and Progress Etsy’s impact strategy focuses on leveraging Etsy’s core businessmission to generate value“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. This is what makes Etsy and our marketplaces distinct from mass retailers. Our mission guides our daily decisions, sets the path for our communitylong-term success, and stakeholders throughreinforces our commitment to make a positive economic, social, and environmental efforts. We believe that aligningecological impact. Since announcing our impact strategy within 2017, we have matured and updated some of our core businessgoals to be more specific, measurable, and time bound. We expect to continue to evolve our impact strategy in the future as we grow and our impact work matures. We apply the same focus and discipline to our impact metrics as we do our financial metrics; and together, they make us stronger and more resilient. We are pleased to share our progress as we execute on this strategy, and we will leadcontinue to positive outcomes. We aimreport our results transparently as it relates to create more economic opportunity for sellers, greater diversityour impact goals. Where applicable, we have included Reverb in our workforce and build long-term resilience by reducing our carbon footprint. We believe that consumers are demanding more of2019 Progress highlights. The chart on the businesses they support and that the companies best positioned to succeed will buildwin-win solutions that are good for people, the planet, and profit. The alignmentfollowing page includes a selection of our mission, values,goals and targets for 2020. You can read more about our impact strategy, alongsideincluding all of our business strategy is criticalgoals and targets, and see how we align our impact reporting with Sustainability Accounting Standards Board (SASB) guidelines, in our Annual Report on Form10-K for the fiscal year ended December 31, 2019 that accompanies this proxy statement. We include progress against our impact metrics in our Form10-K as a way to growing sustainablybetter reflect their significance to Etsy and positioning us for continued success. For 2018, we have set key performance indicators (“KPIs”) in order to measurerespond to increased interest from our impact progress.stakeholders in such reporting.
| | | | | 4 | | 2020 Proxy Statement | | Etsy |
| | | | | | | | | | | | | 2019 GOAL | | 2019 PROGRESS | | 2020 GOAL* | | | | | Economic Impact Make creative entrepreneurship a path to economic security and personal empowerment | | Double U.S. Etsy sellers’ economic output by 2023 | | Commissioned Etsy’s second economic impact study, which found that, in 2019, Etsy sellers: • Contributed $6.16 billion to the U.S. economy • Created 1.7 million jobs in the independent worker economy • Generated more than $2 billion in income • Produced $3.45 billion in additional economic value | | Create and grow economic opportunities for creative entrepreneurs. Target: • Double U.S. Etsy sellers’ economic output by 2023. | | | | | Social
Impact Enable equitable access to the opportunities that we create | | Approximately double the percentage of Black and Latinx employees in Etsy’s workforce by 2023 | | • Exceeded our 2019 Underrepresented Minority (URM) hiring goal and made meaningful progress toward our 2023 goal. In 2019, Black and Latinx employees made up 15% of U.S. Etsy hires. As a result, Black and Latinx people make up 10.4% of our workforce, up from 8.5% in 2018. • Launched targeted,URM-focused retention and leadership development initiatives. • Established a robust Diversity & Inclusion infrastructure, with dedicated staffing, resources and support, inclusive of focused learning and development programs, internal and external events and marketing support, and dedicated recruiting support. | | Build diverse and inclusive workforces that are broadly representative of their communities. Targets: • Approximately double the percentage of Black and Latinx employees at Etsy by 2023. • Set a baseline and goals for Reverb’s performance and pay practices, hiring rubric, and diversity & inclusion strategy. | | | | | Ecological Impact Build long-term resilience by eliminating our carbon impacts and fostering responsible resource use | | Stay on track to meet renewable power and energy intensity goals, and mitigate the ecological impact of our marketplace by offering carbon neutral shipping on 100% of transactions by 2020 | | • Procured 76% of our electricity from renewable sources, up from 58% in 2018. • Achieved a 33% reduction in energy intensity (kWh per square foot) across our global office operations based on a 2016 baseline. • In February 2019, announced immediate action to balance our footprint by offsetting 100% of our emissions generated from Etsy.com shipping through investment in verified emissions reductions. | | Achievebest-in-class sustainable operations, and run a carbon neutral business. Targets: • Source 100% renewable electricity by 2020. • Reduce the intensity of our energy use by 25% by 2025. • Offset 100% of measured Scope 1, 2 and 3 emissions. |
* | The statements above regarding our 2020 goals are forward-looking statements and are subject to material risks and uncertainties, including risks related to our corporate social responsibility metrics as set forth in our Annual Report on Form 10-K for year ended December 31, 2019 and subsequent current and periodic reports we file with the SEC. |
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| | | | | 5 | | 2020 Proxy Statement | | Etsy |
| | | | | | | | | | | Culture and Engagement We believe that our action-oriented, values-based, and purpose-driven work culture is a competitive advantage in attracting and retaining top talent. Etsy’s employees work hard every day to bring innovative ideas to Etsy to strengthen the experience for sellers and buyers in our marketplaces. We are focused on maximizing our employees’ engagement, which is linked with high performance, retention, innovation, and growth. In May 2019, Etsy conducted an engagement survey of all global employees: | | | | | | | | | OVERARCHING
GOAL | | Economic Impact | | Social Impact | | Ecological Impact | | | | | Make creative entrepreneurship93% of employees submitted a pathresponse. 76% of respondents reported favorable employee engagement. We use the results of our engagement survey to economic securityguide the development of more dynamic programs that build knowledge and skills and connectedness between employees. We believe employee engagement comes from fulfilling work focused on serving the needs of our sellers and buyers and from ample personal empowerment | | Enable equitable accessand professional growth opportunities. To that end, we strive to offer competitive benefits, including, but not limited to, the opportunitiesfollowing examples:We have a gender-blind parental leave policy that is available to all Etsy employees globally. Through this policy we create | | Build long-term resilience by eliminating our carbon impacts and fostering responsible resource use | | | | | | | | | | | | KEY
INITIATIVES
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Ensure the economic opportunities Etsy creates meaningfully benefit across a broad swath of our seller community
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Foster economic security and personal empowerment for creative entrepreneurs through charitable and in-kind contributions
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Advance public policies that increase economic security and reduce administrative burdens for creative entrepreneurs
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Meaningfully increase representation of underrepresented groups and ensure equity in Etsy’s workforce
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Build a diverse, equitable, and sustainable supply chainaim to support and enable parents to play equal roles in building their careers and nurturing their families.
We offer our operations and bring valueemployees paid time off to both Etsy and our vendors —
Increase the presence of underrepresented populations within the Etsy seller community
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Utilize and source energy responsiblyvolunteer so that wethey can power our operations with 100% renewable electricity by 2020support the causes and reduce the intensity of our energy use by 25% by 2025organizations they are passionate about.
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In 2018, develop a plan and set a goal to mitigate the carbon impacts of our marketplace that aligns with business growth
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Run zero waste operations by 2020
| | | | | | | | | | | | 2018 KPI
| | Increase the number of sellers whose sales on Etsy serve as a meaningful source of personal income | | Interview at least two candidates from underrepresented backgrounds for each role filled | | Reduce the carbon dioxide emissions generated from our offices by at least 5% in 2018 compared to 2016 |
Leadership and Corporate Governance | | | Executive Team We believe that we have built a highly qualified and effective executive team. Each person brings both fresh perspectives and deep expertise to their particular roles. We’re proud that 60%over half of our executive team identifiesidentify as women. Our executive officers are: •Josh Silverman, President and Chief Executive Officer, Josh Silverman, leading Etsy in its growth and strategic direction
•Rachel Glaser, Chief Financial Officer, Rachel Glaser, overseeing our global financial operations
•Mike Fisher, Chief Technology Officer, Mike Fisher, leading our engineering teamteams
•Kruti Patel Goyal, Chief OperatingProduct Officer, Linda Kozlowski,leading our product teams
Raina Moskowitz, Senior Vice President, People, Strategy and Services, overseeing our marketsstrategy and seller services organizationsleading our human resources and operations teams •Ryan Scott, Chief Marketing Officer, leading our marketing teams
Jill Simeone, General Counsel and Secretary, Jill Simeone, leading our legal, policy, and advocacy teams | | | | | 6 | | 2020 Proxy Statement | | Etsy |
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| | | Director Nominees and Continuing Directors The following table provides summary information about each director nominee and continuing director. See pages 619 to 2035 for more information. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | AGE | | | ETSY DIRECTOR SINCE | | | INDEPENDENT | | | AUDIT COMMITTEE | | | COMPENSATION COMMITTEE | | | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | | | Nominees for election at the 2020 Annual Meeting (Class II) | | | | | | | | | M. Michele Burns | | | 62 | | | | 2014 | | | | Yes | | | | | | | | | | | | | | | | | | | | | Josh Silverman | | | 51 | | | | 2016 | | | | No | | | | | | | | | | | | | | | | | | | | | Fred Wilson (Chair) | | | 58 | | | | 2007 | | | | Yes | | | | | | | | | | | | | | | Directors with terms expiring at the 2021 Annual Meeting (Class III) | | | | | | | | | Gary S. Briggs | | | 57 | | | | 2018 | | | | Yes | | | | | | | | | | | | | | | | | | | | | Edith W. Cooper | | | 58 | | | | 2018 | | | | Yes | | | | | | | | | | | | | | | | | | | | | Melissa Reiff | | | 65 | | | | 2015 | | | | Yes | | | | | | | | | | | | | | | Directors with terms expiring at the 2022 Annual Meeting (Class I) | | | | | | | | | Jonathan D. Klein | | | 59 | | | | 2011 | | | | Yes | | | | | | | | | | | | | | | | | | | | | Margaret M. Smyth | | | 56 | | | | 2016 | | | | Yes | | | | | | | | | | | | | |
| | Chair Member | | | | | | | | | | | | | | | | | | | | Name | | Age | | Etsy Director Since | | Independent | | Audit Committee | | Compensation Committee | | Nominating and Corporate Governance | Nominees for election at the 2018 Annual Meeting (Class III) | | | | | | | | Gary S. Briggs | | 55 | | 2018 | | Yes | | | | | | | | | | | | | | Edith W. Cooper | | 56 | | 2018 | | Yes | | | | | | | | | | | | | | Melissa Reiff | | 63 | | 2015 | | Yes | | | | | | | | Nominees for election at the 2019 Annual Meeting (Class I) | | | | | | | | Jonathan D. Klein | | 57 | | 2011 | | Yes | | | | | | | | | | | | | | Margaret M. Smyth | | 54 | | 2016 | | Yes | | | | | | | | Nominees for election at the 2020 Annual Meeting (Class II) | | | | | | | | M. Michele Burns | | 60 | | 2014 | | Yes | | | | | | | | | | | | | | Josh Silverman | | 49 | | 2016 | | No | | | | | | | | | | | | | | Fred Wilson (Board Chair) | | 56 | | 2007 | | Yes | | | | | | |
| Chair |
| Member |
| Financial Expert |
| | | | | | | Director Dashboard | | | DIRECTOR DASHBOARD
| | | | | 7 | | 2020 Proxy Statement | | Etsy |
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| | | Corporate Governance Strengths We believe that effective corporate governance isdoes not call for aone-size-fits-all.one-size-fits-all approach. We carefully consider our corporate governance practices to ensure that they are appropriately tailored to our business and promote the long-term interests of our stockholders. For information about our stockholder outreach efforts on the topic of corporate governance, please see “Stockholder Engagement” below. OurHighlights of our corporate governance practices include:
• Independent Board Chair
• Except forFully independent Board, except our CEO all directors on the Board are independent
• 100% independent Committee members
• Regular executive sessions of independent directors
• A Board that is comprised of sophisticated and fully engaged directors with different areas of relevant expertise including two new directors
Equal representation of men and women on our Board Even distribution of director tenure, resulting in a Board with expertise in marketingboth institutional and human resources who joinedfresh perspectives Active role by our Board in 2018 and who bring fresh perspectives to our business and operations • Active role in risk management oversight
• Stockholder outreach program
Annual Board and Committee self-evaluations overseen by the lead independent directorBoard Chair and Nominating and Corporate Governance Committee • Robust code of conduct applicable to directors, officers, and employees
• Periodic reviews of our corporate governance structure, including committeeour charter, bylaws, Committee charters, corporate governance guidelines, and code of conduct, to ensure they are typical and appropriate for a company of our stage of development and market size
• Rigorous CEO evaluation process
• Independent director oversight of executive succession planning
• Strict policyPolicy of no pledging or hedging of Etsy shares for current employees and directors
ShareholderStockholder Engagement
We maintain active, year-round engagement with the Etsy community—we regularly meet with our stockholders and other key constituents, like Etsy sellers. In 2017,2019, we held over 430450 meetings with our stockholders who, in the aggregate, held over 45%approximately 63% of our outstanding shares. WeIn our stockholder meetings we discussed a variety of topics, including but not limited to our financial and operating performance, our business and growth strategy, corporate governance practices, Etsy’s impact strategy, and executive compensation matters. We value the insights and feedback we gather from these engagements. In 2018, we also launched a more targeted engagement program to better understand stockholder views on our compensation program and corporate governance practices, which we continued in | | | | | 8 | | 2020 Proxy Statement | | Etsy |
2019. Our management team has principal responsibility for investor relations, and their efforts are overseen by our Board. We proactively arrange calls and meetings with stockholders to discuss corporate governance, environmental, social, and executive compensation issues of interest to investors. We believe this engagement program provides stockholders with an effective channel fortwo-way dialogue with both our Board and management. In 2019, in connection with this engagement program, we reached out to stockholders representing approximately 50% of our outstanding common stock and held discussions with all of the stockholders who wanted to meet, representing approximately 12% of our outstanding shares of common stock. The following sections highlight what we heard from our stockholders in these discussions, and what actions we have taken or expect to take in response to their feedback. Executive Compensation Matters Last year, after stockholders approved Etsy’s 2019 say-on-pay proposal with approximately 92% of the votes cast in favor of the proposal, we continued to seek feedback from them to better understand their views regarding Etsy’s compensation program and practices. In these meetings, stockholders encouraged Etsy to continue to drive accountability and results through a robust pay-for-performance approach to executive compensation. In order to induce Mr. Silverman to join Etsy as Chief Executive Officer in connection with our 2017 strategic and management transition and to provide Mr. Silverman with a meaningful equity stake in the company, aligning his interests with those of our stockholders, he received a one-time front-loaded equity grant in 2017. The Compensation Committee determined that Mr. Silverman would not be eligible to receive additional equity awards until 2021, and the Compensation Committee has kept that commitment. In preparation for Mr. Silverman becoming eligible to receive equity awards in 2021, the Compensation Committee is actively exploring a variety of types of performance-based equity awards, such as performance share units, as suggested by many of our stockholders. For our 2021 executive compensation program and beyond, the Compensation Committee will continue to consider how best to structure executive compensation at Etsy, so that it continues to align with our business strategy, while incentivizing the performance and retention of our executive officers and other participants. The Board of Directors and the Compensation Committee value the opinions of our stockholders, and will continue to consider the feedback of stockholders received through our outreach program, as well as the voting outcome of future votes on say-on-pay proposals. Furthermore, they will remain focused on aligning compensation with performance and retention when making compensation decisions for our executive officers. Corporate Governance Matters We also have regular discussions with stockholders regarding our corporate governance practices as part of our stockholder outreach program. In particular, we are aware that proxy advisory firms and some institutional investors disfavor certain anti-takeover provisions for mature public companies, including classified board structures and supermajority voting requirements to amend a company’s governing documents. Etsy is committed to continuing to listen to our stockholders on this important topic and assessing the value of these structures on an annual basis. | | | | | 9 | | 2020 Proxy Statement | | Etsy |
These types of corporate governance provisions, which we have in our charter and bylaws, are frequently adopted by newly public companies and were implemented by our Board at the time of our initial public offering in 2015. We do not maintain these provisions lightly. In discussing this topic with our stockholders, we communicated that we believe these protections are crucial to Etsy’s success as a relatively young mid-sized public company with goals that are designed to be realized over the next several years. The feedback that Etsy received through our outreach program is that stockholders understand that these types of governance provisions can add stability, providing younger, smaller companies with the runway to grow. Specifically, they agreed that Etsy’s anti-takeover provisions were helpful in 2017 when activist investors were in contact with Etsy. These provisions allowed the Board and management appropriate flexibility and time to make changes to our strategy, which ultimately significantly increased stockholder value. However, our stockholders also shared that they expected the Board to develop a plan for prudently reducing these governance provisions over time, as Etsy matures and grows. In light of the uncertainty caused by the COVID-19 pandemic, its potential impact on the global economy, and the resulting market volatility, our Board has determined that it is not currently prudent to weaken the provisions that increase the likelihood that those seeking short-term gains could take advantage of current market conditions at the expense of the long-term interests of stockholders. At the same time, our Board understands that governance structures that work well today may need to change over time. In the spirit of enhancing accountability to stockholders, our Board has determined that an appropriate next step in evolving our corporate governance provisions is to adopt a director resignation policy that would require individual directors who fail to receive majority support of stockholders in his or her election to tender his or her resignation. We expect to implement this policy in advance of our 2021 Annual Meeting of Stockholders. Etsy is a unique company and our Board’s view is that effective corporate governance is not one-size-fits-all. For example, as the COVID-19 pandemic has evolved, Etsy’s Board and management have continued to demonstrate that they are active and engaged, proactively closing our offices and moving our global workforce to be 100% remote in early March 2020. Additionally, we believe that our Board’s early adoption of a virtual annual meeting format in 2017 (expanding access, improving communication, lowering costs, and aligning with our broader sustainability goals) placed us ahead of the curve in delivering effective stockholder outreach remotely, a necessity in 2020. Our Board and the Nominating and Corporate Governance Committee value our stockholders and will continue to solicit and consider stockholders feedback regarding our corporate governance practices. 2019 Investor Day We were also pleased to hold our first-ever Investor Day in March 2019 at our Brooklyn headquarters where we hosted over 100 analysts and investors in person and had over 300 financial community participants via webcast. Through informalfollow-up discussions as well as a formal perception survey, we received positive feedback concerning the insights we provided regarding Etsy’s long-term strategy, insights into our buyer and seller communities, key operating initiatives, and multi-year financial targets. We look forward to continuing to build relationships with | | | | | 10 | | 2020 Proxy Statement | | Etsy |
the investor community in 2020. Our discussions with investors have been productive and informative and have provided valuable feedback to our Board to help ensure that its decisions are aligned with stockholder objectives. 2020 Engagement Program We plan to continue our stockholder engagement program in 2020 under the Board’s oversight to further enhance and deepen our relationship with our stockholders with respect to corporate governance, environmental, social, executive compensation, and other issues of interest to our stockholders. | | | | | 11 | | 2020 Proxy Statement | | Etsy |
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Executive Compensation InOur 2019 executive compensation program was designed to be a straightforward and thoughtfulpay-for-performance approach. We target a compensation mix for our named executive officers that is weighted heavily towards variable compensation, including short-term cash incentive and long-term equity incentive compensation, that is linked to company performance and stockholder interests. As we have previously discussed, our CEO, Mr. Silverman, did not receive a long-term incentive grant in 2018 or 2019 in light of the substantial changesfront-loaded long-term equity grant he received in May 2017 that was intended to induce him to join Etsy and provide him with a meaningful equity stake in the company, aligning his interests with those of our management team and the changes flowing from our business transformation, our compensation program in 2017 reflected our company’s challenging and changing circumstances. The Committee was largely guided by the need to recruit and hire the appropriate individuals at our most critical senior leadership positions and to ensure the retention and continued service of the remaining senior executive officers. In filling each of the executive positions in 2017, we recognized the need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market.stockholders. For a detailed discussion of our executive compensation program, please see the section titled “Executive Compensation—Compensation“Compensation Discussion and Analysis”. below.
We maintain the following practices that we believe help support the effectiveness of our executive compensation program. | | | | | WHAT WE DO | | WHAT WE DON’T DO | | | What We Maintain a Fully (100%) 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 Provide Excessive Perquisites | | | 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 Defined Benefit Retirement Programs | | | 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 OfferChange-in-Control Excise Tax Payments or“Gross-Ups” | | | Our Executive Officers are Employed “At Will” | | What We Don’t Do Not Permit Hedging or Pledging of Our Equity Securities By Employees or Directors
| | | ✓ We maintain a fully (100%) independent Compensation Committee
| | × We do not provide our executive officers with guaranteed annual base salary increases
| | | ✓ We retain an independent compensation advisor who performs no other services for us
| | × We do not provide excessive perquisites
| | | ✓ 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 defined benefit retirement programs
| | | ✓ 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 offerchange-in-control excise tax payments or“gross-ups”
| | | ✓ Our executive officers are employed “at will”
| | × We do not permit hedging or pledging of our equity securities by current employees or directors
| | | | | We Do Not Permit Stock Option Exchanges or
×Re-pricings We do not permit stock option exchanges orre-pricings without stockholder approvalWithout Stockholder Approval |
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| | | | | 12 | | 2020 Proxy Statement | | Etsy |
| Voting and Meeting Information | |
Voting and Meeting Information What is the purpose of this proxy statement? We are sending you this proxy statement because the Board of Directors of Etsy, Inc. (which we refer to as “Etsy,” “we,” “us,” or “our”) is inviting you to vote (by soliciting your proxy) at our 20182020 Annual Meeting of Stockholders which will take place online on June 7, 20182, 2020 at 9:00 a.m. Eastern Time. You can attend the Annual Meeting by visiting ETSY.onlineshareholdermeeting.com, 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, and aligns with our broader sustainability goals. 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 aone-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials? We are providing access to our proxy materials over the internet, which reduces both the costs and the 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 20, 2018.17, 2020. The Notice contains instructions on how to: access and view the proxy materials over the internet; request a paper ore-mail copy of the proxy materials. In addition, if you received paper copies of our proxy 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 Gary S. Briggs, Edith W. Cooper, and Melissa Reiff as Class III directors to serve until the 2021 Annual Meeting of Stockholders and until their successors have been elected and qualified or until they resign, die, or are removed from the Board;
• The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018; and
• An advisory vote to approve executive compensation, which is commonly referred to as the“say-on-pay” vote.
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The election of M. Michele Burns, Josh Silverman, and Fred Wilson as Class II directors to serve until the 2023 Annual Meeting of Stockholders and until their successors have been elected and qualified or until they resign, die, or are removed from the Board; The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; and | | | | | Etsy13 | | 20182020 Proxy Statement | | 1Etsy |
An advisory vote to approve executive compensation, which is commonly referred to as the“say-on-pay” vote. How does the Board recommend that I vote? Our Board recommends that you vote: • “FOR”
“FOR” the election of Gary S. Briggs, Edith W. Cooper,M. Michele Burns, Josh Silverman, and Melissa ReiffFred Wilson as Class IIIII directors; • “FOR”
“FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018;2020; and • “FOR”
“FOR” the approval, on an advisory basis, of executive compensation. Who is entitled to vote at the Annual Meeting? Stockholders as of the close of business on April 12, 2018,7, 2020, the record date, are entitled to vote. On the record date, there were approximately 119,908,305118,591,339 shares of common stock outstanding and entitled to vote. Stockholders may cast one vote per share on all matters. How do I vote? If, on April 12, 20187, 2020, your Etsy shares were registered directly in youyour name with our transfer agent, Computershare Trust Company, N.A., then you are a shareholderstockholder of record and you can vote your shares in one of two ways: either by proxy or during the virtual Annual Meeting by webcast.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); or | | | |
| | By Smartphone or Tablet Scan this QR code: | |
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Even if you plan to attend the virtual Annual Meeting at ETSY.onlineshareholdermeeting.comwww.virtualshareholdermeeting.com/ETSY2020 (following the instructions below), we recommend that you submit your proxy in advance via one of the methods above. This way, your shares of common stock will be voted as you direct if your plans change or you are unable to attend the Annual Meeting. | | | | | 14 | | 2020 Proxy Statement | | Etsy |
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 12, 20187, 2020, 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. | | | | | 2 | | 2018 Proxy Statement | | Etsy |
How can I attend the Annual Meeting?Meeting online? You can attend the virtual Annual Meeting by visiting ETSY.onlineshareholdermeeting.com. To participate inwww.virtualshareholdermeeting.com/ETSY2020, 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 anin-person event, and aligns with our broader sustainability goals. Stockholders attending the virtual Annual Meeting, youmeeting will needbe afforded the control number included on your Notice or proxy card. same rights and opportunities to participate as they would at anin-person meeting. The Annual Meeting webcast will begin promptlystart at 9:00 a.m. Eastern Time on June 7, 2018.2, 2020. We encouragerecommend that you log in a few minutes early to accessensure you are logged in when the meeting website prior to the start time.starts. Onlinecheck-in will begin at 8:45 a.m. Eastern Time, and you should allow ample time for thecheck-in procedures. In order 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 record of shares of common stock, or 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.” Can I ask questions at the Annual Meeting? 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 and vote your shares electronically atby joining the virtual Annual Meeting at www.virtualshareholdermeeting.com/ETSY2020 and typing your question in the box in the Annual Meeting portal. To help ensure that 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 followingtopic by Etsy management with a representative question read aloud and answered. In addition, questions may be deemed to be out of order if they are, among other things, irrelevant to our business, repetitious of statements already made, or in furtherance of the instructionsspeaker’s own personal, political, or business interests. Questions will be addressed in the Q&A portion of the Annual Meeting. | | | | | 15 | | 2020 Proxy Statement | | Etsy |
What if I need technical assistance accessing or participating in the virtual Annual Meeting? If you encounter any difficulties accessing the virtual Annual Meeting during thecheck-in or meeting time, please call the technical support number that will be posted on the website.virtual Annual Meeting login page. Technical support will be available starting at 8:30 a.m. Eastern Time on June 2, 2020. What is the deadline for voting? If you are a shareholderstockholder of record, your ability to vote by proxy by internet or telephone will end at 11:59 p.m. Eastern Time on June 6, 2018.1, 2020. If you prefer to vote by mail, you should complete and return the proxy card as soon as possible, so that it is received no later than the closing of the polls at the Annual Meeting on June 7, 2018.2, 2020. You will also be able to vote by attending and voting at the virtual Annual Meeting on June 2, 2020. However, we recommend 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 vote? 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 able to vote your shares in its discretion. In this regard, brokers, banks, and other securities intermediaries may use their discretion to vote your “uninstructed” shares with respect to matters considered under applicable exchange rules to be “routine,” but not with respect to“non-routine” matters. Proposals No. 1 (Election of Directors) and No. 3(“Say-on-Pay” vote) are considered to be“non-routine” under applicable exchange rules, meaning that your broker may not vote your shares on those proposals in the absence of your voting instructions, which would result in a “brokernon-vote.” Proposal No. 2 (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 No. 2. 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 the Board, 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. | | | | | 16 | | 2020 Proxy Statement | | Etsy |
Can I change my vote or revoke my proxy? Yes. If your shares are registered directly in your name with our transfer 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 7, 20182, 2020 by: •
providing a new proxy bearing a later date (which automatically revokes the earlier proxy) by internet, telephone, or mail (and until the applicable deadline for each method); or •
attending and voting at the virtual Annual Meeting; orMeeting. • by providing written notice to our Secretary at Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201.
Your most recent proxy submitted by proxy card, internet, or telephone 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. | | | | | Etsy | | 2018 Proxy Statement | | 3 |
How many votes are required to approve each proposal? | | | | | | | | | | | Proposal PROPOSAL | | Vote Required toVOTE REQUIRED FOR
ApprovalAPPROVAL
| | Effect ofEFFECT OF
AbstentionsABSTENTIONS
| | Effect of BrokerEFFECT OF BROKER
Non-VotesNON-VOTES**
| | | | | 1. Election of Directors | | Each director is elected by a plurality of the votes cast. The 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. 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” | | | | | 3. Advisory voteVote on say on payExecutive 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” |
* A “brokernon-vote” occurs when a beneficial owner of shares held by a broker, bank, trustee, or nominee 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 and No. 3, which are considered“non-routine” matters. Therefore, we would expect brokernon-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. * | A “brokernon-vote” occurs when a beneficial owner of shares held by a broker, bank, trustee, or nominee 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 and No. 3, which are considered“non-routine” matters. Therefore, we would expect brokernon-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.
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Who will count the votes? Representatives of Broadridge Financial Services, Inc. will tabulate the votes and act as inspectors of election. What happens if I do not vote?
If you are a shareholder 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 able to vote your shares in its discretion. In this regard, brokers, banks, and other securities intermediaries may use their discretion to vote your “uninstructed” shares with respect to matters considered under applicable exchange rules to be “routine,” but not with respect to“non-routine” matters. See “How many votes are required to approve each proposal?” for more information.
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What is a quorum? A quorum is the minimum number of shares required to be present at the Annual Meeting for any business to be conducted. For our Annual Meeting, a majority of the shares entitled to vote 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 directors, abstentions and brokernon-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 Form8-K within four business days of the Annual Meeting. Who pays for the proxy solicitation expenses? We are soliciting proxies on behalf of our Board and will pay the related costs. As part of this process, we reimburse brokers and other custodians, nominees, and fiduciaries for theirout-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 communication, and will not receive any additional compensation for soliciting proxies. In addition, we have retained Saratoga Proxy Consulting, LLC at a fee estimated to be approximately $15,000, plus reasonableout-of-pocket expenses, to assist in the solicitation of proxies. 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 of your shares, you should sign and return all of 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 at1(866)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 call1(347)1 (347) 382-7582. We will strive to promptly address your request. | | | | | Etsy18 | | 20182020 Proxy Statement | | 5Etsy |
Proposal No. 1 Election of Directors Our Board has eight members. In accordance with our amended and restated certificate of incorporation, our Board is divided into three staggered classes of directors. At the Annual Meeting, three Class IIIII directors are standing for election, each for a three-year term. The Board has nominated Gary S. Briggs, Edith W. Cooper,M. Michele Burns, Josh Silverman, and Melissa ReiffFred Wilson for election as Class IIIII directors at the Annual Meeting. Each director is elected by a plurality of the votes cast. The three director nominees receiving the highest number of “FOR” votes will be elected. If elected at the Annual Meeting, the nominees will serve until our 20212023 Annual Meeting of Stockholders and until their successors have been elected and qualified or until they resign, die, or are removed from the Board. For information about the nominees and each director whose term is continuing after the Annual Meeting, please see “Information Regarding Director Nominees and Current Directors.” The nominees have consented to serve as director, if elected. We have no reason to believe that any of the nominees will be unable or unwilling to serve as director. If, however, a nominee is unavailable for election, your proxy authorizes us to vote for a replacement nominee if the Board names one. The Board of Directors recommends a vote “FOR” each of the director nominees named above. | | | | | 619 | | 20182020 Proxy Statement | | Etsy |
| INFORMATION REGARDING DIRECTOR NOMINEES AND CURRENT DIRECTORS
Information Regarding Director Nominees and Current Directors Below is information regarding our director nominees and directors whose terms are continuing after the Annual Meeting. |
| | | | | | | | | Name | | Age | | Etsy
Director Since | | Independent | | Committee Membership | Nominees for election at the 2018 Annual Meeting (Class III) | | | | | | | | | Gary S. Briggs | | 55 | | 2018 | | Yes | | Compensation Committee | Edith W. Cooper | | 56 | | 2018 | | Yes | | Compensation Committee | Melissa Reiff | | 63 | | 2015 | | Yes | | Compensation Committee | Directors with terms expiring at the 2019 Annual Meeting (Class I) | | | | | | | | | Jonathan D. Klein | | 57 | | 2011 | | Yes | | Compensation Committee (Chair) | Margaret M. Smyth | | 54 | | 2016 | | Yes | | Audit Committee (Chair) | Directors with terms expiring at the 2020 Annual Meeting (Class II) | | | | | | | | | M. Michele Burns | | 60 | | 2014 | | Yes | | Audit Committee Nominating and Corporate Governance Committee | Josh Silverman | | 49 | | 2016 | | No | | | Fred Wilson (Board Chair) | | 56 | | 2007 | | Yes | | Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee (Chair) |
| Nominees for Election to a Three-Year Term Expiring at the 2021 Annual Meeting of Stockholders
Gary S. Briggs has served as the Vice President and Chief Marketing Officer of Facebook, Inc. since August 2013. In 2017, he announced that he planned to leave Facebook in 2018. Prior to Facebook, in 2013, Mr. Briggs served as an Adviser to the Chief Executive Officer of Motorola Mobility, a Google LLC company, and prior to that, in various executive roles at Motorola Mobility and Google from 2010 to 2013. Prior to that, from 2008 to 2010, he was the Chief Executive Officer of Plastic Jungle, Inc., ane-commerce company focused on the unspent gift card market. He has also served in various executive and marketing roles at Ebay, Inc. and othere-commerce and consumer goods companies. Mr. Briggs serves on the advisory boards of LendingClub Corporation, Lagunitas Brewing Company and ISDI Digital University. During the past five years, he served as a director of LifeLock, Inc.
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| | | | | | | | | | | | | | NAME | | AGE | | ETSY DIRECTOR SINCE | | INDEPENDENT | | COMMITTEE MEMBERSHIP | | Nominees for election at the 2020 Annual Meeting (Class II) | | | | | | M. Michele Burns | | 62 | | 2014 | | Yes | | Audit Committee Nominating and Corporate Governance Committee | | | | | | Josh Silverman | | 51 | | 2016 | | No | | | | | | | | Fred Wilson (Chair) | | 58 | | 2007 | | Yes | | Audit Committee Nominating and Corporate Governance Committee (Chair) | | Directors with terms expiring at the 2021 Annual Meeting (Class III) | | | | | | Gary S. Briggs | | 57 | | 2018 | | Yes | | Compensation Committee | | | | | | Edith W. Cooper | | 58 | | 2018 | | Yes | | Compensation Committee | | | | | | Melissa Reiff | | 65 | | 2015 | | Yes | | Compensation Committee (Chair) | | Directors with terms expiring at the 2022 Annual Meeting (Class I) | | | | | | Jonathan D. Klein | | 59 | | 2011 | | Yes | | Compensation Committee | | | | | | Margaret M. Smyth | | 56 | | 2016 | | Yes | | Audit Committee (Chair) |
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| Gary S. Briggs should serve as a member of our Board because of his significant brand strategy and marketing expertise and his executive and leadership experience, particularly in technology ande-commerce companies.
Edith W. Cooper served as executive vice president, global head, human capital management of Goldman Sachs Group, Inc. from March 2008 to December 2017, and, prior to that, she held various leadership positions in Goldman Sachs’ securities division from 1996 to 2008. Ms. Cooper began her career in derivative sales at Bankers Trust and Morgan Stanley. She currently serves on the board of directors of Slack Technologies, Inc., the Museum of Modern Art and Mt. Sinai Hospital.
| Edith W. Cooper should serve as a member of our Board due to her extensive expertise in the human resources field, including recruiting, development and compensation, as well as her strong financial background and public company experience.
Melissa Reiff serves as chief executive officer of The Container Store Group, Inc. (“TCS”), the nation’s originator and leader of the storage and organization category of retail. Prior to that, she served as president and chief operating officer of TCS from March 2013 to June 2016, and as president of TCS from early 2006 to February 2013. She has served on the board of directors of TCS since August 2007. She is a member of the Dallas chapter of the American Marketing Association, International Women’s Foundation, and C200. She also serves on the board of Southern Methodist University’s Cox School of Business Executive Board and is a sustaining member of the Junior League of Dallas.
Melissa Reiff should serve as a member of our Board because of her significant operational experience and her expertise in retail, marketing, and merchandising, and her experience as CEO and director of a public company.
Directors Continuing in Office Until the 2019 Annual Meeting of Stockholders
Jonathan D. Klein is co-founder and chairman of Getty Images, Inc., a global digital media company. Mr. Klein has served as a member of the board of directors of Getty Images, Inc. (and its predecessor company Getty Communications) since March 1995 and served as chief executive officer from inception in March 1995 to October 2015. Mr. Klein also serves as a member of the boards of directors ofnumerous non-profit organizations, including the Committee to Protect Journalists, the Groton School, where he serves as President, and Friends of the Global Fight Against HIV, Tuberculosis and Malaria, where he serves as chairman. Mr. Klein also serves on the board of directors of these private companies: Helix Sleep, Inc., Squarespace, Inc. and Getty Investments.
Jonathan D. Klein should serve as a member of our Board due to his extensive experiencewith e-commerce and digital media companies and his experience as both a public company CEO and a director of a number of public and private companies.
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| Margaret M. Smyth has served as the U.S. chief financial officer of National Grid plc since October 2014. Previously, Ms. Smyth was vice president of finance
Nominees for Election to a Three-Year Term Expiring at ConEdison, Inc. from August 2012 through September 2014. Prior to that, Ms. Smyth served as vice president and chief financial officer of Hamilton Sundstrand, which is part of United Technologies Corp., a provider of products and services to the aerospace and building systems industries, from October 2010 to June 2011. Prior to that, she served as vice president and corporate controller of United Technologies Corp. from August 2007 to September 2010 and vice president and chief accounting officer of 3M Corporation from April 2005 to August 2007. Prior to that, Ms. Smyth served as a senior managing partner at Deloitte & Touche and Arthur Andersen. During the past five years, she served as a director of Martha Stewart Living Omnimedia and Vonage Holdings Corporation. Margaret M. Smyth should serve as a member of our Board due to her expertise in public company finance, accounting, and strategic planning, including experience gained as a chief financial officer and chief accounting officer. In addition, she brings significant international experience and leadership through her service as an executive and director of global public companies.
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Directors Continuing in Office Until the 20202023 Annual Meeting of Stockholders
M. Michele Burns has served ason the Center Fellow and Strategic Advisor toAdvisory Board of the Stanford Center on Longevity at Stanford University since October 2019. She previously served as the Center Fellow and Strategic Advisor from August 2012.2012 to October 2019. Ms. Burns served as the chief executive officerChief Executive Officer of the Retirement Policy Center sponsored by Marsh & McLennan Companies, Inc., an insurance brokerage and consulting firm, from October 2011 to February 2014; as chairmanChairman and chief executive officerChief Executive Officer of Mercer LLC (a subsidiary of Marsh & McLennan Companies, Inc.), a human resources consulting firm, from September 2006 to October 2011; as chief financial officerChief Financial Officer of Marsh & McLennan Companies, Inc. from March 2006 to September 2006; and as chief financial officerChief Financial Officer and chief restructuring officerChief Restructuring Officer of Mirant Corporation, an energy company, from May 2004 to January 2006. Ms. Burns joined Delta Airlines in January 1999 and served as chief financial officerChief Financial Officer from August 2000 until April 2004. She began her career at Arthur Andersen in 1981, serving ultimately as the Senior Partner, Southern Region Federal Tax Practice until December 1998. Ms. Burns is a member of the boards of directors of Cisco Systems, Inc.; Goldman Sachs Group, Inc.; and Anheuser-Busch InBev. Ms. Burns also serves on the board of directors of Alexion Pharmaceuticals, Inc. but will not stand forre-election at its 2018 Annual Meeting on May 8, 2018. During the past five years, she served as a director ofWal-Mart Stores, Inc. She also serves on the boards of directors of, or as an advisor to, several private companies. She is also a member of the executive board of directors of the Elton John AIDS Foundation, where she serves as Treasurer. M. Michele Burns should serve as a member of our Board due to her expertise in corporate finance, accounting, governance, and strategy, including experience gained as the chief financial officer of public companies. She also brings expertise in global and operational management, including a background in organizational leadership and human resources, and experience as a public company director. | | | | | Etsy | | 2018 Proxy Statement | | 9 |
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 sincefrom 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 alsoco-founder and CEO of Evite, Inc. He serves on the board of directors of Shake Shack Inc. Josh Silverman should serve as a member of our Board due to his deep familiarity with our business through his tenure as CEO and his significant executive, operational, and marketing experience and expertise in building and leading online marketplaces and technology companies. Fred Wilson has served as the Chair of our Board since May 2017, and prior to that, as our lead independent director since October 2014. Mr. Wilson has been a venture capitalist for over 30 years. He is a founder and has served as partner of Union Square Ventures, a venture capital firm, since June 2003. Mr. Wilson also serves on the boards of directors of various private companies in connection with his role at Union Square Ventures.Ventures and in a personal capacity. He is a well-known thought leader on technology, venture capital, and management matters. | | | | | 21 | | 2020 Proxy Statement | | Etsy |
Fred Wilson should serve as a member of our Board due to his extensive experience with technology and social media companies and his deep understanding of our business and operations through his tenure on the Board and as one of our early investors. Directors Continuing in Office Until the 2021 Annual Meeting of Stockholders Gary S. Briggs has served as Chairman of Hawkfish, LLC since September 2019. From August 2013 until his retirement in November 2018, he served as the Vice President and Chief Marketing Officer of Facebook, Inc. Prior to joining Facebook, Mr. Briggs served in various marketing roles at Google, eBay, PayPal, and Pepsi. He previously served as a director of LifeLock, Inc. (sold to Symantec). He also is a member of the board of directors at Petco and Afterpay. Gary S. Briggs should serve as a member of our Board because of his significant brand strategy and marketing expertise, and his executive and leadership experience, particularly in technology ande-commerce companies. Edith W. Cooper served as Executive Vice President, Global Head, Human Capital Management of Goldman Sachs Group, Inc. from March 2008 to December 2017, and, prior to that, she held various leadership positions in Goldman Sachs’ Securities Division from 1996 to 2008. Ms. Cooper began her career in derivative sales at Bankers Trust and Morgan Stanley. She currently serves on the board of directors of Slack Technologies, Inc., EQT, the Museum of Modern Art, and Mt. Sinai Hospital. Edith W. Cooper should serve as a member of our Board due to her extensive expertise in the human resources field, including recruiting, talent development, and executive compensation, as well as her strong financial background. Melissa Reiff has served as Chief Executive Officer of The Container Store Group, Inc. (“TCS”), the nation’s originator and leader of the storage and organization category of retail, since July 2016. Prior to that, she served as President and Chief Operating Officer of TCS from March 2013 to June 2016, and as President of TCS from early 2006 to February 2013. She has served on the board of directors of TCS since August 2007. She is a member of the Dallas chapter of the American Marketing Association, International Women’s Foundation, and C200. She also serves on the board of Southern Methodist University’s Cox School of Business Executive Board and is a sustaining member of the Junior League of Dallas. Melissa Reiff should serve as a member of our Board because of her significant operational experience and her expertise in retail, marketing, and merchandising, and her experience as a CEO and director of a public company. Directors Continuing in Office Until the 2022 Annual Meeting of Stockholders Jonathan D. Kleinis Co-Founder and Deputy Chairman of Getty Images, Inc., a global digital media company. Mr. Klein has served as a member of the board of directors of Getty Images, Inc. (and its | | | | | 1022 | | 20182020 Proxy Statement | | Etsy |
predecessor company Getty Communications) since March 1995 and served as Chief Executive Officer from inception in March 1995 to October 2015. Mr. Klein also serves as a member of the boards of directors of Jumia Technologies (Chairman of the Board) and numerousnon-profit organizations, including the Committee to Protect Journalists and Groton School, where he serves as President of the board. Mr. Klein also serves on the board of directors of the following private companies: Kano, Squarespace Inc., and Getty Investments. Jonathan D. Klein should serve as a member of our Board due to his extensive experience withe-commerce and digital media companies and his experience as both a public company CEO and a director of a number of public and private companies. Margaret M. Smyth has served as the U.S. Chief Financial Officer of National Grid plc, a multinational energy company, since October 2014. Previously, Ms. Smyth was Vice President of Finance at ConEdison, Inc. from August 2012 through September 2014. Prior to that, Ms. Smyth served as Vice President and Chief Financial Officer of Hamilton Sundstrand, which is part of United Technologies Corp., a provider of products and services to the aerospace and building systems industries, from October 2010 to June 2011. Prior to that, she served as Vice President and Corporate Controller of United Technologies Corp. from August 2007 to September 2010 and Vice President and Chief Accounting Officer of 3M Corporation from April 2005 to August 2007. Prior to that, Ms. Smyth served as a Senior Managing Partner at Deloitte & Touche and Arthur Andersen. During the past five years, she served as a director of Martha Stewart Living Omnimedia and Vonage Holdings Corporation. Margaret M. Smyth should serve as a member of our Board due to her expertise in public company finance, accounting, and strategic planning, including experience gained as a chief financial officer and chief accounting officer. In addition, she brings significant international experience and leadership through her service as an executive and director of global public companies. Ms. Smyth is also experienced in advancing sustainability accounting practices, and is a Sustainability Accounting Standards Board (SASB) FSA Credential Holder. | | | | | 23 | | 2020 Proxy Statement | | Etsy |
Information Regarding the Board and Corporate Governance Board Leadership Structure In May 2017, the Board separated the positions of Chair and CEO. The Board appointed Fred Wilsonas non-executive Chair to provide independent leadership and to enable Josh Silverman, as incoming CEO, to concentrate on Etsy’s business operations.
Under our Corporate Governance Guidelines, our Board may separate or combine the roles of CEO and Chair when and if it believes it advisable and in the best interests of Etsy and its stockholders to do so. The Board has determined that having an independent director serve as Chair of the Board is in the best interests of our stockholders at this time. The structureFred Wilson has served asour non-executive Chair since May 2017, providing independent leadership and enabling Josh Silverman, our CEO, to concentrate on Etsy’s business operations.
We believe that separating the positions of Chair and CEO ensures a greater role for the independent directors in the oversight of Etsy and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the Board. Our Bylaws and Corporate Governance Guidelines provide the Board with flexibility to make determinations as circumstances requireseparate or combine the roles of the CEO and in a manner thatChair when and if it believes isit advisable and in the best interestsinterest of the company.Etsy stockholders to do so. The Board will continue to evaluate our leadership structure periodically and make changes in the future as it deems appropriate. Board Oversight of Risk One of the key functions of our Board is to provide informed oversight of our risk management process whileprocess. While management is responsible for theday-to-day management of the material risks we face.face, our Board maintains ultimate responsibility for the oversight of risk. In 2019, we formed a risk steering committee that consists of a cross-functional management team who regularly meets to review and discuss the significant risks facing Etsy and reports on those risks to the full Board. Our full Board has overall responsibility for riskreceived regular updates from the management team on the evolving COVID-19 pandemic and is involved in particular, oversees topics such asstrategic decisions related to the impact of COVID-19 on our strategic plan, capital structure, information security, and privacy.business. The Board also oversees risk through its standing committees,Committees, which regularly report back to the full Board. For example,example: The full Board oversees the management of risks relating to our business strategy and capital structure; our legal, regulatory, and ethical compliance program; data privacy, technology, and information security, including cybersecurity; and our strategy and efforts relating to diversity and inclusion; The Audit Committee oversees the management of risks associated with financial reporting, accounting and auditing matters; ourmatters, and investment guidelines; | | | | | 24 | | 2020 Proxy Statement | | Etsy |
The Compensation Committee oversees the management of risks associated with executive compensation policies and programs;programs and ourhuman capital management; and The Nominating and Corporate Governance Committee oversees the management of risks associated with corporate governance matters, such as director independence, conflicts of interest, composition and organization of our Board, and director succession planning.planning, and progress against our impact strategy. | | | | | Etsy | | 2018 Proxy Statement | | 11 |
Director Independence Our Board assesses the independence of each director at least annually and has determined that, other than Josh Silverman, all current directors and director nominees are independent in accordance with the listing standards of Nasdaq and the applicable rules and regulations of the SEC. Josh Silverman is not considered independent because he is our CEO. In making these determinations, our Board considered the current and prior relationships that eachnon-employee director has with our company and all other facts and circumstances our Board deemed relevant. The independent members of our Board hold separate regularly scheduled executive session meetings at which only independent directors are present. In addition, our Board has determined that each member of our Audit Committee, Compensation Committee, and CompensationNominating and Corporate Governance Committee is independent and, in the case of the Audit Committee and Compensation Committee, meets the heightened independence requirements applicable to each such committeeCommittee in accordance with the listing standards of Nasdaq and the applicable rules and regulations of the SEC. Board Meetings Our Board met 18five times during 2017.2019. Each director attended at least 75% of the total number of 20172019 meetings of the Board and of each committeeCommittee on which he or she served. We encourage all directors and director nominees to attend the Annual Meeting; however, attendance is not mandatory. FiveAll of our six directors serving at the time attended the 20172019 Annual Meeting of Stockholders. Board Committees Our Board has the following standing committees: Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Members of these committeesCommittees serve until their resignation or until otherwise determined by our Board. The composition and functions of each committeeCommittee are described below. The charterscharter of each committee,Committee, our Corporate Governance Guidelines, and our Code of Conduct are available on our investor website (investors.etsy.com) under “Leadership & Governance.“Governance-Governance Documents.” | | | | | 1225 | | 20182020 Proxy Statement | | Etsy |
| | | | | | | | | | | | | | Director DIRECTOR | | Independent INDEPENDENT | | Audit AUDIT
Committee(1)COMMITTEE
| | Compensation COMPENSATION
Committee(2)COMMITTEE
| | Nominating NOMINATING
and Corporate AND CORPORATE
Governance GOVERNANCE
Committee COMMITTEE
| | | | | | Gary S. Briggs | | Yes | | | |
| | | | | | | | M. Michele Burns | | Yes | |
| | | |
| | | | | | Edith W. Cooper | | Yes | | | |
| | | | | | | | Jonathan D. Klein | | Yes | | | |
| | | | | | | | Melissa Reiff | | Yes | | | |
| | | | | | | | Josh Silverman | | No | | | | | | | | | | | | Margaret M. Smyth | | Yes | |
| | | | | | | | | | Fred Wilson (Board Chair) | | Yes | |
| |
| |
|
| | | | | Chair
Member
Financial Expert
(1) On June 8, 2017, Margaret M. Smyth replaced M. Michele Burns as Audit Committee Chair.
(2) On May 1, 2017, Fred Wilson replaced Josh Silverman as a member of the Compensation Committee. On April 5, 2018, Gary S. Briggs and Edith W. Cooper joined the Compensation Committee in connection with their appointments to the Board.
(3) On June 7, 2018, following the Annual Meeting, Fred Wilson will rotate off of the Compensation Committee.
|
| | Chair Member Financial Expert |
Audit Committee | | | 20172019 Meetings: | | 105 | Members: | | Margaret M. Smyth (Chair) M. Michele Burns Fred Wilson |
As described in more detail in its charter, among other responsibilities, the Audit Committee: appoints and oversees our independent registered public accounting firm, including its qualifications, independence, and performance, andpre-approves the scope and plans for audits, all audit engagement fees, and all permissiblenon-audit engagements; reviews and discusses with management and the independent registered public accounting firm our annual audited and quarterly unaudited financial statements and annual and quarterly reports on Forms10-K and10-Q and related matters;matters, including non-GAAP financial measures; oversees the performance of our internal audit function; | | | | | Etsy | | 2018 Proxy Statement | | 13 |
oversees our procedures for the receipt, retention, and treatment of any complaints regarding accounting, internal accounting controls, or auditing matters, and for the confidential and anonymous submissions by our employees concerning questionable accounting or auditing matters; reviews and oversees related person transactions; and oversees the management of risks associated with financial reporting, accounting, and auditing matters, including our guidelines and policies with respect to risk assessment and risk management. | | | | | 26 | | 2020 Proxy Statement | | Etsy |
Each member and prospective member of our Audit Committee can read and understand fundamental financial statements. Our Board has determined that each of M. Michele Burns and Margaret M. Smyth each qualifies as an audit committee financial expert in accordance with the applicable rules and regulations of the SEC and meets the financial sophistication requirements of Nasdaq. Compensation Committee | | | 20172019 Meetings: | | 106 | Members: | | Jonathan D. KleinMelissa Reiff (Chair)
Gary S. Briggs Edith W. Cooper Melissa Reiff
Fred WilsonJonathan D. Klein
|
As described in more detail in its charter, among other responsibilities, our Compensation Committee: oversees and reviews our compensation philosophy and strategy; establishes goals and objectives relevant to compensation for the CEO and other senior officers and evaluates their performance against those goals; administers our incentive plans, including approving the terms and conditions orof awards; recommends the form and amount of compensation to be paid tonon-employee Board members; oversees human capital management, including our employee talent and development programs, includingretention and attrition, and periodically reviewing succession planning for key roles other than the CEO;CEO (for which succession planning is overseen by the Board); and 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 inappropriate risk-taking. A description of the role of the compensation consultant engaged by the Compensation Committee, scope of authority of the Compensation Committee, and the role of executive officers in determining executive compensation is on page 3051 under “Executive Compensation—Compensation“Compensation Discussion and Analysis—Compensation-Setting Process.How We Determine Executive Compensation.” | | | | | 14 | | 2018 Proxy Statement | | Etsy |
Nominating and Corporate Governance Committee | | | 20172019 Meetings: | | 2 | Members: | | Fred Wilson (Chair) M. Michele Burns |
As described in more detail in its charter, among other responsibilities, our Nominating and Corporate Governance Committee: advises the Board on corporate governance matters generally, and recommends to the Board appropriate or necessary actions to be taken by Etsy; reviews the composition and size of the Board and makes recommendations to the Board; recommends to the Board criteria for Board membership, including qualifications, qualities, skills, areas of expertise, and other relevant factors; | | | | | 27 | | 2020 Proxy Statement | | Etsy |
reviews and recommends to the Board the director nominees; oversees the annual evaluation of the Board and each Committee; reviews the composition of each Board committeeCommittee and recommends members and chairs; reviews the structure and operations of our Board committees;Committees; reviews director orientation and continuing education offerings and makes recommendations, as needed; oversees the management of risks associated with director independence, conflicts of interest, board composition and organization, and director succession planning; and periodically reviews our progress against our economic, social, and ecological impact goals. Compensation Committee Interlocks and Insider Participation During 2017, Fred Wilson,2019, Gary S. Briggs, Edith W. Cooper, Jonathan D. Klein, and Melissa Reiff and Josh Silverman served on our Compensation Committee. No member 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. Josh Silverman stepped down from the Compensation Committee on May 3, 2017, prior to his appointment as our CEO. During 2017,2019, 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 Assessments On an annual basis, the Board, the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee conduct self-assessments to 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, 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 results of the assessments are then discussed by the 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 the Nominating and Corporate Governance Committee has the authority to recommend prospective director candidates for the Board’s consideration, the Board retains the ultimate | | | | | Etsy | | 2018 Proxy Statement | | 15 |
authority to nominate a candidate for election by the stockholders as a director or to fill any vacancy. Gary S. Briggs and Edith W. Cooper were recommended as nominees to the Board by members of the Nominating and Corporate Governance Committee and/or our CEO. | | | | | 28 | | 2020 Proxy Statement | | Etsy |
Identifying and Evaluating Nominees When identifying and evaluating potential director nominees, including current members of the Board who are eligible forre-election, the Nominating and Corporate Governance Committee seeks a balance of knowledge, experience, and capability on the Board and may consider the following: the current size and composition of the Board and the needs of the Board and Board committees; high integrity and adherence to our 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, 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 committee duties; the range of expertise and experience of the Board at the policy-making level in business, government, or technology and in areas relevant to our business; and other factors, including conflicts of interest or competitive issues. Stockholder Recommendations and Nominees The Nominating and Corporate Governance Committee will consider stockholder recommendations, so long as they comply with applicable law, our Bylaws, and the procedures described below. Stockholder recommendations for candidates to the Board must be received in writing by December 31st of the year prior to the year in which the recommended candidates will be considered for nomination at the next Annual Meeting of Stockholders and sent to our headquarters, Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201, to the attention of our General Counsel and 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. The 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 the Nominating and Corporate Governance Committee’s discretion, its review may | | | | | 16 | | 2018 Proxy Statement | | Etsy |
include interviewing references, performing background checks, direct interviews with the candidate, or other actions it deems necessary or proper. Stockholders may also nominate candidates for election to our Board by following the procedures described in our Bylaws. | | | | | 29 | | 2020 Proxy Statement | | Etsy |
Communications with the Board Stockholders or other interested parties may contact the Board or one or more of our directors with issues or questions about Etsy, by mailing correspondence to our General Counsel and Secretary at our Brooklyn headquarters, Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201. Our legal team will review incoming communications directed to the Board and, if appropriate, will forward such communications to the appropriate member(s) of the Board or, if none is specified, to the Chair of the Board. 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. | | | | | Etsy30 | | 20182020 Proxy Statement | | 17Etsy |
Director Compensation The following table discloses compensation received by ournon-employee directors during 2019 pursuant to ournon-employee director compensation program. | | | | | | | | | | | | | | | | | | | | | | Director | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1)(2) | | | Option Awards ($)(2)(3) | | | Total Compensation ($) | | | | | | | Gary S. Briggs | | | 5,000 | | | | 87,833 | | | | 92,481 | | | | 185,314 | | | | | | | M. Michele Burns | | | 12,000 | | | | 87,833 | | | | 92,481 | | | | 192,314 | | | | | | | Edith W. Cooper | | | 5,000 | | | | 87,833 | | | | 92,481 | | | | 185,314 | | | | | | | Jonathan D. Klein | | | 5,000 | | | | 87,833 | | | | 92,481 | | | | 185,314 | | | | | | | Melissa Reiff | | | 10,000 | | | | 87,833 | | | | 92,481 | | | | 190,314 | | | | | | | Margaret M. Smyth | | | 18,000 | | | | 87,833 | | | | 92,481 | | | | 198,314 | | | | | | | Fred Wilson | | | 15,000 | | | | 87,833 | | | | 192,496 | | | | 295,329 | |
| | | | | | | | | Director Compensation
The following table discloses compensation received by ournon-employee directors during 2017 pursuant to ournon-employee director compensation program.
|
| | | | | | | | | | | | | | | | | | | | | | Director | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1)(2) | | | Option Awards ($)(3)(4) | | | Total Compensation ($) | | M. Michele Burns | | | 129,500 | | | | 49,026 | | | | 43,780 | | | | 222,306 | | Jonathan D. Klein | | | 127,500 | | | | 49,026 | | | | 43,780 | | | | 220,306 | | Melissa Reiff | | | 92,500 | | | | 49,026 | | | | 43,780 | | | | 185,306 | | Margaret M. Smyth | | | 70,500 | | | | 68,640 | | | | 61,303 | | | | 200,443 | | Fred Wilson(5) | | | 50,000 | | | | 92,788 | | | | 187,588 | | | | 330,376 | |
| (1) The value disclosed is the aggregate grant date fair value of 3,5221,434 restricted stock units (“RSUs”) granted to each of Gary S. Briggs, M. Michele Burns, Edith W. Cooper, Jonathan D. Klein, and Melissa Reiff, 4,931 RSUs granted to Margaret M. Smyth, and 5,689 granted to Fred Wilson, each as an incumbent director in 2017,2019, computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the grant date fair value are set forth in Note 11—16—Stock-based Compensation in our Annual Report on Form10-K for the fiscal year ended December 31, 20172019 that accompanies this proxy statement. The number of RSUs granted is setcalculated 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, 20172019 was as follows: |
| | | | | | | | | | | | | | | | | | | | | | RSUs (#) | | | Stock Options (#) | | | | | | | | | | | Gary S. Briggs | | | 4,461 | | | | 13,583 | | | | | | | | | | | M. Michele Burns | | | 1,434 | | | | 72,142 | | | | | | | | | | | Edith W. Cooper | | | 4,461 | | | | 13,583 | | | | | | | | | | | Jonathan D. Klein | | | 1,434 | | | | 36,537 | | | | | | | | | | | Melissa Reiff | | | 1,434 | | | | 47,064 | | | | | | | | | | | Margaret M. Smyth | | | 1,434 | | | | 52,711 | | | | | | | | | | | Fred Wilson | | | 1,434 | | | | 14,378 | | | |
| | | | | • M. Michele Burns: 3,522
• Jonathan Klein: 3,522
• Melissa Reiff: 3,522
• Margaret M. Smyth: 18,218
• Fred Wilson: 5,689
(3) The value disclosed is the aggregate grant date fair value of 7,358 optionsan option to purchase 3,855 shares granted to each of Gary S. Briggs, M. Michele Burns, Edith W. Cooper, Jonathan D. Klein, and Melissa Reiff, 10,303 options to purchase shares granted toand Margaret M. Smyth, each as an incumbent director in 2019, and 27,832 optionsan option to purchase 8,024 shares granted to Fred Wilson, as an incumbent director and Chair of our Board in 2017,2019, computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the grant date fair value are set forth in Note 11—16—Stock-based Compensation in our Annual Report on Form10-K for the fiscal year ended December 31, 20172019 that accompanies this proxy statement. |
| | | | | 1831 | | 20182020 Proxy Statement | | Etsy |
| (4)Non-Employee The aggregate number of stock options held by each director listed in the table above as of December 31, 2017 was as follows: • M. Michele Burns: 181,378
• Jonathan Klein: 43,869
• Melissa Reiff: 71,300
• Margaret M. Smyth: 51,832
• Fred Wilson: 27,832
(5) Fred Wilson was appointed Chair of the Board in May 2017. Accordingly, in addition to his annual director fee, he received a Board Chair equity award comprised of stock options with a fair value on the grant date equal to $100,000.
|
Director Compensation Program The Compensation Committee reviews pay levelsfor non-employee directors at least annually with assistance from Compensia, Inc., a national compensation consulting firm (“Compensia”), whowhich prepares a comprehensive assessment ofour non-employee director compensation program. That assessment includes benchmarking ofreviewing 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. 2019 NewNon-employee Director Retainer Directors We had no new directors join our board of directors in 2019. Under ournon-employee director compensation program effective in 2019, each newnon-employee director who joinsjoined our Board iswould have been granted equity compensation (50% in stock options and 50% in RSUs) with aan aggregate fair value at the time of grant of $262,500 on the first business day of the month following the month in which his or her appointment to the Board became effective. Equity awards for new directors will vest in equal annual installments on the first three anniversaries of the grant date subject toif the director servinghas served continuously as a member of our Board member through the applicable vesting date. In addition, equity awards for new directors will vest in full in the event that we are subject to a change in control or upon certain other events. A director who receives a new director fee willequity grant is not eligible to receive an annual retainerequity compensation grant described below in the same calendar year. 2019 Incumbent DirectorsDirector Annual Retainer Each yearPursuant to ournon-employee director compensation policy effective in 2019, on the date of our Annual Meeting, each incumbentnon-employee director receiveswas granted equity compensation (50% in stock options and 50% in RSUs) with an award with aaggregate fair value at the time of grant equal toof approximately $185,000. In January 2018,Further, the Chair of ournon-employee director Board, on the date of our Annual Meeting, was granted additional equity compensation program was amended to increase the(100% in stock options) with an aggregate fair value ofnon-employee director awards from $175,000 to $185,000. In 2018, like 2017,at the award will be made up equallytime of stock options and restricted stock units. Thegrant of approximately $100,000. These equity portion of the award willawards vest in full on the date of our nextthe following Annual Meeting if the director has served continuously as a member of our Board member through the date of that meeting. In addition, these annual retainer equity awards will vest in full in the event that we are subject to a change in control or upon certain other events.
| | | | | Etsy32 | | 20182020 Proxy Statement | | 19Etsy |
2019 Additional Director Retainers In addition to the annual and newnon-employee director equity awards described above, pursuant to ournon-employee director compensation policy effective in 2019, ournon-employee directors receive thereceived annual cash retainers in the amounts described below for their Board committee service. These retainers were paid in full in cash within 30 days of our Annual Meeting, unless otherwise determined by the Board or Compensation Committee. These cash payments below.would have been prorated for any new director based on the number of whole months that the new director served on our Board before the Annual Meeting. | | | | | | | | Role | | Annual Cash Payments ($) | | | | Audit Committee Chair | | | | 18,000 | | | | Audit Committee Member | | | | 9,000 | | | | Compensation Committee Chair | | | | 10,000 | | | | Compensation Committee Member | | | | 5,000 | | | | Nominating and Corporate Governance Committee Chair | | | | 6,000 | | | | Nominating and Corporate Governance Committee Member | | | | 3,000 | | | | Member of any other Committee constituted by the Board | | |
| 40,000 unless otherwise determined by the Board or Compensation Committee |
|
| | | | | 2033 | | 20182020 Proxy Statement | | Etsy |
AmendedNon-Employee Director Compensation Program Our Compensation Committee amended ournon-employee director compensation program effective February 18, 2020. The revised program specifies the below fees payable to ournon-employee directors. These fees are generally payable in the form of equity awards (options and/or RSUs), as described more fully below. | | | | | | | | | Annual Value of Payments ($) | | | | Annual Board Retainer | | | 240,000 | | | | Additional Retainers | | | | | | | Board Chair | | | 100,000 | | | | Audit Committee Chair | | | 20,000 | | | | Audit Committee Member | | | 10,000 | | | | Compensation Committee Chair | | | 15,000 | | | | Compensation Committee Member | | | 7,500 | | | | Nominating and Corporate Governance Committee Chair | |
| 8,000
|
| | | Nominating and Corporate Governance Committee Member | | | 4,000 | | | | Member of any other Committee constituted by the Board | |
| 40,000 unless otherwise determined by the Board or Compensation Committee |
|
Each newnon-employee director who joins our Board will be granted equity compensation (in the form of stock options or RSUs) with an aggregate fair value at the time of grant of the amount of the Annual Board Retainer, plus the amount of any applicable Additional Retainers (other than the retainer for service as the Board Chair), on the first business day of the month following the month in which his or her appointment to the Board became effective. If the new director is appointed to the Board on a date other than the date of our annual meeting, the equity grant will be prorated based on the number of whole months that the director serves on the Board before the next annual meeting. Equity awards for new directors will vest in full on the date of the next annual meeting of stockholders 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 new director is eligible to receive an Additional Retainer for the Board Chair, it will be paid in the form of stock options, with a fair value on the date of grant equal to the amount of the Additional Retainer for the Board Chair. If such director’s appointment to the Board becomes effective after the date of the annual meeting, such stock option award will bepro-rated based on the number of whole months that the director serves on the Board before the next annual meeting. Such stock option award will be granted on the same date that the director is granted his or her new director equity award and will vest in full on the date of the next annual meeting of stockholders, provided that the director has served continuously as a member of the Board during the vesting period, and will vest in full in the event that we are subject to a change in control or upon the director’s death. | | | | | 34 | | 2020 Proxy Statement | | Etsy |
Each incumbentnon-employee director will receive stock options and/or RSUs with an aggregate fair value at the time of grant of the Annual Board Retainer plus the amount of applicable Additional Retainers (other than the Additional Retainer for service as the Board Chair) on the date of the regular annual meeting of stockholders. Such equity award will vest in full on the date of the next annual meeting of stockholders 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 the Board Chair, or a member or Chair of a Board committee, after the date of the annual meeting (for continuing directors) or the date the director’s appointment to the Board became effective (for new directors), then the director will be entitled to receive a“catch-up retainer.” Thecatch-up retainer is an additional amount equal to the excess of the director’s Additional Retainers for the prior and new roles over the Additional Retainers that were actually paid to the director as of the date of the annual meeting. This additional amount will be prorated based on the number of whole months that the director served in each role during the period from the annual meeting (for continuing directors) or the date the director’s appointment to the Board became effective (for new directors) until the next annual meeting of stockholders. The amount of any excess payment attributable to any Additional Retainers (other than any Additional Retainer for the Board Chair) will be paid in the form of cash on the date of the next annual meeting, provided that the director has served continuously as a member of the Board until the next annual meeting. If a director is eligible to receive acatch-up retainer attributable to an Additional Retainer for the Board Chair, it will be paid in the form of stock options, with a fair value on the date of grant equal to such amount. Such stock option award will be granted on the first business day of the month following the month in which the director becomes the Board Chair (or, if such day is not a trading day, on the following trading day). Such stock option award will vest in full on the date of the next annual meeting, provided that the director has served continuously as a member of the Board during the vesting period, and will vest in full in the event that we are subject to a change in control or upon the director’s death. | | | | | 35 | | 2020 Proxy Statement | | Etsy |
Audit Committee Report Etsy’s 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. The Audit Committee operates pursuant to a charter that is available on the Investor Relations section of our website: https://investors.etsy.com. The principal purpose of 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 andnon-audit services to be provided by the independent auditor. The audit committee’sAudit 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 (“PwC”), our independent registered public accounting firm, was responsible for performing an independent audit of our consolidated financial statementsConsolidated 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, 2017;2019; • | | discussed with our independent registered public accounting firm, PwC, the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, adopted by the Public Company Accounting Oversight Board (the “PCAOB”); and |
discussed with our independent registered public accounting firm, PwC, the matters required to be discussed by the applicable requirements 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 Form10-K for the fiscal year ended December 31, 2017.2019. Respectfully submitted by: Margaret M. Smyth (Chair) M. Michele Burns Fred Wilson | | | | | Etsy36 | | 20182020 Proxy Statement | | 21Etsy |
Proposal No. 2 Ratification of the Appointment of Independent Registered Public Accounting Firm The Audit Committee has appointed PwC as our independent registered public accounting firm for 20182020 and recommends that stockholders vote to ratify the appointment. Although we are not required by law 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, 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 will be present at our Annual Meeting to respond to appropriate questions and to make a statement if they so desire. This proposal is 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. 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, 20162019 and December 31, 2017.2018. | | | | | | | | | | | | | Year Ended December 31, | | | | | | | 2017 | | | 2016 | | | | (in thousands) | | | | | Audit Fees | | | $2,374 | | | | $3,097 | | | | | Audit-Related Fees | | | 50 | | | | 75 | | | | | Tax Fees | | | 391 | | | | 517 | | | | | Other Fees | | | 71 | | | | 87 | | | | | Total Fees | | | $2,886 | | | | $3,776 | |
| | | | | 22 | | 2018 Proxy Statement | | Etsy |
| | | | | | | | | | | YEAR ENDED DECEMBER 31, | | | 2019 | | | 2018 | | | (in thousands) | | | | | Audit Fees | | $ | 2,874 | | | $ | 3,108 | | | | | Audit-Related Fees | | | — | | | | 119 | | | | | Tax Fees | | | 303 | | | | 341 | | | | | Other Fees | | | 95 | | | | 111 | | | | | Total Fees | | $ | 3,272 | | | $ | 3,679 | |
Audit Fees.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 PCAOB, 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 | | | | | 37 | | 2020 Proxy Statement | | Etsy |
with regulatory filings, such as comfort letters, consents, and review of documents filed with the SEC. These amounts also includeSEC, and service fees for professional services incurred with rendering an opinion under Section 404related to specific transactions and events that occurred in each period, such as the convertible debt agreements in both 2018 and 2019, the asset acquisition in 2018, and the acquisition of the Sarbanes-Oxley Act of 2002, as a result of exiting “emerging growth status” under the JOBS ActReverb in 2016.2019. Audit-related Fees. These amounts consist of the aggregate fees for assurance and related services performed by PwC that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include workfees related to an acquisitiondue diligence services and work supporting the assessment of controls in 2016, and in 2017, fees associated with the implementation of Accounting Standards Codification (“ASC”) 606,842,Revenue from Contracts with CustomersLeases. in 2018. 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. Other Fees.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 and PwC’s review of our sustainability data.material. Pre-Approval Policies and Procedures The Audit Committee is required topre-approve all audit andnon-audit services performed by PwC to ensure that the provision of such services does not impair the public accounting firm’s independence. The Audit Committeepre-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 2018.2020. | | | | | Etsy38 | | 20182020 Proxy Statement | | 23Etsy |
Executive Officers 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 NAME | | Age AGE | | Position POSITION | | | | Josh Silverman | | 4951 | | President and Chief Executive Officer | | | | Rachel Glaser | | 58 | | Chief Financial Officer | | | | Mike Fisher | | 4951 | | Chief Technology Officer | | | | Rachel GlaserKruti Patel Goyal
| | 5643 | | Chief FinancialProduct Officer | | | | Linda Findley KozlowskiRaina Moskowitz
| | 4437 | | SVP, People, Strategy and Services | | | | Ryan Scott | | 43 | | Chief OperatingMarketing Officer | | | | Jill Simeone | | 5153 | | General Counsel and Secretary |
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 sincefrom 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 alsoco-founder and CEO of Evite, Inc. He serves on the board of directors of Shake Shack Inc. Mike Fisher has served as Etsy’s chief technology officer since July 2017. Prior to Etsy, he was theco-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 is also an Adjunct Professor at Case Western Reserve University’s School of Management, and has authored multiple books on the subject of scalability. Mr. Fisher has also served as a Captain and pilot in the U.S. Army.
Rachel Glaser has served as our Chief Financial Officer since May 2017. Prior to that, Ms. Glaserjoining Etsy, she was Chief Financial Officer of Leaf Group, a diversified Internet company that owns and operates marketplace and media businesses, sincefrom April 2015. From January 2012 to March 2015, Ms. Glaser served as Chief Financial Officer of Move, Inc. (operator of Realtor.com)Realtor.com®), an online network of websites for real estate search and home enthusiasts, and Ms. Glaser helped lead the sale of Move, | | | | | 24 | | 2018 Proxy Statement | | Etsy |
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. From August 2010 to July 2014, Ms. Glaser served on the board of directors of Sport Chalet, Inc., a full service specialty retailer. Since January 2018, Ms. Glaser has served on the Boardboard of theThe New York Times Company.Company and as a member of its Audit and Compensation Committees. | | | | | 39 | | 2020 Proxy Statement | | Etsy |
Linda Findley KozlowskiMike Fisher has served as our Chief OperatingTechnology Officer since May 2016.July 2017. Prior to joining Etsy, Ms. Kozlowskihe was theco-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 OperatingTechnology Officer of Evernote, where she oversaw worldwide operations,Quigo, a startup internet advertising company, and led cross-functional teamsas Vice President, Engineering & Architecture for PayPal, Inc., an eBay company. Prior to PayPal, he served in offices across seven countries, from May 2015 to December 2015.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 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 Senior Vice President of Worldwide OperationsPeople, Strategy and Services since April 2018. Prior to joining Etsy, she spent 13 years at EvernoteAmerican 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 formerly served as the Annual Fundraising GalaCo-Chair for the Women’s Venture Fund, focused on advising and empowering female entrepreneurs in NYC. 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 mobilepizza-ordering platform from May 2014March 2017 to MayJune 2019. Prior to Slice, he was Chief Marketing Officer at SoulCycle, the boutique fitness company that redefined indoor cycling, where he helped grow revenue and brand awareness by launching them into digital from July 2016 to March 2017. Before SoulCycle, Mr. Scott held the position ofCo-CEO at Pond5, the world’s largesttwo-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 spearheaded all marketing efforts at Seamless as the company’s Chief Marketing Officer, driving market expansion through the merger with Grubhub in 2013. Post-merger, he took over the position of Vice President of International Marketing from April 2013 to May 2014,at Grubhub and played an essential part in the company’s IPO and growth trajectory as Director of Market Development from October 2012 to April 2013. Before joining Evernote, Ms. Kozlowski was the Director of Global Marketing and Customer Experience at Alibaba.com from June 2011 to October 2012, and the Director of International Corporate Affairs from July 2009 to June 2011. She has also held leadership positions in several communications firms including Fleishman-Hillard, Text 100, and Schwartz Communications.a public company. Jill Simeone has served as our General Counsel and Secretary since January 2017. 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 January 2016 to January 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 July 2013 to January 2016. Before joining KCAP Financial, she was an attorney at American ExpressMs. Simeone held several roles advising on divestitures and investments in technology startups from January 20132011 to June 2013. PriorFrom 1999 to American Express, she served as the General Counsel at Roadify from January 2012 through December 2012. From 1999-20112011 Ms. Simeone served as U.S. General Counsel and then North America General Counsel of CEMEX, a multinational building materials company. Ms. Simeone is a Fulbright Scholar (Mexico). | | | | | Etsy40 | | 20182020 Proxy Statement | | 25Etsy |
Executive Compensation 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 20172019 compensation of each of our Named Executive Officersnamed executive officers (“NEOs”). For 2017,2019, our NEOs were: Josh Silverman, President and Chief Executive Officer; Rachel Glaser, Chief Financial Officer; Mike Fisher, Chief Technology Officer; Linda Findley Kozlowski, Chief Operating Officer;Raina Moskowitz, Senior Vice President, People, Strategy and Services; and Jill Simeone, General Counsel and Secretary; Secretary. Chad Dickerson, former President and Chief Executive Officer;
Kristina Salen, former Chief Financial Officer; and
Karen Mullane, former Vice President and Controller, and Interim Chief Financial Officer.
Executive Summary Business Overview Etsy Inc. is the global marketplace for uniqueoperatestwo-sided online marketplaces that connect millions of passionate and creative goods.buyers and sellers. Our mission is to “Keep Commerce Human,” and we’re committed to using the power of business and technology to strengthen communities and empower people around the world. We connect creative entrepreneurs with thoughtful consumers looking for items made by real people. Our mission isthat are intended to “Keep Commerce Human” and we’re committed to using the powerbe special, reflect their sense of business to strengthen communities and empower people.style, or represent a meaningful occasion. As of December 31, 2017,2019, our platform connected 1.92.7 million active Etsy sellers and 33.4to 46.4 million active Etsy 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 widemarketplace with millions of buyers along with a range of Seller Servicesseller tools and toolsservices that are specifically designed to help our creative entrepreneurs start, manage,generate more sales and scale their businesses. 2019 Consolidated Performance Highlights Gross merchandise sales—GMS grew by 26.5% year-over-year to $5.0 billion, up from $3.9 billion in 2018, with 36% of GMS coming from transactions where an Etsy buyer, an Etsy seller, or both, were located outside of the United States. Revenue—Revenue increased by 35.6% year-over-year to a total of $818.4 million, up from $603.7 million in 2018. Net income—Net income was $95.9 million compared with $77.5 million in 2018. | | | | | 41 | | 2020 Proxy Statement | | Etsy |
Non-GAAP Adjusted EBITDA—Non-GAAP Adjusted EBITDA was $186.3 million representing an increase of 33.5% year-over-year, compared to $139.5 million in 2018. See“Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with GAAP. Active Sellers and Active Buyers—Our active seller community grew to 2.7 million (up 27.6% from 2018) and our active buyer community grew to 46.4 million (up 17.5% from 2018). 2019 Executive Compensation Highlights Our 2019 executive compensation program was designed to be a straightforward and thoughtfulpay-for-performance approach. The principal components of compensation for our NEOs were determined considering the items described below under “Factors Used in Determining Executive Compensation.” Compensation for our NEOs was reflective of our strong financial performance. As further described below under “Achievement of 2019 Corporate Performance Objectives,” achievement of the corporate performance objectives under our 2019 annual cash incentive program resulted in an aggregate corporate performance percentage of 122% based on the strong achievement of GMS and revenue performance levels. However, the Compensation Committee (the “Committee”) exercised negative discretion to reduce the corporate performance percentage to 115% given that our GMS and revenue results benefited from themid-year acquisition of Reverb that was not anticipated at the time the performance targets were determined in early 2019. As previously described, our CEO, Mr. Silverman received a front-loaded equity grant in May 2017 that was intended to induce him to join Etsy and provide him with a meaningful equity stake in the company that would align his interests with those of our stockholders. Mr. Silverman’s offer letter states that he is not eligible to receive additional equity grants until 2021. Accordingly, Mr. Silverman did not receive long-term incentive grants in 2018 or 2019. Stockholder Outreach In 2018, we launched a stockholder engagement program for the specific purpose of seeking feedback from Etsy investors to better understand their views regarding Etsy’s compensation program and practices and corporate governance structure and we continued that program in 2019. After stockholders approved our 2019say-on-pay proposal with approximately 92% of the votes cast in favor of the proposal, we continued to seek feedback from Etsy investors to better understand their views regarding Etsy’s compensation program and practices. In 2019, we reached out to stockholders representing approximately 50% of our common stock outstanding and held discussions with stockholders representing approximately 12% of our common stock outstanding (some investors declined our invitation to engage). In these meetings, investors encouraged Etsy to continue to drive accountability and results through a robustpay-for-performance approach to executive compensation. The Committee is actively exploring incorporating performance-based equity awards, such as performance share units, as suggested by many of our stockholders, into our 2021 executive compensation program, when Mr. Silverman will be eligible to receive equity awards. The Board and the Committee value the opinions of our stockholders, and they will continue to consider the feedback of stockholders received through our outreach program, as well as the voting | | | | | 2642 | | 20182020 Proxy Statement | | Etsy |
2017 Management Transition
2017 was a transformational year for Etsy. We transitioned to a new senior leadership team over the first halfoutcome of the year:
New Chief Executive Officer—Mr. Silverman became our President and Chief Executive Officer in May 2017. He replaced Mr. Dickerson, who resigned his position as our President and Chief Executive Officer effective May 3, 2017 and served in an advisory role through May 31, 2017.
New Chief Financial Officer—Ms. Glaser became our Chief Financial Officer in May 2017. Ms. Mullane, our Vice President, Corporate Controller, served as our Interim Chief Financial Officer before Ms. Glaser commenced employmentfuture say-on-pay proposals. Furthermore, they will remain focused on aligning compensation with us.
New Chief Technology Officer—Mr. Fisher became our Chief Technology Officer in July 2017.
New General Counsel—Ms. Simeone became our General Counsel and Secretary in January 2017.
2017 Strategic Transformation & Performance Highlights
Since joining us, our new management team has sought to sharpen our focus on key initiatives and realign our internal resources to pursue the highest growth opportunities in order to deliver value to our stakeholders. We reduced our headcount twice during 2017 and doubled down on what we believe to be the highest-impact initiatives in our core marketplace. The new management team outlined a new business strategy and began executing on our four key initiatives that we believe will help Etsy and our sellers succeed. With this greater focus, we increased the pace of our product experiments and launches. These actions collectively enabled us to achieve the following 2017 results:
Gross merchandise sales—GMS grew by 14.5% year-over-year to $3.25 billion, up from $2.84 billion in 2016, with 33.0% of sales involving a buyer and/or seller outside of the United States. We accelerated GMS growth for the third and fourth quarter of 2017 and we delivered our first-ever billion dollar quarter of GMS in the fourth quarter of 2017, following a strong holiday season.
Revenue—Revenue rose by 20.9% year-over-year to a total of $441 million, compared to $365 million in 2016, led by Seller Services revenue growth of 28.7%.
Net income—Net income was $81.8 million compared with a net loss of $29.9 million in 2016.
• | | Non-GAAP Adjusted EBITDA*—Non-GAAP Adjusted EBITDA was $80.0 million, representing an increase of 40.1% year-over-year, compared to $57.1 million in 2016.Non-GAAP Adjusted EBITDA margin (i.e.,non-GAAP Adjusted EBITDA divided by revenue) was 18.1%, compared to 15.7% in 2016. |
* | See “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP. |
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2017 Executive Compensation Highlights
In light of the substantial changes in our management team and the changes flowing from our business transformation, our compensation program in 2017 reflected our company’s challenging and changing circumstances. The Committee was largely guided by the need to recruit and hire the appropriate individuals at our most critical senior leadership positions and to ensure the retention and continued service of the remaining senior executive officers. In filling each of the executive positions in 2017, we recognized the need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market.
For 2018, the Committee expects a more traditional process where the principal components of compensation for our NEOs and the corporate and individual performance objectives are determined considering the factors described below under “Factors Used in Determining Executive Compensation.”
Pay-for-Performance Overview
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 incentive compensation opportunities in the form of equity awards, to align the compensation of our executive officers with our performance and the interests of our stockholders. We consider our equity awards, which include options to purchase shares of our common stock and restricted stock unit (“RSU”) awards that may be settled for shares of our common stock to be “variable” pay because their realized value 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.
The pay mix for our CEO and our other current NEOs during 2017 reflected this alignment:
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Key Features of our Executive Compensation Program
| | | | | What We Do
| | What We Don’t Do
| | | ✓ We maintain a fully (100%) independent Compensation Committee
| | × We do not provide our executive officers with guaranteed annual base salary increases
| | | ✓ We retain an independent compensation advisor who performs no other services for us
| | × We do not provide excessive perquisites
| | | ✓ 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 defined benefit retirement programs
| | | ✓ 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 offerchange-in-control excise tax payments or“gross-ups”
| | | ✓ Our executive officers are employed “at will”
| | × We do not permit hedging or pledging of our equity securities by current employees or directors
| | | | | × We do not permit stock option exchanges orre-pricings without stockholder approval
|
Stockholder Advisory Vote on Named Executive Officer Compensation
At our 2017 Annual Meeting of Stockholders, we conducted anon-binding stockholder advisory vote on the compensation of our named executive officers (commonly known asa “Say-on-Pay” vote). Our stockholders approved theSay-on-Pay proposal with 96.6% of the votes cast in favor of the proposal. The Committee considered the result and believes that it demonstrates that our stockholders are generally supportive of our executive compensation program. As a result, the Committee did not make changes to our compensation program based on theSay-on-Pay vote.
The Board of Directors and the Committee value the opinions of our stockholders and will continue to consider the outcome of futureSay-on-Pay votes and feedback received throughout the yearretention when making compensation decisions for our executive officers.
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For a more detailed discussion of our 2019 stockholder engagement, please see “Proxy Statement Summary — Stockholder Engagement.”
Key Components and Design of the Executive Compensation Philosophy and Objectives Our Guiding Philosophy
Our executive compensation program is designed to be simple and focus on pay for performance. Our compensation philosophy is to pay all of our employees, including our executive officers, competitively and equitably in a way that aligns with our long-term business goals and values. Specifically, our compensation program aims to:Program
| | | | | | | | | | | | | | | | | ELEMENT | | TYPE | | PRIMARY OBJECTIVE | | REWARD REALIZED ON ACHIEVEMENT OF | Attract, retain, and motivate qualified, engaged, and enthusiastic employees who are passionate about our mission | | | | Foster a culture of shared success through long-term equity awards for our employees | | | | Fairly reflect each employee’s position, responsibilities, and
impact | | | | Pay all employees a living wage; and work to eliminate systemic and unconscious bias related to gender and gender identity, age, race, and ethnicity
|
Key Objectives
Consistent with our philosophy, the key objective of our executive compensation program is to attract, retain and motivate high caliber, values-aligned 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 compensation opportunities enable us to achieve those objectives and align the compensation of our executive officers with our performance and long-term value creation for our stakeholders.
How We Determine Executive Compensation
Role of the Committee
The Committee discharges the responsibilities of our Board of Directors relating to the compensation of our executive officers, including our NEOs. Specifically, the Committee:
Is responsible for executive compensation decisions, including reviewing, evaluating and approving the compensation arrangements, plans, policies and practices for our executive officers, including our NEOs, and overseeing and administering our incentive compensation plans;
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 risks 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
In discharging its responsibilities, the Committee works with members of our management, including our CEO. Our management assists the Committee by providing information on corporate and individual performance, market compensation data, and management’s perspective on
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compensation matters. The Committee solicits and reviews our CEO’s recommendations with respect to the compensation of our executive officers (other than himself), based on his consideration of relevant market data, roles and responsibilities, and individual performance.
The 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.
Role of Compensation Consultant
The Committee engages an external compensation consultant to assist it by providing information, analysis and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. The Committee has engaged Compensia, Inc., a national compensation consulting firm (“Compensia”), as its compensation consultant since 2014 to advise on executive compensation matters, including competitive market pay practices for senior executives, and with the data analysis and selection of the compensation peer group. For 2017, the scope of Compensia’s engagement included:
the review and analysis of the compensation for our executive officers, including our NEOs;
reviewing and providing input on the Compensation Discussion and Analysis section of our proxy statement for our 2017 Annual Meeting of Stockholders;
the research, development, and review of our compensation peer group;
the review and analysis ofnon-employee director compensation;
support on other ad hoc matters throughout the year; and
attendance at Committee meetings as requested.
The terms of Compensia’s engagement include reporting directly to the Committee and to the Committee chair. In 2017, Compensia did not provide any other services to us. The Committee evaluates Compensia’s independence annually and has determined that its relationship with Compensia and the work of Compensia on behalf of the Committee has not raised any conflict of interest.
Factors Used in Determining Executive Compensation
When approving each compensation element and the target total direct compensation opportunity for our executive officers, the 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, the Committee’s determination of the target total direct compensation, mix of cash and equity and fixed and“at-risk” pay opportunities was an individualized decision for each NEO.
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Competitive Positioning
In the course of its deliberations, the Committee considers compensation data on the competitive market for executive talent, particularly the compensation levels and practices of a group of peer companies. Etsy’s compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, geographical location, and number of employees.
In developing the compensation peer group for 2017, the Committee considered whether a company was:
in a similar industry and competitive market for talent (internet software and services companies, with business models focused one-commerce,peer-to-peer commerce, a subscription-based revenue model, andsoftware-as-a-service);
within a range of 0.5x to 2.0x of our revenue; and
within a range of 0.3x to 3.0x of our market capitalization.
In 2017, the Committee used the following compensation peer group to assist with the determination of compensation for our NEOs. The Committee approved this peer group in November 2016 following a review that included input from Compensia.
| | | Box
Demandware
GrubHub
MercadoLibre
Quotient Technologies
RetailMeNot
Shopify
Base Salary | | ShutterstockFixed
| | SPS Commerce Attract and Retain
| | Stamps.com Service
| | | | | TrueCar Annual Cash
Incentive | | Web.com Group Variable
| | Yelp Short-Term Company and
Individual Performance | | Zillow Group Revenue, Adjusted EBITDA
Margin, GMS, Individual Goals | | | | | Long-Term Incentive | | Variable | | Stockholder Alignment and Long-term Value Creation | | Stock Price |
The Committee uses data drawn from our compensation peer group, as well as data from the Radford Global Technology compensation survey, to evaluate the competitive market when making
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its determinations for the total direct compensation packages for our executive officers, including base salary, target annual cash bonus opportunities, and long-term incentive compensation opportunities.
The 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 peer group. In December 2017, the Committee approved the following updates to the peer group for 2018:
• | | Removing: Demandware and RetailMeNot, which were each acquired, and MercadoLibre, which was above the market capitalization and revenue ranges. |
• | | Adding: Benefitfocus, Care.com, Cars.com, Cloudera, and Shutterfly, using the same criteria described above. |
Competitive compensation data is one of several factors that the Committee considers in making its decisions with respect to the compensation of our executive officers, including our NEOs.
Key Components and Design of the Executive Compensation Program
We also provide post-employment compensation payments and benefits andin addition to other benefits, such as health and wellness benefits, management coaching, skills workshops and training, and a Section 401(k) plan. In general, ourplan and match. Our executive officers generally participate in the standard employee benefit plans and programs available to our other employees. Base Salary Base salary represents the fixed portion of the compensation of our executive officers, including our NEOs. Generally, although the Committee seeks to set base salaries at competitive levels, the actual positioning of executive officer base pay will also be based on the Committee’s assessment of the factors described above.in the section titled “Factors Used in Determining Executive Compensation.” The 20172019 base salary decisions are described below as part of the holistic presentation of each NEO’s 20172019 target total compensation. 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. For 2019, annual cash incentive award payments were based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance objectives, except in the case of our CEO, whose annual cash incentive award payment was based 80% on the achievement of corporate performance objectives and 20% on the achievement of individual performance objectives, reflecting his greater responsibility for our overall performance. Target Annual Cash Incentive Opportunities The 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 | | | | | Etsy43 | | 2018 Proxy Statement | | 33 |
Annual Cash Incentive Program
| Overview
Our annual cash incentive plan is intended to reward participants for the achievement of our short-term financial and operational objectives and their individual performance. For 2017, annual cash incentive award payments under this plan were based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance objectives, except in the case of our CEO, whose annual cash incentive award payment was based 80% on the achievement of corporate performance objectives and 20% on the achievement of individual performance objectives, reflecting his greater responsibility for our overall performance.
Target Annual Cash Incentive Opportunities
The 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 above. Generally, the Committee seeks to set the target annual cash incentive award opportunities of our executive officers so that target total cash compensation (the sum of annual base salary and the annual cash incentive award opportunity) is at competitive levels.
2017 Corporate Performance Objectives
In March 2017, the Committee selected revenue, adjusted EBITDA margin, and gross merchandise sales (“GMS”) as the corporate performance measures for our 2017 annual cash incentive plan. The Committee selected revenue and adjusted EBITDA margin because it believes that 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. The 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 ecosystem, and the scale and growth of our business, and, therefore, it is one of our key performance measures.
In March 2017, the Committee established the target levels for each of the corporate performance measures at levels that it believed to be challenging, but attainable with exceptional performance if both revenue and GMS thresholds were not met, the financial portion of the plan would not pay out. The target levels for the measures used in the financial portion of the annual cash incentive plan, and their respective weighting, were as follows:
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| | | | | | | | | | | | | | | | | | | | | | | | | | Financial Performance Measure | | Weighting | | 2017 Threshold Performance Level (75% Payment of Financial Performance Component) | | 2017 Target Performance Level (90% Payment of Financial Performance Component) | | 2017 Stretch Performance Level (200% Payment of Financial Performance Component) | Revenue | | 40% | | $441,610,070 | | $459,417,000 | | $474,511,000 | Adjusted EBITDA Margin | | 20% | | 13.0% | | 14.1% | | 16.2% | GMS | | 40% | | $3,296,701,440 | | $3,439,835,000 | | $3,552,480 |
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| Adjustments to 2017 Corporate Performance Objectives
Following our second quarter of 2017 earnings results, the Committee reviewed our actual results for the first half of the year against the 2017 annual cash incentive plan target levels established for revenue, adjusted EBITDA margin and discussed with our CEO our prospects for the remainder of the year in light of Etsy’s updated financial guidance for fiscal year 2017, the reset of our business priorities and the significant changes in our senior leadership. These discussions focused on our recent efforts tore-orient our business, our cost-reduction/efficiency initiatives, increased voluntary attrition, and our focus on concentrating on our strongest growth opportunities and executing our new business strategy.
| As a result of these discussions, and its
executive compensation review of our projected performance for the remainder of the year, the Committee determined that the performance levels that had been established at the beginning of the year with input from the prior management team based on the then-current business environment and our internal projections were no longer reasonably attainable for GMS and revenue and that the financial performance component of the plan would likely result in no payment to plan participants. As a result, the Committee determined that the 2017 annual cash incentive plan would not effectively serve its goal of incentivizing the performance and retention of our executive officers and other plan participants. The ongoing successful execution of our new business strategy is critical to Etsy’s overall success and depends upon our executive officers, including the NEO’s, delivering strong performances. |
In view of these findings, and makes adjustments after reviewing our revised forecast forconsidering the year,factors described below in September 2017“Factors Used to Determine Executive Compensation.” Generally, the Committee decidedseeks to adjustset the performance levels for each of the three corporate performance measures and reduce the Maximum Payment to 175% as follows:
| | | | | | | | | | | | | | | | | | | | | | | Financial Performance Measure | | Weighting | | Revised 2017 Threshold Performance Level (75% Payment of Financial Performance Component) | | Revised 2017 Target Performance Level (90% Payment of Financial Performance Component) | | Revised 2017 Maximum (“Stretch”) Performance Level (175% Payment of Financial Performance Component) | | | | | | Revenue | | 40% | | $434,310,730 | | $437,051,000 | | $449,351,000 | | | | | | Adjusted EBITDA Margin | | 20% | | 17.0% | | 18.6% | | 19.7% | | | | | | GMS | | 40% | | $3,211,441,920 | | $3,217,387,000 | | $3,297,000,000 |
In making these adjustments, the Committee wanted to ensure the 2017target annual cash incentive plan continued to incentivizeaward opportunities of our executive officers so that target total cash compensation (the sum of annual base salary and other participating employees. The Committee believed that the adjusted target levels remained difficult to achieve (and, notably increased the performance levels for Adjusted EBITDA margin) and would continue to encourage dedicated corporate and individual performance,annual cash incentive award opportunity) is at a competitive level, when considering our Compensation Peer Group (as defined below) but could be achievable with focused and consistent effort bydid not target a specific percentile of our executive officers throughout the remainder of 2017. If both revenue and GMS thresholds were not met, the financial portion of the plan would not pay out.Compensation Peer Group in 2019.
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Achievement of 20172019 Corporate Performance Objectives
In March 2018,2019, the Committee selected GMS, revenue, and adjusted EBITDA margin as the corporate performance objectives for our 2019 annual cash incentive program, which is consistent with prior years. Targets for all three measures require meaningful year-over-year performance. The 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 ecosystem and the scale and growth of our business, and, therefore, one of our key performance measures. The Committee selected revenue and adjusted EBITDA margin because it believes that 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. If the target performance level was achieved, the annual cash incentive program would pay out at 100%, which the Committee believed to be the appropriate payout for that level of achievement. | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial Performance Measure | | Weighting | | | Threshold Performance Level (75% Payment of Financial Performance Component) | | | Target Performance Level (100% Payment of Financial Performance Component) | | | Stretch Performance Level (150% Payment of Financial Performance Component) | | | Kicker Performance Level (180% Payment of Financial Performance Component) | | | | | | | | GMS | | | 40 | % | | $ | 4,600,132,290 | | | $ | 4,758,000,000 | | | $ | 4,836,000,000 | | | $ | 4,914,671,250 | | | | | | | | Revenue | | | 30 | % | | $ | 778,763,970 | | | $ | 803,000,000 | | | $ | 815,000,000 | | | $ | 821,022,480 | | | | | | | | Adjusted EBITDA Margin | | | 30 | % | | | 23% | | | | 25% | | | | 26% | | | | 27% | |
Achievement of 2019 Corporate Performance Objectives In March 2020, the Committee determined our actual performance with respect to the corporate performance measures for the 20172019 annual cash incentive planprogram resulted in aan aggregate corporate performance percentage of 116%122% based on the following achievements:below achievements. However, the Committee exercised negative discretion to reduce the corporate performance percentage to 115% given that our GMS and revenue results benefited from themid-year acquisition of Reverb that was not anticipated at the time the performance targets were determined in early 2019. | | | | | | | Financial Performance Measure | | Revised 2017 Target Performance Level | | 2017 Actual Performance | | Resulting Payout | | Target Performance Level | | | 2019 Actual Performance | | | Resulting Payout | | | | | | | | GMS | | | $ | 4,758,000,000 | | | $ | 4,974,944,191 | | | | 180 | % | | | | | | Revenue | | $437,051,000 | | $441,230,748 | | | 119 | % | | $ | 803,000,000 | | | $ | 818,379,133 | | | | 166.8 | % | | | | | | | Adjusted EBITDA Margin | | 18.6% | | 18.1% | | | 85 | % | | | 25% | | | | 22.8% | | | | 0 | % | | | | | GMS | | $3,217,387,000 | | $3,253,609,178 | | | 129 | % | |
For 2018,2020, we will continue to use GMS, Revenuerevenue, and Adjustedadjusted EBITDA Marginmargin for our annual cash incentive program, as we continue to believe these are the performance metrics that best reflect the success of our business. GMS will be weighted 40% and revenue and adjusted EBITDA margin will each be weighted 30%. 2017
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2019 Individual Performance In March 2018,2020, the Committee also reviewed each NEO’s individual performance, considered our CEO’s recommendations with respect to the individual performance of our other NEOs, and determined an achievementindividual performance percentage for each NEO. In the caseA portion of our CEO, the Committee assessed the achievement with respect to his individual performance. Actual 2017each NEO’s actual 2019 annual cash incentive awards for our NEOs werepayment was based in part, on anthe evaluation of each NEO’s individual performance achievements, as described below. Annual Cash Incentive Award Payments Based on the foregoing determinations, theThe actual cash incentive award payments earned by our NEOs under the 20172019 annual cash incentive program ranged from 120% to 160%124% of each individual’s target annual cash incentive award opportunity, as further described below under “Individual NEO Decisions.”
Long-Term Incentive Awards We view long-term 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 RSU awardsRSUs encourage a 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, the Committee grants stock options and/or RSU awardsRSUs to newly-hired executive officers, in connection with promotions, as a reward for superior performance and/or for retention purposes. In addition, our NEOs typically receive annual equity awards. Generally, when determining the type and size of a grant, the Committee seeks to be competitive, but the committee did not target a specific percentile of our Compensation Peer Group in 2019. Individual2019 NEO Compensation Decisions
Below are summaries for each NEO individually, of the Committee’s decisions about 2017 compensation.2019 compensation for each of our NEOs. As described above,below, when making the 20172019 compensation decisions, the | | | | | 36 | | 2018 Proxy Statement | | Etsy |
Committee focused primarily on the factors set forth in the section titled “Factors Used in Determining Executive Compensation” and the Committee’s specific compensation objectivesdetails noted below for 2017. Each of the employment offer letters for our new executive officers were approved by the Committee. In establishing the initial compensation arrangements for these individuals, the Committee took into consideration the requisite experience and skills that a qualified candidate would need to manage a growing business in a dynamic and ever-changing environment, the competitive market based on a review of peer data, and the critical business needs of the Company.each NEO.
| President and Chief Executive Officer Josh Silverman 2017 Overview:
On May 3, 2017, Mr. Silverman became our President and Chief Executive Officer and remained a member of our Board of Directors. Mr. Silverman has deep experience leading consumer technology companies and scaling global marketplaces. He has led product development and innovation, driven increased customer adoption at massive scale, implemented brand and marketing initiatives, and delivered strong financial results.
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Compensation Decisions:
In connection with Mr. Silverman’s appointment, Etsy and2019, Mr. Silverman entered into an offer letter that provided forreceived the following compensation and benefits: Base Salary: $375,000. In$500,000, increased from $400,000 in March 2018,2019. The 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 closer to the Committee increasedmedian of the Compensation Peer Group. Following such increase, Mr. Silverman’s 2019 base salary to $400,000 in lightapproximated the median of his job responsibilities and performance and peer group comparisons.the Compensation Peer Group. Annual IncentiveIncentive:: Eligibility to participate in Etsy’s management cash incentive plan with a target bonus of 100% of base salary, based 80% on the achievement of corporate performance objectives and 20% on the achievement of individual performance objectives. The actual 2017 performance bonus paid was $400,000, reflecting 160% of target bonus. To determine Mr. Silverman’s bonus, the Committee considered Mr. Silverman’s overall leadership of our organization and his performance with respect to developing and executing our 2017 operating plan priorities and delivering strong financial results. In particular, it acknowledged his successfulre-alignment of our cost structure and organization design to drive a culture of accountability and improve the velocity of product experiments and launches, and the staffing of our senior leadership team. In March 2018, the Committee determined that Mr. Silverman’s target bonus should remain at 100% of base salary. | | | | | 45 | | 2020 Proxy Statement | | Etsy |
| objectives and 20% on individual performance. The actual 2019 performance bonus paid was $600,000, reflecting 120% of target bonus. To determine the individual component of Mr. Silverman’s bonus, which was assessed at 140% of target, the Committee considered Mr. Silverman’s overall leadership of our organization and his performance with respect to developing and executing our 2019 operating plan priorities and delivering strong financial results. In particular, it acknowledged his success in improving the product experience and thus driving GMS, creating more habitual buyers and unlocking new marketing channels, and achieving significant hiring and diversity and inclusion goals. |
Long-Term Incentive: Mr. Silverman did not receive an equity award in 2019. In May 2017, wethe Committee granted Mr. Silverman an equity award, in the form of stock options and RSUs, and stock options. This grantthat was purposefully “front-loaded”front-loaded to induce Mr. Silverman to join Etsy and to provide Mr. Silverman with a meaningful equity stake in the company that would align his interests with those of our stockholders, and asstockholders. As a result, Mr. Silverman’s offer letter states that he is not eligible to receive additional equity grants for four years (i.e., May 2021).until 2021. | | | | | Etsy | | 2018 Proxy Statement | | 37 |
He received:
250,000 RSUs, which vest 100% on May 3, 2018, subject to his continued service on the vesting date.
3,869,969 stock options, which vest 25% on the first anniversary of the grant date and then in equal monthly installments over the following 36 months, provided he remains in service with us on each vesting date.
The grant provides for certain vesting acceleration benefits upon a change in control, which the Committee believed were necessary to attract and retain Mr. Silverman.
Perquisite: Reimbursement of up to $10,000 for his legal fees incurred in connection with the negotiation of the agreement.
| Chief Financial Officer Rachel Glaser 2017 Overview:
On April 3, 2017, Ms. Glaser was appointed as our Chief Financial Officer, effective May 16, 2017. Ms. Glaser has deep experience as a senior finance executive across a variety of consumer-facing and publicly traded companies. She has led efforts to improve operating efficiency, created a foundation for growth and delivered strong financial results.
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Compensation Decisions:
In connection with Ms. Glaser’s appointment, Etsy and2019, Ms. Glaser entered into an offer letter, which was amended in May 2017 prior to her start date to further induce to her join Etsy, that provided forreceived the following compensation and benefits: Base SalarySalary:: $400,000, increased from $375,000 Sign-on and Relocation: Ms. Glaser received:
A cash signing bonus in the amount of $250,000, subject topro-rata repayment if her employment is terminated for “cause” or if she voluntarily resigns her employment without “good reason” (each as definedMarch 2019 in her offer letter) within 12 monthslight of her start date.
Relocation assistance of up to $53,000job responsibilities and a travel allowance of up to $36,000, to be grossed up for tax purposes, subject topro-rata repayment if her employment is terminated for “cause” or if she voluntarily resigns her employment without “good reason” (each as defined in her offer letter) within 12 months of her start date.performance and peer group comparisons.
Annual Incentive: Eligibility to participate in Etsy’s management cash incentive plan with a target bonus of 75% of base salary, based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance objectives.performance. The actual 20172019 performance bonus paid was $213,000,$370,000, reflecting 120%123% of target bonus. To determine Ms. Glaser’s individual performance portion of her bonus, which was assessed at 140% of target, the Committee considered Ms. Glaser’s overall leadership of our organization and her performance with respect to strengtheningdeveloping and executing our finance organization, particularly2019 operating plan priorities and delivering strong financial results, her success in staffing key senior rolesrevamping our payments function, and deepening its integration into the business. In addition, the Committee noted her leadershipsignificant efforts in the 2018 annual planning process andReverb acquisition. | | | | | 38 | | 2018 Proxy Statement | | Etsy |
| development of an actionable plan, and enhanced forecasting and overall financial management. In March 2018, the Committee determined that Ms. Glaser’s target bonus should remain at 75% of base salary.
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Long-Term Incentive: In June 2017,March 2019, we granted Ms. Glaser an equity award with a value of $2,100,000,$2,500,000, 50% in stock options and 50% in RSUs. The purposeCommittee believed the mix of this awardoptions and RSUs was primarilyappropriate in order to induce Ms. Glaser to join Etsy and align her interests with those of our stockholders.stockholder interests. The options and RSUs vest 25%in eight equal semi-annual installments, beginning on the first anniversary of the grant date and then in equal monthly installments over the following 36 months,October 1, 2019, provided she remains in service with us on each vesting date. The RSUs will vest 25% on July 1, 2018, Travel Reimbursement:Ms. Glaser received a travel reimbursement of up to $3,000 a month from January 2019 through April 2019. Additionally, in 2019, the Committee provided Ms. Glaser with a $36,000 travel allowance to cover travel between New York and thereafter will continue to vest in 12 equal quarterly installments, provided she remains in service with us on each vesting date.Los Angeles from May 2019 through April 2020. | | | | | 46 | | 2020 Proxy Statement | | Etsy |
Chief Technology Officer Mike Fisher 2017 Overview:
On July 31, 2017, Mr. Fisher was appointed as our Chief Technology Officer. Mr. Fisher has deep experience scaling complex global platforms and guiding transformation at leading tech companies.
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Compensation Decisions:
In connection with Mr. Fisher’s appointment, Etsy and2019, Mr. Fisher entered into an offer letter that provided forreceived the following compensation and benefits: Base Salary: $400,000, increased from $325,000 in March 2019. The Committee believed this increase was appropriate in recognition of the criticality of Mr. Fisher’s role as our Chief Technology Officer, his expertise and sustained contribution in such role, and to bring his base salary closer to the median of the Compensation Peer Group. Following such increase, Mr. Fisher’s 2019 base salary approximated the median of the Compensation Peer Group. Sign-on: A cash signing bonus in the amount of $200,000, subject topro-rata repayment if he resigns his employment for any reason before histwo-year anniversary with Etsy. This payment was intended to help offset travel expenses between Brooklyn and his home in Ohio, which are not otherwise eligible for reimbursement under Etsy’s Travel & Entertainment Policy.
Annual Incentive: Eligibility to participate in Etsy’s management cash incentive plan with a target bonus of 50%75% of base salary, based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance objectives. In order to induce Mr. Fisher to join Etsy, pursuant to his offer letter, his minimum 2017 bonus award was set at 100%.performance. The actual 20172019 performance bonus paid was $82,000,$365,000, reflecting 120%122% of target bonus. To determine Mr. Fisher’s individual performance percentage, which was assessed at 135% of target, the Committee considered Mr. Fisher’s overall leadership of our organization and his performance with respect to delivery of our 20172019 financial plan while maintaining strong site availability. TheIn addition, the Committee also acknowledgednoted his rolesuccess in leading our migration to the cloud and driving an action-oriented, focused and caring culture in Engineering. In March 2018, the Committee determined to increase Mr. Fisher’s target bonus to 75% of base salary.cloud. Long-Term Incentive:In August 2017,March 2019, we granted Mr. Fisher received the followingan equity award to induce him to joinwith a value of $2,500,000, 50% in stock options and 50% in RSUs. The Committee believed the companymix of options and RSUs was appropriate in order to align his interests with those of our stockholders. | | | | | Etsy | | 2018 Proxy Statement | | 39 |
He received:
112,500stockholder interests. The options and RSUs which vest 25% on July 1, 2018, and will continue to vest in 12 quarterlyeight equal semi-annual installments, beginning on October 1, 2019, provided he remains in service with us on each vesting date.
250,000 stock options, which will vest 25%Travel Allowance:In 2019, the Committee provided Mr. Fisher with a $36,000 travel allowance to cover travel between New York and Ohio from May 2019 through April 2020. SVP, People, Strategy and Services Raina Moskowitz In 2019, Ms. Moskowitz received the following compensation and benefits: Base Salary: $355,000, increased from $300,000 in March 2019. The Committee believed this increase was appropriate in recognition of her increased scope of responsibility as an executive officer and to maintain competitive positioning relative to the other NEOs and the Compensation Peer Group. Following such increase, Ms. Moskowitz’s 2019 base salary was still below the median of the Compensation Peer Group. Annual Incentive: Eligibility to participate in Etsy’s management cash incentive plan with a target bonus of 60% of base salary, based 70% on the first anniversaryachievement of corporate performance objectives and 30% on individual performance. The actual 2019 performance bonus paid was $265,000, reflecting 124% of target bonus. To determine Ms. Moskowitz’s individual performance percentage, which was assessed at 150% of target, the grant date and thenCommittee considered Ms. Moskowitz’s overall leadership of our organization, particularly in equal monthly installments overimproving the following 36 months, provided he remains incustomer service with us on each vesting date.experience | Chief Operating Officer
Linda Findley Kozlowski
2017 Overview:
Ms. Kozlowski has served as our Chief Operating Officer since May 2016. She brings more than 20 years of experience in operations, international marketing, business development, public relations, and customer service.
| Compensation Decisions:
In 2017, Ms. Kozlowski received the following compensation and benefits:
• Base Salary: $350,000, increased from $300,000 in March 2017 by the Committee in recognition of her contributions and impact, the expansion of her role and to set her target total cash compensation at the median of the competitive market.
• Annual Incentive: Eligibility to participate in Etsy’s management cash incentive plan with a target bonus of 75% of base salary, increased from 50% in March 2017 by the Committee in recognition of her contributions and impact, the expansion of her role and to set her target total cash compensation at the median of the competitive market. Ms. Kozlowski’s target bonus was based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance objectives. The actual 2017 performance bonus paid was $324,000, reflecting 126% of target bonus. To determine Ms. Kozlowski’s individual performance percentage, the Committee considered Ms. Kozlowski’s overall leadership of our organization, particularly in leading the company through the management and strategic transitions of 2017. In addition, the Committee considered Ms. Kozlowski’s key role in driving our 2017 organizational redesign and product roadmap, which were essential to our 2017 performance, and her delivery of performance in line with our financial plan. In March 2018, the Committee determined that Ms. Kozlowski’s target bonus should remain at 75% of base salary.
• Long-Term Incentive: In March 2017, Ms. Kozlowski received an aggregate equity award with a value of $750,000, 50% in stock options and 50% in RSUs. The Committee believed the mix of options and RSUs was appropriate in order to align with stockholder interests. The stock options vest 1/16 on June 15, 2017, with the remainder vesting in 45 equal monthly installments, provided she remains in service with us on each vesting date. The RSUs vest quarterly over a four-year period, provided she remains in service with us on each vesting date.
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| General Counsel and Secretary
and employee engagement, strengthening diversity and inclusion initiatives, and significant efforts in the Reverb acquisition. The Committee also noted her strong performance as a trusted strategic advisor to the executive team and the Board. Jill Simeone
2017 Overview:
On January 30, 2017, Ms. Simeone was appointed as our General Counsel and Secretary. Ms. Simeone has deep experience in M&A, international strategic advising, compliance, and public company reporting.
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| Compensation Decisions:
In connection with Ms. Simeone’s appointment, Etsy and Ms. Simeone entered into an offer letter that provided for the following compensation and benefits:
• Base Salary: $325,000
• Sign-on: A cash signing bonus in the amount of $25,000, subject topro-rata repayment if she resigns her employment for any reason before herone-year anniversary with Etsy.
• Annual Incentive: Eligibility to participate in Etsy’s management cash incentive plan with a target bonus of 50% of base salary, based 70% on the achievement of corporate performance objectives and 30% on the achievement of individual performance objectives. The actual 2017 performance bonus paid was $200,000, reflecting 134% of target bonus. To determine Ms. Simeone’s individual performance percentage, the Committee considered Ms. Simeone’s overall leadership of our organization, particularly in leading the company through the management and strategic transitions of 2017. The Committee also noted her strong performance as a trusted strategic advisor to the executive team and the Board and her role in strengthening the policy, advocacy and legal teams through enhanced processes and attracting and retaining key talent. In March 2018, the Committee determined to increase Ms. Simeone’s target bonus to 60% of base salary.
• Long-Term Incentive:
• In February 2017, we granted Ms. Simeone an equity award with a value of $750,000, 50% in stock options and 50% in RSUs. The purpose of this award was primarily to induce Ms. Simeone to join Etsy and align her interests with those of our stockholders. The options vest 25% on the first anniversary of the grant date and then in equal monthly installments over the following 36 months, provided she remains in service with us on each vesting date. The RSUs vested 25% on January 1, 2018, and will continue to vest in 12 equal quarterly installments, provided she remains in service with us on each vesting date.
• In addition, in July 2017, the Committee granted Ms. Simeone an equity award with a value of $500,000, 50% in stock options and 50% in RSUs. This award was granted to supplement her new hire equity award to better align with her peers and to retain her. The options vest 25% on the first anniversary of the grant date and then in equal monthly installments over the following 36 months, provided she remains in service with us on each vesting date. The RSUs vest 25% on July 1, 2018, and thereafter will continue to vest in 12 equal quarterly installments, provided she remains in service with us on each vesting date.
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Long-Term Incentive:In March 2019, we granted Ms. Moskowitz an equity award with a value of $2,000,000, 50% in stock options and 50% in RSUs. The Committee believed the mix of options and RSUs was appropriate in order to align with stockholder interests. The options and RSUs vest in eight equal semi-annual installments, beginning on October 1, 2019, provided she remains in service with us on each vesting date.
| Former President and Chief Executive Officer
Chad Dickerson
2017 Overview:
Mr. Dickerson resigned as our President, Chief Executive Officer and Chair of our Board of Directors effective May 3, 2017. On May 2, 2017, we entered into a letter agreement with Mr. Dickerson governing the terms of his departure. The letter agreement provided certain severance benefits to Mr. Dickerson, as described below.
| Compensation Decisions:
Below is a summary of Mr. Dickerson’s 2017 compensation and benefits:
• Base Salary: $375,000, increased from $300,000 in March 2017 by the Committee after considering an assessment of the competitive market data, his job responsibilities and performance.
• Annual Incentive: None. In March 2017, the Committee determined to maintain the target annual cash bonus opportunity for Mr. Dickerson at 100%. However, Mr. Dickerson was not entitled to receive an annual cash incentive for 2017 due to his resignation prior to the payment date.
• Long-Term Incentive: In March 2017, the Committee granted Mr. Dickerson an aggregate equity grant with a value of $2,500,000, 75% in stock options and 25% in RSUs. The Committee believed the mix of options and RSUs was appropriate in order to align with stockholder interests. All of the stock options and half of the RSUs were forfeited in connection with his departure from Etsy, as described below.
• Severance:
• Continuation of his base salary for 12 months from May 31, 2017;
• Aone-time lump sum cash payment of $156,250;
• Reimbursement of COBRA premiums for up to 12 months from May 31, 2017
• Accelerated vesting of the stock options granted to him on January 30, 2015 and March 1, 2016;
• Forfeiture of 100% of his stock options and 50% of his RSU granted to him on March 15, 2017;
• Accelerated vesting of 50% of the RSU award granted to him on March 15, 2017;
• An extension of the period for him to exercise his vested stock options until May 31, 2018; and
• Reimbursement of up to $15,000 for legal fees incurred in connection with the agreement.
In addition, we entered into a mutual release and waiver of claims with Mr. Dickerson. In return for these benefits, Mr. Dickerson also agreed to comply with certain non-solicitation, non-competition, confidentiality,non-disparagement, and cooperation provisions.
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| Former Chief Financial Officer
Kristina Salen
2017 Overview:
Ms. Salen resigned as our Chief Financial Officer effective March 31, 2017. In October 2016, when Ms. Salen announced her resignation, Etsy entered into a letter agreement with Ms. Salen addressing the terms of her departure. The letter agreement provided certain retention benefits to Ms. Salen to induce her to remain in her role through March 2017, as described below.
| Compensation Decisions:
Below is a summary of Ms. Salen’s 2017 compensation and benefits:
• Base Salary: $340,000
• Annual Incentive: None
• Long-Term Incentive: None
• Retention: In October 2016, Etsy and Ms. Salen entered into a retention agreement that provided for her continued services as our CFO through March 31, 2017, which provided:
• Continuation of base salary at an annualized rate of $340,000 for six months;
• Reimbursement of COBRA premiums for up to six months;
• Payment of her annual cash incentive award for fiscal year 2016, the individual portion of which would be deemed achieved at 100% and the company performance portion payable based on actual performance, which was $323,252;
• Aone-time retention bonus payable in the amount of $63,750;
• Accelerated vesting of her outstanding equity awards;
• An extension of the period for her to exercise her vested stock options until December 30, 2017; and
• Reimbursement of up to $15,000 in legal fees in connection with the agreement, which we reimbursed in 2016 in the amount of $13,255.
In return for these benefits, Ms. Salen provided a release and waiver of claims and agreed to comply with certainnon-solicitation,non-competition, confidentiality,non-disparagement, and cooperation provisions.
| Former Vice President and Controller, and Interim Chief Financial Officer
Karen Mullane
2017 Overview:
Ms. Mullane was appointed as our Vice President and Controller in January 2014. Ms. Mullane was appointed as our Interim Chief Financial Officer in April 2017 upon Ms. Salen’s departure and served until May 2017, when Ms. Glaser joined. Ms. Mullane did not receive additional compensation for her role as Interim Chief Financial Officer. Ms. Mullane resigned as our Vice
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General Counsel and Secretary
| President and Controller effective November 15, 2017. In connection with her departure, Etsy agreed, in view of her contributions to us and her service as our Interim Chief Financial Officer, to provide her with the transition and separation benefits described below. Pursuant to the Committee’s Charter, it is responsible for determining compensation for Senior Vice President roles and above and, as a result, did not determine Ms. Mullane’s compensation.Jill Simeone
In 2019, Ms. Simeone received the following compensation and benefits: |
| Compensation Decisions:
Below is a summary of Ms. Mullane’s received 2017 compensation and benefits:
• Base Salary: $260,000
• Annual Incentive: None. Ms. Mullane was not entitled to receive an annual cash incentive for 2017 due to her resignation prior to the payment date.
• Long-Term Incentive: In March 2017, Ms. Mullane received an aggregate equity award with a value of $200,000, 50% in stock options and 50% in RSUs. The RSUs vest quarterly over a four-year period, subject to her continuous employment with us through the applicable vesting date. The stock options vest monthly over a four-year period, subject to her continuous employment with us through the applicable vesting date. The majority of these awards were forfeited in connection with her separation from Etsy.
• Transition & Separation: In connection with Ms. Mullane’s resignation, Etsy and Ms. Mullane entered into a letter agreement that provided for the following benefits:
• Continuation of base salary for three months;
• Reimbursement of COBRA premiums for up to five months;
• Aone-time lump sum payment of $96,500 (to be paid in 2018); and
• Acceleration of the vesting of 50% of the stock options and 50% of the shares of the RSUs granted to her on March 1, 2016.
• Reimbursement of up to $1,000 in legal fees incurred in connection with the agreement.
In return for these benefits, Ms. Mullane provided a release and waiver of claims and agreed to comply with certainnon-solicitation,non-competition, confidentiality,non-disparagement, and cooperation provisions.
Other Benefits
Base Salary: $355,000, increased from $325,000 in March 2019 in light of her job responsibilities and performance and peer group comparisons. Annual Incentive: Eligibility to participate in Etsy’s management cash incentive plan with a target bonus of 60% of base salary, based 70% on the achievement of corporate performance objectives and 30% on individual performance. The actual 2019 performance bonus paid was $265,000, reflecting 124% of target bonus. To determine Ms. Simeone’s individual performance percentage, which was assessed at 150% of target, the Committee considered Ms. Simeone’s overall leadership of our organization, particularly in strengthening the policy, advocacy, and legal teams through enhanced processes, and her significant efforts in the Reverb acquisition. The Committee also noted her strong performance as a trusted strategic advisor to the executive team and the Board. Long-Term Incentive:In March 2019, we granted Ms. Simeone an equity award with a value of $2,000,000, 50% in stock options and 50% in RSUs. The Committee believed the mix of options and RSUs was appropriate in order to align with stockholder interests. The options and RSUs vest in eight equal semi-annual installments, beginning on October 1, 2019, provided she remains in service with us on each vesting date. Other Benefits Health & Wellness We provide health 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, vision, life, and disability insurance benefits. | | | | | 48 | | 2020 Proxy Statement | | Etsy |
Limited Perquisites and Other Personal Benefits WeOther than the travel benefits extended to Ms. Glaser and Mr. Fisher, we do not typically provide perquisites to our executive officers, including our NEOs, that are not available to employees generally. From time to time, however, we may provide such benefits for recruitment or retention purposes.
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| 401(k) Plan Like other USU.S. employees, our NEOs may participate in a 401(k) Plan. Etsy matches 50% of the first 6% of a participating employee’s contributions under the 401(k) Plan. 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. In 2017,January 2019, we had both aupdated our Executive Severance Plan (the “Plan”) primarily to provide pro rata cash bonus payments to participants, other than our CEO upon a Qualifying Termination (as defined in the Plan) and to increase the severance periods for executive officers other than the CEO and CFO from six months to one year in the event of a Qualifying Termination that is not related to a change in control event. These changes were made primarily to align the Plan to our practices and to ensure that it remained competitive. 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 Plan will serve 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 Plan is intended to reduce the need to negotiate post-employment compensation arrangements on aChange-in-Controlcase-by-case Severancebasis and helps to mitigate potential employer liability. For example, 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. | | | | | 49 | | 2020 Proxy Statement | | Etsy |
Executive Compensation Philosophy and Objectives Key Features of our Executive Compensation Program | | | | | WHAT WE DO | | WHAT WE DON’T DO | | | We Maintain a Fully (100%) 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 Provide Excessive Perquisites | | | 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 Defined Benefit Retirement Programs | | | 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 OfferChange-in-Control Excise Tax Payments or“Gross-Ups” | | | Our Executive Officers are Employed “At Will” | | We Do Not Permit Hedging or Pledging of Our Equity Securities By Employees or Directors | | | | | 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 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 simple and focus on pay for performance. Our compensation philosophy is to pay all of our employees, including our executive officers, competitively and equitably 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 bonuses and equity awards. | | Align pay for each employee’s position with the responsibilities, knowledge, complexity, and impact of the role within the company. |
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Pay all employees fairly and consistently At Etsy, we believe in paying all of our employees fairly and consistently. We award equity 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 can share in our future potential and has helped support the long-term investments in our action-oriented, values-based, and mission-driven work culture. In 2018, Etsy commissioned a pay equity study undertaken by a third-party consulting firm, which revealed no influence of age, race, or gender in Etsy’s pay practices. We are committed to ensuring that fair and consistent pay practices continue to be applied across our organization as we prepare to conduct our second pay equity study in 2020. Key Objectives Consistent with our philosophy, the key objective of our executive compensation program is to attract, retain and motivate high caliber, values-aligned 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 stakeholders. How We Determine Executive Compensation Role of the Compensation Committee The Committee discharges the responsibilities of our Board of Directors relating to the compensation of our executive officers, including our NEOs. Specifically, the Committee: Is responsible for executive compensation decisions, including reviewing, evaluating, and approving the compensation arrangements, plans, policies, and practices for our executive officers, including our NEOs, and overseeing and administering our incentive compensation plans; 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 In discharging its responsibilities, the Committee works with members of our management, including our CEO. Our management assists the Committee by providing information on corporate and individual performance and management’s perspective on compensation matters. The Committee solicits and reviews our CEO’s recommendations with respect to the compensation of our executive officers (other than himself), based on his consideration of relevant market data, roles and responsibilities, and individual performance. | | | | | 51 | | 2020 Proxy Statement | | Etsy |
The 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. Because these plans were scheduledOur CEO recuses himself from all discussions and recommendations regarding his own compensation. Role of Compensation Consultant The Committee engages an external compensation consultant to expire in early 2018, we replaced them withassist it by providing information, analysis and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. The Committee has engaged Compensia, Inc., a single Executive Severance Plan in February 2018 (the “Plan”). national compensation consulting firm, 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 the executive Compensation Peer Group. For 2019, Compensia’s engagement included: the review and analysis of the compensation for our executive officers, including our NEOs; reviewing and providing input on the Compensation Discussion and Analysis section of our proxy statement for our 2019 Annual Meeting of Stockholders; the research, development, and review of our Compensation Peer Group; the review and analysis ofnon-employee director compensation; support on other ad hoc matters throughout the year; and attendance at Committee meetings as requested. The terms of Compensia’s engagement include reporting directly to the PlanCommittee. In 2019, Compensia did not provide any other services to us. The Committee evaluates Compensia’s independence annually and has determined that its relationship with Compensia and the work of Compensia on behalf of the Committee has not raised any conflict of interest. Factors Used in Determining Executive Compensation When approving each compensation element and the target total direct compensation opportunity for our executive officers, the 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, the 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. | | | | | 52 | | 2020 Proxy Statement | | Etsy |
Factors considered when determining NEO compensation | | | | | | | | 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 the Committee and our Board of Directors. | | The positioning of each executive officer’s compensation in a ranking of peer company compensation levels. | | | | Our CEO’s recommendations (other than for himself) considering performance, market analysis, and compensation parity among our executive officers. | | Each executive’s performance, based on an assessment of his or her contribution to our overall performance and his or her ability to lead and work as part of a team. | | The compensation practices of our 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 the Committee considers in making its decisions with respect to the compensation of our executive officers, including our NEOs. Specifically, the 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 the Committee. Etsy’s Compensation Peer Group consists of companies in our industry (consumer discretionary, consumer staples, internet software and services) and that are largely consistentsimilar to us in terms of revenue and market capitalization. Specifically, in determining the Compensation Peer Group for 2019, the Committee considered whether a company was: in a similar industry and competitive market for talent (internet software and services companies with business models focused onpeer-to-peer commerce, transaction- or subscription-based revenue models, andsoftware-as-a-service); 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 2019, the Committee used the following Compensation Peer Group, which was approved in December 2018 after consideration of input from Compensia, to assist with the Severance Plan andChange-in-Control Severance Plan and any changes were administrative in nature. For example, key updates included removing the three-year term, adding forum selection provisions, and adding a claims and appeals provision. |
Formalizing the arrangements upon a severance and change in control event serves several objectives:determination of compensation for our NEOs:
It eliminates the need to negotiate post-employment compensation arrangements on acase-by-case basis;
| | | 2U ANGI Homeservices Box CarGurus Cars.com Cloudera GrubHub Match Group Okta Shopify | | Shutterfly Shutterstock Snap Stamps.com Stitch Fix Trip Advisor Twilio Yelp Zillow Group |
It 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; and
It supports administrative efficiency because they require less time and expense to administer than individual arrangements.
In addition, we believe that the 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 involves a change in control of the Company, which preserves our value and the potential benefit to be received by our stockholders in the transaction.
The Plan is designed to provide reasonable compensation to executive officers who leave our employ under certain circumstances to facilitate their transition to new employment. Further, in some instances we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive officer to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits. These post-employment compensation terms are discussed in “Post-Employment Compensation Arrangements” below.
Other Compensation Policies and Practices
Equity Awards Grant Policy
We maintain a formal equity awards grant policy that provides as follows:
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The Committee uses data drawn from our Compensation Peer Group, as well as data from the Radford Global Technology compensation survey, to evaluate the competitive market when making executive compensation determinations, including base salary, target annual cash bonus opportunities, and long-term incentive compensation opportunities. The 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 2019, the Committee approved the following updates to the Compensation Peer Group for 2020: Our Board of Directors or the Committee must approve all equity awards.
• | | Removing: 2U, Cars.com, and Stamps.com, which were below the market comparison on market capitalization described above, and Shutterfly which was acquired. |
• | | Adding: DocuSign, HubSpot, Pinterest, and The Trade Desk using the criteria described above. |
Other Compensation Policies and Practices Equity Awards Grant Policy We maintain a formal equity awards grant policy that provides: | | | | | Etsy | | 2018 Proxy Statement | | 45 |
Our Board of Directors or the Committee must approve all equity awards.
Equity awards are granted onpre-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.
Annual equity awards granted to our employees, including our executive officers, are effective as of March 15th of each year.
Equity awards are granted onpre-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. Annual equity awards granted to our employees, including our executive officers, are effective as of March 15th of each year. The exercise price of any option to purchase shares of our common stock may not be less than the fair market value of our common stock on the date of grant. This fair market value is to be determined in accordance with generally accepted accounting principles. 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. 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 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 the Committee may determine in its sole discretion. As a result, the fair value of the awards at grant date, 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 the Committee. Policy Prohibiting Hedging and Pledging
Under our insider trading policy, our employees, including our executive officers, and thenon-employee members of our Board of Directors 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 thenon-employee members of our Board of Directors are prohibited from pledging our equity securities or using such securities as collateral for a loan.
Tax and Accounting Considerations
Deductibility of Executive Compensation
Generally, Section 162(m) of the Code disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid for any fiscal year to certain executive officers.
Companies that recently completed an initial offering of their equity securities to the public, generally are permitted a transition period before the deduction limit of Section 162(m) becomes applicable to compensation paid in accordance with plans and arrangements that were in effect at the time of their initial public offering, subject to certain exceptions. This transition period may extend until our 2019 Annual Meeting of Stockholders, unless it is terminated earlier under the Section 162(m) post-initial public offering rules or under the amendments to Section 162(m) that were part of the Tax Cuts and Jobs Act of 2017 effective for taxable years beginning after December 31, 2017.
Taxation ofNon-Qualified Deferred Compensation
Generally, Section 409A of the Code sets limits on the deferral and payment of certain benefits. The Committee takes into account whether elements of the compensation for our executive officers will
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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 Considerations
As part of its deliberations, the Committee takes into consideration the accounting treatment of the various elements of our executive compensation program. For example, we record base salaries and performance-based compensation in the amounts paid or to be paid to our executive officers in our financial statements.
In addition, we follow the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”) for our stock-based compensation awards. ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees, including our executive officers, and thenon-employee members of our Board of Directors, 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 required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.
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Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section of Etsy’s 2018 Proxy Statement. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in Etsy’s 2018 Proxy Statement and incorporated into Etsy’s Annual Report on Form10-K for the fiscal year ended December 31, 2017.
Respectfully submitted by:
Jonathan D. Klein (Chair)
Gary S. Briggs
Edith W. Cooper
Melissa Reiff
Fred Wilson
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Compensation and Risk Management
Our Compensation Committee, Compensia (the Committee’s independent 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 the company. In particular, we considered compensation program attributes that help to mitigate risk, including, for example:
the mix of cash and equity compensation;
a balanced short-term incentive plan design 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 the 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, 2017 in accordance with SEC rules.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) | | | Bonus (1)($) | | | Stock Awards (2)($) | | | Option Awards (3)($) | | | Non-Equity Incentive Plan Compensation (4)($) | | | All Other Compensation (5)($) | | | Total ($) | | | | | | | | | | | Josh Silverman | | | 2017 | | | | 247,159 | | | | – | | | | 2,655,000 | | | | 17,879,257 | | | | 400,000 | | | | 9,044 | | | | 21,190,460 | | President & CEO | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rachel Glaser | | | 2017 | | | | 234,375 | | | | 250,000 | | | | 1,192,576 | | | | 1,050,701 | | | | 213,000 | | | | 102,540 | | | | 3,043,192 | | Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mike Fisher | | | 2017 | | | | 136,648 | | | | 200,000 | | | | 1,609,875 | | | | 1,612,500 | | | | 82,000 | | | | – | | | | 3,641,023 | | Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Linda Kozlowski | | | 2017 | | | | 341,667 | | | | – | | | | 327,043 | | | | 375,297 | | | | 324,000 | | | | 8,100 | | | | 1,376,107 | | | | | | | | | | | Chief Operating Officer | | | 2016 | | | | 187,500 | | | | 75,000 | | | | 676,838 | | | | 625,442 | | | | 123,484 | | | | 55,592 | | | | 1,743,856 | | | | | | | | | | | Jill Simeone | | | 2017 | | | | 300,174 | | | | 25,000 | | | | 637,597 | | | | 624,700 | | | | 200,000 | | | | 4,875 | | | | 1,792,346 | | General Counsel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chad Dickerson(6) | | | 2017 | | | | 196,552 | | | | – | | | | 848,516 | | | | 2,719,208 | | | | – | | | | 411,289 | | | | 4,175,565 | | | | | | | | | | | Former Chair, President & CEO | | | 2016 | | | | 300,000 | | | | – | | | | – | | | | 1,108,170 | | | | 396,000 | | | | – | | | | 1,804,170 | | | | 2015 | | | | 300,000 | | | | – | | | | – | | | | 2,173,949 | | | | 225,000 | | | | – | | | | 2,698,949 | | | | | | | | | | | Karen Mullane(6) | | | 2017 | | | | 235,342 | | | | – | | | | 106,962 | | | | 100,080 | | | | – | | | | 42,189 | | | | 484,573 | | Former VP, Controller | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kristina Salen(6) | | | 2017 | | | | 102,506 | | | | 63,750 | | | | 478,963 | | | | 423,575 | | | | – | | | | 189,362 | | | | 1,258,156 | | | | | | | | | | | Former Chief Financial Officer | | | 2016 | | | | 336,667 | | | | – | | | | 396,473 | | | | 344,449 | | | | 323,252 | | | | 13,255 | | | | 1,414,096 | | | | 2015 | | | | 318,333 | | | | – | | | | 0 | | | | 1,050,742 | | | | 191,382 | | | | – | | | | 1,560,457 | |
| (1) For fiscal year 2017, the amounts in this column represent (a) signing bonuses for Rachel Glaser, Mike Fisher, and Jill Simeone in connection with joining Etsy; and (b) a retention bonus for Kristina Salen.
(2) The amounts in this column represent the aggregate grant date fair value of RSUs and the incremental fair value related to the accelerated vesting of certain RSUs, computed in accordance with FASB ASC Topic 718. The valuation assumptions used718 and presented in the calculationSummary Compensation Table and Grants of Plan-Based Awards Table may be lower or higher than the equity compensation value approved by the Committee.
Policy Prohibiting Hedging and Pledging Under our insider trading policy, our employees, including our executive officers, and thenon-employee members of our Board of Directors are prohibited from engaging in short sales, hedging or similar transactions, or derivatives trading involving our equity securities. | | | | | 54 | | 2020 Proxy Statement | | Etsy |
Similarly, under our insider trading policy, our employees, including our executive officers, and thenon-employee members of our Board of Directors are prohibited from pledging our equity securities or using such amountssecurities as collateral for a loan. Tax and Accounting Considerations Deductibility of Executive Compensation Generally, Section 162(m) of the Internal Revenue Code (the “Code”) disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid for any fiscal year to certain ”covered employees.” Companies that recently completed an initial offering of their equity securities to the public, generally are set forthpermitted a transition period before the deduction limit of Section 162(m) of the Code becomes applicable to compensation paid in Note 11—Stock-Basedaccordance with plans and arrangements that were in effect at the time of their initial public offering, subject to certain exceptions. This transition period ended at our 2019 Annual Meeting of Stockholders. Compensation paid to each of our “covered employees” in excess of $1 million per taxable year generally will not be deductible unless it qualifies for the transition period exception described above. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m) of the Code, as well as other factors beyond the control of the of the Committee, no assurance can be given that any compensation paid by us will qualify for the transition period exception under Section 162(m) and be deductible by us in the future. The Committee retains the flexibility to provide compensation for our NEOs in a manner consistent with the goals of our executive compensation program and the best interests of the Company and our stockholders, which may include providing for compensation that is not deductible by us due to the deduction limit under Section 162(m). The Committee also retains the flexibility to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with our business needs. Taxation ofNon-Qualified Deferred Compensation Generally, Section 409A of the Code sets limits on the deferral and payment of certain benefits. The 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 Considerations The 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 incentive cash bonus compensation in our Consolidated Financial Statements. We follow the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”) for our stock-based compensation awards. 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 thenon-employee members of our Board of Directors, 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. | | | | | 55 | | 2020 Proxy Statement | | Etsy |
Compensation Committee Report The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section of Etsy’s 2020 Proxy Statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in Etsy’s 2020 Proxy Statement and incorporated into Etsy’s Annual Report on Form10-K for the fiscal year ended December 31, 2017 that accompanies this proxy statement. For fiscal year 2017, the amounts in this column represent (a) aggregate grant date fair value of RSUs for each of Josh Silverman, Rachel Glaser, Mike Fisher, Linda Kozlowski, and Jill Simeone; (b) aggregate grant date fair value of RSUs equal to $545,075 and incremental fair value related to the accelerated vesting of certain RSUs pursuant to Chad Dickerson’s separation agreement equal to $303,441; (c) aggregate grant date fair value of RSUs equal to $87,211 and incremental fair value related to the accelerated vesting of certain RSUs pursuant2019. Respectfully submitted by: Melissa Reiff (Chair) Gary S. Briggs Edith W. Cooper Jonathan D. Klein | | | | | 50 | | 2018 | 56 | | 2020 Proxy Statement | | Etsy |
| Compensation and Risk Management Our Compensation Committee, Compensia (the Compensation Committee’s independent 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 Karen Mullane’s transition and separation agreement equalhave a material adverse effect on the Company. In particular, we considered compensation program attributes that help to $19,751; and (d) incremental fair value related to the accelerated vesting of certain RSUs pursuant to Kristina Salen’s retention agreement.mitigate risk, including, for example: (3)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 amounts in this column representCompensation Committee has reviewed the aggregate grant date fair value of stock option awardsrisk assessment report and agreed with the incremental fair value related to the accelerated vesting and extended exercise period of certain 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 11—Stock-Based Compensation in our Annual Report on Form10-K for the fiscal year ended December 31, 2017 that accompanies this proxy statement. For fiscal year 2017, the amounts in this column represent (a) aggregate grant date fair value of stock option awards for each of Josh Silverman, Rachel Glaser, Mike Fisher, Linda Kozlowski, and Jill Simeone; (b) aggregate grant date fair value of stock option awards equal to $1,876,489 and incremental fair value related to the accelerated vesting and extended exercise period of certain stock options pursuant to Chad Dickerson’s separation agreement equal to $842,719; (c) aggregate grant date fair value of stock option awards equal to $100,077 and incremental fair value related to the accelerated vesting of certain stock options pursuant to Karen Mullane’s transition and separation agreement equal to $3; and (d) incremental fair value related to the accelerated vesting and extended exercise period of certain stock options pursuant to Kristina Salen’s retention agreement.conclusion. (4) The amounts in this column represent bonuses paid under our annual cash incentive program.
(5) For fiscal year 2017, the amounts in this column represent (a) for Josh Silverman, 401(k) match of $1,406, and reimbursement of legal fees of $7,638; (b) for Rachel Glaser, 401(k) match of $2,344, $53,000 for relocation expenses, $5,895 in travel allowance, and $41,301 in relocation and travel allowance gross-up; (c) for Jill Simeone, 401(k) match; (d) for Linda Kozlowski, 401(k) match; (e) for Chad Dickerson, 401(k) match of $8,150, reimbursement of legal fees of $15,000, cash severance of $218,750 and a one-time lump sum payment of $156,250, and $13,139 of COBRA premiums; (f) for Karen Mullane, 401(k) match of $8,100, reimbursement of legal fees of $1,000, cash severance of $32,500, and $577 of COBRA premiums, and (g) for Kristina Salen, 401(k) match of $8,100, cash payment of $170,000, and $11,262 of COBRA premiums.
(6) Kristina Salen’s employment ended March 31, 2017, Chad Dickerson’s employment ended May 31, 2017, and Karen Mullane’s employment ended November 15, 2017.
For additional information regarding the severance arrangements for our NEOs please refer to “Potential Payments upon Termination or Change in Control.”
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Executive Compensation Tables Summary Compensation Table The following table provides information regarding the compensation of our NEOs as of December 31, 2019 in accordance with SEC rules. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) | | | Bonus ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | All Other Compensation ($)(5) | | | Total ($) | | | | | | | | | | | Josh Silverman President & CEO | | | 2019 | | | | 475,000 | | | | – | | | | – | | | | – | | | | 600,000 | | | | 8,400 | | | | 1,083,400 | | | | 2018 | | | | 395,833 | | | | – | | | | – | | | | – | | | | 640,000 | | | | 8,250 | | | | 1,044,083 | | | | 2017 | | | | 247,159 | | | | – | | | | 2,655,000 | | | | 17,879,257 | | | | 400,000 | | | | 9,044 | | | | 21,190,460 | | | | | | | | | | | Rachel Glaser Chief Financial Officer | | | 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 | | | | 2017 | | | | 234,375 | | | | 250,000 | | | | 1,192,576 | | | | 1,050,701 | | | | 213,000 | | | | 102,540 | | | | 3,043,192 | | | | | | | | | | | Mike Fisher Chief Technology Officer | | | 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 | | | | 2017 | | | | 136,648 | | | | 200,000 | | | | 1,609,875 | | | | 1,612,500 | | | | 82,000 | | | | – | | | | 3,641,023 | | | | | | | | | | | Raina Moskowitz SVP, People, Strategy and Services | | | 2019 | | | | 341,250 | | | | – | | | | 1,131,030 | | | | 999,972 | | | | 265,000 | | | | 8,400 | | | | 2,745,652 | | | | | | | | | | | Jill Simeone General Counsel & Secretary | | | 2019 | | | | 347,500 | | | | – | | | | 1,131,030 | | | | 999,972 | | | | 265,000 | | | | 8,400 | | | | 2,751,902 | | | | 2018 | | | | 325,000 | | | | – | | | | 629,525 | | | | 499,934 | | | | 290,000 | | | | 8,250 | | | | 1,752,709 | | | | 2017 | | | | 300,174 | | | | 25,000 | | | | 637,597 | | | | 624,700 | | | | 200,000 | | | | 4,875 | | | | 1,792,346 | |
| | | | | (1) The amounts in this column represent signing bonuses for Rachel Glaser, Mike Fisher, and Jill Simeone, each of whom joined Etsy in 2017. | (2) 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 onForm 10-K for the fiscal year ended December 31, 2019 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. | (3) 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, 2019 that accompanies this proxy statement. | (4) The amounts in this column represent bonuses paid under our annual cash incentive program. | (5) For fiscal year 2019, the amounts in this column represent (a) for Josh Silverman, Raina Moskowitz, and Jill Simeone Etsy’s 401(k) match of $8,400 each; (b) for Rachel Glaser Etsy’s 401(k) match of $8,400 and reimbursed travel expenses of $18,217 (including reimbursements for future travel reimbursed prior to April 2019) and a travel stipend of $36,000; (c) for Mike Fisher Etsy’s 401(k) match of $8,400 and $36,000 travel stipend. |
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Grants of Plan-Based Awards The following table provides information regarding grants of plan-based awards to our NEOs during the fiscal year ended December 31, 2017:2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Grant Date | | | Threshold ($) | | | Target ($)(1) | | | Maximum ($) | | | Restricted Stock Units (#) | | | Option Awards (#) | | | Exercise Price of Option Awards ($/Share)(2) | | | Grant Date Fair Value of Stock and Option Awards ($)(3) | | | | | | | | | | | Josh Silverman | | | – | | | | – | | | | 500,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | | | | | | Rachel Glaser | | | – | | | | – | | | | 300,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | – | | | | 42,301 | (4) | | | 69.89 | | | | 1,249,995 | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | 20,229 | (5) | | | – | | | | – | | | | 1,413,805 | | | | | | | | | | | Mike Fisher | | | – | | | | – | | | | 300,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | | | | | 42,301 | (4) | | | 69.89 | | | | 1,249,995 | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | 20,229 | (5) | | | – | | | | – | | | | 1,413,805 | | | | | | | | | | | Raina Moskowitz | | | – | | | | – | | | | 213,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | – | | | | 33,840 | (4) | | | 69.89 | | | | 999,972 | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | 16,183 | (5) | | | – | | | | – | | | | 1,131,030 | | | | | | | | | | | Jill Simeone | | | – | | | | – | | | | 213,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | – | | | | 33,840 | (4) | | | 69.89 | | | | 999,972 | | | | 3/15/2019 | | | | – | | | | – | | | | – | | | | 16,183 | (5) | | | – | | | | – | | | | 1,131,030 | |
| | | | | (1) Etsy’snon-equity incentive plan does not provide thresholds or maximums. Actual cash incentive bonus plan payouts are reflected in theNon-Equity Incentive Plan Compensation column of the “Summary Compensation Table.” | (2) 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 15, 2019, which was $69.89 per share. | (3) The amounts shown in this column represent the aggregate grant date fair value of RSUs and option awards granted during the fiscal year. The amounts are valued in accordance with FASB ASC Topic 718. Assumptions used in the calculation of the grant date fair value are set forth in Note 16—Stock-based Compensation, in our Annual Report on Form10-K for the fiscal year ended December 31, 2019 that accompanies this proxy statement. In order to mitigate the impact of any short-term stock price volatility on the number of stock units granted, the number of stock units in an RSU award is based on the aggregate dollar value of the award divided by the average closing market price of our common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days immediately prior to and including the date of grant. As a result, the fair value of the awards at grant date in this column, computed in accordance with FASB ASC Topic 718, may be lower or higher than the equity compensation value approved by the Compensation Committee. | (4) These stock options vest in 8 equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date. | (5) These RSUs vest in 8 equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Grant Date | | | Approval Date | | | | | | Threshold ($) | | | Target ($)(1) | | | Maximum ($) | | | | | | Restricted Stock Units | | | Option Awards | | | Exercise Price of Option Awards ($/share) | | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | | | | | | | | | | | | | Josh Silverman | | | – | | | | – | | | | | | | | – | | | | 249,657 | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | 5/4/2017 | | | | 5/2/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | 3,869,969 | (3) | | | 10.62 | | | | 17,879,257 | | | | 5/4/2017 | | | | 5/2/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 250,000 | (4) | | | – | | | | – | | | | 2,655,000 | | | | | | | | | | | | | | Rachel Glaser | | | – | | | | – | | | | | | | | – | | | | 177,226 | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | 6/1/2017 | | | | 5/4/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | 171,124 | (3) | | | 13.55 | | | | 1,050,701 | | | | 6/1/2017 | | | | 5/4/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 88,013 | (5) | | | – | | | | – | | | | 1,192,576 | | | | | | | | | | | | | | Mike Fisher | | | – | | | | – | | | | | | | | – | | | | 68,562 | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | 8/1/2017 | | | | 7/31/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | 250,000 | (3) | | | 14.31 | | | | 1,612,500 | | | | 8/1/2017 | | | | 7/31/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 112,500 | (5) | | | – | | | | – | | | | 1,609,875 | | | | | | | | | | | | | | Linda Kozlowski | | | – | | | | – | | | | | | | | – | | | | 256,438 | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | 3/15/2017 | | | | 3/15/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | 82,847 | (6) | | | 10.23 | | | | 375,297 | | | | 3/15/2017 | | | | 3/15/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 31,969 | (7) | | | – | | | | – | | | | 327,043 | | | | | | | | | | | | | | Jill Simeone | | | – | | | | – | | | | | | | | – | | | | 149,589 | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | 2/1/2017 | | | | 1/31/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | 67,890 | (3) | | | 12.46 | | | | 374,753 | | | | 2/1/2017 | | | | 1/31/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 30,000 | (8) | | | – | | | | – | | | | 373,800 | | | | 7/3/2017 | | | | 6/29/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | | | | | 37,250 | (3) | | | 14.72 | | | | 249,948 | | | | 7/3/2017 | | | | 6/29/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 17,921 | (5) | | | – | | | | – | | | | 263,797 | | | | | | | | | | | | | | Chad Dickerson | | | – | | | | – | | | | | | | | – | | | | 362,877 | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | 3/15/2017 | | | | 3/15/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | 414,236 | (9) | | | 10.23 | | | | 1,876,489 | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 842,719 | (10) | | | 3/15/2017 | | | | 3/15/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 53,282 | (11) | | | – | | | | – | | | | 545,075 | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 303,441 | (12) | | | | | | | | | | | | | Karen Mullane | | | – | | | | – | | | | | | | | – | | | | 77,515 | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | 3/15/2017 | | | | 3/15/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | 22,092 | (9) | | | 10.23 | | | | 100,077 | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 3 | (13) | | | 3/15/2017 | | | | 3/15/2017 | | | | | | | | – | | | | – | | | | – | | | | | | | | 8,525 | (9) | | | – | | | | – | | | | 87,211 | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 19,751 | (14) | | | | | | | | | | | | | Kristina Salen | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 423,575 | (15) | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 478,963 | (16) |
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| (1) This target bonus amount, representing a percentage of the executive’s annual base salary, takes into account any change to the executive’s annual base salary rate during the year. The Company’snon-equity incentive plan does not provide thresholds or maximums. Actual cash incentive bonus plan payouts are reflected in theNon-Equity Incentive Plan Compensation column of the “Summary Compensation Table.” Chad Dickerson, Karen Mullane, and Kristina Salen did not receive any incentive plan payouts in light of theirmid-year departure from the company.
(2) The amounts shown in this column represent the aggregate grant date fair value of RSUs and option awards granted during the fiscal year and the incremental fair value related to the accelerated vesting of certain RSUs, and the incremental fair value related to the accelerated vesting and extended exercise period of certain option awards. The amounts are valued in accordance with ASC Topic 718, Compensation – Stock Based Compensation. Assumptions used in the calculation of the grant date fair value are set forth in Note 11, Stock- Based Compensation, in our Annual Report on Form10-K for the fiscal year ended December 31, 2017 that accompanies this proxy statement.
(3) This stock option vests 25% on theone-year anniversary of the grant date, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
(4) These RSUs vest 100% on theone-year anniversary of the grant date, subject to continued service on vesting date.
(5) These RSUs vest 25% on July 1, 2018, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date.
(6) This stock option vested 6.25% on June 15, 2017, with the remainder vesting in 45 equal monthly installments, subject to continued service on each vesting date.
(7) These RSUs vest in 16 equal quarterly installments, beginning on July 1, 2017, subject to continued service on each vesting date.
(8) These RSUs vested 25% on January 1, 2018, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date.
(9) The unvested portion of this equity award was forfeited by Chad Dickerson and Karen Mullane in connection with their departure from Etsy in 2017.
(10) This amount represents the incremental fair value related to the accelerated vesting and extended exercise period of certain stock options pursuant to Chad Dickerson’s separation agreement.
(11) Pursuant to Mr. Dickerson’s separation agreement, 50% of these RSUs vested as of May 31, 2017.
(12) This amount represents the incremental fair value related to the accelerated vesting of certain RSUs pursuant to Chad Dickerson’s separation agreement.
(13) This amount represents the incremental fair value related to the accelerated vesting of certain stock options pursuant to Karen Mullane’s transition and separation agreement.
(14) This amount represents the incremental fair value related to the accelerated vesting of certain RSUs pursuant to Karen Mullane’s transition and separation agreement.
(15) This amount represents the incremental fair value related to the accelerated vesting and extended exercise period of certain stock options pursuant to Kristina Salen’s retention agreement.
(16) This amount represents the incremental fair value related to the accelerated vesting of certain RSUs pursuant to Kristina Salen’s retention agreement.
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| Outstanding Equity Awards at FiscalYear-End The following table sets forth information regarding unexercised stock options and RSUs held by our NEOs as of December 31, 2017.2019. | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | | | | | | | | Name | | Number of Securities Underlying Unexercised Options that are Exercisable as of December 31, 2019 (#) | | | Number of Securities Underlying Unexercised Options that are not Exercisable as of December 31, 2019 (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock that Have not Vested (#) | | | Market Value of Shares or Units of Stock that Have not Vested ($)(6) | | | | | | | | | Josh Silverman | | | 2,499,354 | | | | 1,370,615 | (1) | | | 10.62 | | | | 5/04/2027 | | | | – | | | | – | | | | | | | | | Rachel Glaser | | | 106,952 | | | | 64,172 | (2) | | | 13.55 | | | | 5/31/2027 | | | | – | | | | – | | | | 18,423 | | | | 30,706 | (3) | | | 28.38 | | | | 3/14/2028 | | | | – | | | | – | | | | 5,287 | | | | 37,014 | (4) | | | 69.89 | | | | 3/14/2029 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 38,506 | (5) | | | 1,705,816 | | | | – | | | | – | | | | – | | | | – | | | | 17,330 | (7) | | | 767,719 | | | | – | | | | – | | | | – | | | | – | | | | 17,701 | (8) | | | 784,154 | | | | | | | | | Mike Fisher | | | 10,417 | | | | 104,167 | (9) | | | 14.31 | | | | 7/31/2027 | | | | – | | | | – | | | | 5,287 | | | | 37,014 | (4) | | | 69.89 | | | | 3/14/2029 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 49,219 | (5) | | | 2,180,402 | | | | – | | | | – | | | | – | | | | – | | | | 17,701 | (8) | | | 784,154 | | | | | | | | | Raina Moskowitz | | | 15,991 | | | | 24,409 | (10) | | | 30.32 | | | | 4/30/2028 | | | | – | | | | – | | | | 4,230 | | | | 29,610 | (4) | | | 69.89 | | | | 3/14/2029 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 11,895 | (11) | | | 526,949 | | | | – | | | | – | | | | – | | | | – | | | | 14,161 | (8) | | | 627,332 | | | | | | | | | Jill Simeone | | | 18,387 | | | | 19,802 | (12) | | | 12.46 | | | | 1/31/2027 | | | | – | | | | – | | | | 22,505 | | | | 14,745 | (13) | | | 14.72 | | | | 7/3/2027 | | | | – | | | | – | | | | 14,738 | | | | 24,565 | (3) | | | 28.38 | | | | 3/14/2028 | | | | – | | | | – | | | | 4,230 | | | | 29,610 | (4) | | | 69.89 | | | | 3/14/2029 | | | | – | | | | – | | | | | – | | | | – | | | | – | | | | – | | | | 9,375 | (14) | | | 415,313 | | | | | – | | | | – | | | | – | | | | – | | | | 7,841 | (5) | | | 347,356 | | | | | | | | | | | | | | | | | | | | | 13,864 | (7) | | | 614,175 | | | | | | | | | | | | | | | | | | | | | 14,161 | (8) | | | 627,332 | |
| | | | | (1) 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. | (2) 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. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | | | | | | | | Name | | Number of Securities Underlying Unexercised Options that are Exercisable as of December 31, 2017 (#) | | | Number of Securities Underlying Unexercised Options that are not Exercisable as of December 31, 2017 (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | | | | | | | Josh Silverman | | | – | | | | 3,869,969 | (1) | | | 10.62 | | | | 5/03/2027 | | | | – | | | | – | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | 250,000 | (2) | | $ | 5,112,500 | (3) | | | | | | | | Rachel Glaser | | | – | | | | 171,124 | (4) | | | 13.55 | | | | 5/31/2027 | | | | – | | | | – | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | 88,013 | (5) | | $ | 1,799,866 | (3) | | | | | | | | Mike Fisher | | | – | | | | 250,000 | (6) | | | 14.31 | | | | 7/31/2027 | | | | – | | | | – | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | 112,500 | (5) | | $ | 2,300,625 | (3) | | | | | | | | Linda Kozlowski | | | 55,578 | | | | 92,631 | (7) | | | 9.40 | | | | 5/31/2026 | | | | – | | | | – | | | | | | | | | | | | 15,533 | | | | 67,314 | (8) | | | 10.23 | | | | 3/14/2027 | | | | – | | | | – | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | 49,503 | (9) | | $ | 1,012,336 | (3) | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | 27,973 | (10) | | $ | 572,048 | (3) | | | | | | | | Jill Simeone | | | – | | | | 67,890 | (11) | | | 12.46 | | | | 1/31/2027 | | | | – | | | | – | | | | | | | | | | | | – | | | | 37,250 | (12) | | | 14.72 | | | | 7/3/2027 | | | | – | | | | – | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | 30,000 | (13) | | | 613,500 | (3) | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | 17,921 | (5) | | | 366,484 | (3) | | | | | | | | Chad Dickerson | | | 300,000 | (14) | | | – | | | | 17.00 | | | | 5/31/2018 | | | | – | | | | – | | | | | | | | | Karen Mullane | | | 95,833 | (15) | | | – | | | | 8.26 | | | | 2/15/2018 | | | | – | | | | – | | | | | | | | | | | | 27,500 | (15) | | | – | | | | 17.00 | | | | 2/15/2018 | | | | – | | | | – | | | | | | | | | | | | 20,980 | (16) | | | – | | | | 8.36 | | | | 2/15/2018 | | | | – | | | | – | | | | | | | | | | | | 3,681 | (15) | | | – | | | | 10.23 | | | | 2/15/2018 | | | | – | | | | – | | | | | | | | | Kristina Salen | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
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(1) This stock option will vest 25% on May 4,
| | | | | (3) These stock options vest in 8 equal semi-annual installments, beginning on October 1, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date. (2) These RSUs vest 100% on May 3, 2018, subject to continued service on the vesting date.
(3) This amount represents the market value of unvested RSUs, based on the closing stock price on December 29, 2017 (the last trading day of the fiscal year) which was $20.45.
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(4) These stock options vest in 8 equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date. | | | | (5) 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. | (6) This amount represents the market value of unvested RSUs, based on a closing price of our common stock on December 31, 2019 of $44.30. | (7) These RSUs vest in 8 equal semi-annual installments, beginning on October 1, 2018, subject to continued service on each vesting date. | (8) These RSUs vest in 8 equal semi-annual installments, beginning on October 1, 2019, subject to continued service on each vesting date. | (9) These stock options vested 25% on August 1, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date. | (10) These stock options vested 25% on May 1, 2019, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date. | (11) These RSUs vested 25% on April 1, 2019, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date. | (12) These stock options vested 25% on February 1, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date. | (13) These stock options vested 25% on July 3, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date. | (14) These RSUs vested 25% on January 1, 2018, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date. | 54 | | 2018 |
Option Exercises and Stock Vested The following table provides information regarding exercises of option awards and vesting of stock awards by our NEOs in 2019: | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | | | | | | Named Executive Officer | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(2) | | | | | | | Josh Silverman | | | – | | | | – | | | | – | | | | – | | | | | | | Rachel Glaser | | | – | | | | – | | | | 31,463 | | | | 1,849,891 | | | | | | | Mike Fisher | | | 135,416 | | | | 7,094,659 | | | | 30,653 | | | | 1,778,716 | | | | | | | Raina Moskowitz | | | – | | | | – | | | | 9,158 | | | | 575,657 | | | | | | | Jill Simeone | | | – | | | | – | | | | 19,548 | | | | 1,152,276 | |
| | | | | (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. | (2) 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 (4)Executive Severance Plan
We maintain an executive severance plan and certain other arrangements that provide for payments to our NEOs upon termination of employment, including in connection with a change in control 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 be 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. Each NEO will also be entitled to receive healthcare continuation coverage or cash in lieu 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. As a condition to receiving the payments and benefits under our executive severance plan, the NEO must agree to a standard release of claims. “Qualifying Termination” is defined in our executive severance plan which is filed as an exhibit to our Annual Report on Form10-K This stock optionfor the fiscal year ended December 31, 2019. 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 the3-month period before or the12-month period following a change in control (a “Qualifying Change in Control Termination”). Upon a Qualifying Change in Control Termination, our CEO will vest 25% on June 1, 2018, withbe entitled to receive continued salary payments for 18 months and each other NEO will be entitled to receive continued salary payments for 12 months. Each NEO will also be entitled to receive reimbursement for healthcare continuation coverage for the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date. (5) These RSUs vest 25% on July 1, 2018, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date.
(6) This stock option will vest 25% on August 1, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
(7) This stock option vested 25% on June 1, 2017, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
(8) This stock option vested 6.25% on June 15, 2017, with the remainder vesting in 45 equal monthly installments, subject to continued service on each vesting date.
(9) These RSUs vested 25% on July 1, 2017, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date.
(10) These RSUs vest in 16 equal quarterly installments, beginning on July 1, 2017, subject to continued service on each vesting date.
(11) This stock option will vest 25% on February 1, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
(12) This stock option will vest 25% on July 3, 2018, with the remainder vesting in 36 equal monthly installments, subject to continued service on each vesting date.
(13) These RSUs vest 25% on January 1, 2018, with the remainder vesting in 12 equal quarterly installments, subject to continued service on each vesting date.
(14) Pursuant to Chad Dickerson’s separation agreement, this award fully vested on May 31, 2017.
(15) Represents the fully vested portion of stock options held by Karen Mullane on November 15, 2017, her last day of employment. Any unvested shares were forfeited.
(16) Represents the fully vested portionlesser of the stock option held by Karen Mullane on November 15, 2017, her last datenumber of employment. Pursuantmonths in this specified severance period or until healthcare continuation coverage ends or the NEO becomes eligible for substantially equivalent coverage. Finally, each NEO will be entitled to Karen Mullane’s transition and separation agreement, 50% of this option award fully vested on November 15, 2017. Any unvested shares were forfeited.
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Option Exercises and Stock Vested
The following table provides information regarding exercises of option awards and vesting of stock awards by our NEOs in 2017:
| | | | | | | | | | | | | | | | | | | | | | 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 | | | – | | | | – | | | | – | | | | – | | | | | | | Rachel Glaser | | | – | | | | – | | | | – | | | | – | | | | | | | Mike Fisher | | | – | | | | – | | | | – | | | | – | | | | | | | Linda Kozlowski | | | – | | | | – | | | | 26,497 | | | | 409,671 | | | | | | | Jill Simeone | | | – | | | | – | | | | – | | | | – | | | | | | | Chad Dickerson | | | 2,304,759 | | | | 24,689,521 | | | | 26,641 | | | | 357,256 | | | | | | | Karen Mullane | | | – | | | | – | | | | 9,068 | | | | 133,325 | | | | | | | Kristina Salen | | | 759,173 | | | | 4,180,036 | | | | 41,497 | | | | 444,522 | |
| (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.
(2) Value realized onfull 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
We maintain certain plans and arrangements that provide for payments to our NEOs upon termination of employment, including after a change in control as described below. In 2017, we had both a Severance Plan andChange-in-Control Severance Plan for our executive officers, including our NEOs. Because these plans were scheduled to expire in early 2018, we replaced them with a single Executive Severance Plan in February 2018.
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Executive Severance Plan
Under our severance plan, if we terminate a NEO’s employment without cause or if a NEO terminates employment for good reason other than in connection with a change in control, then he or she will be entitled to receive continued salary payments for a certain number of months, as specified in their employment agreement or participation notice. Each NEO will also be entitled to receive reimbursement for healthcare continuation coverage for the severance period or until healthcare continuation coverage ends or the named executive officer becomes eligible for equivalent coverage, whichever is less. As a condition to receiving the payments and benefits, the NEO must agree to a standard release of claims.
Under the plan, payments and benefits in the event of a change in control are payable only upon a “double trigger;” that is, only following a change in controland a qualifying termination of employment, including a termination of employment without cause or a resignation for good reason. For Joshany outstanding equity awards. In addition, for Mr. Silverman, pursuant to his offer letter, 25% of his 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.
Under the plan, if we terminate a NEO’s employment without cause or if a named executive officer terminates employment for good reason in the three month period before or 12 month period after a change in control, then, they will be entitled to receive continued salary payments for 18 months, in the case of our CEO, and 12 months, in the case of our other NEOs. A NEO will also be entitled to receive reimbursement for healthcare continuation coverage for the lesser of the number of months in the severance period or until healthcare continuation coverage ends or the executive becomes eligible for substantially equivalent coverage. Finally, each NEO will be entitled to full vesting of any outstanding equity awards. As a condition to receiving the payments and benefits, the NEO must agree to a standard release of claims as well as certain non-solicitation,non-competition, confidentiality, non-disparagement, and cooperation provisions.
The following table sets forth the estimated incremental payments and benefits that would be payable to our NEOs upon termination of employment or a change in control, assuming that the triggering event occurred on December 31, 2017. 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. Because Chad Dickerson, Karen Mullane, and Kristina Salen have left Etsy, their actual arrangements upon termination of employment are described in the table.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Termination Scenario | | Cash Severance ($)(1) | | | Health & Welfare Benefits ($) | | | Restricted Stock Unit Awards ($)(2) | | | Option Awards ($)(3) | | | Total ($) | | | | | | | | | Josh Silverman | | Termination Without Cause/ Resignation for Good Reason | | | 375,000 | (6) | | | 22,537 | (9) | | | – | | | | 9,555,824 | (12) | | | 9,953,361 | | | | | | | | | | | Termination Without Cause or Resignation for Good Reason Within 3 Months Prior to or 12 Months Following a Change of Control(4) | | | 562,500 | (7) | | | 33,805 | (10) | | | 5,112,500 | | | | 38,041,795 | | | | 43,750,600 | | | | | | | | | | | Change in Control(5) | | | – | | | | – | | | | – | | | | 9,510,449 | | | | 9,510,449 | | | | | | | | | Rachel Glaser | | Termination Without Cause/ Resignation for Good Reason | | | 375,000 | (6) | | | 22,537 | (9) | | | – | | | | – | | | | 397,537 | | | | | | | | | | | Termination Without Cause or Resignation for Good Reason Within 3 Months Prior to or 12 Months Following a Change of Control(4) | | | 375,000 | (6) | | | 22,537 | (9) | | | 1,799,866 | | | | 1,180,756 | | | | 3,378,159 | | | | | | | | | Mike Fisher | | Termination Without Cause/ Resignation for Good Reason | | | 162,500 | (8) | | | 22,040 | (9) | | | – | | | | – | | | | 184,540 | | | | | | | | | | | Termination Without Cause or Resignation for Good Reason Within 3 Months Prior to or 12 Months Following a Change of Control(4) | | | 325,000 | (6) | | | 22,040 | (9) | | | 2,300,625 | | | | 1,535,000 | | | | 4,182,665 | | | | | | | | | Linda Kozlowski | | Termination Without Cause/ Resignation for Good Reason | | | 175,000 | (8) | | | 3,542 | (11) | | | – | | | | – | | | | 178,542 | | | | | | | | | | | Termination Without Cause or Resignation for Good Reason Within 3 Months Prior to or 12 Months Following a Change of Control(4) | | | 350,000 | (6) | | | 7,084 | (9) | | | 1,584,384 | | | | 1,711,522 | | | | 3,652,990 | | | | | | | | | Jill Simeone | | Termination Without Cause/ Resignation for Good Reason | | | 162,500 | (8) | | | 11,268 | (11) | | | – | | | | – | | | | 173,768 | | | | | | | | | | | Termination Without Cause or Resignation for Good Reason Within 3 Months Prior to or 12 Months Following a Change of Control(4) | | | 325,000 | (6) | | | 22,537 | (9) | | | 979,984 | | | | 755,884 | | | | 2,083,405 | | | | | | | | | Chad Dickerson | | Actual arrangement pursuant to separation agreement(13) | | | 531,250 | | | | 22,537 | | | | 303,441 | | | | 842,719 | | | | 1,699,947 | | | | | | | | | Karen Mullane | | Actual arrangement pursuant to transition and separation agreement(14) | | | 161,500 | | | | 2,889 | | | | 19,751 | | | | 3 | | | | 184,143 | | | | | | | | | Kristina Salen | | Actual arrangement pursuant to retention agreement(15) | | | 493,252 | | | | 11,268 | | | | 478,963 | | | | 423,575 | | | | 1,407,058 | |
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| | (1) Each NEO’s base salary in effect on December 31, 2017 was used for purposes of valuing the severance payments, other than with respect to Chad Dickerson, Karen Mullane, and Kristina Salen, as discussed in footnotes below.
(2) The value of accelerated vesting of unvested RSUs is based upon the closing stock price on December 29, 2017 (the last trading day of the fiscal year), which was $20.45, 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 29, 2017 (the last trading day of the fiscal year), which was $20.45, and the exercise price per option multiplied by the number of unvested options.
(4) 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.
(5) Pursuant to Josh Silverman’s offer letter, 25% of his 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.duties, even if this does not lead to his resignation. As a condition to receiving the payments and benefits under our executive severance plan, the NEO must agree to a standard release of claims as well as certainnon-solicitation,non-competition, confidentiality,non-disparagement, and cooperation provisions.
In January 2019, we updated our executive severance plan primarily to provide pro rata cash bonus payments to participants, other than our CEO, upon a Qualifying Termination and to increase the severance periods for executive officers, other than our CEO and CFO, from 6 months to 12 months in the event of 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. The following table sets forth the estimated incremental payments and benefits that would be payable to our NEOs upon termination of employment, including in connection with a change in (6) Amount reflects cash severance of 12 months’ salary based on the executive officer’s base salary as of December 31, 2017.
(7) Amount reflects cash severance of 18 months’ salary based on the executive officer’s base salary as of December 31, 2017.
(8) Amount reflects cash severance of 6 months’ salary based on the executive officer’s base salary as of December 31, 2017.
(9) Amount reflects the estimated cost of COBRA continuation coverage for 12 months.
(10) Amount reflects the estimated cost of COBRA continuation coverage for 18 months.
(11) Amount reflects the estimated cost of COBRA continuation coverage for 6 months.
(12) Pursuant to Josh Silverman’s offer letter, upon a termination without cause or a resignation for good reason, 25% of his options will accelerate 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 and the value of the extended exercise period of vested options was computed in accordance with FASB ASC Topic 718.
(13) Pursuant to Chad Dickerson’s separation agreement, the amounts in this row reflect (1) cash severance of $531,250, reflecting a continuation of his base salary of $375,000 for twelve months and an additionalone-time lump sum payment of $156,250; (2) estimated cost of reimbursement of COBRA premiums for twelve months; and (3) the incremental fair value from the accelerated vesting of certain RSUs and stock options and the extended exercise period of certain stock options. In addition to the amounts reflected in the table above, Mr. Dickerson also received a legal fee reimbursement in the amount of $15,000.
(14) Pursuant to Karen Mullane’s transition and separation agreement, the amounts in this row reflect (1) cash severance of $161,500, reflecting a continuation of her base salary for three months and an additionalone-time payment of $96,500; (2) estimated cost of reimbursement of COBRA premiums for five months; and (3) the incremental fair value from the accelerated vesting of certain RSUs and stock options. In addition to the amounts reflected in the table above, Ms. Mullane also received a legal fee reimbursement in the amount of $1,000.
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| (15) Pursuantcontrol, assuming that the triggering event occurred on December 31, 2019. Due to Kristina Salen’s retention agreement, the amounts in this row reflect (1) cash severancenumber of $493,252, reflecting a continuation of her base salary of $340,000 for six monthsfactors that affect the nature and payment of her annual cash incentive bonus for 2016 in the amount of $323,252; (2) estimated cost of reimbursement of COBRA premiums for six months;any potential payments or benefits, actual payments and (3) the incremental fair valuebenefits may differ from the accelerated vesting of certain RSUs and stock options and the extended exercise period of certain stock options. In addition to the amounts reflectedthose presented in the table above, Ms. Salen also received a legal fee reimbursement in 2016 in the amount of $13,255.below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Termination Scenario | | Cash Severance ($)(1) | | | Health & Welfare Benefits ($) | | | Restricted Stock Unit Awards ($)(2) | | | Option Awards ($)(3) | | | Total ($) | | | | | | | | | Josh Silverman | | Qualifying Termination | | | 1,000,000 | (6) | | | 28,145 | (9) | | | – | | | | 11,540,578 | (11) | | | 12,568,723 | | | | | | | | | | | Qualifying Change in Control Termination(4) | | | 750,000 | (7) | | | 42,217 | (10) | | | – | | | | 46,162,313 | | | | 46,954,530 | | | | | | | | | | | Change in Control(5) | | | – | | | | – | | | | – | | | | 11,540,578 | | | | 11,540,578 | | | | | | | | | Rachel Glaser | | Qualifying Termination | | | 700,000 | (8) | | | 28,145 | (9) | | | – | | | | – | | | | 728,145 | | | | | | | | | | | Qualifying Change in Control Termination(4) | | | 400,000 | (6) | | | 28,145 | (9) | | | 3,257,689 | | | | 2,462,129 | | | | 6,147,963 | | | | | | | | | Mike Fisher | | Qualifying Termination | | | 700,000 | (8) | | | 27,583 | (9) | | | – | | | | – | | | | 727,583 | | | | | | | | | | | Qualifying Change in Control Termination(4) | | | 400,000 | (6) | | | 27,583 | (9) | | | 3,123,968 | | | | 2,964,556 | | | | 6,516,107 | | | | | | | | | Raina Moskowitz | | Qualifying Termination | | | 568,000 | (8) | | | 28,145 | (9) | | | – | | | | – | | | | 596,145 | | | | | | | | | | | Qualifying Change in Control Termination(4) | | | 355,000 | (6) | | | 28,145 | (9) | | | 341,238 | | | | 1,154,281 | | | | 1,878,664 | | | | | | | | | Jill Simeone | | Qualifying Termination | | | 568,000 | (8) | | | 28,145 | (9) | | | – | | | | – | | | | 596,145 | | | | | | | | | | | Qualifying Change in Control Termination(4) | | | 355,000 | (6) | | | 28,145 | (9) | | | 1,457,728 | | | | 2,004,176 | | | | 3,845,049 | |
| | | | | (1) Each NEO’s base salary in effect on December 31, 2019 was used for purposes of valuing the cash severance payments. | (2) The value of accelerated vesting of unvested RSUs is based upon the closing stock price on December 31, 2019, which was $44.30 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, 2019, which was $44.30 per share, and the exercise price per option multiplied by the number of unvested options. | (4) 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. | (5) Pursuant to Mr. Silverman’s 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. | (6) Amount reflects cash severance of 12 months’ salary based on the NEO’s base salary as of December 31, 2019. | (7) Amount reflects cash severance of 18 months’ salary based on the NEO’s base salary as of December 31, 2019. | (8) Amount reflects cash severance of 12 months’ salary based on the NEO’s base salary as of December 31, 2019 and a pro rata cash bonus payment at 100% of each NEO’s target annual cash incentive bonus. | (9) Amount reflects the estimated reimbursement for COBRA continuation coverage for 12 months. | (10) Amount reflects the estimated reimbursement for COBRA continuation coverage for 18 months. | (11) Pursuant to Mr. Silverman’s 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. |
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Pay Ratio Disclosure Under SEC rules, we are required to calculate and disclose the annual total compensation of our median employee and the ratio 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, 2017. To identify our median employee from our employee population, we calculated the aggregate amount of each employee’s 2017 base compensation and the value of equity awards granted in 2017.
We calculated the value of 2017 equity awards as follows;
stock option awards were calculated in accordance with generally accepted accounting principles (i.e., FASB ASC Topic 718); and
restricted stock units 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 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, 2017.
Using this approach, we determined our median employee. Once the median employee was identified, we then calculated the annual total compensation of this employee for 2017 in accordance with the requirements of the Summary Compensation Table.
For 2017, the median of the annual total compensation of our employees (other than Mr. Silverman) was $121,150 and the annual total compensation of Mr. Silverman, as reported in the Summary Compensation Table included in this proxy statement, was $21,190,460. For purposes of the Pay Ratio, we are required to annualize Mr. Silverman’s base salary which resulted in total compensation of $21,318,301. 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 176:1.
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As described in our Compensation Discussion and Analysis under “Individual NEO Decisions - President and Chief Executive Officer,” Mr. Silverman’s 2017 compensation included an equity award of stock options and restricted stock units that was purposefully “front-loaded” to induce him to join Etsy and to provide him with a meaningful equity stake in the company that would align his interests with those of our stockholders. As a result, Mr. Silverman’s offer letter states that he is not eligible to receive additional equity grants for four years (i.e., May 2021). Consequently, we expect Mr. Silverman’s annual total compensation for the next three years will be lower than his annual total compensation for 2017 as reported in our 2017 Summary Compensation Table and the CEO Pay Ratio will be lower in those years. If we adjust for the four-year period that Mr. Silverman’ssign-on equity awards were intended to cover and instead included 25% of the total value of his sign on equity awards, Mr. Silverman’s 2017 annual total compensation (assuming a full year of base salary) would have been $5,917,608. Using this amount, the ratio of Mr. Silverman’s annual total compensation to the median of the annual total compensation of all employees would be 49:1.
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Equity Compensation Plan Information
The following table provides information as of December 31, 2017 with respect to the shares of our common stock that may be issued under our equity compensation plans.
| | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights(2) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(3) | | | | | | | (a) | | (b) | | | (c) | | | | | Equity compensation plans approved by security holders | | 11,022,186 | | | $10.48 | | | 17,155,379 | | | | | Equity compensation plans not approved by security holders | | – | | | – | | | – | | | | | Total | | 11,022,186 | | | | | | 17,155,379 |
| | (1) 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, 2019.
To identify our median employee from our employee population, we calculated the aggregate amount of each employee’s 2019 base compensation, 2019 employee bonuses, and the value of equity awards granted in 2019. We calculated the value of 2019 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, 2019. Using this approach, we determined our median employee. Once the median employee was identified, we then calculated the annual total compensation of this employee for 2019 in accordance with the requirements of the Summary Compensation Table. In identifying our median employee, we did not include employees of our subsidiary, Reverb, which we acquired in August 2019. Reverb had 184 employees as of December 31, 2019. For 2019, the median of the annual total compensation of our employees (other than Mr. Silverman) was $186,293 and the annual total compensation of Mr. Silverman, as reported in the Summary Compensation Table included in this proxy statement, was $1,083,400. 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 6:1. As described in our Compensation Discussion and Analysis under “2019 Executive Compensation Highlights” Mr. Silverman did not receive long-term incentive grants in 2018 or 2019 in light of the front-loaded grant he received in May 2017 14,355,379that was intended to induce him to join Etsy and provide him with a meaningful equity stake in the Company that would align his interests with those of our stockholders. If we adjust for the four-year period that Mr. Silverman’ssign-on equity awards were intended to cover and instead included 25% of the total value of his sign on equity awards, Mr. Silverman’s 2019 annual total compensation would have been $6,216,964. Using this amount, the ratio of Mr. Silverman’s annual total compensation to the median of the annual total compensation of all employees would be 33:1. | | | | | 64 | | 2020 Proxy Statement | | Etsy |
Equity Compensation Plan Information The following table provides information as of December 31, 2019 with respect to the shares of our common stock that may be issued under our equity compensation plans. | | | | | | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#)(1) (a) | | | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights ($)(2) (b) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#)(3) (c) | | | | | | Equity compensation plans approved by security holders | | | 9,255,332 | | | | $16.26 | | | | 23,294,369 | | | | | | Equity compensation plans not approved by security holders | | | – | | | | – | | | | – | | | | | | Total | | | 9,255,332 | | | | – | | | | 23,294,369 | |
| | | | | (1) 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, 2019, 20,494,369 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 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 2, 2020, the number of shares available for issuance increased automatically by 5% of our outstanding shares of common stock as of December 31, 2019, or 5,917,139 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 approach 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. | | | | | 65 | | 2020 Proxy Statement | | Etsy |
Proposal No. 3 Advisory Vote on Executive Compensation In accordance with SEC rules, we are providing our stockholders with the opportunity to 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, gives 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, 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 anon-binding advisory vote “FOR” the following resolution: “RESOLVED, that the stockholders of Etsy, Inc. approve, on anon-binding advisory basis, the compensation paid to the named executive officers, as disclosed in the proxy statement for the 2020 Annual Meeting, including the Compensation Discussion and Analysis, compensation tables and 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. As an advisory vote, the result will not be binding on the Board or the Compensation Committee. Thesay-on-pay vote will, however, provide us with important feedback from our stockholders about our executive compensation philosophy, objectives and program. The Board and the Compensation Committee value the opinions of our stockholders and expect to take into account the outcome of the vote when considering future executive compensation decisions and when evaluating our executive compensation program. The Board of Directors recommends a vote “FOR” the approval, on anon-binding advisory basis, of executive compensation, as discussed in this proxy statement. The 2015 Equity Incentive Plan provides that on the first 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 2, 2018, the Board determined to increase the number of shares available for issuance by 6,088,461 shares (or approximately 5% of our outstanding shares of common stock as of December 31, 2017) 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 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 approach in prior years, for 2017, the Board determined not to increase the number of shares available for future issuance under the 2015 Employee Stock Purchase Plan.
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Proposal No. 3
Advisory Vote on Executive Compensation
In accordance with SEC rules, we are providing our stockholders with the opportunity to 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, gives 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, 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 anon-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the stockholders of Etsy, Inc. approve, on anon-binding advisory basis, the compensation paid to the named executive officers, as disclosed in the proxy statement for the 2018 Annual Meeting, including the Compensation Discussion and Analysis, compensation tables and 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.
As an advisory vote, the result will not be binding on the Board or the Compensation Committee. TheSay-on-Pay vote will, however, provide us with important feedback from our stockholders about our executive compensation philosophy, objectives and program. The Board and the Compensation Committee value the opinions of our stockholders and expect to take into account the outcome of the vote when considering future executive compensation decisions and when evaluating our executive compensation program.
The Board of Directors recommends a vote “FOR” the approval, on anon-binding advisory basis, of executive compensation, as discussed in this proxy statement.
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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. The Audit Committee has adopted a written related person transaction policy, which requires that any related person transaction must be presented to our Audit Committee for review, consideration, and approval. When considering proposed related person transactions, the 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 the 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 In May 2017,October 2019, we entered into an engineering services consultingemployment agreement with Jonathan Briggs, the son of Gary Briggs, a member of our Board (the “May Consulting“Employment Agreement”). Under the terms of the Employment Agreement, upon joining Etsy as a software engineer, Jonathan will receive a base salary a $110,000, an equity award with AKF Partners, a company in which Mike Fisher served a partner and consultant. Atvalue at the time Mr. Fisher was notof grant of $60,000, and relocation assistance of up to $5,000, and he will be eligible to participate in Etsy’s discretionary bonus program with a related person. Priortarget annual bonus of 10% of base salary. Jonathan is expected to Mr. Fisher’s appointment as Etsy’s CTO on July 31, 2017, we canceled the May Consultingjoin Etsy in 2020. The Employment Agreement and Mr. Fisher stepped down from theday-to-day operations of AKF Partners. On August 1, 2017, we entered into a new arm’s-length consulting agreement between Etsy and AKF Partners, which was approved by theour Audit Committee in accordance with our related person transaction policy (the “August Consultingtransactions policy. | | | | | 6467 | | 20182020 Proxy Statement | | Etsy |
Agreement”). AKF Partners provided us with consulting services under the August Consulting Agreement through the end of 2017. The August Consulting Agreement was formally terminated in January 2018. Since January 1, 2017, we paid approximately $642,174 for consulting services provided by AKF Partners, of which $300,474 was for services provided under the May Consulting agreement and $341,700 was for services provided under the August Consulting Agreement.
Other than the transactionstransaction described above, there were no transactions since January 1, 20172019 or currently proposed transactions in which: we have been or are 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. | | | | | Etsy68 | | 20182020 Proxy Statement | | 65Etsy |
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 12, 2018,7, 2020, 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. Percentage ownership of our common stock is based on approximately 119,908,305118,591,339 shares of our common stock outstanding as of April 12, 2018.7, 2020. 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 12, 2018,7, 2020, and (2) shares issuable upon the vesting of RSUs within 60 days of April 12, 2018.7, 2020. However, we did not deem these shares to be outstanding for the purposes of computing the percentage ownership of any other person. | | | | | 66 | | 2018 Proxy Statement | | Etsy |
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. | | | | | | | | | | | | Name of Beneficial Owner | | Number of Shares Beneficially Owned | | | Percentage of Class Beneficially Owned (%) | | | | | Named Executive Officers, Directors & Director Nominees: | | | | | | | | | | | | Gary S. Briggs | | | – | | | | * | | | | | M. Michele Burns(1) | | | 194,865 | | | | * | | | | | Edith W. Cooper | | | – | | | | * | | | | | Chad Dickerson(2) | | | 538,127 | | | | * | | | | | Mike Fisher | | | – | | | | * | | | | | Rachel Glaser(3) | | | 42,781 | | | | * | | | | | Jonathan D. Klein(4) | | | 190,938 | | | | * | | | | | Linda Kozlowski(5) | | | 121,341 | | | | * | | | | | Karen Mullane | | | 40,875 | | | | * | | | | | Melissa Reiff(6) | | | 79,804 | | | | * | | | | | Kristina Salen | | | – | | | | * | | | | | Josh Silverman(7) | | | 1,281,492 | | | | 1.1 | | | | | Jill Simeone(8) | | | 27,873 | | | | * | | | | | Margaret M. Smyth(9) | | | 56,207 | | | | * | | | | | Fred Wilson(10) | | | 855,583 | | | | * | | | | | All current executive officers, directors and director nominees, as a group (15 persons)(11) | | | 3,429,886 | | | | 2.8 | | | | | 5% Stockholders: | | | | | | | | | | | | T. Rowe Price Associates, Inc.(12) | | | 9,197,166 | | | | 7.9 | | | | | BlackRock, Inc.(13) | | | 9,531,725 | | | | 7.8 | | | | | The Vanguard Group(14) | | | 7,201,495 | | | | 6.2 | |
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| | | | | | | | | | | | NAME OF BENEFICIAL OWNER | | NUMBER OF SHARES BENEFICIALLY OWNED (#) | | | PERCENTAGE OF CLASS BENEFICIALLY OWNED (%) | | Named Executive Officers, Directors & Director Nominees: | | | | | | | | | | | | Gary S. Briggs(1) | | | 14,801 | | | | * | | | | | M. Michele Burns(2) | | | 78,416 | | | | * | | | | | Edith W. Cooper(3) | | | 14,801 | | | | * | | | | | Mike Fisher(4) | | | 50,317 | | | | * | | | | | Rachel Glaser(5) | | | 201,546 | | | | * | | | | | Jonathan D. Klein(6) | | | 105,289 | | | | * | | | | | Raina Moskowitz(7) | | | 38,018 | | | | * | | | | | Melissa Reiff(8) | | | 60,031 | | | | * | | | | | Josh Silverman(9) | | | 3,016,415 | | | | 2.5 | | | | | Jill Simeone(10) | | | 97,716 | | | | * | | | | | Margaret M. Smyth(11) | | | 63,818 | | | | * | | | | | Fred Wilson(12) | | | 759,458 | | | | * | | | | | All current executive officers, directors and director nominees, as a group (14 persons)(13) | | | 4,620,513 | | | | 3.8 | | | | | 5% Stockholders: | | | | | | | | | | | | BlackRock, Inc.(14) | | | 10,905,122 | | | | 9.2 | | | | | The Vanguard Group(15) | | | 11,515,991 | | | | 9.7 | |
| | | | | * Represents less than 1% of our outstanding common stock | (1) Consists of (i) 9,9651,514 shares; (ii) 181,37810,340 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018;7, 2020; and (ii) 3,522(iii) 2,947 shares issuable upon the vesting of RSUs within 60 days of April 12, 2018. 7,2020. |
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| (2) Consists of 538,127 shares, all of which were pledged (following his employment with Etsy) pursuant to a prepaid variable forward sale contract with an unaffiliated third party and for which Mr. Dickerson retains voting rights. (3) Consists of 42,781(i) 11,487 shares; (ii) 65,495 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days April 12, 2018.
(4) Consists of (i) 57,587 shares (ii) 85,960 shares held jointly with a spouse; (iii) 43,869 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018;7, 2020; and (iv) 3,522(iii) 1,434 shares issuable upon the vesting of RSUs within 60 days of April 12, 2018.7, 2020.
| (5)(3) Consists of (i) 23,0741,514 shares; (ii) 98,26710,340 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018.7, 2020; and (iii) 2,947 shares issuable upon the vesting of RSUs within 60 days of April 7,2020.
| (6)(4) Consists of (i) 4,98224,117 shares; and (ii) 71,30026,200 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018; and (iii) 3,522 shares issuable upon the vesting of RSUs within 60 days of April 12, 2018.7, 2020.
| (7)(5) Consists of (i) 64,000 shares held in a GRAT for which Mr. Silverman is a trustee38,065 shares; and annuity beneficiary; (ii) 967,492163,481 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018, and (iii) 250,000 shares issuable upon the vesting of RSUs within 60 days of April 12, 2018.7, 2020.
| (8)(6) Consists of (i) 5,24445,579 shares; (ii) 21,739 shares and (ii) 22,629held jointly with a spouse; (iii) 36,537 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018.7, 2020; and (iv) 1,434 shares issuable upon the vesting of RSUs within 60 days of April 7, 2020.
| (9)(7) Consists of (i) 6,6448,517 shares; (ii) 37,98929,501 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018; and (iii) 11,574 shares issuable upon the vesting of RSUs within 60 days of April 12, 2018.7, 2020.
| (10)(8) Consists of (i) 822,06211,533 shares; (ii) 27,83247,064 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018;7, 2020; and (iii) 5,6891,434 shares issuable upon the vesting of RSUs within 60 days of April 12, 2018.7, 2020.
| (11)(9) Consists of (i) 1,658,520 shares;42,269 shares held jointly with a spouse in a trust; (ii) 41,046 shares held in GRAT for which Mr. Silverman is a trustee and (ii) 1,493,537annuity beneficiary; and (iii) 2,933,100 shares that are issuable to our directors and executive officers upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of April 12, 2018;7, 2020.
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| | | | | (10) Consists of (i) 15,571 shares and (ii) 82,145 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 7, 2020. | (11) Consists of (i) 9,673 shares; (ii) 52,711 shares that are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 7, 2020; and (iii) 277,8291,434 shares issuable upon the vesting of RSUs within 60 days of April 12, 2018.7, 2020. | (12) T. Rowe Price Associates, Inc. (“T. Rowe”) reported on its Schedule 13G/A filed on February 14, 2018 Consists of (i) 750,000 shares; (ii) 8,024 shares that it has sole voting power over 1,534,937are issuable upon exercise of stock options, which are currently exercisable or exercisable within 60 days of April 7, 2020; and (iii) 1,434 shares and sole investment power over 7,264,552 shares. The address for T. Rowe is 100 E. Pratt Street, Baltimore, Maryland 21202.issuable upon the vesting of RSUs within 60 days of April 7, 2020. | (13) Consists of (i) 940,365 shares; (ii) 21,739 shares held jointly with a spouse; (iii) 42,269 shares held jointly with a spouse in a trust; (iv) 41,046 shares held in GRAT; (v) 3,562,030 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 7, 2020; and (vi) 13,064 shares issuable upon the vesting of RSUs within 60 days of April 7, 2020. | (14) BlackRock, Inc. (“BlackRock”) reported on its Schedule 13G/A filed on January 29, 2018February 10, 2020 that it has sole voting power over 7,190,77410,464,314 shares and sole investmentdispositive power over 7,401,56110,905,122 shares. The address for BlackRock is 55 East 52nd Street, New York, NY 10055.
| (14)(15) The Vanguard Group (“Vanguard”) reported on its Schedule 13G/A filed on February 9, 2018,10, 2020, that it has sole voting power over 2,228,48668,030 shares, shared voting power over 5,68822,603 shares, sole investmentdispositive power over 9,303,26311,440,692 shares and shared investmentdispositive power over 228,46275,299 shares. The address for Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
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Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports 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 review of copies of reports provided to us, or written representations that no reports were required, we believe that during 20172019 all Section 16 reports that were required to be filed were filed on a timely basis.basis, with the exception of the inadvertent late filing of one Form 4 on behalf of Melissa Reiff reporting 1) the vesting of RSUs and 2) RSUs and options granted as an annual retainer. | | | | | Etsy71 | | 20182020 Proxy Statement | | 69Etsy |
Non-GAAP Financial Measures Adjusted EBITDA In this proxy statement, we provide Adjusted EBITDA, anon-GAAP financial measure that represents our net income adjusted to exclude: interest and othernon-operating expense, net; benefit for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange (gain) loss; acquisition-related expenses;non-ordinary course disputes; and restructuring and other exit costs (income). 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 of Directors 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 forperiod-to-period comparisons of our business as it removes the impact of certainnon-cash items and certain variable charges. The following table reflects the reconciliation of net income to Adjusted EBITDA for each of the periods indicated: | | | | | | | | | | | YEAR ENDED DECEMBER 31, | | | 2019 | | | 2018 | | | (in thousands) | | Net income | | | 95,894 | | | | 77,491 | | Excluding: | | | | | | | | | Interest and othernon-operating expense, net(1) | | | 11,121 | | | | 13,221 | | Benefit for income taxes | | | (15,248 | ) | | | (22,413 | ) | Depreciation and amortization(1) | | | 48,031 | | | | 26,742 | | Stock-based compensation expense(2) | | | 44,395 | | | | 38,231 | | Foreign exchange (gain) loss | | | (3,006 | ) | | | 6,487 | | Acquisition-related expenses(3) | | | 3,917 | | | | – | | Non-ordinary course disputes | | | 1,164 | | | | – | | Restructuring and other exit costs (income)(4) | | | – | | | | (249 | ) | | | | | | | | | | Adjusted EBITDA | | | 186,268 | | | | 139,510 | | | | | | | | | | | | | | | | | | | |
| | | | | (1) Included in interest and depreciation expense amounts above are interest and depreciation expense related to our headquarters. As part of the adoption of ASU2016-02—Leases in the first quarter of 2019, we now account for our headquarters as a financing lease. Previously, we accounted for our headquarters underbuild-to-suit accounting requirements. For the years ended December 31, 2019 and 2018 those amounts are as follows: |
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| | | | | | | | | | | YEAR ENDED DECEMBER 31, | | | 2019 | | | 2018 | | | (in thousands) | | Interest expense | | $ | 2,675 | | | $ | 8,996 | | Depreciation | | | 8,789 | | | | 3,276 | | (2) Total stock-based compensation expense included in the Consolidated Statements of Operations is as follows: | |
| | | | | | | | | | | YEAR ENDED DECEMBER 31, | | | 2019 | | | 2018 | | | (in thousands) | | Cost of revenue | | $ | 5,787 | | | $ | 3,357 | | Marketing | | | 3,774 | | | | 2,507 | | Product development | | | 21,085 | | | | 21,234 | | General and administrative | | | 13,749 | | | | 11,133 | | | | | | | | | | | Total stock-based compensation expense | | $ | 44,395 | | | $ | 38,231 | | | | | | | | | | | | | | | | | | | | (3) Acquisition-related expenses are expenses related to our acquisition of Reverb. | | (4) Total restructuring and other exit costs (income) included in the Consolidated Statements of Operations are as follows: | |
| | | | | | | | | | | YEAR ENDED DECEMBER 31, | | | 2019 | | | 2018 | | | (in thousands) | | Cost of revenue | | $ | – | | | $ | (19 | ) | Marketing | | | – | | | | (82 | ) | Product development | | | – | | | | (110 | ) | General and administrative | | | – | | | | (38 | ) | | | | | | | | | | Total restructuring and other exit costs (income) | | $ | 0 | | | $ | (249 | ) | | | | | | | | | |
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Additional Information Stockholder Proposals Stockholders who would like to have a proposal considered for inclusion in the proxy materials for our 20192021 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, 2018,18, 2020, and otherwise comply with the SEC’s requirements for stockholder proposals. Stockholders who would like to bring a proposal before our 20192021 Annual Meeting of Stockholders, or to nominate directors for election, in accordance with the advance notice provisions of our 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 theone-year anniversary of the previous year’s annual meeting. That means that to be timely, a notice must be received no later than March 9, 20194, 2021 nor earlier than February 7, 20192, 2021 (assuming the meeting is held not more than 20 days before or more than 60 days after June 7, 2019)2, 2021). The notice must describe the stockholder proposal in reasonable detail and otherwise comply with the requirements set forth in our Bylaws. Our Bylaws may be found on our website at investors.etsy.com under “Leadership & Governance-Governance“Governance—Governance Documents.” Information Requests Our Annual Report on Form10-K for 20172019 is available free of charge on our investor website at http://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 Report 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: info@saratogaproxy.com,(212)257-1311 or Saratoga Proxy Consulting, LLC, 520 8th Avenue, 14th Floor, New York, NY 10018. Other Business We do not know of any other business that may be presented at the 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. | | | | | 7074 | | 20182020 Proxy Statement | | Etsy |
Non-GAAP Financial Measures
Adjusted EBITDA
In this proxy statement, we provide Adjusted EBITDA, anon-GAAP financial measure that represents our net income (loss) adjusted to exclude: depreciation and amortization; stock-based compensation expense; provision (benefit) for income taxes; foreign exchange (gain) loss; asset impairment charges; acquisition-related expenses; restructuring and other exit costs related to the Actions and interest and othernon-operating expense, net. Below is a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.
The following table reflects the reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated:
| | | | | | | | | | | | | Year Ended December 31, | | | | | | | 2017 | | | 2016 | | | | | | (in thousands) | | | | | Net income (loss) | | $ | 81,800 | | | $ | (29,901 | ) | | | | Excluding: | | | | | | | | | | | | Interest and othernon-operating expense, net(1) | | | 8,736 | | | | 5,502 | | | | | (Benefit) provision for income taxes | | | (49,535 | ) | | | 27,025 | | | | | Depreciation and amortization(1) | | | 27,197 | | | | 22,525 | | | | | Stock-based compensation expense(2) | | | 19,953 | | | | 13,168 | | | | | Stock-based compensation expense—acquisitions | | | 3,904 | | | | 2,733 | | | | | Foreign exchange (gain) loss | | | (29,105 | ) | | | 14,951 | | | | | Asset impairment charges | | | 3,162 | | | | 551 | | | | | Restructuring and other exit costs(3) | | | 13,897 | | | | – | | | | | Acquisition-related expenses | | | – | | | | 570 | | | | | Adjusted EBITDA | | $ | 80,009 | | | $ | 57,124 | |
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We love our planet. This report was printed on paper that contains recycled content which is FSC® certified and made with post-consumer waste.
| | (1) Included in interest and depreciation expense amounts above are interest and depreciation expense related to our new headquarters underbuild-to-suit accounting requirements, which commenced in May 2016. For the years ended December 31, 2017 and 2016 those amounts are as follows:
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| | | | | | | | | | | | | Year Ended December 31, | | | | | | | 2017 | | | 2016 | | | | | | (in thousands) | | | | | Interest expense | | $ | 9,000 | | | $ | 5,337 | | | | | Depreciation | | | 3,276 | | | | 2,186 | |
| | (2) $2.7 million of restructuring-related stock-based compensation expense has been excluded from the year ended December 31, 2017 and is included in the restructuring and other exit costs line. See footnote (3) below. Total stock-based compensation expense included in the Consolidated Statements of Operations is as follows:
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| | | | | | | | | | | | | Year Ended December 31, | | | | | | | 2017 | | | 2016 | | | | | | (in thousands) | | | | | Cost of revenue | | $ | 1,739 | | | $ | 1,057 | | | | | Marketing | | | 1,933 | | | | 971 | | | | | Product development | | | 8,274 | | | | 5,079 | | | | | General and administrative | | | 14,613 | | | | 8,794 | | | | | Total stock-based compensation expense | | $ | 26,559 | | | $ | 15,901 | |
| | (3) Total restructuring and other exit costs included in the Consolidated Statements of Operations are as follows:
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| | | | | | | | | | | | | Year Ended December 31, | | | | | | | 2017 | | | 2016 | | | | | | (in thousands) | | | | | Cost of revenue | | $ | 738 | | | $ | – | | | | | Marketing | | | 2,950 | | | | – | | | | | Product development | | | 3,232 | | | | – | | | | | General and administrative | | | 6,977 | | | | – | | | | | Total restructuring and other exit costs | | $ | 13,897 | | | $ | – | |
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ETSY, INC.
117 ADAMS STREET
BROOKLYN, NY 11201
ATTENTION: GENERAL COUNSEL & SECRETARY
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VOTE BY INTERNET
Before The Meeting- Go towww.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on June 6, 2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting- Go toETSY.onlineshareholdermeeting.com
You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 6, 2018. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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SCAN TO VIEW MATERIALS & VOTE w 117 ADAMS STREET BROOKLYN, NY 11201 VOTE BY INTERNET ATTENTION: GENERAL COUNSEL & SECRETARY Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on June 1, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting—Go to www.virtualshareholdermeeting.com/ETSY2020 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BYPHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 1, 2020. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E45688-P03328 D09910-P35442 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY ETSY, INC. The Board of Directors recommends you vote FOR each of the following Class II nominees: 1. Election of Directors to serve until our 2023 Annual Meeting of Stockholders Class II Nominees: For Withhold 1a. M. Michele Burns ! ! 1b. Josh Silverman ! ! 1c. Fred Wilson ! ! The Board of Directors recommends you vote FOR the following proposals: For Against Abstain 2. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending ! ! ! December 31, 2020. 3. Advisory vote to approve executive compensation. ! ! ! NOTE: In their discretion, the proxies are authorized to vote on any other business that may properly come before the meeting or any adjournment or postponement of the meeting. For address changes and/or comments, please check this box and write them on ! the back where indicated. IF VOTING BY MAIL, YOU MUST DATE, SIGN AND RETURN THIS CARD IN ORDER FOR THE SHARES TO BE VOTED. Please sign exactly as your name(s) appear(s) on this card. When signing as attorney, executor, administrator, trustee or other fiduciary, please give full title. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer, giving full title. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date | | | | | | | | | | | | | | | | | | | | | ETSY, INC. | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR each of the following Class III nominees: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors to serve until our 2021 Annual Meeting of Stockholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Class III Nominees: | | For | | Withhold | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1a. Gary S. Briggs | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1b. Edith W. Cooper | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1c. Melissa Reiff | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR the following proposals: | | | | For | | Against | | Abstain | | | | | | | | | | 2. | | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018. | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | 3. | | Advisory vote to approve executive compensation. | | | | ☐ | | ☐ | | ☐ | | | | | | | | NOTE: In their discretion, the proxies are authorized to vote on any other business that may properly come before the meeting or any adjournment or postponement of the meeting. | | | | | | | | | | | | | | | | | | For address changes and/or comments, please check this box and write them on the back where indicated. | | ☐ | | | | | | | | | | | | | | | | | | | | | IF VOTING BY MAIL, YOU MUST DATE, SIGN AND RETURN THIS CARD IN ORDER FOR THE SHARES TO BE VOTED. | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) on this card. When signing as attorney, executor, administrator, trustee or other fiduciary, please give full title. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer, giving full title. | | | | | | | | |
| | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Date | | |
ETSY, INC. ANNUAL MEETING OF STOCKHOLDERS JUNE 7, 2018 2, 2020 9:00 a.m. Eastern Time To be held virtually at: ETSY.onlineshareholdermeeting.com
| Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting
to Be Held on June 7, 2018: The Notice of Annual Meeting and Proxy Statement and Annual Report
are available atwww.proxyvote.com.
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E45689-P03328
www.virtualshareholdermeeting.com/ETSY2020 Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on June 2, 2020: The Notice of Annual Meeting and Proxy Statement and Annual Report are available at www.proxyvote.com. D09911-P35442 ETSY, INC. Proxy Solicited on Behalf of the Board of Directors for the Annual Meeting of Stockholders on June 7, 20182, 2020 at 9:00 a.m. Eastern Time By signing this proxy card, you appoint Rachel Glaser and Jill Simeone individually as proxies, each with the power to appoint her substitute, and authorize them to represent and vote the shares of Etsy, Inc. that you are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 a.m. Eastern Time on June 7, 2018,2, 2020, at ETSY.onlineshareholdermeeting.com,www.virtualshareholdermeeting.com/ETSY2020, and at any adjournment or postponement of the meeting. This proxy, when properly executed, will be voted in the manner you direct. If no direction is given, this proxy will be voted FOR the election of each of the director nominees, FOR the ratification of the appointment of the independent registered public accounting firm (PricewaterhouseCoopers LLP) and FOR the approval, on an advisory basis, of executive compensation. | | | | | | | | | Address Changes/Comments:
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(If Address Changes/Comments: _______________________________________________________________________________ ________________________________________________________________________________________________________ (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be dated and signed on reverse side.
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