DEF 14A of Trade Desk, Inc.
Filed Apr 12, 2023 · FY20220001671933-23-000016
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS In voting on the election of our director nominees, stockholders may: •Vote in favor of all nominees; •Vote in favor of specific nominees; or •Withhold votes as to specific nominees. Assuming a quorum is present; directors will be elected by a plurality of the votes cast. Our bylaws provide that the authorized number of directors shall be determined from time to time by resolution of the board of directors, provided the board of directors shall consist of at least one (1) member. Our board of directors is currently comprised of eight (8) directors. Our certificate of incorporation provides that our board of directors shall be divided into three classes, each consisting of as nearly one-third of the total number of directors as possible. Each class of directors serves a three-year term expiring at the annual meeting of stockholders in the year listed in the table below:
ELECTION OF DIRECTORS
| Class I (2023) | Class II (2024) | Class III (2025) | | Jeff T. Green | David R. Pickles | Lise J. Buyer | | Andrea L. Cunningham | Gokul Rajaram | Kathryn E. Falberg | | Eric B. Paley | | David B. Wells |
ELECTION OF DIRECTORS
Based on the recommendation of the nominating and corporate governance committee, our board of directors has nominated Jeff T. Green and Andrea L. Cunningham for election as Class I directors, each to serve a three-year term that expires at the annual meeting of stockholders in 2026 and until their successors are duly elected and qualified. Ms. Cunningham and Messrs. Green and Paley are currently serving as Class I directors. Each of Ms. Cunningham and Mr. Green has consented to serve for a new term. Mr. Paley’s current term as a Class I director will expire immediately prior to our Annual Meeting and he will not stand for re-election at the Annual Meeting. Effective upon the end of Mr. Paley’s term as a director immediately prior to the Annual Meeting, the authorized number of directors will be reduced to seven (7). Directors listed in Class II and Class III above are not being elected this year and will continue in office for the remainder of their terms, as described above, unless such directors resign or their service as directors otherwise ceases in accordance with our certificate of incorporation or bylaws.
Information Concerning Director Nominees
Information Concerning Director Nominees The name and age of each nominee for director, his or her position with us, the year in which he or she first became a director, and certain biographical information as of April 12, 2023 is set forth below:
Information Concerning Director Nominees
| Name | Age | Positions and Offices Held with the Company | Director Since | | Jeff T. Green | 46 | President and Chief Executive Officer, Director | November 2009 | | Andrea L. Cunningham | 66 | Class A Director | January 2022 |
Information Concerning Director Nominees
Jeff T. Green co-founded The Trade Desk and has served as our president and chief executive officer and as a member of our board of directors since November 2009. Prior to joining The Trade Desk, from May 2004 to October 2009, Mr. Green founded AdECN, the world’s first online advertising exchange, and served as its chief operating officer, where he led strategy, product and business development until it was acquired by Microsoft in 2007. At Microsoft Corporation, Mr. Green oversaw the AdECN exchange business, as well as all reseller and channel partner business. Mr. Green has also played a leadership role in the ad tech industry, having served on the Networks and Exchanges Quality Assurance Guidelines Committee for the Internet Advertising Bureau (“IAB”) from 2011 to 2012. At IAB, Mr. Green led working groups that established rules and best practices for acquiring inventory and set data transaction standards. We believe that Mr. Green is qualified to serve on our board of directors due to his extensive management experience and sophisticated industry background. Andrea L. Cunningham has served as a member of our board of directors since January 2022. Since 2012, Ms. Cunningham has served as the president of Cunningham Collective, a consulting firm she founded that advises companies on marketing, brand and communication strategies. She previously held various senior marketing positions at various companies, including serving as Chief Marketing Officer for Avaya Inc., a cloud communications company, from 2014 to 2015. Ms. Cunningham currently serves on the boards of directors of numerous private companies, and previously served on the boards of directors of RhythmOne plc (formerly Blinkx), a digital advertising technology company then-traded on the London Stock Exchange, from February 2016 to February 2018. Ms. Cunningham received a B.A. in English from Northwestern University and completed the Harvard Business School Executive Education program. On February 22, 2022, in accordance with Article VI, Section E of our certificate of incorporation, our board of directors appointed Ms. Cunningham to serve as a representative of our Class A common stock. For more information, see “Information About the Board of Directors and Corporate Governance-Class A Director.” We believe that Ms. Cunningham is qualified to serve on our board of directors due to her extensive management experience, track record at other technology companies and industry background.
Information Concerning Current Directors and Directors Continuing in Office
Information Concerning Current Directors and Directors Continuing in Office The name and age of each director currently or continuing in office, his or her position with us, the year in which he or she first became a director, and certain biographical information as of April 12, 2023 is set forth below:
Information Concerning Current Directors and Directors Continuing in Office
| Name | Age | Positions and Offices Held with the Company | Director Since | | Lise J. Buyer | 63 | Lead Independent Director | March 2019 | | Kathryn E. Falberg | 62 | Director | August 2016 | | Eric B. Paley | 47 | Director | March 2010 | | David R. Pickles | 45 | Chief Technology Officer, Director | February 2021 | | Gokul Rajaram | 48 | Director | May 2018 | | David B. Wells | 51 | Director | December 2015 |
Information Concerning Current Directors and Directors Continuing in Office
Lise J. Buyer has served as a member of our board of directors since March 2019, and she was appointed as lead independent director in February 2021. Since 2006, Ms. Buyer has served as a partner of Class V Group LLC, a consulting firm she co-founded that advises companies on initial public offerings and other market strategies. From August 2005 to August 2006, she served as vice president of Tellme Networks, Inc., a private Internet telephone business. Between April 2003 and August 2005, Ms. Buyer served as the director of business optimization at Google. From September 2002 to March 2003, she served as a consultant and the director of research for Vista Research LLC, an independent equity research firm in New York, New York. From May 2000 to July 2002 she was a general partner at Technology Partners, a Palo Alto, California venture capital firm. Ms. Buyer was the director of internet/new media research at Credit Suisse First Boston from July 1998 to May 2000. Prior to that, she spent six years as vice president at T. Rowe Price Group, Inc. working predominantly on its Science and Technology Fund, and the preceding nine years as an institutional equity investor and analyst of both the technology and media industries. Ms. Buyer served on the board of directors of publicly traded Greenfield Online Inc., an online survey company, from April 2004 until it was acquired by Microsoft Corporation. Ms. Buyer received a B.A. in Economics and Geology from Wellesley College and an M.B.A. from the Owen Graduate School of Management at Vanderbilt University. We believe that Ms. Buyer is qualified to serve on our board of directors due to her extensive management experience, high-growth company background and strategic leadership track record. Kathryn E. Falberg has served as a member of our board of directors since August 2016. Ms. Falberg served as executive vice president and chief financial officer of Jazz Pharmaceuticals, PLC, a biopharmaceutical company, from March 2012 to March 2014 after serving as senior vice president and chief financial officer since December 2009. From 2001 through 2009, Ms. Falberg worked with a number of smaller companies, including AdECN, Inc. (“AdECN”), while serving as a corporate director and audit committee chair for several companies. Ms. Falberg was with Amgen from 1995 through 2001, where she served as senior vice president, finance and strategy and chief financial officer and before that as vice president, controller and chief accounting officer, and vice president, treasurer. Ms. Falberg currently serves on the board of directors of publicly traded Arcus Biosciences, Inc., Nuvation Bio and Tricida, Inc., and previously served on a number of boards including publicly traded Urogen Pharma Ltd., Aimmune Therapeutics, Inc., Axovant Sciences Ltd., BioMarin Pharmaceutical Inc, Medivation, Inc., Halozyme Therapeutics, Inc., and aTyr Pharma, Inc. Ms. Falberg received a B.A. in Economics and an M.B.A. from the University of California, Los Angeles and is a Certified Public Accountant (inactive). We believe that Ms. Falberg is qualified to serve on our board of directors due to her extensive management experience, strategic leadership track record and service on other boards of directors. Eric B. Paley has served as a member of our board of directors since March 2010. Since January 2009, he has served as a co-founder and managing partner at Founder Collective, a seed stage venture capital fund. Mr. Paley serves on the board of directors of numerous private companies. From October 2002 to December 2008, Mr. Paley served as the chief executive officer and a co-founder of Brontes Technologies, Inc., a company offering advanced dental imaging technology solutions, which was acquired by The 3M Company in October 2006. Mr. Paley received a B.A. in Government from Dartmouth College and an M.B.A. from Harvard Business School. Mr. Paley’s term as a director and as a member of our nominating and corporate governance committee will expire immediately prior to the Annual Meeting. David R. Pickles has served as our chief technology officer since March 2010 and as a member of our board of directors since February 2021. Prior to The Trade Desk, he was with Microsoft Corporation where he served as development lead from September 2008 to March 2010 and senior software development engineer from March 2008 to September 2008. From May 2004 to February 2008, he served as senior database engineer at CallWave, Inc., where he was involved in building back-end components of the system: client session management services, telephone call handling services, client registration services, B2B integrations with all major telephone carriers, and complex high performance database systems (including a custom billing and CRM system). Mr. Pickles received a B.S. in Computer Science from the University of California, Santa Barbara. We believe that Mr. Pickles is qualified to serve on our board of directors due to his extensive management experience, track record at other technology companies and industry background. Gokul Rajaram has served as a member of our board of directors since May 2018. Mr. Rajaram has served on the executive team at DoorDash Inc. (“DoorDash”) since November 2019, after DoorDash acquired a food delivery business owned by Square, Inc. (“Square”) called Caviar, Inc. (“Caviar”), where he served as the Lead for Caviar. Prior to DoorDash, Mr. Rajaram worked as the Product Engineering Lead from July 2013 to October 2019 at Square, where he led several product development teams and served on Square’s executive team. Before joining Square in July 2013, Mr. Rajaram served as Product Director, Ads at Facebook, Inc. from August 2010 to July 2013, where he helped Facebook transition its advertising business to become mobile-first. Mr. Rajaram served as Product Management Director for Google AdSense from January 2003 to November 2007, where he helped launch the product and grow it into a substantial portion of Google's business. Mr. Rajaram has served on the boards of directors of Coinbase Inc. since August 2020 and publicly traded Pinterest, Inc. since February 2020. He also served on the board of directors of publicly traded RetailMeNot, Inc. from September 2013 until it was taken private in May 2017. Mr. Rajaram received a B. Tech in Computer Science from the Indian Institute of Technology Kanpur, an M.S. in Computer Science from the University of Texas and an M.B.A. from the Massachusetts Institute of Technology Sloan School of Management. We believe that Mr. Rajaram is qualified to serve on our board of directors due to his extensive entrepreneurial background, strategic leadership track record and service on other boards of directors of technology companies. David B. Wells has served as a member of our board of directors since December 2015. Mr. Wells served as the chief financial officer of Netflix, Inc., a media-services provider, for eight years, retiring in early 2019 after nearly 15 years with the company and having served as vice president of financial planning and analysis prior to chief financial officer. Mr. Wells is also a director for public direct to consumer healthcare company HIMS, where he is audit chair, and is the chairman of the board and a member of the remuneration committee (formerly the senior independent director) for UK based fintech company WISE PLC. Mr. Wells received a B.S. in Commerce and English from the University of Virginia and an M.B.A./M.P.P. Magna Cum Laude from the University of Chicago. We believe that Mr. Wells is qualified to serve on our board of directors due to his extensive management experience, financial expertise, high-growth company background and strategic leadership track record. PROPOSAL TWO:
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Identifying and Evaluating Director Nominees
Identifying and Evaluating Director Nominees Our nominating and corporate governance committee is responsible for reviewing with the board of directors, on an annual basis, the appropriate characteristics, skills and experience required for the board of directors as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), the nominating and corporate governance committee, in recommending candidates for election, and the board of directors, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following: •personal and professional integrity; •ethics and values; •experience in corporate management, such as serving as an officer or former officer of a publicly held company; •experience in the industries in which we compete; •experience as a board member or executive officer of another publicly held company; •diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; •conflicts of interest; and •practical and mature business judgment. Other than the foregoing, there are no stated minimum criteria for director nominees, although our nominating and corporate governance committee may also consider such other factors as it may deem, from time to time, are in our and our stockholders' best interests. Our board of directors evaluates each individual in the context of the board of directors as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas. Although the nominating and corporate governance committee may consider whether nominees assist in achieving a mix of board members that represents a diversity of background and experience, which is not only limited to race, gender or national origin, we have no formal policy regarding board diversity. The following table sets forth certain diversity statistics as self-reported by the current members of our board of directors.
Identifying and Evaluating Director Nominees
| Board Diversity Matrix (As of April 12, 2023) | | | | | | Total Number of Directors | 8 | | | | | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 3 | 4 | — | 1 | | Part II: Demographic Background | | | | | | African American or Black | — | — | — | — | | Alaskan Native or Native American | — | — | — | — | | Asian | — | — | — | — | | Hispanic or Latinx | — | — | — | — | | Native Hawaiian or Pacific Islander | — | — | — | — | | White | 3 | 3 | — | — | | Two or More Races or Ethnicities | — | — | — | — | | LGBTQ+ | 1 | | | | | Did Not Disclose Demographic Background | 2 | | | |
2022 Executive Compensation Highlights
2022 Executive Compensation Highlights Based on our overall operating environment and these results, the compensation committee took the following key actions with respect to the compensation of our NEOs for and in connection with 2022: •Base Salary: Approved annual base salary increases for each of our NEOs, including a base salary increase to $990,000 for our CEO. •Annual Cash Incentive Awards: Approved annual cash incentive awards of $1,885,455 for our CEO, and $942,727 for each of our other NEOs (excluding Mr. Grayson, who was approved for an annual cash incentive award of $793,208, and Ms. Hulst, who departed the company on July 29, 2022 and was paid in connection with her separation a pro-rated annual cash incentive award of $660,515). •Long-Term Incentive Compensation: Granted long-term incentive compensation opportunities in the form of time-based restricted stock awards covering our Class A common stock and options to purchase shares of our Class A common stock, with an aggregate grant date fair value of approximately $6.1 million to each of our NEOs (other than our CEO). Our CEO did not receive any long-term incentive compensation in 2022. •2021 CEO Performance Option: Granted Mr. Green a market-based performance stock option in 2021 to purchase up to 16,000,000 shares of our Class A common stock (at target) if specified goals for the per share price of our Class A common stock (ranging from $90.00 to $340.00 per share) and certain other vesting conditions are satisfied. Assuming achievement of the share price goals, the number of shares otherwise purchasable pursuant to the stock option may be decreased or increased by up to 20% based on the relative total shareholder return (“TSR”) of our Class A common stock compared to the TSR of the Nasdaq-100 Index at each vesting tranche. Our board of directors currently anticipates that this performance stock option will be the exclusive equity award granted to Mr. Green through the performance period for the award, but the board of directors has discretion (but not the obligation) to grant additional equity awards if the board of directors determines such action to be appropriate. No share price goals were achieved in 2022.
Executive Compensation Program Design
Executive Compensation Program Design Our current practice is to combine a mixture of compensation elements that balance achievement of our short-term goals with the creation of sustainable long-term stockholder value. We provide short-term annual cash incentive award opportunities which focus on our yearly operating results, and we provide long-term incentive compensation opportunities in the form of equity awards. We do not have a specific policy on the percentage allocation between short-term and long-term incentive compensation elements. We also believe that the compensation of our CEO should be primarily influenced by our overall financial performance. The compensation committee endeavors to set the compensation of our CEO within a range of compensation provided to similarly-situated chief executive officers of the companies in our compensation peer group, as adjusted by its consideration of the particular factors influencing our performance.
Compensation-Setting Process
Compensation-Setting Process The compensation committee reviews the compensation arrangements and determines the target total direct compensation opportunity for our executive officers, including our NEOs. A short-term annual cash incentive award plan for the upcoming fiscal year is adopted prior to the beginning of each year, typically in December. Equity awards are typically granted annually. In 2022, equity awards were granted to our executive officers, including our NEOs (other than our CEO), in April. Base salary adjustments are generally effective at the beginning of January of each year. The compensation committee does not use a single method or measure in arriving at its compensation decisions. When making its determinations with respect to the amount of each compensation element and approving each compensation element and the target total direct compensation opportunity for our executive officers, the compensation committee considers the following factors: •our performance against the financial and operational objectives established by the compensation committee and our board of directors; •each individual executive officer’s skills, experience and qualifications relative to other similarly-situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; •the scope of each executive officer’s role compared to other similarly-situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; •the performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function and work as part of a team, all of which reflect our core values; •annual compensation parity among our executive officers; •our financial performance relative to our peers; •the compensation practices of our compensation peer group and the positioning of each executive officer’s compensation relative to peer company compensation levels and the compensation levels in selected broad-based compensation surveys; and •the recommendations of our CEO with respect to the compensation of our other executive officers. These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting pay levels, nor was the impact of any factor on the determination of pay levels quantifiable.
Role of Compensation Consultant
Role of Compensation Consultant The compensation committee engages an external compensation consultant to assist it by providing information, analysis and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. For 2022, the compensation committee engaged Compensia, Inc., a national compensation consulting firm (“Compensia”), as its compensation consultant to advise on executive compensation matters, including competitive market pay practices for senior executives and with the data analysis and selection of the compensation peer group. For 2022, the scope of Compensia’s engagement included, among other things: •a review of our compensation philosophy and practices; •the research, development, review, and updating of our compensation peer group; •the review and analysis of the compensation for our executive officers, including our CEO and our other NEOs; •the review of incentive compensation plan design; •the review and analysis of the compensation for our non-employee directors; and •support on other ad hoc matters throughout the year. The terms of Compensia’s engagement include reporting directly to the compensation committee and to the compensation committee chair. Compensia also coordinates with our management for data collection and job matching for our executive officers. The compensation committee has evaluated Compensia’s independence pursuant to the listing standards of the Nasdaq and the relevant SEC rules and has determined that no conflict of interest has arisen as a result of the work performed by Compensia. In addition, the compensation committee evaluates the independence of its other outside advisors to the compensation committee, including outside legal counsel, considering the same independence factors to ensure that their work for the compensation committee does not raise any conflicts of interest.
Competitive Positioning
Competitive Positioning For purposes of comparing our executive compensation against the competitive market, the compensation committee reviews and considers the compensation levels and practices of a group of peer companies. This compensation peer group consists of advertising technology, software as a service and other technology companies that are similar to us in terms of revenue, profitability, growth and market capitalization. In 2021, with the assistance of Compensia, the compensation committee reviewed and updated our compensation peer group to reflect our increasing market capitalization and revenue size, and account for acquisitions of peer companies. The companies in this compensation peer group were selected on the basis of their similarity to us, based on the following criteria: •publicly traded companies headquartered in the United States; •similar industry and competitive market for talent (advertising, software, Internet software and services, IT consulting and services and research and consulting services); •similar revenue size within a range of ~0.33x to ~3.0x our last four quarter’s revenue (approximately $300 million to approximately $2.7 billion); •similar market capitalization within a range of ~0.25x to ~4.0x our market capitalization (approximately $8 billion to approximately $126 billion); •product and business model similarity; •high growth (greater than 20% growth over the last four fiscal quarters); and •high market capitalization to revenue multiple and high market capitalization to EBITDA multiple. As a result, in July 2021, the compensation committee approved a revised compensation peer group for 2022 consisting of the following companies:
Competitive Positioning
| Coupa Software | Shopify | | CrowdStrike Holdings | Slack Technologies | | Datadog | Snap | | DocuSign | Splunk | | HubSpot | Twilio | | Okta | Twitter | | Pinterest | Zendesk | | RingCentral | Zoom Video | | Roku | Zscaler |
Competitive Positioning
The compensation committee uses data drawn from our compensation peer group to evaluate the competitive market when determining the total direct compensation packages for our executive officers, including base salary, target short-term annual cash incentive award opportunities and long-term incentive compensation.
Individual Compensation Elements
| Element | Compensation Element | Objective | | Base Salary | Cash | Designed to attract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market and reward performance | | Short-Term Annual Cash Incentive Awards | Cash | Designed to motivate our executives to achieve annual business objectives and provide financial incentives when we meet or exceed these annual objectives | | Long-Term Incentive Compensation | Equity awards in the form of restricted stock awards covering shares of our Class A common stock and options to purchase shares of Class A common stock | Designed to align the interests of our executives and our stockholders by motivating our executives to create sustainable long-term stockholder value |
Base Salary
Base Salary Base salary represents the fixed portion of the compensation of our executive officers, including our NEOs, and is an important element of compensation intended to attract and retain highly talented individuals. Using the competitive market data provided by Compensia, the compensation committee reviews and determines appropriate adjustments to the base salaries for each of our executive officers, including our NEOs, as part of its annual executive compensation review. Generally, the compensation committee sets the base salaries of our executive officers with reference to the competitive range of the market median of our compensation peer group and relevant executive compensation survey data, and considers the factors described in “Executive Compensation Governance—Compensation-Setting Process” above. In January 2022, the compensation committee approved the 2022 annual base salaries for our executive officers, including our NEOs, as follows: $990,000 for Mr. Green and $550,000 for each of Messrs. Grayson, Pickles and Grant, and Ms. Hulst. In making these decisions, the compensation committee considered the factors described in “Executive Compensation Governance—Compensation-Setting Process” above and reviewed data drawn from the compensation peer group as approved in July 2021 and relevant executive compensation survey data. The 2022 annual base salaries for our NEOs were increased relative to their 2021 annual base salaries as follows:
Short-Term Annual Cash Incentive Awards
Short-Term Annual Cash Incentive Awards We use a short-term annual cash incentive award plan to motivate our executive officers, including our NEOs, to achieve our key annual business objectives. In July 2021, the compensation committee adopted a short-term annual cash incentive plan for 2022 (the “2022 Cash Incentive Plan”) to provide financial incentives for us to meet or exceed the revenue targets established under our 2022 annual operating plan. Target Short-Term Annual Cash Incentive Award Opportunities The target short-term annual cash incentive award opportunities for our executive officers, including our NEOs, were recommended to the compensation committee by our CEO (except with respect to his own target short-term annual cash incentive award opportunity), and approved by the compensation committee. The determination of target short-term annual cash incentive award opportunities was based on the factors described in “Executive Compensation Governance-Compensation-Setting Process” above and a review of data drawn from the compensation peer group as approved in July 2021 and relevant executive compensation survey data. In January 2022, the compensation committee approved the target short-term annual cash incentive award opportunities for 2022 for our executive officers, including our NEOs. As a percentage of base salary, the target short-term annual cash incentive award opportunities were as follows: 111% for Mr. Green and 100% for Messrs. Grayson, Pickles and Grant, and Ms. Hulst. Performance Measure For purposes of the 2022 Cash Incentive Plan, the compensation committee, upon the recommendation of our CEO, selected revenue as the corporate performance measure for determining the annual cash incentive awards for our executive officers, including our NEOs, for the year. The compensation committee selected this performance measure based on its belief that revenue is the financial metric that was most important to our stockholders in 2022. Cash Incentive Plan Formula For purposes of the 2022 Cash Incentive Plan, target short-term annual cash incentive award payments were determined based on a bonus factor applied against our actual revenue generated for the year. The bonus factor for our CEO was set at 0.00224% of revenue if our revenue for the year was at least $1,376 million. The bonus factor increased with each incremental $9.0 million in revenue between $1,376 million and $1,637 million, at which point the bonus factor was set at 0.16435% of final revenue. Our target performance level for 2022 was $1,520 million of revenue, with a bonus factor of 0.07237%, which would result in a target short-term annual cash incentive award payment of $1,100,000 for our CEO (i.e., 111% of annual base salary for Mr. Green). The bonus factor for each of our other NEOs was set at 0.00112% of revenue if our revenue for the year was at least $1,376 million. The bonus factor increased with each incremental $9.0 million in revenue between $1,376 million and $1,637 million, at which point the bonus factor was set at 0.08217% of final revenue. Our target performance level for 2022 was $1,520 million of revenue, with a bonus factor of 0.03618%, which would result in a target short-term annual cash incentive award payment of $550,000 for each NEO (i.e., 100% of annual base salary for Messrs. Grayson, Pickles, and Grant and Ms. Hulst). Annual Cash Incentive Award Payments The actual cash incentive award payments earned by our NEOs under the 2022 Cash Incentive Plan were $1,885,455 for Mr. Green, $942,727 for Messrs. Pickles and Grant, $793,208 for Mr. Grayson and $660,515 for Ms. Hulst, based on $1,578 million of revenue and a bonus factor of 0.1195% and 0.0597% for Mr. Green and the other NEOs, respectively. Ms. Hulst received a cash payment equal to her pro-rated 2022 short-term annual cash incentive award payment in connection with her separation from the company on July 29, 2022. For additional information, see “Information Regarding Compensation of Executive Officers and Directors—Executive Compensation Arrangements — Separation Agreement with Ms. Hulst.” In light of Mr. Grayson’s discretionary bonus in 2020, Mr. Grayson received approval from the compensation committee for a lesser cash incentive award payment of $793,208 in lieu of the $942,727 calculated under the Cash Incentive Plan above. The short-term annual cash incentive award payments were paid to our NEOs in quarterly installments no later than 60 days following the end of the applicable calendar quarter assuming the underlying performance measure had been achieved for that quarter, subject to the NEO’s continued employment through the end of the applicable calendar quarter. The short-term annual cash incentive award payments made to our NEOs for 2022 are set forth in “Information Regarding Compensation of Executive Officers and Directors-2022 Summary Compensation Table.”
Long-Term Incentive Compensation
Long-Term Incentive Compensation We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our executive officers, including our NEOs, to create value for our stockholders. Equity awards also help us retain qualified executive officers in a competitive market. Long-term incentive compensation opportunities in the form of equity awards are granted by the compensation committee. The amount and forms of such equity awards are determined by the compensation committee after considering the factors described in “Executive Compensation Governance-Compensation-Setting Process” above and reviewing data drawn from the compensation peer group, as approved in July 2021. Equity awards are granted to align management interests with that of our stockholders, as management is only rewarded when there is an increase in stockholder value. Multi-year-vesting is used for such equity awards for retention purposes and to foster long-term alignment with stockholder interests. The amounts of the equity awards are also intended to provide competitively-sized awards and resulting target total direct compensation opportunities at the 75th percentile relative to the competitive market for similar roles and positions for our executive officers as a group, taking into consideration business results, internal equity, experience and individual performance. 2021 CEO Performance Option In recognition of the pivotal role Mr. Green has played in our growth and success since our founding and our initial public offering, our board of directors approved the grant of a market-based performance stock option (the “Performance Option”) to Mr. Green in October 2021. The Performance Option is a long-term, stockholder-aligned incentive that is intended to provide significant motivation to Mr. Green to continue to concentrate his efforts on building our business in a manner that ensures sustainable long-term valuation creation for our stockholders. To this end, the compensation committee, with the assistance of Compensia, designed the Performance Option such that it will only vest (and become exercisable) if the price per share of our Class A common stock reaches certain ambitious price goals, with the number of shares vesting (and becoming exercisable) for each tranche increased or decreased depending on our Class A common stock’s performance relative to the Nasdaq-100 Index, as further described below. With this design, the Performance Option only vests at ambitious targets where our stockholders have already accrued significant market value after the date of grant. Under the Performance Option, if pre-established per share stock price targets for our Class A common stock (ranging from $90.00 to $340.00 per share) are achieved and certain other vesting conditions are satisfied, Mr. Green may purchase 16,000,000 shares of our Class A common stock (at target), subject to adjustment as discussed below. The exercise price for the Performance Option is $68.29 per share, which was the closing price of our Class A common stock on October 6, 2021, the grant date of the Performance Option. The number of shares of our Class A common stock otherwise purchasable under each vesting tranche of the Performance Option may be increased or decreased from target by up to 20% based on the relative TSR of our Class A common stock as compared to the TSR of the Nasdaq-100 Index. The resulting number of shares as so adjusted is referred to herein as the “Eligible Option Shares.” The Performance Option was granted under the Trade Desk, Inc. 2016 Incentive Award Plan (the “2016 Incentive Award Plan”). The shares of our Class A common stock subject to the Performance Option vest and become exercisable in eight tranches over a ten-year term following certification by our board of directors to the extent that the average closing price per share of our Class A common stock on the Nasdaq Global Select Market measured over any 30-consecutive-trading-day period equals or exceeds the applicable per-share stock price target, as set forth in the following table, subject to adjustment for dividends, stock splits, combinations, reorganizations, reclassifications, or similar events (the “Stock Price Achievements”):
Long-Term Incentive Compensation
| | | Number of Shares Subject to Performance Option | | | | Vesting Tranche | Stock Price Achievement Vesting Condition ($) | <50th Percentile against Nasdaq‑100 Index | Target Shares(1) | >75th Percentile against Nasdaq‑100 Index | | 1 | 90.00 | 1,600,000 | 2,000,000 | 2,400,000 | | 2 | 115.00 | 1,600,000 | 2,000,000 | 2,400,000 | | 3 | 145.00 | 1,600,000 | 2,000,000 | 2,400,000 | | 4 | 185.00 | 1,600,000 | 2,000,000 | 2,400,000 | | 5 | 225.00 | 1,600,000 | 2,000,000 | 2,400,000 | | 6 | 260.00 | 1,600,000 | 2,000,000 | 2,400,000 | | 7 | 300.00 | 1,600,000 | 2,000,000 | 2,400,000 | | 8 | 340.00 | 1,600,000 | 2,000,000 | 2,400,000 |
Long-Term Incentive Compensation
(1) If the applicable Stock Price Achievement falls between the 50th and 75th percentiles of the Nasdaq-100 Index, the number of Eligible Option Shares that will vest (and become exercisable) will be interpolated on a linear basis, as described below. The number of Target Shares set forth in the table above may be increased or decreased, based on the greatest result of three tests tied to our stock price performance relative to performance of the companies comprising the Nasdaq‑100 Index as of the grant date. The number of Eligible Option Shares that will vest with respect to each Vesting Tranche if the applicable Stock Price Achievement is met will be 2,000,000 shares, with the possibility of an adjustment (either an increase or a decrease) of up to 400,000 shares for each respective Vesting Tranche. If the applicable Stock Price Achievement falls above the 75th percentile of the Nasdaq-100 Index, the number of Eligible Option Shares that will vest will be increased by 400,000 shares. If the applicable Stock Price Achievement falls below the 50th percentile of the Nasdaq-100 Index, the number of Eligible Option Shares that will vest will be decreased by 400,000 shares. If the applicable Stock Price Achievement falls between the 50th and 75th percentiles of the Nasdaq-100 Index, the number of Eligible Option Shares that will vest will be adjusted using linear interpolation between a 0% adjustment (at the 50th percentile) and a +20% adjustment (at the 75th percentile). For the first four years following the date of grant of the Performance Option, the Eligible Option Shares will vest (and become exercisable) with respect to each Vesting Tranche subject to Mr. Green’s continued service as our CEO as of the applicable vesting date; thereafter, the Eligible Option Shares vest (and become exercisable) with respect to each Vesting Tranche subject to Mr. Green’s continued service as of the applicable vesting date as our CEO or in another role to be determined by our board of directors. In the event of a Change in Control (as defined in the 2016 Incentive Award Plan) that occurs prior to the full vesting of the Performance Option, the number of Eligible Option Shares that will vest will be determined based on the per-share consideration for the Class A common stock received in such Change in Control, as determined by the compensation committee, in accordance with the table above, using linear interpolation in the event such per-share consideration is between the levels in the table above. Any remaining shares will be forfeited as of immediately prior to such Change in Control. In the event of a Qualifying Termination (as defined in the Performance Stock Option Award Agreement for the Performance Option (the “Award Agreement”)) that occurs prior to the full vesting of the Performance Option, the applicable vesting period will continue for nine months from the date of the Qualifying Termination, with the Eligible Option Shares being eligible to vest in the event the applicable stock price goal is achieved during such extended vesting period, and any remaining unvested shares will be forfeited as of nine months following the Qualifying Termination. In the event of a termination of employment due to death or disability (as defined in the Award Agreement) that occurs prior to the full vesting of the Performance Option and that occurs on or before the four-year anniversary of the grant date, the number of Eligible Option Shares that will vest will be determined by measuring the Stock Price Achievement through the date of cessation of continued service, and, if such Stock Price Achievement is less than the stock price goal for the lowest unvested tranche but greater than the next lowest tranche, a number of Eligible Option Shares will vest, calculated using linear interpolation between the Stock Price Achievement through the cessation date and the stock price goal of the next lowest tranche (the “Incrementally Achieved Goal”). Any remaining unvested shares, including the remaining unvested shares in the tranche of the Incrementally Achieved Goal, remain eligible for vesting pursuant to the Qualifying Termination provision in the Award Agreement. In the event of a termination of employment due to death or disability (as defined in the Award Agreement) that occurs prior to the full vesting of the Performance Option and after the four-year anniversary of the grant date, the Target Shares for the lowest unvested tranche will fully vest as of the date of cessation, without application of the relative TSR modifier. Any remaining unvested shares remain eligible for vesting pursuant to the Qualifying Termination provision in the Award Agreement, as described above. In the event of a material restatement of our financial statements during the term of the Performance Option, Eligible Option Shares will be subject to a clawback at the board of directors’ discretion if then-applicable law or the rules or listing standards of the applicable national securities exchange include a clawback provision, Mr. Green knowingly and intentionally engaged in gross misconduct that led to such restatement, and if, as a result of such restatement, one or more Stock Price Achievements was achieved that otherwise would not have been achieved. All shares of our Class A common stock acquired upon exercise of the Eligible Option Shares are subject to a one-year holding period that begins on the date that the related option tranche vested (the “Holding Period”), subject to exceptions for dispositions of shares in connection with an exercise of the Eligible Option Shares solely to cover withholding tax obligations in connection with such exercise and transfers to Mr. Green’s immediate family (as defined in the Award Agreement), for estate planning purposes, or in connection with charitable or philanthropic activities. The term of the applicable Holding Period will continue to apply following such permitted transfers. The board of directors currently anticipates that the Performance Option will be the exclusive equity award granted to Mr. Green through the performance period for the award, but the board of directors has discretion (but not the obligation) to grant additional equity awards if the board of directors determines such action to be appropriate. As of the date of this Proxy Statement, 2,400,000 Eligible Option Shares related to Vesting Tranche 1 vested in 2021 based on the achievement of the stock price goals discussed above. No other Stock Price Achievement has occurred. 2022 Equity Awards In April 2022, the compensation committee determined that the equity awards to be granted to our executive officers, including our NEOs (other than our CEO), should be in the form of time-based restricted stock awards for shares of our Class A common stock (“RSAs”) and options to purchase shares of our Class A common stock (“Stock Options”). The compensation committee approved a target equity amount of $7 million for Messrs. Grayson, Pickles and Grant, and Ms. Hulst split evenly between RSAs and Stock Options. The quantity of equity awards granted was based on the average closing stock price for a share of our Class A common stock for 45 consecutive trading days ending on, and including, the grant date. Based on this methodology, the following equity awards were granted to these NEOs in 2022: (Messrs. Grayson, Pickles and Grant, and Ms. Hulst), 51,094 shares of restricted Class A common stock and options to purchase 82,508 shares of our Class A common stock, with an aggregate grant-date fair value of $6,087,184. Mr. Green was not granted additional equity awards in light of the grant of the CEO Performance Option in 2021.
Long-Term Incentive Compensation
The RSAs vest in equal quarterly installments over a four-year period, with 1/16th of the shares subject thereto vesting on August 15, 2022, and 1/16th of the shares subject thereto vesting on each quarterly anniversary thereafter, contingent upon the NEO remaining continuously employed by us through each applicable vesting date. The stock options vest and become exercisable over a four-year period, with 1/48th of the shares subject thereto vesting on each monthly anniversary of the applicable vesting commencement date, contingent upon the NEO remaining continuously employed by us through each applicable vesting date. The stock options granted to our NEOs are intended to qualify as “incentive stock options” to the maximum extent permitted under the applicable tax regulations. These equity awards were granted pursuant to the terms and conditions of the 2016 Incentive Award Plan. The equity awards granted to our NEOs in 2022 are set forth in “Information Regarding Compensation of Executive Officers and Directors-2022 Summary Compensation Table,” and “Information Regarding Compensation of Executive Officers and Directors-2022 Grants of Plan-Based Awards Table.”
2022 Summary Compensation Table
2022 Summary Compensation Table The following table sets forth information regarding the total compensation, for services rendered in all capacities, that was paid or awarded to or earned by our NEOs during the fiscal years ended December 31, 2022, 2021 and 2020.
2022 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(7) | Option Awards ($)(1)(6) | Stock Awards ($)(2) | Non-Equity Incentive Compensation ($)(3) | All Other Compensation ($)(4) | Total ($)(8) | | Jeff T. Green | 2022 | 990,000 | — | — | — | 1,885,455 | 2,564,581 | 5,440,036 | | Chief Executive Officer | 2021 | 965,000 | 1,000,000 | 828,384,776 | — | 2,703,912 | 1,915,074 | 834,968,762 | | | 2020 | 900,000 | — | 6,460,630 | 6,460,715 | 2,095,294 | 40,221 | 15,956,860 | | Blake J. Grayson | 2022 | 550,000 | — | 3,043,514 | 3,043,670 | 793,208 | 21,570 | 7,451,962 | | Chief Financial Officer | 2021 | 535,000 | — | 2,670,700 | 2,670,512 | 1,351,956 | 22,878 | 7,251,046 | | | 2020 | 500,000 | 149,519 | 1,615,106 | 1,614,954 | 1,047,647 | 21,092 | 4,948,318 | | David R. Pickles | 2022 | 550,000 | — | 3,043,514 | 3,043,670 | 942,727 | 22,400 | 7,602,311 | | Chief Technology Officer | 2021 | 535,000 | — | 2,670,700 | 2,670,512 | 1,351,956 | 22,488 | 7,250,656 | | | 2020 | 500,000 | — | 1,615,106 | 1,614,954 | 1,047,647 | 22,370 | 4,800,077 | | Jay R. Grant | 2022 | 550,000 | — | 3,043,514 | 3,043,670 | 942,727 | 25,431 | 7,605,342 | | Chief Legal Officer | 2021 | 535,000 | — | 2,670,700 | 2,670,512 | 1,351,956 | 21,716 | 7,249,884 | | | 2020 | 105,769 | 250,000 | 1,657,698 | 1,519,714 | 338,902 | 1,942 | 3,874,025 | | Michelle E. Hulst (5) | 2022 | 316,438 | — | 3,043,514 | 3,043,670 | 660,515 | 1,166,843 | 8,230,980 | | Former Chief Data Officer | 2021 | 531,301 | — | 2,670,700 | 2,670,512 | 1,342,183 | 22,705 | 7,237,401 |
2022 Summary Compensation Table
(1)Amounts reported reflect the aggregate full grant-date fair value of the Stock Options granted to our NEOs during 2022, 2021 and 2020, as applicable, calculated in accordance with ASC Topic 718. The aggregate grant-date fair values for the Stock Options was based on the Black-Scholes option valuation methodology, except for the CEO Performance Option that was valued using a Monte Carlo valuation model. Such aggregate grant-date fair values do not take into account any estimated forfeitures related to service-based vesting conditions. Additional information regarding these Stock Options is set forth in the “2022 Grants of Plan-Based Awards Table” and the “2022 Outstanding Equity Awards at Fiscal Year End Table.” For additional information, refer to Notes 2 and 10 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 15, 2023 (the 2022 Annual Report). The amounts reported in this column reflect the accounting cost for the Stock Options and do not correspond to the actual economic value that may be received by our NEOs upon the exercise of the Stock Options. (2)Amounts reported reflect the aggregate grant-date fair value of the RSAs granted to our NEOs during 2022, 2021 and 2020, as applicable, calculated in accordance with ASC Topic 718. Such aggregate grant-date fair values do not take into account any estimated forfeitures related to service-based vesting conditions and were based on the fair value of our common stock on the date of grant, which was determined as the closing market price per share of our Class A common stock on the date of grant. Additional information regarding these RSAs is set forth in the “2022 Grants of Plan-Based Awards Table” and the “2022 Outstanding Equity Awards at Fiscal Year End Table.” For additional information, refer to Notes 2 and 10 to our audited consolidated financial statements included in our 2022 Annual Report. The amounts reported in this column reflect the accounting cost for the RSAs and do not correspond to the actual economic value that may be received by the NEOs upon the vesting or settlement of the RSAs. (3)Amounts reported represent cash incentive awards earned by our NEOs under our short-term annual cash incentive award plan. For additional information about the payments made in 2022, see “Compensation Discussion and Analysis—Individual Compensation Elements—Annual Cash Incentive Awards.” In light of Mr. Grayson’s discretionary bonus in 2020, Mr. Grayson received approval from the compensation committee for a lesser incentive compensation payout of $793,208 as compared to $942,727 calculated under the 2022 Cash Incentive Plan as described in “Compensation Discussion and Analysis - Individual Compensation Elements - Annual Cash Incentive Awards.” (4)Amounts represent our Section 401(k) matching contributions for our NEOs, cell phone and internet allowances, term life insurance and executive health benefits as well as milestone perquisites generally available to our employees. Additionally, for 2022, the amount reported for Ms. Hulst included a payment of $1,100,000 pursuant to the separation terms of our Separation Agreement (as defined below) with Ms. Hulst, $29,201 for COBRA reimbursements and $14,395 of payment related to accrued vacation through the date of termination of employment. For additional information, see “Information Regarding Compensation of Executive Officers and Directors—Executive Compensation Arrangements — Separation Agreement with Ms. Hulst.” Additionally, for 2022 and 2021, the amounts reported include the following items for Mr. Green: (i) a tax equalization payment in connection with the International Assignment Agreement in the amount of $2,214,378 and $1,597,273, respectively, and (ii) an income tax gross up bonus in connection with such tax equalization payment in the amount of $329,614 and $298,486, respectively. (5)Ms. Hulst employment with us ended on July 29, 2022. Her 2022 annual base salary and short-term annual cash incentive award payment were pro-rated to reflect her separation in 2022. (6)For 2021, reflects the Performance Option for Mr. Green, which will become exercisable and vested in eight tranches over a ten-year term to the extent that the average closing price per share of the Class A common stock on the Nasdaq Global Select Market measured over any 30-consecutive-trading-day period equals or exceeds the applicable per-share stock price (ranging from $90.00 to $340.00 per share) following certification by our board of directors, subject to adjustment for dividends, stock splits, combinations, reorganizations, reclassifications or similar events. See “Compensation Discussion and Analysis – Individual Compensation Elements - Long-Term Incentive Compensation—CEO Performance Option” above for further information. As permitted pursuant to guidance under Item 402 of Regulation S-K, the amount included for the Performance Option reflects the full grant-date fair value, as adjusted to reflect any reduction in value that is appropriate for the probability that the applicable stock price goals might not be met and the underlying shares not earned. (7)For 2021, the $1,000,000 bonus to Mr. Green represents a discretionary bonus in addition to the non-equity incentive compensation under our annual cash incentive plan. For 2020, the $149,519 bonus to Mr. Grayson represents a discretionary bonus in addition to the non-equity incentive compensation under our annual cash incentive plan. Mr. Grant received a signing bonus of $250,000 in 2020 in connection with his appointment as our Chief Legal Officer. (8)For Mr. Green, the $834,968,762 in compensation for 2021 includes the value of the Performance Option for accounting purposes.
2022 Grants of Plan-Based Awards Table
2022 Grants of Plan-Based Awards Table The following table provides information about the plan-based awards granted in 2022 to each of our NEOs.
2022 Grants of Plan-Based Awards Table
| | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards Target | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock Options and Awards | | Name | | ($)(1) | (#) | (#) | ($/Sh) | ($)(2) | | Jeff T. Green | N/A | 1,100,000 | — | — | — | — | | Blake J. Grayson | N/A | 550,000 | — | — | — | — | | | 4/26/2022 | — | 51,094 | — | — | 3,043,670 | | | 4/26/2022 | — | — | 82,508 | 59.57 | 3,043,514 | | David R. Pickles | N/A | 550,000 | — | — | — | — | | | 4/26/2022 | — | 51,094 | — | — | 3,043,670 | | | 4/26/2022 | — | — | 82,508 | 59.57 | 3,043,514 | | Jay R. Grant | N/A | 550,000 | — | — | — | — | | | 4/26/2022 | — | 51,094 | — | — | 3,043,670 | | | 4/26/2022 | — | — | 82,508 | 59.57 | 3,043,514 | | Michelle E. Hulst | N/A | 550,000 | — | — | — | — | | | 4/26/2022 | — | 51,094 | — | — | 3,043,670 | | | 4/26/2022 | — | — | 82,508 | 59.57 | 3,043,514 |
2022 Grants of Plan-Based Awards Table
(1)Amount reported represents the potential target short-term annual cash incentive award opportunity under our 2022 Cash Incentive Plan. No threshold or maximum payouts were established under our 2022 Cash Incentive Plan, and accordingly, the sub-columns Threshold ($) and Maximum ($) are not applicable and have not been presented. Additional information regarding the 2022 Cash Incentive Plan is set forth in “Compensation Discussion and Analysis - Individual Compensation Elements - Annual Cash Incentive Awards” above. (2)Amounts reported represent the aggregate grant-date fair values of the equity awards calculated in accordance with ASC Topic 718. All equity awards were granted under the 2016 Incentive Award Plan. The aggregate grant-date fair value for the RSAs was based on the fair value of our common stock on the date of grant, which was determined as the closing market price per share of our Class A common stock on the date of grant. The aggregate grant-date fair value for the Stock Options was based on the Black-Scholes option valuation methodology. This calculation is performed for accounting purposes and reported in the table. However, our NEOs may never realize any value from their equity awards. For additional information, refer to Notes 2 and 10 to our audited consolidated financial statements included in our 2022 Annual Report.
2022 Outstanding Equity Awards at Fiscal Year-End Table
2022 Outstanding Equity Awards at Fiscal Year-End Table The following table summarizes the number of shares of common stock underlying outstanding equity awards for each NEO as of December 31, 2022. The equity awards below are subject certain vesting acceleration provisions as provided in the applicable NEO’s employment agreement, as discussed in “Executive Compensation Arrangements” and “Potential Payments Upon Termination or Change in Control Table.”
2022 Outstanding Equity Awards at Fiscal Year-End Table
| | | | Option Awards | | | | | Stock Awards | | | Name | Grant Date | Vesting Commence- ment Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Jeff T. Green | 12/1/2018(4) | 12/1/2018 | 70,650 | — | | 14.245 | 12/1/2028 | — | — | | | 12/9/2019(4) | 12/9/2019 | 42,400 | 68,650(5) | | 24.949 | 12/9/2029 | 38,650(6) | 1,732,680 | | | 12/9/2019(4) | 12/9/2022 | — | 4,000(7) | | 27.444 | 12/9/2024 | — | — | | | 5/15/2020(4) | 5/15/2020 | 64,880 | 134,530(8) | | 30.001 | 5/15/2030 | 80,760(9) | 3,620,471 | | | 5/15/2020(4) | 12/15/2023 | — | 3,330(10) | | 33.001 | 5/15/2025 | — | — | | | 4/29/2021(4) | 4/29/2021 | 90,420 | 125,300(11) | | 74.898 | 4/29/2031 | — | — | | | 4/29/2021(4) | 12/29/2024 | — | 1,330(12) | | 82.388 | 4/29/2026 | — | — | | | 10/6/2021(4) | 10/6/2021 | 2,400,000 | — | 16,800,000(13) | 68.290 | 10/6/2031 | — | — | | Blake J. Grayson | 12/27/2019(4) | 12/16/2019 | 64,396 | 60,950(14) | | 27.235 | 12/27/2029 | 44,690(6) | 2,003,453 | | | 12/27/2019(4) | 12/16/2019 | 20,464 | 22,750(15) | | 27.235 | 12/27/2029 | — | — | | | 5/15/2020(4) | 5/15/2020 | 21,854 | 34,400(15) | | 30.001 | 5/15/2030 | 20,190(9) | 905,118 | | | 4/28/2021(4) | 4/28/2021 | 16,630 | 35,800(15) | | 74.637 | 4/28/2031 | 22,370(16) | 1,002,847 | | | 4/26/2022(4) | 4/26/2022 | 13,751 | 68,757(15) | | 59.570 | 4/26/2032 | 44,708(17) | 2,004,260 | | David R. Pickles | 2/8/2013(2) | 10/17/2012 | 288,500 | — | | 0.017 | 2/7/2023 | — | — | | | 1/20/2015(2) | 1/20/2015 | 801,780 | — | | 0.082 | 1/19/2025 | — | — | | | 12/9/2015(3) | 1/1/2016 | 434,810 | — | | 0.336 | 12/8/2025 | — | — | | | 12/1/2017(4) | 12/1/2017 | 17,620 | — | | 4.800 | 12/1/2027 | — | — | | | 12/1/2018(4) | 12/1/2018 | 51,250 | — | | 14.245 | 12/1/2028 | — | — | | | 12/1/2019(4) | 12/1/2019 | 28,800 | 24,700(15) | | 26.334 | 12/1/2029 | 13,160(6) | 589,963 | | | 5/15/2020(4) | 5/15/2020 | 30,350 | 34,400(15) | | 30.001 | 5/15/2030 | 20,190(9) | 905,118 | | | 4/28/2021(4) | 4/28/2021 | 25,570 | 35,800(15) | | 74.637 | 4/28/2031 | 22,370(16) | 1,002,847 | | | 4/26/2022(4) | 4/26/2022 | 13,751 | 68,757(15) | | 59.570 | 4/26/2032 | 44,708(17) | 2,004,260 | | Jay Grant | 10/5/2020(4) | 10/5/2020 | 26,640 | 22,560(14) | | 57.391 | 10/5/2030 | 13,240(18) | 593,549 | | | 4/28/2021(4) | 4/28/2021 | 25,570 | 35,800(15) | | 74.637 | 4/28/2031 | 22,370(16) | 1,002,847 | | | 4/26/2022(4) | 4/26/2022 | 13,751 | 68,757(15) | | 59.570 | 4/26/2032 | 44,708(17) | 2,004,260 |
2022 Outstanding Equity Awards at Fiscal Year-End Table
(1)Market value based upon the closing price of a share of our Class A common stock on December 30, 2022 (which was the last trading date in 2022). (2)Award granted under The Trade Desk, Inc. 2010 Stock Plan. (3)Award granted under The Trade Desk, Inc. 2015 Equity Incentive Plan. (4)Award granted under the 2016 Incentive Award Plan. (5)Represents a stock option that vests and becomes exercisable as follows: (1) with respect to 217,950 of the shares of Class A common stock subject to the option (the 2019 NSO Tranche I Shares), one-thirty-sixth (1/36th) of the 2019 NSO Tranche I Shares shall vest and become exercisable on each of the first thirty-six (36) monthly anniversaries of the Vesting Commencement Date (rounded down to the nearest 2019 NSO Tranche I Share on each vesting date that occurs during any calendar year until the last vesting date to occur during such calendar year, with any remaining shares that would have otherwise vested during such calendar year vesting on such last vesting date, such that the option will vest and become exercisable with respect to a total of 72,650 2019 NSO Tranche I Shares during each of calendar years 2020, 2021 and 2022), and (2) with respect to 68,650 of the shares of Class A common stock subject to the option (the 2019 NSO Tranche II Shares), one-twelfth (1/12th) of the 2019 NSO Tranche II Shares shall vest and become exercisable on each monthly anniversary of the Vesting Commencement Date commencing on the thirty-seventh (37th) monthly anniversary of the Vesting Commencement Date and continuing through and including the forty-eighth (48th) monthly anniversary of the Vesting Commencement Date (rounded down to the nearest 2019 NSO Tranche II Share until the last vesting date), in each case, subject to Mr. Green’s continued employment through the applicable vesting date. (6)Represents RSAs vesting with respect to 25% of the shares subject thereto on each of the first four anniversaries of the vesting commencement date, subject to the applicable NEOs continued employment through the applicable vesting date. (7)Represents a stock option that vests and becomes exercisable with respect to one-twelfth (1/12th) of the shares of Class A common stock subject thereto on each monthly anniversary of the vesting commencement date (rounded down to the nearest share until the last vesting date), in each case, subject to Mr. Green’s continued employment through the applicable vesting date. (8)Represents a stock option that vests and becomes exercisable as follows: (1) with respect to 291,830 of the shares of Class A common stock subject to the option (the “2020 NSO Tranche I Shares”), one-thirty-sixth (1/36th) of the 2020 NSO Tranche I Shares shall vest and become exercisable on each of the first thirty-six (36) monthly anniversaries of the Vesting Commencement Date (rounded down to the nearest 2020 NSO Tranche I Share on each vesting date that occurs during any twelve month period until the last vesting date to occur during such twelve month period, with any remaining shares that would have otherwise vested during such twelve month period vesting on such last vesting date, such that the option will vest and become exercisable with respect to a total of 97,270, 97,280 and 97,280 2020 NSO Tranche I Shares during each of the twelve month periods ending May 15, 2021, 2022 and 2023, respectively), (2) with respect to 56,700 of the shares of Class A common stock subject to the option (the “2020 NSO Tranche II Shares”), one-seventh (1/7th) of the 2020 NSO Tranche II Shares shall vest and become exercisable on each monthly anniversary of the Vesting Commencement Date commencing on the thirty-seventh (37th) monthly anniversary of the Vesting Commencement Date and continuing through and including the forty-third (43rd) monthly anniversary of the Vesting Commencement Date, and (3) with respect to 37,250 of the shares of Class A common stock subject to the option (the “2020 NSO Tranche III Shares”), 7,440 of the 2020 NSO Tranche III Shares shall vest and become exercisable on each monthly anniversary of the Vesting Commencement Date commencing on the forty-fourth (44th) monthly anniversary of the Vesting Commencement Date and continuing through and including the forty-seventh (47th) monthly anniversary of the Vesting Commencement Date and 7,490 of the 2020 NSO Tranche III Shares shall vest and become exercisable on the forty-eighth (48th) monthly anniversary of the Vesting Commencement Date, in each case, subject to Mr. Green’s continued employment through the applicable vesting date. (9)Represents RSAs vesting with respect to one-sixteenth (1/16th) of the shares subject thereto on each quarterly anniversary of the vesting commencement date, subject to the applicable NEOs continued employment through the applicable vesting date. (10)Represents a stock option that vests and becomes exercisable with respect to one-fifth (1/5th) of the shares of Class A common stock subject thereto on each monthly anniversary of the vesting commencement date (rounded down to the nearest share until the last vesting date), in each case, subject to Mr. Green’s continued employment through the applicable vesting date. (11)Represents a stock option that vests and becomes exercisable as follows: (1) with respect to 162,780 of the shares of Class A common stock subject to the option (the 2021 NSO Tranche I Shares), one-thirty-sixth (1/36th) of the 2021 NSO Tranche I Shares shall vest and become exercisable on each of the first thirty-six (36) monthly anniversaries of the Vesting Commencement Date (rounded down to the nearest 2021 NSO Tranche I Share on each vesting date that occurs during any twelve month period until the last vesting date to occur during such twelve month period, with any remaining shares that would have otherwise vested during such twelve month period vesting on such last vesting date, such that the option will vest and become exercisable with respect to a total of 54,260 2021 NSO Tranche I Shares during each of the twelve month periods ending April 29, 2022, 2023 and 2024, respectively), (2) with respect to 36,160 of the shares of Class A common stock subject to the option (the 2021 NSO Tranche II Shares), one-eighth (1/8th) of the 2021 NSO Tranche II Shares shall vest and become exercisable on each monthly anniversary of the Vesting Commencement Date commencing on the thirty-seventh (37th) monthly anniversary of the Vesting Commencement Date and continuing through and including the forty-fourth (44th) monthly anniversary of the Vesting Commencement Date, and (3) with respect to 16,780 of the shares subject to the option (the 2021 NSO Tranche III Shares), 4,190 of the 2021 NSO Tranche III Shares shall vest and become exercisable on each monthly anniversary of the Vesting Commencement Date commencing on the forty-fifth (45th) monthly anniversary of the Vesting Commencement Date and continuing through and including the forty-seventh (47th) monthly anniversary of the Vesting Commencement Date and 4,210 of the 2021 NSO Tranche III Shares shall vest and become exercisable on the forty-eighth (48th) monthly anniversary of the Vesting Commencement Date, in each case, subject to Mr. Green’s continued employment through the applicable vesting date. (12)Represents a stock option that vests and becomes exercisable with respect to one-fourth (1/4th) of the shares of Class A common stock subject thereto on each monthly anniversary of the vesting commencement date (rounded down to the nearest share until the last vesting date), in each case, subject to Mr. Green’s continued employment through the applicable vesting date.
2022 Outstanding Equity Awards at Fiscal Year-End Table
(13)Represents the Performance Option. In December 2021, 2,400,000 shares of our Class A common stock subject to the Performance Option vested as a result of the achievement of the first stock price tranche and achievement of our stock price compared to the Nasdaq-100 Index at more than the 75th percentile. See footnotes 1 and 6 in “2022 Summary Compensation Table” and “Compensation Discussion and Analysis – Individual Compensation Elements - Long-Term Incentive Compensation—CEO Performance Option” for further discussion, including the valuation assumptions and vesting schedule. (14)Represents stock options vesting with respect to one-fourth of the shares of Class A common stock subject thereto on the first anniversary of the vesting commencement date and with respect to one-forty-eighth (1/48th) of the shares of Class A common stock subject thereto on each monthly anniversary of the vesting commencement date thereafter, subject to the applicable NEOs continued employment through the applicable vesting date. (15)Represents stock options vesting with respect to one-forty-eighth (1/48th) of the shares of Class A common stock subject thereto on each monthly anniversary of the vesting commencement date, subject to the applicable NEOs continued employment through the applicable vesting date. (16)Represents RSAs vesting with respect to one-sixteenth (1/16th) of the shares subject thereto on August 15, 2021, and the remainder of the shares subject thereto vesting ratably over fifteen (15) quarters on each quarterly anniversary thereafter, subject to the applicable NEOs continued employment through the applicable vesting date. (17)Represents RSAs vesting with respect to one-sixteenth (1/16th) of the shares subject thereto on August 15, 2022, and the remainder of the shares subject thereto vesting ratably over fifteen (15) quarters on each quarterly anniversary thereafter, subject to the applicable NEOs continued employment through the applicable vesting date. (18)Represents RSAs vesting with respect to one-fourth (1/4th) of the shares subject thereto on November 15, 2021, and the remainder of the shares subject thereto vesting ratably over twelve (12) quarters on each quarterly anniversary thereafter, subject to the applicable NEOs continued employment through the applicable vesting date.
2022 Option Exercises and Stock Vested Table
2022 Option Exercises and Stock Vested Table The following table sets forth information with respect to our NEOs concerning the exercise of stock options and vesting of stock awards during the year ended December 31, 2022.
2022 Option Exercises and Stock Vested Table
| | Option Exercises | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Jeff T. Green | 1,165,330 | 51,659,239 | 160,280 | 8,885,455 | | Blake Grayson | 8,596 | 408,748 | 73,436 | 3,936,295 | | David R. Pickles | 0 | — | 65,226 | 3,767,298 | | Jay R. Grant | — | — | 21,946 | 1,428,400 | | Michelle E. Hulst | 60,543 | 1,311,208 | 35,613 | 1,763,926 |
2022 Option Exercises and Stock Vested Table
(1)Based upon the closing price of a share of our Class A common stock on the date of exercise, which ranged from $43.75 to $80.91 per share, less the exercise price of the associated stock option multiplied by the number of shares of our Class A common stock exercised. (2)Based upon the closing price of a share of our Class A common stock on the date of vesting, which ranged from $45.00 to $80.52 per share, multiplied by the number of shares of our Class A common stock that vested.
Potential Payments Upon Termination or Change in Control Table
Potential Payments Upon Termination or Change in Control Table Excluding the potential payments associated with the Performance Option, the following table shows the potential payments and benefits to be received by our NEOs upon a termination of employment without cause or for good reason and upon a termination of employment without cause or for good reason in connection with a change in control of the company (assuming in such change in control all outstanding awards are assumed, substituted or continued by the successor entity), except for Ms. Hulst, whose employment terminated with us on July 29, 2022 (so the payments listed below represent the actual payments made to her pursuant to her Separation Agreement described above). Potential payments associated with the Performance Option are described in footnote 4 of the following table. The types of events constituting cause, good reason and change in control may differ in some respects among the different arrangements providing for payments and benefits to the NEOs; however, for consistency in presentation, our executive compensation arrangements have been grouped together based on these concepts without regard for any such differences. Our NEOs are not entitled to any payments and benefits if their employment is terminated for cause or they resign without good reason, retire, or, except for the Performance Option, are terminated due to death or disability. Except for the Performance Option, we do not have any agreements or other arrangements with our NEOs that provide for payments and benefits solely upon a change in control of the company without an accompanying termination of employment. The table below summarizes the payments and benefits available to each NEO under various termination scenarios, assuming the separation from service was on December 31, 2022 (except for Ms. Hulst, whose employment terminated in July 2022). The value of vested equity for continuing executive officers is based on the closing price of a share of our Class A common stock on December 30, 2022 (the last trading day in 2022), which was $44.83 per share (except for Ms. Hulst, whose equity value represents an original grant date fair value acceleration).
Potential Payments Upon Termination or Change in Control Table
| Name and Termination / Change in Control Scenario | Cash Severance Payment ($)(1) | Equity Awards ($) | Benefits ($)(2) | Total Payout ($)(3) | | Jeff T. Green(4) | | | | | | Without Cause or Resignation for Good Reason (No Change in Control) | 3,135,000 | 8,821,861(5) | 151,724 | 12,108,585 | | Without Cause or Resignation for Good Reason (Change in Control) | 6,270,000 | 8,821,861(6) | 189,216 | 15,281,077 | | Blake J. Grayson | | | | | | Without Cause or Resignation for Good Reason (No Change in Control) | 1,100,000 | 5,413,501(5) | 55,869 | 6,569,370 | | Without Cause or Resignation for Good Reason (Change in Control) | 2,200,000 | 7,898,496(6) | 80,864 | 10,179,360 | | David R. Pickles | | | | | | Without Cause or Resignation for Good Reason (No Change in Control) | 1,100,000 | 2,984,161(5) | 88,457 | 4,172,618 | | Without Cause or Resignation for Good Reason (Change in Control) | 2,200,000 | 5,469,156(6) | 113,452 | 7,782,608 | | Jay R. Grant | | | | | | Without Cause or Resignation for Good Reason (No Change in Control) | 1,100,000 | 1,270,662(5) | 82,111 | 2,452,773 | | Without Cause or Resignation for Good Reason (Change in Control) | 2,200,000 | 3,600,656(6) | 107,106 | 5,907,762 | | Michelle E. Hulst | | | | | | Without Cause or Resignation for Good Reason (No Change in Control) | 1,760,515 | 3,393,373(5) | 43,596 | 5,197,484 |
Potential Payments Upon Termination or Change in Control Table
(1)Reflects the aggregate amount of cash severance payable to each NEO based on a multiple of base salary and target annual short-term cash incentive compensation as of 2022 pursuant to the terms of the respective NEO’s employment agreement, as described above. Except for Ms. Hulst, does not include pro-rated bonus that the NEO would have been entitled to, since on December 31, 2022, the full annual bonus, which is shown in the “2022 Summary Compensation Table,” was earned. For Ms. Hulst, includes a pro-rated portion of the annual bonus she earned in 2022 through her termination date. (2)Represents the estimated value of unused accrued vacation and the continuation of health benefits that each NEO would have been entitled to receive upon a termination of employment as of December 31, 2022, as based on actual 2022 premiums and the terms of the respective NEO’s employment agreement, as described above. For Ms. Hulst, includes actual final payment of accrued vacation and continuation of health benefits of $14,395 and $29,201, respectively. (3)The respective employment agreement for each NEO includes a modified cutback provision, such that if any severance payments or benefits would constitute a parachute payment and would be subject to the excise tax imposed by Section 4999 of the Code, the aggregate benefits will either be delivered in full or delivered in a lesser amount that would result in no portion of the aggregate benefits being subject to the excise tax, whichever results in the receipt by the NEO of the greatest amount of aggregate benefits on an after-tax basis. For purposes of the table set forth above, it has been assumed that the payments and benefits will not be reduced pursuant to the preceding sentence and, accordingly, include the full value of such payments and benefits. (4)The amounts in the table above exclude any potential payment to Mr. Green for the Performance Option. Pursuant to the Award Agreement, Mr. Green is entitled to payment in the event of a Qualifying Termination or a Change in Control. The terms that govern the number of shares that may vest under each scenario are described in “CEO Performance Option” in the “Compensation Discussion and Analysis – Individual Compensation Elements - Long-Term Incentive Compensation” section above. In the event that a Qualifying Termination (other than a termination due to death or disability) occurred on December 31, 2022 (the last trading day of the year), assuming no further stock price achievement goals were met over the nine-month period following the date of the Qualifying Termination, Mr. Green would not have received any additional payment or benefit pursuant to the Award Agreement. In the event that a Change in Control or a termination of employment due to death or disability (each as defined in the Award Agreement) occurred on December 31, 2022, Mr. Green would not have received any additional payment or benefit pursuant to the Award Agreement. The actual amount of payments or benefits that may be received by Mr. Green can only be determined at the time of a Change in Control or a Qualifying Termination. (5)Represents the value of equity award vesting accelerated by an additional 18 months for Mr. Green and by 12 months for our other NEOs. (6)Represents the value of full acceleration of equity award vesting.
CEO Pay Ratio
CEO Pay Ratio In determining the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees (excluding our CEO), we selected December 31, 2022 as the determination date for identifying the median employee for purposes of this disclosure. We are using a different median employee from the person that was identified in the preparation of our pay ratio disclosure for 2021 since we experienced a significant increase in our employee population compared to December 31, 2021. We selected annual total direct compensation as our consistently applied compensation measure, which we calculated as cash compensation from base wages, actual bonuses and commissions, and the grant-date fair value of equity awards granted to our employees in 2022. Compensation was annualized for our employees who were hired in 2022 and for employees on an unpaid leave of absence in 2022. Compensation for international employees was converted to U.S. dollar equivalents using month-end exchange rates and no cost-of-living adjustments were made. Once the median employee was identified based on this approach, we calculated the median employee’s annual total compensation in accordance with the requirements of the Summary Compensation Table. Our median employee’s annual total compensation for 2022 was $213,742. Our CEO’s annual total compensation for 2022 was $5,440,036 as reported in the “2022 Summary Compensation Table.” Therefore, our CEO to median employee pay ratio was 25:1 for 2022. This ratio is a reasonable estimate calculated in a manner consistent with SEC rules. This information is being provided for compliance purposes. Neither the compensation committee nor management used the pay ratio measure in making compensation decisions.
Pay Versus Performance
Pay Versus Performance The following table sets forth information regarding the total compensation, for services rendered in all capacities, that was paid to, awarded to or earned by our CEO (and on average to our non-CEO NEOs, or our “Other NEOs”), as compared to compensation actually paid (“CAP”) to our CEO (and on average to our Other NEOs) and certain company and peer performance measures during the years ended December 31, 2022, 2021 and 2020, as calculated in accordance with Item 402(v) of Regulation S-K (the “Pay Versus Performance Table”).
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for CEO (1) | Compensation Actually Paid to CEO (1) (4) (6) | Average Summary Compensation Table Total for Other NEOs (2) | Average Compensation Actually Paid to Other NEOs (2) (4) (6) | Total Shareholder Return(5) | Peer Group Total Shareholder Return (5) | Net Income (Thousands) | Revenue (Thousands) (3) | | 2022 | $5,440,036 | $(620,324,699) | $7,722,649 | $(4,257,881) | $172.56 | $65.71 | $53,385 | $1,577,795 | | 2021 | $834,968,762 | $1,201,214,676 | $7,247,247 | $9,887,245 | $352.73 | $199.65 | $137,762 | $1,196,467 | | 2020 | $15,956,860 | $123,533,884 | $4,614,376 | $34,802,362 | $308.31 | $216.40 | $242,317 | $836,033 |
Pay Versus Performance
(1)In all years presented, our CEO was Jeff Green. (2)For the years 2022 and 2021, our NEOs included in the calculation of average CAP were Blake Grayson, David Pickles, Jay Grant and Michelle Hulst. For the year 2020, our NEOs included in the calculation of average CAP were Messrs. Grayson, Pickles, Grant, Brian Stempeck, our former Chief Strategy Officer, and Susan Vobejda, our former Chief Marketing Officer. (3)Revenue represents the Company-Selected-Measure (“CSM”) as it is the next most important financial performance measure not otherwise required to be disclosed in the Pay Versus Performance Table. Refer to the Tabular List (as defined below) of financial performance measures. Revenue represents revenue as disclosed in our Annual Reports on Form 10-K filed with the SEC for the applicable fiscal years. (4)Assumptions used in the valuation of equity awards for the table above were materially consistent with those used as of the grant date of the equity awards as described in “Compensation Discussion and Analysis” and in Notes 1 and 2 of the “2022 Summary Compensation Table.” (5)Total Shareholder Return (“TSR”) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment (if applicable), and the difference between the stock price at the end and the beginning of the measurement period by the stock price at the beginning of the measurement period. For Peer Group TSR, the returns of each component company of this group are weighted according to the respective company’s stock market capitalization at the beginning of each period for which a return is indicated. For 2022, Peer Group TSR reflects the average cumulative total shareholder return of our peer group approved in July 2021 for the most recent preceding fiscal year, as described in “Compensation Discussion and Analysis” above, apart from Slack Technologies, Twitter and Zendesk which were no longer public companies as of the measurement date. For 2021, Peer Group TSR reflects the average cumulative total shareholder return of our peer group determined in October 2020 for 2021 compensation setting as disclosed in our 2022 Proxy Statement (to the extent the entities remained publicly traded companies as of the measurement date), including Alteryx, Coupa Software, CrowdStrike Holdings, Datadog, DocuSign, Dropbox, Fair Isaac, Guidewire Software, Hubspot, Ziff Davis (formerly J2 Global), LiveRamp Holdings, New Relic, Okta, Paycom Software, Paylocity Holding, RingCentral, Roku, Shopify, Snap, Splunk, Twilio, Twitter, Veeva Systems, Zendesk, Zoom Video and Zscaler. For 2020, Peer Group TSR reflects the average cumulative total shareholder return of our peer group determined in October 2019 for 2020 compensation setting as disclosed in our 2021 Proxy Statement (to the extent the entities remained publicly traded companies as of the measurement date), including Alteryx, Cornerstone OnDemand, DocuSign, Dropbox, Fair Isaac, GrubHub, Guidewire Software, Hubspot, Ziff Davis (formerly J2 Global), LiveRamp Holdings, New Relic, Okta, Paycom Software, Paylocity Holding, RealPage, RingCentral, Roku, Shopify, Snap, Splunk, Twilio and Zendesk. Changes in the peer group year to year are driven by our annual compensation setting process as described in “Compensation Discussion and Analysis.” (6)SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine CAP as reported in the Pay Versus Performance Table. CAP does not necessarily represent cash and equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. CAP for our CEO and average CAP for our Other NEOs are calculated by taking the amount in the “Total” column of the Summary Compensation Table (the average amount for our Other NEOs): (a) less the grant-date fair value of equity granted during the year in the “2022 Summary Compensation Table”; (b) plus the year-end fair value of unvested equity awards granted during the covered year; (c) plus, for awards granted in prior years that are outstanding and unvested at the end of the covered year, the difference between the year-end fair value and the immediately prior year-end fair value; (d) plus, for awards that granted and vested during the covered year, the fair value as of the vesting date; (e) plus, for awards granted in prior years that vested during the covered year, the difference between the fair value as of the vesting date and the immediately prior year-end fair value; (f) less, the prior year-end fair value of awards granted in prior years that failed to meet their vesting requirements. NEOs do not participate in a defined benefit plan so no adjustment for pension benefits is included in the table below. Similarly, no CAP amounts included any dividends or other earnings paid on stock or option awards not otherwise reflected in the fair value of total compensation, as no such payments occurred during any of the years ended 2022, 2021, and 2020. The following table details these adjustments.
Pay Versus Performance
| Fiscal Year | NEO Category | Summary Compensation Table Total | Less: Summary Compensation Table Equity Awards | Add: Year-End Fair Value of Unvested Equity Awards Granted in the Year (7) | Add: Change in Year-End Fair Value of Unvested Equity Awards Granted in Prior Years | Add: Vest-Date Fair Value of Equity Awards Granted and Vested in the Year (8) | Add: Change in Fair Value of Equity Awards Granted in Prior Years and Vested in the Year | Less: Prior Year-End Fair Value of Equity Awards that Failed to Vest | CAP | | 2022 | CEO | $5,440,036 | $— | $— | $(609,383,966) | $— | $(16,380,769) | $— | $(620,324,699) | | | Other NEOs | $7,722,649 | $(6,087,184) | $2,903,890 | $(4,719,144) | $804,015 | $(3,780,444) | $(1,101,663) | $(4,257,881) | | 2021 | CEO | $834,968,762 | $(828,384,776) | $1,049,008,288 | $8,124,815 | $136,560,071 | $937,516 | $— | $1,201,214,676 | | | Other NEOs | $7,247,247 | $(5,341,212) | $5,532,323 | $1,611,926 | $853,458 | $(16,497) | $— | $9,887,245 | | 2020 | CEO | $15,956,860 | $(12,921,345) | $33,871,114 | $54,812,898 | $3,473,898 | $28,340,459 | $— | $123,533,884 | | | Other NEOs | $4,614,376 | $(3,219,530) | $7,688,467 | $16,543,071 | $694,170 | $8,481,808 | $— | $34,802,362 |
Pay Versus Performance
(7)2021 CAP to our CEO included $1,039,020,000 for the fair value of CEO Performance Option tranches granted during 2021 that were outstanding and unvested as of the end of 2021, valued as of December 31, 2021. (8)2021 CAP to our CEO included $135,023,000 for the vest-date fair value related to the first tranche of the CEO Performance Option that vested on December 10, 2021.
2022 Director Compensation
2022 Director Compensation Our non-employee directors receive the following annual retainer fees for board and committee service: a cash retainer for each board member of $50,000 and an additional cash retainer of $20,000 (increased to $25,000 for 2023) for the lead independent director. Members of the audit, compensation and nominating and corporate governance committees receive an additional cash retainer of $10,000, $8,000 and $5,000, respectively, and the chair of each the foregoing committees receives an additional cash retainer of $24,000, $16,000 and $10,000, respectively. In 2023, members of the audit, compensation and nominating and corporate governance committees will receive an additional cash retainer of $12,500, $10,000 and $6,000, respectively, and the chair of each the foregoing committees receives an additional cash retainer of $50,000, $50,000 and $25,000, respectively. Each director may make an annual election to receive an equity award in lieu of the cash retainer in the form of restricted stock, restricted stock units (“RSUs”), stock options or a mix thereof. The equity awards will vest in four equal installments over the one-year period following the date of grant, with such vesting to take place on the quarterly anniversaries of the date of grant, or if earlier, the regularly scheduled meetings of our board of directors applicable to such respective quarters. If not already vested in full pursuant to the forgoing installment arrangements, the award will vest in full on the date of our next annual meeting. All unvested equity awards will vest in full upon a Change in Control of the company. Each newly elected non-employee director receives an initial director equity award upon initial election to our board of directors with a value of $250,000 (increased to $265,000 for 2023) and may elect to receive the initial director equity award in the form of restricted stock, restricted stock units, stock options or a mix of one-half restricted stock or restricted stock units and one-half stock options. The initial director equity award will generally vest in substantially equal quarterly installments over the three-year period following the date of grant, subject to continued service as of each vesting date. On the date of each annual meeting, continuing directors will receive an annual director equity award with a value of $250,000 (increased to $265,000 for 2023) and may elect to receive the equity award in the form of restricted stock, restricted stock units, stock options or a mix thereof. The quantity of equity awards granted is based on the average closing stock price for a share of our Class A common stock for 45 consecutive trading days ending on, and including, the grant date. The annual director equity award will vest in four equal installments over the one-year period following the date of grant, with such vesting to take place on the quarterly anniversaries of the date of grant, or if earlier, the regularly scheduled meetings of our board of directors applicable to such respective quarters. If not already vested in full pursuant to the forgoing installment arrangements, the award will vest in full on the date of our next annual meeting. All unvested equity awards will vest in full upon a Change in Control of the company. A director who is appointed to our board of directors other than on the date of an annual meeting will receive a prorated annual director equity award. Directors who join our board of directors on the date of an annual meeting will receive both an initial director equity award and an annual director equity award. We also reimburse our non-employee directors for reasonable out-of-pocket expenses incurred in attending board and committee meetings, as well as up to $10,000 for director education programs. Our employee directors did not receive any additional compensation for their service as members of our board of directors in 2022.
2022 Director Compensation Table
2022 Director Compensation Table The following table sets forth information for the year ended December 31, 2022 regarding the compensation awarded to, earned by or paid to our non-employee directors.
2022 Director Compensation Table
| Name | Fees Earned or Paid in Cash ($)(1)(2)(3)(4) | Stock Awards ($)(5)(6) | Option Awards ($)(7)(8) | Total ($) | | Lise J. Buyer | 90,000 | 204,847 | — | 294,847 | | Andrea L. Cunningham | 54,425 | 274,432 | 274,391 | 603,248 | | Kathryn E. Falberg | 71,000 | 204,847 | — | 275,847 | | Eric B. Paley | 55,000 | 204,847 | — | 259,847 | | Gokul Rajaram | 68,000 | 204,847 | — | 272,847 | | David B. Wells | 82,000 | — | 204,848 | 286,848 |
2022 Director Compensation Table
(1)With the exception of cash payments of $68,000 for annual retainer fees and committee fees earned by Mr. Rajaram for the year ended December 31, 2022, amounts represent cash forgone by each director due to elections made in 2021 and 2022 to receive equity awards in lieu of cash for annual retainer and committee fees earned for the year ended December 31, 2022 (such equity awards in lieu of cash are typically granted in May following our Annual Meeting of the Stockholders with respect to the fees for the coming year, except for changes in committee assignment mid-year). (2)On January 1, 2022, Ms. Cunningham was appointed as a Class I director and elected to be granted 1,341 RSUs and 2,320 Stock Options for her initial equity awards, 536 RSUs and 975 Stock Options for her prorated annual director equity award and 214 RSUs for her prorated annual retainer fees with a grant date fair value of $19,611 calculated in accordance with ASC Topic 718. Ms. Cunningham’s initial director equity awards vest quarterly over a three-year period through the third anniversary of the grant date, subject to continued service as of each vesting date Ms. Cunningham’s prorated annual equity awards vested in two installments with 209 RSUs and 380 Stock Options vesting on February 22, 2022 and 327 RSUs and 595 Stock Options vesting on April 26, 2022. Ms. Cunningham’s prorated annual retainer award vested in two installments with 83 RSUs vesting on February 22, 2022 and 131 RSUs vesting on April 26, 2022. (3)On February 22, 2022, Ms. Cunningham was appointed as a member of the Nominating and Corporate Governance Committee and elected to be granted 16 RSUs for her prorated annual committee fees with a grant date fair value of $1,197 calculated in accordance with ASC Topic 718. Ms. Cunningham’s prorated committee fees award vested in full on April 26, 2022. (4)On May 26, 2022, Ms. Cunningham, Ms. Falberg and Mr. Paley elected to be granted stock awards (RSUs for Ms. Cunningham and RSAs for Ms. Falberg and Mr. Paley) for their annual retainer and committee fees in lieu of quarterly cash payments, and each were granted 835 shares of or units for our Class A common stock for their annual retainer fees each with a grant date fair value of $40,940 calculated in accordance with ASC Topic 718. Further, Ms. Cunningham, Ms. Falberg and Mr. Paley were granted 83, 350 and 83 RSAs with an aggregate grant date fair value of $4,070, $17,161 and $4,070 calculated in accordance with ASC Topic 718, respectively, for their annual committee fees. On the same date, Ms. Buyer and Mr. Wells elected to be granted Stock Options for their annual retainer and committee fees in lieu of quarterly cash payments, and each were granted 1,365 Stock Options for their annual retainer fees each with a grant date fair value of $40,964 calculated in accordance with ASC Topic 718. Further, Ms. Buyer and Mr. Wells were granted 546 and 873 Stock Options with an aggregate grant date fair value of $16,385 and $26,199 calculated in accordance with ASC Topic 718, respectively, for their annual committee fees. Additionally, Ms. Buyer elected to be granted 546 Stock Options for the lead independent director retainer with a grant date fair value of $16,385 calculated in accordance with ASC Topic 718. These RSAs, RSUs and Stock Options, granted on May 26, 2022, vest in four equal installments over the one-year period following the date of grant, with such vesting to take place on the quarterly anniversaries of the date of grant, or if earlier, the regularly scheduled Board meetings applicable to such respective quarters. If not already vested in full pursuant to the forgoing installment arrangements, the award will vest in full on the date of our next annual meeting. All unvested equity awards will vest in full upon a Change in Control of the company. (5)Amounts reflect the aggregate grant-date fair value of the restricted stock awards granted to our non-employee directors during 2022, calculated in accordance with ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The aggregate grant-date fair values of these awards were based on the fair value of our common stock on the date of grant, which was determined as the closing market price per share of our Class A common stock on the date of grant. For additional information, refer to Notes 2 and 10 to our audited consolidated financial statements included in our 2022 Annual Report. The amounts reported in this column reflect the accounting cost for the stock awards and do not correspond to the actual economic value that may be received by the non-employee directors upon the vesting or settlement of the stock awards, as applicable. (6)As of December 31, 2022, Ms. Buyer, Ms. Falberg, Mr. Paley and Mr. Rajaram held unvested RSAs covering 2,089, 2,683, 2,549, and 2,089 shares of our Class A common stock, respectively; and Ms. Cunningham held 2,511 RSUs. Mr. Wells did not hold any unvested RSAs or unvested RSUs as of December 31, 2022. (7)Amounts reflect the aggregate grant-date fair value of the Stock Options granted to our non-employee directors during 2022, calculated in accordance with ASC Topic 718. The aggregate grant-date fair value for the Stock Options was based on the Black-Scholes option valuation methodology and do not take into account any estimated forfeitures related to service-vesting conditions. For additional information, refer to Notes 2 and 10 to our audited consolidated financial statements included in our 2022 Annual Report. The amounts reported in this column reflect the accounting cost for the Stock Options and do not correspond to the actual economic value that may be received by the non-employee directors upon the exercise of the Stock Options. (8)As of December 31, 2022, Ms. Buyer, Ms. Cunningham and Mr. Wells held stock options to purchase an aggregate of 36,207, 6,708 and 18,334 shares of our Class A common stock, respectively, and Ms. Falberg held stock options to purchase an aggregate of 103,030 shares of our Class B common stock. None of our other non-employee directors held stock options as of December 31, 2022.