSU award was granted under our 2019 Equity Incentive Plan and each RSU award (other than Mr. Suko’s RSU award) shall vest in 16 equal installments on a quarterly basis thereafter. Mr. Suko’s RSU award shall vest 25% on the first anniversary of the vesting commencement date and in 12 equal installments on a quarterly basis thereafter. Vesting will occur only if the named executive officer is continuously employed by the Company or one of its subsidiaries through each vesting date, except a portion of the RSU award may vest in cases involving termination without cause or resignation for good reason in the change of control context. Mr. Suko’s RSU award additionally provides that a portion of his RSU award may vest in cases involving termination without cause or resignation for good reason prior to May 20, 2021. See “—Potential Payments Upon Termination or Change in Control.”
|
(3) | This column represents the aggregate grant date fair value of RSU grants to the named executive officers computed in accordance with ASC 718. The grant date fair value for RSU awards granted in 2020 was determined using the closing price of the Company’s common stock on the grant date multiplied by the number of shares subject to the award. These amounts reflect our calculation of the value of these awards, and do not necessarily correspond to the actual value that may ultimately be realized by the named executive officers.
|
(1) These columns represent the potential awards under our annual cash bonus program for 2023, as further discussed in the section named “Compensation Discussion and Analysis – 2023 Compensation Decisions – Annual Cash Bonuses.” The payments our NEOs earned under our annual cash bonus program for 2023 are reflected in the 2023 Summary Compensation Table under “Non-Equity Incentive Plan Compensation” for 2023.
(2) Each 2023 PSU award was granted under our 2019 Equity Incentive Plan or, in the case of Mr. Koryl’s award, granted outside of our equity plans as a material inducement to employment under Nasdaq Rule Listing Rule 5635(c)(4), and vests subject to the applicable executive’s continued service through the applicable service period and the Company’s stock price achievement over a five-year performance period, except that a portion of the 2023 PSU award may vest in the event of a qualifying termination that occurs in the change of control context (see the section named “Potential Payments Upon Termination or Change in Control”). Performance is measured based on achievement of stock price hurdles and service-based vesting conditions, as further discussed in the section named “Compensation Discussion and Analysis – 2023 Compensation Decisions – Long-Term Incentive Compensation.” Amounts included in the column labeled “threshold” reflect the first tranche of PSUs vesting, which is the minimum amount of PSUs payable, and amounts included in the column labeled “target” reflects all tranches vesting, which is the maximum amount of PSUs payable. There is no payout possible above target.
(3) Each 2023 RSU award granted to Ms. Sahi Levesque and Messrs. Suko and Julian was granted under our 2019 Equity Incentive Plan and vests in 12 equal installments on a quarterly basis following the vesting commencement date. Each 2023 RSU award granted to Messrs. Koryl and Friang was granted outside of our equity plans as a material inducement to employment under Nasdaq Rule Listing Rule 5635(c)(4) and vests 25% on the first anniversary of the applicable vesting commencement date and in 12 equal installments on a quarterly basis thereafter. Vesting will occur only if the NEO is continuously employed by the Company or one of its subsidiaries through each vesting date, except that a portion of the 2023 RSU award may vest in the event of a qualifying
termination that occurs in the change of control context. See the section named “Potential Payments Upon Termination or Change in Control.”
(4) This column represents (a) the grant date fair value of 2023 RSU awards granted to our NEOs in 2023 computed in accordance with FASB ASC Topic 718 and excluding estimated forfeitures, determined using the closing price of the Company’s common stock on the grant date multiplied by the number of shares subject to the award and (b) the grant date fair value of 2023 PSU awards granted in 2023, computed in accordance with FASB ASC Topic 718, and excluding estimate forfeitures, based on the probable performance outcome using a Monte Carlo valuation (threshold).
2023 Outstanding Equity Awards at
2020Fiscal Year End
Table
The following table presents information regarding the outstanding stock options,
RSU and
RSUsPSU awards held by each of
the named executive officersour NEOs as of December 31,
2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Award | |
| Name | | Grant
Date | | | Vesting
Commencement
Date | | | Number of
Securities
Underlying
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | | | Option
Exercise
Price ($) | | | Option
Expiration
Date | | | Number of
Shares of
Units of
Stock that
have not
Vested (#) | | | Market
Value of
Shares or
Units of
Stock that
have not
Vested
($)(5) | |
| | | | | | | | |
Julie Wainwright | | | 3/27/2014 | | | | 3/14/2014 | | | | 624,250 | | | | — | | | $ | 0.90 | | | | 3/27/2024 | | | | | | | | | |
| | | 2/19/2015 | | | | 2/19/2015 | | | | 792,361 | | | | — | | | $ | 1.74 | | | | 2/19/2025 | | | | | | | | | |
| | | 12/17/2015 | | | | 12/17/2015 | | | | 50,000 | | | | — | | | $ | 3.48 | | | | 12/17/2025 | | | | | | | | | |
| | | 2/16/2017 | (1) | | | 2/16/2017 | | | | 239,583 | | | | 10,417 | | | $ | 2.56 | | | | 2/16/2027 | | | | | | | | | |
| | | 7/22/2019 | (2) | | | 8/20/2019 | | | | 56,818 | | | | 125,000 | | | $ | 24.79 | | | | 7/22/2029 | | | | | | | | | |
| | | 7/22/2019 | (3) | | | 8/20/2019 | | | | — | | | | — | | | | — | | | | — | | | | 68,750 | | | $ | 1,343,375 | |
| | | 2/20/2020 | (3) | | | 2/20/2020 | | | | | | | | | | | | | | | | | | | | 254,065 | | | $ | 4,964,430 | |
| | | | | | | | |
Rati Sahi Levesque | | | 3/27/2014 | | | | 3/14/2014 | | | | 175,750 | | | | — | | | $ | 0.90 | | | | 3/27/2024 | | | | | | | | | |
| | | 2/19/2015 | | | | 2/19/2015 | | | | 94,905 | | | | — | | | $ | 1.74 | | | | 2/19/2025 | | | | | | | | | |
| | | 12/17/2015 | | | | 12/17/2015 | | | | 36,119 | | | | — | | | $ | 3.48 | | | | 12/17/2025 | | | | | | | | | |
| | | 2/16/2017 | (1) | | | 2/16/2017 | | | | 45,972 | | | | 2,593 | | | $ | 2.56 | | | | 2/16/2027 | | | | | | | | | |
| | | 12/5/2018 | (1) | | | 12/5/2018 | | | | 22,794 | | | | 62,500 | | | $ | 7.64 | | | | 12/5/2028 | | | | | | | | | |
| | | 7/22/2019 | (2) | | | 8/20/2019 | | | | 22,727 | | | | 50,000 | | | $ | 24.79 | | | | 7/22/2029 | | | | | | | | | |
| | | 7/22/2019 | (3) | | | 8/20/2019 | | | | — | | | | — | | | | — | | | | — | | | | 27,500 | | | $ | 537,350 | |
| | | 2/20/2020 | (3) | | | 2/20/2020 | | | | | | | | | | | | | | | | | | | | 101,626 | | | $ | 1,985,772 | |
| | | | | | | | |
Matt Gustke | | | 5/31/2013 | | | | 4/3/2013 | | | | 143,821 | | | | — | | | $ | 0.78 | | | | 5/31/2023 | | | | | | | | | |
| | | 3/27/2014 | | | | 3/14/2014 | | | | 75,000 | | | | — | | | $ | 0.90 | | | | 3/27/2024 | | | | | | | | | |
| | | 2/19/2015 | | | | 2/19/2015 | | | | 60,017 | | | | — | | | $ | 1.74 | | | | 2/19/2025 | | | | | | | | | |
| | | 12/17/2015 | | | | 12/17/2015 | | | | 74,999 | | | | — | | | $ | 3.48 | | | | 12/17/2025 | | | | | | | | | |
| | | 2/16/2017 | (1) | | | 2/16/2017 | | | | 44,892 | | | | 1,952 | | | $ | 2.56 | | | | 2/16/2027 | | | | | | | | | |
| | | 12/5/2018 | (1) | | | 12/5/2018 | | | | 37,500 | | | | 37,500 | | | $ | 7.64 | | | | 12/5/2028 | | | | | | | | | |
| | | 7/22/2019 | (2) | | | 8/20/2019 | | | | 11,363 | | | | 25,001 | | | $ | 24.79 | | | | 7/22/2029 | | | | | | | | | |
| | | 7/22/2019 | (3) | | | 8/20/2019 | | | | — | | | | — | | | | — | | | | — | | | | 13,750 | | | $ | 268,675 | |
| | | 4/24/2020 | (3) | | | 2/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | 126,875 | | | $ | 2,479,138 | |
| | | | | | | | |
Todd Suko | | | 5/5/2020 | (4) | | | 5/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | 275,000 | | | $ | 5,373,500 | |
| | | | | | | | |
Fredrik Bjôrk | | | 2/16/2017 | (1) | | | 6/1/2017 | | | | 417 | | | | 2,500 | | | $ | 2.56 | | | | 2/16/2027 | | | | | | | | | |
| | | 9/21/2017 | (1) | | | 9/21/2017 | | | | — | | | | 28,125 | | | $ | 2.68 | | | | 9/21/2027 | | | | | | | | | |
| | | 7/22/2019 | (2) | | | 8/20/2019 | | | | 11,363 | | | | 25,001 | | | $ | 24.79 | | | | 7/22/2029 | | | | | | | | | |
| | | 7/22/2019 | (3) | | | 7/22/2019 | | | | — | | | | — | | | | — | | | | — | | | | 13,750 | | | $ | 268,675 | |
| | | 2/20/2020 | (3) | | | 2/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | 101,626 | | | $ | 1,985,772 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | Grant
Date | Vesting
Commencement
Date | Number of Securities Underlying
Options
Exercisable
(#) | Number of
Securities Underlying Unexercised
Options
Unexercisable
(#) | Option
Exercise
Price
($) | Option
Expiration
Date | | Number of Shares of Units of
Stock that
have not
Vested
(#) | Market Value of Shares or Units of Stock that have not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) |
| | | | | | | | | | | |
| | | | | | | | | | | |
John
Koryl | 3/3/2023(3) | 2/20/2023 | — | — | — | — | | 1,250,000 | 2,512,000 | — | — |
3/3/2023(4) | 2/20/2023 | — | — | — | — | | — | — | 150,000 | 208,500 |
| | | | | | | | | | | |
| Rati Sahi Levesque | 2/19/2015 | 2/19/2015 | 44,905 | — | 1.74 | 2/19/2025 | | — | — | — | — |
| 12/17/2015 | 12/17/2015 | 36,119 | — | 3.48 | 12/17/2025 | | — | — | — | — |
| 2/16/2017 | 2/16/2017 | 35,799 | — | 2.56 | 2/16/2027 | | — | — | — | — |
| 12/5/2018 | 12/5/2018 | 73,608 | — | 7.64 | 12/5/2028 | | — | — | — | — |
| 7/22/2019 | 8/20/2019 | 65,001 | — | 24.79 | 7/22/2029 | | — | — | — | — |
| 2/20/2020(5) | 2/20/2020 | — | — | — | — | | 7,818 | 15,714 | — | — |
| 3/13/2021(5) | 2/20/2021 | — | — | — | — | | 30.072 | 60,445 | — | — |
| 12/13/2021(5) | 11/20/2021 | — | — | — | — | | 68,359 | 137,402 | — | — |
| 2/14/2022(5) | 2/20/2022 | — | — | — | — | | 83,822 | 168,482 | — | — |
| 2/18/2022(6) | 1/1/2022 | — | — | — | — | | — | — | 74,508 | 93,135 |
| 3/3/2023(7) | 2/20/2023 | — | — | — | — | | 262,500 | 527,625 | — | — |
| 3/3/2023(4) | 2/20/2023 | — | — | — | — | | — | — | 50,000 | 69,500 |
| | | | | | | | | | | |
| Robert Julian | 11/3/2021(8) | 10/1/2021 | — | — | — | — | | 249,167 | 500,826 | — | — |
2/14/2022(5) | 2/20/2022 | — | — | — | — | | 20,956 | 42,122 | — | — |
| 2/18/2022(6) | 1/1/2022 | — | — | — | — | | — | — | 18,627 | 23,284 |
| 3/3/2023(7) | 2/20/2023 | — | — | — | — | | 262,500 | 527,625 | — | — |
| 3/3/2023(4) | 2/20/2023 | — | — | — | — | | — | — | 50,000 | 69,500 |
| | | | | | | | | | | |
Todd
Suko | 5/5/2020(3) | 5/20/2020 | — | — | — | — | | 34,375 | 69,094 | — | — |
3/13/2021(5) | 2/20/2021 | — | — | — | — | | 6,016 | 12,092 | — | — |
| 12/13/2021(5) | 11/20/2021 | — | — | — | — | | 41,016 | 82,442 | — | — |
| 2/14/2022(5) | 2/20/2022 | — | — | — | — | | 58,675 | 117,937 | — | — |
| 2/18/2022(6) | 1/1/2022 | — | — | — | — | | — | — | 22,352 | 27,940 |
| 3/3/2023(7) | 2/20/2023 | — | — | — | — | | 157,500 | 316,575 | — | — |
| 3/3/2023(4) | 2/20/2023 | — | — | — | — | | — | — | 30,000 | 41,700 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | Grant
Date | Vesting
Commencement
Date | Number of Securities Underlying
Options
Exercisable
(#) | Number of
Securities Underlying Unexercised
Options
Unexercisable
(#) | Option
Exercise
Price
($) | Option
Expiration
Date | | Number of Shares of Units of
Stock that
have not
Vested
(#) | Market Value of Shares or Units of Stock that have not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Luke Friang | 3/3/2023(3) | 2/20/2023 | — | — | — | — | | 325,000 | 653,250 | — | — |
(1) | This option vests in 1/48th increments beginning on the one-month anniversary of the vesting commencement date and for each subsequent month of continuous employment.
| |
(2) | This option vests in 16 equal quarterly installments, subject to the named executive officer’s continuous employment through the applicable vesting date.
|
(3) | This RSU award vests in 16 equal quarterly installments, subject to the named executive officer’s continuous employment through the applicable vesting date.
|
(4) | This RSU award vests 25% on the first anniversary of the vesting commencement date and in 12 equal quarterly installments thereafter, subject to the named executive officer’s continuous employment through the applicable vesting date.
|
(5) | The market value of shares or units of stock that have not vested reflects a stock price of $19.54, our closing stock price on December 31, 2020.
|
(1) Value is calculated by multiplying the number of RSUs that have not vested by the closing market price of our stock ($2.01) as of the close of trading on December 29, 2023 (the last trading day prior to our December 31, 2023 fiscal year-end).
(2) With respect to the PSUs granted in 2022, value is calculated by multiplying the number of PSUs that have not vested by the closing market price of our stock ($2.01 as of the close of trading on December 29, 2023 (the last trading day prior to our December 31, 2022 fiscal year-end). With respect to the PSUs granted in 2023, value is calculated based on the Monte Carlo valuation.In accordance with SEC guidance, the number of PSUs reflect threshold performance.
(3) This award vests 25% on the first anniversary of the vesting commencement date and in 12 equal quarterly installments thereafter, subject to the NEO’s continuous employment through the applicable vesting date.
(4) This award vests subject to the applicable executive’s continued service through the applicable service period and the Company’s stock price achievement over a five-year performance period.
(5) This award vests in 16 equal quarterly installments, subject to the NEO’s continuous employment through the applicable vesting date.
(6) This award cliff-vests subject to the applicable executive’s continued service through March 1, 2025 and the Company’s performance over a three-year period based on achievement of annual GMV and Adjusted EBITDA goals, weighted 50/50 and measured annually from January 1, 2022 through December 31, 2024.
(7) This award vests in 12 equal quarterly installments, subject to the NEO’s continuous employment through the applicable vesting date.
(8) This award vests 35% on the first anniversary of the vesting commencement date and in 12 equal quarterly installments thereafter, subject to the NEO’s continuous employment through the applicable vesting date.
2023 Option Exercises and Stock Vested
Table
The following table sets forth the number of shares of the Company’s common stock acquired by
our NEOs through stock option exercises and
the vesting of
RSUsPSU and RSU awards during
fiscal year 2020.2023. No PSU awards vested during 2023. In addition, the table presents the value realized upon such exercises or vesting, as calculated, in the case of stock options, based on the difference between the closing price of the Company’s common stock on the date of exercise (or, in the event the date of exercise occurs on a holiday or weekend, the closing price of the Company’s common stock on the immediately preceding trading day) and the option exercise price and, in the case of
RSUs,PSU and RSU awards, based on the closing price per share of the Company’s common stock on the vesting date (or, in the event the vesting date occurs on a holiday or weekend, the closing price of the Company’s common stock on the immediately preceding trading day).
| | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
| | | | |
| Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized Upon
Exercise ($) | | | Number of Shares
Acquired on Vesting (#) | | | Value Realized on
Vesting ($) | |
| | | | |
Julie Wainwright | | | 274,329 | | | $ | 4,351,915 | | | | 50,720 | | | $ | 716,245 | |
| | | | |
Rati Sahi Levesque | | | 67,273 | | | $ | 568,199 | | | | 19,831 | | | $ | 279,992 | |
| | | | |
Matt Gustke | | | — | | | | — | | | | 14,823 | | | $ | 247,600 | |
| | | | |
Todd Suko | | | — | | | | — | | | | — | | | | — | |
| | | | |
Fredrik Bjôrk | | | 14,958 | | | $ | 3,121,817 | | | | 18,101 | | | $ | 256,485 | |
| | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
| Name | Number of Shares
Acquired on Exercise
(#) | Value Realized Upon
Exercise
($) | | Number of Shares
Acquired on Vesting
(#) | Value Realized on
Vesting
($) |
|
|
| | | | | |
| | | | | |
| John Koryl | — | — | | | — | — | |
| Rati Sahi Levesque | — | — | | | 221,761 | 435,432 | |
| Robert Julian | — | — | | | 221,396 | 410,493 | |
| Todd Suko | — | — | | | 172,649 | 337,284 | |
| Luke Friang | — | — | | | — | — | |
Potential Payments
uponUpon Termination or Change in Control
Executive
Severance
BenefitsIn 2020,and Change in Control Agreements
As noted above, in May 2021, our Board approved a form severance and change in control agreement for our executives,
were not eligible for any contractualand each of our NEOs has since entered into this form agreement. All severance
payments and benefits
upon terminationdescribed hereunder are subject to the applicable NEO’s execution and non-revocation of
their employment.Equity Awards
Eacha release of claims in favor of the equity awards heldCompany. The Company’s standard severance and change in control agreement has a three-year term, subject to automatic one-year renewal periods unless the Company provides at least 60 days of advance notice of its intention to terminate the applicable agreement. The Company’s standard severance and change in control agreement also contains restrictive covenants, including confidentiality, non-competition and non-solicitation obligations.
Qualifying Termination During the Change in Control Protection Period
If the employment of an NEO is terminated by our NEOs containthe Company without “cause” or the NEO resigns from the Company with “good reason,” in either case, during the three-month period preceding or the 12-month period following a provision for accelerated vesting of 50%“change in control” of the outstanding unvested options and/or RSUs heldCompany (referred to as the “change in control protection period”) (each term, as defined in the Company’s standard severance and change in control agreement), the NEO would be entitled to the following payments and benefits:
| | | | | | | | |
| Component | | Benefits |
| | |
| | |
| | |
| Salary Benefit | | 1.5 times base salary (CEO) or 1.0 times base salary (other NEOs), payable in a lump sum |
| | |
| | |
| Bonus | | 1.0 times target annual cash bonus opportunity plus a prorated portion of the target annual cash bonus opportunity (prorated based on the number of days elapsed in the calendar year as of the termination date), payable in a lump sum |
| | |
| | |
| Equity | | Full acceleration of all outstanding and unvested equity awards |
| | |
| | |
| Health Benefits | | COBRA subsidy for 18 months (CEO) or 12 months (other NEOs), payable in a lump sum |
Qualifying Termination Outside of the Change in Control Protection Period
If the employment of an NEO is terminated by the named executive officer as of the termination date in the event an executive’s employment is terminatedCompany without cause or due tothe NEO resigns from the Company with good reason, on or within 12 months following ain either case, outside of the change in control (or,protection period, the NEO would be entitled to the following payments and benefits:
| | | | | | | | |
| Component | | Benefits |
| | |
| | |
| | |
| Salary Benefit | | 1.0 times base salary (CEO) or 0.5 times base salary (other NEOs), payable in a lump sum |
| | |
| | |
| Bonus | | N/A |
| | |
| | |
| Equity | | N/A |
| | |
| | |
| Health Benefits | | COBRA subsidy for 12 months (CEO) or 6 months (other NEOs), payable in a lump sum |
Our Former Chief Financial Officer
On September 29, 2023, the Company announced that Robert Julian would step down from his CFO role on January 31, 2024, and would serve as an executive advisor to the Company from February 1, 2024 to June 30, 2024. Mr. Julian’s termination of employment constituted a termination without “cause,” as defined in our
severance and change in control agreement, and Mr. Julian became entitled to the benefits provided thereunder for options granteda qualifying termination outside of the change in control period. In order to ensure continuity between Mr. Julian and our executive team, on September 28, 2023 the Company entered into a Transition and Separation Agreement with Mr. Julian relating to the termination of his employment on January 31, 2024 (the “Transition and Separation Agreement”) and a Consulting Agreement related to his continued service as an executive advisor to the Company following his termination of employment (the “Consulting Agreement”).
Pursuant to the terms of the Transition and Separation Agreement, upon his termination, and subject to his execution and non-revocation of a release of claims in favor of the Company, Mr. Julian was entitled to the cash severance and benefits described above under our 2011 Equity Incentive Plan,the severance and change in control agreement for qualifying terminations that occur outside of the change in control protection period, as well as the full year annual bonus under the 2023 annual bonus program based on actual performance achievement. Mr. Julian must also comply with certain restrictive covenants, including confidentiality and non-disparagement obligations.
Pursuant to the terms of the Consulting Agreement, from February 1, 2024 to June 30, 2024, Mr. Julian is eligible to receive a
stock sale). In addition,monthly consulting fee in the
initial RSU award grantedamount of $5,000 and continued vesting of his equity awards, subject to
Mr. Suko in connection with his
commencement of employmentcontinued service with the Company
provided for acceleratedthrough each applicable vesting
of 25% of his initial RSU award if his employment was terminated without cause or resigned he for good reason prior to May 20, 2021.date.
The tabletables below reflectsreflect the value of compensation and benefits that would become payable to each of our NEOs under his or her severance and change in control agreement (or, in the named executive officerscase of Mr. Julian, his Transition and Separation Agreement) if, on December 31, 2023, (a) with respect to the first table, a change in control (or, for options granted under our 2011 Equity Incentive Plan, a stock sale) occurred on December 31,
2020 and the named executive officerNEO experienced a qualifying termination of employment on that date. Theseor (b) with respect to the second table, the NEO experienced a qualifying termination of employment. A qualifying termination of employment generally refers to the NEO’s termination of employment by the Company without “cause” or the NEO’s resignation with “good reason” (each, as defined in the applicable agreement) and does not include death, disability or retirement. Our NEOs are not entitled to severance, or any other benefits, if they experience a non-qualifying termination.
The amounts below are based uponon the named executive officer’sNEO’s outstanding and unvested equity awards as of such dateDecember 31, 2023 and on the Company’s closing stock price of $19.54$2.01 on the preceding trading day, December 29, 2023.
Qualifying Termination and Change in Control
| | | | | | | | | | | | | | | | | | | | |
| Name | Cash Severance ($)(1) | Benefit Continuation ($)(2) | Options ($)(3) | RSUs ($)(4) | PSUs ($)(5) | Total
($) |
| | | | | | |
| | | | | | |
| John Koryl | 2,380,959 | | 42,012 | | — | | 2,512,500 | | 3,015,000 | | 7,950,471 | |
| Rati Sahi Levesque | 1,177,945 | | 1,935 | | — | | 909,668 | | 451,261 | | 2,540,809 | |
| Todd Suko | 872,308 | | 26,382 | | — | | 598,140 | | 225,828 | | 1,722,658 | |
| Luke Friang | 821,473 | | 26,382 | | — | | 653,250 | | — | | 1,501,105 | |
(1) Represents (a) 1.5 times base salary for Mr. Koryl and 1.0 times base salary for Ms. Sahi Levesque and Messrs. Suko and Friang, (b) 1.0 times the 2023 target annual cash bonus opportunity, and (c) a prorated portion of the 2023 target annual cash bonus opportunity (assuming 100% of days worked during 2023).
(2) Represents (a) an 18-month COBRA subsidy for Mr. Koryl and (b) a 12-month COBRA subsidy for Ms. Sahi Levesque and Messrs. Julian, Suko and Friang.
(3) Ms. Sahi Levesque’s unvested stock options as of December 31, 2020. These benefits2023 have an exercise price that is greater than the closing stock price as of December 30, 2022 (the preceding trading day) and, as a result, are in additionnot ascribed any value. Messrs. Koryl, Julian, Suko and Friang did not hold any stock options as of December 31, 2023.
(4) Represents full acceleration of unvested RSUs.
(5) Represents full acceleration of unvested PSUs based on target performance.
Qualifying Termination
| | | | | | | | | | | | | | | | | | | | |
| Name | Cash Severance ($)(1) | Benefit Continuation ($)(2) | Options
($) | RSUs
($) | PSUs
($) | Total
($) |
| | | | | | |
| | | | | | |
| John Koryl | 700,000 | | 28,008 | | — | | — | | — | | 728,008 | |
| Rati Sahi Levesque | 237,500 | | 968 | | — | | — | | — | | 238,468 | |
Robert Julian(3) | 237,500 | | 13,191 | | — | | — | | — | | 250,961 | |
| Todd Suko | 225,000 | | 13,191 | | — | | — | | — | | 238,191 | |
| Luke Friang | 207,500 | | 13,191 | | — | | — | | — | | 220,691 | |
(1) Represents (a) 1.0 base salary for Mr. Koryl and (b) 0.5 times base salary for Ms. Levesque and Messrs. Julian, Suko and Friang. For Mr. Julian, also includes the 2023 annual cash bonus (based on actual performance achievement) he received pursuant to the benefits under then-exercisable stock optionsterms of his Transition and Separation Agreement.
(2) Represents (a) a 12-month COBRA subsidy for Mr. Koryl and (b) a six-month COBRA subsidy for Ms. Levesque and Messrs. Julian, Suko and Friang.
(3) As described above, Mr. Julian’s employment terminated effective January 31, 2024. As permitted by SEC guidance, the benefits available generallyamounts shown are the actual amounts Mr. Julian received in connection with his termination pursuant to salaried employees, such as distributions under the Company’s broad based 401(k) plan. In 2020, the NEOs were notMr. Julian’s Transition and Separation Agreement. Mr. Julian was also entitled to receive his full year annual bonus for 2023 based on actual performance achievement.
CEO Pay Ratio
Under SEC rules, we are required to calculate and disclose the annual total compensation of our median employee and the ratio of the annual total compensation of our median employee as compared to the annual total compensation of our CEO (‘‘CEO Pay Ratio’’). The following CEO Pay Ratio disclosure for 2023 is the Company’s reasonable, good faith estimate calculated in accordance with the requirements of Item 402(u) of Regulation S-K and Section 952(6) of the Dodd-Frank Act and may not be comparable to the pay ratio disclosures of other companies.
To identify our median employee, we chose December 31, 2023 as the measurement date. As of such date, the Company had 3,032 employees, all of which were employed in the United States. We included all full-time and part-time employees and excluded our CEO, John Koryl, and all independent contractors and leased employees. As permitted by SEC rules, we annualized the 2023 total compensation of Mr. Koryl who joined the Company on February 6, 2023 and was serving as CEO on the date selected to calculate the median employee.
As permitted under the SEC rules, we then calculated the total cash compensation for all employees who were active employees as of the measurement date using their gross compensation stated on their 2023 Form W-2, annualizing total cash compensation for any employee that commenced employment during 2023. Using this annual cash compensation or benefits upon death, disability,data, we identified the median employee. Once the median employee was identified, the annual total compensation of this employee was calculated in accordance with the requirements of the “Total Compensation” column of the Summary Compensation Table.
For 2023, the median of the annual total compensation of our employees (other than Mr. Koryl) was $51,920. The annual total compensation of our CEO, as reported in the “Total Compensation” column of the 2023 Summary Compensation Table included in this proxy statement, was $4,428,149, which equals $4,647,000 on an involuntary termination outsideannualized basis. Based on this information, the contextratio of a changeour CEO’s annual total compensation to the median of the annual total compensation of all employees was 89.5:1.
PAY VERSUS PERFORMANCE
Pay vs. Performance
As required by SEC rules, the following tables set forth required information regarding the relationship between compensation paid to our CEO, who is our principal executive officer (“PEO”), and our other NEOs, calculated in
control or a corporate transaction in which equity awards are not assumed, continued or substituted.The actual amounts that would be paid in such circumstances can be determined only at the time of any such event. Due to a number of factors that affect the nature and amount of any benefits provided upon such an event, any actual amounts paid or distributed may be higher or lower than reported below. Factors that could affect these amounts include the timing during the year of any such eventaccordance with SEC regulations, and the Company’s stock price.
Mr. Bjôrk’s employment with thefinancial performance for fiscal years 2023, 2022 and 2021. The Company terminated on March 1, 2021.
| | | | | | | | | | |
| | | | | |
| Name | | Cash
Severance | | Benefit
Continuation | | Options | | RSUs | | Total |
Julie Wainwright | | — | | — | | $88,440 | | $3,153,903 | | $3,242,343 |
| | | | | |
Rati Sahi Levesque | | — | | — | | $393,890 | | $1,261,561 | | $1,655,451 |
| | | | | |
Matt Gustke | | — | | — | | $239,697 | | $1,372,906 | | $1,612,603 |
| | | | | |
Todd Suko | | — | | — | | — | | $2,868,750(1) | | $2,686,750 |
| | | | | |
Fredrik Bjôrk | | — | | — | | $258,319 | | $1,127,224 | | $1,385,543 |
(1) | The initial RSU award granted to Mr. Suko in connection with his commencement of employment with the Company provided for accelerated vesting of 25% of his initial RSU award if his employment was terminated without cause or he resigned for good reason prior to May 20, 2021. If such a qualifying termination occurred on December 31, 2020 without the occurrence of a change in control, RSUs with a value equal to $1,343,375 would vest upon such qualifying termination based upon Mr. Suko’s outstanding and unvested RSUs as of such date and on the Company’s closing stock price of $19.54 on December 31, 2020.
|
CEO Pay Ratio
Prior to 2021, our Company qualifiedqualifies as an “emerging growth company”a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K, and has provided scaled pay versus performance disclosure as permitted by and in accordance with Item 402(u) of Regulation S- K, we are not required to provide any pay ratio disclosure until 2022 based on the transition relief available for emerging growth companies.
DIRECTOR COMPENSATION
This section providesSEC rules. For information regarding decisions made by our directorCompensation Committee with respect to executive compensation, policy for non-employee directorsrefer to our CD&A.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| John Koryl(1) | Rati Sahi Levesque(1) | Robert Julian(1) | Julie Wainwright(1) | | | | |
| Year | Summary Compen- sation Table Total for PEO ($)(2) | Compen-sation Actually Paid to PEO(3) | Summary Compen- sation Table Total for PEO ($)(2) | Compen- sation Actually Paid to PEO(3) | Summary Compen- sation Table Total for PEO(2) | Compen- sation Actually Paid to PEO(3) | Summary Compen- sation Table Total for PEO(2) | Compen- sation Actually Paid to PEO(3) | Average Summary Compen- sation Table Total for Non-PEO NEOs(4) | Average Compen- sation Actually Paid to Non-PEO NEOs(5) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return(6) | Net Loss(7) |
| | | | | | | | | | | | |
| 2023 | 4,428,149 | | 7,709,649 | | 2,045,929 | | 2,617,003 | | 2,045,929 | | 2,582,719 | | — | | — | | 1,336,500 | | 1,876,296 | | 10.29 | 168,472,000 | |
| 2022 | — | | — | | 3,246,285 | (3,852,982) | 2,070,494 | (6,765,822) | 5,360,969 | (4,077,100) | 1,037,349 | (3,143,353) | 59.42 | 196,445,000 | |
| 2021 | — | | — | | — | | — | | — | | — | | 4,985,262 | (813,737) | 4,653,506 | 2,001,534 | 10.77 | 236,107,000 | |
(1) Mr. Koryl was appointed the Company’s CEO on February 6, 2023. Our founder Ms. Wainwright stepped down as the Company’s CEO and Board Chair on June 7, 2022, and Ms. Sahi Levesque and Mr. Julian served as the Company’s Co-Interim CEOs from June 7, 2022 to February 5, 2023.
(2) The dollar amounts reported are the amounts of total compensation reported in the Summary Compensation Table for our PEOs Mr. Koryl, Ms. Sahi Levesque and Mr. Julian for fiscal year 2023, Ms. Sahi Levesque, Mr. Julian and Ms. Wainwight, respectively, in the Summary Compensation Table for fiscal year 2022, and for Ms. Wainwright for fiscal year 2021.
(3) The dollar amounts reported represent the amount of “compensation actually paid” to Mr. Koryl, Ms. Sahi Levesque, Mr. Julian and Ms. Wainwight, respectively, as computed in accordance with SEC rules. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to each PEO. The dollar amounts reported are the amounts of total compensation reported Mr. Koryl, Ms. Sahi Levesque, Mr. Julian and Ms. Wainwight, respectively, during the applicable year, adjusted for (i) the year-end value of equity awards granted during the reported year, (ii) the change in the value of equity awards that were unvested at the end of the prior year, measured through the date the awards vested, or through the end of the reported fiscal year, and (iii) value of equity awards issued and vested during the reported fiscal year. The Company does not offer a defined benefit pension plan, so no pension adjustments were made. See Table below for further information.
(4) The dollar amounts reported are the average of the total compensation reported for our NEOs, other than our PEOs, in the Summary Compensation Table for fiscal years 2023, 2022 and 2021. For 2023, our non-PEO NEOs included: Todd Suko and Luke Friang. For 2022, our non-PEO NEOs included: Todd Suko and Arnie Katz. For 2021, our non-PEO NEOs included: Rati Sahi Levesque, Robert Julian, Todd Suko, Matt Gustke and Arnie Katz.
(5) The dollar amounts reported represent the average amount of “compensation actually paid”, as computed in accordance with SEC rules, for our NEOs, other than our PEOs. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to theseeach PEO. The dollar amounts reported are the average of the total compensation reported for our NEOs, other than our PEOs, in the Summary Compensation Table for fiscal years 2023, 2022 and 2021, adjusted for (i) the year-end value of equity awards granted during the reported year, (ii) the change in the value of equity awards that were unvested at the end of the prior year, measured through the date the awards vested, or through the end of the reported fiscal year, and (iii) value of equity awards issued and vested during the reported fiscal year. The Company does not offer a defined benefit pension plan, so no pension adjustments were made. See Table below for further information.
(6) Reflects the cumulative shareholder return over the measurement period, computed in accordance with SEC rules, assuming an investment of $100 in our common shares at a price per share equal to the closing price of our common stock on the last trading day before the commencement of the applicable fiscal year and the measurement end point of the closing price of our common stock on the last trading day in the applicable fiscal year. For 2023, the closing price of our common stock on December 30, 2022 (the last trading day preceding December 31, 2022) was $1.25, and the closing price of our common stock on December 29, 2023 was $2.01 (the last trading day preceding December 31, 2023). For 2022, the closing price of our common stock on December 31, 2021 was $11.61, and the closing price of our common stock on December 30, 2022 was $1.25. For 2021, the closing price of our common stock on December 31, 2020 was $19.54, and the closing price of our common stock on December 31, 2021 was $11.61.
(7) Reflects net income (loss) reflected in the Company’s audited financial statements for the applicable year.
To calculate the amounts in the “Compensation Actually Paid to PEO” columns in the table above, the following amounts were deducted from and added to (as applicable) each of our PEO’s “Total” compensation as reported in the Summary Compensation Table:
| | | | | | | | | | | | | | | | | | | | | | | |
| PEO: John Koryl |
| Year | Deduct Summary Compensation Table Total for PEO | Add Reported Value of Equity Awards for PEO(1) | Add Fair Value as
of Year End for Unvested Awards Granted During
the Year | Add Fair
Value Year over
Year Increase
or Decrease
in Unvested
Awards Granted
in Prior Years | Add Fair Value
of Awards Granted and Vested During the Year | Add Fair Value Increase or Decrease from Prior Year End for Awards that Vested During the Year | Compensation
Actually Paid
to PEO |
| | | | | | | |
| 2023 | 4,428,149 | 2,246,000 | 5,527,500 | — | | — | | — | | 7,709,649 |
| 2022 | — | | — | | — | | — | | — | | — | | — | |
| 2021 | — | | — | | — | | — | | — | | — | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| PEO: Rati Sahi Levesque |
| Year | Summary Compensation Table Total for PEO | Reported Value of Equity Awards for PEO(1) | Fair Value as
of Year End for Unvested Awards Granted During
the Year | Fair Value Year
over Year Increase or Decrease
in Unvested
Awards Granted
in Prior Years | Fair Value of Awards
Granted and Vested During the Year | Fair Value Increase or Decrease from Prior Year End for Awards that Vested During the Year | Compensation
Actually Paid
to PEO |
| | | | | | | |
| 2023 | 2,045,929 | 640,000 | 829,125 | 89,880 | 179,667 | 112,402 | 2,617,004 |
| 2022 | 3,246,285 | 2,577,977 | 337,615 | (3,385,059) | 69,152 | (1,542,998) | (3,852,982) |
| 2021 | — | | — | | — | | — | | — | | — | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| PEO: Robert Julian |
| Year | Summary Compensation Table Total for PEO | Reported Value of Equity Awards for PEO(1) | Fair Value as
of Year End for Unvested Awards Granted During
the Year | Fair Value Year
over Year Increase
or Decrease
in Unvested
Awards Granted
in Prior Years | Fair Value of Awards
Granted and Vested During the Year | Fair Value Increase
or Decrease from
Prior Year End for Awards that Vested During the Year | Compensation
Actually Paid
to PEO |
| | | | | | | |
| 2023 | 2,045,929 | 640,000 | 829,125 | 66,237 | 179,667 | 101,761 | 2,582,719 |
| 2022 | 2,070,494 | 644,494 | 84,404 | (6,208,563) | 17,287 | (2,084,950) | (6,765,822) |
| 2021 | — | | — | | — | | — | | — | | — | | — | |
(1) Represents the grant date fair value of the equity awards to our PEO, as reported in the Summary Compensation Table.
To calculate the amounts in the “Compensation Actually Paid to Non-PEO NEOs” column in the table above, the following amounts were deducted from and added to (as applicable) the average “Total” compensation of our Non-PEO NEOs as reported in the Summary Compensation Table:
| | | | | | | | | | | | | | | | | | | | | | | |
| Non-PEO NEOs |
| Year | Summary Compensation Table Total for Non-PEO NEOs | Reported Value of Equity Awrds for Non-PEO NEOs(1) | Fair Value as
of Year End for Unvested Awards Granted During
the Year | Fair Value Year over
Year Increase or Decrease in Unvested
Awards Granted in
Prior Years | Fair Value of Awards
Granted and Vested During the Year | Fair Value Increase or
Decrease from Prior Year End for Awards that Vested During
the Year | Compensation
Actually Paid
to Non-PEO NEOs |
| | | | | | | |
| 2023 | 1,336,500 | 456,875 | 575,363 | 321,751 | 53,900 | 45,657 | 1,876,296 |
| 2022 | 1,037,349 | 660,584 | 80,911 | (2,652,328) | 24,203 | (972,902) | (3,143,353) |
| 2021 | 4,653,506 | 4,074,744 | 2,440,094 | (694,134) | 147,912 | (471,101) | 2,001,534 |
(1) Represents the grant date fair value of the equity awards to our Non-PEO NEOs, as reported in the Summary Compensation Table.
Relationship between Pay and Performance
Our “total shareholder return,” as set forth in the above table, during the three-year period ending December 31, 2023 decreased by 90%, compared to an increase of 39% for the Russell 3000 index during this time. Our net income (loss) improved by $7.4MM during this period. During the one-year period ending December 31, 2023, our total shareholder return increased by 161%, compared to an increase of 156% for the Russell 3000.
Over the three-year period ending December 31, 2023, Ms. Levesque saw compensation actually paid increase from $329K to $2.6MM. Over the same period, Mr. Julian saw compensation actually paid decrease from $7.6MM to $2.6MM. Because Mr. Koryl joined the Company in February 2023, there is no prior year comparison for Mr. Koryl. The three-year average compensation actually paid for other non-PEO NEOs increased from ($478K) to $1.9MM.
We feel our compensation programs have the appropriate level of incentive-based compensation and are designed to deliver pay in line with shareholder interest.
DIRECTOR COMPENSATION
Our non-employee director compensation program aims to align our non-employee directors’ interests with the long-term interests of our stockholders and to recognize the substantial investment of time and expertise necessary for our directors to discharge their duties to oversee the Company’s affairs. The focus of this section is on the Company’s compensation philosophies and programs for our non-employee directors in
fiscal 2020. The Company’s director compensation policy is designed to provide the appropriate amount and form of compensation to our non-employee directors. Directors who are employees (i.e., Ms. Wainwright) receive no compensation for their services as directors.2023.
Director Compensation Highlights
•Fees for committee chair service to differentiate individual pay based on workload
•Emphasis on equity in the overall compensation mix
•Full-value equity grantsawards under a fixed-value annual grant policy, withsubject to time-based vesting
•No performance-based equity awards
to discourage excessive risk-takingA robust•Robust stock ownership guidelineguidelines set at five times the annual cash retainer to support stockholder alignment
Stockholder approved governance•Stockholder-approved limit of $1,000,000 on the total value of cash and equity compensation that may be granted to a non-employee director each fiscal year
Policies prohibiting•Prohibition on hedging and pledging by our non-employee directors
•No additional compensation paid to employee directors for director service
Director Compensation Program
On August 4, 2020, our
board of directorsBoard approved
our non-employee director compensation program,
consisting of a cash component and equity component for certain ofwith assistance from our
independent compensation consultant, Compensia. Under this program, our non-employee directors
which consists ofare each entitled to receive an annual cash retainer
of $35,000, paid quarterly in arrears, and an annual
equityRSU award,
with a valuewhich cliff-vests after approximately one year of
$165,000 in the formservice. Chairs of
restricted stock units (“RSUs”) granted under the Company’s 2019 Equity Incentive Plan, which vest on the earlier of the one-year anniversary of the grant of such equity award or the date immediately priorcommittees are entitled to
the Company’s annual meeting of stockholders occurring after such date of grant, subject to continued service as a non-employee director through such vesting date. In addition, the chairpersons of the audit Committee, the compensation, diversity and inclusion committee, and the corporate governance and nominating committee will receive
an additional
annual cash retainer of $20,000, $14,000 and $8,000, respectively paid quarterly in arrears.Initial cash retainers in light of their increased responsibilities and workloads. Cash retainers and initial equity awards are adjusted pro rataprorated for the first partial year after the date that the boardyears of directors approved the director compensation program or the first partial year of service, as the case may be. For the initial annual equity award, the amount of the award is pro-rated for the first partial year after the date that the board of directors
service.approved the director compensation program or the first partial year of service, as the case may be, and then converted into RSUs based on a 30-day average stock price for the Company’s common stock ending on the date that board of directors approved the director compensation program or the date that a director was appointed to the board of directors, as the case may be.
Our board of directors engaged an independent compensation consultant to assist in developingDuring 2023, our non-employee director compensation program.
During 2020, our director compensation program consisted of the following compensation components:
elements: | | | | | | | | |
| Component | | Description |
| | |
| | |
Component | | | | Description |
| | | | |
| Annual Board Service Retainer | | |
Annual Retainer | | | | • $35,000$35,000 in cash payable Payable in equal quarterly installments in arrears and prorated for any partial quarter or year of service |
| | | | |
| | |
Committee Chair Retainers | | |
| | •$20,000 in cash |
•Compensation, Diversity & Inclusion | | •$14,000 in cash |
•Corporate Governance & Nominating | | | | • $20,000$8,000 in cash• $14,000 in cash
• $8,000 in cash
•
|
| | Committee chair retainers are payable in equal quarterly installments in arrears and prorated for any partial quarter or year of service |
| | |
| | | | | | | | |
| Component | | Description |
Annual Equity | | | |
| | |
| | |
| Annual Equity Award | | •On or about the annual meeting of the Company’s stockholders, non-employee directors will receive an annual award of RSUs with a grant date fairin the value of $165,000, which shall vestvests on the earlier of (a) the one-yearfirst anniversary of the grant date of such equity award or (b) the date immediately prior topreceding the Company’snext annual meeting of Company’s stockholders, occurring after such date of grant, subject to the non-employee director’s continued service as a non-employee director through suchthe applicable vesting date.date •Initial equity awards would beare prorated for any partial year of service.service |
| | | | |
| | | | |
| | |
Component | | | | Description |
| | |
| Stock Ownership Guidelines | | | | •Each non-employee director is expected to own shares valued at five times the annual Board service retainer fees •Shares underlying RSU awards held by the non- employeenon-employee directors (whether or not vested) will be counted toward satisfaction of the guidelines •Ownership levels must be achieved within five years from the date upon which an individual becomes a non-employee director non-employee• director• In the event that the annual retainer fee is increased, directors will have one year to meet the new ownership guidelines.
guidelines |
2023 Director Compensation Table
The following table sets provides information on the compensation of our non-employee directors for 2023:
| | | | | | | | | | | |
Name(1) | Fees Earned or Paid in Cash
($) | Stock Awards ($)(2) | Total
($) |
| | | |
| | | |
| Chip Baird | 43,000 | 296,178 | 339,178 |
| Caretha Coleman | 49,000 | 296,178 | 345,178 |
| Karen Katz | 35,000 | 296,178 | 331,178 |
| Robert Krolik | 55,000 | 296,178 | 351,178 |
| Niki Leondakis | 35,000 | 296,178 | 331,178 |
| Carol Melton | 35,000 | 296,178 | 331,178 |
| James Miller | 35,000 | 296,178 | 331,178 |
(1) Mr. Koryl did not earn any additional compensation in respect of his role as an employee director. See the “Summary Compensation Table” for a description of the compensation Mr. Koryl earned in respect of his role as CEO.
(2) Amounts reported in the “Stock Awards” column reflect the aggregate grant date fair value of the RSU awards granted in 2023, computed in accordance with ASC Topic 718 and excluding estimated forfeitures. The number of units subject to the RSU award reported in the “Stock Awards” column was calculated by dividing $165,000 by $1.39, which was the 30-day average stock price for the Company’s common stock ending on the date of the Company’s 2023 Annual Meeting of Stockholders held on June 14, 2023.
The following table sets forth
certain information about the
compensationaggregate number of
our outstanding shares of the Company’s common stock underlying stock options and RSU awards held by each non-employee directors during 2020: | | | | | | | | | | | | |
Name | | Fees Earned in Cash(1) | | | Stock Awards(5) | | | Total | |
| | | |
Chip Baird(2) | | $ | 17,484 | | | $ | 136,155 | | | $ | 160,473 | |
| | | |
Caretha Coleman(2) | | $ | 14,231 | | | $ | 136,155 | | | $ | 157,220 | |
| | | |
Emma Grede(3) | | $ | 6,154 | | | $ | 104,495 | | | $ | 110,649 | |
| | | |
Karen Katz(4) | | | — | | | | — | | | | — | |
| | | |
Robert Krolik(2) | | $ | 22,363 | | | $ | 136,155 | | | $ | 165,352 | |
| | | |
Michael Kumin(2) | | $ | 19,923 | | | $ | 136,155 | | | $ | 162,912 | |
| | | |
Niki Leondakis(2) | | $ | 14,231 | | | $ | 136,155 | | | $ | 157,220 | |
| | | |
Carol Melton(2) | | $ | 14,231 | | | $ | 136,155 | | | $ | 157,220 | |
| | | |
James Miller(2) | | $ | 14,231 | | | $ | 136,155 | | | $ | 157,220 | |
(1) | Pro-rated payment for first partial year after the date that the board of directors approved the director compensation program or the first partial year of service, as the case may be.
|
(2) | Amounts reported for “RSU Awards” reflect the aggregate grant date fair value the RSUs awarded in 2020, computed in accordance with FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). These RSU awards were calculated based on a pro-rated amount of $143,000 converted into RSUs by dividing this amount by $13.81, which was the 30-day average stock price for the Company’s common stock ending on the date, August 4, 2020, the date that the board of directors approved the director compensation program. Ms. Coleman and Ms. Melton each joined the board of directors on August 4, 2020.
|
(3) | Amounts reported in this column reflect the aggregate grant date fair value of the RSUs awarded in 2020, computed in accordance with FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). These RSU awards were calculated based on a pro-rated amount of $104,500 converted into RSUs by dividing this amount by $15.07, which was the 30-day average stock price for the Company’s common stock ending on October 28, 2020, the date that Mrs. Grede was appointed to the board of directors.
|
(4) | Ms. Katz joined the board of directors on February 17, 2021.
|
(5) | The following table sets forth the aggregate number of outstanding options and RSUs held by each non-employee director as of the end of 2020:
|
director as of December 31, 2023: | | | | | | | | |
| | |
| Name | | Options Awards | | | Stock Awards | |
| | |
Chip Baird | | | — | | | | 10,354 | |
| | |
Caretha Coleman | | | — | | | | 10,354 | |
| | |
Emma Grede | | | — | | | | — | |
| | |
Karen Katz | | | — | | | | — | |
| | |
Robert Krolik | | | 20,000 | | | | 10,354 | |
| | |
Michael Kumin | | | — | | | | 10,354 | |
| | |
Niki Leondakis | | | 20,000 | | | | 10,354 | |
| | |
Carol Melton | | | — | | | | 10,354 | |
| | |
James Miller | | | 20,000 | | | | 10,354 | |
| | | | | | | | |
| Name | Options | RSUs |
| | |
| | |
| Chip Baird | — | 118,947 |
| Caretha Coleman | — | 118,947 |
| Karen Katz | — | 118,947 |
| Robert Krolik | 20,000 | 118,947 |
| Niki Leondakis | 20,000 | 118,947 |
| Carol Melton | — | 118,947 |
| James Miller | 20,000 | 118,947 |
The Company has a policy that prohibits
our non-employee directors from engaging in hedging transactions, such as the purchase or sale of puts or calls, or the use of any other derivative instruments.
DirectorsNon-employee directors of the Company are also prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan without the approval of
the board of directors.Fiscal 2021our Board.
2024 Director Compensation
It is anticipated that the
Our Compensation Diversity & Inclusion Committee will periodically initiate a review ofreviews our non-employee director compensation and may recommend changes to the full Board, of Directors, who determines the compensation of directors. Changes to non-employee director compensation will generally be made to ensure that compensation levels are market-competitive and that the compensation structure supports our business objectives, aligns with the interests of stockholders, reflects competitive best practice and is cost-and-tax-effective. Given
In October 2023, the Compensation Committee adopted a new RSU deferral program for non-employee directors. Under this program, non-employee directors may defer 0 to 100% of their vested RSU awards to a future settlement date, which is the earliest of (a) a future date of the director’s choosing, (b) a “change in control” of the Company (as defined in the 2019 EIP), (c) the director’s “separation of service” from the Company within the meaning of Section 409A of the Internal Revenue Code, and (d) the director’s death or disability. This program takes effect beginning with RSUs granted during the 2024 calendar year and will be available to non-employee directors for calendar years that follow.
On February 20, 2024, the Company’s director compensation program was recently adoptedBoard appointed Ms. Katz as its independent Board Chairperson, and Mr. Krolik stepped down from his Lead Independent Director role as a result. Based on August 4, 2020,a review of peer company information provided by Compensia, the Compensation Committee determined Ms. Katz would be paid an additional annual fee of $30,000 in respect of her role as Board Chairperson, payable in equal quarterly installments in arrears and prorated for any partial quarter or year of service.
As of the date of this proxy statement, no further changes have been made to the non-employee director compensation program for 2021.2024.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
20202023 regarding the number of shares of our common stock that may be issued under our equity compensation plans.
| | | | | | | | | | | | |
| | | |
| | | A | | | B | | | C | |
| | | | | | | | | | | | |
| | | |
| Plan Category | | Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights | | | Weights
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights | | | Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities
Reflected in
Column A) | |
| | | |
Equity Compensation Plans Approved by Security Holders | | | 10,897,829 | (1) | | $ | 5.63 | (2) | | | 9,531,756 | (3) |
| | | |
Equity Compensation Plans Not Approved by Security Holders | | | — | | | | — | | | | — | |
| | | |
Total | | | 10,897,829 | | | $ | 5.63 | | | | 9,531,756 | |
| | | | | | | | | | | |
| A | B | C |
| | | |
| Plan Category | Number of Securities
to be Issued upon Exercise of Outstanding Options, Warrants
and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
($) | Number of Securities Remaining Available for
Future Issuance Under
Equity Compensation Plans (Excluding Securities
Reflected in Column A) |
| | | |
| | | |
| Equity Compensation Plans Approved by Security Holders | 10,875,035(1) | 7.80(2) | 12,356,276(3) |
| Equity Compensation Plans Not Approved by Security Holders | 3,075,000(4) | — | — |
| Total | 13,950,035 | — | 12,356,276 |
(1) | Includes 5,798,564 shares issuable pursuant to outstanding stock options and 5,099,265 shares issuable pursuant to outstanding RSUs under our 2019 Equity Incentive Plan and 2011 Equity Incentive Plan.
| |
(2) | Only option awards were used in computing the weighted-average exercise price.
|
(3) | Includes 2,517,258 shares available for issuance under our Employee Stock Purchase Plan (“ESPP”). The ESPP provides the opportunity for eligible employees to acquire shares of our common stock at a 15% discount.
|
(1) Includes 1,119,426 shares issuable pursuant to outstanding stock options, 8,844,092 shares issuable pursuant to outstanding RSU awards, and 911,517 shares issuable pursuant to outstanding PSU awards (assuming maximum performance achievement) under our 2019 Equity Incentive Plan and 2011 Equity Incentive Plan.
(2) Only option awards were used in computing the weighted-average exercise price. PSU and RSU awards were excluded.
(3) Includes 4,701,620 shares available for issuance under our Employee Stock Purchase Plan (“ESPP”). The ESPP provides the opportunity for eligible employees to acquire shares of our common stock at a 15% discount.
(4) Includes (a) 1,500,000 shares issuable pursuant to the PSU award granted to John Koryl on March 3, 2023, (b) 1,250,000 shares issuable pursuant to the RSU award granted to John Koryl on March 3, 2023, and (c) 325,000 shares issuable pursuant to the RSU award granted to Luke Friang on March 3, 2023, and assumes full vesting of such awards. These awards were granted outside of our equity plans in accordance with Nasdaq Listing Rule 5635(c)(4). See “Compensation Discussion and Analysis” for a discussion of the terms of such awards.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the executive officer and director compensation arrangements discussed in
the section titled “Executive Compensation,”this proxy statement, we describe below the transactions since January 1,
20202023 to which we have been a participant, in which the amount involved in the transaction exceeds
or will exceedthe lesser of (a) $120,000
and (b) 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
Investors’ Rights Agreement
We are party to an investors’ rights agreement, dated as of March 22, 2019 (“IRA”), between us and the holders of certain registrable securities which provides, among other things, that certain holders of our capital stock, including entities affiliated with PWP Growth Equity, have the right to demand that we file a registration statement or request that their shares of our capital stock be covered by a registration statement that we are otherwise filing. Chip Baird, a current member of our
board of directors,Board, is affiliated with PWP Growth Equity.
Julie Wainwright, our Chief Executive Officer and Chair of our board of directors, is a party to the IRA. Rita Sahi, the mother of Rati Sahi Levesque, one of our executive officers, is also a party to the IRA.
Indemnification of Directors and Executive Officers
We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our
Amended and Restated Bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware General Corporation
Law.Law (“DGCL”). Subject to very limited exceptions, our
Amended and Restated Bylaws also require us to advance expenses incurred by our directors and
executive officers.
Policies and Procedures for Related Party Transactions
Our audit committeeAudit Committee has the primary responsibility for the review, approval and oversight of any “related party transaction,” which is any transaction, arrangement or relationship (or series of similar transactions, arrangements or relationships) in which we are, were or will be a participant and the amount involved exceeds $120,000, and in which the related person has, had or will have a direct or indirect material interest. We have adopted a written related party transaction policy. Under our related party transaction policy, our management is required to submit any related person transaction not previously approved or ratified by our audit committeeAudit Committee to our audit committee.Audit Committee. In approving or rejecting the proposed transactions, our audit committeeAudit Committee takes into account all of the relevant facts and circumstances available.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial ownership of our common stock as of April
20, 2021,15, 2024, referred to in the table below as the
“Beneficial“Beneficial Ownership Date”Date”:
•each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares;
•each of our named executive officers;NEOs; and
•all directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, common stock subject to stock options that are currently exercisable or exercisable within 60 days of the Beneficial Ownership Date and any RSUsRSU awards that will become vested within 60 days of the Beneficial Ownership Date are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Percentage of beneficial ownership is based on 90,786,845105,949,185 shares of our common stock outstanding as of the Beneficial Ownership Date.
To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name. Except as otherwise indicated, the address of each of the persons in this table is c/o The RealReal, Inc., 55 Francisco Street, Suite 600,150, San Francisco, California 94133.
| | | | | | | | |
| | |
| Name of beneficial owner | | Shares
beneficially
owned(1) | | | Percentage
of shares
Beneficially
owned | |
| |
|
Directors and Named Executive Officers: | |
| | |
Julie Wainwright (2) | | | 6,237,460 | | | | 6.73 | % |
| | |
Chip Baird (3) | | | 7,460,684 | | | | 8.22 | % |
| | |
Caretha Coleman (4) | | | 10,354 | | | | * | |
| | |
Emma Grede (5) | | | 6,934 | | | | * | |
| | |
Karen Katz (6) | | | 2,143 | | | | * | |
| | |
Robert Krolik (7) | | | 17,020 | | | | * | |
| | |
Michael Kumin (8) | | | 64,557 | | | | * | |
| | |
Niki Leondakis (9) | | | 15,770 | | | | * | |
| | |
Carol Melton (10) | | | 10,354 | | | | * | |
| | |
James Miller (11) | | | 15,770 | | | | * | |
| | |
Rati Sahi Levesque (12) † | | | 980,525 | | | | 1.08 | % |
| | |
Matt Gustke (13) † | | | 687,459 | | | | * | |
| | |
Todd Suko (14) † | | | 71,951 | | | | * | |
| | |
Fredrik Bjôrk (15) | | | — | | | | — | |
| | |
All executive officers and directors as a group (14 persons)(16) | | | 15,587,231 | | | | 16.67 | % |
|
5% Stockholders: | |
| | |
FMR LLC (17) | | | 10,138,729 | | | | 11.17 | % |
| | |
Entities affiliated with GreyLion Capital (18) | | | 7,460,684 | | | | 8.22 | % |
| | |
The Vanguard Group (19) | | | 5,256,379 | | | | 5.79 | % |
| | |
Entities affiliated with Woodson Capital (20) | | | 5,198,141 | | | | 5.73 | % |
| | |
BlackRock, Inc. (21) | | | 4,683,776 | | | | 5.16 | % |
| | | | | | | | |
| Name of Beneficial Owner | Shares Beneficially Owned(1) | Percentage
of Shares
Beneficially
Owned |
| | |
| | |
| Directors and Named Executive Officers: | | |
John Koryl(2)† | 355,589 | * |
Chip Baird(3) | 7,635,517 | 7.20% |
Caretha Coleman(4) | 185,187 | * |
Karen Katz(5) | 183,376 | * |
Robert Krolik(6) | 189,144 | * |
Niki Leondakis(7) | 205,187 | * |
Carol Melton(8) | 185,187 | * |
James Miller(9) | 180,492 | * |
Rati Sahi Levesque(10) | 664,921 | * |
Robert Julian(11) | 58,443 | * |
Todd Suko(12)† | 334,384 | * |
Luke Friang(13) | 102,193 | * |
All executive officers and directors as a group (15 persons)(14) | 10,529,196 | 9.78% |
| | |
| | |
| | | | | | | | |
| Name of Beneficial Owner | Shares Beneficially Owned(1) | Percentage
of Shares
Beneficially
Owned |
| | |
| | |
| 5% Stockholders: | | |
Entities affiliated with GreyLion Partners(15) | 7,516,570 | 7.09% |
Timothy M. Riley and Angela A. Riley(16) | 6,000,000 | 5.66% |
* | Indicates beneficial ownership of 1% or less of the outstanding shares of our common stock.
| |
|
† | Excludes shares of common stock that will be purchased under the Company’s Employee Stock Purchase Plan on May 14, 2021 as the amounts of such shares are not yet determinable.
|
(1) | Shares shown in this table include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account.
|
(2) | Consists of (a) 4,403,482 shares of common stock held by Julie Wainwright, including 1,700,000 shares of common stock pledged as collateral to secure certain personal indebtedness, (b) 1,796,156 shares of common stock issuable upon exercise of options held by Ms. Wainwright that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date and (c) RSUs for 37,822 shares of common stock that will vest within 60 days of the Beneficial Ownership Date.
|
(3) | Consists of RSUs for 10,354 shares of common stock held by Chip Baird that will vest within 60 days of the Beneficial Ownership Date and 7,450,330 shares of common stock beneficially owned by entities affiliated with GreyLion Capital LP, formerly Perella Weinberg Partners Capital Management LP, as described in footnote (18). Mr. Baird is the Co-Founder and Managing Parnter of GreyLion Capital, LP and disclaims beneficial ownership of the shares of common stock listed in footnote (18)
•Indicates beneficial ownership of 1% or less of the outstanding shares of our common stock. † Excludes shares of common stock that will be purchased under the Company’s Employee Stock Purchase Plan on May 14, 2024 as the amounts of such shares are not yet determinable. (1) Shares shown in this table include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. (2) Consists (a) 277,464 shares of common stock held by John Koryl and (b) RSUs for 78,125 shares of common stock held by Mr. Koryl that will vest within 60 days of the Beneficial Ownership Date. (3) Consists (a) RSUs for 118,947 shares of common stock held by Mr. Baird that will vest within 60 days of the Beneficial Ownership Date, and (b) 7,516,570 shares of common stock beneficially owned by entities affiliated with GreyLion Partners LP, formerly Perella Weinberg Partners Capital Management LP, as described in footnote (15). Mr. Baird is the Co-Founder and Managing Partner of GreyLion Partners, LP and disclaims beneficial ownership of the shares of common stock listed in footnote (15) within the meaning of Rule 16a-1(a)(2) promulgated pursuant to the Exchange Act, except to the extent of his proportionate pecuniary interest therein, if any. The address for Mr. Baird is 900 Third Avenue, 23rd Floor, New York, NY 10022. |
(4) | Consists of RSUs for 10,354 shares of common stock held by Caretha Coleman that will become vested within 60 days of the Beneficial Ownership Date.
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(5) | Consists of RSUs for 6,934 shares of common stock held by Emma Grede that will become vested within 60 days of the Beneficial Ownership Date.
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(6) | Consists of RSUs for 2,143 shares of common stock held by Karen Katz that will become vested within 60 days of the Beneficial Ownership Date.
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(7) | Consists of (a) 11,666 shares of common stock issuable upon exercise of options held by Robert Krolik that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date and (b) RSUs for 10,354 shares of common stock that will become vested within 60 days of the Beneficial Ownership Date.
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(8) | Consists of (a) 54,203 shares of common stock held by Michael Kumin and (b) RSUs for 10,354 shares of common stock that will become vested within 60 days of the Beneficial Ownership Date.
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(9) | Consists of (a) 10,416 shares of common stock issuable upon exercise of options held by Niki Leondakis that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date and (b) RSUs for 10,354 shares of common stock that will become vested within 60 days of the Beneficial Ownership Date.
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(10) | Consists of RSUs for 10,354 shares of common stock held by Carol Melton that will become vested within 60 days of the Beneficial Ownership Date.
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(11) | Consists of (a) 10,416 shares of common stock issuable upon exercise of options held by James R. Miller that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date and (b) RSUs for 10,354 shares of common stock that will vest within 60 days of the Beneficial Ownership Date.
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(12) | Consists of (a) 453,480 shares of common stock held by Rati Sahi Levesque, (b) 217,648 shares of common stock issuable upon exercise of options held by Ms. Levesque that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date and (c) RSUs for 16,331 shares of common stock that will vest within 60 days of the Beneficial Ownership Date.
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(13) | Consists of (a) 512,202 shares of common stock held by Matt Gustke, (b) 463,465 shares of common stock issuable upon exercise of options held by Mr. Gustke that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date, and (c) RSUs for 4,858 shares of common stock that will vest within 60 days of the Beneficial Ownership Date.
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(14) | Consists of (a) 1,998 shares of common stock held by Todd Suko, (b) 0 shares of common stock issuable upon exercise of options held by Mr. Suko that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date and (c) RSUs for 69,953 shares of common stock that will vest within 60 days of the Beneficial Ownership Date.
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(15) | Fredrik Bjôrk resigned as Chief Technology Officer on December 31, 2020 and left the company on March 1, 2021.
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(16) | Consists of (a) 12,875,695 shares of common stock beneficially owned by our directors and five current executive officers, (b) 2,494,767 shares of common stock issuable upon exercise of options held by our directors and five current executive officers that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date and (c) RSUs for 220,873 shares of common stock that will vest within 60 days of the Beneficial Ownership Date.
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(17) | As reported in a statement on Schedule 13G/A filed with the SEC on February 8, 2021, FMR LLC reported, as of December 31, 2020, sole voting power over 1,734,321 shares of our Common Stock and sole dispositive power over 10,138,729 shares of our Common Stock. Pursuant to Item 3 classification, the following entities beneficially own shares of common stock: FIAM LLC, Fidelity Institutional Asset Management Trust Company, Fidelity Management & Research Company LLC and Strategic Advisers LLC. Abigail P. Johnson is a Director, the Chairman and Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly,
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| through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company LLC (“FMR Co. LLC”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co. LLC carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The Schedule 13G reflects the securities beneficially owned, or that may be deemed to be beneficially owned, by FMR LLC, certain of its subsidiaries and affiliates, and other companies (collectively, the “FMR Reporters”). The Schedule 13G does not reflect securities, if any, beneficially owned by certain other companies whose beneficial ownership of securities is disaggregated from that of the FMR Reporters in accordance with SEC Release No. 34-39538 (January 12, 1998). The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. |
(18) | As reported in a statement on Schedule 13G filed with the SEC on February 17, 2021. The Reporting Persons are (i) PWP Growth Equity Fund II LP, (ii) PWP Growth Equity Fund II B LP, (iii) GreyLion Capital LP, (iv) GreyLion Capital GP LLC, (v) David Ferguson and (vi) Gilbert Baird. PWP Growth Equity Fund II LP and PWP Growth Equity Fund II B LP (collectively the “Funds”) acquired the shares of our Common Stock reported in the Schedule 13G in private placements prior to our initial public offering, as reported in the Form 4s filed by the Funds on July 2, 2019. On June 15, 2020, the Funds spun off from Perella Weinberg Partners Capital Management LP and their affiliates and, as a result of the spin-off and the separation agreement signed in connection therewith, investing, management and voting control over the shares of our Common Stock transferred to GreyLion Capital LP (the “Separation”). As reported in the Schedule 13G, as of December 4, 2020, 5,785,182 shares of our Common Stock were held of record by PWP Growth Equity Fund II LP, 1,665,148 shares of our Common Stock were held of record by PWP Growth Equity Fund II B LP, and RSUs for 10,354 shares of common stock held by Chip Baird. In connection with the Separation, sole voting, management and investment control was delegated to GreyLion Capital LP (together with its affiliates, “GreyLion”). GreyLion Capital GP LLC is the general partner of GreyLion Capital LP. David Ferguson and Gilbert Baird are members of the GreyLion investment committee, and in such capacities control voting and investment decisions related to the shares reported herein. The address of the Reporting Persons is c/o GreyLion Capital, 900 Third Avenue, 23rd Floor, New York, NY 10022.
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(19) | As reported in a statement on Schedule 13G filed with the SEC on February 10, 2021 by The Vanguard Group (“Vanguard”) on behalf of itself and its subsidiaries, Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited. Vanguard reported that as of December 31, 2020, it had shared voting power with respect to 130,496 shares of our Common Stock, sole dispositive power with respect to 5,095,003 shares of our Common Stock and shared dispositive power with respect to 161,376 shares of our Common Stock. The address of each of the foregoing is 100 Vanguard Blvd., Malvern, PA 19355.
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(20) | As reported in a statement on Schedule 13G/A filed with the SEC on February 16, 2021. The Reporting Persons are (i) Woodson Capital Master Fund, LP, a Cayman Islands exempted company (“Woodson Master”), with respect to the shares of our Common Stock held by it; (ii) Woodson Capital General Partner, LLC, a Delaware limited liability company and the general partner of Woodson Master (the “Fund General Partner”), with respect to the shares of our Common Stock held by Woodson Master and other private funds; (iii) Woodson Capital Management, LP, a Delaware limited partnership and the investment manager of Woodson Master (the “Investment Manager”), with respect to the shares of our Common Stock held by Woodson Master and other private funds; (iv) Woodson Capital GP, LLC, a Delaware limited liability company and the general partner of the Investment Manager (the “Investment Manager General Partner”), with respect to the shares of our Common Stock held by Woodson Master and other private funds; and (v) James Woodson Davis, a United States citizen and the sole managing member of the Investment Manager General Partner (“Woodson”), with respect to the shares of our Common Stock held by Woodson Master and other private funds. Woodson Master reported that as of December 31, 2020, it had shared voting and dispositive power with respect to 5,198,141 shares of our Common Stock; and each of the Fund General Partner, the Investment Manager, the Investment Manager General Partner and Woodson reported that as of December 31, 2020, they had shared voting and dispositive power with respect to 5,571,428 shares of our Common Stock. The address of (i) all of the Reporting Persons other than Woodson Master is 101 Park Avenue, 48th Floor, New York, New York, 10178; and (ii) Woodson Master is Maples Corporate Services Limited, Ugland House Grand Cayman, KY1-1104 Cayman Islands.
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(21) | As reported in a statement on Schedule 13G filed with the SEC on February 2, 2021 by BlackRock, Inc. (“BlackRock”) on behalf of itself and its wholly owned subsidiaries, BlackRock Life Limited, BlackRock Advisors, LLC, BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Fund Advisors and BlackRock Fund Managers Ltd. BlackRock reported that as of December 31, 2020, it had sole voting power with respect to 4,574,354 shares of our Common Stock and sole dispositive power with respect to 4,683,776 shares of our Common Stock, and that the shares are beneficially owned by BlackRock and its wholly owned subsidiaries identified above. The address of each of the foregoing is 55 East 52nd Street, New York, NY 10055.
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Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act, requiresexcept to the extent of his proportionate pecuniary interest therein, if any. The address for Mr. Baird is 900 Third Avenue, 23rd Floor, New York, NY 10022.
(4) Consists of (a) 66,240 shares of common stock held by Caretha Coleman and (b) RSUs for 118,947 shares of common stock held by Ms. Coleman that will become vested within 60 days of the Beneficial Ownership Date.
(5) Consists of (a) 64,429 shares of common stock held by Karen Katz and (b) RSUs for 118,947 shares of common stock held by Ms. Katz that will become vested within 60 days of the Beneficial Ownership Date.
(6) Consists of (a) 50,197 shares of common stock held by Rob Krolik, (b) 20,000 shares of common stock issuable upon exercise of stock options held by Mr. Krolik that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date, and (c) RSUs for 118,947 shares of common stock held by Mr. Krolik that will become vested within 60 days of the Beneficial Ownership Date.
(7) Consists of (a) 66,240 shares of common stock held by Niki Leondakis, (b) 20,000 shares of common stock issuable upon exercise of stock options held by Ms. Leondakis that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date, and (c) RSUs for 118,947 shares of common stock held by Ms. Leondakis that will become vested within 60 days of the Beneficial Ownership Date.
(8) Consists of (a) 66,240 shares of common stock held by Carol Melton and (b) RSUs for 118,947 shares of common stock held by Ms. Melton that will become vested within 60 days of the Beneficial Ownership Date.
(9) Consists of (a) 41,545 shares of common stock held by James Miller, (b) 20,000 shares of common stock issuable upon exercise of stock options held by Mr. Miller that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date, and (c) RSUs for 118,947 shares of common stock held by Mr. Miller that will vest within 60 days of the Beneficial Ownership Date.
(10) Consists of (a) 318,950 shares of common stock held by Rati Sahi Levesque, (b) 255,432 shares of common stock issuable upon exercise of stock options held by Ms. Levesque that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date, and (c) RSUs for 90,539 shares of common stock held by Ms. Levesque that will vest within 60 days of the Beneficial Ownership Date.
(11) Consists of (a) 26,948 shares of common stock held by Robert Julian and (b) RSUs for 31,495 shares of common stock held by Mr. Julian that will become vested within 60 days of the Beneficial Ownership Date.
(12) Consists of (a) 263,514 shares of common stock held by Todd Suko and (b) RSUs for 70,780 shares of common stock held by Mr. Suko that will become vested within 60 days of the Beneficial Ownership Date.
(13) Consists of (a) 61,465 shares of common stock held by Luke Friang and (b) RSUs for 40,728 shares of common stock held by Mr. Friang that will become vested within 60 days of the Beneficial Ownership Date.
(14) Consists of (a) 1,479,701 shares of common stock beneficially owned by our current directors and executive officers, (b) 328,974 shares of common stock issuable upon exercise of stock options held by our current directors and executive officers that are vested and exercisable as of the Beneficial Ownership Date or will become vested and exercisable within 60 days of such date, and (c) RSUs for 1,184,510 shares of common stock held by our directors and executive officers and holdersthat will vest within 60 days of more than 10% of our common stock to file reports regarding their ownership and changesthe Beneficial Ownership Date.
(15) As reported in ownership of our securitiesa statement on Schedule 13G/A filed with the SEC on February 9, 2024. The Reporting Persons are (i) GreyLion Partners LP, (ii) GreyLion Partners GP LLC, (iii) PWP Growth Equity Fund II LP, (iv) PWP Growth Equity Fund II B LP, (v) David Ferguson and (vi) Gilbert Baird. PWP Growth Equity Fund II LP and PWP Growth Equity Fund II B LP (collectively the “Funds”) acquired the shares of our Common Stock reported in the Schedule 13G in private placements prior to furnish usour initial public offering, as reported in the Form 4s filed by the Funds on July 2, 2019. On June 15, 2020, the Funds spun off from Perella Weinberg Partners Capital Management LP and their affiliates and, as a result of the spin-off and the separation agreement signed in connection therewith, investing, management and voting control over the shares of our Common Stock transferred to GreyLion Partners LP (the “Separation”). As reported in the Schedule 13G/A, as of February 9, 2024, 5,785,182 shares of our Common Stock were held of record by PWP Growth Equity Fund II LP, 1,665,148 shares of our Common Stock were held of record by PWP Growth Equity Fund II B LP, and 66,240 shares of our Common Stock were directly held by an affiliate of the Reporting Persons, which shares were
received upon vesting of restricted stock units granted to Gilbert Baird in respect of his service on the Company’s board of directors. In connection with copiesthe Separation, sole voting, management and investment control was delegated to GreyLion Partners LP (together with its affiliates, “GreyLion”). GreyLion Partners LP has management and investment control of the Funds and GreyLion Partners GP LLC is the general partner of GreyLion Partners LP. David Ferguson and Gilbert Baird are members of the GreyLion investment committee, and in such capacities control voting and investment decisions related to the shares reported herein. The address of the Reporting Persons is c/o GreyLion Partners, 900 Third Avenue, 23rd Floor, New York, NY 10022.
(16) As reported in a statement on a Schedule 13G/A filed with the SEC on January 3, 2024 by Timothy M. Riley and Angela A. Riley. Timothy A. Riley reported that as of December 31, 2023, he had sole voting power with respect to 5,110,000 shares of our Common Stock, shared voting power with respect to 33,000 shares of our Common Stock, sole dispositive power over 5,110,000 shares of our Common Stock, and shared dispositive power over 33,000 shares of our Common Stock. Angela A. Riley reported that as of December 31, 2023, she had sole voting power with respect to 857,000 shares of our Common Stock, shared voting power with respect to 33,000 shares of our Common Stock, sole dispositive power over 857,000 shares of our Common Stock, and shared dispositive power over 33,000 shares of our Common Stock. Timothy M. Riley and Angela A. Riley beneficially own the 6,000,000 shares of our Common Stock as identified above. The address of Timothy M. Riley and Angela A. Riley is P.O. Box 2113, Darien, CT 06820.
PROPOSAL FOUR
APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY OUR BOARD OF DIRECTORS
Our Board and Corporate Governance Committee have unanimously approved and recommend that our stockholders approve amending certain sections of our Amended and Restated Certificate of Incorporation (the “Certificate”) to phase in the declassification of our Board (the “Declassification Amendment”), as described below and set forth in Annex I of this proxy statement. If our stockholders approve the proposed Declassification Amendment, we intend to file with the Secretary of State of the State of Delaware a certificate of amendment that includes the amendments corresponding to this proposal, which will become effective upon filing.
Background of the Proposal
Article V of the Certificate currently provides that our Board shall be divided into three classes, designated Class I, Class II and Class III, each to consist of as nearly an equal number of directors as is practicable, with the term of office of one class expiring each year and directors in each class being elected to three-year terms. If the proposed Declassification Amendment is approved by our stockholders, directors previously elected to three-year terms of office by our stockholders, including those directors elected at the 2024 Annual Meeting, will complete their three-year terms, and thereafter they or their successors would be elected to one-year terms at each future annual meeting of stockholders.
Beginning at the 2027 annual meeting of stockholders, the declassification of our Board would be complete, and all directors would be subject to annual election to one-year terms. In addition, Delaware law provides that directors serving on declassified boards of directors may be removed with or without cause, and therefore, the proposed amendments would permit the removal without cause of directors, but will provide that the directors serving the remainder of a three-year term in office will be removable only for cause. Finally, the proposed amendments will provide that any director appointed to fill a vacancy or newly created directorship will hold office until the next election for the class to which such director is appointed, or following the completion of the declassification, any director appointed to fill a vacancy or newly created directorship will serve for a term expiring at the next annual meeting and will remain in office until such person’s successor is elected and qualified (or earlier death, resignation or removal).
The description of the proposed Declassification Amendment is only a summary of the proposed amendments to our Certificate and is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the proposed amendments to our Certificate, with proposed deletions reflected by “strike-through” text and proposed additions reflected by “underline” text, set forth in Annex I of this proxy statement.
Reasons for the Proposed Amendment
Our Board and Corporate Governance Committee regularly review our corporate governance practices. Our Board believes that a classified board structure, which was implemented in 2019 when we became a public company, promotes board continuity and stability, encourages directors to take a long-term perspective and reduces the Company's vulnerability to coercive takeover tactics. However, as our Company matures, our Board recognizes that our corporate governance practices should mature as well.
In our proxy statement for the 2023 annual meeting of stockholders, we provided a roadmap for corporate governance best practices over the next several years. In creating the roadmap, our Board sought to balance the challenges faced by the Company, in particular as it navigates its path to profitability, against the need for the Company to improve its corporate governance practices and eventually achieve best practices. Following consideration of our current governance structure and strong governance practices, as well as feedback received from our stockholders, and upon the recommendation of our Corporate Governance Committee, in 2022, our Board committed to submitting for stockholder vote at the 2024 Annual
Meeting a management proposal to amend the Company’s Certificate to declassify our Board, which if approved, would begin the declassification process at the 2025 annual meeting of stockholders.
Our Corporate Governance Committee and Board believe that this proposal’s inclusion in this proxy statement allows the Company to progress towards corporate governance best practices on a reasonable timeline. While our Board believes there are important benefits to a classified board structure, our Board recognizes the sentiment among certain stockholders and members of the investment community in favor of annual elections and the benefit of providing stockholders an annual opportunity to express their views on the individual performance of each director and on the entire Board more frequently than with a classified board structure. The Company received positive support for this proposal from the vast majority of stockholders with whom we met as part of our 2023-2024 investor outreach.
Required Vote
Approval of this proposal requires the affirmative vote of least sixty-six and two-thirds percent (66 2/3%) of the voting power of all Section 16(a) reports that they file. We believe that during the fiscal year ended December 31, 2020, our directors, executive officers, and holders of more than 10% of our common stock complied with all applicable Section 16(a) filing requirements, except for one Form 4, filed late due to an administrative error on December 22, 2020, to report a sale ofoutstanding shares of our common stock by Julie Wainwright. In making this statement, weentitled to vote generally in the election of directors.
Recommendation of Our Board
OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY OUR BOARD OF DIRECTORS
PROPOSAL FIVE
APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING EXCULPATION OF OFFICERS
Our Board and Corporate Governance Committee have relied upon a reviewunanimously approved and recommend that our stockholders approve amending certain sections of our Certificate to reflect new Delaware law provisions regarding exculpation of certain officers of the copiesCompany (the “Officer Exculpation Amendment”), as described below and set forth in Annex II of this proxy statement. If our stockholders approve the proposed Officer Exculpation Amendment, we intend to file with the Secretary of State of the State of Delaware a certificate of amendment that includes the amendments corresponding to this proposal, which will become effective upon filing.
Background of the Proposal
Our Certificate currently provides for the Company to limit the monetary liability of directors in certain circumstances pursuant to and consistent with Section 16(a) reports furnished102(b)(7) of the General Corporation Laws of Delaware (“DCGL”). Effective August 1, 2022, Section 102(b)(7) of the DCGL was amended to uspermit a corporation’s certificate of incorporation to include a provision eliminating or limiting monetary liability for certain senior corporate officers for breach of their duty of care in certain limited circumstances (the “Section 102(b)(7) Amendment”). Consistent with Section 102(b)(7) of the DGCL, the Officer Exculpation Amendment would only permit exculpation of certain officers for breaches of the fiduciary duty of care for direct claims. Like the provision limiting the liability of directors, the Officer Exculpation Amendment does not permit the elimination of liability of certain officers for any breach of the duty of loyalty to the Company or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, or any transaction from which the officer derived an improper personal benefit. The Officer Exculpation Amendment also does not permit the limitation of liability of certain officers in any derivative action.
The description of the proposed Officer Exculpation Amendment is only a summary of the proposed amendments to our Certificate and is qualified in its entirety by reference to, and should be read in conjunction with, the written representationsfull text of the proposed amendments to our Certificate, with proposed deletions reflected by “strike-through” text and proposed additions reflected by “underline” text, set forth in Annex II of this proxy statement.
Reasons for the Proposed Amendment
Our Board desires to amend the Company’s Certificate to maintain provisions consistent with the governing statutes contained in the DGCL. Delaware law has long permitted Delaware corporations to protect directors executivefrom personal liability for monetary damages associated with breaches of the duty of care, but that protection did not extend to a Delaware corporation’s officers. Consequently, stockholder plaintiffs routinely bring claims against officers that would otherwise be dismissed if brought against directors. The Section 102(b)(7) Amendment was adopted to address the inconsistent treatment between officers and holdersdirectors and address rising litigation and insurance costs for stockholders.
Our Board believes it is appropriate to provide this protection to officers to the fullest extent permitted by law in order to continue to attract and retain top talent. This protection has long been afforded to directors, and accordingly, our Board believes that this proposal provides consistency and is in the best interests of more than 10%the Company and its stockholders.
Required Vote
Approval of this proposal requires the affirmative vote of least sixty-six and two-thirds percent (66 2/3%) of the voting power of all outstanding shares of our common stock.stock entitled to vote generally in the election of directors.
Recommendation of Our Board
OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING EXCULPATION OF OFFICERS
THE INFORMATION PROVIDED IN THE “QUESTIONS AND ANSWERS” FORMAT BELOW IS FOR YOUR CONVENIENCE AND INCLUDES ONLY A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS PROXY STATEMENT. YOU SHOULD READ THIS ENTIRE PROXY STATEMENT CAREFULLY.
How do I attend the Annual Meeting?
Our
board of directorsBoard considers the appropriate format for our annual meeting of stockholders on an annual basis.
This year, we took into account the unprecedented impact of the COVID-19 pandemic, which has heightened public health and travel concerns for in-person annual meetings. We
also continue to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and our Company.
Accordingly, the Annual Meeting will be a virtual stockholder meeting through which you can listen to the meeting, submit questions and vote online. The Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/real2021real2024. To participate, you will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials. There is no physical location for the Annual Meeting.
What proposals will be voted on at the Annual Meeting?
Stockholders will vote on three proposals at the Annual Meeting:
•the election of threetwo Class II directors named in this proxy statement;
•the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and
2024;to vote,•the approval, on an advisory basis, on the frequency with which the advisory vote to approveof the compensation of our named executive officers;
•the approval of a management proposal to amend our Amended and Restated Certificate of Incorporation to phase in the declassification of our Board of Directors; and
•the approval of a management proposal to amend our Amended and Restated Certificate of Incorporation to limit the liability of certain officers should be held.of the Company as permitted pursuant to the Delaware General Corporation Law.
We will also consider other business, if any, that properly comes before the Annual Meeting.
How does the
board of directorsBoard recommend that stockholders vote on the proposals?
Our board of directorsBoard recommends that stockholders vote “FOR”“FOR” the election of the threetwo Class II directors, vote “FOR”“FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, and2024, vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers, vote “FOR” the approval of a management proposal to hold say-on-pay votes every year (as opposedamend our Amended and Restated Certificate of Incorporation to every two years or every three years).phase in the declassification of our Board of Directors, and vote “FOR” the approval of a management proposal to amend our Amended and Restated Certificate of Incorporation to limit the liability of certain officers of the Company as permitted pursuant to the Delaware General Corporation Law.
What happens if other business not discussed in this proxy statement comes before the Annual Meeting?
The Company does not know of any business to be presented at the Annual Meeting other than the proposals discussed in this proxy statement. If other business comes before the Annual Meeting and is proper under our
Amended and Restated Certificate of Incorporation, Amended and RestatedCharter, Bylaws, and
Delaware law,the DGCL, the Company representatives will use their discretion in casting all of the votes that they are entitled to cast.
Why am I receiving these materials?
We are distributing our proxy materials because our
board of directorsBoard is soliciting your proxy to vote at the Annual Meeting. This proxy statement summarizes the information you need to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares.
Pursuant to SEC rules, we are providing access to our proxy materials via the Internet. Accordingly, we are sending an Internet Notice to all of our stockholders as of the record date. All stockholders may access our proxy materials on the website referred to in the Internet Notice. You may also request to receive a printed set of the proxy materials. You can find instructions regarding how to access our proxy materials via the Internet and how to request a printed copy in the Internet Notice. Additionally, by following the instructions in the Internet Notice, you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We believe that these rules allow us to provide our stockholders with the information they need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.
The record date for the Annual Meeting is the close of business on April
20, 2021.15, 2024. As of the record date,
90,786,845105,949,185 shares of common stock, par value $0.00001 per share, were outstanding. Only holders of record of our common stock as of the record date will be entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. Each stockholder is entitled to one vote for each share of our common stock held by such stockholder on the record date.
How can I vote my shares?
You can vote your shares via the Internet by following the instructions in your proxy materials, on your proxy card or on the instructions that accompanied your proxy materials. The Internet voting procedures are designed to authenticate your identity, allow you to vote your shares and confirm your voting instructions have been properly
recorded. If you vote via the Internet, you do not need to complete and mail a proxy card or attend the Annual Meeting to have your vote count. We encourage you to vote your shares via the Internet in advance of the Annual Meeting even if you plan to attend the Annual Meeting.
You can vote your shares by mail by requesting a printed copy of the proxy materials sent to your address. When you receive the proxy materials, you may fill out the proxy card enclosed therein and return it per the instructions on the card. By signing and returning the proxy card according to the instructions provided, you are enabling the individuals named on the proxy card, known as “proxies,” to vote your shares at the Annual Meeting in the manner you indicate. If you request a printed copy of the proxy materials, we encourage you to sign and return the proxy card even if you plan to attend the Annual Meeting.
You can vote your shares by telephone. Instructions are included on your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials. If you vote by telephone, you do not need to complete and mail your proxy card or attend the Annual Meeting to have your vote count.
What if I am not the stockholder of record?
If you are a holder of record of shares of common stock of the Company, you may direct your vote as instructed above.
If you hold your shares in street name via a broker, bank or other nominee, you may direct your vote by signing, dating and mailing your voting instruction card. Internet or telephonic voting may also be available. Please see your voting instruction card provided by your broker, bank or other nominee for further details.
Can I change my vote or revoke my proxy?
You may change your vote or revoke your proxy at any time before it is voted at the Annual Meeting. If you are a stockholder of record, you may change your vote or revoke your proxy by:
•delivering to the attention of the Corporate Secretary at The RealReal, Inc., 55 Francisco Street, Suite 600,150, San Francisco, California 94133, a written notice of revocation of your proxy;
•delivering to us an authorized proxy bearing a later date (including a proxy over the Internet or by telephone); or
•attending the Annual Meeting and voting your shares electronically. Attendance at the Annual Meeting will not, by itself, revoke a proxy.
