UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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| ☒ Definitive Proxy Statement | |
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Cars.com Inc. 300 S. Riverside Plaza, Suite 1000 |
Letter from our Chairman
Dear Fellow Stockholders:
On behalf of the Board of Directors and the senior management team, we are pleased to invite you to join the 2023 Annual Meeting of Stockholders of Cars.com Inc., which will be held virtually on June 7, 2023, beginning at 9:00 a.m. Central Time. You may join at www.virtualshareholdermeeting.com/CARS2023.
Your vote is important. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote online, by telephone or by mail as soon as possible to ensure your vote is recorded promptly.
During the Annual Meeting, you will also have the opportunity to vote on matters set forth in the accompanying Proxy Statement, as well as have the opportunity to ask questions.
On behalf of the Board of Directors, I thank you for your investment and continued support of Cars.com, and I look forward to working with my fellow directors and the management team to drive growth and sustainable long-term value for all our stockholders in 2023 and beyond.
Sincerely,
Scott E. Forbes
Chairman of the Board of Directors
Cars.com Inc. 
2023 Proxy Statement
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Time and Date
Wednesday, June 7, 2023
9:00 a.m. Central Time
Place
Online at
http://www.
virtualshareholdermeeting.
com/CARS2023.
Record Date
April 11, 2023
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Notice of 2023 Annual Meeting of Stockholders
To our stockholders, you are invited to attend the Annual Meeting of Stockholders of Cars.com Inc. (the “Annual Meeting”).
At the Annual Meeting, we will ask you to consider the following proposals as more fully explained in the accompanying Proxy Statement:
| Items of Business | Board Recommendation | |
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Election of eleven directors named in this Proxy Statement (Page 20) | “FOR” |
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Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year 2023 (Page 59) | “FOR” |
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Advisory approval of our Named Executive Officer compensation (Page 62) | “FOR” |
In addition, at the Annual Meeting we will conduct any other business that may properly come before the meeting.
While all stockholders are invited to attend the Annual Meeting, only stockholders of record as of the close of business on April 11, 2023, are entitled to receive notice of, to attend and to vote at the Annual Meeting or any postponements or adjournments of the Annual Meeting. The Annual Meeting will be a completely virtual meeting. All stockholders are cordially invited to attend the Annual Meeting by live webcast. You will not be able to attend the Annual Meeting in person.
WE ENCOURAGE YOU TO READ THE 2023 PROXY STATEMENT CAREFULLY AND TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
2023
Proxy Statement
YOUR VOTE
IS IMPORTANT
Whether or not you
plan to attend the
Annual Meeting,
please vote as soon
as possible. It is
extremely important
that your shares be
represented and
voted at the Annual
Meeting.
If voting in advance of the Annual Meeting, you may do so as follows:
|
Vote by Internet
|
Go to www.proxyvote.com
Follow instructions on the website.
Vote by 11:59 p.m. ET on June 6, 2023 |
|
Vote by Telephone |
Call 1-800-690-6903
Follow the recorded instructions
Vote by 11:59 p.m. ET on June 6, 2023 |
|
Vote by Mail |
If you received a proxy card by mail, mark, sign, date and return the proxy card in the enclosed, postage-paid envelope. |
If you do not vote in advance and instead plan to vote during the Annual Meeting, you may do so by entering the 16-digit control number found on your proxy card, Voting Instruction Form, or Notice, as applicable, at the time you log into the Annual Meeting at www.virtualshareholdermeeting.com/CARS2023.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 7, 2023.
Our Proxy Statement and 2023 Annual Report are available on our Investor Relations website at https://investor.cars.com and at www.proxyvote.com. You may also request paper copies of these proxy materials free of charge by following the instructions for requesting such materials contained in the Notice.
Questions and Answers about the Annual Meeting
By Order of the Board of Directors,
Angelique Strong Marks
Chief Legal Officer and Secretary
April 28, 2023
Chicago, Illinois
Cars.com Inc. 2023 Proxy Statement
Table of Contents
Cars.com Inc. 2023 Proxy Statement
Forward Looking Statements
All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. Important factors that could cause actual results to differ materially from our expectations or estimates reflected in such forward-looking statements are disclosed under “Risk Factors” and “Forward-Looking Statements” in our Annual Report on Form 10-K.
Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.
Corporate Governance
Corporate governance at CARS is designed to promote the long-term interests of our stockholders, strengthen Board and management accountability, provide strategic oversight and risk assessment, and engender public trust.
Key Governance Practices
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10 of 11 of our directors are independent (91%) | |
No Poison Pill |
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Independent Chair of the Board | |
Stock Ownership and Retention Policy for our non-employee directors and executive officers |
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All Board committees are comprised of independent directors and are chaired by independent directors | |
Executive Compensation Clawback Policy |
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Separate Chair and CEO | |
Prohibition on hedging and restrictions on pledging CARS’ common stock |
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All directors elected by stockholders annually | |
One class of common stock, with each share carrying equal voting rights (a “one-share, one-vote” standard) |
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Majority Voting Standard in Director Elections, and directors not receiving majority support must tender their resignation for consideration by the Board | |
Annual Board and committee evaluations |
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An executive session for non-executive directors is included on the agenda of every regular Board meeting and regular committee meeting | |
Annual “Say-on-Pay” Advisory Vote |
Board Leadership Structure
The Board regularly evaluates the leadership structure of CARS and may consider alternative structures, as appropriate, over time. The Board believes that CARS and our stockholders are best served by the Board retaining discretion to determine the appropriate leadership structure. The Board also believes that the current structure, which separates the Chair and CEO roles, is appropriate. In particular, this structure clarifies the individual roles and responsibilities of CEO and Chair, streamlines decision-making, and enhances accountability.
The Chair has robust responsibilities including:
| ● | ensuring that the Board is effectively discharging its responsibility for setting and implementing CARS’ strategic plan; |
| ● | presiding over all Board meetings and executive sessions of non-executive directors; |
| ● | serving as the principal liaison between CARS management and directors, although CARS policy also provides that all directors have direct and complete access to the CEO and other members of senior management at any time as they deem necessary or appropriate, and vice versa; |
| ● | consulting with the CEO and directors regarding Board agenda items; |
Cars.com Inc. 2023 Proxy Statement
| ● | approving the scheduling of Board meetings and approving the agenda and materials for each Board meeting and executive session of our Board’s non-employee directors; |
| ● | calling meetings of the non-executive directors, if desired; |
| ● | leading the Board in its review of the results of the annual self-evaluation process, including acting on director feedback as needed; and |
| ● | communicating with stockholders when appropriate. |
Director Independence
The Board believes that a majority of its members should be independent. The Board, led by the Environmental, Social and Governance Committee (“ESG Committee”), evaluates the independence of its members at least annually, and at other appropriate times when a change in circumstances could potentially impact the independence or effectiveness of one or more directors (such as in connection with a change in employment status or other significant status changes). After carefully considering all relevant relationships, the Environmental, Social and Governance Committee submits its recommendations regarding independence to the Board, which then makes a determination with respect to each director.
The Board has affirmatively determined that all non-executive directors are independent as defined by the NYSE listing standards and the Securities Exchange Act of 1934, as amended. Mr. Vetter, our CEO, is the only employee director and is not independent because of his employment with CARS. The Chair of the Board is independent and all current members of the Audit Committee, Compensation Committee, and ESG Committee are independent.
Board Size
The Board sets the number of directors from time to time by resolution adopted by a majority of the Board. The ESG Committee reassesses the suitability of the Board’s size at least annually. The Board has the flexibility to increase or decrease the size of the Board as circumstances warrant. There are currently 11 members of the Board, comprised of 10 independent, non-executive directors and the CEO.
Board Tenure and Refreshment
We routinely assess the composition of our Board to ensure we have the right combination of attributes, experiences, qualifications, and skills to maximize the Board’s potential. We believe CARS, our employees, and our stockholders benefit from both the continuity of longer-tenured directors and complemented by the fresh perspectives of newer directors. CARS does not currently have a specific term limit or a set retirement age for directors. CARS’ policy regarding director tenure and retirement is determined on a case-by-case basis depending upon various factors, including the age and experience of the director and history of service on the Board. The average tenure of our directors is less than six years as of the date of the Annual Meeting, and our most recent director joined the Board in 2021.
Meeting Attendance
During 2022, our Board held five meetings, the Audit Committee held eight meetings, the Compensation Committee held five meetings and the ESG
Committee held four meetings. Each director attended more than 75% of the total meetings of the Board and committees on which the director served. Nine directors attended the 2022 Annual Meeting of Stockholders.
Executive Sessions
Executive sessions of non-employee directors are held in connection with regularly scheduled Board meetings and at other times as necessary and are chaired by the Chair. Our Board’s practice is to hold executive sessions without the presence of management, including the CEO. Our committees also generally meet in executive session at the end of committee meetings and are chaired by the respective committee chairs.
Cars.com Inc. 2023 Proxy Statement
Director Service on Outside Boards and Other Commitments
While our directors bring a wealth of business and strategic experience from other business affiliations to our Board, each director is expected to ensure that other existing and future commitments, including employment responsibilities and service on other public company boards, does not materially interfere or conflict with service as a director on our Board. The ESG Committee regularly reviews directors’ outside commitments for conflicts of interest and may not consent to a director’s acceptance of an additional directorship as a condition of continued service on our Board. We do not have any directors that serve as executive chair of any public company while serving on more than two external public company boards or any directors who serve on more than five public company boards. We do not believe that any of our directors have been or are overboarded.
Board Oversight Roles
Strategic Oversight
One of the Board’s key responsibilities is overseeing management’s development and execution of CARS’ business strategy. Throughout the year, our CEO and executive officers provide detailed business and strategy updates to the Board. The Board engages with our CEO and executive officers regarding various strategic topics, including business operating strategy and initiatives, capital allocation, the competitive landscape, industry and economic trends, talent and culture (including the benefits of experience that comes from a diverse and inclusive board), environmental, social, and governance matters, and regulatory developments. Additionally, on an annual basis, the Board reviews and approves CARS’ financial plans. While the Board oversees our strategic planning process, management is responsible for day-to-day operations and executing our strategy.
Risk Oversight
Our business faces various risks, including strategic, financial, legal, operational, and accounting risks. Identifying, managing and mitigating our exposure to these risks and effectively overseeing the risk management process is critical to our operational decision-making and annual planning processes. While management is responsible for the day-to-day management and mitigation of risk, our Board, acting directly and through its committees, is responsible for the oversight of our risk management. As part of our overall risk oversight framework, our committees also oversee certain categories of risk associated with their respective areas of responsibility. Each committee regularly reports to the Board on its risk oversight activities and invites all members of the Board to committee meetings for the discussion of risks that the chair of that committee believes will benefit non-committee member directors.
Cars.com Inc. 2023 Proxy Statement
Our committees are charged with specific areas of risk oversight, summarized below.
| Board of Directors | ||||
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Overall identification, management and mitigation of risk, with a focus on strategic risks
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| Audit Committee |
Compensation Committee |
Environmental, Social, and Governance Committee
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Oversees CARS’ financial statements, compliance with legal and regulatory requirements and corporate policies and controls, including controls over financial reporting, information security and cybersecurity, and the independent auditor and internal audit function.
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Oversees CARS’ compensation plans, including employee and director equity grants as well as senior management organization and succession planning.
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Oversees key non-financial regulatory risks; management policies and programs relating to environmental, social, and governance matters, including those related to sustainability and climate change, diversity and inclusion, Board effectiveness and independence, adherence to our corporate governance guidelines; and other corporate governance matters.
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| Management | ||||
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● Responsible for the day-to-day management and mitigation of risk
● Provides reports to the Board, the Audit Committee, and any other appropriate committee regarding key risks and the actions management has taken to monitor, control, and mitigate risks
● Discusses and provides updates on business performance and progress on strategic plan
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To learn more about risks facing CARS, you can review the risks described in Item 1A. Risk Factors in the 2022 Annual Report on Form 10-K. The risks described in Form 10-K are not the only risks facing CARS. Additional risks and uncertainties also may materially adversely affect our business, financial condition or results of operations in future periods.
Cars.com Inc. 2023 Proxy Statement
Cybersecurity and Information Security Risk Oversight
Our Board and the Audit Committee oversee CARS’ management of cybersecurity and information security risk. The Board and the Audit Committee receive presentations and regular reports throughout the year from management on the effectiveness of CARS’ overall cybersecurity program, CARS’ inherent cybersecurity risks, updates on recent cybersecurity threats and incidents, policies and practices, industry trends, regulatory developments, threat environment and vulnerability assessments, and specific and ongoing efforts to prevent, detect, and respond to internal and external cybersecurity threats. We have taken the following steps to address cybersecurity and information security risks:
| ● | Implemented company-wide cybersecurity training, anti-phishing and awareness programs for employees; |
| ● | Conducted periodic audits and targeted risk assessments of our IT security capabilities to proactively identify and strengthen cybersecurity; and |
| ● | purchased cybersecurity insurance policy to provide financial protections. |
Oversight of Environmental, Social and Governance
Board Committees
Our Board has three committees: the Audit Committee, the Compensation Committee, and the ESG Committee. Each Committee Chair meets regularly with management during the year to discuss committee business, develop agendas, and facilitate efficient meetings. Each Committee operates under a written charter, a current copy of which is available on our Investor Relations website at investor.cars.com.
Committee Membership
| Name | Audit Committee | Compensation Committee | ESG Committee |
| Scott Forbes | Chair |  |
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| Jerri DeVard |  |
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| Jill Greenthal | |
Chair | |
| Thomas Hale | |
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| Michael Kelly | |
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| Donald A. McGovern Jr. | Chair | |
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| Greg Revelle | |
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| Jenell Ross | |
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| Bala Subramanian | |
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| Alex Vetter | |||
| Bryan Wiener | |
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Cars.com Inc. 2023 Proxy Statement
Information about our Committees
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The Audit Committee assists our Board in its oversight of CARS’ financial statements, compliance with legal and regulatory requirements and corporate policies and controls, including controls over financial reporting, information security and cybersecurity, and the independent auditor and internal audit function.
The Audit Committee’s responsibilities include:
● Accounting and Financial Reporting: overseeing the financial reporting process, including the integrity of our financial statements and internal controls; ● Independent Auditor: reviewing and evaluating the independent auditor’s qualifications, performance, compensation and independence;
● Internal Audit: overseeing the design, implementation and performance of the CARS’ internal audit function; ● Transactions with Related Persons: reviewing and approving or ratifying related party transactions between CARS or our subsidiaries and related persons; ● Policy Oversight: implementing policies with respect to risk assessment and management, including financial, data privacy and security (including cybersecurity), business continuity, and operational risks; and
● Audit Committee Report: provide annual Audit Committee Report.
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Audit Committee
Committee Members
Donald A. McGovern Jr. Jill Greenthal Thomas Hale Michael Kelly Jenell Ross Bala Subramanian Bryan Wiener
Number of meetings during 2022
8
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Independence Determination
The Board has determined that all members of the Audit Committee satisfy the applicable audit committee independence requirements of the NYSE and the SEC.
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Financial Literacy and Audit Committee Financial Expert
The Board has also determined that all members meet the NYSE’s financial literacy requirements and that each of Don, Jill, Tom, Mike and Bryan qualifies as an “audit committee financial expert” as defined by applicable SEC rules.
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Audit Committee Highlights
| ● | Audit Committee Chair. The Chair of the Audit Committee is a Certified Public Accountant (“CPA”) with knowledge and experience in auditing financial matters. |
Cars.com Inc. 2023 Proxy Statement
| ● | Enterprise Risk Management. The Audit Committee in its risk management function continued its oversight of the enterprise risk management, which is delegated to the legal and information security functions of CARS. Management provides the Audit Committee with periodic updates as part of regularly held Committee meetings with the Audit Committee providing guidance and support. |
| ● | Cybersecurity. The Audit Committee regularly reviewed notable security events, information security and data privacy projects, and phishing simulation campaigns results. |
| ● | Audit Committee Charter Update. The Audit Committee updated its charter to align with corporate governance best practices. |
| ● | Investment Policy and Treasury Risk Management Policy. The Audit Committee reviewed the CARS Investment Policy and Treasury Risk Management Policy to ensure compliance with best practice. |
| ● | Policy on Hiring of Employees or Former Employees of Independent Auditor. The Audit Committee has clear guidelines when CARS considers hiring employees, former employees or close family members of employees of our independent auditor. |
| ● | Internal Audit Charter. The Audit Committee updated CARS Internal Audit Charter to further align with best practices for public companies. |
Whistleblower Hotline
| ● | The Board has established a hotline for employees, customers, suppliers, stockholders and other interested parties to submit confidential and anonymous reports regarding any actual or suspected violation of CARS policies or applicable laws and regulations. Any employee, stockholder, or other interested party may call the hotline and submit a report 24 hours a day, seven days a week. Information on our hotline is available in our Ethics Reporting Guidelines, which are available on our website at investor.cars.com under Governance, our Code of Conduct, our Employee Handbook, our annual employee training and our employee intranet. The Audit Committee regularly receives updates on Whistleblower Hotline activity during regularly held Committee meetings. |
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The Compensation Committee assists the Board in discharging its responsibilities relating to the CARS’ compensation philosophy and the compensation of CARS’ directors, executive officers, and senior officers and has overall responsibility for oversight of CARS’ compensation plans, policies, and programs.
The Compensation Committee’s duties and responsibilities include:
● Director Compensation: periodically reviewing and recommending to the Board the appropriate level and manner of compensation for directors, including equity-based compensation;
● CEO Compensation: annually reviewing and approving corporate goals and objectives relevant to CEO compensation, evaluating the CEO’s performance considering those goals and objectives and determining and approving the CEO’s compensation level based on this evaluation;
● Senior Officer Compensation: periodically reviewing and approving the annual base salaries, short term incentive, long-term incentive, equity awards and other forms of compensation for senior officers;
● Compensation Plans: reviewing and approving all equity-based compensation plans of the Company and administering our Omnibus Incentive Compensation Plan and in that role is responsible for approving equity grants to employees;
● Compensation Risk Management: reviewing and overseeing the risk assessment of the CARS’ compensation programs and advising the Audit Committee of financial risks related matters arising from, or relating to, CARS’ compensation programs, and reporting the same to the Board;
● Organization and Succession Planning: together with the ESG Committee, annually reviewing CARS’ Organization and Succession Plan for our CEO and senior officers; and
● Compensation Committee Report: providing the annual Compensation Committee Report.
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Compensation
Committee Members
Scott Forbes (Chair) Jerri DeVard Michael Kelly Donald A. McGovern, Jr. Greg Revelle Bala Subramanian
Number of meetings during 2022
5
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Independence Determination
The Board has determined that all members of the Compensation Committee satisfy the applicable compensation committee independence requirements of the NYSE and the SEC.
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Compensation Committee Interlocks and Insider Participation
No Compensation Committee member has ever been an officer or employee of CARS. No executive officer of CARS currently serves, or during the past year has served, as a member of the board of directors of any other entity that has one or more executive officers serving on our Board or Compensation Committee.
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Cars.com Inc. 2023 Proxy Statement
Compensation Committee Highlights
| ● | New Independent Compensation Consultant. In 2022, the Compensation Committee initiated a competitive process and a request for proposal for independent compensation consultant support. After rigorous review and diligence, the Compensation Committee retained Korn Ferry as its independent compensation consultant. |
| ● | 2022 Advisory Vote on Executive Compensation (Say on Pay). CARS has continued to actively engage with its stockholders, and in 2022, CARS received 91.2% of stockholder approval, based on the total votes cast. |
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Environmental, Social and Governance Committee
Committee Members
Jill Greenthal (Chair) Jerri DeVard Scott Forbes Thomas Hale Greg Revelle Jenell Ross Bryan Wiener
Number of meetings during 2022
4 |
The ESG Committee assists our Board in overseeing environmental, social, and governance matters, including those related to sustainability and climate change, that are relevant to CARS’ business, and devoting appropriate attention and effective response to stockholder concerns regarding such matters.
The ESG Committee’s duties and responsibilities include:
Environmental
● overseeing progress and advising the Board on CARS’ environmental and climate-related goals and initiatives and CARS’ position in independent rating systems;
● maintaining oversight of communications on environmental sustainability matters, including climate-related risks and opportunities, and working with management to collect feedback on stockholder concerns related to environmental sustainability;
Social
● reviewing and discussing with management the human capital management matters relevant to CARS’ employees, including creating an equitable and fair work environment, workplace health and safety, diversity and inclusion, employee engagement, and policies promoting such outcomes;
● reviewing and providing guidance on CARS’ public policy advocacy efforts to ensure alignment with company policies and values;
● overseeing and reviewing CARS’ policies on community involvement and corporate charitable activities;
Governance
● overseeing CARS’ corporate governance policies and practices;
● assisting the Board by identifying individuals qualified to become directors consistent with criteria approved by the Board;
● recommending Board committee appointments and chairs; and
● leading the Board in its annual review of the performance of management and of the Board itself and its committees.
Organization and Succession Planning: the ESG Committee, together with the Compensation Committee annually reviews CARS’ Organization and Succession Plan
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Independence Determination
The Board has determined that all members of the ESG Committee are independent under NYSE requirements.
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Cars.com Inc. 2023 Proxy Statement
Environmental, Social and Governance Highlights
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● Scope 1 and Scope 2 Emissions Assessment. CARS completed a scope 1 and 2 greenhouse gas emissions inventory for 2019 through 2021 to understand our carbon footprint and identify areas to incrementally reduce emissions. We noted a 19% decrease in emissions from 2020 to 2021, due to our hybrid work environment and decreased in-office energy consumption. We are continuing to collect data for subsequent years and will report GHG emissions for 2022 once they become available. CARS updated its Environmental and Climate Change Policy to include annual GHG emissions reporting. Our baseline emissions for 2019 through 2021 are as follows:
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| GHG Emissions (Metric tons CO2e) | |||||
| 2019 | 2020 | 2021 | |||
| Scope 1 | 119.06 | 127.40 | 102.05 | ||
| Scope 2 | 939.57 | 691.02 | 564.63 | ||
Environmental |
● Climate Risk Assessment. CARS conducted a climate risk assessment to better understand the types of climate-related risks that are most salient for our business. This assessment reviewed CARS’ exposure to these risks as well as the systems in place to mitigate these risks. Overall, it was determined that CARS has a low risk of significant business impacts related to climate change.
● Increased Electric Vehicle Editorial Content. CARS drove education and awareness of electric vehicles through increased editorial content on our Cars.com website, resulting in over six million visits to the Cars.com website.
● CARS Carbon Cashback. CARS launched a campaign that awards a $1,500 grant to CARS employees who purchased an all-electric vehicle from any of CARS’ dealer customers between January 1, 2022 – December 31, 2022.
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Cars.com Inc. 2023 Proxy Statement
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Social
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● Training and Development Opportunities. Our training opportunities and leadership development programs combined with our annual performance reviews and employee feedback processes enable our teams to grow and evolve to meet the needs of our company and our industry. We partner with several educational institutions to provide internships and training programs for staff and offer tuition reimbursements for degree programs and certifications.
● Expanded Employee Health and Wellness Benefits and Training. CARS expanded mental health programming to recognize Mental Health Awareness Month in May 2022 with new resources, events and activities for employees. ● CARS Votes. We launched the CARS Votes initiative, which empowers our employees and communities to make their voices heard on election day. The initiative includes voting registration, voting resources and up to eight hours of paid time off to participate in local and federal elections. ● CARS Giving. CARS has donated over $1,000,000 to local and industry organizations since 2020, including the National Association of Minority Automobile Dealers (NAMAD), Women in Automotive and Girls Who Code. ● Local Community Support. We launched the CARS Volunteer Challenge to 100 with the goal of serving 100 local communities and encouraging employees to use their eight volunteer hours, resulting in 132 local communities impacted.
● Occupational (Workplace) Health and Safety Policy. We updated our Labor and Human Rights Policy to indicate monitoring of OH&S performance data.
● Labor Rights and Human Rights Policy. We updated our Labor and Human Rights Policy to indicate consideration of environmental, human and labor rights issues when selecting new suppliers and to identify water as a fundamental right.
● Employee Resource Groups (ERGs). ERGs are voluntary, employee-led groups that are open to all employees that allow for the open sharing of ideas and cultural awareness, opportunities to network internally, provide ideas and solutions, and create opportunities for mentoring and career development. ● Diversity Equity and Inclusion Included as a Component of Executive Compensation. CARS continues to consider diversity, equity and inclusion as a critical component of executive incentive compensation.
● Annual Diversity Equity and Inclusion (“DEI”) Forum. CARS held its annual company-wide DEI forum to review our progress against DEI goals.
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Cars.com Inc. 2023 Proxy Statement
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Governance
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● Charter Updates. The ESG Committee led a review of all committee charters and updated the ESG charter to further reflect the committee’s responsibilities for environmental, social, and governance matters.
● Stock Ownership and Retention Policy. We revised our Stock Ownership and Retention Policy to align with best practices.
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Building a Diverse and Inclusive Workforce
Corporate Governance Documents
Code of Conduct
Our credibility and reputation depend upon the good judgment, ethical behavior and personal integrity of each director, executive officer and employee. Unethical or illegal business conduct destroys trust, exposes us to legal liability and significant financial loss, and damages the very reputation for excellence we have worked hard to build. The Code of Conduct embodies our expectations on several topics including conflicts of interest, fair dealing, compliance with laws, rules, and regulations, protection of company assets, and protection of confidential information. Employees are expected to report any conduct that they believe in good faith to be an actual or apparent violation of our Code of Conduct.
We regularly review our Code of Conduct and related policies to ensure that they provide clear guidance. Additionally, to foster a strong culture of compliance and ethics, we conduct annual compliance training for all employees, which covers areas such as our Code of Conduct, insider trading, anti-harassment, employment discrimination and cybersecurity. Upon joining CARS and annually thereafter, our employees must complete the required compliance training.
Cars.com Inc. 2023 Proxy Statement
Governance Guidelines of the Board of Directors
The Board has adopted Corporate Governance Guidelines to serve as a framework to aid the Board in effectively conducting its business. The Corporate Governance Guidelines cover many of the policies and practices discussed in this Proxy Statement. The ESG Committee reviews the Corporate Governance Guidelines annually and recommends changes to the Board for consideration and approval as necessary or appropriate in response to changing regulatory requirements, evolving best practices and other considerations.
Insider Trading Policy
Our Insider Trading Policy prohibits all CARS directors, executive officers and employees from trading in CARS securities while in possession of material, non-public information about CARS, and from trading any CARS derivatives (e.g., put or call options), engaging in short sales or otherwise engaging in hedging activities, and pledging of CARS securities.
Where to Find Governance Documents
CARS is committed to strong corporate governance, and we believe that it is essential to creating long-term stockholder value. Aligned with that belief, our Board has adopted company-wide corporate governance policies and works with management to review and revise as appropriate on a periodic basis to ensure that the policies reflect our corporate governance objectives and best practices. Please visit the Governance section of our website at https://investor.cars.com/ to learn more about our corporate governance practices and to access the following material:
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Director and Management Biographies
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Code of Conduct
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Environmental Compliance and Climate Change Policy
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Certificate of Incorporation
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Insider Trading Policy
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Labor Rights and Human Rights Policy
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Bylaws
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Corporate Governance Guidelines
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Supplier Code of Conduct
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Committee Charters
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Clawback Policy
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Ethics Reporting Guidelines
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Cars.com Inc. 2023 Proxy Statement
Proposal One:
Election of Directors
The Board, acting upon the recommendation of the ESG Committee, has nominated the following 11 directors for reelection to the Board.
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● Scott Forbes ● Jerri DeVard ● Jill Greenthal ● Thomas Hale ● Michael Kelly ● Donald A. McGovern Jr.
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● Greg Revelle ● Jenell Ross ● Bala Subramanian ● Alex Vetter ● Bryan Wiener |
Each of the director nominees currently serves on the Board and was elected by the stockholders at the 2022 Annual Meeting. Our directors are elected annually by a majority of votes cast to enhance their accountability to stockholders. If elected, each director will hold office until the 2024 Annual Meeting and until his or her successor is elected and qualified. We have no reason to believe that any of the director nominees will be unable or unwilling to serve if elected. If any nominee should become unavailable for election, our Board may designate a substitute nominee, in which event the shares represented by proxies at the Annual Meeting will be voted for such substitute nominee unless an instruction to the contrary is indicated on the proxy card.
The Board believes that the combination of the qualifications and experiences of the director nominees will contribute to an effective and well-functioning board and that the director nominees possess the relevant skills and capacity to provide effective oversight of the business and counsel to management to advance our long-term strategy and oversee the interests of our stockholders.
Further information on the Board’s composition, as well as each nominee’s qualifications and relevant experience, are provided on the following pages.
| VOTE |  |
The Board, upon recommendation of the ESG Committee, unanimously recommends that stockholders vote FOR the election of each of the nominees for director.
Cars.com Inc. 2023 Proxy Statement
Director Nomination Process
Our Board believes that an appropriate balance of skills, attributes and experience is important for an effective board of directors. The ESG Committee is responsible for establishing director qualification criteria and identifying the key competencies, skills and desired areas of expertise for the Board. When evaluating potential directors for nomination to the Board, the ESG Committee considers, among other factors, the candidate’s: (i) demonstrated ability, as evidenced by significant accomplishment in the candidate’s field, to contribute meaningfully to the Board’s oversight of CARS’ business and affairs; (ii) reputation for honesty and ethical conduct in the candidate’s personal and professional activities; (iii) specific experience and skills, industry background and knowledge relevant to CARS’ strategic needs; and (iv) diversity of experience and perspectives, including diversity with respect to race, gender, sexual orientation, ethnicity, background and areas of expertise.
The ESG Committee believes that a board composed of diverse backgrounds and experiences will enhance the quality of the Board’s discussions and decision-making process and expand the Board’s understanding of the needs and viewpoints of our customers, partners, employees and other stakeholders. The ESG Committee regularly reviews and evaluates the Board’s composition to determine whether the Board requires skills or experience not currently represented on the Board. If, as part of its ongoing review and evaluation, the ESG Committee or the Board determines that it requires any additional directors, CARS’ bylaws permit the Board to expand the size of the Board and appoint persons to fill any resulting vacancies without the need for stockholder action. The ESG Committee will consider candidates for our Board recommended by our stockholders for election at the Annual Meeting. Nominations of candidates for our Board by our stockholders for consideration at the Annual Meeting are subject to the deadlines and other requirements described under the Questions and Answers about the Annual Meeting section.
Board Composition and Experience
Board Diversity and Tenure
Our Board recognizes the value of diverse opinions, perspectives, personal and professional experiences, and backgrounds, including gender, race, ethnicity, and country of origin. We believe the judgment and perspectives offered by a diverse board of directors improves the quality of decision-making and enhances CARS’ business performance. CARS is committed to having a Board and a workforce that reflects the world in which it operates, its stockholders and its customers. Currently, our Board is composed of 73% men and 27% women. Our Board is also 73% White (8), 18% African American (2), and 9% Asian (1). 55% of our Board is under the age of 60, 36% between the ages of 60 and 70, and 9% is over 70 years old.
Cars.com Inc. 2023 Proxy Statement
Skills Matrix
The Board believes that the combination of backgrounds, skills, and experiences has produced a Board that is well-equipped to exercise oversight responsibilities on behalf of CARS’ stockholders. The following tables highlight the key skills, qualifications, experiences, and diversity attributes that each director nominee brings to our Board. The skills matrix is a summary, and it is not intended to be a complete description of all the key skills, qualifications, attributes, and experience of each director. Nominees developed competencies in these skills through education, direct experience, and oversight responsibilities.
| Forbes | DeVard | Greenthal | Hale | Kelly | McGovern | Revelle | Ross | Subramanian | Vetter | Wiener | |
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Board Evaluations
The Board recognizes that a robust and constructive evaluation process is an essential part of good corporate governance and board effectiveness. As such, the Board conducts an annual evaluation process intended to determine whether the Board, each of its committees, and individual directors are functioning effectively, and to provide the Board with an opportunity to reflect upon and improve processes and effectiveness. Our annual evaluation process is led by the Chair of the Board and the ESG Committee. This evaluation is intended to elicit the views of all directors about Board effectiveness, areas of improvement, collaboration with management, current business strategy and whether steps should be taken to improve the performance of the Board and its committees. The evaluation has taken a variety of forms including written surveys and interviews conducted by the Chair of the Board. The results are then reported to the full Board, which considers the results and ways in which Board processes and effectiveness may be enhanced.
Cars.com Inc. 2023 Proxy Statement
2023 Director Nominees
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Scott Forbes
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Age 65
Director since 2017
Independent
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COMMITTEES:
● Chair, Compensation
● ESG
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Background
Scott has over 40 years of experience in operations, finance and mergers and acquisitions, business strategy, business integration, and building online marketplace brands. His experience includes several senior leadership positions during his 15 years at Cendant Corporation, which was formerly a leading provider of travel and real estate services and its predecessor HFS Inc, operating in more than 100 countries. He then served from 2005 to 2019 as Executive Chairman and subsequently Non-Executive Chairman of Rightmove plc, the UK’s largest online real estate portal and property website. Scott has had significant board experience with companies in the online marketing, real estate, travel and digital commerce industries. He currently serves as Chairman of Ascential plc, a global specialist eCommerce business and is Senior Independent Director of Auction Technology Group plc, a proprietary platform for curated online auctions. Scott holds a B.S. from Rutgers University.
Other Public Company Board Experience:
| Current | Within past five years |
| Ascential plc (2016 – Present) | Rightmove plc (2005 – 2019) |
| Auction Technology Group plc (2021 – Present) | Travelport Limited (2016 -2019) |
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Jerri DeVard
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Age 64
Director since 2017
Independent
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COMMITTEES:
● Compensation
● ESG
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Background
Jerri has more than 30 years of extensive marketing, e-Commerce, brand management and leadership experience at large global brands with in-depth knowledge of strategic, operational and financial aspects of integrated and online marketing along with expertise in brand management, customer engagement and e-Commerce. Jerri is the former Executive Vice President and Chief Customer Officer of Office Depot, Inc., an office supply retailing company, a role she held from 2018 to 2020. Prior to joining Office Depot in 2017 as Chief Marketing Officer, she served as Senior Vice President and Chief Marketing Officer at The ADT Corporation from 2014 to 2016 and Executive Vice President and Chief Marketing Officer at Nokia Corporation. Jerri has held senior marketing roles at Verizon Communications Inc., Citibank N.A., Revlon Inc., Harrah’s Entertainment, the NFL’s Minnesota Vikings and The Pillsbury Company. Jerri was also principal at DeVard Marketing Group, a firm specializing in digital and multicultural branding and marketing strategies. She is also the founder of the Black Executive CMO Alliance (“BECA”), an alliance designed to champion corporate diversity and build the next generation of C-suite marketing executives. Jerri holds an M.B.A. from Atlanta University Graduate School of Business and B.A. from Spelman College.
Other Public Company Board Experience:
| Current | Within past five years |
| Dow Inc. (2022 – Present) | The ServiceMaster Company, LLC (2016 – 2018) |
| Root, Inc. (2020 – Present) | |
| Under Armour, Inc. (2017 – Present) |
Cars.com Inc. 2023 Proxy Statement
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Jill Greenthal
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Age 66
Director since 2017
Independent
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COMMITTEES:
● ESG, Chair
● Audit
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Background
Jill has more than 30 years of financial and investment banking experience in M&A, corporate finance and highly structured transactions. Jill served as a Senior Advisor in Private Equity at the Blackstone Group from 2007 until her retirement in 2022. Prior to 2007, she served as a Senior Managing Director in Blackstone’s Advisory Business group. She also held leadership positions at Credit Suisse First Boston, Donaldson, Lufkin & Jenrette, and Lehman Brothers. Jill holds an M.B.A. from Harvard Business School and B.A. from Simmons University.
Other Public Company Board Experience:
| Current | Within past five years |
| TaskUS, Inc. (2022 – Present) | Akamai Technologies, Inc. (2007 – 2022) |
| Houghton Mifflin Harcourt (2012 – 2022) | |
| Flex, Ltd. (2018 – 2020) | |
| TEGNA Inc. (2015 – 2017) |
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Thomas Hale
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Age 54
Director since 2017
Independent
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COMMITTEES:
● Audit
● ESG
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Background
Tom has extensive expertise with web marketplaces, subscription businesses, and product and technology operations, as well as financial expertise and significant management, leadership and operational experience gained through his leadership positions at multiple successful online companies. Tom is the Chief Executive Officer of ŌURA Health Oy, a health technology company, known for the Oura Ring, a smart ring used to track sleep and physical activity. Prior to joining ŌURA, Tom served as President of Momentive, an agile experience management company, and the makers of GetFeedback and SurveyMonkey from 2016 to 2022 and as Chief Operating Officer of HomeAway, an internet marketplace for vacation rentals from 2010 to 2015. Tom holds a B.A. from Harvard University.
Other Public Company Board Experience:
| Current | Within past five years |
| N/A | Intralinks Holdings, Inc. (2008 – 2017) |
Cars.com Inc. 2023 Proxy Statement
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Michael Kelly
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Age 65
Director since 2018
Independent
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COMMITTEES:
● Audit
● Compensation
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Background
Mike brings experience in digital transformation, delivering quality content to consumers across various platforms and investment advising. He is the Co-Founder of Kelly Newman Advisors, an advisory and investment firm, and has served as its Chief Executive Officer since its formation in September 2016. Mike previously served as President and Chief Executive Officer of The Weather Channel Companies and served as the President of AOL Media Networks, a division of Time Warner, Inc. Mike holds a B.A. from the University of Illinois at Urbana-Champaign.
Other Public Company Board Experience:
| Current | Within past five years |
| N/A | Bankrate Inc. (2012 – 2017) |
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Donald A. McGovern Jr.
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Age 72
Director since 2017
Independent
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COMMITTEES:
● Audit, Chair
● Compensation
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Background
Don brings wide-ranging operational, financial, accounting, audit, restructuring, divestiture and mergers and acquisitions experience gained through more than 45 years of financial and accounting experience. In June 2013, Don retired from PricewaterhouseCoopers following a 39-year career with the firm. Don is a member of the American Institute of Certified Public Accountants and is currently licensed in California, Illinois and New York. Don holds an M.B.A. from DePaul University and B.A. from Marquette University.
Other Public Company Board Experience:
| Current | Within past five years |
| 180 Life Sciences (2020 – Present) | CRH, plc (2013 – 2019) |
Cars.com Inc. 2023 Proxy Statement
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Greg Revelle
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Age 45
Director since 2017
Independent
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COMMITTEES:
● ESG
● Compensation
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Background
Greg brings senior leadership expertise in digital transformation, brand positioning, media, customer strategy and traffic generation, as well as sophisticated analytics capabilities and automotive marketing experience gained across industries. Greg currently serves as the Chief Commercial Officer at Cap Hill Brands. Prior to joining Cap Hill Brands, Greg was the Chief Marketing Officer for Kohl’s, responsible for the marketing organization and overall marketing strategy, including the company’s focus on driving customer engagement through analytics, enhancing the loyalty platform, accelerating customer traffic and continuing to build Kohl’s overall brand position. Prior to joining Kohl’s, Greg was the Chief Marketing Officer at Best Buy and has also served as Chief Marketing Officer at AutoNation; Vice President of worldwide online marketing at Expedia; and as an investment banker at Credit Suisse. Greg holds an M.B.A from Harvard Business School and B.A. from Princeton University.
Other Public Company Board Experience:
| Current | Within past five years |
| N/A | N/A |
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Jenell R. Ross
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Age 53
Director since 2021
Independent
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COMMITTEES:
● Audit
● ESG
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Background
Jenell brings valuable insights to the Board through her years of leadership in the automotive industry and the many public, civic and charity boards on which she is involved. Jenell is the President of the Bob Ross Auto Group in Centerville, Ohio, a position she has held since 2010. The company’s Mercedes-Benz dealership is the first African American-owned Mercedes dealership in the world, and Ms. Ross is the sole second-generation African American woman automobile dealer in the country. Her real-world experience as a successful dealer and owner-operator further enhances the perspectives of our Board. Jenell holds a B.A. from Emory University and completed the General Motors Dealer Management Development Program and National Automobile Dealers Association Dealer Candidate Academy.
Other Public Company Board Experience:
| Current | Within past five years |
| Hub Group, Inc. (2020 – Present) | N/A |
Cars.com Inc. 2023 Proxy Statement
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Bala Subramanian
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Age 51
Director since 2018
Independent
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COMMITTEES:
● Audit
● Compensation
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Background
Bala brings more than 16 years of leadership and management experience in digital transformations and building out best-in-class consumer experiences in competitive environments. Bala serves as Executive Vice President (EVP) and Chief Digital and Technology Officer at UPS. As a member of the Executive Leadership Team, he is responsible for leading the company’s digital transformation to enhance customer and employee experiences, build digital fluency and improve organizational agility. Prior to joining UPS, Bala served as Chief Digital Officer at AT&T where he led the transformation of customer and employee experiences across all company touchpoints. Before then, he was Chief Digital Officer at Best Buy, part of the senior leadership team involved in the company’s digital transformation. Earlier in his career, Bala served in technology leadership roles at T-Mobile U.S.A. Inc. and Ericsson. Bala holds his M.B.A. from the Fuqua School of Business at Duke University, a M.S. from the University of Oklahoma, and a B.A. from the University of Madras.
Other Public Company Board Experience:
| Current | Within past five years |
| N/A |
Ahold Delhaize (2021 – 2023) |
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Alex Vetter
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Age 52
Director since 2017
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Background
Alex serves as the CEO of Cars.com Inc. Alex is one of the founding members of Cars.com, and since becoming CEO in 2014, has taken CARS public and transformed the business model from an online listings and content provider to a technology platform powering innovative solutions and frictionless omni-channel experiences for the automotive industry. Prior to serving as CEO, Alex served in several senior management roles for Cars.com spanning multiple functional areas. From 2006 until 2014, he served as Senior Vice President and Chief Operating Officer. Prior to Cars.com, Alex served as Manager of Business Development of Classified Ventures from 1997 to 1998, and as Business Development Manager of Tribune Interactive/Tribune Media Services from 1996 to 1997. Alex holds a B.A. from Providence College.
Other Public Company Board Experience:
| Current | Within past five years |
| N/A | N/A |
Cars.com Inc. 2023 Proxy Statement
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Bryan Wiener
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Age 52
Director since 2018
Independent
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COMMITTEES:
● Audit
● ESG
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Background
Bryan is an entrepreneur and 25-year advertising industry veteran who is experienced in successfully transforming and growing companies in highly disruptive environments. He is currently the CEO of Profitero, Inc. a leading global enterprise eCommerce SaaS analytics platform, where he has served since 2020. He was CEO of Comscore, Inc., a global leader in cross-platform audience and advertising measurement from 2018 to 2019 and served as a member of the board of directors from 2017 to 2019. Prior to joining Comscore Inc., Bryan co-founded and was co-CEO of Innovation Interactive, the parent company of award-winning digital agency 360i and search marketing SaaS provider, Ignition One. Bryan also previously served as the Chairman of Expion, a social content and analytics software SaaS company from 2014 until the company was acquired in 2015. He also previously held a series of senior management positions at public companies, including serving as president of Net2Phone Global Services, LLC, a subsidiary of Net2Phone, Inc., an early VoIP software company. Prior to Net2Phone, Bryan served as general manager at theGlobe.com, one of the first-ever social media companies. Bryan holds an M.B.A from the Stern School of Business at New York University and a B.A. from Syracuse University.
Other Public Company Board Experience:
| Current | Within past five years |
| N/A | Comscore, Inc. (2017 – 2019) |
Compensation of Non-Executive Directors
CARS’ philosophy regarding director compensation is to align the interests of non-employee directors with the interests of our stockholders and to provide market competitive compensation commensurate with the work required to serve on CARS’ Board. Under the CARS’ Non-Executive Director Compensation Program, each of our non-executive directors receives the following:
| ● | an annual cash retainer of $75,000, payable quarterly, plus an additional $1,000 per meeting if the number of meetings of any one committee exceeds eight meetings per year; | |
| ● | an annual equity award in the form of restricted stock units (“RSUs”) with a grant date value equal to $180,000, which will vest on the terms described in the table below and be eligible for dividend equivalents that would be deemed to be reinvested in shares of our common stock; and | |
| ● | an additional annual cash retainer of $20,000, payable quarterly, to committee chairs and an additional annual equity award to the independent Chair of the Board in the form of RSUs with a grant date value equal to $75,000, which will vest on the terms described below and be eligible for dividend equivalents. | |
Non-executive directors have the option to defer receipt of their equity awards after their vesting date.
Stock Ownership and Retention Policy
Our non-executive directors are subject to minimum share ownership and stock retention requirements. Under our Stock Ownership and Retention Policy, non-executive directors are expected to hold shares of our common stock with a value of three times the annual cash retainer (currently $225,000). Our non-executive directors are expected to hold at least 50% of the shares received from CARS as compensation until the stock ownership requirements are met. All current non-executive directors are in compliance with these guidelines as of the date of this Proxy Statement.
Cars.com Inc. 2023 Proxy Statement
2022 Director Compensation Table
The following table shows the compensation paid to our non-executive directors for their service on the Board during the fiscal year ending on December 31, 2022. Alex Vetter, our CEO, did not receive additional compensation for his service on the Board. Information on compensation paid to Mr. Vetter in his role as CEO during the fiscal year ending December 31, 2022, is described in the Compensation Discussion and Analysis section and the Summary Compensation Tables of this Proxy Statement.
| Name | Fees Earned or Paid in Cash ($)(1) |
Stock Awards ($) (2) |
Total ($) |
| Scott Forbes (3) | 95,000 | 255,005 | 350,005 |
| Jerri DeVard (3) | 75,000 | 180,010 | 255,010 |
| Jill Greenthal (4) | 95,000 | 180,010 | 275,010 |
| Tom Hale (4) | 75,000 | 180,010 | 255,010 |
| Mike Kelly (3) | 75,000 | 180,010 | 255,010 |
| Don McGovern | 95,000 | 180,010 | 275,010 |
| Greg Revelle (3) | 75,000 | 180,010 | 255,010 |
| Jenell Ross (4) | 75,000 | 180,010 | 255,010 |
| Bala Subramanian (4) | 75,000 | 180,010 | 255,010 |
| Bryan Wiener (3) | 75,000 | 180,010 | 255,010 |
| (1) | Reflects annual cash retainer of $75,000 and an additional annual cash retainer of $20,000, for service as a committee chair, if applicable, all paid quarterly. |
| (2) | On June 8, 2022, an annual equity award in the form of 17,342 RSUs was granted to each non-executive director based on a grant date value equal to $180,000. Scott received an additional annual equity award of 7,225 RSUs based on a grant date value equal to $75,000 for serving as the independent chair. Each of these RSUs will vest on the earlier of June 8, 2023 or the day preceding the 2023 Annual Meeting of Stockholders, and these awards were the only unvested awards held by the non-executive directors as of December 31, 2022. |
| (3) | Each of Scott, Jerri, Bryan, Greg and Mike has elected to defer delivery of the underlying shares of stock once his/her RSUs vest until separation from service on the Board. |
| (4) | Each of Jill, Jenell, Bala and Tom has elected to defer delivery of the underlying shares of stock once the RSUs vest until the earlier of the third anniversary of the grant date or separation from service on the Board. |
Cars.com Inc. 2023 Proxy Statement
Compensation Discussion and Analysis
Executive Summary
This Compensation Discussion and Analysis (“CD&A”) describes our compensation program, philosophy, decisions and the process for the compensation of our Named Executive Officers (“NEOs”) for fiscal 2022 (January 1, 2022 to December 31, 2022). Additionally, we outline our rationale for the compensation framework for fiscal 2022. We are committed to maintaining a close alignment of our executive pay programs with CARS’ and our stockholders’ interests, which includes establishing a compensation structure that will allow us to fairly reward, attract and retain key talent.
Executive Officers
Information on Alex Vetter, who is also a member of our Board, can be found above in the “2023 Director Nominee” section.
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Sonia Jain Chief Financial Officer Age 43 |
Background
Sonia serves as CARS’ Chief Financial Officer and in this role, she is responsible for CARS’ financial health and leads accounting, finance and analytics, treasury, investor relations and strategic planning. Sonia joined CARS as Chief
Financial Officer in July 2020 and was reappointed to the role in October 2022 after serving as Chief Financial Officer of Convoy from April 2022 to September 2022. A former Morgan Stanley investment banker and McKinsey & Co. consultant,
Sonia spent 10 years with the Redbox organization, first joining then-parent Outerwall in 2010. It was under her watch that the company was acquired by Apollo Global Management and launched its Redbox On Demand online video store. Sonia holds
a M.B.A from Harvard University, M.S. from Massachusetts Institute of Technology, and B.S.E from Princeton University.
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Doug Miller President and Chief Commercial Officer Age 52 |
Background
Doug serves as CARS’ President and Chief Commercial Officer and in this role, he is responsible for commercial strategy and execution. Doug served as Chief Revenue Officer from July 2018 to December 2021. Prior to joining CARS, Doug
served as Chief Revenue Officer at online consumer marketplace LivingSocial where he helped grow the company from a small start-up to a global enterprise with nearly $2 billion in sales. Doug also held executive positions at Expedia,
Ticketmaster and Citysearch. Doug holds a B.A. from Hamilton College.
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Cars.com Inc. 2023 Proxy Statement
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Angelique Strong Marks Chief Legal Officer Age 55 |
Background
Angelique serves as CARS’ Chief Legal Officer and in this role,
she is responsible for CARS’ legal corporate governance, compliance and information security and data privacy matters. CARS appointed Angelique to this role in April 2022. Prior to joining CARS, Angelique served as General Counsel at REE
Automotive where she was part of the core team that successfully established REE as a publicly traded company. Angelique also served as General Counsel at MAHLE Industries and Behr America, global suppliers to the automotive industry. Angelique
holds a J.D. from the Ohio State University, a M.B.A. from Miami University and a B.S. from the University of Akron.
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Our Named Executive Officers
For fiscal 2022, our NEOs were:
| Name | Position with Cars.com Inc. |
| Alex Vetter | Chief Executive Officer |
| Sonia Jain (1) | Chief Financial Officer |
| Doug Miller |
President and Chief Commercial Officer |
| Angelique Strong Marks (2) | Chief Legal Officer |
| Jandy Tomy (3) |
Executive Vice President, Finance and Treasurer and Former Interim Chief Financial Officer |
| Jim Rogers (4) | Former Chief Legal Officer |
| (1) | Sonia served as the Chief Financial Officer from January 1, 2022 through April 15, 2022, the effective date of her resignation and rejoined CARS in the same role on October 17, 2022. |
| (2) | Angelique was appointed Chief Legal Officer effective April 4, 2022. |
| (3) | Jandy served as Interim Chief Financial Officer from April 15, 2022 through October 17, 2022. |
| (4) |
Jim’s employment with CARS terminated effective April 29, 2022, and he served in an advisory role from April 4, 2022 to April 29, 2022.
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Fiscal 2022 Performance
2022 marked a strong year of growth for our business as we helped consumers, dealers, OEMs and lenders in an environment that challenged many. At the beginning of fiscal 2022, management proposed, and the Board approved a financial plan that demonstrated the strength and resiliency of our online marketplace platform even during uncertain economic times for the automotive industry. The Compensation Committee then approved the fiscal 2022 short-term incentive plan based upon the 2022 financial plan and set long-term incentive targets based on our three-year outlook. Our fiscal 2022 financial results, which is the criteria CARS uses to measure performance relative to our 2022 short-term incentive plan were as follows:
| Revenue | Net Income | Adjusted EBITDA (1) |
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$653.9 million |
$17.2 million |
$186.7 million |
| Up $30.2 million, or 5% increase year-over-year | $0.25 per diluted share | or 29% of revenue |
| (1) | Adjusted EBITDA is not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). CARS uses Adjusted EBITDA as a measure for determining incentive compensation targets. For a reconciliation of Adjusted EBITDA to its most directly comparable financial measure prepared in accordance with GAAP, see below: |
Cars.com Inc. 2023 Proxy Statement
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Non-GAAP Reconciliation (in thousands) Year Ended December 31, 2022 |
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| Reconciliation of Net Income to Adjusted EBITDA | |
| Net Income (loss) | $17,206 |
| Interest expense, net | $35,320 |
| Income tax expense (benefit) | $5,370 |
| Depreciation and amortization | $94,394 |
| Stock-based compensation | $22,966 |
| Write-off of long-lived assets and other | $999 |
| Severance, transformation and other exit costs | $4,329 |
| Transaction-related items | $6,144 |
| Adjusted EBITDA | $186,728 |
Revenue for the year totaled $653.9 million, an increase of $30.2 million, or up 5%, compared to the prior year period. 2022 Net income totaled $17.2 million, or $0.25 per diluted share, compared to Net income of $10.8 million, or $0.15 per diluted share in the prior year. Adjusted EBITDA for the year totaled $186.7 million, or 29% of revenue, compared to $189.2 million, or 30% of revenue, in the prior year period.
Despite strong performance relative to marketplace peers and the broader industry, CARS did not meet its financial targets set at the beginning of its fiscal 2022 year. Aligned with our pay-for-performance strategy, the short-term incentive plan paid at 80% of target payouts.
Our Compensation Philosophy
Our executive compensation program is designed to recruit, retain and fairly reward highly skilled executives who bring the business acumen necessary to achieve our long-term business objectives. We pay for performance and design executive compensation programs that reward short and long-term performance and align the financial interests of executive officers with those of our stockholders. Accordingly, the compensation packages provided to our executives include both cash and equity-based components. We evaluate performance and compensation levels to ensure that:
| ● | we maintain our ability to attract and retain outstanding employees in executive positions, | |
| ● | executive compensation remains competitive with the compensation paid to similarly situated executives at companies with whom we compete for talent, and | |
| ● | compensation programs are applied in a performance-oriented manner. |
Cars.com Inc. 2023 Proxy Statement
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What We Do in Our Compensation Programs |
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What We Do Not Do or allow in Our Compensation Programs |
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● Establish, communicate, and monitor measurable goals and objectives
● Review total compensation when making executive compensation decisions
● Establish maximum award levels for short- and long-term incentive plans
● Obtain advice of an independent compensation consultant
● Assess our programs against peer companies and best practices
● Require executives to pre-clear all stock transactions
● Avoid incentives that encourage excessive risk
● Annually assess risk associated with our compensation program
● Require adherence to our executive stock ownership and holding guidelines
● Subject incentive compensation of executives to our Clawback Policy
● Engage with stockholders regarding perspectives on executive compensation
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● No tax gross-ups on change in control
● No single-trigger change-in-control payments
● No dividends or dividend equivalents on unearned or unvested share units
● No hedging transactions or short sales
involving CARS stock ● No pledging of CARS stock as collateral or depositing or holding CARS stock in a margin account
● No executive perquisite programs |
Role of the Compensation Committee, Management, Compensation Consultants and Compensation Peer Groups
Role of the Compensation Committee
Our Compensation Committee is responsible for establishing the compensation of our NEOs and other senior officers. The Compensation Committee oversees (i) administration of CARS’ executive compensation plan, policies and programs, including corporate goals and objectives relating to compensation, short-term bonus (incentive) plans and long-term equity compensation plans, (ii) approval of grants of equity awards, and (iii) senior officer organization and succession planning. The Compensation Committee is appointed by the Board.
Role of Executive Officers
Management participates in the review and refinement of our executive compensation program. Our CEO meets with the Compensation Committee to discuss compensation packages for the executive team and to review the performance of CARS and each executive, other than himself, and makes recommendations with respect to the appropriate base salary, annual cash bonus and grants of long-term equity awards. After considering these recommendations and other considerations discussed below, the Compensation Committee determines the annual compensation package for each executive.
Role of Compensation Consultants
The Compensation Committee regularly reviews our compensation philosophy and objectives. As part of this process, it monitors, reviews and evaluates our executive compensation program to determine and ensure that it provides reasonable compensation that aligns with its philosophy and objectives. The Compensation Committee engages an outside compensation consultant to assist in its monitoring, review and evaluations of its executive compensation programs.
In the first half of 2022, the Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”) as its consultant to advise it on executive compensation matters for which Meridian received customary fees. Meridian’s work included providing guidance regarding the treatment of compensation, including equity compensation awards and related matters, as described in more detail below. Additionally, after considering the required factors relevant to evaluate independence, the Compensation Committee determined that Meridian is an independent compensation consultant in accordance with applicable SEC and NYSE rules.
Meridian participated in Compensation Committee meetings as requested by the Chair of the Compensation Committee and communicated directly with the Chair of the Compensation Committee outside of meetings. Meridian participated in Compensation Committee executive sessions to assist in analyzing executive compensation practices and trends, the appropriate relationship between pay and performance, and other relevant compensation-related matters; consulting with management and the Compensation Committee regarding market data used as a reference for pay decisions; participating in the design of CARS’ equity award programs and short-term incentive plan; advising regarding proxy disclosures; advising and participating in stockholder and proxy advisor consultation meetings; and advising regarding CARS’ director compensation program.
Cars.com Inc. 2023 Proxy Statement
Working with Meridian, the Compensation Committee considered multiple sources of data to evaluate the fairness of our compensation structures and whether they met our compensation objectives. We also considered how our compensation practices compare to market practices among relevant companies in terms of size, industry and geography. Among other factors considered and provided by Meridian are the following, when available, regarding compensation for executives:
| ● | Data from base salary, bonus and equity compensation surveys that include companies of a similar size, based on metrics such as revenue, profitability measurements, growth and market capitalization; | |
| ● | Compensation data for executive officer positions for comparable companies based upon current and prior proxy statements and other SEC filings of relevant companies, including direct industry competitors and non-industry companies with which we commonly compete for talent (including both regional and national competitors). |
As it does on at least an annual basis, in 2022 the Compensation Committee worked with Meridian to review the composition of the peer group to determine if its compensation structure required any changes. The Compensation Committee evaluated the peer group based on a variety of factors including revenue size, market capitalization, industry, talent market and organizational structure. The addition and removal of companies to the peer group also reflect capital market changes such as delisting of companies from capital markets as a result of divestiture or other reasons. As a result of this review, three peer companies were removed in 2022: CDK Global Inc., Cornerstone OnDemand Inc. and GrubHub Inc. The 2022 peer group consists of 13 companies. The Compensation Committee believes this peer group is reflective of the CARS’ competitive market for executive talent.
In connection with the Compensation Committee’s approval of executive officer base salary, incentives and equity compensation discussed below in the section titled “Principal Elements of Our Executive Compensation Practices,” data regarding compensation practices for comparable executive officer positions at the following peer companies were considered and used for the purpose of determining competitive compensation levels:
|
2022 Compensation Peer Group
|
||
| America’s Car-Mart, Inc. | Match Group, Inc. | TrueCar, Inc. |
| CarGurus, Inc. | QuinStreet, Inc. | Vroom, Inc. |
| CoStar Group, Inc. | Shutterstock, Inc. | Yelp Inc. |
| Gogo Inc. | TripAdvisor, Inc. | Ziff Davis Inc. (formerly known as J2 Global, Inc.) |
| Groupon, Inc. | ||
In July 2022, at the conclusion of a competitive selection process with highly regarded compensation advisory firms, the Compensation Committee retained Korn Ferry as its compensation consultant to advise it on executive compensation matters. The selection process was done in accordance with CARS and the Board’s normal cadence of assessing the costs and level of services of its vendors and consultants. Korn Ferry demonstrated that it has the level of expertise necessary to support CARS and was deemed to be a strong strategic fit and was engaged based on market terms. Additionally, after considering the required factors relevant to evaluate independence, the Compensation Committee determined that Korn Ferry is an independent compensation consultant in accordance with applicable SEC and NYSE rules.
Cars.com Inc. 2023 Proxy Statement
Stockholder Engagement
Considerations of 2022 Say-On-Pay-Vote
At our 2022 Annual Meeting of Stockholders, 91.2% of our stockholders approved our advisory “say-on-pay” proposal to approve the compensation of our NEOs, based on the total votes cast. After discussions with our stockholders regarding executive compensation in the spring of 2022, the Compensation Committee reiterated its commitment to proactively engage stockholders regarding compensation matters and, given the level of support for the “say-on-pay” proposal, did not make any changes as a direct result of such vote.
Principal Elements of Our Executive Compensation Practices
As described below, the key elements of our compensation package for NEOs are base salary, short-term (annual) cash incentive plan (“STIP”) awards, equity-based awards, and our benefits programs.
| Pay Elements | Objective | Benefit to Stockholders |
| Base Salary |
● Provides NEOs with competitive level of fixed compensation
● Reflects individual performance and scope of responsibilities, as well as the competitive market for executive talent |
●
Competitive salaries help us fairly compensate, attract and retain talented
executives
|
| STIP |
●
Rewards NEOs for achieving annual company and individual goals
|
●
Focused on meeting key short-term business objectives and performance metrics, including DEI
targets
|
| Equity-Based Awards |
●
Provides equity awards for NEOs to focus on long-term stockholder value creation
|
● Award value is based on long-term performance metrics correlated with an increase in long-term market valuation
● Assists in retention of key executives and focus on long-term strategic objectives |
Pay Mix, Awards, and Targets
Each executive officer’s compensation has been individually designed to provide a combination of fixed and at-risk compensation that is tied to the achievement of CARS’ short- and long-term objectives.
Equity grants represent the majority of our executives’ total direct compensation at target (sum of base salary, STIP and equity-based awards). This helps to align our NEOs’ interests with those of our stockholders. We intend to continue our practice of awarding equity to our executives as it reaffirms our philosophy of paying for performance and aligning compensation directly to the long-term value and growth of CARS. The following charts show the weight of each element of compensation relative to target direct compensation for our CEO and the other NEOs, in the aggregate.
Cars.com Inc. 2023 Proxy Statement
In 2022, 89% of aggregate CEO target compensation was variable compensation. Of that amount, 14% was in the form of the STIP cash-based award and the remaining 86% was in the form of Long-Term Incentive Plan equity-based awards with multi-year vesting periods.
| CEO-Total Compensation | CEO-Variable Compensation |
 |
 |
In 2022, 76% of aggregate NEO (other than CEO) target compensation was variable compensation. Of that amount, 30% was in the form of the STIP cash-based award and the remaining 70% was in the form of Long-Term Incentive Plan equity-based awards comprised of both time-based and performance-based equity grants that have multi-year vesting periods.
| NEO-Total Compensation | NEO-Variable Compensation |
 |
 |
Base Salary
Base salary represents annual fixed compensation and is a standard element of compensation necessary to attract and retain talent. Each NEO’s base salary is generally reviewed annually to determine whether an adjustment is warranted or required based on the competitive market, the economic environment and the individual’s performance.
In determining base salaries for our NEOs, the Compensation Committee considers several factors, including:
| ● | The scope of responsibilities, prior experience, and qualifications; | |
| ● | Past individual performance; | |
| ● | Base salary and total compensation relative to other executives in similar positions; | |
| ● | Competitive market conditions and market data; and | |
| ● | Recommendations of the CEO, other than with respect to his own compensation. |
Cars.com Inc. 2023 Proxy Statement
After considering the above factors, the Compensation Committee approved the following salary increases for our NEOs for 2022, effective as of April 1, 2022.
| Name | 2021 Annual Base Salary Rate ($) |
2022 Annual Base Salary Rate
($)
|
| Alex Vetter | 700,000 | 750,000 |
| Sonia Jain(1) | 494,400 | 550,000 |
| Doug Miller |
450,000 | 500,000 |
| Angelique Strong Marks(2) | — | 375,000 |
| Jandy Tomy | 290,700 | 301,601 |
| Jim Rogers (3) | 371,315 | 371,315 |
| (1) | Sonia rejoined CARS as Chief Financial Officer on October 17, 2022, at the same salary approved in April 2022. |
| (2) | Angelique was appointed Chief Legal Officer effective April 4, 2022. |
| (3) |
Jim’s employment with CARS terminated effective April 29, 2022, and he served in an advisory role from April 4, 2022 to April 29, 2022.
|
Short Term Incentive Plan (STIP) Awards
We offer our NEOs the opportunity to earn STIP awards based on achieved performance against Compensation Committee-approved single-year performance goals. The Compensation Committee, in its sole discretion with respect to the CEO and in collaboration with the CEO for all other NEOs, determines whether and to what extent STIP awards shall be paid to each NEO. The Compensation Committee approved a Company Performance Factor (“CPF”) of 80% which is based on internal targets previously established and approved by the Compensation Committee included in the 2022 STIP. The Compensation Committee selects Revenue and Adjusted EBITDA targets to measure annual performance because they are and have been the metrics by which management has measured success and accountability, both internally and externally.
Overview of 2022 STIP Awards
In 2022, our NEOs participated in our STIP program. The Compensation Committee set each NEO’s 2022 target STIP award opportunity (expressed as a percentage of base salary) based on several factors, including CARS’ financial performance relative to targets set by the Compensation Committee, the NEO’s scope of duties and responsibilities, internal pay equity considerations and competitive market conditions and data. The cash payout under this program was equal to the product of the following Compensation Committee-approved performance factors: (i) the Company Performance Factor (CPF), which is related to achieved performance against two equally weighted performance metrics, Adjusted EBITDA and Revenue, multiplied by (ii) the Individual Performance Factor (IPF), which is related to each NEO’s performance considering functional leadership, talent and team growth, role modeling and features DEI recruitment and retention goals. CARS defines Adjusted EBITDA as net income (loss) before (1) interest expense, net, (2) income tax (benefit) expense, (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, (6) unrealized mark-to-market adjustments and cash transactions related to derivative instruments, and (7) certain other items, such as transaction-related costs, severance, transformation and other exit costs and write-off and impairments of goodwill, intangible assets and other long-lived assets.
Based on achieved performance against the two financial metrics, the CPF may make a NEO eligible to earn between 0% and 200% of the NEO’s target STIP opportunity. In accordance with the STIP formula, the threshold payout for Adjusted EBITDA requires the attainment of at least 90% of target Adjusted EBITDA to yield 20% of the NEO’s target STIP opportunity, and the threshold payout for Revenue requires the attainment of at least 90% of target Revenue to yield 25% of the NEO’s target STIP opportunity. As described above and below, the amount earned under the financial metrics is subject to adjustment based on a NEO’s IPF, based on functional leadership, talent and team growth, role modeling and DEI commitment.
Determination of 2022 STIP Awards
Using the Revenue and Adjusted EBITDA calculations described above, the table below shows target, threshold, and maximum goals for each financial metric, 2022 results achieved against these goals and the CPF payout calculation (expressed as a percentage of target STIP opportunity) for each financial metric.
Cars.com Inc. 2023 Proxy Statement
| Financial Metrics | Goal Weighting % |
Threshold (Payout %) $ |
Target $ |
Maximum $ |
2022 Results $ |
Performance Payout % |
||
| 45% | 100% | 200% | ||||||
| Revenue ($ in millions) | 50% | 618.2 (25%) | 686.9 | 755.6 | 653.9 | 43.0% | ||
| Adjusted EBITDA ($ in millions) | 50% | 175.6 (20%) | 195.2 | 214.7 | 183.8 | 38.5% | ||
| 81.5% | ||||||||
Based on the approved formula as described above, the 2022 CPF calculation would have resulted in a CPF of 81.5%, but management recommended, and the Compensation Committee adopted, a CPF of 80% with the excess portion used to provide a discretionary STIP pool to reward outstanding performers below the executive level while still maintaining the STIP formula-driven aggregate incentive compensation.
Based on such payout percentages, the Compensation Committee approved the following determination of each NEO’s 2022 cash award under the STIP:
| Name | 2022 Annual STIP Target % |
2022 Annual STIP Target $ |
2022 Formula Driven CPF % |
2022 Committee- Approved CPF % |
2022 IPF % |
2022 Earned |
| Alex Vetter | 110% | 811,250 | 81.5% | 80% | 100% | 649,000 |
| Sonia Jain | 110% | 296,283 | 81.5% | 80% | 100% | 237,026 |
| Doug Miller |
110% | 550,000 | 81.5% | 80% | 100% | 440,000 |
| Angelique Strong Marks | 50% | 140,024 | 81.5% | 80% | 100% | 112,019 |
| Jandy Tomy | 50% | 149,438 | 81.5% | 80% | 100% | 119,550 |
| Jim Rogers (1) | 50% | 185,658 | 81.5% | 80% | 100% | 48,424 |
| (1) | Jim received a prorated STIP payment for the number of days he was employed in 2022 (January 1, 2022 – April 29, 2022). |
Long-Term Incentive Plan (LTIP) – Equity Awards
Our LTIP awards are designed to drive achievement of long-term operational and financial goals and increased stockholder value, as well as to attract and retain key talent. CARS has a pay-for-performance culture and includes performance conditions in a portion of equity grants to executive leaders. The Compensation Committee approved targets with a three-year performance period for performance-based Restricted Stock Units (PSUs) comprising 50% of the equity grant allocation to continuing NEOs in 2022. The Board believes Revenue and Adjusted EBITDA compound annual growth rates over a three-year period are the most appropriate metrics and most correlated with CARS’ success and the sustainable growth in stockholder value.
Cars.com Inc. 2023 Proxy Statement
2022 Equity Pay Mix
The Compensation Committee approved the following 2022 equity pay mix for our NEOs:
| ● | CEO equity pay mix: 50% PSUs and 50% Options (by value) |
| ● | CFO and CCO equity pay mix: 50% PSUs and 50% RSUs. Jandy’s equity pay mix remained at 100% RSUs upon assumption of the Interim Chief Financial Officer role |
| ● | CLO equity pay mix: 100% RSUs |
CARS’ pay policy for NEOs has been for long-term equity grants to comprise the majority of target compensation and for half of those equity grants to include performance conditions. As previously disclosed, the Compensation Committee removed the performance condition requirement in 2020 and 2021 based on exceptional economic circumstances and the just completed strategic business transformation that compromised its ability to confidently set reasonable targets. The completion of a comprehensive strategic transformation in 2019 resulted in a more limited line of sight for target-setting in 2020, further exacerbated by uncertainties related to prevailing automotive industry market conditions during the pandemic period, such as inventory shortages and mandatory lockdowns. The Compensation Committee reintroduced performance conditions for 50% of long-term equity grants in March 2022 as consistent with CARS’ historic practice as the Chair had indicated to stockholders during investor consultations in June and November 2021. The Compensation Committee continued that practice in 2023 with 50% of the long-term equity grants for continuing NEOs being subject to achievement of performance conditions.
2022 Performance Share Units (PSUs)
In 2022, the Compensation Committee awarded the CEO, CFO and CCO equity grants in the form of PSUs. The PSUs are based on a three-year performance period consisting of fiscal years 2022, 2023, and 2024, measuring performance against pre-established Revenue and Adjusted EBITDA targets and will include threshold and maximum payouts as indicated in the chart below.
| Performance Achievement % | ||||
| Financial Metrics (in Millions) | Goal Weighting % |
Threshold % |
Target % |
Maximum % |
| Three-Year Average Growth – Revenue | 50 | 25 | 50 | 100 |
| Three-Year Compound Annual Growth Rate – Adjusted EBITDA | 50 | 25 | 50 | 100 |
| 2022 – 2024 LTIP Payout | 50 | 100 | 200 | |
| Name | Number of Securities Underlying PSUs Granted in 2022 |
| Alex Vetter | 165,893 |
| Sonia Jain (1) | 29,650 |
| Doug Miller | 49,768 |
| (1) | As a condition of her re-hire as Chief Financial Officer on October 17, 2022, Sonia was granted 29,650 PSUs which represents the pro rata portion of her full 2022 PSU LTI grant. |
Cars.com Inc. 2023 Proxy Statement
2022 Restricted Stock Units (RSUs)
The number of RSUs granted was determined by dividing the approved value of each grant by the closing share price of a share of Cars.com Inc. common stock on the date of grant. The 2022 RSUs vest ratably over a three-year period. Generally, an NEO must be employed through each vesting date to avoid forfeiting any unvested RSUs except as provided by CARS’ severance plans. RSUs that vest on each vesting date are settled in shares of common stock, less shares that may be withheld by CARS for payment of taxes. The following table shows the number of RSUs granted to our NEOs in 2022.
| Name | Number of Securities Underlying RSUs Granted in 2022 |
| Alex Vetter | _ |
| Sonia Jain (1) | 204,610 |
| Doug Miller |
49,768 |
| Angelique Strong Marks | 66,625 |
| Jandy Tomy (2) | 24,547 |
| Jim Rogers | 36,960 |
| (1) |
As a condition of her re-hire as Chief Financial Officer on October 17, 2022, Sonia was granted the following: (i) 29,650 RSUs which represents the pro rata portion of her full 2022 RSU LTIP grant and (ii) 174,960
RSUs which represents the amount of RSUs that were canceled upon her resignation from CARS on April 15, 2022.
|
| (2) |
Jandy’s 2022 equity grants consisted of the following (i) 13,272 RSUs granted as part of CARS LTIP and (ii) 11,275 RSUs as a result of assuming duties of Interim Chief Financial Officer.
|
2022 Non-Qualified Stock Options (NQSO)
The Options issued to Alex represent 50% of his Target LTIP amount. The number of Options issued was determined by dividing the allocated value of the Option grant by a single Option’s value as determined under the Black-Scholes option pricing model using the 30-day trailing average stock price. The Options will vest 100% on March 1, 2025 if Alex continues in employment through that date.
| Name | Number of Securities Underlying Stock-Options in 2022 |
| Alex Vetter | 263,119 |
Other Compensation
In addition to the primary elements of compensation (base salary, cash bonuses and equity awards) described above, the NEOs may participate in benefit programs generally available to our employees, including a 401(k) plan that provides for matching contributions up to a stated limit.
Executive Compensation Policies and Arrangements
Employment Arrangements
Except for the general offer letters provided to all CARS employees, CARS does not enter into employment agreements with its employees. In certain instances, to attract and retain executives or key employees, CARS may provide sign-on bonuses (typically reflected in the offer letter) or award bonuses in recognition of interim service beyond the executive’s normal role. To minimize the need for unique employment agreements and to establish compensation programs that are market competitive, we have also adopted a Change-in-Control Severance Plan and an Executive Severance Plan as described in the section “Named Executive Officer Compensation – Potential Payments Upon Termination or Change in Control” below.
Cars.com Inc. 2023 Proxy Statement
Stock Ownership and Retention Policy
CARS is committed to fostering a compensation structure that aligns each executive’s interests with those of our stockholders. As part of these alignment efforts, the Board adopted a Stock Ownership and Retention Policy that requires each senior executive, including each NEO, to maintain a meaningful level of investment in CARS common stock. The levels of stock ownership are reviewed by the ESG Committee to evidence compliance with the guidelines. Senior executives are expected to hold shares (at least 50% of the net shares received after shares are withheld by CARS in payment of withholding taxes, counting unvested RSUs at 50% of the underlying shares, and PSUs at zero until the performance period is complete) received under equity grants until the stock ownership requirements are met. The following table reflects the minimum stock ownership guideline for the senior officers, including the NEOs. All NEOs are currently, and have always been, in compliance with the Stock Ownership and Retention Policy.
| Executive | Minimum Guideline Multiple of Base Salary |
| CEO | 5x |
| President | 2x |
| Chief Financial Officer | 2x |
| CEO direct reports | 1x |
Hedging and Other Prohibited Transactions Policy
Our Insider Trading Policy prohibits employees (including executive officers), directors and their family members, from engaging in short sales, directly or indirectly, trading in puts or calls, options, warrants or similar instruments relating to CARS securities or selling such securities “short” (i.e., selling stock that is not owned and borrowing the shares to make delivery), day-trading or hedging with respect to CARS securities. These restrictions are also applicable to hedging transactions through the purchase of financial instruments, such as prepaid variable forward contracts, equity swaps, collars and exchange funds, trading on margin or in margin-related derivatives, or any financial instruments or derivatives or entering into any contracts, warrants or the like for the purpose of hedging price movements in CARS securities. Additionally, directors and executive officers may not, directly or indirectly, pledge CARS securities as collateral on any debt instrument.
Incentive Compensation Clawback Policy
The Compensation Committee has adopted a Clawback Policy that applies to compensation granted to current and former senior officers. Under the policy, the Compensation Committee is authorized to recover any excess incentive compensation received by certain employees, including current and former senior officers in the event of (i) an accounting restatement resulting from material noncompliance with financial reporting requirements under any applicable securities laws, or (ii) any material violation of laws, regulations, or employment policies that lead to significant harm to CARS, including but not limited to reputational, financial, or competitive harm. The Clawback Policy will be reviewed and revised in connection with the SEC’s final clawback rules and consistent with the NYSE’s listing standards.
Tax and Accounting Considerations
Although the Compensation Committee considers tax and accounting consequences in making its determination, the Compensation Committee designs and administers compensation programs that it believes are in the best interests of us and our stockholders.
|
Compensation Committee Report
The Compensation Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis and discussed it with CARS management. Based on the Compensation Committee’s review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in CARS’ Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2022.
The Compensation Committee Report does not constitute soliciting material and is not considered filed or incorporated by reference by any general statement incorporating by reference this Proxy Statement or future filings into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934.
Compensation Committee of the Board of Directors
Scott Forbes, Chairman |
Cars.com Inc. 2023 Proxy Statement
Named Executive Officer Compensation
2022 SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary | Bonus | Stock Awards |
Option Awards | Non-Equity Incentive Plan Compensation |
All Other Compensation | Total Compensation |
| ($) | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($) | ||
|
Alex Vetter Chief Executive Officer |
2022 | 737,500 | – | 2,500,008 | 2,470,499 | 649,000 | 12,200 | 6,369,207 |
| 2021 | 687,500 | – | 2,500,001 | 2,803,029 | 983,125 | 11,600 | 6,985,255 | |
| 2020 | 608,250 | – | 2,500,000 | 1,434,626 | 669,075 | 11,400 | 5,223,351 | |
|
Sonia Jain (5) Chief Financial Officer |
2022 | 261,100 | – | 2,977,445 | – | 237,026 | 2,336 | 3,477,907 |
| 2021 | 490,800 | – | 1,483,201 | – | 738,040 | 9,816 | 2,721,857 | |
| 2020 | 234,769 | 484,769 | 1,510,006 | – | – | – | 2,229,544 | |
|
Doug Miller President and Chief Commercial Officer |
2022 | 500,000 | – | 1,500,008 | – | 440,000 | 12,200 | 2,452,208 |
| 2021 | 440,500 | – | 1,125,007 | – | 629,915 | 11,600 | 2,207,022 | |
| 2020 | 406,000 | – | 844,603 | – | 446,600 | 11,400 | 1,708,603 | |
|
Angelique Strong Marks Chief Legal Officer |
2022 |
280,048 |
– | 656,256 |
– | 112,019 |
10,000 | 1,058,323 |
|
Jandy Tomy (6) Former Interim Chief Financial Officer |
2022 | 298,876 | 389,099(7) | 311,068 | – | 119,550 | 12,200 | 1,130,793 |
| 2021 | 289,275 | – | 200,001 | – | 197,430 | 11,600 | 698,306 | |
| 2020 | 285,000 | 150,000 | 300,002 | – | 138,938 | 7,996 | 881,936 | |
|
Jim Rogers (8) Former Chief Legal Officer |
2022 | 123,772 | – | 556,987 | – | 48,424 | 12,200 | 741,383 |
| 2021 | 368,611 | – | 556,982 | – | 239,597 | 10,635 | 1,175,825 | |
| 2020 | 360,500 | – | 540,751 | – | 180,250 | 7,405 | 1,088,906 | |
| (1) |
Amounts disclosed in this column represent grants of RSUs and PSUs made under our Omnibus Incentive
Compensation Plan. With respect to each RSU and PSU grant, the amounts disclosed reflect the grant date fair value computed in accordance with FASB ASC Topic 718 and not amounts actually paid to, or realized by, the NEOs. The value of the PSUs
included in the table above is based on probable outcome as of the grant date. Assuming maximum performance, the grant date value of the PSUs would be as follows: Alex - $5,000,0015, Sonia - $753,703 and Doug - $1,500,008. For additional
information, including assumptions used in calculating these amounts, see Note 12 to the CARS’ audited consolidated financial statements for the year ended December 31, 2022, included in CARS’ Annual Report on Form 10-K for the year ended
December 31, 2022. For additional information on the RSU Option grants made in 2021, see the “Grants of Plan-Based Awards in 2022” table below.
|
| (2) |
Amounts disclosed in this column for 2022 reflect Non-Qualified Stock Options granted under our Omnibus Incentive Compensation Plan. With respect to each Option grant, the amounts disclosed reflect the grant date
fair value computed in accordance with FASB ASC Topic 718 and not the amounts actually paid to or realized by the CEO. For additional information, including assumptions used in calculating these amounts, see Note 12 to CARS’ audited financial
statements for the year ended December 31, 2022 included in CARS’ Annual Report on Form 10-K for the year ended December 31, 2022. For additional information on the Stock Option grants made in 2022, see the “Grants of Plan-Based Awards in
2022” table below.
|
| (3) |
Amounts disclosed in this column for 2022 reflect cash amounts paid under our STIP. For additional information, see the section entitled “Compensation Discussion and Analysis— Elements of our Executive Compensation
Practices.”
|
| (4) |
Amounts disclosed in this column for 2022 include the Company’s 401(k) matching contributions.
|
| (5) |
Sonia voluntarily resigned from CARS on April 15, 2022, and was re-hired as Chief Financial Officer on October 17, 2022.
|
| (6) |
Jandy was appointed Interim Chief Financial Officer upon Sonia’s resignation on April 15, 2022 until October 17, 2022.
|
| (7) |
This amount reflects (i) a bonus of $129,650 paid on April 15, 2022 and (ii) salary enhancement payments of $28,811 paid monthly from April to December 2022, both of which were pursuant to her agreement to fulfill
the responsibilities as Interim Chief Financial Officer as well as $150 5-year anniversary bonus.
|
| (8) |
Jim’s employment with CARS terminated on April 29, 2022 and was classified as a Qualifying Termination under the terms set forth in CARS Executive Severance Plan. In May 2022 Jim received a severance payout
of $539,641 comprised of $371,315 for base salary, $162,720 for STIP and $5,606 for COBRA benefits. In March 2023, Jim received $48,424 which represents the prorated portion of his 2022 STIP award and $1,093,290 which represents the value of
the 57,938 RSUs that vested on March 1, 2023 at $18.87 per share.
|
Cars.com Inc. 2023 Proxy Statement
GRANTS OF PLAN-BASED AWARDS IN 2022
The following table sets forth information regarding grants of awards made to our NEOs during 2022.
| Name | Award Type |
Grant Date |
Estimated Possible Payouts under Non-Equity Incentive Plan Awards |
Estimated Future Payouts under Equity Incentive Plan Awards |
All Other Stock Awards: Number of Securities Underlying Restricted Stock Units (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Awards ($/sh) |
Grant Date Fair Value of Stock Awards ($) | |||||
|
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||
| Alex Vetter | STIP Bonus | 365,063 | 811,250 | 1,622,500 | – | – | – | – | – | – | – | ||
| PSU | 3/16/2022 | – | – | – | 82,947 | 165,893 | 331,786 | – | – | – | 2,500,008 | ||
| NQSO | 3/16/2022 | – | – | – | – | – | – | – | 263,119 | 15.07 | 2,470,499 | ||
| Sonia Jain | STIP Bonus | 133,327 | 296,283 | 592,566 | – | – | – | – | – | – | – | ||
| PSU | 10/17/2022 | – | – | – | 14,825 | 29,650 | 59,300 | – | – | – | 376,864 | ||
| RSU | 10/17/2022 | – | – | – | – | – | – | 204,610 | – | – | 2,600,593 | ||
| Doug Miller | STIP Bonus | 247,500 | 550,000 | 1,100,000 | – | – | – | – | – | – | – | ||
| PSU | 3/16/2022 | – | – | – | 24,884 | 49,768 | 99,536 | – | – | – | 750,004 | ||
| RSU | 3/16/2022 | – | – | – | – | – | – | 49,768 | – | – | 750,004 | ||
| A. Strong Marks |
STIP Bonus |
63,011 |
140,024 |
280,048 | – | – | – | – | – | – | – | ||
| RSU | 5/13/2022 |
– | – | – | – | – | – | 66,625 |
– | – | 656,256 | ||
|
Jandy Tomy
|
STIP Bonus | 67,247 | 149,438 | 298,876 | – | – | – | – | – | – | – | ||
| RSU | 3/16/2022 | – | – | – | – | – | – | 13,272 | – | – | 200,009 | ||
| RSU | 5/13/2022 | – | – | – | – | – | – | 11,275 | – | – | 111,059 | ||
| Jim Rogers | STIP Bonus | 83,546 | 185,658 | 371,315 | – | – | – | – | – | – | – | ||
| RSU | 3/16/2022 | – | – | – | – | – | – | 36,960 | – | – | 556,987 | ||
Outstanding Equity Awards at 2022 Year-End
The following table lists all outstanding equity awards held by our NEOs as of December 31, 2022.
| Option Awards | Stock Awards | |||||||||
| Name | Grant Date |
Number of Securities Underlying Unexercised Options (#)
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options |
Option Exercise Price |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested |
Market Value of Shares or Units That Have Not Vested |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
|
| Exercised | Unexercisable | |||||||||
| 3/18/2020 (2) | – | 513,228 | – | 5.40 | 3/18/2030 | – | – | – | – | |
| 3/18/2020 (3) | – | – | – | – | – | 154,321 | 2,125,000 | – | – | |
| Alex Vetter | 3/17/2021 (4) | – | – | – | 15.17 | 3/17/2031 | – | – | – | – |
| 3/17/2021 (5) | – | – | – | – | – | 109,866 | 1,512,855 | – | – | |
| 3/16/2022 (6) | – | 263,119 | – | 15.07 | 3/16/2032 | – | – | – | – | |
| 3/16/2022 (7) | – | – | – | – | – | – | – | 165,893 | 2,284,347 | |
| Sonia Jain | 10/17/2022 (8) | – | – | – | – | – | 204,610 | 2,817,480 | – | – |
| 10/17/2022 (7) | – | – | – | – | – | – | – | 29,650 | 408,281 | |
| Doug Miller | 3/18/2020 (3) | – | – | – | – | – | 52,136 | 717,913 | – | – |
| 3/17/2021 (5) | – | – | – | – | – | 24,720 | 340,394 | – | – | |
| 3/16/2022 (9) | – | – | – | – | – | 49,768 | 685,305 | – | – | |
| 3/16/2022 (7) | – | – | – | – | – | – | – | 49,768 | 685,305 | |
| Angelique Strong Marks |
5/13/2022 (10) | – | – | – | – | – | 66,625 |
917,426 |
– | – |
| Jandy Tomy | 3/18/2020 (3) | – | – | – | – | – | 18,519 | 255,007 | – | – |
| 3/17/2021 (5) | – | – | – | – | – | 8,789 | 121,025 | – | – | |
| 3/16/2022 (9) | – | – | – | – | – | 13,272 | 182,755 | – | – | |
| 5/13/2022 (11) | – | – | – | – | – | 11,275 | 155,257 | – | – | |
| Jim Rogers | 3/18/2020 (3) | – | – | – | – | – | 33,380 | 459,643 | – | – |
| 3/17/2021 (5) | – | – | – | – | – | 12,238 | 168,517 | – | – | |
| 3/16/2022 (10) | – | – | – | – | – | 12,320 | 169,646 | – | – | |
Cars.com Inc. 2023 Proxy Statement
| (1) |
Reflects the market value of outstanding RSUs and PSUs based on the price per share of common stock of $13.77, the closing market price on December 30, 2022. These amounts do not correspond to the actual value that
may be realized by the NEOs. Receipt of any of the value of vesting equity is contingent upon the NEO’s continued employment with the Company through each applicable vesting date.
|
| (2) |
On March 1, 2023, 100% of these stock options vested.
|
| (3) |
On March 1, 2023, the final installment of RSUs vested: 154,321 for Alex, 18,519 for Jandy, 33,380 for Jim and 52,136 for Doug.
|
| (4) |
100% of these stock options will vest on March 1, 2024.
|
| (5) |
On March 1, 2023, the following RSUs vested: 54,933 for Alex, 4,394 for Jandy, 12,238 for Jim, and 24,720 for Doug.
|
| (6) |
100% of these stock options will vest on March 1, 2025.
|
| (7) |
100% of these PSUs will vest on March 1, 2025, subject to attainment of specific performance objectives established for fiscal years 2022 - 2024. The PSU value is set forth at target.
|
| (8) |
These RSUs will vest in equal installments annually on October 1, 2023, 2024 and 2025.
|
| (9) |
On March 1, 2023, the following RSUs vested: 4,424 for Jandy, 12,320 for Jim, and 16,590 for Doug.
|
| (10) |
These RSUs will vest in equal installments annually on May 1, 2023, 2024 and 2025.
|
| (11) |
100% of these RSUs will vest on May 1, 2023.
|
OPTION EXERCISES AND STOCK VESTED IN 2022
The following table sets forth the number of shares of common stock acquired during 2022 by our NEOs upon the vesting of RSUs and the value realized upon such vesting. No stock options were exercised during 2022.
| Name | Number of Shares Acquired on Vesting (#)(1) |
Value Realized On Vesting ($)(2) |
| Alex Vetter | 256,346 | 4,104,099 |
| Sonia Jain | 32,591 | 521,782 |
| Doug Miller |
86,776 | 1,381,433 |
| Angelique Strong Marks | — | — |
| Jandy Tomy | 27,549 | 441,059 |
| Jim Rogers | 53,044 | 849,234 |
| (1) |
Reflects the aggregate number of shares of common stock underlying the RSUs and PSUs that vested in 2022.
|
| (2) | Calculated by multiplying (i) the fair market value of common stock on the vesting date, which was determined using the closing price on the NYSE of a share of common stock on the date of vesting or, if such day is a holiday, on the immediately preceding trading day by (ii) the number of shares of common stock acquired upon vesting. Shares of stock were withheld to pay taxes due in connection with the vesting. Of the amount shown, Alex received net shares valued at $2,434,689; Sonia received net shares valued at $373,481; Jandy received net shares valued at $306,960, Jim received net shares valued at $596,340; and Doug received net shares valued at $987,969. |
Cars.com Inc. 2023 Proxy Statement
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Severance Arrangements
CARS maintains a Change in Control Severance Plan (the “CIC Severance Plan”) and the Cars.com Inc. Executive Severance Plan (the “Executive Severance Plan” and together with the CIC Severance Plan, the “Severance Plans”). There is no duplication of benefits between the Severance Plans, so participants who have a qualifying termination of employment under both Severance Plans receive benefits from the CIC Severance Plan and not from the Executive Severance Plan. Participants in the Severance Plans are generally selected by the Compensation Committee and currently include Alex, Sonia, Doug and Angelique and certain other key employees. The following describes the severance arrangements that were in place for both as of December 31, 2022.
Under the CIC Severance Plan, a participant who, in connection with a change in control of CARS or within two years following a change in control, experiences an involuntary termination without cause or voluntarily terminates his or her employment for good reason, would receive a lump sum amount equal to the sum of (1) any unpaid base salary and (2) a prorated annual bonus for the portion of the fiscal year elapsed prior to the termination date in an amount equal to the average annual bonus the participant earned with respect to the three fiscal years immediately prior to the fiscal year in which the termination date occurs, as well as outplacement benefits. If the annual bonus for the year prior to the date of termination had not yet been paid, the participant would be paid at the time those bonuses are paid to other participants. Additionally, participants would receive a lump sum cash severance payment equal to the product of (a) a severance multiple and (b) the sum of (1) the participant’s annual base salary at the highest rate of salary during the 12-month period immediately prior to the termination date or, if higher, during the 12-month period immediately prior to the change in control, and (2) the participant’s average annual bonus earned for the three most recent fiscal years for which the participant had been paid (or was eligible for) a bonus preceding the termination (or, if higher, the three fiscal years preceding the change in control). The severance multiple for Alex is 2.0 and 1.5 for each of Sonia, Doug and Angelique. A participant will also receive an amount equal to the monthly COBRA cost of the participant’s medical and dental coverage in effect as of the date of termination multiplied by 24 for Alex and 18 for each of Sonia, Angelique, and Doug.
The CIC Severance Plan does not provide excise tax gross-ups on payments to participants. If payments would subject a participant to the IRS parachute excise tax, CARS would then either (i) reduce the payment to the largest portion of the payments that would result in no portion of the payments being subject to the parachute excise tax or (ii) pay the full amount of such payments, whichever is better on an after-tax basis for the participant.
Under the Executive Severance Plan, a participant who experiences an involuntary termination of employment without cause would receive a lump-sum cash severance payment equal to the product of (a) a severance multiple and (b) the sum of the participant’s annual base salary and average annual bonus earned for the three most recent fiscal years for which the participant had been paid (or was eligible for) a bonus preceding the termination. The severance multiple is 1.5 for Alex and 1.0 for each of Sonia, Doug and Angelique. The participant would also receive a lump sum amount equal to any unpaid base salary and bonus through the date of termination and would be eligible to receive a prorated annual bonus for the portion of the fiscal year elapsed prior to the termination based on actual CARS performance and individual performance at target, paid when such payments are made to other participants. (In the event the termination occurs before annual bonuses have been paid for the prior year, the participant would be entitled to receive the annual bonus for that year based on actual performance, paid when such payments are made to other participants.) Additionally, the participant would generally receive 12 months continued vesting under equity awards (18 months for Alex). A participant would also receive an amount equal to the monthly COBRA cost of the participant’s medical and dental coverage in effect as of the date of termination multiplied by 18 for Alex and 12 for each of Sonia, Doug and Angelique.
Both the CIC Severance Plan and the Executive Severance Plan provide that severance payments are contingent upon the participant’s execution of a release of claims in favor of CARS and its affiliates and agreeing to (or reaffirming) restrictive covenants in other agreements or providing covenants restricting the participant’s solicitation of employees, disparagement of CARS and its affiliates, and disclosure of confidential information (other than as required by law) and, in the case of the Executive Severance Plan, restricting the participant’s competition.
In addition, RSUs and Options awarded to Alex, Sonia, Doug and Angelique provide for pro-rata vesting upon death and disability. RSUs, Options and PSUs vest (at target for PSUs) upon a change in control if the awards are not continued or assumed in connection with the change in control and vest upon a termination by CARS or its successor without cause or by the NEO for good reason within two years after a change in control if the equity awards are continued or assumed in connection with the change in control.
Cars.com Inc. 2023 Proxy Statement
Under our STIP, if a participant’s employment is terminated involuntarily during a performance year due to death or disability, such participant will be eligible for a prorated portion of his or her bonus, as determined based on actual performance and the number of days completed in the performance year. If a participant’s employment is terminated for any other reason during a performance year, no award shall be payable to such participant in respect of such year.
Summary of Potential Benefits
The following table shows the payments and benefits potentially payable to each of our NEOs upon a qualifying termination under the Severance Plans assuming a December 31, 2022 termination of employment. The employment of the NEOs listed below in the table did not actually terminate on December 31, 2022, and as a result they received none of the amounts shown in the table below. The actual amounts to be paid to our executives in connection with their termination can be determined only at the time and in the circumstances of such termination. In addition to the amounts shown in the table below, each executive is entitled to receive amounts earned during the term of employment regardless of the manner of termination, including accrued but unpaid base salary and other employee benefits to which such NEO was entitled on the date of termination. For purposes of calculating the value of equity acceleration, the December 31, 2022 closing price of $13.77 was used.
| Executive | Payment Elements |
CIC Termination ($) |
Qualifying Termination (other than a CIC Termination) ($) |
| Alex Vetter | Salary | 1,500,000 (1) | 1,125,000 (1) |
| Annual Performance Bonus | 1,887,128 (2) | 1,592,564 (3) | |
| Restricted Stock Units | 3,637,855 (4) | 3,637,855 (5) | |
| Performance Share Units | 2,284,347 (6) | — | |
| Stock Options | 4,295,718 (7) | 3,937,742 (8) | |
| Health Coverage | 47,832 | 35,874 | |
| Outplacement | 25,000 | — | |
| TOTAL | 13,677,880 | 10,329,035 | |
| Sonia Jain | Salary | 825,000 (1) | 550,000 (1) |
| Annual Performance Bonus | 1,210,674 (2) | 721,296 (3) | |
| Restricted Stock Units | 2,817,480 (4) | 939,169 (5) | |
| Performance Share Units | 408,281 (6) | — | |
| Health Coverage | — | — | |
| Outplacement | 25,000 | — | |
| TOTAL | 5,286,435 | 2,210,465 | |
| Doug Miller |
Salary | 750,000 (1) | 500,000 (1) |
| Annual Performance Bonus | 1,035,329 (2) | 854,132 (3) | |
| Restricted Stock Units | 2,084,007 (4) | 1,286,751 (5) | |
| Performance Share Units | 685,305 (6) | — | |
| Health Coverage | 28,287 | 18,858 | |
| Outplacement | 25,000 | — | |
| TOTAL | 4,607,928 | 2,659,741 | |
| Angelique Strong Marks | Salary | 562,500 (1) | 375,000 (1) |
| Annual Performance Bonus | 468,750 (2) | 299,519 (3) | |
| Restricted Stock Units | 917,426 (4) | 305,818 (5) | |
| Performance Share Units | — | — | |
| Health Coverage | 14,760 | 9,840 | |
| Outplacement | 25,000 | — | |
| TOTAL | 1,988,436 | 990,177 | |
| Jandy Tomy | Salary | — |
150,801 |
| Annual Performance Bonus | — |
186,779 | |
| Restricted Stock Units | 714,043 (4) | 714,043 | |
| Performance Share Units | — | — | |
| Health Coverage | — | 9,438 | |
| Outplacement | — | — | |
| TOTAL | 714,043 | 1,061,061 | |
| Jim Rogers (9) | Salary | — | 371,315 (1) |
| Annual Performance Bonus | — | 211,144 (3) | |
| Restricted Stock Units | — | 1,093,290 (5) | |
| Performance Share Units | — | — | |
| Health Coverage | — | 5,606 | |
| Outplacement | — | — | |
| TOTAL | — | 1,681,355 |
Cars.com Inc. 2023 Proxy Statement
| (1) | Represents a lump sum payment in an amount equal to the executive’s annual base salary times the severance multiple applicable under each termination scenario. |
| (2) | Represents a lump sum payment in an amount equal to the severance multiple times the three-year average STIP award plus a pro-rated portion of the three-year average bonus based on the number of days served during the year of termination. As of December 31, 2022, the pro-rated portion of the three-year average bonus is 100%. |
| (3) | Represents a lump sum payment in an amount equal to the severance multiple times the three-year average STIP award plus a pro-rated portion of the annual bonus based on actual Company performance and on the number of days served during the year of termination. As of December 31, 2022, the pro-rated portion of the annual bonus is 100%. |
| (4) | Represents the dollar value of 100% accelerated vesting of such individual’s RSU awards outstanding as of December 31, 2022. |
| (5) | Represents the dollar value of continued vesting of RSUs vesting for 18 months (for the CEO) or 12 months (for the other NEOs) of the termination date, which is assumed to be December 31, 2022. |
| (6) | Represents the dollar value of accelerated vesting of PSUs based on target achievement of performance objective. |
| (7) | Represents the dollar value calculated by multiplying the amount by which $13.77 (the closing price of the Company’s stock on December 30, 2022) exceeds the exercise price of the Option by the number of shares subject to the accelerated portion of the Option. Alex’s Options outstanding as of December 31, 2022 comprised of 513,228 Options at an exercise price of $5.40 and 290,994 options at an exercise price of $15.17 and 263,119 Options at an exercise price of $15.07. |
| (8) | A pro rata portion of Options vest for Alex, which is calculated as the total number of Options eligible to vest multiplied by a fraction, the numerator of which is the number of full months from grant date to termination date (December 31, 2022) and the denominator of which is the number of full months from grant date to vesting date. This represents 33 of 36 months for 513,228 Options granted on March 18, 2020 at an exercise price of $5.40 and 21 of 36 months for 290,994 Options granted on March 17, 2021 at an exercise price of $15.17 and 9 of 36 months for 263,119 Options granted on March 16, 2022 at an exercise price of $15.07. Such pro rata number of shares subject to the Option is then multiplied by the amount by which $13.77 exceeds the exercise price of the Option to calculate the dollar value. |
| (9) | Jim’s employment with CARS terminated on April 29, 2022. His severance was calculated as a Qualifying Termination. Amounts noted represent actual payments made and also include the pro-rated 2022 STIP payout of $48,424 and 57,938 RSUs that vested on March 1, 2023 at a price of $18.87. |
Compensation and Risk
We have undertaken a risk review of CARS’ employee compensation plans and arrangements in which our employees (including our executive officers) participate, to determine whether these plans and arrangements have any features that might create undue risks or encourage unnecessary and excessive risk-taking that could threaten the value of CARS. In our review, we considered numerous factors and design elements that manage and mitigate risk, without diminishing compensation objectives such as fair rewards, successful recruitment and retention of talent and including the following elements of the compensation framework of CARS:
| ● | a commission-based incentive program for sales employees that results in payout based only on measurable financial or business-critical metrics |
Cars.com Inc. 2023 Proxy Statement
| ● | annual bonuses with a portion for executive employees that are correlated with and funded based on CARS performance and are paid based on a combination of quantitative and/or qualitative factors and individual performance; and | |
| ● | our practice of awarding long-term equity grants to our executives upon hire and annually to directly tie the executive’s expectation of compensation to their contributions to the long-term value of CARS. |
Based on our review, we concluded that any potential risks arising from our employee compensation programs, including our executive programs, are not reasonably likely to have a material adverse effect on CARS.
Equity Compensation Plan Information
The following table provides information about shares of our common stock that may be issued upon the exercise of options, warrants and rights under all our existing equity compensation plans as of December 31, 2022. Our Omnibus Incentive Compensation Plan and Employee Stock Purchase Plan are our only compensation plans pursuant to which our equity securities are authorized for issuance. We refer to these plans and grants collectively as our Equity Compensation Plans.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) (a) |
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (2) |
||
| Equity compensation plans approved by security holders | 5,083,912 | $10.45 | 8,900,027 | ||
| Equity compensation plans not approved by security holders | - | - | - | ||
| Total | 5,083,912 | $10.45 | 8,900,027 |
| (1) | Represents RSUs, PSUs, and stock options issued under our Equity Compensation Plans. RSUs and PSUs may be settled only for shares of our common stock on a one-for-one basis. Stock options may be exercised at a specified grant exercise price and settled for shares of our common stock on a one-for-one basis. The number included for PSUs reflects units awarded at target. Please see the “Compensation Discussion and Analysis” section of this Proxy Statement for further information regarding our equity awards |
| (2) | Consists of 6,787,971 shares reserved for issuance under our Omnibus Incentive Compensation Plan and 2,112,056 shares reserved for issuance under our ESPP. |
CEO Pay Ratio Disclosure
CARS strives to establish fair and competitive compensation programs to effectively attract, retain, and motivate our talented workforce. Presented below is the ratio of the total annual compensation of our Chief Executive Officer, Alex Vetter, to the annual total compensation of our median employee (other than the Chief Executive Officer). As of December 31, 2022, our employee population consisted of 1,715 full-time, part-time, seasonal and temporary US-based employees. This number excludes the CEO and 13 Canadian-based employees.
We identified the “median employee” based on the “annual total compensation” of each employee who was part of our employee population on December 31, 2022. Each employee’s annual total compensation was calculated by totaling the following compensation components: (i) cash compensation paid in 2022, which included regular pay (wages and salary), all overtime, bonus payments and commissions, and (ii) the grant date fair value of each equity award granted in 2022. The foregoing calculation excluded any cash or equity-based sign-on bonus paid or granted to an employee during 2022. We annualized the compensation for any full or part-time employee in the population who had worked less than a year as of December 31, 2022.
The annual total compensation of our CEO was $6,369,207 as presented in the 2022 Summary Compensation Table. For 2022, the annual total compensation of our Median Employee was $84,662.06, which was calculated in the same manner that the total compensation of our NEOs was calculated and reported in the Summary Compensation Table. Based on this information, the ratio of our CEO’s total compensation to our median employee’s total compensation for fiscal 2022 was 75 to 1.
Cars.com Inc. 2023 Proxy Statement
