DEF 14A of Chegg, Inc
Filed Apr 19, 2024 · FY20230001364954-24-000028
2024 Director Nominees
2024 Director Nominees We introduce our 2024 director nominees below.
2024 Director Nominees
| | | | | Committee Memberships | | | | Name | Age | Director Since | Independent | Audit Committee | Compensation Committee | Governance and Sustainability Committee | | Marne Levine | 53 | 2013 | YES | | ■ | ■ | | Paul LeBlanc | 66 | 2019 | YES | | | • | | Richard Sarnoff | 65 | 2012 | YES | ■ | | | | ■ - Member | | | | | | | | • - Chair | | | | | | |
Election of Directors
Election of Directors Our Board of Directors currently consists of 10 directors and is divided into three classes, with each class serving for three years and with the terms of office of the respective classes expiring in successive years. Directors in Class II will stand for election at this meeting. The terms of office of directors in Class III and Class I do not expire until the Annual Meetings of Stockholders to be held in 2025 and 2026, respectively. At the recommendation of our Governance and Sustainability Committee, our Board of Directors proposes that each of the three Class II nominees named below be elected as a Class II director for a three-year term expiring at the Annual Meeting of Stockholders to be held in 2027 and until such director’s successor is duly elected and qualified, or until such director’s earlier resignation or removal. Shares of our common stock represented by proxies will be voted “FOR” the election of each of the three nominees named below, unless the proxy is marked to abstain. If any of the nominees for any reason are unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder may determine. Each nominee has consented to being named in this proxy statement and to serve if elected. Proxies may not be voted for more than three directors. Stockholders may not cumulate votes in the election of directors.
Election of Directors
| Surpass the class Learning tools that go beyond graduation. | |
Election of Directors
| Chegg, Inc. | 23 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Nominees to the Board of Directors
Nominees to the Board of Directors The nominees, and their ages, occupations, and length of service on our Board of Directors are provided in the table below. Additional biographical descriptions of each nominee are set forth in the text below the table. This description includes the primary individual experience, qualifications, qualities and skills of the nominees that led to the conclusion that the nominees should serve as members of our Board of Directors at this time.
Nominees to the Board of Directors
| Name of Director/Nominee | Age(6) | Principal Occupation | Joined Our Board | | Marne Levine(1)(2) | 53 | Former Chief Business Officer, Meta Platforms, Inc. | May 2013 | | Paul LeBlanc(3) | 66 | President, Southern New Hampshire University | July 2019 | | Richard Sarnoff(4)(5) | 65 | Chairman of Media, KKR Americas Private Equity | August 2012 |
Nominees to the Board of Directors
| (1) Member of the Compensation Committee. | | (2) Member of the Governance and Sustainability Committee. | | (3) Chair of the Governance and Sustainability Committee. | | (4) Member of the Audit Committee. | | (5) Board of Directors Co-Chairperson. | | (6) Age as of the Record Date of the 2024 Annual Meeting. |
Nominees to the Board of Directors
| | | Marne Levine Marne Levine brings extensive experience in the policy, communication, and technology fields, and has served on our Board of Directors since May 2013. From September 2021 to February 2023, Ms. Levine served as the Chief Business Officer at Meta Platforms, Inc. (doing business as Meta and formerly known as Facebook, Inc.), a social media company, and served as its Vice President of Global Partnerships, Business and Corporate Development from February 2019 to June 2021. Previously, Ms. Levine served as Chief Operating Officer of Instagram from December 2014 to February 2019 where she was responsible for helping to scale the company’s business and operations globally and turn Instagram from a beloved app into a thriving business. She joined Meta in 2010 as Meta’s first Vice President of Global Policy, a position she held for four years. Prior to Meta, Ms. Levine served in the Obama Administration as Chief of Staff of the National Economic Council (NEC) at the White House and Special Assistant to the President for Economic Policy. From 2006 to 2008, Ms. Levine was Head of Product Management for Revolution Money, an early-stage start-up working on person-to-person online money transfers, which was ultimately sold to American Express. Prior to this, she served as Chief of Staff to Larry Summers, then President of Harvard University. Ms. Levine began her career in 1993 at the United States Department of Treasury under President Bill Clinton where she held several leadership positions. She holds a B.A. in Political Science and Communications from Miami University and an M.B.A. from Harvard Business School. | | | Member of Compensation Committee and Governance and Sustainability Committee DIRECTOR SINCE: 2013 | | | | | We believe that Ms. Levine should continue to serve on our Board of Directors due to her extensive experience scaling brands globally and serving in executive positions at global technology companies. |
Nominees to the Board of Directors
| Chegg, Inc. | 24 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Nominees to the Board of Directors
| | | Paul LeBlanc Paul LeBlanc has served on our Board of Directors since July 2019. Since 2003, Mr. LeBlanc has served as the President of Southern New Hampshire University, a private non-profit university. From 1996 to 2003, Mr. LeBlanc served as the President of Marlboro College, a private liberal arts college. Prior to Marlboro College, Mr. LeBlanc served as Director of Sixth Floor Media, a division of Houghton Mifflin Harcourt, Publishing Company. Mr. LeBlanc holds a B.A. in English from Framingham State University, a M.A. in English Language, Literature and Letters from Boston College, and a Ph.D. in Rhetoric, Composition and Technology from the University of Massachusetts, Amherst. | | | Chair of Governance and Sustainability Committee DIRECTOR SINCE: 2019 | | | | | We believe that Mr. LeBlanc should continue to serve on our Board of Directors due to his extensive experience in the education sector and his expertise utilizing technological innovation in higher education. |
Nominees to the Board of Directors
| | | Richard Sarnoff Richard Sarnoff has served on our Board of Directors since August 2012 and as a Co-Chairperson of our Board of Directors since July 2018. Since 2022, Mr. Sarnoff has served as the Chairman of Media, KKR Americas Private Equity. From 2014 through 2022, he served first as Managing Director and then as Partner and Head of the Media and Communications industry group at KKR, leading investments in the Media, Telecom, Information Services, Digital Media and Education sectors in the United States. From 2011 to 2014, Mr. Sarnoff was a Senior Adviser to KKR. Before 2011, Mr. Sarnoff was a longstanding senior executive at Bertelsmann AG, Europe’s largest media company, where he served in the early 2000s as EVP and Chief Financial Officer of Bertelsmann’s book publishing division, Random House, during which time he also chaired the Association of American Publishers (AAP). In 2006, Mr. Sarnoff established Bertelsmann's digital media arm, BDMI, and, as President, oversaw the corporation’s global investment activities in digital media. In 2008, Mr. Sarnoff was named Co-Chairman of Bertelsmann’s US holding company, Bertelsmann Inc., and served on the Supervisory Board of Bertelsmann AG for six years. Mr. Sarnoff currently serves on the board of directors of RBMedia, OverDrive, Teaching Strategies, AST SpaceMobile and EMSI Burning Glass, as well as numerous not-for-profit organizations. Mr. Sarnoff holds a B.A. in Art History from Princeton University and an M.B.A. from Harvard Business School. | | | Member of Audit Committee and Co-Chairperson of the Board of Directors DIRECTOR SINCE: 2012 | | | | | We believe that Mr. Sarnoff should continue to serve on our Board of Directors due to his extensive experience serving in senior leadership roles in media and digital technology companies and investing in education companies. |
Nominees to the Board of Directors
| Chegg, Inc. | 25 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Continuing Directors
Continuing Directors The directors who are serving for terms that end in 2025 and 2026, and their ages, principal occupations and length of service on our Board of Directors are provided in the table below. Additional biographical descriptions of each continuing director are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each continuing director that led to the conclusion that each director should continue to serve as a member of our Board of Directors at this time.
Continuing Directors
| Name of Director | Age(7) | Principal Occupation | Joined Our Board | | CLASS III DIRECTORS - TERMS EXPIRING 2025: | | | | | Sarah Bond(1) | 45 | President of Xbox, Microsoft Corporation | December 2020 | | Marcela Martin(4) | 52 | Chief Financial Officer, Ouro | September 2021 | | Melanie Whelan(2) | 46 | Managing Director, Summit Partners | June 2019 | | John (Jed) York(1)(3) | 43 | Chief Executive Officer, San Francisco 49ers | June 2013 | | CLASS I DIRECTORS - TERMS EXPIRING 2026: | | | | | Renee Budig(1)(5) | 63 | Former Executive Vice President and Chief Financial Officer, Paramount Streaming, a division of Paramount Global, Inc. | November 2015 | | Dan Rosensweig(6) | 62 | President, Chief Executive Officer and Co-Chairperson, Chegg, Inc. | March 2010 | | Ted Schlein(3)(4) | 60 | General Partner, Kleiner Perkins | December 2008 |
Continuing Directors
| (1) Member of the Compensation Committee. | | (2) Chair of the Compensation Committee. | | (3) Member of the Governance and Sustainability Committee. | | (4) Member of the Audit Committee. | | (5) Chair of the Audit Committee. | | (6) Co-Chairperson of the of Board of Directors. | | (7) Age as of the Record Date of the 2024 Annual Meeting. |
Continuing Directors
| Learn with Chegg Chegg is a student’s ride-or-die, 24/7, always-answers-when-you-call partner. | |
Continuing Directors
| Chegg, Inc. | 26 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Class II Directors
Class II Directors
Class II Directors
| | | Sarah Bond Sarah Bond has served on our Board of Directors since December 2020. Since October 2023, Ms. Bond has served as President of Xbox at Microsoft. From June 2020 to October 2023, Ms. Bond served as the Corporate Vice President, Game Creator Experience and Gaming Ecosystem at Microsoft, and from April 2017 to June 2020, Ms. Bond served as the Corporate Vice President of Gaming Partnerships and Business Development. Previously, Ms. Bond served in several senior roles at T-Mobile USA Inc., a telecommunications company, including as Senior Vice President of Emerging Businesses from August 2013 to September 2015, and Chief of Staff to the CEO from March 2011 to July 2013. Ms. Bond started her career at McKinsey & Company in 2001 and was as an Associate Partner before joining T-Mobile in 2011. Ms. Bond currently serves on the Board of Councilors at the USC School of Cinematic Arts, as well as on the boards of directors at the Entertainment Software Association (ESA) and Zuora Inc. Ms. Bond holds a B.A. in Economics from Yale University and an M.B.A. from Harvard Business School. | | | Member of Compensation Committee DIRECTOR SINCE: 2020 | | | | | We believe that Ms. Bond should continue to serve on our Board of Directors due to her extensive experience in leadership positions at large, global technology companies. |
Class II Directors
| | | Marcela Martin Marcela Martin has served on our Board of Directors since September 2021. Since January 2024, Ms. Martin has served as the Chief Financial Officer of Ouro, a financial technology company. Previously, Ms. Martin served as the President of BuzzFeed, Inc., an internet media company, from August 2022 to January 2024. Ms. Martin served as Chief Financial Officer of Squarespace, a website building and hosting company, from November 2020 to July 2022 and as Senior Vice President and Chief Financial Officer of Booking.com, a digital travel company, from January 2019 to November 2020. Ms. Martin was Executive Vice President and Chief Financial Officer of National Geographic Partners, a media and publishing company, from January 2016 to December 2018. From 2007 to 2016, Ms. Martin was Executive Vice President and Chief Financial Officer of Fox International Channels, a media and broadcasting company, and its Vice President and Deputy Chief Financial Officer from 2003 to 2007. Ms. Martin currently serves on the board of directors of Cvent. Ms. Martin holds a B.S. in Accounting from the University of Moron, Argentina, and an M.B.A. from the University of Liverpool, United Kingdom. | | | Member of Audit Committee. DIRECTOR SINCE: 2021 | | | | | We believe that Ms. Martin should continue to serve on our Board of Directors due to her extensive financial experience through her service as a Chief Financial Officer of public and private entities. |
Class II Directors
| Chegg, Inc. | 27 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Class II Directors
| | | Melanie Whelan Melanie Whelan has served on our Board of Directors since June 2019. Ms. Whelan has served as a Managing Director at Summit Partners, a growth equity investment firm, since June 2020 and served as an Executive in Residence from January 2020 to June 2020. Previously, Ms. Whelan served as Chief Executive Officer of SoulCycle Inc., an indoor cycling fitness company, from June 2015 to November 2019 and as Chief Operating Officer from April 2012 until May 2015. Prior to joining SoulCycle, Ms. Whelan was Vice President of Business Development at Equinox Holdings, Inc., a luxury fitness company, from January 2007 to April 2012. Prior to Equinox, she also held leadership positions with Virgin Management, where she was on the founding team of Virgin America, and with Starwood Hotels & Resorts, a hospitality company. Ms. Whelan currently serves on the Board of Trustees of Southern New Hampshire University. Ms. Whelan holds a B.A. in Engineering and Economics from Brown University. | | | Chair of Compensation Committee DIRECTOR SINCE: 2019 | | | | | We believe that Ms. Whelan should continue to serve on our Board of Directors due to her extensive experience in business operations, international growth, and consumer marketing. |
Class II Directors
| | | John (Jed) York John York has served on our Board of Directors since June 2013. Since February 2010, Mr. York has served as the Chief Executive Officer of the San Francisco 49ers, a professional football team in the National Football League, where he previously served as President from 2008 to February 2010 and as Vice President of Strategic Planning from 2005 to 2008. Prior to those roles, Mr. York served as a financial analyst at Guggenheim Partners. Mr. York holds a B.A. in Finance from the University of Notre Dame. | | | | We believe that Mr. York should continue to serve on our Board of Directors due to his extensive leadership experience and strong corporate development background. | | | Member of Compensation Committee and Governance and Sustainability Committee DIRECTOR SINCE: 2013 | |
Class II Directors
| Chegg, Inc. | 28 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Class III Directors
Class III Directors
Class III Directors
| | | Renee Budig Renee Budig has served on our Board of Directors since November 2015. From September 2012 to January 2021, Ms. Budig served as the Executive Vice President and Chief Financial Officer of Paramount Streaming, a division of Paramount Global Inc. (formerly CBS Interactive, a division of CBS Inc.), an online content network for information and entertainment. From 2010 to September 2012, Ms. Budig served as Chief Financial Officer of Hightail, Inc. (formerly branded YouSendIt and acquired by OpenText), a cloud service that allowed users to send, receive, digitally sign and synchronize files. From 2006 to 2010, Ms. Budig was the Vice President of Finance at Netflix, Inc., a multinational provider of on-demand Internet streaming media. Ms. Budig served on the board of directors of iRhythm Technologies from April 2020 to May 2023. Ms. Budig holds a B.S. in Business Administration from the University of California, Berkeley. | | | Chair of Audit Committee and Member of Compensation Committee DIRECTOR SINCE: 2015 | | | | | We believe that Ms. Budig should continue to serve on our Board of Directors due to her extensive background in consumer technology companies and her financial expertise through her service as a Chief Financial Officer. |
Class III Directors
| | | Dan Rosensweig Dan Rosensweig has served as our President and Chief Executive Officer since February 2010, as Co-Chairperson of our Board of Directors since July 2018, and served as the Chairperson of our Board of Directors from March 2010 to July 2018. From 2009 to 2010, Mr. Rosensweig served as President and Chief Executive Officer of RedOctane, a business unit of Activision Publishing, Inc. and developer, publisher, and distributor of Guitar Hero. From 2007 to 2009, Mr. Rosensweig was an Operating Principal at the Quadrangle Group, a private investment firm. From 2002 to 2009, Mr. Rosensweig served as Chief Operating Officer of Yahoo! Inc., an internet content and service provider. Prior to serving at Yahoo!, Mr. Rosensweig served as the President of CNET Networks and prior to that as Chief Executive Officer and President of ZDNet, until it was acquired by CNET Networks. Mr. Rosensweig currently serves on the boards of directors of Adobe Systems Inc,.UpGrad, Inc. and Yumi, each a privately held company. Mr. Rosensweig holds a B.A. in Political Science from Hobart and William Smith Colleges. | | | Co-Chairperson of the Board of Directors DIRECTOR SINCE: 2010 | | | | | We believe that Mr. Rosensweig should continue to serve on our Board of Directors due to the perspective and experience he brings as our Chief Executive Officer and his extensive experience with consumer internet and media companies. |
Class III Directors
| Chegg, Inc. | 29 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Class III Directors
| | | Ted Schlein Ted Schlein has served on our Board of Directors since December 2008. Mr. Schlein has served as a General Partner of Kleiner Perkins, a venture capital firm, since November 1996. Mr. Schlein is also Chairman and a General Partner of Ballistic Ventures. From 1986 to 1996, Mr. Schlein served in various executive positions at Symantec Corporation, a provider of internet security technology and business management technology solutions, including as Vice President of Enterprise Products. Mr. Schlein currently serves on the boards of directors of a number of privately held companies. Mr. Schlein holds a B.A. in Economics from the University of Pennsylvania. | | | Member of Audit Committee and Governance and Sustainability Committee DIRECTOR SINCE: 2008 | | | | | We believe that Mr. Schlein should continue to serve on our Board of Directors due to his extensive experience working with and investing in technology companies. |
Class III Directors
There are no familial relationships among our directors and officers.
Class III Directors
| Chegg, Inc. | 30 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Director Compensation
Director Compensation We compensate our non-employee directors with a combination of cash and equity. The form and amount of compensation paid to our non-employee directors for serving on our Board of Directors and its committees is designed to be competitive in light of industry practices and the obligations imposed by such service. In order to align the long-term interests of our directors with those of our stockholders, the majority of director compensation is provided in equity-based compensation. The Compensation Committee, after considering the information, analysis and recommendations provided by Aon Consulting, Inc., its independent compensation consultant, including data regarding compensation paid to non-employee directors by companies in our “peer group” (as described in the “Executive Compensation—Compensation Discussion and Analysis” section of this proxy statement), evaluates the appropriate level and form of compensation for non-employee directors and recommends compensation changes to the Board when appropriate.
2023 Director Compensation Table
2023 Director Compensation Table
2023 Director Compensation Table
| Name | Fees Earned or Paid in Cash ($)(3) | RSU Awards ($)(4) | Option Awards ($)(4) | Total ($)(5) | | Sarah Bond | 50,000 | 199,999 | — | 249,999 | | Renee Budig | 60,000 | 199,999 | — | 259,999 | | Paul LeBlanc(1) | 55,659 | 199,999 | — | 255,658 | | Marne Levine(2) | 66,841 | 199,999 | — | 266,840 | | Marcela Martin | 50,000 | 199,999 | — | 249,999 | | Richard Sarnoff | 50,000 | 349,992 | — | 399,992 | | Ted Schlein | 60,000 | 199,999 | — | 259,999 | | Melanie Whelan | 60,000 | 199,999 | — | 259,999 | | John (Jed) York | 60,000 | 199,999 | — | 259,999 |
2023 Director Compensation Table
| (1) Committee fees for Mr. LeBlanc are prorated to reflect his transition to the Governance and Sustainability Committee Chair effective June 7, 2023. | | (2) Committee fees for Ms. Levine are pro-rated to reflect her transition from the Governance and Sustainability Committee Chair effective June 7, 2023. | | (3) All director fees were paid at the end of the quarter for which services were provided. | | (4) Amounts shown in this column do not reflect dollar amounts actually received by non-employee directors. Instead these amounts reflect the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board, Accounting Standards Codification Topic 718, Compensation-Stock Compensation, (formerly SFAS 123R) (“ASC 718”), for awards granted during 2023. During 2023, each non-employee member of the Board of Directors, who was a director as of the close of our 2023 Annual Meeting of Stockholders on June 7, 2023, was granted an RSU award covering 19,305 shares of our common stock with an aggregate grant date fair value of $199,999. In consideration for Richard Sarnoff's service as non-executive Co-Chairperson of the Board of Directors, Mr. Sarnoff received an additional RSU award covering 14,478 shares of our common stock with an aggregate grant date fair value of $149,992. The grant date fair value for RSUs was determined using the closing share price of our common stock on the date of grant. For information on other valuation assumptions with respect to stock awards, refer to notes 2 and 12 of the notes to consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There can be no assurance that this grant date fair value will ever be realized by the non-employee director. | | (5) Non-employee directors receive no other form of remuneration, perquisites or benefits for their service as members of our Board of Directors, but they are reimbursed for their reasonable travel expenses incurred in attending Board of Directors and committee meetings and certain Chegg events and approved continuing education programs. |
2023 Director Compensation Table
| Chegg, Inc. | 32 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
2023 Director Compensation Table
Our non-employee directors held the following number of stock options and unvested RSU awards as of December 31, 2023.
2023 Director Compensation Table
| Name | Option Awards | RSU Awards | | Sarah Bond | — | 19,305 | | Renee Budig | 43,445 | 19,305 | | Paul LeBlanc | — | 19,305 | | Marne Levine | 108,426 | 19,305 | | Marcela Martin | — | 20,370 | | Richard Sarnoff | — | 33,783 | | Ted Schlein | — | 19,305 | | Melanie Whelan | — | 19,305 | | John (Jed) York | 80,456 | 19,305 |
2023 Director Compensation Table
| | Our Board of Directors recommends a vote “FOR” each of the three Class II director nominees. |
2023 Director Compensation Table
| Chegg Helping students thrive. | |
2023 Director Compensation Table
| Chegg, Inc. | 33 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
2023 Director Compensation Table
| | | Proposal No. 2 |
2023 Compensation Highlights
2023 Compensation Highlights Our executive compensation programs, which are reviewed in the first fiscal quarter of each year, reflect our commitment to pay for performance and our prioritization of stockholder alignment while being designed to attract and retain leadership in our next phase of growth. Our Compensation Committee determined that Chegg’s compensation philosophy and objectives would be best served and fulfilled with a mix of base salary and equity grants. To our NEOs receiving annual cycle equity compensation, our Compensation Committee granted a target mix of 50% RSUs and 50% PSUs. In 2023, the Compensation Committee maintained base salaries at the 2022 level with no increase for our NEOs. In addition, the size of equity awards for our NEOs receiving annual cycle equity compensation, excepting Nathan Schultz (as further described below in the section titled “Elements of Fiscal Year 2023 Compensation”), was reduced in overall size to one-third of the 2022 grant levels and with a corresponding overall term of one year. Total net revenues, adjusted EBITDA, and free cash flow targets each represented one-third of the PSU targets for our NEOs. Total net revenues for fiscal year 2023 of $716.3 million was achieved at 51.7% of our target of $752.5 million for our annual PSUs (“2023 PSUs”). Adjusted EBITDA of $222.4 million did not meet the threshold target of $225 million, and free cash flow of $172.9 million was achieved at 55.1% of the $190 million target. As a result, our NEOs performance-based compensation was paid accordingly at a blended 35.6% of target.
CEO Realizable Compensation
CEO Realizable Compensation In addition, by delivering the majority of our NEOs' compensation in the form of equity, the value ultimately realized by our executives continues to be closely linked to our stock price performance. As of December 31, 2023, our CEO’s “realizable value” of compensation (see below chart) is only 60% of target, further demonstrating alignment between pay and performance. Target total direct compensation reflects salary paid through 2023 and the grant date fair value of the 2023 equity awards, including RSUs and PSUs. Realizable value reflects salary paid during 2023 and value of the 2023 equity awards based on Chegg’s closing stock price of $11.36 on December 29, 2023 (the last trading day of the year ended December 31, 2023), with the 2023 PSUs earned at 35.6% of target.
Compensation Practices
| What We Do | •Pay-for-Performance •Prioritize stockholder alignment with a majority of pay mix allocated to equity compensation, half of which is performance-conditioned for our executive officers •Use a representative and relevant peer group for assessing compensation •Consider stockholder dilution, burn rate, and stock-based compensation expense in our equity compensation decisions •Include caps on individual payouts in incentive plans •Maintain a recoupment policy on cash or equity incentive awards in the event of a financial restatement •Maintain stock ownership guidelines for our executive officers and non-employee directors •Maintain a Compensation Committee comprised solely of independent directors •Retain an independent compensation consultant •Conduct ongoing stockholder outreach •Conduct an annual Say-On-Pay vote | | What We Don't Do | •Provide guaranteed annual salary increases or bonuses •Provide excise tax gross-ups •Provide defined benefit or contribution retirement plans or arrangements, other than our Section 401(k) plan which is generally available to all employees •Provide excessive benefits and/or perquisites to our executive officers •Include “single-trigger” vesting change of control provisions in equity awards •Allow hedging or monetization transactions, such as zero cost collars and forward sale transactions |
Compensation Philosophy and Objectives
Compensation Philosophy and Objectives Our executive compensation program is designed to: •Attract, motivate and retain highly qualified executive officers in a competitive market; •Reward the achievement of challenging business objectives; and •Align our executive officers’ interests with those of our stockholders by providing a majority of total compensation in the form of equity awards. We operate in a fast-paced, innovative education software and services industry, which is an emerging category with very few public company peers in the United States. Our executive team possesses a unique mix of education software industry experience and the ability to scale for high growth and profitability. Our leaders are difficult to replace, and we compete for talent in the highly competitive San Francisco Bay Area market. To retain key talent and remain competitive in our labor market, we provide compensation to our employees that recognizes and incentivizes high performance. Our total direct compensation to our executive officers consists of two components: base salary and equity incentive compensation. Our base salaries provide a stable source of income and keep our compensation competitive. Our time and performance-based equity compensation provides an incentive for our executive officers to achieve both short-term and long-term corporate goals. We generally do not grant cash bonuses to our executives. We recognize that short-term cash incentives are a standard component of executive compensation. However, we have opted to break from this common practice because we feel that linking a significant portion of executive compensation to equity provides for sustainable growth and aligns our executives’ goals with our stockholders’ interests. We believe that allocating a meaningful percentage of compensation to equity-based opportunities motivates our executive officers to create long-term stockholder value. To that end, our equity compensation is comprised of time-based RSUs and PSUs, with vesting of the PSUs based on three equally weighted metrics. Our total direct compensation is generally targeted at market competitive ranges, and while competitive market data informs the pay decisions of our Compensation Committee, it is not the determinative factor in setting our executives’ compensation. In setting compensation levels, our Compensation Committee further takes into account our financial and market performance on an absolute basis and relative to our peer group, as well as individual factors, including, but not limited to, job responsibilities and complexity of the role, contributions to Chegg, market competition for talent, experience and tenure.
Role of Our Compensation Committee, Management and Independent Compensation Consultant
Role of Our Compensation Committee, Management and Independent Compensation Consultant
Role of Our Independent Compensation Consultant
Role of Our Independent Compensation Consultant For fiscal year 2023, the Compensation Committee retained FW Cook as its independent compensation consultant, and for fiscal year 2024 the Compensation Committee has retained Aon Consulting, Inc. (“Aon”) as its independent compensation consultant. The Compensation Committee determined that each of FW Cook and Aon is an independent compensation advisor including for purposes of the Dodd-Frank Act and other applicable SEC and NYSE regulations. During fiscal year 2023, FW Cook was retained to, among other activities, review our compensation philosophy and objectives, to develop an updated compensation peer group, to gather and analyze compensation data for our compensation peer group, to evaluate compensation practices and pay levels for our executives and non-employee directors, and to review certain compensation arrangements with our executives. In the course of fulfilling these responsibilities, representatives of FW Cook attended Compensation Committee meetings and met with management from time to time to gather relevant information. Neither FW Cook nor Aon performed services for us in fiscal year 2023, other than executive and general compensation survey consulting services. Both compensation consultants only reported to the Compensation Committee and did not provide services to our management.
2023 Compensation Peer Group
2023 Compensation Peer Group Our Compensation Committee considered market data compiled by its independent compensation consultant to better inform its determination of the key components of our executive compensation program and to develop a program that it believes will enable us to compete effectively for new executives and retain existing executives. In general, this market data consists of compensation information from both broad-based third-party compensation surveys and a compensation “peer group”. Our peer group for purposes of making determinations with respect to 2023 compensation consists of software companies that are similar to us in revenue, market capitalization, market capitalization to revenue ratio, growth, and relevant geographic locations where we compete for executive talent (generally San Francisco Bay Area, Los Angeles, and New York). While Chegg is classified by MSCI and S&P under the Global Industry Classification Standard (GICS) in the “Education Services” sub-industry, our peer group and competitive market consists primarily of other software, SaaS, and internet companies. Therefore, the industries considered for our peer group extend beyond Education Services and also include companies in the following GICS industries: “Application Software,” “Interactive Media and Services,” “Internet & Direct Retail Marketing” and “Systems Software.” Each year, the Compensation Committee, with the assistance of its independent compensation consultant, conducts an annual review of the compensation levels and practices of our peer companies. As part of the review, the Compensation Committee assesses our compensation peer group to ensure the constituents continue to generally meet the selection criteria listed above. For the 2023 compensation peer group, the Compensation Committee in November 2022 approved changes to the peer group taking into account Chegg’s market capitalization as it existed at that time and for the prior fiscal year, resulting in the removal of seven companies that were more than three times Chegg’s then-market capitalization previously included in the peer group approved by the Compensation Committee. Chegg was in the 44th percentile of the peer group’s market capitalization and the 41st percentile of the peer group's revenue for the trailing four quarters.
2023 Compensation Peer Group
| Chegg, Inc. | 49 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
2023 Compensation Peer Group
For our 2023 compensation decisions, our compensation peer group consisted of the 18 companies set forth below:
2023 Compensation Peer Group
| 2U, Inc. | Guidewire Software, Inc. | Progress Software Corporation | | Alteryx, Inc. | LivePerson, Inc. | Qualys, Inc. | | Blackbaud, Inc. | Momentive Global Inc. | Ring Central, Inc. | | Box, Inc. | New Relic, Inc. | Smartsheet, Inc. | | Coupa Software Inc. | Nutanix, Inc. | Sumo Logic, Inc. | | Dropbox, Inc. | Okta, Inc. | Yelp, Inc. |
2023 Compensation Peer Group
The peer group information serves as a data point in determining the appropriate pay mix and overall compensation, but the Compensation Committee does not seek to align its compensation against any specific company member of our compensation peer group.
Fiscal Year 2023 Pay Mix
Fiscal Year 2023 Pay Mix Consistent with our compensation philosophy and objectives, we provide compensation to our Chief Executive Officer and our executive officers in the form of base salaries, RSUs and PSUs. We generally do not provide annual cash incentive opportunities to our executive officers, which are typically provided by our peer companies, as our equity incentive compensation is intended to tie the majority of our executive officers’ pay to the delivery of stockholder value. Our 2023 PSUs include a one-year performance period to incentivize the achievement of critical short-term goals. Equity compensation in fiscal year 2023 constitutes 76% of the total pay mix for our Chief Executive Officer and 74% on average for our other NEOs.
2023 Total Direct Compensation and Target Pay Mix(1)
| Performance-Based RSUs |
2023 Total Direct Compensation and Target Pay Mix(1)
| Represents 50% of the target incentive value of our annual equity awards. Designed to motivate and reward executives to drive critical annual performance goals. Performance is measured based on three equally weighted financial metrics in 2023, consisting of (1) total net revenues, (2) adjusted EBITDA and (3) free cash flow. To the extent performance is achieved, the PSU awards granted in 2023 vest after one year, except Mr. Schultz’s award, which vests over 36 months, with one-third vested on March 12, 2024 and then in quarterly installments over the subsequent 24 months, subject to his continued service up to and through the applicable vesting dates. |
2023 Total Direct Compensation and Target Pay Mix(1)
| Time-Based RSUs |
2023 Total Direct Compensation and Target Pay Mix(1)
| Represents 50% of the target incentive value of our annual equity awards. Intended to provide retention value and align the interests of executives and stockholders. Awards granted in 2023 vest after one year, except Mr. Schultz’s award, which vests over 36 months, with one-third vested on March 12, 2024 and then in quarterly installments over the subsequent 24 months, subject to his continued service up to and through the applicable vesting dates. |
2023 Total Direct Compensation and Target Pay Mix(1)
| (1) Target pay mix represents annual base salary rates as of the fiscal year end, RSUs at grant date fair value, and PSUs at grant date fair value, assuming the target performance level is achieved. Percentages may not sum to 100% due to rounding. Mr. Fillmore is omitted from the totals for the Other NEOs as a result of his non-receipt of any equity award in 2023. |
Equity Incentive Compensation
Equity Incentive Compensation The Compensation Committee believes that equity compensation should represent a significant amount of our executive officers’ total compensation so that the interests of our executive officers are aligned with those of our stockholders. The Compensation Committee determines the amount of equity compensation appropriate for each NEO based on a variety of factors, including our compensation objectives; corporate operational and financial performance and relative stockholder return; each executive’s responsibilities; the compensation peer group and third-party survey market analysis provided by its independent compensation consultant; historical equity grants and equity holdings; and internal parity, overall share usage and equity pool availability and, for executive officers other than the Chief Executive Officer, recommendations from the Chief Executive Officer. Executive officers are initially granted an equity award, generally in the form of RSUs, when they join us, based on their position and their relevant prior experience. Thereafter, equity awards are generally granted annually to eligible executive officers around March of each year. The Compensation Committee has the discretion to grant equity awards in addition to these annual grants based on, among other factors, changes in job responsibilities, performance and experience, or material changes in market compensation. In October 2022, the Compensation Committee determined to increase Mr. Schultz’s 2023 annual target equity award value to $6.6 million in connection with his promotion to Chief Operating Officer. Rather than granting Mr. Schultz an off-cycle grant in connection with his promotion, Mr. Schultz was granted this annual equity award on March 27, 2023, and it was split into 50% RSUs and 50% PSUs.
Equity Incentive Compensation
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Equity Incentive Compensation
In March 2023, the Compensation Committee granted annual cycle equity compensation to our NEOs other than Mr. Fillmore, with a target mix of 50% RSUs and 50% PSUs. The Compensation Committee believes that a 50/50 mix of time-based and performance-based equity awards for 2023 continues to be the most effective incentive for driving and rewarding achievement of short-term company objectives while also creating equity incentives to sustain that performance and supporting the retention of our executive officers. In light of a challenging operating environment and our efforts to prudently manage our objectives regarding our equity burn rate and stock based compensation, and to ensure executive retention, for 2023, we modified our equity grant practices by reducing the grant size and vesting period of both the RSUs and PSUs that were granted to Mr. Rosensweig, Mr. Brown, and Ms. Lem, as further described below. The Compensation Committee routinely evaluates and considers the type of awards granted under our equity incentive program and may, in the future, decide that other types of awards or a different mix of awards are appropriate to provide incentives to our executive officers.
Restricted Stock Units
Restricted Stock Units We grant RSUs because they provide retentive value for our executive officers and are linked to creating stockholder value as the award value increases with our stock price appreciation. On March 27, 2023, the Compensation Committee granted RSUs to Mr. Rosensweig, Mr. Brown, and Ms. Lem, vesting in full on March 12, 2024, conditioned on the executive officer’s service up to and through the applicable vesting date. In consideration of the Company’s operating environment and need to prudently manage our objectives regarding burn rate, dilution and stock based compensation, the Compensation Committee significantly reduced Mr. Rosensweig’s, Mr. Brown’s, and Ms. Lem’s 2023 RSU awards to one-third of their 2022 RSU awards. At the same time, the Compensation Committee decreased the vesting period from three years to one year to ensure executive retention during this period. Mr. Schultz’s RSU award, which the Compensation Committee issued in connection with his promotion to Chief Operating Officer, was also granted effective March 27, 2023, and vested as to one-third of the underlying shares of common stock on March 12, 2024, with the remaining amount vesting in equal quarterly installments over the next 24 months conditioned on his service up to and through the applicable time-based vesting dates.
Performance-Based Restricted Stock Units
Performance-Based Restricted Stock Units We grant PSUs because they are linked to stockholder value creation, like RSUs, but are also leveraged to our financial performance and allow us to set appropriate annual goals that we believe are critical to drive long-term success. On March 27, 2023, the Compensation Committee granted PSUs to our NEOs other than Mr. Fillmore, subject to the achievement of certain financial performance goals and conditioned on such NEOs (other than Mr. Fillmore) service up to and through the applicable time-based vesting dates. The Compensation Committee determined the achievement of these PSUs in March 2024 based on three equally weighted performance metrics: (1) fiscal year 2023 total net revenue, (2) fiscal year 2023 adjusted EBITDA, and (3) fiscal year 2023 free cash flow (each as defined below). These three metrics were selected because the Compensation Committee believes that the three measures appropriately balance growth and profitability. The Compensation Committee included free cash flow as an additional performance metric for fiscal 2023 in response to stockholder feedback and because it is an important indicator of, among other things, (i) the amount of cash that the business is generating, (ii) the leverage in our business model, (iii) our liquidity, and (iv) what drives stockholder value for Chegg. The Compensation Committee selected total net revenue, rather than Chegg Services revenue which it had used previously, to recognize the importance of the diversity of the Company’s revenue sources. Along with total net revenue, the Committee selected adjusted EBITDA, a non-GAAP measure of profitability, as both are the most important drivers of stockholder value for Chegg and are primary components of our overall revenue growth and profitability. We believe that each of
Performance-Based Restricted Stock Units
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Performance-Based Restricted Stock Units
these are appropriate performance measures for our executive officers, as their decisions can significantly impact these metrics, and the selection of these three measures as PSU metrics ensures our executive officers are incentivized in accordance with the long-term interests of our stockholders. The performance metrics are synchronized with the corporate strategic plan and associated metrics and targets approved by our Board of Directors. We currently use a one-year performance period for our annual cycle PSUs to allow us the flexibility to set appropriate annual goals to drive stockholder value given our growth expectations and the rapidly changing nature of the industry in which we operate. As with the 2023 RSU awards, the Compensation Committee significantly reduced Mr. Rosensweig’s, Mr. Brown’s, and Ms. Lem’s 2023 PSU awards to one-third of their 2022 PSU awards, and correspondingly shortened the vesting period to one year. Upon the determination of the level of attainment of the performance metrics, a percentage of PSUs may be earned based on actual achievement. Any PSUs that are not earned are forfeited at the end of the performance period. The number of PSUs that may be earned range from 0% to 150% of the total number of shares subject to the PSU award depending on the level of performance achieved for each goal. No payout will be made for performance below the threshold level. The metrics are equally weighted (each representing one-third of the target number of shares) and measured separately, and the resulting number of earned PSUs with respect to each metric are added together for the total number of earned PSUs that are eligible to vest over time. If actual performance falls between the threshold, target, or maximum levels, linear interpolation will be used to determine the number of PSUs earned, as set forth in the table below:
Performance-Based Restricted Stock Units
| Performance Level | Threshold | Target | Maximum | | Payout % of Award | 50% | 100% | 150% | | Total Net Revenues | $715,500,000 | $752,500,000 | $790,500,000 | | Adjusted EBITDA* | $225,000,000 | $250,000,000 | $275,000,000 | | Free Cash Flow* | $171,000,000 | $190,000,000 | $209,000,000 |
Performance-Based Restricted Stock Units
*Adjusted EBITDA and free cash flow are non-GAAP financial measures, as defined above. A reconciliation of net income to EBITDA and to adjusted EBITDA and a reconciliation of net cash provided by operating activities to free cash flow, in each case prepared in accordance with GAAP, is included as Appendix A to this proxy statement. The Compensation Committee recognizes the importance of establishing rigorous but realistic performance targets with respect to our annual cycle PSUs in order to motivate executives to drive strong performance that translates to value creation for stockholders, and the 2023 performance targets were established in consideration of those factors and our business environment.
2023 Equity Incentive Awards
2023 Equity Incentive Awards The grant date fair value calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 (“ASC 718”) of the annual cycle RSUs and PSUs is set forth in the table below, denominated at target payout levels.
2023 Equity Incentive Awards
| | Number of Shares Granted | | Grant Date Fair Value of Awards | | | Named Executive Officer | Time-Vesting RSUs (#) | PSUs (Target) (#) | Time-Vesting RSUs ($) | PSUs (Target) ($) | | Dan Rosensweig | 115,376 | 115,376 | 1,833,323 | 1,833,323 | | Andrew Brown | 57,688 | 57,688 | 916,662 | 916,662 | | Nathan Schultz | 207,677 | 207,677 | 3,299,988 | 3,299,988 | | Esther Lem | 36,920 | 36,920 | 586,659 | 586,659 |
2023 Equity Incentive Awards
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Fiscal Year 2023 Performance-Based Restricted Stock Units Payout
Fiscal Year 2023 Performance-Based Restricted Stock Units Payout In February 2024, the Compensation Committee certified our financial performance in 2023 with respect to the 2023 PSU metrics. We achieved the following results, resulting in a weighted average payout of 35.6% of Target:
Fiscal Year 2023 Performance-Based Restricted Stock Units Payout
| Performance Metric | Achievement | Percent of Award Earned | Component Weighting | Subtotal | | Total Net Revenues | $716,295,000 | 51.7% | 1/3 | 17.2% | | Adjusted EBITDA* | $222,389,000 | 0.0% | 1/3 | 0.0% | | Free Cash Flow* | $172,933,000 | 55.1% | 1/3 | 18.4% | | Total Performance (rounded) | | | | 35.6% |
Fiscal Year 2023 Performance-Based Restricted Stock Units Payout
The Compensation Committee did not use any discretionary authority to adjust the resulting corporate performance from the financial measures reflected in the table above. The 2023 PSUs that were earned for Mr. Schultz vest over a three-year, time-based vesting schedule as follows: one-third vested on March 12, 2024 and the remaining earned 2023 PSUs vest in quarterly installments over the subsequent 24-month period, with vesting subject to his continued service up to and through the applicable vesting dates. The 2023 PSUs that were earned for Mr. Rosensweig, Mr. Brown, and Ms. Lem vested in full on March 12, 2024.
Total Stockholder Return PSUs
Total Stockholder Return PSUs During 2021, to incentivize our executives' long-term engagement, drive the next phase of our growth and support retention, we granted special absolute total stockholder return PSUs (the “TSR PSUs”) to certain of our executive officers. The TSR PSUs were eligible to be earned based on share price growth over a three-year performance period from March 1, 2021 through February 29, 2024 (subject to a four-year time-vesting period from the grant date). The TSR PSU goal was measured by calculating the percentage of growth of our share price from $99.05 - the closing trading price of our common stock on the March 1, 2021 grant date. The TSR PSUs were eligible to vest if the Company achieved absolute TSR growth of between 25% and 75% during the three-year performance period. During this three-year performance period, none of the performance goals for the TSR PSUs were achieved; and therefore, no portion of this award was earned.
Severance and Change-of-Control Arrangements
Severance and Change-of-Control Arrangements To enable us to attract talented executives, as well as ensure ongoing retention when considering potential corporate transactions that may create uncertainty as to future employment, we offer certain post-employment and change-of-control payments and benefits to certain NEOs. Given the nature and competitiveness of our industry, the Compensation Committee believes these severance and change-of-control protections are essential elements of our NEOs' compensation program and assist us in recruiting, retaining, and developing key management talent. Our change-of-control benefits are intended to allow key employees, including our NEOs, to focus their attention on the business operations of our Company in the face of the potentially disruptive impact of a rumored, or actual change-of-control transaction, to assess takeover bids objectively without regard to the potential impact on their own job security and to allow for a smooth transition in the event of a change-of-control.
Severance and Change-of-Control Arrangements
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Severance and Change-of-Control Arrangements
We have entered into an offer letter agreement with Mr. Rosensweig and adopted a Change-of-Control Severance Plan in which each of the NEOs, other than Mr. Rosensweig, participates. These arrangements provide, as applicable, cash severance benefits and equity award vesting acceleration in the event of certain terminations of employment both outside a change-of-control and in connection with a change-of-control (i.e., double-trigger severance protections). We do not provide “single trigger” protections or tax gross-ups if an executive is subject to excise taxes as a result of severance or change-of-control benefits. A detailed description of the terms of Mr. Rosensweig’s offer letter and the Change-of-Control Severance Plan can be found under the “Termination and Change-of-Control Arrangements” section of this proxy statement.
Summary Compensation
| Name and Principal Position(1) | Year | Salary ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | Dan Rosensweig | 2023 | 1,100,000 | 3,666,649 | 13,200 | 4,779,849 | | President and Chief Executive Officer | 2022 | 1,075,000 | 10,999,964 | 12,200 | 12,087,164 | | | 2021 | 1,000,000 | 19,999,479 | 6,126 | 21,005,605 | | Andrew Brown | 2023 | 850,000 | 1,833,325 | 13,200 | 2,671,525 | | Former Chief Financial Officer | 2022 | 806,250 | 5,499,946 | 12,200 | 6,318,396 | | | 2021 | 750,000 | 9,999,672 | 6,500 | 10,756,172 | | Nathan Schultz | 2023 | 900,000 | 6,599,975 | 13,200 | 7,513,175 | | Chief Operating Officer | 2022 | 821,875 | 5,499,946 | 12,200 | 6,334,021 | | | 2021 | 750,000 | 9,999,672 | 4,875 | 10,754,547 | | John Fillmore | 2023 | 446,875 | — | 4,767 | 451,642 | | Former President of Chegg Skills | 2022 | 698,750 | 4,399,986 | 12,200 | 5,110,936 | | | 2021 | 650,000 | 7,999,725 | 4,875 | 8,654,600 | | Esther Lem | 2023 | 605,000 | 1,173,318 | 2,017 | 1,780,334 | | Former Chief Marketing Officer | 2022 | 591,250 | 3,519,960 | 12,200 | 4,123,410 | | | 2021 | 550,000 | 6,399,720 | 6,500 | 6,956,220 |
Grants of Plan Based Awards
Grants of Plan Based Awards The following table sets forth certain information regarding grants of plan-based awards to each of our NEOs during fiscal year 2023.
Grants of Plan Based Awards
| | Grant Date | Board Approval Date | Award Type | Estimated Possible Payout Under Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | Market Value of Shares that Have Not Vested ($)(3) | | Name | | | | Threshold (#) | Target (#) | Maximum (#) | | | | Dan Rosensweig | 3/27/2023 | 3/27/2023 | PSU | 57,688 | 115,376 | 173,064 | — | 1,833,325 | | | 3/27/2023 | 3/27/2023 | RSU | — | — | — | 115,376 | 1,833,325 | | Andrew Brown | 3/27/2023 | 3/27/2023 | PSU | 28,844 | 57,688 | 86,532 | — | 916,662 | | | 3/27/2023 | 3/27/2023 | RSU | — | — | — | 57,688 | 916,662 | | Nathan Schultz | 3/27/2023 | 3/27/2023 | PSU | 103,839 | 207,677 | 311,516 | — | 3,299,988 | | | 3/27/2023 | 3/27/2023 | RSU | — | — | — | 207,677 | 3,299,988 | | John Fillmore | 3/27/2023 | 3/27/2023 | PSU | — | — | — | — | — | | | 3/27/2023 | 3/27/2023 | RSU | — | — | — | — | — | | Esther Lem | 3/27/2023 | 3/27/2023 | PSU | 24,567 | 49,134 | 73,701 | — | 1,759,980 | | | 3/27/2023 | 3/27/2023 | RSU | — | — | — | 49,134 | 1,759,980 |
Grants of Plan Based Awards
| (1) Upon the achievement by December 31, 2023 of certain Company performance metric measurements approved by the Compensation Committee as described under the heading “Elements of Fiscal Year Compensation—Equity Incentive Compensation—Performance-Based Restricted Stock Units,” the PSUs earned with respect to each performance metric vested as to 100% on March 12, 2024, except for Mr. Schultz whose PSUs vested one-third on March 12, 2024, and 8.33% shall vest on each quarterly anniversary thereafter such that the PSUs shall be fully vested on March 12, 2026, subject in each case to Mr. Schultz's continued service up to and through the applicable vesting dates. | | (2) 100% of the shares vested on March 12, 2024 except for Mr. Schultz, whose shares vested one-third on March 12, 2024 and 8.33% shall vest on each quarterly anniversary thereafter such that the RSUs shall be fully vested on March 12, 2026. The vesting is subject to continued service through each vesting date. | | (3) Reflects the grant date fair value of each equity award at the target performance level computed in accordance with ASC 718 and described in footnote 1 to the Summary Compensation Table. The assumptions used in the valuation of these awards are set forth in notes 2 and 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. These amounts may not correspond to the actual value that may be realized by the NEOs. |
Grants of Plan Based Awards
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Outstanding Equity Awards at Fiscal Year-End Table
Outstanding Equity Awards at Fiscal Year-End Table The following table provides information with respect to outstanding equity awards as of December 31, 2023 with respect to our NEOs.
Outstanding Equity Awards at Fiscal Year-End Table
| | | | Option Awards | | | | Stock Awards | | | | Grant Date | | Number of Securities Underlying Unexercised Options | | Exercise Price ($) | Expiration Date | Number of Shares that Have Not Vested (#) | Market Value of Shares that Have Not Vested ($)(1) | | Name | | Award Type | Exercisable (#) | Unexercisable (#) | | | | | | Dan Rosensweig | 3/1/2021(2) | PSU | — | — | — | — | 6,310 | 71,682 | | | 3/1/2021(3) | TSR PSU | — | — | — | — | 145,871 | 1,657,095 | | | 3/28/2022(4) | PSU | — | — | — | — | 63,978 | 726,790 | | | 3/27/2023(5) | PSU | — | — | — | — | 115,376 | 1,310,671 | | | 3/1/2021(6) | RSU | — | — | — | — | 4,207 | 47,792 | | | 3/28/2022(7) | RSU | — | — | — | — | 63,978 | 726,790 | | | 3/27/2023(8) | RSU | — | — | — | — | 115,376 | 1,310,671 | | Andrew Brown | 3/1/2021(2) | PSU | — | — | — | — | 3,155 | 25,841 | | | 3/1/2021(3) | TSR PSU | — | — | — | — | 72,935 | 828,542 | | | 3/28/2022(4) | PSU | — | — | — | — | 31,989 | 363,395 | | | 3/27/2023(5) | PSU | — | — | — | — | 57,688 | 655,336 | | | 3/1/2021(6) | RSU | — | — | — | — | 2,104 | 23,901 | | | 3/28/2022(7) | RSU | — | — | — | — | 31,989 | 363,395 | | | 3/27/2023(8) | RSU | — | — | — | — | 57,688 | 655,336 | | Nathan Schultz | 3/1/2021(2) | PSU | — | — | — | — | 3,155 | 35,841 | | | 3/1/2021(3) | TSR PSU | — | — | — | — | 72,935 | 828,542 | | | 3/28/2022(4) | PSU | — | — | — | — | 31,989 | 363,395 | | | 3/27/2023(9) | PSU | — | — | — | — | 207,677 | 2,359,211 | | | 3/1/2021(6) | RSU | — | — | — | — | 2,104 | 23,901 | | | 3/28/2022(7) | RSU | — | — | — | — | 31,989 | 363,395 | | | 3/27/2023(10) | RSU | — | — | — | — | 207,677 | 2,359,211 |
Outstanding Equity Awards at Fiscal Year-End Table
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Outstanding Equity Awards at Fiscal Year-End Table
| | | | Option Awards | | | | Stock Awards | | | | Grant Date | | Number of Securities Underlying Unexercised Options | | Exercise Price ($) | Expiration Date | Number of Shares that Have Not Vested (#) | Market Value of Shares that Have Not Vested ($)(1) | | Name | | Award Type | Exercisable (#) | Unexercisable (#) | | | | | | Esther Lem | 3/1/2021(2) | PSU | — | — | — | — | 2,019 | 22,936 | | | 3/1/2021(3) | TSR PSU | — | — | — | — | 46,678 | 530,262 | | | 3/28/2022(4) | PSU | — | — | — | — | 20,474 | 232,585 | | | 3/27/2023(5) | PSU | — | — | — | — | 36,920 | 419,411 | | | 3/1/2021(6) | RSU | — | — | — | — | 1,347 | 15,302 | | | 3/28/2022(7) | RSU | — | — | — | — | 20,474 | 232,585 | | | 3/27/2023(8) | RSU | — | — | — | — | 36,920 | 419,411 |
Outstanding Equity Awards at Fiscal Year-End Table
| (1) The market price for our common stock is based on the closing price per share of our common stock as listed on the New York Stock Exchange on December 29, 2023 (the last trading day of the year ended December 31,2023) of $11.36. | | (2) The shares subject to the PSU award were earned only upon achievement by December 31, 2021 of Company performance metrics consisting of Chegg Services Revenue and Adjusted EBITDA as approved by the Compensation Committee. The Compensation Committee determined that the weighted average percentage of 98.3% of the measurements had been achieved, therefore a weighted average of 98.3% of the shares subject to the PSU award were earned. One-third of the achieved shares vested on March 1, 2022 and the remaining unvested portion of this PSU is scheduled to vest as to 8.33% on each quarterly anniversary thereafter such that the PSUs shall be fully vested on March 1, 2024, subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below. | | (3) The shares subject to the TSR PSU award will be earned only upon achievement by February 29, 2024 of the Company performance metrics consisting of TSR as approved by the Compensation Committee. One-half of the achieved shares were to vest on March 1, 2024 and the remaining unvested portion of this TSR PSU is scheduled to vest on March 1, 2025, subject to the officers continued service up to and through each vesting date and the acceleration as described in "Termination and Change-of-Control Arrangements" below. None of the performance goals for the TSR PSUs were achieved; and therefore, no portion of this award was earned. | | (4) The shares subject to the PSU award were earned only upon achievement by December 31, 2022 of Company performance metrics consisting of Chegg Services Revenue and adjusted EBITDA as approved by the Compensation Committee. The Compensation Committee determined that the weighted average percentage of 39.5% of the measurements had been achieved, therefore a weighted average of 39.5% of the shares subject to the PSU award were earned. One-third of the achieved shares vested on March 12, 2023 and the remaining unvested portion of this PSU is scheduled to vest as to 8.33% on each quarterly anniversary thereafter such that the PSUs shall be fully vested on March 12, 2025, subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below. | | (5) The shares subject to the PSU award were earned only upon achievement by December 31, 2023 of Company performance metrics consisting of Chegg Services Revenue, adjusted EBITDA and free cash flow as approved by the Compensation Committee. The Compensation Committee determined that the weighted average percentage of 35.6% of the measurements had been achieved, therefore a weighted average of 35.6% of the shares subject to the PSU award were earned. 100% of the achieved shares vested on March 12, 2024. | | (6) One-third of the shares vested on March 1, 2022 and 8.33% shall vest on each quarterly anniversary thereafter such that the RSUs were fully vested on March 1, 2024. The vesting was subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below. | | (7) One-third of the shares vested on March 12, 2023 and 8.33% shall vest on each quarterly anniversary thereafter such that the RSUs shall be fully vested on March 12, 2025. The vesting is subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below. | | (8) 100% of the shares vested on March 12, 2024. The vesting was subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below. | | (9) The shares subject to the PSU award were earned only upon achievement by December 31, 2023 of Company performance metrics consisting of Chegg Services Revenue, adjusted EBITDA, and free cash flow as approved by the Compensation Committee. The Compensation Committee determined that the weighted average percentage of 35.6% of the measurements had been achieved, therefore a weighted average of 35.6% of the shares subject to the PSU award were earned. One-third of the achieved shares vested on March 12, 2024 and the remaining unvested portion of this PSU is scheduled to vest as to 8.33% on each quarterly anniversary thereafter such that the PSUs shall be fully vested on March 12, 2026, subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below. | | (10) One-third of the shares vested on March 12, 2024 and 8.33% shall vest on each quarterly anniversary thereafter such that the RSUs shall be fully vested on March 12, 2026. The vesting is subject to the officer's continued service up to and through each vesting date and the acceleration as described in “Termination and Change-of-Control Arrangements” below. |
Outstanding Equity Awards at Fiscal Year-End Table
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Option Exercises and Stock Vested Table
Option Exercises and Stock Vested Table The following table presents information concerning the aggregate number of shares of our common stock for which options were exercised during fiscal year 2023 for each of the NEOs. In addition, the table presents information on shares of our common stock that were acquired upon the vesting of stock awards during 2023 for each of the NEOs on an aggregated basis.
Option Exercises and Stock Vested Table
| | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting ($)(2) | | Name | | | | | | Dan Rosensweig | — | — | 178,258 | 2,385,510 | | Andrew Brown | — | — | 88,462 | 1,182,423 | | Nathan Schultz | — | — | 88,462 | 1,182,423 | | John Fillmore | — | — | 59,227 | 819,960 | | Esther Lem | — | — | 57,036 | 763,282 |
Option Exercises and Stock Vested Table
| (1) Amounts reflect the vesting of RSUs and PSUs. | | (2) The value realized on the shares acquired is the fair market value of the shares on the date of vesting, which was the closing price of our common stock on such date as traded on the NYSE. |
Option Exercises and Stock Vested Table
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Option Exercises and Stock Vested Table
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Chief Executive Officer Pay Ratio
Chief Executive Officer Pay Ratio Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K (“Item 402(u)”), we are required to disclose the ratio of our principal executive officer’s annual total compensation to the annual total compensation of our median employee. As disclosed in the Summary Compensation Table, the 2023 annual total compensation for our Chief Executive Officer was $4,779,849. The 2023 annual total compensation of our median employee was $79,041. Accordingly, the ratio of the 2023 annual total compensation of our Chief Executive Officer to the 2023 annual total compensation of our median employee is 60 to 1. We believe this ratio, which was calculated in a manner consistent with Item 402(u), to be a reasonable estimate, based upon the assumptions and adjustments described below.
Compensation Measures and Calculation Methodology
| | | Pay Versus Performance Disclosure |
Pay Versus Performance Table
Pay Versus Performance Table In accordance with Item 402(v), we provide below the tabular disclosure for the Company's President, Chief Executive Officer and Co-Chairperson (our Principal Executive Officer or “PEO”) and the average of our NEOs other than the PEO (“non-PEO NEOs”) for 2023, 2022 and 2021 and 2020.
Pay Versus Performance Table
| | | | | | Value of Initial Fixed S100 Investment Based On: | | | | | Fiscal Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total for non-PEO NEOs(1) ($) | Average Compensation Actually Paid to non-PEO NEOS(3) ($) | Total Stockholder Return ($) | NASDAQ Composite Total Stockholder Return(4) ($) | Net Income (Loss) (in thousands) ($) | Adjusted EBITDA (in thousands)(5) ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 4,779,849 | (688,671) | 3,104,169 | 196,528 | 29.97 | 167.30 | 18,180 | 222,400 | | 2022 | 12,087,164 | (4,776,037) | 5,471,691 | 2,348,120 | 67.34 | 116.65 | 266,638 | 254,525 | | 2021 | 21,005,605 | (2,978,784) | 9,280,385 | (826,037) | 80.98 | 174.36 | (1,458) | 265,859 | | 2020 | 10,381,080 | 36,270,875 | 4,285,861 | 13,669,798 | 238.27 | 143.64 | (6,221) | 207,058 |
Pay Versus Performance Table
| (1) Dan Rosensweig is the PEO for each year shown. The non-PEO NEOs for each year shown were Andrew Brown, Nathan Schultz, John Fillmore and Esther Lem. | | (2) To calculate CAP to the PEO in column (c) the following amounts were deducted from and added to the applicable SCT Total Compensation: |
Pay Versus Performance Table
| Fiscal Year | Summary Compensation Table Total for PEO ($) | Deductions from Summary Compensation Table Total(a) ($) | Inclusion of Equity Values Total l(b) ($) | Compensation Actually Paid to PEO ($) | | 2023 | 4,779,849 | (3,666,649) | (1,801,871) | (688,671) |
Pay Versus Performance Table
| (a) Represents the grant date fair value of equity awards reported in the “Stock Awards” column in the Summary Compensation Table for 2023. | | (b) Reflects the value of equity calculated in accordance with the SEC methodology for determining compensation actually paid under Item 402(v) of Regulation S-K. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity values included in CAP are as follows: |
Pay Versus Performance Table
| Year | Year End Fair Value of Equity Awards Granted in the Year ($) | Year Over Year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | Value of Dividends or Other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) | Equity Value Included in Compensation Actually Paid ($) | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) = (a) + (b) + (c) + (d) - (e) + (f) | | 2023 | 1,777,270 | (1,412,126) | — | (2,167,015) | — | — | (1,801,871) |
Pay Versus Performance Table
| Chegg, Inc. | 70 | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Pay Versus Performance Table
| (3) To calculate CAP to the non-PEO NEOs in the column (e) the following amounts were deducted from and added to the applicable SCT Total compensation: |
Pay Versus Performance Table
| Fiscal Year | Summary Compensation Table Total for non-PEO NEOs ($) | Deductions from Summary Compensation Table Total(a) ($) | Additions to Summary Compensation Table Total(b) ($) | Compensation Actually Paid to non-PEO NEOs ($) | | 2023 | 3,104,169 | (2,401,654) | (505,986) | 196,528 |
Pay Versus Performance Table
| (a) Represents the grant date fair value of equity awards reported in the “Stock Awards" column in the Summary Compensation Table for 2023. | | (b) Reflects the value of equity calculated in accordance with the SEC methodology for determining compensation actually paid under Item 402(v) of Regulation S-K. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity values included in CAP are as follows: |
Pay Versus Performance Table
| Year | Year End Fair Value of Equity Awards Granted in the Year ($) | Year Over Year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | Value of Dividends or Other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) | Equity Value Included in Compensation Actually Paid ($) | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) = (a) + (b) + (c) + (d) - (e) + (f) | | 2023 | 1,164,112 | (466,013) | — | (884,954) | (319,131) | — | (505,986) |
Pay Versus Performance Table
| (4) Reflects TSR indexed to $100 for the Nasdaq Composite Index, which is an industry line peer group reported in the performance graph included in the Company's 2023 Annual Report on Form 10-K. | | (5) Please see page 46 for a definition of Adjusted EBITDA. |
Pay Versus Performance Table
| Chegg, Inc. | 71 | Proxy Statement for the 2024 Annual Meeting of Stockholders |