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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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CHEWY, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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☐
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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WHAT:
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2020 Annual Meeting of Stockholders of Chewy, Inc.
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WHEN:
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Tuesday, July 14, 2020, at 10:00 a.m., Eastern Time.
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WHERE:
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Our meeting will be a virtual stockholder meeting, conducted via live audio
webcast, a format designed to increase stockholder access, reduce the environmental impact of a physical meeting, save Chewy and our stockholders time and money and, during the current global pandemic, ensure the safety of participants.
In addition to online attendance, this format provides stockholders with the opportunity to hear all portions of the official meeting, submit written questions during the meeting, and vote online during the open poll section of the
meeting. You are invited to attend the live webcast of our meeting, vote your shares and submit questions at https://www.virtualshareholdermeeting.com/CHWY2020. To join the meeting, you will need the 16-digit control number that is
printed on your Notice Regarding the Availability of Proxy Materials (“Notice”). When accessing our Annual Meeting, please allow ample time for online check-in, which will begin at 9:45 a.m., Eastern Time, on Tuesday, July 14, 2020. If a
bank, brokerage firm, or other nominee holds your shares, you should contact that organization for additional information.
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WHY:
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We are holding the Annual Meeting for the following purposes, as more fully
described in our proxy statement:
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1.
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to elect to our Board of Directors three director nominees for three-year terms
(Proposal No. 1);
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2.
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to ratify the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for the fiscal year ending January 31, 2021 (Proposal No. 2);
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3.
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to approve, on a non-binding, advisory basis, the compensation of our named
executive officers (Proposal No. 3);
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4.
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to approve, on a non-binding, advisory basis, the frequency of future votes on
named executive officer compensation (Proposal No. 4); and
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5.
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to transact such other business as may properly be presented at the Annual Meeting
or any adjournments or postponements thereof.
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RECORD DATE:
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Stockholders of record as of the close of business on May 18, 2020 (“Record Date”)
are entitled to this notice and to vote at the Annual Meeting or at any adjournment or postponement that takes place.
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PROXY VOTING:
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On or about May 26, 2020, we will mail to stockholders of record as of the Record
Date (other than those who previously requested electronic or paper delivery on an ongoing basis) a Notice with instructions for accessing our proxy materials and voting instructions over the Internet, by telephone, or by mail. We expect
that our proxy statement and other proxy materials will be available to stockholders on this same date.
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Your vote is very important. Whether or not you plan to attend our Annual Meeting,
we encourage you to read our proxy materials and submit your proxy or voting instructions as soon as possible.
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Susan Helfrick
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General Counsel & Secretary
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1.
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Why am I receiving these materials?
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2.
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Why is the Annual Meeting online only? How do I attend the Annual Meeting?
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3.
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Who may vote at the Annual Meeting?
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4.
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How can I access the proxy materials over the Internet?
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5.
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How can I request a paper or email copy of the proxy materials?
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By Internet: www.proxyvote.com
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By telephone: 1-800-579-1639
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By email: sendmaterial@proxyvote.com (follow instructions on the Notice)
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1
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6.
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What matters are being voted on at the Annual Meeting?
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Proposal 1: To elect to the Board of Directors three director nominees for three-year terms;
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Proposal 2: To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm
for the fiscal year ending January 31, 2021;
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Proposal 3: To approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers; and
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Proposal 4: To approve, on a non-binding, advisory basis, the frequency of future votes on named executive compensation.
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7.
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How does our Board recommend that stockholders vote on the proposals?
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“FOR” the election of all of the Board’s director nominees for three-year terms, as
described in Proposal 1;
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“FOR” the ratification of the appointment of Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for the fiscal year ending January 31, 2021, as described in Proposal 2;
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“FOR” approval, on a non-binding, advisory basis, of the compensation of the Company’s
named executive officers, as described in Proposal 3; and
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“FOR” approval, on a non-binding advisory basis, of future votes on named executive
compensation to be held every year, as described in Proposal 4.
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8.
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What vote is required to approve each of the proposals?
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2
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9.
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As a controlled company, how does the voting power of our principal stockholders affect approval of the
proposals being voted on at the Annual Meeting?
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10.
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How do I vote?
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11.
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What is the difference between a “stockholder of record” and a “beneficial owner”?
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Stockholder of record: If your shares are registered directly in your name with our transfer agent, American Stock Transfer &
Trust Company, LLC, you are considered, with respect to those shares, the stockholder of record, and the Notice was sent to you directly. As the stockholder of record, you have the right to grant your proxy directly to Chewy or to vote in
person at the Annual Meeting.
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3
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Beneficial owner: If your shares are held by your bank, brokerage firm, or other nominee (i.e., in street name), you are
considered the beneficial owner of shares held in street name, and the Notice was forwarded to you by that organization. As the beneficial owner, you have the right to direct your bank, brokerage firm, or other nominee regarding how to
vote your shares, and you are also invited to attend the Annual Meeting. Since a beneficial owner is not the stockholder of record, you may not vote your shares at the Annual Meeting unless you obtain a legal proxy from your bank,
brokerage firm, or other nominee that holds your shares, giving you the right to vote the shares at the Annual Meeting.
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12.
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How do I vote my shares during the Annual Meeting?
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13.
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How do I vote my shares without attending the Annual Meeting?
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Vote by Internet by going to www.proxyvote.com at any time up until 11:59 p.m., Eastern Time, on July 13, 2020. Please have your
Notice or proxy card in hand when you access the website and then follow the instructions.
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Vote by telephone at 1-800-690-6903 at any time up until 11:59 p.m., Eastern Time, on July 13, 2020. Please have your Notice or
proxy card in hand when you call and then follow the instructions.
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Vote by mail if you requested and received a proxy card. Please mark, sign, and date your proxy card and return it in the
postage-paid envelope we provided with it or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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14.
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What is the effect of giving a proxy?
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15.
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If I fail to provide specific voting instructions on my proxy, how will my shares be voted?
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If you are a stockholder of record, your shares will be voted in accordance with the recommendations of our Board described in
Question 7.
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4
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If you are a beneficial owner, and you do not provide instructions to your bank, brokerage firm, or other nominee holding your
shares, the organization that holds such shares on your behalf will be entitled to vote those shares on matters that are “routine” in nature. Proposal 2 (ratification of independent registered public accounting firm) is the only proposal
to be acted on at the Annual Meeting that would be considered routine. A bank, brokerage firm, or other nominee is not entitled to vote shares it holds for a beneficial owner on any proposals that are “non-routine,” and the absence of a
vote on those matters will be considered “broker non-votes.” Proposal 1 (election of directors), Proposal 3 (advisory vote on named executive officer compensation), and Proposal 4 (advisory vote on the frequency of future votes on named
executive officer compensation) are considered “non-routine” and may not be voted on at the Annual Meeting by a bank, brokerage firm, or other nominee that holds your shares in the absence of your instructions.
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16.
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May I revoke my proxy or voting instructions before my shares are voted at the Annual Meeting?
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Stockholders of record: If you are a stockholder of record, you may revoke a proxy by:
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○
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completing and returning a later dated proxy card;
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granting a subsequent proxy via Internet or telephone;
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○
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delivering written notice to our Secretary at our principal executive office, bearing a date later than the proxy, stating the proxy is revoked; or
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voting your shares online at the Annual Meeting.
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Beneficial owners: If you are a beneficial owner of shares held in street name, you must follow the instructions for changing or
revoking your proxy provided by your broker, bank, or other nominee.
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17.
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Are a certain number of shares required to be present at the Annual Meeting?
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18.
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Why did some people receive a Notice instead of a full set of printed proxy materials?
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5
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19.
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What does it mean if I receive more than one Notice?
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20.
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I share an address with another stockholder. What do I do if we received only one paper copy of the proxy
materials and want additional copies or we received multiple copies and want only one?
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21.
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Who bears the cost of this proxy solicitation?
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22.
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Who will count the votes?
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23.
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Where can I find the voting results of the Annual Meeting?
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24.
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When are stockholder proposals for inclusion in our proxy materials for the 2021 annual meeting of stockholders
due?
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6
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25.
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When are other proposals and director nominations for the 2021 annual meeting of stockholders due?
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26.
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What is the address of Chewy’s principal executive office?
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7
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Name
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Age
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Class
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Director
Since |
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Current
Term Expires |
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Position
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Committee Membership
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AC
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CC
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NCGC
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Raymond Svider(1)
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57
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I
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2019
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2020
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Chairperson
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☆
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☆
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Sharon McCollam(2)
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58
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I
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2019
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2020
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Director
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☆
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J.K. Symancyk(3)
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48
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I
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2019
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2020
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Director
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Fahim Ahmed(4)
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41
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II
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2019
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2021
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Director
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✔
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✔
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Michael Chang(5)
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43
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II
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2019
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2021
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Director
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✔
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✔
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James A. Star(6)
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59
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II
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2019
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2021
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Director
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Brian McAndrews(7)
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61
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II
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2019
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2021
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Director
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✔
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James Kim(8)
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28
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III
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2019
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2022
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Director
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David Leland(9)
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45
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III
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2019
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2022
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Director
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Lisa Sibenac(10)
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39
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III
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2019
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2022
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Director
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Sumit Singh(11)
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40
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III
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2019
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2022
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Director and CEO
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AC: Audit Committee
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☆ Committee Chairperson
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CC: Compensation Committee
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✔ Committee Member
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(1)
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Elected as Chairperson of our Board effective April 29, 2019, and appointed as Chairperson of both our Compensation and Nominating
and Corporate Governance Committees effective June 13, 2019.
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(2)
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Elected to our Board and appointed as Chairperson of our Audit Committee effective June 13, 2019.
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(3)
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Elected to our Board effective April 29, 2019.
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(4)
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Elected to our Board effective April 29, 2019, and appointed as a member of both our Compensation and Nominating and Corporate
Governance Committees effective June 13, 2019.
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(5)
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Elected to our Board effective April 29, 2019, and appointed as a member of both our Audit and Nominating and Corporate Governance
Committees effective June 13, 2019.
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(6)
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Elected to our Board effective June 13, 2019.
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(7)
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Elected to our Board and appointed as a member of our Audit Committee effective September 10, 2019.
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(8)
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Elected to our Board effective April 29, 2019.
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(9)
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Elected to our Board effective September 10, 2019.
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(10)
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Elected to our Board effective April 29, 2019.
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(11)
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Elected to our Board effective April 29, 2019.
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8
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9
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10
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11
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(i)
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managing the appointment, retention, compensation, oversight, and termination of our independent registered public accounting
firm;
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(ii)
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overseeing the pre-approval process governing permitted audit and non-audit and tax related services provided by our independent
registered public accounting firm;
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(iii)
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reviewing and approving the function and scope of our internal audit department, including its purpose, organization,
responsibilities, budget, audit plans, and performance;
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(iv)
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providing meaningful consideration to our external financial reporting, including periodic reports, earnings releases, and
earnings guidance;
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(v)
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overseeing the adequacy and effectiveness of our internal controls over financial reporting and disclosure controls;
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(vi)
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monitoring legal and regulatory compliance, including our Code of Conduct;
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(vii)
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reviewing and approving related party transactions in accordance with our related party transactions policy; and
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(viii)
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overseeing procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal
accounting controls, or auditing matters.
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12
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(i)
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reviewing and approving corporate goals and objectives applicable to our Chief Executive Officer and other members of executive
management, evaluating performance in light of such objectives, and approving compensation;
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(ii)
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reviewing director compensation and benefits for service on our Board and making recommendations for modification;
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(iii)
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reviewing and approving incentive compensation and equity-based plans, and administering those plans on behalf of executive
officers; and
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(iv)
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monitoring the effectiveness of non-equity-based benefit plan offerings and approving any material new employee benefit plan or
change to an existing plan that creates a material financial commitment for our Company.
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(i)
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identifying and evaluating candidates and making recommendations to our Board for director nominees;
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(ii)
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assessing the size, structure, and composition of our Board and committees and making recommendations to our Board for
modifications;
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(iii)
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overseeing periodic evaluations of our Board’s performance, including Board committees;
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(iv)
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monitoring corporate governance trends and developments and making recommendations to our Board for modifications; and
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(v)
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developing a Chief Executive Officer succession plan and evaluating potential Chief Executive Officer candidates.
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13
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(i)
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the independence, judgment, strength of character, reputation in the business community, ethics, and integrity of the individual;
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(ii)
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the business and other relevant experience, skill, and knowledge that the individual may have that will enable him or her to
provide effective oversight of our business;
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(iii)
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the fit of the individual’s skill set and personality with those of the other directors so as to build a Board that works together
effectively and constructively; and
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(iv)
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the individual’s ability to devote sufficient time to carry out his or her responsibilities as a director.
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14
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$175,000 annual retainer per year for service as a Board member
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$15,000 per year for service as a committee chairperson
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•
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$5,000 per year for service as a committee member
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15
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Name
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Fees paid
in Cash |
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Stock
Awards(1)(2)(3) |
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Other
Compensation |
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Total($)
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Sharon McCollam(4)
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$75,863
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$137,977
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$ —
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$213,840
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Brian McAndrews(5)
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$26,630
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$112,534
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$—
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$139,164
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(1)
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The amounts reflected in this column represent the grant date fair value of the awards made in fiscal year 2019, as computed in
accordance with Topic 718, Compensation—Stock Compensation, of the Accounting Standards Codification of the Financial Accounting Standards Board (“ASC 718”). For a discussion of the assumptions used in the calculation of the grant date
fair value, refer to Note 8. Share-Based Compensation in the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended February 2, 2020.
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(2)
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Amounts shown do not reflect compensation actually received by the director, and there can be no assurance that these amounts will
ever be realized by the director. Each independent director received a grant of Director RSUs in an amount equal to 75% of his or her retainer, prorated to reflect actual months of service from the date of his or her Board appointment
through July 15, 2020, less any excess of cash compensation already provided, divided by the 20-day average closing price of Chewy’s Class A common stock for the 20 trading days immediately preceding the grant date of January 8, 2020,
rounded to the nearest whole share.
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(3)
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100% of the Director RSUs vest on July 15, 2020, subject to the director’s continued service with us.
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(4)
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Ms. McCollam was granted 4,821 Director RSUs in fiscal year 2019, settlement of which will be deferred until her termination of
service. These amounts reflect her appointment as a director commencing June 13, 2019.
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(5)
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Mr. McAndrews was granted 3,932 Director RSUs in fiscal year 2019, settlement of which will be deferred until his termination of
service.
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16
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(i)
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whether the transaction was undertaken in the ordinary course of our business;
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(ii)
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whether the transaction was initiated by us or the related party;
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(iii)
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the availability of other sources of comparable products or services;
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(iv)
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whether the transaction is proposed to be, or was, entered on terms no less favorable to us than terms that could have been
reached with an unrelated third party;
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(v)
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the purpose of, and the potential benefits of, the transaction;
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(vi)
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the approximate dollar value of the amount involved in the transaction, particularly as it relates to the related party;
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(vii)
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the related party’s interest in the transaction; and
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(viii)
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any other information regarding the transaction or the related party that would be material to investors in light of the
circumstances of the particular transaction.
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17
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In connection with our IPO, Chewy entered into a master transaction agreement (“MTA”) with PetSmart. The MTA contains provisions
relating to our ongoing relationship with PetSmart, including terms relating to joint-purchasing services, administrative, and support services and fees payable by Chewy to PetSmart in exchange for guaranteeing Chewy’s obligations entered
into in the ordinary course of business under certain of its credit insurance, industrial lease, and equipment lease agreements. In fiscal year 2019, Chewy paid PetSmart $122,798 in consideration of services provided by PetSmart to Chewy
pursuant to the MTA.
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Certain of our pharmacy operations are currently conducted through Chewy Pharmacy KY, LLC (“Chewy KY”), a wholly owned subsidiary
of PetSmart. We have entered into a services agreement with Chewy KY that provides for the payment of a management fee to us for providing services to Chewy KY. Pursuant to the terms of this agreement, Chewy received $50,987,510 from
Chewy KY in fiscal year 2019.
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Chewy and PetSmart Home Office, Inc. (“PetSmart Home”), a wholly owned subsidiary of PetSmart, have entered into a master purchase
agreement (“MPA”) that governs sales of our respective private brand products to each other. In fiscal year 2019, we made payments of $1,283,221 to PetSmart Home, and PetSmart Home made payments of $495,081 to us, in connection with the
sale and purchase of private brand products to each other pursuant to the terms of the MPA.
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•
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Prior to completion of our IPO, Chewy was a guarantor under PetSmart’s asset-backed revolving credit agreement. Our guarantee and
pledge of assets under this credit agreement was released in connection with the IPO.
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•
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In connection with our IPO, we entered into a master procurement agreement with The China Joint Business Arrangement between
PetSmart International Holdings I LLC and PetSmart International Holdings II LLC (“Service Provider”), affiliates of PetSmart. In consideration of the product sourcing services provided by the Service Provider, we paid the Service
Provider $14,255 in fiscal year 2019.
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•
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In connection with our IPO, we entered into a tax matters agreement (“TMA”) with PetSmart and Argos Intermediate Holdco I Inc.
that governs the parties’ respective rights, responsibilities, and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and
other matters regarding taxes. In fiscal year 2019, we received $17,300,000 from PetSmart pursuant to the TMA.
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•
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From time to time, we purchase compliance management software and services from Navex Global, Inc. and its subsidiaries (“Navex”).
Navex is a portfolio company of BC Partners. In fiscal year 2019, we paid Navex $57,982 in consideration of the services provided by Navex to Chewy.
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18
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|
| |
|
•
|
From time to time, we purchase security solutions and other services from GardaWorld Corporation and its subsidiaries
(“GardaWorld”). GardaWorld is a portfolio company of BC Partners. In fiscal year 2019, we paid GardaWorld $2,518,089 in consideration of the services provided by GardaWorld to Chewy.
|
•
|
Investor Rights Agreement, dated June 13, 2019, by and among Chewy and certain holders identified therein; and
|
•
|
Stockholders Agreement, dated as of April 17, 2019, by and among Chewy and the other parties named therein.
|
(1)
|
For a description of our Short-Term Incentive Plan refer to Annual Short-Term Incentive in the Elements of NEO Compensation section
below. The Short-Term Incentive Plan payment for fiscal year 2019 was determined and paid in fiscal year 2020.
|
(2)
|
For a description of IPO RSUs refer to Long-Term Equity Incentives in the Elements of NEO Compensation section below.
|
(3)
|
The grant date fair value of the awards computed in accordance with ASC 718 was $1,190,476 and $10,567,990, respectively.
|
|
| |
|
| |
19
|
|
FOR
✔ |
| |
OUR BOARD, UPON RECOMMENDATION OF OUR NOMINATING AND CORPORATE GOVERNANCE COMMITTEE, RECOMMENDS A
VOTE “FOR” ALL OF THE NOMINEES NAMED ABOVE.
|
|
20
|
| |
|
| |
|
|
|
| |
Voting Shares Beneficially Owned
|
| |
% Total
Voting Power(1) |
| |||||||||
|
|
| |
Class A
Common Stock |
| |
Class B
Common Stock |
| |||||||||
|
Name of Beneficial Owner
|
| |
Shares
|
| |
%
|
| |
Shares
|
| |
%
|
| |||
|
Named Executive Officers and Directors(2)
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Sumit Singh(3)
|
| |
552,453
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Mario Marte(4)
|
| |
277,386
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Satish Mehta(5)
|
| |
211,334
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Susan Helfrick(6)
|
| |
139,949
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Raymond Svider(7)
|
| |
60,000
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Fahim Ahmed(8)
|
| |
10,000
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Michael Chang(9)
|
| |
10,000
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
James Kim(10)
|
| |
1,500
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
David Leland
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Brian McAndrews(11)
|
| |
3,932
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Sharon McCollam(12)
|
| |
8,321
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Lisa Sibenac(13)
|
| |
1,000
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
James A. Star(14)
|
| |
91,521
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
J.K. Symancyk(15)
|
| |
228,238
|
| |
*
|
| |
—
|
| |
—
|
| |
*
|
|
|
Other > 5% Security Holders
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
BC Partners Holdings Limited/Argos Holdings GP LLC(16)
|
| |
17,584,098
|
| |
20.9
|
| |
317,338,356
|
| |
100.0
|
| |
98.0
|
|
|
PetSmart, Inc.(17)
|
| |
17,584,098
|
| |
20.9
|
| |
238,738,356
|
| |
75.2
|
| |
73.8
|
|
|
Entities affiliated with Lone Pine Capital LLC(18)
|
| |
5,071,531
|
| |
6.0
|
| |
—
|
| |
—
|
| |
*
|
|
|
Baillie Gifford & Co(19)
|
| |
5,228,809
|
| |
6.2
|
| |
—
|
| |
—
|
| |
*
|
|
|
Entities affiliated with Morgan Stanley(20)
|
| |
12,413,136
|
| |
14.7
|
| |
—
|
| |
—
|
| |
*
|
|
*
|
Represents less than one percent (1%).
|
(1)
|
Percentage total voting power represents voting power with respect to all shares of our Class A common stock and Class B common
stock, voting together as a single class. Each holder of Class B common stock is entitled to ten (10) votes per share of Class B common stock, and each holder of Class A common stock is entitled to one (1) vote per share of Class A common
|
|
| |
|
| |
21
|
(2)
|
Consists of (i) 334,115 shares of Class A common stock held by our named executive officers and directors and (ii) 1,261,519 shares
of Class A common stock issuable upon the vesting of RSUs within 60 days of May 18, 2020.
|
(3)
|
Consists of (i) 11,000 shares of Class A common stock held by Mr. Singh and (ii) 541,453 shares of Class A common stock issuable to
Mr. Singh upon the vesting of RSUs within 60 days of May 18, 2020. This does not include 2,445,878 shares of Class A common stock issuable to Mr. Singh upon the vesting of RSUs, which are not expected to vest within 60 days of May 18,
2020. These RSUs vest based on time vesting and share price conditions. The time vesting condition will be satisfied with respect to 25% of these RSUs on June 13, 2020 and then with respect to 12.5% of these RSUs at the end of each
six-month period thereafter, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition will be satisfied with respect to a percentage of these RSUs, as and when the price per
share of Class A common stock specified in Chewy’s Registration Statement on Form S-1 (File No. 333-231095), as amended, is achieved, on a weighted-average basis, on every trading day during a consecutive 45-day trading period completed
prior to June 13, 2024, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition has currently been satisfied with respect to 72.5% of these RSUs. This also does not include
286,784 shares of Class A common stock issuable to Mr. Singh’s spouse upon the vesting of RSUs.
|
(4)
|
Consists of (i) 17,489 shares of Class A common stock held by Mr. Marte and (ii) 259,897 shares of Class A common stock issuable
upon the vesting of RSUs within 60 days of May 18, 2020. This does not include 1,174,022 shares of Class A common stock issuable to Mr. Marte upon the vesting of RSUs, which are not expected to vest within 60 days of May 18, 2020. These
RSUs vest based on time vesting and share price conditions. The time vesting condition will be satisfied with respect to 25% of these RSUs on June 13, 2020 and then with respect to 12.5% of these RSUs at the end of each six-month period
thereafter, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition will be satisfied with respect to a percentage of these RSUs, as and when the price per share of Class A
common stock specified in Chewy’s Registration Statement on Form S-1 (File No. 333-231095), as amended, is achieved, on a weighted-average basis, on every trading day during a consecutive 45-day trading period completed prior to June 13,
2024, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition has currently been satisfied with respect to 72.5% of these RSUs.
|
(5)
|
Consists of (i) 16,411 shares of Class A common stock held by Mr. Mehta and (ii) 194,923 shares of Class A common stock issuable
upon the vesting of RSUs within 60 days of May 18, 2020. This does not include 880,516 shares of Class A common stock issuable to Mr. Mehta upon the vesting of RSUs, which are not expected to vest within 60 days of May 18, 2020. These
RSUs vest based on time vesting and share price conditions. The time vesting condition will be satisfied with respect to 25% of these RSUs on June 13, 2020 and then with respect to 12.5% of these RSUs at the end of each six-month period
thereafter, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition will be satisfied with respect to a percentage of these RSUs, as and when the price per share of Class A
common stock specified in Chewy’s Registration Statement on Form S-1 (File No. 333-231095), as amended, is achieved, on a weighted-average basis, on every trading day during a consecutive 45-day trading period completed prior to June 13,
2024, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition has currently been satisfied with respect to 72.5% of these RSUs.
|
(6)
|
Consists of (i) 10,000 shares of Class A common stock held by the Susan Helfrick Revocable Trust, dated November 27, 2019, of which
Ms. Helfrick is the trustee and (ii) 129,949 shares of Class A common stock issuable upon the vesting of RSUs within 60 days of May 18, 2020. This does not include 587,011 shares of Class A common stock issuable to Ms. Helfrick upon the
vesting of RSUs, which are not expected to vest within 60 days of May 18, 2020. The RSUs vest based on time vesting and share price conditions. The time vesting condition will be satisfied with respect to 25% of these RSUs on June 13,
2020 and then with respect to 12.5% of these RSUs at the end of each six-month period thereafter, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition will be satisfied
with respect to a percentage of these RSUs, as and when the price per share of Class A common stock specified in Chewy’s Registration Statement on Form S-1 (File No. 333-231095), as amended, is achieved, on a weighted-average basis, on
every trading day during a consecutive 45-day trading period completed prior to June 13, 2024, subject to the holder’s continued employment with Chewy through the applicable vesting date. The share price condition has currently been
satisfied with respect to 72.5% of these RSUs. This also does not include 80,000 shares of Class A common stock owned by Ms. Helfrick’s spouse.
|
(7)
|
Consists of 60,000 shares of Class A common stock held by Mr. Svider.
|
(8)
|
Consists of 10,000 shares of Class A common stock held by Mr. Ahmed.
|
(9)
|
Consists of 10,000 shares of Class A common stock held by Mr. Chang.
|
(10)
|
Consists of 1,500 shares of Class A common stock held by Mr. Kim.
|
(11)
|
Consists of 3,932 shares of Class A common stock issuable upon the vesting of RSUs, which will vest on July 15, 2020, subject to
Mr. McAndrews’ continued service as a director on the Board through the vesting date.
|
(12)
|
Consists of (i) 3,500 shares of Class A common stock held by Ms. McCollam and (ii) 4,821 shares of Class A common stock issuable
upon the vesting of RSUs, which will vest on July 15, 2020, subject to Ms. McCollam’s continued service as a director on the Board through the vesting date.
|
(13)
|
Consists of 1,000 shares of Class A common stock held by Ms. Sibenac.
|
(14)
|
Consists of 91,521 shares of Class A common stock held by Mr. Star.
|
(15)
|
Consists of (i) 92,941 shares of Class A common stock held by Mr. Symancyk and (ii) 135,297 shares of Class A common stock issuable
upon the vesting of RSUs within 60 days of May 18, 2020. This does not include 611,173 shares of Class A common stock issuable to Mr. Symancyk upon the vesting of RSUs, which are not expected to vest within 60 days of May 18, 2020. The
RSUs vest based on time vesting and share price conditions. The time vesting condition will be satisfied with respect to 25% of these RSUs on June 13, 2020 and then with respect to 12.5% of these RSUs at the end of each six-month period
thereafter, subject to the holder’s continued service with Chewy through the applicable vesting date. The share price condition will be satisfied with respect to a percentage of these RSUs, as and when the price per share of Class A
common
|
22
|
| |
|
| |
|
(16)
|
The number of shares listed as beneficially owned consists of (i) 191,477,454 shares of Class B common stock held by PetSmart’s
wholly owned subsidiary, PetSmart Buddy Holdings Corp., (ii) 17,584,098 shares of Class A common stock held by PetSmart’s wholly owned indirect subsidiary, Buddy Chester Sub LLC, (iii) 47,260,902 shares of Class B common stock held by
PetSmart’s wholly owned subsidiary, Buddy Chester Corp., and (iv) 78,600,000 shares of Class B common stock held by Buddy Holdings Corp., a wholly owned subsidiary of Argos Holdings L.P. (“Argos Holdings”). The general partner of Argos
Holdings is Argos Holdings GP LLC (“Argos GP”). Argos GP is controlled by affiliates of BC Partners. The business address of Argos Holdings, Argos GP and BC Partners is 650 Madison Avenue, New York, NY 10022.
|
(17)
|
The number of shares listed as beneficially owned consists of (i) 191,477,454 shares of Class B common stock held by PetSmart’s
wholly owned subsidiary, PetSmart Buddy Holdings Corp., (ii) 47,260,902 shares of Class B common stock held by PetSmart’s wholly owned subsidiary, Buddy Chester Corp. and (iii) 17,584,098 shares of Class A common stock held by PetSmart’s
wholly owned indirect subsidiary, Buddy Chester Sub LLC. The business address of PetSmart is 19601 N. 27th Avenue, Phoenix, AZ 85027.
|
(18)
|
Based solely on a Schedule 13G/A filed on February 14, 2020. Lone Pine Capital LLC (“Lone Pine Capital”) exercises shared voting
power and shared dispositive power with respect to 5,071,531 shares of Class A common stock. Lone Pine Capital serves as investment manager to Lone Spruce, L.P. (“Lone Spruce”), Lone Cascade, L.P. (“Lone Cascade”), Lone Sierra, L.P.
(“Lone Sierra”), Lone Cypress, Ltd., (“Lone Cypress”), and Lone Monterey Master Fund, Ltd. (“Lone Monterey Master Fund” and, together with Lone Spruce, Lone Cascade, Lone Sierra, Lone Cypress, and Lone Monterey Master Fund, the “Lone Pine
Funds”), with respect to the shares of Class A common stock directly held by each of the Lone Pine Funds. David F. Craver, Brian F. Doherty, Mala Gaonkar, Kelly A. Granat, and Kerry A. Tyler, is each an Executive Committee Member of Lone
Pine Managing Member LLC (“LPMM”), which is the Managing Member of Lone Pine Capital, and exercise shared voting power and shared dispositive power with respect to 5,071,531 shares of Class A common stock. Stephen F. Mandel, Jr., the
managing member of Lone Pine Managing Member LLC, which is the Managing Member of Lone Pine Capital, also exercises shared voting power and shared dispositive power with respect to such shares. The business address of these entities is
Two Greenwich Plaza, Greenwich, CT 06830.
|
(19)
|
Based solely on a Schedule 13G filed on February 3, 2020. Baillie Gifford & Co. exercises sole voting power and sole
dispositive power with respect to 5,228,809 shares of Class A Common stock. The business address of Baillie Gifford & Co. is Calton Square 1 Greenside Row, Edinburgh EH1 3AN, Scotland, United Kingdom.
|
(20)
|
Based solely on a Schedule 13G/A filed on January 10, 2020. Morgan Stanley Investment Management Inc. exercise shared voting power
with respect to 12,027,371 shares of Class A common stock and shared dispositive power with respect to 12,413,136 shares of Class A common stock. The business address of these entities is 1585 Broadway, New York, NY 10036.
|
|
| |
|
| |
23
|
|
|
| |
February 2, 2020
|
| |
February 3, 2019
|
|
|
Audit Fees(1)
|
| |
$ 1,368,000
|
| |
$—
|
|
|
Audit-Related Fees(2)
|
| |
$ 1,483,000
|
| |
$—
|
|
|
Tax Fees(3)
|
| |
$—
|
| |
$ 35,000
|
|
|
Total Fees
|
| |
$ 2,851,000
|
| |
$ 35,000
|
|
(1)
|
Audit fees consist of fees for services rendered and expenses billed in connection with the annual audit of our consolidated
financial statements, the review of our quarterly condensed consolidated financial statements, and consultations on accounting matters directly related to the audit. For the fiscal year ended February 3, 2019, our audit fees were included
in PetSmart’s consolidated financial statements and not allocated to Chewy.
|
(2)
|
Audit-related fees include fees for assurance and related services that are traditionally performed by the independent registered
accounting firm. More specifically, this includes services rendered in connection with the submission of a Registration Statement on Form S-8 related to our Plan in fiscal year 2019 and the submission of our Registration Statement on Form
S-1 in connection with our initial public offering in fiscal year 2019.
|
(3)
|
Tax fees consist of fees billed in fiscal year 2018 for services rendered for tax compliance, tax advice, and tax planning relating
to fiscal year 2017.
|
•
|
reviewed and discussed the audited financial statements with management and Deloitte & Touche LLP;
|
•
|
discussed with Deloitte & Touche LLP the matters required to be discussed by Auditing Standards no. 1301, “Communications with
Audit Committees” issued by the Public Company Accounting Oversight Board (“PCAOB”); and
|
24
|
| |
|
| |
|
•
|
received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the PCAOB
regarding the independent accountant’s communications with our Audit Committee concerning independence and has discussed with Deloitte & Touche LLP its independence.
|
|
| |
|
| |
25
|
|
FOR
✔ |
| |
OUR BOARD, UPON RECOMMENDATION OF OUR AUDIT COMMITTEE, RECOMMENDS THAT STOCKHOLDERS VOTE “FOR”
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JANUARY 31, 2021.
|
|
26
|
| |
|
| |
|
|
Name
|
| |
Age
|
| |
Title
|
|
|
Sumit Singh
|
| |
40
|
| |
Chief Executive Officer
|
|
|
Mario Marte
|
| |
44
|
| |
Chief Financial Officer
|
|
|
Satish Mehta
|
| |
55
|
| |
Chief Technology Officer
|
|
|
Susan Helfrick
|
| |
53
|
| |
General Counsel & Secretary
|
|
|
| |
|
| |
27
|
|
Component
|
| |
Objective
|
| |
Key Features
|
|
|
Base Salary
|
| |
Recognizes market factors, as well as individual experience, performance and level of responsibility.
|
| |
Fixed compensation designed to attract and retain talent.
|
|
|
Annual Short-Term Incentive
|
| |
Motivates and establishes a strong link between pay and performance.
|
| |
Variable, at risk compensation directly tied to the achievement of financial and strategic annual
goals; STI thresholds, targets and maximums are set as a percentage of base salary.
|
|
|
Long-Term Equity Incentives
|
| |
Aligns compensation with creating long-term stockholder value and retains talent through multiyear
vesting.
|
| |
Variable, at risk compensation in the form of Performance RSUs that vest upon satisfaction of Service
Conditions and Performance Conditions.
|
|
•
|
Net sales of $4.85 billion grew 37.2 percent year-over-year
|
•
|
Gross margin of 23.6 percent expanded 340 basis points year-over-year
|
•
|
Net loss of $252.4 million, including share-based compensation expense of $136.2 million
|
•
|
Adjusted EBITDA(1) loss of $81.0 million improved 65
percent year-over-year
|
•
|
Adjusted EBITDA margin(1) of (1.7) percent improved
480 basis points year-over-year
|
•
|
Free cash flow improved by $55.5 million year-over-year(1)
|
(1)
|
Adjusted EBITDA, adjusted EBITDA margin and Free Cash Flow are non-GAAP financial measures. For a reconciliation of non-GAAP to
GAAP financial measures refer to Reconciliation of Non-GAAP Financial Measures in the Appendix.
|
|
Named Executive Officer
|
| |
Pre-FY 2019
Base Salary |
| |
FY 2019 Ending Base
Salary(1) |
|
|
Sumit Singh
|
| |
$ 1,200,000
|
| |
$ 1,200,000
|
|
|
Mario Marte
|
| |
$ 500,000
|
| |
$ 595,000
|
|
|
Satish Mehta
|
| |
$ 400,000
|
| |
$ 475,000
|
|
|
Susan Helfrick
|
| |
$375,000
|
| |
$ 450,000
|
|
(1)
|
For actual base salary amounts paid to the NEOs during fiscal year 2019 refer to the Summary Compensation Table below.
|
28
|
| |
|
| |
|
|
Metric
|
| |
Weighting
|
| |
Achievement
(% of Target) |
| |
Weighted
Achievement |
|
|
Net Sales
|
| |
40%
|
| |
119%
|
| |
48%
|
|
|
Adjusted EBITDA(1)
|
| |
30%
|
| |
150%
|
| |
45%
|
|
|
Free Cash Flow(2)
|
| |
20%
|
| |
50%
|
| |
10%
|
|
|
Employee Engagement(3)
|
| |
10%
|
| |
80%
|
| |
8%
|
|
|
Total
|
| |
100%
|
| |
|
| |
111%
|
|
(1)
|
For STI plan purposes, adjusted EBITDA excluded certain costs that were unforeseeable at the time this metric was established,
including those related to being a public company, incentive compensation, and 2018 related medical expenses.
|
(2)
|
For STI plan purposes, free cash flow excluded certain costs that were unforeseeable at the time this metric was established,
including those related to strategic inventory build, being a public company, 2018 related medical expenses, and equity compensation related payroll taxes. While these adjustments would have resulted in achievement of 100% of the
performance metric, our Compensation Committee, based on a recommendation from management, approved performance at 50% of target.
|
(3)
|
Employee engagement was determined after consultation with management.
|
|
NEO
|
| |
Base Salary
|
| |
Target %
of Base Salary |
| |
Award at
Target |
| |
Achievement
|
| |
Payout
|
|
|
Sumit Singh
|
| |
$ 1,200,000
|
| |
100%
|
| |
$ 1,200,000
|
| |
111%
|
| |
$ 1,328,676
|
|
|
Mario Marte
|
| |
$595,000
|
| |
100%
|
| |
$595,000
|
| |
111%
|
| |
$ 654,756
|
|
|
Satish Mehta
|
| |
$475,000
|
| |
100%
|
| |
$475,000
|
| |
111%
|
| |
$522,741
|
|
|
Susan Helfrick
|
| |
$450,000
|
| |
100%
|
| |
$450,000
|
| |
111%
|
| |
$ 495,060
|
|
|
| |
|
| |
29
|
|
Share Price Hurdle
|
| |
Portion of Performance RSUs
Vested (the “Achievement Percentage”) |
|
|
$15.27
|
| |
10.0%
|
|
|
$17.81
|
| |
25.0%
|
|
|
$ 20.36
|
| |
40.0%
|
|
|
$ 22.90
|
| |
52.5%
|
|
|
$ 25.45
|
| |
65.0%
|
|
|
$27.99
|
| |
72.5%
|
|
|
$ 30.53
|
| |
80.0%
|
|
|
$ 33.08
|
| |
87.5%
|
|
|
$ 35.62
|
| |
95.0%
|
|
|
$ 38.17
|
| |
100.0%
|
|
30
|
| |
|
| |
|
|
| |
|
| |
31
|
32
|
| |
|
| |
|
|
Name and Principal Position
|
| |
|
| |
Salary ($)(1)
|
| |
Bonus ($)
|
| |
Non-Equity
Incentive Plan Compensation ($) |
| |
Stock
Awards ($)(2) |
| |
All Other
Compensation ($)(3) |
| |
Total ($)
|
|
|
Sumit Singh
Chief Executive Officer |
| |
FY19
|
| |
1,200,000
|
| |
—
|
| |
1,328,676
|
| |
147,285,377
|
| |
37,836
|
| |
149,851,889
|
|
|
FY18
|
| |
1,161,154
|
| |
—
|
| |
—
|
| |
—
|
| |
74,941
|
| |
1,236,095
|
| |||
|
Mario Marte
Chief Financial Officer |
| |
FY19
|
| |
591,346
|
| |
—
|
| |
654,756
|
| |
58,792,260
|
| |
5,927
|
| |
60,044,289
|
|
|
FY18
|
| |
412,692
|
| |
50,000(4)
|
| |
24,674(5)
|
| |
—
|
| |
1,154
|
| |
488,520
|
| |||
|
Satish Mehta
Chief Technology Officer |
| |
FY19
|
| |
472,116
|
| |
—
|
| |
522,741
|
| |
44,094,186
|
| |
5,881
|
| |
45,094,924
|
|
|
FY18
|
| |
246,154
|
| |
—
|
| |
—
|
| |
—
|
| |
2,663
|
| |
248,817
|
| |||
|
Susan Helfrick
General Counsel & Secretary |
| |
FY19
|
| |
447,116
|
| |
—
|
| |
495,060
|
| |
29,396,149
|
| |
5,881
|
| |
30,344,206
|
|
|
FY18
|
| |
372,115
|
| |
58,510(6)
|
| |
—
|
| |
—
|
| |
865
|
| |
431,490
|
|
(1)
|
These amounts reflect the actual salary earned by each NEO during fiscal years 2018 and 2019.
|
(2)
|
These amounts reflect the aggregate grant date fair value of the awards, as computed in accordance with ASC 718.
|
(3)
|
For Mr. Marte, Mr. Mehta, and Ms. Helfrick, these amounts reflect our matching contributions made to the 401(k) retirement savings
plan. For Mr. Singh, these amounts reflect: (a) for fiscal year 2018, our matching contributions made to the 401(k) retirement savings plan and $73,556 of relocation costs grossed up for taxes, and (b) for fiscal year 2019, our matching
contributions made to the 401(k) retirement savings plan, $32,390 for the value of security, including at times a driver, which we believe is necessary and appropriate (this value reflects the aggregate incremental cost to the Company for
a leased automobile and 25% of the cost to the Company for one full-time security employee, which represents the portion of time spent providing security services to the CEO), and approximately $1,200 for Company provided meals.
|
(4)
|
This amount reflects a $50,000 spot bonus paid to Mr. Marte during fiscal year 2018.
|
(5)
|
This amount reflects a $24,674 retention bonus paid to Mr. Marte during fiscal year 2018.
|
(6)
|
This amount reflects a $58,510 retention bonus paid to Ms. Helfrick during fiscal year 2018.
|
|
|
| |
|
| |
Estimated Future Payouts Under Non-
Equity Incentive Plan Awards(1) |
| |
Estimated Future Payouts
Under Equity Incentive Plan Awards(2) |
| |
All Other
Stock Awards: Number of Shares of Stock or Units (#)(3) |
| |
Grant Date
Fair Value of Stock and Option Awards ($)(4) |
| |||||||||
|
Name
|
| |
Grant Date
|
| |
Threshold
($) |
| |
Target
($) |
| |
Maximum
($) |
| |
Threshold
(#) |
| |
Target
(#) |
| ||||||
|
Sumit Singh
|
| |
|
| |
600,000
|
| |
1,200,000
|
| |
1,800,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
74,683
|
| |
2,987,331
|
| |
—
|
| |
110,083,147
|
| |||
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
995,777
|
| |
37,202,229
|
| |||
|
Mario Marte
|
| |
|
| |
297,500
|
| |
595,000
|
| |
892,500
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
35,847
|
| |
1,433,919
|
| |
—
|
| |
52,839,904
|
| |||
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
159,324
|
| |
5,952,345
|
| |||
|
Satish Mehta
|
| |
|
| |
237,500
|
| |
475,000
|
| |
712,500
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
26,885
|
| |
1,075,439
|
| |
—
|
| |
39,629,920
|
| |||
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
119,493
|
| |
4,464,258
|
| |||
|
Susan Helfrick
|
| |
|
| |
225,000
|
| |
450,000
|
| |
675,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
17,924
|
| |
716,960
|
| |
—
|
| |
26,419,969
|
| |||
|
6/18/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
79,662
|
| |
2,976,172
|
|
(1)
|
These amounts reflect the threshold, target, and maximum payouts under our 2019 STI plan. For Mr. Marte, Mr. Mehta, and Ms.
Helfrick, these amounts reflect a percentage of their respective base salaries but effective as of the first day of fiscal year 2019. For amounts actually earned by each of our NEOs pursuant to our STI plan for fiscal year 2019 refer to
the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table above. For additional information regarding these amounts refer to Annual Short-Term Incentive in the Elements of NEO Compensation section.
|
|
| |
|
| |
33
|
(2)
|
These amounts reflect shares of our Class A common stock underlying Performance RSUs that are eligible to vest upon satisfaction of
the Service Condition and Performance Condition as described in Long-Term Equity Incentives in the Elements of NEO Compensation section.
|
(3)
|
These amounts reflect IPO RSUs.
|
(4)
|
These amounts reflect the full grant date fair value of the awards computed in accordance with ASC 718, which for the IPO RSUs, is
calculated based on the closing price of our Class A common stock on the NYSE on the grant date ($37.36). With respect to the Performance RSUs, the amount reflects the full grant date fair value computed in accordance with ASC 718 based
on probable achievement of the performance conditions, which is consistent with the estimate of aggregate compensation to be recognized over the term of the Service Condition, excluding the effect of estimated forfeitures. For information
about assumptions made in the valuation of these awards, refer to Note 8 to our audited consolidated financial statements for the fiscal year ended February 2, 2020, included in our Annual Report on Form 10-K for the fiscal year ended
February 2, 2020.
|
|
|
| |
Equity Incentive Plan Awards
|
| |||
|
Name
|
| |
Number of Unearned Shares,
Units or Other Rights That Have Not Vested (#)(1) |
| |
Market or Payout Value of Unearned
Shares, Units or Other Rights That Have Not Vested ($)(2) |
|
|
Sumit Singh
|
| |
2,987,331
|
| |
79,194,145
|
|
|
Mario Marte
|
| |
1,433,919
|
| |
38,013,193
|
|
|
Satish Mehta
|
| |
1,075,439
|
| |
28,509,888
|
|
|
Susan Helfrick
|
| |
716,960
|
| |
19,006,610
|
|
(1)
|
These amounts reflect Performance RSUs as described in Long-Term Equity Incentives in the Elements of NEO Compensation section
above.
|
(2)
|
These amounts reflect the closing price of our Class A common stock on the NYSE on January 31, 2020 (the last trading day of fiscal
year 2019), which was $26.51.
|
|
Name
|
| |
Number of Shares
Acquired on Vesting (#)(1) |
| |
Value Realized
on Vesting ($)(2) |
|
|
Sumit Singh
|
| |
995,777
|
| |
37,202,229
|
|
|
Mario Marte
|
| |
159,324
|
| |
5,952,345
|
|
|
Satish Mehta
|
| |
119,493
|
| |
4,464,258
|
|
|
Susan Helfrick
|
| |
79,662
|
| |
2,976,172
|
|
(1)
|
These amounts reflect IPO RSUs.
|
(2)
|
These amounts reflect the closing price of our Class A common stock on the NYSE on the vesting date ($37.36).
|
|
Plan Category
|
| |
Number of Securities
to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights |
| |
Weighted-Average
Exercise Price of Outstanding Options, Warrants, and Rights |
| |
Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) |
|
|
|
| |
(a)
|
| |
(b)
|
| |
(c)
|
|
|
Equity Compensation Plans Approved by Security Holders
|
| |
24,061,154(1)
|
| |
N/A(2)
|
| |
7,803,711
|
|
|
Equity Compensation Plans Not Approved by Security Holders
|
| |
N/A
|
| |
N/A
|
| |
N/A
|
|
|
Total
|
| |
24,061,154
|
| |
—
|
| |
7,803,711
|
|
(1)
|
This amount reflects RSUs issued under our Plan.
|
(2)
|
As of February 2, 2020, no options or other exercisable awards were outstanding under the Plan.
|
34
|
| |
|
| |
|
•
|
12 months of base salary payable in equal monthly installments over the 12-month period following termination;
|
•
|
a pro-rated annual bonus for the year of termination based on actual performance and any earned, but unpaid bonus, for the fiscal
year prior to such termination, each payable at the same time annual bonuses are paid to executives generally for the relevant year;
|
•
|
an amount equal to 18 months of premiums for continuation coverage under our group health plans payable within 30 days of
termination;
|
•
|
in the case of Mr. Singh, 100% of target bonus payable in equal monthly installments over the 12-month period following
termination; and
|
•
|
in the case of Mr. Singh, nine months of service credit with respect to any time- or service-based equity incentive awards (or if
greater, service credit for 40% of the awards).
|
•
|
24 months of base salary and 200% of target bonus, both generally payable in a lump sum within 30 days following termination;
|
•
|
a pro-rated annual bonus for the year of termination based on actual performance and any earned, but unpaid, annual bonus for the
year preceding termination, each payable at the same time annual bonuses are paid to executives generally for the relevant year;
|
•
|
an amount equal to 24 months of premiums for continuation coverage under our group health plans payable within 30 days of
termination; and
|
•
|
nine months of service credit with respect to any time- or service-based equity incentive awards (or if greater, service credit
for 40% of the awards).
|
•
|
18 months of base salary and 100% of target bonus, generally payable in a lump sum within 30 days following termination;
|
•
|
an amount equal to 18 months of premiums for continuation coverage under our group health plans payable within 30 days; and
|
•
|
any earned, but unpaid, annual bonus for the year preceding termination.
|
|
| |
|
| |
35
|
|
Name
|
| |
Involuntary
Termination (not for Cause; Good Reason for Mr. Singh) w/ no CIC(1) ($) |
| |
CIC no
Termination(2) ($) |
| |
Involuntary
Termination (not for Cause) in Connection w/ a CIC(3) ($) |
| |
Death or
Disability(4) ($) |
|
|
Sumit Singh
|
| |
|
| |
|
| |
|
| |
|
|
|
Cash Payments
|
| |
2,409,464
|
| |
—
|
| |
4,812,619
|
| |
—
|
|
|
Accelerated Equity Vesting
|
| |
22,966,302
|
| |
57,415,755
|
| |
57,415,755
|
| |
22,966,302
|
|
|
Total
|
| |
25,375,766
|
| |
57,415,755
|
| |
62,228,374
|
| |
22,966,302
|
|
|
Mario Marte
|
| |
|
| |
|
| |
|
| |
|
|
|
Cash Payments
|
| |
622,207
|
| |
—
|
| |
1,514,707
|
| |
—
|
|
|
Accelerated Equity Vesting
|
| |
—
|
| |
27,559,565
|
| |
27,559,565
|
| |
—
|
|
|
Total
|
| |
622,207
|
| |
27,559,565
|
| |
29,074,272
|
| |
—
|
|
|
Satish Mehta
|
| |
|
| |
|
| |
|
| |
|
|
|
Cash Payments
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Accelerated Equity Vesting
|
| |
—
|
| |
20,669,669
|
| |
20,669,669
|
| |
—
|
|
|
Total
|
| |
—
|
| |
20,669,669
|
| |
20,669,669
|
| |
—
|
|
|
Susan Helfrick
|
| |
|
| |
|
| |
|
| |
|
|
|
Cash Payments
|
| |
457,774
|
| |
—
|
| |
1,132,774
|
| |
—
|
|
|
Accelerated Equity Vesting
|
| |
—
|
| |
13,779,792
|
| |
13,779,792
|
| |
—
|
|
|
Total
|
| |
457,774
|
| |
13,779,792
|
| |
14,912,566
|
| |
—
|
|
(1)
|
For Mr. Singh, this amount includes (a) cash payments and (b) partial accelerated vesting of the Service Condition for Performance
RSUs, both as outlined in the Involuntary Termination of Employment Not Involving a Change in Control in the NEO Employment Agreements and Potential Payments Upon Termination or Change in Control section above. For Mr. Marte and Ms.
Helfrick, these amounts include cash payments as outlined in Involuntary Termination of Employment Not Involving a Change in Control in the NEO Employment Agreements and Potential Payments Upon Termination or Change in Control section
above.
|
(2)
|
These amounts reflect accelerated vesting of the Service Condition upon a Change in Control for Mr. Singh, Mr. Marte, and Ms.
Helfrick’s respective Performance RSUs as described in Long-Term Equity Incentives in the Elements of NEO Compensation section above.
|
36
|
| |
|
| |
|
(3)
|
For Mr. Singh, this amount includes (a) cash payments as described in Involuntary Termination of Employment Not Involving a Change
in Control in the NEO Employment Agreements and Potential Payments Upon Termination or Change in Control section above, and (b) accelerated vesting of the Service Condition upon a Change in Control for Performance RSUs as described in
Long-Term Equity Incentives in the Elements of NEO Compensation section above. For Mr. Marte and Ms. Helfrick, these amounts include (a) cash payments as described in Involuntary Termination of Employment Involving a Change in Control in
the NEO Employment Agreements and Potential Payments Upon Termination or Change in Control section above, and (b) accelerated vesting of the Service Condition upon a Change in Control for Performance RSUs as described in Long-Term Equity
Incentives in the Elements of NEO Compensation section above.
|
(4)
|
These amounts reflect partial accelerated vesting of the Service Condition for Mr. Singh’s Performance RSUs as described in Death
or Disability and Restrictive Covenants in the NEO Employment Agreements and Potential Payments Upon Termination or Change in Control section above.
|
|
| |
|
| |
37
|
|
FOR
✔ |
| |
OUR BOARD, UPON RECOMMENDATION OF OUR COMPENSATION COMMITTEE, RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR,” ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT.
|
|
38
|
| |
|
| |
|
|
FOR
✔ |
| |
OUR BOARD, UPON RECOMMENDATION OF OUR COMPENSATION COMMITTEE, RECOMMENDS THAT STOCKHOLDERS VOTE FOR
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION TO BE HELD EVERY “1-YEAR.”
|
|
|
| |
|
| |
39
|
40
|
| |
|
| |
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in
the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;
|
•
|
adjusted EBITDA does not reflect share-based compensation and related taxes. Share-based compensation has been, and will continue
to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy;
|
•
|
adjusted EBITDA does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital;
|
•
|
adjusted EBITDA does not reflect transaction and other costs which are generally incremental costs that result from an actual or
planned transaction and include transaction costs (i.e. IPO costs), integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain
costs related to integrating and converging IT systems; and
|
•
|
other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a
comparative measure.
|
|
| |
|
| |
A-1
|
|
($ in thousands, except percentages)
|
| |
Fiscal Year
|
| |||
|
Reconciliation of Net Loss to Adjusted EBITDA
|
| |
2019
|
| |
2018
|
|
|
Net loss
|
| |
$ (252,370)
|
| |
$(267,890)
|
|
|
Add (deduct):
|
| |
|
| |
|
|
|
Depreciation and amortization
|
| |
30,645
|
| |
23,210
|
|
|
Share-based compensation expense and related taxes
|
| |
136,237
|
| |
14,351
|
|
|
Interest (income) expense, net
|
| |
(356)
|
| |
124
|
|
|
Management fee expense(1)
|
| |
1,300
|
| |
1,300
|
|
|
Transaction related costs
|
| |
1,396
|
| |
—
|
|
|
Other
|
| |
2,123
|
| |
—
|
|
|
Adjusted EBITDA
|
| |
$(81,025)
|
| |
$ (228,905)
|
|
|
Net sales
|
| |
$ 4,846,743
|
| |
$3,532,837
|
|
|
Adjusted EBITDA margin
|
| |
(1.7)%
|
| |
(6.5)%
|
|
(1)
|
Management fee expense allocated to us by PetSmart for organizational oversight and certain limited corporate functions provided by
its sponsors. Although we are not a party to the agreement governing the management fee, this management fee is reflected as an expense in our consolidated financial statements.
|
A-2
|
| |
|
| |
|
|
($ in thousands)
|
| |
Fiscal Year
|
| |||
|
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash
Flow
|
| |
2019
|
| |
2018
|
|
|
Net cash provided by (used in) operating activities
|
| |
$46,581
|
| |
$(13,415)
|
|
|
Deduct:
|
| |
|
| |
|
|
|
Capital expenditures
|
| |
(48,636)
|
| |
(44,160)
|
|
|
Free Cash Flow
|
| |
$ (2,055)
|
| |
$ (57,575)
|
|
|
| |
|
| |
A-3
|