DEF 14A of Arhaus, Inc.
Filed Apr 10, 2025 · FY20240001193125-25-077328
NOMINEES FOR ELECTION AT ANNUAL MEETING
NOMINEES FOR ELECTION AT ANNUAL MEETING
NOMINEES FOR ELECTION AT ANNUAL MEETING
| Albert Adams | Age: 74 | Director Since 2021 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
Albert Adams has served as a member of our Board since July 2021, on the Board of Directors of Arhaus, LLC since 2014, and joined the Board of Directors of the predecessor of Arhaus, LLC in 2001. Mr. Adams joined Baker & Hostetler LLP in 1977, became a partner in 1984, and served as a member of its governing body between 1993 to 2014. Mr. Adams’ practice is in the business and corporate areas, with special emphasis on the structuring and financial aspects of business transactions. Mr. Adams has served as a director of numerous private businesses and seven public companies. He also has been a board member or trustee of a number of community and charitable organizations, including the Cleveland Chapter of the American Red Cross, the Center for Families and Children, the Greater Cleveland Roundtable, the Greater Cleveland Sports Commission, the Corporate College (a division of Cuyahoga Community College), the Western Reserve Historical Society, Learning Disability Associates, and the Karamu Playhouse. We believe Mr. Adams is qualified to serve on our Board of Directors because of his combination of legal and business skills and his extensive experience in advising public and private companies in various capacities, including with respect to capital markets activity, business combinations, and corporate governance.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| Stuart Burgdoerfer | Age: 62 | Director Since 2024 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
Stuart Burgdoerfer has served as a member of our Board since June 2024. Mr. Burgdoerfer currently serves on the board of directors of The Progressive Corporation as chair of its Audit Committee and a member of its Technology Committee. Prior to his retirement, he was the Executive Vice President and Chief Financial Officer of L Brands, Inc. from April 2007 through August 2021, and served from May 2020 through February 2021 as Interim Chief Executive Officer of L Brand’s subsidiary Victoria’s Secret (VS NewCo). Mr. Burgdoerfer’s experience includes work as a CPA at Deloitte, as a management consultant and in financial leadership roles at PepsiCo/YUM Brands subsidiary Pizza Hut, and as a Senior Vice President of Finance at The Home Depot. Mr. Burgdoerfer also served as a member of the board of Galyan’s Trading Company, which shares were listed on NASDAQ until the Company was acquired by Dick’s Sporting Goods in 2004, and the Spelman College Board of Trustees. We believe Mr. Burgdoerfer is qualified to serve on our board of directors because his substantial experience in leadership roles as a financial professional and senior executive enhances the Board’s financial expertise.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| John Kyees | Age: 78 | Director Since 2021 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
John Kyees has served as a member of our Board since 2021 and served as a member of the Board of Directors of Arhaus, LLC since November 2011. He is currently the President of Kyees Construction. Mr. Kyees has held the Chief Financial Officer role at the following retailers: Urban Outfitters, Inc. from 2003 to 2010, bebe Stores, Inc. from 2002 to 2003, Skinmarket from 2000 to 2002, Ashley Stewart from 1997 to 2002, Express (Division of the Limited) from 1984 to 1997, and Chas. A. Stevens (Division of Hartmarx) from 1982 to 1984. Mr. Kyees recently served on the board of directors of Vera Bradley from 2010 to 2022 as lead independent director and formerly served as chair of the audit committee, and he previously served as chair and a director of Destination XL Group, Inc. We believe Mr. Kyees is qualified to serve on our Board of Directors because of his extensive executive-level retail experience having served as Chief Financial Officer for several prominent retailers.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| John M. Roth | Age: 66 | Director Since 2021 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
John M. Roth has served as a member of our Board since 2021 and served as a member of the Board of Directors of Arhaus, LLC since January 2014. Mr. Roth joined Freeman Spogli in 1988 and has been a partner since 1993. Mr. Roth previously served as a director of Floor & Decor Holdings, Inc. from November 2010 to December 2020 and El Pollo Loco Holdings, Inc. from 2007 to August 2023. We believe Mr. Roth is qualified to serve on our Board of Directors because of his extensive experience as a Board member of numerous retail and consumer businesses and his experience and insights into strategic expansion opportunities, capital markets, and capitalization strategies.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| OTHER DIRECTORS |
NOMINEES FOR ELECTION AT ANNUAL MEETING
The following Directors have terms that expire in 2026 and 2027 and will continue to serve as Directors following the Annual Meeting.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| Bill Beargie | Age: 68 | Director Since 2021 Term Expires: 2027 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
Bill Beargie has served as a member of our Board since 2021, served as a member of the Board of Directors of Arhaus, LLC since 2014, and joined the Board of Directors of the predecessor of Arhaus, LLC in 2001. Mr. Beargie served as a CPA for Card, Palmer, Sibbison & Co. from 2015 until his retirement in 2023. Mr. Beargie was Chief Financial Officer and Administrative Vice President of Arhaus from 1987 to 1997. We believe Mr. Beargie is qualified to serve on our Board of Directors because of his extensive experience in accounting and finance and his familiarity with the Company as its former Chief Financial Officer.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| Alexis DePree | Age: 46 | Director Since 2023 Term Expires: 2026 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
Alexis DePree has served as a member of our Board since March 2023. Ms. DePree has served as Chief Operating Officer of Nordstrom, Inc. since May 2024. Prior to that, Ms. DePree served as Chief Supply Chain Officer of Nordstrom since January 2020. Ms. DePree previously served as Vice President of Americas Sort Centers at Amazon.com, Inc. from 2018 to 2020, and as Amazon’s Vice President of Global Supply Chain Operations from 2016 to 2018. From 2007 to 2016, she held executive positions with increasing responsibility at Target Corporation, prior to which she was employed at Dell Technologies Inc. in various leadership positions from 2001 to 2005. We believe Ms. DePree is qualified to serve on our Board of Directors because of her significant supply chain experience in the retail industry.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| Rick Doody | Age: 66 | Director Since 2021 Term Expires: 2026 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
Rick Doody has served as a member of our Board since 2021 and served as a member of the Board of Directors of Arhaus, LLC since January 2014. Mr. Doody was the chair and founder of Bravo/Brio Restaurant Group (BBRG) and served as CEO and then its chairman from 1992 until it was sold in 2018. Mr. Doody owns six restaurant concepts in the Cleveland area: Cedar Creek Grille, 17 River Grille, Lindey’s Lake House, Jojo’s Bar and Bar Italia (2). Mr. Doody is a member of the World Presidents’ Organization (WPO) and serves on the boards of Lindey’s, Stella Maris Rehabilitation Center, and the Boys and Girls Club of Cleveland. We believe Mr. Doody is qualified to serve on our Board of Directors because of his substantial management, operational, and entrepreneurial experience related to restaurant concepts and site selection.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| Andrea Hyde | Age: 60 | Director Since 2021 Term Expires: 2026 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
Andrea Hyde has served as a member of our Board since 2021 and served as a member of the Board of Directors of Arhaus, LLC since January 2018. Ms. Hyde is the founder and President of Hyde & Chic Inc., a business growth strategy consulting firm, and has been a director of Awake Chocolate since 2022. Prior to founding Hyde & Chic Inc. in January 2018, Ms. Hyde was Chief Executive Officer of Draper James from 2014 to 2017. Prior to her role at Draper James, Ms. Hyde held the positions of President of Burch Creative Capital and President & Chief Executive Officer of French Connection USA. Ms. Hyde held senior management positions at Kenneth Cole and The Gap, where she oversaw the marketing departments and was part of the initial concept and development team for Old Navy. Early in her career she worked for Estee Lauder and Calvin Klein. We believe Ms. Hyde is qualified to serve on our Board of Directors because of her extensive experience in leadership management, marketing, and branding lifestyle retail concepts and her knowledge of building out omni-channel platforms.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| Gary Lewis | Age: 66 | Director Since 2021 Term Expires: 2027 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
Gary Lewis has served as a member of our Board since 2021, served as a member of the Board of Directors of Arhaus, LLC since January 2014, and joined the Board of Directors of the predecessor to Arhaus, LLC in September 2013. Mr. Lewis has been a principal at GLA Real Estate since 2013. Prior to his role at GLA Real Estate, Mr. Lewis was Senior Executive Vice President and President of the Mall Leasing Division at Simon Property Group from 1986 to 2013. Mr. Lewis also guest teaches in the Ring Distinguished Speakers series in the Bergstrom Center for Real Estate in the Warrington College of Business Administration at the University of Florida and is a member of the International Council of Shopping Centers (ICSC). We believe Mr. Lewis is qualified to serve on our Board of Directors because of his substantial experience in retail real estate, including the representation of landlords and tenants in lease negotiations, and experience leading and overseeing new construction, renovations, and expansions of retail and mixed-use projects.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| John Reed | Age: 70 | Chairman and Director Since 2021 Term Expires: 2027 |
NOMINEES FOR ELECTION AT ANNUAL MEETING
John Reed has served as a member of our Board since July 2021. He co-founded Arhaus in 1986 and has served on the Board of Directors of Arhaus, LLC as Chairman since its formation in December 2013, and served as our Chief Executive Officer (“CEO”) from January 1997 through December 2015 and since February 2017 through the reorganization into Arhaus, Inc. We believe Mr. Reed is qualified to serve on our Board of Directors because of, among other things, his extensive knowledge and experience with the business and his role as our Founder(1) and CEO. (1) “Founder” refers to John Reed and when used in the context of ownership of our securities, includes trusts or other entities controlled by him that hold Class B common stock.
NOMINEES FOR ELECTION AT ANNUAL MEETING
| GOVERNANCE |
Compensation Committee
| • | reviewing, approving, and making recommendations to our Board of Directors about incentive compensation and equity compensation plans; and |
Compensation Committee
| • | appointing and overseeing any compensation consultants. |
Contacting the Board of Directors
| DIRECTOR COMPENSATION |
Contacting the Board of Directors
Each non-employee Director, other than Mr. Roth, receives an annual retainer of $80,000. In addition, the non-employee Director serving as the Chair of our Audit Committee receives an additional annual retainer of $20,000, the Chairs of each of our Compensation Committee, Nominating and Corporate Governance Committee, Real Estate Committee and Technology Committee receive an additional annual retainer of $15,000, and the Independent Lead Director receives an additional annual retainer of $30,000, in each case earned on a quarterly basis. In 2024, each non-employee Director, other than Mr. Roth, also received an annual restricted stock unit award with a grant date value of $110,000, which generally vests in full one year after the date of grant, subject to the non-employee Director continuing in service through such date. The vesting of this award accelerates and vests in the event a Director’s service is terminated for any reason other than a removal in accordance with the Company’s Amended and Restated Bylaws. The following table sets forth the compensation paid to the Company’s non-employee Directors during the 2024 fiscal year.
Contacting the Board of Directors
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation(3) | Total | | Albert Adams | $125,000 | $110,014 | — | $235,014 | | Bill Beargie | $80,000 | $110,014 | — | $190,014 | | Stuart Burgdoerfer (2) | $46,667 | $110,012 | — | $156,679 | | Alexis DePree | $83,750 | $110,014 | — | $193,764 | | Rick Doody | $80,000 | $110,014 | — | $190,014 | | Andrea Hyde | $95,000 | $110,014 | — | $205,014 | | John Kyees | $100,000 | $110,014 | — | $210,014 | | Gary Lewis | $95,000 | $110,014 | $36,000 | $241,014 | | John M. Roth | — | — | — | — |
Contacting the Board of Directors
| (1) Represents grant date fair value of RSU awards. Except for the award to Mr. Burgdoerfer, the awards were granted on May 16, 2024, and valued based on that day’s closing price of $16.42. All awards will vest on May 16, 2025, if the individual remains a director until that date. |
Contacting the Board of Directors
| (1) Beneficial ownership excludes unvested RSUs and PSUs that will not vest within 60 days of March 17, 2025. The number of unvested RSUs held is 6,700 for each current non-employee director, which vest within 60 days, with the exception of Mr. Roth, who holds 0 unvested RSUs and Mr. Burgdoerfer, who holds 6,954 RSUs. Ms. Chi holds 34,670 unvested PSUs and 731,043 unvested RSUs. Ms. Porter holds 34,670 unvested PSUs and 464,376 unvested RSUs. Ms. Veltri holds 34,670 unvested PSUs and 264,376 unvested RSUs. |
Other
| • | support long-term sustainable business growth by attracting, retaining and motivating innovative, effective, and engaged leaders; |
Other
| • | create incentives aligned with achievement of the Company’s goals to drive long-term sustainable value for all our stakeholders. |
Other
While we do not specifically benchmark our compensation against companies in the peer group, our Compensation Committee periodically reviews compensation analysis of the compensation paid by these companies and periodically surveys the compensation practices of these companies to assess our competitiveness. This information is used as part of the Compensation Committee’s considerations in setting compensation for our named executive officers. Stockholder Advisory Vote. Our Compensation Committee recognizes the fundamental interest our stockholders have in the compensation of our named executive officers. At the 2024 Annual Meeting of Stockholders, approximately 98% of the shares present and entitled to vote on the advisory resolution on named executive compensation were voted to approve the compensation of the Company’s named executive officers. Based upon the results of such advisory vote and our review of our compensation policies and decisions, we believe that our existing compensation policies and decisions are consistent with our compensation philosophy and objectives discussed above and adequately align the interests of our named executive officers with the interests of our stockholders. Elements of our Executive Compensation Program The Company’s executive compensation program consists of the following elements, each established in order to achieve the compensation objective specified below:
Other
| Compensation Element | Desired Objectives and Key Features | | Base Salary | Attracts and retains key talent by offering base cash compensation at competitive levels | | Cash-Based Incentive Compensation | Provides short-term incentives based on the Company’s annual performance | | Equity Compensation | Provides long-term equity incentives to align the interests of our named executive officers and stockholders and to retain key talent | | Severance and Other Benefits Potentially Payable upon Termination of Employment or Change in Control | Creates clarity around termination or change in control events and provides for retention of executives | | Health and Welfare Benefits | Offers market-competitive benefits |
Cash-Based Incentive Compensation
Cash-Based Incentive Compensation We consider annual cash incentive bonuses to be an important component of our total compensation program. Annual Incentive Plan For fiscal year 2024, the Compensation Committee adopted a cash-based incentive plan, the Arhaus Incentive Plan (“AIP”), in which certain team members, including our named executive officers, participated. Each participant had a target incentive amount based on a percentage of base salary for 2024 (“Target Incentive”). In fiscal year 2024, the Target Incentives for our named executive officers were as follows:
Cash-Based Incentive Compensation
Awards under the AIP were based on the Company’s achievement towards goals established for two metrics: (a) 2024 Adjusted EBITDA (before bonus) and (b) 2024 demand. Adjusted EBITDA is defined on the same basis and using the same criteria that were applied in connection with establishing the 2024 budget and was calculated before giving effect to payments under the AIP. Adjusted EBITDA is defined as EBITDA (net income before depreciation and amortization, interest expense and taxes) further adjusted for equity based compensation expense, annual corporate bonus expense and other expenses. Demand is an operating metric that we use to measure the dollar value of orders (based on purchase price) at the time the order is placed, net of the dollar value of cancellations and returns (based on unpaid purchase price and amount credited to client). In establishing the levels of Adjusted EBITDA and demand that would earn payouts, the Compensation Committee used a matrix of potential results based on business expectations. The Compensation Committee determined a threshold AIP payout of 25% of Target Incentive and a maximum AIP payout of 200% of Target Incentive. For fiscal year 2024, although demand was achieved at target, Adjusted EBITDA was below the threshold amount established resulting in no payout under the program.
Equity Compensation
Equity Compensation The Company adopted the 2021 Equity Incentive Plan in order to facilitate the grant of cash and equity incentives to Directors, team members (including our named executive officers), and consultants of the Company and certain of its affiliates and to enable the Company and certain of its affiliates to obtain and retain the services of these individuals, which is essential to our long-term success. A substantial portion of compensation for our executive officers (other than John Reed) is in the form of long-term equity compensation. In granting equity compensation, the Committee uses a combination of restricted stock units (“RSUs”) and performance stock units (“PSUs”). The Committee believes this design ensures that the majority of compensation opportunity is linked to the Company’s financial performance. Each RSU represents a contingent right to receive one share of the Company’s Class A common stock upon vesting. The RSUs generally vest in one-third increments on each of the first, second and third anniversary of the date of grant, provided that the executive officer continues to serve the Company through the applicable vesting date (“Continuous Service”). The Committee has from time-to-time made additional grants of RSUs for retention purposes to one or more executive officers. Each PSU represents a contingent right to receive one share of the Company’s Class A common stock. The number of shares earned upon vesting of the PSUs is based on the Company’s financial performance as measured against pre-established target goals over a multi-year period, generally three. 2024 Equity Grants. The RSUs granted in 2024 have terms similar to prior year grants. For PSUs granted in 2024, the number of shares earned will be based on (1) cumulative demand revenue(4) (50% of PSUs) and (2) cumulative adjusted EBITDA(5) (50% of PSUs) over the performance period beginning on January 1, 2024 and ending on December 31, 2026 (the “Performance Period”). PSUs will vest as of the end of the Performance Period subject to the executive officer’s Continuous Service, but awards will not settle and shares will not be issued until results are certified by the Compensation Committee. The executive officer may earn shares representing between 0% and 200% of the PSU target award based on the Company’s achievement of each of the performance goals. (4) Demand revenue is defined as the dollar value of orders at the time the order is placed, net of the dollar value of cancellations and returns. (5) Adjusted EBITDA is defined as EBITDA (net income before depreciation and amortization, interest expense and taxes) further adjusted for incentive unit compensation expense, annual corporate bonus expense and other expenses. On April 12, 2024, the Compensation Committee granted the equity awards set forth in the table below.
Equity Compensation
| Named Executive Officer | RSUs (#) | PSUs Target Award (#) | | John Reed | — | — | | Dawn Phillipson | 4,538 | 13,613 | | Kathy Veltri | 4,538 | 13,613 | | Jennifer Porter | 4,538 | 13,613 | | Lisa Chi | 4,538 | 13,613 |
Equity Compensation
Settlement of 2022-24 PSUs (Granted in 2022). The Committee reviewed the Company’s (1) cumulative demand revenue (50% of PSUs) and (2) cumulative adjusted EBITDA (50% of PSUs) results over the three-year performance period beginning January 1, 2022 and ending December 31, 2024 to determine the payout with respect to the 2022 PSUs. The total number of shares earned was 110.27% of the PSU target award. This payout was based on achievement of cumulative demand revenue at 102.14% of target performance (resulting in 108.55% of the target award of PSUs associated with cumulative demand revenue vesting), and cumulative adjusted EBITDA at 103% of target performance (resulting in 111.98% of the target award of PSUs associated with adjusted EBITDA vesting).
Equity Compensation
| Named Executive Officer | PSUs Target Award (#) | PSUs Vested (#) | | John Reed | — | — | | Dawn Phillipson | 37,500 | 41,352 | | Kathy Veltri | 37,500 | 41,352 | | Jennifer Porter | 37,500 | 41,352 | | Lisa Chi | 37,500 | 41,352 |
Health and Welfare Benefits
| • | short-term and long-term disability insurance; and |
Clawback Policy
Clawback Policy We have adopted a Dodd-Frank Wall Street Reform and Consumer Protection Act-compliant compensation recoupment policy in accordance with SEC and listing exchange requirements (the “Clawback Policy”). In the event we are required to prepare an accounting restatement, the policy provides for the recovery by the Company of any compensation received after the effective date of the policy, October 3, 2023, by any current or former executive officer that is based wholly or in part upon the attainment of a restated financial reporting measure. As previously disclosed, on March 11, 2024, the Company filed Amendment No. 1 on Form 10-Q/A to its Quarterly Report on Form 10-Q for the period ended September 30, 2023 (the “Q3 Form 10-Q” and such period, the “Affected Period”) to amend and restate its previously issued unaudited condensed consolidated financial statements for the Affected Period. The identified error was within the unaudited condensed consolidated balance sheet as of September 30, 2023 and resulted in inaccurate cash flows ascribed to operating and investing activities in the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2023. In preparation of the March 31, 2024 unaudited condensed consolidated financial statements, the Company identified additional errors within the unaudited condensed consolidated balance sheet as of September 30, 2023, and on May 10, 2024 filed Amendment No. 2 on Form 10-Q/A to its Q3 Form 10-Q for the Affected Period. The errors resulted in inaccurate cash flows ascribed to operating and investing activities in the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2023. The Compensation Committee considered whether the restatements required recovery of erroneously awarded incentive-based compensation pursuant to the Clawback Policy. The Committee concluded that the restatements did not impact the performance metrics used for executive compensation and therefore no recovery of incentive-based compensation was required.
Severance and Other Benefits Payable upon Termination of Employment or Change in Control
Severance and Other Benefits Payable upon Termination of Employment or Change in Control Our named executive officers, except Mr. Reed, have employment agreements with the Company, pursuant to which they are entitled to receive certain benefits upon qualifying termination. See the section “Potential Payments upon Termination or Change in Control” below for additional information regarding these benefits.
COMPENSATION COMMITTEE REPORT
| SUMMARY COMPENSATION TABLE |
COMPENSATION COMMITTEE REPORT
| Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock Awards (3) | Non-Equity Incentive Plan Compensation (4) | All Other Compensation (5) | Total | | | | $ | $ | $ | $ | $ | $ | | John Reed President and Chief Executive Officer | 2024 2023 2022 | 1,491,280 1,445,231 1,379,953 | — 173,428 — | — — — | — 520,283 1,655,944 | 766,248 735,035 563,941 | 2,257,528 2,873,977 3,599,838 | | Dawn Phillipson Chief Financial Officer | 2024 2023 2022 | 489,992 474,862 448,231 | — 56,983 — | 284,789 673,037 287,500 | — 170,950 537,877 | 121,174 37,153 29,781 | 895,955 1,412,985 1,303,389 | | Kathy Veltri Chief Retail Officer | 2024 2023 2022 | 489,992 474,862 449,076 | — 47,486 — | 284,789 673,037 287,500 | — 142,458 449,076 | 90,209 28,081 34,932 | 864,990 1,365,924 1,220,584 | | Jennifer Porter Chief Marketing and eCommerce Officer | 2024 | 479,340 | — | 284,789 | — | 113,829 | 877,958 | | Lisa Chi Chief Merchandising Officer | 2024 2023 | 467,544 456,185 | — 43,357 | 284,789 1,489,037 | — 130,071 | 128,996 11,803 | 881,329 2,130,453 |
COMPENSATION COMMITTEE REPORT
| GRANTS OF PLAN-BASED AWARDS |
COMPENSATION COMMITTEE REPORT
| OUTSTANDING EQUITY AWARDS AT 2024 YEAR END |
COMPENSATION COMMITTEE REPORT
| (1) All outstanding equity awards reported in this table were granted under either the pre-IPO plan (in the case of awards granted pre-IPO) or the 2021 Equity Incentive Plan (in the case of awards granted since our IPO). Restricted shares were exchanged for incentive units granted under the pre-IPO plan at the time of the IPO and in connection with the reorganization as described herein. |
COMPENSATION COMMITTEE REPORT
| OPTION EXERCISES AND STOCK VESTED |
Jennifer Porter
| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
Potential Payments upon Termination or Change in Control at December 31, 2024
Potential Payments upon Termination or Change in Control at December 31, 2024
Potential Payments upon Termination or Change in Control at December 31, 2024
| Name | Voluntary Termination (or Retirement) | Termination for Cause | Termination Without Cause (Or Voluntary With Good Reason) | Death | Disability | Change in Control(1) | | | ($) | ($) | ($) | ($) | ($) | ($) | | John Reed | — | — | — | — | — | — | | Dawn Phillipson(2) Salary Annual Bonus COBRA Benefits Restricted Shares(3) RSUs(3) PSUs(3)(4) Total | — — — — — — — | — — — — — — — | 246,376 — 11,275 457,103 — — 714,754 | — — — — 439,130 678,398 1,117,528 | — — — — 439,130 678,398 1,117,528 | — — — 457,103 439,130 678,398 1,574,631 | | Kathy Veltri Salary Annual Bonus COBRA Benefits Restricted Shares(3) RSUs(3) PSUs(3)(4) Total | — — — — — — — | — — — — — — — | 246,376 — 4,708 — — — 251,084 | — — — — 439,130 678,398 1,117,528 | — — — — 439,130 678,398 1,117,528 | — — — — 439,130 678,398 1,117,528 | | Jennifer Porter Salary Annual Bonus COBRA Benefits Restricted Shares(3) RSUs(3) PSUs(3)(4) Total | — — — — — — — | — — — — — — — | 241,020 — 4,072 — — — 245,092 | — — — — 439,130 678,398 1,117,528 | — — — — 439,130 678,398 1,117,528 | — — — — 439,130 678,398 1,117,528 |
Potential Payments upon Termination or Change in Control at December 31, 2024
| Name | Voluntary Termination (or Retirement) | Termination for Cause | Termination Without Cause (Or Voluntary With Good Reason) | Death | Disability | Change in Control(1) | | | ($) | ($) | ($) | ($) | ($) | ($) | | Lisa Chi Salary Annual Bonus COBRA Benefits Restricted Shares(3) RSUs(3) PSUs(3)(4) Total | — — — — — — — | — — — — — — — | 224,952 — 12,763 — — — 237,715 | — — — — 1,065,800 678,398 1,744,198 | — — — — 1,065,800 678,398 1,744,198 | — — — 148,670 1,065,800 678,398 1,892,868 |
Potential Payments upon Termination or Change in Control at December 31, 2024
| (1) The awards shown reflect (i) a change in control for restricted shares and (ii) termination without Cause within sixty (60) days preceding or twenty-four (24) months following a change in control for RSUs and PSUs. All such awards would also vest if not assumed or substituted with a substantially equivalent award by a successor corporation. |
Potential Payments upon Termination or Change in Control at December 31, 2024
| (2) Ms. Phillipson resigned as our CFO effective January 15, 2025 and did not receive any payments described in the table above in connection with her resignation. |
Potential Payments upon Termination or Change in Control at December 31, 2024
| (3) The potential payments for equity awards are based on the closing price of the Company’s Class A common stock on December 31, 2024. |
Potential Payments upon Termination or Change in Control at December 31, 2024
| (4) The amounts shown assume target performance. See Compensation, Discussion and Analysis, Settlement of 2022-2024 PSUs (Granted in 2022) for actual payout with respect to 2022 PSU awards. |
Potential Payments upon Termination or Change in Control at December 31, 2024
The following is a description of the payments that may be made to our named executive officers upon several events of termination or a change in control. Pursuant to the employment agreements with each of our named executive officers, except Mr. Reed, if the named executive officer’s employment is terminated by the Company without Cause, then, subject to her or his timely signing and non-revocation of a release of claims, she or he will be entitled to: (i) a lump sum payment equal to six (6) months of base salary and (ii) a lump sum amount equal to six (6) months of COBRA.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” (as computed in accordance with Item 402 of Regulation S-K) and certain financial performance of the Company. “Compensation actually paid” does not reflect the actual amount of compensation earned or paid to an executive officer, and may differ significantly because of the impact of equity awards. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Executive Compensation.”
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Fiscal Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs(4) | Total Shareholder Return(5) | Peer Group Total Shareholder Return(6) | Net Income (millions)(7) | Adjusted EBITDA (millions)(8) | | (a) | (b) | (c) | (d) | (e) | (f) | (f) | (h) | (i) | | 2024 | $2,257,528 | $2,257,528 | $880,058 | $432,075 | $75.97 | $81.11 | $69 | $133 | | 2023 | $2,873,977 | $2,873,977 | $1,734,494 | $2,573,925 | $92.58 | $80.60 | $125 | $203 | | 2022 | $3,599,838 | $(886,579) | $1,261,987 | $263,241 | $76.17 | $69.59 | $137 | $223 |
Pay Versus Performance
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Reed (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Summary Compensation Table.” |
Pay Versus Performance
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Reed, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Reed during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Reed’s total compensation for each year to determine the compensation actually paid: |
Pay Versus Performance
| Fiscal Year | Reported Summary Compensation Table Total for PEO | Average Reported Value of Equity Awards(a) | Average Equity Award Adjustments(b) | Compensation Actually Paid to PEO | | 2024 | $2,257,528 | $— | $— | $2,257,528 | | 2023 | $2,873,977 | $— | $— | $2,873,977 | | 2022 | $3,599,838 | $— | $(4,486,417) | $(886,579) |
Pay Versus Performance
| (a) The grant date fair value of equity awards represents the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
Pay Versus Performance
| (b) Mr. Reed did not receive equity awards during 2024, 2023 or 2022. The average equity award adjustment of $(4,486,417) made in 2022 relates to the change in the fair value (from prior year-end to vesting date) of all Stock Awards granted in any prior fiscal year that vested. |
Pay Versus Performance
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers as a group (excluding Mr. Reed) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the named executive officers (excluding Mr. Reed) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2024 Dawn Phillipson, Kathy Veltri, Jennifer Porter and Lisa Chi; (ii) for 2023, Dawn Phillipson, Kathy Veltri, Lisa Chi and Venkat Nachiappan; and (iii) for 2022, Dawn Phillipson and Kathy Veltri. |
Pay Versus Performance
| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the named executive officers as a group (excluding Mr. Reed), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the named executive officers as a group (excluding Mr. Reed) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the named executive officers as a group (excluding Mr. Reed) for each year to determine the compensation actually paid, using the same methodology described above : |
Pay Versus Performance
| Fiscal Year | Average Reported Summary Compensation Table Total For Non-PEO NEOs | Average Reported Value of Equity Awards(a) | Average Equity Award Adjustments(b) | Average Compensation Actually Paid to Non-PEO NEOs | | 2024 | $880,058 | $284,789 | $(447,983) | $432,075 | | 2023 | $1,734,494 | $1,067,786 | $839,431 | $2,573,925 | | 2022 | $1,261,987 | $287,500 | $(998,746) | $263,241 |
Pay Versus Performance
| (a) The grant date fair value of equity awards represents the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
Pay Versus Performance
| (b) Description of average equity award adjustments: |
Pay Versus Performance
| | 2024 | 2023 | 2022 | | Deduction of the grant date fair value of awards reported in the “Stock Awards” column of the Summary Compensation Table (Stock Awards) for the covered year | $(284,789) | $(1,067,786) | $(287,500) | | Addition of the year-end fair value of all Stock Awards granted during the covered fiscal year that are outstanding and unvested | 170,619 | 1,501,066 | 487,500 | | Change in the year-end fair value (from prior year-end) of all Stock Awards granted in any prior fiscal year that are outstanding and unvested | (235,231) | 165,917 | (608,698) | | Change in the fair value (from prior year-end to vesting date) of all Stock Awards granted in any prior fiscal year that vested | (98,582) | 240,234 | (590,048) | | Total adjustments | $(447,983) | $839,431 | $(998,746) |
Pay Versus Performance
| (5) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
Pay Versus Performance
| (6) Cumulative Peer Group TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Dow Jones U.S. Furnishings index’s share price at the end and the beginning of the measurement period by the Dow Jones U.S. Furnishings index’s share price at the beginning of the measurement period. |
Pay Versus Performance
| (7) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
Pay Versus Performance
| (8) The dollar amounts reported represent the amount of adjusted EBITDA, which is a non-GAAP measure. We believe that adjusted EBITDA is a useful measure of operating performance as the adjustments eliminate items that we believe are not reflective of underlying operating performance |
Pay Versus Performance
| in a particular period. Adjusted EBITDA facilitates a comparison of our operating performance on a consistent basis from period-to-period and provides for a more complete understanding of factors and trends affecting our business. For more information about this measure, refer to the Company’s Annual Report on Form 10-K for the applicable year. |
Narrative Disclosure to Pay Versus Performance Table
Narrative Disclosure to Pay Versus Performance Table Financial Performance Measures The following is a list of financial performance measures, which we believe, represent the most important performance used by the Company to link compensation actually paid to our named executive officers, for fiscal year 2024, to Company performance. The demand and adjusted EBITDA measures are further described above in “Executive Compensation”.
Narrative Disclosure to Pay Versus Performance Table
| • | Demand |
Narrative Disclosure to Pay Versus Performance Table
| • | Adjusted EBITDA |
Narrative Disclosure to Pay Versus Performance Table
| • | Net income |
Narrative Disclosure to Pay Versus Performance Table
Relationship Between Financial Performance Measures We are providing the following graphics to illustrate the relationship between the “compensation actually paid” to our CEO and our named executive officers (excluding the CEO) and Company performance as set forth and described in and under the “Pay versus Performance Table,” including the cumulative total shareholder return (“TSR”) for the Company and peer group, net income and adjusted EBITDA.
Narrative Disclosure to Pay Versus Performance Table
| PROPOSAL TWO: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION |
Narrative Disclosure to Pay Versus Performance Table
Commonly referred to as a “say-on-pay” vote, this is a proposal for our stockholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement pursuant to Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”). Accordingly, we ask our stockholders to vote on the following resolution at the Annual Meeting: “RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the Annual Meeting, including the disclosures in the Executive Compensation section, the Summary Compensation Table, and the other related tables and disclosures.” This vote is advisory, and therefore not binding, on the Company, our Board of Directors or the Compensation Committee. Our Board and our Compensation Committee value the opinions of our stockholders, and to the extent there is any significant vote against this Proposal Two, we will consider our stockholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. Under current Board policy, the shareholder vote for advisory approval of named executive officer compensation will occur annually. After the 2025 Annual Meeting, the next such vote will occur at our 2026 annual meeting of shareholders.