EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
2022 Business Highlights
The following are some of our key 2022 financial and performance highlights:
•Our clinical outcomes with respect to single embryo transfer rates, pregnancy rate, miscarriage rate, live birth rate and IVF multiples rate remained superior to national averages.
•By becoming an even more present resource for our members in 2022, our industry-leading Net Promoter Score, or NPS, increased to +82, the highest level we have achieved.
•We had our most successful sales season ever, which is the most important driver of our long-term growth, by adding over a record 105 new clients and 1.2 million new covered lives.
•We achieved 2022 revenues of over $786 million, representing 57% year-over-year growth, based on strong utilization and the contribution of early client launches from our 2022 sales season.
In this Compensation Discussion and Analysis (“CD&A”) set forth below, we provide an overview and analysis of the compensation awarded to or earned by our named executive officers identified in the Summary Compensation Table below during 2022, including the elements of our compensation program for named executive officers, material compensation decisions made under that program for 2022 and the material factors considered in making those decisions. Our named executive officers consistingfor the year ended December 31, 2022, which consist of our principal executive officer, our principal financial officer, and the next twoour three most other highly compensated executive officers for the fiscal year ended December 31, 2019 were:2022 (collectively, the “named executive officers”) are:
•
Peter Anevski, who serves as Chief Executive Officer and is our principal executive officer;
•Mark Livingston, who serves as Chief Financial Officer and is our principal financial officer;
•David Schlanger who serves as Executive Chairman;
•Allison Swartz, who serves as Executive Vice President and General Counsel; and
•Michael Sturmer, who serves as President.
Ms. Swartz commenced employment with us effective November 28, 2022.
This section also describes the actions and decisions of our compensation committee as it relates to fiscal 2022 compensation decisions. Where relevant, the discussion below also reflects certain contemplated changes to our compensation structure that occurred after fiscal 2022 but before our Annual Meeting.
Details of our Compensation Program
Compensation Philosophy, Objectives and Design
Philosophy. We are focused on our mission of making dreams of parenthood come true throughhealthy, timely and supported fertility journeys. We believe that we are still in the early stages and to be successful, we must hire and retain a talented team of individuals who can help achieve this mission through the successful pursuit of our company priorities. We have provided compensation packages that we view as fair and competitive and that are designed to incentivize our executives to drive superior performance, as our ability to meet and exceed our business goals depends on the skills and contributions of each executive.
Historically, our compensation programs for our executives have been weighted towards rewarding both short- and long-term performance incentives through a mix of cash and equity compensation, providing our executives with an opportunity to share in the appreciation of our business over time. Following our initial public offering, we have continued emphasizing pay for performance and compensation that is “at risk.” We also intend to maintain a commitment to strong corporate governance and best practice as we design and implement compensation programs for our executives.
Objectives. Our compensation program for our named executive officers is built to support thefollowing objectives:
•Attract and retain highly qualified and productive executives
•Provide a competitive total pay opportunity
•Motivate executives to reach short-term and long-term company goals
•Align executive pay with stockholder interest through equity awards with multi-year vesting
Design. Our executive compensation program has been designed to motivate, reward, attract andretain high caliber management deemed essential to ensure our success. The program seeks to align executive compensation with our short-and long-term objectives, business strategy and financial performance.
| | | | | | | | | | | | | | |
What We Do | | What We Don’t Do |
ü | Deliver a significant portion of executive compensation through long-term equity to align interests with stockholders | | Χ | No pledging or hedging of Progyny stock |
ü | Engage an independent compensation consultant | | Х | No excessive perquisites |
ü | Benchmark certain pay against industry peers to offer market-competitive compensation | | Х | No supplemental executive retirement plans |
ü | Set challenging company metrics and targets | | Х | No compensation-related tax gross-ups |
ü | Conduct an annual executive compensation review | | Х | No incentives that encourage excessive risk-taking |
Determination of Compensation/Compensation Practices
The compensation committee administers the executive compensation program relating to the compensation of our executive officers, including our named executive officers. The compensation committee annually reviews and approves the compensation of our executives and the cash and equity incentive plans, including setting corporate goals and objectives upon which the executive compensation program is based, or recommends it for approval to the board of directors. The compensation committee evaluates our named executive officers’ performance in light of these goals and objectives.
We expect that our compensation committee will continue to make future compensation decisions with respect to our named executive officers. In making executive compensation determinations for 2022, we relied on a variety of factors, including compensation data from market survey data published by third parties for use as a general indicator of relevant market conditions and pay practices.
Role of Chief Executive Officer
At the request of the compensation committee, our Chief Executive Officer;Officer made recommendations to the compensation committee to assist in determining 2022 compensation levels of the other named executive officers other than with respect to his own compensation. The compensation committee considers the Chief Executive Officer’s evaluation and his direct knowledge of each named executive officer’s performance and contributions when making compensation decisions. However, the ultimate decisions regarding 2022 executive compensation were made by the compensation committee.
Role of Compensation Consultant
•
Our board of directors retained Willis Towers Watson, an independent compensation consultant, in April 2020 to provide advisory services to the compensation committee regarding executive compensation matters, including for 2022. The compensation committee has determined that Willis Towers Watson is independent and that there is no conflict of interest resulting from retaining Willis Towers Watson.
Peter Anevski,When making compensation decisions in 2022, the compensation committee analyzed market data for executive compensation focusing on the benchmarking analysis and market data provided by Willis Towers Watson. Our peer group review took into account multiple factors in which we selected companies that were similar in size (primarily revenue), in the healthcare industry, including healthcare services, healthcare technology and managed healthcare, and with similar direction on industry and business strategy.
In particular, for 2022 compensation determinations, the compensation committee reviewed compensation data from the public filings for the following companies, the peer group used to evaluate compensation was updated in 2022 due to the level of M&A activity and volatility in the market:
| | | | | |
CareDx, Inc | National Research Corp |
Certara, Inc. | NeoGenomics, Inc. |
Corvel Corp | Omnicell, Inc. |
Haemonetics Corporation | Quidel Corporation |
HeathEquity Inc. | Repligen Corporation |
Maravai LifeSciences Holdings, Inc | Tandem Diabetes Care, Inc. |
Masimo Corporation | Veracyte, Inc. |
MultiPlan Corporation | |
Use of Peer Group
The compensation committee reviewed our President, Chief Financialnamed executive officer compensation against this peer group to ensure that our named executive officer compensation is competitive and Operating Officer;sufficient to recruit and retain our named executive officers. While we sought to
Karin Ajmani,benchmark cash compensation for our formernamed executive officers to approximately the 50th percentile of our peer group, the compensation committee considered this data as only one factor in its compensation determination process. Compensation data from public filings of companies in our peer group formed the basis of the competitive benchmarking analysis and pay mix comparison.
Stockholder Input on Executive Vice President, ChiefCompensation
At the 2022 annual meeting of Strategic Development.shareholders, the Company provided the shareholders with the opportunity to cast an annual advisory vote to approve the Company’s executive compensation. Approximately 98.7% of the shares present by virtual attendance or represented by proxy and entitled to vote on the on the “2022 say-on-pay advisory vote” were voted in favor of the proposal. We have considered the 2022 say-on-pay advisory vote and believe that the overwhelming support of our shareholders for 2022 say-on-pay advisory vote indicates that our shareholders are generally supportive of our approach to executive compensation. The Company considered the outcome of the say-on-pay advisory votes when making compensation decisions regarding its NEOs for 2022 and plans to continue to consider input from shareholders in future years.
Elements of Executive Compensation
2019 Summary Compensation TableOur executive officer compensation packages generally include:
•Base salary;
•Performance-based cash incentives; and
•Equity-based compensation.
We believe that our compensation mix supports our objective of focusing on at-risk compensation having significant financial upside based on our performance relative to company priorities. We expect to continue to emphasize equity awards because of the direct link that equity compensation provides between stockholder interests and the interests of our executive officers, thereby motivating our executive officers to focus on increasing our value over the long term.
Our 2022 equity program provided for serviced-based awards in stock options and restricted stock units (“RSU”), and performance-based restricted stock units (“PSU”), for certain of our named executive officers, which PSUs represent a multi-year compensation structure that promotes retention and incentivizes commitment to the operating results of the Company. At this point in our growth cycle, a significant portion of the total compensation of our executive officers is directly tied, through the use of stock options, restricted stock units and PSUs, to the growth and long-term success of our Company.
Base Salary
The base salaries of our named executive officers are an important part of their total compensation package, and are intended to reflect their respective positions, duties and responsibilities. The compensation committee reviews executive officer base salaries each year (or otherwise at the time of a new hire or promotion) and makes any adjustments it deems necessary. In setting base salaries, the compensation committee considers changes in responsibilities, individual performance, tenure in position, internal pay equity, Company performance, market data for individual in similar positions and advice from our independent compensation consultant. The compensation committee gives no specific weighting to any one factor in setting the level of base salary and the process ultimately relies on the subjective exercise of the compensation committee’s judgment. We intend to continue to evaluate the mix of base salary, short-term incentive compensation and long-term incentive compensation to appropriately align the interests of our named executive officers with those of our stockholders.
The following table sets forth the annualized base salaries of our named executive officers for 2022:
| | | | | | | | |
Named Executive Officer | | Fiscal 2022 Annual Base Salary |
Peter Anevski | | $500,000 |
Mark Livingston | | $425,000 |
David Schlanger | | $250,000 |
Allison Swartz | | $350,000(1) |
Michael Sturmer | | $425,000 |
______________________
(1) Ms. Swartz commenced employment with us November 28, 2022.
In connection with their executive transition, effective January 1, 2022, Mr. Schlanger’s base salary was reduced to $250,000 and Mr. Anevski’s base salary was increased to $500,000 to reflect their new roles. No other named executive officers received base salary increases in 2022.
Bonuses
We consider annual cash incentive bonuses to be an important component of our total compensation program and they provide incentives necessary to retain executive officers. Each named executive officer is eligible to receive an annual performance-based cash bonus based on a specified target annual bonus award amount, expressed as a percentage of the periods presented informationnamed executive officer’s base salary. Payments to our named executive officers under our bonus plan are determined by our compensation committee based, in the case of our named executive officers other than our Chief Executive Officer, on recommendations made by our Chief Executive Officer, considering each officer’s contributions to Company performance and also measured against their own defined job responsibilities.
In 2022, our named executive officers participated in our annual cash incentive bonus program at the following target percentages of base salary as of December 31, 2022:
| | | | | | | | |
Named Executive Officer | | Target Percentage Salary |
Peter Anevski | | 100 | % |
Mark Livingston | | 60 | % |
David Schlanger | | 100 | % |
Allison Swartz(1) | | N/A |
Michael Sturmer | | 75 | % |
______________________
(1) Ms. Swartz was not entitled to receive a bonus with respect to 2022 under our annual cash incentive bonus program because she was newly hired effective November 28, 2022. However, the Compensation Committee determined to pay Ms. Swartz a discretionary performance bonus of $40,000 with respect to 2022 due to her immediate constructive impact to the legal team and assistance in finalizing the 2022 selling season contracts. She will be eligible for a bonus of up to a maximum of 50% of her base salary commencing in fiscal year 2023.
In connection with their executive transition, effective January 1, 2022, Mr. Schlanger’s and Mr. Anevski’s target bonus opportunities were each increased to 100% of their base salaries respectively to reflect their new roles and the changes made to their base salaries. For 2022, the bonus opportunity for all executives was limited to 200% of the accrued bonus potential.
Short-term incentive payments for our named executive officers are based on the attainment of company-wide operational objectives and an individualized leadership assessment of each executive, as assessed by the compensation committee.
Payments Under Our 2022 Bonus Program
For 2022, we operated an annual cash-based incentive program for eligible employees, including our named executive officers, pursuant to which participants could receive bonuses based on the achievement of certain Company operational and strategic performance metrics (the “2022 Bonus Program”). Under the 2022 Bonus Program the compensation committee assesses whether or not the applicable performance goals have been met or exceeded, and based on such performance assessment and individualized executive performance assessment, determines payout levels for named executive officers based on their respective target bonus opportunities. Based on the compensation committee’s assessment, the actual payout amounts may be higher than the target opportunity.
2022 Bonus Program Performance Objectives
The 2022 Bonus Program included a variety of specified operational and strategic performance criteria. At the time these objectives were set, the board of directors felt that they were rigorous yet achievable incentive targets for management.
The compensation committee used the measures set forth below in order to determine performance achievement with respect to 2022 bonuses.
| | | | | | | | | | | | | | |
Performance Metric/Goal | | Actual | | Assessment |
Sales and Account Management – grow client base, upsells to existing clients and client retention | | Entered 2023 with a large contractual backlog of estimated annual revenues | | Exceeds expectations |
Clinical Outcomes and Scientific Leadership – generate industry leading clinical outcomes that exceed national averages | | All clinical outcomes substantially exceeded most recently reported national averages and are industry leading | | Exceeds expectations |
Member Services – continue to improve and refine the member experience to maintain competitive differentiation | | NPS score of 82+ by year-end and average member satisfaction survey score of 4.9 out of 5 | | Exceeds expectations |
| | | | | | | | | | | | | | |
Performance Metric/Goal | | Actual | | Assessment |
Provider Network and Relations – continue to have a high quality network and maintain unique collaborative relationship with network providers | | Continued to grow network and clinic watch lists to ensure alignment with high standards and developed provider collaboration opportunities | | Meets expectations |
Organization – maintain the unique mission-driven and collaborative culture | | Positive results from employee engagement survey and had more employee engagement events | | Exceeds expectations |
Strategic – finalize priority areas for growth and support investor engagement | | Launched male infertility services and named Best IR Program | | Exceeds expectations |
2022 Bonus Payout Results
| | | | | | | | | | | | | | | | | | | | |
Name | | Target | | Overall Assessment | | Actual Bonus Payout |
Peter Anevski | | $500,000 | | Exceeds expectations | | $500,000 |
Mark Livingston | | $255,000 | | Exceeds expectations | | $255,000 |
David Schlanger | | $250,000 | | Exceeds expectations | | $250,000 |
Allison Swartz | | N/A | | N/A | | N/A |
Michael Sturmer | | $318,750 | | Exceeds expectations | | $325,000 |
The actual amounts earned under the 2022 Bonus Program are set forth below in the column of the Summary Compensation Table titled “Non-Equity Incentive Plan Compensation.”
Equity Awards/Stock Plans
We view equity-based compensation as a critical component of our balanced total compensation program which establishes a performance-oriented culture at the Company for all levels of employees, including our executives. Equity-based compensation creates an ownership culture among our employees that provides an incentive to contribute to the continued growth and development of our business and aligns interest of executives with those of our stockholders. Our current equity program provides for awards in stock options, restricted stock units, and, as of 2022, PSUs. We rely on these long-term equity awards to attract, motivate, and retain an outstanding executive team and to ensure a strong connection between our executive compensation program and the long-term interests of our stockholders. We do not currently have any formal policy for determining the number of equity-based awards to grant to named executive officers. Our compensation committee reviews and considers data provided by Willis Towers Watson in its assessment of our long-term incentive program.
The following table sets forth the aggregate number of stock options and restricted stock units, including those with performance-based vesting, granted to our named executive officers in the 2022 fiscal year.
| | | | | | | | | | | | | | | | | | | | |
Named Executive Officer | | 2022 Stock Options Granted | | 2022 RSUs Granted | | 2022 PSUs Granted |
Peter Anevski | | 1,800,000 | | 250,000 | | 250,000 |
Mark Livingston | | 250,000 | | — | | — |
David Schlanger | | 333,000 | | 84,000 | | 83,000 |
Allison Swartz | | 175,000 | | 60,000 | | — |
Michael Sturmer | | 320,000 | | 7,000 | | — |
Messrs. Schlanger and Anevski did not receive any equity grants in 2020 or 2021. On January 1, 2022, in recognition of the significant new roles assumed by each executive, as well as to incentivize performance in light of each executive having not received any equity grants during the past two years, Messrs. Schlanger and Anevski received grants of 333,000 and 1,000,000 options at an exercise price of $50.35, 84,000 and 250,000 restricted stock units, and 83,000 and 250,000 PSUs, respectively in connection with their transitions to their new respective roles. Each such option and restricted stock unit award vests as to 25% on the first anniversary of the vesting commencement date of January 1, 2022 with the remaining 75% of such award vesting in equal quarterly installments on each quarterly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
The PSUs vest and are earned, if at all, in two equal tranches in the event that specified rigorous revenue targets (as determined by the compensation committee) are achieved and sustained over any four consecutive fiscal quarters between the grant date and the fifth anniversary of the grant date. Each tranche of PSUs may be earned at any point prior to the fifth anniversary of the grant date; provided that if either or both tranches have not been earned prior to such date they will be forfeited for no consideration. The design of the PSUs serves to align certain of our key executives’ interests with those of long-term stockholders, incentivizes the achievement of sustained and strong Company financial performance and create retentive value.
On March 2, 2022, Mr. Sturmer received a grant of 20,000 options at an exercise price of $44.53 and 7,000 restricted stock units as part of the Company’s annual 2021 merit grant process. On October 18, 2022, the Company determined to grant certain employees additional retention and merit equity awards, including Messrs. Anevski, Livingston and Sturmer received grants of 800,000, 250,000 and 300,000 options, respectively, at an exercise price of $39.39. In addition, on November 28, 2022 Ms. Swartz received new-hire grants of 175,000 options at an exercise price of $36.92 and 60,000 restricted stock units in connection with her commencement of employment with us. Each such award vests as to 25% on the first anniversary of the applicable vesting commencement date with the remaining 75% of such award vesting in equal quarterly installments on each quarterly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
Other Company Compensation & Benefit Programs for Fiscal 2022
In addition to the annual and long-term compensation programs described above, we provided the named executive officers with benefits and limited perquisites consistent with those provided to other Company executives, as described below.
Comprehensive Benefits Package
We provide a competitive benefits package to all full-time employees, including the named executive officers, that includes health and welfare benefits, such as medical, dental, vision care, disability insurance and life insurance benefits.
Other Benefits and Perquisites
We did not pay any housing allowances or relocation amounts to our executives for 2022.
We do not generally provide any tax “gross ups” to our named executive officers.
401(k) Plan
We maintain a 401(k) plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation up to certain Code limits, which are updated annually. Currently, we match 50% of the contributions that eligible employees make to the 401(k) plan up to 6% of the employee’s eligible compensation. The 401(k) plan is intended to be qualified under Section 401(a) of the Code, with the related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan are deductible by us when made, and contributions and earnings on those amounts are not generally taxable to the employees until withdrawn or distributed from the 401(k) plan. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan, and making fully vested matching contributions, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.
In the future, we may provide different and/or additional compensation components, benefits and/or perquisites to our named executive officers to ensure that we provide a balanced and comprehensive compensation structure. We believe that it is important to maintain flexibility to adapt our compensation structure to properly attract, motivate and retain the top executive talent for which we compete. All future practices regarding compensation awarded components, benefits and/or paidperquisites will be subject to or earnedperiodic review by the compensation committee.
Employment Agreements
We are party to employment agreements with each of our named executive officers:officers, described in “— Employment Arrangements” below.
Name and Principal Position | | | Year | | | Salary | | | Option Awards(1) | | | Non-Equity Incentive Plan Compensation(2) | | | All Other Compensation(3) | | | Total | |
David Schlanger Chief Executive Officer | | | | | 2019 | | | | | $ | 431,250 | | | | | $ | 4,240,075 | | | | | $ | 250,000 | | | | | $ | 42,871 | | | | | $ | 4,964,196 | | |
| | | 2018 | | | | | | 350,000 | | | | | | 244,812 | | | | | | 175,000 | | | | | | 74,574 | | | | | | 844,386 | | |
Peter Anevski President, Chief Financial & Operating Officer | | | | | 2019 | | | | | | 375,000 | | | | | | 3,865,951 | | | | | | 250,000 | | | | | | 30,714 | | | | | | 4,521,665 | | |
| | | 2018 | | | | | | 325,000 | | | | | | 139,893 | | | | | | 163,000 | | | | | | 53,698 | | | | | | 681,591 | | |
Karin Ajmani(4) Former Executive Vice President, Chief of Strategic Development | | | | | 2019 | | | | | | 325,031 | | | | | | 374,122 | | | | | | — | | | | | | 10,346 | | | | | | 709,499 | | |
| | | 2018 | | | | | | 325,000 | | | | | | — | | | | | | 100,000 | | | | | | 9,520 | | | | | | 434,520 | | |
Severance Benefits
A detailed description of the applicable severance provisions contained in our named executive officer’s employment agreements is described in “— Employment Arrangements — Severance” below.
Other Matters
Tax and Accounting Considerations
Compensation Deductibility / Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code, as amended by the Tax Cuts and Jobs Act of 2017, generally prohibits executive compensation in excess of $1 million per year to be deducted by us as a compensation expense, unless it qualifies for transition relief (i.e. grandfathering) applicable to certain arrangements in place as of November 2, 2017. Under a Section 162(m) transition rule for compensation plans or agreements of corporations which are privately held and which become publicly held in an initial public offering, compensation paid under a plan or agreement that existed prior to the initial public offering will not be subject to Section 162(m) for a transition period following the initial public offering (the “Post-IPO Transition Period”). As of December 31, 2022, the Company continues to be in the Post-IPO Transition Period. The compensation committee has approved, and may continue to approve, compensation exceeding the $1 million
limitation, including with respect to a portion of base salary, annual bonus and long-term incentives. While compensation tax deductions are relevant issues to consider, the compensation committee believes that stockholder interests are best served by not restricting flexibility in designing compensation programs, even though such programs may result in nondeductible compensation expenses for tax purposes.
Section 409A of the Internal Revenue Code
Section 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A of the Code.
Section 280G of the Internal Revenue Code
Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% penalty on the individual receiving the excess payment.
Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Code based on the executive’s prior compensation. In approving the compensation arrangements for our named executive officers in the future, the compensation committee will consider all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G of the Code. However, the compensation committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.
Accounting Standards
ASC Topic 718 requires us to calculate the grant date “fair value” of our stock-based awards using a variety of assumptions. ASC Topic 718 also requires us to recognize an expense for the fair value of equity-based compensation awards. Grants of restricted stock units and performance units under our equity incentive award plans will be accounted for under ASC Topic 718. The compensation committee will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align the accounting expense of our equity awards with our overall executive compensation philosophy and objectives.
Responsible Equity Grant Practices
Our equity grant practices ensure all grants are made on fixed grant dates and at exercise prices or grant prices equal to the fair market value of our Common Stock on such dates. Equity grants are awarded under our stockholder approved plans and we do not backdate, reprice or grant equity awards retroactively. Our stockholder approved equity plans prohibit repricing of awards or exchanges of underwater options for cash or other securities without stockholder approval.
2022 SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of our named executive officers for the year ended December 31, 2022, December 31, 2021 and December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position during 2022 | | Year | | Salary ($) | | Bonus ($)(1) | | Stock Awards ($)(2) | | Option Awards ($)(2) | | Non-Equity Incentive Plan Compensation ($)(3) | | All Other Compensation ($)(4) | | Total ($) |
Peter Anevski Chief Executive Officer | | 2022 | | 500,000 | | | — | | | 25,175,000 | | | 42,393,600 | | | 500,000 | | | 11,472 | | | 68,580,072 | |
| | 2021 | | 425,000 | | | — | | | — | | | — | | | 350,000 | | | 10,770 | | | 785,770 | |
| | 2020 | | 425,000 | | | 156,250 | | | — | | | — | | | 318,750 | | | 9,861 | | | 909,861 | |
Mark Livingston Chief Financial Officer | | 2022 | | 425,000 | | | — | | | — | | | 5,339,500 | | | 255,000 | | | 13,872 | | | 6,033,372 | |
| | 2021 | | 425,000 | | | — | | | 4,521,210 | | | 7,586,995 | | | 255,000 | | | 275,467 | | | 13,063,672 | |
| | 2020 | | 389,776 | | | 127,812 | | | 299,760 | | | 94,529 | | | 207,188 | | | 132,230 | | | 1,251,295 | |
David Schlanger Executive Chairman | | 2022 | | 250,000 | | | — | | | 8,408,450 | | | 8,427,298 | | | 250,000 | | | 10,408 | | | 17,346,156 | |
| | 2021 | | 500,000 | | | — | | | — | | | — | | | 350,000 | | | 12,462 | | | 862,462 | |
| | 2020 | | 500,000 | | | 125,000 | | | — | | | — | | | 350,000 | | | 12,312 | | | 987,312 | |
Allison Swartz(5) Executive Vice President and General Counsel | | 2022 | | 33,205 | | | 140,000 | | | 2,215,200 | | | 3,503,675 | | | — | | | 149 | | | 5,892,229 | |
Michael Sturmer President | | 2022 | | 425,000 | | | — | | | 311,710 | | | 6,862,078 | | | 325,000 | | | 11,498 | | | 7,935,286 | |
______________________
(1)For 2022, amounts reflect a sign-on bonus for Ms. Swartz, who commenced employment with us on November 28, 2022, as well as a discretionary performance bonus for Ms. Swartz for 2022, which the Compensation Committee determined to pay Ms. Swartz due to her immediate constructive impact to the legal team and assistance in finalizing the 2022 selling season contracts. For 2020, amounts reflect special bonuses paid to each of our named executive officers in 2020 and adjustments to the cash performance bonus payouts made by our compensation committee in recognition of our named executive officers’ individual performance during 2020.
(2)Amounts reported represent the aggregate grant date fair value of stock options and stock awards, including those with performance-based vesting, granted to our named executive officers under our 2017 Equity Incentive Plan (the “2017 Plan”),in 2022, computed in accordance with ASC Topic 718, excluding the estimated effect of forfeitures. The assumptions used in calculating the grant date fair value of the stock options and stock awards reported in this column are set forth in the notes toNote 10 of our audited consolidated financial statements included in the Annual Report.Report for the year ended December 31, 2022. This amount does not reflect the actual economic value that may be realized by the executive officer.
(2)
(3)Amounts shown represent the named executive officers’ total performance-based cash bonuses earned for 20192022, 2021 and 2018,2020, as applicable, based on the achievement of company-wide performance goals as determined by our board of directors. These objectives included revenue, gross margin, adjusted EBITDA and sales targets, as well as operational goals related to client management and retention, member experience and our provider network.compensation committee.
(3)
(4)For 2019, amounts include $36,000 and $24,000 in housing expenses provided to Mr. Schlanger and Mr. Anevski respectively, pursuant to their prior employment agreements, which provided for a monthly housing allowance of $6,000 and $4,000 to Mr. Schlanger and Mr. Anevski, respectively. The remainder of the amounts in2022, this column include 401(k)amount includes matching contributions to the 401(k) plan of $9,150 and grouppayment of term life insurance tax reimbursements made to eachpremiums of our named executive officers.$2,322. For 2018, amounts include $72,000 and $48,000 in housing expenses provided to Mr. Schlanger and Mr. Anevski, respectively. The remainder of the amounts inLivingston for 2022, this column include 401(k)amount includes matching contributions and groupto the 401(k) plan of $9,150; payment of term life insurance taxpremiums of $2,322; cell phone reimbursements madeof $900; and HSA employer contributions equal to each$1,500. For Mr. Schlanger for 2022, this amount includes matching contributions to the 401(k) plan of our named executive officers.$6,843 and payment of term life insurance premiums of $3,564. For Ms. Swartz for 2022, this amount includes payment of term life insurance premiums of $36; and cell phone reimbursements of $113. For Mr. Sturmer for 2022, this amount includes matching contributions to the 401(k) plan of $9,150; payment of term life insurance premiums of $810; cell phone reimbursements of $788; and HSA employer contributions equal to $750.
(5)Ms. Swartz commenced employment with us November 28, 2022.
(4)Ms. Ajmani’s resigned from Progyny, effective March 2, 2020, and was not eligible to receive a performance-based cash bonus for 2019.
Outstanding Equity Awards as of December 31, 2019GRANTS OF PLAN-BASED AWARDS — FISCAL YEAR 2022
The following table sets forth certain information regarding outstanding equityshows all plan-based awards which the Company granted to the named executive officers during 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards($)(1) |
Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | | |
Peter Anevski | | N/A | | — | | | 500,000 | | | 1,000,000 | | | — | | — | | — | | — | | — | | — | | | — | |
| | 1/1/22 (3) | | — | | | — | | | — | | | — | | — | | — | | 250,000 | | | | — | | | 12,587,500 | |
| | 1/1/22 (3) | | — | | | — | | | — | | | — | | 250,000 | | 250,000 | | — | | | | — | | | 12,587,500 | |
| | 1/1/22 (3) | | — | | | — | | | — | | | — | | — | | — | | | | 1,000,000 | | 50.35 | | | 25,307,200 | |
| | 10/18/22 (4) | | — | | | — | | | — | | | — | | — | | — | | — | | 800,000 | | 39.39 | | | 17,086,400 | |
Mark Livingston | | N/A | | — | | | 255,000 | | | 510,000 | | | — | | — | | — | | — | | — | | — | | | — | |
| | 10/18/22 (4) | | — | | | — | | | — | | | — | | — | | — | | — | | 250,000 | | 39.39 | | | 5,339,500 | |
David Schlanger | | N/A | | — | | | 250,000 | | | 500,000 | | | — | | — | | — | | — | | — | | — | | | — | |
| | 1/1/22 (3) | | — | | | — | | | — | | | — | | — | | — | | 84,000 | | | | — | | | 4,229,400 | |
| | 1/1/22 (3) | | — | | | — | | | — | | | — | | 83,000 | | 83,000 | | — | | — | | — | | | 4,179,050 | |
| | 1/1/22 (3) | | — | | | — | | | — | | | — | | — | | — | | | | 333,000 | | 50.35 | | | 8,427,298 | |
Allison Swartz | | N/A | | — | | | — | | | — | | | — | | — | | — | | — | | — | | — | | | — | |
| | 11/28/22 (5) | | — | | | — | | | — | | | — | | — | | — | | 60,000 | | — | | — | | | 2,215,200 | |
| | 11/28/22 (5) | | — | | | — | | | — | | | — | | — | | — | | — | | 175,000 | | 36.92 | | | 3,503,675 | |
Michael Sturmer | | N/A | | — | | | 318,750 | | | 637,500 | | | — | | — | | — | | — | | — | | — | | | — | |
| | 3/2/22 (6) | | — | | | — | | | — | | | — | | — | | — | | 7,000 | | — | | — | | | 311,710 | |
| | 3/2/22 (6) | | — | | | — | | | — | | | — | | — | | — | | — | | 20,000 | | 44.53 | | | 571,846 | |
| | 10/18/22 (4) | | — | | | — | | | — | | | — | | — | | — | | — | | 300,000 | | 39.39 | | | 6,407,400 | |
(1)Amounts reported represent the aggregate grant date fair value of stock options and stock awards granted to our named executive officers that remain outstanding asin 2022, computed in accordance with ASC Topic 718, excluding the estimated effect of forfeitures. The assumptions used in calculating the grant date fair value of the stock options and stock units reported in this column are set forth in Note 10 to our audited consolidated financial statements included in the Annual Report for the year ended December 31, 2019.
| | | Option Awards(1) | |
Name | | | Number of Securities Underlying Unexercised Options Exercisable | | | Number of Securities Underlying Unexercised Options Unexercisable | | | Option Exercise Price | | | Option Expiration Date | |
David Schlanger | | | | | 2,596,316 | | | | | | 1,618,068(2) | | | | | $ | 0.91 | | | | 8/3/2027 | |
| | | 147,871 | | | | | | 54,923(2) | | | | | $ | 1.50 | | | | 8/16/2028 | |
| | | — | | | | | | 1,870,022(3) | | | | | $ | 3.96 | | | | 5/23/2029 | |
Peter Anevski | | | | | 142,619 | | | | | | 924,610(2) | | | | | $ | 0.91 | | | | 8/3/2027 | |
| | | 5,071 | | | | | | 31,385(2) | | | | | $ | 1.50 | | | | 8/16/2028 | |
| | | — | | | | | | 1,705,020(3) | | | | | $ | 3.96 | | | | 5/23/2029 | |
Karin Ajmani | | | | | 622,386 | | | | | | — | | | | | $ | 0.87 | | | | 6/2/2020 (5) | |
| | | 43,047 | | | | | | 344,375(4) | | | | | $ | 0.91 | | | | 6/2/2020 (5) | |
| | | — | | | | | | 165,001(3) | | | | | $ | 3.96 | | | | 6/2/2020 (5) | |
2022. This amount does not reflect the actual economic value that may be realized by the executive officer.(1)
All awards were granted(2)These columns show the range of estimated payouts targeted for 2022 performance bonuses under our 20172022 Bonus Program for our executive officers as described above in the section titled “Elements of Executive Compensation — Bonuses.” The actual cash bonus payments made in 2022 based on 2022 performance are set forth in the Summary Compensation Table in the column titled “Non-Equity Incentive Plan or 2008 Stock Plan.Compensation.” Ms. Swartz was not entitled to receive a bonus with respect to 2022 because she was newly hired effective November 28, 2022.
(2)
(3)On January 1, 2022, Messrs. Schlanger and Anevski received grants of 333,000 and 1,000,000 options at an exercise price of $50.35, 84,000 and 250,000 restricted stock units, and 83,000 and 250,000 PSUs, respectively in connection with their transitions to their new respective roles. Each such option and restricted stock unit award vests as to 25% on the first anniversary of the shares underlying this option vested onvesting commencement date of January 16, 2018,1, 2022 with the remaining 75% of such award vesting in equal monthlyquarterly installments on each quarterly anniversary thereafter over the next three years.years, subject to the executive’s continued service through each applicable vesting date.
(3)
25%The PSUs vest and are earned, if at all, in two equal tranches in the event that specified rigorous revenue targets (as determined by the compensation committee) are achieved and sustained over any four consecutive fiscal quarters between the grant date and the fifth anniversary of the shares underlying this option will vestgrant date, in each case subject to the executive’s continued service through each applicable vesting date, as described above in the section titled “Elements of Executive Compensation —Equity Awards/Stock Plans.” As a result, there is no “threshold” opportunity with respect to the PSUs that may be earned.
(4)On October 18, 2022, Messrs. Anevski, Livingston and Sturmer received merit grants of 800,000, 250,000 and 300,000 options, respectively, at an exercise price of $39.39. Each such award vests as to 25% on May 23, 2020,the first anniversary of the vesting commencement date of October 18, 2022 with the remaining 75% of such award vesting in equal monthlyquarterly installments on each quarterly anniversary thereafter over the next three years.years, subject to the executive’s continued service through each applicable vesting date.
(5)On November 28, 2022, Ms. Swartz received new-hire grants of 175,000 options at an exercise price of $36.92 and 60,000 restricted stock units in connection with her commencement of employment with us. Each such award vests as to 25% on the first anniversary of the shares underlying this option vested on April 1, 2018,vesting commencement date of November 28, 2022 with the remaining 75% of such award vesting in equal monthlyquarterly installments on each quarterly anniversary thereafter over the next three years.years, subject to the executive’s continued service through each applicable vesting date.
(5)
All(6)On March 2, 2022, Mr. Sturmer received a grant of Ms. Ajmani’s option awards will expire20,000 options at an exercise price of $44.53 and 7,000 restricted stock units. Each such award vests as to 25% on the three-monthfirst anniversary of her departurethe applicable vesting commencement date of March 2, 2022 with the remaining 75% of such award vesting in equal quarterly installments on each quarterly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment Arrangements
We are party to amended and restated employment agreements with each of our named executive officers. The arrangements generally provide for at-will employment without any specific term and set forth the named executive officer’s initial base salary, bonus potential, eligibility for employee benefits and severance benefits upon a qualifying termination of employment, subject to such employee executing a separation agreement with us.
Peter Anevski
In September 2019, we entered into an amended and restated employment agreement with Mr. Anevski, our President, Chief Operating & Financial Officer, and which was further amended and restated effective January 1, 2022 in connection with Mr. Anevski’s transition to the role of Chief Executive Officer. Pursuant to his amended and restated agreement, Mr. Anevski’s annual base salary increased from $425,000 to $500,000 and Mr. Anevski is also eligible to receive an annual discretionary performance and retention bonus of up to a maximum of 100% of his annual salary for 2022, which was increased from 75% of his annual salary. Pursuant to his agreement, Mr. Anevski was also granted an equity award comprised of 1,000,000 options, 250,000 RSUs and 250,000 PSUs (as described further above).
Pursuant to his agreement, Mr. Anevski will continue to be entitled to severance benefits in the event that he is terminated by us without “cause” or if he resigns for “good reason” outside of the “change of control severance period” (as those terms are defined in his agreement), such that he will be entitled to: (1) continued payment of his then-current base salary for a period of 12 months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to 12 months following his termination, (4) 12 months of accelerated vesting of any of his then-unvested shares subject to outstanding equity awards and (5) his options remaining exercisable for 12 months following his termination. If Mr. Anevski is terminated without cause or resigns with good reason within one month prior to or within two years following our “acquisition” (referred to as the “change of control severance period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. Good reason within two years of our acquisition includes resignation by Mr. Anevski for any or no reason after the nine-month anniversary of the acquisition. If Mr. Anevski resigns without good reason or is terminated for cause, he will not be entitled to any severance benefits, his equity awards will no longer vest and all payments, other than those already earned, will terminate. If Mr. Anevski is terminated because of his disability, then his then-outstanding options will be exercisable for 12 months following his last day of employment, while if Mr. Anevski’s employment is terminated due to his death, his then outstanding equity awards will accelerate in full. Mr. Anevski’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his offer letter and timely signing a general release of claims in our favor.
Mark Livingston
Effective September 15, 2020, we entered into an amended and restated employment agreement with Mr. Livingston providing for his promotion to Chief Financial Officer, which was further amended and restated effective June 7, 2022. Pursuant to his agreement, Mr. Livingston is entitled to an annual base salary of $425,000 and is eligible to receive an annual discretionary performance and retention bonus of up to a maximum of 60% of his annual salary.
Pursuant to his agreement, if Mr. Livingston is terminated by us without “cause” or if Mr. Livingston resigns for “good reason” outside of the “change of control severance period” (as those terms are defined in his agreement), he is entitled to: (1) continued payment of his then-current base salary for a period of six months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to six months following his termination, (4) six months of accelerated vesting of any of his then-unvested shares subject to outstanding equity awards and (5) his options remaining exercisable for twelve months following his termination. If Mr. Livingston is terminated without cause or resigns with good reason within one month prior to or within two years following our “acquisition” (referred to as the “change of control severance period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. If Mr. Livingston resigns without good reason or is terminated for cause, he will not be entitled to any
severance benefits, his equity awards will no longer vest and all payments, other than those already earned, will terminate. If Mr. Livingston is terminated because of his disability, then his then outstanding options will be exercisable for 12 months following his last day of employment, while if his employment is terminated due to his death, his then outstanding equity awards will accelerate in full. Mr. Livingston’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his employment agreement and timely signing a general release of claims in our favor.
David Schlanger
In September 2019, we entered into an amended and restated employment agreement with Mr. Schlanger, ourwho served as Chief Executive Officer during 2021, and which was further amended and restated effective asJanuary 1, 2022 in connection with Mr. Schlanger’s transition to the role of July 1, 2019.Executive Chairman. Pursuant to his amended and restated agreement, Mr. Schlanger’s annual base salary decreased from $500,000 to $250,000 for 2022. Mr. Schlanger is also eligible to receive an annual discretionary performance and retention bonus of up to a maximum of 100% of his annual salary, which was increased from 75% of his annual salary. Pursuant to his agreement, Mr. Schlanger was also granted an equity award comprised of 333,000 options, 84,000 RSUs and 83,000 PSUs (as described further above).
Pursuant to his agreement, Mr. Schlanger will continue to be entitled to severance benefits in the event that he is terminated by us without “cause” or if Mr. Schlanger resigns for “good reason” outside of the “change of control severance period” (as those terms are defined in his agreement), such that he will be entitled to: (1) continued payment of his then-current base salary for a period of 12 months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to 12 months following his termination, (4) 12 months of accelerated vesting of any of his then-unvested shares subject to outstanding equity awards and (5) his options remaining exercisable for 12 months following his termination. If Mr. Schlanger is terminated without cause or resigns with good reason within one month prior to or within two years following our “acquisition” (referred to as the “change of control severance period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. Good reason within two years of our acquisition includes resignation by Mr. Schlanger for any or no reason after the nine-month anniversary of the acquisition. If Mr. Schlanger resigns without good reason or is terminated for cause, he will not be entitled to any severance benefits, his options will no longer vest and all payments, other than those already earned, will terminate. If Mr. Schlanger is terminated because of his disability, then his then-outstanding options will be exercisable for 12 months following his last day of employment, while if Mr. Schlanger’s employment is terminated due to his death, his then outstanding equity awards will accelerate in full. Mr. Schlanger’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his agreement and timely signing a general release of claims in our favor.
Allison Swartz
On October 26, 2022, we entered into an employment agreement with Ms. Swartz as our Executive Vice President, General Counsel effective November 28, 2022. Pursuant to her agreement, Ms. Swartz is entitled to an annual base salary of $500,000$350,000 and is eligible to receive an annual discretionary performance bonus of up to a maximum of 50% of her base salary commencing as of fiscal year 2023. The board approved a one-time performance bonus for 2022 in the amount of $40,000. The agreement also provided for a sign-on bonus of $100,000, which is subject to repayment in the event Ms. Swartz resigns from her employment or is terminated by the Company for “cause” within 12 months of her start date, as well as an initial stock option grant of 175,000 options and 60,000 restricted stock units under the 2019 Plan.
Michael Sturmer
We are party to an amended and restated employment agreement with Mr. Sturmer providing for his employment as President, effective January 1, 2022. Pursuant to his agreement, Mr. Sturmer is entitled to an annual base salary of $425,000 and is eligible to receive an annual discretionary performance and retention bonus of up to a maximum of 75% of his annual salary.
Pursuant to his agreement, if Mr. Sturmer is terminated by us without “cause” or if Mr. Sturmer resigns for “good reason” outside of the “change of control severance period” (as those terms are defined in his agreement), he is entitled to: (1) continued payment of his then-current base salary for a period of twelve months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to twelve months following his termination, (4) twelve months of continued vesting of any of his then-unvested shares subject to outstanding equity awards and (5) his options remaining exercisable for six months following his termination. If Mr. Sturmer is terminated without cause or resigns with good reason within one month prior to or within one year following our “acquisition” (referred to as the “change of control severance period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. If Mr. Sturmer resigns without good reason or is terminated for cause or due to his disability, he will not be entitled to any severance benefits, his equity awards will no longer vest and all payments, other than those already earned, will terminate. If Mr. Sturmer is terminated due to his death, his then-outstanding equity awards will accelerate in full. Mr. Sturmer’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his employment agreement and timely signing a general release of claims in our favor.
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END
The following table shows all outstanding equity awards held by the named executive officers as of December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Option Awards | | Stock Awards |
Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Equity Incentive Plan Awards: Number of unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
Peter Anevski | | 10/18/2022 | | — | | | 800,000(2) | | 39.3900 | | 10/17/2032 | | — | | | — | | | — | | | — | |
| | 1/1/2022 | | — | | | 1,000,000(3) | | 50.3500 | | 12/31/2031 | | — | | | — | | | — | | | — | |
| | 1/1/2022 | | — | | | — | | | — | | | — | | | 250,000(3) | | 7,787,500 | | | — | | | — | |
| | 1/1/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 250,000(4) | | 7,787,500 | |
| | 5/24/2019 | | 1,177,949(5) | | 177,607(5) | | 3.9545 | | 05/23/2029 | | — | | | — | | | — | | | — | |
| | 8/17/2018 | | 34,042(6) | | — | | | 1.5000 | | 08/16/2028 | | — | | | — | | | — | | | — | |
| | 8/4/2017 | | 472,107(6) | | — | | | 0.9091 | | 8/3/2027 | | — | | | — | | | — | | | — | |
Mark Livingston | | 10/18/2022 | | — | | | 250,000(2) | | 39.3900 | | 10/17/2032 | | — | | | — | | | — | | | — | |
| | 9/1/2021 | | 78,125(7) | | 171,875(7) | | 56.2900 | | 8/31/2031 | | — | | | — | | | — | | | — | |
| | 9/1/2021 | | — | | | — | | | — | | | — | | | 51,561(7) | | 1,606,125 | | | — | | | — | |
| | 3/3/2021 | | 8,750(8) | | 11,250(8) | | 42.7800 | | 3/2/2031 | | — | | | — | | | — | | | — | |
| | 3/3/2021 | | — | | | — | | | — | | | — | | | 3,935(8) | | 122,575 | | | — | | | — | |
| | 5/4/2020 | | — | | | — | | | — | | | — | | | 2,500(9) | | 77,875 | | | — | | | — | |
| | 3/9/2020 | | 3,376(10) | | 2,810(10) | | 23.1600 | | 3/8/2030 | | — | | | — | | | — | | | — | |
| | 3/9/2020 | | — | | | — | | | — | | | — | | | 1,091(10) | | 33,895 | | | — | | | — | |
| | 6/4/2019 | | 96,251(11) | | 34,376(11) | | 3.9545 | | 6/3/2029 | | — | | | — | | | — | | | — | |
David Schlanger | | 1/1/2022 | | — | | | 333,000(3) | | 50.3500 | | 12/31/2031 | | — | | | — | | | — | | | — | |
| | 1/1/2022 | | — | | | — | | | — | | | — | | | 84,000(3) | | 2,616,600 | | | — | | | — | |
| | 1/1/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 83,000(4) | | 2,585,450 | |
| | 5/24/2019 | | 1,675,229(5) | | 194,793(5) | | 3.9545 | | 05/23/2029 | | — | | | — | | | — | | | — | |
| | 8/17/2018 | | 202,794(6) | | — | | | 1.5000 | | 8/16/2028 | | — | | | — | | | — | | | — | |
| | 8/4/2017 | | 1,232,229(6) | | — | | | 0.9091 | | 8/03/2027 | | — | | | — | | | — | | | — | |
Allison Swartz | | 11/28/2022 | | — | | | 175,000(12) | | 36.9200 | | 11/27/2032 | | — | | | — | | | — | | | — | |
| | 11/28/2022 | | — | | | — | | | — | | | — | | | 60,000(12) | | 1,869,000 | | | — | | | — | |
Michael Sturmer | | 10/18/2022 | | — | | | 300,000(2) | | 39.3900 | | 10/17/2032 | | — | | | — | | | — | | | — | |
| | 3/2/2022 | | — | | | 20,000(13) | | 44.5300 | | 3/1/2032 | | — | | | — | | | — | | | — | |
| | 3/2/2022 | | — | | | — | | | — | | | — | | | 7,000(13) | | 218,050 | | | — | | | — | |
| | 3/3/2021 | | 262,500(8) | | 337,500(8) | | 42.7800 | | 3/2/2031 | | — | | — | | — | | — | | — | | — | | — | |
| | 3/3/2021 | | — | | — | | — | | — | | — | | — | | — | | | 140,625(8) | | 4,380,469 | | | — | | — | | — | |
______________________
(1)For stock awards, this value is based upon the closing stock price of our common stock of December 31, 2022 of $31.15.
(2)Each such award will vest as to 25% on October 18, 2023 with the remaining 75% of such award vesting in equal quarterly installments over the next three years, subject to the executive’s continued service through each applicable vesting date.
(3)Each such award vested as to 25% on January 1, 2023 with the remaining 75% of such award vesting in equal quarterly installments over the next three years, subject to the executive’s continued service through each applicable vesting date.
(4)Each such award will vest and be earned, if at all, in two equal tranches in the event that specified rigorous revenue targets (as determined by the compensation committee) are achieved and sustained over any four consecutive fiscal quarters between the grant date and the fifth anniversary of the grant date, in each case subject to the executive’s continued service through each applicable vesting date, as described above in the section titled “Elements of Executive Compensation —Equity Awards/Stock Plans.”
(5)Each such award vested as to 25% on May 23, 2020 with the remaining 75% of such award vesting in equal monthly installments on each monthly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
(6)Each such award vested as to 25% on January 16, 2018 with the remaining 75% of such award vesting in equal monthly installments on each monthly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
(7)Each such award vested as to 25% on September 1, 2022 with the remaining 75% of such award vesting in equal quarterly installments over the next three years, subject to the executive’s continued service through each applicable vesting date.
(8)Each such award vested as to 25% on February 26, 2022 (or February 25, 2022 for Mr. Sturmer’s March 3rd RSU grant) with the remaining 75% of such award vesting in equal quarterly installments over the next three years, subject to the executive’s continued service through each applicable vesting date.
(9)Each such award vested as to 25% on October 25, 2020 with the remaining 75% of such award vesting in equal quarterly installments over the next three years, subject to the executive’s continued service through each applicable vesting date.
(10)Each such award vested as to 25% on March 9, 2021 with the remaining 75% of such award vesting in equal quarterly installments thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
(11)Each such award vested as to 25% on May 29, 2020 with the remaining 75% of such award vesting in equal monthly installments on each monthly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
(12)Each such award will vest as to 25% on November 28, 2023 with the remaining 75% of such award vesting in equal monthly installments on each monthly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
(13)Each such award vested as to 25% on March 2, 2023 with the remaining 75% of such award vesting in equal monthly installments on each monthly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date.
OPTION EXERCISES AND STOCK VESTED — FISCAL YEAR 2022
The following table shows for 2022 the number of shares acquired upon exercise of option awards and the vesting of stock awards and the value realized upon such exercise and vesting.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name | | Number of Shares Acquired on Exercise (#)(1) | | Value Realized on Exercise ($)(4) | | Number of Shares Acquired on Vesting (#)(1) | | Value Realized on Vesting ($)(5) |
Peter Anevski | | 320,080 | | 11,966,776 | | — | | — |
Mark Livingston | | — | | — | | 29,880(2) | | 1,163,371 |
David Schlanger | | 1,002,156 | | 42,217,365 | | — | | — |
Allison Swartz | | — | | — | | — | | — |
Michael Sturmer | | — | | — | | 109,375(3) | | 4,014,531 |
______________________
(1)Represents the gross number of shares acquired on the exercise of options or vesting of restricted stock units, as applicable, without taking into account any shares withheld to satisfy applicable tax obligations.
(2)After withholding shares sufficient to cover applicable taxes and fees upon the vesting of restricted stock units, Mr. Livingston retained a total of 17,836 net shares.
(3)After withholding shares sufficient to cover applicable taxes and fees upon the vesting of restricted stock units, Mr. Sturmer retained a total of 62,695 net shares.
(4)Represents the value of the exercised stock options, calculated by multiplying (1) the number of vested options exercised by (2) the closing stock price from the previous trading day, less the exercise price of such options.
(5)Represents the value of the vested restricted stock units, calculated by multiplying (1) the number of vested restricted stock units by (2) the closing stock price from the previous trading day.
SUMMARY OF POTENTIAL PAYMENTS AND BENEFITS — TERMINATION EVENTS
Overview
This section describes the benefits payable to our named executive officers in two circumstances:
•Termination of Employment
•Change in Control
Employment Agreements — Severance
Peter Anevski
Pursuant to his employment agreement, if Mr. Anevski is terminated by us without “cause” or if Mr. Anevski resigns for “good reason” outside of the “change of control severance period” (as those terms are defined in his agreement), he is entitled to: (1) continued payment of his then-current base salary for a period of 12 months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to 12 months following his termination, (4) 12 months of accelerated vesting of any of his then-unvested shares subject to outstanding equity awards, as well as full acceleration of the 2022 PSUs (whether or not performance has been attained), and (5) his options remaining exercisable for 12 months following his termination. If Mr. Anevski is terminated without cause or resigns with good reason within one month prior to or within two years following our “acquisition” (referred to as the “change of control severance period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. Good reason within two years of our acquisition includes resignation by Mr. Anevski for any or no reason after the nine-month anniversary of the acquisition. If Mr. Anevski resigns without good reason or is terminated for cause, he will not be entitled to any severance benefits, his equity awards will no longer vest and all payments, other than those already earned, will terminate. If Mr. Anevski is terminated because of his disability, then his then-outstanding options will be exercisable for 12 months following his last day of employment while if his employment is terminated due to his death, his then outstanding equity awards will accelerate in full. Mr. Anevski’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his offer letter and timely signing a general release of claims in our favor.
Mark Livingston
Pursuant to his employment agreement, if Mr. Livingston is terminated by us without “cause” or if Mr. Livingston resigns for “good reason” outside of the “change of control severance period” (as those terms are defined in his agreement), he is entitled to: (1) continued payment of his then-current base salary for a period of six months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to six months following his termination, (4) six months of accelerated vesting of any of his then-unvested shares subject to outstanding equity awards and (5) his options remaining exercisable for six months following his termination. If Mr. Livingston is terminated without cause or resigns with good reason within one month prior to or within two years following our “acquisition” (referred to as the “change of control severance period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. Good reason within two years of our acquisition includes resignation by Mr. Livingston for any or no reason after the nine-month anniversary of the acquisition. If Mr. Livingston is terminated because of his disability, then his then-outstanding options will be exercisable for 12 months following his last day of employment, while if his employment is terminated due to his death, his then outstanding equity awards will accelerate in full. Mr. Livingston’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his employment agreement and timely signing a general release of claims in our favor.
David Schlanger
Pursuant to his employment agreement, if Mr. Schlanger is terminated by us without “cause” or if Mr. Schlanger resigns for “good reason” outside of the “change in control severance period” (as those terms are defined in his agreement), he is entitled to: (1) continued payment of his then-current base salary for a period of 12 months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to 12 months following his termination, (4) 12 months of accelerated vesting of any of his then-unvested shares subject to outstanding equity awards as well as full acceleration of the 2022 PSUs (whether or not performance has been attained), and (5) his options remaining exercisable for 12 months following his termination. If Mr. Schlanger is terminated without cause or resigns with good reason within one
month prior to or within two years following our “acquisition” (or(referred to as the “change of control severance period,” each as defined in his agreement)period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. Good reason within two years of our acquisition includes resignation by Mr. Schlanger for any or no reason after the nine-month anniversary of the acquisition. If Mr. Schlanger resigns without good reason or is terminated for cause, or death, he will not be entitled to any severance benefits, his options will no longer vest and all payments, other than those already earned, will terminate. If Mr. Schlanger is terminated because of his disability, then his then-outstanding options will be exercisable for 12 months following his last day of employment.
employment, while if his employment is terminated due to his death, his then-outstanding equity awards will accelerate in full. Mr. Schlanger’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his agreement and timely signing a general release of claims in our favor.
Peter AnevskiAllison Swartz
In September 2019, we entered into an amended and restated employment agreement with Mr. Anevski, our President, Chief Operating & Financial Officer, which was effective as of July 1, 2019. Pursuant to his agreement, Mr. AnevskiMs. Swartz is not entitled to an annual base salary of $425,000 and is eligibleany severance benefits pursuant to receive an annual discretionary performance and retention bonus of up to a maximum of 75% of his annual salary.her employment agreement.
Michael Sturmer
Pursuant to his agreement, if Mr. AnevskiSturmer is terminated by us without “cause” or if Mr. AnevskiSturmer resigns for “good reason” outside of the “change of control severance period” (as those terms are defined in his agreement), he is entitled to: (1) continued payment of his then-current base salary for a period of 12twelve months, (2) payment of his current year target bonus, prorated based on completed months of service to the date of termination, as well as any bonus relating to the prior year to the extent earned as determined by our board of directors, (3) payment of premiums for continued health benefits to him under COBRA for up to 12twelve months following his termination, (4) 12twelve months of acceleratedcontinued vesting of any of his then-unvested shares subject to outstanding equity awards and (5) his options remaining exercisable for 12six months following his termination. If Mr. AnevskiSturmer is terminated without cause or resigns with good reason within one month prior to or within two yearsone year following our “acquisition” (or(referred to as the “change of control severance period,” each as defined in his agreement)period”), he is entitled to the aforementioned payments and benefits, except that any then-unvested outstanding equity awards will become vested in their entirety as of the last day of his employment. Good reason within two years of our acquisition includes resignation by Mr. Anevski for any or no reason after the nine-month anniversary of the acquisition. If Mr. AnevskiSturmer resigns without good reason or is terminated for cause or death,due to his disability, he will not be entitled to any severance benefits, his equity awards will no longer vest and all payments, other than those already earned, will terminate. If Mr. AnevskiSturmer is terminated because ofdue to his disability, thendeath, his then-outstanding optionsequity awards will be exercisable for 12 months following his last day of employment.accelerate in full. Mr. Anevski’sSturmer’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his offer letteremployment agreement and timely signing a general release of claims in our favor.
Karin AjmaniEquity Plans
We entered into a letter agreement with Ms. Ajmani, our former Executive Vice President, Chief of Strategic Development in June 2015, which was amended and restated in June 2019 and governed the terms of Ms. Ajmani’s employment with us prior to her resignation in March 2020. Pursuant to our 2017 Plan and 2019 Plan (as defined below), in the event any of our employees, including our executives, are terminated by reason of his or her agreement, Ms. Ajmani wasdeath, such employee will be entitled to: (1) an annualto accelerated vesting of the then-unvested service-based awards.
Summary of Potential Payments Upon Termination or Change in Control
The following table summarizes the payments that would be made to our named executive officers who remained employed as of December 31, 2022 upon the occurrence of certain qualifying terminations of employment or a change in control, in any case, occurring on December 31, 2022. Amounts shown do not include (i) accrued but unpaid base salary through the date of $325,000,termination, (ii) other benefits earned or accrued by the named executive officer during his employment that are available to all salaried employees, such as accrued vacation or acceleration of outstanding stock options and restricted stock units (unless the vesting is contingent on attainment of a performance condition).
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Benefit | | Termination Without Cause or for Good Reason / Cause (no Change in Control) ($) | | Termination Without Cause or for Good Reason / Cause in Connection with a Change in Control ($)(6) | | Death |
Peter Anevski | | Cash | | 1,000,000(1) | | 1,000,000(1) | | — | |
| | Equity Acceleration | | 16,024,642(2) | | 20,405,111(3) | | 12,617,611(3) |
| | All Other Payments or Benefits | | 31,719(4) | | 31,719(4) | | — | |
| | Gross Up Payment | | — | | | — | | | — | |
| | Total | | 17,056,361 | | | 21,436,830 | | | 12,617,611 | |
Mark Livingston | | Cash | | 467,500(1) | | 467,500(1) | | — | |
| | Equity Acceleration | | 1,315,753(2) | | 2,797,884(3) | | 2,797,884(3) |
| | All Other Payments or Benefits | | 12,172(4) | | 12,172(4) | | — | |
| | Total | | 1,795,425 | | | 3,277,556 | | | 2,797,884 | |
David Schlanger | | Cash | | 500,000(1) | | 500,000(1) | | — | |
| | Equity Acceleration | | 9,027,706(2) | | 10,499,543(3) | | 7,914,093(3) |
| | All Other Payments or Benefits | | 22,438(4) | | 22,438(4) | | — | |
| | Gross Up Payment | | — | | | — | | | — | |
| | Total | | 9,550,144 | | | 11,021,981 | | | 7,914,093 | |
Allison Swartz(5) | | Cash | | — | | | — | | | — | |
| | Equity Acceleration | | — | | | — | | | 1,869,000(3) |
| | All Other Payments or Benefits | | — | | | — | | | — | |
| | Gross Up Payment | | — | | | — | | | — | |
| | Total | | — | | | — | | | 1,869,000 | |
Michael Sturmer | | Cash | | 743,750(1) | | 743,750(1) | | — | |
| | Equity Acceleration | | 2,042,350(2) | | 4,598,519(3) | | 4,598,519(3) |
| | All Other Payments or Benefits | | 7,828(4) | | 7,828(4) | | — | |
| | Gross Up Payment | | — | | | — | | | — | |
| | Total | | 2,793,928 | | | 5,350,097 | | | 4,598,519 | |
______________________
(1)Represents payment equal to (1) 12 months (or six months for Mr. Livingston) of the executive’s base salary at termination for the year ended December 31, 2022 and (2) was eligiblethe executive’s full target bonus for such year of termination (without regard to receive an annual discretionary bonusproration assuming a termination date of upDecember 31, 2022).
(2)Represents the value of 12 months (or six months for Mr. Livingston) of unvested equity awards that would be subject to a maximum of 50% of her annual salary,accelerated vesting, based onupon the achievement of certain individual performance goals and our achievement of certain performance targets, and (3) was granted options to purchase 165,001 sharesclosing price of our common stock which optionon December 31, 2022 of $31.15. These values do not include options that have an exercise price that is less than the closing market price of our common stock on December 31, 2022 and as a result are underwater.
(3)Represents the value of all unvested equity awards that would be subject to accelerated vesting, including the PSUs, based upon the closing price of our common stock on December 31, 2022 of $31.15. These values do not include options that have an exercise price that is less than the closing market price of our common stock on December 31, 2022 and as a result are underwater.
(4)Represents the estimated costs of continuation of group health benefits for 12 months (or six months for Mr. Livingston) following the executive’s termination.
(5)Ms. Swartz is not entitled to any payments or benefits under her employment agreement upon a termination of her employment or the occurrence of a change in control.
(6)Pursuant to their terms, the equity awards held by our named executive officers will vestnot automatically accelerate in connection with a change in control unless they are not assumed or substituted in connection with such change in control. The values of any potential acceleration if the awards are not assumed or substituted would be as reflected in this column. In addition, as described above, pursuant to 25%our 2017 Plan and 2019 Plan, in the event any of our employees, including our executives, are terminated by reason of his or her death, such employee will be entitled to accelerated vesting of the then-unvested service-based awards, with the equity acceleration values set forth in this column.
CEO Pay Ratio
Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of our Chief Executive Officer’s annual total compensation to the annual total compensation of our other employees.
The annual total compensation for 2022 for our Chief Executive Officer was $68,580,072, as previously disclosed and further described in our Compensation Discussion and Analysis, Mr. Anevski received equity grants associated with his transition to the role of Chief Executive Officer. The annual total compensation for 2022 for our median employee, identified as discussed below, was $105,419, calculated as explained below. Based on this information, for 2022, the oneratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our other employees was approximately 651 to 1.
Methodology, Assumptions and Estimates Used in Determining our Pay Ratio Disclosure
We chose December 31, 2022 as the date for establishing the employee population used in identifying the median employee and used calendar year anniversary2022 as the measurement period. We identified the median employee using the consistently applied compensation measure of actual gross wages for each employee employed as of December 31, 2022 (other than our Chief Executive Officer). We captured all full-time, part-time, seasonal and temporary employees, consisting of approximately 400 individuals.
The annual total compensation of the median employee and the annual total compensation of the CEO were calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.
The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported above should not be used as a basis for comparison between companies by other companies. In addition, we expect the Company’s annually reported pay ratio may vary significantly year over year, given the size of the Company and the potential variability in Company employee compensation.
Pay Versus Performance Table
The following table sets forth information concerning the compensation of our NEOs, including compensation actually paid (“CAP”), for each of the fiscal years ended December 31, 2020, 2021 and 2022, and our financial performance for each such fiscal year:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Value of Initial Fixed $100 Investment Based On(7): | | | | |
Year | | Summary Compensation Table Total for PEO(1) | | Compensation Actually Paid to PEO($)(2)(3) | | Average Summary Compensation Table Total for non-PEO NEOs($)(4) | | Average Compensation Actually Paid to non-PEO NEOs ($)(2)(4)(5) | | Total Shareholder Return ($) | | Peer Group Total Shareholder Return ($)(6) | | Net Income (thousands) ($) | | Revenue (thousands) ($)(8) |
2022 | | 68,580,072 | | 31,304,264 | | 9,301,761 | | (708,249) | | 113.48 | | 133.44 | | 30,358 | | 786,913 |
2021 | | 862,462 | | 12,703,237 | | 5,449,136 | | 6,880,527 | | 183.42 | | 138.35 | | 65,769 | | 500,621 |
2020 | | 987,312 | | 19,593,349 | | 793,843 | | 2,978,511 | | 154.43 | | 111.43 | | 46,459 | | 344,858 |
______________________
(1)Mr. Schlanger served as our CEO from January 2017 to December 2021. Mr. Anevski has served as our CEO since January 1, 2022.
(2)The fair values of RSUs, PSUs and stock options included in the CAP to our PEOs and the Average CAP to our NEOs are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described in our Annual Report on Form 10-K for the year ended December 31, 2022. Any changes to the RSU fair values from the grant date (for current year grants) and from prior year-end (for prior year RSU grants) are based on our updated stock price at the remainder will vest monthlyrespective measurement dates and updated performance target projections (for PSUs). Changes to the stock option fair values are based on the updated stock price at the respective measurement dates, in addition to updated expected option term, implied volatility of our stock over the following 36 months.updated expected option term, and risk-free rate assumptions. For all years presented, the meaningful increases or decreases in the year-end stock option fair value from the fair value on the grant date were primarily driven by changes in the stock price.
Ms. Ajmani resigned from Progyny, effective March 2, 2020. No severance or other benefits upon termination were(3)Compensation actually paid or providedto our PEOs represents the “Total” compensation reported in connection with her resignation.the Summary Compensation Table for the applicable fiscal year, as adjusted as follows:
| | | | | | | | | | | | | | | | | | | | |
| | 2022 ($) | | 2021 ($) | | 2020 ($) |
Summary Compensation Table Total | | 68,580,072 | | 862,462 | | 987,312 |
Less, value of Stock Awards and Options Awards in Summary Compensation Table | | (67,568,600) | | — | | — |
Plus, year-end fair value of outstanding and unvested equity awards granted in the year | | 39,410,940 | | — | | — |
Plus/Less, year-over-year change in fair value of outstanding and unvested equity awards granted in prior years | | (3,368,117) | | 5,284,970 | | 18,392,284 |
Plus/Less, year-over-year change in fair value of equity awards granted in prior years that vested in the year | | (5,750,031) | | 6,555,805 | | 213,753 |
Compensation Actually Paid to PEOs | | 31,304,264 | | 12,703,237 | | 19,593,349 |
(4)Non-PEO NEOs include the following for 2022: Mr. Livingston, Mr. Schlanger, Ms. Swartz, and Mr. Sturmer. For 2021, the non-PEO NEOs include Mr. Anevski, Mr. Livingston, Ms. Bealer, and Ms. Greenbaum. For 2020, the non-PEO NEOs include Mr. Anveski, Ms. Ajmani, Ms. Bealer, Ms. Greenbaum, and Mr. Livingston.
(5)Average compensation actually paid to our non-PEO NEOs represents the average “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted as follows:
| | | | | | | | | | | | | | | | | | | | |
| | 2022 ($) | | 2021 ($) | | 2020 ($) |
Average Summary Compensation Table Total | | 9,301,761 | | 5,449,136 | | 793,843 |
Less, average value of Stock Awards and Options Awards in Summary Compensation Table | | (8,766,978) | | (4,777,735) | | (188,928) |
Plus, average year-end fair value of outstanding and unvested equity awards granted in the year | | 5,604,053 | | 3,820,260 | | 360,083 |
Plus/Less, average year-over-year change in fair value of outstanding and unvested equity awards granted in prior years | | (3,796,209) | | 1,617,046 | | 4,340,920 |
Plus, average fair value of equity awards granted and vested in the year | | — | | — | | 27,950 |
Plus/Less, average year-over-year change in fair value of equity awards granted in prior years that vested in the year | | (3,050,876) | | 1,950,757 | | (75,463) |
Less, average fair value of equity awards granted in prior years that failed to meet vesting conditions in the year | | — | | (1,178,937) | | (2,279,894) |
Average Compensation Actually Paid to non-PEO NEOs | | (708,249) | | 6,880,527 | | 2,978,511 |
(6)The peer group used for this purpose is Standard & Poor's 500 Health Care index.
(7)The total shareholder return and peer group total shareholder return are three year cumulative returns assuming an initial fixed investment of $100, and that all dividends, if any, were reinvested.
(8)Revenue is a GAAP measure. The Company selected Revenue as the Company-Selected Measure due to it being an important financial measure that helps link CAP to the Company’s NEOs to the Company’s performance for the most recently completed fiscal year. Specifically, Revenue is used as a performance metric in our long-term equity incentive program for our PSUs, which are eligible to be earned based on achievement of specific Revenue targets over a five-year performance period.
Narrative Disclosure to Pay Versus Performance Table
Relationship Between Financial Performance Measures
The graphs below compare the compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs, with (i) our three-year cumulative TSR,(ii) our three-year Peer Group TSR,(iii) our net income,and (iv) our revenue, in each case, for the fiscal years ended December 31, 2020, 2021 and 2022. TSR amounts reported in the graph assume an initial fixed investment of $100, and that all dividends, if any, were reinvested.
Equity Compensation Plan Information
Pay Versus Performance Tabular List
We believe the following performance measures represent the most important financial performance measures used by us to link compensation actually paid to our NEOs for the fiscal year ended December 31, 2022:
a.Revenue.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes our equity compensation plan information as of December 31, 2019.2022. Information is included for equity compensation plans approved by our stockholders. We do not have any equity compensation plans not approved by our stockholders:
Plan Category | | | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | | | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(2) | |
Equity plans approved by stockholders | | | | | 15,721,139 | | | | | $ | 2.44 | | | | | | 4,824,294 | | |
Equity plans not approved by stockholders | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | |
Plan Category | | Number of Shares to be issued upon exercise of outstanding options, warrants and rights (#) | | Weighted-average exercise price of outstanding options, warrants and rights ($) | | Number of Shares remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) (#) |
Equity compensation plans approved by security holders | | 21,789,539(1) | | $ | 31.24 | | | 4,547,752(2) |
Equity compensation plan not approved by security holders | | — | | — | | | — |
Total | | 21,789,539 | | $ | 31.24 | | | 4,547,752 |
(1)
______________________
Includes(1)This amount includes the following:
(a)18,808,026 shares to be issued upon the exercise of outstanding stock options, of which 65,480 were granted from the Progyny Inc. 2008 Stock Plan (the 2008 Stock Plan) with a weighted-average exercise price of $1.22, 6,511,674 were granted from the Progyny Inc. 2017 Equity Incentive Plan, as amended (the 2017 Plan) with a weighted-average exercise price of $3.23 and 12,230,872 were granted from the 2017 Plan. There were no options outstanding under theProgyny Inc. 2019 Equity Incentive Plan, as amended (the “2019 Plan”) as2019 Plan) with a weighted-average exercise price of December 31, 2019. Further, does not include future rights$32.13.
(b)565,351 shares to purchasebe issued upon the exercise of outstanding common stock under our 2019 Employee Stock Purchase Plan (“2019 ESPP”).warrants with a weighted-average exercise price of $1.73.
(2)
Includes the 2017 Plan, 2019 Plan and 2019 ESPP. Stock options or other(c)2,416,162 shares subject to restricted stock awardsunits that were granted under the 2017 Plan that2019 Plan. Since these awards have no exercise price, they are forfeited, terminated, expired or repurchased becomenot included in the weighted-average exercise price calculation.
(2)Includes 1,241,365 shares available for issuance under the 2019 Plan.Plan as of December 31, 2022. In addition, in accordance withOctober 2019, the termsCompany’s Board of Directors and stockholders adopted and approved the 2019 Plan as the successor to continuation of the Company’s 2017 Plan. Under the 2019 Plan, an annual increase to the number of shares issuable is automatically added on January 1 of each year for a period of ten years commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to (i) 4% the total number of shares of common stock outstanding on December 31 of the preceding year or (ii) such lesser number of shares as the Board of Directors may provide.
Also includes 3,306,387 shares available for issuance under the ESPP as of December 31, 2021 (of which 27,492 shares were issued with respect to the purchase period in effect as of December 31, 2022, which purchase period ended on January 31, 2023). Under the ESPP, an annual increase to the number of shares issuable is automatically added on January 1 of each year from January 1, 2021 through January 1, 2029, by the lesser of (1) 1% of the total number of shares of our common stock reserved for issuance thereunder automatically increased on January 1, 2020 by 3,367,528 shares, which is equal to 4% of the total number of shares of our capital stock outstanding on December 31 2019. This increase is not reflected in the table above.
401(k) Plan
We maintain a 401(k) plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation up to certain Code limits, which are updated annually. Currently, we match 50% of the contributionspreceding calendar year, and (2) 2,500,000 shares; provided that eligible employees makeprior to the 401(k) plan up to 6% of the employee’s eligible compensation. The 401(k) plan is intended to be qualified under Section 401(a) of the Code, with the related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan are deductible by us when made, and contributions and earnings on those amounts are not generally taxable to the employees until withdrawn or distributed from the 401(k) plan.
Limitations on Liability and Indemnification Matters
Our amended and restated certificate of incorporation contains provisions that limit the liability of our current and former directors for monetary damages to the fullest extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for any breach of fiduciary duties as directors, except liability for:
•
any breach of the director’s duty of loyalty to the corporation or its stockholders;
•
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
•
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or
•
any transaction from which the director derived an improper personal benefit.
Such limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.
Our amended and restated certificate of incorporation authorizes us to indemnify our directors, officers, employees and other agents to the fullest extent permitted by Delaware law. Our amended and
whosestock (which represents a majority of the combined voting power of the common stock) of TPG Inc., a Delaware corporation, which is the sole member of TPG GPCo, LLC, a Delaware limited liability company, which is the sole member of TPG Holdings I-A, LLC, a Delaware limited liability company, which is the general partner of TPG Operating Group I, L.P., a Delaware limited partnership, which is the sole member of TPG Biotechnology GenPar III Advisors, LLC, a Delaware limited liability company, whose sole memberwhich is the general partner of TPG Holdings I,Biotechnology GenPar III, L.P., a Delaware limited partnership, whosewhich is the general partner isof TPG Holdings I-A, LLC,Biotech III, a Delaware limited liability company, whose sole memberpartnership. Because of TPG GP A’s relationship to TPG Biotech III, TPG GP A may be deemed to be the beneficial owner of the securities held by TPG Biotech III. TPG GP A is owned by entities owned by Messrs. Bonderman, Coulter and Winkelried. Because of the relationship of Messrs. Bonderman, Coulter and Winkelried to TPG Group Holdings (SBS), L.P., a Delaware limited partnership, whose general partner TPG Group Holdings (SBS) Advisors, LLC, a Delaware limited liability company, whose sole member is TPG Group Holdings (SBS) Advisors, Inc., a Delaware corporation.GP A, each of Messrs. David Bonderman, and James G. Coulter are sole stockholders of TPG Group Holdings (SBS) Advisors, Inc. and Jon Winkelried may therefore be deemed to be the beneficial owners of the securitiesshares of Common Stock held by TPG Biotechnology Partners III, L.P.Biotech III. Messrs. Bonderman, Coulter and CoulterWinkelried disclaim beneficial ownership of the securitiessuch shares of common stock and warrants held by TPG Biotechnology PartnersBiotech III L.P. except to the extent of their pecuniary interest therein. The address of TPG Biotechnology Partners III, L.P. is c/o TPG Global, LLC,Inc. 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102.
(3)
Based solely on a Schedule 13G/A filed with the SEC on January 6, 2023, indicating that BlackRock, Inc. (“BlackRock”) had sole voting power with respect to 9,151,785 shares, shared voting power with respect to no shares, sole dispositive power with respect to 9,346,854 shares, and shared dispositive power with respect to no shares. The principal address of BlackRock is 55 East 5nd Street, New York, NY 10055.
(4)Based on a Schedule 13G/A filed with the SEC on February 9, 2023, indicating that The Vanguard Group (“Vanguard”) had sole voting power with respect to no shares, shared voting power with respect to 128,258 shares, sole dispositive power with respect to 7,143,492 shares, and shared dispositive power with respect to 201,362 shares. The principal business address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.
(5)Based on a Schedule 13G/A filed with the SEC on February 11, 2022. Consists of (a) 17,621,8966,473,515 shares held by Kleiner Perkins Caufield & Byers XIII, LLC (“KPCB XIII”), (b) 1,273,553 shares held by individuals and entities associated with Kleiner Perkins Caufield and Byers (“KPCB”), (c) warrants to purchase 527,246 shares held by KPCB XIII and (d) warrants to purchase 38,105 shares held by individuals and entities associated with KPCB. All shares are held for convenience in the name of “KPCB Holdings, Inc., as nominee” for the accounts of such individuals and entities.. The managing member of KPCB XIII, is KPCB XIII Associates, LLC (“KPCB XIII Associates”). L., John Doerr, Raymond J. Lane, Theodore E. Schlein and Brook H. Byers, the managing members of KPCB XIII Associates, exercise shared voting and dispositive control over the shares held by KPCB XIII. Such managing members and Dr. Seidenberg disclaim beneficial ownership of all shares held by KPCB XIII exceptmay be deemed to the extent of their pecuniary interest therein.have sole power to vote these shares. The principal business address for Kleiner Perkins Caufield & Byers, LLC, is 2750 Sand Hill Road, Menlo Park, CA 94025.
(6)Based solely on a Schedule 13G/A filed with the SEC on February 14, 2023, indicating that Macquarie Investment Management Business Trust (“Macquarie Trust”) had sole voting power with respect to 4,972,471 shares, shared voting power with no respective shares, sole dispositive power with respect to 4,972,471 shares, and shared dispositive power with respect to no shares. The shares held by Macquarie Trust are deemed to be beneficially owned by Macquarie Management Holdings Inc. (“Macquarie Holdings”) due to its ownership of Macquarie Trust. The shares held by Macquarie Holdings and Macquarie Trust are deemed to be beneficially owned by Macquarie Group Limited (“Macquarie Group”) due to its ownership of Macquarie Holdings and Macquarie Trust. The principal business address of Macquarie Group is 50 Martin Place Sydney, New South Wales, Australia. The principal business address of Macquarie Holdings and Macquarie Trust is 2005 Market Street, Philadelphia, PA 19103.
(4)
(7)Consists of (a) 10,238,244 shares and (b) warrants to purchase 288,713 shares held by S.R. One, Limited, an indirect wholly owned subsidiary of GlaxoSmithKline plc. The address of S.R. One, Limited is 161 Washington Street, Suite 500, Conshohocken, PA 19428.
(5)
Consists of (A)(i) 3,855,1531,891,973 shares issuable upon the exercise of options and (ii) 580,010within 60 days of March 27,2023, (b) 15,625 restricted stock units vesting within 60 days of March 27, 2023, (c) 46,401 shares held by Mr. SchlangerAnevski, and (B) 220,002(d) 86,040 shares held by DS2019 LLC, which is owned by David Schlanger 2019 Grantor Retained Annuity Trust (the “DS GRAT”). Mr. Schlanger is the managing member of DS2019 LLC and Mr. Schlanger’s spouse is the trustee of the DS GRAT.PECO ANEVSKI 2020 SD LLC.
(6)
(8)Consists of (a) 4,108,965 shares and (b) warrants to purchase 188,449 shares held by Merck Ventures B.V., a wholly owned subsidiary of Merck B.V. Merck B.V. is a wholly owned indirect subsidiary of Merck KGaA, a publicly traded company. The address of Merck Ventures B.V. is Gustav Mahlerplein 102, Toyo Ito Building, 20th Floor, 1082 MA Amsterdam, The Netherlands.
(7)
Consists of (a) 941,636109,188 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 3,480 restricted stock units vesting within 60 days of March 27, 2023, and (b) 1,466,135(c) 8,652 shares held by Mr. Anevski.Dr. Cohen.
(8)
(9)Consists of (a) 239,48593,574 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 2,900 restricted stock units vesting within 60 days of March 27, 2023, and (b) 1,128,560(c) 7,210 shares held by Ms. Ajmani.Mr. Gordon.
(9)
(10)Consists of (A)(i) 146,937(a) 56,658 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 2,900 restricted stock units vesting within 60 days of March 27, 2023, and (ii) 522,446(c) 2,210 shares held by Dr. Payson, (B) 1,200,199Mr. Holstein.
(11)Consists of (a) 232,689 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 1,063 restricted stock units vesting within 60 days of March 27, 2023, and (c) 3,832 shares held by Melinda B. PaysonMr. Livingston.
(12)Consists of (a) 115,451 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 3,480 restricted stock units vesting within 60 days of March 27, 2023, and Robert L. Carson, Trustee(c) 8,652 shares held by Mr. Park.
(13)Consists of The Melinda B. Payson 2018 Grantor Retained Annuity Trust dated November 28, 2018, (C) 1,200,199(a) 144,249 shares issuable upon the exercise of options within 60 days of March 27, 2023, (ii) 3,480 restricted stock units vesting within 60 days of March 27, 2023, (c) 281,098 shares held by Norman C. Payson and Robert L. Carson, TrusteeMelinda B. Payson, Trustees of The Norman C. and Melinda B. Payson 2018 Grantor Retained AnnuityRevocable Trust dated November 28, 2018 and (D)(d) 122,493 shares held by EVO Eagle, LLC. Mr. Payson and his spouse shareshares voting and dispositive power over the shares held by EVO Eagle, LLC.
(10)
(14)Consists of (a) 76,9232,909,109 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 5,250 restricted stock units vesting within 60 days of March 27, 2023, and (c) 13,168 shares held by Mr. Schlanger.
(15)Consists of (a) 122,136 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 4,060 restricted stock units vesting within 60 days of March 27, 2023, (c) 10,094 shares held by Dr. Seidenberg, (d) 227,906 shares of common stock held by The Seidenberg/Vogel Rev TrustuaRevocable Trust u/a/d 3/6/03 Paul Vogeamended and restated on 6/16/2020 (the “Seidenberg Trust”), and (b) 19,460,800(e) 6,473,515 aggregate shares of common stock and warrants to purchase shares of common stock held by KPCB XIII and individuals and entities associated with KPCB referred to in footnote (3)(5) above. Dr. Seidenberg is a trustee of the Seidenberg Trust, and is a partner at KPCB. Dr. Seidenberg disclaims beneficial ownership of all shares held by KPCB XIII except to the extent of her pecuniary interest therein.
(11)
(16)Consists of (a) 24,302,09593,575 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 2,900 restricted stock units vesting within 60 days of March 27, 2023, and (c) 4,360 shares held by Ms. Scott.
(17)Consists of (a) 342,500 shares issuable upon the exercise of options within 60 days of March 27, 2023, (b) 15,625 restricted stock units vesting within 60 days of March 27, 2023, and (c) 73,632 shares held by Mr. Sturmer.
(18)Consists of (a) 7,369,263 shares, (b) 5,009,8746,111,102 shares issuable upon the exercise of options, and (c) warrants to purchase 565,351 shares. The shares held by Ms. Ajmani have been excluded due to her resignation in60,763 restricted stock units vesting within 60 days of March 2020.27, 2023.
DELINQUENTSECTION16(A) REPORTS
Section 16(a) of the Exchange Act requires our executive officers and directors, our principal accounting officer and persons who beneficially own more than 10% of our common stock to file with the SEC reports of their ownership and changes in their ownership of our common stock. To our knowledge, based solely on review of the copies of such reports and amendments to such reports with respect to the year ended December 31, 2022 filed with the SEC and on written representations by our directors and executive officers, all required Section 16 reports under the Exchange Act for our directors, executive officers, principal accounting officer and beneficial owners of greater than 10% of our common stock were filed on a timely basis during the year ended December 31, 2022 other than one Form 4 for Norman Payson; one amended Form 4 for Lloyd Dean; and one amended Form 3 for Monice Barbero. In addition to the aforementioned late and amended Form 4 filings, during the year ending December 31, 2023, Mark Livingston and Michael Sturmer each filed one late Form 4, respectively.
TRANSACTIONS WITH RELATED PERSONS
The following is a summary of transactions since January 1, 20192022 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of any class of our capital stock at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest.
Employment Arrangements
We have entered into employment agreements with certain of our executive officers. For more information regarding these agreements with our named executive officers, see “Executive Compensation”.Compensation.”
Stock Option Grants to Directors and Executive Officers
We have granted stock options to certain of our directors and executive officers. For more information regarding the stock options and stock awards granted to our directors and named executive officers see “Executive Compensation” and “Non-Employee Director“Director Compensation.”
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our amended and restated bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. For more information regarding these agreements, see “Executive Compensation — Limitations on Liability and Indemnification Matters.”
Related Person Transaction Policy
We have adopted a written policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the prior approval or, if not a related person transaction when originally consummated or not initially identified as a related person transaction prior to consummation, the ratification of our board of directors or our audit committee. Any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of our common stock or any member of the immediate family of any of the foregoing persons, in which the amount involved exceeds $120,000 and such person would have a direct or indirect interest, must be presented to our board of directors or our audit committee for review, consideration and approval. In approving or rejecting any such proposal, our board of directors or our audit committee is to consider the material facts of the transaction, including without limitation whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
With respect to any transactions above that were entered into prior to the adoption of the written policy, such transactions were approved by our board of directors considering similar factors to those described in the preceding paragraph.