Compensation Committee2020 Meetings:
| | | 8
| Members:
| | | Melissa Reiff (Chair)
| | | | Gary S. Briggs
| | | | Edith W. Cooper
| | | | Jonathan D. Klein
| 2022 Meetings: 6 |
| | | | | | | | | | Members | | | | As described in more detail in its charter, among other responsibilities, our Compensation Committee: oversees•Oversees and reviews our compensation philosophy and strategy;
establishes•Establishes goals and objectives relevant to compensation for the CEO and, in consultation with the CEO, other senior officers, and evaluates theirthe CEO's and, in consultation with the CEO, other senior officer's performance against those goals;
reviews•Reviews and approves the form and amount of compensation to be paid to the CEO and other senior members of the executive team either directly or through the establishment of a sub-committee;
administers•Administers our incentive compensation plans, including approving the terms and conditions of awards;
recommends•Recommends to our Board adoption of executive compensation policies;
recommends•Reviews and approves the form and amount of compensation to be paid to our non-employee Board members;directors;
oversees•Oversees human capital management, including our employee talent and development programs, our diversity, equity, and inclusion policies and strategies, and retention and attrition, and periodically reviewingattrition;
•Periodically reviews succession planning for key roles other than the CEO (for which succession planning is overseen by theour Board); and oversees•Oversees the management of risks associated with our compensation policies, programs and practices, including an annual risk assessment to determine whether our compensation program encourages excessive or inappropriate risk-taking.
A description of the role of the compensation consultant engaged by theour Compensation Committee, scope of authority of theour Compensation Committee, and the role of executive officers in determining executive compensation is on page 55can be found under “Compensation Discussion and Analysis—How We Determine Executive Compensation.” | | | | Melissa Reiff (Chair) | | | | | | | Gary S. Briggs | | | | | | | Jonathan D. Klein | | | | | | | C. Andrew Ballard | | | | |
| | | | | | Nominating and Corporate Governance Committee2020 Meetings:
| | | 4
| Members:
| | | Fred Wilson (Chair)
| | | | M. Michele Burns
| 2022 Meetings: 2 |
| | | | | | | | | | Members | | | | As described in more detail in its charter, among other responsibilities, our Nominating and Corporate Governance Committee: advises the•Advises our Board on corporate governance matters generally, and recommends to theour Board appropriate or necessary actions to be taken by Etsy;
reviews•Reviews the composition and size of theour Board and makes recommendations to theour Board;
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recommends•Recommends to theour Board criteria for Board membership, including qualifications, qualities, including areas of expertise, differences of viewpoint, age, skill, gender, race, and other individual characteristics, as well as other relevant factors;
actively•Actively seeks out diverse director candidates to include in the pool from which Board nominees are chosen;
reviews•Reviews and recommends to theour Board the director nominees;
oversees•Oversees the annual evaluation of theour Board and each Committee;
reviews•Reviews the composition of each Committee and recommends members and chairs;
reviews•Reviews the structure and operations of our Committees;
reviews•Reviews director orientation and continuing education offerings and makes recommendations, as needed;
oversees•Oversees the management of risks associated with director independence, conflicts of interest, board composition and organization, and director succession planning; and
periodically reviews•Reviews our economic,environmental and social and ecological ImpactESG goals and our progress against those goals.
| | | | Fred Wilson (Chair) | | | | | | | M. Michele Burns | | | | | | |
Compensation Committee Interlocks and Insider Participation
Board Oversight Responsibilities Board Meetings Our Board met five times during 2022. Each director attended at least 75% of the total number of 2022 meetings of our Board and of each Committee on which he or she served. We encourage all directors and director nominees to attend the Annual Meeting; however, attendance is not mandatory. All directors attended the 2022 Annual Meeting of Stockholders. Board Oversight of Strategy Our Board is actively engaged in overseeing our long-term strategy. Management presents our annual operating plan for Board approval each year, together with an update on the prior year’s financial results. While our Board approves our annual operating plan, our management is responsible for developing this plan and executing on our business strategy. Our Board’s oversight and management’s execution of our plan are conducted with a long-term mindset and focus on assessing operational opportunities and strategic areas of impact. Board Oversight of Risk While management is responsible for the day-to-day management of the material risks we face, our Board maintains ultimate responsibility for the oversight of risk. In addition, our Committees assist our Board in risk oversight and report regularly to our full Board. During 2020, Gary S. Briggs, Edith W. Cooper, Jonathan D. Klein, and Melissa Reiff served on our Compensation Committee. No member | | | | | | | | | | | | | | | | Areas of the Compensation Committee had served as one of our officers or employees at the time that they were a member of the Compensation Committee. During 2020, none of our executive officers served as a member of the board of directors or as a member of a compensation committee of any other company that has an executive officer serving as a member of our Board or Compensation Committee.Board and Committee Self AssessmentsOn an annual basis, the Board, the Oversight
| | | | | | | Risk or Focus | Audit Committee the | Compensation
Committee and the | Nominating and Corporate
Governance Committee conduct self-assessments | Full Board
of Directors | | Accounting & Financial Reporting | l | | | l | | Audit Matters | l | | | l | | Investments and Investment Guidelines | l | | | l | | Related Party Transactions | l | | | l | | Payment Operations, Cash and Foreign Exchange Management, and Taxes | l | | | l | | Executive Compensation Policies | | l | | l | | Human Capital Management | | l | | l | Strategy and efforts relating to ensure effective performance
diversity, equity, and to identify opportunities for improvement. As the first step in the self-assessment process, directors respond to a comprehensive questionnaire through an interview process with outside counsel, which asks them to consider various topics related to board and committee composition, structure, effectiveness, and responsibilities, as well as satisfaction with the schedule, agendas, materials, and discussion topics. Each committee, as well as the Board as a whole, then reviews and assesses the responses from this assessment and any recommendations to the Board. The resultsinclusion | | l | | l | | Corporate Governance | | | l | l | Conflicts of the assessments are then discussed by the Interest | | | l | l | Board and the respective committees in executive session, with a view toward taking action to address any issues presented. Results requiring additional consideration are addressed at subsequent boardCommittee Composition | | | l | l | | Director Succession Planning | | | l | l | ESG Strategy and committee meetings, where appropriate.Goals | l | l | l | l | | Business Strategy | | | | l | | Capital Structure | | | | l | | Regulatory and Compliance Programs | | | | l | | Data Privacy, Technology, and Information Security, including Cybersecurity | l | | | l | | Insurance Program | | | | l |
Our Board oversight of risk is informed by updates from management team members responsible for oversight of particular risk areas, which typically occurs quarterly. We also have a Risk Steering Committee comprised of a cross-functional management team, which meets regularly to review and discuss the significant risks facing our business, including any material ESG risks. The work of the Risk Steering Committee meetings helps identify key or emerging areas of risks and informs management reporting to our Board. Our Board also receives regular updates from our management team on the evolving impact of world events such as macroeconomic shifts, geopolitical events, the COVID-19 pandemic, and regulatory changes. Our Board oversees the strategic decisions related to our response to and our planning for our business operations through these many changes. Director Nomination Process
Additional Information Regarding Oversight of Information Security Risk We recognize the importance of information security, cyber readiness, and data privacy protections to our business and reputation. While management has general responsibility for implementation of our information technology, cybersecurity, and privacy strategies and policies, including deployment and use of security tools, applications, and employee training, our Board and our Audit Committee are actively engaged in the oversight of our information security program. Since 2022, our Audit Committee has overseen Etsy’s technology and information security policies and practices, and the internal controls relating to information security, and the steps taken by management to identify, monitor, and control any risk exposures, to provide for more focused oversight of rapidly evolving information security risks and mitigation strategies. •Given the importance of information security to our stakeholders, our Board or our Audit Committee receives regular reports on these matters from our Chief Information Security Officer team, including on the status of projects to strengthen the company’s security systems and improve cyber readiness, as well as on existing and emerging threat landscapes and our program for managing these security risks. •Our information security program is subject to an annual self-assessment that measures maturity of our program in a manner aligned with the National Institute of Standards and Technology ("NIST") Cybersecurity Framework ("CSF"). •Our information security posture is subject to regular third-party testing, including penetration testing, and the results are shared with our Board. •We have established a notification protocol designed to escalate material cyber-security events to appropriate levels, including to senior management and our Board. •Our Board also periodically participates in tabletop exercises conducted by senior management as part of risk management and disaster-related planning to validate, test, and assess the effectiveness and adequacy of certain roles and decision-making processes in the event of a cyber-incident. •You can find further information about our Data Privacy & Security policies on our Investor Relations website. Board Oversight of Human Capital and Talent Management Succession Planning Our Board considers its oversight and involvement in key aspects of management succession planning to be critical in ensuring Etsy’s competitive success over the long-term. In this role, our Board has established a CEO succession plan, which it reviews and updates periodically. Our Compensation Committee also reviews management succession plans for senior leadership roles (other than our CEO), including an evaluation of the skills they believe are needed for each role, potential successors in the short- and long-term, and any external search plans. We also consider, among other factors, the competitive landscape, leadership competencies, and organizational goals, including our commitment to diversity, equity, and inclusion. In 2022, we announced the appointment of Raina Moskowitz as Etsy’s Chief Operating Officer, effective March 22, 2022. Ms. Moskowitz previously served as Etsy’s Chief Operations, Strategy and People Officer. We also announced that Kruti Patel Goyal, who was then serving as Etsy's Chief Product Officer, had been named Chief Executive Officer of our Depop subsidiary, effective September 12, 2022. In connection with assuming that role, Ms. Patel Goyal stepped down from her role as Chief Product Officer effective July 29, 2022, and Nicholas Daniel, who was then serving as Etsy's VP of Product Management, assumed the role of Chief Product Officer. Additionally, we announced that Rachana Kumar, who was Etsy’s Vice President of Engineering, would assume the role of Chief Technology Officer effective January 1, 2023. In addition to the appointment of these internal candidates, in 2022, Kim Seymour joined Etsy as its Chief Human Resources Officer, and, in 2023, Colin Stretch joined Etsy as its Chief Legal Officer and Corporate Secretary. As Etsy has grown and evolved, we are proud that our leadership team today reflects a combination of those who have been with Etsy for five years or more - some elevated through thoughtful talent development and succession planning - and world-class talent attracted to our track record of success and long-term growth potential. We also have transitioned proven executives to key roles supporting our “House of Brands” strategy. Our Compensation Committee and our Board have overseen this leadership development and succession planning. In addition, our Compensation Committee receives an annual update on talent management and compensation strategies across Etsy. Board Oversight of ESG Strategy Etsy's full Board has overall responsibility for oversight of risk management at Etsy, including management of climate risk. Additionally, our Nominating and Corporate Governance Committee Charter provides that the Committee has responsibility for periodic review of our environmental and social ESG goals and our progress toward those goals. We typically report on our progress towards our ESG goals to our Nominating and Corporate Governance Committee or the full Board two times a year. In addition, our Audit Committee oversees the disclosures in our Form 10-K, which includes our ESG disclosures, and our Compensation Committee oversees our talent and employee development programs including our social ESG goals and our policies and strategies regarding diversity and inclusion.
The following graphic reflects our ESG strategy oversight: For more information on our ESG goals, strategy, and progress, please see our Form 10-K at pages 21-43. Board Oversight of Responsible Advocacy Etsy engages in advocacy on policy issues that are aligned with our marketplaces, sellers, employees, and other stakeholders’ interests. This engagement is overseen and driven primarily through our Public Policy and Advocacy team. In these activities, we seek to protect and advance Etsy’s interests, competitiveness, reputation, and goals and shape public policy issues that impact Etsy and our various constituencies. •Political Contributions. Etsy does not maintain a political action committee or make contributions in money, employee time, goods, or services to political parties or candidates, and we are committed to meaningful oversight of Etsy’s engagement with government officials. •Lobbying. Etsy’s Public Policy and Advocacy team is committed to advancing common sense public policies that benefit our communities and business. We seek to build trust in our marketplaces and support our buyers and small business sellers by advocating for such policies as government investment in internet infrastructure, enhanced leave and caregiving policies, balanced product liability rules, common sense regulation of online commerce, and Corporate Governance Committee has the authority to recommend prospective director candidates for the Board’s consideration, the use of our technology and marketplaces by communities that have been economically disadvantaged. All Etsy lobbying activities, including by third parties on behalf of Etsy, require the prior approval of the Vice President, Head of Public Policy and Advocacy and must comply with applicable law and Etsy’s Business Conduct Guidelines. Etsy files quarterly and other required Lobbying Disclosure Act reports detailing our U.S. federal lobbying activities and expenditures with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives. Etsy also files disclosure reports detailing our lobbying activities and expenditures with U.S. state and municipal governments, where required, and with the European Union Transparency Register. •Trade Associations and Coalitions. Etsy joins trade and industry associations that add value to Etsy, our marketplaces, stockholders and employees. These groups often have many members from a wide variety of industries, and advocate on broadly applicable public policy and industry issues. Although we work to make our voice heard within these groups, there may be occasions where our views on an issue differ from those of a particular association. We perform comprehensive due diligence on our trade associations and coalitions designed to confirm they are reputable and have no history of malfeasance.
Our Board, as part of its general oversight function, periodically receives reports from senior management regarding Etsy’s advocacy strategy and agenda. Our senior management monitors and coordinates Etsy’s public policy advocacy efforts, as well as any lobbying activities. Board and Committee Self-Assessments On an annual basis, our Board, Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee conduct self-assessments to help ensure effective performance and to identify opportunities for improvement. As the first step in the self-assessment process, directors respond to a comprehensive questionnaire through an interview process with outside counsel, which asks them to consider various topics related to Board and Committee composition, structure, effectiveness, and responsibilities, as well as satisfaction with the schedule, agendas, materials, and discussion topics. Each Committee, as well as our Board as a whole, then reviews and assesses the responses from this assessment and any recommendations to our Board. The results of the assessments are then discussed by our Board and the respective Committees in executive session, with a view toward taking action to address any issues presented. Results requiring additional consideration are addressed at subsequent Board and Committee meetings, where appropriate. Director Nomination Process Although our Nominating and Corporate Governance Committee has the authority to recommend prospective director candidates for our Board’s consideration, our Board retains the ultimate authority to nominate a candidate for election by the stockholders as a director or to fill any vacancy. 312021 Proxy StatementEtsy
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Identifying and Evaluating Nominees When searching for new directors, theour Nominating and Corporate Governance Committee actively seeks out diverse candidates to include in the pool from which Board nominees are chosen. In 2022, our Board strengthened its commitment to diversity by specifically requiring that any initial list of candidates considered by the Nominating and Corporate Governance Committee for nomination to our Board include at least two candidates with diversity of race, ethnicity, or gender. When identifying and evaluating potential director nominees, including current members of theour Board who are eligible for re-election, theour Nominating and Corporate Governance Committee seeks a balance of knowledge, experience, and capability on theour Board and may consider the following: •the current size and composition of theour Board and the needs of theour Board and Board committees;our Committees; •high integrity and adherence to ourEtsy values; •qualities such as character, judgment, independence, relationships, experience, length of service, and the like; •commitment to enhancing long-term stockholder value; •diversity of backgrounds, which is construed broadly to include differences of viewpoint, age, skill, gender, race, ethnicity, and other individual characteristics; •financial literacy or financial expertise or other requirements as may be required by applicable rules; •sufficiency of time to carry out their Board and committeeCommittee duties; •the range of expertise and experience of theour Board, including at the policy-making level, in business, government, technology, or other areas relevant to our business; and •other factors, including conflicts of interest or competitive issues. Stockholder Recommendations and Nominees TheOur Nominating and Corporate Governance Committee will consider stockholder recommendations, so long as they comply with applicable law and our Bylaws, andbylaws, including the procedures described below. Stockholder recommendations for candidates to theour Board must be received in writing by December 31st ofwithin the year prior to the yeartime frame specified in which the recommended candidates will be considered for nomination at the next Annual Meeting of Stockholdersour bylaws and sent to our headquarters, Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201, to the attention of our Chief Legal Officer and Corporate Secretary. The recommendation must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and Etsy within the last three years, and evidence of the recommending person’s ownership of Etsy stock. Recommendations must also include a statement from the recommending stockholder in support of the candidate that addresses the criteria for Board membership, personal references, and confirmation of the candidate’s willingness to serve.
Our Nominating and Corporate Governance Committee will review the qualifications of any candidate recommended by stockholders in accordance with the criteria described above. In addition, in theour Nominating and Corporate Governance Committee’s discretion, its review may include requiring the candidate to complete a questionnaire regarding his or her background, interviewing references, performing background checks, direct interviews with the candidate, or other actions it deems necessary or proper. StockholdersOur Bylaws provide a proxy access right for stockholders, pursuant to which a stockholder, or a group of up to 20 stockholders, owning at least three percent of the voting power of the outstanding shares of our common stock continuously for at least three years, may also nominate candidates for electionand include in our annual meeting proxy materials director nominees constituting up to the greater of two directors or twenty percent of the number of directors to be elected at the annual meeting, subject to certain limitations and provided that the stockholders and nominees satisfy the timing and other requirements specified in our bylaws.
Compensation Committee Interlocks and Insider Participation During 2022, C. Andrew Ballard, Gary S. Briggs, Jonathan D. Klein, and Melissa Reiff served on our Compensation Committee. No member of our Compensation Committee had served as one of our officers or employees at the time that they were a member of our Compensation Committee. Other than disclosed below under “Related Persons Transactions” with respect to Gary Briggs, no member of our Compensation Committee had or has any relationships with us that are required to be disclosed under SEC rules. During 2022, none of our executive officers served as a member of the board or as a member of a compensation committee of any other company that has an executive officer serving as a member of our Board by following the procedures described in our Bylaws. 322021 Proxy StatementEtsy
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Communications with theour Board Stockholders or other interested parties may contact theour Board or one or more of our directors with issues or questions about Etsy, by mailing correspondence to our Chief Legal Officer and Corporate Secretary at our Brooklyn headquarters, Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201. Our legal team will review incoming communications directed to theour Board and, if appropriate, will forward such communications to the appropriate member(s) of theour Board or, if none is specified, to the Chair of the Board.our Board Chair. For example, we will generally not forward a communication that is primarily commercial in nature, is improper or irrelevant, or is a request for general information about Etsy. 332021 Proxy StatementEtsy
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The following table discloses compensation received by our non-employee directors during 2020 pursuant to our non-employee director compensation program.
| | Gary S. Briggs | | | 136,706 | | | 123,747 | | | 260,453 | | | | M. Michele Burns | | | 140,308 | | | 126,977 | | | 267,285 | | | | Edith W. Cooper | | | 136,706 | | | 123,747 | | | 260,453 | | | | Jonathan D. Klein | | | 136,706 | | | 123,747 | | | 260,453 | | | | Melissa Reiff | | | 140,881 | | | 127,478 | | | 268,359 | | | | Margaret M. Smyth | | | 143,582 | | | 129,987 | | | 273,569 | | | | Fred Wilson | | | 142,518 | | | 228,991 | | | 371,509 | |
| (1)
| | | The value disclosed is the aggregate grant date fair value of 1,670 restricted stock units (“RSUs”) granted to each of Gary S. Briggs, Edith W. Cooper, and Jonathan D. Klein; 1,714 RSUs granted to M. Michele Burns, 1,721 RSUs granted to Melissa Reiff; 1,754 RSUs granted to Margaret M. Smyth; and 1,741 RSUs granted to Fred Wilson, each as an incumbent director in 2020, computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the grant date fair value are set forth in Note 16—Stock-based Compensation in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that accompanies this proxy statement. The number of RSUs granted is calculated by Etsy using the average closing price of Etsy’s common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days up to and including the grant date.
| | | (2)
| | | The aggregate number of RSUs and stock options held by each director listed in the table above as of December 31, 2020 was as follows:
| |
| | | | | Gary S. Briggs | | | 3,184 | | | 17,529 | | | | | | | | | | M. Michele Burns | | | 1,714 | | | 38,894 | | | | | | | | | | Edith W. Cooper | | | 3,184 | | | 17,529 | | | | | | | | | | Jonathan D. Klein | | | 1,670 | | | 22,264 | | | | | | | | | | Melissa Reiff | | | 1,721 | | | 24,129 | | | | | | | | | | Margaret M. Smyth | | | 1,754 | | | 56,856 | | | | | | | | | | Fred Wilson | | | 1,741 | | | 7,302 | | | | |
| (3)
| | | The value disclosed is the grant date fair value of an option to purchase 3,946 shares granted to each of Gary S. Briggs, Edith W. Cooper, and Jonathan D. Klein; an option to purchase 4,049 shares granted to M. Michele Burns; an option to purchase 4,065 shares granted to Melissa Reiff; and an option to purchase 4,145 shares granted to Margaret M. Smyth, each as an incumbent director in 2020, and an option to purchase 7,302 shares granted to Fred Wilson, as an incumbent director and Chair of our Board in 2020, computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the grant date fair value are set forth in Note 16—Stock-based Compensation in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that accompanies this proxy statement.
| |
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Non-Employee Director Compensation Program for Non-Employee Directors
Our non-employee directors play a critical role in guiding our strategic direction and overseeing management. TheOur Compensation Committee reviews pay levels for non-employee directors at least annually, with assistanceinformed by feedback from Compensia, Inc., a national compensation consulting firm (“Compensia”), which prepares a comprehensive assessment of our compensation program for non-employee director compensation program.directors. That assessment includes reviewing director compensation against the same peer group used for executive compensation purposes, an update on recent trends in director compensation, and a review of related corporate governance best practices. Non-Employee Director Compensation ProgramNon-employee directors receive an annual retainer for their service as directors and additional retainer amounts depending on their committee service, as described below, both paid in equity. Directors who are also employees of Etsy do not receive any additional compensation for their service as directors. Non-employee directors are also reimbursed for travel and other reasonable out-of-pocket expenses related to attendance at Board and committee meetings.
OurIn early 2022, Compensia conducted a review of our non-employee director compensation relative to our peer group. Based on market data from Compensia, our Compensation Committee adopted a director compensation policy for non-employee directors, which was most recently amended in March 2021. The amendments increased the Annual Board Retainer from $240,000approved updates to $250,000; the Compensation Committee chair and member retainers from $15,000 and $7,500, respectively, to $16,000 and $8,000, respectively; and the Nominating and Corporate Governance Committee chair and member retainers from $8,000 and $4,000, respectively, to $10,000 and $5,000, respectively. The amendments also adjusted the mix of equity to be used to pay theour director compensation to 60% restricted stock units (“RSUs”),align more closely to the market median. The annual retainer was increased from $250,000 to $285,000, the Audit Committee Chair retainer was increased from $20,000 to $24,000, and 40% stock options,our Compensation Committee Chair retainer was increased from the previous 50/50 mix of RSUs and stock options. In addition, the Board Chair fee, which was previously paid entirely in options will now be paid 60% in RSUs and 40% in stock options. $16,000 to $20,000.
Our non-employee director compensation program as amended,for 2022 is more fully described below.below: | | | | | | | Annual Value of Payments ($) |
(Shown in $, Paid in Equity) | | Annual Board Retainer | 285,000 | | 250,000
| | | Additional Retainers | | | | | | Board Chair | 100,000 | | 100,000
| | | Audit Committee Chair | 24,000 | | 20,000
| | | Audit Committee Member | 10,000 | | 10,000
| | | Compensation Committee Chair | 20,000 | | 16,000
| | | Compensation Committee Member | 8,000 | | 8,000
| | | Nominating and Corporate Governance Committee Chair | 10,000 | | 10,000
| | | Nominating and Corporate Governance Committee Member | 5,000 | | 5,000
| | | Member of any other Committee constituted by theour Board | | | 40,000 unless otherwise
determined by theour Board or
Compensation Committee
| |
On the date of our 2022 Annual Meeting, each continuing non-employee director received an equity award with an aggregate fair value at the time of grant equal to the annual board retainer plus the amount of applicable additional retainers in the form of RSUs, other than our Board Chair who received stock options to accommodate Hart-Scott-Rodino Act considerations. Each new non-employee director who joins our Board will be grantedreceive an equity compensation (inaward in the form of 60% RSUs and 40% stock options) with an aggregate fair value at the time of grant equal to the amount of the Annual Board Retainer,annual board retainer, plus the amount of any applicable Additional Retainers,additional retainers, on the first business day of the month following the month in which his or her appointment to theour Board became effective (or if such date iswas not a trading day, the first succeeding trading day). If the new director is appointed to theour Board on a date after the date of our annual meeting,Annual Meeting, the equity grantaward will be prorated based on the number of whole months that the director serves on theour Board before theour next annual meeting. EquityAnnual Meeting. These equity awards for new directors will vest in full on the date of the next annual meeting of stockholdersAnnual Meeting if the director has served continuously as a member of theour Board during the vesting period and, if earlier, will vest in full in the event we are subject to a change in control, or upon the director’s death. Each incumbent non-employee director will receive compensation in the form of RSUs (60%) and stock options (40%) on the date of the annual meeting of stockholders with an aggregate fair value at the time of grant equal to the Annual Board Retainer plus the amount of applicable Additional
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Retainers. Such equity award will vest in full on the date of the next annual meeting of stockholdersAdditionally, if the director has served continuously as a member of the Board during the vesting period and will vest in full in the event we are subject to a change in control, or upon the director’s death.
If a director becomes theour Board Chair, or a member or Chair of a Board committee,Committee, after the date of the annual meetingour Annual Meeting (for continuing directors) or the date the director’s appointment to theour Board became effective (for new directors), then the director will be entitled to receive a “catch-up"catch-up retainer.”" The catch-up retainer is an additional amount equal to the excess of the director’s Additional Retainersadditional retainers for the prior and new roles over the Additional Retainersadditional retainers that were actually paid to the director as of the date of the annual meeting.our Annual Meeting. This additional amount will be prorated based on the number of whole months that the director served in each additional role during the period from the annual meetingour Annual Meeting (for continuing directors) or the date the director’s appointment to theour Board became effective (for new directors) until theour next annual meeting of stockholders.Annual Meeting. The amount of any catch-up retainer attributable to any Additional Retainersadditional retainers (other than any Additional Retaineradditional retainer for theour Board Chair) will be paid in the form of cash on the date of theour next annual meeting,Annual Meeting, provided that the director has served continuously as a member of theour Board until the next annual meeting.Annual Meeting.
If a director is eligible to receive a catch-up retainer attributable to an Additional Retaineradditional retainer for theour Board Chair, it will be paid in the form of 60% RSUs and 40% stock options,equity, with a fair value on the date of grant equal to suchthe additional retainer amount. SuchThe award will be granted on the first business day of the month following the month in which the director becomes theour Board Chair (or, if suchthat day is not a trading day, on the following trading day). SuchThe award will vest in full on the date of theour next annual meeting,Annual Meeting, provided that the director has served continuously as a member of theour Board during the vesting period, and, if earlier, will vest in full in the event that we are subject to a change in control or upon the director’s death. 362021 Proxy StatementEtsy
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Etsy’s Audit Committee is comprised entirelyWe also adopted Stock Ownership Guidelines in 2022 that require non-employee members of independentour Board to own a minimum number of shares of our common stock equivalent to the lesser of $150,000 or 1,500 shares. While our non-employee directors have until December 31, 2027 to comply with these guidelines, as of December 31, 2022, all non-employee directors who meetjoined our Board prior to 2021 held sufficient shares of our common stock to satisfy these guidelines.
The following table discloses compensation received by our non-employee directors during 2022 pursuant to our non-employee director compensation program: Director Compensation Table | | | | | | | | | | | | | Director | Stock
Awards ($)(1)(3) | Option Awards ($)(2)(3) | Total
Compensation
($) | | C. Andrew Ballard | 271,422 | | — | | 271,422 | | | Marla Blow | 273,248 | | — | | 273,248 | | | Gary S. Briggs | 271,422 | | — | | 271,422 | | | M. Michele Burns | 277,887 | | — | | 277,887 | | | Jonathan D. Klein | 271,422 | | — | | 271,422 | | | Melissa Reiff | 282,526 | | — | | 282,526 | | | Margaret M. Smyth | 286,252 | | — | | 286,252 | | | Fred Wilson | — | | 404,969 | | 404,969 | |
(1)The value disclosed is the independence requirementsaggregate grant date fair value of 3,569 RSUs granted to Mr. Ballard; 3,593 RSUs granted to Ms. Blow; 3,569 RSUs granted to Mr. Briggs; 3,654 RSUs granted to Ms. Burns; 3,569 RSUs granted to Mr. Klein; 3,715 RSUs granted to Ms. Reiff; and 3,764 RSUs granted to Ms. Smyth, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The number of RSUs granted is calculated by Etsy using the average closing price of Etsy’s common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days up to and including the grant date. Assumptions used in the calculation of the Listing Rulesgrant date fair value are set forth in Note 15—Stock-based Compensation in our Form 10-K. (2)The value disclosed is the grant date fair value of an option to purchase 9,916 shares granted to Mr. Wilson, computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the Nasdaq Stock Marketgrant date fair value are set forth in Note 15—Stock-based Compensation in our Form 10-K. (3)As of December 31, 2022, the aggregate number of RSUs and stock options held by each non-employee director listed in the SEC. The Audit Committee operates pursuant to a charter that is available on the Investor Relations sectiontable above was as follows: | | | | | | | | | | RSUs
(#) | Stock Options
(#) | | C. Andrew Ballard | 3,569 | | 689 | | | Marla Blow | 3,593 | | 420 | | | Gary S. Briggs | 3,569 | | 18,869 | | | M. Michele Burns | 3,654 | | 30,244 | | | Jonathan D. Klein | 3,569 | | 23,578 | | | Melissa Reiff | 3,715 | | 16,184 | | | Margaret M. Smyth | 3,764 | | 58,257 | | | Fred Wilson | — | | 11,827 | |
Changes for 2023 In early 2023, Compensia conducted its annual review of our website: investors.etsy.com. The principal purpose ofcompensation program for non-employee directors relative to our peer group. Based on market data from Compensia, our Compensation Committee approved an increase to our annual board retainer from $285,000 to $300,000 to align non-employee director compensation to the Audit Committee is to assist the Board in its oversight of our accounting practices, system of internal controls, audit processes, and financial reporting processes. The Audit Committee is responsible for appointing and retaining our independent auditor and approving the audit and non-audit servicesmarket median. Non-employee director compensation will continue to be provided byin the independent auditor. The Audit Committee’s functionform of equity only.
Executive Officers Below is more fully described in its charter.information regarding each of our current Executive Team members. Our Executive Team serves at the discretion of our Board. There are no family relationships among any of our directors or Executive Team members. Management is responsible for preparing our financial statements and ensuring they are complete and accurate and prepared | | | | | | | | | | | | | | | | | | | | | Josh Silverman President and Chief Executive Officer since 2017 Age: 54 | | | Professional Experience •President and Chief Executive Officer of Etsy since May 2017 •Senior Operating Advisor at Hellman & Friedman, a private equity investment firm, in 2017 •Executive in Residence at Greylock Partners, a venture capital firm in 2016 Prior to that: Mr. Silverman served as President of Consumer Products and Services at American Express Company from 2011 to 2015. Before joining American Express, he was the Chief Executive Officer of Skype from 2008 to 2010. Mr. Silverman served as Chief Executive Officer of Shopping.com, an eBay company, from 2006 to 2008 and, prior to that, in various executive roles at eBay. Mr. Silverman was also co-founder and Chief Executive Officer of Evite, Inc. from 1998 to its sale in 2001. Other Information Mr. Silverman serves on the board of Etsy and Shake Shack Inc., where he is a member of Shake Shack's audit committee and its nominating and corporate governance committee. | | | | | | | | | | | | | | | | | Rachel Glaser Chief Financial Officer since 2017 Age: 61 | | | Professional Experience •Chief Financial Officer of Etsy since May 2017 •Chief Financial Officer of Leaf Group, a diversified consumer internet company that builds creator-driven brands, from 2015 to 2017 •Chief Financial Officer of Move, Inc. (operator of Realtor.com®), an online network of websites for consumers and real estate professionals from 2012 to 2015. Ms. Glaser helped lead the sale of Move, Inc. to News Corporation, a global, diversified media and information services company, in 2014 •Chief Operating and Financial Officer of MyLife.com, a subscription-based people search business, from 2008 to 2011 Prior to that: Ms. Glaser was the Senior Vice President of Finance at Yahoo! Inc. from 2005 to 2008. Between 1986 and 2005, Ms. Glaser held finance and operations positions of increasing responsibility at The Walt Disney Company and was Vice President of Operations and Business Planning for the Consumer Products group at the time of her departure. Other Information Ms. Glaser serves on the board of The New York Times Company and is chair of its audit committee and a member of its compensation committee. | | | | | |
| | | | | | | | | | | | | | | | | | | | | Nicholas Daniel Chief Product Officer since 2022 Age: 41 | | | Professional Experience •Chief Product Officer of Etsy since July 2022 •Vice President, Product of Etsy from March 2018 to July 2022 •Senior Director, Product of Etsy from 2016 to March 2018 Prior to that: Mr. Daniel held several roles within the Product Management team at Etsy, including Director, Product from 2015 to 2016, Group Product Manager from 2014 to 2015, and Senior Product Manager in 2014. | | | | | |
| | | | | | | | | | | | | | | | | | | | | Rachana Kumar Chief Technology Officer since 2023 Age: 39 | | | Professional Experience •Chief Technology Officer of Etsy since January 2023 •Vice President, Engineering of Etsy & Managing Director, Etsy Mexico of Etsy from April 2021 to December 2022 •Vice President of Engineering of Etsy from March 2020 to March 2021 •Sr. Director of Engineering of Etsy from March 2019 to February 2020 Prior to that: Ms. Kumar held several roles within the Engineering team at Etsy, including Director of Engineering from 2017 to February 2019, Sr. Engineer Manager from 2016 to 2017 and Engineering Manager from 2014 to 2016. | | | | | | | | | | | | | | | | | Raina Moskowitz Chief Operating Officer since 2022 Age: 40 | | | Professional Experience •Chief Operating Officer of Etsy since March 2022 •Chief Operations, Strategy and People Officer at Etsy from August 2020 to March 2022 •Senior Vice President of People, Strategy and Services at Etsy from April 2018 to August 2020 Prior to that: Ms. Moskowitz was employed by the American Express Company from 2005 to 2018, where she held multiple leadership roles of increasing responsibility, leading teams across product management, strategy, operations, and marketing. Other Information Ms. Moskowitz serves on the board of Sprout Social Inc. and is chair of its compensation committee and a member of its audit committee. | | | | | |
| | | | | | | | | | | | | | | | | | | | | Ryan Scott Chief Marketing Officer since 2019 Age: 46 | | | Professional Experience •Chief Marketing Officer of Etsy since June 2019 •Chief Marketing Officer at Slice, an online ordering and marketing platform for pizzerias, from March 2017 to June 2019 •Chief Marketing Officer at SoulCycle, a lifestyle fitness company, from 2016 to 2017 •Co-Chief Executive Officer at Pond5, a two-sided marketplace for HD and 4K stock video, where Mr. Scott relaunched the brand while building out sales and marketing from the ground up, from 2015 to 2016 Prior to that: Mr. Scott was the Chief Marketing Officer at Seamless through its merger with Grubhub in 2013. Post-merger, he took over the position of Vice President of Marketing at Grubhub and played an essential part in the company’s initial public offering and growth trajectory as a public company. | | | | | | | | | | | | | | | | | Kim Seymour Chief Human Resources Officer since 2022 Age: 53 | | | Professional Experience •Chief Human Resources Officer of Etsy since April 2022 •Chief People Officer of WW International, Inc. from April 2019 to April 2022 Prior to that: Ms. Seymour held several roles at American Express Company from 2008 to December 2018, most recently serving as Senior Vice President and Human Resources Business Partner. Earlier in her career she served in roles of increasing responsibility at The Home Depot, Inc. and General Electric Company in Appliances, Capital and Energy. Other Information Ms. Seymour serves as an advisor to MasterClass, as a trustee of Fisk University, and as a Director of RHR International. | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Colin Stretch Chief Legal Officer and Corporate Secretary since 2023 Age: 54 | | | Professional Experience •Chief Legal Officer and Corporate Secretary of Etsy since February 2023 •Of Counsel to Latham & Watkins LLP from August 2022 to February 2023 •Leader-in-Residence at Columbia Law and Business Schools’ Reuben Mark Initiative for Organizational Character and Leadership, from February 2020 to February 2023 •General Counsel of Facebook, Inc. (now Meta Platforms, Inc.) from June 2013 to September 2019 Earlier in his career, Mr. Stretch was a law clerk to Justice Stephen G. Breyer on the U.S. Supreme Court and to Judge Laurence H. Silberman on the U.S. Court of Appeals for the District of Columbia Circuit, and he was in the Honors Program in the Antitrust Division of the U.S. Department of Justice. | | | | | |
| | | | | | | | | | | | | Proposal 2 | | | Advisory Vote on Named Executive Officer Compensation | | | | |
In accordance with generally accepted accounting principles. PricewaterhouseCoopers LLP (“PwC”), our independent registered public accounting firm, was responsible for performing an independent audit of our Consolidated Financial Statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles and as to the effectiveness of our internal control over financial reporting. In performing its responsibilities, the Audit Committee has:
reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2020;
discussed with our independent registered public accounting firm, PwC, the matters required to be discussed by the applicable requirementsSection 14A of the Public Company Accounting Oversight Board (the “PCAOB”); and
received the written disclosures and the letter from PwC required by the applicable PCAOB requirements for the independent accountant communications with audit committees concerning auditor independence, and has discussed with PwC its independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Respectfully submitted by:
Margaret M. Smyth (Chair)
M. Michele Burns
Fred Wilson
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Ratification of the Appointment of Independent Registered Public Accounting Firm
The Audit Committee has appointed PwC as our independent registered public accounting firm for 2021 and recommends that stockholders vote to ratify the appointment. AlthoughExchange Act, we are not required by law to obtain such ratification fromproviding our stockholders we believe it is good practice to do so. If our stockholders do not ratify the appointment of PwC, the Audit Committee may reconsider its appointment. The Audit Committee, in its discretion, may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of Etsy and our stockholders.
PwC has audited our consolidated financial statements since 2012. A representative of PwC is expected to be present at our Annual Meeting and available to respond to appropriate questions and will havewith the opportunity to make a statement if they so desire.approve, by advisory vote, the compensation of our named executive officers, as described in this proxy statement.
This proposal, commonly referred to as the “say-on-pay” vote, provides our stockholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all our named executive officers and our executive compensation philosophy, objectives, and program, as described in this proxy statement. Etsy currently holds a say-on-pay vote annually, which is consistent with the results of the most recent vote held on the frequency of our say-on-pay votes at the 2017 Annual Meeting. We ask our stockholders to approve the compensation of our named executive officers, as disclosed in the section titled “Executive Compensation,” including the Compensation Discussion and Analysis, the compensation tables, and the related narrative disclosure, by casting a non-binding advisory vote “FOR” the following resolution: “RESOLVED, that the stockholders of Etsy, Inc. approve, on a non-binding advisory basis, the compensation paid to the named executive officers, as disclosed in the proxy statement for the 2023 Annual Meeting of Stockholders, including the Compensation Discussion and Analysis, compensation tables, and related narrative discussion.” This proposal will be decided by a majority of the votes cast. This means that this proposal will be approved on an advisory basis if the number of votes cast “FOR” the proposal exceeds the number of votes cast “AGAINST” the proposal. An abstention will not have any effect on the outcome. FeesAs an advisory vote, the result will not be binding on our Board or our Compensation Committee. The say-on-pay vote will, however, provide us with important feedback from our stockholders about our executive compensation philosophy, objectives, and ServicesThe following table presents fees for professional audit servicesprogram. Our Board and other services renderedour Compensation Committee value the opinions of our stockholders and expect to us by PwC forconsider the fiscal years ended December 31, 2020 and December 31, 2019.
| | Audit Fees | | | $2,727 | | | $2,874 | | | | Tax Fees | | | 619 | | | 303 | | | | Other Fees | | | 181 | | | 95 | | | | Total Fees | | | $3,527 | | | $3,272 | |
Audit Fees. These amounts consist of fees and expenses for professional services necessary to perform an audit or review in accordance with the standardsoutcome of the PCAOB, including services rendered for the audit of Etsy’s annual financial statementsvote when evaluating our executive compensation program and review of quarterly financial statements. These amounts also include fees for services that are normally incurred in connection with regulatory filings, such as comfort letters, consents, and review of documents filed with the SEC, and service fees related to specific transactions and events that occurred in each period, such as the convertible debt offerings in both 2019 and 2020.making future executive compensation decisions.
Tax Fees. These amounts consist of fees for tax compliance, tax planning, and tax advice. Corporate tax services encompass a variety of permissible services, including technical tax advice related to U.S. and international matters, assistance with foreign income and withholding tax matters, and assistance with tax audits. | | | | | | | | | Our Board recommends a vote “FOR” the approval, on a non-binding advisory basis, of our named executive officer compensation, as discussed in this proxy statement. |
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Other Fees. These amounts consist of the aggregate fees for other services performed or provided by PwC not included in the categories above. These amounts include fees for PwC’s review of our sustainability and diversity data and subscriptions to online accounting reference material.
Pre-Approval Policies and ProceduresThe Audit Committee is required to pre-approve all audit and non-audit services performed by PwC to ensure that the provision of such services does not impair the public accounting firm’s independence. The Audit Committee pre-approved all of the services described above.
The Board of Directors recommends that you vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for 2021.
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Below is information regarding each of our current executive officers. Our executive officers serve at the discretion of our Board. There are no family relationships among any of our directors or executive officers.
| NAME
| | | AGE
| | | POSITION
| | | Josh Silverman
2023 Proxy Statement | | | 52
| | | President and Chief Executive Officer
| | | Rachel Glaser
| | | 59
| | | Chief Financial Officer
| | | Mike Fisher
| | | 52
| | | Chief Technology Officer
| | | Kruti Patel Goyal
| | | 44
| | | Chief Product Officer
| | | Raina Moskowitz
| | | 38
| | | Chief Operations, Strategy and People Officer
| | | Ryan Scott
| | | 44
| | | Chief Marketing Officer
| | | Jill Simeone
| | | 54
| | | Chief Legal Officer and Corporate Secretary
| 41 |
Josh Silverman has served as our President and Chief Executive Officer since May 2017 and as a member of our Board since November 2016. Prior to joining Etsy as our President and CEO, he served as the Senior Operating Advisor at Hellman & Friedman, a private equity investment firm from January 2017. In 2016, Mr. Silverman served as Executive in Residence at Greylock Partners, a venture capital firm. Prior to that, Mr. Silverman served as President of Consumer Products and Services at American Express Company from June 2011 to December 2015. Before joining American Express, he was the CEO of Skype from February 2008 to September 2010. Mr. Silverman served as CEO of Shopping.com, an eBay company, from July 2006 to February 2008 and, prior to that, in various executive roles at eBay. Mr. Silverman was also co-founder and CEO of Evite, Inc. He serves on the board of directors of Shake Shack Inc.
Rachel Glaser has served as our Chief Financial Officer since May 2017. Prior to joining Etsy, she was Chief Financial Officer of Leaf Group, a diversified Internet company that owns and operates marketplace and media businesses, from April 2015. From January 2012 to March 2015, Ms. Glaser served as Chief Financial Officer of Move, Inc. (operator of Realtor.com®), an online network of websites for real estate search and home enthusiasts, and Ms. Glaser helped lead the sale of Move, Inc. to News Corporation, a diversified media and information services company, in November 2014. From April 2008 to November 2011, Ms. Glaser served as Chief Operating and Financial Officer of MyLife.com, a subscription-based people search business, and from May 2005 to April 2008, she was the Senior Vice President of Finance at Yahoo! Inc. Between 1986 and 2005, Ms. Glaser held finance and operations positions of increasing responsibility at The Walt Disney Company and was Vice President of Operations and Business Planning for the Consumer Products group at the time of her departure. Since January 2018, Ms. Glaser has served on the board of directors of The New York Times Company and as a member of its audit and compensation committees.
Mike Fisher has served as our Chief Technology Officer since July 2017. Prior to joining Etsy, he was the co-founder of AKF Partners, a technology consulting company, from February 2008 to July 2017. Prior to that, Mr. Fisher served as an executive at a number of technology companies, including as the Chief Technology Officer of Quigo, a startup internet advertising company, and as Vice President, Engineering & Architecture for PayPal, Inc., an eBay company. Prior to PayPal, he served in various technology roles at General Electric. Mr. Fisher has served as an Adjunct Professor at Case Western University and has authored multiple books, articles, and chapters on the subjects of scalability, product development, and leadership. Mr. Fisher also served as a Captain and pilot in the U.S. Army.
Kruti Patel Goyal has served as our Chief Product Officer since October 2019. Prior to that, she served as Etsy's Senior Vice President, Product from August 2018. Ms. Patel Goyal joined Etsy in February 2011 and has held many senior leadership roles, including General Manager of Seller
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Services, leading our Business & Corporate Development function, leading our International team, and leading our Marketplace Integrity and Trust & Safety teams. Before joining Etsy, Ms. Patel Goyal worked in strategy and business development at Viacom, focused on digital media growth, and at (RED), a global marketing company that raises funds to fight AIDS in Africa. Ms. Patel Goyal began her career at Morgan Stanley and General Atlantic Partners with a focus on media, telecom and technology businesses.
Raina Moskowitz has served as our Chief Operations, Strategy and People Officer since August 2020. Prior to that she served as our Senior Vice President of People, Strategy and Services from April 2018. Her team includes People and Talent, Workplace and Sustainability, Strategy and Operations, Member Services, and Trust & Safety. Prior to joining Etsy, she spent 13 years at the American Express Company, where she held multiple leadership roles in product, strategy, operations, and marketing, most recently, leading the U.S. Customer Marketing team. Ms. Moskowitz joined the board of directors of Sprout Social Inc. in December 2020.
Ryan Scott has served as our Chief Marketing Officer since June 2019. Prior to joining Etsy, Mr. Scott was the Chief Marketing Officer at Slice, the nation's leading online and mobile pizza-ordering platform from March 2017 to June 2019. Prior to Slice, he was Chief Marketing Officer at SoulCycle, the boutique fitness company that redefined indoor cycling, from July 2016 to March 2017. Before SoulCycle, Mr. Scott held the position of Co-CEO at Pond5, the world’s largest two-sided marketplace connecting media buyers to leading-edge video content, where he relaunched the brand while building out sales and marketing from the ground up from April 2015 to July 2016. Prior to Pond5, Mr. Scott was the Chief Marketing Officer at Seamless through its merger with Grubhub in 2013. Post-merger, he took over the position of Vice President of Marketing at Grubhub and played an essential part in the company’s IPO and growth trajectory as a public company.
Jill Simeone has served as our General Counsel and Corporate Secretary since 2017 and as our Chief Legal Officer and Corporate Secretary since August 2020. Prior to joining Etsy, Ms. Simeone was the Vice President, Senior Counsel, and Assistant Secretary at American Express Global Business Travel, where she led the legal side of their mergers and acquisitions program from 2016 to 2017. Prior to that, she served as the General Counsel and Chief Compliance Officer at KCAP Financial, Inc., a publicly traded financial services company, from 2013 to 2016. Ms. Simeone held several roles advising investments in startups from 2011 to 2013. From 1999 to 2011 Ms. Simeone served as U.S. General Counsel and then North America General Counsel of CEMEX, a multinational building materials company. Ms. Simeone began her career in the Manhattan District Attorney's office. Ms. Simeone is a Fulbright Scholar (Mexico).
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Compensation Discussion and Analysis This Compensation Discussion and Analysis section is intended to provide our stockholders with a clear understanding of our compensation philosophy, objectives, and practices; our compensation-setting process; our executive compensation program components; and the decisions made with respect to the 20202022 compensation of each of our named executive officers (our “NEOs”). For 2020,2022, our NEOs were: •Josh Silverman, our President and Chief Executive Officer; •Rachel Glaser, our Chief Financial Officer; Mike•Raina Moskowitz, our Chief Operating Officer;
•Ryan Scott, our Chief Marketing Officer; •Michael Fisher, our Chief Technology Officer;Officer until December 31, 2022(1); and •Kruti Patel Goyal, our Chief Product Officer;Officer until July 29, 2022(1).
(1)As previously announced, Mr. Fisher stepped down from his position as Chief Technology Officer effective December 31, 2022 and is continuing to serve in an advisory capacity through April 30, 2023. Ms. Patel Goyal served as our Chief Product Officer through July 29, 2022, was appointed Chief Executive Officer of our Depop subsidiary effective September 12, 2022, and ceased serving as an executive officer of Etsy upon that appointment. Ms. Patel Goyal is included as an NEO for 2022 because she would have been among our three most highly compensated executive officers, other than our Chief Executive Officer and Chief Financial Officer, had she been serving as an executive officer of Etsy as of December 31, 2022. Ryan Scott, Chief Marketing Officer.
Executive Summary Business Overview Etsy’s mission to “Keep Commerce Human” is rooted in our belief that, although automation and commoditization are parts of modern life, human creativity cannot be automated and human connection cannot be commoditized. Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers. Oursellers around the world. These marketplaces - which collectively create a "House of Brands" - share our mission, iscommon levers for growth, similar business models, and a strong commitment to “Keep Commerce Human,” and we’re committed to using the power ofuse business and technology to strengthen communities and empower people aroundpeople. Our primary marketplace, Etsy.com, is the world. We connectglobal destination for unique and creative goods made by independent sellers. The Etsy marketplace connects creative artisans and entrepreneurs with thoughtful consumers looking for items that are intendeda joyful expression of their taste and values. In addition to makeour core Etsy marketplace, our "House of Brands" consists of Reverb Holdings, Inc. (“Reverb”), our musical instrument marketplace acquired in 2019, Depop Limited (“Depop”), our fashion resale marketplace, and Elo7 Serviços de Informática S.A. (“Elo7”), our Brazil-based marketplace for handmade and unique items. We acquired both everydayDepop and meaningful occasions feel special as well as reflect their sense of style. As 2020 brought an unparalleled set of challenges for our seller community, we expanded our resources and tools to help sellers grow their businesses during the pandemic. We collected our best practices and published our “Ultimate Guide to Running Your Shop During COVID-19,” which highlights trends and some of the biggest themes that emergedElo7 in 2020. During the year, we dedicated resources to invest in our seller community and advocated on their behalf. We provided over $13 million of onetime investments and donations to support our sellers and communities, launched a multi-channel campaign titled “Stand with Small” to remind shoppers that a purchase from Etsy supports independent sellers, and advocated on behalf of our sellers to members of the U.S. Congress to ensure that the self-employed were included in major COVID-19 relief bills and legislation.
During 2020, the COVID-19 pandemic significantly shifted global consumer shopping behavior towards online purchases of many retail categories. Millions of buyers found us for the first time, or discovered Etsy again, for many everyday items, including those that were temporarily unavailable elsewhere. This enabled us to reinforce our brand messaging by aligning “special” with everyday purchase occasions. We highlighted sellers’ merchandise and categories to focus on essentials and developed a thoughtful and powerful strategy to define what “everyday” means for Etsy, bringing it to life in our marketing and product experiences for buyers.July 2021.
As of December 31, 2020,2022, our platformmarketplaces connected 4.4approximately 7.5 million active sellers to 81.995.1 million active buyers, in nearly every country in the world. Our sellers are the heart and soul of Etsy, and our technology platform allows our sellers to turn their creative passions into economic opportunity. We have a seller-aligned business model: we make money when our sellers make money. We offer our sellers a marketplace with millions of buyers along with a range of seller tools and services that are specifically designed to help our creative entrepreneurs generate more sales and scale their businesses.
| | | | | | | | | | | | | 2022 Performance Highlights | | | | | | | | | Despite significant macroeconomic headwinds, we maintained the vast majority of our pandemic gains and delivered double digit revenue growth and excellent profitability during 2022. 2022 consolidated financial results include the following: •approximately $13.3 billion in gross merchandise sales ("GMS"), representing a 1.3% decline over the prior year; •$2.6 billion in revenue, representing 10.2% growth over the prior year; •net loss of $694.3 million, driven by the Depop and Elo7 goodwill impairment charge of $1.0 billion, representing a 240.7% decline over the prior year; and •non-GAAP adjusted EBITDA of $716.9 million, essentially flat over the prior year, with an adjusted EBITDA margin of 28%. See the “Non-GAAP Financial Measures” section of this proxy statement for more information regarding our use of adjusted EBITDA and adjusted EBITDA margin and a reconciliation of adjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measure, and our calculation of adjusted EBITDA margin. | | | | |
During 2022, we focused on improving the Etsy customer experience focused on our "Right to Win" strategy - including improving Search and Discovery, Human Connections, Trusted Brand and highlighting our sellers' unique merchandise. As of December 31, 2022, we have nearly twice as many active buyers as we did in 2019, shoppers are coming to us more frequently, and shoppers are spending more with Etsy. In addition, we believe we have deepened our relationship with Etsy sellers. Our seller cohorts have retained much of the gains achieved during the pandemic, even as the world re-opened and e-commerce headwinds increased. Our mission is to Keep Commerce Human, and we believe that we continue to show that Etsy offers something different. In addition, we continued to focus on attracting and retaining a diverse team of world-class talent. We promoted from within, announcing a new Chief Product Officer and Chief Technology Officer. We also recruited a new Chief Legal Officer and expanded our Executive Team by recruiting a Chief Human Resources Officer, who bring significant experience to their respective roles. You can read more about our work on "Prioritizing People" in the ESG section found on pages 27-34 of our Form 10-K. 2022 Executive Compensation Highlights Pay for Performance Our executive compensation strategy is to provide a transparent and thoughtful "pay-for-performance" program. We generally target a compensation mix for our executive officers that is weighted heavily towards variable, or “at risk,” compensation, including short-term cash incentives and long-term equity incentive compensation opportunities to align the compensation of our executive officers with our performance and the interests of our stockholders. Within this framework, individual compensation decisions are determined after considering the factors described below under “Factors Considered When Determining Executive Compensation.” The target annual pay mix for our CEO and other NEOs, shown below as of the time that compensation was approved in early 2022, reflects our pay for performance philosophy: We believe that this design provides balanced incentives for our NEOs to drive financial performance and long-term growth.
2020 Performance Highlights
2020Etsy has achieved significant growth under the leadership of Mr. Silverman and his Executive Team. From 2017, when Mr. Silverman became our CEO, through 2022:
| | | | | | | | | | | | | | | | | | | | GMS grew from $3.3 billion in 2017 to approximately $13.3 billion in 2022, representing a 33% compound annual growth rate over the period; | Revenue grew from $441 million in 2017 to $2.6 billion in 2022, representing a 42% compound annual growth rate over the period; | Net (loss) income(1) decreased from $82 million in 2017 to $(694.3) million in 2022; | Non-GAAP adjusted EBITDA(2) grew from $80 million in 2017 to $716.9 million in 2022, representing a 55% compound annual growth rate over the period; and | Etsy was admitted to the S&P 500 in 2020. | | | | | |
(1)Net loss for the year ended December 31, 2022 was an inflection point in history for e-commercedriven by the Depop and for Etsy, with millionsElo7 goodwill impairment charge of buyers choosing us for their everyday needs as we lived up to our mission to “Keep Commerce Human.” We are particularly gratified that$1.0 billion. (2)See the circumstances met preparedness, highlighting the agility of our team and the power of our differentiated strategy. We achieved record 2020 consolidated financial results, including the following: approximately $10.3 billion in GMS, representing 106.7% growth over the prior year;
$1.7 billion in revenue, representing 110.9% growth over the prior year;
net income of $349.2 million, representing 264.2% growth over the prior year; and
non-GAAP adjusted EBITDA of $549.1 million, representing 194.8% growth over the prior year. See “Non-GAAP Financial Measures” section of this proxy statement for more information regarding our use of adjusted EBITDA and adjusted EBITDA margin and a reconciliation of Adjustedadjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measure calculatedmeasure.
Additionally, during this time we have grown our business in accordance with GAAP. During 2020, we provided economic opportunity for millions of creative entrepreneurs, careda responsible and ethical way, as stewards for our teamvarious stakeholders. We have developed an ESG strategy and communities, invested deeply in technology, improved customer experiences, expanded Etsy’s global visibility through world-class marketing strategies, and gained meaningful market share. Whilegoals that reflect the ongoing COVID-19 pandemic created uncertainty, and the impacts of the pandemicpositive impact we want to have on the global economyworld while advancing and complementing our business strategy. For more information on our business continue to evolve, Etsy benefited from several tailwinds, including the shift from offline to online shopping, retail business closures, pent-up demand, government stimulus, gifting trendsESG goals, strategy, and emerging categories such as face masks.
Etsy assembled a COVID-19 task force in January and moved to a fully remote workforce for both Etsy and Reverb by early March. Despite this shift in the working environment, our NEOs and other senior management provided strong leadership throughout the year and our team remains highly productive. The shift to fully remote work was not without personal stress on manyprogress, see pages 21- 43 of our employees, butForm 10-K.
Say-on-Pay Results and Stockholder Engagement Since 2018, we have conducted targeted stockholder engagement for the specific purpose of seeking feedback from Etsy stepped upinvestors to supportbetter understand their views regarding our team and contractors. We initiated Company-wide “rest and recharge” days off, expanded paid family leave, and provided additional resources to help our teams weather the impact of the pandemic. Our Company-wide initiatives were among many efforts to provide a safe and sustainable working environment. In fact, our employee engagement scores from a September 2020 survey showed that 95% of our employees are proud to work at Etsy – more than 10 percentage points higher than the industry benchmark. 2020 Executive Compensation Highlights
Our 2020 executive compensation program was designed to be a transparent and thoughtful pay-for-performance approach. The principal components of compensation forcorporate governance practices. Since our NEOs were determined considering the items described below under “Factors Used in Determining Executive Compensation.” Compensation for our NEOs was reflective2022 Annual Meeting and as part of our strong financial performance. As further described below under “Achievementoff-season stockholder engagement efforts, we reached out to stockholders representing approximately 45% of 2020 Corporate Performance Objectives,” achievementour outstanding shares of common stock and held discussions with all of the corporate performance objectives understockholders who wanted to meet, representing approximately 30% of our 2020 annual cash incentiveoutstanding shares of common stock. In the course of these discussions, we received valuable feedback on our executive compensation program, resultedpolicies, and practices as summarized in an aggregate corporate performance percentagethe following chart.
| | | | | | | | | | Stockholder Feedback | | Our Response | | | •Our stockholders are consistently positive about our efforts to retain and incentivize Mr. Silverman, as well as about the introduction of performance stock units ("PSUs") in our equity compensation program design. •New Several of our stockholders asked questions or commented on our consideration of pay equity among our CEO and our other NEOs. •New Stockholders also inquired about our plans to adopt a clawback policy. | •Since 2021, we have incorporated PSUs into the mix of equity awards granted to Mr. Silverman and our other executive officers. •Our Compensation Committee maintains a continued focus on retention of Mr. Silverman and our other Executive Team members. •New In response to feedback on our prior year disclosure, we have added additional disclosure regarding the ratio of CEO to other NEO compensation. •New We are reviewing the recently adopted SEC rules and Nasdaq proposed listing standards regarding clawback policies. We plan to adopt a clawback policy consistent with those rules in the required timeframe. |
Our Compensation Committee also considers the results of 200% based onour say-on-pay votes. In 2022, approximately 83% of the strong achievement of GMS, revenue, and non-GAAP adjusted EBITDA margin performance levels. In Mayvotes cast supported our say-on-pay proposal. As previously disclosed, in 2017 our CEO, Mr. Silverman received a front-loaded equity award that was designed to induce him to join Etsy as CEO at a turbulent time, provide him with a meaningful equity stake in Etsy, and align his interests with those of our stockholders. Mr. Silverman’s 2017 offer letter stated that he would not be eligible to receive additional equity awards until 2021. Accordingly, Mr. Silverman did not receive any long-term equity incentive awards in 2018, 2019, or 2020. As described in “Overview of 2021 Compensation Decisions” below, Mr. Silverman was granted certain long-term equity incentive awards in early 2021, including an equity award subject to multi-year performance conditions.
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Overview of 2021 Compensation Decisions
Since our 2017 business and management team transformation, Etsy has experienced a significant turn-around under Mr. Silverman’s leadership, including:
GMS grew from $3.3 billion in 2017 to approximately $10.3 billion in 2020, representing a 47% compound annual growth rate over the period;
Revenue grew from $441 million in 2017 to $1.7 billion in 2020, representing a 58% compound annual growth rate over the period;
Net income grew from $82 million in 2017 to $349.2 million in 2020, representing 62% compound annual growth rate over the period;
Non-GAAP adjusted EBITDA grew from $80 million in 2017 to $549.1 million in 2020, representing a 90% compound annual growth rate over the period; and
Etsy was admitted to the S&P 500 in 2020.
Importantly, during this four-year period we've grown our business in a responsible and ethical way, as stewards for all of our various stakeholders. Our strategy has enabled us to do our part to protect the planet, drive economic empowerment for our sellers which is a virtuous cycle with growing our own GMS, improve the Etsy marketplace and take care of our employees and the communities in which we live and work.
Because of the structure of Mr. Silverman's 2017 equity award, he approached 2021 with almost no unvested equity. As a result, our Board and the Compensation Committee determined it was in the best interests of our stockholders to design a newIn 2021, equity compensation program for Mr. Silverman with three key objectives: (1) recognize Mr. Silverman’s unique and significant contributions to Etsy over the past four years, (2) retain Mr. Silverman’s services for the foreseeable future, and (3) provide further motivation to Mr. Silverman, using long-term performance incentives, to ensure the continued growth and success of Etsy by creating long-term sustainable value for our stockholders. In early 2020, the Compensation Committee engaged Compensia, a national compensation consulting firm, to help design a new equity compensation program that would achieve these goals. Followingfollowing more than a year of careful analysis and development led by theour Compensation Committee, with participation by the Chairman,our Board Chair, advice and input from Compensia, and our external legal counsel, and engagement with and feedback from many of our largest stockholders, (as discussed below), in March 2021 Mr. Silverman was granted the followingreceived a performance-based equity awardsaward (the "2021 Performance Award") and an annual equity award intended to ensure that his compensation remains competitive compared to the chief executive officers of our peers and current market practice and to provide him with a strong incentive to remain with Etsy and continue to drive positive results:
A performance-based equity award (the “2021 Silverman Performance Award”) to retain, incentivize and motivate Mr. Silverman for the next four years, drive Etsy's long-term growth and promote the alignment of Mr. Silverman’s compensation with long-term stockholder value creation. The 2021 Silverman Performance Award is in the form of performance share units (“PSUs”), with the target number of shares ofresults. During our common stock underlying the award equal to 114,836 shares. The target number of shares underlying the award was determined by dividing $25 million by the average closing price of our common stock on Nasdaq on the 30 trading days immediately preceding and including March 15, 2021. The number of shares earned under the 2021 Silverman Performance Award will be based on our actual level of performance achieved as measured against four performance goals during a three-year performance period commencing January 1, 2021 and ending December 31, 2023. The number of shares that may be earned will range from 0% to 200% of the target number of PSUs subject to the 2021 Silverman Performance Award, generally subject to Mr. Silverman’s continued service through the vesting dates. The shares will be earned and vest based on Mr. Silverman's continued service and performance on four equally-weighted metrics: (1) GMS; (2) revenue; (3) adjusted EBITDA margin (the performance metrics (1), (2) and (3) are referred to as the “financial
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metrics”); and (4) relative total stockholder return (“TSR”) compared to the Nasdaq Composite constituents. For the financial metrics, performance will be based on our fiscal 2023 results, and for the relative TSR metric, performance will be based on our TSR performance during the entire three-year performance period ending December 31, 2023. In early 2024, the number of PSUs earned will be determined in good faith by the Compensation Committee and any such earned PSUs will generally vest and settle in shares of our common stock as to 50% of the earned PSUs on each of April 1, 2024 and April 1, 2025.
Annual equity awards to be granted as part of Etsy’s 2021 annual compensation cycle, with an aggregate grant date fair value of $9 million, of which 60% will be in the form of RSUs and 40% will be in the form of stock options. The RSUs and stock options vest in eight equal semi-annual installments, beginning on October 1, 2021, generally subject to Mr. Silverman's continued service with Etsy on each vesting date. The Compensation Committee determined that Mr. Silverman will be eligible to receive annual equity awards as part of Etsy’s annual compensation cycle going forward, provided that the terms of any such future equity award, including the value and the form of the award, will take into account the market compensation data for chief executive officers in our Compensation Peer Group (as defined below) and that any such future equity awards will be granted at the discretion of our Board or the Compensation Committee.
The Compensation Committee also determined that the 2021 annual equity awards granted to our other executive officers would include a mix of 25% PSUs, 50% RSUs and 25% stock options. The earning and vesting of these PSUs will be based on continued service and the same four equally-weighted performance metrics that underlie the 2021 Silverman Performance Award.
| GMS (25%)
| | | The dollar value of items sold in our marketplaces within the applicable period, excluding shipping fees and net of refunds associated with canceled transactions
| | | Revenue (25%)
| | | Our revenue (determined on a consolidated basis) reported in Etsy’s financial statements
| | | Adjusted EBITDA Margin (25%)
| | | Etsy’s profitability from our operations that will be calculated by dividing (i) our net income adjusted to exclude: interest and other non-operating expense, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); acquisition-related expenses; non-ordinary course disputes; loss on extinguishment of debt; and restructuring and other exit income, by (ii) our revenue and will be expressed as a percentage
| | | Relative TSR (25%)
| | | Our financial performance, reflecting returns to our stockholders relative to our Nasdaq Composite constituents
| |
Stockholder Engagement
In 2018, we launched a targeted stockholder engagement program for the specific purpose of seeking feedback from Etsy investors to better understand their views regardingefforts following our executive compensation program and corporate governance practices, which program we continued in 2020 and early 2021. Althoughlast Annual Meeting, while stockholders approved our 2020 say-on-pay proposal with approximately 99% of the votes cast in favor of the proposal, we continued to seek stockholder feedback on our executive compensation program. We received consistent feedback that our stockholders would like to see performance-based equity awards incorporated into our 2021 executive compensation program, when Mr. Silverman was next eligible to receive new equity awards. As our Board and the
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Compensation Committee designed a new equity compensation program for Mr. Silverman, they gave significant weight to our stockholders’ feedback, much of which was incorporated into the design of the 2021 Silverman Performance Award granted in March 2021.
In early 2021, as part of our off-season engagement on our executive compensation program, we reached out to stockholders representing approximately 69% of our common stock outstanding and held discussions with stockholders representing approximately 33% of our common stock outstanding (some stockholders declined our invitation to engage). In these meetings, which took place after our public announcement regarding the approval of the 2021 Silverman Performance Award and annual equity awards to Mr. Silverman, the stockholders we spoke with were uniformlyconsistently positive about theour efforts to retain and incentivize Mr. Silverman, throughwe also received questions regarding the next four years, as well as2021 Performance Award, including whether it was indicative of 2022 compensation and regarding the useratio of PSUs in our new equityCEO's compensation to average compensation for our other NEOs.
This proxy statement contains information regarding 2022 compensation, which provides our stockholders with meaningful insight into our compensation setting process. In particular, our compensation program design.reflects our pay for performance philosophy and is informed by a review of competitive market data. NewAdditionally, in response to stockholder feedback, we are disclosing the ratio of Mr. Silverman's average total compensation (computed in the manner required to be disclosed on the Summary Compensation Table) over the 2017 through 2022 period (the period during which Mr. Silverman has served as CEO), to the average total compensation received by our other NEOs during that same period (computed on the same basis, excluding any compensation reported for 2017 for our former CEO, Chief Financial Officer and Controller). During this period, the ratio of Mr. Silverman's average total compensation to the average total compensation received by our other NEOs was 3.2:1. Our Board and theour Compensation Committee value the opinions of our stockholders, and intend to continue to solicit and consider feedback obtained through theour stockholder engagement program, as well as the voting outcome of future say-on-pay proposals. Furthermore, when making compensation decisions for our executive officers, theyour Board and our Compensation Committee remain focused on aligning compensation with performance and retention. For a more detailed discussion of our recent stockholder engagement activities, please see “Proxy Statement Summary“Corporate Governance — Stockholder Engagement.” Key Components andOverview of our 2022 Executive Compensation Design
Elements of Annual Compensation A summary of the 2020 Executive Compensation Program Our 2020key elements of our 2022 executive compensation program consisted of the following key components: (1) base salary; (2) an annual cash incentive award; and (3) long-term incentive awards in the form of RSUs and stock options. A brief overview of each component is provided in the chart below, with further details provided below in this Compensation Discussion and Analysis.set forth below:
| | ELEMENT
| | TYPE
| | PRIMARY OBJECTIVE
| | REWARD REALIZED ON
ACHIEVEMENT OF
| | | | Element |
Type | Primary Objective | Reward Realized On Achievement Of | Base Salarysalary | Fixed | Fixed
| | Attract and Retain retain | | Service | | | Annual cash incentives | Variable | Annual Cash Incentive
Short-term company and individual performance | | Variable
| | Short-Term CompanyService, GMS, revenue, adjusted EBITDA margin, and Individual Performance
| | Revenue, Adjusted EBITDA Margin, GMS, and Individual Goals (including Economic, Social and Sustainability Impact Goals)
| | individual goals (includes ESG goals) | Long-term incentives | Variable | Long-Term Incentive
Stockholder alignment, retention, and long-term value creation | | Variable
| | Stockholder Alignment, RetentionService, stock price and, Long-term Value Creation
| | Stock Price
| | for PSUs, GMS, revenue, adjusted EBITDA, and relative total stockholder return ("TSR") |
In addition, our executive officers participate in the standard health and wellness benefits, employee benefit plans and programs, our 401(k) plan and(with employer matching contributions,contributions), and training and coaching available to our other employees, and are eligible for severance payments and benefits, as discussed in more detail below.
Key Features of our Executive Compensation Program | | | | | | | | | | | | | | | | | | | | | | What We Do | | | What We Don’t Do | | | | | | | | | | | | | | | | | We maintain an independent Compensation Committee | | | | We do not contractually guarantee annual base salary increases to our Executive Team | | | | | | | | | | Our Compensation Committee retains an independent compensation advisor who performs no other services for us | | | | We do not offer defined benefit retirement programs or excessive perquisites | | | | | | | | | | Our Compensation Committee conducts an annual executive compensation review, including a review of our compensation peer group, and a compensation-related risk assessment | | | | We do not offer change-in-control excise tax reimbursement payments or “gross-ups” | | | | | | | | | | We use variable pay, including long-term equity awards, as a substantial portion of our Executive Team’s target total direct compensation opportunity | | | | We prohibit hedging or pledging of our equity securities by our officers, employees, or directors | | | | | | | | | | We have adopted Stock Ownership Guidelines designed to align our Executive Team's interests with those of our stockholders | | | | We do not permit stock option exchanges or re-pricings without stockholder approval | | | | | | | | | | Our Equity Granting Policy sets pre-established grant dates for Executive Team members' annual equity awards | | | | We do not permit stock option backdating | | | | | | | | | | Our Executive Team is employed “at will” | | | | We do not encourage unreasonable risk taking | | | | | | | | | | Our annual cash incentive program includes individual ESG goals ESG | | | | Our Executive Team is not entitled to single-trigger change-in-control equity acceleration | | | | | | | |
Executive Compensation Philosophy and Objectives We Pay for Performance Our executive compensation philosophy is to design our compensation programs to be thoughtful and transparent with a strong focus on pay for performance. We generally target a compensation mix for our executive officers that is weighted heavily towards variable, or “at risk,” compensation, including short-term cash incentives earned based on both Company and individual performance, and long-term equity incentive compensation opportunities. We believe this approach aligns the compensation of our executive officers with our performance and the interests of our stockholders. We consider our equity awards, which in 2022 included restricted stock unit ("RSU") awards that may be settled for shares of our common stock, and PSU awards where the number of shares earned is determined based on our actual level of performance achieved as measured against the award performance goals, to be “variable” pay because the realized value of these awards depends in large measure on the performance of our stock price. We Pay all Employees Competitively, Fairly, and Consistently We also strive to pay all of our employees, including our executive officers, competitively, fairly, and consistently in a way that aligns with our long-term business goals and values. Specifically, our compensation program aims to: | | | | | | | | | | | | | | | | | | | | | Attract, motivate, and retain highly qualified and engaged employees who are passionate about our mission. | | Foster a culture of shared success through pay for performance opportunities, including cash incentives and equity awards. | | Align pay for each employee’s position with the responsibilities, knowledge, complexity, and impact of the role within the Company. | | | | | |
At Etsy, we believe in paying all of our employees fairly, consistently, and without bias. We have implemented a system of checks, balances, and audits of our compensation decisions designed to mitigate bias and encourage consideration of business-related factors in a consistent way. As part of our commitment to fair pay practices, we completed our 2022 Pay Equity analysis, conducted by a third-party consulting firm. The purpose of this analysis is to look at pay across jobs and levels to ensure our practices are fair and consistent and that compensation is not influenced by gender or race/ethnicity.
The analysis found no unexplained pay gaps adverse to women or employees from other marginalized genders, or non-white employees. Additionally, there were no unexplained pay gaps based on intersectionality (i.e., based on the combination of race and gender/ethnicity). This was consistent with the findings of our 2020 and 2018 Pay Equity analyses. We are committed to ensuring that fair and consistent pay practices continue to be applied across our organization. We also grant equity awards to most employees, to help align the interests of our employees with the long-term interests of our stockholders. We periodically refresh those awards, granting additional equity awards to employees when our Compensation Committee deems it appropriate, in light of market conditions, to replenish unvested equity for retention, to reward performance, and to keep pace with the evolving competitive market. This broad-based equity program is intended to ensure that our employees are invested in and receive the rewards of our future success. We are Mindful of Key Objectives Consistent with our broader compensation philosophy, the key objective of our executive compensation program is to attract, retain, and motivate high caliber, diverse talent who share our dedication to our community and commitment to our mission to “Keep Commerce Human.” We evaluate the efficacy of our compensation programs in supporting this objective on an ongoing basis, collecting feedback from our recruiting efforts as well as competitive market data. While the weight of the elements evolves in light of our business needs and market conditions, we continue to believe that competitive executive compensation packages that consist of both fixed and variable pay in the form of base salaries, annual cash incentive opportunities, and long-term equity incentive compensation opportunities enable us to achieve this objective and align the compensation of our executive officers with our performance and long-term value creation for our stockholders. Key Components and Design of our 2022 Executive Compensation Program Base Salary Base salary represents the fixedsmallest portion of the compensation of our executive officers, includingofficers’ target total direct compensation, reflecting our NEOs. Generally, althoughgoal to allocate a significant majority of compensation to the variable, performance-based elements of our Executive Team’s total compensation package. Although our Compensation Committee generally seeks to set base salaries at competitive levels, the actual positioning of executive officer base salaries willis also be based on the 462021 Proxy StatementEtsy
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our Compensation Committee’s assessment of the factors described below in the section titled “Factors Used inConsidered When Determining Executive Compensation.” The 2020 Our Compensation Committee reviews and approves the base salary decisions are described below as part of the holistic presentation of each NEO’s 2020 target total direct compensation.NEO, including the base salary of our Chief Executive Officer. Annual base salary increases for our NEOs other than Mr. Silverman were recommended by him in light of each NEO's job responsibilities and performance, as well as comparisons to our executive compensation peer group (discussed below). Following a review of Mr. Silverman's recommendations for NEOs other than himself and a competitive market data analysis prepared by Compensia, including with respect to Mr. Silverman's compensation, our Compensation Committee approved the changes set forth below to the NEOs' annual base salaries, effective as of April 1, 2022. | | | | | | | | | | | | | Named Executive Officer | 2022 Base
Salary | 2022 Base Salary Increase (% of 2021 Base Salary) | Josh Silverman | | $ | 630,000 | | 5.00 | % | | Rachel Glaser | | $ | 475,000 | | 5.56 | % | | Raina Moskowitz | | $ | 425,000 | | 8.97 | % | | Ryan Scott | | $ | 425,000 | | 6.25 | % | | Michael Fisher | | $ | 475,000 | | 5.56 | % | Kruti Patel Goyal(1) | | $ | 425,000 | | 6.25 | % |
(1)In connection with Ms. Patel Goyal's appointment as Chief Executive Officer of our Depop subsidiary effective September 12, 2022, the Compensation Committee approved an increase in her base salary to $450,000 per year. For more information, see "Named Executive Officer Transitions" on page 56 for a discussion of Ms. Patel Goyal's compensation arrangements related to her appointment as Depop's CEO.
Annual Cash Incentive Program Overview Our annual cash incentive program is intended to reward participants for the achievement of our short-term financial and operational objectives and their individual performance in meeting those objectives. For 2020,2022, annual cash incentive award paymentsopportunities for our Executive Team were based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance goals and objectives, except in the case of our CEO, whose annual cash incentive award paymentopportunity was based 80% on the achievement of corporate performance objectives and 20% on the achievement of individual performance goals and objectives, reflecting his greater responsibility for our overall performance. Additionally, Ms. Patel Goyal's annual cash incentive award payment for the time she served as Depop's CEO was based 80% on Depop's corporate performance objectives and 20% on individual performance goals and objectives. The individual performance objectives for each NEO include ESG goals tailored to their business responsibilities. Each NEO’sExecutive Team member’s annual cash incentive award was subject to a maximum payout opportunity equal to 200% of his or her target annual cash incentive award opportunity. Target Annual Cash Incentive Opportunities TheOur Compensation Committee reviews the target annual cash incentive award opportunities (which are expressed as a percentage of annual base salary) of our executive officers each year as part of its annual executive compensation review and makes adjustments after considering the factors described below in “Factors Used inConsidered When Determining Executive Compensation.” Generally, theour Compensation Committee seeks to set the target annual cash incentive award opportunities of our executive officersExecutive Team members so that their target total cash compensation (the sum of their annual base salarysalaries and the target annual cash incentive award opportunity)opportunities) is at a competitive level with our Compensation Peer Group (as defined below)executive compensation peer group, but does not target a specific percentilepercentile.
Following a review by our Compensation Committee of competitive market data analysis, the target annual cash incentive award opportunity as a percentage of annual base salary for each of the NEOs was increased from 2021 to 2022 as follows: Mr. Silverman from 100% to 120%; Ms. Glaser and Mr. Fisher from 75% to 90%; and Ms. Moskowitz, Mr. Scott, and Ms. Patel Goyal from 60% to 80%. These increases were intended to align NEO compensation with market trends and maintain Etsy's focus on variable, performance-based pay. For more information on how our Compensation Committee considers competitive compensation data in making its decisions with respect to the executive compensation, see the discussion beginning at page 55. The 2022 target total cash compensation for each our NEOs was as follows: | | | | | | | | | | | | | | | | | | | | | | | | | Cash Incentive Opportunity | | | | Named Executive Officer | 2022 Base Salary | 2022 Target Opportunity (% of Base Salary) | 2022 Corporate Performance Component Weight* | 2022 Individual Performance Component Weight | Target Total Cash Compensation | | Josh Silverman | | $ | 630,000 | | 120 | % | 80 | % | 20 | % | | $ | 1,386,000 | | | Rachel Glaser | | $ | 475,000 | | 90 | % | 70 | % | 30 | % | | $ | 902,500 | | | Raina Moskowitz | | $ | 425,000 | | 80 | % | 70 | % | 30 | % | | $ | 765,000 | | | Ryan Scott | | $ | 425,000 | | 80 | % | 70 | % | 30 | % | | $ | 765,000 | | | Michael Fisher | | $ | 475,000 | | 90 | % | 70 | % | 30 | % | | $ | 902,500 | | Kruti Patel Goyal(1) | | $ | 425,000 | | 80 | % | 70 | % | 30 | % | | $ | 765,000 | |
* As described below, the achievement of 2022 aggregate corporate performance percentage was determined to be 45%. (1)Amounts for Ms. Patel Goyal are reflected as of her service as Chief Product Officer. In connection with her appointment as Chief Executive Officer of our Depop subsidiary effective September 12, 2022, the Compensation Peer Group.Committee approved an increase in her base salary to $450,000 per year and changed the weighting of the components of her annual cash incentive opportunity to be 80% based on the corporate performance related to Depop's goals and 20% based on the individual performance component. Each of these changes took effect commencing September 12, 2022. For more information, see "Named Executive Officer Transitions" on page 56 for a discussion of Ms. Patel Goyal's compensation arrangements related to her appointment as Depop's CEO.
2022 Corporate Performance Objectives In March 2020, the2022, our Compensation Committee selected consolidated GMS, revenue, and adjusted EBITDA margin as the corporate performance objectives for our 20202022 annual cash incentive program, which iswas consistent with prior years. The Compensation Committee set performance targets for each performance objective at levels that required meaningful year-over-year performance, as evidenced by our actual performance with respect to these measures during 2019, provided in the table below, and it subjected each performance objective to a maximum payout equal to 200%. Our Compensation Committee set the performance target for adjusted EBITDA margin slightly below our actual 2019 performance because it anticipated that several factors would serve as headwinds to adjusted EBITDA margin in 2020, including increased employee-related expenses in product development, driven in part by lower capitalization of costs relative to prior years; anticipated accounting impacts of new advertising initiatives; and the impact of our acquisition of Reverb, which has a lower adjusted EBITDA margin than Etsy and would be included in Etsy’s reported adjusted EBITDA for the full year of 2020 versus only part of 2019. These factors also influenced our adjusted EBITDA margin guidance which, on February 26, 2020, was set in the range of 21-22%. We withdrew our annual guidance for adjusted EBITDA, as well as for GMS and revenue, on April 2, 2020 when we provided a business update related to the COVID-19 pandemic. We did not modify any corporate performance objectives for the 2020 annual cash incentive program when the guidance was withdrawn, or later during 2020, due to COVID-19 related circumstances or otherwise. 472021 Proxy StatementEtsy
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The Compensation Committee selected •GMS because it believes that it is an indicator of the success of Etsy sellers, the satisfaction of Etsy buyers, the health of our ecosystemmarketplaces, and the scale and growth of our business, and, therefore, one of our key performance measures. The Compensation Committee selected revenue
•Revenue and adjusted EBITDA margin because it believes these measures provide a balance between generating revenue, managing our expenses, and growing our business, thereby directly influencing the creation of long-term value for our stockholders. See "Non-GAAP Financial Measures" in this proxy statement for a reconciliation of adjusted EBITDA margin to net (loss) income, the most directly comparable GAAP financial measure. Our Compensation Committee approved performance targets for each performance objective at levels that were designed to capture a range of performance outcomes, given continued uncertainty in 2022, which are described in the table below. Adjusted EBITDA margin targets were set lower on a year-over-year basis due to expected contraction as we absorbed headcount investments, reinvested most of the Etsy transaction fee increase back into the business, and annualized our 2021 acquisitions of Depop and Elo7, which are lower margin businesses. If the target performance levels were achieved, the 20202022 annual cash incentive program would pay out at 100% of target, which the Compensation Committee believedtarget. Performance objectives were subject to be the appropriatea maximum payout for that level of achievement.equal to 200%. | | GMS | | | 40% | | | $4,975 | | | $5,731 | | | $6,368 | | | $6,686 | | | $7,005 | | | $10,281 | | | 200% | | | | Revenue | | | 30% | | | $818 | | | $965 | | | $1,072 | | | $1,126 | | | $1,179 | | | $1,726 | | | 200% | | | | Adjusted EBITDA Margin | | | 30% | | | 22.8% | | | 18.7% | | | 22.0% | | | 24.2% | | | 25.3% | | | 31.8% | | | 200% | |
Achievement of 2020 Corporate Performance Objectives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Measure | Weighting | 2021 Actual Performance | Threshold Performance Level (50% Payment of Financial Performance Component) | Target Performance Level (100% Payment of Financial Performance Component) | Stretch Performance Level (180% Payment of Financial Performance Component) | Kicker Performance Level (200% Payment of Financial Performance Component) | 2022 Actual Performance | Weighted
Resulting
Payout % | | | | (dollars in millions) | | | GMS | 40 | % | | $ | 13,492 | | $ | 14,203 | | | $ | 15,781 | | | $ | 16,570 | | | $ | 17,359 | | | $ | 13,318 | — | % | | Revenue | 30 | % | | $ | 2,329 | | $ | 2,562 | | | $ | 2,847 | | | $ | 2,989 | | | $ | 3,132 | | | $ | 2,566 | 15 | % | | Adjusted EBITDA Margin | 30 | % | | 30.8% | | 23.8% | | 28.0% | | 30.8% | | 32.2% | | 27.9 | % | 30 | % |
In February 2021, the2023, our Compensation Committee determined our actual performance with respect to the corporate performance objectives for the 20202022 annual cash incentive program resulted in an aggregate corporate performance percentage of 200%45%, based on the achievements reflectedachievement of revenue and adjusted EBITDA margin as shown in the table above.above table. With respect to the portion of Ms. Patel Goyal's annual cash incentive program related to Depop's corporate performance (which related to Depop’s GMS, revenue, and adjusted EBITDA margin), the Depop goals were not achieved and, accordingly, the corporate performance percentage was 0%.
2022 Individual Performance In March 2021, the second quarter of 2022, our Compensation Committee reviewed and approved the CEO's goals and objectives for 2022 and reviewed and approved the 2022 goals and objectives for each other Executive Team member shared by Mr. Silverman. In February 2023, our Compensation Committee also reviewed each NEO’sNEO's individual performance in 2020,2022, as measured against the individual goals establishedand objectives reviewed by theour Compensation Committee in the second quarter of 2020,2022, considered our CEO’s recommendations with respect to the individual performance of our other NEOs, and determined a 20202022 individual performance percentage for each NEO. A | | | | | | | | | | | | | Consideration of ESG Goals | | | | | | | | | Our business model and our ESG strategy are well aligned in a way that is designed to make the pie bigger for all stakeholders. Consistent with this alignment, a portion of each NEO’s actual 2022 annual cash incentive payment was based on our Compensation Committee's evaluation of individual performance achievements that support our ESG strategy and further our business objectives. | | | | |
When making the 2022 compensation decisions, our Compensation Committee considered the factors described in the section “Factors Considered When Determining Executive Compensation,” in addition to information provided by Mr. Silverman for each NEO’s actual 2020 annual cash incentive payment was based on the evaluation ofother NEO. The following table summarizes select 2022 achievements for each NEO’s individual performance achievements, which were measured against certain business project goals as well as economic, social, and sustainability Impact goals, as described below.NEO. | | | | | | | | | | Named Executive Officer | Select 2022 Achievements | Individual Performance Factor | | | | | | | | Josh Silverman | •Mr. Silverman effectively managed Etsy through 2022, retaining most of Etsy’s significant pandemic growth despite strong headwinds growing revenue 10% year-over-year with an adjusted EBITDA margin of approximately 28%. •Under Mr. Silverman’s guidance, Etsy.com continued our efforts to make buying on Etsy.com worry-free and to drive seller and buyer loyalty, introducing Etsy Purchase Protection and materially reducing resolution times for customer issues and improving our customer effort score. •Etsy.com also made the buying experience more efficient, with improvements in the search experience driving increases in site-wide conversion rate and average buyer spend and improved overall site performance, including nearly one second faster search page load times, driving nearly $100 million in incremental site-wide GMS. •Mr. Silverman also nurtured our equitable and productive work environment, evidenced by low overall attrition rates and diverse hiring success as well as an increase in agreement with the statement that “people from all backgrounds have equal access to opportunities that they need to succeed at Etsy” in our most recent Etsy.com employee engagement survey. ESG •In addition, Mr. Silverman remained focused on our sustainability goals, including sourcing renewable energy for 100% of the electricity used to power Etsy.com and Reverb's offices and employees working from home, as well as Etsy.com's computing load in Google Cloud, and reducing our scope 3 emissions intensity by approximately 14% on a year-over-year basis. ESG | 95% | | | | | | | | Rachel Glaser | •In 2022, Ms. Glaser continued to identify and prioritize investments that deliver strong return on invested capital and maximize free cash flow while executing on our 2022 operating plan and ably navigating through continued macroeconomic uncertainty. •Under Ms. Glaser’s guidance, Etsy invested in operational improvements and tooling for key financial processes, business insight generation, and resource allocation. •Ms. Glaser managed enterprise risk by supporting our "House of Brands" finance teams in adopting Etsy standards and practices. Her teams also identified, established, and implemented strategic partnerships and enhanced critical vendor relationships driving enterprise savings. •Ms. Glaser oversaw efforts to attract, develop, and retain our finance talent, with a focus on creating a diverse, equitable, and sustainable work environment. ESG •Ms. Glaser led finance teams that continued to deliver on our integrated ESG reporting, where we share our ESG metrics alongside our financial results in our Form 10-K – a practice intended to ensure that we’re transparent about and accountable for progress against our environmental and social goals. ESG | 100% | | | |
| | | | | | | | | | Raina Moskowitz | •In 2022, Ms. Moskowitz led efforts focused on making buying on Etsy more worry-free, as well as being a selling platform that drives seller and buyer loyalty. In 2022 this included the launch of Etsy Purchase Protection program, improved delivery transparency, additional functionality for sellers to offer return options, and increased enforcement of our "handmade" policies. •Ms. Moskowitz's also oversaw projects focused on defining, communicating, and executing on our Long Term Company Strategy, key company-wide cross-functional programs, and our "House of Brands"-wide Impact strategy. ESG •Ms. Moskowitz led our efforts to launch sustainability listing attributes that allow sellers to indicate if their items are made from environmentally conscious materials or are designed to be reusable or reduce waste. ESG | 110% | | | | | | | | Ryan Scott | •In 2022, Mr. Scott oversaw marketing efforts designed to bring buyers around the world back to Etsy more frequently and on new, higher-value pathways. These efforts resulted in improvement in Etsy category consideration in targeted categories and geographies. •Mr. Scott also led efforts to help new buyers discover Etsy, including new buyers who identify as men, and led efforts also focused on making Etsy a top marketplace for international buyers. •Mr. Scott also focused on attracting, retaining, and developing diverse talent in the United States and he met his goal to include diverse imagery in our marketing that is broadly representative of the communities we serve. ESG | 85% | | | | | | | | Michael Fisher | •Mr. Fisher and Ms. Patel Goyal's engineering and product goals and objectives were combined for 2022. While Ms. Patel Goyal was Chief Product Officer, they worked together, leading teams that empowered sellers to grow their businesses and that improved personalization of the content shown to buyers throughout their shopping journeys on Etsy. •Mr. Fisher and Ms. Patel Goyal's teams enabled buyers to more confidently evaluate and buy items they find on Etsy, making buying and selling on Etsy more worry-free and strengthening the foundation of Etsy to enable growth for the marketplace. •Mr. Fisher and Ms. Patel Goyal also worked to scale our infrastructure, operations, and safeguards to efficiently and sustainably power our global growth and availability. •Mr. Fisher and Ms. Patel Goyal also focused on community inclusion and new hiring DEI goals, including for teams based in Mexico and Ireland. ESG | 95% | | | | | | | | Kruti Patel Goyal | •For more information on Ms. Patel Goyal's goals and objectives during her time at Etsy, please see the above discussion. •Ms. Patel Goyal was appointed Depop's CEO in September 2022. Accordingly, her Etsy individual performance was evaluated partially based on her time served as Chief Product Officer, and partially based on her service as Depop's CEO. •At Depop, Ms. Patel Goyal led efforts to accelerate Depop's product experimentation velocity, an important foundational focus area, nearly tripling velocity rate from the first quarter of 2022, and improve the quality and personalization of search. | 100% Etsy portion / 120% Depop portion | | | |
2022 Annual Cash Incentive Award PaymentsCompensation Decisions The actualIn early 2023, our Compensation Committee approved the final cash incentive award payouts based on our corporate performance and their evaluation of the individual performance goals and objectives for our NEOs, all of which included ESG goals.
As a result, the following payments were approved for 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | 2022
Base Salary | 2022 Target Opportunity (% of Base Salary) | 2022 Company
Portion Earned | 2022 Individual
Portion Earned | 2022 Total Earned (% of Base Salary) | 2022
Incentive Cash
Compensation | | Josh Silverman | | $ | 630,000 | | 120 | % | 45 | % | 95 | % | 66 | % | | $ | 416,000 | | | Rachel Glaser | | $ | 475,000 | | 90 | % | 45 | % | 100 | % | 55 | % | | $ | 263,000 | | | Raina Moskowitz | | $ | 425,000 | | 80 | % | 45 | % | 110 | % | 52 | % | | $ | 219,000 | | | Ryan Scott | | $ | 425,000 | | 80 | % | 45 | % | 85 | % | 46 | % | | $ | 194,000 | | Michael Fisher(1) | | $ | 475,000 | | 90 | % | 45 | % | 95 | % | 54 | % | | $ | 257,000 | | Kruti Patel Goyal(2) | | $ | 425,000 | | 80 | % | 45% / 0% | 100% / 120% | 40 | % | | $ | 171,000 | |
(1)In light of Mr. Fisher's employment through December 31, 2022 and continued service in an advisory capacity through April 2023, the Compensation Committee exercised discretion to deem Mr. Fisher eligible for his 2022 annual cash incentive award paymentsaward. (2)Ms. Patel Goyal's incentive cash compensation was based on Etsy performance for the period prior to her becoming Depop's CEO and based on Depop performance for the portion of the year during her service as Depop's CEO. Depop did not meet its GMS and revenue goals and, as a result, no Company portion was earned by our NEOs underMs. Patel Goyal for the 2020 annual cash incentive program ranged from 188% to 192%period she served as CEO of each individual’s targetDepop.
As described above, Mr. Silverman's annual cash incentive award opportunity was based 80% on the achievement of corporate performance objectives and 20% on the achievement of individual performance goals and objectives. Ms. Patel Goyal's annual cash incentive award payment for the time she served as further described below under “2020Depop's CEO was based 80% on Depop's corporate performance objectives and 20% on individual performance goals and objectives. The annual cash incentive award opportunities for each other NEO Compensation Decisions.”(and for Ms. Patel Goyal for the portion of the year prior to her becoming Depop's CEO) was based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance goals and objectives. Long-Term Incentive Awards Overview We view long-term equity incentive compensation in the form of equity awards as a critical element of our executive compensation program. We provide long-term equity incentive compensation opportunities to help align the interests of our executive officers, including our NEOs, with the long-term interests of our stockholders. We believe that equity awards in the form of stock options and RSUs encourage long-term focus and decision-making that is consistent with our mission and strategic goals. We also grant equity awards to attract, motivate, and retain executive talent. Typically, we grant stock options and/or RSUsequity awards to newly-hired executive officers, in connection with promotions, as a reward for superior performance, and/or for retention purposes. In addition, our 482021 Proxy StatementEtsy
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NEOs typically receive annual equity awards. Generally, when determining the type and size of an award, theour Compensation Committee seeks to be competitive with the companies in our Compensation Peer Group,executive compensation peer group, but theour Compensation Committee did not target a specific percentile of our Compensation Peer Grouppeer group in 2020.2022. 2020 NEO Compensation Decisions
Below are summaries ofSince 2021, we have included PSUs in the Compensation Committee’s decisions about 2020 compensationlong-term incentive mix for each of our NEOs. As described below, when making the 2020 compensation decisions, the Compensation Committee focused primarily on the factors set forth in the section titled “Factors Used in Determining Executive Compensation”In 2022, our CEO received a mix of PSUs (50%) and RSUs (50%), and the details noted belowlong-term incentive awards for each NEO.
Presidentour other NEOs were delivered in a mix of RSUs (70%) and Chief Executive Officer
Josh Silverman
In 2020, Mr. SilvermanPSUs (30%), excluding the grant that Ms. Patel Goyal received the following compensation and benefits:
Base Salary: $600,000, increased from $500,000 in March 2020. The Compensation Committee believed this increase was appropriate in recognition of his individual performance, his experience and overall contribution to our business, Etsy’s performance under his leadership, and to bring his base salary closerconnection with her appointment as Depop's CEO. PSUs granted to the median of the non-founder CEOs within the Compensation Peer Group.
Annual Incentive: Mr. Silverman is eligible to participateNEOs in our annual cash incentive program with a target award opportunity equal to 100% of base salary,2022 are earned based 80% on the achievement of corporate performance objectivescontinued service and 20% on individual performance. The actual 2020 cash incentive award paid was $1,150,000, reflecting 192% of his target award opportunity. To determine Mr. Silverman’s individual performance portion of his 2020 cash incentive award, which was assessed at 160% of target, the Compensation Committee considered Mr. Silverman’s overall leadership of our organization during 2020 and his individual performance as measured against the individual goals reviewed by the Compensation Committee in April 2020 and approved in June 2020, which included goals related to financial performance, customer satisfaction, sustainability, and human capital management, including attracting, retaining and developing top, diverse talent. In particular, the Compensation Committee acknowledged Mr. Silverman's success in effectively managing Etsy through the turbulence of 2020 and achieving key financial targets, improving the product experience and thus driving GMS, creating more habitual buyers and unlocking new marketing channels, and achieving significant sustainability, hiring, and diversity and inclusion goals. In 2020, Etsy achieved record levels of GMS (up approximately 107% year-over-year) and revenue (up approximately 111% year-over-year), an adjusted EBITDA margin of approximately 32% for 2020 and expanded our community to 4.4 million active sellers (up approximately 62% year-over-year), serving nearly 82 million active buyers (up approximately 77% year-over-year) at year-end. Of the 60.7 million new and reactivated buyers, approximately 17% made four or more purchases across two or more categories, and habitual buyers, defined as Etsy buyers who have spent $200 or more and made purchases on six or more days in the previous 12 months, grew to 6.5 million (up approximately 157% year-over-year). We also significantly enhanced the search and discovery experience on the Etsy marketplace. In addition, despite the turbulence of 2020, Mr. Silverman remained focused on our sustainability, hiring, and diversity and inclusion goals, allowing Etsy to meet our goal to source 100% of our electricity from renewable energy by 2020 and increasing Black, Latinx, and Native American people in Etsy’s and Reverb’s combined leadership-level workforce, to 8.6% (up from 4.5% in 2019).
Long-Term Incentive: As discussed above, Mr. Silverman did not receive an equity award in 2020, pursuant to the terms of his 2017 offer letter. In early 2021, Mr. Silverman was granted certain equity awards in the form of PSUs, RSUs and stock options, which are discussed in detail under “Overview of 2021 Compensation Decisions” above.
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Home Security: In August 2020, the Compensation Committee approved the installation of a home security system at Mr. Silverman’s home for which we paid approximately $200,000, with such amount covering configuration, hardware and installation costs, as well as internet services associated with the home security system.
Given Mr. Silverman’s position and his work-from-home arrangement necessitated by the COVID-19 pandemic, the Compensation Committee determined it was prudent to install a home security system at Mr. Silverman’s home in order to mitigate the risks to Etsy posed by his remote work arrangement. Although we view the security services provided to Mr. Silverman as an integral part of our risk management program, and as necessary and appropriate business expenses, because they may be viewed as conveying a personal benefit to him, we have reported the aggregate costs to Etsy for this installation and internet costs associated with operating the system in the “All Other Compensation” column of the Summary Compensation Table below.
Chief Financial Officer
Rachel Glaser
In 2020, Ms. Glaser received the following compensation and benefits:
Base Salary: $425,000, increased from $400,000 in March 2020 in light of her job responsibilities and performance and peer group comparisons.
Annual Incentive: Eligibility to participate in our annual cash incentive program with a target award opportunity equal to 75% of base salary, based 70% on the achievement of corporate performance objectives and 30% on individual performance. The actual 2020 cash incentive award paid was $600,000, reflecting 188% of her target award opportunity. To determine Ms. Glaser’s individual performance portion of her 2020 cash incentive award, which was assessed at 161% of target, the Compensation Committee considered Ms. Glaser’s performance with respect to developing and executingfour equally-weighted metrics selected by our 2020 operating plan priorities and delivering strong financial results, and ably forecasting and navigating the business through the turbulent macro environment of 2020. In particular, Ms. Glaser led teamsCompensation Committee, described below:
| | | | | | | Performance Metric | What it Measures | | GMS (25%) | The dollar value of items sold in our marketplaces within the applicable period, excluding shipping fees and net of refunds associated with canceled transactions | | Revenue (25%) | Our revenue (determined on a consolidated basis) reported in Etsy's audited financial statements | | Adjusted EBITDA (25%) | Etsy’s profitability from our operations that is: our net income (determined on a consolidated basis) adjusted to exclude: interest and other non-operating expense, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); acquisition-related expenses; non-ordinary course disputes; restructuring and other exit income; and loss on extinguishment of debt. Adjusted EBITDA was used for the 2022 PSUs instead of adjusted EBITDA margin to differentiate from the annual cash incentive program. New | | Relative TSR (25%) | Our stock price performance, reflecting returns to our stockholders relative to our Nasdaq Composite constituents |
Our Compensation Committee selected: •GMS because it believes that expanded profitability and free cash flow, launched installment payments, refinanced our convertible debt to achieveit is an even stronger balance sheet for investments in future growth, increased efficiency for both Etsy and Reverb quarterly close processes, managed enterprise risk and grew enterprise value by solid execution of financial results along with clear and transparent investor communication. Ms Glaser and her finance team also led and facilitated many of Etsy’s key initiatives in 2020 to support our team and communities during a turbulent time, including fee reductions for sellers at the startindicator of the COVID-19 pandemic, philanthropic donationssuccess of Etsy sellers, the satisfaction of Etsy buyers, the health of our marketplaces, and the scale and growth of our expanded diversity,business, and, therefore, one of our key performance measures. •Revenue and adjusted EBITDA because it believes these measures provide a balance between generating revenue, managing our expenses, and growing our business, thereby directly influencing the creation of long-term value for our stockholders. See "Non-GAAP Financial Measures" in this proxy statement for a reconciliation of adjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measure. •Relative TSR because it directly aligns the interests of our executive officers with those of our stockholders. 2022 Target Long-Term Incentive Opportunities In 2022, our Compensation Committee approved increases to the value of the long-term incentive opportunities granted to our NEOs. These increases were made following the Committee's review and consideration of competitive market data analysis prepared by Compensia and reflected competitive market conditions, as well as the desire to retain Etsy's management team following several years of continued business growth.
The following long-term incentive compensation equity awards were granted to our NEOs in 2022. | | | | | | | | | | | | | | | | Named Executive Officer | 2022 Long -Term Incentive Award (Granted Value)(1) | PSUs Granted (#)(2) | RSUs Granted (#)(3) | | Josh Silverman | | $ | 16,000,000 | | 57,516 | | 57,516 | | | Rachel Glaser | | $ | 8,000,000 | | 17,255 | | 40,261 | | | Raina Moskowitz | | $ | 6,000,000 | | 12,941 | | 30,196 | | | Ryan Scott | | $ | 6,000,000 | | 12,941 | | 30,196 | | | Michael Fisher | | $ | 7,500,000 | | 16,176 | | 37,745 | | Kruti Patel Goyal(4) | | $ | 7,000,000 | | 12,941 | | 39,719 | |
(1)To mitigate the impact of any short-term stock price volatility, the target number of PSUs and inclusion investments. Further details regarding these activities can be found innumber of RSUs subject to an award was determined by dividing the aggregate granted value of the award by the average closing market price of our Annual Reportcommon stock on Form 10-KNasdaq (rounded to the nearest hundredth) for the fiscal year ended December 31, 2020. Long-Term Incentive: In March 2020, we granted Ms. Glaser equity awards with an aggregate30 trading days immediately prior to and including the date of grant. The grant date fair value of $3,000,000, allocated by value approximately 60%the RSUs and 40%the PSUs based on GMS, revenue, and adjusted EBITDA, computed in accordance with FASB ASC Topic 718, is based on the closing market price of our common stock options.on Nasdaq on the grant date and the probable outcome of the applicable performance conditions. The grant date fair value of the PSUs based on relative TSR, computed in accordance with FASB ASC Topic 718, is determined using a Monte-Carlo simulation model. As a result, the dollar value in this column will vary from the value of awards as reflected in the Summary Compensation Committee believedTable and the mixGrants of RSUsPlan-Based Awards Table.
(2)The number of shares earned under the PSUs was based on our actual level of performance achieved during 2022 based on GMS, revenue, and stock options was appropriateadjusted EBITDA objectives and will be based on a three-year performance period from January 1, 2022 through December 31, 2024 for the PSUs based on relative TSR. The number of shares that may be earned will range from 0% to 200% of the target number of PSUs specified in orderthe above table, generally subject to aligncontinued service through the applicable vesting dates. (3)Except for Ms. Patel Goyal's additional RSU grant in connection with stockholder interests. Theher appointment as Depop's CEO, the RSUs and stock options vest in eight equal semi-annual installments beginning on October 1, 2020, provided she remains in service with us on each vesting date. 2022.Travel Reimbursement: In early 2020, the Compensation Committee provided (4)Ms. Glaser withPatel Goyal's amounts consist of a $36,000 travel allowance to cover travel between New York$6,000,000 RSU and Los Angeles from May 2020 through April 2021 (at the time, such travel was expected to resume shortly).
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Chief Technology Officer
Mike Fisher
In 2020, Mr. Fisher received the following compensation and benefits:
Base Salary: $425,000, increased from $400,000PSU grant in March 20202022, as well as a $1,000,000 RSU grant made in light of his job responsibilities and performance and peer group comparisons.
Annual Incentive: Eligibility to participateOctober 2022 in our annual cash incentive programconnection with a target award opportunity equal to 75% of base salary, based 70% on the achievement of corporate performance objectives and 30% on individual performance. The actual 2020 cash incentive award paid was $600,000, reflecting 188% of his target award opportunity. To determine Mr. Fisher’s individual performance portion of his 2020 cash incentive award,her appointment as Depop's CEO, which was assessed at 161% of target, the Compensation Committee considered Mr. Fisher’s overall leadership of our organization and his performance with respect to delivery on our 2020 financial plan while maintaining strong site up-time for all public facing services. In addition, the Compensation Committee noted his success in measurably increasing engineering’s productivity, efficiency and engagement, and increasing the focus on diversity and inclusivity in engineering cohorts. In particular, Mr. Fisher led Etsy’s migration to Google Cloud, which was completed early in 2020, enabling us to handle the massive influx of traffic to our marketplace, which served as the foundation for our launch of personalized search results and innovative products like augmented reality and listing videos. Mr. Fisher also scaled our developer productivity and marketplace experience teams, invested in new technologies and approaches that are expected to drive aspects of Etsy’s future product roadmap, and increased focus on inclusivity across our engineering teams.
Long-Term Incentive: In March 2020, we granted Mr. Fisher equity awards with an aggregate grant date fair value of $3,000,000, allocated by value approximately 60% RSUs and 40% stock options. The Compensation Committee believed the mix of RSUs and stock options was appropriate in order to align with stockholder interests. The RSUs and stock options vest in eight equal semi-annual installments, beginning on OctoberApril 1, 2020, provided he remains in2023, subject to continued service with us on each vesting date.
Long-Term Incentives Earned from 2022 PSU Awards Travel Allowance: InWhile for PSUs granted in 2021 our Compensation Committee approved targets for the GMS, revenue, and adjusted EBITDA margin performance objectives that were tied to our fiscal year 2023 results, in light of the continued global macroeconomic uncertainty in early 2020,2022, including additional or unforeseen effects from the COVID-19 pandemic and general market, political, economic, and business conditions, in March 2022, our Compensation Committee approved performance targets for the GMS, revenue, and adjusted EBITDA performance objective in the PSUs granted in 2022 that were tied to our 2022 results and set at levels that were designed to capture a range of performance outcomes, as set forth below. For the relative TSR metric, the Compensation Committee approved a performance target based on our relative TSR performance during the three-year performance period ending December 31, 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Measure | Weighting(1) | Threshold Performance Level | Target Performance Level | Stretch Performance Level | 2022 Actual Performance | Weighted
Resulting
Payout % | | | (dollars in millions) | | | GMS | 25% | | $ | 14,203 | | | $ | 15,781 | | | $ | 17,359 | | | $ | 13,318 | | — | % | | Revenue | 25% | | $ | 2,562 | | | $ | 2,847 | | | $ | 3,132 | | | $ | 2,566 | | 12.7 | % | | Adjusted EBITDA | 25% | | $ | 610 | | | $ | 797 | | | $ | 1,009 | | | $ | 717 | | 19.6 | % |
(1)The performance objective for the remaining 25% of the PSUs is based on relative TSR through December 31, 2024, for which the performance period is still underway. In February 2023, our Compensation Committee determined our actual performance relative to the performance objectives resulted in 32.3% of the PSUs granted, or 43% of the PSUs for which the performance period was complete, being earned as shown in the above table. One-third of the earned PSUs vested on April 1, 2023, and one-third will vest on each of April 1, 2024 and April 1, 2025, subject to continued service through the applicable vesting date.
This resulted in the following number of PSUs earned. | | | | | | | | | | | | | Named Executive Officer | 2022 PSUs Granted at Target(1) | 2022 PSUs Earned Based on Performance Objectives where Performance Period is Complete (#)(2) | 2022 PSUs for which Performance Period is Not Complete (#)(3) | | Josh Silverman | 57,516 | | 18,592 | | 14,379 | | | Rachel Glaser | 17,255 | | 5,578 | | 4,314 | | | Raina Moskowitz | 12,941 | | 4,183 | | 3,235 | | | Ryan Scott | 12,941 | | 4,183 | | 3,235 | | Michael Fisher(4) | 16,176 | | 5,229 | | 4,044 | | | Kruti Patel Goyal | 12,941 | | 4,183 | | 3,235 | |
(1)The number of shares earned under the PSUs was based on our actual level of performance achieved during 2022 based on GMS, revenue, and adjusted EBITDA objectives and will be based on a three-year performance period from January 1, 2022 through December 31, 2024 for PSUs based on relative TSR. The number of shares that may be earned will range from 0% to 200% of the target number of PSUs specified in the table, generally subject to continued service through the applicable vesting dates. (2)As described above, 32.3% of the PSUs granted in 2022 were earned based on achievement of the performance goals relating to GMS, revenue, and adjusted EBITDA, and will vest subject to continued service through the vesting dates. (3)These PSUs may be earned if target performance relating to relative TSR is achieved. The number of shares that may be earned will range from 0% to 200% of the target number of PSUs specified in the table, generally subject to continued service through the vesting dates. (4)Mr. Fisher's consulting services will terminate on April 30, 2023 and any PSUs not earned and vested by that date will be forfeited. In early 2025, the target number of PSUs earned based on relative TSR during the performance period will be determined in good faith by our Compensation Committee, and any earned PSUs will generally vest and settle in shares of our common stock on April 1, 2025, subject to continued service through the vesting date. 2023 Target Long-Term Incentive Opportunities In response to favorable feedback from our stockholders regarding the inclusion of PSUs in our executive compensation program, our Compensation Committee continued to include PSUs in our 2023 equity awards. In early 2023, our Compensation Committee approved performance targets for the GMS, revenue, and adjusted EBITDA margin performance objectives that must be achieved in order to earn the PSUs granted in 2023 that are tied to performance over the two year period ending December 31, 2024 and set at levels that are designed to capture a range of performance outcomes. For the relative TSR metric, the Compensation Committee approved a performance target based on our relative TSR performance during the three-year performance period ending December 31, 2025. Our Compensation Committee approved annual refresh equity awards consisting of 50% PSUs and 50% RSUs for Mr. Silverman, and for each other Executive Team member, equity awards consisting of 70% RSUs and 30% PSUs. How We Determine Executive Compensation Role of our Compensation Committee Our Compensation Committee discharges the responsibilities of our Board relating to the compensation of our executive officers, including our NEOs. Specifically, our Compensation Committee: •Is responsible for executive compensation decisions, including reviewing, evaluating, and approving the compensation arrangements, plans, policies, and practices for our CEO and, in consultation with our CEO, our other executive officers (including our NEOs), and overseeing and administering our incentive compensation plans, provided that it may delegate to a subcommittee of two or more directors the authority to grant equity awards under our equity plans, or delegate to two or more officers or directors the authority to grant equity awards to employees who are not senior officers; •Oversees risk management of our compensation programs, policies, and practices, including an annual review of our programs to ensure that they are not reasonably likely to incentivize employee behavior that would result in any material adverse risk to us; and •Has sole authority to continue or terminate its relationship with outside advisors, including its compensation consultant, and retain additional outside advisors. Role of Chief Executive Officer To discharge its responsibilities, in 2022 our Compensation Committee worked with members of our management, including our CEO, our Chief Human Resources Officer, our Vice President, Global People & Talent Strategy and our Senior Director, Global People Operations & Total Rewards. Management assists our Compensation Committee by providing information on corporate and individual performance and management’s perspective on compensation matters. Our Compensation Committee solicits and
reviews our CEO’s recommendations with respect to the compensation of our Executive Team members (other than himself), based on his consideration of relevant market data, roles and responsibilities, and individual performance. Our Compensation Committee reviews and discusses these recommendations with our CEO and considers them as one factor in approving the compensation for our executive officers, including our NEOs. Our CEO recuses himself from all discussions and recommendations regarding his own compensation and is not present when his compensation is determined. Role of the Compensation Consultant Our Compensation Committee engages an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions made as part of its annual executive compensation review. Our Compensation Committee has engaged Compensia as its compensation consultant since 2014 to advise on executive compensation matters, provide information on competitive market pay practices for senior executives, and supply data analysis and recommendations for the selection of our executive compensation peer group. For 2022, Compensia’s engagement included: •the review and analysis of the compensation for our executive officers, including our NEOs, as well as an analysis of the mix of compensation elements and the terms included in our forms of equity compensation award agreements; •the research, review, and updating of our executive compensation peer group; •an assessment of our equity usage and burn rate compared to our peers; •the review and analysis of non-employee director compensation compared to market practices; •summarizing market trends and regulatory and governance updates; •the review of and input on the Compensation Discussion and Analysis section of our proxy statement; •attendance at Compensation Committee meetings as requested; and •support on other ad hoc matters throughout the year. Compensia reports directly to our Compensation Committee. In 2022, Compensia did not provide any other services to Etsy. Our Compensation Committee evaluates Compensia’s independence annually and has determined that under the applicable SEC rules and Nasdaq listing standards its relationship with Compensia and the work of Compensia on behalf of our Compensation Committee has not raised any conflict of interest. Factors Considered When Determining Executive Compensation When approving each compensation element and the target total direct compensation opportunity for our Executive Team members, including our NEOs, our Compensation Committee considers a variety of factors that provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single method or factor is determinative in setting pay levels for our executive officers. Rather, our Compensation Committee’s determination of the target total direct compensation, fixed, and “at-risk” pay opportunities was an individualized decision for each executive officer, including each NEO. | | | | | | | | | | Scope & Impact of Role | Individual & Company Performance | Market Analysis | | | | | Each executive officer’s skills, experience, and qualifications relative to similarly-situated executives at our peer companies. | Our Company performance against financial and operational objectives established by our Compensation Committee and our Board. | The positioning of each executive officer’s compensation in a ranking of peer company compensation levels, or in comparison to a compensation database where there are insufficient data points in our compensation peer group. | | | | | Our CEO’s recommendations (other than for himself) considering performance, a competitive market analysis, and compensation parity among our executive officers. | Each executive officer’s performance, based on an assessment of his or her contribution to our overall performance, including effective contribution to the achievement of ESG goals, and his or her ability to lead and work as part of a team. | The compensation practices of our executive compensation peer group, and the scope of each executive’s role compared to similarly-situated executives at our peer companies. |
Competitive Positioning Competitive compensation data is one of several factors that our Compensation Committee considers in making its decisions with respect to the compensation of our Executive Team, including our NEOs. Specifically, our Compensation Committee considers compensation data in our competitive market for executive talent, particularly the compensation levels and practices of a group of peer companies (the "Compensation Peer Group"), as determined by our Compensation Committee. Our Compensation Peer Group consists of companies in our industry (consumer discretionary, consumer staples, information technology) that are similar to us in terms of revenue and market capitalization.
Specifically, in determining the Compensation Peer Group for 2022, our Compensation Committee considered whether a company was: •in a similar industry (focusing on companies in the consumer discretionary, consumer staples and information technology industries and with a preference for companies with business models focusing on peer-to-peer commerce, transaction- or subscription-based revenue models, services and/or e-commerce); •within a range of 0.5x to 2.0x of our revenue; and •within a range of 0.33x to 3.0x of our market capitalization. In 2022, our Compensation Committee used the following Compensation Peer Group, which was approved in December 2021 after consideration of input from Compensia, to assist with the determination of the compensation for our NEOs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ANGI Homeservices DocuSign DoorDash New Dropbox eBay New GoDaddy | HubSpot
Match Group
MercadoLibre
Okta
Peloton Interactive
Pinterest | RingCentral New Shopify Snap Stitch Fix The Trade Desk Tripadvisor | Twilio
Twitter
Wayfair
Zendesk
Zillow Group | | | | | | | | | | | | | |
Our Compensation Committee uses data drawn from our Compensation Peer Group, as well as data from the Radford Global Compensation Database for positions where there are insufficient data points in the Compensation Peer Group data, to evaluate the competitive market when making executive compensation determinations, including base salary, target annual cash incentive opportunities, and long-term incentive compensation opportunities in the form of equity awards. Our Compensation Committee reviews our Compensation Peer Group at least annually and makes adjustments to its composition, if warranted, taking into account changes in both our business and the businesses of the companies in the Compensation Peer Group. In December 2022, our Compensation Committee approved the following updates to the Compensation Peer Group for 2023: •Removing: MercadoLibre and Stitch Fix, based on the criteria described above and Twitter and Zendesk, which were acquired; and •Adding: Roblox, using the criteria described above. Named Executive Officer Transitions On October 27, 2022, Etsy announced that Mr. Fisher would step down from his role as Etsy's Chief Technology Officer, effective December 31, 2022 and remain with a $36,000 travel allowance to cover travel between New York and Ohio from May 2020Etsy in an advisory capacity through April 2021 (at2023. Pursuant to his advisory agreement, in exchange for serving as a strategic advisor to Etsy during the time, such travelperiod from January 1, 2023 through April 30, 2023 (the "Advisory Period"), Mr. Fisher's existing equity awards continued vesting through April 30, 2023 in accordance with the terms of those awards and our 2015 Equity Incentive Plan. According to the terms of his option agreements, his options will expire immediately to the extent unvested as of April 30, 2023 and will expire on July 30, 2023 (three months following his termination date) to the extent vested as of April 30, 2023. In light of Mr. Fisher's employment through December 31, 2022 and continued service in an advisory capacity through April 2023, our Compensation Committee exercised discretion to deem Mr. Fisher eligible for his 2022 annual cash incentive award. Mr. Fisher is subject to the confidentiality and non-compete obligations that he agreed to in his 2017 offer letter. Mr. Fisher was expectedeligible to resume shortly). receive no other salary or benefits during the Advisory Period.Chief Product Officer
Kruti Patel Goyal
In 2020,On July 20, 2022, Etsy announced that Ms. Patel Goyal, received the following compensationwho was then serving as Etsy's Chief Product Officer, had been named Chief Executive Officer of Etsy's subsidiary Depop effective September 12, 2022. To facilitate this transition, Ms. Patel Goyal was seconded from Etsy, Inc. to Depop and benefits:
Base Salary: $380,000,therefore became eligible for certain expatriate benefits and allowances. Pursuant to her letter agreement, Ms. Patel Goyal agreed to work from Depop's London, U.K. office. Ms. Patel Goyal's base salary was increased from $355,000 in March 2020 in light of her job responsibilities and performance and peer group comparisons.
Annual Incentive: Eligibility to participate in our$450,000 USD per year. The letter agreement also specified that Ms. Patel Goyal's annual cash incentive program with a target award opportunity equal to 60% of base salary,payment for the time she served as Depop's CEO would be based 70%80% on the achievement ofDepop's corporate performance objectives and 30%20% on individual performance. The actual 2020 cash incentive award paid was $430,000, reflecting 189% of her target award opportunity. To determine Ms. Patel Goyal’s individualperformance goals and objectives and for 2022, the Company performance portion of her 2020target annual cash incentive award which was assessed at 162%opportunity would be determined based on Etsy consolidated Company performance for the portion of target, the Compensation Committee considered Ms. Patel Goyal’s leadershipyear prior to her becoming Depop's CEO. In addition, in delivering on our 2020 financial plan and in improving the overall customer experience. In particular,connection with her appointment as Depop's CEO, Ms. Patel Goyal led the accelerationwas granted an RSU award with a granted value of our product experiment
512021 Proxy Statement$1,000,000, which will vest in eight semi-annual installments over a four-year term subject to continued service. Etsy
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velocity also agreed to provide certain relocation, expatriate, and drove many exciting product launches, including the introduction of installment payments, personalized search and listing videos, and buyers’ ability to filter searches around expected delivery dates.tax benefits for Ms. Patel Goyal, also successfully led efforts to expand diversity on the product team.
Long-Term Incentive: In March 2020, we granted Ms. Patel Goyal equity awards with an aggregate grant date fair value of $2,250,000, allocated by value approximately 60% RSUs and 40% stock options. The Compensation Committee believed the mix of RSUs and stock options was appropriate in order to align with stockholder interests. The RSUs and stock options vest in eight equal semi-annual installments, beginning on October 1, 2020, provided she remains in service with us on each vesting date.
Chief Marketing Officer
Ryan Scott
In 2020, Mr. Scott received the following compensation and benefits:
Base Salary: $370,000, increased from $355,000 in March 2020 in light of his job responsibilities and performance and peer group comparisons.
Annual Incentive: Eligibility to participate in our annual cash incentive program with a target award opportunity equal to 60% of base salary, based 70% on the achievement of corporate performance objectives and 30% on individual performance. The actual 2020 cash incentive award paid was $421,000, reflecting 190% of his target award opportunity. To determine Mr. Scott’s individual performance portion of his 2020 cash incentive award, which was assessed at 165% of target, the Compensation Committee considered Mr. Scott’s performance with respect to delivery of our 2020 financial plan, as well as his contribution to strong year-over-year growth in marketing generated GMS, his successful integration of key marketing technology platforms, and his leadershipdescribed more fully in the development of meaningful brand differentiation campaigns. For example, under Mr. Scott’s leadership, we invested more heavily in upper funnel strategies through TV, digital video and paid social, utilized new customer relationship management tools and approaches, introduced Offsite Ads, and increased our influencer marketing and earned media activities. Mr. Scott’s team led“All Other Compensation” column footnote to the work to ensure that the images we proactively create and share in our marketplace are representative of the communities in which we live by committing to include at least 30% representation of black or brown skin tones in marketing assets. In the fourth quarter of 2020, 59% of the images with a human element developed by our creative team had black or brown skin tone representation. Our award-winning Gift Like You Mean It advertising campaign, which aired across the United States during the holiday season, showcased our commitment to diversity and inclusion by featuring Black, Latinx and LGBTQ community members and storylines, as well as people with disabilities.
Long-Term Incentive: In March 2020, we granted Mr. Scott equity awards with an aggregate grant date fair value of $2,000,000, allocated by value approximately 60% RSUs and 40% stock options. The2022 Summary Compensation Committee believed the mix of RSUs and stock options was appropriate in order to align with stockholder interests. The RSUs and stock options vest in eight equal semi-annual installments, beginning on October 1, 2020, provided he remains in service with us on each vesting date.Table.
Other BenefitsRole of Chief Executive Officer
We believe the best work comes from happy employees. We offer allTo discharge its responsibilities, in 2022 our employees a robust benefit package designed to support employee retention and engagement.
Health & Wellness
We provide health and wellness benefits toCompensation Committee worked with members of our executive officers,management, including our NEOs,CEO, our Chief Human Resources Officer, our Vice President, Global People & Talent Strategy and our Senior Director, Global People Operations & Total Rewards. Management assists our Compensation Committee by providing information on the same basis as these benefits are provided to our other eligible employees, including health, dental,corporate and individual performance and management’s perspective on compensation matters. Our Compensation Committee solicits and
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fitness, vision, life, and disability insurance benefits. Etsy is also recognized for leading in gender-neutral paid parental leave, adoption assistance, family planning benefits and back up child care programs.
Perquisites and Other Personal Benefits
Perquisites, beyond those that are availablereviews our CEO’s recommendations with respect to employees generally, represent a small partthe compensation of our executive compensation program. From time to time, however, we may provide benefits that theExecutive Team members (other than himself), based on his consideration of relevant market data, roles and responsibilities, and individual performance.
Our Compensation Committee has determined are reasonable yet competitive to attractreviews and retaindiscusses these recommendations with our CEO and considers them as one factor in approving the compensation for our executive officers, including our NEOs. Perquisites in 2020 consisted of the travel benefits extended to Ms. GlaserOur CEO recuses himself from all discussions and Mr. Fisher that are further described aboverecommendations regarding his own compensation and the security system installed at Mr. Silverman's home that is further described above. For information regarding the perquisites that our NEOs received during 2020, see the column titled “All Other Compensation” of the Summary Compensation Table and the accompanying footnotes.
401(k) Plan
Like other U.S. employees, our NEOs may participate in a 401(k) Plan. Etsy matches 50% of the first 6% of each participating employee’s contributions under the 401(k) Plan.
Post-Employment Compensation Arrangements
We believe that having in place reasonable and competitive post-employmentnot present when his compensation arrangements are essential to attracting and retaining highly-qualified executive officers and we maintain an executive severance plan for that purpose.
Maintaining competitive severance and change in control arrangements helps assure our executive officers that their severance payments and benefits are comparable to those of other executive officers with similar levels of responsibility and tenure. We also believe that the executive severance plan serves as an incentive for our executive officers to remain employed and focused on their responsibilities during the threat or negotiation of a transaction that may involve a change in control of the company, which helps preserve our value and the potential benefit to be received by our stockholders in such a transaction.
In addition, the executive severance plan is intended to reduce the need to extensively negotiate post-employment compensation arrangements on a case-by-case basis and to help mitigate potential employer liability. For example, executive severance plan participants are required to sign a separation and release agreement as a condition to receiving post-employment compensation payments or benefits.
See “Potential Payments Upon Termination or Change of Control” below for additional information.
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Executive Compensation Philosophy and Objectives
Key Features of our Executive Compensation Program
| We Maintain an Independent Compensation Committee
| | | We Do Not Provide Our Executive Officers with Guaranteed Annual Base Salary Increases
| | | Our Compensation Committee Retains an Independent Compensation Advisor Who Performs No Other Services for Us
| | | We Do Not Offer Defined Benefit Retirement Programs
| | | Our Compensation Committee Conducts an Annual Executive Compensation Review, Including a Review of Its Compensation Peer Group, and a Compensation-Related Risk Assessment
| | | We Do Not Offer Change-in-Control Excise Tax Payments or “Gross-Ups”
| | | We Use Variable Pay, Including Long-Term Equity Awards, as a Substantial Portion of Our Executive Officers’ Target Total Direct Compensation Opportunity
| | | We Do Not Permit Hedging or Pledging of Our Equity Securities by Employees or Directors
| | | Our Executive Officers Are Employed “At Will”
| | | We Do Not Permit Stock Option Exchanges or Re-pricings Without Stockholder Approval
| |
Our Guiding Philosophy
Pay-for-Performance Philosophy
We generally target a compensation mix for our executive officers that is weighted heavily towards variable, or “at risk,” compensation, including short-term cash incentives and long-term incentives in the form of equity awards. We believe this approach aligns the compensation of our executive officers with our performance and the interests of our stockholders. We consider our equity awards, which include stock options to purchase shares of our common stock and RSU awards that may be settled for shares of our common stock to be “variable” pay because the realized value of these awards depends on the performance of our stock price. We believe that this design provides balanced incentives for our NEOs to drive financial performance and long-term growth.
Our executive compensation program is designed to be transparent and focus on pay for performance. Our compensation philosophy is to pay all of our employees, including our executive officers, competitively, fairly and consistently in a way that aligns with our long-term business goals and values. Specifically, our compensation program aims to:
|
Attract, motivate, and retain highly qualified and engaged employees who are passionate about our mission.
| | | | | |
Foster a culture of shared success through pay for performance opportunities, including cash incentives and equity awards.
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Align pay for each employee’s position with the responsibilities, knowledge, complexity, and impact of the role within the Company.
| |
Pay all employees fairly and consistently
At Etsy, we believe in paying all of our employees fairly, consistently, and without bias. In 2020, Etsy commissioned a pay equity study undertaken by a third-party consulting firm. The analysis found no unexplained pay gaps adverse to women or employees from other marginalized genders, or non-white employees. This was consistent with the findings of our 2018 analysis. We are committed to ensuring that fair and consistent pay practices continue to be applied across our organization.
We grant equity awards to virtually all employees, to help align the interests of our employees with the long-term interests of our stockholders. This broad-based equity program ensures that our employees are invested in and receive the rewards of our future success.
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Key Objectives
Consistent with our broader compensation philosophy, the key objective of our executive compensation program is to attract, retain and motivate high caliber talent who share our dedication to our community and are committed to our mission to “Keep Commerce Human.” We believe that competitive executive compensation packages that consist of both fixed and variable pay in the form of base salaries, annual cash incentive opportunities, and long-term equity incentive opportunities enable us to achieve this objective and align the compensation of our executive officers with our performance and long-term value creation for our stockholders.
How We Determine Executive Compensationdetermined.Role of the Compensation CommitteeConsultant TheOur Compensation Committee discharges the responsibilities of our Boardengages an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions made as part of its annual executive compensation review. Our Compensation Committee has engaged Compensia as its compensation consultant since 2014 to advise on executive compensation matters, provide information on competitive market pay practices for senior executives, and supply data analysis and recommendations for the selection of our executive officers, including our NEOs. Specifically, compensation peer group. For 2022, Compensia’s engagement included:
•the Compensation Committee: Is responsible for executive compensation decisions, including reviewing, evaluating,review and approvinganalysis of the compensation arrangements, plans, policies, and practices for our executive officers, including our NEOs, as well as an analysis of the mix of compensation elements and overseeingthe terms included in our forms of equity compensation award agreements;
•the research, review, and administering our incentive compensation plans; Oversees risk managementupdating of our executive compensation programs, policiespeer group;
•an assessment of our equity usage and practices, including an annualburn rate compared to our peers; •the review and analysis of non-employee director compensation compared to market practices; •summarizing market trends and regulatory and governance updates; •the review of and input on the Compensation Discussion and Analysis section of our programsproxy statement; •attendance at Compensation Committee meetings as requested; and •support on other ad hoc matters throughout the year. Compensia reports directly to ensureour Compensation Committee. In 2022, Compensia did not provide any other services to Etsy. Our Compensation Committee evaluates Compensia’s independence annually and has determined that they are not reasonably likely to incentivize employee behavior that would result in any material adverse risk to us;under the applicable SEC rules and Has sole authority to continue or terminate Nasdaq listing standards its relationship with outside advisors,Compensia and the work of Compensia on behalf of our Compensation Committee has not raised any conflict of interest.
Factors Considered When Determining Executive Compensation When approving each compensation element and the target total direct compensation opportunity for our Executive Team members, including our NEOs, our Compensation Committee considers a variety of factors that provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single method or factor is determinative in setting pay levels for our executive officers. Rather, our Compensation Committee’s determination of the target total direct compensation, fixed, and “at-risk” pay opportunities was an individualized decision for each executive officer, including each NEO. | | | | | | | | | | Scope & Impact of Role | Individual & Company Performance | Market Analysis | | | | | Each executive officer’s skills, experience, and qualifications relative to similarly-situated executives at our peer companies. | Our Company performance against financial and operational objectives established by our Compensation Committee and our Board. | The positioning of each executive officer’s compensation in a ranking of peer company compensation levels, or in comparison to a compensation database where there are insufficient data points in our compensation peer group. | | | | | Our CEO’s recommendations (other than for himself) considering performance, a competitive market analysis, and compensation parity among our executive officers. | Each executive officer’s performance, based on an assessment of his or her contribution to our overall performance, including effective contribution to the achievement of ESG goals, and his or her ability to lead and work as part of a team. | The compensation practices of our executive compensation peer group, and the scope of each executive’s role compared to similarly-situated executives at our peer companies. |
Competitive Positioning Competitive compensation data is one of several factors that our Compensation Committee considers in making its decisions with respect to the compensation consultant,of our Executive Team, including our NEOs. Specifically, our Compensation Committee considers compensation data in our competitive market for executive talent, particularly the compensation levels and retain additional outside advisors.practices of a group of peer companies (the "Compensation Peer Group"), as determined by our Compensation Committee. Our Compensation Peer Group consists of companies in our industry (consumer discretionary, consumer staples, information technology) that are similar to us in terms of revenue and market capitalization.
Specifically, in determining the Compensation Peer Group for 2022, our Compensation Committee considered whether a company was: •in a similar industry (focusing on companies in the consumer discretionary, consumer staples and information technology industries and with a preference for companies with business models focusing on peer-to-peer commerce, transaction- or subscription-based revenue models, services and/or e-commerce); •within a range of 0.5x to 2.0x of our revenue; and •within a range of 0.33x to 3.0x of our market capitalization. In 2022, our Compensation Committee used the following Compensation Peer Group, which was approved in December 2021 after consideration of input from Compensia, to assist with the determination of the compensation for our NEOs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ANGI Homeservices DocuSign DoorDash New Dropbox eBay New GoDaddy | HubSpot
Match Group
MercadoLibre
Okta
Peloton Interactive
Pinterest | RingCentral New Shopify Snap Stitch Fix The Trade Desk Tripadvisor | Twilio
Twitter
Wayfair
Zendesk
Zillow Group | | | | | | | | | | | | | |
Our Compensation Committee uses data drawn from our Compensation Peer Group, as well as data from the Radford Global Compensation Database for positions where there are insufficient data points in the Compensation Peer Group data, to evaluate the competitive market when making executive compensation determinations, including base salary, target annual cash incentive opportunities, and long-term incentive compensation opportunities in the form of equity awards. Our Compensation Committee reviews our Compensation Peer Group at least annually and makes adjustments to its composition, if warranted, taking into account changes in both our business and the businesses of the companies in the Compensation Peer Group. In December 2022, our Compensation Committee approved the following updates to the Compensation Peer Group for 2023: •Removing: MercadoLibre and Stitch Fix, based on the criteria described above and Twitter and Zendesk, which were acquired; and •Adding: Roblox, using the criteria described above. Named Executive Officer Transitions On October 27, 2022, Etsy announced that Mr. Fisher would step down from his role as Etsy's Chief Technology Officer, effective December 31, 2022 and remain with Etsy in an advisory capacity through April 2023. Pursuant to his advisory agreement, in exchange for serving as a strategic advisor to Etsy during the period from January 1, 2023 through April 30, 2023 (the "Advisory Period"), Mr. Fisher's existing equity awards continued vesting through April 30, 2023 in accordance with the terms of those awards and our 2015 Equity Incentive Plan. According to the terms of his option agreements, his options will expire immediately to the extent unvested as of April 30, 2023 and will expire on July 30, 2023 (three months following his termination date) to the extent vested as of April 30, 2023. In light of Mr. Fisher's employment through December 31, 2022 and continued service in an advisory capacity through April 2023, our Compensation Committee exercised discretion to deem Mr. Fisher eligible for his 2022 annual cash incentive award. Mr. Fisher is subject to the confidentiality and non-compete obligations that he agreed to in his 2017 offer letter. Mr. Fisher was eligible to receive no other salary or benefits during the Advisory Period. On July 20, 2022, Etsy announced that Ms. Patel Goyal, who was then serving as Etsy's Chief Product Officer, had been named Chief Executive Officer of Etsy's subsidiary Depop effective September 12, 2022. To facilitate this transition, Ms. Patel Goyal was seconded from Etsy, Inc. to Depop and therefore became eligible for certain expatriate benefits and allowances. Pursuant to her letter agreement, Ms. Patel Goyal agreed to work from Depop's London, U.K. office. Ms. Patel Goyal's base salary was increased to $450,000 USD per year. The letter agreement also specified that Ms. Patel Goyal's annual cash incentive award payment for the time she served as Depop's CEO would be based 80% on Depop's corporate performance objectives and 20% on individual performance goals and objectives and for 2022, the Company performance portion of her target annual cash incentive award opportunity would be determined based on Etsy consolidated Company performance for the portion of the year prior to her becoming Depop's CEO. In addition, in connection with her appointment as Depop's CEO, Ms. Patel Goyal was granted an RSU award with a granted value of $1,000,000, which will vest in eight semi-annual installments over a four-year term subject to continued service. Etsy also agreed to provide certain relocation, expatriate, and tax benefits for Ms. Patel Goyal, as described more fully in the “All Other Compensation” column footnote to the 2022 Summary Compensation Table. Role of Chief Executive Officer In dischargingTo discharge its responsibilities, thein 2022 our Compensation Committee worksworked with members of our management, including our CEO, our Chief Human Resources Officer, our Vice President, Global People & Talent Strategy and our ChiefSenior Director, Global People Operations Strategy and People Officer.& Total Rewards. Management assists theour Compensation Committee by providing information on corporate and individual performance and management’s perspective on compensation matters. TheOur Compensation Committee solicits and
reviews our CEO’s recommendations with respect to the compensation of our executive officersExecutive Team members (other than himself), based on his consideration of relevant market data, roles and responsibilities, and individual performance. TheOur Compensation Committee reviews and discusses these recommendations with our CEO and considers them as one factor in approving the compensation for our executive officers, including our NEOs. Our CEO recuses himself from all discussions and recommendations regarding his own compensation.compensation and is not present when his compensation is determined.
Role of the Compensation Consultant TheOur Compensation Committee engages an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions resulting frommade as part of its annual executive compensation review. TheOur Compensation Committee has engaged Compensia as its compensation consultant since 2014 to advise on executive compensation matters, provide information on competitive market pay practices for senior executives, and supply data analysis and recommendations for the selection of theour executive Compensation Peer Group.compensation peer group. For 2020,2022, Compensia’s engagement included:
•the review and analysis of the compensation for our executive officers, including our NEOs, which included detailed studies and consultations for bothas well as an analysis of the designmix of Mr. Silverman’s new equity grants awarded in early 2021compensation elements and the introductionterms included in our forms of PSUs intoequity compensation award agreements; •the research, review, and updating of our 2021 executive compensation program; 552021 Proxy StatementEtsy
•the review and analysis of non-employee director compensation compared to market practices;•the review of and input on the Compensation Discussion and Analysis section of our proxy statement for our 2020 Annual Meeting of Stockholders;statement; the research, review•attendance at Compensation Committee meetings as requested; and updating of our Compensation Peer Group;
the review and analysis of non-employee director compensation;
•support on other ad hoc matters throughout the year; and attendance at Compensation Committee meetings as requested.year.
Compensia reports directly to theour Compensation Committee. In 2020,2022, Compensia did not provide any other services to Etsy. TheOur Compensation Committee evaluates Compensia’s independence annually and has determined that under the applicable SEC rules and Nasdaq listing standards its relationship with Compensia and the work of Compensia on behalf of theour Compensation Committee has not raised any conflict of interest. Factors Used inConsidered When Determining Executive Compensation When approving each compensation element and the target total direct compensation opportunity for our executive officers, theExecutive Team members, including our NEOs, our Compensation Committee considers a variety of factors that provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single method or factor is determinative in setting pay levels for our executive officers. Rather, theour Compensation Committee’s determination of the target total direct compensation, fixed, and “at-risk” pay opportunities was an individualized decision for each executive officer, including each NEO. Factors considered when determining NEO compensation
| SCOPE & IMPACT OF ROLE
| | | INDIVIDUAL & COMPANY
PERFORMANCE
| | | MARKET ANALYSIS
| | Scope & Impact of Role |
Individual & Company Performance | Market Analysis | | | | Each executive officer’s skills, experience, and qualifications relative to similarly-situated executives at our peer companies.
| | |
Our Company performance against financial and operational objectives established by theour Compensation Committee and our Board. | | |
The positioning of each executive officer’s compensation in a ranking of peer company compensation levels. | levels, or in comparison to a compensation database where there are insufficient data points in our compensation peer group. | |
| | Our CEO’s recommendations (other than for himself) considering performance, a competitive market analysis, and compensation parity among our executive officers.
| | |
Each executive’sexecutive officer’s performance, based on an assessment of his or her contribution to our overall performance, including effective contribution to the achievement of ESG goals, and his or her ability to lead and work as part of a team.
| | |
The compensation practices of our executive compensation peer group, and the scope of each executive’s role compared to similarly-situated executives at our peer companies. | |
Competitive Positioning Competitive compensation data is one of several factors that theour Compensation Committee considers in making its decisions with respect to the compensation of our executive officers,Executive Team, including our NEOs. Specifically, theour Compensation Committee considers compensation data in our competitive market for executive talent, particularly the compensation levels and practices of a group of peer companies (the “Compensation"Compensation Peer Group”Group"), as determined by theour Compensation Committee. Etsy’sOur Compensation Peer Group consists of companies in our industry (consumer discretionary, consumer staples, internet software and services)information technology) that are similar to us in terms of revenue and market capitalization.
Specifically, in determining the Compensation Peer Group for 2020, the2022, our Compensation Committee considered whether a company was: •in a similar industry (focusing on companies in the consumer discretionary, consumer staples and competitive marketinformation technology industries and with a preference for talent (internet software and services companies with business models focusedfocusing on peer-to-peer commerce, transaction- or subscription-based revenue models, and software-as-a-service)services and/or e-commerce); 562021 Proxy StatementEtsy
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•within a range of 0.5x to 2.0x of our revenue; and •within a range of 0.33x to 3.0x of our market capitalization. In 2020, the2022, our Compensation Committee used the following Compensation Peer Group, which was approved in December 20192021 after consideration of input from Compensia, to assist with the determination of the compensation for our NEOs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ANGI Homeservices
Box
CarGurus
Cloudera
DocuSign
GrubHub
DoorDash New
HubSpot
Dropbox
eBay New GoDaddy | HubSpot
Match Group
MercadoLibre
Okta
| |
Peloton Interactive
Pinterest | Pinterest
RingCentral New
Shopify
Shutterstock
Snap
Stitch Fix
The Trade Desk
Trip Advisor
Tripadvisor
| Twilio
Yelp
Twitter
Wayfair
Zendesk
Zillow Group
| | | | | | | | | | | | | |
TheOur Compensation Committee uses data drawn from our Compensation Peer Group, as well as data from the Radford Global Technology compensation survey,Compensation Database for positions where there are insufficient data points in the Compensation Peer Group data, to evaluate the competitive market when making executive compensation determinations, including base salary, target annual cash incentive opportunities, and long-term incentive compensation opportunities.opportunities in the form of equity awards.
TheOur Compensation Committee reviews our Compensation Peer Group at least annually and makes adjustments to its composition, if warranted, taking into account changes in both our business and the businesses of the companies in the Compensation Peer Group.
In December 2020, the2022, our Compensation Committee approved the following updates to the Compensation Peer Group for 2021:2023: •Removing: Box, CarGurus, Shutterstock,MercadoLibre and Yelp,Stitch Fix, based on the criteria described above and Twitter and Zendesk, which were below the market comparison on market capitalization and/or revenue described above.acquired; and •Adding: Dropbox, GoDaddy, MercadoLibre, Peloton Interactive, Slack Technologies, Twitter, Wayfair, and ZendeskRoblox, using the criteria described above. Named Executive Officer Transitions On October 27, 2022, Etsy announced that Mr. Fisher would step down from his role as Etsy's Chief Technology Officer, effective December 31, 2022 and remain with Etsy in an advisory capacity through April 2023. Pursuant to his advisory agreement, in exchange for serving as a strategic advisor to Etsy during the period from January 1, 2023 through April 30, 2023 (the "Advisory Period"), Mr. Fisher's existing equity awards continued vesting through April 30, 2023 in accordance with the terms of those awards and our 2015 Equity Incentive Plan. According to the terms of his option agreements, his options will expire immediately to the extent unvested as of April 30, 2023 and will expire on July 30, 2023 (three months following his termination date) to the extent vested as of April 30, 2023. In light of Mr. Fisher's employment through December 31, 2022 and continued service in an advisory capacity through April 2023, our Compensation Committee exercised discretion to deem Mr. Fisher eligible for his 2022 annual cash incentive award. Mr. Fisher is subject to the confidentiality and non-compete obligations that he agreed to in his 2017 offer letter. Mr. Fisher was eligible to receive no other salary or benefits during the Advisory Period. On July 20, 2022, Etsy announced that Ms. Patel Goyal, who was then serving as Etsy's Chief Product Officer, had been named Chief Executive Officer of Etsy's subsidiary Depop effective September 12, 2022. To facilitate this transition, Ms. Patel Goyal was seconded from Etsy, Inc. to Depop and therefore became eligible for certain expatriate benefits and allowances. Pursuant to her letter agreement, Ms. Patel Goyal agreed to work from Depop's London, U.K. office. Ms. Patel Goyal's base salary was increased to $450,000 USD per year. The letter agreement also specified that Ms. Patel Goyal's annual cash incentive award payment for the time she served as Depop's CEO would be based 80% on Depop's corporate performance objectives and 20% on individual performance goals and objectives and for 2022, the Company performance portion of her target annual cash incentive award opportunity would be determined based on Etsy consolidated Company performance for the portion of the year prior to her becoming Depop's CEO. In addition, in connection with her appointment as Depop's CEO, Ms. Patel Goyal was granted an RSU award with a granted value of $1,000,000, which will vest in eight semi-annual installments over a four-year term subject to continued service. Etsy also agreed to provide certain relocation, expatriate, and tax benefits for Ms. Patel Goyal, as described more fully in the “All Other Compensation” column footnote to the 2022 Summary Compensation Table. Other Benefits We believe the best work comes from happy employees. We offer all our employees a robust benefit package designed to support employee retention and engagement.
Health & Wellness We provide health and wellness benefits to our executive officers, including our NEOs, on the same basis as these benefits are provided to our other eligible employees, including health, dental, fitness, vision, life, and disability insurance benefits. Etsy is also recognized for leading in gender-neutral paid parental leave, adoption assistance, family planning benefits and back up childcare programs. 401(k) Plan Like other U.S. employees, our NEOs may participate in our 401(k) Plan. Etsy matches 50% of the first 6% of each participating employee’s contributions under our 401(k) Plan. Perquisites and Other Personal Benefits Perquisites, beyond those that are available to employees generally, represent a small part of our executive compensation program. From time to time, however, we may provide perquisites or other personal benefits that our Compensation Committee has determined are reasonable yet competitive to attract and retain our executive officers, including our NEOs. Except as described above in connection with Ms. Patel Goyal's international assignment, perquisites in 2022 consisted of internet services associated with a home security system for Mr. Silverman which, in light of his position and the work from home arrangement necessitated by the COVID-19 pandemic, was installed in order to mitigate risks to Etsy. In addition, each of Ms. Glaser and Mr. Fisher received a travel allowance of $45,000 (which represented $3,000 per month from January 2022 to March 2023) to cover travel from Los Angeles and Ohio, respectively. We have since further clarified our Global Gathering strategy and Executive Team meeting rhythm. As a result, in February 2023, the Committee approved an increase in the travel allowance for NEOs who reside outside of the New York area to $7,500 per month to avoid out-of-pocket travel expenses, while minimizing the administrative burden on the Executive Team members. Ms. Patel Goyal received certain perquisites and other personal benefits related to her appointment as Depop's CEO, including a pre-relocation trip; Company-provided housing and housing-related costs; children's tuition, deposits, and school placement support; international relocation services and assistance; home leave and family travel; and tax services. Additionally, to ensure that Ms. Patel Goyal had substantially the same income tax liability as she would have had if she worked exclusively in the United States, Ms. Patel Goyal will receive tax equalization payments. For more information regarding the perquisites or other personal benefits that our NEOs received during 2022, see the column titled “All Other Compensation” of the 2022 Summary Compensation Table and the accompanying footnotes. Post-Employment Compensation Arrangements We believe that having in place reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly-qualified executive officers and we maintain an executive severance plan for that purpose. Maintaining competitive severance and change in control arrangements helps assure our executive officers that their severance payments and benefits are comparable to those of other executive officers with similar levels of responsibility and tenure. We also believe that the executive severance plan serves as an incentive for our executive officers to remain employed and focused on their responsibilities during the threat or negotiation of a transaction that may involve a change in control of the company, which helps preserve our value and the potential benefit to be received by our stockholders in such a transaction. In addition, the executive severance plan is intended to reduce the need to extensively negotiate post-employment compensation arrangements on a case-by-case basis and to help mitigate potential employer liability. For example, executive severance plan participants are required to sign a separation and release agreement (including a release in favor of Etsy) as a condition to receiving post-employment compensation payments or benefits. See “Executive Compensation Tables – Potential Payments Upon Termination or Change of Control” below for additional information. Other Compensation Policies and Practices Equity Awards Grant Policy We maintain a formal equity awards grant policy. Thepolicy, which has been adopted by our Compensation Committee amended our formal policy (as amended, the “Equity Awards Grant Policy”) in April 2020 and 2021. TheCommittee. Our Equity Awards Grant Policy provides: •Our Board, theour Compensation Committee, or a subcommittee of two or more members of the Compensation Committeedirectors must approve all equity awards granted to senior officers. TheOur Compensation Committee may also delegate its authority to grant awards to employees other than senior officers to two or more officers or directors, of Etsy, as theour Compensation Committee deems appropriate.
•Unless otherwise approved by our Board or theour Compensation Committee, equity awards are granted on pre-established dates as follows: •For newly-hired and promoted employees, awards are effective on the first business day of the month immediately following the month in which a newly-hired employee’s employment commences or a promoted employee’s promotion occurs (or, if suchthat day is not a trading day, on the following trading day). 572021 Proxy StatementEtsy
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•Annual equity awards granted to our employees, including our executive officers, are effective as of March 15th of each year (or, if suchthat day is not a trading day, on the following trading day). The exercise price of any option to purchase shares of our common stock will be the closing price of our common stock on Nasdaq on the date of grant. This fair market value is to be determined in accordance with generally accepted accounting principles.
•In order to mitigate the impact of any short-term stock price volatility on the number of stock units granted, the number of stock units in an RSU or PSU award is based on the aggregate dollar value of the award divided by the average closing market price of our common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days immediately prior to and including the date of grant, or based on such other methodology as theour Compensation Committee may determine in its sole discretion. As a result, the grant date fair value of the awards, computed in accordance with FASB ASC Topic 718 and presented in the Summary Compensation Table and Grants of Plan-Based Awards Table, may be lower or higher than the equity compensation value approved by theour Compensation Committee. Stock Ownership Guidelines To support continued alignment of the interests of our non-employee directors and executive officers with the interests of our stockholders, in 2022 our Board adopted formal stock ownership guidelines that require our executive officers and the non-employee members of our Board to own a minimum number of shares of our common stock. Under our guidelines, these individuals are required to hold shares of our common stock equivalent in value to a multiple of their base salaries or a minimum dollar amount or to hold a minimum number of shares as set forth below: | | | | | | | Individual Subject to Ownership Guidelines | Minimum Required Level of Stock Ownership | | Chief Executive Officer | Lesser of six times base salary or 37,800 shares | | Other Executive Officers | Lesser of one time base salary or 4,400 shares | | Non-Employee Members of our Board | Lesser of $150,000 or 1,500 shares |
The ownership level specified by the guidelines must be achieved by each non-employee director and executive officer within five years of the date the guidelines were adopted or, if later, within five years of first becoming one of our directors or executive officers (or being promoted to chief executive officer), measured as of the last day of the applicable fiscal year (the “measurement date”). For the executive officers, the required ownership level is calculated using the executive officer’s annual base salary as of January 1 of the year of the measurement date. The following shares of our common stock count towards compliance with the guidelines: •shares owned outright by the director or executive officer or by members of his or her immediate family; •shares held in a trust for the benefit of the director or executive officer and/or members of his or her immediate family; and •vested restricted stock units, including vested performance-based awards, net of the estimated number of shares needed to pay the minimum tax withholding for those vested units. These shares are then valued at the average daily closing price per share of our common stock during the 90-trading day period ending 30 days prior to the measurement date. Unvested restricted stock units and unexercised stock options (whether or not vested) do not count towards director or executive officers’ compliance with the guidelines. If the guidelines have not been met by the initial compliance date, the executive officers are required to retain 50% of any shares acquired under any equity award granted by Etsy (net of any shares sold or withheld to pay any applicable exercise price or satisfy any employment or income taxes related to the equity awards) until the stock ownership guidelines are met. The ownership levels of our named executive officers and non-employee directors as of April 1, 2023 are set forth in the section entitled “Security Ownership of Certain Beneficial Owners, Directors, and Management.” Policy Prohibiting Hedging and Pledging Under our insider trading policy, our employees, including our executive officers, and the non-employee members of our Board are prohibited from engaging in short sales, hedging or similar transactions, or derivatives trading involving our equity securities. Similarly, under our insider trading policy, our employees, including our executive officers, and the non-employee members of our Board are prohibited from pledging our equity securities or using such securities as collateral for a loan.
Clawback Policy We are reviewing the recently adopted SEC rules and Nasdaq proposed listing standards regarding clawback policies. We plan to adopt a clawback policy consistent with those rules in the required timeframe. Compensation and Risk Management Our Compensation Committee, Compensia, and our management team each play a role in evaluating and mitigating potential risks associated with our compensation program, practices, and policies. Our Compensation Committee, with input and support from Compensia and management, has performed a compensation risk assessment. In particular, this assessment considered compensation program attributes that help to mitigate risk, including, for example: •the mix of cash and equity compensation; •a balance of short and long-term incentive plan designs with multiple performance measures that emphasize top and bottom-line performance; •our formal policies for equity administration; •our insider trading policy, which prohibits short sales, hedging or similar transactions, derivatives trading and pledging and using our securities as collateral; •our stock ownership guidelines; and •the oversight of an independent Compensation Committee. Based on this assessment, our Compensation Committee concluded that our compensation policies and practices, taken as a whole, are not reasonably likely to have a material adverse effect on Etsy. Tax and Accounting Considerations Deductibility of Executive Compensation Under Section 162(m) of the Internal Revenue Code (“("Section 162(m)”"), compensation paid to each of our “covered employees”"covered employees" that exceeds $1 million per taxable year is generally non-deductible unless the compensation qualifies for (i) certain grandfathered exceptions (including the “performance-based compensation”"performance-based compensation" exception) for certain compensation paid pursuant to a written binding contract in effect on November 2, 2017 and not materially modified on or after such date or (ii) the reliance period exception for certain compensation paid by corporations that became publicly held on or before December 20, 2019.date. Although theour Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, theour Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for our named executive officers in a manner consistent with the goals of our executive compensation program and the best interests of the CompanyEtsy and itsour stockholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m). TheOur Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with Etsy's business needs. Taxation of Non-Qualified Deferred Compensation Generally, Section 409A of the Code sets limits on the deferral and payment of certain benefits. TheOur Compensation Committee takes into account whether elements of the compensation for our executive officers will be adversely impacted by the penalty tax imposed by Section 409A, and seeks to structure these elements to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences. Accounting 582021 Proxy StatementEtsy
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Accounting Considerations
TheOur Compensation Committee considers the accounting treatment of the various elements of our executive compensation program. For example, we record our executive officers’ base salaries, equity awards, and our cash incentive compensation in our Consolidated Financial Statements.
We follow the Financial Accounting Standard Board’s Accounting Standards CodificationFASB ASC Topic 718 (“ASC Topic 718”) for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all stock-based payment awards made to our employees, including our executive officers, and the non-employeenon-employee members of our Board, including stock options and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables in this proxy statement, even though the recipient of the awards may never realize any value from their awards. 592021 Proxy StatementEtsy
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Compensation Committee Report TheOur Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section of Etsy’s 2021 Proxy Statement.Statement for the 2023 Annual Meeting of Stockholders. Based on this review and discussion, theour Compensation Committee has recommended to theour Board that the Compensation Discussion and Analysis be included in Etsy’s 20212023 Proxy Statement and incorporated into Etsy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.2022.
Respectfully submitted by:
Melissa Reiff (Chair)
C. Andrew Ballard Gary S. Briggs
Edith W. Cooper
Jonathan D. Klein 602021 Proxy StatementEtsy
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Compensation and Risk ManagementOur Compensation Committee, Compensia (the Compensation Committee’s compensation consultant), and our management team each play a role in evaluating and mitigating potential risks associated with our compensation plans, practices, and policies. Compensia, with input from management, has performed a compensation risk assessment and concluded that our compensation policies and practices, taken as a whole, are not reasonably likely to have a material adverse effect on Etsy. In particular, we considered compensation program attributes that help to mitigate risk, including, for example:
the mix of cash and equity compensation;
a balance of short and long-term incentive plan designs with multiple performance measures that emphasize top and bottom-line performance;
our formal policies for equity administration;
our insider trading policy, which prohibits short sales, hedging or similar transactions, derivatives trading and pledging and using Etsy securities as collateral; and
the oversight of an independent Compensation Committee.
The Compensation Committee has reviewed the risk assessment report and agreed with this conclusion.
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Executive Compensation Tables Summary Compensation Table The following table provides information regarding the compensation of our NEOs as of December 31, 2022, 2021, and 2020 in accordance with SEC rules. | | Josh Silverman
President & CEO | | | 2020 | | | 575,000 | | | — | | | — | | | 1,150,000 | | | 209,307 | | | 1,934,307 | | | | 2019 | | | 475,000 | | | — | | | — | | | 600,000 | | | 8,400 | | | 1,083,400 | | | | 2018 | | | 395,833 | | | — | | | — | | | 640,000 | | | 8,250 | | | 1,044,083 | | | | Rachel Glaser
Chief Financial Officer | | | 2020 | | | 418,750 | | | 1,799,988 | | | 1,199,994 | | | 600,000 | | | 44,550 | | | 4,063,282 | | | | 2019 | | | 393,750 | | | 1,413,805 | | | 1,249,995 | | | 370,000 | | | 62,617 | | | 3,490,167 | | | | 2018 | | | 375,000 | | | 786,921 | | | 624,921 | | | 410,000 | | | 47,283 | | | 2,244,125 | | | | Mike Fisher
Chief Technology Officer | | | 2020 | | | 418,750 | | | 1,799,988 | | | 1,199,994 | | | 600,000 | | | 45,089 | | | 4,063,821 | | | | 2019 | | | 381,250 | | | 1,413,805 | | | 1,249,995 | | | 365,000 | | | 44,400 | | | 3,454,450 | | | | 2018 | | | 325,000 | | | — | | | — | | | 360,000 | | | 8,250 | | | 693,250 | | | | Kruti Patel Goyal
Chief Product Officer | | | 2020 | | | 373,750 | | | 1,349,960 | | | 899,991 | | | 430,000 | | | 8,550 | | | 3,062,251 | | | | Ryan Scott,
Chief Marketing Officer | | | 2020 | | | 366,250 | | | 1,199,978 | | | 799,996 | | | 421,000 | | | 8,550 | | | 2,795,774 | |
| (1)
| | | The amounts in this column represent the aggregate grant date fair value of RSUs computed in accordance with FASB ASC Topic 718. The valuation assumptions used in the calculation of such amounts are set forth in Note 16—Stock-based Compensation in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that accompanies this proxy statement. In order | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary
($)(1) | Stock
Awards
($)(2) | Option
Awards
($)(3) | Non-Equity Incentive
Plan Compensation
($)(4) | All Other
Compensation
($)(5) | Total
($) | Josh Silverman
President & CEO | 2022 | | 622,500 | | 15,410,262 | | — | | 416,000 | | 12,745 | | 16,461,507 | | | 2021 | 600,000 | | 35,273,412 | | 3,599,940 | | 1,099,000 | | 11,940 | | 40,584,292 | | | 2020 | 575,000 | | — | | — | | 1,150,000 | | 209,307 | | 1,934,307 | | Rachel Glaser
Chief Financial Officer | 2022 | 468,750 | | 7,498,440 | | — | | 263,000 | | 54,150 | | 8,284,340 | | | 2021 | 443,750 | | 4,049,928 | | 1,249,973 | | 609,000 | | 8,700 | | 6,361,351 | | | 2020 | 418,750 | | 1,799,988 | | 1,199,994 | | 600,000 | | 44,550 | | 4,063,282 | | Raina Moskowitz
Chief Operating Officer | 2022 | 416,250 | | 5,623,794 | | — | | 219,000 | | 9,150 | | 6,268,194 | | | | | | | | | Ryan Scott
Chief Marketing Officer | 2022 | 418,750 | | 5,623,794 | | — | | 194,000 | | 9,150 | | 6,245,694 | | | 2021 | 392,500 | | 3,239,898 | | 999,978 | | 433,000 | | 8,700 | | 5,074,076 | | | 2020 | 366,250 | | 1,199,978 | | 799,996 | | 421,000 | | 8,550 | | 2,795,774 | | Michael Fisher(6)
Former Chief Technology Officer | 2022 | 468,750 | | 7,029,729 | | — | | 257,000 | | 54,150 | | 7,809,629 | | | 2021 | 443,750 | | 4,049,928 | | 1,249,973 | | 609,000 | | 8,700 | | 6,361,351 | | | 2020 | 418,750 | | 1,799,988 | | 1,199,994 | | 600,000 | | 45,089 | | 4,063,821 | | Kruti Patel Goyal(7)
Former Chief Product Officer | 2022 | 427,083 | | 6,623,614 | | — | | 171,000 | | 476,778 | | 7,698,475 | | | 2021 | 395,000 | | 3,645,096 | | 1,124,975 | | 433,000 | | 8,700 | | 5,606,771 | | | 2020 | 373,750 | | 1,349,960 | | 899,991 | | 430,000 | | 8,550 | | 3,062,251 | |
(1)The amounts reported in this column reflect base salaries earned during 2022. Annual base salaries as of December 31, 2022 were $630,000 for Mr. Silverman; $475,000 for each of Ms. Glaser and Mr. Fisher; $425,000 for each of Ms. Moskowitz and Mr. Scott, and $450,000 for Ms. Patel Goyal. (2)The amounts reported in this column represent the aggregate grant date fair value of restricted stock units (“RSUs”) and performance share units ("PSUs") granted under Etsy’s 2015 Equity Incentive Plan (the “2015 Plan”) computed in accordance with FASB ASC Topic 718. To mitigate the impact of any short-term stock price volatility on the number of RSUs and PSUs granted, the number of RSUs and target number of PSUs subject to mitigate the impact of any short-term stock price volatility on the number of stock units granted, the number of stock units in an RSU award is based on the aggregate dollar value of the award divided by the average closing market price of our common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days immediately prior to and including the date of grant. As a result, the grant date fair value of the awards reported in this column, computed in accordance with FASB ASC Topic 718, may be lower or higher than the aggregate dollar value approved by our Compensation Committee. The grant date fair value of the RSUs, computed in accordance with FASB ASC Topic 718, is based on the closing market price of our common stock on Nasdaq on the grant date. The valuation assumptions used in the calculation of such amounts for the RSUs are set forth in Note 15—Stock-based Compensation in our Form 10-K. The grant date fair value of the PSUs based on GMS, revenue, and adjusted EBITDA or adjusted EBITDA margin, as applicable, computed in accordance with FASB ASC Topic 718, is based on the closing market price of our common stock on Nasdaq on the grant date and the probable outcome of the applicable metrics. The grant date fair value of the PSUs based on relative TSR is determined using a Monte-Carlo simulation model. See Footnote 3 to the nearest hundredth) for the 30 trading days immediately prior to and including the date of grant. As a result, the fair value of the awards at grant date in this column, computed in accordance with FASB ASC Topic 718, may be lower or higher than the equity compensation value approved by the Compensation Committee. | | | (2)
| | | The amounts in this column represent the aggregate grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718. The valuation assumptions used in the calculation of such amounts are set forth in Note 16—Stock-based Compensation in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that accompanies this proxy statement.
| | | (3)
| | | The amounts in this column represent bonuses paid under our annual cash incentive program.
| | | (4)
| | | For fiscal year 2020, the amounts in this column include (a) for Josh Silverman, a home security system in the amount of $200,757, of which $199,748 was for configuration, hardware and installation costs with the remainder for internet services related to the home security security system, (b) for Rachel Glaser, a travel stipend of $36,000, and (c) for Mike Fisher, a travel stipend of $36,000 and Etsy gift cards in the amount of $275 along with a gift card related tax gross-up. For fiscal year 2020, the amounts in this column also include Etsy’s 401(k) match of $8,550 for each NEO.
| | | | | | For fiscal year 2019, the amounts in this column include (a) for Rachel Glaser, reimbursed travel expenses of $18,217 (including reimbursements for future travel reimbursed prior to April 2019), and a travel stipend of $36,000, and (b) for Mike Fisher, a travel stipend of $36,000. The amounts in this column for fiscal year 2019 also include Etsy’s 401(k) match of $8,400 for Josh Silverman, Mike Fisher, and Rachel Glaser.
| | | | | | For fiscal year 2018, the amounts in this column include for Rachel Glaser $14,515 in travel reimbursement in connection with her relocation from Los Angeles and $16,513 for a related relocation gross-up, and $8,005 in personal travel reimbursement. The amounts in this column for fiscal year 2018 also includes Etsy’s 401(k) match of $8,250 for Josh Silverman, Mike Fisher, and Rachel Glaser.
| |
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Grants of Plan-Based Awards Table for the valuation assumptions used in the calculation of such amounts for the PSUs.The grant date fair value, computed in accordance with FASB ASC Topic 718, represents the amount we expect to expense for accounting purposes over the award's vesting schedule and not the actual value that will be realized by the NEO to the extent the award vests. In addition to the level of performance achieved, the realized value of the PSUs earned will be determined by the price of our stock on the date any shares are issued following the end of the performance period, which may be more or less than the grant date fair value. The grant date fair values of the 2022 PSU awards, based on the probable outcome using the Monte-Carlo simulation model for the PSUs based on relative TSR, and assuming the maximum 200% payout for the PSUs based on GMS, revenue, and adjusted EBITDA, are as follows: Mr. Silverman: $16,443,824; Ms. Glaser: $4,933,240; Ms. Moskowitz: $3,699,796; Mr. Scott: $3,699,796; Mr. Fisher: $4,624,718; and Ms. Patel Goyal: $3,699,796. The grant date fair values of the 2021 PSU awards, based on the probable outcome using the Monte-Carlo simulation model for the PSUs based on relative TSR, and assuming the maximum 200% payout for the PSUs based on GMS, revenue, and adjusted EBITDA, are as follows: Mr. Silverman: $48,962,545; Ms. Glaser: $2,447,805; Mr. Scott: $1,958,334; Mr. Fisher: $2,447,805; and Ms. Patel Goyal: $2,203,030.
(3)The amounts reported in this column represent the aggregate grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718. The valuation assumptions used in the calculation of such amounts are set forth in Note 15—Stock-based Compensation in our Form 10-K. (4)The amounts reported in this column represent bonuses paid under Etsy’s annual cash incentive program. For more information on the determination of these amounts based on achievement of 2022 corporate performance objectives and individual performance, please see the Compensation Discussion and Analysis. (5)For 2022, this column includes: (a) payments of $3,595 related to internet services associated with a home security system for Mr. Silverman; (b) a travel stipend of $45,000 for each of Ms. Glaser and Mr. Fisher; and (c) Etsy's 401(k) match of $9,150 for each of Mr. Silverman, Ms. Glaser, Ms. Moskowitz, Mr. Scott, Mr. Fisher, and Ms. Patel Goyal. For Ms. Patel Goyal, amounts also include certain costs related to her international assignment, including: a pre-relocation trip in the amount of $21,367; Company-provided housing and housing-related costs (in the amount of $212,578); children's tuition, deposits, and school placement support (in the amount of $49,311), international relocation services and assistance (in the amount of $53,609), home leave and family travel (in the amount of $36,317), tax gross up of $85,881, and tax services of $8,566. The amount for Ms. Goyal Patel does not reflect tax equalization payments for 2022, which amount had not been determined prior to filing this proxy statement. For 2021, this column includes: (a) payments of $3,240 related to internet services associated with a home security system for Mr. Silverman; and (b) Etsy's 401(k) match of $8,700 for each of Mr. Silverman, Ms. Glaser, Mr. Fisher, Ms. Patel Goyal, and Mr. Scott. For 2020, this column includes: (a) a home security system that was installed for Mr. Silverman in light of his position and the work from home arrangement necessitated by the COVID-19 pandemic and in order to mitigate risks to Etsy in the amount of $200,757 (of which $199,748 was for configuration, hardware, and installation costs, with the remainder for related internet services); (b) a travel stipend of $36,000 for each of Ms. Glaser and Mr. Fisher; and (c) Etsy's 401(k) match of $8,550 for each of Mr. Silverman, Ms. Glaser, Mr. Fisher, Ms. Patel Goyal, and Mr. Scott. (6)Mr. Fisher served as our Chief Technology Officer through December 31, 2022. In light of Mr. Fisher's employment through December 31, 2022 and his continued service in an advisory capacity through April 2023, our Compensation Committee exercised discretion to deem Mr. Fisher eligible for his 2022 annual cash incentive award. (7)Ms. Patel Goyal served as our Chief Product Officer through July 29, 2022 and following her move overseas, began serving as Depop's CEO effective September 12, 2022. Ms. Patel Goyal is included as an NEO for 2022 because she would have been among our three most highly compensated executive officers, other than our Chief Executive Officer and Chief Financial Officer, had she been serving as an executive officer of Etsy as of December 31, 2022.
Grants of Plan-Based Awards Table The following table provides information regarding grants of plan-based awards to our NEOs during the fiscal year ended December 31, 2020:2022: | | Josh Silverman | | | — | | | 600,000 | | | —
| | | —
| | | — | | | — | | | | Rachel Glaser | | | — | | | 318,750 | | | —
| | | —
| | | — | | | — | | | | | | | 3/16/2020 | | | — | | | —
| | | 73,755(4) | | | 41.65 | | | 1,199,994 | | | | | | | 3/16/2020 | | | — | | | 43,217(5) | | | —
| | | — | | | 1,799,088 | | | | Mike Fisher | | | — | | | 318,750 | | | —
| | | —
| | | — | | | — | | | | | | | 3/16/2020 | | | — | | | | | | 73,755(4) | | | 41.65 | | | 1,199,994 | | | | | | | 3/16/2020 | | | — | | | 43,217(5) | | | —
| | | — | | | 1,799,988 | | | | Kruti Patel Goyal | | | — | | | 228,000 | | | —
| | | —
| | | — | | | — | | | | | | | 3/16/2020 | | | — | | | —
| | | 55,316(4) | | | 41.65 | | | 899,991 | | | | | | | 3/16/2020 | | | — | | | 32,412(5) | | | —
| | | — | | | 1,349,960 | | | | Ryan Scott | | | — | | | 222,000 | | | —
| | | —
| | | — | | | — | | | | | | | 3/16/2020 | | | — | | | —
| | | 49,170(4) | | | 41.65 | | | 799,996 | | | | | | | 3/16/2020 | | | — | | | 28,811(5) | | | —
| | | — | | | 1,199,978 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named
Executive
Officer | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | Restricted
Stock
Units
(#) | | Grant Date Fair Value of Stock Awards
($)(3) | Threshold
($) | Target
($) | Maximum
($) | | Threshold
(#) | Target
(#) | Maximum
(#) | | | Josh Silverman | – | 0 | | 756,000 | | 1,512,000 | | | — | | — | | — | | — | | | — | | | 3/15/2022 | — | | — | | — | | | 0 | | 57,516 | | 115,032 | | — | | | 8,221,912 | | | 3/15/2022 | — | | — | | — | | | — | | — | | — | | 57,516 | | (4) | 7,188,350 | | | Rachel Glaser | – | 0 | | 427,500 | | 855,000 | | | — | | — | | — | | — | | | — | | | 3/15/2022 | — | | — | | — | | | 0 | | 17,255 | | 34,510 | | — | | | 2,466,620 | | | 3/15/2022 | — | | — | | — | | | — | | — | | — | | 40,261 | | (4) | 5,031,820 | | | Raina Moskowitz | – | 0 | | 340,000 | | 680,000 | | | — | | — | | — | | — | | | — | | | 3/15/2022 | — | | — | | — | | | — | | 12,941 | | 25,882 | | — | | | 1,849,898 | | | 3/15/2022 | — | | — | | — | | | — | | — | | — | | 30,196 | | (4) | 3,773,896 | | | Ryan Scott | – | | 340,000 | | 680,000 | | | — | | — | | — | | — | | | — | | | 3/15/2022 | — | | — | | — | | | 0 | | 12,941 | | 25,882 | | — | | | 1,849,898 | | | 3/15/2022 | — | | — | | — | | | — | | — | | — | | 30,196 | | | 3,773,896 | | | Michael Fisher | – | 0 | | 427,500 | | 855,000 | | | — | | — | | — | | — | | | — | | | 3/15/2022 | — | | — | | — | | | 0 | | 16,176 | | 32,352 | | — | | | 2,312,359 | | | 3/15/2022 | — | | — | | — | | | — | | — | | — | | 37,745 | | (4) | 4,717,370 | | Kruti Patel Goyal(6) | – | 0 | | 340,000 | | 680,000 | | | — | | — | | — | | — | | | — | | | 3/15/2022 | — | | — | | — | | | 0 | | 12,941 | | 25,882 | | — | | | 1,849,898 | | | 3/15/2022 | — | | — | | — | | | — | | — | | — | | 30,196 | | (4) | 3,773,896 | | | 10/3/2022 | — | | — | | — | | | — | | — | | — | | 9,523 | | (5) | 999,820 | |
(1)The annual cash incentive program provides for no payment if the specified performance metrics are achieved below the threshold performance level and there is a maximum payment of 200% of the target bonus amount if achievement of the specified performance metrics meets or exceeds the “kicker” performance level. The actual payouts based on achievement of 2022 corporate performance objectives and individual performance are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table and described in the Compensation Discussion and Analysis. (2)These PSUs are based on performance conditions relating to GMS, revenue, and adjusted EBITDA, as well as relative TSR compared to a comparator group of Nasdaq Composite Index constituents. 33 1/3% of the PSUs earned on achievement of the GMS, revenue, and adjusted EBITDA performance conditions will vest on each of April 1, 2023, April 1, 2024, and April 1, 2025, subject to continued service through each vesting date. 100% of the relative TSR PSUs earned will vest on April 1, 2025, subject to continued service through the vesting date. The portion, if any, of PSUs that will vest ranges from 0% to 200% of the target number of shares underlying the award. See the Compensation Discussion & Analysis for information on the PSUs earned based on 2022 achievement of the GMS, revenue, and adjusted EBITDA performance objectives. (3)The amounts reported in this column represent the aggregate grant date fair value of RSUs and target number of PSUs granted under the 2015 Plan and valued in accordance with FASB ASC Topic 718. To mitigate the impact of any short-term stock price volatility on the number of RSUs and PSUs granted, the number of RSUs and target number of PSUs subject to an award is based on the aggregate dollar value of the award divided by the average closing market price of our common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days immediately prior to and including the date of grant. As a result, the fair value of the awards at grant date in this column, computed in accordance with FASB ASC Topic 718, may be lower or higher than the equity compensation value approved by our Compensation Committee. In accordance with FASB ASC Topic 718, the grant date fair value of $124.98 per share reflected in the table above for the RSUs, and the target number of PSUs based on the GMS, revenue, and adjusted EBITDA performance, is computed based on the closing market price of our common stock on Nasdaq on the grant date and, with respect to the PSUs based on GMS, revenue, and adjusted EBITDA performance, an assumed 100% performance achievement. The grant date fair value of $196.86 per share reflected in the table above for the PSUs based on relative TSR is determined using a Monte-Carlo simulation model with the historical stock price volatilities of the companies in the comparator group over the most recent three-year period from the date of grant assuming dividends for each company are reinvested on a continuous basis and a risk-free rate of interest of 1.99%. The grant date fair value computed in accordance with FASB ASC Topic 718 represents the amount we expect to expense for accounting purposes over the award's vesting schedule, and not the actual value that will be realized by the NEOs to the extent the awards vest. In addition to the level of performance achieved, the realized value of the PSUs earned will be determined by the price of our stock on the date any shares are issued at the end of the performance period, which may be more or less than the grant date fair value. | (1)
| | | Etsy’s non-equity incentive plan does not provide thresholds or maximums. Actual cash incentive bonus plan payouts are reflected in the Non-Equity Incentive Plan Compensation column of the “Summary Compensation Table.”
| | | | | | (2)
2023 Proxy Statement | | | The exercise price of each option award is equal to the fair market value of our common stock on the date of grant, as determined by reference to the closing market price of our common stock on Nasdaq on March 16, 2020, which was $41.65 per share.
| | | (3)
| | | The amounts shown in this column represent the aggregate grant date fair value of RSUs and option awards granted during the fiscal year. The amounts are valued in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the grant date fair value are set forth in Note 16—Stock-based Compensation, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that accompanies this proxy statement. In order to mitigate the impact of any short-term stock price volatility on the number of stock units granted, the number of stock units in an RSU award is based on the aggregate dollar value of the award divided by the average closing market price of our common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days immediately prior to and including the date of grant. As a result, the fair value of the awards at grant date in this column, computed in accordance with FASB ASC Topic 718, may be lower or higher than the equity compensation value approved by the Compensation Committee.
| | | (4)
| | | These stock options vest in 8 equal semi-annual installments, beginning on October 1, 2020, subject to continued service on each vesting date.
| | | (5)
| | | These RSUs vest in 8 equal semi-annual installments, beginning on October 1, 2020, subject to continued service on each vesting date.
| 63 |
632021 Proxy StatementEtsy
The grant date fair values of the 2022 PSU awards, based on the probable outcome using the Monte-Carlo simulation model for the PSUs based on relative TSR, and assuming the maximum 200% payout for the PSUs based on GMS, revenue, and adjusted EBITDA margin, are as follows: Mr. Silverman: $16,443,824; Ms. Glaser: $4,933,240; Ms. Moskowitz $3,699,796; Mr. Scott; $3,699,796; Mr. Fisher: $4,624,718; and Ms. Patel Goyal: $3,699,796.TABLE OF CONTENTS
(4)These RSUs vest in eight equal semi-annual installments, beginning on October 1, 2022, subject to continued service on each vesting date.(5)Ms. Patel Goyal received an additional equity award in 2022, in connection with her appointment as Depop's CEO. These RSUs vest in eight equal semi-annual installments, beginning on April 1, 2023, subject to continued service on each vesting date. (6)The amounts for Ms. Patel Goyal in the non-equity incentive plan awards column reflect her salary as Etsy's Chief Product Officer. Upon her appointment as Depop's CEO, Ms. Patel Goyal's base salary was increased to $450,000 per year. Ms. Patel Goyal's incentive cash compensation was based on Etsy performance for the period prior to her becoming Depop's CEO and based on Depop performance for the portion of the year during her service as Depop's CEO and resulted in an actual payout of $171,000. Outstanding Equity Awards at Fiscal Year-End Table The following table sets forth information regarding unexercised stock options, RSUs, and RSUsPSUs held by our NEOs as of December 31, 2020.2022. | | Josh Silverman | | | 2,646,528 | | | 403,123(2)
| | | 10.62 | | | 5/04/2027 | | | —
| | | — | | | | Rachel Glaser | | | 119,733 | | | 21,391(3)
| | | 13.55 | | | 5/31/2027 | | | —
| | | — | | | | | | | 30,705 | | | 18,424(4)
| | | 28.38 | | | 3/14/2028 | | | —
| | | — | | | | | | | 15,862 | | | 26,439(5)
| | | 69.89 | | | 3/14/2029 | | | —
| | | — | | | | | | | 9,219 | | | 64,536(6)
| | | 41.65 | | | 3/15/2030 | | | —
| | | — | | | | | | | — | | | —
| | | — | | | — | | | 16,503(7)
| | | 2,936,049 | | | | | | | — | | | —
| | | — | | | — | | | 10,398(8)
| | | 1,849,908 | | | | | | | — | | | —
| | | — | | | — | | | 12,644(9)
| | | 2,249,494 | | | | | | | — | | | —
| | | — | | | — | | | 37,815(10) | | | 6,727,667 | | | | Mike Fisher | | | — | | | 41,667(11) | | | 14.31 | | | 7/31/2027 | | | —
| | | — | | | | | | | — | | | 62,439(5)
| | | 69.89 | | | 3/14/2029 | | | —
| | | — | | | | | | | — | | | 64,536(6)
| | | 41.65 | | | 3/15/2030 | | | —
| | | — | | | | | | | — | | | —
| | | — | | | — | | | 21,094(7)
| | | 3,752,834 | | | | | | | — | | | —
| | | — | | | — | | | 12,644(9)
| �� | | 2,249,494 | | | | | | | — | | | —
| | | — | | | — | | | 37,815(10) | | | 6,727,667 | | | | Kruti Patel Goyal | | | 20,433 | | | 3,108(12) | | | 10.23 | | | 3/14/2027 | | | —
| | | — | | | | | | | 29,478 | | | 22,109(4)
| | | 28.38 | | | 3/14/2028 | | | —
| | | — | | | | | | | 12,690 | | | 21,150(5)
| | | 69.89 | | | 3/14/2029 | | | —
| | | — | | | | | | | 6,914 | | | 48,402(6)
| | | 41.65 | | | 3/15/2030 | | | —
| | | — | | | | | | | — | | | —
| | | — | | | — | | | 2,398(13) | | | 426,628 | | | | | | | — | | | —
| | | — | | | — | | | 12,478(8)
| | | 2,219,961 | | | | | | | — | | | —
| | | — | | | — | | | 10,115(9)
| | | 1,799,560 | | | | | | | — | | | —
| | | — | | | — | | | 28,361(10) | | | 5,045,706 | | | | Ryan Scott | | | — | | | 29,528(14) | | | 62.06 | | | 6/30/2029 | | | —
| | | — | | | | | | | — | | | 43,024(6)
| | | 41.65 | | | 3/15/2030 | | | —
| | | — | | | | | | | — | | | —
| | | — | | | — | | | 11,646(15) | | | 2,071,940 | | | | | | | — | | | —
| | | — | | | — | | | 25,210(10) | | | 4,485,111 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | STOCK AWARDS | | Named Executive Officer | Number of Securities Underlying Unexercised Options
that are
Exercisable as of December 31, 2022 (#) | Number of Securities Underlying Unexercised Options that are not Exercisable as of December 31, 2022 (#) | | 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) | | Josh Silverman | 2,130,200 | | — | | | 10.62 | 5/3/2027 | | — | | | — | | — | | | — | | | 14,104 | | 23,509 | | (2) | 223.23 | | 3/14/2031 | | — | | | — | | — | | | — | | | — | | — | | | — | | – | | 15,503 | | (3) | 1,856,949 | | — | | | — | | | | | | | | | 50,327 | | (4) | 6,028,168 | | | | | | — | | — | | | — | | – | | — | | | — | | 86,127 | | (5) | 10,316,292 | | | | | | | | | | | | 64,706 | | (6) | 7,750,485 | | | Rachel Glaser | 43,528 | | — | | | 13.55 | 5/31/2027 | | — | | | — | | — | | | — | | | 29,650 | | — | | | 28.38 | 3/14/2028 | | — | | | — | | — | | | — | | | 14,999 | | 5,288 | | (7) | 69.89 | 3/14/2029 | | — | | | — | | — | | | — | | | 25,985 | | 27,659 | | (8) | 41.65 | 3/15/2030 | | — | | | — | | — | | | — | | | 4,897 | | 8,163 | | (2) | 223.23 | | 3/14/2031 | | — | | | — | | — | | | — | | | — | | — | | | — | | – | | 2,529 | | (9) | 302,924 | | — | | | — | | | — | | — | | | — | | – | | 16,207 | | (10) | 1,941,274 | | — | | | — | | | — | | — | | | — | | – | | 7,177 | | (3) | 859,661 | | — | | | — | | | — | | — | | | — | | – | | 35,229 | | (4) | 4,219,730 | | — | | | — | | | — | | — | | | — | | – | | — | | | — | | 4,306 | | (5) | 515,773 | | | | | | | | | | | | 19,413 | | (6) | 2,325,289 | | | Raina Moskowitz | 5,051 | | — | | | 30.32 | | 4/30/2028 | | — | | | — | | — | | | — | | | 17,725 | | 4,230 | | (7) | 69.89 | 3/14/2029 | | — | | | — | | — | | | — | | | 30,731 | | 18,439 | | (8) | 41.65 | 3/15/2030 | | — | | | — | | — | | | — | | | 3,673 | | 6,122 | | (2) | 223.23 | | 3/14/2031 | | — | | | — | | — | | | — | | | — | | — | | | — | | – | | 2,023 | | (9) | 242,315 | | | | | | — | | — | | | — | | – | | 10,805 | | (10) | 1,294,223 | | | | | | — | | — | | | — | | – | | 5,385 | | (3) | 644,776 | | | | | | — | | — | | | — | | – | | 26,422 | | (4) | 3,164,827 | | | | | | — | | — | | | — | | | | — | | | — | | 3,230 | | (5) | 386,889 | | | — | | — | | | — | | | | — | | | — | | 14,558 | | (6) | 1,743,757 | |
| (1)
| | | This amount represents the market value of unvested RSUs, based on a closing price of our common stock on December 31, 2020 of $177.91.
| | | | | 64 | (2)
Etsy | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | STOCK AWARDS | | Named Executive Officer | Number of Securities Underlying Unexercised Options
that are
Exercisable as of December 31, 2022 (#) | Number of Securities Underlying Unexercised Options that are not Exercisable as of December 31, 2022 (#) | | Option
Exercise
Price
($) | 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) | | Ryan Scott | 4,921 | | 9,843 | | (11) | 62.06 | 6/30/2029 | | — | | | — | | — | | | — | | | — | | 18,439 | | (8) | 41.65 | 3/15/2030 | | — | | | — | | — | | | — | | | 2,612 | | 6,530 | | (2) | 223.23 | | 3/14/2031 | | — | | | — | | — | | | — | | | — | | — | | | — | | – | | 3,882 | | (13) | 464,986 | | — | | | — | | | — | | — | | | — | | – | | 10,805 | | (10) | 1,294,223 | | — | | | — | | | — | | — | | | — | | – | | 5,742 | | (3) | 687,777 | | — | | | — | | | — | | — | | | — | | – | | 26,422 | | (4) | 3,164,827 | | | | | | — | | — | | | — | | – | | — | | | — | | 3,445 | | (5) | 412,642 | | | — | | — | | | — | | – | | — | | | — | | 14,558 | | (6) | 1,743,757 | | | Michael Fisher | — | | 5,288 | | (7) | 69.89 | 7/30/2023 | (14) | — | | | — | | — | | | — | | | — | | 27,659 | | (8) | 41.65 | 7/30/2023 | (14) | — | | | — | | — | | | — | | | 3,265 | | 8,163 | | (2) | 223.23 | | 7/30/2023 | (14) | — | | | — | | — | | | — | | | — | | — | | | — | | – | | 2,529 | | (9) | 302,924 | | — | | | — | | | — | | — | | | — | | – | | 16,207 | | (10) | 1,941,274 | | — | | | — | | | — | | — | | | — | | – | | 7,177 | | (3) | 859,661 | | — | | | — | | | — | | — | | | — | | – | | 33,027 | | (4) | 3,955,974 | | — | | | — | | | — | | — | | | — | | – | | — | | | — | | 4,306 | | (5) | 515,773 | | | — | | — | | | — | | – | | — | | | — | | 18,198 | | (6) | 2,179,756 | | | Kruti Patel Goyal | 16,674 | | — | | | 28.38 | 3/14/2028 | | — | | | — | | — | | | — | | | 29,610 | | 4,230 | | (7) | 69.89 | 3/14/2029 | | — | | | — | | — | | | — | | | 34,572 | | 20,744 | | (8) | 41.65 | 3/15/2030 | | — | | | — | | — | | | — | | | 4,407 | | 7,347 | | (2) | 223.23 | | 3/14/2031 | | — | | | — | | — | | | — | | | — | | — | | | — | | – | | 2,023 | | (9) | 242,315 | | — | | | — | | | — | | — | | | — | | – | | 12,155 | | (10) | 1,455,926 | | — | | | — | | | — | | — | | | — | | – | | 6,460 | | (3) | 773,779 | | — | | | — | | | — | | — | | | — | | – | | 26,422 | | (4) | 3,164,827 | | — | | | — | | | | | | | | 9,523 | | (12) | 1,140,665 | | | | | | — | | — | | | — | | – | | — | | | — | | 3,876 | | (5) | 464,267 | | | — | | — | | | — | | – | | — | | | — | | 14,558 | | (6) | 1,743,757 | |
(1)This amount reflects the market value of unvested RSUs and target number of PSUs based on a closing market price on December 30, 2022 of $119.78 per share. (2)These stock options vest in eight equal semi-annual installments, beginning on October 1, 2021, subject to continued service on each vesting date. (3)These RSUs vest in eight equal semi-annual installments, beginning on October 1, 2021, subject to continued service on each vesting date. (4)These RSUs vest in eight equal semi-annual installments, beginning on October 1, 2022, subject to continued service on each vesting date. (5)These PSUs granted in 2021 are based on performance conditions relating to GMS, revenue, and adjusted EBITDA margin, as well as relative TSR compared to a comparator group of Nasdaq Composite Index constituents. 50% of the PSUs earned on achievement of the performance conditions will vest on each of April 1, 2024 and April 1, 2025, subject to continued service through each vesting date. The portion, if any, of PSUs that will vest ranges from 0% to 200% of the target number of shares underlying the award. In calculating the number of PSUs reported and their value, we are required by SEC rules to compare our performance through 2022 under the PSU award against the threshold, target, and maximum performance levels for the grant and report in these columns the applicable potential share number and payout amount. If the performance is between levels, we are required to report the potential payout at the next highest level. Based on performance through the end of 2022, certain performance conditions are below threshold and others are between threshold and target. We have reported the PSUs in this table at the next level of performance for each performance condition for this performance period. | | These stock options vested 25% on May 4, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
| | | | | | | | (3)
2023 Proxy Statement | | | These stock options vested 25% on June 1, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
| | | (4)
| | | These stock options vest in 8 equal semi-annual installments, beginning on October 1, 2018, subject to continued service on each vesting date.
| | | (5)
| | | These stock options vest in 8 equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date.
| 65 |
642021 Proxy StatementEtsy
(6)These PSUs granted in 2022 are based on performance conditions relating to GMS, revenue, and adjusted EBITDA, as well as relative TSR compared to a comparator group of Nasdaq Composite Index constituents. 33 1/3% of the PSUs based on achievement of the GMS, revenue, and adjusted EBITDA performance conditions will vest on each of April 1, 2023, April 1, 2024, and April 1, 2025, subject to continued service through the applicable vesting date. 100% of the relative TSR PSUs earned will vest on April 1, 2025, subject to continued service through each vesting date. The portion, if any, of PSUs that will vest ranges from 0% to 200% of the target number of shares underlying the award. In calculating the number of PSUs reported and their value, we are required by SEC rules to compare our performance through 2022 under the PSU award against the threshold, target, and maximum performance levels for the grant and report in these columns the applicable potential share number and payout amount. If the performance is between levels, we are required to report the potential payout at the next highest level. Based on performance through the end of 2022, certain performance conditions are below threshold and others are between threshold and target. We have reported the PSUs in this table at the next level of performance for each performance condition for this performance period.TABLE OF CONTENTS
(7)These stock options vest in eight equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date.(8)These stock options vest in eight equal semi-annual installments, beginning on October 1, 2020, subject to continued service on each vesting date. | (9)These RSUs vest in eight equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date. (10)These RSUs vest in eight equal semi-annual installments, beginning on October 1, 2020, subject to continued service on each vesting date. (11)These stock options vested 25% on July 1, 2020, with the remainder vesting in six equal semi-annual installments, subject to continued service on each vesting date. (12)These RSUs vest in eight equal semi-annual installments, beginning on April 1, 2023, subject to continued service on each vesting date (13)These RSUs vested 25% on July 1, 2020, with the remainder vesting in six equal semi-annual installments, subject to continued service on each vesting date. (14)Mr. Fisher served as Chief Technology Officer through December 31, 2022, and will serve in an advisory capacity through April 30, 2023. According to the terms of his option agreements, his options will expire immediately to the extent unvested as of April 30, 2023 and will expire on July 30, 2023 (three months following his termination date) to the extent vested as of April 30, 2023. (6)
| | | These stock options vest in 8 equal semi-annual installments, beginning on October 1, 2020, subject to continued service on each vesting date.
| | | (7)
| | | These RSUs vested 25% on July 1, 2018, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date.
| | | (8)
| | | These RSUs vest in 8 equal semi-annual installments, beginning on October 1, 2018, subject to continued service on each vesting date.
| | | (9)
| | | These RSUs vest in 8 equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date.
| | | (10)
| | | These RSUs vest in 8 equal semi-annual installments, beginning on October 1, 2020, subject to continued service on each vesting date.
| | | (11)
| | | These stock options vested 25% on August 1, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
| | | (12)
| | | These stock options vest in 48 equal monthly installments, beginning on April 15, 2017, subject to continued service on each vesting date.
| | | (13)
| | | These RSUs vest in 16 equal quarterly installments, beginning on July 1, 2017, subject to continued service on each vesting date.
| | | (14)
| | | These stock options vested 25% on July 1, 2020, with the remainder vesting in 6 equal semi-annual installments, subject to continued service on each vesting date.
| | | (15)
| | | These RSUs vested 25% on July 1, 2020, with the remainder vesting in 6 equal semi-annual installments, subject to continued service on each vesting date.
| |
Option Exercises and Stock Vested TableThe following table provides information regarding exercises of option awards and vesting of stock awards held by our NEOs in 2020:2022: | | Josh Silverman | | | 820,318 | | | 80,454,812 | | | — | | | — | | | | Rachel Glaser | | | 30,000 | | | 2,731,650 | | | 39,394 | | | 3,488,124 | | | | Mike Fisher | | | 97,998 | | | 7,160,173 | | | 38,584 | | | 3,402,618 | | | | Kruti Patel Goyal | | | 62,728 | | | 5,892,472 | | | 21,211 | | | 1,953,584 | | | | Ryan Scott | | | 15,988 | | | 1,031,929 | | | 7,482 | | | 905,822 | |
| | | | | | | | | | | | | | | | | | | OPTION AWARDS | | STOCK AWARDS | | Named Executive Officer | Number of Shares
Acquired on Exercise
(#) | Value Realized on Exercise ($)(1) | | Number of Shares
Acquired on Vesting
(#) | Value Realized on Vesting ($)(2) | | Josh Silverman | 576,800 | | 67,057,213 | | | 13,390 | | 1,424,220 | | | Rachel Glaser | 103,700 | | 9,865,628 | | | 27,230 | | 3,071,950 | | | Raina Moskowitz | — | | — | | | 19,554 | | 2,311,633 | | | Ryan Scott | 17,214 | | 1,641,910 | | | 17,154 | | 2,036,642 | | | Michael Fisher | 29,013 | | 1,370,770 | | | 23,450 | | 2,600,154 | | | Kruti Patel Goyal | — | | — | | | 22,667 | | 2,579,954 | |
(1)Value realized on exercise of stock options is based on the fair market value of our common stock on the date of exercise minus the exercise price multiplied by the number of shares acquired on exercise and does not reflect the actual proceeds received. (2)Value realized on vesting of stock awards is based on the fair market value of our common stock on the vesting date multiplied by the number of shares vesting and does not reflect the actual proceeds received. | (1)
| | | Value realized on exercise of stock options is based on the fair market value of our common stock on the date of exercise minus the exercise price and does not reflect actual proceeds received.
| | | | | 66 | (2)
Etsy | | | Value realized on vesting of stock awards is based on the fair market value of our common stock on the vesting date and does not reflect actual proceeds received.
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Potential Payments Upon Termination or Change of Control Executive Severance Plan We maintain an executive severance plan and certain other arrangements that provide for payments and benefits to our NEOsexecutive officers upon termination of employment, including in connection with a change in control of Etsy as described below. Under our executive severance plan, if we terminate an NEO’s employment without cause or if an NEO terminates his or her employment with us for good reason (a “Qualifying Termination”) other than in connection with a change in control, then he or she will beis entitled to receive continued salary payments for a certain number of months, as specified in his or her employment agreement or executive severance plan participation notice.12 months. Each NEO willis also be entitled to receive healthcare continuation coverage orand a pro rata cash in lieubonus payment if the termination occurs after the third month of such continuation coverage for this specified severance period or until healthcare continuation coverage ends or the NEO becomes eligible for equivalent coverage, whichever is less.year. As a condition to receiving the payments and benefits under our executive severance plan, the NEO must agree to a standard release of claims.claims in favor of Etsy. “Qualifying Termination” is defined in our executive severance plan, and includes a termination by Etsy without "cause" as defined in our executive severance plan (or, in the case of our CEO, as "cause" is defined in his 2021 amended and restated offer letter), each of which isare filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.10-K. Under our executive severance plan, payments and benefits in the event of a change in control are payable only upon a “double trigger;” that is, only upon a Qualifying Termination that occurs in the 3-month period before or the 12-month period following a change in control of Etsy (a “Qualifying Change in Control Termination”). Upon a Qualifying Change in Control Termination, our CEO will beis entitled to receive continued salary payments for 18 months and each other NEO will beis entitled to receive continued salary payments for 12 months. Each NEO willis also be entitled to receive reimbursement for healthcare continuation coverage for the lesser of the number of monthsand a pro rata bonus as in this specified severance period or until healthcare continuation coverage ends or the NEO becomes eligible for substantially equivalent coverage.any Qualifying Termination. Finally, each NEO will beis entitled to full vesting of any outstanding equity awards. In addition, for Mr. Silverman, pursuant to his 2017 offer letter, 25% of hisRSUs and stock options will vest upon a change in control if, in his reasonable judgment, the change in control materially adversely affects his position, title, responsibilities or ability to perform his duties, even if this does not lead to his resignation.and any earned PSUs. As a condition to receiving the payments and benefits under our executive severance plan, the NEO must agree to a standard release of claims in favor of Etsy, as well as certain non-solicitation, non-competition, confidentiality, non-disparagement, and cooperation provisions. In January 2019, we updated our executive severance plan primarilyUnder the terms of the outstanding PSUs:
•if a change in control occurs prior to provide pro rata cash bonus payments to participants, other than our CEO, the last day of the applicable performance period, the performance period will end as of the date of the change in control and (a) the portion of the PSU earned based on GMS, revenue, and adjusted EBITDA margin for the PSUs granted in 2021 and GMS, revenue, and adjusted EBITDA for the PSUs granted in 2022 will be deemed earned at the greater of the target performance level or actual performance over a trailing 12-month period ending on the date of the change in control, and (b) the portion of the PSU earned based on relative TSR will be deemed earned at the greater of the target performance level or actual performance based on a performance period ending on the date of the change in control. •upon a Qualifying Termination that does not involve a change in control, (a) the portion of the PSU earned based on GMS, revenue, and adjusted EBITDA margin for the PSUs granted in 2021 and GMS, revenue, and adjusted EBITDA for the PSUs granted in 2022 will be deemed earned at the greater of the target performance level or actual performance over a trailing 12-month period ending on the date of the Qualifying Termination, and (b) the portion of the PSU earned based on relative TSR will be deemed earned at the greater of the target performance level or actual performance based on a performance period ending on the date of the Qualifying Termination. As of the date of a Qualifying Termination, a prorated portion (based on the number of days between the PSU grant date and the date of the Qualifying Termination) of the earned PSUs will vest. In addition, under Mr. Silverman's 2021 amended and restated offer letter, if his employment with Etsy is terminated as a result of a Qualifying Termination, he will be entitled to increase the severance periods for executive officers, other thanone year of additional vesting service credit with respect to shares underlying his unvested RSUs and stock options. RSUs and options held by any employee, including our CEO and CFO, from 6 monthsNEOs, are subject to 12 monthsaccelerated vesting in the event of the death of the holder, and options remain exercisable for a Qualifying Termination that is not in connection with a change in control. These changes were made primarily to align our executive severance plan with our practices and to ensure that our plan remains competitive.period of 12 months after the date of death.
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The following table sets forth the estimated incremental payments and benefits that would behave been payable to our NEOs upon termination of employment, including in connection with a change in control of Etsy, assuming that the triggering event occurred on December 31, 2020.2022. Due to the number of factors that affect the nature and amount of any potential payments or benefits, actual payments and benefits may differ from those presented in the table below. | | Josh Silverman | | | Qualifying Termination | | | 600,000(4)
| | | 28,186(5) | | | — | | | 16,859,612(6) | | | 17,487,798 | | | | | | | Qualifying Change in Control Termination(7) | | | 900,000(8)
| | | 42,279(9) | | | — | | | 67,438,447
| | | 68,380,726 | | | | | | | Change in Control(10) | | | —
| | | —
| | | — | | | 16,859,612
| | | 16,859,612 | | | | Rachel Glaser | | | Qualifying Termination | | | 743,750(11) | | | 27,658(5) | | | — | | | —
| | | 771,408 | | | | | | | Qualifying Change in Control Termination(7) | | | 425,000(4)
| | | 27,658(5) | | | 13,763,118 | | | 17,920,382
| | | 32,136,158 | | | | Mike Fisher | | | Qualifying Termination | | | 743,750(11) | | | 27,658(5) | | | — | | | —
| | | 771,408 | | | | | | | Qualifying Change in Control Termination(7) | | | 425,000(4)
| | | 27,658(5) | | | 12,729,994 | | | 18,466,337
| | | 31,648,989 | | | | Kruti Patel Goyal | | | Qualifying Termination | | | 608,000(11) | | | 27,658(5) | | | — | | | —
| | | 635,658 | | | | | | | Qualifying Change in Control Termination(7) | | | 380,000(4)
| | | 27,658(5) | | | 9,491,854 | | | 12,706,988
| | | 22,606,500 | | | | Ryan Scott | | | Qualifying Termination | | | 592,000(11) | | | 28,186(5) | | | — | | | —
| | | 620,186 | | | | | | | Qualifying Change in Control Termination(7) | | | 370,000(4)
| | | 28,186(5) | | | 6,557,051 | | | 9,283,269
| | | 16,238,506 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | Termination Scenario | Cash
Severance ($)(1) | Health &
Welfare
Benefits ($)(2) | PSUs ($)(3) | RSUs ($)(4) | Option Awards ($)(5) | Total
($) | | | | | | | | | | Josh Silverman | Qualifying Termination | 1,386,000 | | 28,287 | | 14,541,472 | | 2,465,072 | | — | | 18,420,831 | | Qualifying Change in Control Termination(6) | 1,701,000 | | 42,431 | | 20,807,254 | | 10,350,190 | | — | | 32,900,875 | | | | | | | | | | | | | | | | | | | Rachel Glaser | Qualifying Termination | 902,500 | | 27,835 | | 2,152,948 | | — | | — | | 3,083,283 | | Qualifying Change in Control Termination(6) | 902,500 | | 27,835 | | 2,803,344 | | 7,323,589 | | 2,424,816 | | 13,482,084 | | | | | | | | | | | | | | | | | | | Raina Moskowitz | Qualifying Termination | 765,000 | | 27,835 | | 1,614,742 | | — | | — | | 2,407,577 | | Qualifying Change in Control Termination(6) | 765,000 | | 27,835 | | 2,102,502 | | 5,346,141 | | 1,651,674 | | 9,893,152 | | | | | | | | | | | | | | | | | | | Ryan Scott | Qualifying Termination | 765,000 | | 28,287 | | 1,636,829 | | — | | — | | 2,430,116 | | Qualifying Change in Control Termination(6) | 765,000 | | 28,287 | | 2,136,879 | | 5,611,813 | | 2,008,777 | | 10,550,756 | | | | | | | | | | | | | | | | | | Kruti Patel Goyal(7) | Qualifying Termination | 765,000 | | 28,992 | | 1,681,004 | | — | | — | | 2,474,996 | | Qualifying Change in Control Termination(6) | 765,000 | | 28,992 | | 2,205,633 | | 6,777,512 | | 1,831,763 | | 11,608,900 | |
(1)For a Qualifying Termination, amounts reflect cash severance of 12 months' base salary based on the NEO's base salary as of December 31, 2022 and a pro rata cash bonus payment at 100% of the NEO's target annual cash incentive bonus. For a Qualifying Change in Control Termination, amounts reflect cash severance of 18 months' base salary for Mr. Silverman and 12 months’ salary for each other NEO, based on the NEO’s base salary as of December 31, 2022, as well as a pro rata cash bonus payment at 100% of the NEO's target annual cash incentive bonus. (2)For Mr. Silverman, this amount reflects the estimated reimbursement for COBRA continuation coverage for 12 months upon a Qualifying Termination and for 18 months upon a Qualifying Change in Control Termination. For each other NEO, amount reflects the estimated reimbursement for COBRA continuation coverage for 12 months. (3)For PSUs granted in 2021, for a Qualifying Termination or Qualifying Change in Control Termination, the PSUs would be deemed earned at the greater of target performance or actual performance based on the truncated performance period ending on December 31. For PSUs granted in 2022, for a Qualifying Termination or Qualifying Change in Control Termination, the PSUs based on GMS, revenue, and adjusted EBITDA would be deemed earned at the target level and PSUs based on relative TSR would be deemed earned at the greater of target performance or actual performance based on the truncated performance period ending on December 31. Qualifying Termination amounts assume that a prorated portion of the target shares will vest, based on the number of days of service between the date of grant and the date of the Qualifying Termination. (4)The value of accelerated vesting of unvested RSUs is based upon the closing stock price on December 30, 2022, the last business day of the fiscal year ended December 31, 2022, which was $119.78 per share, multiplied by the number of unvested RSUs. (5)The value of accelerated vesting of unvested stock options is based on the difference between the closing stock price on December 30, 2022, the last business day of the fiscal year ended December 31, 2022, which was $119.78 per share, and the exercise price per option multiplied by the number of unvested options. (6)Represents change in control severance benefits based on a double-trigger arrangement, which assumes the termination of an NEO without “cause” or the resignation of an NEO for “good reason” within 3 months prior to or 12 months following a change in control. In the event of a Qualifying Change in Control Termination, each NEO is entitled to full vesting of any outstanding equity awards, as described in the above narrative. (7)In accordance with her letter agreement, Ms. Patel Goyal continues to participate in Etsy's executive severance plan in her role as Depop's CEO. As previously announced, Mr. Fisher stepped down from his role as our Chief Technology Officer, effective December 31, 2022. For more information, see "Compensation Discussion and Analysis — Named Executive Officer Transitions." | (1)
| | | Each NEO’s base salary in effect on December 31, 2020 was used for purposes of valuing the cash severance payments.
| | | | | 68 | (2)
Etsy | | | The value of accelerated vesting of unvested RSUs is based upon the closing stock price on December 31, 2020, which was $177.91 per share, multiplied by the number of unvested RSUs.
| | | (3)
| | | The value of accelerated vesting of unvested stock options is based on the difference between the closing stock price on December 31, 2020, which was $177.91 per share, and the exercise price per option multiplied by the number of unvested options.
| | | (4)
| | | Amount reflects cash severance of 12 months’ salary based on the NEO’s base salary as of December 31, 2020.
| | | (5)
| | | Amount reflects the estimated reimbursement for COBRA continuation coverage for 12 months.
| | | (6)
| | | Pursuant to Mr. Silverman’s 2017 offer letter, upon a termination without cause or a resignation for good reason, 25% of his option award will vest and vested options will remain exercisable for 6 months. The value of the accelerated vesting of unvested stock options was computed in accordance with footnote 3 above.
| | | (7)
| | | Represents change in control severance benefits based on a double-trigger arrangement, which assumes the termination of an NEO without “cause” or the resignation of an NEO for “good reason” within 3 months prior to or 12 months following a change in control. In the event of a Qualifying Change in Control Termination, each NEO is entitled to full vesting of any outstanding equity awards.
| | | (8)
| | | Amount reflects cash severance of 18 months’ salary based on the NEO’s base salary as of December 31, 2020.
| | | (9)
| | | Amount reflects the estimated reimbursement for COBRA continuation coverage for 18 months.
| | | (10)
| | | Pursuant to Mr. Silverman’s 2017 offer letter, 25% of Mr. Silverman’s stock option award will vest upon a change in control if, in his reasonable judgment, the change in control materially adversely affects his position, title, responsibilities or ability to perform his duties, even if it does not lead to his resignation.
| | | (11)
| | | Amount reflects cash severance of 12 months’ salary based on the NEO's base salary as of December 31, 2020 and a pro rata cash bonus payment at 100% of each NEO's target annual cash incentive bonus.
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Under SEC rules, we are required to calculate and disclose the median of the annual total compensation of all our employees (other than our CEO), the annual total compensation of our median employeeCEO, and the ratio of the median of the annual total compensation of our median employee as compared to the annual total compensation of our CEO (“CEO Pay Ratio”). To identify our median employee, we used the following methodology: •To determine our total population of employees, we included all full-time, part-time, and temporary employees as of December 31, 2020.2022. Historically, our employee population for pay ratio included Etsy and Reverb employees. Beginning in 2022, we included employees from Depop and Elo7, which we acquired in 2021. We did not exclude any non-U.S. employees. •To identify our median employee from our employee population, we calculated the aggregate amount of each employee’s 20202022 base compensation, 2020 employee bonuses,bonus earned for 2022, and the value of equity awards granted in 2020.2022. •We calculated the value of 20202022 RSU and PSU equity awards as follows: stock option awards were calculated in accordance with generally accepted accounting principles (i.e., FASB ASC Topic 718); and
RSU awards were calculated based on the average closing price of our common stock on Nasdaq (rounded to the nearest hundredth) on the 30 trading days up to and including the grant date, which is in accordance with our Equity Granting Policy.
•We annualized the base compensation of all permanent (full-time and part-time) employees who were employed by us for less than the entire calendar year. •Compensation paid in foreign currencies was converted to U.S. dollars based on the exchange rates in effect on December 31, 2020.2022. Using this approach, we determinedidentified our median employee. For 2022, our median employee is a U.S.-based, full-time employee at Etsy. Once the median employee was identified, we then calculated the annual total compensation of this employee for 20202022 in accordance with the requirements of the Summary Compensation Table. For 2020,2022, the median of the annual total compensation of our employees (other than Mr. Silverman) was $190,451$248,232 and the annual total compensation of Mr. Silverman, as reported in the Summary Compensation Table included in this proxy statement, was $1,934,307.$16,461,507. Based on this information, the ratio of Mr. Silverman’s annual total compensation to the median of the annual total compensation of all employees was 10:66:1. AsThe foregoing information in this section is provided for compliance purposes only and is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median employee 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. Accordingly, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. Neither our Compensation Committee nor Etsy management uses pay ratios in making compensation decisions.
Pay Versus Performance The following table sets forth the compensation for our Chief Executive Officer (“CEO”) and the average compensation for our other Named Executive Officers (“Other NEOs”) for 2022, 2021 and 2020 (each, a “Covered Year”), both as reported in the Summary Compensation Table and with certain adjustments to reflect the “compensation actually paid” to such individuals, as calculated in accordance with the pay versus performance rules adopted by the SEC in August 2022. “Compensation actually paid” does not reflect amounts actually realized by our CEO and Other NEOs and may be higher or lower than the amounts, if any, that are ultimately realized by such individuals. Our Compensation Committee did not consider “compensation actually paid,” as defined by the SEC, when making its executive compensation decisions for the Covered Years. Please see the Compensation Discussion and Analysis section in this proxy statement for a discussion of our Compensation Committee’s philosophy, objectives, and practices when making executive compensation decisions. The table below also provides information for each Covered Year on our cumulative total stockholder return ("TSR"), the cumulative TSR of our peer group, our Net Income and our Revenue. Although we selected Revenue as our “most important financial performance measure” used to link “compensation actually paid” to our CEO and Other NEOs to our performance for 2022, we consider Gross Merchandise Sales ("GMS") to be the most important performance measure for purposes of linking executive compensation to our performance. As discussed in more detail in the Compensation Discussion and Analysis section of this proxy statement, GMS was weighted more heavily than Revenue in determining the payout under “2020 Executiveour 2022 annual cash incentive program and was weighted equally with Revenue for purposes of our 2022 and 2021 PSUs. However, GMS is not considered a “financial performance measure” within the meaning of the SEC’s pay versus performance rules, so we selected Revenue for purposes of the table below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | Summary Compensation Table Total for CEO
($) | Compensation Actually Paid to CEO ($)(1)(2) | Average Summary Compensation Table Total for Other NEOs ($)(3)(4) | Average Compensation Actually Paid to Other NEOs ($)(2)(4) | Value of Initial Fixed $100
Investment Based On: | Net Income ($ in millions) (6) | Revenue ($ in millions) (7) | Total Shareholder Return
($) | Peer Group Total Shareholder Return ($)(5) | | 2022 | 16,461,507 | | (15,823,299) | | 7,261,266 | | (4,534,407) | | 270.38 | | 118.03 | | (694) | | 2,566 | | | 2021 | 40,584,292 | | 52,367,686 | | 5,850,887 | | 11,909,053 | | 494.22 | | 148.30 | | 494 | | 2,329 | | | 2020 | 1,934,307 | | 102,473,221 | | 3,496,282 | | 28,464,462 | | 401.60 | | 118.87 | | 349 | | 1,726 | |
(1)The following table shows for each Covered Year the adjustments made to the total compensation shown for our CEO, Josh Silverman, on the Summary Compensation Highlights” Mr. Silverman did not receive long-term incentive grantsTable to arrive at “compensation actually paid” as reflected on the table above: | | | | | | | | | | | | | Adjustments to Determine CEO Compensation Actually Paid | 2022 | 2021 | 2020 | | Summary Compensation Table (SCT) amount | 16,461,507 | | 40,584,292 | | 1,934,307 | | Less Amounts Reported under “Stock Awards” Column in SCT for the Covered Year | (15,410,262) | | (35,273,412) | | — | | Less Amounts Reported under “Option Awards” Column in SCT for the Covered Year | — | | (3,599,940) | | — | | | Plus Year-end Fair Value of Stock Awards and Options Awards Granted during Covered Year that Remain Unvested as of Year-end | 11,006,723 | | 41,651,651 | | — | | | Plus Fair Value on Vesting of Awards Granted during Covered Year that Vest during Covered Year | 719,835 | | 1,091,784 | | — | | | Change (positive or negative) in Fair Value from Prior Year-end to Covered Year-end of Awards Granted Prior to Covered Year that were Outstanding and Unvested as of Covered Year-end | (27,327,632) | | — | | 53,602,053 | | | Change (positive or negative) in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to Covered Year that Vested during Covered Year | (1,273,470) | | 7,913,311 | | 46,936,861 | | | TOTAL ADJUSTMENTS: | (32,284,806) | | 11,783,394 | | 100,538,914 | | | TOTAL COMPENSATION ACTUALLY PAID: | (15,823,299) | | 52,367,686 | | 102,473,221 | |
(2)For purposes of the adjustments to determine “compensation actually paid,” we computed the fair value of stock option awards, RSUs, and PSUs in 2018,accordance with FASB ASC Topic 718 as of the end of the relevant fiscal year, other than the fair values of equity awards that vested in the Covered Year, which are valued as of the applicable vesting date. The valuation assumptions used in the calculation of such amounts are set forth in Note 15—Stock-based Compensation in our Form 10-K. The fair value of the PSUs based on relative TSR is determined based on the probable outcome (as determined in accordance with FASB ASC Topic 718) as of the end of the relevant fiscal year using a Monte-
Carlo simulation model. See Footnote 3 to the Grants of Plan-Based Awards Table for the valuation assumptions used in the calculation of such amounts for the PSUs. (3)The Other NEOs for 2020 and 2021 were Rachel Glaser, Michael Fisher, Kruti Patel Goyal, and Ryan Scott. The Other NEOs for 2022 were Rachel Glaser, Raina Moskowitz, Ryan Scott, Michael Fisher, and Kruti Patel Goyal. (4)The following table shows for each Covered Year presented the adjustments made to the average of the total compensation shown for the Other NEOs on the Summary Compensation Table to arrive at “compensation actually paid” as reflected on the table above: | | | | | | | | | | | | | Adjustments to Determine Average Other NEO Compensation Actually Paid | 2022 | 2021 | 2020 | | Summary Compensation Table (SCT) amount | 7,261,266 | | 5,850,887 | | 3,496,282 | | | Less Amounts Reported under “Stock Awards” Column in SCT for the Covered Year | (6,479,874) | | (3,746,213) | | (1,537,479) | | | Less Amounts Reported under “Option Awards” Column in SCT for the Covered Year | — | | (1,156,225) | | (1,024,994) | | | Plus Year-end Fair Value of Stock Awards and Options Awards Granted during Covered Year that Remain Unvested as of Year-end | 5,012,989 | | 4,719,336 | | 13,433,980 | | | Plus Fair Value on Vesting of Awards Granted during Covered Year that Vest during Covered Year | 421,988 | | 418,417 | | 1,353,123 | | | Change (positive or negative) in Fair Value from Prior Year-end to Covered Year-end of Awards Granted Prior to Covered Year that were Outstanding and Unvested as of Covered Year-end | (6,138,107) | | 3,889,359 | | 9,926,723 | | | Change (positive or negative) in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to Covered Year that Vested during Covered Year | (4,612,669) | | 1,933,492 | | 2,816,827 | | | TOTAL ADJUSTMENTS: | (11,795,673) | | 6,058,166 | | 24,968,180 | | | TOTAL COMPENSATION ACTUALLY PAID: | (4,534,407) | | 11,909,053 | | 28,464,462 | |
(5)Our peer group is the Russell 1000 Index, which is the index included in our Performance Graph in our Form 10-K for each of the Covered Years. (6)Reflects “Net Income” for each Covered Year as set forth in our Consolidated Statements of Operations included in our Form 10-K for each of the Covered Years. (7)Reflects “Revenue” for each Covered Year as set forth in our Consolidated Statements of Operations included in our Form 10-K for each of the Covered Years. Discussion of Compensation Actually Paid As reflected in the tables above, changes in the market price of our common stock following the date of grant of an award can have a significant impact on the disclosure of "compensation actually paid" to our NEOs, as calculated pursuant to the SEC rules. Etsy grew significantly during 2020 as millions of buyers found Etsy for the first time, or discovered Etsy again. At the same time, Etsy’s stock price increased from $44.30 per share on December 31, 2019 orto $177.91 per share on December 31, 2020, which significantly increased the intrinsic value of the options our CEO was granted in light2017. Further, the timing of equity awards may also unintentionally impact the “compensation actually paid” as calculated pursuant to the rule. Because of the structure of the front-loaded equity award that Mr. Silverman received when he became our CEO in 2017, he approached 2021 with almost no unvested equity. Our CEO received a performance-based equity award in 2021 with an aggregate grant he received in May 2017 thatdate value of $25 million which was intended to induce himretain, incentivize, and motivate our CEO for the next four years, drive Etsy's long-term growth, and promote the alignment of CEO compensation with long-term stockholder value creation. The “compensation actually paid” attributed to join Etsy and provide him withthis award, as well as the remaining unvested 2017 options, also increased as a meaningful equity stakeresult of the continued strong performance of Etsy's stock price in Etsy that would align his interests with those2021. To assist in understanding these changes in value, the following table shows the closing price for one share of our stockholders. If we adjust for the four-year period that Mr. Silverman’s sign-on equity awards were intended to cover and instead included 25%common stock as of the last trading day of the year preceding the initial Covered Year and each Covered Year: | | | | | | | | | | | | | | | | 2019 | 2020 | 2021 | 2022 | | Closing Market Price of our Common Stock as of December 31 | $44.30 | $177.91 | $218.94 | $119.78 |
The graph below illustrates the total valueshareholder return on a fixed $100 investment made as of his signmarket close on equity awardsDecember 31, 2019 in shares of Etsy common stock and in the Russell 1000 Index, our peer group. Notably, an investment in shares of Etsy common stock significantly outperformed an investment in the Russell 1000 during the three-year period ended December 31, 2022. Set forth below are charts illustrating the relationship between (a) the compensation actually paid to our CEO and (b) the average compensation actually paid to our non-CEO NEOs during each Covered Year and each of: •Etsy’s Revenue for each Covered Year; •Etsy’s Net (loss) income(1) for each Covered Year; and •Etsy’s cumulative TSR(2) each Covered Year. (1)Net (loss) income is not a metric used by Etsy to determine executive compensation and therefore any relationship between compensation actually paid and net (loss) income is likely as 2020a result of our including adjusted EBITDA, a non-GAAP financial measure that represents our net (loss) income adjusted to exclude: interest and other non-operating expense, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation Mr. Silverman’s 2020 annual totalexpense; foreign exchange loss (gain); acquisition-related expenses; goodwill impairment; and loss on extinguishment of debt, and adjusted EBITDA margin (adjusted EBITDA divided by Revenue) as key metrics in our compensation would have been $7,067,871. Using this amount, the ratioprogram. For a reconciliation of Mr. Silverman’s annual total compensationNet (loss) income to adjusted EBITDA see “Non-GAAP Financial Measures.” (2)In 2021 we added relative TSR (a measure reflecting returns to our stockholders relative to the medianNasdaq Composite constituents) over a three-year performance period to the mix of performance metrics used in our compensation program. The initial performance period will expire at the end of 2023 and therefore is not a direct contributor to any correlation shown in the chart above.
Most Important Performance Measures for FYE 2022 The following table sets forth an unranked list of the performance measures which we view as the “most important” measures for linking “compensation actually paid” to our CEO and Other NEOs for 2022 to Etsy's performance: | | | | | | | Performance Measure | What it Measures | | Gross Merchandise Sales (GMS) ($) | The dollar value of items sold in our marketplace within the applicable period, excluding shipping fees and net of refunds associated with canceled transactions | | Revenue ($) | Our revenue (determined on a consolidated basis) reported in Etsy's audited financial statements | | Adjusted EBITDA ($) | Our net income (determined on a consolidated basis) adjusted to exclude: interest and other non-operating expense, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); acquisition-related expenses; non-ordinary course disputes; restructuring and other exit income; and loss on extinguishment of debt | | Adjusted EBITDA Margin (%) | Etsy’s profitability from our operations calculated by dividing (i) our adjusted EBITDA by (ii) our revenue, and expressed as a percentage | | Relative TSR ($) | Our stock price performance, reflecting returns to our stockholders relative to the Nasdaq Composite constituents | | |
Our Compensation Committee also reviewed and approved individual goals and objectives for 2022 for our CEO and for each other Executive Team member (including each of our Other NEOs). These individual goals included both business project goals as well as ESG goals aligned with the Executive Team member’s business functions. A portion of each NEO’s actual annual total compensationcash incentive (20% for our CEO; 30% for our Other NEOs) is based on the evaluation of all employees would be 37:1.each NEO’s individual performance achievements measured against these individual goals. Please see the Compensation Discussion and Analysis section in this proxy statement for additional information.
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Equity Compensation Plan Information The following table provides information as of December 31, 20202022 with respect to the shares of our common stock that may be issued under our equity compensation plans. | | Equity compensation plans approved by security holders | | | 8,185,939 | | | $20.97 | | | 27,620,928 | | | | Equity compensation plans not approved by security holders | | | — | | | — | | | — | | | | Total | | | 8,185,939 | | | | | | 27,620,928 | |
| | | | | | | | | | | | | | Plan Category | Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants, and Rights (a)(#)(1) | Weighted-Average Exercise
Price of Outstanding
Options, Warrants, and
Rights (b)($)(2) | Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation Plans
(Excluding Securities Reflected in
Column (a)) (c)(#)(3) | | Equity compensation plans approved by security holders | 9,850,103 | | 31.99 | | 34,988,305 | | | Equity compensation plans not approved by security holders | — | | — | | — | | | Total | 9,850,103 | | | 34,988,305 | |
(1)Amounts include outstanding awards under our 2006 Stock Plan and 2015 Plan, including PSUs at target. If all outstanding PSUs at December 31, 2022 were to be earned at the maximum achievement level, an additional 468,270 shares would be issuable under outstanding awards. There are no outstanding awards under our 2015 Employee Stock Purchase Plan. (2)The weighted-average exercise price excludes RSU and PSU awards, which have no exercise price. (3)Amounts reflect the shares available for future issuance under our 2015 Plan and our 2015 Employee Stock Purchase Plan. As of December 31, 2022, 32,188,305 shares remained available for issuance under the 2015 Plan and 2,800,000 shares remained available for issuance under the 2015 Employee Stock Purchase Plan. | | | Amounts include outstanding awards under our 2006 Stock Plan and 2015 Equity Incentive Plan. There are no outstanding awards under our 2015 Employee Stock Purchase Plan.
| | | (2)
| | | The weighted-average exercise price excludes RSU awards, which have no exercise price.
| | | (3)
| | | Amounts reflect the shares available for future issuance under our 2015 Equity Incentive Plan and our 2015 Employee Stock Purchase Plan. As of December 31, 2020, 24,820,928 shares remained available for issuance under the 2015 Equity Incentive Plan and 2,800,000 shares remained available for issuance under the 2015 Employee Stock Purchase Plan.
| |
The 2015 Equity Incentive Plan provides that on the first business day of each fiscal year, the number of shares available for issuance is automatically increased by a number equal to the least of (i) 7,050,000 shares, (ii) 5% of the outstanding shares of our common stock as of the last business day of the prior year, or (iii) such other amount as our Board determines. As of January 4, 2021,2, 2023, the number of shares available for issuance increased automatically by 5% of our outstanding shares of common stock as of December 31, 2020,2022, or 6,291,7976,252,714 shares, pursuant to this provision. This increase is not reflected in the table above. Similarly, the 2015 Employee Stock Purchase Plan provides that on the first business day of each fiscal year, the number of shares available for issuance is automatically increased by a number equal to the least of (i) 1,400,000 shares, (ii) 1% of the outstanding shares of our common stock as of the last business day of the prior fiscal year, or (iii) such other amount as our Board determines. Consistent with its approachThere has been no increase in prior years, for 2020, the Board determined not to increase the number of shares available for future issuance under the 2015 Employee Stock Purchase Plan.Plan since its inception. 692021 Proxy StatementEtsy
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Proposal No. 3 | | | | | | | | | | | | | Proposal 3 | | | Advisory Vote on the Frequency of Future Advisory Votes to Approve Named Executive Officer Compensation | | | | |
In accordance with SEC rules, we are providingseeking an advisory vote from our stockholders with the opportunityon how often we should hold an advisory vote to approve byexecutive compensation. We currently hold an advisory vote on executive compensation every year. You may vote for every one, two, or three years, or you may abstain from voting. After careful consideration, our Board recommends holding an advisory say-on-pay vote annually. Our Board believes that holding a say-on-pay vote annually is the compensation of our named executive officers, as described in this proxy statement. This proposal, commonly referred to as the “say-on-pay” vote,most appropriate option because it gives us more frequent feedback from our stockholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and our executive compensation philosophy, objectives, and program, as described in this proxy statement. Accordingly, we ask our stockholders to approve the compensation of our named executive officers,well as disclosed in the section titled “Executive Compensation” of this proxy statement, including the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosure, by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the stockholders of Etsy, Inc. approve, on a non-binding advisory basis, the compensation paid to theour named executive officers, as disclosedofficers. The next vote with respect to the frequency of future say-on-pay votes is expected to occur at the 2029 Annual Meeting.
The option of one, two, or three years that receives the highest number of votes cast will be deemed to be the frequency of future say-on-pay votes recommended by our stockholders. Although this advisory vote is non-binding, our Board and our Compensation Committee will review and consider the voting results. Notwithstanding our Board’s present recommendation and the voting results, our Board may in the proxy statementfuture decide to conduct advisory say-on-pay votes on a different frequency and may vary its practice based on future discussions with stockholders and/or changes to our executive compensation practices and programs. | | | | | | | | | Our Board recommends a vote to hold future advisory votes on named executive officer compensation every “ONE YEAR.” |
| | | | | | | | | | | | | Proposal 4 | | | Ratification of the Appointment of Independent Registered Public Accounting Firm | | | | |
Our Audit Committee has appointed PricewaterhouseCoopers LLP ("PwC") as our independent registered public accounting firm for 2023 and recommends that stockholders vote to ratify the 2021appointment. Although we are not required by law or our bylaws to obtain such ratification from our stockholders, we believe it is good practice to do so. If our stockholders do not ratify the appointment of PwC, our Audit Committee may reconsider its appointment. Our Audit Committee, in its discretion, may appoint a new independent registered public accounting firm at any time during the year if our Audit Committee believes that such a change would be in the best interests of Etsy and our stockholders. PwC has audited our consolidated financial statements since 2012. A representative of PwC is expected to be present at our Annual Meeting includingand available to respond to appropriate questions and will have the Compensation Discussion and Analysis, compensation tables and narrative discussion.”opportunity to make a statement if they so desire. This proposal will be decided by a majority of the votes cast. This means that this proposal will be approved on an advisory basis if the number of votes cast “FOR” the proposal exceeds the number of votes cast “AGAINST” the proposal. An abstention will | | | | | | | | | Our Board recommends a vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2023. |
Fees and Services The following table presents fees for professional audit services and other services rendered to us by PwC for the fiscal years ended December 31, 2022 and December 31, 2021. | | | | | | | | | | YEAR ENDED DECEMBER 31, | | 2022 | 2021 | | (in thousands) | | Audit Fees | $3,531 | | $3,647 | | | Tax Fees | 470 | | 566 | | | Other Fees | 171 | | 152 | | | Total Fees | $4,172 | | $4,365 | |
Audit Fees. These amounts consist of fees and expenses for professional services necessary to perform an audit or review in accordance with the standards of the Public Company Accounting Oversight Board, including services rendered for the audit of Etsy’s annual financial statements and review of quarterly financial statements. These amounts also include fees for services that are normally incurred in connection with regulatory filings, such as statutory audits, comfort letters, consents, and review of documents filed with the SEC, as well as service fees related to specific transactions and events that occurred in each period, such as the goodwill impairment-related work in 2022, and the convertible debt offering and the acquisitions of Depop and Elo7 in 2021. Tax Fees. These amounts consist of fees for tax compliance, tax planning, and tax advice. Corporate tax services include a variety of permissible services, including technical tax advice related to U.S. and international matters, assistance with foreign income and withholding tax matters, and assistance with tax audits. Other Fees. These amounts consist of the aggregate fees for other services performed or provided by PwC not haveincluded in the categories above. These amounts include fees for PwC’s review of our sustainability and diversity data and subscriptions to online accounting reference material. Pre-Approval Policies and Procedures Our Audit Committee is required to pre-approve all audit and non-audit services performed by PwC to ensure that the provision of such services does not impair the public accounting firm’s independence. Our Audit Committee pre-approved all services provided to us by PwC in 2022 and 2021 as described above. Our Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm, PwC. The policy generally pre-approves specified services in the defined categories of audit services, audit-related services, tax services, and permitted non-audit services up to specified amounts. Pre-approval may also be given as part of our Audit Committee's approval of the scope of the engagement of the independent registered public accounting firm or on an individual, explicit, case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated to one or more of our Audit Committee's members, but any effectpre-approval decision made pursuant to such delegation must be reported to the full Audit Committee at its next scheduled meeting.
Audit Committee Report Our Audit Committee is comprised entirely of independent directors who meet the independence requirements of the Listing Rules of the Nasdaq Stock Market and the SEC. Our Audit Committee operates pursuant to a charter that is available on the outcome.Investor Relations section of our website at investors.etsy.com. AsThe principal purpose of our Audit Committee is to assist our Board in its oversight of our accounting practices, system of internal controls, audit processes, and financial reporting processes. Our Audit Committee is responsible for appointing and retaining our independent auditor and approving the audit and non-audit services to be provided by the independent auditor. Our Audit Committee’s function is more fully described in its charter.
Management is responsible for preparing our financial statements and ensuring they are complete and accurate and prepared in accordance with generally accepted accounting principles. PricewaterhouseCoopers LLP, our independent registered public accounting firm, was responsible for performing an advisory vote, the result will not be bindingindependent audit of our Consolidated Financial Statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles and as to the effectiveness of our internal control over financial reporting. In performing its responsibilities, our Audit Committee has: •reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2022; •discussed with our independent registered public accounting firm, PricewaterhouseCoopers LLP, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board or(the “PCAOB”); and •received the Compensation Committee. The say-on-pay vote will, however, provide us with important feedback from our stockholders about our executive compensation philosophy, objectives and program. The Boardwritten disclosures and the Compensationletter from PricewaterhouseCoopers LLP required by the applicable PCAOB requirements for the independent accountant communications with audit committees concerning auditor independence, and has discussed with PricewaterhouseCoopers LLP its independence. Based on the reviews and discussions referred to above, our Audit Committee valuerecommended to our Board that the opinionsaudited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Respectfully submitted by: Margaret M. Smyth (Chair) Marla Blow M. Michele Burns Fred Wilson
| | | | | | | | | | | | | Proposal 5 | | | Advisory Vote on a Stockholder Proposal Requesting a Report on the Effectiveness of our Efforts to Prevent Harassment and Discrimination | | | | |
Nia Impact Capital, on behalf of Nia Community Foundation, has advised us that it intends to present the following stockholder proposal at the Annual Meeting. Nia Community Foundation has indicated that it holds sufficient shares of Etsy common stock to meet the requirements of Rule 14a-8. The stockholder proposal will be voted on at the Annual Meeting only if properly presented by or on behalf of the proponent. The text of the stockholder proposal and supporting statement appear exactly as it was received by us unless otherwise noted. All statements contained in the stockholder proposal and supporting statement are the sole responsibility of the proponent. The stockholder proposal may contain assertions about Etsy or other matters that we believe are incorrect, but we have not attempted to refute those assertions. The address of the proponent is available and will be provided upon request to the attention of our stockholders and expect to take into accountCorporate Secretary at Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201. OUR BOARD RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL BASED ON THE REASONS SET FORTH IN ETSY’S STATEMENT IN OPPOSITION FOLLOWING THE STOCKHOLDER PROPOSAL. Resolved: Shareholders request the outcome of the vote when considering future executive compensation decisions and when evaluating our executive compensation program. The Board of Directors commission an independent review of the effectiveness and outcomes of the company's efforts to prevent harassment and discrimination against its protected classes of employees, and issue a public report summarizing the findings.
Supporting Statement: In its discretion, the Board may wish to consider including in the report disclosures such as: •the total number and aggregate costs associated with disputes settled by the company related to harassment or discrimination in the previous three years; •the total number of pending harassment or discrimination complaints the company is seeking to resolve through internal processes, arbitration or litigation; •the total number and aggregate costs associated with contracts that include exit or other agreements where concealment clauses that restrict discussions of harassment or discrimination are present, •an estimate of the number of claims which may be made public, should existing non-disclosure or arbitration agreements be made null by changing legislation. The report should not include the names of accusers or details of their settlements without their consent and should be prepared at a reasonable cost and omit any information that is proprietary, privileged, or violative of contractual obligations. Whereas: In January 2022, Etsy's management released a report confirming its use of employment-related concealment clauses. In its report, Etsy states that it provides payments to terminated employees that have harassed or discriminated against other Etsy employees in exchange for their agreement to non-disclosure or non-disparagement agreements.1 As Etsy continues to use non-disclosure and non-disparagement clauses at severance, investors cannot be confident in their knowledge of Etsy's workplace culture unless the company agrees to additional transparency and reporting. A healthy workplace culture is linked to strong returns. For example, the consultancy McKinsey found that companies in the top quartile for workplace culture post a return to shareholders that is 60 percent higher than median companies and 200 percent higher than organizations rated in the bottom quartile for healthy workplace culture.2
Etsy also operates under a quickly changing patchwork of state and federal laws related to the use of concealment clauses and may benefit from a consistent practice regardless of employee or contractor protected class or physical location. As of November 26, 2022, "The Speak Out Act," which limits non- disclosure agreements when sexual harassment is claimed, is expected to soon be signed into federal law by the President.3 Additionally, a number of states, including California, Maine, New York, and Washington, have reduced employers' abilities to use of concealment clauses. Investors have reason to be concerned. Etsy has stated that almost 10% of employees do not agree that Etsy is a place where they rarely experience or observe misconduct.4 Alphabet5, Apple6, Microsoft7, or Salesforce8, among others, have moved away from the use of concealment clauses. 1https://s22.q4cdn.com/941741262/files/doc_downloads/governance_documents/2022/0130/Risk-Assessment-(Employment-Related-Concealment-Clauses)-Final.pdf 2https://www.mckinsey.com/business-functions/organization/our-insights/the-organization-blog/culture-4-keys-to-why-it-matters 3https://www.forbes.com/sites/kimelsesser/2022/11/16/congress-passes-law-restoring-victims-voices-banning-ndas-in-sexual-harassment-cases/ 4https://s22.q4cdn.com/941741262/files/doc_downloads/governance_documents/2022/0130/Risk-Assessment-(Employment-Related-Concealment-Clauses)-Final.pdf 5https://www.sec.gov/Archives/edgar/data/1652044/000130817922000262/lgoog2022_def14a.htm 6https://www.sec.gov/Archives/edgar/data/320193/000119312522003583/d222670ddef14a.htm 7https://blogs.microsoft.com/on-the-issues/2022/06/08/microsoft-announces-four-new-employee-workforce-initiatives/ 8https://www.salesforce.com/news/stories/salesforce-extends-workplace-protections-in-ca-sb331-bill-to-all-u-s-employees/ Our Board's Statement in Opposition Our Board recommends that stockholders vote AGAINST this proposal for the following reasons: Etsy’s commitment to Keep Commerce Human starts with our own people. We care deeply about creating a vote “FOR”workplace free from discrimination and harassment and have shown a strong commitment to equity efforts. We invest in robust employment policies and practices to promote community, to help prevent harassment and discrimination, and to help ensure that all voices at Etsy are heard. We are proud of our work here, which features the approval,following core tenets of our approach: 1.Diversity, equity, and inclusion are core to Etsy’s culture. 2.We take proactive measures to help foster diversity, equity, and inclusion and to help ensure fair pay practices and equity in promotions and performance ratings. 3.We provide extensive training to help prevent harassment and discrimination. 4.We have established processes for reporting and investigating concerns regarding discrimination and harassment in the workplace. 5.We have a transparent culture, and we welcome employee and stakeholder feedback in furtherance of our commitment to equity. 6.We have Board and Executive Team oversight of our supportive and inclusive workplace environment. As detailed below, we believe that commissioning a report as requested by the proposal will not provide value to our stakeholders, as proven by the success of our robust harassment and discrimination prevention programs and our reputation as a destination where employees of all backgrounds can come, stay, and thrive. Details of our employment policies and practices appear below: 1. Diversity, equity, and inclusion are core to Etsy’s culture. In 2022, Etsy formalized the Executive Diversity Council, bringing together senior stakeholders to support current and future diversity, equity, and inclusion (“DEI”) efforts, embed inclusive practices throughout Etsy.com, and hold leaders accountable for results. Members of this council are the Executive Team, who are responsible for Etsy’s principal business units, and Etsy’s DEI leaders. Etsy’s Executive Diversity Council is working to support strategic initiatives, partnerships, advocacy, and programs that contribute to Etsy’s DEI mission and employee experience, and whose results can be measured against an established DEI scorecard. We also have robust mentorship and employee resource group (“ERG”) programs. Our goal is to create a positive, empowering, and inclusive workplace culture where employees from all backgrounds, ages, and abilities have access to programs that foster a sense of community, contribute to professional development, and amplify diverse voices within the organization. In 2022, Etsy.com grew our ERG program to ten communities, created a series of roundtable dialogs with executive leaders, and hosted a robust program of ERG-produced events focused on advocacy and equity. Etsy also continues to ensure our ERGs have a voice in Etsy.com’s benefits offerings and responses to global concerns. You can find a list of our ERGs on the Social Impact section of our Investor Relations website.
2. We take proactive measures to help foster diversity, equity, and inclusion and to help ensure fair pay practices and equity in promotions and performance ratings. Our Etsy.com business proudly maintains approximate gender parity in the overall employee population, among leadership, and at our Board level. In the United States, the percentage of women and marginalized gender software engineers at Etsy.com is 37.9% as of December 31, 2022. Globally across all functions at Etsy.com, the representation of women and marginalized gender employees was 51% at year-end 2022. We also have identified opportunities and set goals to increase representation of women and marginalized genders on software engineering teams in Mexico and Ireland, and at our subsidiary marketplaces Reverb and Depop, as described on pages 28-29 of our Form 10-K. We take proactive measures at each step of the employee journey, which are designed to ensure we maintain fair pay practices. For example: •At the recruiting stage, we determine compensation packages within our existing frameworks by comparing outgoing offers to internal roles with comparable experience. •During compensation reviews, we use guideposts based on performance outcomes when setting the size of merit and promotion increases and amounts of bonuses. •All compensation recommendations are reviewed by the appropriate Human Resources Business Partner and the Executive Team to promote equity. •Our promotion cycles include a calibration step where senior leaders in the relevant internal organization meet to review all promotion nominations in that organization to ensure fairness in decision-making practices. As part of our commitment to fair pay practices and transparency, we have voluntarily undertaken biennial third-party pay equity studies since 2018. Each of these analyses found no unexplained pay gaps adverse to women or employees from other marginalized genders, or non-white employees. Additionally, our 2022 pay equity analysis found no unexplained pay gaps based on intersectionality (i.e., based on the combination of race and gender/ethnicity). We plan to continue to comprehensively audit pay equity biennially with an external consultant, and conduct internal reviews several times a year in conjunction with events such as rating and promotion decisions and market adjustments. 3. We provide extensive training to prevent harassment and discrimination. At Etsy.com and across the House of Brands, employees participate in extensive and regular training designed to prevent harassment and discrimination. In addition to onboarding and annual training that are bespoke to employees’ roles as individuals or managers, last year, Etsy.com and Reverb offered all employees the opportunity to participate in a virtual reality diversity training program, followed by small group discussions with employees and leadership about relating to and supporting one another across the many demographic differences in the virtual reality program. Managers were required to participate in these training sessions, and employees were strongly encouraged to do so as well. Recognizing the critical role that people managers play in maintaining a safe and equitable workplace, Etsy.com and Reverb also provide quarterly live, interactive training to help new managers spot and encourage reporting of any behavior that falls short of Etsy’s high bar for respect and inclusion at work. 4. We have established processes for reporting and investigating concerns regarding discrimination and harassment in the workplace. Employees have multiple avenues to report any actual or possible violations of Etsy.com’s anti-discrimination and harassment policies, articulated in our Code of Conduct and Employee Handbook, which all employees acknowledge and have access to on our company intranet and which are publicly available among the Corporate Governance Documents on Etsy’s investor website. These reporting options include discussing the situation internally with the employee’s manager, the Chief Legal Officer, the VP, Global People & Talent Strategy, or the VP, Deputy General Counsel, Labor & Employment, who partner with the Human Resources and Employee Relations teams as needed. These options are designed to give employees multiple options for safe spaces to report complaints, and are visible, accessible, and approachable for all employees. Etsy.com also publicizes and maintains a 24/7, confidential, and anonymous Whistleblower Hotline for employees to report concerns by phone or online. Additionally, Etsy.com’s Employee Handbook provides contact information for local human rights agencies in multiple jurisdictions should they wish to report any perceived unlawful activity. When Etsy receives allegations of harassment and/or discrimination, they are addressed promptly and in accordance with the law. We investigate matters thoroughly and initiate swift remedial action where appropriate, up to and including the termination of employment of the bad actor. Etsy does not tolerate retaliation and takes great efforts to protect existing employees who speak up about conduct they perceive to be unlawful from retaliation. 5. We have a transparent culture, including significant public disclosure of our policies and practices in this area, and we welcome employee and stakeholder feedback in furtherance of our commitment to equality. We have a transparent culture, and we encourage employee feedback through frequent engagement and pulse surveys, and regular live question and answer sessions with our Executive Team. We believe that our culture and our efforts are reflected in the
results of our annual, global engagement survey. As of our last survey in May 2022, 89% of Etsy.com respondents feel that our community values diversity (six points higher than the industry benchmark2), and 94% feel that Etsy fosters a culture of compliance. As noted above, Etsy’s anti-discrimination and harassment policies, articulated in our Code of Conduct and Employee Handbook, are accessible internally on the company intranet and publicly available among the Corporate Governance Documents on Etsy’s investor website. Further, in response to a stockholder proposal received last year, which was submitted by Ms. Kristen Hull, Nia Impact Capital’s CEO and CIO, requesting that Etsy assess the risks associated with the use of “concealment clauses,” such as arbitration, non-disparagement and non-disclosure clauses, Etsy considered the proponent’s views and published a report on the Corporate Governance Documents section on Etsy’s investor website. The report outlined Etsy’s very limited use of such provisions, as well as Etsy’s assessment regarding employment-related confidentiality clauses. Among other things, the report notes that: Etsy does not use any arbitration clauses in any employment or contractor agreements; non-disparagement and confidentiality provisions are not used when joining Etsy; and non-disparagement and confidentiality provisions are only used post-employment on involuntary separation from Etsy, with an explicit statement that the employee may raise any claims of harassment, discrimination, or unlawful behavior by Etsy through the relevant administrative agencies in charge of overseeing workplace issues (i.e., the EEOC and state and local partner agencies) and with OSHA or the SEC, as well as to continue to make use of our anonymous reporting hotline. Following the publication of our report, the proponent withdrew their proposal. Etsy is committed to creating a workplace free from discrimination and harassment, as evidenced by our commitments described above to training, DEI, and promptly reporting and investigating any concerns, as well as publication of our prior report. 6. We have Board and Executive Team oversight of our supportive and inclusive workplace environment. Etsy takes seriously its responsibility to maintain a supportive and inclusive environment. Our Nominating and Corporate Governance Committee periodically reviews Etsy’s Impact goals, including employee DEI goals, and our progress toward those goals. Our Compensation Committee has oversight over the development and effectiveness of our diversity and inclusion programs. In addition, as noted above, our Executive Team participates in Etsy’s Executive Diversity Council, which supports Etsy’s current and future DEI efforts. Conclusion: We do not believe that an additional report would provide corresponding benefit to stakeholders. As a result of all of our activities, we are widely recognized for our workplace community: including America’s Most Just Companies, BuiltIn Best Places to Work New York City, and more. Creating a culture of equity, transparency, and inclusion is one of our differentiators; it’s in our DNA, it’s one of the reasons why people come to work for Etsy. Etsy already has programs and policies in place to prevent, and on the rare occasions necessary remediate, harassment and discrimination, and our current approach appears to be effective. We also provide robust disclosure of our policies, practices, and assessments related to these issues. We believe that commissioning an additional report as requested by the proposal will not provide value to our stakeholders, as proven by the success of our robust harassment and discrimination prevention programs and our reputation as a destination where employees of all backgrounds can come, stay, and thrive. | | | | | | | | | Our Board recommends a vote “AGAINST” the stockholder proposal. |
2 According to Culture Amp benchmark results based on comparable tech companies in 2022.
Security Ownership of Certain Beneficial Owners, Directors, and Management The following table presents information as to the beneficial ownership of our common stock as of April 1, 2023, for, each director and director nominee; each named executive officer; all current executive officers, directors and director nominees, as a group; and each stockholder known by us to beneficially own more than 5% of our outstanding common stock. The percentage ownership of our common stock is based on approximately 122,975,608 shares of our outstanding common stock as of April 1, 2023. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding: (1) shares subject to stock options held by that person that are currently exercisable or exercisable within 60 days of April 1, 2023, and (2) shares issuable upon the vesting of PSUs and RSUs within 60 days of April 1, 2023. However, we did not deem these shares to be outstanding for the purposes of computing the percentage ownership of any other person. | | | | | | | | | Name of Beneficial Owner(1) | Number of Shares Beneficially Owned (#)(2) | Percentage of Class
Beneficially Owned
(%) | | Named Executive Officers, Directors & Director Nominees: | | | C. Andrew Ballard(3) | 1,155 | | * | Marla Blow(4) | 716 | | * | Gary S. Briggs(5) | 27,446 | | * | M. Michele Burns(6) | 45,798 | | * | Michael Fisher(7) | 42,728 | | * | Rachel Glaser(8) | 171,785 | | * | Jonathan D. Klein(9) | 63,133 | | * | Kruti Patel Goyal(10) | 146,092 | | * | Raina Moskowitz(11) | 91,047 | | * | Melissa Reiff(12) | 20,281 | | * | Ryan Scott(13) | 11,758 | | * | Josh Silverman(14) | 2,181,827 | | 1.8 | | Margaret M. Smyth(15) | 63,357 | | * | Fred Wilson(16) | 534,515 | | * | All current executive officers, directors and director nominees, as a group (16 persons)(17) | 3,267,538 | | 2.6 | | | 5% Stockholders: | | | The Vanguard Group(18) | 13,892,541 | | 11.1 | | BlackRock, Inc.(19) | 11,463,909 | | 9.1 | | Wellington Management Group LLP(20) | 7,816,653 | | 6.2 | | Capital International Investors(21) | 6,424,148 | | 5.1 | |
* Represents less than 1% of our outstanding common stock. (1)Unless otherwise indicated below, shares reflect sole voting and investment power and the address of each of the individuals listed below is c/o Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201. (2)For directors, amounts exclude RSUs that will vest and stock options that will become exercisable on the date of the 2023 Annual Meeting of Stockholders, which date is more than 60 days after the date of this table. (3)For Mr. Ballard, amount consists of (i) 466 shares and (ii) 689 shares that are issuable upon exercise of stock options, which are currently exercisable. (4)For Ms. Blow, amount consists of (i) 296 shares and (ii) 420 shares that are issuable upon exercise of stock options, which are currently exercisable. (5)For Mr. Briggs, amount consists of (i) 8,577 shares and (ii) 18,869 shares that are issuable upon exercise of stock options, which are currently exercisable. (6)For Ms. Burns, amount consists of (i) 15,574 shares and (ii) 30,224 shares that are issuable upon exercise of stock options, which are currently exercisable.
(7)For Mr. Fisher, amount consists of (i) 23,322 shares and (ii) 19,406 shares that are issuable upon exercise of stock options, which are currently exercisable. (8)For Ms. Glaser, amount consists of (i) 56,407 shares and (ii) 115,378 shares that are issuable upon exercise of stock options, which are currently exercisable. (9)For Mr. Klein, amount consists of (i) 17,816 shares; (ii) 21,739 shares held jointly with spouse; and (iii) 23,578 shares that are issuable upon exercise of stock options, which are currently exercisable. (10)For Ms. Patel Goyal, amount consists of (i) 27,522 shares; (ii) 8,014 shares held jointly with spouse; (iii) 12,678 shares held in a grantor retained annuity trust; and (iv) 97,878 shares that are issuable upon exercise of stock options, which are currently exercisable. (11)For Ms. Moskowitz amount consists of (i) 22,267 shares and (ii) 68,780 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 1, 2023. (12)For Ms. Reiff, amount consists of (i) 4,097 shares and (ii) 16,184 shares that are issuable upon exercise of stock options which are currently exercisable. (13)For Mr. Scott, amount consists of (i) 1,694 shares and (ii) 10,064 shares that are issuable upon exercise of stock options, which are currently exercisable. (14)For Mr. Silverman, amount consists of (i) 114,674 shares; (ii) 42,269 shares held jointly with spouse in trust, (iii) 21,828 shares held by spouse in trusts and (iv) 2,003,056 shares that are issuable upon exercise of stock options, which are currently exercisable. (15)For Ms. Smyth, amount consists of (i) 5,100 shares and (ii) 58,257 shares that are issuable upon exercise of stock options which are currently exercisable. (16)For Mr. Wilson amount consists of (i) 501,329 shares, (ii) 31,275 shares held by two charitable foundations and (iii) 1,911 shares that are issuable upon exercise of stock options which are currently exercisable. (17)Consists of (i) 772,881 shares; (ii) 21,739 shares held jointly with spouse; (iii) 64,097 shares held in trusts; (iv) 31,275 shares held by charitable foundations and (v) 2,377,546 shares that are issuable to executive officers and directors upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 1, 2023. (18)The Vanguard Group ("Vanguard") reported on its Schedule 13G/A filed on February 9, 2023, that it has shared voting power over 185,916 shares, sole dispositive power over 13,367,526 shares and shared dispositive power over 525,015 shares. The address for Vanguard is 100 Vanguard Boulevard, Malvern, PA 19355. (19)BlackRock, Inc. ("BlackRock") reported on its Schedule 13G/A filed on January 27, 2023 that it has sole voting power over 10,559,716 shares and sole dispositive power over 11,463,909 shares. The address for BlackRock is 55 East 52nd Street, New York, NY 10055. (20)Wellington Management Group LLP ("Wellington") reported on its Schedule 13G filed on February 6, 2023 that it has shared voting power over 6,381,735 shares and shared dispositive power over 7,816,653 shares. The address for Wellington is 280 Congress Street, Boston, MA 02210. (21)Capital International Investors ("Capital") reported on its Schedule 13G filed on February 14, 2023 that it has sole voting power over 6,410,784 shares and sole dispositive power over 6,424,148 shares. The address for Capital is 333 South Hope Street, 55th Floor, Los Angeles, CA 90071. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our executive officers, directors, and 10% stockholders to file certain reports with respect to beneficial ownership of our equity securities. To our knowledge, based solely on a non-binding advisory basis,review of executive compensation, as discussed in this proxy statement.copies of reports provided to us, or written representations that no reports were required, we believe that during 2022, all Section 16 reports that were required to be filed were filed on a timely basis. 702021 Proxy StatementEtsy
TABLE OF CONTENTS
Certain Relationships and Related Person Transactions Policies and Procedures for Related Person Transactions Our Audit Committee has the primary responsibility for the review, approval, and oversight of “related person transactions,” as defined under the rules and regulations of the Securities Exchange Act of 1934, as amended. Theamended (the “Exchange Act”). Our Audit Committee has adopted a written related person transaction policy,Related Person Transaction Policy, which requires that anyall related person transactiontransactions must be presented to our Audit Committee for review, consideration, and approval. When considering proposed related person transactions, theour Audit Committee will take into account the relevant facts and circumstances and will approve only those transactions that are not inconsistent with our best interests and the best interests of our stockholders. In addition, our Code of Conduct (available on our website at investors.etsy.com) provides that directors, executive officers, and employees should avoid conflicts of interest or even the appearance of a conflict of interest. Under theour Code of Conduct, a conflict of interest occurs when personal interests, activities, investments, or associations interfere in any way, or even appear to interfere, with our interests as a company. We have multiple processes for identifying related person transactions and conflicts of interest. Under our related person transaction policy, each director, director nominee, and executive officer is responsible for identifying potential related person transactions and conflicts of interest. We also annually distribute a questionnaire to directors and executive officers requesting certain information regarding, among other things, their immediate family members and employment and beneficial ownership interests in Etsy. We then review this information for any related person transactions and conflicts of interest. Related Person Transactions Jonathan Briggs, the son of Gary Briggs, a member of our Board, joinedis employed by Etsy as a software engineer in July 2020.engineer. Jonathan's base salary as of December 31, 2022 was $140,500, and in 2020 was $110,000, andMarch 2022 he received an equity refresh award with a value at the time of grant of $60,000.$142,000. Jonathan was also eligible to participate in Etsy's 2022 discretionary bonus program with a target annual bonus of 10% of base salary. Jonathan’s compensation was established in accordance with Etsy’s policies and practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions.positions, and his employment by Etsy does not employ immediate family members of any other members of the Board. The employment agreement we entered into with Jonathan was approved by our Audit Committee in accordance with our related person transactions policy.Related Person Transactions Policy. Other than the transaction described above, there were no reportable related person transactions since January 1, 20202022 or currently proposed transactions in which: we have•Etsy has been or areis to be a participant;
•the amount involved exceeded or will exceed $120,000; and •any of our directors, executive officers, or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest. 712021 Proxy StatementEtsy
Voting and Meeting InformationTABLE OF CONTENTS
Security OwnershipWhat is the purpose of Certain Beneficial Owners, Directorsthis proxy statement?We are sending you this proxy statement because Etsy's Board is inviting you to vote (by soliciting your proxy) at our 2023 Annual Meeting of Stockholders which will take place online on June 14, 2023 at 9:00 a.m. Eastern Time. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement. Why did I receive a one-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials? We provide access to our proxy materials over the internet, which reduces both the costs and Managementthe environmental impact of sending our proxy materials to stockholders. We mailed a Notice of Internet Availability (the “Notice”) to our stockholders (other than those who previously requested paper copies) on or about April 25, 2023. The Notice contains instructions on how to access and view the proxy materials over the internet, vote, and request a paper or e-mail copy of the proxy materials. The following table presents information as to the beneficial ownershipIn addition, if you received paper copies of our common stockproxy materials and wish to receive all future proxy materials, proxy cards, and annual reports electronically, please follow the electronic delivery instructions on www.proxyvote.com. We encourage stockholders to take advantage of the availability of the proxy materials on the internet to help reduce the cost and environmental impact of the Annual Meeting.
What am I being asked to vote on? You are being asked to vote on: •The election of M, Michele Burns, Josh Silverman, and Fred Wilson as Class II directors to serve until the 2026 Annual Meeting of Stockholders and until their successors have been elected and qualified or until they resign, die, or are removed from our Board; •An advisory vote to approve executive compensation, which is commonly referred to as the “say-on-pay” vote; •An advisory vote to approve the frequency of the "say-on-pay" vote; •The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and •An advisory vote on a stockholder proposal requesting a third-party report on the effectiveness of our harassment and discrimination prevention efforts, if properly presented. How does our Board recommend that I vote? Our Board recommends that you vote: •“FOR” the election of M. Michele Burns, Josh Silverman, and Fred Wilson as Class II directors; •“FOR” the approval, on an advisory basis, of executive compensation; •"ONE YEAR," on an advisory basis, for the frequency of the advisory vote on executive compensation; •“FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and •"AGAINST," on an advisory basis, the stockholder proposal requesting a third-party report on the effectiveness of our harassment and discrimination prevention efforts. Who is entitled to vote at the Annual Meeting? Stockholders as of the close of business on April 13, 2021, for: each director and director nominee;
each named executive officer;
all current executive officers, directors and director nominees, as a group; and
each stockholder known by us17, 2023, the record date, are entitled to beneficially own more than 5% of our outstanding common stock.
Percentage ownership of our common stock is based onvote. On the record date, there were approximately 127,097,712123,329,414 shares of our common stock outstanding and entitled to vote. Stockholders may cast one vote per share on all matters.
How do I vote? If, on April 17, 2023, your Etsy shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record and you can vote your shares in one of two ways: either by proxy or during the virtual Annual Meeting electronically. If you choose to vote by proxy, you may do so: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By Internet You can vote over the internet at www.proxyvote.com by following the instructions on the Notice or proxy card | | By Telephone You can vote by telephone by calling toll-free 1 (800) 690-6903 and following the instructions on the Notice or proxy card | | By Mail You can vote by mail by signing, dating and mailing the proxy card (if you received one by mail) | | By Smartphone or Tablet You can vote on your mobile device by scanning this QR code |
We recommend that you submit your proxy in advance via one of the methods above even if you plan to attend the virtual Annual Meeting. This way, your shares of common stock will be voted as you direct if your plans change or you are unable to attend. If you want to vote your shares at the virtual Annual Meeting, you will need the control number included on your Notice or proxy card and should follow the instructions on the webcast. Note that there are additional instructions described below that will apply if you hold your shares with a broker, bank, trustee, or nominee. If, on April 17, 2023, your Etsy shares were held in an account with a broker, bank, trustee, or nominee, you will receive instructions on how to vote from your broker, bank, trustee, or nominee. Please follow those instructions in order to vote your shares. If you would like to vote your shares at the virtual Annual Meeting, you will need to obtain a valid proxy from the broker, bank, trustee, or nominee that holds your shares giving you the right to vote the shares at the meeting. How can I attend the Annual Meeting online? You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/ETSY2023, where you will be able to listen to the meeting live, submit questions, and vote online. We have decided to hold a virtual meeting because it improves stockholder access, encourages greater global participation, lowers costs compared to an in-person event, and aligns with our broader sustainability goals. Stockholders attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. The Annual Meeting will start at 9:00 a.m. Eastern Time on June 14, 2023. We recommend that you log in a few minutes early to ensure you are logged in when the meeting starts. Online check-in will begin at 8:45 a.m. Eastern Time. To enter the meeting, you will need the control number, which is included in the Notice or on your proxy card if you are a stockholder of April 13, 2021. In computing the numberrecord of shares of common stock, beneficially ownedor included with your voting instruction card and voting instructions received from your broker, bank, trustee, or nominee if you hold your shares of common stock in “street name.” A list of stockholders entitled to vote at the Annual Meeting will be available for examination at our corporate headquarters for any purpose germane to the Annual Meeting during normal business hours for ten days prior to the Annual Meeting. What happens if there are technical problems with the virtual meeting? If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting login page. Technical support will be available starting at 8:30 a.m. Eastern Time on June 14, 2023. In the event of a technical malfunction or other situation that the meeting chair determines may affect the ability of the Annual Meeting to satisfy the requirements for a meeting of stockholders to be held by means of remote communication under applicable Delaware corporate law, or that otherwise makes it advisable to adjourn the Annual Meeting, the chair or secretary of the Annual Meeting will convene the meeting at 12:00 p.m. Eastern Time on the date specified above and at the address specified above solely for the purpose of adjourning the meeting to reconvene at a persondate, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on our investor relations website at investors.etsy.com.
Can I ask questions at the Annual Meeting? After voting has taken place and the percentage ownershipformal meeting has adjourned, we will hold a brief question and answer session. Only stockholders of record as of the record date for the Annual Meeting and their proxy holders may submit questions or comments. You will be able to ask questions by joining the virtual Annual Meeting and typing your question in the box provided. We do not intend to post questions received during the Annual Meeting on our website. To help ensure that person, we have a productive and efficient meeting, and in fairness to all stockholders in attendance, you will also find posted our rules of conduct for the Annual Meeting when you log in prior to its start. In accordance with the rules of conduct, we ask that you limit your remarks to one brief question or comment that is relevant to the Annual Meeting or Etsy’s business and that remarks are respectful of your fellow stockholders and meeting participants. Questions may be grouped by topic by Etsy management with a representative question read aloud and answered. In addition, questions may be deemed outstanding: (1) shares subject to stock options heldbe out of order if they are, among other things, irrelevant to our business, repetitious of statements already made, or in furtherance of the speaker’s own personal, political, or business interests. What is the deadline for voting? If you are a stockholder of record, your ability to vote by proxy by internet, smartphone, tablet, or telephone will end at 11:59 p.m. Eastern Time on June 13, 2023. If you prefer to vote by mail, you should complete and return the proxy card as soon as possible, so that person that are currently exercisable or exercisable within 60 daysit is received no later than the closing of April 13, 2021,the polls at the Annual Meeting on June 14, 2023. You will also be able to vote by attending and (2) shares issuable uponvoting at the vesting of RSUs within 60 days of April 13, 2021.virtual Annual Meeting on June 14, 2023. However, we didrecommend that you submit your proxy in advance in the event your plans change or you are unable to attend the Annual Meeting. If your Etsy shares are held in an account with a broker, bank, trustee, or nominee, you should vote in accordance with the instructions from your broker, bank, trustee, or nominee. What happens if I do not deem thesevote? If you are a stockholder of record and do not vote by completing your proxy card, by telephone, through the internet, or online during the meeting, your shares will not be voted. If your Etsy shares are held in an account with a broker, bank, trustee, or nominee, and you do not instruct your broker, bank, trustee, or nominee how to vote your shares, your broker, bank, trustee, or nominee may still be outstanding for the purposes of computing the percentage ownership of anyable to vote your shares in its discretion. In this regard, brokers, banks, and other person. Unless otherwise indicated below,securities intermediaries may use their discretion to vote your “uninstructed” shares reflect sole voting and investment power and the address of each of the individuals listed below is c/o Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201.
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| | Named Executive Officers, Directors & Director Nominees:
| | | | | | | | | | Gary S. Briggs(1) | | | 25,174 | | | * | | | | M. Michele Burns(2) | | | 48,529 | | | * | | | | Edith W. Cooper(3) | | | 25,174 | | | * | | | | Mike Fisher(4) | | | 33,660 | | | * | | | | Rachel Glaser(5) | | | 217,993 | | | * | | | | Jonathan D. Klein(6) | | | 60,905 | | | * | | | | Kruti Patel Goyal(7) | | | 96,259 | | | * | | | | Melissa Reiff(8) | | | 22,284 | | | * | | | | Ryan Scott | | | 918 | | | * | | | | Josh Silverman(9) | | | 3,064,097 | | | 2.4 | | | | Margaret M. Smyth(10) | | | 60,982 | | | * | | | | Fred Wilson(11) | | | 549,043 | | | * | | | | All current executive officers, directors and director nominees, as a group (14 persons)(12) | | | 4,352,841 | | | 3.3 | | | | 5% Stockholders:
| | | | | | | | | | BlackRock, Inc.(13) | | | 9,701,405 | | | 7.7 | | | | T. Rowe Price Associates, Inc.(14) | | | 8,234,991 | | | 6.5 | | | | The Vanguard Group(15) | | | 13,902,095 | | | 11.03 | |
| *
| | | Represents less than 1% of our outstanding common stock
| | | (1)
| | | Consists of (i) 4,461 shares; (ii) 17,529 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (iii) 3,184 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| | | (2)
| | | Consists of (i) 12,921 shares; (ii) 33,894 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (iii) 1,714 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| | | (3)
| | | Consists of (i) 4,461 shares; (ii) 17,529 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (iii) 3,184 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| | | (4)
| | | Consists of (i) 15,580 shares; (ii) 7,663 shares held by spouse in trust; and (iii) 10,417 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021.
| | | (5)
| | | Consists of (i) 28,935 shares; and (ii) 189,058 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021.
| | | (6)
| | | Consists of (i) 15,232 shares; (ii) 21,739 shares held jointly with spouse; (iii) 22,264 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (iv) 1,670 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| | | (7)
| | | Consists of (i) 32,321 shares; (ii) 63,938 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021.
| | | (8)
| | | Consists of (i) 1,434 shares; (ii) 19,129 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (iii) 1,721 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| | | (9)
| | | Consists of (i) 42,269 shares held jointly with spouse in a trust; (ii) 21,828 shares held by spouse in trusts; and (iii) 3,000,000 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021.
| | | (10)
| | | Consists of (i) 2,372 shares; (ii) 56,856 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (iii) 1,754 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| | | (11)
| | | Consists of (i) 540,000 shares; (ii) 7,302 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (iii) 1,741 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| |
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| (12)
| | | Consists of (i) 681,370 shares; (ii) 21,739 shares held jointly with spouse; (iii) 42,269 shares held jointly with a spouse in a trust; (iv) 29,491 shares held by spouses in trusts; (v) 3,597,959 shares that are issuable to our current executive officers and directors upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 13, 2021; and (vi) 14,968 shares issuable upon the vesting of RSUs within 60 days of April 13, 2021.
| | | (13)
| | | BlackRock, Inc. (“BlackRock”) reported on its Schedule 13G/A filed on February 4, 2021 that it has sole voting power over 8,662,361 shares and sole dispositive power over 9,701,405 shares. The address for BlackRock is 55 East 52nd Street, New York, NY 10055.
| | | (14)
| | | T. Rowe Price Associates, Inc. (“T. Rowe”) reported on its Schedule 13G/A filed on February 16, 2021 that it has sole voting power over 3,236,909 shares and sole dispositive power over 8,234,991 shares. The address for T. Rowe is 100 E. Pratt Street, Baltimore, Maryland 21202.
| | | (15)
| | | The Vanguard Group (“Vanguard”) reported on its Schedule 13G/A filed on February 8, 2021, that it has shared voting power over 211,530 shares, sole dispositive power over 13,352,882 shares and shared dispositive power over 529,213 shares. The address for Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
| |
Delinquent Section 16(a) ReportsSection 16(a) of the Exchange Act requires our executive officers, directors, and 10% stockholders to file certain reports with respect to beneficial ownershipmatters considered under applicable exchange rules to be “routine,” but not with respect to “non-routine” matters. Proposals 1 (Election of Directors), 2 (an Advisory Vote on Executive Compensation), 3 (an Advisory Vote on the Frequency of Advisory Votes on Executive Compensation) and 5 (Stockholder Proposal) are proposals in the absence of your voting instructions, which would result in a “broker non-vote.” Proposal 4 (Ratification of Auditors), however, is considered to be a “routine” matter, meaning that if you do not return voting instructions to your broker by its deadline, your shares may be voted by your broker in its discretion on Proposal 4. See “How many votes are required to approve each proposal?” below for more information. Please instruct your broker, bank, trustee, or nominee to ensure that your vote will be counted.
What if I return a proxy card but do not make specific choices? If you submit a properly signed proxy card but do not provide any voting instructions, the persons named as proxies will vote in accordance with the recommendations of our equity securities. ToBoard, which are indicated above and with each proposal in this proxy statement. We know of no other business that will be presented at the Annual Meeting. However, if any other matter is properly presented at the meeting, the persons named as proxies will vote your shares using his or her best judgment. Can I change my vote or revoke my proxy? Yes. If your shares are registered directly in your name with our knowledge, based solelytransfer agent, Computershare Trust Company, N.A., you may change your vote or revoke your proxy at any time prior to the final vote at the virtual Annual Meeting on June 14, 2023 by: •providing a reviewnew proxy bearing a later date (which automatically revokes the earlier proxy) by internet, telephone, smartphone, tablet, or mail (and until the applicable deadline for each method); or •attending and voting at the virtual Annual Meeting. Your most recent proxy submitted by proxy card, internet, telephone, smartphone, or tablet is the one that will count. Your attendance at the virtual Annual Meeting by itself will not revoke your proxy if you do not also submit a proxy card or vote at the virtual Annual Meeting. If you hold shares in an account with a broker, bank, trustee, or nominee, you may change your vote by submitting new voting instructions to your broker, bank, trustee, or nominee in accordance with the instructions they provide to you. If you have obtained a valid proxy from your broker, bank, trustee, or nominee giving you the right to vote your shares, you may change your vote by attending the virtual Annual Meeting and voting.
How many votes are required to approve each proposal? | | | | | | | | | | | | | | | | Proposal | Vote Required For Approval | Effect of Abstentions | | Effect of Broker Non-Votes* | | 1. Election of Directors | Each director is elected by a plurality vote. The three director nominees receiving the highest number of “FOR” votes will be elected. | Not applicable | ** | No effect; Brokers may not vote the shares if not instructed by the proxyholder, as this matter is considered “non-routine.” | | 2. Advisory Vote on Named Executive Officer Compensation (“Say-on-Pay” Vote) | Decided by a majority of the votes cast. This proposal will be approved if the number of votes cast “FOR” the proposal exceeds the number of votes cast “AGAINST” the proposal. | Not applicable | | No effect; Brokers may not vote the shares if not instructed by the proxyholder, as this matter is considered “non-routine.” | | 3. Advisory Vote on the Frequency of Future Advisory Votes on Named Executive Officer Compensation | The option of "one year," "two years," or "three years" that receives the highest number of votes cast will be deemed to be the frequency of future say-on-pay votes recommended by our stockholders. | Not applicable | | No effect; Brokers may not vote the shares if not instructed by the proxyholder, as this matter is considered “non-routine.” | | 4. Ratification of Auditors | Decided by a majority of the votes cast. This proposal will be approved if the number of votes cast “FOR” the proposal exceeds the number of votes cast “AGAINST” the proposal. | Not applicable | | Not applicable; Brokers may vote the shares if not instructed by the proxyholder, as this matter is considered “routine.” | | 5. Advisory Vote on a Stockholder Proposal Requesting a Report on Harassment and Discrimination Prevention Efforts, if properly presented | Decided by a majority of the votes cast. This proposal will be approved if the number of votes cast “FOR” the proposal exceeds the number of votes cast “AGAINST” the proposal. | Not applicable | | No effect; Brokers may not vote the shares if not instructed by the proxyholder, as this matter is considered “non-routine.” |
* A “broker non-vote” occurs when a beneficial owner of copiesshares held by a broker, bank, or other securities intermediary does not give voting instructions to his or her broker, bank, or other securities intermediary as to how to vote on matters deemed to be “non-routine” and, as a result, the broker, bank, or other securities intermediary may not vote the shares on those matters. As discussed above, this would be the case for Proposals No. 1, No. 2, No. 3, and No. 5, which are considered “non-routine” matters. Therefore, we would expect broker non-votes to result from these proposals. We urge you to provide instructions so that your shares held in a stock brokerage account or by a bank or other record holder may be voted. ** Our Board has adopted a director resignation policy which requires any nominee for director who, in an uncontested election, receives more votes "withheld" than "for" his or her election to offer his or her resignation for consideration by our Nominating and Corporate Governance Committee and subsequently by our Board. Our director resignation policy is incorporated into our Corporate Governance Guidelines, a copy of reports provided to us, or written representations that no reports were required, we believe that during 2020 all Section 16 reports that werewhich can be found through the “Governance” link on our Investor Relations page at investor.etsy.com. Who will count the votes? Representatives of Broadridge Financial Services, Inc. will tabulate the votes and act as inspectors of election. What is a quorum? A quorum is the minimum number of shares required to be filed were filed onpresent at the Annual Meeting for any business to be conducted. For our Annual Meeting, a timely basis, with the exceptionmajority of the inadvertent one day late filingoutstanding shares must be present, either during the Annual Meeting, or represented by proxy. If a quorum is not present, we will not be able to conduct any business, and the Annual Meeting will be rescheduled for a later date. Instructions to “withhold” authority to vote in the election of onedirectors, abstentions, and broker non-votes will be counted as present for determining whether or not a quorum is present. Where can I find the voting results of the Annual Meeting? We plan to announce preliminary voting results at the Annual Meeting and will report the final voting results in a Current Report on Form 48-K within four business days of the Annual Meeting.
Who pays for the proxy solicitation expenses? We are soliciting proxies on behalf of Raina Moskowitz reportingour Board and will pay the exerciserelated costs. As part of stock optionsthis process, we reimburse brokers and saleother custodians, nominees, and fiduciaries for their out-of-pocket expenses for forwarding proxy materials to our stockholders. Our directors, officers, and employees may also solicit proxies in person, by telephone, or by other means of stock.communication, and will not receive any additional compensation for soliciting proxies. In addition, we have retained Okapi Partners LLC to provide investor response services and assist in the solicitation of proxies at a solicitation fee of $17,500, plus related reasonable out-of-pocket expenses. What does it mean if I receive more than one set of materials? If you receive more than one set of materials that means you hold your shares in more than one name or account. In order to vote all your shares, you should sign and return all the proxy cards you receive or follow the instructions for any alternative voting procedures on the proxy cards or the Notice you receive. How do I obtain a separate set of proxy materials or request a single set for my household? We have adopted a practice approved by the SEC called ‘‘householding.’’ This means that stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Notice and our annual report and proxy statement unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces printing costs, postage fees, and the environmental impact. Each stockholder who participates in householding will continue to be able to access or receive a separate proxy card. If you prefer to receive a separate Notice, or if you currently receive multiple copies and would like to request householding of your communications, please contact Broadridge by phone at 1 (866) 540-7095 or by mail to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. If any stockholders in your household would like to receive a separate annual report or proxy statement, please send an email to ir@etsy.com or call 1 (347) 382-7582. In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or you may notify Broadridge at the above telephone number or address if you hold registered shares. 742021 Proxy StatementEtsy
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Non-GAAP Financial MeasuresAdjusted EBITDA
In this proxy statement, we provide Adjusted EBITDA, a non-GAAP financial measure that represents our net income adjusted to exclude: interest and other non-operating expense, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); acquisition-related expenses; non-ordinary course disputes; and loss on extinguishment of debt. Below is a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure.
Adjusted EBITDA is a key measure used by our management and Board to evaluate our operating performance and trends, allocate internal resources, prepare and approve our annual budget, develop short- and long-term operating plans, determine incentive compensation, and assess the health of our business. We believe that Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business as it removes the impact of certain non-cash items and certain variable charges.
The following table reflects the reconciliation of net income to Adjusted EBITDA for each of the periods indicated:
| | Net income | | | $349,246 | | | $95,894
| | | | Excluding:
| | | | | | | | | | Interest and other non-operating expense, net(1) | | | 34,923 | | | 11,121
| | | | Provision (benefit) for income taxes | | | 16,463 | | | (15,248) | | | | Depreciation and amortization(2) | | | 58,189 | | | 48,031
| | | | Stock-based compensation expense | | | 65,114 | | | 44,395
| | | | Foreign exchange loss (gain) | | | 6,522 | | | (3,006) | | | | Acquisition-related expenses(3) | | | 1,804 | | | 3,917
| | | | Non-ordinary course disputes | | | — | | | 1,164
| | | | Loss on extinguishment of debt(4) | | | 16,855 | | | —
| | | | Adjusted EBITDA | | | $549,116 | | | $186,268
| |
| (1)
| | | Included in interest and other non-operating expense, net is primarily non-cash interest expense, including amortization of debt issuance costs, related to our convertible debt offerings, which were entered into in March 2018, September 2019, and August 2020.
| | | | | | (2)
2023 Proxy Statement | | | Included in depreciation and amortization is depreciation expense related to our headquarters lease, which is accounted for as a finance lease. Additionally, the years ended December 31, 2020 and 2019 include amortization expense of acquired intangible assets and developed technology related to the acquisition of Reverb in the third quarter of 2019.
| | | (3)
| | | Acquisition-related expenses are expenses related to our acquisition of Reverb.
| | | (4)
| | | During the third quarter of 2020, we repurchased $301.1 million aggregate principal amount of our outstanding 2018 Notes. We recognized a non-cash loss on extinguishment of debt of $16.9 million as a result.
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Stockholder Proposals Stockholders who would like to have a proposal considered for inclusion in the proxy materials for our 20222024 Annual Meeting of Stockholders must submit the proposal in writing to our Secretary at Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201, by no later than December 21, 2021,27, 2023, and otherwise comply with the SEC’s requirements for stockholder proposals. Stockholders who would like to bring a proposal before our 20222024 Annual Meeting of Stockholders, or to nominate directors for election, in accordance with the advance notice provisions of our Bylaws,bylaws, must give timely written notice to our Secretary. To be considered timely, the notice must be delivered to our headquarters at least 90 days, but not more than 120 days before the one-year anniversary of the previous year’s annual meeting. That means that to be timely, a notice must be received no later than March 13, 202216, 2024 nor earlier than February 11, 202215, 2024 (assuming the meeting is held not more than 20 days before or more than 60 days after June 11, 2022)14, 2024). The notice must describe the stockholder proposal in reasonable detail and otherwise comply with the requirements set forth in our Bylaws.bylaws. Our Bylawsbylaws may be found on our website at investors.etsy.com under “Governance—Governance Documents.” In addition to satisfying all of the requirements under our bylaws (including the advance notice provisions described above), to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than Etsy’s nominees must provide a notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 15, 2024. This advance notice requirement under Rule 14a-19 does not override or supersede a longer advance notice requirement under our bylaws. Information Requests Our Annual Report on Form 10-K for 2020 is available free of charge on our investor website at investors.etsy.com. No other information on our website is incorporated by reference in or considered to be a part of this document. You may also request a free copy of our Annual ReportForm 10-K by sending an email to ir@etsy.com or by calling (347) 382-7582. If you have any questions about giving your proxy or require assistance, please contact our proxy solicitor, at:Okapi Partners LLC, at info@okapipartners.com, toll free (888) 785-6668(844) 202-6026, or Okapi Partners LLC, 1212 Avenue of the Americas, 24th17th Floor, New York, NY 10036. Other Business We do not know of any other business that may be presented at the 2023 Annual Meeting. If any other matters are properly presented at the Annual Meeting, the persons named on the proxy card will have discretion to vote on the matters in accordance with their best judgment. Cautionary Note Regarding Forward-Looking Statements This proxy statement contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to our “Right to Win” and other growth strategies, including our strategies for integrating our “House of Brands” marketplaces, marketing and other product initiatives, and our ESG goals, strategy, and intended progress. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “aim,” “anticipate,” “believe,” “could,” “enable,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and derivative forms and/or negatives of those terms. Forward-looking statements are not guarantees of performance and involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Those risks include those described in Part I, Item 1A, “Risk Factors” and elsewhere in our Form 10-K. Given these uncertainties, you should not place undue reliance on any forward-looking statements in this proxy statement.
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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this proxy statement and, although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.Moreover, we operate in a competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements made in this proxy statement. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this proxy statement may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. In addition, global macroeconomic uncertainty, including additional or unforeseen effects from the COVID-19 pandemic and general market, political, economic, and business conditions, may amplify many of these risks. Forward-looking statements represent our beliefs and assumptions only as of the date of this proxy statement. We disclaim any obligation to update forward-looking statements.
Adjusted EBITDA and Adjusted EBITDA Margin In this proxy statement, we provide adjusted EBITDA, a non-GAAP financial measure that represents our net (loss) income adjusted to exclude: interest and other non-operating expense, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); acquisition-related expenses; and goodwill impairment. We also provide adjusted EBITDA margin, a non-GAAP financial measure that presents adjusted EBITDA divided by revenue. Below is a reconciliation of adjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measure. Adjusted EBITDA and adjusted EBITDA margin are key measures used by our management and Board to evaluate our operating performance and trends, allocate internal resources, prepare and approve our annual budget, develop short- and long-term operating plans, determine incentive compensation, and assess the health of our business. We believe that adjusted EBITDA and adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business as they remove the impact of certain non-cash items and certain variable charges. The following table reflects the reconciliation of net (loss) income to adjusted EBITDA and the calculation of adjusted EBITDA margin for each of the periods indicated: | | | | | | | | | | YEAR ENDED DECEMBER 31, | | 2022 | 2021 | | (in thousands) | | Net (loss) income | ($694,288) | | $493,507 | | | Excluding: | | | | Interest and other non-operating expense, net | 3,212 | | 7,748 | | | Provision (benefit) for income taxes | 32,310 | | (21,853) | | Depreciation and amortization(1) | 96,702 | | 74,267 | | Stock-based compensation expense(2) | 230,888 | | 139,910 | | | Foreign exchange loss (gain) | 206 | | (13,670) | | Acquisition-related expenses(3) | 2,830 | | 36,704 | | Goodwill impairment(4) | 1,045,022 | | — | | | | | | | | | Adjusted EBITDA | $716,882 | | $716,613 | | | Divided by: | | | | Revenue | $2,566,111 | | $2,329,114 | | | Adjusted EBITDA margin | 28 | % | 31 | % |
(1)Included in depreciation and amortization is amortization expense of acquired intangible and developed technology assets related to the acquisitions of Depop and Elo7 in July 2021. (2)The increase in stock-based compensation expense is primarily driven by headcount growth and the issuance of equity awards as part of our compensation strategy. (3)Acquisition-related expenses for the years ended December 31, 2022 and December 31, 2021 are related to our acquisitions of Depop and Elo7 which occurred in July 2021. (4)Goodwill impairment expense for the year ended December 31, 2022 relates to the impairment of all of the goodwill of Depop and Elo7.
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