DEF 14A of Amplitude, Inc.
Filed Apr 29, 2024 · FY20230001140361-24-023026
Nominees For Class III Director (terms to expire at the 2027 Annual Meeting of Stockholders)
| Ron Gill | | Ron Gill has served as a member of our Board since June 2019. Mr. Gill has served as an Operating Partner of Lead Edge Capital, a growth equity investment firm, since June 2018. From August 2007 to March 2017, Mr. Gill held multiple financial leadership positions at NetSuite, Inc., a cloud computing company, most recently serving as Chief Financial Officer from July 2010 to March 2017, including through NetSuite’s acquisition by Oracle in 2016. He previously held a variety of financial positions with several technology companies, including Hyperion Solutions, SAP SE, Dell Inc., and Sony Group Corporation. Mr. Gill has served on the Board of Directors of HubSpot, Inc., a publicly-traded customer relationship management software company, since June 2012. Mr. Gill received a B.A. in Finance and Economics from Baylor University and an M.I.B. in International Business from the University of South Carolina. We believe that Mr. Gill is qualified to serve on our Board due to his extensive experience as a senior executive at public technology companies and his deep financial expertise. |
Nominees For Class III Director (terms to expire at the 2027 Annual Meeting of Stockholders)
| Elisa Steele | | Elisa Steele has served as a member of our Board since March 2021. Ms. Steele previously served as Chief Executive Officer of Namely, Inc., a human resources software company, from August 2018 to July 2019, and as a member of the Board of Directors of Namely from August 2017 to September 2022, including as Chairperson of the Board from July 2019 to September 2022. From January 2014 to July 2017, Ms. Steele held various leadership positions at Jive Software, Inc., a collaboration software company acquired by Aurea Software, Inc., most recently serving as Chief Executive Officer and President. Ms. Steele has also previously held executive leadership positions at Microsoft Corporation, Skype Inc., Yahoo! Inc., and NetApp, Inc. She currently serves on the Boards of Directors of multiple publicly-traded technology companies, including Bumble Inc., since July 2020, JFrog Ltd., since March 2020, and Procore Technologies, Inc., since February 2020. Ms. Steele previously served as chair of the Board of Directors of Cornerstone OnDemand, Inc., a publicly-traded human capital management software company, from June 2018 to June 2021 and as a member of the Boards of Directors of Splunk, Inc., then a publicly-traded technology company, from September 2017 until Splunk was acquired by Cisco in March 2024, and Jive Software from February 2015 to June 2017. Ms. Steele received a B.S. in Business Administration from the University of New Hampshire and an M.B.A. from San Francisco State University. We believe that Ms. Steele is qualified to serve on our Board due to her marketing expertise and her extensive experience as a public and private company chief executive officer and as a board member of publicly-traded technology companies. |
Nominees For Class III Director (terms to expire at the 2027 Annual Meeting of Stockholders)
| Eric Vishria | | Eric Vishria has served as a member of our Board since December 2014. Since July 2014, Mr. Vishria has served as a General Partner of Benchmark Capital, a venture capital firm, where he focuses on early-stage infrastructure and enterprise software investments. From August 2013 to August 2014, Mr. Vishria was Vice President, Digital Magazines and Verticals at Yahoo! Inc., a web services provider. He currently serves on the Board of Directors of Confluent, Inc., a publicly-traded data solutions company, and on the Boards of Directors of numerous privately-held technology companies, including AcuityMD, Inc., Airplane Labs, Inc., Benchling, Inc., Cerebras Inc., Commerce Layer, Inc. and Contentful Global, Inc. He received a B.S. in Mathematical and Computational Science from Stanford University. We believe that Mr. Vishria is qualified to serve on our Board due to his extensive operational and marketing expertise and his service as a board member of other technology companies. |
Nominees For Class III Director (terms to expire at the 2027 Annual Meeting of Stockholders)
| James Whitehurst | | James Whitehurst has served as a member of our Board since September 2021. Mr. Whitehurst has served as interim Chief Executive Officer and President, and as a member of the Board of Directors, of Unity Software Inc., a publicly-traded software development company, since October 2023. He has also served as a Special Advisor at Silver Lake Partners, a technology investment firm, since March 2021. He previously served as a Senior Advisor at International Business Machines Corporation (“IBM”), a global technology company, from July 2021 to May 2022, after serving as President from April 2020 to July 2021 and as Senior Vice President from July 2019 to April 2020. From January 2008 to April 2020, he served as Chief Executive Officer of Red Hat, Inc., an open source software company, including through Red Hat’s acquisition by IBM in July 2019. Prior to joining Red Hat, Mr. Whitehurst held various leadership positions at Delta Air Lines, Inc., a global airline operator, from January 2002 to August 2007, and Boston Consulting Group, a management consulting firm, from September 1989 to December 2001. Mr. Whitehurst has served on the Boards of Directors of United Airlines Holdings, Inc., a publicly-traded global airline operator, since March 2016, Tanium Inc., a privately-held cybersecurity and systems management company, since January 2022, and Software AG, a software company traded on a foreign stock exchange, since January 2023. Mr. Whitehurst previously served on the Boards of Directors of multiple publicly-traded companies, including Red Hat, from January 2008 to July 2019, SecureWorks Corp., a cybersecurity company, from April 2016 to April 2019, and DigitalGlobe, Inc., a builder and operator of satellites for digital imaging, from August 2009 to May 2016. Mr. Whitehurst received a B.A. in Computer Science and Economics from Rice University and an M.B.A. from Harvard Business School. We believe that Mr. Whitehurst is qualified to serve on our Board due to his extensive operational and management expertise and his experience as a public company chief executive officer and as a board member of publicly-traded technology companies. |
Continuing Directors Not Standing for Election at the Annual Meeting
Continuing Directors Not Standing for Election at the Annual Meeting The current continuing members of the Board who are not standing for election at the Annual Meeting are as follows:
Continuing Directors Not Standing for Election at the Annual Meeting
| Name | Age | Position with the Company | Class / Term Expires | | Erica Schultz | 50 | Director | Class I / 2025 | | Spenser Skates | 35 | President and Chief Executive Officer, Director, and Chairperson of the Board | Class I / 2025 | | Pat Grady | 41 | Director | Class II / 2026 | | Curtis Liu | 35 | Chief Technology Officer, Director | Class II / 2026 | | Catherine Wong | 48 | Director | Class II / 2026 |
Continuing Directors Not Standing for Election at the Annual Meeting
| 2024 Proxy Statement | 12 | |
Continuing Directors Not Standing for Election at the Annual Meeting
The principal occupations and business experience, for at least the past five years, of each continuing director not standing for election at the Annual Meeting are as follows:
Continuing Directors Not Standing for Election at the Annual Meeting
| Erica Schultz | | Erica Schultz has served as a member of our Board since December 2020. Since October 2019, Ms. Schultz has served as President of Field Operations at Confluent, Inc., a publicly- traded data solutions provider. She also serves as a Limited Partner and Fund Advisor at Operator Collective, a venture capital fund that she joined in January 2019. Prior to joining Confluent, Ms. Schultz held various leadership positions at New Relic, Inc., a cloud-based software company, from June 2014 to October 2019, most recently serving as Chief Revenue Officer. She previously served as Executive Vice President of Global Sales, Services and Field Operations at LivePerson, Inc., a digital engagement company, from May 2013 to March 2014, after serving as Executive Vice President of Global Sales from February 2012 to May 2013. From November 1995 to January 2012, Ms. Schultz served in various roles at Oracle Corporation, a computing infrastructure and software company. She received a B.A. in Spanish and Latin American Studies from Dartmouth College, where she has served as a member of the Board of Trustees since June 2016. We believe that Ms. Schultz is qualified to serve on our Board due to her sales expertise and extensive management experience as a senior executive at enterprise technology companies. |
Continuing Directors Not Standing for Election at the Annual Meeting
| Spenser Skates | | Spenser Skates is our co-founder and has served as our Chief Executive Officer and as a member of our Board since 2011. Mr. Skates previously worked as an algorithmic trader at DRW Trading Group, a diversified trading firm, from July 2010 to March 2011. He received a B.S. in Biological Engineering from the Massachusetts Institute of Technology (“MIT”). While at MIT, he won MIT’s largest programming competition, Battlecode, in 2009 and 2010. We believe that Mr. Skates is qualified to serve on our Board due to the valuable expertise and perspective he brings in his capacity as our Chief Executive Officer and because of his extensive experience and knowledge of our industry. |
Continuing Directors Not Standing for Election at the Annual Meeting
| Pat Grady | | Pat Grady has served as a member of our Board since November 2018. Mr. Grady is a Partner of Sequoia Capital, a technology-focused venture capital firm that he joined in March 2007. He also serves on the Boards of Directors of numerous privately-held technology companies, including Attentive Mobile, Inc., Cribl, Inc., Pilot.com, Inc, Watershed and Harvey. He previously served on the Boards of Directors of Okta, Inc., a publicly-traded identity and access management company, from May 2014 to June 2023, and Embark Trucks Inc., a publicly-traded autonomous trucking company, from May 2018 to August 2023, and on the Boards of Directors of numerous privately-held technology companies, including MarkLogic Corporation, Prosper Marketplace, Inc., and Namely, Inc.. Mr. Grady received a B.S. in Economics from Boston College. We believe that Mr. Grady is qualified to serve on our Board due to his extensive experience in the venture capital industry and his knowledge of scaling technology companies. |
Continuing Directors Not Standing for Election at the Annual Meeting
| 2024 Proxy Statement | 13 | |
Continuing Directors Not Standing for Election at the Annual Meeting
| Curtis Liu | | Curtis Liu is our co-founder and has served as our Chief Technology Officer and as a member of our Board since 2011. Mr. Liu previously worked as a Software Engineer at Google LLC, a technology company, from August 2010 to August 2011. He received a B.S. in Electrical Engineering and Computer Science from MIT. While at MIT, he won MIT’s largest programming competition, Battlecode, in 2010. We believe that Mr. Liu is qualified to serve on our Board due to his perspective, experience and leadership as our Chief Technology Officer. |
Continuing Directors Not Standing for Election at the Annual Meeting
| Catherine Wong | | Catherine Wong has served as a member of our Board since June 2021. Since March 2023, Ms. Wong has served as Chief Operating Officer and Chief Product Officer of Entrata, Inc., a property management software company. Prior to Entrata, Ms. Wong held various roles at Domo, Inc., a publicly-traded cloud-based business intelligence platform, serving as Chief Operating Officer and Executive Vice President, Engineering from November 2015 to January 2023, after serving as Chief Product Officer and Executive Vice President, Engineering from November 2015 to March 2022 and Senior Vice President, Engineering from September 2013 to November 2015. Ms. Wong continued to provide advisory services to Domo through March 2023. Prior to joining Domo, Ms. Wong was Vice President, Engineering at Adobe Inc., a software company, from August 2009 to August 2013, and previously held various roles at Omniture, Inc., an online marketing and web analytics company, prior to its acquisition by Adobe. She currently serves as a member of the Boards of Directors of Human Interest, Inc., an employee benefit plan provider, and the Women Tech Council. Ms. Wong received a B.S. in Computer Science from Brigham Young University. We believe that Ms. Wong is qualified to serve on our Board due to her extensive experience as a senior engineering executive at enterprise technology companies and her deep knowledge of our industry. |
Continuing Directors Not Standing for Election at the Annual Meeting
| 2024 Proxy Statement | 14 | |
Continuing Directors Not Standing for Election at the Annual Meeting
Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm Our Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024. Our Board has directed that this appointment be submitted to our stockholders for ratification at the Annual Meeting. Although ratification of our appointment of KPMG LLP is not required, we value the opinions of our stockholders and believe that stockholder ratification of our appointment is a good corporate governance practice. KPMG LLP also served as our independent registered public accounting firm for the fiscal year ended December 31, 2023, and has served as our independent registered public accounting firm since 2017. Neither the accounting firm nor any of its members has any direct or indirect financial interest in, or any connection with, us in any capacity other than as our auditors, providing audit and non-audit related services. A representative of KPMG LLP is expected to attend the Annual Meeting and to have an opportunity to make a statement and be available to respond to appropriate questions from stockholders. In the event that the appointment of KPMG LLP is not ratified by the stockholders, the Audit Committee will consider this fact when it determines whether to retain KPMG LLP. Even if the appointment of KPMG LLP is ratified, the Audit Committee retains the discretion to appoint a different independent registered public accounting firm at any time if it determines that such a change is in the interest of the Company.
Vote Required
| Thomas Hansen | | Thomas Hansen has served as our President since June 2022. He previously served as Chief Revenue Officer of UiPath, Inc., a publicly-traded robotics software company, from April 2020 to May 2022. Prior to that, Mr. Hansen served as Senior Vice President of Operations, Carbon Black Security Division at VMware, Inc., a software company, from October 2019 to April 2020. Until its acquisition by VMware in October 2019, Mr. Hansen held multiple positions at Carbon Black, Inc., a cybersecurity company, serving as Chief Operating Officer and Executive Vice President from October 2018 to October 2019 and Chief Revenue Officer and Executive Vice President from July 2017 to October 2018. Previously, Mr. Hansen served as Global Vice President of Revenue for Dropbox, Inc., a cloud computing company, from August 2015 to July 2017. He has served on the Boards of Directors of Forter, Inc. since July 2019 and Dixa ApS since April 2021. Mr. Hansen holds a B.S. in Economics & Business Administration and an M.S. in Economics & Business Administration, both from the Copenhagen Business School. |
Vote Required
| Christopher Harms | | Christopher Harms has served as our Chief Financial Officer since February 2023. He previously served as Chief Financial Officer of Forescout Technologies, Inc., then a publicly-traded cybersecurity software company, from March 2013 to August 2020. From July 2011 to January 2013, Mr. Harms served as Chief Financial Officer of Socialware, a software company. He previously held a variety of financial positions with several technology companies, including IBM, PSS Systems, Transitive, BT Group (formerly British Telecom), and Hewlett Packard. Mr. Harms has served on the Board of Directors of Slice Solutions, Inc., a software platform and service provider to independent pizzerias, since February 2022, and served on the Board of Directors of WorkBoard, Inc., a strategy execution platform provider, from August 2022 to October 2023. Mr. Harms holds a B.S. in Accounting and an M.B.A., both from the University of California, Berkeley. |
Executive Compensation Philosophy and Objectives
| • | Align our target total direct compensation opportunities to our long-term growth-oriented business goals and strategic priorities; |
Executive Compensation Policies and Practices
| | What We Do | | What We Do Not Do | | ✔ | Emphasize performance-based, at risk compensation. | ✘ | Do not grant uncapped cash incentives or guaranteed equity compensation. | | ✔ | Emphasize the use of equity compensation to promote executive retention and reward long-term value creation. | ✘ | Do not provide significant perquisites. | | ✔ | Weight the overall pay mix towards incentive compensation for senior executives. | ✘ | Do not provide any compensation-related tax gross-ups. | | ✔ | Engage an independent compensation consultant to advise our Compensation Committee. | ✘ | Do not reprice our stock option awards. | | ✔ | Maintain a Policy for Recovery of Erroneously Awarded Compensation compliant with SEC and Nasdaq rules. | | |
Compensation-Setting Process
Compensation-Setting Process Role of Compensation Committee, Board of Directors, and CEO The Compensation Committee, composed of independent, non-employee members of the Board, oversees the executive compensation program for our executive officers, except for our CEO whose compensation is determined by the independent members of the full Board. The Compensation Committee and the Board work closely with Compensia, the Compensation Committee’s compensation consultant. The Compensation Committee also seeks the input of our CEO (except with respect to his own compensation) to examine the effectiveness of our executive compensation program throughout the year. During fiscal year 2023, the independent members of the full Board, with respect to our CEO, and our Compensation Committee, with respect to each other named executive officer, were responsible for designing and administering our executive compensation program and making compensation decisions. In each case, the independent members of the full Board and the Compensation Committee determined these compensation arrangements were also influenced by a variety of factors, including the relevant experience of the individual, competitive standards of pay, business conditions, and Company and individual performance. Our CEO made recommendations to the Compensation Committee to assist in determining fiscal year 2023 compensation levels for our executive officers, including our other named executive officers. While the Compensation Committee considered this information, the ultimate decisions regarding fiscal year 2023 executive compensation were made by the Compensation Committee and the independent members of the full Board exercising their own independent judgment. Role of Compensation Consultant When making compensation decisions in fiscal year 2023, our Compensation Committee considered data and analysis provided by Compensia to provide guidance regarding our executive compensation program and how our compensation practices compare to the compensation practices of the competitive market (based on the companies comprising the compensation peer companies). The Compensation Committee analyzed public company market data for executive compensation as a general indicator of relevant competitive market conditions and pay practices, focusing on revenue, industry, talent competitors, operating income, etc. In particular, our Compensation Committee reviewed competitive market compensation data from the following group of peer companies as a reference source, developed in consultation with Compensia:
Compensation-Setting Process
In establishing the peer group for fiscal 2023, we removed three peers due to acquisition (Anaplan, Cloudera, and Medallia) and removed another peer due to it not meeting our market capitalization requirements (Upland Software). Three peers were added (Braze, Domo, and Sprinklr) as they met our peer group selection criteria. The Compensation Committee reviewed our named executive officer compensation against this compensation peer group to ensure that our named executive officer compensation is competitive and sufficient to recruit and retain our named executive officers. While the Compensation Committee and the Board considered this data in evaluating the compensation of our executive officers, including our CEO, they did not seek to benchmark our executive officer compensation to any particular level. The Compensation Committee has evaluated Compensia’s independence pursuant to the Nasdaq listing requirements and SEC rules and concluded that Compensia’s work did not give rise to a conflict of interest that would have prevented Compensia from serving as an independent consultant to the Compensation Committee currently or during fiscal year 2023. Our Compensation Committee expects to periodically review and update this compensation peer group and to utilize Compensia for peer group data and analysis in determining and developing compensation packages for our executive officers.
Elements of Our Executive Compensation Program
| Compensation Element | Compensation Objectives Designed to be Achieved and Key Features | | | performance and achievement of specified financial, business, and strategic goals | | Equity-Based Incentive Compensation | Provides long-term incentives to drive financial and operational performance and stockholder value creation | | Severance and Other Benefits Potentially Payable upon Termination of Employment or Change in Control | Create clarity around termination or change of control events and provide for retention of executives | | Health and Welfare Benefits/Perquisites | Attract and retain key talent by providing competitive health and welfare benefit programs |
Elements of Our Executive Compensation Program
| Measure | Weight | Original Target | Actual | Bonus Driver | Payout (Bonus Driver x Weight) | | Revenue | 70% | $301.2 million | $276.3 million | 17.4% | 12.2% | | Non-GAAP Operating Income | 30% | -$15.6 million | -$3.5 million | 200.0% | 60.0% | | | | | | | 72.2% |
Elements of Our Executive Compensation Program
The above-referenced performance targets should not be interpreted as a prediction of how we will perform in future periods. As described below, the targets were established for the purpose of establishing a method for determining the payment of fiscal year 2023 annual cash bonuses under the Bonus Plan. The following table summarizes the annual cash bonuses paid to our NEOs for fiscal year 2023 under the Bonus Plan.
Elements of Our Executive Compensation Program
| Named Executive Officer | 2023 Bonus Payment ($) | Target Bonus Opportunity (as % of annual base salary) | Bonus Payment as a % of Target Bonus Opportunity | | Christopher Harms(1) | $149,840 | 50% | 72.2% | | Thomas Hansen(2) | $361,020 | 100% | 72.2% |
Elements of Our Executive Compensation Program
| (1) Mr. Harms’ base salary was prorated to 85.8% of his annual base salary for purposes of determining his 2023 bonus payment given his commencement of employment with us in February 2023. His 2023 bonus payment was made on March 15, 2024. |
Elements of Our Executive Compensation Program
| (2) Mr. Hansen was paid $183,400 of his 2023 bonus payment in November 2023. The remaining $177,620 was paid on March 15, 2024. |
Elements of Our Executive Compensation Program
For fiscal year 2023, only Messrs. Hansen and Harms participated in the Bonus Plan and received annual cash-based incentive bonuses. No other NEO received a cash-based incentive bonus payment. The actual annual cash bonuses paid to our named executive officers during fiscal year 2023 are set forth in the “Fiscal 2023 Summary Compensation Table” below. For fiscal year 2024, we have adopted a similar Bonus Plan, pursuant to which several of our executive officers are eligible to participate, including Messrs. Harms and Hansen. Equity-Based Incentive Compensation We view equity-based incentive compensation as a critical element of our balanced total executive compensation program. Equity-based compensation creates an ownership culture among our executive officers, including our named executive officers, that provides an incentive to contribute to the continued growth and development of our business and aligns the interests of our executive officers with those of our stockholders. We have historically granted stock options and restricted stock unit (“RSU”) awards to our executive officers. When determining the size of the equity awards for our NEOs, the independent members of the full Board and/or our Compensation Committee, as applicable, take into account the size of past equity awards, the NEO’s position (level) in the Company, and the NEO’s value for the Company based on his or her experience, innovation, expertise, and leadership capabilities. The Compensation Committee believes that stock options provide the executive officer with a strong incentive to build long-term value in the Company. Such awards vest according to the schedule set out in the applicable equity award agreement subject to the executive officer’s continued service with us through the applicable vesting dates. In addition, the exercise price of the stock options granted to our executive officers is equal to the fair market value of our common stock on the date of grant as determined by the independent members of the full Board or the Compensation Committee, as applicable. The following table sets forth the stock options and RSU awards granted to our named executive officers in fiscal year 2023. Mr. Harms received two sets of equity awards. The first set of awards was granted in connection with his commencement of employment with us and the second set of awards were refresher grants made in recognition of his continued service to the Company. Mr. Hansen’s equity awards were refresher grants made in recognition of his continued service to the Company. The Compensation Committee did not grant any new equity awards to Messrs. Liu and Vuong, nor did the independent members of our Board grant any new equity awards to Mr. Skates in fiscal year 2023.
Elements of Our Executive Compensation Program
| Named Executive Officer | Options Granted | RSUs Granted | | Christopher Harms | 385,607(1) | 655,636(2) | | Thomas Hansen | 39,745(3) | 66,021(4) |
Elements of Our Executive Compensation Program
| (1) 241,819 of the shares subject to the stock option award vest as to 1/36th of the shares on each monthly anniversary of February 15, 2023, and 143,788 of the shares subject to the stock option award vest as to 1/48th of the shares on each monthly anniversary of August 15, 2023, in each case, subject to Mr. Harms’ continued service through the applicable vesting date. |
Elements of Our Executive Compensation Program
| (2) 408,057 of the units subject to the RSU award vest as to 1/36th of the units on each quarterly anniversary of February 15, 2023, and 247,579 of the units subject to the RSU award vest as to 1/48th of the units on each quarterly anniversary of August 15, 2023, in each case, subject to Mr. Harms’ continued service through the applicable vesting date. |
Elements of Our Executive Compensation Program
| (3) 1/24th of the shares subject to the stock option award vest on each monthly anniversary of August 15, 2023, subject to Mr. Hansen’s continued service through the applicable vesting date. |
Elements of Our Executive Compensation Program
| (4) 1/8th of the units subject to the RSU award vest on each quarterly anniversary of August 15, 2023, subject to Mr. Hansen’s continued service through the applicable vesting date. |
Elements of Our Executive Compensation Program
| • | short-term and long-term disability insurance; and |
Other Retirement Plans
awards, which shall be governed by the terms of the applicable award agreement). The foregoing severance benefits are subject to the applicable NEO’s delivery of an executed release of claims against us and continued compliance with the NEO’s confidentiality agreement with us. In addition, each of our named executive officers has executed our standard confidential information and invention assignment agreement. Mr. Vuong ceased serving as Chief Financial Officer on February 22, 2023, and remained as our employee through May 31, 2023 during which time he continued to be an employee of the Company providing advice and services as requested by the Company. As an at-will employee, he continued receiving his same base salary and his outstanding equity awards continued to vest. We do not have any agreements with our named executive officers guaranteeing any tax gross-up payments on severance or change in control payments or benefits. See “Potential Payments Upon Termination or Change in Control” for information regarding these post-employment compensation arrangements, including an estimate of the payments and benefits that would have been payable under these arrangements at the end of fiscal year 2023.
Tax and Accounting Considerations
Tax and Accounting Considerations As a general matter, the independent members of the full Board and the Compensation Committee review and consider the various tax and accounting implications of compensation programs we utilize. Taxation of Parachute Payments and Deferred Compensation Section 280G of the Internal Revenue Code disallows a company’s tax deduction for payments received by certain individuals in connection with a change in control to the extent that the payments exceed an amount approximately three times their average annual compensation and Section 4999 of the Internal Revenue Code imposes a 20% excise tax on those payments. Our Board will take into account the implications of Section 280G in determining potential payments to be made to our executive officers in connection with a change in control. Nevertheless, to the extent that certain payments upon a change in control are classified as excess parachute payments, such payments may not be deductible pursuant to Section 280G. Deductibility of Executive Compensation The Compensation Committee and our Board have considered the potential future effects of Section 162(m) of the Internal Revenue Code on the compensation paid to our executive officers. Section 162(m) disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1.0 million in any taxable year for “covered employees.” While we consider the tax deductibility of each element of executive compensation as a factor in our overall compensation program, the independent members of the full Board and the Compensation Committee, however, retain the discretion to approve compensation that may not qualify for the compensation deduction if, considering all applicable circumstances, it would be in our best interest for such compensation to be paid without regard to whether it may be tax deductible. Accounting for Stock-Based Compensation Under FASB ASC Topic 718, we are required to estimate the grant date “fair value” for each grant of equity award using various assumptions. This calculation is performed for accounting purposes and reported in the compensation tables below, even though recipients may never realize any value from their awards. FASB ASC Topic 718 also requires us to recognize the compensation cost of stock-based awards in our income statements over the period that an employee is required to render service in exchange for the award.
Fiscal Year 2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(1) | All Other Compensation ($)(5) | Total | | Spenser Skates | 2023 | $300,000 | — | — | — | — | — | $300,000 | | Chief Executive Officer | 2022 | 450,000 | — | — | — | — | — | 450,000 | | | 2021 | 450,000 | — | — | — | — | — | 450,000 | | Hoang Vuong(3) | 2023 | $229,167 | — | — | — | — | — | 229,167 | | Former Chief Financial Officer | 2022 | 550,000 | — | 4,691,673 | 1,582,666 | — | — | 6,824,339 | | | 2021 | 550,000 | — | — | — | — | — | 550,000 | | Christopher Harms(4) | 2023 | 414,537 | — | 7,862,638 | 2,595,389 | 149,840 | 24,836 | 11,047,240 | | Chief Financial Officer | | | | | | | | | | Thomas Hansen | 2023 | 500,000 | — | 750,659 | 250,601 | 361,020 | — | 1,862,280 | | President | 2022 | 240,530 | 242,466 | 14,620,000 | 5,516,016 | — | — | 20,619,012 | | Curtis Liu | 2023 | 266,667 | — | — | — | — | — | 267,667 | | Chief Technology Officer | 2022 | 400,000 | — | — | — | — | — | 400,000 | | | 2021 | 400,000 | — | — | — | — | — | 400,000 |
Grants of Plan-Based Awards in Fiscal Year 2023 Table
Grants of Plan-Based Awards in Fiscal Year 2023 Table The following table provides supplemental information relating to grants of plan-based awards made during fiscal year 2023 to help explain information provided above in our Summary Compensation Table. This table presents information regarding all grants of plan-based awards occurring during fiscal year 2023. Messrs. Skates, Vuong, and Liu were not granted any equity award in fiscal year 2023.
Grants of Plan-Based Awards in Fiscal Year 2023 Table
| Name | Grant Date | Estimated Future Payouts Under Non- Equity Incentive Plan Awards Target ($)(1) | Maximum ($)(1) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair value of Stock and Option Awards ($)(2) | | Christopher Harms | 3/15/2023 | — | | — | 241,819 | 12.37 | 1,654,042 | | | 3/15/2023 | — | | 408,057 | — | — | 5,047,665 | | | 8/15/2023 | — | | — | 143,788 | 11.37 | 941,346 | | | 8/15/2023 | — | | 247,579 | — | — | 2,814,973 | | | N/A | 149,840 | 484,000 | | | | | | Thomas Hansen | 8/15/2023 | — | | — | 39,745 | 11.37 | 250,601 | | | 8/15/2023 | — | | 66,021 | — | — | 750,659 | | | N/A | 361,020 | 1,000,000 | | | | |
Grants of Plan-Based Awards in Fiscal Year 2023 Table
| (1) Amount reported in the target column represents the potential target short-term annual cash incentive award opportunity under our Bonus Plan based on achievement of the performance goals at 100%. Amount reported in the maximum column represents the potential maximum short-term annual cash incentive award opportunity under our Bonus Plan based on achievement of the performance goals which is capped at 200% of target. No threshold payouts were established under our Bonus Plan, and accordingly, the sub-columns Threshold ($) is not applicable and has not been presented. Additional information regarding the Bonus Plan is set forth in “Compensation Discussion and Analysis – Cash-Based Incentive Compensation” above. |
Grants of Plan-Based Awards in Fiscal Year 2023 Table
| (2) Amounts reported represent the aggregate grant-date fair values of the equity awards calculated in accordance with ASC Topic 718. The aggregate grant-date fair values for the RSUs were based on the fair value of our common stock on the date of grant, which was determined as the closing market price per share of our Class A common stock on the date of grant. The aggregate grant-date fair value for the stock options was based on the Black-Scholes option valuation methodology. This calculation is performed for accounting purposes and reported in the table. However, our NEOs may never realize any value from their equity awards. For a discussion of the assumptions and methodologies used to calculate the amounts reported for equity awards, please see Note 5 of the audited consolidated financial statements included in our 2023 Annual Report filed with the SEC on February 20, 2024. |
Grants of Plan-Based Awards in Fiscal Year 2023 Table
| 2024 Proxy Statement | 46 | |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table lists all outstanding equity awards held by our NEOs as of December 31, 2023. The equity awards below are subject to certain vesting acceleration provisions as provided in the applicable NEO’s employment agreement, as discussed in “Employment and Severance Agreement” and the “Potential Payments Upon Termination or Change in Control Table.”
Outstanding Equity Awards at Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | Name | Vesting Commencement Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(12) | | Spenser Skates | 01/01/2021(1) | 723,298 | 47,732 | 4.19 | 12/27/2030 | — | — | | | 09/21/2021(2) | 1,101,030 | — | 4.19 | 12/27/2030 | — | — | | Hoang Vuong | 04/29/2019(1) | 878,009 | — | 2.26 | 06/03/2029 | — | — | | | 04/29/2022(1) | 19,517 | — | 4.19 | 12/27/2030 | — | — | | | 05/15/2022(3) | 22,953 | — | 15.63 | 06/14/2032 | — | — | | Christopher Harms | 02/15/2023(6) | 67,172 | 174,647 | 12.37 | 03/14/2033 | — | — | | | 02/15/2023(7) | — | — | — | — | 306,043 | 3,892,867 | | | 08/15/2023(8) | 11,982 | 131,806 | 11.37 | 08/14/2033 | — | — | | | 08/15/2023(9) | — | — | — | — | 232,106 | 2,952,388 | | Thomas Hansen | 07/08/2022(4) | 191,250 | 483,750 | 14.62 | 07/14/2032 | — | — | | | 07/08/2022(5) | — | — | — | — | 700,000 | 8,904,000 | | | 08/15/2023(10) | 6,624 | 33,121 | 11.37 | 8/14/2033 | — | — | | | 08/15/2023(11) | — | — | — | — | 57,769 | 734,822 | | Curtis Liu | 01/01/2021(1) | 117,768 | 36,065 | 4.19 | 12/27/2030 | 4,744 | 60,344 | | | 09/21/2021(2) | 515,515 | — | 4.19 | 12/27/2030 | — | — |
Outstanding Equity Awards at Fiscal Year-End
| (1) The shares subject to the option vest as to 1/48th of the shares on each month following the vesting commencement date, such that all awards will be fully vested on the four-year anniversary of the vesting commencement date, subject to the applicable NEO continuing to provide services to us through such vesting date. The option is exercisable prior to vesting subject to the applicable NEO agreeing that any shares that were exercised prior to vesting are subject to a right of repurchase in favor of us (although only a portion of the grant was exercisable prior to vesting). For Mr. Liu, he early exercised a portion of his option and received restricted stock that vests upon the same vesting schedule (the portion of which remains unvested is set forth in the Stock Award column). |
Outstanding Equity Awards at Fiscal Year-End
| (2) The shares subject to the option vested as to 1/24th of the shares on each monthly anniversary of September 21, 2021, the date of effectiveness of the registration statement relating to our Direct Listing, such that the options were fully vested on September 21, 2023. The option was exercisable prior to vesting subject to the applicable NEO agreeing that any shares that were exercised prior to vesting are subject to a right of repurchase in favor of us. |
Outstanding Equity Awards at Fiscal Year-End
| (3) Mr. Vuong’s employment with the Company was terminated effective May 31, 2023. The shares subject to the option vested as to 1/8th of the shares on the first anniversary of the vesting commencement date. The Company extended the post-termination exercise period of his outstanding vested stock options from 90 days after his termination to June 15, 2032. |
Outstanding Equity Awards at Fiscal Year-End
| (4) The shares subject to the option vest as to 1/60th of the shares on each monthly anniversary of the vesting commencement date, subject to Mr. Hansen’s continued service through the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (5) The RSUs vest as to 1/20th of the RSUs on each quarterly anniversary of the vesting commencement date, such that all RSUs will be fully vested on May 15, 2027, subject to Mr. Hansen’s continued service through the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (6) The shares subject to the option vest as to 1/36th of the shares on each monthly anniversary of the vesting commencement date, such that all awards will be fully vested on the three-year anniversary of the vesting commencement date, subject to Mr. Harms continuing to provide services to us through such vesting date |
Outstanding Equity Awards at Fiscal Year-End
| (7) The RSUs vest as to 1/12th of the RSUs on each quarterly anniversary of the vesting commencement date, such that the award will be fully vested on the three-year anniversary of the vesting commencement date, subject to Mr. Harms’ continued service through the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
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Outstanding Equity Awards at Fiscal Year-End
| (8) The shares subject to the option vest as to 1/48th of the shares on each monthly anniversary of the vesting commencement date, such that all awards will be fully vested on the four-year anniversary of the vesting commencement date, subject to Mr. Harms continuing to provide services to us through such vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (9) The RSUs vest as to 1/16th of the RSUs on each quarterly anniversary of the vesting commencement date, such that the award will be fully vested on the four-year anniversary of the vesting commencement date, subject to Mr. Harms’ continued service through the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (10) The shares subject to the option vest as to 1/24th of the shares on each monthly anniversary of the vesting commencement date, such that all awards will be fully vested on the two-year anniversary of the vesting commencement date, subject to Mr. Hansen continuing to provide services to us through such vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (11) The RSUs vest as to 1/8th of the RSUs on each quarterly anniversary of the vesting commencement date, such that the award will be fully vested on the two-year anniversary of the vesting commencement date, subject to Mr. Hansen’s continued service through the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (12) The market value of shares that have not vested is based on the closing trading price of our Class A common stock on the Nasdaq Capital Market on December 29, 2023 (which was the last trading day in 2023), which was $12.72. |
Options Exercised and Stock Vested in Fiscal Year 2023 Table
Options Exercised and Stock Vested in Fiscal Year 2023 Table The following table sets forth options that were exercised by our NEOs and time-based RSUs held by our NEOs that vested during fiscal year 2023.
Options Exercised and Stock Vested in Fiscal Year 2023 Table
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(3) | Number of Shares Acquired on Vesting (#)(4) | Value Realized on Vesting($)(5) | | Spenser Skates | — | — | — | — | | Hoang Vuong | 36,945(2) | 346,027 | 37,521 | 387,592 | | Christopher Harms | — | — | 117,487 | 1,270,281 | | Thomas Hansen | — | — | 258,252 | 2,891,292 | | Curtis Liu | 23,866(1) | 258,230 | — | — |
Options Exercised and Stock Vested in Fiscal Year 2023 Table
| (1) The number of shares reflected are shares of our Class B common stock. Mr. Liu exercised options to acquire the stated number of shares of our Class A common stock, and converted those shares to our Class B common stock. |
Options Exercised and Stock Vested in Fiscal Year 2023 Table
| (2) The number of shares reflected are shares of our Class A common stock. |
Options Exercised and Stock Vested in Fiscal Year 2023 Table
| (3) The value realized on each exercise is based on the difference between the closing price of our Class A common stock on the date of exercise and the applicable exercise price of those options, and does not represent actual amounts received by the NEOs as a result of the option exercises. |
Options Exercised and Stock Vested in Fiscal Year 2023 Table
| (4) The number of shares reflected is equal to the gross number of RSU shares that vested prior to tax withholding. Accordingly, the NEO actually received fewer shares than the amounts set forth in the table above. |
Options Exercised and Stock Vested in Fiscal Year 2023 Table
| (5) The value realized on vesting is based upon the gross shares underlying the time-based RSU awards that vested multiplied by the market value of our Class A common stock on the vesting date. |
Pension Benefits
Pension Benefits None of our NEOs participated in, or had account balances in, qualified or non-qualified defined benefit plans sponsored by us during fiscal year 2023.
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation None of our NEOs participated in, or had account balances in, non-qualified defined contribution plans or other deferred compensation plans maintained by us during fiscal year 2023.
Non-Qualified Deferred Compensation
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Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control We have entered into certain agreements with each of our named executive officers, as described above, that provide for potential payments upon either a termination of employment or upon a change in control of the Company. The following table summarizes the payments that would be made to our named executive officers upon the occurrence of certain qualifying terminations of employment or a change in control of the Company, in any case, occurring on the last day of fiscal year 2023. For Mr. Vuong, he is not included in the table below as his employment with the Company was terminated effective as of May 31, 2023 and he did not receive any payments or benefits upon the termination of his employment. Amounts shown do not include (i) accrued but unpaid base salary through the date of termination or (ii) other benefits earned or accrued by the named executive officer during his employment that are available to all salaried employees, such as accrued vacation, and assume that any successor company in a change in control assumed or substituted awards for any outstanding awards under the 2021 Plan.
Potential Payments Upon Termination or Change in Control
| Name | Benefit(1) | Termination Without Cause or for Good Reason / Cause (no Change in Control) ($) | Termination Without Cause or for Good Reason / Cause in Connection with a Change in Control ($) | | Spenser Skates | Cash(2) | 112,500 | 225,000 | | | Bonus(3) | — | — | | | Equity Acceleration(4) | — | 2,705,324 | | | COBRA Reimbursement(5) | 9,760 | 19,520 | | | Total | 122,260 | 2,949,844 | | Christopher Harms | Cash(2) | 242,000 | 484,000 | | | Bonus(3) | — | 242,000 | | | Equity Acceleration(4) | — | 7,084,320 | | | COBRA Reimbursement(5) | 14,107 | 28,214 | | | Total | 256,107 | 7,838,534 | | Thomas Hansen | Cash(2) | 250,000 | 500,000 | | | Bonus(3) | — | 500,000 | | | Equity Acceleration(4) | — | 9,683,535 | | | COBRA Reimbursement(5) | 11,848 | 23,697 | | | Total | 261,848 | 10,707,232 | | Curtis Liu | Cash(2) | 100,000 | 200,000 | | | Bonus(3) | — | — | | | Equity Acceleration(4) | — | 1,352,662 | | | COBRA Reimbursement(5) | 3,905 | 7,810 | | | Total | 103,905 | 1,560,472 |
Potential Payments Upon Termination or Change in Control
| (1) Severance payments and benefits are subject to the applicable NEO’s delivery of an executed release of claims against us and continued compliance with the NEO’s confidentiality agreement. |
Potential Payments Upon Termination or Change in Control
| (2) Represents a cash payment of (i) six months of base salary in the event of termination of employment without cause or for good reason outside a change in control of the Company; and (ii) 12 months of base salary in the event of termination of employment without cause or for good reason during the period commencing three months prior to a Change in Control (as defined in the 2021 Plan) and ending on the 12-month anniversary following such Change of Control. |
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
| (3) Represents a cash payment of 100% of the NEO’s target bonus amount in the event of termination of employment without cause or for good reason during the period commencing three months prior to a Change in Control and ending on the 12-month anniversary following such Change in Control. No NEO besides Messrs. Hansen and Harms had target cash bonus opportunities during fiscal year 2023. |
Potential Payments Upon Termination or Change in Control
| (4) Represents the aggregate value of the NEO’s unvested equity awards that would have vested on an accelerated basis, based on the difference between the fair market value of our common stock ($12.72 per share as of December 29, 2023, the last trading date in 2023) and, if applicable, the options’ exercise prices in the event of termination of employment without cause or for good reason during the period commencing three months prior to a Change in Control and ending on the 12-month anniversary following such Change in Control. |
Potential Payments Upon Termination or Change in Control
| (5) Represents continued coverage under COBRA based on the incremental cost of our contribution as of December 31, 2023 to provide this coverage of (i) six months in the event of termination of employment without cause or for good reason outside a change in control; and (ii) 12 months in the event of termination of employment without cause or for good reason during the period commencing three months prior to a Change in Control and ending on the 12-month anniversary following such Change in Control. |
CEO Pay Ratio
CEO Pay Ratio As required by Item 402(u) of Regulation S-K, we are required to disclose the ratio of our CEO’s annual total compensation to the median of the annual total compensation of our other employees. The annual total compensation for 2023 for our CEO was $300,000, as reported in the Fiscal Year 2023 Summary Compensation Table. The annual total compensation for 2023 for our median employee, identified as discussed below, was $261,840, calculated in accordance with Item 402(c)(2)(x) of Regulation S-K. Based on this information, for 2023, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees was approximately 1.15 to 1. For purposes of calculating the CEO pay ration above, we used the same median employee who was identified in fiscal year 2022. Since December 31, 2022, there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure. Methodology, Assumptions, and Estimates Used in Determining our Pay Ratio Disclosure We chose December 31, 2022 as the date for establishing the employee population used in identifying the median employee and used calendar year 2023 as the measurement period. We identified the median employee using the consistently applied compensation measure of base wages for each employee employed as of December 31, 2022 (other than our CEO). We annualized the compensation measure for permanent employees who joined in 2022. We captured all full-time, part-time, seasonal, and temporary employees, consisting of approximately 728 individuals. The annual total compensation of the median employee and the annual total compensation of our CEO were calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported above should not be used as a basis for comparison between companies by other companies. In addition, we expect our annually reported pay ratio may vary significantly year over year, given our size and the potential variability in our employee compensation.
CEO Pay Ratio
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Pay Versus Performance
Pay Versus Performance Pay Versus Performance Table As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between the executive compensation actually paid to our named executive officers for the fiscal years ended December 31, 2023, December 31, 2022 and December 31, 2021 and certain aspects of our financial performance. We completed our Direct Listing in September 2021, so we have not included any information for fiscal year 2020 while we were a privately-held company. Prior to and since our Direct Listing, we have not yet granted performance-based equity awards. For further information concerning our “pay for performance” philosophy and how we align executive compensation with our performance, please refer to “Executive Compensation – Compensation Discussion and Analysis.”
Pay Versus Performance
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO($)(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($)(3) | Average Compensation Actually Paid to Non- PEO Named Executive Officers ($)(4) | Total Stockholder Return($)(5) | Peer Group Total Stockholder Return($)(6) | Net Income (Loss) (in millions) ($)(7) | Company- Selected Measure – GAAP Revenue (in millions) ($) | | 2023 | $300,000 | $147,456 | $3,351,589 | $2,242,561 | $23.21 | 61.33 | ($90.36) | $276 | | 2022 | $450,000 | ($70,416,709) | $7,994,979 | ($14,202,174) | $22.04 | 43.78 | ($93.38) | $238 | | 2021 | $450,000 | $102,026,238 | $771,571 | $40,646,680 | $96.61 | $90.31 | ($74.98) | $167 |
Pay Versus Performance
| (1) The dollar amounts reported in column (b) represent the amount of total compensation reported for Mr. Skates (our “PEO”) for each covered fiscal year in the “Total” column of the Summary Compensation Table for such fiscal year. Please refer to “Executive Compensation – Executive Compensation Tables – Fiscal Year 2023 Summary Compensation Table.” |
Pay Versus Performance
| (2) The dollar amounts reported in column (c) represent the amount of executive “compensation actually paid” (“CAP”) to our PEO, as computed in accordance with Item 402(v) of Regulation S-K for each covered fiscal year. The dollar amounts do not reflect the actual amount of compensation earned or received by or paid to our PEO in each covered fiscal year. Our PEO does not participate in a defined benefit plan, so no adjustment for pension benefits is included in the table below. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to our PEO’s total compensation for each covered fiscal year to determine his CAP: |
Pay Versus Performance
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards (a) | Equity Award Adjustments (b) | Compensation Actually Paid to PEO | | 2023 | $300,000 | $0 | ($152,544) | $147,456 | | 2022 | $450,000 | $0 | ($70,866,709) | ($70,416,709) | | 2021 | $450,000 | $0 | $101,576,238 | $102,026,238 |
Pay Versus Performance
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for each covered fiscal year. |
Pay Versus Performance
| (b) The equity award adjustments for each covered fiscal year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year; (ii) the amount equal to the change as of the end of the covered fiscal year (from the end of the prior fiscal year) in fair value (whether positive or negative) of any equity awards granted in any prior fiscal year that are outstanding and unvested as of the end of the covered fiscal year; (iii) for equity awards that are granted and vest in the same covered fiscal year, the fair value as of the vesting date; (iv) for equity awards granted in any prior fiscal year for which all |
Pay Versus Performance
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Pay Versus Performance
applicable vesting conditions were satisfied at the end of or during the covered fiscal year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative); (v) for equity awards granted in any prior fiscal year that are determined to fail to meet the applicable vesting conditions during the covered fiscal year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year. The valuation assumptions used to calculate the fair values of the stock options held by our PEO that vested during or were outstanding as of the end of each covered fiscal year materially differed from those valuation assumptions disclosed at the time of grant in the following respects: the expected term assumptions varied from seven years to ten years, the stock price volatility assumptions varied from 51.95% to 57.13%, and the risk-free interest rate assumptions varied from 1.09% to 4.75%, depending on the specific stock option the fair value of which was being recalculated. The valuation assumptions used to calculate the fair values of the RSU awards held by our PEO that vested during or were outstanding as of the end of each covered fiscal year did not materially differ from those valuation assumptions disclosed at the time of grant. For the majority of these values, the valuation was based on objective, observable market prices on the closing price on the day of vest. The amounts deducted or added in calculating the equity award adjustments are as follows:
Pay Versus Performance
| Year | Year End Fair Value of Equity Awards | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in Year | Fair Value at End of Prior Year of Equity Awards that Failed to Meet Vesting Conditions in Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $0 | $123,232 | $0 | ($275,776) | $0 | — | ($152,544) | | 2022 | $0 | ($41,690,077) | $0 | ($29,176,632) | $0 | — | ($70,866,709) | | 2021 | $0 | $87,392,626 | $0 | $14,183,612 | $0 | — | $101,576,238 |
Pay Versus Performance
| (3) The dollar amounts reported in column (d) represent the average of the amounts of total compensation reported for our named executive officers (our “NEOs”) as a group (excluding Mr. Skates, who has served as our PEO since 2012) for each covered fiscal year in the “Total” column of the Summary Compensation Table for such fiscal year. Please refer to “Executive Compensation – Executive Compensation Tables – Fiscal Year 2023 Summary Compensation Table.” The names of each NEO (excluding our PEO) included for purposes of calculating the average of the amounts of total compensation in each covered fiscal year are as follows: (i) for 2023, Christopher Harms, our Chief Financial Officer, Hoang Vuong, our former Chief Financial Officer, Thomas Hansen, our President, and Curtis Liu, our Chief Technology Officer; (ii) for 2022, Hoang Vuong, our Chief Financial Officer, Thomas Hansen, our President, Curtis Liu, our Chief Technology Officer, and Matthew Heinz, our Chief Revenue Officer; and (iii) for 2021, Hoang Vuong, our Chief Financial Officer, and Matthew Heinz, our Chief Revenue Officer. |
Pay Versus Performance
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Pay Versus Performance
| (4) The dollar amounts reported in column (e) represent the average of the amount of executive “compensation actually paid” to our NEOs as a group (excluding our PEO), as computed in accordance with Item 402(v) of Regulation S-K for each covered fiscal year. The dollar amounts do not reflect the average actual amount of compensation earned or received by or paid to our NEOs as a group (excluding our PEO) in each covered fiscal year. Our NEOs do not participate in a defined benefit plan, so no adjustment for pension benefits is included in the table below. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average of the total compensation of our NEOs as a group (excluding our PEO) for each covered fiscal year to determine the CAP, using the same methodology described above in Note 2(b): |
Pay Versus Performance
| Year | Average Reported Summary Compensation Table Total for Non-PEO Named Executive Officers | Average Reported Value of Equity Awards (a) | Average Equity Award Adjustments (b) | Average Compensation Actually Paid to Non- PEO Named Executive Officers | | 2023 | $3,351,589 | 2,864,822 | $1,755,794 | $2,242,561 | | 2022 | $7,994,979 | $7,496,242 | ($14,700,911) | ($14,202,174) | | 2021 | $771,571 | $0 | $39,875,109 | $40,646,680 |
Pay Versus Performance
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for each covered fiscal year. |
Pay Versus Performance
| (b) The valuation assumptions used to calculate the fair values of the stock options held by our NEOs as a group (excluding our PEO) that vested during or were outstanding as of the end of each covered fiscal year materially differed from those valuation assumptions disclosed at the time of grant in the following respects: the expected term assumptions varied from five years to ten years, the stock price volatility assumptions varied from 52.0% to 60.60%, and the risk-free interest rate assumptions varied from 0.9% to 4.75%, depending on the specific stock option the fair value of which was being recalculated. The valuation assumptions used to calculate the fair values of the RSU awards held by our NEOs as a group (excluding our PEO) that vested during or were outstanding as of the end of each covered fiscal year did not materially differ from those valuation assumptions disclosed at the time of grant. For the majority of these values, the valuation was based on objective, observable market prices on the closing price on the day of vest. |
Pay Versus Performance
The amounts deducted or added in calculating the average total equity award adjustments are as follows:
Pay Versus Performance
| Year | Average Year End Fair Value of Equity Awards | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | Total Average Equity Award Adjustments | | 2023 | $2,503,568 | $133,446 | $474,306 | ($134,872) | ($1,220,654) | — | $1,755,794 | | 2022 | $5,152,809 | ($10,410,578) | $353,556 | ($9,796,698) | $0 | — | ($14,700,911) | | 2021 | $0 | $30,477,302 | — | $9,397,807 | $0 | — | $39,875,109 |
Pay Versus Performance
| (5) Cumulative total stockholder return (“TSR”) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period. |
Pay Versus Performance
| (6) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: the NASDAQ Emerging Cloud Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our 2023 Annual Report. |
Pay Versus Performance
| (7) The dollar amounts reported represent the amount of net income (loss) reflected in our audited financial statements for each covered fiscal year. |
Pay Versus Performance
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Pay Versus Performance
Financial Performance Measures For the fiscal years covered by this table, (i) in 2023, we used two financial performance measures, revenue and non-GAAP operating income, in our short-term incentive compensation award program and (ii) in 2022 and 2021 we did not use any financial or other performance measures for our short-term or long-term incentive compensation award programs. Please see our “Compensation Discussion and Analysis – Elements of our Executive Compensation Program – Cash-Based Incentive Compensation” for more information on our most important financial performance measures for the years covered by this table. Analysis of Information Presented in Pay-Versus-Performance Table As described in more detail in “Executive Compensation – Compensation Discussion and Analysis,” our executive compensation program reflects a variable “pay-for-performance” philosophy. Over the three years since our Direct Listing, we have used financial or other performance measures to align executive compensation with our performance only in 2023 with respect to our short-term incentive compensation award program. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between the information presented in the Pay-Versus-Performance Table.
Compensation Actually Paid and Company TSR
Compensation Actually Paid and Company TSR As reflected by the following graph, the amount of compensation actually paid to our PEO and the average amount of compensation actually paid to our other NEOs as a group (excluding our PEO) is generally aligned with our TSR for the period presented in the Pay-Versus-Performance Table. This alignment of compensation actually paid with our cumulative TSR over the period presented results because a significant portion of the compensation provided to our PEO and our other NEOs is comprised of equity awards, the value of which is dependent on the growth of our common stock price. We believe equity compensation creates an ownership culture among our NEOs that provides an incentive to contribute to the continued growth and development of our business and aligns the interests of our NEOs with those of our stockholders. Generally, we seek to provide the majority of the target total direct compensation opportunity of our PEO and our other NEOs in the form of equity awards, including options to purchase shares of our common stock and restricted stock unit awards.
Compensation Actually Paid and Company TSR
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Compensation Actually Paid and Net Income (Loss)
Compensation Actually Paid and Net Income (Loss) As reflected in the following graph, the amount of compensation actually paid to our PEO and the average amount of compensation actually paid to our other NEOs as a group (excluding our PEO) decreased significantly in 2022, while our net income (loss) also declined during that period. We have not used net income (loss) as a financial performance measure in our overall executive compensation program, so there is, at best, only an indirect correlation between our profitability and the compensation that we pay to our PEO and our other NEOs. As described in more detail in “Executive Compensation – Compensation Discussion and Analysis,” we seek to provide the majority of the target total direct compensation opportunity of our PEO and our other NEOs in the form of equity awards under our long-term incentive compensation program.
Compensation Actually Paid and Net Income (Loss)
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Compensation Actually Paid and GAAP Revenue
Compensation Actually Paid and GAAP Revenue As reflected in the following graph, the amount of compensation actually paid to our PEO and the average amount of compensation actually paid to our other NEOs as a group (excluding our PEO) decreased significantly in 2022, largely as a result of the decrease in unrealized appreciation in our PEO’s and other NEOs’ outstanding equity awards reflecting the volatility of our stock price during the year, while our revenue has consistently and significantly increased during the past three years. Given our growth-oriented focus, we have used and continue to use revenue as one of the financial performance measures in our short-term incentive compensation program and believe that, for purposes of our long-term incentive compensation program, revenue growth is an important contributing factor to the market’s evaluation of our stock price which is, of course, the key driver for the stock options granted to our PEO and other NEOs.
Compensation Actually Paid and GAAP Revenue
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Company TSR and Peer Group TSR
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1)($) | Option Awards(1)($) | Total ($) | | Pat Grady | — | 175,157 | — | 175,157 | | Ron Gill | 57,000 | 175,157 | — | 232,157 | | Erica Schultz | 34,000 | — | — | 34,000 | | Elisa Steele | 48,000 | — | — | 48,000 | | Eric Vishria | — | 175,157 | — | 175,157 | | James Whitehurst | 59,000 | — | — | 59,000 | | Catherine Wong | 37,000 | — | — | 37,000 |