DEF 14A 1 d404757ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.)

 

 

Filed by the Registrant  ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under §240.14a-12

PELOTON INTERACTIVE, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

 

No fee required

 

Fee paid previously with preliminary materials

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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LOGO

PELOTON 2022 PROXY STATEMENT


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LOGO

OUR MISSION Peloton uses technology and design to connect the world through fitness, empowering people to be the best version of themselves anywhere, anytime. OUR VALUES PUT MEMBERS FIRST OPERATE WITH A BIAS FOR ACTION EMPOWER TEAMS OF SMART CREATIVES TOGETHER WE GO FAR BE THE BEST PLACE TO WORK


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LOGO

 

 

 

 

PELOTON INTERACTIVE, INC.

 

LETTER TO SHAREHOLDERS

 

October 25, 2022

 

 

 

LOGO

 

 

 

“YOUR VOTE
IS IMPORTANT. WHETHER OR
NOT YOU PLAN
TO ATTEND THE ANNUAL MEETING, PLEASE CAST
YOUR VOTE AS SOON AS POSSIBLE BY INTERNET, TELEPHONE,
OR MAIL.”

 

                    

 

 

TO OUR STOCKHOLDERS:

 

You are cordially invited to attend the 2022 Annual Meeting of Stockholders (the “Annual Meeting’’) of Peloton Interactive, Inc., which will be held virtually at www.virtualshareholdermeeting.com/PTON2022 on Tuesday, December 6, 2022 at 5:00 p.m. Eastern Time. The Annual Meeting will be held in a virtual meeting format only, you will not be able to attend in person, and we have taken measures to ensure and enhance stockholder access.

 

The matters expected to be acted upon at the Annual Meeting are described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement (the “Proxy Statement”).

 

Your vote is important. Whether or not you plan to attend the Annual Meeting virtually, please cast your vote as soon as possible by Internet, telephone or, if you received a paper proxy card by mail, by completing and returning the enclosed proxy card in the postage-prepaid envelope to ensure that your shares will be represented. Your vote by proxy will ensure your representation at the Annual Meeting regardless of whether or not you attend virtually. Returning the proxy does not affect your right to attend the Annual Meeting virtually or to vote your shares virtually during the Annual Meeting.

 

Sincerely,

 

 

LOGO

 

KAREN BOONE

Chairperson of the Board of Directors

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON TUESDAY, DECEMBER 6, 2022. THE PROXY STATEMENT AND ANNUAL REPORT ARE AVAILABLE AT WWW.VIRTUALSHAREHOLDERMEETING.COM/PTON2022.

 

 

 

        

 

    

   

 

                 


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LOGO

 

 

 

 

PELOTON INTERACTIVE, INC.

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

 

 

 

PELOTON INTERACTIVE, INC.

441 Ninth Avenue, Sixth Floor

New York, New York 10001

 

TIME AND DATE:    Tuesday, December 6, 2022 at 5:00 p.m. Eastern Time
PLACE:    You are cordially invited to attend the 2022 Annual Meeting of Stockholders of Peloton Interactive, Inc., which will be held virtually at www.virtualshareholdermeeting.com/PTON2022. To ensure stockholder access regardless of location, the Annual Meeting will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting in person.
ITEMS OF BUSINESS:    1.    Elect one Class III director of Peloton Interactive, Inc., to serve a three-year term expiring at the 2025 annual meeting of stockholders and until such director’s successor is duly elected and qualified.
   2.    Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2023.
   3.    Transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
RECORD DATE:    Only stockholders of record at the close of business on October 10, 2022 are entitled to notice of, and to attend and vote at, the Annual Meeting and any adjournments thereof.
PROXY VOTING:    Each share of Class A common stock that you own represents one vote and each share of Class B common stock that you own represents twenty votes. For questions regarding your stock ownership, you may contact us through our website at https://investor.onepeloton.com or, if you are a registered holder, our transfer agent, American Stock Transfer & Trust Company, LLC, through its website at www.astfinancial.com, by phone at (800) 937-5449, or by e-mail at help@astfinancial.com.
This notice of the Annual Meeting, Proxy Statement, and form of proxy are being distributed and made available on or about October 25, 2022. For ten days prior to the Annual Meeting, a complete list of the stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose relating to the Annual Meeting during ordinary business hours at our headquarters, at 441 Ninth Avenue, Sixth Floor, New York, New York 10001, and will be available in electronic form on the day of the Annual Meeting at www.virtualshareholdermeeting.com/PTON2022.

 

 

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE ENCOURAGE YOU TO VOTE AND SUBMIT YOUR PROXY THROUGH THE INTERNET OR BY TELEPHONE OR REQUEST AND SUBMIT YOUR PROXY CARD AS SOON AS POSSIBLE, SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.

 

By Order of the Board of Directors,

LOGO

TAMMY ALBARRÁN
Chief Legal Officer and Secretary
New York, New York
October 25, 2022

 

 

     

 

    

   


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LOGO

 

 

 

 

PELOTON INTERACTIVE, INC.

 

TABLE OF CONTENTS

 

 

 

 

PROXY STATEMENT FOR 2022 ANNUAL MEETING OF STOCKHOLDERS

 

PROXY SUMMARY     2  
INFORMATION ABOUT SOLICITATION AND VOTING     6  
INTERNET AVAILABILITY OF PROXY MATERIALS     6  
GENERAL INFORMATION ABOUT THE MEETING     6  
CORPORATE GOVERNANCE     12  
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS     22  
PROPOSAL NO. 1 ELECTION OF DIRECTOR     24  
PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     33  
REPORT OF THE AUDIT COMMITTEE     35  
EXECUTIVE OFFICERS     36  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT     38  
EXECUTIVE COMPENSATION     42  
EQUITY COMPENSATION PLAN INFORMATION     76  
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS     77  
ADDITIONAL INFORMATION     79  
OTHER MATTERS     81  
ANNEX A     82  

 

 

   

 

  

 

 

 

    

   


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      PELOTON INTERACTIVE, INC.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement includes forward-looking statements, which are statements other than statements of historical facts and statements in the future tense. These statements include, but are not limited to, statements regarding execution of and the expected benefits from our restructuring initiatives and cost-saving measures, our future operating results and financial position, our business strategy and plans, market growth, our objectives for future operations, and our social responsibility and ESG initiatives. In some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expect,” “believe,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seeks,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date hereof and are subject to risks and uncertainties. Accordingly, actual results could differ materially due to a variety of factors. These risks and uncertainties include, but are not limited to: our ability to achieve and maintain future profitability; our ability to attract and maintain subscribers; our ability to accurately forecast consumer demand of our products and services and adequately maintain our inventory; our ability to execute and achieve the expected benefits of our restructuring initiatives and other cost-saving measures; our ability to effectively manage our growth; our ability to anticipate consumer preferences and successfully develop and offer new products and services in a timely manner, or effectively manage the introduction of new or enhanced products and services; demand for our products and services and growth of the Connected Fitness Products industry; our reliance on a limited number of suppliers, contract manufacturers, and logistics partners for our Connected Fitness Products; our reliance on and lack of control over suppliers, contract manufacturers and logistics partners for our Connected Fitness Products; our ability to predict our long-term performance and declines in our revenue growth as our business matures; the effects of increased competition in our markets and our ability to compete effectively; declines in sales of our Bike and Bike+; the direct and indirect impacts to our business and financial performance from the COVID-19 pandemic; our dependence on third-party licenses for use of music in our content; actual or perceived defects in, or safety of, our products, including any impact of product recalls or legal or regulatory claims, proceedings or investigations involving our products; our ability to maintain, protect, and enhance our intellectual property; and our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally; and those described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, and our other Securities and Exchange Commission (“SEC”) filings, which are available on the Investor Relations page of our website at https://investor.onepeloton.com/investor-relations and on the SEC website at www.sec.gov.

All forward-looking statements contained herein are based on information available to us as of the date hereof and you should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this proxy statement or to conform these statements to actual results or revised expectations, except as required by law. Undue reliance should not be placed on forward-looking statements.

 

 

 

 

 

 

                 

 

 

   

 

    

   


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          PELOTON INTERACTIVE, INC.

 

    PROXY SUMMARY

 

 

 

 

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.

 

  

 

References in this Proxy Statement to (i) “we,” “us,” “our,” “ours,” “Peloton,” and the “company” refer to Peloton Interactive, Inc. and its consolidated subsidiaries and (ii) “stockholders” refers to holders of our Class A common stock and Class B common stock unless the context requires otherwise.

 

 

    

 

MEETING INFORMATION

 

Your vote is important. Please submit your proxy as soon as possible (see “Voting Instructions; Voting of Proxies”
on page 9 for voting instructions).

 

MEETING DATE  

RECORD DATE

 

MEETING TIME

  VIRTUAL MEETING ONLY

Tuesday, December 6, 2022

 

October 10, 2022

 

5:00 p.m. (Eastern Time)

 

www.virtualshareholdermeeting.com/PTON2022

using your 16-digit control number included on your Notice of Internet Availability of Proxy Materials or on your proxy card

VOTING METHODS

You may vote in advance of the virtual meeting using one of these voting methods:

 

 

LOGO  

 

 

VIA THE INTERNET

www.proxyvote.com

 

 

LOGO

 

 

CALL TOLL FREE

Follow instructions shown on proxy card

 

 

LOGO

 

 

MAIL SIGNED PROXY CARD

If you received paper materials, mail to:

Vote Processing, c/o Broadridge Financial Solutions, Inc.

51 Mercedes Way, Edgewood, New York 11717

 

 

    

VOTING AGENDA / VOTING MATTERS

 

PROPOSAL

  

 

BOARD

RECOMMENDATION

  

PAGE

REFERENCE

PROPOSAL 1

  

The election of the Class III director named in this Proxy Statement

  

For

  

24

PROPOSAL 2

  

The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2023

  

For

  

33

WHO WE ARE

We are the largest interactive fitness platform in the world with a loyal community of nearly 7 million Members1 worldwide as of June 30, 2022. We pioneered connected, technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes to our Members anytime, anywhere. We make fitness entertaining, approachable, effective, and convenient, while fostering social connections that encourage our Members to be the best versions of themselves.

We are an innovation company at the nexus of fitness, technology, and media. We have disrupted the fitness industry by developing a first-of-its-kind subscription platform that seamlessly combines the best equipment, proprietary networked software, and world-class streaming digital fitness and wellness content, creating a product that our Members love.

Our world-class instructors teach classes across a variety of fitness and wellness disciplines, including indoor cycling, indoor/outdoor running and walking, Bike/Tread/Row bootcamps, yoga, Pilates, Barre, strength training, stretching, meditation, rowing, and floor cardio. We produce hundreds of original programs per month and maintain a vast and constantly updated library of thousands of original fitness and wellness programs. We make it easy for Members to find a class that fits their interests based on class type, instructor, music genre, length, available equipment, area of physical focus, and level of difficulty.

 

 

 

 

1 

We define a Member as any individual who has a Peloton account through a paid Connected Fitness Subscription or a paid Peloton App subscription.

 

 

 

 

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BOARD DIRECTORS AND NOMINEES

 

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GOVERNANCE AND BOARD HIGHLIGHTS

We are committed to good corporate governance, which strengthens the accountability of our board of directors (the “Board”) and promotes the long-term interests of our stockholders. The list below highlights our independent board and leadership practices, as discussed further in this Proxy Statement.

 

INDEPENDENT BOARD AND LEADERSHIP PRACTICES

 

  Majority of directors are independent (5 out of 7 current directors)

 

  Independent Chairperson of the Board with well-defined rights and responsibilities

 

  All board committees are composed of independent directors

 

  The Board is focused on enhancing diversity and refreshment, with 3 of our 7 current directors joining in the last 12 months

 

  Comprehensive risk oversight practices, including cybersecurity, data privacy, safety, legal and regulatory matters, compensation, and other critical evolving areas

 

  Our nominating, governance, and corporate responsibility committee oversees our programs relating to corporate responsibility and sustainability, including environmental, social, and corporate governance matters and related risks

 

  Independent directors hold regular executive sessions

 

  Directors maintain open communication and strong working relationships among themselves and have regular access to management

 

  Directors conduct a robust annual board of directors and committee self-assessment process

 

  The Board is subject to a related party transactions policy for any direct or indirect involvement of a director in the company’s business activities

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE HIGHLIGHTS

We are proud to be a company that leads with purpose. Through a transformative year, we have continued to strengthen our commitment to the principles that matter to us, including motivating the world to live better through fitness, making progress against the Peloton Pledge—our ongoing commitment to combat systemic inequity and promote global health and well-being—supporting our team members to be their best selves, and taking action on environmental sustainability.

Our forthcoming 2022 Environmental Social and Governance (“ESG”) Report will include updates on key ESG topics for our business, including but not limited to carbon emissions data, environmental sustainability targets, ongoing efforts to foster diversity, equity, and inclusion across our teams and Member community, and practices we employ to ensure we’re operating with integrity.

For additional information on our ESG practices, please see page 19 below. We expect our ESG report to be available on or about November 1, 2022 on https://investor.onepeloton.com/esg.

 

 

 

 

 

                 

 

 

 

 

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COMPENSATION PHILOSOPHY AND HIGHLIGHTS

We strive to design our executive compensation program to balance the goals of attracting, motivating, rewarding, and retaining our executive officers, including our named executive officers, with the goal of promoting the interests of our stockholders. Our executive compensation policies and practices are designed to ensure that our compensation program is consistent with our short-term and long term goals and include:

 

 

an independent compensation committee that receives advice from an independent compensation consultant;

 

annual executive compensation review;

 

total direct compensation that is comprised mostly of at-risk compensation;

 

multi-year vesting requirements;

 

pay-for-performance philosophy;

 

maintaining a compensation recovery (clawback) policy;

 

no annual cash bonus program; and

 

“double-trigger” change in control arrangements.

We structured the annual compensation of our executive officers for our fiscal year ended June 30, 2022 (“Fiscal 2022”), including our named executive officers, using two principal elements: base salary and long-term incentive compensation opportunities in the form of equity awards.

 

  FISCAL 2022 COMPENSATION
ELEMENT
   DESCRIPTION   ELEMENT OBJECTIVES

 

BASE SALARY

  

Fixed cash compensation based on executive officer’s role, responsibilities, competitive market positioning, and individual performance

 

   Attract and retain key executive talent

   Drive top-tier performance through individual contributions

 

LONG-TERM INCENTIVE COMPENSATION

  

Long-term equity awards granted in the form of time-based options and restricted stock unit (“RSU”) awards to acquire shares of our Class A common stock

 

   Attract and retain key executive talent

   Drive top-tier performance through long-term individual contributions and focus on sustained success

Our primary goals are to align the interests of executive officers and stockholders and to link pay to performance. To that end, a substantial portion of our named executive officer target total direct compensation for Fiscal 2022 was contingent (rather than fixed). We believe the use of equity awards strongly links the interests of our executive officers to the interests of our stockholders.

Please refer to the “Compensation Discussion and Analysis” section of this Proxy Statement, beginning on page 42 below, for a full description of our executive compensation philosophy, policies, and practices.

 

 

          

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     PELOTON INTERACTIVE, INC.

 

  PROXY STATEMENT

 

    FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS

 

 

 

PELOTON INTERACTIVE, INC.

441 Ninth Avenue, Sixth Floor

New York, New York 10001

October 25, 2022

INFORMATION ABOUT SOLICITATION AND VOTING

The accompanying proxy is solicited on behalf of the board of directors, or the Board, of Peloton Interactive, Inc. for use at our 2022 Annual Meeting of Stockholders to be held virtually at www.virtualshareholdermeeting.com/PTON2022 on Tuesday, December 6, 2022, at 5:00 p.m. Eastern Time, and any adjournment or postponement thereof. The Notice of Internet Availability of Proxy Materials and this proxy statement for the Annual Meeting and the accompanying form of proxy were first distributed and made available on the Internet to stockholders on or about October 25, 2022. An annual report for the fiscal year ended June 30, 2022 is available with this Proxy Statement by following the instructions in the Notice of Internet Availability of Proxy Materials. In this Proxy Statement, we refer to Peloton Interactive, Inc. as “Peloton,” the “Company,” “we,” “our” or “us.” References to our website in this Proxy Statement are not intended to function as hyperlinks, and the information contained on our website is not intended to be incorporated into this Proxy Statement.

INTERNET AVAILABILITY OF PROXY MATERIALS

In accordance with SEC rules, we are using the Internet as our primary means of furnishing proxy materials to stockholders. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send these stockholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our Proxy Statement and annual report, and voting via the Internet. The Notice of Internet Availability of Proxy Materials also provides information on how stockholders may obtain paper copies of our proxy materials if they so choose. We believe this rule makes the proxy distribution process more efficient, less costly, and helps in conserving natural resources.

GENERAL INFORMATION ABOUT THE MEETING

PURPOSE OF THE ANNUAL MEETING

You are receiving this Proxy Statement because our Board is soliciting your proxy to vote your shares at the Annual Meeting with respect to the proposals described in this Proxy Statement. This Proxy Statement includes information that we are required to provide to you pursuant to the rules and regulations of the SEC and is designed to assist you in voting your shares.

RECORD DATE; QUORUM

Only holders of record of our Class A common stock and Class B common stock at the close of business on October 10, 2022 (the “Record Date”) will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, we had 312,827,716 shares of Class A common stock and 27,176,209 shares of Class B common stock outstanding and entitled to vote. At the close of business on the Record Date, our directors and executive officers and their respective affiliates beneficially owned and were entitled to vote 973,586

 

 

 

 

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shares of Class A common stock and 1,772,974 shares of Class B common stock at the Annual Meeting, or approximately 4.25%2 of the voting power of the shares of our Class A common stock and Class B common stock outstanding on such date. The holders of a majority of the voting power of the shares of our Class A common stock and Class B common stock issued and outstanding and entitled to vote at the Annual Meeting, present in person (virtually) or represented by proxy, shall constitute a quorum for the transaction of business at the Annual Meeting. In order to hold the Annual Meeting and conduct business a quorum must be present. If a quorum is not present at the Annual Meeting, the chairperson of the meeting may adjourn the meeting. Your shares are counted as present at the Annual Meeting if you are present (virtually) at the Annual Meeting or if you have properly submitted a proxy.

VOTING RIGHTS; REQUIRED VOTE

In deciding all matters at the Annual Meeting, as of the close of business on the Record Date, each share of Class A common stock represents one vote, and each share of Class B common stock represents twenty votes. We do not have cumulative voting rights for the election of directors. You may vote all shares owned by you as of the Record Date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, trustee, or other nominee.

Stockholder of Record: Shares Registered in Your Name. If, on the Record Date, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the Annual Meeting or vote by telephone, through the Internet or, if you request or receive paper proxy materials, by filling out and returning the proxy card.

Beneficial Owner: Shares Registered in the Name of a Broker or Nominee. If, on the Record Date, your shares were held in an account with a brokerage firm, bank, or other nominee, then you are the beneficial owner of the shares held in street name. As a beneficial owner, you have the right to direct your nominee on how to vote the shares held in your account, and your nominee has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. However, the organization that holds your shares is considered the stockholder of record for purposes of voting at the Annual Meeting. Because you are not the stockholder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid proxy from the organization that holds your shares giving you the right to vote the shares at the Annual Meeting.

The Class III director will be elected by a plurality of the votes cast, which means that the individual nominated for election to our Board at the Annual Meeting receiving the highest number of “FOR” votes will be elected. You may vote “FOR” the nominee or “WITHHOLD” authority to vote for the nominee. Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2023 (“Fiscal 2023”) shall be decided by the affirmative vote of the holders of a majority of the voting power of our Class A common stock and Class B common stock that are present in person (virtually) or represented by proxy at the Annual Meeting and are voted for or against the matter. Accordingly, approval of the ratification of the appointment of Ernst & Young LLP will be obtained if the number of votes cast “FOR” the proposal at the Annual Meeting exceeds the number of votes “AGAINST” the proposal.

 

2 

This voting power calculation reflects the voting power of all directors and executive officers as of the Record Date, October 10, 2022; however, it does not include the voting power of the shares held by other 5% or more stockholders, including but not limited to, TCV. See “Security Ownership of Certain Beneficial Owners and Management” for more information.

 

 

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RECOMMENDATIONS OF OUR BOARD OF DIRECTORS ON EACH OF THE PROPOSALS SCHEDULED TO BE VOTED ON AT THE ANNUAL MEETING

 

PROPOSAL

  

BOARD

RECOMMENDATION

  

PAGE

REFERENCE

PROPOSAL 1

  

The election of the Class III director named in this Proxy Statement

  

For

  

24

PROPOSAL 2

  

The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2023

  

For

  

33

None of our non-employee directors has any substantial interest in any matter to be acted upon, except with respect to the director so nominated. None of our executive officers has any substantial interest in any matter to be acted on.

UNIVERSAL PROXY RULES

Pursuant to the SEC’s new universal proxy rules, which became effective September 1, 2022, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice of such intent to the Company in accordance with the requirements of SEC Rule 14a-19 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As of the deadline for stockholders to provide notice of such intent pursuant to Rule 14a-19 for the Annual Meeting, no stockholder has provided such notice to the Company. Therefore, the universal proxy rules do not apply to this solicitation.

WITHHELD VOTES, ABSTENTIONS AND BROKER NON-VOTES

A “vote withheld,” in the case of the proposal regarding the election of the Class III director, or an “abstention,” in the case of the proposal regarding the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm represent a stockholder’s affirmative choice to decline to vote on such proposal. Votes withheld and abstentions are counted as present and entitled to vote for purposes of determining a quorum. Votes withheld have no effect on the election of the Class III director. Abstentions have no effect on the ratification of the appointment of Ernst & Young LLP.

Brokers, banks, and other nominees have limited discretionary authority to vote shares that are beneficially owned. While a broker, bank or other nominee is entitled to vote shares held for a beneficial owner on “routine” matters without instructions from the beneficial owner of those shares, absent instructions from the beneficial owner of such shares, a broker, bank, or other nominee is not entitled to vote shares held for a beneficial owner on “non-routine” matters. Broker non-votes occur when shares held by a broker, bank or other nominee for a beneficial owner are voted on at least one proposal at a meeting but are not voted with respect to other proposals because the nominee did not receive voting instructions from the beneficial owner and lacked discretionary authority to vote the shares on such proposals. Under Delaware law, broker non-votes are counted as present and entitled to vote for purposes of determining whether a quorum is present. At our Annual Meeting, only Proposal No. 2 is considered a routine matter, and nominees have discretionary authority to vote shares that are beneficially owned on Proposal No. 2. Accordingly, we do not expect there to be any broker non-votes for Proposal No. 2. Proposal No. 1 is a non-routine matter. Broker non-votes for Proposal No. 1 are not deemed to be voted for or against the matter and therefore will have no effect on the proposal.

 

 

 

 

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VOTING INSTRUCTIONS; VOTING OF PROXIES

 

VOTE BY INTERNET
AT THE ANNUAL MEETING
 

VOTE BY TELEPHONE

OR INTERNET

  VOTE BY MAIL

You may vote via the virtual meeting website—any stockholder can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/PTON2022, where stockholders may vote and submit questions during the meeting. The meeting starts at 5:00 p.m. Eastern Time. Please have your 16-Digit Control Number to join the Annual Meeting. Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com.

 

You may vote by telephone or through the Internet—in order to do so, please follow the instructions shown on your Notice of Internet Availability of Proxy Materials or proxy card.

 

You may vote by mail—if you request or receive a paper proxy card by mail, simply complete, sign, and date the enclosed proxy card and promptly return it in the envelope provided or, if the envelope is missing, please mail your completed proxy card to Vote Processing, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York 11717. Your completed, signed, and dated proxy card must be received prior to the Annual Meeting.

Votes submitted by telephone or through the Internet must be received by 11:59 p.m. Eastern Time on December 5, 2022. Submitting your proxy, whether by telephone, through the Internet or, if you request or receive a paper proxy card, by mail will not affect your right to vote in person should you decide to attend the Annual Meeting. If you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct your nominee on how to vote your shares. Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure that your vote is counted.

All proxies will be voted in accordance with the instructions specified on the signed proxy card. If you sign a physical proxy card and return it without instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated above.

If you hold your shares in street name and do not vote, your shares may constitute “broker non-votes” (as described above) with respect to certain proposals and will not be counted in determining the number of shares necessary for approval of such proposals. However, broker non-votes will be counted for the purpose of establishing a quorum for the Annual Meeting.

If you receive more than one proxy card or Notice of Internet Availability of Proxy Materials, your shares are registered in more than one name or are registered in different accounts. To make certain all of your shares are voted, please follow the instructions included on each Notice of Internet Availability of Proxy Materials or proxy card and vote each Notice of Internet Availability of Proxy Materials or proxy card by telephone, through the Internet, or by mail. If you requested or received paper proxy materials and you intend to vote by mail, please complete, sign, and return each proxy card you received to ensure that all of your shares are voted.

We strongly recommend that you vote your shares in advance of the Annual Meeting as instructed above, even if you plan to attend the Annual Meeting virtually.

REVOCABILITY OF PROXIES

A stockholder of record who has given a proxy may revoke it at any time before it is exercised at the Annual Meeting by:

 

 

delivering to our Secretary by mail a written notice stating that the proxy is revoked;

 

signing and delivering a proxy bearing a later date;

 

voting again by telephone or through the Internet; or

 

attending virtually and voting during the Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy).

Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to revoke a proxy, you must contact that firm to revoke any prior voting instructions.

 

 

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EXPENSES OF SOLICITING PROXIES

We are soliciting proxies and will pay the expenses of soliciting proxies, including preparation, assembly, printing, and mailing of the Notice of Internet Availability of Proxy Materials or this Proxy Statement, proxy card and our annual report, as applicable, and any other information furnished to stockholders. Following the original mailing of the soliciting materials, we and our agents, including directors, officers, and other employees, without additional compensation, may solicit proxies by mail, email, telephone, facsimile, by other similar means, or in person. In addition, we have engaged the firm of Okapi Partners LLC to assist in the soliciting of proxies and we will pay Okapi Partners LLC a fee of $15,000 plus reimbursement of out of pocket expenses. The address of Okapi Partners LLC is 1212 Avenue of the Americas, 24th Floor, New York, New York 10036. Following the original mailing of the soliciting materials, we will request brokers, custodians, nominees, and other record holders to forward copies of the soliciting materials to persons for whom they hold shares and to request authority for the exercise of proxies. In such cases, we, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you need assistance in completing your proxy card or voting by telephone or on the Internet, or have questions regarding the Annual Meeting, please contact Okapi Partners LLC at (877) 274-8654 or by email at info@okapipartners.com.

VOTING RESULTS

Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. The preliminary voting results will be announced at the Annual Meeting. The final results will be tallied by the inspector of elections and filed with the SEC in a current report on Form 8-K within four business days of the Annual Meeting.

PARTICIPATING IN THE ANNUAL MEETING

To participate in the virtual meeting, visit www.virtualshareholdermeeting.com/PTON2022 and enter the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials. Beneficial stockholders who do not have a control number may gain access to the meeting by logging into their broker, brokerage firm, bank, or other nominee’s website and selecting the shareholder communications mailbox to link through to the meeting. Instructions should also be provided on the voting instruction card provided by your broker, bank, or other nominee.

As part of the Annual Meeting, we will hold a live Q&A session, during which we intend to answer appropriate questions submitted during the meeting and that relate to the matters to be voted on at the Annual Meeting. If you wish to submit questions prior to the Annual Meeting, please visit www.proxyvote.com and follow the instructions on your Notice of Internet Availability of Proxy Materials or proxy card. If you wish to submit a question during the Annual Meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/PTON2022, type your question into the “Ask a Question” field, and click “Submit.” Our Annual Meeting, including the Q&A session, will follow “Rules of Conduct,” which will be available on our Annual Meeting web portal. If your question is properly submitted during the relevant portion of the meeting agenda pursuant to the “Rules of Conduct,” we will respond to your question during the live webcast, subject to time constraints. To provide access to all stockholders, each stockholder will be limited to two questions, and if multiple questions are submitted on the same subject, we will consolidate them for a single response to avoid repetition. We reserve the right to exclude questions that are irrelevant to the proposals that are the subject of the Annual Meeting or irrelevant to the business of Peloton, or derogatory or in bad taste; that relate to pending or threatened litigation or on-going regulatory matters; that are personal grievances; or that are otherwise inappropriate (as determined by the Secretary of the Annual Meeting). Only validated stockholders or proxy holders will be able to ask questions in the designated field on the web portal. A webcast replay of the Annual Meeting, including the Q&A session, will be archived on the virtual meeting platform at www.virtualshareholdermeeting.com/PTON2022 until the date of the 2023 annual meeting of stockholders.

 

 

 

 

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If we experience technical difficulties during the meeting (e.g., a temporary or prolonged power outage), we will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any such situation, we will promptly notify stockholders of the decision via www.virtualshareholdermeeting.com/PTON2022. If you encounter technical difficulties accessing our meeting or asking questions during the meeting, please contact the support line noted on the login page of the virtual meeting website.

 

 

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     PELOTON INTERACTIVE, INC.

 

  CORPORATE GOVERNANCE

 

 

 

BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS; CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE

We are strongly committed to good corporate governance practices. These practices provide an important framework within which our Board and management can pursue our strategic objectives for the benefit of our stockholders.

INDEPENDENCE OF DIRECTORS

The listing rules of the Nasdaq Stock Market LLC (“Nasdaq”) generally require that a majority of the members of a listed company’s board of directors be independent. In addition, the listing rules generally require that, subject to specified exceptions, each member of our audit, compensation, and nominating, governance, and corporate responsibility committees be independent.

In addition, audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in their capacity as a member of the audit committee, the board of directors, or any other board committee: accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or be an affiliated person of the listed company or any of its subsidiaries.

Our Board conducts an annual review of the independence of our directors, including a review of all Fiscal 2022 commercial transactions, relationships, and arrangements between us and our subsidiaries, affiliates, and executive officers with entities associated with our directors or members of their immediate family. Based on its most recent review, our Board determined that Karen Boone, Jon Callaghan, Jay Hoag, Angel Mendez, and Pamela Thomas-Graham, representing five of our seven directors, are “independent directors” as defined under the applicable rules, regulations, and listing standards of Nasdaq and the applicable rules and regulations promulgated by the SEC. In particular, in finding Mr. Callahan and Mr. Hoag to be independent, the Board considered Mr. Callaghan’s service on the Board of True Ventures Investments, which has an ownership stake in companies that had ordinary course commercial business relationships with the Company in Fiscal 2022, and Mr. Hoag’s role as Co-Founder and General Partner of TCV, a large stockholder of the Company (see “Security Ownership of Certain Beneficial Owners and Management” for more information). Our Board has also determined that all members of our audit committee, compensation committee, and nominating, governance, and corporate responsibility committee are independent and satisfy the relevant SEC and Nasdaq independence requirements for such committees.

The Board determined that Jonathan Mildenhall is not an “independent director” due to the Company’s prior transactions with TwentyFirstCenturyBrand. The Company and TwentyFirstCenturyBrand terminated their commercial relationship upon Mr. Mildenhall’s commencement of service on the Board. However, Nasdaq rules require such transactions not to have occurred during any of the past three fiscal years before he can be found to be independent, and the Company expects Mr. Mildenhall will qualify as independent under applicable stock exchange rules after the applicable three-year period lapses.

BOARD OF DIRECTORS AND COMMITTEE SELF-EVALUATIONS

Throughout the year, our Board discusses corporate governance practices with management and third-party advisors to ensure that the Board and its committees follow practices that are optimal for the company and its stockholders. Based on an evaluation process recommended and overseen by our

 

 

 

 

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nominating, governance, and corporate responsibility committee pursuant to the committee’s authority set forth in its charter, the board of directors conducts an annual self-evaluation, including an evaluation of each committee and the contributions of individual directors, in order to determine whether the board and its committees are functioning effectively. The results of the annual self-evaluation are reviewed and addressed by the nominating, governance, and corporate responsibility committee and then by the full board of directors.

BOARD LEADERSHIP STRUCTURE

The nominating, governance, and corporate responsibility committee periodically considers the leadership structure of our Board and makes such recommendations to our Board with respect thereto as appropriate, including whether the roles of CEO and Chairperson of the Board should be separated or combined.

Currently, upon the recommendation of the nominating, governance, and corporate responsibility committee, our Board has determined that the roles should be separated, with Karen Boone, an independent director, serving as our Chairperson of the Board. Ms. Boone previously served as lead independent director of the Board from October 2021 until September 2022, during which time the roles of CEO and Chairperson of the Board were combined. Having an independent Chairperson of the Board helps to ensure that stockholders and other stakeholders are represented in all deliberations with a voice and point of view that is independent of the senior management team. Ms. Boone’s fundamental responsibilities as Chairperson of the Board include:

 

 

coordinating board-relevant activities of the independent directors;

 

calling meetings of the independent directors, as needed;

 

chairing executive sessions of the independent directors and providing feedback and perspective to the CEO about discussions among the independent directors;

 

helping to facilitate communication between the CEO and the other independent directors;

 

collaborating with the CEO, and/or the secretary to set the agenda for Board meetings, including soliciting and taking into account suggestions from other members of our Board; and

 

presiding at all Board meetings.

In addition, as applicable, the Chairperson of the Board performs other functions and responsibilities as requested by our Board, including providing leadership and support from time to time to the CEO, committee chairs, the secretary, and other members of management with respect to best practices in board governance (including the effectiveness of Board meetings), succession planning for Board members as well as key members of management, and stockholder and stakeholder engagement.

Our Board believes that its independence and oversight of management is maintained effectively through this leadership structure, the composition of our Board, and sound corporate governance policies and practices.

In the past, when the position of chairperson and CEO were held by the same person, our Board designated a “lead independent director” to preside over periodic meetings of our independent directors, serve as a liaison between the chairperson of our Board and the independent directors, and perform such additional duties as our Board may otherwise determine and delegate. As noted above, Ms. Boone previously served as our lead independent director of the Board from October 2021 until September 2022.

PRESIDING DIRECTOR OF NON-EMPLOYEE DIRECTOR MEETINGS

The non-employee directors meet in regularly scheduled executive sessions without management to promote open and honest discussion. The Chairperson of the Board, Ms. Boone, is the presiding director at these meetings.

BOARD GOVERNANCE STRUCTURE

We are committed to strong corporate governance. Our Board regularly reviews our governance structure, including our classified board. Our board is divided into three classes, with each class serving a three-year

 

 

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term. We believe this structure encourages our directors to make decisions in the short- and long-term interests of our stockholders, and that it continues to be the appropriate structure for the Company’s board. In contrast, annual election of all directors can, in some cases, lead to short-term focus or a concentration on only immediate results, which can discourage or impair long-term investments, improvements and initiatives that may be in the best interests of stockholders.

The Company’s classified board structure also fosters stability and continuity on the Board and ensures that, at any given time, the Board consists of experienced directors who are familiar with our business, strategic goals, history, and culture. We believe our current three-year terms enable our existing and future directors to develop substantive knowledge about our specific operations and goals, which better positions them to make strategic decisions that are in the best interest of our stockholders. Further, this structure strengthens our non-management directors’ independence from parties whose short-term goals may not be in the best interests of all of our stockholders.

All directors, regardless of the length of their term, have a fiduciary duty under the law to act in a manner they believe to be in the best interests of the Company and all of our stockholders. The classified board structure still provides for accountability to stockholders, while also reducing the Company’s vulnerability to certain potentially abusive short-term takeover tactics.

BOARD REFRESHMENT

Since we filed our 2021 Proxy Statement, we have made a number of changes that have refreshed the composition of our Board and ensured that our directors have the breadth of experience and expertise necessary to expertly advise our Company on corporate strategy, risk management, corporate governance, and other critical matters. Alongside the departures of Howard Draft, Erik Blachford, William Lynch, and John Foley since last year’s proxy statement, the Board has welcomed three new directors, Barry McCarthy, our President and CEO, Angel L. Mendez, a proven supply chain leader at the intersection of software, technology, and industrial operations, and Jonathan Mildenhall, a globally recognized creative leader in marketing and advertising. With these additions, our Board now consists of seven directors, five of whom are independent and three of whom have been appointed in the past twelve months.

COMMITTEES OF OUR BOARD

Our Board has established an audit committee, a compensation committee, and a nominating, governance, and corporate responsibility committee. The composition and responsibilities of each committee are described below.

 

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Each of these committees has a written charter approved by our Board. Copies of the charters for each committee are available, without charge, upon request in writing to Peloton Interactive, Inc., 441 Ninth Avenue, Sixth Floor, New York, New York 10001, Attn: Chief Legal Officer and Secretary, or in the “Investors” section of our website, which is located at https://investor.onepeloton.com, by clicking on “Documents & Charters” in the “Governance” section of our website. Directors serve on these committees until their resignations, deaths, or until otherwise determined by our Board.

AUDIT COMMITTEE

Our audit committee is composed of Ms. Boone, who is the chairperson of our audit committee, and Messrs. Callaghan and Mendez. Each member of our audit committee is independent under the current Nasdaq and SEC rules and regulations. Each member of our audit committee is financially literate as required by the current Nasdaq listing standards. Our Board has also determined that Ms. Boone is an “audit committee financial expert” as defined by SEC rules. This designation does not impose any duties, obligations, or liabilities that are greater than those generally imposed on members of our audit committee and our Board. Our audit committee is responsible for, among other things:

 

 

reviewing and discussing with management our quarterly and annual financial results, earnings guidance, earnings press releases, and other public announcements regarding our operating results prior to distribution to the public;

 

selecting, appointing, compensating, and overseeing the work of the independent registered public accounting firm;

 

reviewing the qualification, performance, and continuing independence of the independent registered public accounting firm;

 

discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and annual financial results;

 

establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, and for the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

 

establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;

 

overseeing our internal audit function;

 

overseeing and considering the effectiveness of our internal control over financial reporting;

 

reviewing proposed waivers of the code of conduct for directors, executive officers, and employees (with waivers for directors or executive officers to be approved by the Board);

 

reviewing with management the Company’s significant risks, reviewing our policies for risk assessment and risk management, and steps management has taken to monitor or mitigate these risks;

 

reviewing and approving or ratifying related party transactions that are material or otherwise implicate disclosure requirements; and

 

approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.

COMPENSATION COMMITTEE

Our compensation committee is composed of Mr. Hoag, who is the chairperson of our compensation committee, Mr. Mendez, and Ms. Thomas-Graham. Each member of our compensation committee is independent under the current Nasdaq and SEC rules and regulations. Each member of this committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act. Our compensation committee is responsible for, among other things:

 

 

reviewing and approving the compensation and the terms of any compensatory agreements of our executive officers;

 

reviewing and recommending to our Board the compensation of our non-employee directors;

 

reviewing and approving the selection of our peer companies for compensation assessment purposes;

 

 

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administering our equity incentive compensation plans;

 

reviewing our compensation-related risk exposures and management’s mitigation measures;

 

reviewing succession plans for senior management positions, including our CEO;

 

overseeing matters relating to human capital management, including the attraction, engagement, development, and retention of employees, as well as the Company’s key human capital policies and practices, including with respect to workplace culture and equitable pay practices;

 

reviewing and approving, or making recommendations to our Board, with respect to, incentive compensation and equity plans; and

 

establishing our overall compensation philosophy.

NOMINATING, GOVERNANCE, AND CORPORATE RESPONSIBILITY COMMITTEE

Our nominating, governance, and corporate responsibility committee is composed of Ms. Thomas-Graham, who is the chairperson of the nominating, governance, and corporate responsibility committee, and Ms. Boone and Mr. Callaghan. Each member of our nominating, governance, and corporate responsibility committee is independent under the current Nasdaq and SEC rules and regulations. Our nominating, governance, and corporate responsibility committee is responsible for, among other things:

 

 

identifying and recommending candidates for membership on our Board;

 

recommending directors to serve on board committees;

 

advising the board on certain corporate governance matters;

 

developing policies regarding director nomination processes, if and as the committee determines it appropriate to have such policies;

 

developing policies and programs for new director orientation and continuing director education, if and as the committee determines it appropriate;

 

developing and overseeing any program relating to corporate responsibility and sustainability, including environmental, social, and corporate governance matters and related risks, controls, and procedures; and

 

overseeing the evaluation of our Board and each of its committees on an annual basis.

OUR BOARD’S ROLE IN RISK OVERSIGHT

Our Board, as a whole, has responsibility for overseeing our risk management process, although the committees of our Board oversee and review risk areas that are particularly relevant to them.

Each committee of our Board meets with key management personnel and representatives of outside advisors to oversee risks associated with their respective principal areas of focus, as described below. We believe this division of responsibilities is an effective approach for addressing the risks we face and that our board leadership structure supports this approach.

 

 

 

 

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Our Board also reviews strategic, operational, compliance and financial risk in the context of discussions, question and answer sessions, and reports from the management team at each regular board meeting, receives reports on all significant committee activities at each regular board meeting, and evaluates the risks inherent in significant transactions. Our audit committee assists our board in fulfilling its oversight responsibilities with respect to risk management.

 

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The risk oversight responsibility of our Board and its committees is supported by management level committees, which include our risk committee, executive product safety committee, and our disclosure committee.

The risk committee implements our overall enterprise risk management reporting processes in a manner designed to provide our Board and our personnel responsible for risk assessment across the organization with visibility into the identification, assessment, and management of critical risks and management’s risk

 

 

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mitigation strategies. The risk committee meets at least semi-annually and its co-chairs, our head of the Internal Audit function and our head of the Compliance, Risk, and Ethics function, present the full Enterprise Risk Management program to the audit committee and board on an annual basis, or as requested.

The executive product safety committee is a management level committee that informs the enterprise risk management function, and with responsibility for oversight of the Company’s product safety compliance program, policies, and major processes. The product safety committee reviews product safety clearances throughout the product development lifecycle up to and including member experience through ongoing monitoring of safety-related data for our products. Co-chaired by our head of the Compliance, Risk, and Ethics function and our head of the Quality and Safety function and composed of senior leaders across our Legal, Technology, and Product teams, the product safety committee advises senior leadership, the, audit committee, and the board of directors, as applicable on all product safety-related matters and initiatives.

Our disclosure committee reports to the audit committee and assists our CEO, CFO, and our audit committee in preparing the disclosures required under SEC rules. The disclosure committee is composed of our CEO, CFO, and senior leaders across our organization, including, but not limited to, our Accounting, Financial Planning and Analysis, Tax, Treasury, Internal Audit, Compliance, Legal, People, Technology, Product and Supply Chain teams. The disclosure committee works to ensure that our filings are accurate, complete, timely, and fair, and sets parameters for and determines the appropriateness of disclosures in all publicly disseminated information.

RELATIONSHIP OF COMPENSATION POLICIES AND PROGRAMS TO RISK MANAGEMENT

The compensation committee has responsibility for establishing our compensation philosophy and objectives, determining the structure, components, and other elements of our programs, and reviewing and approving the compensation of our named executive officers. With the advice of its independent compensation consultant, the compensation committee determined that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on us.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our compensation committee during the fiscal year ended June 30, 2022 included Ms. Thomas-Graham and Messrs. Hoag and Mendez, as well as Erik Blachford, a former member of our Board. No member of our compensation committee in Fiscal 2022, or currently serving on our compensation committee, was at any time during Fiscal 2022 or at any other time an officer or employee of ours or any of our subsidiaries, and none had or has any relationships with us that are required to be disclosed under the Exchange Act, or Regulation S-K. During Fiscal 2022, none of our executive officers served as a member of the Board, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our Board or compensation committee.

BOARD AND COMMITTEE MEETINGS AND ATTENDANCE

Our Board and its committees meet regularly throughout the year, and also hold special meetings and act by written consent from time to time. During Fiscal 2022, our Board met 11 times, the audit committee met seven times, the compensation committee met 10 times, and the nominating, governance, and corporate responsibility committee met five times. During Fiscal 2022, each incumbent member of our Board attended at least 75% of the aggregate of all meetings of our Board and of all meetings of committees of our Board on which such member served that were held during the period in which such director served.

BOARD ATTENDANCE AT ANNUAL STOCKHOLDERS’ MEETING

Our policy is to invite and encourage each member of our Board to be present at our annual meetings of stockholders. Each member of our Board serving on the date of our 2021 annual meeting of stockholders attended the meeting held virtually on December 7, 2021.

 

 

 

 

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COMMUNICATION WITH DIRECTORS

Stockholders and interested parties who wish to communicate with our Board, non-management members of our Board as a group, a committee of our Board, or a specific member of our Board (including our chairperson or lead independent director, if any) may do so by letters addressed to the attention of our Secretary.

All communications are reviewed by the Secretary and provided to the members of our Board as appropriate. Unsolicited items, sales materials, abusive, threatening, or otherwise inappropriate materials, and other routine items and items unrelated to the duties and responsibilities of our Board will not be provided to directors.

The address for these communications is:

Peloton Interactive, Inc.

c/o Chief Legal Officer and Secretary

441 Ninth Avenue, Sixth Floor

New York, New York 10001

CODE OF CONDUCT

We have adopted a Code of Conduct that applies to all of the members of our Board, officers, and employees, and we expect our agents and contractors to conform to the standards of our Code of Conduct. Our Code of Conduct is posted on the “Investors” section of our website, which is located at https://investor.onepeloton.com under “Documents & Charters” in the “Governance” section of our website. We intend to satisfy the disclosure requirement under applicable SEC and stock exchange rules regarding amendment to, or waiver from, a provision of our Code of Conduct by posting such information on our website at the address and location specified above.

CORPORATE SOCIAL RESPONSIBILITY AND OUR ESG ROADMAP

At Peloton, we’re more than just a fitness brand – we’re a platform that fosters connections and motivates millions of Members to grow stronger together every day. This is the reason we show up: our purpose, to motivate the world to live better.

We bring our purpose to life by supporting the well-being of our people, our community, and our planet. We’re focused on unlocking our collective and individual greatness, making progress toward a more equitable and healthy society, and improving the environmental sustainability of our business practices.

Central to how we deliver on our ambitions, and underpinning our culture, are our five core values:

 

1.

Put Members first

2.

Operate with a bias for action

3.

Empower teams of smart creatives

4.

Together we go far

5.

Be the best place to work

Our forthcoming 2022 Environmental, Social, and Governance (ESG) Report will be our second annual report to date outlining our continued efforts across key areas of importance to our business and stakeholders, and progress made on our commitments during Fiscal 2022.

Our People

At Peloton, we are committed to providing support and benefits that enable a fulfilling and healthy experience as a Peloton team member.

Through a year of change, we have worked to provide our team members with a positive experience at every stage of their employment journey – from an onboarding that sets them up to succeed and fulfilling

 

 

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day-to-day experience to supportive offboarding. We remain steadfast in our efforts to provide benefits that are competitive and relevant and cultivate a team member experience grounded in personal and professional well-being. From pay equity, competitive healthcare benefits, and learning and development opportunities to brave conversations about race and justice, we are moving from ambition to performance, and setting a clear definition for a positive and inclusive work environment.

Diversity, Equity, and Inclusion

At Peloton, diversity, equity, and inclusion (DEI) is a way of being that we strive to build into our day-to-day. We foster a culture of inclusion across our company, advocate for respect among team members in every interaction, and strive to provide equitable processes and opportunities for our team members. We believe that, as an employer with a commitment to anti-racism, our role is to educate and empower all our team members and prepare leadership with skills required to build a more just and equitable society.

Today, we are proud to have eight Employee Resource Groups (“ERGs”) that were built from the bottom up by passionate team members and supported by executive sponsors. Our ERGs amplify team member voice and help us foster belonging and engagement across all the markets we operate in:

 

 

ACE@Peloton (Asian Community);

 

Black@Peloton;

 

LHIT@Peloton (Latinx/Hispanic in Tech);

 

Peloton Pride + Allies;

 

The Parenthood Journey;

 

The Women’s Alliance;

 

Veterans@Peloton; and

 

Thrive (mental health, neurodiversity, and disability).

To hold ourselves accountable on pay equity, we conduct an annual third-party analysis of team members’ pay to evaluate the impact, if any, of gender, race, or ethnicity on base pay independent of business relevant factors. The pay equity study conducted in April 2022 identified no statistically significant pay gaps based on gender, race, or ethnicity. For any non-statistically significant instances of disparity, we took immediate action to eliminate identified gaps. Our pay equity study is in addition to any market-specific obligations we have to undertake pay gap analyses, such as our Gender Pay Gap Study in the United Kingdom.

Our Communities

We’ve seen firsthand how movement and community can support and amplify feelings of self-confidence, strength, and belonging. That’s why we’re committed to making our products and services continuously more inclusive and accessible, shaping experiences that celebrate diversity, and fostering partnerships to support lasting change in our communities.

In the spirit of the Peloton Pledge and our ongoing commitment to tackle racial barriers to health and wellbeing, we’re proud of the progress we’ve made in producing inclusive content, accessible products, and experiences that celebrate the diversity of our Member community. In 2022, we developed instructor-led community circles, held virtual Member events, and hosted meetings with our Health and Wellness Advisory Council to uplift diverse perspectives within the Peloton community and create space for discussions at the intersection of race and wellness.

This past year, we are proud to have announced Logan Aldridge joining our team as Peloton’s first Adaptive Instructor and training consultant and released an adaptive training collection. We will continue to work with accessibility groups and communities to build our adaptive training collection and programs in Fiscal 2023 and beyond.

Looking to the broader communities where we have a presence, as the global leader in connected fitness, we recognize our responsibility to help break down barriers to physical and mental wellness. As part of the Peloton Pledge, we have committed to support leading, action-oriented nonprofit organizations driving solutions at the intersection of systemic racism, discrimination, and health disparities in markets where we operate. Fiscal 2023 marked one year of our Pledge partnerships in action.

 

 

 

 

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                    CORPORATE GOVERNANCE

 

Our Planet

As we advance efforts to integrate environmental sustainability principles throughout our business, we continue to be guided by our sustainability aspirations to:

 

 

Create fitness that leaves a mark on the world, equipment that doesn’t – Continuously improve the environmental impacts of our products and accessories

 

Reclaim materials – Pursue circular solutions across our products, supply chain, and interactions with Members and team members

 

Wear sustainability on our sleeve – Tackle environmental challenges head on across our apparel business, from design to use and beyond

 

Power up for the clean energy future – Look for opportunities to power our operations with carbon-free electricity

 

Move from factory floor to final mile, and back again, without a trace – Seek efficiency and decarbonization opportunities across our business operations and logistics network

In our forthcoming 2022 ESG Report, we plan to share Peloton’s initial set of environmental sustainability targets and updates on progress across several key focus areas. Since publishing our first ESG report in 2021, we are proud to have taken significant steps forward in terms of climate-related disclosures, cross-functional strategic integration, and executive oversight and governance structures.

Operating with Integrity

Our actions as a Company are guided by our values, including operating with honesty and integrity in all our business activities. As a company that aims to help others be their best selves, we hold ourselves to the highest possible standards. This belief informs our approach to corporate governance, our culture of compliance, responsible supply chain practices, and public sector engagement.

Our nominating, governance, and corporate responsibility committee oversees our programs relating to corporate responsibility and sustainability, including environmental, social, and corporate governance matters and related risks. Our VP, ESG Strategy, continues to provide regular updates to the nominating, governance, and corporate responsibility committee of our Board.

We will continue to review our approach to governance over ESG strategy, execution, and disclosure. As we evolve and build, we will seek frequent engagement with all our stakeholders to ensure that we maintain a 360-degree view of our own organization, our value chain, and our role in our communities and society.

For more information, please see our forthcoming ESG Report, which will be available on November 1, 2022 at https://investor.onepeloton.com/esg.

Neither our 2021 ESG Report nor any other information contained on our website is incorporated by reference into this proxy statement or any other Peloton filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

 

 

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     PELOTON INTERACTIVE, INC.

 

  NOMINATIONS PROCESS AND DIRECTOR

  QUALIFICATIONS

 

 

 

NOMINATION TO THE BOARD

Candidates for nomination to our Board are selected by our Board based on the recommendation of the nominating, governance, and corporate responsibility committee in accordance with the committee’s charter, our restated certificate of incorporation and amended and restated bylaws, and the criteria approved by our Board regarding director candidate qualifications. In recommending candidates for nomination, the nominating, governance, and corporate responsibility committee considers candidates recommended by directors, officers, employees, stockholders, and others, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions, and interviews with selected candidates as appropriate and, in addition, the committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.

Additional information regarding the process for properly submitting stockholder nominations for candidates for membership on our Board is set forth below under “Additional Information—Stockholder Proposals to Be Presented at Next Annual Meeting” and the nominating, governance, and corporate responsibility committee evaluates such candidates in the same manner it evaluates all other candidates.

DIRECTOR QUALIFICATIONS; DIVERSITY

With the goal of developing a diverse, experienced and highly qualified board of directors, the nominating, governance, and corporate responsibility committee is responsible for developing and recommending to our Board the desired qualifications, expertise, and characteristics of members of our Board, including any specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership on our Board and any specific qualities or skills that the committee believes are necessary for one or more of the members of our Board to possess. We value diversity on a company-wide basis and seek to achieve a mix of board members that represents a diversity of background and experience, including with respect to age, gender, race, ethnicity, and occupation. Although the Board does not establish specific goals with respect to diversity, our board of director’s overall diversity is a significant consideration in the director nomination process.

Because the identification, evaluation, and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, and will be significantly influenced by the particular needs of our Board from time to time, our Board has not adopted a specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and the Nasdaq listing requirements and the provisions of our restated certificate of incorporation, amended and restated bylaws and charters of the committees of our Board. In addition, neither our Board nor our nominating, governance, and corporate responsibility committee has a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, the nominating, governance, and corporate responsibility committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, diversity, skills, financial and other expertise, breadth of experience, knowledge about our business or industry, and ability to devote adequate time and effort to responsibilities of our Board in the context of its existing composition. Through the nomination process, the nominating, governance, and corporate responsibility committee seeks to promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds, and other characteristics that are expected to contribute to our Board’s overall effectiveness.

 

 

 

 

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                    NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS

 

The matrix below as required by Nasdaq rules sets forth the self-identified gender identity and demographic diversity attributes of each of our directors, and the brief biographical description of the directors set forth in Proposal No. 1 below includes the primary individual experience, qualifications, attributes, and skills of each of our directors that led to the conclusion that each director should serve as a member of our Board at this time.

OUR BOARD DIVERSITY

 

 

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      PELOTON INTERACTIVE, INC.

 

  PROPOSAL NO. 1

 

    ELECTION OF DIRECTOR

 

 

 

Our Board is currently divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Directors in Class III will stand for election at the Annual Meeting. The terms of office of directors in Class I and Class II do not expire until the annual meetings of stockholders held in 2023 and 2024, respectively.

On February 8, 2022, in connection with the resignation of Erik Blachford and the appointment of Angel Mendez, Barry McCarthy, and Jonathan Mildenhall, our Board increased in size from seven to nine directors, with the number of Class I and Class II directors each increasing from two to three. On May 6, 2022, William Lynch resigned from our Board, decreasing its size from nine to eight and the number of Class III directors from three to two. On September 12, 2022, John Foley resigned as Executive Chair, decreasing the size of our Board from eight to its current size of seven and the number of Class III directors from two to one.

At the recommendation of our nominating, governance, and corporate responsibility committee, our Board proposes that the Class III nominee named below, who is currently serving as a director in Class III, be elected as a Class III director for a three-year term expiring at the 2025 annual meeting of stockholders and until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification, or removal.

Shares represented by proxies will be voted “FOR” the election of the nominee named below unless the proxy is marked to withhold authority to so vote. If the nominee for any reason is unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might determine. The nominee has consented to being named in this Proxy Statement and to serve if elected, and management and the Board have no reason to believe that such nominee will be unable to serve.

If, however, prior to the Annual Meeting, the Board should learn that the nominee will be unable to serve for any reason, the proxies that otherwise would have been voted for this nominee will be voted for a substitute nominee as selected by the Board.

 

 

OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE CLASS III DIRECTOR

 

 

 

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

NOMINEE TO OUR BOARD

The nominee and her age, occupation, length of service on our Board and other biographical information as of the date of this Proxy Statement are provided below.

 

LOGO

 

AGE: 48

 

DIRECTOR SINCE:

January 2019

 

COMMITTEES:

  Audit (Chair)

  Nominating, Governance, and Corporate Responsibility

  

 

KAREN BOONE

 

Chairperson of the Board, since September 2022

Lead Independent Director, from October 2021 through August 2022

 

Karen Boone has served as a member of our Board since January 2019. Ms. Boone most recently served as the President, Chief Financial and Administrative Officer of Restoration Hardware, Inc., a home furnishings company, from May 2014 to August 2018 and as Chief Financial Officer from June 2012 to May 2014. Prior to that, from 1996 to 2012, Ms. Boone held various roles at Deloitte & Touche LLP, a public accounting firm, most recently as an Audit Partner. Ms. Boone currently serves on the board of directors of Sonos, Inc., Rivian Automotive, Inc. and several private companies.

 

SKILLS AND EXPERIENCE

Ms. Boone holds a B.S. in Business Economics from the University of California, Davis. We believe Ms. Boone is qualified to serve on our Board because of her extensive product and retail experience leading a consumer brand and her expertise and background with regard to overseeing administrative functions, including human resources, investor relations, accounting and legal. Ms. Boone’s experience in strategic and financial planning for public companies, including her service on the boards and audit committees of public companies, brings essential leadership and financial expertise to our Board.

 

OTHER CURRENT PUBLIC BOARD DIRECTORSHIPS

  Sonos, Inc.

  Rivian Automotive, Inc.

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

CONTINUING DIRECTORS

The directors who are serving for terms that end after the Annual Meeting and their ages, occupations, and length of service on our Board as of the date of this Proxy Statement are provided in the table below and in the additional biographical descriptions set forth in the text below the table.

 

NAME OF DIRECTOR

   AGE    POSITION    DIRECTOR SINCE

CLASS I DIRECTORS:

              

BARRY MCCARTHY

  

69

  

CEO, President, and Director

  

February 2022

ANGEL MENDEZ(1)(2) 

  

62

  

Director

  

February 2022

PAMELA THOMAS-GRAHAM(1)(3)

  

59

  

Director

  

March 2018

CLASS II DIRECTORS:

              

JON CALLAGHAN(2)(4)

  

53

  

Director

  

April 2015

JAY HOAG(5)

  

64

  

Director

  

August 2018

JONATHAN MILDENHALL

  

55

  

Director

  

February 2022

 

(1) 

Member of compensation committee

 

(2) 

Member of audit committee

 

(3) 

Chairperson of the nominating, governance, and corporate responsibility committee

 

(4) 

Member of the nominating, governance, and corporate responsibility committee

 

(5) 

Chairperson of the compensation committee

 

LOGO

 

DIRECTOR

 

AGE: 53

 

DIRECTOR SINCE:

April 2015

 

COMMITTEES:

  Audit

  Nominating, Governance, and Corporate Responsibility

  

 

JON CALLAGHAN

 

Jon Callaghan has served as a member of our Board since April 2015. Mr. Callaghan is a founder and Managing Member of True Ventures, a venture capital firm, where he has served since January 2006. Prior to True Ventures, Mr. Callaghan served as a Managing Director at Globespan Capital, a venture capital firm, and as a Managing Partner at CMGI@Ventures, CMGI Inc.’s affiliated venture capital group. Mr. Callaghan served on the board of directors of Fitbit, Inc. from September 2008 to May 2018 and currently serves as a member of the board of directors of several private companies.

 

SKILLS AND EXPERIENCE

Mr. Callaghan holds a B.A. in Government from Dartmouth College and an M.B.A. from Harvard Business School. We believe Mr. Callaghan is qualified to serve on our Board because of his extensive experience working with the management teams of, and investing in, a number of privately and publicly held companies. As a venture capitalist investor, he brings an entrepreneurial spirit and experience building technology companies.

 

OTHER CURRENT PUBLIC BOARD DIRECTORSHIPS

  None

 

 

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

 

 

LOGO

DIRECTOR

 

AGE: 64

 

DIRECTOR SINCE:

August 2018

 

COMMITTEES:

  Compensation (Chair)

  

 

JAY HOAG

 

Jay Hoag has served as a member of our Board since August 2018. Mr. Hoag is a co-founder and General Partner of TCV where he has served since June 1995. Mr. Hoag currently serves on the board of directors of TCV Acquisition Corp., TripAdvisor, Inc., Zillow Group, Inc., and Netflix Inc. and several private companies. Mr. Hoag also previously served on the board of directors of various public companies, including Electronic Arts until August 2021.

 

SKILLS AND EXPERIENCE

Mr. Hoag holds a B.A. from Northwestern University and an M.B.A. from the University of Michigan. We believe Mr. Hoag is qualified to serve on our Board because of his extensive experience working with the management teams of, and investing in, a number of privately and publicly held companies. As a technology investor and board member of numerous companies, Mr. Hoag brings valued insights on topics such as corporate strategy and risk management.

 

OTHER CURRENT PUBLIC BOARD DIRECTORSHIPS

  TCV Acquisition Corp.

  TripAdvisor, Inc.

  Zillow Group, Inc.

  Netflix Inc.

 

 

 

LOGO

DIRECTOR

 

AGE: 62

 

DIRECTOR SINCE:

February 2022

 

COMMITTEES:

  Audit

  Compensation

  

 

ANGEL MENDEZ

 

Angel Mendez has served as a member of our Board since February 2022. Mr. Mendez is Executive Chairman of the Board of LevaData Inc., a privately held, artificial intelligence company focused on supply chain management. He also serves on two other public company boards: Kinaxis, Inc., which specializes in supply chain planning solutions; and Sleep Number Corporation, a sleep technology company. He previously served as executive vice president and chief operating officer of HERE Technologies from 2016 to 2020. From 2005 to 2015, he was a senior executive at Cisco Systems, where he led the company’s corporate transformation program as well as its global supply chain. Earlier in his career, Mr. Mendez served in senior roles at Palm Inc., Gateway Inc., Citigroup, and in various executive positions at Allied Signal Aerospace and GE.

 

SKILLS AND EXPERIENCE

Mr. Mendez earned a Bachelor of Sciences degree in Electrical Engineering from Lafayette College and a Master’s in Business Administration from the Crummer School at Rollins College. We believe Mr. Mendez is qualified to serve on our Board because of his extensive experience working with the management teams of a number of privately and publicly held tech companies. He is a thought leader and trailblazer as an architect of end-to-end supply chains at global technology companies, and he brings more than three decades of leadership experience, including supply chain management with some of the world’s most forward-thinking technology and aerospace companies.

 

OTHER CURRENT PUBLIC BOARD DIRECTORSHIPS

  Sleep Number Corporation

  Kinaxis, Inc.

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

LOGO

 

DIRECTOR

 

AGE: 55

 

DIRECTOR SINCE:

February 2022

 

COMMITTEES:

  None

  

 

JONATHAN MILDENHALL

 

Jonathan Mildenhall has served as a member of our Board since February 2022. Mr. Mildenhall is the Co-Founder and Executive Chairman of TwentyFirstCenturyBrand, a consumer brand strategy and marketing consultancy firm. He is also a board member of Northern Star Investment Corp. IV and serves on a number of private company boards, including Fanatics, GoFundMe, and College Track. Prior to co-founding TwentyFirstCenturyBrand, Mr. Mildenhall served as Chief Marketing Officer of Airbnb from 2014 to 2018. Before Airbnb, Mr. Mildenhall led The Coca-Cola Company’s marketing initiatives as VP of global advertising strategy and content excellence from 2007 to 2013 and as SVP of integrated marketing communication and design excellence from 2013 to 2014. Earlier in his career, Mr. Mildenhall served in various management positions in marketing and advertising.

 

SKILLS AND EXPERIENCE

Mr. Mildenhall holds an HND in Business and Finance from The Manchester Metropolitan University. He completed the Advanced Management Program at Harvard Business School and holds an Honorary Doctorate in Business Administration from The Manchester Metropolitan University. We believe Mr. Mildenhall is qualified to serve on our Board because of his extensive experience with regard to corporate and consumer brand strategy, marketing and advertising. Furthermore, Mr. Mildenhall has helped companies innovate and strive for diverse and inclusive representation not only in the marketing and advertising sectors, but as a globally focused initiative.

 

OTHER CURRENT PUBLIC BOARD DIRECTORSHIPS

  Northern Star Investment Corp. IV

 

 

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

LOGO

 

PRESIDENT, CEO & DIRECTOR

 

AGE: 69

 

DIRECTOR SINCE:

February 2022

 

COMMITTEES:

  None

  

 

BARRY MCCARTHY

 

Barry McCarthy has served as Peloton’s Chief Executive Officer and President and as a member of our Board since February 2022. Prior to joining Peloton, Mr. McCarthy served as Spotify’s Chief Financial Officer from 2015 to January 2020 and global head of the advertising business from September 2016 to January 2020. Prior to joining Spotify, Mr. McCarthy was a private investor and served as a member of the board of directors of several private companies. From 1999 to 2010, Mr. McCarthy served as Chief Financial Officer and Principal Accounting Officer of Netflix, Inc. Mr. McCarthy held various management positions in management consulting, investment banking, media, and entertainment. Additionally, from 2011 until February 2022 when he joined Peloton, Mr. McCarthy served as a consultant at TCV. Mr. McCarthy has served on the board of directors of Spotify since January 2020, and he serves and has served as a director of several private companies, including Instacart since January 2021, and previously Chegg, Eventbrite, MSD Acquisition Corp, Pandora, and Rent the Runway.

 

SKILLS AND EXPERIENCE

Mr. McCarthy holds a Bachelor of Arts in History from Williams College and a Master of Business Administration in Finance from the Wharton School at the University of Pennsylvania. We believe Mr. McCarthy is qualified to serve on our Board because of the strategic and financial experience that he brings as our Chief Executive Officer and President and the perspectives he has gained as a former chief financial officer and executive leader in the management consulting, investment banking, media, and entertainment industries.

 

OTHER CURRENT PUBLIC BOARD DIRECTORSHIPS

  Spotify Technology S.A.

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

LOGO

 

DIRECTOR

 

AGE: 59

 

DIRECTOR SINCE:

March 2018

 

COMMITTEES:

  Compensation

  Nominating, Governance, and Corporate Responsibility (Chair)

  

 

PAMELA THOMAS-GRAHAM

 

Pamela Thomas-Graham has served as a member of our Board since March 2018. Since August 2016, Ms. Thomas-Graham has served as the Founder and Chief Executive Officer of Dandelion Chandelier LLC, a private digital media enterprise focused on the world of luxury. From 2010 to August 2016, she served as a member of the Executive Board at Credit Suisse Group AG, a multinational investment bank and financial services company. While at the firm she held several titles, including Chair, New Markets for the global Private Bank, and Global Chief Marketing and Talent Officer.

 

From 2008 to 2010, she served as a Managing Director at Angelo, Gordon & Co., a privately held investment firm. From 2005 through 2007, Ms. Thomas-Graham was a Group President of Liz Claiborne Inc. (now Tapestry). She served as President and Chief Executive Officer of NBC Universal’s CNBC television, and President and Chief Executive Officer of CNBC.com, beginning in 1999. She began her career at global consultancy McKinsey & Co. in 1989, becoming the firm’s first black woman partner in 1995.

 

Ms. Thomas-Graham served on the board of directors of Norwegian Cruise Line Holdings Ltd. from 2018 to 2021, and of The Clorox Company from 2005 to 2021 and as its Lead Independent Director from 2016 to 2021. She currently serves as a board member of Bumble Inc.; Compass, Inc.; Rivian Automotive, Inc.; Anthemis Digital Acquisitions I Corp., a special purpose acquisitions company that went public October 2021 and has not yet completed an acquisition; and the Bermuda-based Bank of N.T. Butterfield & Son Limited.

 

SKILLS AND EXPERIENCE

Ms. Thomas-Graham holds a B.A. in Economics from Harvard University and a joint M.B.A. - J.D. from Harvard Business School and Harvard Law School. We believe Ms. Thomas-Graham is qualified to serve on our Board because she brings invaluable strategic, operational, and corporate governance experience as a board member, chief executive officer and executive leader of several public and private companies. Her extensive experience in branding and management consulting enables her to contribute to the oversight of the Company.

 

OTHER CURRENT PUBLIC BOARD DIRECTORSHIPS

  Bank of N.T. Butterfield & Son Limited

  Bumble Inc.

  Compass, Inc.

  Rivian Automotive, Inc.

  Anthemis Digital Acquisitions I Corp.

There are no family relationships among our directors and executive officers.

 

 

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

NON-EMPLOYEE DIRECTOR COMPENSATION

Under our current compensation practices, our non-employee directors receive equity compensation for their service as directors, which we believe reinforces alignment with our stockholders and is consistent with our overall compensation philosophy. Through August 2022, each non-employee director was entitled to receive equity awards under our 2019 Equity Incentive Plan, or the “2019 Plan,” in the form of options to purchase shares of our Class A common stock (an “Option”), RSUs, or a 50%-50% combination thereof pursuant to our “Employee Equity Choice Program” as described in the “Compensation Discussion and Analysis—Employee Equity Choice Program” section below. Beginning in September 2022, non-employee directors are entitled to receive equity awards solely in RSUs. Non-employee directors do not receive any cash compensation for service on our Board.

Our compensation arrangements for non-employee directors are reviewed periodically by our compensation committee and our Board. In addition, at the compensation committee’s direction, Compensia, Inc. (“Compensia”), the compensation committee’s independent compensation consultant, provides a competitive analysis of director compensation levels, practices, and design features as compared to the general market as well as our compensation peer group.

Initial Equity Grant. Each non-employee director appointed to our Board is granted an initial equity award having an aggregate value of $500,000 based on the closing price of our Class A common stock on the date of grant. Through August 2022, such grants were made pursuant to the “Employee Equity Choice Program,” and following September 2022, such awards would be made in the form of RSUs. The award will vest with respect to 1/3rd of the total number of shares subject to such award on each annual anniversary of the grant, in each case, so long as such non-employee director continues to provide service through such date. Each initial equity grant will accelerate in full upon the consummation of a Corporate Transaction (as defined in our 2019 Plan).

Annual Equity Grant. On the date of each annual meeting of stockholders, each non-employee director who is serving on our Board, and will continue to serve on our Board immediately following the date of such annual meeting, will automatically be granted equity, in the form of RSUs for all awards beginning in September 2022, having an aggregate value of $325,000 based on the closing price of our Class A common stock on the date of grant (the “Annual Equity Grant”). Each Annual Equity Grant will vest with respect to 1/4th of the total number of RSUs subject to such award on each quarterly anniversary thereafter, such that the equity award will be fully vested on the one-year anniversary of the date of grant, or if earlier, the next annual meeting of stockholders, in each case, so long as such non-employee director continues to provide service through such date. Each Annual Equity Grant will accelerate in full upon the consummation of a Corporate Transaction (as defined in our 2019 Plan).

 

 

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                    PROPOSAL NO. 1: ELECTION OF DIRECTOR

 

The following table provides information for the fiscal year ended June 30, 2022 regarding all compensation awarded to, earned by, or paid to each person who served as a director for some portion or all of Fiscal 2022, other than Messrs. Foley, Lynch and McCarthy. Messrs. Foley (the former Executive Chair of our Board and previously our CEO) and McCarthy (our current President and CEO) are not included in the table below, as they served as employees of the Company in Fiscal 2022 and received no compensation for their service as directors. Mr. Lynch (our former President) is not included in the table below, as prior to his service solely as a member of our Board from February—May 2022, he was an employee of the Company during Fiscal 2022. The compensation received by Messrs. Foley and McCarthy as employees, and by Mr. Lynch as an employee and board member, is shown in the “Executive Compensation—Fiscal 2022 Summary Compensation Table” below.

 

NAME(1)

   OPTION
AWARDS
($)(2)
      

TOTAL  

($)  

 

KAREN BOONE

  

 

325,002

 

    

 

325,002  

 

JON CALLAGHAN

  

 

325,002

 

    

 

325,002  

 

JAY HOAG

  

 

325,002

 

    

 

325,002  

 

PAMELA THOMAS-GRAHAM

  

 

325,002

 

    

 

325,002  

 

ANGEL L MENDEZ

  

 

500,002

 

    

 

500,002  

 

JONATHAN MILDENHALL

  

 

500,002

 

    

 

500,002  

 

ERIK BLACHFORD

  

 

3,972,401

 

    

 

3,972,401  

 

HOWARD DRAFT

  

 

 

    

 

—  

 

 

(1)

Mr. Blachford served on our Board through February 8, 2022. Mr. Draft served on our Board through October 25, 2021. Mr. Mendez and Mr. Mildenhall were appointed to our Board effective February 8, 2022.

 

(2)

The amounts reported in this column represent the aggregate grant date value of stock option awards made to directors in Fiscal 2022 computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718, or ASC 718. The amount reported in the Option Awards column for Mr. Blachford includes (i) $325,002, which represents the value of Option awards granted to him in Fiscal 2022 and (ii) $3,647,399, which represents the (non-cash) incremental fair value of modifications to all of Mr. Blachford’s outstanding Options that occurred in connection the extension of the Options’ exercise period (until the ultimate expiration date of his Options) upon his termination of service, as computed in accordance with FASB ASC Topic 718.These amounts do not reflect the actual economic value realized by the director, which will vary depending on the performance of our Class A common stock. The table below shows the aggregate numbers of stock option awards held as of June 30, 2022 by each director.

 

NAME

 

NUMBER OF
CLASS A SHARES
UNDERLYING
TOTAL
STOCK
OPTIONS
HELD AT
FISCAL

YEAR END

   

NUMBER OF
CLASS B SHARES
UNDERLYING
TOTAL
STOCK
OPTIONS
HELD AT
FISCAL

YEAR END

 

KAREN BOONE

    22,319       450,000  

JON CALLAGHAN

    40,435       0  

JAY HOAG

    40,435       0  

PAMELA THOMAS-GRAHAM

    15,438       368,116  

ANGEL L MENDEZ

    24,859       0  

JONATHAN MILDENHALL

    24,859       0  

ERIK BLACHFORD

    24,997       1,233,333  

HOWARD DRAFT

    24,997       160,835  

 

 

 

 

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      PELOTON INTERACTIVE, INC.

 

  PROPOSAL NO. 2

 

    RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

Our audit committee has appointed Ernst & Young LLP as our independent registered public accounting firm to perform the audit of our consolidated financial statements for the fiscal year ending June 30, 2023 and recommends that stockholders vote for ratification of such appointment. The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2023 requires the affirmative vote of the holders of a majority of the voting power of our Class A common stock and Class B common stock that are present in person (virtually) or represented by proxy at the Annual Meeting and are voted for or against the proposal. In the event that Ernst & Young LLP is not ratified by our stockholders, the audit committee will consider whether it is appropriate to appoint another independent registered public accounting firm, but it will not be obligated to do so. Even if the appointment is ratified, the audit committee, in its discretion, may appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.

Ernst & Young LLP audited our financial statements for the fiscal year ended June 30, 2022. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and they will be given an opportunity to make a statement at the Annual Meeting if they desire to do so and will be available to respond to appropriate questions. Ernst & Young LLP has served as our independent registered public accounting firm since 2017.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES

We regularly review the services and fees from our independent registered public accounting firm. These services and fees are also reviewed with our audit committee annually. In accordance with standard policy, Ernst & Young LLP will periodically rotate the individuals who are responsible for our audit.

During the fiscal years ended June 30, 2021 and 2022, fees for services provided by Ernst & Young LLP were as follows:

 

  

 

   FISCAL YEAR ENDED
JUNE 30, 2021
    

FISCAL YEAR ENDED  

JUNE 30, 2022  

 

FEES BILLED TO PELOTON

    

 

      

 

 

AUDIT FEES(1)

  

 

$3,826,000

 

  

 

$4,065,000  

AUDIT-RELATED FEES(2)

  

 

 

  

 

205,688  

TAX FEES(3)

  

 

5,000

 

  

 

9,000  

ALL OTHER FEES(4)

  

 

5,000

 

  

 

5,000  

TOTAL FEES

  

 

$3,836,000

  

 

$4,284,688  

 

(1) 

“Audit fees” include fees for audit services primarily related to the audit of our annual consolidated financial statements; the review of our quarterly consolidated financial statements; comfort letters, consents, and assistance with and review of documents filed with the SEC; and other accounting and financial reporting consultation and research work billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board (United States).

 

(2) 

“Audit-related fees” includes fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements.

 

(3)

“Tax fees” include fees for tax compliance and advice. Tax advice fees encompass a variety of permissible tax services, including technical tax advice related to federal and state and international income tax matters, assistance with sales tax and assistance with tax audits.

 

(4) 

“All other fees” includes fees for services other than the services reported in audit fees, audit-related fees, and tax fees.

 

 

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                    PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm, the scope of services provided by the independent registered public accounting firm, and the fees for the services to be performed. These services may include audit services, audit-related services, tax services, and other services. In addition, the audit committee has established procedures by which the chairperson of the audit committee may pre-approve such services up to $200,000 per service matter or project, subject to ratification by the audit committee at its next regularly scheduled quarterly meeting following such approval. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.

All of the services relating to the fees described in the table above were approved by our audit committee.

 

 

OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2023

 

 

 

 

 

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     PELOTON INTERACTIVE, INC.

 

  REPORT OF THE AUDIT COMMITTEE

 

 

 

The information contained in the following report of our audit committee is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by us under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”) unless and only to the extent that we specifically incorporate it by reference.

The principal purpose of the audit committee is to assist the board of directors in its general oversight of our accounting practices, system of internal controls, audit processes and financial reporting processes. The audit committee is responsible for appointing and retaining our independent auditor and approving the audit and non-audit services to be provided by the independent auditor. The audit committee’s function is more fully described in its charter.

Our management is responsible for preparing our financial statements and ensuring they are complete and accurate and prepared in accordance with generally accepted accounting principles. Ernst & Young LLP, our independent registered public accounting firm for the fiscal year ended June 30, 2022, was responsible for performing an independent audit of our consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles.

Our audit committee has reviewed and discussed with our management and Ernst & Young LLP our audited consolidated financial statements for the fiscal year ended June 30, 2022. Our audit committee has also discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.

Our audit committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with our audit committee concerning independence and has discussed with Ernst & Young LLP its independence from us.

Based on the review and discussions referred to above, our audit committee recommended to our Board that the audited consolidated financial statements be included in our annual report on Form 10-K for the fiscal year ended June 30, 2022 for filing with the U.S. Securities and Exchange Commission.

Members of our audit committee rely without independent verification on the information provided to them and on the representations made by management and the independent auditor. Accordingly, the audit committee’s oversight does not provide an independent basis to determine that management has maintained the appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the audit committee’s consideration and discussions do not assure that the audit of the company’s consolidated financial statements have been carried out in accordance with the standards of the PCAOB, that the consolidated financial statements are presented in accordance with the accounting principles generally accepted in the United Statements and that Ernst & Young LLP is in fact “independent.”

SUBMITTED BY THE AUDIT COMMITTEE

Karen Boone, Chairperson

Jon Callaghan

Angel Mendez

 

 

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      PELOTON INTERACTIVE, INC.

 

  EXECUTIVE OFFICERS

 

 

 

The names of our executive officers, their ages as of the date of this proxy statement and their positions are shown below.

 

NAME

   AGE      POSITION

EXECUTIVE OFFICERS:

 

    

 

    

 

BARRY MCCARTHY

  

69

  

Chief Executive Officer, President, and Director

LIZ CODDINGTON

  

47

  

Chief Financial Officer

THOMAS CORTESE

  

42

  

Chief Product Officer

JEN COTTER

  

50

  

Chief Content Officer

ANDY RENDICH

  

55

  

Chief Supply Chain Officer

Our Board chooses executive officers, who then serve at the discretion of our Board. There is no family relationship between any of the directors or executive officers and any of our other directors or executive officers.

For information regarding Mr. McCarthy, please refer to “Proposal No. 1—Election of Directors.”

LIZ CODDINGTON has served as our CFO since June 2022. Ms. Coddington most recently served as Vice President of Finance for Amazon Web Services (“AWS”) at Amazon.com, Inc. (“Amazon”) from January 2021 to June 2022, and in finance roles of increasing responsibility at AWS since joining Amazon in March 2016. Prior to joining Amazon, Ms. Coddington served as Chief Financial Officer of Adara, Inc.; Vice President, Finance, and Chief Financial Officer at Walmart.com at Walmart Inc.; and Vice President, Financial Planning and Analysis at Netflix, Inc. Ms. Coddington holds a Bachelor of Science in Chemical Engineering from the Massachusetts Institute of Technology and a Master of Business Administration from the University of North Carolina at Chapel Hill.

THOMAS CORTESE is one of our co-founders and has served as our Chief Product Officer since August 2021. From February 2012 to August 2021, Mr. Cortese served as our Chief Operating Officer and from April 2019 to August 2021 he served as our Head of Product Development. Prior to our founding, Mr. Cortese served as the Chief Executive Officer of Proust.com, an online social media and memory sharing company, and a subsidiary of IAC/InterActiveCorp, a media and internet company, from February 2010 to January 2012. From February 2008 to February 2010, Mr. Cortese served as the Vice President of Product Management at Pronto.com, a price comparison service platform and a subsidiary of IAC/InterActiveCorp. Mr. Cortese holds a B.A. in Philosophy from The George Washington University.

JEN COTTER has served as our Chief Content Officer since May 2019. Previously, Ms. Cotter served as Chief Content Officer for ProCaps Laboratories from January to May 2019 and co-founded and led The JJB Collective, an agency serving clients on the evolution of brand, product, multi-channel, and creative strategy, from January 2018 to May 2019. From June 2005 to December 2017, Ms. Cotter held various roles at HSN, a leading interactive and lifestyle retailer, including Vice President, Talent; Senior Vice President, Television and On-Air Development; and Executive Vice President—Content, Programming and Television. Ms. Cotter holds a B.A. in Communication and Media Studies from Seton Hall University and a Certificate in Diversity and Inclusion from Cornell University.

ANDY RENDICH has served as our Chief Supply Chain Officer since March 2022. Previously, Mr. Rendich served as Chief Operating Officer at Grove Collaborative and held several executive and officer roles with Eat Just, Good Eggs and Walmart, as well as board and advisory roles in many companies. Mr. Rendich

 

 

 

 

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                    EXECUTIVE OFFICERS

 

currently serves as an advisor to the TCV Velocity Fund. He also spent more than 12 years at Netflix in a variety of executive positions, including Chief Service and Operations Officer. Mr. Rendich holds a Bachelors of Technology in Computer Engineering Technology from Rochester Institute of Technology and an Associates of Science from Alfred State College—SUNY College of Technology.

 

 

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     PELOTON INTERACTIVE, INC.

 

  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

  OWNERS AND MANAGEMENT

 

 

 

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of October 4, 2022, by:

 

 

each of our named executive officers;

 

each of our directors or director nominees;

 

all of our directors and executive officers as a group; and

 

each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of our Class A common stock or Class B common stock.

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all shares beneficially owned, subject to applicable community property laws.

The footnotes to the table below include details on shares pledged as collateral to secure certain personal indebtedness. In each case, such pledges were made in accordance with the Company’s Insider Trading Policy in effect at the time the pledges were made. The Insider Trading Policy was updated in October 2022 to prohibit pledging. For additional information, see “Compensation Discussion and Analysis—Hedging and Pledging Restrictions.”

 

 

 

 

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                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Applicable percentage ownership is based on 311,167,743 shares of Class A common stock and 28,733,963 shares of Class B common stock outstanding as of October 4, 2022. Shares of our Class A common stock and Class B common stock subject to stock options that are currently exercisable or exercisable within 60 days of October 4, 2022 or RSUs that may vest and settle within 60 days of October 4, 2022 are deemed to be outstanding and to be beneficially owned by the person holding the stock options or RSUs for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities listed in the table below is c/o Peloton Interactive, Inc., 441 Ninth Avenue, Sixth Floor, New York, New York 10001.

 

     SHARES BENEFICIALLY OWNED

 

    

% OF
TOTAL
VOTING
POWER(1)

 

 
    

 

CLASS A

 

      

 

CLASS B

 

 

NAME OF BENEFICIAL OWNER

  

 

SHARES

      

 

%

      

 

SHARES

      

 

%

 

DIRECTORS AND NAMED EXECUTIVE OFFICERS:

  

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

  

 

 

 

BARRY MCCARTHY(2)

  

 

1,500,250

 

    

 

*

 

    

 

 

    

 

 

  

 

*

 

KAREN BOONE(3)

  

 

68,460

 

    

 

*

 

    

 

450,000

 

    

 

1.5

 

  

 

1.0

 

JONATHAN CALLAGHAN(4)

  

 

835,530

 

    

 

*

 

    

 

 

    

 

 

  

 

*

 

JAY HOAG(5)

  

 

36,576

 

    

 

*

 

    

 

 

    

 

 

  

 

*

 

ANGEL MENDEZ

  

 

 

    

 

 

    

 

 

    

 

 

  

 

 

JONATHAN MILDENHALL

  

 

 

    

 

 

    

 

 

    

 

 

  

 

 

PAMELA THOMAS-GRAHAM(6)

  

 

14,277

 

    

 

*

 

    

 

368,116

 

    

 

1.3

 

  

 

*

 

ELIZABETH CODDINGTON

  

 

 

    

 

 

    

 

 

    

 

 

  

 

 

THOMAS CORTESE(7)

  

 

636,150

 

    

 

*

 

    

 

4,302,338

 

    

 

13.8

 

  

 

9.8

 

JENNIFER COTTER(8)

  

 

226,891

 

    

 

*

 

    

 

159,604

 

    

 

*

 

  

 

*

 

HISAO KUSHI(9)

  

 

788,109

 

    

 

*

 

    

 

3,367,110

 

    

 

10.8

 

  

 

7.7

 

ANDREW RENDICH(10)

  

 

30,658

 

    

 

*

 

    

 

 

    

 

 

  

 

*

 

JOHN FOLEY(11)

  

 

1,318,577

 

    

 

*

 

    

 

15,081,113

 

    

 

40.6

 

  

 

33.8

 

WILLIAM LYNCH(12)

  

 

1,947,370

 

    

 

*

 

    

 

3,942,215

 

    

 

12.5

 

  

 

9.1

 

KEVIN CORNILS(13)

  

 

592,474

 

    

 

*

 

    

 

530,000

 

    

 

1.8

 

  

 

1.3

 

JILL WOODWORTH(14)

  

 

662,410

 

    

 

*

 

    

 

2,900,000

 

    

 

9.2

 

  

 

6.6

 

ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (11 PERSONS)(15)

  

 

3,348,792

 

    

 

1.1

 

    

 

5,280,058

 

    

 

16.4

 

  

 

12.2

 

OTHER 5% STOCKHOLDERS:

                                                  

ENTITIES AFFILIATED WITH TCV(16)

  

 

6,218,039

 

    

 

2.0

 

    

 

15,602,635

 

    

 

54.3

 

  

 

35.9

 

THE VANGUARD GROUP(17)

  

 

24,917,165

 

    

 

8.0

 

    

 

 

    

 

 

  

 

2.8

 

BAILLIE GIFFORD & CO.(18)

  

 

31,817,011

 

    

 

10.2

 

    

 

207,754

 

    

 

*

 

  

 

4.1

 

T. ROWE PRICE ASSOCIATES, INC.(19)

  

 

30,788,261

 

    

 

9.9

 

    

 

 

    

 

 

  

 

3.5

 

 

* 

Less than 1%

 

(1) 

Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class B common stock are entitled to 20 votes per share, and holders of our Class A common stock are entitled to one vote per share.

 

 

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                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

(2) 

Represents (i) 250 shares of Class A common stock held of record by spouse and (ii) 1,500,000 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022.

 

(3) 

Represents (i) 50,000 shares of Class A common stock, (ii) 18,460 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022, and (iii) 450,000 shares underlying options to purchase shares of Class B common stock that are exercisable within 60 days of October 4, 2022.

 

(4) 

Represents (i) 798,954 shares of Class A common stock held of record by Jonathan D. Callaghan and Christie Blom Callaghan, Trustees of the Callaghan Family Trust and (ii) 36,576 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022.

 

(5) 

Represents 36,576 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022. Mr. Hoag is a director of Technology Crossover Management IX, Ltd. and Technology Crossover Management X, Ltd. and a limited partner of Technology Crossover Management IX, L.P. and Technology Crossover Management X, L.P. which are entities affiliated with the TCV Funds described in note 16 below but does not hold voting or dispositive power over the shares held of record by the TCV Funds.

 

(6) 

Represents (i) 2,698 shares of Class A common stock, (ii) 11,579 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022, and (iii) 368,116 shares underlying options to purchase shares of Class B common stock that are exercisable within 60 days of October 4, 2022.

 

(7) 

Represents (i) 413 shares of Class A common stock, (ii) 106,000 shares of Class A common stock held of record by The Harbor View Investments LLC, (iii) 499,986 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022, (iv) 1,461,922 shares of Class B common stock, (v) 261,052 shares of Class B common stock held of record by The Harbor View Investments LLC, (vi) 29,751 shares of Class A common stock underlying RSUs to acquire Class A common stock that are vested and settled within 60 days of October 4, 2022, (vii) 50,000 shares of Class B common stock held of record by The TPC 2021 GRAT 3, and (viii) 2,529,364 shares underlying options to purchase shares of Class B common stock that are exercisable within 60 days of October 4, 2022. Of the shares of Class B common stock listed, 1,300,000 are pledged as collateral to secure certain personal indebtedness.

 

(8) 

Represents (i) 15,271 shares of Class A common stock, (ii) 171,790 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022, (iii) 39,830 shares of Class A common stock underlying RSUs to acquire Class A common stock that are vested and settled within 60 days of October 4, 2022, and (iv) 159,604 shares underlying options to purchase shares of Class B common stock that are exercisable within 60 days of October 4, 2022.

 

(9) 

Represents (i) 29,561 shares of Class A common stock, (ii) 758,548 shares underlying options to purchase shares of Class A common stock that are exercisable as of October 4, 2022, (iii) 367,607 shares of Class B common stock held of record by Kushi Family 2018 GRAT, (iv) 632,393 shares of Class B common stock held of record by Kushi Family Trust dated June 3, 2013, and (v) 2,367,110 shares underlying options to purchase shares of Class B common stock that are exercisable as of October 4, 2022. Of the shares of Class B common stock listed, 991,107 are pledged as collateral to secure certain personal indebtedness.

 

(10) 

Represents 30,658 shares of Class A common stock underlying RSUs to acquire Class A common stock that are vested and settled within 60 days of October 4, 2022.

 

(11) 

Represents (i) 200,000 shares of Class A common stock, (ii) 1,118,577 shares underlying options to purchase shares of Class A common stock that are exercisable as of October 4, 2022, (iii) 6,586,232 shares of Class B common stock, (iv) 117,958 shares of Class B common stock held of record by spouse, (v) 8,376,923 shares underlying options to purchase shares of Class B common stock that are exercisable as of October 4, 2022. Of the shares listed, 200,000 shares of Class A common stock and 6,586,232 shares of Class B common stock are pledged as collateral to secure certain personal indebtedness.

 

(12) 

Represents (i) 1,204,039 shares of Class A common stock, (ii) 50,000 shares of Class A common stock held of record by William Lynch and Nicole P Lynch JT TEN, (iii) 7,200 shares of Class A common stock held of record by William J. Lynch, Jr. Grantor Retained Annuity Trust dtd 4/9/20, (iv) 25,000 shares of Class A common stock held of record by WJL GRAT for the Benefit of CAW 2022, and (v) 25,000 shares of Class A common stock held of record by WJL GRAT for the Benefit of JRB 2022, (vi) 636,131 shares underlying options to purchase shares of Class A common stock that are exercisable as of October 4, 2022, (vii) 667,500 shares of Class B common stock held of record by William Lynch and Nicole P Lynch JT TEN, (viii) 475,000 shares of Class B common stock held of record by Lynch Holdings I LP—Hydra Series, and (ix) 2,799,715 shares underlying options to purchase shares of Class B common stock that are exercisable as of October 4, 2022.

 

(13) 

Represents (i) 61,100 shares of Class A common stock, (ii) 531,374 shares underlying options to purchase shares of Class A common stock that are exercisable as of October 4, 2022, and (iii) 530,000 shares underlying options to purchase shares of Class B common stock that are exercisable as of October 4, 2022.

 

(14) 

Represents (i) 39,325 shares of Class A common stock, (ii) 623,085 shares underlying options to purchase shares of Class A common stock that are exercisable as of October 4, 2022, and (iii) 2,900,000 shares underlying options to purchase shares of Class B common stock that are exercisable as of October 4, 2022.

 

(15) 

Includes all Directors and Executive Officers as of October 4, 2022. Represents (i) 973,586 shares of Class A common stock, (ii) 2,274,967 shares underlying options to purchase shares of Class A common stock that are exercisable within 60 days of October 4, 2022, (iii) 100,239 shares of Class A common stock underlying RSUs to acquire Class A common stock that are vested and settled within 60 days of October 4, 2022, (iv) 1,772,974 shares of Class B common stock, and (v) 3,507,084 shares underlying options to purchase shares of Class B common stock that are exercisable within 60 days of October 4, 2022.

 

(16) 

Represents (i) 2,602,444 shares of Class A common stock held of record by TCV IX, L.P., (ii) 734,319 shares of Class A common stock held of record by TCV IX (A) Opportunities, L.P., (iii) 138,996 shares of Class A common stock held by TCV IX (B), L.P., (iv) 200,654 shares of Class A common stock held by TCV Member Fund, L.P., (v) 1,878,926 shares of Class A common stock held of record by TCV X, L.P., (vi) 465,945 shares of Class A common stock held of record by TCV X (A) Blocker, L.P., (vii) 91,608 shares of Class A common stock held of record by TCV X (B), L.P., (viii)105,147 shares of Class A common stock held of record by TCV X

 

 

 

 

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  Member Fund, L.P., (ix) 9,091,405 shares of Class B common stock held of record by TCV IX, L.P., (x) 2,565,254 shares of Class B common stock held of record by TCV IX (A) Opportunities, L.P., (xi) 485,543 shares of Class B common stock held of record by TCV IX (B), L.P., (xii) 704,842 shares of Class B common stock held of record by TCV Member Fund, L.P., (xiii) 2,037,126 shares of Class B common stock held of record by TCV X, L.P., (xiv) 505,169 shares of Class B common stock held of record by TCV X (A) Blocker, L.P., (xv) 99,314 shares of Class B common stock held of record by TCV X (B), L.P., and (xvi) 113,982 shares of Class B common stock held of record by TCV X Member Fund, L.P., collectively the TCV Funds. Technology Crossover Management IX, Ltd., or Management IX, is the sole general partner of Technology Crossover Management IX, L.P., or TCM IX, which in turn is the sole general partner of TCV IX, L.P. TCM IX is also the sole general partner of TCV IX (A), L.P., which is the sole shareholder of TCV IX (A) Opportunities, Ltd., which in turn is the sole limited partner of TCV IX (A) Opportunities, L.P. TCM IX is also the sole general partner of TCV IX (B), L.P. Management IX is also a general partner of TCV Member Fund, L.P. Management IX may be deemed to have the sole voting and dispositive power over the shares held by TCV IX, L.P., TCV IX (A) Opportunities, L.P., TCV IX (B), L.P., and TCV Member Fund, L.P. Technology Crossover Management X, Ltd., or Management X, is the sole general partner of Technology Crossover Management X, L.P., or TCM X, which in turn is the sole general partner of TCV X, L.P. TCM X is also the sole general partner of TCV X (A), L.P., which in turn is the sole shareholder of TCV X (A) Blocker, Ltd, which in turn is the sole limited partner of TCV X (A) Blocker, L.P. TCM X is also the sole general partner of TCV X (A) Blocker, L.P. and TCV X (B), L.P. Management X is also the general partner of TCV X Member Fund, L.P. Management X may be deemed to have the sole voting and dispositive power over the shares held by TCV X, L.P., TCV X (A) Blocker, L.P., TCV X (B), L.P., and TCV X Member Fund, L.P. The address of each of the foregoing entities is 250 Middlefield Road, Menlo Park, California 94025.

 

(17) 

Based solely on information contained in a Schedule 13G/A filed with the SEC on February 10, 2022. Of the shares of Class A common stock beneficially owned, The Vanguard Group reported that it had shared voting power with respect to 268,264 shares, sole dispositive power with respect to 24,301,789 shares and shared dispositive power with respect to 615,376 shares. The address for The Vanguard Group is 100 Vanguard Blvd. Malvern, PA 19355.

 

(18) 

Based solely on information contained in a Schedule 13G filed with the SEC on January 27, 2022. Of the shares of Class A common stock beneficially owned, Baillie Gifford & Co reported that it had sole voting power with respect to 19,433,347 shares, and sole dispositive power with respect to 31,817,011 shares. The address for Baillie Gifford & Co is Calton Square, 1 Greenside Row, Edinburgh EH1 3AN Scotland UK.

 

(19) 

Based solely on information contained in a Schedule 13G/A filed with the SEC on February 10, 2022. Of the shares of Class A common stock beneficially owned, T. Rowe Price Associates, Inc. reported that it had sole voting power with respect to 15,725,593 shares and sole dispositive power with respect to 30,788,261 shares. The address for T. Rowe Price Associates is 100 E. Pratt Street, Baltimore, MD 21202.

 

 

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     PELOTON INTERACTIVE, INC.

 

  EXECUTIVE COMPENSATION

 

    COMPENSATION DISCUSSION AND ANALYSIS

 

 

This Compensation Discussion and Analysis describes the compensation program for our named executive officers for Fiscal 2022. Our named executive officers and their positions during Fiscal 2022 were:

 

 

Barry McCarthy, our Chief Executive Officer and President (our “CEO”);

 

Elizabeth Coddington, our Chief Financial Officer (our “CFO”);

 

John Foley, our Co-founder, Executive Chair of the Board, and former CEO;

 

Thomas Cortese, our Co-founder and Chief Product Officer;

 

Hisao Kushi, our Co-founder and Chief Legal Officer and Secretary;

 

Kevin Cornils, our Chief Commercial Officer;

 

Jill Woodworth, our former CFO; and

 

William Lynch, our former President.

The list of Fiscal 2022 named executive officers above encompasses: (i) each individual who served as our Principal Executive Officer at any time during Fiscal 2022, (ii) each individual who served as our Principal Financial Officer at any time during Fiscal 2022, (iii) the next three most highly-compensated executive officers (other than any individual who served as our Principal Executive Officer or Principal Financial Officer) who were serving in such capacity as of the last day of Fiscal 2022, and (iv) one additional individual for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the Company as of the last day of Fiscal 2022.

During Fiscal 2022, the following transitions occurred with respect to our named executive officers:

 

 

Mr. McCarthy was appointed as our CEO and President effective February 9, 2022. On the same date, Mr. Foley, our former CEO, was appointed as our Executive Chair.

 

Mr. Lynch transitioned from our President to a non-executive member of our Board on February 8, 2022. Mr. Lynch later resigned from our Board on May 6, 2022.

 

Ms. Coddington was appointed as our CFO effective June 13, 2022. Ms. Woodworth separated employment with us from her position as our CFO on the same date.

During Fiscal 2023, the following transitions occurred with respect to our named executive officers:

 

 

Mr. Foley separated employment with us as our Executive Chair, effective September 12, 2022.

 

Mr. Kushi separated employment with us as our Chief Legal Officer and Secretary, effective October 3, 2022.

 

Mr. Cornils separated employment with us as our Chief Commercial Officer, effective September 23, 2022.

This Compensation Discussion and Analysis describes the material elements of our executive compensation program during Fiscal 2022. It also provides an overview of our executive compensation philosophy, core principles, and objectives. Finally, it analyzes how and why the compensation committee of our Board arrived at the specific compensation determinations for our named executive officers for Fiscal 2022, including the key factors that the compensation committee considered in deciding their compensation.

 

 

 

 

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EXECUTIVE SUMMARY

WHO WE ARE

We are the largest interactive fitness platform in the world with a loyal community of nearly 7 million Members as of June 30, 2022. We pioneered connected, technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes to our Members anytime, anywhere. We make fitness entertaining, approachable, effective, and convenient, while fostering social connections that encourage our Members to be the best versions of themselves.

We are an innovation company at the nexus of fitness, technology, and media. We have disrupted the fitness industry by developing a first-of-its-kind subscription platform that seamlessly combines the best equipment, proprietary networked software, and world-class streaming digital fitness and wellness content, creating a product that our Members love.

BUSINESS UPDATE

During Fiscal 2022, we pivoted our focus from growth to concentrate on sustained positive cash flow. We continue to re-architect our business while harnessing the power and engagement of our Member community. Our Fiscal 2022 key operational metrics demonstrate our continued significant progress in this regard:

 

 

our connected Fitness Subscriptions base grew 27% from the start of the fiscal year ended June 30, 2021 (“Fiscal 2021”) through Fiscal 2022 year-end, to 2.97 million as of June 30, 2022;

 

paid App Subscriptions grew 12% to 980 thousand as of June 30, 2022;

 

total Members grew to approximately 6.9 million as of June 30, 2022; and

 

average Net Monthly Connected Fitness Churn (which generally is defined as the number of Connected Fitness Subscription cancellations, net of reactivations, in the quarter, divided by the average number of beginning Connected Fitness Subscriptions in each month, divided by three months) was 0.96% as of June 30, 2022.

While we have been able to grow more than we anticipated just a couple of years ago, fluctuations in demand and supply that we have been navigating during this time period led us to grow our operations beyond what we believe is best suited to our business. Therefore, in February 2022, we announced and began implementing a restructuring plan to realign our operational focus to support our multi-year growth, enable us to scale the business, and facilitate improved costs (the “Restructuring Plan”). The Restructuring Plan has included:

 

 

reducing our headcount;

 

reducing our spending with outside professional services;

 

closing several assembly and manufacturing plants, including the completion and intended sale of the shell facility for our previously planned U.S.-based manufacturing facility in Troy Township, Ohio, which we called “Peloton Output Park”;

 

closing and consolidating several distribution facilities as part of our expanded partnership with third-party logistics providers; and

 

shifting to third-party logistics providers in certain locations.

The significant operating loss we recognized in Fiscal 2022, which included a number of restructuring charges, reflects the substantial progress we made re-architecting the business to reduce the current and future inventory overhang, converting fixed to variable costs, and addressing numerous supply chain issues. Our Fiscal 2022 financial results included:

 

 

a total Revenue decrease of 11% from the start of Fiscal 2021 through Fiscal 2022 year-end, to $3,582.1 million as of June 30, 2022;

 

a Net Loss of (2,827.7) million for Fiscal 2022; and

 

Adjusted EBITDA of ($982.7) million, representing an Adjusted EBITDA Margin of (27.4)%.

 

 

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Please refer to Annex A for descriptions of Adjusted EBITDA and Adjusted EBITDA Margin, and a reconciliation of Net Loss (a GAAP measure) to Adjusted EBITDA (a non-GAAP measure).

In July and August 2022, we announced expanded partnerships with third-party manufacturing partners and our exit from all owned-manufacturing operations and our decisions regarding the following additional restructuring activities:

 

eliminating our North American Field Operations Warehouses;

 

eliminating a significant number of North America Member Support roles and exiting our Plano, Texas and Tempe, Arizona real estate locations; and

 

reducing our North America retail showroom presence.

Additionally, in October 2022, we announced a further reduction in headcount as part of a final phase of our transformation journey. Each of the above Restructuring Plan efforts are important steps on our comeback journey and the achievement of our goals in Fiscal 2023.

 

  

 

 

FISCAL 2022 EXECUTIVE COMPENSATION HIGHLIGHTS

 

Consistent with our performance and compensation objectives, the compensation committee took the following actions relating to the compensation of our named executive officers for and during Fiscal 2022:

 

  Base Salary — In August 2021, the compensation committee determined to maintain the annual base salaries for our then-CEO and our other named executive officers who were employed by the Company at that time at their Fiscal 2021 levels, except for Mr. Cortese whose base salary was increased from $500,000 to $600,000.

 

  No Annual Cash Bonus Program — In July 2021, the compensation committee decided to eliminate a formal annual cash bonus plan for any of our executive officers, including our named executive officers, for Fiscal 2022. Instead, the compensation committee designed our compensation program for Fiscal 2022 to balance the goals of attracting, motivating, rewarding, and retaining our executive officers and key employees with the goal of promoting the interests of our stockholders solely by using “fixed” pay in the form of base salaries and “variable” pay in the form of long-term equity awards.

 

  One-Time Transition Equity Awards — As part of its decision to eliminate the formal annual cash bonus plan for Fiscal 2022, the compensation committee approved the one-time grant of “transition equity awards” to our executive officers in September 2021. The “transition equity awards” were intended to bridge the gap as we shifted from a program that included annual cash bonus opportunities to a program that relied more heavily on equity compensation opportunities with a longer vesting schedule.

 

  Regular Long-Term Incentive Compensation Awards — In September 2021 and March 2022, the compensation committee approved the grant of our regular bi-annual “refresh” equity awards to our named executive officers who were employed at such times (other than Mr. McCarthy, and for, March 2022, Mr. Foley). In March 2022 we also granted “together we go far” equity awards to our named executive officers who were employed at such time (other than Mr. McCarthy and Mr. Foley) to motivate and retain our employees, including our named executive officers, in light of our Restructuring Plan. Both the “refresh” and the “together we go far” equity awards were granted pursuant to our 2019 Equity Incentive Plan, or the “2019 Plan,” and our “Employee Equity Choice Program,” as described below. These equity awards were granted to align our named executive officers’ incentives with the long-term interests of our company and our stockholders and to focus our named executive officers on achieving our financial and strategic objectives.

 

Mr. McCarthy did not receive regular equity awards in March 2022 because in connection with his appointment as CEO and President in February 2022, he received an equity award that was intended to be in lieu of any additional compensatory equity awards for approximately four years. Additionally, it is intended that we would not grant Ms. Coddington an additional compensatory equity award in respect of her first year of service as the equity awards she received in connection her appointment as CFO were made in lieu of the two bi-annual equity “refresh” awards typically available to our executive officers (which we expect to grant in Fiscal 2023).

 

We believe providing variable pay in the form of long-term equity awards motivates and rewards individual initiative and effort, and the compensation committee designed our Fiscal 2022 compensation program so that a meaningful portion of our executive officers’ annual target total direct compensation was both “at-risk” and variable in nature.

    

 

 

 

 

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We believe that this approach provides balanced incentives for our executive officers to drive financial performance and further enhance their focus on long-term growth relative to shorter-term metrics.

 

  New Compensation Arrangements — During Fiscal 2022 we entered into employment offer letters with Mr. McCarthy and Ms. Coddington in connection with their appointments as CEO and CFO. These offer letters generally provide for the executive’s base salary, new hire equity awards, reimbursements for legal expenses and relocation expenses, and eligibility to participate in our Severance and Change in Control Plan (the “Severance Plan”) as a Tier 1 participant. For a summary of the material terms and conditions of these offer letters, see “Executive Compensation — Employment Arrangements” below.

 

In establishing our CEO’s and CFO’s initial compensation arrangements, we took into consideration the requisite experience and skills that a qualified candidate would need to manage a growing business in a dynamic and ever-changing environment, the competitive market for similar positions at other comparable companies based on a review of compensation survey data, new CEO pay packages at top technology companies, and the need to integrate them into the executive compensation structure that we had developed since our initial public offering of our equity securities, balancing both competitive and internal equity considerations.

 

 

    

RELATIONSHIP BETWEEN PAY AND PERFORMANCE

We strive to design our executive compensation program to balance the goals of attracting, motivating, rewarding, and retaining our executive officers, including our named executive officers, with the goal of promoting the interests of our stockholders. To ensure this balance and to motivate and reward individual initiative and effort, we seek to ensure that our program is designed so that a meaningful portion of our executive officers’ annual target total direct compensation is both “at-risk” and variable in nature. While we do not determine either “variable” or “fixed” pay for each executive officer with reference to a specific percentage of target total direct compensation, consistent with our “pay-for-performance” philosophy, generally, we seek to emphasize variable pay over fixed pay.

Generally, this philosophy is reflected in the target total direct compensation opportunities of our named executive officers. In Fiscal 2022, the vast majority of the target total direct compensation granted to our executive officers consisted of variable pay consisting of long-term incentive compensation in the form of Option and/or RSU awards that may be settled for shares of our Class A common stock.

As our new CEO, almost all of Mr. McCarthy’s target total direct compensation for Fiscal 2022 consisted of variable pay in the form of an option to purchase shares of our Class A common stock. As mentioned above, it was intended that we would not grant Mr. McCarthy additional equity awards for approximately four more years.

These variable pay elements ensured that a substantial majority of our named executive officers’ target total direct compensation for Fiscal 2022 was contingent (rather than fixed) in nature, with the amounts ultimately payable subject to variability above or below grant levels commensurate with our actual performance.

As we continue to mature as a public company, we believe that the compensation elements provided to all of our executive officers, including our named executive officers, will continue to emphasize “at-risk” and variable pay that should enable us to provide a balanced set of incentives for our executive officers to meet our business objectives and drive long-term growth.

EXECUTIVE COMPENSATION-RELATED POLICIES AND PRACTICES

We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The compensation committee evaluates our executive compensation program on a regular basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our

 

 

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business and the market in which we compete for executive talent. The following summarizes our executive compensation and related policies and practices:

WHAT WE DO

 

 

Maintain an Independent Compensation Committee with Independent Compensation Consultant. The compensation committee consists solely of independent directors who establish our compensation practices. The compensation committee consults with an independent consultant on compensation levels and practices.

 

 

Annual Executive Compensation Review. The compensation committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes and a review of our compensation-related risk profile to ensure that our compensation programs do not encourage excessive or inappropriate risk-taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on us.

 

 

Compensation At-Risk. Our executive compensation program is designed so that a significant portion of our named executive officers’ compensation is “at-risk,” as the value derived from equity awards is variable in nature based on corporate performance, to align the interests of our named executive officers and stockholders.

 

 

Multi-Year Vesting Requirements. The annual equity awards granted to our named executive officers vest over multi-year periods, consistent with current market practice and our retention objectives.

 

 

Use a Pay-for-Performance Philosophy. The majority of our named executive officers’ compensation is directly linked to corporate performance; we also structure their target total direct compensation opportunities with a significant long-term equity element, thereby making a substantial portion of each named executive officer’s target total direct compensation dependent upon our stock price performance. Because the majority of our named executive officers’ compensation is in the form of variable, “at-risk” pay, our named executive officers are incentivized to drive financial performance and further enhance their focus on long-term growth.

 

 

Compensation Recovery (“Clawback”) Policy. We maintain a policy that provides that if our financial statements are adjusted to correct an error that has a material impact on our financial statements and our Board determines that a current or former executive officer engaged in fraud or intentional misconduct that materially contributed to the need for such restatement, then we may recoup or require forfeiture of any of such executive officer’s incentive-based cash or equity compensation granted or received during the three-year period preceding such restatement that is in excess of any compensation that would have been earned by such executive officer based upon the restated financial results.

 

 

“Double-Trigger” Change in Control Arrangements. Under our Severance and Change in Control Plan, all change in control payments and benefits are based on a “double-trigger” arrangement (that is, they require both a change in control of the Company plus a qualifying termination of employment before payments and benefits are paid).

WHAT WE DO NOT DO

 

 

No Executive Retirement Plans. We do not currently offer, nor do we have plans to offer, defined benefit pension plans or any nonqualified deferred compensation plans or arrangements to our named executive officers other than the plans and arrangements that are available to all employees. Our named executive officers are eligible to participate in our tax-qualified Section 401(k) retirement savings plan (“Section 401(k) Plan”) on the same basis as our other employees.

 

 

Perquisites. We provide only limited recurring perquisites or other personal benefits to our named executive officers.

 

 

No Excise Tax Payments on Change in Control Compensation Arrangements. We do not provide any “golden parachute” excise tax reimbursement payments (including “gross-ups”) on payments or benefits contingent upon a change in control of the Company.

 

 

 

 

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No Special Health or Welfare Benefits. We do not provide our named executive officers with any unique or special health or welfare benefit programs. They participate in our broad-based employee programs on the same basis as our other full-time, salaried employees.

 

 

No Hedging or Pledging of our Equity Securities. Under our Insider Trading Policy, we prohibit our employees, including our named executive officers and the members of our Board, from hedging our securities. Prior to October 2022, we permitted using or pledging securities as collateral in a margin account or as collateral for a loan for up to 40% of the number of an individual’s vested and outstanding Peloton securities, subject to the sole discretion of the Insider Trading Policy Administrators. In October 2022, our Insider Trading Policy was updated to, among other things, prohibit pledging of our securities on a prospective basis.

STOCKHOLDER ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

At our 2020 Annual Meeting of Stockholders, we conducted a non-binding stockholder advisory vote on the frequency (commonly known as a “Say-on-Frequency” vote) of future non-binding stockholder advisory votes on the compensation of our named executive officers (commonly known as a “Say-on-Pay” vote). Our stockholders expressed a preference for holding future Say-on-Pay votes on a triennial, rather than an annual or biennial, basis. In recognition of this preference and other factors considered, our Board determined that, until the next Say-on-Frequency vote, we will hold triennial Say-on-Pay votes. Our most recent Say-On-Pay vote was held at our 2021 Annual Meeting of Stockholders, and following the Annual Meeting to which this Proxy Statement relates, our next Say-on-Pay vote will take place at our 2024 Annual Meeting of Stockholders.

At our 2021 Annual Meeting of Stockholders, we conducted our first Say-on-Pay vote. Approximately 83.3%of the votes cast approved our executive compensation program for Fiscal 2021. Our Board and the compensation committee consider the result of the Say-on-Pay vote in determining the compensation of our named executive officers. Based on the level of support for our executive compensation program demonstrated by the result of this Say-on-Pay vote, among other factors, our Board and the compensation committee determined not to implement significant changes to our executive compensation program for Fiscal 2023.

We value the opinions of our stockholders. Our Board and the compensation committee will continue to consider the outcome of future advisory votes on the compensation of our named executive officers, as well as any feedback received throughout the year, when making compensation decisions for our executive officers.

EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES

Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary objectives:

 

 

Provide market competitive compensation and benefit levels that will attract, motivate, reward, and retain a highly-talented team of executives within the context of responsible cost management;

 

Incentivize executives to model our values of putting Members first, operating with a bias for action, empowering teams of smart creatives, going far together, and being the best place to work;

 

Align the interests and objectives of our executives with those of our stockholders by linking their long-term incentive compensation opportunities to stockholder value creation; and

 

Offer total compensation opportunities to our executives that, while competitive, are internally consistent and fair.

Through Fiscal 2022, the compensation committee structured the annual compensation of our executive officers, including our named executive officers, using two principal elements: base salary and long-term incentive compensation opportunities in the form of equity awards. The design of our executive compensation program is influenced by a variety of factors, with the primary goals being to align the

 

 

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interests of our executive officers and stockholders and to link pay with performance. More specifically, we seek to align our longer-term incentive compensation with the objective of enhancing stockholder value over the long term. We believe the use of equity awards strongly links the interests of our executive officers to the interests of our stockholders.

In addition, our total compensation packages must be competitive with other companies in our industry to ensure that we can continue to attract, motivate, reward, and retain the executive officers who we believe are critical to our success. Keeping this in mind, the compensation committee seeks to accomplish our executive compensation goals while maintaining appropriate levels of internal pay equity, both between our CEO and our other executive officers, and between our executive officers and other non-executive employees.

To date, the compensation committee has not adopted policies or employed guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation.

COMPENSATION-SETTING PROCESS

ROLE OF THE COMPENSATION COMMITTEE

The compensation committee has the overall responsibility for overseeing our compensation and benefits policies generally, and overseeing and evaluating the compensation plans, policies, and practices applicable to our executive officers. In addition, the compensation committee also makes recommendations to our Board for compensation programs for our non-employee members of our Board.

In carrying out its responsibilities, the compensation committee evaluates our compensation policies and practices with a focus on the degree to which these policies and practices reflect our executive compensation philosophy, develops strategies, and makes decisions that it believes further our philosophy or align with developments in best compensation practices and reviews the performance of our executive officers when making decisions with respect to their compensation.

The compensation committee conducts an evaluation of our executive compensation program each year to determine if any changes are appropriate. In addition, the compensation committee conducts an annual review of the compensation arrangements of our executive officers, including our named executive officers, typically during the first quarter of the fiscal year.

During Fiscal 2022, we established the compensation committee sub-committee, or the CC subcommittee, consisting of the Chairperson of the compensation committee, and delegated authority to the CC subcommittee to grant a limited number of equity awards (subject to limitations) and perform related functions. The compensation committee separately delegated authority to the CEO and the Company’s chief people officer to grant a limited number of non-executive equity awards. The compensation committee delegated this authority to assist our Board and compensation committee in administering its duties with respect to the grant of equity awards.

SETTING TARGET TOTAL DIRECT COMPENSATION

The compensation committee reviews the compensation arrangements of our executive officers, including base salary levels and long-term incentive compensation opportunities at the beginning of each fiscal year, or more frequently as warranted.

The compensation committee does not rely upon a specific target or benchmark compensation to formulaically set the target total direct compensation of our executive officers, including our named executive officers. In making decisions about the compensation of our executive officers, the members of

 

 

 

 

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the compensation committee exercise their own judgment relying primarily on their general experience and subjective considerations of various factors, including the following:

 

 

our executive compensation program objectives;

 

our performance against the financial, operational, and strategic objectives established by the compensation committee and our Board;

 

each individual executive officer’s knowledge, skills, experience, qualifications, and tenure relative to other similarly situated executives at the companies in our compensation peer group;

 

the scope of each executive officer’s role and responsibilities compared to other similarly situated executives at the companies in our compensation peer group;

 

the prior performance of each individual executive officer, based on a subjective assessment of their contributions to our overall performance, ability to lead their business unit or function and work as part of a team;

 

the potential of each individual executive officer to contribute to our long-term financial, operational, and strategic objectives;

 

our financial performance relative to our peers;

 

the compensation practices of our compensation peer group and selected broad-based compensation surveys and the positioning of each executive officer’s compensation in a ranking of executive officer compensation levels based on an analysis of competitive market data;

 

the current economic value of each executive’s unvested equity and the ability of these unvested holdings to satisfy our retention objectives; 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 compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable.

The compensation committee does not weigh these factors in any predetermined manner, nor does it apply any formulas in developing its compensation decisions. In making their decisions, which are subjective in nature, the members of the compensation committee consider all of this information in view of their individual experience, knowledge of our company, knowledge of the competitive market, knowledge of each executive officer, and business judgment.

The compensation committee does not use benchmarking in a formulaic manner against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation decisions with respect to our executive officers. Instead, in making its determinations, with the assistance of an independent compensation consultant, the compensation committee reviews surveys and other publicly available information summarizing the compensation paid at a representative group of peer companies, to the extent that the executive positions at these companies are considered comparable to our positions and informative of the competitive environment to gain a general understanding of market compensation levels.

ROLE OF MANAGEMENT

In discharging its responsibilities, the compensation committee works with members of our management, including our CEO. Our management assists the compensation committee by providing information on corporate and individual performance, market compensation data, and management’s perspective on compensation matters. The compensation committee solicits and reviews our CEO’s proposals with respect to program structures, as well as his recommendations for adjustments to annual cash compensation, long-term incentive compensation, and other compensation-related matters for our executive officers, including our named executive officers (except with respect to his own compensation), based on his evaluation of their performance for the prior fiscal year.

At the beginning of each fiscal year, our CEO reviews the performance of our other executive officers based on such individual’s level of success in accomplishing the business objectives established for them for the prior fiscal year and their overall performance during that year, and then shares these evaluations with, and makes recommendations to, the compensation committee for each element of compensation as described

 

 

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above. In Fiscal 2022, these reviews were conducted by our then-CEO, Mr. Foley. The annual individual business objectives for each executive officer are developed through mutual discussion and agreement between our CEO and the executive officers and are reviewed with our Board.

The compensation committee reviews and discusses our CEO’s proposals and recommendations and considers them as one factor in determining and approving the compensation of our executive officers. Our CEO also attends meetings of the compensation committee at which executive compensation matters are addressed, except with respect to discussions involving his own compensation.

COMPENSATION CONSULTANT

Pursuant to its charter, the compensation committee has the authority to engage external advisors, including compensation consultants, legal counsel, and other advisors to assist it in discharging the responsibilities of our Board relating to the compensation of our executive officers, including our named executive officers. In Fiscal 2022, the compensation committee engaged Compensia, a national compensation consultant, to advise on various executive and director compensation-related matters, which included providing information, analysis, and other advice during Fiscal 2022, including assistance with the development of a compensation peer group.

Other than advising the compensation committee, neither Compensia nor any of its affiliates maintain any other direct or indirect business relationships with us or any of our subsidiaries. The compensation committee has considered the independence of Compensia, consistent with the requirements of Nasdaq, and has determined that Compensia is independent. Further, pursuant to SEC rules and Nasdaq listing standards, the compensation committee conducted a conflicts of interest assessment and determined there was no conflict of interest resulting from the services Compensia provided in Fiscal 2022. During Fiscal 2022, Compensia did not provide any services to us other than as described below and described under “Non-Employee Director Compensation” above, regarding executive and director compensation and broad-based plans that do not discriminate in scope, terms, or operation, in favor of our executive officers or directors, and that are available generally to all salaried employees.

During Fiscal 2022, Compensia worked with the compensation committee as requested and provided various services, including the following:

 

 

the review, analysis, and updating of our compensation peer group;

 

the review and analysis of the base salary levels and long-term incentive compensation opportunities of our executive officers, including our named executive officers, against competitive market data based on the companies in our compensation peer group and selected broad-based compensation surveys;

 

an analysis of competitive market data for the CEO position, which was based on compensation peer group data, compensation arrangements at various technology companies and the broader technology sector;

 

an analysis of competitive market data for the CFO position, which was based on compensation peer group data and the broader technology sector;

 

the review and analysis of the compensation arrangements of the non-employee members of our Board against competitive market data based on the companies in our compensation peer group;

 

the review and analysis of clawback policy practices; and

 

the review and assessment of the risk profile of our compensation programs.

COMPETITIVE POSITIONING

At the request of our management, Compensia developed an updated compensation peer group in July 2021 consisting of technology companies that were similar to us in terms of revenue, market capitalization, and industry focus to prepare a competitive market analysis of our executive compensation program. Subsequently, this compensation peer group was used by Compensia to prepare its competitive market analysis. This analysis was made available to the compensation committee for purposes of making decisions about the Fiscal 2022 compensation of our named executive officers in August 2021.

 

 

 

 

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In evaluating and updating the companies comprising the compensation peer group, Compensia considered the following primary criteria:

 

 

companies with a primary focus on the fitness lifestyle or high-growth technology companies with a strong consumer orientation;

 

companies with similar revenues – within a range of approximately 0.5x to approximately 2.0x our last four fiscal quarters’ revenues of approximately $2.95 billion; and

 

companies with similar market capitalization – within a range of approximately 0.3x to approximately 3.0x our 30-day average market capitalization of $40.5 billion as of March 5, 2021.

After a review of the peer group companies, the compensation committee elected to make the following changes to our peer group for Fiscal 2022 due primarily to changing revenue and market cap ranges:

 

 

Added Autodesk, Cadence Design Systems, Doordash, Electronic Arts, Match Group, Pinterest, Snap, Synopsys, Take-Two Interactive Software, Twitter, and Zoom Video Communications.

 

Removed GrubHub, Inc., Proofpoint, RealPage, Slack Technologies, Zendesk, and Zynga.

The companies comprising the Fiscal 2022 compensation peer group were as follows:

 

 

AUTODESK

  

ROKU, INC.

CADENCE DESIGN SYSTEMS

  

SNAP

DOCUSIGN

  

SPLUNK

DOORDASH

  

SYNOPSYS

ELECTRONIC ARTS

  

TAKE-TWO INTERACTIVE SOFTWARE

GODADDY

  

TWILIO

MATCH GROUP

  

TWITTER

OKTA

  

WORKDAY

PINTEREST

  

ZILLOW GROUP

RINGCENTRAL

  

ZOOM VIDEO COMMUNICATIONS

The compensation committee used data drawn from the companies in our compensation peer group, as well as data from a custom data cut of all 20 peer companies drawn from the Radford Global Technology Survey and a broad survey cut covering U.S.-based technology companies with revenue between $3 billion and $5 billion from the Radford Global Technology Survey where insufficient data was reported in custom peer survey, to evaluate and analyze the competitive market when determining the total direct compensation of our named executive officers, including base salary and long-term incentive compensation opportunities in the form of equity awards.

The compensation committee believes that peer group comparisons are useful guides to measure the competitiveness of our executive compensation program and related policies and practices. The compensation committee intends to review our compensation peer group annually and make adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.

COMPENSATION ELEMENTS

The principal elements of our Fiscal 2022 executive compensation program are described in detail below. The compensation committee considers the factors described under “Compensation-Setting Process–Setting Target Total Direct Compensation” above to determine the form and amount of each element of compensation both for our CEO and our executive officers, including our other named executive officers.

BASE SALARY

Base salary represents the fixed portion of the compensation of our executive officers and is an important element of compensation intended to attract and retain highly talented individuals and motivate top-tier

 

 

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performance through individual contributions. Generally, we use base salary to provide each executive officer, including each named executive officer, with a specified level of cash compensation during the year with the expectation that they will perform their responsibilities to the best of their ability and in our best interests.

In August 2021, the compensation committee determined to maintain the annual base salaries of each of our Fiscal 2021 named executive officers at their Fiscal 2021 level, except in the case of Mr. Cortese, whose base salary was increased to $600,000. The compensation committee determined to increase Mr. Cortese’s base salary in order to align his compensation with market compensation of similar roles within our peer group companies, in particular taking into account the elimination of our bonus program in Fiscal 2022.

The base salaries of our named executive officers for Fiscal 2021 (as applicable) and Fiscal 2022 were as follows:

 

NAMED EXECUTIVE OFFICER

   FISCAL 2021
BASE SALARY
     FISCAL 2022
BASE SALARY
 

MR. MCCARTHY

  

 

N/A

 

  

$

1,000,000

 

MS. CODDINGTON

  

 

N/A

 

  

$

1,000,000

 

MR. FOLEY

  

$

1,000,000

 

  

$

1,000,000

 

MR. CORTESE

  

$

500,000

 

  

$

600,000

 

MR. KUSHI

  

$

750,000

 

  

$

750,000

 

MR. CORNILS

  

 

N/A

 

  

$

453,750

(1) 

MS. WOODWORTH

  

$

750,000

 

  

$

750,000

 

MR. LYNCH

  

$

1,000,000

 

  

$

1,000,000

 

 

(1) 

Mr. Cornils’ salary was paid in Pounds sterling, and the amount set forth in the table above uses a conversion rate of 1.21 U.S. Dollars to 1.00 British Pound as of June 30, 2022.

The actual base salaries paid to our named executive officers with respect to Fiscal 2022 are set forth in the “Fiscal 2022 Summary Compensation Table” below.

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. In Fiscal 2022, we granted the following types of equity awards to our named executive officers:

 

 

Regular bi-annual refresh grants (the “Refresh Grants”). The Refresh Grants are part of our regular practice of splitting annual equity awards for each fiscal year into two separate grants, the total value of which is intended to align with competitive market compensation. The Refresh Grants are awarded to incentivize and reward our executive officers, including our named executive officers, for long-term corporate growth based on the value of our Class A common stock and, thereby, to align their interests with the interests of our stockholders.

 

One-time “transition” equity awards (the “Transition Grants”), which were intended to compensate our executive officers for the compensation committee’s elimination of the annual bonus program for Fiscal 2022. The Transition Grants were intended to bridge the gap as we shifted from a program that included annual cash bonus opportunities to a program that relied more heavily on equity compensation opportunities with a longer vesting schedule.

 

“Together we go far” achievement equity awards (the “Together We Go Far Grants”), to reward and retain certain executive officers in light of our Restructuring Plan.

 

One-time RSU award to Mr. Cornils to reward him for high achievements during Fiscal 2021.

 

One-time Option grants to Mr. Cortese to incentivize and reward him for achievement of performance goals, the details of which are described further below under the heading “ — Additional Equity Awards for Mr. Cortese.”

 

 

 

 

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New hire equity grants to Mr. McCarthy and Ms. Coddington in connection with their commencement of employment with us, the details of which are described further below under the heading “ — New Hire Equity Awards.”

The realized value of each of these equity awards bears a direct relationship to our stock price, and, therefore, our compensation committee believes these awards are an incentive for our executive officers to create value for our stockholders over, in most cases, a multi-year period. Equity awards also help us retain our executive officers in a highly competitive market.

To date, the compensation committee has not applied a rigid formula in determining the size of these equity awards. The compensation committee determines the amount of the equity award for each executive officer, including each named executive officer, after taking into consideration an analysis of market compensation data at the companies in our compensation peer group, the amount of equity compensation held by the executive officer at the time of grant (including the current economic value of their unvested equity and the ability of these unvested holdings to satisfy our retention objectives), if applicable, our contemplated equity budget and potential award ranges for our employees, including our executive officers, the projected impact of the proposed awards on our earnings, the proportion of our total shares outstanding used for annual employee long-term incentive compensation awards (our “burn rate”) in relation to the companies in our compensation peer group, the potential voting power dilution to our stockholders (our “overhang”) in relation to the companies in our compensation peer group, the recommendations of our CEO (except with respect to his own equity award), and the other relevant factors described in “Compensation-Setting Process–Setting Target Total Direct Compensation” above.

Another aspect of our long-term incentive compensation program for Fiscal 2022 was our Employee Equity Choice Program, which allows all equity award recipients to elect the form of equity award granted to them under the 2019 Plan. Recipients may elect to receive an equity award either in the form of Options or RSU awards. Specifically, under the Employee Equity Choice Program, employees and our executive officers who were selected by the compensation committee to receive an equity award could chose the form of the equity award as follows:

 

 

100% of the grant value of the equity award in the form of an Option;

 

50% of the grant value of the equity award in the form of an Option and 50% of the grant value of the equity award in the form of an RSU award; or

 

100% of the grant value of the equity award in the form of an RSU award.

If an eligible employee did not make a timely election as to the form of their equity award, 100% of the grant value of such employee’s equity award will be granted in the form of an Option.

Our named executive officers had the ability to participate in the Employee Equity Choice Program with respect to all equity awards granted to them in Fiscal 2022 (except with respect to Mr. McCarthy’s new hire equity grant, which was designated as an Option in his offer letter). In August 2022, we decided to discontinue the Employee Equity Choice Program such that, beginning in September 2022, all equity grants will be granted in the form of RSU awards.

Below we describe in further details the equity awards we granted to our named executive officers during Fiscal 2022.

August 2021 Equity Awards

In August 2021, the compensation committee determined to grant Mr. Cornils a one-time award of RSUs to reward him for his high individual achievements during Fiscal 2021. The total value of the RSUs awarded to Mr. Cornils was $600,559, which resulted in the grant of 5,918 RSUs on August 30, 2021.

September 2021 Equity Awards

In September 2021, the compensation committee approved the grant to our named executive officers of the first bi-annual Refresh Grants and the Transition Grants. The table set forth below indicates, for each named

 

 

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executive officer who was employed by the Company in September 2021, the value of the named executive officer’s Refresh Grant and Transition Grant (computed in accordance with FASB Accounting Standards Codification Topic 718, or FASB ASC Topic 718), and the form of equity vehicle selected by the named executive officer pursuant to the Employee Equity Choice Program.

 

NAMED EXECUTIVE OFFICER

   FORM OF EQUITY AWARD      VALUE OF REFRESH
GRANTS($)
     VALUE OF TRANSITION
GRANTS($)
 

MR. FOLEY

  

 

Stock Option

 

  

$

12,353,519

 

  

$

2,737,633

 

MR. LYNCH

  

 

RSU Award

 

  

$

6,000,999

 

  

$

3,233,393

 

MS. WOODWORTH

  

 

Stock Option

 

  

$

5,000,024

 

  

$

2,712,710

 

MR. CORTESE

  

 

Stock Option

 

  

$

 

  

$

1,266,720

 

MR. KUSHI

  

 

Stock Option

 

  

$

5,000,024

 

  

$

2,712,710

 

MR. CORNILS

  

 

Stock Option

 

  

$

4,500,013

 

  

$

1,038,807

 

The Refresh Grants vest (and, in the case of Options, become exercisable) over a four-year period, with 1/16th of the total number of shares of our Class A common stock subject to the equity award vesting quarterly, in each case, for so long as the named executive officer continues to provide services to us on such date. Quarterly vesting will occur on each of February 15th, May 15th, August 15th, and November 15th following the vesting commencement date. The vesting commencement date for the Refresh Grants is the grant date of the award, September 1, 2021.

The Transition Grants vest (and, in the case of Options, become exercisable) over a three-year period, with 1/12th of the total number of shares of our Class A common stock subject to the equity award vesting quarterly, in each case, for so long as the named executive officer continues to provide services to us on such date. Quarterly vesting will occur on each of February 15th, May 15th, August 15th, and November 15th following the vesting commencement date. The vesting commencement date for the Transition Grants is the grant date of the award, September 1, 2021.

March 2022 Equity Awards

In March 2022, the compensation committee approved the grant to our named executive officers of the second bi-annual Refresh Grants and the Together We Go Far Grants. The table set forth below indicates, for each named executive officer who was employed by the Company in March 2022 (other than Mr. McCarthy and Mr. Foley), the value of the named executive officer’s Refresh Grant and Together We Go Far Grant (computed in accordance with FASB ASC Topic 718), and the form of equity vehicle selected by the named executive officer pursuant to the Employee Equity Choice Program. As discussed above, Mr. McCarthy did not receive a Refresh Grant or Together We Go Far Grant during Fiscal 2022 given that his new hire equity grant was intended to be granted in lieu of any additional equity awards for approximately four years.

 

NAMED EXECUTIVE OFFICER

   FORM OF EQUITY AWARD      VALUE OF REFRESH
GRANTS($)
     VALUE OF TOGETHER WE
GO FAR GRANTS($)
 

MS. WOODWORTH

  

 

RSU Award

 

  

$

2,443,541

 

  

$

2,443,541

 

MR. CORTESE

  

 

Stock Option

 

  

$

3,500,009

 

  

$

3,500,009

 

MR. KUSHI

  

 

Stock Option

 

  

$

2,500,009

 

  

$

2,500,009

 

MR. CORNILS

  

 

RSU Award

 

  

$

2,850,798

 

  

$

2,850,798

 

Both the Refresh Grants and the Together We Go Far Grants vest (and, in the case of Options, become exercisable) over a four-year period, with 1/16th of the total number of shares of our Class A common stock

 

 

 

 

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subject to the award vesting quarterly, in each case, for so long as the named executive officer continues to provide services to us on such date. Quarterly vesting will occur on each of February 15th, May 15th, August 15th, and November 15th following the vesting commencement date. The vesting commencement date for each of the Refresh Grants and the Together We Go Far Grants is the grant date of the award, March 1, 2022.

Additional Equity Awards for Mr. Cortese

In June 2021, the compensation committee approved the grant to Mr. Cortese of a time-based Option to purchase 41,827 shares of our Class A common stock (the “Cortese Time Option”) and a performance-based Option to purchase 41,690 shares of our Class A common stock (the “Cortese Performance Option”), which Options together were valued at $4,563,039 on the date of grant. These awards were intended to motivate and retain Mr. Cortese and would in part supplant his September 2021 Refresh Grant.

The Cortese Time Option vests and becomes exercisable over a four-year period, with 1/16th of the total number of shares of our Class A common stock subject to the Option vesting quarterly, in each case, for so long as Mr. Cortese continued to provide services to us on such date. Quarterly vesting of the Cortese Time Option will occur each of February 15th, May 15th, August 15th, and November 15th following the Vesting Commencement Date. The vesting commencement date of the Cortese Time Option is the grant date of the award, July 1, 2021.

The Cortese Performance Option was to become eligible to vest (the “Eligible Shares”) if we achieved the following performance metrics, subject to Mr. Cortese’s continuous service on the related certification date: (A) 50% of the shares subject to the Cortese Performance Option were to become Eligible Shares if a pre-established number of Tread units had been produced and shipped by us from inception of production of such units through September 30, 2021 (the “September 2021 Shares”) and (B) the other 50% of the shares subject to the Cortese Performance Option were to become Eligible Shares if a pre-established number of Tread units had been produced and shipped by us from November 1, 2021 through December 31, 2021 (the “December 2021 Shares”). Any Eligible Shares would then vest and become exercisable, in whole or in part, if Mr. Cortese remained in continuous service through the quarterly vesting schedule over four years.

In October 2021, the compensation committee determined that the performance goal under the Cortese Performance Option for the September 2021 Shares had not been met and, therefore, that none of the shares of our Class A common stock subject to that performance metric had become Eligible Shares. However, in part in recognition of managing macro supply chain disruptions under extraordinary circumstances, and ultimately reaching the performance goal on a slightly delayed time frame, the compensation committee determined to grant Mr. Cortese an Option to purchase 23,089 shares of our Class A common stock (the “Additional Cortese Option”), which vests as to 1/16th of the total number of shares of our Class A common stock quarterly, for so long as Mr. Cortese continues to provide services to us on such date. Quarterly vesting would occur on each February 15th, May 15th, August 15th, and November 15th following the vesting commencement date. The vesting commencement date for Cortese Additional Option is the grant date of the award, November 15, 2021.

Additionally, in January 2022, the compensation committee determined that the performance goal under the Cortese Performance Option for the December 2021 Shares had not been met and therefore, that none of the shares of our Class A common stock subject to that performance metric had become Eligible Shares. Thus, Mr. Cortese is no longer eligible to earn the Cortese Performance Option but remains eligible to vest in the Cortese Time Option and the Additional Cortese Option subject to his continued employment with us through the applicable vesting dates.

New Hire Equity Awards

In February 2022, in connection with his appointment as our CEO and President, Mr. McCarthy was granted an Option to purchase 8,000,000 shares of our Class A common stock (the “McCarthy Option”). The McCarthy Option will vest and become exercisable over four years, with 1/48th vesting on each monthly anniversary of the vesting commencement date, February 9, 2022, subject to Mr. McCarthy continuing to

 

 

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provide service to us on each vesting date. The McCarthy Option was intended to be in lieu of granting any additional compensatory equity awards to Mr. McCarthy for approximately four years.

In June 2022, in connection with her appointment as our Chief Financial Officer, Ms. Coddington was granted an equity award in respect of our Class A common stock valued at $9,000,000 on the date of grant, which Ms. Coddington elected pursuant to the Employee Equity Choice Program to receive in the form of both an Option and RSUs (collectively, the “Coddington Equity Awards”), with each award valued at $4,500,000. The Coddington Equity Awards will vest and, as applicable, become exercisable, with respect to 25% of the shares of Class A common stock underlying the Coddington Equity Awards on June 13, 2023, and as to 1/16th of the shares of Class A common stock underlying the Coddington Equity Award on quarterly anniversaries thereafter, for so long as Ms. Coddington continues to provide services to us on such date. Quarterly vesting will occur on the first trading day on or after each of June 13th, September 13th, December 13th, and March 13th following the vesting commencement date. The vesting commencement date for the Coddington Equity Awards was June 13, 2022. The Coddington Equity Awards were intended to be granted in lieu of the two bi-annual Refresh Grants that would typically be granted to Ms. Coddington in respect of her first year of service.

HEALTH AND WELFARE BENEFITS

Our executive officers, including our named executive officers, are eligible to participate in the same employee benefit plans, and on the same terms and conditions, as all other full-time, salaried U.S. employees. These benefits include medical, dental, and vision insurance, business travel insurance, an employee assistance program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, and commuter benefits.

We also maintain a Section 401(k) Plan, that provides eligible U.S. employees, including our named executive officers, with an opportunity to save for retirement on a tax-advantaged basis. Participants may make pre-tax contributions to the Section 401(k) Plan from their eligible earnings up to the statutorily prescribed annual limit on pre-tax contributions under the Internal Revenue Code of 1986, as amended, or the “Code.” An employee’s interest in their pre-tax deferrals is 100% vested when contributed. As a tax-qualified retirement plan, contributions to the Section 401(k) Plan are deductible by us when made, and contributions and earnings on those amounts are generally not taxable to the employees until withdrawn or distributed from the plan. In Fiscal 2022, we matched the Section 401(k) Plan contributions for all employees who contributed to the Section 401(k) Plan, including our executive officers. Specifically, we matched 100% of an employee’s contributions up to a maximum of either the lesser of 4% of contributions or $20,500 in calendar year 2022.

We design our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.

PERQUISITES AND OTHER PERSONAL BENEFITS

Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant recurring perquisites or other personal benefits to our executive officers, including our named executive officers, except as generally made available to all our employees, or in situations where we believe it is appropriate to assist an individual in the performance of their duties, to make our executive officers more efficient and effective, to ensure their safety and security, or for recruitment and retention purposes. Such perquisites may include reimbursement of commuting expenses and long-term disability coverage. In Fiscal 2022, in connection with their commencement of employment with us, we agreed to reimburse Mr. McCarthy and Ms. Coddington for relocation expenses and legal fees in connection with negotiating their offer letters and related documentation. Our compensation committee determined to provide these perquisites for recruitment purposes.

 

 

 

 

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In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be fully disclosed in accordance with SEC disclosure requirements and, as applicable, subject to periodic review by the compensation committee.

EMPLOYMENT ARRANGEMENTS

With respect to Fiscal 2022, we were parties to written employment offer letters with our CEO and each of our other named executive officers (other than Mr. Kushi). We believe that these arrangements were necessary to induce these individuals to forgo other employment opportunities or leave their then-current employer for the uncertainty of a demanding position in a new and unfamiliar organization.

Each of these employment offer letters provides for “at will” employment (meaning that either we or the named executive officer may terminate the employment relationship at any time without cause) and sets forth the initial compensation arrangements for the named executive officer, including an initial base salary, participation in our employee benefit programs, and, in some instances, a recommendation for an equity award in the form of an option to purchase shares of our Class A common stock and various perquisites.

For detailed descriptions of the employment offer letters we maintained with our named executive officers during Fiscal 2022, see “Offer Letters” below.

POST-EMPLOYMENT COMPENSATION

Each of our named executive officers has entered into a participation agreement under our Severance Plan, which provides certain protections in the event of their involuntary termination of employment under specified circumstances, including following a change in control of our Company. The provisions of the Severance Plan supersede the post-employment compensation provisions contained in our named executive officers’ employment offer letters.

These arrangements provide reasonable compensation to a named executive officer if they leave our employ under certain circumstances to facilitate their transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing named executive officer to execute (and not revoke) a general release of claims acceptable to us, and agreeing to be bound by certain restrictive covenants, as a condition to receiving post-employment compensation payments or benefits. We also believe that these arrangements help maintain our named executive officers’ continued focus and dedication to their assigned duties to maximize stockholder value if there is a potential transaction that could involve a change in control of our Company.

In determining payment and benefit levels under the various circumstances triggering post-employment compensation provisions under the Severance Plan, the compensation committee has drawn a distinction between (i) voluntary terminations of employment without good reason or terminations of employment for cause and (ii) terminations of employment without cause or voluntary terminations of employment for good reason. Payment in the latter circumstances has been deemed appropriate in light of the benefits described in the prior paragraph, as well as the likelihood that the named executive officer’s departure is due, at least in part, to circumstances not within their control. In contrast, we believe that payments are not appropriate in the event of a termination of employment for cause or a voluntary resignation without good reason because such events often reflect either performance challenges or an affirmative decision by the named executive officer to end their relationship without fault by our Company.

All payments and benefits under the Severance Plan in the event of a change in control of our Company are payable only if there is a loss of employment by a named executive officer during the “change in control period” (a so-called “double-trigger” arrangement). Under their employment letters, the “change in control period” for Mr. McCarthy and Ms. Coddington includes the 120-day period immediately prior to a “change in control” (as defined in the Severance Plan), in addition to the 12-month period following a change in control of the Company (which period applies to all other participants in the Severance Plan). In the case of the

 

 

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acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of our Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.

In the event of a change in control of our Company, to the extent Section 280G or 4999 of the Code is applicable to a named executive officer, such individual is entitled to receive either payment of the full amounts specified in the Severance Plan to which they are entitled or payment of such lesser amount that does not trigger the excise tax imposed by Section 4999, whichever results in him or her receiving the greatest after-tax amount.

We believe that having in place reasonable and competitive post-employment compensation arrangements in the event of a change in control of our Company are essential to attracting and retaining highly-qualified executive officers. The compensation committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining the annual compensation for our executive officers. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive.

For a summary of the material terms and conditions of the post-employment compensation arrangements we maintained with our named executive officers during Fiscal 2022, as well as an estimate of the potential payments and benefits that certain named executive officers would have been eligible to receive if a hypothetical change in control or other trigger event had occurred on June 30, 2022, see “Potential Payments Upon Termination or Change in Control” below.

In connection with their departures, we entered into severance or transition agreements with each of our named executive officers who departed in Fiscal 2022 or Fiscal 2023. The material terms of these agreements are described below under “Offer Letters.”

OTHER COMPENSATION POLICIES

EQUITY GRANTING POLICY

We maintain an equity award granting policy which provides as follows:

 

 

In the case of a newly-hired employee, the effective date of grant of an equity award, or grant date, will be the first day of the month (or if such date is not a trading day, on the next trading day) immediately following the date on which the compensation committee approves the grant, or such other date as approved by the compensation committee with advice of legal counsel. All grants are conditioned on the employee being an employee with us on the grant date. In addition, the vesting commencement date for any such new-hire grant will be the newly hired employee’s hire date.

 

In the case of an equity award granted for “refresh,” promotion, or other discretionary purposes, the effective date of grant will be the first day of the month (or if such date is not a trading day, on the next trading day) immediately following the date on which the compensation committee approves the grant; provided, however, that if such date falls within a trading blackout period, then the grant date will be on the next trading day immediately following the public dissemination of the information giving rise to the blackout period, or such other date as approved by the compensation committee with advice of legal counsel.

 

The exercise price of any option to purchase shares of our Class A common stock or any stock appreciation right to purchase shares of our Class A common stock will be the closing price of our Class A common stock on the grant date on the principal national securities exchange on which our Class A common stock is listed or admitted to trade.

CLAWBACK POLICY

In January 2022, the compensation committee adopted a clawback policy which provides that if any incentive-based cash compensation or equity awards granted to a current or former executive officer is

 

 

 

 

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predicated upon us achieving certain financial results, and (i) if our financial statements are adjusted to correct an error that has a material impact on the our financial statements and (ii) our Board determines that an executive officer engaged in fraud or intentional misconduct that materially contributed to the need for such restatement, then our Board or the compensation committee shall, in such circumstances as it deems appropriate, recoup or require forfeiture of any of such executive officer’s incentive-based cash or equity compensation granted or received during the three-year period preceding such restatement that is in excess of any compensation that would have been earned by such executive officer based upon the restated financial results.

HEDGING AND PLEDGING RESTRICTIONS

Our Insider Trading Policy prohibits our employees (including our executive officers) and the non-employee members of our Board from engaging in transactions involving options or other derivative securities on our securities, such as puts and calls, whether on an exchange or in any other market (provided, however, that such individuals may exercise compensatory equity grants issued by us). In addition, our Insider Trading Policy prohibits our employees (including our executive officers) and the non-employee members of our Board from engaging in hedging or monetization transactions involving our securities, such as zero-cost collars and forward sale contracts or contributing our securities to exchange funds that could be interpreted as having the effect of hedging in our securities. Finally, beginning in October 2022, our Insider Trading Policy prohibits our employees (including our executive officers) and the non-employee members of our Board from using or pledging our securities as collateral in a margin account or as collateral for a loan. Prior to October 2022, pledging was allowable if the pledge had been approved by our Insider Trading Policy Administrators, in their sole discretion, provided that an individual only pledged up to 40% of the number of such individual’s vested and outstanding Peloton securities. For additional information, see the section titled “Security Ownership of Certain Beneficial Owners and Management.

RULE 10B5-1 SALES PLANS

Our Insider Trading Policy requires that each of our directors, executive officers, and certain other senior level persons who have been designated as having regular access to material nonpublic information about our Company in the normal course of their duties must conduct any open market sales or purchases of our securities only through use of stock trading plans adopted pursuant to Rule 10b5-1 of the Exchange Act. Rule 10b5-1 provides a way for insiders to buy and sell our securities over a designated period by adopting pre-arranged stock trading plans entered into during an open trading window and at a time when they were not aware of material nonpublic information regarding the Company; following a cooling off period from after the adoption of a plan until at least the beginning of the next open trading window, their shares of our Class A common stock are sold in accordance with the terms of their stock trading plans without regard to whether or not they are in possession of material nonpublic information about the Company at the time of the sale. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director, executive officer, or other senior level person when entering into the plan, without further direction from such insider.

ACCOUNTING FOR STOCK-BASED COMPENSATION

We follow FASB ASC Topic 718, Compensation—Stock Compensation, for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all stock-based payments made to our employees and the non-employee members of our Board, including options to purchase shares of our Class A common stock and other stock-based awards, based on the grant date “fair value” of these awards. This calculation is performed for financial accounting purposes and reported in the compensation tables below, even though recipients may never realize any value from their awards. FASB ASC Topic 718 also requires us to recognize the compensation cost of our stock-based compensation awards in our statement of operations over the period that a recipient is required to render services in exchange for the stock option or other award. 

 

 

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REPORT OF THE COMPENSATION COMMITTEE

This report of the compensation committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporated by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the compensation committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

SUBMITTED BY THE COMPENSATION COMMITTEE

Jay Hoag, Chair

Angel Mendez

Pamela Thomas-Graham

 

 

 

 

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FISCAL 2022 SUMMARY COMPENSATION TABLE

The following table provides information concerning compensation to each of our named executive officers for all services rendered in all capacities during the last three or fewer fiscal years during which such individuals were named executive officers.

 

NAME AND

PRINCIPAL POSITION

  YEAR     SALARY
($)(1)
    STOCK
AWARDS
($)(2)
    OPTION AWARDS
($)(2)
    NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)
    ALL OTHER
COMPENSATION
($)
   

TOTAL

($)

 

JOHN FOLEY

Former Executive

Chairman and Former

Chief Executive Officer

 

 

2022

 

 

 

1,000,000

 

 

 

 

 

 

15,091,152

 

 

 

 

 

 

 

 

 

16,091,152

 

 

 

2021

 

 

 

1,000,000

 

 

 

 

 

 

16,800,028

 

 

 

 

 

 

 

 

 

17,800,028

 

 

 

2020

 

 

 

974,359

 

 

 

 

 

 

8,882,408

 

 

 

1,500,000

 

 

 

 

 

 

11,356,767

 

BARRY MCCARTHY

Chief Executive Officer

 

 

2022

 

 

 

357,692

 

 

 

 

 

 

167,628,328

 

 

 

 

 

 

87,400

(3) 

 

 

168,073,420

 

JILL WOODWORTH

Former Chief Financial Officer

 

 

2022

 

 

 

738,462

 

 

 

4,887,084

 

 

 

7,712,734

 

 

 

 

 

 

41,492

(4) 

 

 

13,379,772

 

 

 

2021

 

 

 

750,000

 

 

 

 

 

 

7,888,069

 

 

 

 

 

 

2,308

 

 

 

8,640,377

 

 

 

2020

 

 

 

730,769

 

 

 

 

 

 

5,329,445

 

 

 

1,125,000

 

 

 

 

 

 

7,185,214

 

LIZ CODDINGTON

Chief Financial Officer

 

 

2022

 

 

 

19,231

 

 

 

3,435,223

 

 

 

4,500,002

 

 

 

 

 

 

 

 

 

7,954,456

 

WILLIAM LYNCH

Former President

 

 

2022

 

 

 

642,308

 

 

 

9,442,478

 

 

 

5,602,005

 

 

 

 

 

 

1,049,031

(5) 

 

 

16,735,822

 

 

 

2021

 

 

 

1,000,000

 

 

 

 

 

 

11,362,056

 

 

 

 

 

 

21,263

 

 

 

12,383,319

 

 

 

2020

 

 

 

974,359

 

 

 

 

 

 

7,698,087

 

 

 

1,500,000

 

 

 

33,050

 

 

 

10,205,496

 

THOMAS CORTESE

Chief Product Officer

 

 

2022

 

 

 

580,769

 

 

 

 

 

 

13,970,569

 

 

 

 

 

 

18,648

(6) 

 

 

14,569,986

 

 

 

2021

 

 

 

500,000

 

 

 

 

 

 

8,496,068

 

 

 

 

 

 

19,115

 

 

 

9,015,183

 

 

 

2020

 

 

 

487,180

 

 

 

 

 

 

4,737,284

 

 

 

750,000

 

 

 

12,184

 

 

 

5,986,648

 

HISAO KUSHI

Chief Legal Officer and

Secretary

 

 

2022

 

 

 

750,000

 

 

 

 

 

 

12,712,750

 

 

 

 

 

 

16,624

(7) 

 

 

13,479,374

 

 

 

2021

 

 

 

750,000

 

 

 

 

 

 

7,888,069

 

 

 

 

 

 

133,704

 

 

 

8,771,773

 

 

 

2020

 

 

 

730,769

 

 

 

 

 

 

5,329,445

 

 

 

1,125,000

 

 

 

81,016

 

 

 

7,266,230

 

KEVIN CORNILS

Chief Commercial Officer

 

 

2022

 

 

 

433,936

 

 

 

6,302,155

 

 

 

5,538,820

 

 

 

 

 

 

 

 

 

12,274,911

 

 

(1) 

The amounts reported in the Salary column represent salary for the applicable year. Salary amounts for Mr. McCarthy, Ms. Woodworth, Ms. Coddington, and Mr. Lynch have been prorated to reflect a partial year of service in Fiscal 2022. For additional information regarding the named executive officer transitions that occurred in Fiscal 2022 and Fiscal 2023, see “Compensation Discussion and Analysis.” Mr. Cornils’ salary was paid in Pounds sterling, and the amount reported uses a conversion rate of 1.21 U.S. Dollars to 1.00 British Pound as of June 30, 2022.

 

(2) 

The amounts reported in the Stock Awards and Option Awards columns represent the grant date fair value of the RSU and Option awards granted to our named executive officers during Fiscal 2022 as computed in accordance with FASB Accounting Standards

 

 

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  Codification Topic 718, or FASB ASC Topic 718. The amount reported in the Option Awards column for Mr. Cortese includes the grant date fair value of the performance-based stock option granted to Mr. Cortese on July 1, 2021, assuming achievement at maximum performance, and excluding the effect of estimated forfeitures. The amounts reported in the Stock Awards and Option Awards column for Mr. Lynch include the value of the RSU and Option awards granted to him in Fiscal 2022 when he served as our President, as well as an initial equity grant (pro-rated for partial year of service) in connection with his commencement of service as a member of our Board on February 8, 2022. Additionally, the amount reported In the Option Awards column for Mr. Lynch includes $5,468,425 which represents the incremental fair value of award modifications to all of Mr. Lynch’s outstanding Options deemed to have occurred in connection with his termination of employment pursuant to the Severance Plan, as computed in accordance with FASB ASC Topic 718, which extended the exercise period of his Options until the twelve-month anniversary of his employment termination date. The amount reported in the Stock Awards column for Mr. Lynch includes $27,587 which represents the incremental fair value of award modifications to all of Mr. Lynch’s RSUs deemed to have occurred in connection with Mr. Lynch’s termination of service from our Board, as computed in accordance with FASB ASC Topic 718. There was no incremental fair value associated with the accelerated vesting of Mr. Lynch’s outstanding Options and RSUs that occurred in connection with his termination of employment and there was no incremental fair value associated with the modification of Mr. Lynch’s board Options in connection with his termination of service.

 

  

All amounts reported in these columns, including with respect to any incremental fair value, are non-cash amounts. The assumptions used in calculating the grant date fair value of the RSUs and Option awards reported in the Stock Awards and Option Awards columns are set forth in Note 15 of the notes to our consolidated financial statements included in our annual report on Form 10-K for the year ended June 30, 2022 filed with the SEC on September 7, 2022. These amounts do not reflect the actual economic value realized by our named executive officers, which will vary depending on the performance of our Class A common stock. For additional information, see “ —Fiscal 2022 Outstanding Equity Awards at Fiscal Year-End Table.”

 

(3) 

The amount reported includes: (i) $29,400 for the cost of legal fees incurred by Mr. McCarthy in connection with the negotiation of his employment offer letter, which fees were reimbursed by the Company in accordance with the terms of his employment offer letter, (ii) $50,308 reimbursements for expenses incurred while commuting between Mr. McCarthy’s primary residence in California and our corporate headquarters in New York, prior to Mr. McCarthy’s relocation to New York, and (iii) $7,692 for Section 401(k) Plan matching contributions.

 

(4) 

The amount reported includes: (i) $3,462 for Section 401(k) Plan matching contributions, (ii) $37,500 for consulting fees for services rendered in Fiscal 2022, and (iii) $530 in long term disability premiums.

 

(5) 

The amount reported includes: (i) $4,323 for Section 401(k) Plan matching contributions, (ii) $10,578 in reimbursements for expenses incurred while commuting between Mr. Lynch’s primary residence and our corporate headquarters in New York, and (iii) $1,034,130 for base salary continuation and Company-paid health continuation benefits pursuant to the Severance Plan in accordance with Mr. Lynch’s termination of employment, including tax gross-up payments by the Company to cover the taxes owed by Mr. Lynch in connection with the Company’s provision of such benefits in the amount of $802.04.

 

(6) 

The amount reported includes (i) $11,909 for Section 401(k) Plan matching contributions (ii) $6,338 for the Company’s reimbursement of commuting expenses and other travel related costs incurred in connection with COVID-19 and security concerns, and (iii) $401 in a long term disability premiums.

 

(7) 

The amount reported includes: (i) $12,200 for Section 401(k) Plan matching contributions (ii) $3,616 in reimbursements for expenses incurred while commuting between Mr. Kushi’s primary residence in California and our corporate headquarters in New York, and (iii) $808 in long term disability premiums.

 

 

 

 

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FISCAL 2022 GRANTS OF PLAN-BASED AWARDS TABLE

The following table provides information concerning each grant of an award made in Fiscal 2022 for each of our named executive officers under any compensation plan. This information supplements the information about these awards set forth in the Summary Compensation Table.

 

 

 

NAME

  TYPE OF
AWARD
  GRANT
DATE
    ESTIMATED FUTURE PAYOUTS
UNDER EQUITY INCENTIVE PLAN
AWARDS(1)
   

ALL OTHER

STOCK
AWARDS:
NUMBER OF
SHARES OF
STOCK OR
UNITS (#)

    ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS (#)
   

EXERCISE

OR BASE
PRICE OF
OPTION
AWARDS

($/SH)(2)

    GRANT DATE
FAIR VALUE OF
STOCK AND
OPTION
AWARDS ($)(3)
 
 

THRESHOLD

(#)

   

TARGET

(#)

   

MAXIMUM

(#)

 

JOHN FOLEY

 

Options(4)

 

 

9/1/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

278,022

 

 

 

100.04

 

 

 

12,353,519

 

 

Options(5)

 

 

9/1/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61,512

 

 

 

100.04

 

 

 

2,737,633

 

BARRY MCCARTHY

 

Options(6)

 

 

2/9/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,000,000

 

 

 

38.77

 

 

 

167,628,328

 

LIZ CODDINGTON

 

Options(7)

 

 

6/13/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

638,699

 

 

 

9.84

 

 

 

4,500,002

 

 

RSU(7)

 

 

6/13/2022

 

 

 

 

 

 

 

 

 

 

 

 

349,108

 

 

 

 

 

 

 

 

 

3,435,223

 

JILL WOODWORTH

 

Options(4)

 

 

9/1/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

112,528

 

 

 

100.04

 

 

 

5,000,024

 

 

Options(5)

 

 

9/1/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60,952

 

 

 

100.04

 

 

 

2,712,710

 

 

RSU(4)

 

 

3/1/2022