nautilus-def14a

DEF 14A 1 nautilus-def14a_080222.htm DEFINITIVE PROXY STATEMENT nautilus-def14a_080222


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	Filed by a Party other than the Registrant
Check the appropriate box:
	Preliminary Proxy Statement
	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material under Rule 14a-12

United States

Securities and Exchange Commission

Washington, D.C. 20549

Schedule 14 A

Proxy Statement Pursuant To Section 14(a)
of the Securities Exchange Act of 1934

(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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


	No fee required
	Fee paid previously with preliminary materials.
	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.


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Message from the Chief Executive Officer

In March 2021, during our Investor Day, we unveiled “North Star” - our new, long-term, strategic plan. This strategy is built on our key strengths, which differentiate us from our competitors: well-respected brands, a portfolio of products that includes multiple modalities and price points, and broad, multichannel distribution. Our consumer is at the heart of everything we do and has fueled the modernization of our Bowflex® brand. This renewed focus, powered by an enhanced team with expanded long-term capabilities, sets us on a path to scale with our differentiated JRNY® platform offering.

At the center of North Star is connected fitness and our transformation from a product-led to a consumer-led company. An important catalyst for this change is the digital transformation that has been occurring over the last few years in home fitness and was accelerated to elevated levels of opportunity by the COVID-19 pandemic. People discovered that connected fitness brought home many of the benefits of the gym, along with a variety of programming as available in JRNY®, to provide encouragement to stick to their fitness routines longer.

As a result of these long-term changes in habits, we believe the industry growth opportunity will remain elevated relative to pre-pandemic levels. This results in greater opportunities for our industry and for Nautilus.

We are focused on investing in our company and have continued to concentrate investments on JRNY®, our brands, and our digital transformation. Our Board and Management Team are committed to our strategy and will continue to invest prudently while balancing the long and short-term challenges and opportunities.

Through disciplined execution and staying true to our North Star initiative, I am confident that we are emerging from the pandemic as a much stronger company.

FY 2022 Highlights

• Revenue of $590M, 112% increase versus pre-pandemic FY 2020

• Over 325,000 JRNY® members (exceeding by 30% the goal of 250,000 that we set in March 2021)

• Added nearly 600,000 new customers in the last two years

• Increased the installed base from 140k in FY 2020 to over 2.7 million at the end of FY 2022

• Approximately 80% of total units sold connectable-to-JRNY® versus only 22% in FY 2020


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FY 2022 FINANCIAL HIGHLIGHTS

FY 2022 demonstrated strong demand for our products, resulting in another historic sales year. For FY 2022, net sales were $590 million, a 112% increase compared to the same period two years ago, excluding Octane. FY 2022 had the second highest annual revenue in the last 15 years, with FY 2021 being the highest. Our omnichannel approach and assortment of strength and cardio products has enabled us to strongly compete in the market. Offering a diverse portfolio of modalities and price points provided us with the foundation to meet our target consumer's need for variety. As we enter year two of our North Star strategy, we are proud of the tremendous progress.

Strategic North Star Pillar Progress


	ADOPT A CONSUMER-FIRST MINDEST

The enhanced level of research we have conducted about consumers led us to identify a new target market segment we call enthusiastic cross-trainers and now drives our product and go-to-market decisions. Our commitment to a Consumer-First Mindset guided our transition to a consumer-led digital company, as the preferred home workout habits established during the pandemic helped us acquire nearly 600,000 new customers in two years, compared to a pre-pandemic average of 100,000 per year. We have also increased by almost three times the number of Retail doors where our products are sold, providing numerous choices for consumers.


	Scale a Differentiated Digital Offering

The successful launch of a full line of connected cardio machines, treads, bikes, and Max Trainers all with the JRNY® differentiated digital platform allowed us to expand our JRNY® reach to more than 325,000 members. We expanded the capability of our JRNY® digital platform to include usage to those who do not own a connected fitness product. Adaptive, personalized training was made available, along with a substantial increase in content available to our subscribers. We acquired Vay, a market leader in vision systems, and have focused on integrating its motion tracking capabilities into the JRNY® platform. Expansion of our SelectTech® JRNY® experience will offer rep-counting and individualized form strength coaching. This will advance and accelerate our personalized strength workouts, enhancing the JRNY® experience.


	Focus Investments on Core Businesses

One step in returning to our Core Business included the selling of our Commercial Business (Octane). We also reduced our SKU count by more than 25%, allowing us to focus on our exceptional brand choices. Our revenue more than doubled at its peak, but through efficiencies and streamlined processes, we managed to keep our increase in headcount to less than 20%. A variable cost structure has allowed us to maintain agility during volatile times, and to navigate the company through extraordinary challenges with disciplined execution.


	Evolve Supply Chain to be a Strategic Advantage

As the world grappled with unprecedented supply chain challenges this past year, our improvements in planning and execution across our supply chain allowed us to ship a record number of units in FY 2022. A new Distribution Center was successfully opened in Southern California, putting us closer to larger ports and expediting our supply chain timing. Additionally, we continue to look for opportunities to diversify our supply chain both through supplier selection and geographical footprint. In FY 2023, we will continue to actively manage the supply chain situation, keeping line of site on inbound freight and third-party storage costs. We are also expecting to capture cost savings through consolidation of our Distribution Centers by exiting our Portland DC location.


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	Build Organizational Capabilities to Win

Immense progress has been made in building our organizational capabilities this year. We enhanced our talent to drive the North Star transformation, adding seasoned leaders and refreshing our Board of Directors. Based on our new hybrid work model, we were able to bring in a variety of new talent allowing for a greater diversity of thought, experience, and backgrounds to drive our transformation.

We have positioned Nautilus well to capture the numerous opportunities available in the home fitness market. As we enter the second year of our North Star Strategy, our people continue to deliver incredible and tangible results. I am proud of our ability to move the company to the next level, while remaining nimble and agile. We have achieved strong operating results in the face of incredible and dynamic challenges. We will draw on our talent and experience to keep the focus on our long-term success, continuing the North Star momentum, while navigating through the micro and macroeconomic conditions. This approach puts us on a path to success, building a healthier world, one person at a time.

On behalf of all of us at Nautilus, I thank you for your continued support as we embark on this exciting JRNY®.

Onwards and upwards,

Jim Barr

Chief Executive Officer


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Notice of Annual Meeting of Shareholders to
be held on August 2, 2022 as a Virtual Meeting

To the Shareholders of Nautilus, Inc.:

The annual meeting of shareholders of Nautilus, Inc. (the “Company”) will be held on Tuesday, August 2, 2022, at 8:00 a.m. Pacific Daylight Time. With the health and well-being of our shareholders, employees, directors, auditors, and those corporate partners who normally attend the annual meeting in mind, to expand shareholder access to attend the meeting, and to reduce our costs and environmental impact, this year’s annual meeting will be held virtually and will be conducted via our live webcast. Our embrace of the latest technology provides expanded access, improved communication and cost savings for our shareholders and the Company. We believe that hosting a virtual meeting will enable greater shareholders attendance and participation from any location around the world. You will not be able to attend the annual meeting in person. You will be able to participate in the annual meeting of shareholders online, vote and submit your questions during the meeting by visiting https://meetnow.global/M4JQLZS, for the following purposes:


	To elect a Board of Directors, consisting of six (6) members, to serve until the next annual meeting of shareholders or until their successors are duly elected and qualified;
	To approve the compensation of the named executive officers in a non-binding, advisory vote, as reported in this Proxy Statement;
	To approve an amendment to the Nautilus, Inc. Amended and Restated 2015 Long-Term Incentive Plan;
	To ratify the Audit Committee’s appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2023; and
	To consider and act upon any other matter which may properly come before the annual meeting or any adjournment thereof.

Only shareholders who held their shares at the close of business on June 3, 2022, the record date, are entitled to receive notice of and to vote at the annual meeting or any adjournment or postponement thereof.

All shareholders are cordially invited to participate in the annual meeting. Whether or not you plan to participate in the annual meeting, please sign and promptly return the enclosed proxy card, which you may revoke at any time prior to its use. A prepaid, self-addressed envelope is enclosed for your convenience. Your shares will be voted at the annual meeting in accordance with your proxy.

By Order of the Board of Directors,

Alan L. Chan

Secretary

Vancouver, Washington
June 17, 2022

Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting of
Shareholders to Be Held On August 2, 2022:

Pursuant to rules promulgated by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials by sending you a Notice of Annual Meeting, and by notifying you of the availability of our proxy materials on the Internet. The Notice of Annual Meeting, Proxy Statement and FY 2022 Annual Report on Form 10-K are available at no cost at www.nautilusinc.com. In accordance with the SEC rules, the materials on the website are searchable, readable and printable, and the website does not have “cookies” or other tracking devices which identify visitors.


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Notice of Annual Meeting of Shareholders

when

August 2, 2022
8:00am PT

where

Virtual Meeting
https://meetnow.global/M4JQLZS

record date

June 3, 2022


Items of Business		Voting recommendation
1	To elect a Board of Directors, consisting of six (6) members, to serve until the next annual meeting of shareholders or until their successors are duly elected and qualified;	“FOR” all of the nominees
2	To approve the compensation of the named executive officers in a non-binding, advisory vote, as reported in this Proxy Statement;	“FOR”
3	To approve an amendment to the Nautilus, Inc. Amended and Restated 2015 Long-Term Incentive Plan;	“FOR”
4	To ratify the Audit Committee’s appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2023; and	“FOR”
5	Transact other business that may properly come before the annual meeting.

Your vote is very important

Make your vote count. Please cast your vote as soon as possible, even if you plan to attend the 2022 annual meeting. For information about registering, attending, and voting at the 2022 annual meeting, please see “Participating in the Annual Meeting” on page 8 of the proxy statement

Important Notice

Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on August 2, 2022.

The Notice of Annual Meeting of Shareholders, Proxy Statement, and FY 2022 Annual Report on Form 10-K are available at www.nautilusinc.com/investors.

Vote by Internet

Access the website indicated on the Notice of Internet Availability of Proxy Materials, proxy card, or voting instruction form.

Vote by Phone

Call the number on the Notice of Internet Availability of Proxy Materials, proxy card, or voting instruction form.

Vote by Mail*

Sign, date, and return the proxy card or voting instruction form in the postage-paid envelope.

*if you requested paper material

By Order of the Board of Directors,

Alan L. Chan

Chief Legal Officer and Corporate Secretary

Vancouver, Washington

June 17, 2022


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Table of Contents


2		Message from the Chief Executive Officer
3		FY 2022 Financial Highlights
5		Notice of Annual Meeting of Shareholders
8		General Information
15		Environmental, Social, Governance (ESG)
15		Environment
16		Social
20		Governance
22		Proposal No. 1: Election of Directors
27		Information Concerning the Board of Directors
33		Director Compensation
38		Executive Officers
43		Compensation Discussion & Analysis
64		Proposal No. 2: Advisory Vote on Executive Compensation
65		Proposal No. 3: Approval of the Amendment and Restatement of the Nautilus, Inc. Amended 2015 Long-Term Incentive Plan
75		Proposal No. 4: Ratification of Appointment of Independent Registered Public Accounting Firm for the Fiscal Year End March 31, 2023
Appendix A		Amended & Restated 2015 Long-Term Incentive Plan
Appendix B		Sample Proxy Card


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Proxy Statement

General Information

Our Board of Directors (the “Board”) is furnishing this Proxy Statement and the accompanying Annual Report to Shareholders, Notice of Annual Meeting and proxy card in connection with its solicitation of proxies for use at our 2022 annual meeting of shareholders (the “Annual Meeting”) or any adjournment thereof. The Annual Meeting will be held on Tuesday, August 2, 2022, beginning at 8:00 a.m., Pacific Daylight Time, online via live webcast at https://meetnow.global/M4JQLZS.

Our Board has designated the person named on the enclosed proxy card, Aina E. Konold, to serve as proxy in connection with the Annual Meeting. These proxy materials and the accompanying Annual Report to Shareholders are being mailed on or about June 17, 2022 to our shareholders of record as of June 3, 2022.

Participating in the Annual Meeting

We will be hosting the Annual Meeting live via Internet webcast. You will not be able to attend the meeting in person. A summary of the information you need to participate in the Annual Meeting online is provided below:

•Any shareholder may listen to the Annual Meeting and participate live via webcast at https://meetnow.global/ M4JQLZS. The webcast will begin at 8:00 a.m. Pacific Daylight Time on Tuesday, August 2, 2022

•Shareholders may vote and submit questions during the Annual Meeting via live webcast.

•To enter the meeting, please have your 15-digit control number which is available on your proxy card. If you do not have your 15-digit control number, you will be able to listen to the meeting only, you will not be able to vote or submit questions during the meeting.

•Instructions on how to connect to and participate in the Annual Meeting via the Internet, including how to demonstrate proof of stock ownership, are posted at https://meetnow.global/M4JQLZS.

How Do I Vote?

If you are a shareholder of record, there are several ways to vote:

•by participating in the Annual Meeting and voting according to the instructions posted at https://meetnow.global/ M4JQLZS;

•by completing and mailing your proxy card (if you requested printed proxy materials); or

•by following the instructions on your proxy card for voting either online or by phone.

Even if you plan to participate in the Annual Meeting, we recommend that you also vote by proxy so that your vote will be counted if you later decide not to participate in the Annual Meeting.

If you are a street name shareholder, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to instruct your broker, bank or other nominee on how to vote your shares. Street name shareholders should generally be able to vote by returning an instruction card, or by telephone or on the Internet. However, the availability of telephone and Internet


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voting will depend on the voting process of your broker, bank or other nominee. As discussed below, if you are a street name shareholder, you may not vote your shares live during the Annual Meeting unless you obtain a legal proxy from your broker, bank or other nominee

Can I attend the Annual Meeting in person?

With the health and well-being of our shareholders, employees, directors, auditors and those corporate partners who normally attend the annual meeting in mind, we will be hosting the Annual Meeting via live webcast on the Internet. You will not be able to attend the Annual Meeting in person. The webcast will start at 8:00 a.m. Pacific Daylight Time, on August 2, 2022. Shareholders may vote and submit questions while connected to the Annual Meeting on the Internet. Any shareholder can listen to and participate in the Annual Meeting live via the Internet at https://meetnow.global/ M4JQLZS.

What do I need in order to be able to participate in the Annual Meeting online?

You will need the 15-digit control number included on your proxy card in order to be able to vote your shares or submit questions during the meeting. Instructions on how to connect and participate in the Annual Meeting via the Internet, including how to demonstrate proof of stock ownership, are posted at https://meetnow.global/M4JQLZS. If you do not have your 15-digit control number, you will be able to listen to the meeting only, you will not be able to vote or submit questions during the meeting.

Revocability of Proxies

If you are a shareholder of record, you may change your vote or revoke any proxy you execute at any time prior to its use at the Annual Meeting by:

•delivering written notice of revocation to our Secretary at the address provided on the first page of this proxy statement; or

•delivering an executed proxy bearing a later date to our Secretary at the address provided on the first page of this proxy statement.

To revoke your proxy and vote during the Annual Meeting, follow the instructions posted at https://meetnow.global/ M4JQLZS.

If you are a street name shareholder, your broker, bank or other nominee can provide you with instructions on how to change your vote.

Record Date

Our Board has fixed the close of business on June 3, 2022 as the record date for determining which of our shareholders are entitled to notice of and to vote at the Annual Meeting. At the close of business on the record date, 31,467,688 shares of our common stock were outstanding.


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Voting; Quorum

Each share of common stock outstanding on the record date is entitled to one vote per share at the Annual Meeting. Shareholders are not entitled to cumulate their votes. The presence, online at the virtual meeting or by proxy, of the holders of a majority of our outstanding shares of common stock is necessary to constitute a quorum at the Annual Meeting.

Votes Required to Approve Each Proposal

If a quorum is present at the Annual Meeting:

(i) the six (6) nominees for the election of directors who receive the greatest number of votes cast by the shares present and voting online at the virtual meeting or by proxy will be elected as directors;

(ii) the proposal regarding the advisory vote on named executive officer compensation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against it;

(iii) the amendment to the Nautilus, Inc. Amended and Restated 2015 Long-Term Incentive Plan will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against it; and

(iv) the ratification of the selection of the independent registered public accounting firm will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against it.

Counting of Votes; Abstentions

You may vote “FOR” or “WITHHOLD” authority to vote for the nominees for election as directors. If you vote your shares without providing specific instructions, your shares will be voted FOR the nominees for election to the Board of Directors. If you vote to “WITHHOLD” authority to vote for the nominees for election as directors, the shares represented will be counted as present for the purpose of determining a quorum, but they will not be counted as a vote cast on the proposal and will have no effect in determining whether a nominee is elected.

You may vote “FOR” or “AGAINST” or “ABSTAIN” from voting when voting on the proposals regarding the advisory vote on named executive officer compensation, the amendment to the Nautilus, Inc. Amended and Restated 2015 Long-Term Incentive Plan, and the ratification of the selection of the independent registered public accounting firm. If you choose “ABSTAIN” from voting on a proposal, your shares represented will be counted as present for the purpose of determining a quorum but will not be counted as votes cast on the proposal and will have no effect in determining whether the proposal is approved.

Broker non-votes, as explained below, will not be counted as votes cast on any proposal and will have no effect in determining whether any proposal at the Annual Meeting is approved.

Broker Discretionary Voting

If your shares are held on your behalf in a brokerage account or by a bank or other nominee, you are considered to be the beneficial owner of shares that are held in “street name,” and the Notice of Annual Meeting was forwarded to you by your broker or nominee, who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee as to how to vote your shares. Beneficial owners are also invited to participate in the Annual Meeting. However, since a beneficial owner is not the shareholder


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of record, you may not vote your shares of our common stock at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy. If you request a printed copy of our proxy materials by mail, your broker, bank or other nominee will provide a voting instruction form for you to use. Throughout this proxy statement, we refer to shareholders who hold their shares through a broker, bank or other nominee as “street name shareholders.”

If you hold your shares in street name, your broker, bank or other similar institution may be able to vote your shares without your instructions depending on whether the matter being voted on is “discretionary” or “non-discretionary.” In the case of a discretionary matter (for example, the ratification of the independent registered public accounting

SEC Form DEF 14A filed by Nautilus Inc.