The bulk of the salary package awarded to CEO Jeff Green reflects a stock option grant that vests or becomes exercisable in eight batches if the company’s stock price increases by significantly over the next decade, according to Trade Desk filings.
The $835 million value Trade Desk assigned to Mr. Green’s pay package exceeds those reported so far by the 358 S&P 500 companies that disclosed their CEOs’ compensation in 2021, according to data provided by MyLogIQ. LLC. Trade Desk calculated the figure by modeling the potential outcomes of the arrangement, it said in its filings.
The compensation figure also exceeds the salary reported by top earners at other companies, including private equity firm KKR & Co., talent agency Endeavor Group Holdings Inc. and online gaming platform Roblox. Corp.
“These are performance-based options, which vest at stretch price targets,” a Trade Desk spokesperson said. The board believed that the option grant aligns Mr. Green’s interests with those of other shareholders, he added.
“We have heard from our major investors that they are very supportive of this subsidy as they stand to benefit significantly if these price thresholds are met,” the spokesperson said.
Mr Green holds 49% of the Trade Desk voting rights, according to his proxy statement. It owns 1.1% of Class A shares and 97.7% of Class B shares, which have 10 times the voting power of Class A shares. The company said its Class B shares will be automatically converted into class A shares in December 2025.
“It certainly stands out in terms of the magnitude of the potential dollar amount,” said Ben Silverman, director of research at VerityData, which tracks insider stock trades and assesses unusual stock allocations as potential signals. for investors. its stake in Trade Desk already gives it a strong incentive to improve its stock price, leaving it up to investors to decide how big the option award should be.
Mr. Green can already exercise the first batch of options, on 2.4 million shares, the company said in its annual proxy statement, filed with the Securities and Exchange Commission last week. The company’s stock price averaged at or above the $90 target price for exactly 30 consecutive trading days ending in mid-January – the time required for acquisition, data from the market and Trade Desk securities deposits show this.
If Mr. Green had exercised the options when they were acquired, when Trade Desk shares averaged about $90, he would have received about $34 million in new shares.
Trade Desk shares have remained below $90 since Jan. 3. They closed at $62.03 on Monday, meaning it would cost Mr Green more to exercise the newly acquired options than the underlying shares are worth. Mr. Green can exercise the options until the end of 2031 and he must hold the shares resulting from their exercise for at least one year after acquiring each lot, the company said in its documents.
Mr. Green did not exercise any of the options included in the October grant, according to his filings with the SEC. He spent about $14.1 million to exercise about $52.9 million of other older options, holding the resulting shares either directly or through trusts and a foundation he controls, according to VerityData. and securities deposits.
Share price targets unlocking the remainder of Mr. Green’s October option grant range from $115 per share, about 85% above recent prices, to $340 per share, or more than five times Monday’s close.
If the remaining seven stock price targets are met, the company’s market capitalization would increase by $122.5 billion and Mr. Green would receive options paying $1.8 billion to $5.2 billion in new shares, or 1.5% to 4.3% of market capitalization gain with currently outstanding shares, depending on when he exercised the options. The number of shares Mr. Green may receive with each tranche may increase or decrease by 20% depending on how the Company’s shareholder return compares to that of the Nasdaq-100 Index.
“Even though [Trade Desk] achieved these very ambitious goals, this would be a very low single-digit percentage for a founder and CEO who the board believes is integral to the company’s success to date and its growth program. future growth,” the company spokesperson said.
Mr. Green’s 2021 salary also included $965,000 in salary, a discretionary bonus of $1 million and an annual cash incentive payment of $2.7 million, as well as $1.9 million in expenses. ‘tax paid by the company, indicates the power of attorney statement.
Mr. Green co-founded Trade Desk after selling an early online advertising exchange he also founded to Microsoft Corp. in 2007. Trade Desk said that before receiving the options award, Mr. Green signed the Giving Pledge, a campaign started by Bill Gates. , his then-wife Melinda French Gates and Warren Buffett, who encourages the world’s wealthiest individuals and couples to give more than half of their wealth to philanthropy or charity, during their lifetime or by will. The company said Mr Green had pledged to give away almost all of his fortune during his lifetime.
Trade Desk began trading on the public markets in 2016 at around $1.80 per share, adjusted for splits.
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