Document

DEF 14A 1 def14a-2022proxystatement.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_______________________________________________________________________

SCHEDULE 14A

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

_______________________________________________________________________

Filed by the Registrant ☒ 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 § 240.14a-12

The RealReal, Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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 14ia-6(i)(1) and 0-11.

TO OUR STOCKHOLDERS:

We are pleased to invite you to attend the 2022 annual meeting of stockholders of The RealReal, Inc., a Delaware corporation, to be held on June 15, 2022 at 9:00 a.m. Pacific Time. The annual meeting will be a virtual stockholder meeting through which you can listen to the meeting, submit questions and vote online.

The annual meeting can be accessed by visiting www.virtualshareholdermeeting.com/real2022. To participate, you will need your 16-digit control number included in your proxy materials, on your proxy card or on the instructions that accompanied your proxy materials.

Details regarding admission to the annual meeting and the business to be conducted at the annual meeting are described in the accompanying Notice of Annual Meeting of Stockholders and proxy statement.

We have elected to provide access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, we are mailing to our stockholders a notice instead of paper copies of this proxy statement and our 2021 Annual Report. The notice contains instructions on how to access those documents over the Internet. The notice also contains instructions on how stockholders can receive a paper copy of our proxy materials, including this proxy statement, our 2021 Annual Report and a form of proxy card or voting instruction form. We believe that providing our proxy materials over the Internet increases the ability of our stockholders to connect with the information they need, while reducing the environmental impact and cost of our annual meeting.

Your vote is important. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible. You may vote by telephone or through the Internet by following the instructions on the notice you received or, if you receive a paper proxy card by mail, by completing and returning the proxy card or voting instruction form mailed to you. Please carefully review the instructions for each of the voting options described in this proxy statement, as well as in the notice you received in the mail.

Thank you for your ongoing support of and continued interest in The RealReal, Inc. We look forward to your participation at the annual meeting.

Sincerely,

/s/ Todd Suko

Todd Suko

Chief Legal Officer and Secretary

THE REALREAL, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 15, 2022

Notice is hereby given that the 2022 annual meeting of stockholders of The RealReal, Inc., a Delaware corporation, will be held on June 15, 2022 at 9:00 a.m. Pacific Time. The annual meeting will be a virtual stockholder meeting through which you can listen to the meeting, submit questions and vote online.

The annual meeting can be accessed by visiting www.virtualshareholdermeeting.com/real2022 and entering the 16-digit control number included in your proxy materials, on your proxy card or on the instructions that accompanied your proxy materials. There is no physical location for the annual meeting.

The purpose of the annual meeting will be the following:

1. the election of the three Class III directors named in the proxy statement;

2. the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022;

3. the approval, on an advisory basis, of the compensation of our named executive officers; and

4. the transaction of such other business as may properly come before the meeting, or any adjournment or postponement thereof.

These items of business are more fully described in the proxy statement accompanying this notice.

Stockholders of record at the close of business on April 18, 2022 are entitled to notice of, and to vote at, the annual meeting and any adjournment or postponement thereof. We expect to commence mailing of a Notice of Internet Availability of Proxy Materials to our stockholders of record containing instructions on how to access the proxy materials on or about May 2, 2022.

YOUR VOTE IS IMPORTANT

You may cast your vote over the Internet, by telephone or by completing and mailing a proxy card. Returning the proxy does not deprive you of your right to attend the annual meeting and to vote your shares online during the annual meeting.

Proxies forwarded by or for banks, brokers or other nominees should be returned as requested by them. We encourage you to vote promptly to ensure your vote is represented at the annual meeting, regardless of whether you plan to attend the annual meeting.

You can find detailed information regarding voting in the section entitled “Questions and Answers” of the accompanying proxy statement.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 15, 2022

The notice of the annual meeting, proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, are available at www.proxyvote.com.

By order of the board of directors,

/s/ Todd Suko

Todd Suko

Chief Legal Officer and Secretary

San Francisco, California

April 29, 2022

TABLE OF CONTENTS


PROXY STATEMENT			1
PROPOSAL ONE			2
General			2
Directors			2
Recommendation of Our Board			5
CORPORATE GOVERNANCE			6
Corporate Governance Highlights			6
Board Committees			6
Meetings of Our Board of Directors			9
Board Leadership Structure			9
Corporate Governance Guidelines			9
Stockholder Engagement			10
Stock Ownership by Directors and Executives			10
Oversight of Environmental, Social and Governance ("ESG") Initiatives			11
Evaluations of Our Board, Committees and Directors			14
Code of Ethics and Business Conduct			14
Role of Our Board in Risk Oversight			14
Current Classified Board and Corporate Governance Roadmap			15
Director Independence			16
Prohibition on Hedging and Pledging of Company Securities			16
Board Diversity Disclosure			17
Information About Our Executive Officers			17
PROPOSAL TWO			19
Principal Accountant Fees and Services			19
Determination of Independence			19
Pre-Approval Policy			20
Recommendation of Our Board of Directors and Audit Committee			20
Report of the Audit Committee			20
PROPOSAL THREE			22
Recommendation of Our Board of Directors			22
COMPENSATION DISCUSSION AND ANALYSIS			23
Executive Summary			23
2021 Financial and Business Highlights			23
2021-2022 Executive Compensation Updates			23
Our Executive Compensation Philosophy			25
Elements of Our 2021 Compensation Program			26
2021 Compensation Decisions			27
Our Compensation Process			32
Compensation Peer Group			33
Employment, Severance and Change in Control Agreements			34
Clawback Policy			34
Report of the Compensation, Diversity and Inclusion Committee			34
COMPENSATION TABLES			36
2021 Summary Compensation Table			36
2021 Grants of Plan-Based Awards Table			37


2021 Outstanding Equity Awards at Fiscal Year End Table			38
2021 Option Exercises and Stock Vested Table			39
Potential Payments Upon Termination or Change in Control			40
CEO Pay Ratio			42
DIRECTOR COMPENSATION			43
Director Compensation Highlights			43
Director Compensation Program			43
2021 Director Compensation Table			44
No Hedging or Pledging			45
2022 Director Compensation			45
EQUITY COMPENSATION PLAN INFORMATION			46
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			47
Investors' Rights Agreement			47
Indemnification of Directors and Executive Officers			47
Policies and Procedures for Related Party Transactions			47
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			48
Delinquent Section 16(a) Reports			50
QUESTIONS AND ANSWERS			52
How do I attend the Annual Meeting?			52
What proposals will be voted on at the Annual Meeting?			52
How does the Board recommend that stockholders vote on the proposals?			52
What happens if other business not discussed in this proxy statement comes before the Annual Meeting?			52
Why am I receiving these materials?			52
Who is entitled to vote?			53
How can I vote my shares?			53
What if I am not the stockholder of record?			53
Can I change my vote or revoke my proxy?			53
What is a broker non-vote?			54
What constitutes a quorum?			54
What vote is required to approve each matter to be considered at the Annual Meeting?			54
What is the deadline for submitting a proxy?			55
What does it mean if I receive more than one Internet Notice or proxy card?			55
How will my shares be voted if I return a blank proxy card or a blank voting instruction card?			55
Who is making this solicitation and who will pay the expenses?			55
Will a stockholder list be available for inspection?			55
What is “householding” and how does it affect me?			56
How can I find out the results of the voting at the Annual Meeting?			56
When are stockholder proposals due for next year’s annual meeting of the stockholders?			56
Whom can I contact for further information?			56
WHERE YOU CAN FIND MORE INFORMATION			57
FORM 10-K			58
OTHER MATTERS			58


Class III Directors – Nominees for Election at the 2022 Annual Meeting


Name	Age	Director Since	Board Committee(s)

Chip Baird	50	June 2018	Corporate Governance and Nominating Committee* Compensation, Diversity and Inclusion Committee
James Miller	58	May 2019	Audit Committee
Julie Wainwright**	65	March 2011	—


Class I Directors – Continuing Directors, Term Expiring at the 2023 Annual Meeting


Name	Age	Director Since	Board Committee(s)

Caretha Coleman	72	August 2020	Compensation, Diversity and Inclusion Committee*
Karen Katz	65	February 2021	Audit Committee
Carol Melton	67	August 2020	Corporate Governance and Nominating Committee


Class II Directors – Continuing Directors, Term Expiring at the 2024 Annual Meeting


Name	Age	Director Since	Board Committee(s)

Rob Krolik***	53	January 2019	Audit Committee*
Niki Leondakis	61	April 2019	Audit Committee


Board Independence and Composition	Board Performance	Policies, Programs and Guidelines


•All directors except our Chief Executive Officer (our “CEO”) are independent •100% independent committee members •Executive sessions of independent directors at meetings •Empowered Lead Independent Director •Board and committees may engage outside advisers independently	•Annual board, committee and director self-evaluations •Commitment to continuing director education •Oversight of key risk areas and certain aspects of risk management efforts •Oversight of key human capital issues, including diversity and inclusion and executive succession planning	•Robust stock ownership guidelines for directors and executives •Comprehensive Code of Conduct and Business Ethics and Corporate Governance Guidelines •Prohibition on hedging and pledging for any officers or directors on a go-forward basis •Clawback policy


Name	Audit Committee	Compensation, Diversity and Inclusion Committee	Corporate Governance and Nominating Committee


Julie Wainwright**	—	—	—
Chip Baird	—	x	x*
Caretha Coleman	—	x*	—
Karen Katz	x	—	—
Robert Krolik***	x*	—	—
Niki Leondakis	—	x	—
Carol Melton	—	—	x
James Miller	x	—	—
Emma Grede	—	—	x
Mike Kumin	—	x*	—
Total Meetings in 2021	6	5	4


Position			Minimum Stock Ownership

Non-Employee Directors			5 times annual cash retainer
CEO			5 times base salary
Other Executives*			3 times base salary


	All	Corporate	Management	Executives	Board


Black	18%	15%	8%	—	22%
Hispanic/Latinix	29%	12%	17%	—	—
Asian	8%	19%	13%	14%	—
White	36%	45%	55%	79%	78%
Female	66%	65%	63%	53%	67%


	Female	Male	Non-Binary	Did Not Disclose Gender


Part 1: Gender Identity
Directors	5	3	—	—
Part II: Demographic Background
African American or Black	1	—	—	—
Alaskan Native or Native American	—	—	—	—
Asian	—	—	—	—
Hispanic or Latinx	—	—	—	—
Native Hawaiian or Pacific Islander	—	—	—	—
White	7	—	—	—
Two or More Races or Ethnicities	—	—	—	—
LGBTQ+	—	—	—	—
Did Not Disclose Demographic Background	—	—	—	—


Name	Age	Position(s)

Julie Wainwright	65	Chief Executive Officer and Chair of our Board
Rati Sahi Levesque	41	President and Chief Operating Officer
Robert Julian	59	Chief Financial Officer
Todd Suko	55	Chief Legal Officer and Secretary


Years Ended December 31


	2021 ($)	2020 ($)

Audit fees	2,869,650	3,423,000
Audit-related fees	—	—
Tax fees	—	—
All other fees	—	—
Total fees	2,869,650	3,423,000


What We Do						What We Don’t Do


•Pay for performance: A significant portion of NEO compensation is tied to the Company’s financial performance and the performance of the Company’s stock price. •Multiple performance metrics: The annual cash bonus program and, beginning in 2022, the long-term incentive program use multiple performance metrics. This approach discourages excessive risk-taking by removing any incentive to focus on a single performance goal to the detriment of the Company. •Engagement of independent advisor: Our Compensation Committee directly retains an independent compensation consultant to advise on the Company’s executive compensation program and practices. •Independent Compensation Committee: Our Compensation Committee consists solely of independent directors. •"Double trigger” arrangements: The equity awards held by our NEOs require both a change in control of the Company and a qualifying termination of employment for vesting to accelerate.						•No guaranteed bonuses: We do not provide guaranteed bonuses to any of our NEOs. •No enhanced benefits or excessive perquisites: The Company does not maintain enhanced health benefits for its NEOs and does not permit excessive perquisites. •No tax gross-ups: No tax gross-ups are paid to cover personal income taxes or excise taxes that pertain to executive or severance payments or benefits. •No executive retirement plans: We do not offer retirement arrangements for our NEOs that are different from those offered to our other employees. •No “single trigger” acceleration: We do not provide cash severance or automatic vesting of equity awards based solely upon a change in control of the Company.


NEO	2020 Base Salary ($)	2021 Base Salary ($)	Percentage Increase

Julie Wainwright	365,000	400,000	10%
Rati Sahi Levesque1	325,000	375,000	15%
Robert Julian2	N/A	425,000	N/A
Todd Suko2	325,000	325,000	N/A
Matt Gustke	325,000	370,000	14%
Arnie Katz2	N/A	$325,00	N/A


NEO			2021 Target Bonus as Percentage of Base Salary

Julie Wainwright			50%
Rati Sahi Levesque1			50%
Robert Julian2			50%
Todd Suko			40%
Matt Gustke			40%
Arnie Katz2			40%


Metric	Percentage of Bonus Opportunity	Description

GMV	50%	GMV represents the total amount paid for goods across our online marketplace in a given period. We believe this is an important measure of the scale and growth of our online marketplace and a key indicator of the health of our consignor ecosystem. We monitor trends in GMV to inform budgeting and operational decisions to support and promote growth in our business and to monitor our success in adapting our business to meet the needs of our consignors and buyers.
Adjusted EBITDA Margin	30%	Adjusted EBITDA Margin is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA Margin facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our business strategies and for business planning purposes. Adjusted EBITDA Margin is calculated by dividing the non-GAAP measure of Adjusted EBITDA by total revenue (as discussed below).
Individual Goals	20%	Individual performance goals were established for each NEO based on key objectives in support of the Company’s strategic goals.


Metric	2021 Results	Percentage Payment by Metric

GMV	$1,482,000	82%
Adjusted EBITDA Margin1	-27.0%	0%
Individual Goals2	Target	100%
Total Payment Percentage2 3		61%


NEO			Total 2021 Bonus Payment ($)


Julie Wainwright			120,725
Rati Sahi Levesque			112,435
Robert Julian1			32,470
Todd Suko			79,456
Matt Gustke1			88,899
Arnie Katz1			53,011


Named Executive Officer	Total Number of RSUs (#)	Grant Date Fair Value of RSUs ($)


Julie Wainwright	192,460	4,468,921
Rati Sahi Levesque1	232,948	3,846,366
Robert Julian	575,000	7,308,250
Todd Suko2	101,281	1,414,130
Matt Gustke3	57,740	1,340,723
Arnie Katz3 4	225,000	6,464,250


2021 Compensation Peer Group

Appian	Box	Eventbrite	Everquote
Cars.com	Etsy	Grubhub	LendingClub
Revolve Group, Inc.	Glu Mobile	Shutterstock	Stamps.com
Quotent Technology	Redfin	TrueCar	Upwork
Stitch Fix	Magnite	CarGurus



Industry			•Internet and direct marketing retail •Interactive media and services; software •Other industry connected to retail, or consumer discretionary, with a focus on internet and direct marketing.


Revenue			•Prior four quarter revenue in range of 0.5x to 2.0x to the Company


Market Capitalization			•Market capitalization range of 0.25x to 4.0x to the Company


Geography			•Companies who may compete for executive talent in the San Francisco Bay Area


Name and Principal Position	Year	Salary ($)(1)	Bonus ($)(2)	Stock Awards ($)(3)	Option Awards ($)(4)	Non-Equity Incentive Plan Compensation ($)(5)	All Other Compensation ($)(6)	Total ($)


Julie Wainwright Chief Executive Officer and Chair of Board	2021	394,616	—	4,468,921	—	120,725	1,000	4,985,262
	2020	365,769	—	4,878,042	—	—	1,000	5,244,042
	2019	365,000	—	2,479,000	2,018,998	107,675	1,000	4,971,673

Rati Sahi Levesque President and Chief Operating Officer	2021	367,308	—	3,846,366	—	112,435	1,000	4,327,109
	2020	325,385	—	1,951,217	—	—	1,000	2,277,602
	2019	316,923	—	991,600	807,597	89,700	1,000	2,206,820

Robert Julian(7) Chief Financial Officer	2021	99,712	750,000	7,308,250	—	32,470	123	8,190,309
	2020	—	—	—	—	—	—	—
	2019	—	—	—	—	—	—	—

Todd Suko Chief Legal Officer and Secretary	2021	325,000		1,414,130	—	79,456	1,000	1,819,586
	2020	213,750		3,333,000	—	—	1,000	3,547,750
	2019	—		—	—	—	—	—

Matt Gustke(8) Former Chief Financial Officer	2021	370,192		1,340,723	—	—	293,700	2,093,514
	2020	325,385		1,465,950	—	—	1,000	1,792,335
	2019	325,000		495,800	403,804	76,700	1,000	1,302,403

Arnie Katz(9) Former Chief Technology Officer	2021	318,750		6,464,250	—	53,011	1,000	6,837,011
	2020	—		—	—	—	—	—
	2019	—		—	—	—	—	—


			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)			All other stock awards: Number of shares of stock or units (#)(2)	Grant date fair value of stock and option awards ($)(3)
Name	Award Type	Grant Date	Threshold ($)	Target ($)	Maximum ($)


Julie Wainwright	Cash Bonus	—	98,761	197,521	296,282	—	—
	RSU	3/13/2021	—	—	—	192,460	4,468,921
Rati Sahi Levesque	Cash Bonus	—	91,979	183,958	275,937	—	—
	RSU	3/13/2021	—	—	—	96,230	2,234,461
	RSU	12/13/2021	—	—	—	136,718	1,611,905
Robert Julian	Cash Bonus	—	26,563	53,125	79,688	—	—
	RSU	11/3/2021	—	—	—	575,000	7,308,250
Todd Suko	Cash Bonus	—	65,000	130,000	195,000	—	—
	RSU	3/13/2021	—	—	—	19,250	446,985
	RSU	12/13/2021	—	—	—	82,031	967,145
Matt Gustke	Cash Bonus	—	72,725	145,450	218,175	—	—
	RSU	3/13/2021	—	—	—	57,740	1,340,723
Arnie Katz	Cash Bonus	—	64,459	128,917	193,376	—	—
	RSU	2/17/2021	—	—	—	200,000	5,746,000
	RSU	2/17/2021	—	—	—	25,000	718,250



			Option Awards				Stock Awards
Name	Grant Date	Vesting Commencement Date	Number of Securities Underlying Options Exercisable (#)	Number of Securities Underlying Unexercised Options Unexercisable (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares of Units of Stock that have not Vested (#)	Market Value of Shares or Units of Stock that have not Vested ($)(1)





Julie Wainwright	3/27/2014	3/14/2014	624,250	—	0.90	3/27/2024	—	—
	2/19/2015	2/19/2015	792,361	—	1.74	2/19/2015	—	—
	12/17/2015	12/17/2015	50,000	—	3.48	12/17/2015	—	—
	2/16/2017	2/16/2017	250,000	—	2.56	2/16/2027	—	—
	7/22/2019(2)	8/20/2019	102,272	79,546	24.79	7/22/2029	—	—
	7/22/2019(2)	8/20/2019	—	—	—	—	43,750	507,938
	2/20/2020(2)	2/20/2020	—	—	—	—	175,891	2,042,095
	3/13/2021(2)	2/20/2021	—	—	—	—	156,374	1,815,502

Rati Sahi Levesque	2/19/2015	2/19/2015	94,905	—	1.74	2/19/2025	—	—
	12/17/2015	12/17/2015	36,119	—	3.48	12/17/2025	—	—
	2/16/2017	2/16/2017	35,799	—	2.56	2/16/2027	—	—
	12/5/2018(3)	12/5/2018	42,358	31,250	7.64	12/5/2028	—	—
	7/22/2019(2)	8/20/2019	33,182	31,819	24.79	7/22/2029	—	—
	7/22/2019(2)	8/20/2019	—	—	—	—	17,500	203,175
	2/20/2020(2)	2/20/2020	—	—	—	—	70,357	816,845
	3/13/2021(2)	2/20/2021	—	—	—	—	78,187	907,751
	12/13/2021(2)	11/20/2021	—	—	—	—	136,718	1,587,296

Robert Julian	11/3/2021(4)	10/1/2021	—	—	—	—	575,000	6,675,750

Todd Suko	5/5/2020(5)	—	—	—	—	—	171,875	1,995,469
	3/13/2021(2)	2/20/2021	—	—	—	—	15,641	181,592
	12/13/2021(2)	11/20/2021	—	—	—	—	82,031	952,380

Matt Gustke	5/31/2013	4/3/2013	143,821	—	0.78	5/31/2023	—	—
	3/27/2014	3/14/2014	75,000	—	0.90	3/27/2024	—	—
	2/19/2015	2/19/2015	60,017	—	1.74	2/19/2025	—	—
	12/17/2015	12/17/2015	67,499	—	3.48	12/17/2025	—	—
	2/16/2017	2/16/2017	46,844	—	2.56	2/16/2027	—	—
	12/5/2018(3)	12/5/2018	56,250	—	7.64	12/5/2028	—	—
	7/22/2019(2)	8/20/2019	20,454	—	24.79	8/20/2029	—	—


Component			Benefits

Salary Benefit			1.5 times base salary (CEO) or 1.0 times base salary (other NEOs), payable in a lump sum
Bonus			1.0 times target annual cash bonus opportunity plus a prorated portion of the target annual cash bonus opportunity (prorated based on the number of days elapsed in the calendar year as of the termination date), payable in a lump sum
Equity

SEC Form DEF 14A filed by The RealReal Inc.