ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of the executive officers named in the Summary Compensation Table under “Executive Compensation,” who we refer to as our “named executive officers," as disclosed in this Proxy Statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act. Section 14A of the Exchange Act also requires that stockholders have the opportunity to cast an advisory vote with respect to whether future executive compensation advisory votes will be held every one, two or three years, which is the subject of Proposal 4.
Our executive compensation programs are designed to attract, motivate, and retain our executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of our near-term and longer-term financial and strategic goals and for driving corporate financial performance and stability. The programs contain elements of cash and equity-based compensation and are designed to align the interests of our executives with those of our stockholders.
The “Executive Compensation” section of this Proxy Statement beginning on page 52, including “Executive Compensation Overview,” describes in detail our executive compensation programs and the decisions made by the people, culture and compensation committee and our board of directors with respect to the year ended December 31, 2022. Our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the interests of our executives with our stockholders.
Our board of directors believes this link between compensation and the achievement of our near- and long-term business goals has helped drive our performance over time. At the same time, we believe our program does not encourage excessive risk-taking by management.
Our board of directors is asking stockholders to approve a non-binding advisory vote on the following resolution:
RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this Proxy Statement, is hereby approved.
As an advisory vote, this proposal is not binding. Neither the outcome of this advisory vote nor of the advisory vote included in Proposal 4 overrules any decision by the company or our board of directors (or any committee thereof), creates or implies any change to the fiduciary duties of the company or our board of directors (or any committee thereof), or creates or implies any additional fiduciary duties for the company or our board of directors (or any committee thereof). However, our people, culture and compensation committee and board of directors value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.
Recommendation of Our Board of Directors
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| | | The board of directors recommends that you vote FOR the approval of the compensation of our named executive officers. | |
BLUE APRON 2023 PROXY STATEMENT 39
Proposal 4—
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
In Proposal 3, we are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers. In this Proposal 4, we are asking our stockholders to cast a non-binding advisory vote regarding the frequency of future advisory votes to approve named executive officer compensation. Stockholders may vote for a frequency of every one, two, or three years, or may abstain.
Our board of directors believes that an annual executive compensation advisory vote will facilitate more direct stockholder input about named executive officer compensation and is consistent with our policy of reviewing our compensation program annually, as well as seeking frequent input from our stockholders on corporate governance and executive compensation matters. We believe an annual vote would be the best governance practice for our company at this time.
Our board of directors will take into consideration the outcome of this vote in making a determination about the frequency of future named executive officer compensation advisory votes. However, because this vote is advisory and non-binding, our board of directors may decide that it is in the best interests of our stockholders and the company to hold the advisory vote to approve executive compensation more or less frequently than the option selected by a plurality of our stockholders.
Recommendation of Our Board of Directors
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| One Year | | The board of directors believes that holding the executive compensation advisory vote every one year is in the best interests of the company and its stockholders and recommends voting for a frequency of every ONE YEAR.
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40 BLUE APRON 2023 PROXY STATEMENT
Proposal 5—
TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT
We are seeking stockholder approval for an amendment to our restated certificate of incorporation to effect a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding Class A common stock using a ratio of not less than 1-for-5 and not more than 1-for-20, with the split ratio and the implementation and timing of such Reverse Stock Split to be determined in the discretion of our board of directors. As further described below, if this proposal is approved, our board of directors may determine to effect the Reverse Stock Split at any time prior to the date of the company's 2024 annual meeting of stockholders. Our board of directors reserves the right to elect to abandon the Reverse Stock Split if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of our company and our stockholders.
Approval of the Reverse Split Proposal would permit (but not require) our board of directors to amend our restated certificate of incorporation to effect the Reverse Stock Split using a split ratio of not less than 1-for-5 and not more than 1-for-20, with the exact split ratio to be set within this range as determined by our board of directors in its sole discretion, provided that the board of directors must determine to effect the Reverse Stock Split and such amendment must be filed with the Secretary of State of the State of Delaware no later than the date of the company's 2024 annual meeting of stockholders. If our board of directors determines to implement the Reverse Stock Split, the exact split ratio of the Reverse Stock Split will be determined by the board of directors prior to the effective time of the Reverse Stock Split and will be publicly announced prior to such effective time. We believe that enabling our board of directors to set the split ratio of the Reverse Stock Split within the specified range and within the specified time period will provide us with the flexibility to implement the Reverse Stock Split in a manner and at a time designed to maximize the anticipated benefits for our stockholders.
Criteria to be Used for Decision to Apply the Reverse Stock Split
If our stockholders approve the Reverse Split Proposal, our board of directors will be authorized to proceed with the Reverse Stock Split. The exact ratio of the Reverse Stock Split, within the 1-for-5 to 1-for-20 range, would be determined by our board of directors and publicly announced by us prior to the effective time of the Reverse Stock Split. In determining whether to proceed with the Reverse Stock Split and setting the appropriate split ratio for the Reverse Stock Split, if any, following the receipt of stockholder approval, our board of directors may consider, among other things, factors such as:
•the historical trading prices and trading volume of our Class A common stock;
•the number of shares of our Class A common stock outstanding prior to and after the Reverse Stock Split;
•the then-prevailing and expected trading price and trading volume of our Class A common stock and the anticipated impact of the Reverse Stock Split (including the reduction in the number of outstanding shares) on the trading market for our Class A common stock;
•the initial or continuing listing requirements of various stock exchanges, including the NYSE;
•the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs;
•business developments affecting us; and
•prevailing general market and economic conditions.
BLUE APRON 2023 PROXY STATEMENT 41
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
Background and Reasons for the Reverse Stock Split
Our board of directors is seeking authority to effect the Reverse Stock Split with the primary intent of increasing the per-share price of our Class A common stock to meet the price criteria for continued listing of our Class A common stock on the NYSE. Our Class A common stock is publicly traded and listed on the NYSE under the symbol “APRN." Our board of directors believes that, in addition to increasing the per-share price of our Class A common stock to meet the price criteria for continued listing on the NYSE, the Reverse Stock Split would also make our common stock more attractive to a broader range of institutional and other investors. Accordingly, for these and other reasons discussed below, we believe that effecting the Reverse Stock Split is in the company’s and its stockholders’ best interests.
At our 2019 annual meeting of stockholders, our stockholders approved an amendment to our restated certificate of incorporation to effect a reverse stock split of our then outstanding shares of Class A common stock and Class B common stock at a ratio of not less than 1-for-5 and not more than 1-for-15, with the exact ratio to be set within that range at the discretion of our board of directors before our 2020 annual meeting of stockholders. Following the 2019 annual meeting of stockholders, on June 13, 2019, our board of directors approved the implementation of that reverse stock split at a ratio of 1-for-15. On June 14, 2019, that reverse stock split became effective when we filed a certificate of amendment to our restated certificate of incorporation with the Secretary of State of the State of Delaware to effect the 1-for-15 reverse stock split of the then outstanding shares of our Class A common stock and Class B common stock.
On December 21, 2022, we received written notice from the NYSE notifying us that we no longer satisfied the continued listing compliance standard set forth Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Class A common stock was less than $1.00 per share over a consecutive 30-day trading period (the “Share Price Rule”). In accordance with Section 802.01C of the NYSE Listed Company Manual, we have until the date six months following receipt of the notice, or June 21, 2023 (the “Compliance Date”), to regain compliance with the Share Price Rule, with the possibility of extension at the discretion of the NYSE (the “Share Price Cure Period”). In order to regain compliance with the Share Price Rule, on the last trading day in any calendar month during the Share Price Cure Period, our Class A common stock must have: (i) a closing price of at least $1.00 per share; and (ii) an average closing price of at least $1.00 per share over the 30 trading-day period ending on the last trading day of such month. If we do not regain compliance with the Share Price Rule by the Compliance Date, then our Class A common stock may be subject to delisting.
We also received written notification on December 21, 2022 from the NYSE notifying us that we no longer satisfied the continued listing compliance standard set forth in Section 802.01B of the NYSE Listed Company Manual because our average global market capitalization over a consecutive 30 trading-day period was less than $50.0 million and, at the same time, our last reported stockholders’ equity was less than $50.0 million. In accordance with Section 802.02 of the NYSE Listed Company Manual, we submitted a plan for curing the market capitalization deficiency to the NYSE and the NYSE has accepted the plan. The proposed Reverse Stock Split is not intended to address the market capitalization standard.
In the event we are delisted from the NYSE, the only established trading market for our Class A common stock would be eliminated, and we would be forced to list our shares on the OTC Markets or another quotation medium, depending on our ability to meet the specific listing requirements of those quotation systems. As a result, an investor would likely find it more difficult to trade or obtain accurate price quotations for our shares. Delisting would likely also reduce the visibility, liquidity, and value of our Class A common stock, reduce institutional investor interest in our company, and may increase the volatility of our Class A common stock. Delisting could also cause a loss of confidence of potential industry partners, lenders, and employees, which could further harm our business and our future prospects. We believe that effecting the Reverse Stock Split will help us avoid delisting from the NYSE and any resulting consequences.
In addition, in determining to seek authorization for the Reverse Stock Split, our board of directors considered that the implementation of a reverse stock split is likely to increase the trading price of our Class A common stock as a result of the reduction in the number of shares outstanding. Our board of directors believes that the increased market price of our Class A common stock expected as a result of implementing the Reverse Stock Split may improve marketability and liquidity of our Class A common stock and may encourage interest and trading in our Class A common stock.
42 BLUE APRON 2023 PROXY STATEMENT
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
For example, some investors may prefer to invest in stocks that trade at a per-share price range more typical of companies listed on the NYSE, and, because of the trading volatility often associated with low-priced stocks, certain institutional investors may be prohibited in their investment charters from purchasing stocks that trade below certain minimum price levels. In addition, brokerage firms may be reluctant to recommend lower-priced stocks to their clients. Further, brokerage commissions paid by investors, as a percentage of a total transaction, tend to be higher for lower-priced stocks. As a result, certain investors may also be dissuaded from purchasing lower-priced stocks. Our board of directors believes that the higher share price that may result from the Reverse Stock Split could enable institutional investors and brokerage firms with such policies and practices to invest in our Class A common stock.
Although we expect that the Reverse Stock Split will increase the market price of our Class A common stock as result of having fewer outstanding shares, the Reverse Stock Split may not result in a permanent increase in the market price of our Class A common stock, which will continue to be dependent on many factors, including general economic, market and industry conditions and other factors detailed from time to time in the reports we file with the SEC.
Certain Risks Associated with the Reverse Stock Split
Reducing the number of outstanding shares of our Class A common stock through the Reverse Stock Split is intended, absent other factors, to increase the per-share trading price of our Class A common stock above $1.00 to meet the Share Price Rule. However, other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the trading price of our Class A common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the trading price of our Class A common stock will increase following the Reverse Stock Split, that the trading price of our Class A common stock will not decrease in the future or that we will remain in or be able to resume compliance with the NYSE listing requirements. Additionally, we cannot assure you that the trading price per share of our Class A common stock after the Reverse Stock Split will increase in proportion to the reduction in the number of shares of our Class A common stock outstanding before the Reverse Stock Split. Additionally, there can be no guarantee that the closing price of our Class A common stock will remain at or above $1.00 for 30 consecutive trading days, whether following the Reverse Stock Split or otherwise, which is required to cure our NYSE listing standard deficiency with the Share Price Rule. Accordingly, the total market capitalization of our Class A common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split, including for reasons unrelated to the Reverse Stock Split.
The proposed Reverse Stock Split may decrease the liquidity of our Class A common stock and result in higher transaction costs. The liquidity of our Class A common stock may be negatively impacted by the Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the per-share trading price does not increase as a result of the Reverse Stock Split. For instance, if the Reverse Stock Split is implemented, it may result in some stockholders owning "odd lots" (less than 100 shares) of Class A common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions in "round lots" of even multiples of 100 shares. If we effect the Reverse Stock Split, the resulting per-share stock price may nevertheless fail to attract institutional investors and may not satisfy the investing guidelines of such investors and, consequently, the trading liquidity of our common stock may not improve. Accordingly, the Reverse Stock Split may not achieve the desired results of increasing marketability of our Class A common stock as described above.
You should also keep in mind that the implementation of the Reverse Stock Split does not have an effect on the actual or intrinsic value of our business or a stockholder’s proportional ownership in our company (subject to the treatment of fractional shares). However, should the overall value of our Class A common stock decline after the proposed Reverse Stock Split, then the actual or intrinsic value of the shares of our Class A common stock held by you will also proportionately decrease as a result of the overall decline in value.
BLUE APRON 2023 PROXY STATEMENT 43
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
Reservation of Right to Abandon the Amendment to our Restated Certificate of Incorporation and the Reverse Stock Split
Our board of directors reserves the right to abandon the amendment to our restated certificate of incorporation described in this Reverse Split Proposal without further action by our stockholders, even if stockholders approve such amendment at the Annual Meeting, if at any time prior to the filing or effectiveness of a certificate of amendment to our restated certificate of incorporate to effect the Reverse Stock Split, our board of directors determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interest of our company and our stockholders. If we do not file a certificate of amendment effecting the Reverse Stock Split with the Secretary of State of the State of Delaware on or before the date of the company's 2024 annual meeting of stockholders, our board of directors will be deemed to have abandoned the Reverse Stock Split.
By voting in favor of the amendment to our restated certificate of incorporation, stockholders are also expressly authorizing the board of directors to determine not to proceed with, and abandon, a reverse stock split if it should so decide.
Procedure for Implementing the Reverse Stock Split
If stockholders approve the Reverse Split Proposal and if our board of directors elects to implement the Reverse Stock Split (with the ratio to be determined in the discretion of the board within the parameters described), the Reverse Stock Split will become effective upon the filing with the Secretary of State of the State of Delaware of a certificate of amendment to our restated certificate of incorporation, in the form attached as Appendix A (the “Certificate of Amendment”). The Certificate of Amendment will not change the number of authorized shares of Class A common stock, Class B common stock, Class C capital stock or preferred stock, or the par value of the Class A common stock, Class B common stock, Class C capital stock or preferred stock. We currently have no outstanding shares of Class B common stock, Class C capital stock or preferred stock. The exact timing of the filing of the Certificate of Amendment and the effectiveness of the Reverse Stock Split will be determined by our board of directors, in its sole discretion, provided that in no event shall the filing of the Certificate of Amendment effecting the Reverse Stock Split occur after the date of the company's 2024 annual meeting of stockholders.
Effect of the Reverse Stock Split on Holders of Outstanding Class A Common Stock
If our stockholders approve the Reverse Split Proposal and our board of directors elects to implement the Reverse Stock Split, depending on the split ratio for the Reverse Stock Split determined by our board of directors, a minimum of every 5 and a maximum of every 20 shares of issued and outstanding Class A common stock will be combined into one new share of Class A common stock.
The actual number of shares issued and outstanding after giving effect to the Reverse Stock Split, if implemented, will depend on the split ratio for the Reverse Stock Split that is ultimately determined by our board of directors. The Reverse Stock Split will affect all holders of our Class A common stock uniformly and will not affect any stockholder's percentage ownership interest in our company, except that, as described below under "—Fractional Shares," record holders of Class A common stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will receive cash in lieu of such fractional share. In addition, the Reverse Stock Split will not affect any stockholder's proportionate voting power (subject to the treatment of fractional shares).
After the effective time of the Reverse Stock Split, our Class A common stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described below. The Reverse Stock Split is not intended as, and would not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act.
Assuming split ratios of 1-for-5, 1-for-12.5 and 1-for-20, which reflect the low end, middle and high end of the range that our stockholders are being asked to approve, the following table sets forth (i) the number of shares of our Class A common stock that would be issued and outstanding, (ii) the number of shares of our Class A common stock that would be reserved for issuance pursuant to outstanding options, warrants, restricted stock units and performance stock units, and (iii) the weighted-average exercise price of outstanding options and warrants, each giving effect to the Reverse Stock Split and based on 70,468,683 shares of Class A common stock outstanding as of April 10, 2023.
44 BLUE APRON 2023 PROXY STATEMENT
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
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| | Before | | Split Ratio | | Split Ratio | | Split Ratio |
| | Reverse | | of | | of | | of |
| | Stock Split | | 1-for-5 | | 1-for-12.5 | | 1-for-20 |
| Number of Shares of Class A Common Stock Issued and Outstanding | | 70,468,683 | | 14,093,737 | | 5,637,495 | | 3,523,435 |
| Number of Shares of Class A Common Stock Reserved for Issuance Pursuant to Outstanding Options, Warrants, Restricted Stock Units and Performance Stock Units | | 15,061,012 | | 3,012,203 | | 1,204,881 | | 753,051 |
If our board of directors does not implement the Reverse Stock Split prior to our 2024 annual meeting of stockholders, the authority granted in this proposal to implement the Reverse Stock Split would terminate.
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in the Reverse Split Proposal, except to the extent of their ownership in shares of our Class A common stock and securities exercisable for our Class A common stock, which shares and securities would be subject to the same proportionate adjustment in accordance with the terms of the Reverse Stock Split as all other outstanding shares of our Class A common stock and securities exercisable for our Class A common stock.
Authorized Shares of Class A Common Stock
Currently, we are authorized to issue up to a total of 2,185,000,000 shares of capital stock, consisting of 1,500,000,000 shares of Class A common stock, 175,000,000 shares of Class B common stock, 500,000,000 shares of Class C capital stock and 10,000,000 shares of preferred stock. Except for the shares issuable upon the exercise or vesting of outstanding options, restricted stock units and performance stock units, shares reserved for issuance under our at-the-market offering or the remaining shares issuable to RJB Partners pursuant to the RJB Purchase Agreement, we do not currently have any plans, proposals or arrangement to issue any of our authorized but unissued shares of Class A common stock. Authorized shares represent the number of shares of Class A common stock that we are permitted to issue under our restated certificate of incorporation, as amended. If our board of directors elects to implement the Reverse Stock Split, the Reverse Stock Split will not change the number of authorized shares of our Class A common stock under our restated certificate of incorporation. If the Reverse Stock Split is implemented, (i) the number of shares of issued and outstanding Class A common stock will decrease as a result of the Reverse Stock Split by the ratio selected by our board of directors within the 1-for-5 to 1-for-20 range described above, and (ii) the number of shares of Class A common stock available for issuance will increase.
The Reverse Stock Split could, under certain circumstances, have an anti-takeover effect, although this is not the intent of the board of directors. For example, it may be possible for the board of directors to delay or impede a takeover or transfer of control of our company by causing the additional shares of our Class A common stock that will be available for issuance as a result of the Reverse Stock Split to be issued to holders who might side with the board of directors in opposing a takeover bid that the board of directors determines is not in the best interests of our company or our stockholders. The Reverse Stock Split, therefore, may have the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover attempts, the Reverse Stock Split may limit the opportunity for our stockholders to dispose of their shares at the higher price generally available in takeover attempts or that may be available under a merger proposal. The Reverse Stock Split may have the effect of permitting our current management, including the current board of directors, to retain its position, and place it in a better position to resist changes that stockholders may wish to make if they are dissatisfied with the conduct of our company's business. However, the board of directors is not aware of any attempt to take control of our company and the board of directors has not approved the Reverse Stock Split with the intent that it be utilized as a type of anti-takeover device.
BLUE APRON 2023 PROXY STATEMENT 45
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
Beneficial Holders of Class A Common Stock (i.e., stockholders who hold in street name)
If our board of directors elects to implement the Reverse Stock Split, then, for purposes of implementing the Reverse Stock Split, we intend to treat shares held by stockholders through a bank or broker, trustee or nominee in the same manner as registered stockholders whose shares are registered in their names. Banks or brokers, trustees or nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Class A common stock in street name. However, these banks or brokers, trustees or nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. Stockholders who hold shares of our Class A common stock with a bank or broker, trustee or nominee and who have any questions in this regard are encouraged to contact their banks or brokers, trustees or nominees.
Registered "Book-Entry" Holders of Class A Common Stock (i.e., stockholders that are registered on our transfer agent's books and records but do not hold stock certificates)
Certain of our registered holders of Class A common stock may hold some or all of their shares electronically in book-entry form with our transfer agent. These stockholders do not have physical stock certificates evidencing their ownership of Class A common stock. They are, however, provided with a periodic statement reflecting the number of shares of Class A common stock registered in their accounts.
Stockholders who hold shares of Class A common stock electronically in book-entry form with our transfer agent will not need to take further action to receive whole shares of post-Reverse Stock Split Class A common stock or payment in lieu of fractional shares if applicable. If a stockholder is entitled to post-Reverse Stock Split shares, a transaction statement will automatically be sent to the stockholder’s address of record indicating the number of shares of our Class A common stock held following the Reverse Stock Split.
Exchange of Stock Certificates
If the Reverse Stock Split is effected, stockholders holding certificated shares (i.e., shares represented by one or more physical stock certificates) will be requested to exchange their old stock certificate(s) ("Old Certificate(s)") for shares held in book-entry form at the transfer agent in their direct registration system representing the appropriate number of whole shares of our Class A common stock, resulting from the Reverse Stock Split. Stockholders of record upon the effective time of the Reverse Stock Split will be furnished the necessary materials and instructions for the surrender and exchange of their Old Certificate(s) at the appropriate time by our transfer agent, Computershare. Stockholders will not have to pay any transfer fee or other fee in connection with such exchange. As soon as practicable after the effective time of the Reverse Stock Split, our transfer agent will send a transmittal letter to each stockholder advising such holder of the procedure for surrendering Old Certificate(s) in exchange for new shares held in book-entry form. Your Old Certificate(s) representing pre-split shares cannot be used for either transfers or deliveries. Accordingly, you must exchange your Old Certificate(s) in order to effect transfers or deliveries of your shares.
YOU SHOULD NOT SEND YOUR OLD CERTIFICATES NOW. YOU SHOULD SEND THEM ONLY IF WE EFFECT A REVERSE STOCK SPLIT AND YOU RECEIVE A LETTER OF TRANSMITTAL FROM OUR TRANSFER AGENT.
As soon as practicable after the surrender to our transfer agent of any Old Certificate(s), together with a properly completed and duly executed transmittal letter and any other documents our transfer agent may specify, our transfer agent will have its records adjusted to reflect that the shares represented by such Old Certificate(s) are held in book-entry form in the name of such person.
Until surrendered as contemplated herein, a stockholder's Old Certificate(s) shall be deemed at and after the effective time of the Reverse Stock Split to represent the number of whole shares of our Class A common stock, as applicable, resulting from the Reverse Stock Split.
Any stockholder whose Old Certificate(s) have been lost, destroyed or stolen will be entitled to new shares in book-entry form only after complying with the requirements that we and our transfer agent customarily apply in connection with lost, stolen or destroyed certificates.
46 BLUE APRON 2023 PROXY STATEMENT
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
No service charges, brokerage commissions or transfer taxes shall be payable by any holder of any Old Certificate, except that if any book-entry shares are to be issued in a name other than that in which the Old Certificate(s) are registered, it will be a condition of such issuance that (1) the person requesting such issuance must pay to us any applicable transfer taxes or establish to our satisfaction that such taxes have been paid or are not payable, (2) the transfer complies with all applicable federal and state securities laws, and (3) the surrendered certificate is properly endorsed and otherwise in proper form for transfer.
Any stockholder who wants to continue holding certificated shares may request new certificate(s) from our transfer agent.
Fractional Shares
If our board of directors elects to implement the Reverse Stock Split, fractional shares will not be issued. Stockholders of record and stockholders who hold their shares through a bank or broker, trustee or nominee who would otherwise hold fractional shares of our Class A common stock as a result of the Reverse Stock Split will be entitled to receive a cash payment (without interest and subject to applicable withholding taxes) in lieu of such fractional shares. Each such stockholder will be entitled to receive an amount in cash equal to the fraction of one share to which such stockholder would otherwise be entitled multiplied by the closing price per share of the Class A Common Stock on the NYSE at the close of business on the trading day preceding the date of the effective time of the Reverse Stock Split multiplied by the reverse stock split ratio.
Stockholders should be aware that, under the escheat laws of the various jurisdictions where stockholders reside, where we are domiciled and where the funds will be deposited, sums due for fractional interests resulting from the Reverse Stock Split or fractional interests in new shares of Class A common stock that are not timely claimed after the effective time of the Reverse Stock Split in accordance with applicable law may be required to be paid to the designated agent for each such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds may have to seek to obtain them directly from the state to which they were paid.
Effect of the Reverse Stock Split on Employee Plans, Options, Restricted Stock Units and Performance Stock Units
Pursuant to our 2012 Equity Incentive Plan and our 2017 Equity Incentive Plan, in connection with any Reverse Stock Split, our board of directors will reduce the number of shares of Class A common stock reserved for issuance under such plans in proportion to the ratio of the Reverse Stock Split. In addition, pursuant to the various instruments governing our then outstanding stock options, restricted stock units and performance stock units, in connection with any Reverse Stock Split, our board of directors will reduce the number of shares of Class A common stock issuable upon the exercise or vesting of such stock options, restricted stock units and performance stock units in proportion to the split ratio of the Reverse Stock Split and proportionately increase the exercise price of our outstanding stock options. In connection with such proportionate adjustments, the number of shares of Class A common stock issuable upon exercise or vesting of outstanding stock options, restricted stock units and performance stock units will be rounded down to the nearest whole share, the exercise prices of stock options will be rounded up to the nearest cent and no cash payment will be made in respect of such rounding.
No Appraisal Rights
Stockholders do not have a right to dissent and obtain appraisal of, or payment for, such stockholders’ capital stock under the Delaware General Corporation Law, our restated certificate of incorporation, or our bylaws in connection with the Reverse Stock Split.
Accounting Matters
The amendment to our restated certificate of incorporation would not affect the per-share par value of our Class A common stock, which would remain $0.0001 par value per share, while the number of outstanding shares of Class A common stock would decrease in accordance with the split ratio. As a result, as of the effective time of the Reverse Stock Split, the stated capital attributable to Class A common stock on our balance sheet would decrease and the additional paid-in capital account on our balance sheet would increase by an offsetting amount due to the Reverse Stock Split. Following the Reverse Stock Split, reported per-share net income or loss will be higher because there will be fewer shares of Class A common stock outstanding, and we would adjust historical per-share amounts set forth in our future financial statements.
BLUE APRON 2023 PROXY STATEMENT 47
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following discussion is a summary of the material U.S. federal income tax consequences of the proposed Reverse Stock Split to U.S. Holders (as defined below). This discussion is based on the Internal Revenue Code of 1986, as amended, (the "Code"), U.S. Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the "IRS"), in each case in effect as of the date of this Proxy Statement. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the proposed Reverse Stock Split.
For purposes of this discussion, a "U.S. Holder" is a beneficial owner of our Class A common stock that, for U.S. federal income tax purposes, is:
•an individual who is a citizen or resident of the United States;
•a corporation (or any other entity or arrangement treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;
•an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
•a trust if (1) its administration is subject to the primary supervision of a court within the United States and all of its substantial decisions are subject to the control of one or more "United States persons" (within the meaning of Section 7701(a)(30) of the Code), or (2) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person.
This discussion is limited to U.S. Holders who hold our Class A common stock as a "capital asset" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to the particular circumstances of a U.S. Holder, including the impact of the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to U.S. Holders that are subject to special rules, including, without limitation:
•Financial institutions;
•Insurance companies;
•Real estate investment trusts;
•Regulated investment companies;
•Grantor trusts;
•U.S. expatriates and former citizens or long-term residents of the United States;
•Persons subject to special tax accounting rules as a result of any item of gross income with respect to our Class A common stock being taken into account in an "applicable financial statement" (as defined in the Code);
•Persons who hold or received our Class A common stock pursuant to the exercise of any employee stock option or otherwise as compensation;
•Tax-exempt organizations;
•Dealers or traders in securities or currencies;
•U.S. Holders who hold Class A common stock as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes; or
•U.S. Holders who have a functional currency other than the U.S. dollar.
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of our Class A common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Accordingly, partnerships (and other entities treated as partnerships for U.S. federal income tax purposes) holding our Class A common stock and the partners in such entities should consult their own tax advisors regarding the U.S. federal income tax consequences of the proposed Reverse Stock Split to them.
48 BLUE APRON 2023 PROXY STATEMENT
PROPOSAL 5―TO APPROVE AN AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT | RECOMMENDATION OF OUR BOARD OF DIRECTORS
In addition, the following discussion does not address the U.S. federal estate and gift tax, alternative minimum tax, or state, local and non-U.S. tax consequences of the proposed Reverse Stock Split. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the proposed Reverse Stock Split, whether or not they are in connection with the proposed Reverse Stock Split.
THIS DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE TAX ADVICE. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
The proposed Reverse Stock Split is intended to be treated as a "recapitalization" for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Code. As a result, a U.S. Holder generally should not recognize gain or loss upon the proposed Reverse Stock Split for U.S. federal income tax purposes, except with respect to cash received in lieu of a fractional share of our Class A common stock, as discussed below. A U.S. Holder's aggregate adjusted tax basis in the shares of our Class A common stock received pursuant to the proposed Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of our Class A common stock surrendered (reduced by the amount of such basis that is allocated to any fractional share of our Class A common stock). The U.S. Holder's holding period in the shares of our Class A common stock received should include the holding period in the shares of our Class A common stock surrendered. U.S. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of shares of common stock surrendered in a recapitalization to shares received in the recapitalization. U.S. Holders who acquired shares of our Class A common stock on different dates or at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A U.S. Holder that, pursuant to the proposed Reverse Stock Split, receives cash in lieu of a fractional share of our Class A common stock should recognize capital gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion of the U.S. Holder's aggregate adjusted tax basis in the shares of our Class A common stock surrendered that is allocated to such fractional share. Such capital gain or loss will be short term if the pre-Reverse Stock Split shares were held for one year or less at the effective time of the Reverse Stock Split and long term if held for more than one year.
Payments of cash made in lieu of a fractional share of our Class A common stock may, under certain circumstances, be subject to information reporting and backup withholding. To avoid backup withholding, each holder of our Class A common stock that does not otherwise establish an exemption should furnish its taxpayer identification number and comply with the applicable certification procedures.
Backup withholding is not an additional tax and amounts withheld will be allowed as a credit against the holder's U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS. U.S. Holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.
Recommendation of Our Board of Directors
| | | | | | | | | | | | | | |
| | | | |
| | | The board of directors recommends that you vote FOR the approval of the amendment to our restated certificate of incorporation, as amended, to approve the Reverse Stock Split | |
BLUE APRON 2023 PROXY STATEMENT 49
Security Ownership of Certain
Beneficial Owners and Management
AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information known to us regarding the beneficial ownership of our capital stock as of March 31, 2023, for:
•each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Class A common stock;
•each of our named executive officers;
•each of our directors; and
•all of our executive officers and directors as a group.
Applicable percentage ownership is based on 69,735,289 shares of Class A common stock outstanding at March 31, 2023. The number of shares beneficially owned by each stockholder is determined under rules of the SEC and includes voting or investment power with respect to securities. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power.
In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of Class A common stock subject to options, warrants or other rights held by such person that are currently exercisable or will become exercisable within 60 days after March 31, 2023 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. At March 31, 2023, there were no outstanding shares of Class B common stock or Class C capital stock.
Unless otherwise indicated, the address of all listed stockholders is c/o Blue Apron Holdings, Inc., 28 Liberty Street, New York, NY 10005. Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable. Beneficial ownership representing less than 1% is denoted with an asterisk (*).
| | | | | | | | | | | |
| Name | Shares Beneficially Owned | % of Total
Voting Power |
| Class A |
| Number | % |
| 5% STOCKHOLDERS | | | |
Joseph N. Sanberg(1)(11) | 27,562,492 | 31.0% | 31.0%(2) |
RJB Partners LLC(3)(11) | 25,717,585 | 29.0% | 29.0%(2) |
UBS O'Connor(4) | 6,265,813 | 9.0% | 9.0% |
DPH Holdings Ltd.(5) | 3,538,054 | 5.1% | 5.1% |
| NAMED EXECUTIVE OFFICERS AND DIRECTORS | |
Linda Findley(6)(11) | 278,413 | * | * |
Meredith L. Deutsch(7)(11) | 46,341 | * | * |
Irina Krechmer(8)(11) | 65,009 | * | * |
| Beverly Carmichael | 2,674 | * | * |
| Jennifer Carr-Smith | 18,574 | * | * |
| Brenda Freeman | 18,574 | * | * |
Elizabeth Huebner(9)(11) | 57,453 | * | * |
| Amit Shah | 2,945 | * | * |
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (12 PERSONS)(10)(11) | 535,953 | * | * |
50 BLUE APRON 2023 PROXY STATEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
*Less than 1%
(1)Consists of: (i) 1,250 shares of Class A common stock beneficially owned by Aspiration Growth Opportunities II GP, LLC (of which Mr. Sanberg is managing member); (ii) 6,622,956 shares of Class A common stock held by RJB Partners LLC (of which Mr. Sanberg is managing member) ("RJB Partners"); (iii) 1,666,666 of Class A common stock held by Long Live Bruce, LLC (of which Mr. Sanberg is the managing member; (iv) 176,991 shares of Class A common stock held by Remember Bruce, LLC (of which Mr. Sanberg is the managing member ); (v) 9,823,009 of Class A common stock issuable upon the Second RJB Closing, which has not yet closed, (as defined under “Related Party Transactions” of this Proxy Statement); and (vi) 9,271,620 shares of Class A common stock issuable upon the exercise of warrants held by RJB Partners. Does not reflect impact of the exercise caps in the warrants purchased pursuant to the Purchase Agreement dated September 15, 2021, that we entered into with RJB Partners and Matthew B. Salzberg (the “September 2021 Purchase Agreement”) and the February 2022 Purchase Agreement (as defined under “Related Party Transactions” of this Proxy Statement), which prohibit RJB Partners from exercising warrants for such number of shares of Class A common stock to the extent that if the warrants were exercisable, such exercise would result in RJB Partners and/or its affiliates owning more than 33% of the aggregate outstanding voting power of the company’s equity interests. Share amounts include the shares of Class A common stock referred to in Footnote 4 below.
(2)Pursuant to the September 2021 Purchase Agreement and the February 2022 Purchase Agreement, as further described under “Related Person Transactions” of this Proxy Statement, RJB Partners (of which Mr. Sanberg is managing member) and its affiliates under common control are required to vote all shares in excess of 19.9% of the company’s outstanding voting securities in proportion with the company’s other stockholders.
(3)Consists of: (i) 6,622,956 shares of Class A common stock beneficially owned by RJB Partners; (ii) 9,823,009 of Class A common stock issuable upon the Second RJB Closing; and (iii) 9,271,620 shares of Class A common stock issuable upon the exercise of warrants held by RJB Partners. Does not reflect impact of the exercise caps in the warrants purchased pursuant to the September 2021 Purchase Agreement and February 2021 Purchase Agreement, which prohibit RJB Partners from exercising warrants for such number of shares of Class A common stock to the extent that if the warrants were exercisable, such exercise would result in RJB Partners and/or its affiliates owning more than 33% of the aggregate outstanding voting power of the company’s equity interests. Share amounts include the shares of Class A common stock referred to in Footnote 4 below.
(4)As reported on a 13D filed on November 15, 2021 by RJB Partners and Mr. Sanberg, RJB Partners reported ownership of 6,362,783 shares of our Class A common stock, and further that “the purchase price” for such shares “was funded with a portion of the proceeds of a loan from O’Connor and Associates, a subsidiary of UBS Group AG (“UBS O’Connor”), which is secured by, among other things, a customary pledge of all of the shares of Class A Common Stock held by RJB Partners and Mr. Sanberg.” As reported on a Schedule 13G filed with the SEC on February 13, 2023, UBS O’Connor, LLC reported that it has sole voting and dispositive power with respect to 6,265,813 shares of our outstanding Class A common stock. These 6,362,783 shares are also included in Footnotes 1 and 3 above.
(5)The information shown is based upon disclosures filed on a Schedule 13G/A with the SEC on February 10, 2023 based on holdings as of December 31, 2022 by DPH Holdings Ltd. The address of DPH Holdings Ltd. is: SUITE 3E-1, LANDMARK SQUARE 64 EARTH CLOSE, GRAND CAYMAN E9 KY1-9006.
(6)Consists of (i) 234,644 shares of Class A common stock held by Ms. Findley; (ii) 17,329 shares of Class A common stock issuable to Ms. Findley pursuant to restricted stock units vesting within 60 days of March 31, 2023; and (iii) 26,440 shares of Class A common stock issuable upon the exercise of warrants held by Ms. Findley.
(7)Consists of (i) 39,496 shares of Class A common stock held by Ms. Deutsch; and (ii) 6,845 shares of Class A common stock issuable to Ms. Deutsch pursuant to restricted stock units vesting within 60 days of March 31, 2023.
(8)Consists of (i) 56,516 shares of Class A common stock held by Ms. Krechmer; and (ii) 8,493 shares of Class A common stock issuable to Ms. Krechmer pursuant to restricted stock units vesting within 60 days of March 31, 2023.
(9)Consists of (i) 49,388 shares of Class A common stock held by Ms. Huebner; and (ii) 8,065 shares of Class A common stock issuable upon the exercise of warrants held by Ms. Huebner.
(10)Consists of (i) 466,104 shares of Class A common stock; (ii) 35,344, shares of Class A common stock issuable pursuant to restricted stock units vesting within 60 days of March 31, 2023; and (iii) 34,505 shares of Class A common stock issuable upon the exercise of warrants.
(11)In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of Class A common stock subject to options, warrants or other rights held by such person that are currently exercisable or will become exercisable within 60 days after March 31, 2023 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person.
BLUE APRON 2023 PROXY STATEMENT 51
Executive
COMPENSATION
Executive Compensation Overview
This section describes the material elements of compensation awarded to, earned by or paid to our chief executive officer and our two most highly compensated executive officers (other than our chief executive officer). We refer to this group of executive officers as our “named executive officers.”
For 2022, our named executive officers were:
| | | | | | | | | | | | | | |
| | | |
| Linda Findley | | | Irina Krechmer |
| President and chief executive officer | | Chief technology officer |
| | | | |
| | | | |
| Meredith L. Deutsch | | | |
| General counsel and corporate secretary | | | |
This section also provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our executive officers and is intended to place in perspective the data presented in the tables and narrative discussions that follow.
Summary Compensation Table
The following table presents information regarding the total compensation awarded to, earned by, or paid to each of our named executive officers during the years indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and principal position | Year | | Salary
($) | | Bonus
($) | | Stock awards(1) | | All other
compensation
($) | Total
($) |
Linda Findley President and chief executive Officer | 2022 | | 500,000 |
| — | | 1,265,394 | | — | 1,765,394 |
| 2021 | | 460,274 | | 250,000 | | 647,000 | | — | 1,357,274 |
Meredith L. Deutsch General counsel and corporate secretary | 2022 | | 456,277 | (2) | — | | 335,335 | | — | 791,612 |
| 2021 | | 445,000 | | 166,598 | | 342,910 | | — | 954,508 |
Irina Krechmer Chief technology officer | 2022 | (3) | 398,526 | (4) | — | | 284,718 | | — | 683,244 |
52 BLUE APRON 2023 PROXY STATEMENT
EXECUTIVE COMPENSATION | NARRATIVE TO SUMMARY COMPENSATION TABLE
(1)The amounts reported in this column represent the aggregate grant date fair value of the performance-based restricted stock units (“PSUs”) and restricted stock units (“RSUs”) granted to the named executive officers during the applicable year, as computed in accordance with FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation. PSUs are subject to vesting conditions that are tied to the achievement of the relative total shareholder return comparative to the Russell 2000 and time-based requirements. RSUs are subject to the vesting conditions that are tied to time-based requirements. The assumptions used in calculating the grant date fair value of the PSUs and RSUs reported in this column are set forth in Note 12 “Share-based Compensation” of our Annual Report on Form 10-K for the year ended December 31, 2022.
(2)Ms. Deutsch’s annual base salary increased from $445,000 to $459,000 effective as of March 13, 2022.
(3)Because Ms. Krechmer was not an NEO prior to 2022, compensation information is not provided for 2021.
(4)Ms. Krechmer’s annual base salary increased from $380,000 to $403,000 effective as of March 13, 2022.
Narrative to Summary Compensation Table
We review compensation annually for all employees, including our executives. In setting executive base salaries and bonuses and granting equity incentive awards, we consider:
•compensation for comparable positions in the market,
•the historical compensation levels of our executives,
•individual performance as compared to our expectations and objectives,
•our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our stockholders, and
•a long-term commitment to our company.
Our executive compensation total rewards approach is divided into four components: base salary, annual bonus (short-term incentives), long-term incentives and benefits. We have established guidelines to structure each element of compensation between the median and 75% of the relevant market comparative set.
Specifically, our people, culture and compensation committee believes that executive compensation should be determined using a comprehensive approach, involving an evaluation of a wide variety of relevant factors, including the competitive market for executive talent, individual skills and experience, company performance, and internal pay equity. While the people, culture and compensation committee has identified target guidelines for each element of compensation, it does not use a predefined framework to weigh the relative importance of the evaluation criteria, and the emphasis placed on specific evaluation factors may vary from executive to executive. Ultimately, the terms on which any given executive officer is employed reflect the people, culture and compensation committee’s independent judgment regarding the amount and form of compensation necessary to attract, retain, and motivate that individual.
Under our compensation program, a significant portion of the compensation awarded to our chief executive officer and named executive officers is generally subject to the achievement of pre-established short-term financial performance goals or is tied to the stock price.
The people, culture and compensation committee believes that executive compensation that is variable and tied our performance incentivizes business and financial performance and, by linking certain components of compensation with stock performance, aligns the interests of executives with those of our stockholders. In terms of target pay mix for 2022, for Ms. Findley, 50% of her target total compensation was performance-based (annual bonus and PSU awards), and for the other named executive officers, an average of approximately 45% of target total compensation was performance-based (annual bonus and PSU awards).
Our chief executive officer typically proposes base salary, target bonuses and equity incentive compensation for members of our executive team (excluding himself or herself, as applicable) to the people, culture and compensation committee. The chief executive officer’s proposals are based on the company’s pay philosophy and methodology and in line with executive compensation for similarly situated executives at peer companies. Our people, culture and compensation committee then typically reviews and discusses the proposals with the chief executive officer for all executives other than the chief executive officer. The people, culture and compensation committee, without the applicable members of management present, further discusses the chief executive officer’s recommendations and ultimately recommends for our board of directors’ approval the base salary, target bonuses and equity incentive compensation of our executive officers for the current year, as well as the amount of executive officer cash bonuses for the prior year, based on the attainment of company and individual goals. The chief executive officer is not present during voting or deliberations regarding her compensation by the people, culture and compensation committee or the board of directors.
BLUE APRON 2023 PROXY STATEMENT 53
EXECUTIVE COMPENSATION | NARRATIVE TO SUMMARY COMPENSATION TABLE
BASE SALARY
In 2022, we paid annual base salaries to our named executive officers as follows:
| | | | | |
| Named executive officer | Base salaries
($) |
| Ms. Findley | 500,000 |
Ms. Deutsch(¹) | 459,000 |
Ms. Krechmer(²) | 403,000 |
(¹) Ms. Deutsch’s annual base salary increased from $445,000 to $459,000 effective as of March 13, 2022.
(²) Ms. Krechmer’s annual base salary increased from $380,000 to $403,000 effective as of March 13, 2022.
These base salaries were determined based on a variety of factors, including using a competitive assessment of similarly situated executives at peer companies, and taking into account customary annual base salary increases, recognizing their individual performance and providing competitive compensation to retain key executives. We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. None of our named executive officers is currently party to an employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary and the people, culture and compensation committee reviews annual base salary each year.
ANNUAL BONUS
Our board of directors may, in its discretion, award bonuses to our named executive officers from time to time. We typically establish annual bonus targets based around a set of specified corporate goals for our named executive officers, along with individual goals, and conduct an annual performance review to determine the attainment of such goals. The target bonuses for our named executive officers for 2022 were:
| | | | | |
| Named executive officer | Target annual bonus,
as a percentage of
base salary |
| Ms. Findley | 100% |
| Ms. Deutsch | 75% |
| Ms. Krechmer | 75% |
Our management may propose bonus awards to the people, culture and compensation committee or the board of directors primarily based on such review process and such target percentages. Our people, culture and compensation committee determines or makes a recommendation to the board of directors regarding eligibility requirements for and the amount of such bonus awards. With respect to 2022, no bonuses were paid to our named executive officers based on the company’s performance in 2022.
EQUITY INCENTIVES
Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, or any formal equity ownership guidelines applicable to them, other than for our chief executive officer pursuant to our Stock Ownership Guidelines, we believe that equity grants:
•provide our executives with a strong link to our long-term performance,
•create an ownership culture, and
•help to align the interests of our executives and our stockholders.
In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period. Accordingly, our people, culture and compensation committee and board of directors periodically review the equity incentive compensation of our named executive officers and from time to time may grant equity incentive awards to them in the form of stock options, PSUs and/or RSUs. For example, in 2021, the people, culture and compensation committee determined to shift the company’s equity incentive award strategy from time-based RSU awards to PSU awards with vesting subject to (i) our Class A common stock achieving certain minimum unweighted closing prices per share, averaged over a 30 consecutive trading day period prior to February 25, 2024 and (ii) time-based vesting. In addition, in 2022, the people, culture and compensation committee determined to shift the company’s equity award strategy for our executive officers to a mix of 50% RSUs and 50% PSUs, with the number of PSUs that could be earned and vest depending on our total stockholder return (“TSR”) over the performance period beginning February 25, 2022 and ending February 25, 2025, relative to the TSR of the group companies in the Russell 2000 Index. The actual number of shares that may vest ranges from 0% to 200% of the PSUs awarded.
54 BLUE APRON 2023 PROXY STATEMENT
EXECUTIVE COMPENSATION | NARRATIVE TO SUMMARY COMPENSATION TABLE
On March 1, 2021, our people, culture and compensation committee granted PSU awards representing the right to receive an aggregate amount of 100,000 shares, 53,000 shares, and 45,000 shares to each of Ms. Findley, Ms. Deutsch, and Ms. Krechmer, respectively. The aggregate targeted dollar value of these PSU awards was approximately $1,000,000, $530,000, and $450,000 for each of Ms. Findley, Ms. Deutsch, and Ms.Krechmer, respectively adjusted, based on the grant methodology described in the following sentence. The number of shares of Class A common stock underlying each such PSU award was determined by dividing the target dollar value of each award by $10.00. Vesting of 50%, 25% and 25% of the PSUs granted on March 1, 2021 is subject to our Class A common stock achieving certain minimum unweighted closing prices per share averaged over a 30 consecutive trading day period prior to February 25, 2024. PSUs that meet the stock price targets referred to in the prior sentence will vest (i) 50% on the later to occur of (A) the date a stock price target is met and (B) February 25, 2022 and (ii) 50% on February 25, 2024. Any PSUs that have not achieved the performance targets by February 25, 2024 shall expire and have no further force or effect. As of April 13, 2023 none of the performance targets had been met.
On February 25, 2022, our people, culture and compensation committee granted PSU awards representing the right to receive an aggregate amount of 93,387 shares, 24,748 shares, and 21,012 shares to each of Ms. Findley, Ms. Deutsch and Ms. Krechmer, respectively, and RSU awards representing the right to receive an aggregate amount of 93,387 shares, 24,748 shares, and 21,013 shares to each of Ms. Findley, Ms. Deutsch and Ms. Krechmer, respectively. The aggregate targeted dollar value of the RSU and PSU awards was approximately $1,500,000, $397,507, and $337,507 for each of Ms. Findley, Ms. Deutsch, and Ms.Krechmer, respectively adjusted, based on the grant methodology described in the following sentence. The number of shares of Class A common stock underlying each such RSU and PSU award was determined by dividing the target dollar value of each award by $8.0311, representing the average 90-trading day price of the Class A common stock. Each PSU and each RSU represents the right to receive one share of Class A common stock. The RSUs granted in 2022 to our named executive officers vest in equal quarterly installments on each May 25, August 25, November 25 and February 25 through February 25, 2025. The PSUs vest on February 25, 2025, subject to the meeting of the performance metrics during the performance period. The number of PSUs that could be earned and vest under the grant depends on our TSR over the performance period beginning February 25, 2022 and ending February 25, 2025 relative to the TSR of the group companies in the Russell 2000 Index. The actual number of shares that may vest ranges from 0% to 200% of the target amount.
Any PSUs that have not achieved the performance targets by February 25, 2025 shall expire and have no further force or effect.
On February 25, 2023, our people, culture and compensation committee granted PSU awards representing the right to receive an aggregate amount of 150,000 shares, 37,500 shares, and 37,500 shares to each of Ms. Findley, Ms. Deutsch and Ms. Krechmer, respectively, and RSU awards representing the right to receive an aggregate amount of 150,000 shares, 37,500 shares, and 37,500 shares to each of Ms. Findley, Ms. Deutsch and Ms. Krechmer, respectively. In 2023, the people, culture and compensation committee shifted to a share-based grant methodology tied to a fixed pool of shares to be granted by employee level in lieu of the value-based methodology in prior years, and, accordingly, the number of shares of Class A common stock underlying each such RSU and PSU award for 2023 was determined by application of the share-based grant model. Each PSU and each RSU represents the right to receive one share of Class A common stock. The RSUs granted in 2023 to our named executive officers vest in equal quarterly installments on each May 25, August 25, November 25 and February 25 through February 25, 2026. The PSUs vest on February 25, 2026, subject to the meeting of the performance metrics during the performance period. The number of PSUs that could be earned and vest under the grant depend on the company's TSR over the performance period beginning January 1, 2023 and ending December 31, 2025 relative to the TSR of the group companies in the Russell 2000 Index. The actual number of shares that may vest ranges from 0% to 200% of the target amount. Any PSUs that have not achieved the performance targets by December 31, 2025 shall expire and have no further force or effect.
In addition, on February 25, 2023, the people, culture and compensation committee granted RSU awards as special recognition and retention incentive awards to Ms. Deutsch and Ms. Krechmer representing the right to each to receive an aggregate amount of 30,000 shares of Class A common stock. These RSUs will vest in full on February 25, 2024. On March 25, 2023, the people, culture and compensation committee granted an RSU award as a special recognition and retention incentive award to Ms. Findley representing the right to receive an aggregate amount of 75,000 shares of Class A common stock. These RSUs will vest in full on March 25, 2024. The people, culture and compensation committee determined to grant the special recognition awards as retention incentives to maintain critical business functions for our named executive officers and other executive officers.
The vesting is subject to the named executive officer’s continued service to us on each applicable vesting date.
BLUE APRON 2023 PROXY STATEMENT 55
EXECUTIVE COMPENSATION | OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the outstanding equity awards held by each named executive officer as of December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | |
| Option awards | | Stock awards |
| Name | Number of
securities
underlying
unexercised
options
(#)
exercisable | Number of
securities
underlying
unexercised
options
(#)
unexercisable | Option
exercise
price
($) | Option
expiration
date | | Number of
shares or
units of
stock that
have not
vested
(#) | Market value of shares of units of stock that have not vested(1) ($) |
| Linda Findley | — | — | — | — | | 301,040(2) | 249,863 |
| Meredith L. Deutsch | — | — | — | — | | 117,120(3) | 97,210 |
| Irina Krechmer | — | — | — | — | | 105,756(4) | 87,777 |
(1)This column represents the market value of the shares underlying RSUs and PSUs as of December 30, 2022, based on the closing price of our Class A common stock, as reported on the NYSE, of $0.83 per share on December 30, 2022.
(2)Represents RSU awards granted on May 25, 2019, February 27, 2020, May 25, 2020 August 25, 2020, November 25, 2020, and February 25, 2022 and PSU awards granted on March 1, 2021 and February 25, 2022 for 544,174 shares of Class A common stock under our 2017 Equity Incentive Plan. The RSUs and PSUs vest as follows:
(i)The May 2019 RSU grant vested 3.38% of the RSUs on May 25, 2019, 6.25% of the RSUs in equal installments for the 15 quarters thereafter, and the remaining 2.87% on May 25, 2023.
(ii)The February 2020 RSU grant began vesting on May 25, 2020 in equal quarterly installments of 6.25% until it becomes fully vested on February 25, 2024.
(iii)The May 2020 RSU grant vested in 8.31% quarterly installments until February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(iv)The August 2020 RSU grant vested in 12.5% quarterly installments until February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(v)The November 2020 RSU grant vested 25% on February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(vi)The March 2021 PSU grant will vest 50%, 25% and 25% of the PSUs is subject to the issuer’s Class A Common Stock achieving certain minimum unweighted closing prices per share averaged over a 30 consecutive trading day period prior to February 25, 2024. PSUs that meet the stock price targets referred to in the prior sentence will vest (i) 50% on the later to occur of (A) the date a stock price target is met and (B) February 25, 2022 and (ii) 50% on February 25, 2024. Any PSUs that have not achieved the performance targets by February 25, 2024 shall expire and have no further force or effect.
(vii)The February 2022 RSU grant began vesting on May 25, 2022 in equal quarterly installments of 8.33% until it becomes fully vested on February 25, 2025.
(viii)The February 2022 PSU grant will vest on February 25, 2025, subject to meeting the performance metrics during the performance period. The number of PSUs that could be earned and vest under the grant depends on our TSR over the performance period beginning February 25, 2022 and ending February 25, 2025 relative to the TSR of the group companies in the Russell 2000 Index. The actual number of shares that may vest ranges from 0% to 200% of the target amount. Any PSUs that have not achieved the performance targets by February 25, 2025 shall expire and have no further force.
The vesting is subject to the named executive officer’s continued service to us on each applicable vesting date.
(3)Represents RSU awards granted on November 25, 2019, February 27, 2020, May 25, 2020 August 25, 2020, November 25, 2020, and February 25, 2022 and PSU awards granted on March 1, 2021 and February, 25 2022 for 179,053 shares of Class A common stock under our 2017 Equity Incentive Plan. The RSUs and PSUs vest as follows:
(i)The November 2019 RSU grant vested 25% of the RSUs on November 25, 2020 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on November 25, 2023.
(ii)The February 2020 RSU grant began vesting on May 25, 2020 in equal quarterly installments of 6.25% until it becomes fully vested on February 25, 2024.
(iii)The May 2020 RSU grant vested in 8.31% quarterly installments until February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
56 BLUE APRON 2023 PROXY STATEMENT
EXECUTIVE COMPENSATION | OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
(iv)The August 2020 RSU grant vested in 12.5% quarterly installments until February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(v)The November 2020 RSU grant vested as to 25% of the RSUs on February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(vi)The March 2021 PSU grant will vest 50%, 25% and 25% of the PSUs is subject to the issuer’s Class A Common Stock achieving certain minimum unweighted closing prices per share averaged over a 30 consecutive trading day period prior to February 25, 2024. PSUs that meet the stock price targets referred to in the prior sentence will vest (i) 50% on the later to occur of (A) the date a stock price target is met and (B) February 25, 2022 and (ii) 50% on February 25, 2024. Any PSUs that have not achieved the performance targets by February 25, 2024 shall expire and have no further force or effect.
(vii)The February 2022 RSU grant began vesting on May 25, 2022 in equal quarterly installments of 8.33% until it becomes fully vested on February 25, 2025.
(viii)The February 2022 PSU grant will vest on February 25, 2025, subject to meeting the performance metrics during the performance period. The number of PSUs that could be earned and vest under the grant depends on our TSR over the performance period beginning February 25, 2022 and ending February 25, 2025 relative to the TSR of the group companies in the Russell 2000 Index. The actual number of shares that may vest ranges from 0% to 200% of the target amount. Any PSUs that have not achieved the performance targets by February 25, 2025 shall expire and have no further force
The vesting is subject to the named executive officer’s continued service to us on each applicable vesting date.
(4)Represents RSU awards granted on August 25, 2019, February 27, 2020, May 25, 2020, August 25, 2020, November 25, 2020, and February 25, 2022 and PSU awards granted on March 1, 2021 and February 25, 2022 for 194,911 shares of Class A common stock under our 2017 Equity Incentive Plan. The RSUs and PSUs vest as follows:
(i)The August 2019 RSU grant vested 25% of the RSUs on August 25, 2020 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on August 25, 2023.
(ii)The February 2020 RSU grant began vesting on May 25, 2020 in equal quarterly installments of 6.25% until it becomes fully vested on February 25, 2024.
(iii)The May 2020 RSU grant vested in 8.31% quarterly installments until February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(iv)The August 2020 RSU grant vested in 12.5% quarterly installments until February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(v)The November 2020 RSU grant vested 25% of the RSUs on February 25, 2021 and thereafter vests in equal 6.25% quarterly installments until it becomes fully vested on February 25, 2024.
(vi)The March 2021 PSU grant vests 50%, 25% and 25% of the PSUs is subject to the issuer’s Class A Common Stock achieving certain minimum unweighted closing prices per share averaged over a 30 consecutive trading day period prior to February 25, 2024. PSUs that meet the stock price targets referred to in the prior sentence will vest (i) 50% on the later to occur of (A) the date a stock price target is met and (B) February 25, 2022 and (ii) 50% on February 25, 2024. Any PSUs that have not achieved the performance targets by February 25, 2024 shall expire and have no further force or effect.
(vii)The February 2022 RSU grant began vesting on May 25, 2022 in equal quarterly installments of 8.33% until it becomes fully vested on February 25, 2025.
(viii)The February 2022 PSU grant will vest on February 25, 2025, subject to meeting the performance metrics during the performance period. The number of PSUs that could be earned and vest under the grant depends on our TSR over the performance period beginning February 25, 2022 and ending February 25, 2025 relative to the TSR of the group companies in the Russell 2000 Index. The actual number of shares that may vest ranges from 0% to 200% of the target amount. Any PSUs that have not achieved the performance targets by February 25, 2025 shall expire and have no further force.
The vesting is subject to the named executive officer’s continued service to us on each applicable vesting date.
BLUE APRON 2023 PROXY STATEMENT 57
EXECUTIVE COMPENSATION | EQUITY COMPENSATION PLAN INFORMATION
Equity Compensation Plan Information
Our equity compensation plans consist of our 2012 Equity Incentive Plan and our 2017 Equity Incentive Plan. Prior to our IPO, we granted awards under the 2012 Equity Incentive Plan. Following our IPO, any remaining shares available for issuance under our 2012 Equity Incentive Plan were added to the shares reserved under our 2017 Equity Incentive Plan.
The following table shows certain information concerning all of our equity compensation plans in effect as of December 31, 2022:
| | | | | | | | | | | | | | |
| Equity compensation plans | Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights(1) ($) | Number of securities
remaining available for
future issuance under
equity compensation
plans |
| Equity compensation plans approved by security holders | | | |
| 2012 Equity Incentive Plan | 26,705 | 95.49 | — |
| 2017 Equity Incentive Plan | 2,290,605 | — | 2,131,798 |
| Equity compensation plans not approved by security holders | — | — | — |
| Total | 2,317,310 | 95.49 | 2,131,798 |
(1)The weighted average exercise price is calculated based solely on outstanding stock options. It does not take into account the shares of our common stock underlying RSUs and PSUs, which have no exercise price.
58 BLUE APRON 2023 PROXY STATEMENT
EXECUTIVE COMPENSATION | PAY VERSUS PERFORMANCE DISCLOSURE
Pay Versus Performance Disclosure
The following tables and related disclosures provide information about (i) the “total compensation” of our principal executive officer (“PEO”) and our other named executive officers (“Other NEOs”) as presented under “Executive Compensation—Summary Compensation Table” on page 52 of this Proxy Statement (the “SCT Amounts”), (ii) the “compensation actually paid” to our PEO and our Other NEOs, as calculated pursuant to the SEC’s pay-versus-performance rules (the “CAP Amounts”), (iii) certain financial performance measures, and (iv) the relationship of the CAP Amounts to those financial performance measures.
This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Exchange Act and does not necessarily reflect value actually realized by the executives or how our people, culture and compensation committee evaluates compensation decisions in light of company or individual performance. For discussion of how our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the interests of our executives with our stockholders, please review the “Executive Compensation” section of this Proxy Statement beginning on page 52.
| | | | | | | | | | | | | | | | | | | | |
Year (a) | Summary Compensation Table Total for PEO (b) (1) | Compensation Actually Paid to PEO (c) (1)(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (d) (1) | Average Compensation Actually Paid to Non-PEO Named Executive Officers (e) (1)(2) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (f) | Net Income (Loss) (in millions) (g) |
2022 | $1,765,394 | $(104,354) | $737,428 | $91,515 | $14.85 | $(109.733) |
2021 | $1,357,274 | $1,291,147 | $986,985 | $866,960 | $120.39 | $(88.381) |
(1) The PEO was Linda Findley for both years in the table. The Other NEOs were Meredith Deutsch and Irina Krechmer for 2022 and Meredith Deutsch and Randy Greben, the former Chief Financial Officer, for 2021.
(2) The following table describes the adjustments, each of which is required by SEC rule, to calculate the CAP Amounts from the SCT Amounts of our PEO (column (b)) and our Other NEOs (column (d)). The SCT Amounts and the CAP Amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402 of Regulation S-K under the Exchange Act.
BLUE APRON 2023 PROXY STATEMENT 59
EXECUTIVE COMPENSATION | PAY VERSUS PERFORMANCE DISCLOSURE
| | | | | | | | | | | | | | |
Adjustments | 2022 | 2021 |
PEO | Other NEOs* | PEO | Other NEOs* |
SCT Amounts | $1,765,394 | $737,428 | $1,357,274 | $986,985 |
Adjustments for stock and option awards |
(Subtract): Aggregate value for stock awards and option awards included in SCT for the covered fiscal year | $(1,265,394) | $(310,027) | $(647,000) | $(365,555) |
Add: Fair value at year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | $83,349 | $20,421 | $36,700 | $207,355 |
Add (Subtract): Year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | $(587,911) | $(311,485) | $116,244 | $22,773 |
Add: Vesting date fair value of awards granted and vested during the covered fiscal year | $80,077 | $19,618 | $0 | $0 |
Add (Subtract): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | $(179,868) | $(64,441) | $97,629 | $15,403 |
CAP Amounts (as calculated) | $(104,354) | $91,515 | $1,291,147 | $866,960 |
Valuation assumptions used to calculate fair values did not materially differ from those used to calculate fair values at the time of grant as reflected in the SCT Amounts.
RELATIONSHIP BETWEEN CAP AMOUNTS AND PERFORMANCE MEASURES
The following charts show graphically the relationships over the past two years of the CAP Amounts for our PEO and Other NEOs as compared to our (i) cumulative total shareholder return and (ii) net income (loss).
60 BLUE APRON 2023 PROXY STATEMENT
EXECUTIVE COMPENSATION | POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Potential Payments Upon Termination or Change in Control
The Blue Apron Holdings, Inc. Executive Severance Benefits Plan, adopted by our people, culture and compensation committee in February 2018 (the “Severance Plan”), provides certain designated eligible full-time executives of the company or any of its subsidiaries whose position generally is at or above the level of Senior Vice President or its equivalent (“Covered Employees”), including our named executive officers, certain severance benefits upon the occurrence of the following events (each, a “Covered Termination”):
•with respect to Covered Employees other than Ms. Findley, a termination without cause (as defined in the Severance Plan) prior to a change in control (as defined in the Severance Plan);
•with respect to Ms. Findley, a termination without cause or a resignation for good reason (as defined in the Severance Plan and as modified by Ms. Findley’s offer letter), in either case prior to a change in control; and
•a termination without cause or a resignation for good reason, in either case within 12 months following a change in control, or, pursuant to Ms. Findley’s offer letter, in Ms. Findley’s case, 24 months following a change in control (a “Change in Control Termination”).
The Severance Plan administrator is our board of directors or a committee thereof designated by our board of directors. Pursuant to the Severance Plan, each Covered Employee who is subject to a Covered Termination is entitled to:
•continuation of such Covered Employee’s monthly base salary (as defined in the Severance Plan) for a period of 12 months in the case of Ms. Findley, or six months in the case of other Covered Employees (as applicable, the “Severance Period”), following such termination, and with respect to certain executive officers, as provided for in the applicable officer’s offer letter, in the case of a Change in Control Termination, an additional 6 months of base salary continuation;
•in the event such Covered Employee elects to receive COBRA continuation health coverage following such termination, payment by the company of a portion of the cost of COBRA continuation health coverage for the Covered Employee and his or her applicable dependents through the earliest of:
(i)the end of the Covered Employee’s Severance Period,
(ii)the date on which the Covered Employee’s new benefits plan coverage commences with a new employer, and
(iii)the date on which such COBRA continuation health coverage is no longer in force;
•at the request of the Covered Employee and as determined in the Severance Plan administrator’s sole discretion, the arrangement of and payment for reasonable outplacement services by the company for up to six months following the Covered Employee’s date of termination of employment;
•any unpaid annual or other bonus earned in respect of any completed bonus period that ended prior to the date of the Covered Employee’s Covered Termination that the Severance Plan administrator determines to be payable to the Covered Employee in its discretion pursuant to the company’s compensation program(s);
•solely in the case of a Change in Control Termination, a lump sum payment in an amount equal to the prorated portion of the Covered Employee’s annual target bonus for the year of the Covered Termination; and
•in the case of a Change in Control Termination, full vesting of any unvested company equity awards held by the Covered Employee that vest based solely on continued service.
All payments and benefits provided under the Severance Plan are contingent upon the execution and effectiveness of a release of claims by the executive in our favor and continued compliance by the executive with any applicable noncompetition, nonsolicitation, and other obligations owed to the company or any of its subsidiaries.
BLUE APRON 2023 PROXY STATEMENT 61
EXECUTIVE COMPENSATION | PROHIBITION ON HEDGING AND CERTAIN OTHER TRANSACTIONS
Retirement Benefits
We maintain a retirement plan for the benefit of our employees, including our named executive officers. The plan is intended to qualify as a tax-qualified 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan (except in the case of contributions under the 401(k) plan designated as Roth contributions).
The 401(k) plan provides that each participant may contribute up to an annual statutory limit. Participants who are at least 50 years old can also contribute additional amounts based on statutory limits for “catch-up” contributions. Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee as directed by participants. Beginning in 2022, our 401(k) plan provides for a company-matching contribution of (1) 100% on contributions up to the first 3% of a participant’s eligible pay and (2) 50% on contributions on the next 2% of a participant’s eligible pay.
Employee Benefits and Perquisites
Our named executive officers are eligible to participate in our health and welfare plans to the same extent as all full-time employees.
Prohibition on Hedging and Certain Other Transactions
We prohibit our directors, officers, and employees (or any of their family members or designees) from directly or indirectly engaging in the following transactions with respect to securities of the Company:
•short sales, including short sales “against the box”;
•purchases or sales of put or call options or other derivative securities based on our securities; or
•purchases of financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of securities of the company.
In addition, we prohibit our directors, officers, and employees from purchasing company securities on margin, borrowing against company securities held in a margin account, or pledging company securities as collateral for a loan.
62 BLUE APRON 2023 PROXY STATEMENT
EXECUTIVE COMPENSATION | LIMITATION OF LIABILITY AND INDEMNIFICATION
Limitation of Liability and Indemnification
Our restated certificate of incorporation, as amended, limits the personal liability of directors for breach of fiduciary duty to the maximum extent permitted by the Delaware General Corporation Law and provides that no director will have personal liability to us or to our stockholders for monetary damages for breach of fiduciary duty or other duty as a director. However, these provisions do not eliminate or limit the liability of any of our directors:
•for any breach of the director’s duty of loyalty to us or our stockholders;
•for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•for voting or assenting to unlawful payments of dividends, stock repurchases or other distributions; or
•for any transaction from which the director derived an improper personal benefit.
Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to such amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.
In addition, our restated certificate of incorporation, as amended, provides that we must indemnify our directors and officers and we must advance expenses, including attorneys’ fees, to our directors and officers in connection with legal proceedings, subject to very limited exceptions.
We maintain a general liability insurance policy that covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers. In addition, we have entered into indemnification agreements with all of our directors and executive officers. These indemnification agreements may require us, among other things, to indemnify each such director and executive officer for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by him in any action or proceeding arising out of his service as one of our directors.
Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our board of directors. We have agreed that we will be the indemnitor of “first resort,” however, with respect to any claims against these directors for indemnification claims that are indemnifiable by both us and their employers. Accordingly, to the extent that indemnification is permissible under applicable law, we will have full liability for such claims (including for the advancement of any expenses) and we have waived all related rights of contribution, subrogation or other recovery that we might otherwise have against these directors’ employers.
BLUE APRON 2023 PROXY STATEMENT 63
Director
COMPENSATION
Under our non-employee director compensation policy, which was adopted in August 2017 and amended in April 2019, February 2020, September 2020 and May 2021 our non-employee directors receive the cash compensation set forth below, and an annual RSU award grant having an aggregate fair market value of $85,000 ($125,000 prior to September 2020) on the date of grant. Annual RSU awards are made at each annual meeting of stockholders, including the Annual Meeting. Each such RSU award will vest in full on the earlier of the first anniversary of the date of grant and the date of the next annual stockholder meeting following the date of grant. In addition, under our director compensation policy, new non-employee directors are also eligible for an initial RSU award having an aggregate fair market value of $85,000 on the date of grant, which is the date of such director’s initial election to our board of directors, which amount shall be prorated based on time until our next scheduled annual meeting of stockholders or, if the date of the annual meeting has not been set on the date of grant, the business day following the first anniversary of the last annual meeting.
Such RSU award will vest in full on the first anniversary of the grant date. All RSU awards granted to our non-employee directors provide for the immediate acceleration of all vesting thereunder in the event of a change in control. Directors may elect to defer the delivery of the shares of Class A common stock that they would otherwise receive upon the vesting of the RSUs until the earlier of 30 days following the director’s separation from service with the company and a change in control of the company.
Each non-employee director is eligible to receive compensation for his or her service on our board of directors or committees thereof consisting of annual cash retainers paid quarterly in arrears, as follows:
| | | | | |
| Non-employee director service | Annual cash retainer
($) |
| Non-employee directors | 50,000 |
| Additional annual retainers, for service as: | |
•Chairperson of the Board | 50,000 |
•Lead independent director, if appointed | 20,000 |
•Chairperson of the Audit Committee | 15,000 |
•Non-chair member of the Audit Committee | 7,500 |
•Chairperson of the People, Culture and Compensation Committee | 13,000 |
•Non-chair member of the People, Culture and Compensation Committee | 6,500 |
•Chairperson of the Nominating and Corporate Governance Committee | 9,000 |
•Non-chair member of the Nominating and Corporate Governance Committee | 4,500 |
64 BLUE APRON 2023 PROXY STATEMENT
DIRECTOR COMPENSATION
The table below shows all compensation to our non-employee directors serving during 2022.
| | | | | | | | | | | | | | |
| Name | Fees earned or paid in cash
($) | Stock awards(1)(2) ($) | Total
($) |
| Beverly K. Carmichael | 51,029 | 57,696 | 108,725 |
| Jennifer Carr-Smith | 119,392 | 44,567 | 163,959 |
| Peter Faricy³ | 46,218 | 44,567 | 90,785 |
| Brenda Freeman | 66,500 | 44,567 | 111,067 |
| Elizabeth Huebner | 71,500 | 44,567 | 116,067 |
| Amit Shah | 47,260 | 57,436 | 104,696 |
(1)The values disclosed represent the aggregate grant date fair value of RSUs granted to the director, calculated in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the RSU grants reported in this column are set forth in Note 13 “Share-based Compensation” to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Pursuant to our non-employee director compensation policy, each of Ms. Carmichael, Ms. Carr-Smith, Ms. Freeman, and Ms. Huebner, elected to defer delivery of the shares of our Class A common stock that they would otherwise receive upon the vesting of the annual RSU award for 2022 until the earlier of 30 days following the director’s separation from service with the company and a change in control of the company. Amounts for Ms. Carmichael and Mr. Shah include the new director grants made in March 2022 and, the annual 2022 grant.
(2)As of December 31, 2022, the aggregate number of shares of our Class A common stock subject to outstanding stock awards held by our non-employee directors serving during 2022 was as follows:
| | | | | | | | | | | | | | |
| Name | Aggregate number of stock awards | | | |
| Beverly K. Carmichael | 21,967 | | | |
| Jennifer Carr-Smith | 19,293 | | | |
| Peter Faricy | 19,293 | | | |
| Brenda Freeman | 19,293 | | | |
| Elizabeth Huebner | 19,293 | | | |
| Amit Shah | 22,238 | | | |
(3)Mr. Faricy resigned from our board of directors effective October 15, 2022. Upon Mr. Faricy's resignation, all unvested stock awards held by Mr. Faricy were automatically forfeited and canceled.
As a general matter, we do not provide any additional compensation to Ms. Findley, our president and chief executive officer, for her service as a member of our board of directors. The compensation related to Ms. Findley’s service as president and chief executive officer of the company paid in 2022 is set forth above under “Executive Compensation—Summary Compensation Table.”
In connection with becoming a public company, our non-employee director compensation policy was developed in 2016, taking into consideration the observations and recommendations of Compensia, a national management consulting firm, who provided survey data of a group of other publicly traded companies of similar size and industries, and considered the overall economic environment and trends and developments in non-employee director compensation.
In 2019, Compensia assisted our people, culture and compensation committee in modifying our non-employee director compensation policy to provide for the payment of additional compensation for service as chairperson of the board by a non-employee based on the peer group data described above and comparable companies within Compensia’s Tech 150. In September 2020, in connection with the refresh of our board of directors, our people, culture and compensation committee reviewed publicly available data regarding director compensation of comparable companies based on revenue and market capitalization, and modified our non-employee director compensation policy to reduce the amount of annual stock-based compensation paid to non-employee directors from $125,000 to $85,000.
In addition, we have a policy of reimbursing our directors for their reasonable out-of-pocket expenses incurred in attending board of directors and committee meetings.
BLUE APRON 2023 PROXY STATEMENT 65