DEF 14A of Honest Company, Inc.
Filed Apr 10, 2024 · FY20230001530979-24-000047
Proposal 1 Election Of Directors
Proposal 1 Election Of Directors
Classified Board
Classified Board Our Board is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified. The Board presently has nine members. There are three directors in the class whose term of office expires in 2024. The Nominating and Corporate Governance Committee has recommended each of Katherine Bayne, Susan Gentile and James D. White for election as a Class III Director at the Annual Meeting. Ms. Bayne, Ms. Gentile and Mr. White are each currently a director of the Company and were previously elected by our stockholders prior to our initial public offering pursuant to the provisions of a voting agreement between us and several of our stockholders. If elected at the Annual Meeting, each of these nominees would serve until the 2027 Annual Meeting and until his or her successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal. It is the Company’s policy to invite and encourage directors and nominees for director to attend the Annual Meeting. All of our directors, apart from Mr. Hartung, attended our 2023 annual meeting of stockholders. Directors are elected by a plurality of the votes of the holders of shares present virtually or represented by proxy and entitled to vote on the election of directors. Accordingly, the three nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the three nominees named below. We have no reason to believe that any of the nominees will be unavailable or, if elected, will decline to serve. If any nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee proposed by Honest, or alternatively, the Board may leave a vacancy on the Board or reduce the size of the Board. Each person nominated for election has agreed to serve if elected. The Company’s management has no reason to believe that any nominee will be unable to serve. The biographies of each of our nominees for election to the Board as Class III directors, and all other directors are set forth below, including the offices held, other business directorships and the class and term of each director nominee and director. Each of the biographies highlights specific experience, qualifications, attributes, and skills that led us to conclude that such person should serve as a director. We believe that, as a whole, our Board possesses the requisite skills and characteristics, leadership traits, work ethic, and independence to provide effective oversight. No director or executive officer is related by blood, marriage, or adoption to any other director or executive officer. No arrangements or understandings exist between any director and any other person pursuant to which such person was selected as a director or nominee.
Class III Directors - Nominees for Election for a Three-year Term Expiring at the 2027 Annual Meeting
Class III Directors - Nominees for Election for a Three-year Term Expiring at the 2027 Annual Meeting Katherine Bayne, age 57 Katherine Bayne has served as a member of our Board since October 2018. Since February 2019, Ms. Bayne has served as a Senior Advisor with Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, LLC, a global investment and advisory financial services firm. Since March 2018, Ms. Bayne has also served as founder and President of Bayne Advisors, an advisory firm that helps brands and businesses find their strategic identities, drive sustained consumer engagement and innovate for transformative results. Prior to serving in her current roles, from 1989 to 2018, Ms. Bayne served in numerous roles at The Coca-Cola Company, a beverage company, focused on consumer strategy, retail marketing and consumer marketing in the United States, Australia and globally, most recently serving as the company’s President, North America Brands, from 2013 to 2015 and Senior Vice President, Global Center, from 2015 to 2018. Ms. Bayne previously served as a member of the board of directors for Ascena Retail Group, Inc., Ann Inc., Beazer Homes USA Inc., Acreage Holdings, Inc., and Eargo, Inc. Ms. Bayne is also a member of the board of visitors for the Fuqua School of Business at Duke University, and serves on the board of directors of the Cox School of Business at Southern Methodist University. Ms. Bayne holds a B.A. in Psychology from Duke University and an M.B.A. from Duke University’s Fuqua School of Business. We believe that Ms. Bayne is qualified to serve on our Board due to her strong background in consumer strategy, retail and consumer marketing and brand management. Susan Gentile, age 57 Susan Gentile has served on our Board since May 2021. Ms. Gentile is the Managing Director and Chief Financial Officer at Advent International, a private equity firm. Prior to joining Advent International in August 2022, Ms. Gentile was the Chief Financial and Administrative Officer at H.I.G. Capital Management, LLC, a global alternative asset investment firm. Prior to joining H.I.G. Capital Management in May 2018, Ms. Gentile served as Managing Director and Chief Accounting Officer at Oaktree Capital Management, a global alternative investment firm, from October 2013 to March 2018. Ms. Gentile also held various management roles at The Clorox Company from March 2006 to September 2013. Prior to joining The Clorox Company, Ms. Gentile served in roles at Levi Strauss & Co., Motorola, Inc. and Deloitte & Touche LLP. Ms. Gentile holds a B.S.B.A. in Finance from Boston University and is a Certified Public Accountant. We believe that Ms. Gentile is qualified to serve on our Board due to her financial expertise and experience working with consumer product brands. James D. White, age 63 James D. White has served as Chair of our Board since May 2021. From 2008 to 2016, Mr. White served as the Chair, President and Chief Executive Officer of Jamba, Inc., a restaurant company. Mr. White also served as Senior Vice President and General Manager of Safeway, Inc., a U.S. supermarket chain, from 2005 to 2008. From 1983 to 2005, Mr. White held management roles at The Gillette Company, Inc., Nestlé S.A. and The Coca-Cola Company. Additionally, Mr. White currently serves on the board of directors of Schnucks Markets, Inc. and on the board of directors of the following public companies: Affirm Holdings Inc., The Simply Good Foods Company, and CAVA Group, Inc. Mr. White previously served on the board of directors of Medallia, Inc., Adtalem Global Education Inc., Panera Bread Company, Callidus Software Inc., and Hillshire Brands Company. Mr. White’s non-profit board experience includes Directors Academy, where he is a founding member and chair of the board of directors, as well as Fair Trade USA, where he previously served as chair of the board of directors. Mr. White previously served on the non-profit boards of directors of the Nasdaq Entrepreneurial Center, The Organic Center and the Network of Executive Women. Mr. White received a B.S. degree, with a major in marketing, from The University of Missouri and an M.B.A. from Fontbonne University. Mr. White is also a graduate of the Cornell University Food Executive Program and was a Stanford University Distinguished Careers Institute Fellow in 2018. We believe that Mr. White is qualified to serve on our Board due to his experience as a public company director and his experience as a consumer products executive.
The Board Of Directors Recommends
The Board Of Directors Recommends A Vote In Favor Of Each Named Nominee.
Class I Directors Continuing in Office Until the 2025 Annual Meeting
Class I Directors Continuing in Office Until the 2025 Annual Meeting Michael Barkley, age 57 Michael Barkley has served on our Board since December 2023. Since May 2023, Mr. Barkley has served as an independent private equity advisor for MJB Advisory LLC, a management consulting company focused on the needs of high growth food and beverage brands. Mr. Barkley served as the former Chief Executive Officer of KIND LLC (“KIND”), a snack food company, from 2018 to 2021 and is currently a board member of the Ignatian Solidarity Network. Prior to KIND, Mr. Barkley served as President of Boulder Brands, a food company, and Chief Marketing Officer of Pinnacle Foods, Inc., a packaged foods company. Mr. Barkley earned a BS in Commerce at the University of Virginia and an MBA at the University of North Carolina. We believe that Mr. Barkley is qualified to serve on our Board due to his significant experience in consumer-packaged goods and as a purpose-driven executive leader. John R. (Jack) Hartung, age 66 John R. (Jack) Hartung has served on our Board since May 2022. Mr. Hartung has served as Chief Financial Officer of Chipotle Mexican Grill, Inc. (“Chipotle”), a restaurant company, since 2002, and beginning in 2022, as Chief Financial and Administrative Officer of Chipotle. Prior to joining Chipotle, Mr. Hartung worked for 18 years at McDonald’s Corp., where he held a variety of management positions, most recently as Vice President and Chief Financial Officer of its Partner Brands Group. Mr. Hartung has a Bachelor of Science degree in accounting and economics as well as an M.B.A. from Illinois State University. We believe that Mr. Hartung is qualified to serve on our board because of his expertise overseeing financial and reporting functions at multiple public companies, and as a chief financial officer at a public company, along with his extensive public company leadership experience. Carla Vernón, age 53 Carla Vernón joined Honest as Chief Executive Officer on January 9, 2023 and has served on our Board since January 25, 2023. Prior to joining Honest, Ms. Vernón served as the Vice President of Consumables Categories at Amazon.com, Inc. (“Amazon”), an e-commerce company, from January 2021 to December 2022 where she had Profit and Loss (“P&L”) responsibility for Household Essentials, Wellness, Beauty, Baby, Food and Beverage categories on Amazon.com as well as responsibility for technology development for those categories. Prior to joining Amazon, Ms. Vernón spent more than two decades in various P&L leadership roles at General Mills, Inc. (“General Mills”), a food manufacturing company. Most recently at General Mills, Ms. Vernón served as a Corporate Officer and the Operating Unit President of the Natural & Organic Division from July 2017 to April 2020. In this role, she had full management and P&L responsibility for a $900M portfolio of highly regulated ESG (Environmental, Social and Governance) brands including Annie's Organic, Cascadian Farm, Epic Provisions, and Muir Glen as well as leadership for establishing General Mills' leadership in regenerative agriculture. Ms. Vernón serves on the Board of Trustees for both Princeton University and The Smithsonian National Museum of the American Latino. Ms. Vernón holds a B.A. degree in Ecology and Evolutionary Biology from Princeton and a Master of Business Administration from Texas McCombs School of Business. We believe that Ms. Vernón is qualified to serve on our Board because of her leadership experience at prior consumer product companies and focus on technology development, as well as her role as Chief Executive Officer of the Company which provides valuable insight into the day-to-day operations at the Company.
Class II Directors - Continuing in Office Until the 2026 Annual Meeting
Class II Directors - Continuing in Office Until the 2026 Annual Meeting Jessica Alba, age 42 Jessica Alba is one of our founders and has served as our Chief Creative Officer since our incorporation in July 2011 and as Chair of our Board from May 2018 to May 2021. Ms. Alba is a globally recognized and influential Mexican-American business leader, entrepreneur, advocate, actress and New York Times bestselling author. Ms. Alba serves on the board of directors of Baby2Baby, a charitable organization that provides diapers, clothes and other basic necessities to children living in poverty. She also serves on the board of directors of LA28, the Los Angeles Olympics board, and Yahoo! Inc., a media company. We believe that Ms. Alba is qualified to serve on our Board due to her knowledge and insights in founding and developing our Company in addition to her industry experience and knowledge. We refer to Jessica Warren, our founder, Chief Creative Officer and member of our board of directors, as Jessica Alba in this Proxy Statement. Alissa Hsu Lynch, age 55 Alissa Hsu Lynch has served on our Board since December 2023. Ms. Lynch served as the Global Head of MedTech Strategy and Solutions for Google Cloud Platform, offered by Google LLC, a technology company, from 2020 to 2023, where she worked with Fortune 500 customers to transform healthcare through technology. Previously, Ms. Lynch spent 20 years at Johnson & Johnson, a pharmaceutical and medical technologies company, working in consumer marketing, strategy, and general management roles, and most recently, from 2016 to 2020 served as Vice President, Medical Devices. Before joining Johnson & Johnson, Ms. Lynch was a professional modern dancer for six years. Ms. Lynch served as a board member of Pulmonx Corporation from July 2021 and will no longer be serving as a director at such company following its annual meeting in May 2024. Also, she is a member of the Board of Trustees of American Ballet Theatre and is a Henry Crown Fellow of The Aspen Institute. Ms. Lynch holds an M.B.A in General Management from Columbia University and an A.B. in English from Princeton University. We believe that Ms. Hsu Lynch is qualified to serve on our Board due to her significant experience in technology, consumer marketing, and her executive leadership experience. Andrea Turner, age 60 Andrea Turner has served on our Board since December 2023. Ms. Turner served as Senior Vice President, Global Customer Service and Logistics at Mondelēz International, Inc., a confectionery, food, holding, beverage and snack food company, from 2020 to 2023, where she strategized and led logistics during the COVID-19 pandemic for the $25 billion supply chain across 80 countries. Ms. Turner was also responsible for driving teams to solve complex supply chain problems at General Mills from 2008 to 2020 and Merck & Co., Inc., a pharmaceutical company, from 1998 to 2009, delivering improved productivity and accelerating growth. She previously served as the Chair of the 2016 Minneapolis Martin Luther King Celebration, the largest fundraising event in Minneapolis and currently serves on the boards of directors of GS1, People Serving People, and Mainstreet School of the Arts. Ms. Turner received a Bachelor of Industrial Engineering from Georgia Institute of Technology and a Bachelor of Science in Mathematics from Spelman College. We believe that Ms. Turner is qualified to serve on our Board due to her extensive experience in consumer-packaged goods and global supply chain and operations, and her executive leadership experience.
Board Diversity
Board Diversity The Board Diversity Matrix, below, provides the diversity statistics for our Board. We included last year's diversity statistics for our Board of Directors in our proxy statement for our 2023 annual meeting of stockholders filed with the SEC on April 13, 2023.
Board Diversity
| Board Diversity Matrix (As of April 10, 2024) | | | | | | Total Number of Directors | 9 | | | | | | Female | Male | Non- Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 6 | 3 | - | - | | Part II: Demographic Background | | | | | | African American or Black | 2 | 1 | - | - | | Alaskan Native or Native American | - | - | - | - | | Asian | 1 | - | - | - | | Hispanic or Latinx | 2 | - | - | - | | Native Hawaiian or Pacific Islander | - | - | - | - | | White | 2 | 2 | - | - | | Two or More Races or Ethnicities | 1 | - | - | - | | LGBTQ+ | - | | | | | Did Not Disclose Demographic Background | - | | | |
INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE
INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE
Summary Compensation Table
Summary Compensation Table The following table shows for the fiscal years ended December 31, 2023 and 2022, compensation awarded to, or paid to our named executive officers.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Ms. Carla Vernon, Chief Executive Officer (5) | 2023 | 711,058 | 833,333 | 3,247,619 | — | 717,025 | 263,535 | 5,772,569 | | Mr. Nikolaos Vlahos, Former Chief Executive Officer(6) | 2023 | 22,885 | — | — | — | 20,728 | 5,227,706 | 5,271,319 | | | 2022 | 846,154 | — | 4,535,333 | — | 114,750 | 65,699 | 5,561,937 | | Ms. Jessica Alba, Chief Creative Officer | 2023 | 700,000 | — | 1,381,579 | — | 484,610 | 96,656 | 2,662,845 | | | 2022 | 688,077 | — | 1,401,188 | — | 66,150 | 348 | 2,155,763 | | Ms. Kate Barton, Chief Growth Officer(5) | 2023 | 228,846 | 75,000 | 1,476,239 | — | 126,922 | 61,521 | 1,968,527 |
Summary Compensation Table
(1) Amounts reported represent sign-on bonuses. (2) Amounts reported represent the aggregate grant date fair value of the restricted stock units (“RSUs”) granted to our named executive officers during 2023 and 2022 under our 2021 Equity Incentive Plan (“2021 Plan”). The assumptions used in calculating the grant date fair value and incremental fair value of the stock awards reported in this column are set forth in Note 12 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on March 8, 2024. This amount does not reflect the actual economic value that may be realized by the named executive officer. (3) Reflects non-equity incentive plan compensation paid to Ms. Vernón, Mr. Vlahos, Ms. Alba and Ms. Barton for the achievement of pre-established corporate performance goals during fiscal year 2023 and 2022. See “—Narrative to the Summary Compensation Table —Non-Equity Incentive Plan Compensation” below for a description of the material terms pursuant to which the non-equity incentive plan compensation for 2023 and 2022 was awarded. (4) For 2023, represents (i) for Ms. Vernon, $11,400 for matching contributions made by us under our 401(k) plan, $155 for life insurance policy premiums paid by us, $26,979 in fees for legal services paid by us, and $225,000 in relocation expenses; (ii) for Mr. Vlahos, $3,487,660 in consulting fees paid by us, $1,677,674 in a severance package in accordance with Mr. Vlahos’ separation agreement as described below under “Nick Vlahos Separation Agreement”, $40,000 in COBRA, $18,529 in director compensation, $2,223 for matching contributions made by us under our 401(k) plan, $1,607 for medical premiums paid by us, and $12 for life insurance policy premiums paid by us; and (iii) for Ms. Alba, $168 relates to life insurance policy premiums paid by us and $96,488 in legal fees incurred by Ms. Alba and reimbursed by us in connection with negotiations related to the Name and Likeness License Agreement entered into between the Company and Ms. Alba; and (iv) for Ms. Barton, $7,846 for matching contributions made by us under our 401(k) plan, $97 for life insurance policy premiums paid by us, $3,577 in fees for legal services paid by us, and $50,000 in relocation expenses. (5) Ms. Vernón's employment with us commenced on January 9, 2023 and Ms. Barton's employment with us commenced on May 8, 2023; therefore certain amounts for Ms. Vernón and Ms. Barton, such as salary, reflect a partial year of service for 2023. (6) Mr. Vlahos’ service as our Chief Executive Officer terminated on January 9, 2023; therefore, certain amounts for Mr. Vlahos, such as salary, reflect a partial year of service for 2023. See “Potential Payments Upon Termination or Change in Control—Nick Vlahos Separation Agreement” below.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table shows for the fiscal year ended December 31, 2023, certain information regarding outstanding equity awards for the named executive officers.
Outstanding Equity Awards At December 31, 2023
Outstanding Equity Awards At December 31, 2023
Outstanding Equity Awards At December 31, 2023
| | | | Option Awards | | | | Stock Awards | | | Name | Grant Date | Vesting Commencement Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Ms. Carla Vernon, Chief Executive Officer | 3/21/2023 (1) | 3/21/2023 | - | - | - | - | 1,845,238 | 6,089,285 | | Nikolaos Vlahos Former Chief Executive Officer | 4/26/2017 (2) | 4/26/2017 | 745,126 | - | 5.125 (7) | 4/26/2027 | - | - | | | 4/26/2017 (2) | 4/26/2017 | 377,634 | - | 5.125 (7) | 4/26/2027 | - | - | | | 4/27/2017 (2) | 4/26/2017 | 1,888,168 | - | 5.125 (7) | 4/27/2027 | - | - | | | 9/12/2018 (3) | 9/12/2018 | 600,000 | - | 5.75 | 9/12/2028 | - | - | | | 9/12/2018 (4) | 5/4/2021 | 300,000 | - | 5.75 | 9/12/2028 | - | - | | | 9/12/2018 (4) | 5/4/2021 | 300,000 | - | 5.75 | 9/12/2028 | - | - | | | 2/28/2020 (3) | 2/28/2020 | 177,083 | 72,917 | 5.23 | 2/28/2030 | - | - | | | 2/28/2020 (4) | 5/4/2021 | 166,666 | - | 5.23 | 2/28/2030 | - | - | | | 2/28/2020 (4) | 5/4/2021 | 125,000 | - | 5.23 | 2/28/2030 | - | - | | | 2/28/2020 (4) | 5/4/2021 | 125,000 | - | 5.23 | 2/28/2030 | - | - | | Jessica Alba Chief Creative Officer | 12/19/2014 (2) | 12/19/2014 | 465,000 | - | 5.125 (7) | 12/19/2024 | - | - | | | 3/24/2015 (5) | 3/24/2015 | 550,000 | - | 5.125 (7) | 3/24/2025 | - | - | | | 2/7/2018 (3) | 2/7/2018 | 300,000 | - | 5.13 | 2/7/2028 | - | - | | | 9/12/2018 (4) | 5/4/2021 | 100,000 | - | 5.75 | 9/12/2028 | - | - | | | 9/12/2018 (4) | 5/4/2021 | 100,000 | - | 5.75 | 9/12/2028 | - | - | | | 9/12/2018 (3) | 9/12/2018 | 200,000 | - | 5.75 | 9/12/2028 | - | - | | | 5/26/2021 (6) | 5/4/2021 | - | - | - | - | 184,181 | 607,797 | | | 2/25/2022 (1) | 2/25/2022 | - | - | - | - | 122,696 | 404,897 | | | 2/27/2023 (1) | 1/2/2023 | - | - | - | - | 493,421 | 1,628,289 | | Ms. Kate Barton, Chief Growth Officer | 5/18/2023 (1) | 5/18/2023 | - | - | - | - | 843,565 | 2,783,765 |
Outstanding Equity Awards At December 31, 2023
(1) 25% of the shares underlying this RSU award vest on the one-year anniversary of the vesting commencement date and 1/12th of the remainder vest in 12 equal quarterly installments thereafter, subject to continued service to us through the applicable vesting dates. (2) 25% of the shares underlying this option vest on the one-year anniversary of the vesting commencement date and the remainder vest in 36 equal monthly installments thereafter, subject to continued service to us through the applicable vesting date. (3) 1/48th of the shares underlying this option vest on a monthly basis following the vesting commencement date, subject to continued service to us through the applicable vesting date. (4) The shares underlying this option vested on the effective date of the registration statement for our IPO, which met the requirements of the applicable “Qualifying Liquidity Event.” (5) 1/60th of the shares underlying this option vest on a monthly basis following the vesting commencement date, subject to continued service to us through the applicable vesting date. (6) 20% of the shares underlying this RSU award vest on the one-year anniversary of the vesting commencement date and the remainder vest in 16 equal quarterly installments thereafter, subject to continued service to us through the applicable vesting date. (7) Option was repriced on January 22, 2018 based on the valuation of our common stock of $5.125 as of January 1, 2018.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control As of December 31, 2023, each of our named executive officers, other than Mr. Vlahos was eligible for severance benefits under his or her employment agreement with us upon termination of employment under certain circumstances, as described below. Mr. Vlahos’ service as our Chief Executive Officer terminated on January 10, 2023. See “—Nick Vlahos Separation Agreement” below for more information regarding Mr. Vlahos’ separation and the payments received in connection therewith. If Ms. Vernón is terminated without “cause” (excluding by reason of death or disability) or resigns for “good reason” (such terms as defined below), she will be entitled to receive cash severance in an amount equal to (i) 12 months of her then-current base salary, plus (ii) a pro rata portion of her target bonus amount calculated from the achievement of identified corporate goals, with any personal goals deemed achieved as of the date of Ms. Vernón's employment termination, with such amount to be paid in equal installments on our regular payroll dates over 12 months. If Ms. Alba is terminated without “cause” (excluding by reason of death or disability) or resigns for “good reason’ (such terms as defined below), in either case outside of the change in control period (as defined below), she will be entitled to receive cash severance in an amount equal to (i) 12 months of her then-current base salary, plus (ii) her target annual bonus amount, with such amount to be paid in equal installments on our regular payroll dates over 12 months. Ms. Alba’s severance will also include a cash amount equal to a pro rata portion of the annual bonus, if any, that she would have otherwise earned for the year in which her employment termination occurs, based on the number of days she was employed in the year of her employment termination. We will also accelerate the vesting of the unvested portion of any of Ms. Alba’s then-outstanding equity awards as to the number of shares subject to the outstanding equity awards that would have vested if Ms. Alba had remained employed for an additional 12 months after her termination date, except if after giving effect to such service credit, and only if such service credit extends to or past the last day of the performance period, any performance-vesting award will vest based on actual performance for the entire performance period. Alternatively, if Ms. Alba is terminated without “cause” (excluding by reason of death or disability) or resigns for “good reason,” in either case during the change in control period, Ms. Alba will be entitled to receive (i) cash severance in an amount equal to 24 months of her then-current base salary, plus an amount equal to two times her target annual bonus, (ii) a cash amount equal to a pro rata portion of the annual bonus, if any, that she would have otherwise earned for the year in which her employment termination occurs, based on the number of days she was employed in the year of her employment termination, and (iii) 100% accelerated vesting of all outstanding equity awards, with any performance-vesting award to be deemed to have vested at the target performance level. If Ms. Barton is terminated without “cause” (excluding by reason of death or disability) or resigns for “good reason” (such terms as defined below), she will be entitled to receive cash severance in an amount equal to (i) six months of her then-current base salary, plus (ii) a pro rata portion of her target bonus amount calculated from the achievement of identified corporate goals, with any personal goals deemed achieved as of the date of Ms. Barton's employment termination, with such amount to be paid in equal installments on our regular payroll dates over 12 months. As additional severance, we will pay each named executive officer’s COBRA group health insurance premiums for the named executive officer and his or her eligible dependents for up to 12 months for Ms. Vernón, and up to 12 months (increased to 24 months if the applicable termination occurs during the change in control period) for Ms. Alba and up to six months for Ms. Barton. These severance benefits are conditioned upon the named executive officer signing and not revoking a separation agreement and release of claims by no later than the sixtieth (60th) day after the employment termination, and resigning from all positions and terminating any relationships as an employee, advisor, officer, or director with us and any of its affiliates as of the date of termination. For purposes of Ms. Vernón's severance benefits, “cause” means any one of the following: (a) willful material breach by Ms. Vernón of any material company policy (including, but not limited to, our policies on nondiscrimination, anti-harassment, and confidential information) or Ms. Vernón’s duties or obligations thereunder; (b) Ms. Vernón’s willful engagement in conduct materially injurious to us, monetarily or otherwise; (c) conviction on acts of fraud, theft or other willful and material illegal acts of moral turpitude, or conviction on a felony charge, whether or not related to Vernón’s employment hereunder; or (d) Ms. Vernón’s willful refusal to follow lawful instructions of the Board. For purposes of Ms. Alba’s severance benefits, “cause” means any one of the following: (a) willful material breach by Ms. Alba of any material company policy (including, but not limited to, our policies on nondiscrimination, anti-harassment, and confidential information) or Ms. Alba’s duties or obligations thereunder; (b) Ms. Alba’s willful engagement in conduct materially injurious to us, monetarily or otherwise; (c) conviction on acts of fraud, theft or other willful and material illegal acts of moral turpitude, or conviction on a felony charge, whether or not related to Ms. Alba’s employment hereunder; or (d) Ms. Alba’s willful refusal to follow lawful and reasonable instructions of our Board. For purposes of Ms. Barton's severance benefits, “cause” means any one of the following: (a) willful material breach by Ms. Barton of any material Company policy (including, but not limited to, the Company’s policies on nondiscrimination, anti-harassment, and confidential information) or Ms. Barton's duties or obligations hereunder; (b) Ms. Barton's willful engagement in conduct materially injurious to the Company, monetarily or otherwise; (c) acts of fraud, theft or other willful illegal acts calling into question Ms. Barton's personal integrity, or conviction on a felony charge, whether or not related to Ms. Barton's employment hereunder; or (d) Ms. Barton's willful refusal to follow lawful instructions of the Board. For purposes of Ms. Alba’s severance benefits, “change in control period” means the period from three months before the consummation of a “change in control” (as defined in the 2021 Plan) until the two-year anniversary of the change in control. For purposes of Ms. Vernón's severance benefits, “good reason” means any one of the following without the named executive officer’s consent: (a) an assignment of duties or responsibilities (including reporting responsibilities) materially inconsistent with, or which materially reduce, your duties, authority, responsibilities and status with the Company; (b) an adverse change in your title; (c) any material reduction in Ms. Vernón's base salary, other than a reduction, generally applicable to other executives of ours, by not more than 25%; (d) the relocation of Ms. Vernón's principal place of employment to a location that is more than twenty-five (25) miles away from its current location; or (e) the uncured breach of any material provision of Ms. Vernón's employment agreement (or any other agreement with you) by us.
Potential Payments Upon Termination or Change in Control
For purposes of Ms. Alba’s severance benefits, “good reason” means the occurrence of any one of the following events without Ms. Alba’s written consent: (a) an assignment of duties or responsibilities (including reporting responsibilities) materially inconsistent with, or which materially reduce, Ms. Alba’s duties, authority, responsibilities and status with us (for this purpose, the parties agree that following a change in control (as defined in the 2021 Plan) a material reduction will occur if Ms. Alba does not report directly to the Board of the entity that determines our strategy); (b) an adverse change in Ms. Alba’s title; (c) any material reduction in Ms. Alba’s base salary, other than a reduction, generally applicable to our other executives, by not more than 10%; (d) the relocation of Ms. Alba’s principal place of employment to a location that is more than twenty-five (25) miles away from its current location; or (e) the uncured breach of any material provision of Ms. Alba’s employment agreement (or any other agreement with you) by us. For purposes of Ms. Barton’s severance benefits, “good reason” means any one of the following without Ms. Barton's consent: (a) an assignment of duties or responsibilities (including reporting responsibilities) materially inconsistent with, or which materially reduce, Ms. Barton's duties, authority, responsibilities, and status with the Company; (b) an adverse change in Ms. Barton's title; (c) any material reduction in Ms. Barton's base salary, other than a reduction, generally applicable to other executives, by not more than 25%; (d) the relocation of Ms. Barton's principal place of employment to a location that is more than twenty-five (25) miles away from its current location; or (e) the uncured breach of any material provision of this agreement (or any other agreement with Ms. Barton) by the Company. In order to resign for Good Reason, Ms. Barton must provide written notice to the Company’s Board within thirty (30) days after the first occurrence of the event giving rise to good reason setting forth the basis for Ms. Barton's resignation, allow the Company thirty (30) days from receipt of such written notice to cure such event, and if such event is not reasonably cured within such period, Ms. Barton must resign from all positions Ms. Barton then hold with the Company not later than thirty (30) days after the expiration of the cure period. Mr. Vlahos’ stock options granted in September 2018 and February 2020 (other than his stock options that vested upon the completion of our IPO) accelerate vesting upon certain qualifying terminations of his employment as follows: (i) in the event of his involuntary termination without “cause” or his resignation for good reason within three months before or twelve months following a “change in control” (each as defined in the 2011 Plan), the vesting of the shares of our common stock subject to such options will be accelerated in full and (ii) in the event of his involuntary termination without cause, or his resignation for good reason outside of such change in control period, the vesting of a number of shares of our common stock subject to such options equal to the number of shares, if any, that would have vested during the twelve-month period following such termination or resignation will be accelerated. In March 2022, our Compensation Committee amended Mr. Vlahos’ RSU award granted on May 26, 2021 so that it would be subject to vesting acceleration upon termination of Mr. Vlahos’ service pursuant to a termination initiated by the Company without “cause” or Mr. Vlahos’ resignation for “good reason;” if, following his transition of service, he resigned from the Board without “cause” at the request of the Company; or if he was not re-nominated by the Board or not re-elected to the Board by the stockholders of the Company as a continuing director. As a result of Mr. Vlahos not being re-nominated for election by the Board, the vesting of the remaining shares, prorated through December 31, 2023, under Mr. Vlahos’ RSU award granted on May 26, 2021 accelerated on May 24, 2023. In addition, the vesting of the shares under Mr. Vlahos' RSU award granted on March 24, 2022 accelerated on May 24, 2023 as a result of Mr. Vlahos not being re-nominated for election by the Board.
Director Compensation
Director Compensation The following table shows for the fiscal year ended December 31, 2023 certain information with respect to the compensation of all non-employee directors of the Company. Ms. Vernón, our Chief Executive Officer, and Ms. Alba, our Chief Creative Officer, did not receive additional compensation for their service as directors, and therefore are not included in the Director Compensation table below. All compensation paid to Ms. Vernón and Ms. Alba in 2023 is reported above in the “Summary Compensation Table.” The compensation Nick Vlahos received for his service as a non-employee director following his resignation as our Chief Executive Officer is reported above in the “Summary Compensation Table.”
Director Compensation for Fiscal 2023
Director Compensation for Fiscal 2023
Director Compensation for Fiscal 2023
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) | Total ($) | | Michael Barkley | 4,076 | 408,126 | 412,202 | | Katherine Bayne(1) | — | 236,925 | 236,925 | | Julia M. Brown | 54,552 | 158,768 | 213,319 | | Susan Gentile | 70,000 | 158,768 | 228,768 | | John R. (Jack) Hartung(1) | 326 | 226,505 | 226,831 | | Eric Liaw(1) | — | 234,319 | 234,319 | | Alissa Hsu Lynch | 4,565 | 408,126 | 412,691 | | Avik Pramanik(1) | — | 223,898 | 223,898 | | Andrea Turner | 4,728 | 408,126 | 412,854 | | James D. White(1) | — | 299,452 | 299,452 |
Director Compensation for Fiscal 2023
(1) Ms. Bayne, Mr. Hartung, Mr. Liaw, Mr. Pramanik and Mr. White each elected to receive the cash fees he or she was otherwise entitled to receive in 2023 and eligible to elect in the form of an RSU award of equivalent value calculated as set forth under “Equity Compensation” below: Ms. Bayne $75,000, Mr. Hartung $30,000, Mr. Liaw $67,500, Mr. Pramanik $62,500 and Mr. White $135,000. Accordingly, Ms. Bayne, Mr. Hartung, Mr. Liaw, Mr. Pramanik and Mr. White each received 25,966, 22,504, 25,100, 21,638 and 46,739 fully vested RSUs, respectively. Mr. Hartung elected to defer the settlement of his fully vested RSUs until the earlier of a Change in Control, as defined in the Non-Employee Director Compensation Policy, or within 60 days following his Separation Date (as defined therein) or death, whichever is earlier. (2) Amounts reflect the aggregate grant date fair value of RSUs granted in 2023, computed in accordance with the provisions of ASC Topic 718, Stock Compensation. These amounts do not reflect the actual economic value that will be realized by the director upon the vesting or settlement of the RSU. The assumptions that we used to calculate these amounts are discussed in Note 12 to our audited consolidated financial statements for the fiscal year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on March 8, 2024. During 2023, the following number of RSUs were granted to the directors as follows: (i) Ms. Bayne: an award of 25,966 RSUs with a grant date fair value of $78,158 and an award of 105,845 RSU's with a grant date fair value of $158,768, (ii) Ms. Gentile: an award of 105,845 RSUs with a grant date fair value of $158,768, (iii) Mr. Liaw: an award of 25,100 RSUs with a grant date fair value of $75,551 and an award of 105,845 RSUs with a grant date fair value of $158,768, (iv) Mr. Pramanik: an award of 21,638 RSUs with a grant date fair value of $65,130 and an award of 105,845 RSU's with a grant date fair value of $158,768, (v) Mr. White: an award of 46,739 RSUs with a grant date fair value of $140,684 and an award of 105,845 RSUs with a grant date fair value of $158,768, (vi) Ms. Brown: an award of 105,845 RSU's with a grant date fair value of $158,768, (vii) Mr. Hartung: an award of 22,504 RSUs with a grant date fair value of $67,737 and an award of 105,845 RSU's with a grant date fair value of $158,768, (viii) Mr. Barkley, Ms. Lynch and Ms. Turner: an award of 51,659 RSUs with a grant date fair value of $128,114 and an award of 112,908 RSUs with a grant date fair value of $280,012, respectively. The table below shows the aggregate numbers of shares of our common stock subject to outstanding option awards (exercisable and unexercisable) and/or RSU awards (unvested) held as of December 31, 2023 by each non-employee director who was serving as of December 31, 2023.
Director Compensation for Fiscal 2023
| Name | Options Outstanding at Year End | Stock Awards Outstanding at Year End | | Mr. Michael Barkley | — | 164,567 | | Ms. Katherine Bayne | 120,000 | 105,845 | | Ms. Julia M. Brown | — | — | | Ms. Susan Gentile | — | 109,699 | | Mr. John R. (Jack) Hartung | — | 138,255 | | Mr. Eric Liaw | — | — | | Ms. Alissa Hsu Lynch | — | 164,567 | | Mr. Avik Pramanik | — | — | | Ms. Andrea Turner | — | 164,567 | | Mr. James D. White | — | 109,699 |
Narrative to Director Compensation Table
Narrative to Director Compensation Table Our Board has adopted a Non-Employee Director Compensation Policy (the “Policy”), which became effective in connection with our IPO in May 2021, pursuant to which each of our directors who is not serving as an employee of the Company is eligible to receive compensation for service on our Board and committees of our Board. The Policy consists of the following components:
Equity Compensation
Equity Compensation •Initial Grant: Each non-employee director who first joins our Board will be automatically granted an RSU award (the “Initial Grant”), covering a number of RSUs equal to (i) $185,000 divided by (ii) the average fair market value of a share of our common stock for the 30 consecutive market trading days ending on and including the last market trading day prior to the grant date of such Initial Grant (or if the Initial Grant is granted on the effective date of the Policy, the initial price of a share of our common stock to the public), rounded down to the nearest whole unit. Each Initial Grant will vest in three equal annual installments on the one-, two- and three-year anniversaries of the grant date, subject to the non-employee director’s continued service on each vesting date. •Annual Grant and Prorated Annual Grant: On the date of each Annual Meeting of our stockholders, each person who is then a non-employee director will be automatically granted an RSU award (the “Annual Grant”), covering a number of RSUs equal to (i) $185,000 divided by (ii) the average fair market value of a share of our common stock for the 30 consecutive market trading days ending on and including the last market trading day prior to the grant date of such Annual Grant, rounded down to the nearest whole unit. In addition, each non-employee director who first joins our Board on a date other than the date of an annual meeting of our stockholders, on the date the non-employee director first joins our Board, will be automatically granted an RSU award (the “Prorated Annual Grant”), covering a number of RSUs equal to (i) $185,000 multiplied by a fraction, the numerator of which equals 365 minus the total number of days, as of the grant date of such Prorated Annual Grant, that have occurred since the last Annual Meeting of our stockholders and the denominator of which equals 365, divided by (ii) the average fair market value of a share of our common stock for the 30 consecutive market trading days ending on and including the last market trading day prior to the grant date of such Prorated Annual Grant, rounded down to the nearest whole unit. Each Annual Grant and Prorated Annual Grant will fully vest on the earlier of (i) the one-year anniversary of its grant date, and (ii) the date immediately prior to the next Annual Meeting of our stockholders following its grant date, subject to the non-employee director’s continued service through the applicable vesting date. •Interim Annual Grant and Prorated Interim Annual Grant: Each non-employee director who first joined our Board before June 1, 2022, was automatically granted an RSU award (the “Prorated Interim Annual Grant”), on the date such non-employee director first joins our Board. Each Prorated Interim Annual Grant will cover a number of RSUs equal to (i) $185,000 multiplied by a fraction, the numerator of which equals the total number of days during the period beginning on the date the non-employee director first joined our Board and ending on June 1, 2022 and the denominator of which equals 365, divided by (ii) the average fair market value of a share of common stock for the 30 consecutive market trading days ending on and including the last market trading day prior to the grant date of such Prorated Interim Annual Grant, rounded down to the nearest whole unit. Each Prorated Interim Annual Grant fully vested on the earlier of (i) the date immediately prior to the Annual Meeting of our stockholders next following the grant date of the Prorated Interim Annual Grant and (ii) June 1, 2022, subject to the non-employee director’s continued service through the vesting date. •Retainer Grant: Each non-employee director may elect to forego receiving payment of all (but not less than all) of the annual cash retainers described above that he or she is otherwise eligible to receive for the period during our fiscal year that the election applies commencing on the first day of such fiscal year (or if the non-employee director makes the election in our fiscal year that the election applies, on the first day of our fiscal quarter next following our fiscal quarter in which the election is made) and ending on the last day of such fiscal year and instead receive an award of RSUs (the “Retainer Grant”), provided such election is timely made and complies with certain other requirements specified in the Policy. If a non-employee director timely makes the election described above in accordance with the Policy, on the first day of our fiscal year that the election applies (or if the non-employee director makes the election in our fiscal year that the election applies, on the first day of our fiscal quarter following our fiscal quarter in which the election is made), the non-employee director will be automatically granted a Retainer Grant covering a number of RSUs equal to the (i) aggregate amount of the annual cash retainers that the non-employee director is eligible to receive under the Policy for the applicable period to which the election applies divided by (ii) the average fair market value of a share of our common stock for the 30 consecutive market trading days ending on and including the last market trading day prior to the grant date of such Retainer Grant, rounded down to the nearest whole unit. Each Retainer Grant will vest in equal quarterly installments over the period commencing on the grant date of the Retainer Grant and ending on the last day of the fiscal year in which the Retainer Grant is granted, subject to the non-employee director’s continued service on each vesting date. Each non-employee director may elect to defer the delivery of shares in settlement of any RSU award granted under the Policy that would otherwise be delivered to such non-employee director on or following the date such award vests pursuant to the terms of a deferral election such non-employee director makes in accordance with the Policy. Each restricted RSU award held by a non-employee director that is granted under the Policy, including the awards described above, will fully vest upon such non-employee director’s death or disability (as defined in our 2021 Plan), or immediately prior to the consummation of a change in control (as defined in our 2021 Plan), in each case to extent such award is outstanding immediately prior to the occurrence of such event. The aggregate value of all compensation granted or paid, to any non-employee director with respect to any fiscal year of the company, including awards granted and cash fees paid by us to such non-employee director, will not exceed (1) $750,000 in total value or (2) if such non-employee director first joins our Board during such fiscal year or is serving as the non-employee chair of our Board during such fiscal year, $1,500,000 in total value.