DEF 14A of FIGS, Inc.
Filed Apr 24, 2024 · FY20230001628280-24-017664
Proposal 1: Election of Directors
Proposal 1: Election of Directors At the Annual Meeting, three (3) Class III Directors are to be elected to hold office until the Annual Meeting of Stockholders to be held in 2027 and until each such director’s respective successor is elected and qualified or until each such director’s earlier death, resignation or removal. We currently have nine (9) directors on our Board. The Board has nominated our current Class III Directors, A.G. Lafley, Jeffrey Wilke and J. Martin Willhite, for re-election at the Annual Meeting. The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the three nominees receiving the highest number of affirmative “FOR” votes will be elected as Class III Directors. Votes withheld and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal. As set forth in our Amended and Restated Certificate of Incorporation, the Board is currently divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. The current class structure is as follows: Class I, whose current term will expire at the 2025 Annual Meeting of Stockholders; Class II, whose current term will expire at the 2026 Annual Meeting of Stockholders; and Class III, whose current term will expire at the Annual Meeting and, if elected at the Annual Meeting, whose subsequent term will expire at the 2027 Annual Meeting of Stockholders. The current Class I Directors are Catherine Spear, Sheila Antrum and Mario Marte; the current Class II Directors are Heather Hasson, Kenneth Lin and Michael Soenen; and the current Class III Directors are A.G. Lafley, Jeffrey Wilke and J. Martin Willhite. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide that, subject to the rights of the holders of any series of preferred stock to elect directors and subject to the terms of the Voting Agreement (as defined below), the authorized number of directors may be changed from time to time by the Board. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our Board into three classes with staggered three-year terms ensures continuity from year to year and may delay or prevent a change of our management or a change in control of our Company. Subject to the rights of the holders of any series of preferred stock to elect directors and the rights granted pursuant to the Voting Agreement (as defined below), our directors may be removed only for cause by the affirmative vote of the holders of a majority of our outstanding voting stock entitled to vote in the election of directors, voting together as a single class. In connection with our initial public offering (“IPO”) of our Class A common stock in May 2021, we entered into a voting agreement (the “Voting Agreement”) with our co-founders, Ms. Hasson and Ms. Spear, Tulco, LLC (“Tulco”) and certain related persons and trusts, pursuant to which such parties have agreed to take all necessary action to include each of Ms. Hasson, Ms. Spear and the Tulco Director (as defined in the Voting Agreement) in the slate of nominees nominated by the Board for the applicable class of directors for election or re-election by the stockholders of the Company and to vote, or cause to vote, all of their outstanding shares of our Common Stock for the election of Ms. Hasson, Ms. Spear and, for so long as Tulco and its permitted transferees (as defined in the Company’s Amended and Restated Certificate of Incorporation) maintains a specified percentage of ownership of our outstanding Common Stock, the Tulco Director, at any annual or special meeting of stockholders at which directors are elected, as applicable. On March 21, 2022, the existing parties to the Voting Agreement entered into an amendment and joinder with Thomas Tull, the founder, chairman and chief executive officer of Tulco, and his family trust (the “Tull Parties”), under which the Tull Parties were acknowledged as permitted transferees under the Voting Agreement and joined as parties to the Voting Agreement, with the same rights and obligations as the other investor parties thereto. Pursuant to the Voting Agreement, Ms. Spear, Ms. Hasson and J. Martin Willhite (the current Tulco Director) have been designated as directors of the Board, serving as Class I, II and III directors, respectively. The Board has nominated Mr. Willhite for election as a Class III Director at the Annual Meeting. As a result of the Voting Agreement and the aggregate voting power of the parties thereto, we expect that the parties acting together will control the election of directors of the Company. For more information, see “Corporate Governance—Voting Agreement” and “—Controlled Company Exemption” below. If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the shares of Common Stock represented thereby for the election as Class III Directors of the persons whose names and biographies appear below. In the event that any of the nominees should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by the Board or the Board may elect to reduce its size. The Board has no reason to believe that the nominees named below will be unable to serve if elected. Each of the nominees named below has consented to being named in this Proxy Statement and to serve if elected.
Class I Directors (terms to expire at the 2025 Annual Meeting)
Class I Directors (terms to expire at the 2025 Annual Meeting) The current members of the Board who are Class I Directors are as follows:
Class I Directors (terms to expire at the 2025 Annual Meeting)
| Name | Age | Served as a Director Since | Position with FIGS | | Catherine Spear | 40 | 2013 | Director, Co-Founder and Chief Executive Officer | | Sheila Antrum | 65 | 2021 | Director | | Mario Marte | 48 | 2023 | Director |
Class I Directors (terms to expire at the 2025 Annual Meeting)
The principal occupations and business experience, for at least the past five years, of each Class I Director are as follows:
Catherine Spear
Catherine Spear Ms. Spear co-founded our company and serves as our Chief Executive Officer and as a member of our Board. Prior to co-founding FIGS, Ms. Spear served as an associate at the Blackstone Group Inc, a leading global alternative investment business, in the firm’s hedge fund group. Ms. Spear began her career at Citigroup Global Markets Inc., where she spent four years in its investment banking and private equity divisions. Since February 2024, Ms. Spear has served as a member of the board of directors of Amer Sports, Inc., a global group of sports and outdoor brands, including Arcteryx, Salomon and Wilson. From August 2020 to July 2021, Ms. Spear also served as a member of the board of directors of One, a blank check company. Ms. Spear holds a B.A. in Economics from Tufts University and an M.B.A. from Harvard Business School. She was also selected to join the Aspen Institute’s Henry Crown Fellows in 2018. We believe that Ms. Spear is qualified to serve as a member of our Board based on the perspective and experience she brings as our co-founder and Chief Executive Officer.
Sheila Antrum
Sheila Antrum Ms. Antrum has served as a member of our Board since May 2021. Since 2007, Ms. Antrum has served in roles of increasing responsibility at the University of California, including serving as the Senior Vice President and Chief Operating Officer of UCSF Health since August 2017, UCSF Health President-Adult Services since September 2015 and the Chief Nursing Officer of UCSF Medical Center from September 2007 to 2017 and again as interim Chief Nursing Officer from 2019 to 2020. Before that, from 2003 to 2007, Ms. Antrum served as the Chief of Ambulatory Operations and Associate Director of Clinical Cancer Center Operations at the University of California San Diego Medical Center. Ms. Antrum also has served on the board of directors of Integer Holdings Corporation since February 2021. Ms. Antrum holds a B.A. of Science in Nursing from Hampton University and a Master’s in Health Services Administration from the University of Michigan School of Public Health. We believe Ms. Antrum is qualified to serve as a member of our Board based on her extensive leadership experience in the healthcare industry.
Mario Marte
Mario Marte Mr. Marte has served as a member of our Board since November 2023. From September 2018 to July 2023, Mr. Marte served as Chief Financial Officer at Chewy, Inc., a leading online pet product and service retailer. Before that, from April 2015 until September 2018, Mr. Marte served as Vice President—Finance & Treasurer at Chewy. Mr. Marte previously served as the Vice President—Financial Planning & Analysis for Hilton Worldwide Holdings, Inc., and in various other roles at Hilton, American Airlines Group Inc. and Accenture LLC, a consulting firm. Since January 2021, Mr. Marte has served on the board of directors of Best Buy Co., Inc. and as chair of its audit committee since June 2023. Mr. Marte holds a B.S. in Computer Engineering from the University of South Florida and an M.B.A. from Duke University’s Fuqua School of Business. We believe Mr. Marte is qualified to serve as a member of our Board based on his extensive financial expertise, his deep knowledge in eCommerce and consumer businesses, and his leadership experience at private and publicly traded companies.
Class II Directors (terms to expire at the 2026 Annual Meeting)
Class II Directors (terms to expire at the 2026 Annual Meeting) The current members of the Board who are Class II Directors are as follows:
Class II Directors (terms to expire at the 2026 Annual Meeting)
| Name | Age | Served as a Director Since | Position with FIGS | | Heather Hasson | 42 | 2013 | Director, Co-Founder and Executive Chair | | Kenneth Lin | 48 | 2022 | Director | | Michael Soenen | 54 | 2021 | Director |
Class II Directors (terms to expire at the 2026 Annual Meeting)
The principal occupations and business experience, for at least the past five years, of each Class II Director are as follows:
Heather Hasson
Heather Hasson Ms. Hasson co-founded our company and serves as the Executive Chair of our Board. Ms. Hasson previously served as our Co-Chief Executive Officer until August 2022. Prior to co-founding FIGS, Ms. Hasson was an entrepreneur, having served as founder and CEO of Heather Hasson bags, a high-end bag line, and FIGS Ties, a tie and scarf company. Since January 2021, Ms. Hasson also has served as a member of the board of directors of G Squared Ascend I Inc. and G Squared Ascend II Inc., two blank check companies, and as a member of the board of directors of RxArt, a non-profit whose mission is to help children heal through the extraordinary power of visual art. Ms. Hasson holds a B.A. in Political Science from the University of Wisconsin-Madison. We believe that Ms. Hasson is qualified to serve as a member of our Board based on her experience in the apparel industry and the knowledge of our company she brings as our co-founder and Executive Chair.
Kenneth Lin
Kenneth Lin Mr. Lin has served as a member of our Board since April 2022. Mr. Lin has served as the Chief Executive Officer of Credit Karma, a consumer finance company that he founded and that was acquired by Intuit in 2020, since March 2007. He previously founded Multilytics Marketing, a data driven marketing agency and has served as a member of the board of trustees at Boston University since December 2021. Mr. Lin holds a B.A. in Economics and Mathematics from Boston University and was selected to join the Aspen Institute’s Henry Crown Fellows in 2018. We believe that Mr. Lin is qualified to serve as a member of our Board due to his extensive leadership, technology and internet company experience.
Compensation Governance and Best Practices
| What We Do | | What We Do Not Do | | | ✓ | Emphasize performance-based, at risk compensation. | X | Do not grant uncapped cash incentives or guaranteed equity compensation. | | ✓ | Maintain a peer group to align pay with market competitive practices. | X | Do not provide significant perquisites. | | ✓ | Emphasize the use of equity compensation to promote executive retention and reward long-term value creation. | X | Do not provide tax gross-ups in connection with severance and/or change in control payments. | | ✓ | Weight the overall pay mix towards incentive compensation for senior executives. | X | Do not have defined benefit pension plans or supplemental executive retirement plans. | | ✓ | Regular review of share utilization, dilution, and cost. | X | Do not allow hedging or pledging of stock. | | ✓ | Conduct an annual risk assessment to mitigate any compensation program-related risk reasonably likely to have a material adverse effect on the organization. | X | Do not pay dividends on unvested shares. | | ✓ | Engage an independent compensation consultant to advise our Compensation Committee. | | | | ✓ | Maintain a clawback policy for recovery of erroneously awarded incentive compensation from executive officers. | | |
Role of Compensation Committee
Role of Compensation Committee Our Compensation Committee administers the executive compensation program for our NEOs and executive officers of the Company. The Compensation Committee may at times be directed by the Board to consult with a majority of the independent directors of the Board with respect to compensation of our Chief Executive Officer. The Compensation Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The Compensation Committee may also delegate to an officer the authority to grant equity awards to certain employees, as further described in its charter and subject to the terms of our equity plans. In 2023, the Compensation Committee delegated authority to our Chief Executive Officer and Chief Financial Officer to grant annual and new hire equity awards under our Equity Grant Policy to employees who are not executive officers or directors of the Board. In January 2024, the Compensation Committee renewed this delegation for twelve months. This authority is subject to a cap on both the aggregate number of shares approved for issuance and the dollar amount of any individual award. For more information about the Equity Grant Policy, see “—Other Policies and Considerations—Equity Grant Policy” below. In setting executive compensation, the Compensation Committee considers a number of factors, including the recommendations of our Chief Executive Officer (other than with respect to the Chief Executive Officer’s own compensation) and our human resources team, current and past total compensation, competitive market data and analysis provided by the Compensation Committee’s independent compensation consultant, equity dilution and burn rate, retention needs, Company performance and each executive’s impact on performance, relative scope of responsibility, individual performance, potential and demonstrated leadership, and internal equity pay considerations. Our Chief Executive Officer’s recommendations are based on her evaluation of each other executive officer’s individual performance and contributions, of which our Chief Executive Officer has direct knowledge.
Role of Compensation Consultant
Role of Compensation Consultant Since 2022, our Compensation Committee has engaged Pay Governance as an independent compensation consultant to provide executive compensation advisory services, help evaluate our compensation philosophy and objectives, and provide guidance in administering our executive compensation program and selecting our compensation peer group composition. The Compensation Committee has evaluated Pay Governance’s independence pursuant to the requirements of NYSE and SEC rules and has determined that Pay Governance does not have any conflicts of interest in advising the Compensation Committee. Pay Governance did not provide any other services to the Company in 2023 for which the amount exceeds $120,000. In consultation with Pay Governance, in 2023 our Compensation Committee reviewed benchmarking information representative of a group of similarly situated peer companies. Recognizing that FIGS has few direct competitors, we aim to select peers that meet some or all of the following criteria: •Similar in size, primarily revenue and market capitalization •Similar in scope and complexity to FIGS •Operating in e-commerce, and direct to consumer industries •Recently public, or at similar life cycle stage The following companies were used to review our executive compensation program designs and pay levels for 2023: •AllBirds, Inc. •Beyond Meat, Inc. •Bumble, Inc. •Canada Goose Holdings Inc. •Chewy, Inc. •Etsy, Inc. •Freshpet, Inc. •GoodRx Holdings, Inc. •Peloton Interactive, Inc. •Poshmark, Inc. •Revolve Group, Inc. •Stitch Fix, Inc. •The Honest Company, Inc. •The RealReal, Inc. •Warby Parker Inc. •YETI Holdings, Inc. As of May 2023, as compared to such peer group, we were at the 23rd percentile for revenues for the preceding four quarters, the 28th percentile for 30-day average market cap, 58th percentile for EBITDA and 83rd percentile for one year revenues growth. In making compensation decisions for the NEOs, the Compensation Committee reviews analysis of data derived from members of our peer group and, with respect to all full-time permanent employees other than the NEOs, also utilized survey data provided by Radford. For 2023, the Compensation Committee used these analyses to help ensure that our executive compensation program is competitive, by considering market data and using comparable positions at companies with which we compete for talent as a reference point for individual compensation decisions. While the Compensation Committee does not establish compensation levels solely based on a review of competitive data or benchmark to any particular level, it believes such data is a useful tool in its deliberations as our compensation policies and practices must be competitive in the marketplace for us to be able to attract, motivate and retain qualified executive officers.
Elements of Compensation
Elements of Compensation The primary elements of our NEOs’ compensation and the main objectives of each are: •Base Salary. Base salary attracts and retains talented executives, recognizes individual roles and responsibilities, and provides stable income. •Annual Performance-Based Cash Incentive Compensation. Annual performance bonuses encourage focus on performance objectives and reward executives for their contributions toward achieving those objectives. •Equity-Based Long-Term Incentive Compensation. Equity compensation, provided in the form of stock options and RSUs, aligns executives’ interests with our stockholders’ interests, emphasizes long-term financial and operational performance, and helps retain executive talent. During fiscal 2023, we established an annual equity grant practice for our executive officers, including our NEOs. The vast majority of our NEOs’ target annual compensation is in the form of compensation that is variable or “at-risk,” and dependent upon our financial and operating performance, individual performance factors and the value of our stock price. The at-risk elements of our compensation program for fiscal 2023 include (i) our 2023 Bonus Program and (ii) annual equity-based long term incentive award grants, in the form of RSU and option awards. Our NEOs’ respective target total annual compensation for fiscal 2023 is set forth below: * The dollar-denominated value of the long-term incentive RSU award used to calculate the percentage in this table is different from the grant-date fair value of the RSU award disclosed in our Summary Compensation Table below, because the number of RSUs underlying the award was calculated based on the 20-day average of our closing stock price ending on and including the date of the grant. In addition, our NEOs are eligible to participate in our health and welfare programs and our 401(k) plan on the same basis as our other employees (except for our Executive Chair, with respect to our 401(k) plan). We also maintain severance and change in control arrangements, which aid in attracting and retaining executive talent and help executives to remain focused and dedicated during potential transition periods due to a change in control. Each of these elements of compensation for 2023 is described further below.
Cash Incentive Compensation
Cash Incentive Compensation Annual cash incentive compensation is an important part of our compensation philosophy that emphasizes pay for performance by aligning compensation with financial and operational achievements, incentivizing our NEOs and other bonus-eligible employees to drive operating performance that is aligned with stockholder value creation. The 2023 Bonus Program was based on achievement of the following metrics and weightings: •37.5% based on Company achievement of net revenues goals; •37.5% based on Company achievement of adjusted EBITDA margin goals; and •25% based on individual performance, as determined by the Compensation Committee, which is based on the Chief Executive Officer’s recommendations to the Compensation Committee in the case of Ms. Turenshine. In fiscal 2023, the following NEOs were eligible to participate in our 2023 Bonus Program at the following target bonuses:
Cash Incentive Compensation
| Named Executive Officer | Target Bonus | | Catherine Spear | 100% of base salary | | Daniella Turenshine | $300,000 |
Cash Incentive Compensation
The following table sets forth the threshold, target, stretch and maximum bonus opportunities established by the Compensation Committee with respect to the net revenues, adjusted EBITDA margin and individual performance components of the 2023 Bonus Program:
Cash Incentive Compensation
| Metric | Weight | Minimum | Threshold | Target | Stretch | Maximum | | Net Revenues | 37.5% | - | $506M | $576M | $600M | $700M | | Adjusted EBITDA Margin | 37.5% | - | 11% | 12.8% | 16.5% | 18% | | Individual Performance | 25% | “Below Target” | - | “On Target” | - | “Above Target” | | Payout as a % of Target | | 0% | 50% | 100% | 115% | 200% |
Cash Incentive Compensation
The following table sets forth the actual achievement of the net revenues and adjustment EBITDA margin components for 2023:
Cash Incentive Compensation
| Metric | Actual Achievement | Actual Achievement as a % of Target Payout | | Net Revenues | $550.3M(1) | 80.8% | | Adjusted EBITDA Margin(2) | 15.8% | 111.8% | | Combined Payout as a % of Target | | 96.3% |
Cash Incentive Compensation
(1) For purposes of the 2023 Bonus Program, net revenues is calculated as net revenues as determined under GAAP, adjusted to disregard the impact of an accounting reclassification related to duty subsidies for customers in Canada. (2) For purposes of the 2023 Bonus Program, adjusted EBITDA margin is a non-GAAP measure as defined in the section titled “Non-GAAP Financial Measures and Key Operating Metrics” in the Appendix. The following table sets forth the actual achievement by our bonus-eligible NEOs of the individual performance component of the 2023 Bonus Program, as determined by our Compensation Committee, which was based on the Chief Executive Officer’s recommendations to the Compensation Committee in the case of Ms. Turenshine, as discussed below the following table:
Cash Incentive Compensation
| Named Executive Officer | Actual Achievement as a % of Target Payout(1) | | Catherine Spear | 77.0% | | Daniella Turenshine | 96.3% |
Cash Incentive Compensation
(1) In order to better align bonus achievements with the broader financial performance of the Company, the Compensation Committee determined to cap the payout of the individual performance component of the 2023 Bonus Program at the actual combined percentage achievement of the Company financial performance components, which was 96.3%. The Compensation Committee determined that Ms. Spear achieved 80% of her individual performance component target, resulting in a 77% payout of her individual performance component (i.e., 80% of 96.3%), and that Ms. Turenshine achieved 100% of her individual performance component target, resulting in a 96.3% payout of her individual performance component (i.e., 100% of 96.3%). In determining the component of Ms. Spear’s bonus related to her individual performance, the Compensation Committee considered both the overall financial and operational performance of the Company and the voluntary recommendation brought forth by Ms. Spear. The Compensation Committee considered that while business performance and Ms. Spear’s leadership may have warranted a higher payout for her, Ms. Spear’s recommendation, which resulted in the lowest actual achievement of the individual performance component among the Company’s leadership team, demonstrated accountability, a commitment to continuous improvement and excellence, and focus on team performance to drive longer-term success. Based on its review, the Compensation Committee determined that the individual performance component of Ms. Spear’s bonus would be paid out at the level shown in the table above. In determining the component of Ms. Turenshine’s bonus related to her individual performance, the Compensation Committee considered the recommendation from Ms. Spear and Ms. Turenshine’s overall performance across key strategic goals. In particular, the Compensation Committee recognized Ms. Turenshine’s role in driving the Company’s above-target Adjusted EBITDA Margin results and her leadership in helping further develop the Company’s strategic plans, as well as her role in further strengthening the Company’s finance and accounting team and internal audit program. The Compensation Committee further recognized that, under her leadership, the Company successfully completed its second year as a large accelerated filer and received an unqualified SOX opinion with no material weaknesses from the Company’s independent registered public accountants for the fiscal year ended December 31, 2023. Based on its review, the Compensation Committee determined that the individual performance component of Ms. Turenshine’s bonus would be paid out at the level shown in the table above. Based on the Company’s achievement of the net revenues and adjusted EBITDA margin components, and the Compensation Committee’s determination of the NEOs individual performance, the bonus-eligible NEOs achieved the following percentages of their applicable target bonus opportunities:
Cash Incentive Compensation
| Named Executive Officer | Actual Achievement as a % of Target Bonus Payout | | Catherine Spear | 91.6% | | Daniella Turenshine | 96.5% |
Cash Incentive Compensation
The NEOs’ 2023 annual bonus payments are set forth in the columns titled “Bonus” and “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table below.
Equity-Based Long-Term Incentive Awards
Equity-Based Long-Term Incentive Awards We view equity-based compensation as a critical component of our balanced total compensation program. Equity-based compensation creates an ownership culture among our employees that provides an incentive to contribute to the continued growth and development of our business and aligns the interests of executives with those of our stockholders. Our Compensation Committee believes it is essential to provide equity-based compensation to our executive officers in order to link the interests and risks of our executive officers with those of our stockholders, reinforcing our commitment to ensuring a strong linkage between company performance and pay. In 2023, we transitioned to an annual equity award cadence for eligible executive level employees to align with common market practice, reduce the impact of stock price volatility, and help ensure employees held sufficient outstanding and unvested equity incentives on a more continuous basis. Annual grants provide the Chief Executive Officer and the Compensation Committee a chance to review grants annually and ensure grant values are aligned with individual performance and competitive with the external market data. As part of this transition, in May 2023, we granted stock option and RSU awards to each of Mses. Spear and Turenshine, as follows:
Equity-Based Long-Term Incentive Awards
| Named Executive Officer | Stock Option Value(1) | Number of Shares Subject to Stock Option | Restricted Stock Unit Value(2) | Number of Restricted Stock Units | | Catherine Spear | $3,000,000 | 833,334 | $3,000,000 | 436,047 | | Daniella Turenshine | $750,000 | 208,334 | $750,000 | 109,012 |
Equity-Based Long-Term Incentive Awards
(1) The number of shares underlying each stock option was calculated based on the Black-Scholes fair value of the stock option on the date of the grant. (2) The number of RSUs underlying each award was calculated based on the 20-day average of our closing stock price ending on and including the date of the grant. As such, the dollar-denominated value set forth in this table may be different from the grant-date fair value of the RSU award disclosed in our Summary Compensation Table below. The stock option awards vest in equal monthly installments over a four-year period and the RSU awards vest in equal quarterly installments over a four-year period, in each case subject to continued employment. In determining the amounts and form of these awards, the Compensation Committee considered market data provided by Pay Governance, individual performance, roles and responsibilities of each NEO, competitive factors, vested and unvested value of the equity awards held by each NEO, and the timing of prior equity awards granted. For more information regarding equity awards granted to the NEOs in 2023, see “—Executive Compensation Tables—Grants of Plan-Based Awards in Fiscal 2023” below. Due to the equity awards granted to Ms. Hasson in connection with her transition to Executive Chair in 2022, the Compensation Committee determined not to grant any equity awards to her in 2023.
Severance and Change in Control Arrangements
Severance and Change in Control Arrangements Pursuant to their respective employment agreements, each of our NEOs is entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements facilitate an orderly transition in the event of changes in management. For more information about severance payments and benefits, see “—Executive Compensation Tables—Potential Payments Upon Termination or Change in Control” below.
Equity Grant Policy
Equity Grant Policy Our Compensation Committee administers the Equity Grant Policy, which provides the following: •The grant date of equity awards occurs on or after the date on which the applicable award is approved, which, to the extent reasonably practicable, is the 10ᵗʰ day of each month or the immediately following business day. •New hire grants made by the Management Designees to employees vest over four years from the employee’s start date. RSUs vest quarterly and options to purchase our Class A common stock vest monthly, subject to a one-year cliff from the employee’s start date. •Annual grants made by the Management Designees to employees vest over four years from the grant date. RSUs vest quarterly and options to purchase our Class A common stock vest monthly, subject to a one-year cliff from the employee’s start date if the annual grant occurred prior to the one-year anniversary of such employee’s start date. •Grants made by the Management Designees to consultants vest over two years from the grant date. RSUs vest quarterly, subject to a discretionary cliff that may be applied as determined by the Management Designees. The Management Designees may deviate from the foregoing suggested vesting schedule on a case-by-case basis. •The number of shares of our Class A common stock subject to options is determined by dividing the dollar-denominated value of the applicable option by the per share Black-Scholes valuation as of the applicable grant date, utilizing the same assumptions that the Company uses in preparation of its financial statements. •The number of shares of our Class A common stock subject to RSUs is determined by dividing the dollar-denominated value of the applicable RSU award by the average closing price of our Class A common stock over the 20-trading day period ending on (and including) the applicable grant date.
“Golden Parachute” Payments
“Golden Parachute” Payments Sections 280G and 4999 of the Code provide that certain executive officers and other service providers who are highly compensated or hold significant equity interests may be subject to an excise tax if they receive payments or benefits in connection with a change in control of the Company that exceeds certain prescribed limits, and that we, or a successor, may forfeit a tax deduction on the amounts subject to this additional tax. While the Compensation Committee may take the potential forfeiture of such tax deduction into account when making compensation decisions, it will award compensation that it determines to be consistent with the goals of our executive compensation program even if such compensation is not deductible by us. We do not provide any tax gross-ups to cover excise taxes under Section 4999 in connection with a change in control.
Accounting for Share-Based Compensation
Accounting for Share-Based Compensation We follow Financial Accounting Standard Board Accounting Standards Codification Topic 718, (“ASC Topic 718”), for our share-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and RSUs, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our NEOs may never realize any value from their awards.
Summary Compensation Table
Summary Compensation Table The following table contains information about the compensation earned by each of our NEOs during the years ended December 31, 2021, 2022 and 2023.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Compensation Plan ($)(3) | All Other Compensation ($)(4) | Total ($) | | Catherine Spear Chief Executive Officer | 2023 | 1,000,000 | 192,600 | 3,449,132 | 3,000,002 | 723,750 | 22,851 | 8,388,335 | | | 2022 | 1,000,000 | -- | -- | -- | -- | 40,737 | 1,040,737 | | | 2021 | 851,923 | 1,000,000 | 3,609,111 | 7,500,006 | -- | 70,588 | 13,031,628 | | Heather Hasson Executive Chair | 2023 | -- | -- | -- | -- | -- | 351 | 351 | | | 2022 | 593,956 | -- | 11,320,485 | 13,603,183 | -- | 43 | 25,517,667 | | | 2021 | 851,923 | 1,000,000 | 3,609,111 | 7,500,006 | -- | 530 | 12,961,570 | | Daniella Turenshine Former Chief Financial Officer(5) | 2023 | 500,000 | 72,225 | 862,285 | 750,002 | 217,125 | 22,851 | 2,424,488 | | | 2022 | 500,000 | -- | -- | -- | -- | 18,138 | 518,138 | | | 2021 | 311,539 | 375,000 | 10,252,659 | 10,527,665 | -- | 26,039 | 21,492,902 |
Summary Compensation Table
__________________ (1) Amounts represent bonuses earned by our NEOs based on individual performance under our 2023 Bonus Program. For a description of the 2023 Bonus Program, see “—Compensation Discussion and Analysis—Elements of Compensation—Cash Incentive Compensation” above. (2) Amounts reflect the full grant-date fair value of RSU awards and stock options granted during the applicable fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all stock awards and option awards made to our NEOs in 2023 in Note 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (3) Amounts represent bonuses earned by our NEOs based on the Company’s achievement of pre-established financial metrics under our 2023 Bonus Program. For a description of the 2023 Bonus Program, see “—Compensation Discussion and Analysis—Elements of Compensation—Cash Incentive Compensation” above. (4) Amount for 2023 includes (i) Company-paid life insurance premiums and (ii) for Mses. Spear and Turenshine, 401(k) match in the amount of $22,500. (5) Ms. Turenshine resigned from her position as Chief Financial Officer, effective as of April 12, 2024.
Grants of Plan-Based Awards in Fiscal 2023
Grants of Plan-Based Awards in Fiscal 2023 The following table provides supplemental information relating to grants of plan-based awards made during fiscal 2023 to help explain information provided above in our Summary Compensation Table. This table presents information regarding all grants of plan-based awards to our NEOs occurring during fiscal 2023.
Grants of Plan-Based Awards in Fiscal 2023
| Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(2) | | | | Threshold ($) | Target ($) | Stretch ($) | Maximum ($) | | | | | | Catherine Spear | N/A | 375,000 | 750,000 | 862,500 | 1,500,000 | | | | | | | 5/9/2023(3) | | | | | | 833,334 | 7.91 | 3,000,002 | | | 5/9/2023(4) | | | | | 436,047 | | | 3,449,132 | | Daniella Turenshine | N/A | 112,500 | 225,000 | 258,750 | 450,000 | | | | | | | 5/9/2023(3) | | | | | | 208,334 | 7.91 | 750,002 | | | 5/9/2023(4) | | | | | 109,012 | | | 862,285 |
Grants of Plan-Based Awards in Fiscal 2023
(1) Amounts reflect potential payouts under the portion of our 2023 Bonus Program based on the Company’s achievement of pre-established financial metrics, assuming each of the components of the 2023 Bonus Program were met at their respective “Threshold,” “Target,” “Stretch” and “Maximum” levels. For more information about the 2023 Bonus Program, see “—Compensation Discussion and Analysis—Elements of Compensation—Cash Incentive Compensation” above. (2) Amounts reflect the grant-date fair value in accordance with ASC Topic 718. We provide information regarding the assumptions used to calculate these values in Note 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (3) Represents the grant of an option to purchase shares of the Company’s Class A common stock that vests and becomes exercisable in 48 substantially equal installments on each monthly anniversary of May 9, 2023. (4) Represents the grant of RSUs that vests in 16 substantially equal installments on each quarterly anniversary of June 1, 2023.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Outstanding Equity Awards at Fiscal Year-End Table
Outstanding Equity Awards at Fiscal Year-End Table The following table summarizes the number of shares of common stock underlying incentive plan awards for each NEO as of December 31, 2023. Unless otherwise specified, each equity award listed in the following table was granted under the Company’s 2021 Equity Incentive Award Plan (“2021 Plan”) and covers our Class A common stock. Shares underlying equity awards identified by an asterisk in the following table held by Mses. Hasson and Spear are exchangeable for Class B common stock pursuant to the Equity Award Exchange Agreement (as defined below in the section of this Proxy Statement titled “Certain Relationships and Related Person Transactions”). The market value of unvested RSUs in the following table are based on a closing price of our Class A common stock on December 29, 2023, the last trading day of the last completed fiscal year, of $6.95 per share.
Outstanding Equity Awards at Fiscal Year-End Table
| Name | Grant Date | Option Awards | | | | Stock Awards | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | 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 ($) | | Catherine Spear | 02/22/2018(1)*† | 7,695,000 | — | 0.86 | 02/21/2028 | — | — | | | 06/27/2018(2)*† | 900,000 | — | 1.37 | 06/26/2028 | — | — | | | 09/16/2020(3)* | 6,653,436 | 3,582,624 | 5.10 | 09/15/2030 | — | — | | | 05/26/2021(4) | 469,583 | 257,514 | 22.00 | 05/25/2031 | — | — | | | 06/01/2021(5) | — | — | — | — | 42,614 | 296,167 | | | 05/09/2023(6) | 121,527 | 711,807 | 7.91 | 05/8/2033 | — | — | | | 05/09/2023(7) | — | — | — | — | 381,542 | 2,651,717 | | Heather Hasson | 02/22/2018(1)*† | 313,336 | — | 0.86 | 02/21/2028 | — | — | | | 06/27/2018(2)*† | 900,000 | — | 1.37 | 06/26/2028 | — | — | | | 09/16/2020(3)*† | 10,236,060 | — | 5.10 | 09/15/2030 | — | — | | | 05/26/2021(4) | 469,583 | 257,514 | 22.00 | 05/25/2031 | — | — | | | 06/01/2021(5) | — | — | — | — | 42,614 | 296,167 | | | 08/09/2022(8) | 1,580,042 | 1,283,786 | 11.79 | 08/08/2032 | | | | | 08/09/2022(9) | — | — | — | — | 480,089 | 3,336,619 | | Daniella Turenshine | 12/12/2018(10)† | 37,503 | — | 0.46 | 12/11/2028 | — | — | | | 10/09/2019(11)† | 37,131 | — | 0.46 | 10/08/2029 | — | — | | | 09/16/2020(11) | 2,814 | 7,503 | 0.81 | 09/15/2030 | — | — | | | 12/26/2020(11) | 95,625 | 33,750 | 6.02 | 12/25/2030 | — | — | | | 05/26/2021(11) | 31,810 | 19,087 | 22.00 | 05/25/2031 | — | — | | | 06/01/2021(12) | — | — | — | — | 2,983 | 20,732 | | | 12/24/2021(11) | 408,606 | 408,605 | 26.36 | 12/23/2031 | — | — | | | 12/24/2021(13) | — | — | — | — | 189,682 | 1,318,290 | | | 05/09/2023(6) | 30,382 | 177,952 | 7.91 | 05/8/2033 | — | — | | | 05/09/2023(7) | — | — | — | — | 95,386 | 662,933 |
Outstanding Equity Awards at Fiscal Year-End Table
__________________ * Following the exercise of this option, the resulting shares of Class A common stock may be exchanged at a 1:1 ratio for shares of the Company’s Class B common stock at the election of the holder pursuant to the Equity Award Exchange Agreement. † The option is fully vested. (1) This option was granted under the Company’s Amended 2016 Equity Incentive Plan (the “2016 Plan”) and vested and became exercisable as to 1/48th of the total number of shares of Class A common stock underlying the option on each monthly anniversary of the vesting commencement date. (2) This option was granted under the 2016 Plan and vested and became exercisable as to 1/48th of the total number of shares of Class A common stock underlying the option on each monthly anniversary of the vesting commencement date. (3) This option was granted under the 2016 Plan and vests and becomes exercisable as to 1/60th of the total number of shares of Class A common stock underlying the option on each monthly anniversary of the grant date. In the event of a change in control (as defined in the 2016 Plan), 100% of the then-unvested shares subject to the option will accelerate and vest immediately prior to the change in control. If the executive’s service terminates due to a termination by us without “cause” or by the executive for “good reason,” or due to death or “disability” (each, as defined in the applicable executive’s amended and restated employment agreement), then 100% of the then-unvested shares subject to the option will accelerate and vest. The vesting of the option held by Ms. Hasson was accelerated in connection with our IPO. (4) This option vests and becomes exercisable as to 1/48th of the total number of shares of Class A common stock underlying the option on each monthly anniversary of the grant date. If the executive’s service terminates due to a termination by us without “cause” or by the executive for “good reason,” or due to death or “disability” (each, as defined in the applicable executive’s amended and restated employment agreement), then 100% of the then-unvested shares subject to the option will accelerate and vest. (5) This RSU award vests as to 1/16th of the total number of shares of Class A common stock underlying the RSU award on each quarterly anniversary of the vesting commencement date. If the executive’s service terminates due to a termination by us without “cause” or by the executive for “good reason,” or due to death or “disability” (each, as defined in the applicable executive’s amended and restated employment agreement), then 100% of the then-unvested shares subject to the RSU award will accelerate and vest. (6) This option vests and becomes exercisable as to 1/48th of the total number of shares of Class A common stock underlying the option on each monthly anniversary of the grant date. Solely with respect to the option granted to Ms. Spear, if Ms. Spear’s service terminates due to a termination by us without “cause” or by her for “good reason,” or due to death or “disability” (each, as defined in Ms. Spear’s amended and restated employment agreement), then 100% of the then-unvested shares subject to the option will accelerate and vest. (7) This RSU award vests as to 1/16th of the total number of shares of Class A common stock underlying the RSU award on each quarterly anniversary of the vesting commencement date. Solely with respect to the RSUs granted to Ms. Spear, if Ms. Spear’s service terminates due to a termination by us without “cause” or by her for “good reason,” or due to death or “disability” (each, as defined in Ms. Spear’s amended and restated employment agreement), then 100% of the then-unvested shares subject to the RSU award will accelerate and vest. (8) This option vests and becomes exercisable in 29 substantially equal installments on each monthly anniversary of August 4, 2022 (with the last installment vesting on December 31, 2024). If (i) Ms. Hasson’s service is terminated by us without “cause” or by her for “good reason” (each, as defined in her amended and restated employment agreement), and, in each case, such termination occurs during the period beginning three months prior and ending 12 months following a change in control (as defined in the 2021 Plan) or (ii) Ms. Hasson’s service is terminated due to her death or “disability” (as defined in her amended and restated employment agreement), then 100% of the then-unvested shares subject to the option will accelerate and vest. If Ms. Hasson’s service is terminated by us other than for “cause” or by her for “good reason,” in each case, other than within the change in control period described in the preceding sentence, then 50% of the then-unvested shares subject to the option will accelerate and vest. (9) This RSU award vests in 10 substantially equal installments on each quarterly anniversary of August 4, 2022 (with the last installment vesting on December 31, 2024). If (i) Ms. Hasson’s service is terminated by us without “cause” or by her for “good reason” (each, as defined in her amended and restated employment agreement), and, in each case, such termination occurs during the period beginning three months prior and ending 12 months following a change in control (as defined in the 2021 Plan) or (ii) Ms. Hasson’s service is terminated due to her death or “disability” (as defined in her amended and restated employment agreement), then 100% of the then-unvested shares subject to the RSU award will accelerate and vest. If Ms. Hasson’s service is terminated by us other than for “cause” or by her for “good reason,” in each case, other than within the change in control period described in the preceding sentence, then 50% of the then-unvested shares subject to the RSU award will accelerate and vest. (10) This option was granted under the 2016 Plan and vested and became exercisable as to 25% of the total number of shares of Class A common stock underlying the option on the first anniversary of the vesting commencement date, and as to 1/48th of the shares underlying the option on each monthly anniversary thereafter. (11) This option vests and becomes exercisable as to 1/48th of the total number of shares of Class A common stock underlying the option on each monthly anniversary of the vesting commencement date. If Ms. Turenshine’s service was terminated by us without “cause” or by her for “good reason” (each, as defined in the applicable Board consent or her employment letter agreement, as the case may be), in either case, within 12 months following a change in control (as defined in the applicable Board consent or her employment letter agreement, as the case may be), then 100% of the then-unvested shares subject to the option would have accelerated and vested. (12) This RSU award vests as to 1/16th of the total number of shares of Class A common stock underlying the RSU award on each quarterly anniversary of the vesting commencement date. If Ms. Turenshine’s service was terminated by us without “cause” or by her for “good reason” (each, as defined in the applicable Board consent), in either case, within 12 months following a change in control (as defined in the applicable Board consent), then 100% of the then-unvested shares subject to the RSU award would have accelerated and vested. (13) This RSU award vests as to 1/16th of the total number of shares of Class A common stock underlying the RSU award on March 1, 2022, and as to 1/16th of the RSU award on each quarterly anniversary thereafter. If Ms. Turenshine’s service was terminated by us without “cause” or by her for “good reason” (each, as defined in her employment letter agreement), in either case, within 12 months following a change in control (as defined in her employment letter agreement), then 100% of the then-unvested shares subject to the RSU award would have accelerated and vested.
Option Exercises and Stock Vested in Fiscal 2023
Option Exercises and Stock Vested in Fiscal 2023
Option Exercises and Stock Vested in Fiscal 2023
| Name | 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) ($) | | Catherine Spear | — | — | 759,218 | 6,589,644 | | Heather Hasson | 634,995 | 4,738,831 | 1,088,784 | 7,959,411 | | Daniella Turenshine | 49,122 | 276,991 | 110,455 | 790,276 |
Option Exercises and Stock Vested in Fiscal 2023
__________________ (1) Represents the gross number of shares acquired upon vesting of RSUs, without taking into account any shares withheld to satisfy applicable tax withholding obligations. (2) Amounts are calculated by multiplying the number of shares vested by our closing stock price on the vesting date.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control As referenced above, we are party to employment agreements with each of our NEOs which provide for severance payments and benefits in the event the NEO is terminated without “cause” or resigns for “good reason.” These severance payments are enhanced if the qualifying termination occurs: (i) for Mses. Spear and Hasson, within three months prior to or 12 months following a change in control, or (ii) for Ms. Turenshine, within 12 months following a change in control. Additionally, each of Mses. Spear’s and Hasson’s employment agreements provides for accelerated vesting of certain equity awards if the executive’s employment is terminated due to death or disability, or if a change in control of the Company occurs (regardless of whether the executive experiences a termination). We are also party to cash sale bonus letter agreements with each of Mses. Spear and Hasson that provide for payment in connection with a qualifying change in control. The benefits payable to our NEOs pursuant to these arrangements are described in detail below.
Estimated Potential Payments
Estimated Potential Payments The following table summarizes the payments that would be made to our NEOs upon the occurrence of certain qualifying terminations of employment or a change in control, in any case, occurring on December 31, 2023. Amounts shown do not include (i) accrued but unpaid base salary through the date of termination or (ii) other benefits earned or accrued by the NEO during her employment that are available to all salaried employees, such as accrued vacation.
Estimated Potential Payments
| Name | Benefit | Death / Disability | Termination Without Cause or for Good Reason (no Change in Control) ($) | Change in Control (no Termination) ($) | Termination Without Cause or for Good Reason in Connection with a Change in Control ($) | | Catherine Spear | Cash | -- | 2,000,000 | -- | 5,000,000 | | | COBRA Premiums(1) | -- | 24,598 | -- | 24,598 | | | Restricted Stock Units Acceleration(2) | 2,947,883 | 2,947,883 | -- | 2,947,883 | | | Stock Options Acceleration(2) | 6,627,854 | 6,627,854 | 6,627,854 | 6,627,854 | | | Cash Sale Bonus(3) | -- | -- | 3,750,000 | 3,750,000 | | | Total(4) | 9,575,738 | 11,600,336 | 10,377,854 | 18,350,336 | | Heather Hasson | Cash | -- | -- | -- | -- | | | COBRA Premiums(1) | -- | 45,520 | -- | 45,520 | | | Restricted Stock Units Acceleration(2) | 3,632,785 | 1,964,476 | -- | 3,632,785 | | | Stock Options Acceleration(2) | -- | -- | -- | -- | | | Cash Sale Bonus(3) | -- | -- | 1,500,000 | 1,500,000 | | | Total(4) | 3,632,785 | 2,009,996 | 1,500,000 | 5,178,305 | | Daniella Turenshine(5) | Cash | -- | 500,000 | -- | 800,000 | | | COBRA Premiums(1) | -- | -- | -- | -- | | | Restricted Stock Units Acceleration(2) | -- | -- | -- | 1,339,019 | | | Stock Options Acceleration(2) | -- | -- | -- | 77,456 | | | Total(4) | -- | 500,000 | -- | 2,216,475 |
Estimated Potential Payments
(1) Represents the estimated value of COBRA premium reimbursement based upon the monthly cost of such benefits to the Company as of December 31, 2023. (2) With respect to stock options, the value of equity acceleration was calculated by (i) multiplying the number of accelerated shares of common stock underlying the options by $6.95, the closing trading price of our Class A common stock on December 29, 2023, the last trading day of fiscal 2023 and (ii) subtracting the exercise price for the options. With respect to RSUs, the value of equity acceleration was calculated by multiplying the number of accelerated RSUs by $6.95, the closing trading price of our Class A common stock on December 29, 2023. (3) Pursuant to each of the Cash Sale Bonus Letters dated February 22, 2018, by and between the Company and each of Mses. Hasson and Spear, Mses. Hasson and Spear are entitled to a lump-sum payment equal to $1,500,000 and $3,750,000, respectively, upon a Qualifying Cash Sale, as defined in the Cash Sale Bonus Letters. (4) The total amounts reported in this row may not equal the sum of amounts reflected in the preceding rows as a result of rounding to the nearest whole dollar as required by SEC rules. (5) Ms. Turenshine resigned from her position as Chief Financial Officer, effective as of April 12, 2024. She was not entitled to any severance benefits in connection with her resignation.
Pay Versus Performance Table
Pay Versus Performance Table Under rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are required to disclose certain information about the relationship between the “compensation actually paid” to our NEOs and certain measures of company performance. The information that follows is provided in compliance with these rules; however, additional information regarding our compensation philosophy, the structure of our performance-based compensation programs and compensation decisions made in 2023 is described under “—Compensation Discussion and Analysis” above. Note that “compensation actually paid” does not necessarily reflect value actually realized by the NEOs. The following table sets forth both pay as reported in the Summary Compensation Table in this Proxy Statement and information concerning the “compensation actually paid” to our principal executive officers (“PEOs”) and other NEOs for each of the fiscal years ended December 31, 2021, 2022 and 2023, and our total shareholder return (“TSR”), as well as net income and net revenues for each such fiscal year:
Pay Versus Performance Table
| Year | Summary Compensation Table Total for PEO (Catherine Spear) ($) (in thousands)(1) | Summary Compensation Table Total for PEO (Heather Hasson) ($) (in thousands)(1) | Compensation Actually Paid to PEO (Catherine Spear) ($) (in thousands)(1)(2) | Compensation Actually Paid to PEO (Heather Hasson) ($) (in thousands)(1)(2) | Average Summary Compensation Table Total for Non-PEO NEOs ($) (in thousands) | Average Compensation Actually Paid to Non-PEO NEOs ($) (in thousands)(1)(2) | Value of Initial Fixed $100 Investment Based on: | | Net Income ($) (in thousands) | Net Revenues ($) (in thousands)(4) | | | | | | | | | Total Shareholder Return ($)(3) | Peer Group Total Shareholder Return ($)(3) | | | | 2023 | 8,388 | N/A | 8,732 | N/A | 2,424 | 2,340 | 23.15 | 48.16 | 22,637 | 550,315 | | 2022 | 1,041 | 25,518 | (170,952) | (19,989) | 518 | (19,685) | 22.42 | 49.85 | 21,186 | 505,835 | | 2021 | 13,032 | 12,962 | 290,153 | 298,744 | 13,839 | 19,870 | 91.81 | 91.22 | (9,556) | 419,591 |
Pay Versus Performance Table
(1) On August 2, 2022, Ms. Spear was appointed by our Board as our sole Chief Executive Officer and Ms. Hasson was appointed as Executive Chair of the Board. (2) Amounts represent “compensation actually paid” to our PEO and the average “compensation actually paid” to our remaining NEOs for the relevant fiscal year, each computed in accordance with Item 402(v) of Regulation S-K, which includes the individuals indicated in the table below for the fiscal years listed:
Pay Versus Performance Table
| Year | PEO(s) | Non-PEO NEO(s) | | 2023 | Catherine Spear | Daniella Turenshine | | 2022 | Catherine Spear and Heather Hasson | Daniella Turenshine | | 2021 | Catherine Spear and Heather Hasson | Daniella Turenshine and Jeffrey D. Lawrence |
Pay Versus Performance Table
Although we have voluntarily included Heather Hasson in this Proxy Statement as an NEO for the fiscal year ended December 31, 2023, we have excluded her from the calculations applicable to our non-PEO NEOs in the above table for the fiscal year ended December 31, 2023 because she is not a “named executive officer” under SEC regulations. The dollar amounts in this “compensation actually paid” column do not reflect the amount of compensation actually realized by our NEOs during the applicable year. As shown in the following table, to calculate “compensation actually paid,” Item 402(v) of Regulation S-K requires us to begin with the dollar amounts in the “total” column of the Summary Compensation Table appearing earlier in this Proxy Statement, and make adjustments for a variety of factors, including the impact of changes in the fair value of our NEOs’ previously granted equity awards, as follows:
Pay Versus Performance Table
| | 2023 | | | Adjustments | PEO ($) | Average Non-PEO NEOs ($) | | Summary Compensation Table Total | 8,388,335 | 2,424,488 | | Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY | (6,449,134) | (1,612,287) | | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | 4,940,692 | 1,235,177 | | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date | 753,225 | 188,304 | | Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | 114,631 | 10,350 | | Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | 983,771 | 94,383 | | Deduction of ASC 718 Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End | — | — | | Increase based on Dividends or Other Earnings Paid during Applicable FY prior to Vesting Date | — | — | | Increase based on Incremental Fair Value of Options Modified during Applicable FY | — | — | | Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of the Summary Compensation Table for Applicable FY | — | — | | Increase for Service Cost and, if applicable, Prior Service Cost for Pension Plans | — | — | | Compensation Actually Paid amounts (as calculated) | 8,731,520 | 2,340,415 |
Pay Versus Performance Table
The fair values of unvested and outstanding equity awards to our NEOs were remeasured as of the end of each fiscal year, and as of each vesting date, during the 2021, 2022 and 2023 fiscal years. Fair values as of each measurement date were determined using valuation assumptions and methodologies (including volatility, dividend yield, and risk-free interest rates) that are generally consistent with those used to estimate fair value at grant in accordance with ASC Topic 718, except for the remeasurement of stock options. The grant-date fair values of stock options were estimated using Black-Scholes. Subsequent stock option valuations at the end of each fiscal year and as of each vest date are performed using the a lattice valuation model due to a change in the expected term of out-of-the-money options. A lattice model utilizes the contractual term of maturity of each stock option, and assumes the holder will exercise stock options the first time the Company’s stock price exceeds a pre-defined multiple of the strike price which was determined to be 3.0x (which we believe provides a better estimate of out-of-the-money options). (3) The Company’s TSR and Peer Group TSR reflected in these columns for each applicable fiscal year is calculated based on a fixed investment of $100 beginning with our initial public offering in May 2021. The Peer Group reflected in the Peer Group TSR is the S&P 500 Apparel, Accessories, & Luxury Goods Index, as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 pursuant to Item 201(e) of Regulation S-K. (4) For 2023, net revenues represents net revenues, as adjusted. Net revenues, as adjusted is calculated as net revenues as determined under GAAP, adjusted to disregard the impact of an accounting reclassification related to duty subsidies for customers in Canada.
Narrative Disclosure to Pay Versus Performance Table
Narrative Disclosure to Pay Versus Performance Table
Pay Versus Performance Tabular List
Pay Versus Performance Tabular List We believe the following performance measures represent the most important financial performance measures used by us to link “compensation actually paid” to our NEOs for the fiscal year ended December 31, 2023: •net revenues; and •adjusted EBITDA margin.
CEO Pay Ratio
CEO Pay Ratio As required by Item 402(u) of Regulation S-K, we are providing pay ratio information about the relationship of the annual total compensation of our employees and the annual total compensation of Catherine Spear, our Chief Executive Officer (“CEO”). For 2023, our last completed fiscal year: •The median of the annual total compensation of all employees of our company (other than our CEO), was $95,750; and •The annual total compensation of our CEO, as reported in the Summary Compensation Table presented above in this Proxy Statement was $8,388,355. Based on this information, for 2023 the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 87.6 to 1. During fiscal year 2023, we established an annual equity grant practice for our executive officers, including our NEOs. This change, and the annual grant to Ms. Spear in 2023, led to a significant increase in the CEO pay ratio as compared to the CEO pay ratio in the prior year, when Ms. Spear did not receive an equity grant.
Methodology, Assumptions and Estimates Used in Determining our Pay Ratio Disclosure
Methodology, Assumptions and Estimates Used in Determining our Pay Ratio Disclosure In determining the pay ratio calculation, we used the methodology, assumptions and estimates set forth below in determining the median employee: 1.We selected December 31, 2023, which is within the last three months of 2023, as the date upon which we would identify the median employee. 2.We determined that, as of December 31, 2023, our employee population consisted of approximately 342 employees working at the Company and its subsidiaries. 3.For purposes of measuring the compensation of our employee population, we selected total cash compensation. Total cash compensation includes base salary, hourly pay, overtime, bonuses and commissions, as reported on our payroll records. We measured total cash compensation of the employees included in the calculation over the twelve-month period ended December 31, 2023. 4.We gathered our total cash compensation information for the twelve-month period ended December 31, 2023 from payroll records of each of our business units and applied this compensation measure consistently to all of our employees included in the calculation. We annualized the total cash compensation of permanent employees hired during the year. We did not make any other annualizing adjustments, and we did not make any cost-of-living adjustments in identifying the median employee. 5.Once we identified the median employee, we identified and calculated the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $95,750. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table included above in this Proxy Statement for Catherine Spear, our CEO as of December 31, 2023. We believe the pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
2023 Director Compensation
2023 Director Compensation The following table sets forth the compensation awarded to, earned by or paid to our non-employee directors who served on our Board during the year ended December 31, 2023, pursuant to our non-employee director compensation program as further described below. Our co-founders Heather Hasson and Catherine Spear, who serve as our Executive Chair and Chief Executive Officer, respectively, are also members of our Board but did not receive any additional compensation for service as a director. For more information regarding the compensation paid to Mses. Hasson and Spear in 2023, see “Executive Compensation—Executive Compensation Tables—Summary Compensation Table” above.
2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | A.G. Lafley | 50,000 | 150,008 | 200,008 | | Jeffrey Wilke(2) | 61,192 | 150,008 | 211,200 | | Kenneth Lin | 60,000 | 150,008 | 210,008 | | Mario Marte(2) | 9,535 | 88,768 | 98,303 | | J. Martin Willhite | 67,500 | 150,008 | 217,508 | | Michael Soenen | 85,000 | 150,008 | 235,008 | | Sheila Antrum | 55,000 | 150,008 | 205,008 |
2023 Director Compensation
__________________ (1)Amounts reflect the full grant date fair value of RSU awards granted during 2023 computed in accordance with ASC Topic 718. We provide information regarding the assumptions used to calculate the value of the RSU awards granted to our non-employee directors in Note 12 to the financial statements for the fiscal year ended December 31, 2023, included in our Annual Report on Form 10-K filed with the SEC on February 28, 2023. As of December 31, 2023, each director listed in this table, except Mr. Marte, held 18,227 RSUs. As of December 31, 2023, Mr. Marte held 13,035 RSUs. (2)The service of Mr. Wilke on the Audit Committee and of Mr. Marte on our Board, respectively, began in November 2023. We reimburse any non-employee director for his or her reasonable out-of-pocket expenses incurred in attending Board and committee meetings.
Director Compensation Program
Director Compensation Program In connection with our IPO, our Board adopted and our stockholders approved a non-employee director compensation program (the “Director Compensation Program”). The Director Compensation Program provides for annual retainer fees and long-term equity awards for certain of our non-employee directors (each, an “Eligible Director”). The material terms of the Director Compensation Program are summarized below. The Director Compensation Program consists of the following components: