DEFA14A: Coursera Addresses Stockholder Feedback with Compensation Program Enhancements Ahead of 2025 Annual Meeting

Coursera is urging stockholders to approve the Say-on-Pay proposal at the 2025 Annual Meeting, highlighting enhancements made to executive compensation in response to stockholder feedback.

Summary

• Coursera is seeking stockholder approval for its executive compensation program at the upcoming 2025 Annual Meeting.
• In response to stockholder feedback, Coursera has made significant changes to its compensation program, including the introduction of Performance Stock Units (PSUs) and the adoption of stock ownership guidelines for NEOs and Board members.
• PSUs, which constitute 25% of equity compensation, vest over four years based on rigorous revenue milestones.
• Stock ownership guidelines require the CEO to hold stock worth 5x their base salary, other NEOs 1x, and non-employee directors 3x their cash retainer within five years.
• In 2024, the company also added Adjusted EBITDA as a performance metric in its short-term incentive program.
• The HRC Committee is committed to annually evaluating the executive compensation program to balance performance incentives and retention.
• Pay outcomes for 2024 reflect the pay and performance alignment of our compensation program design is working as intended.
• The 2024 PSUs paid out at 83.8% of target based on 2024 revenue performance.
• The Board recommends a vote FOR the advisory approval of the compensation of the Company's named executive officers.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment, highlighting the company's responsiveness to stockholder feedback and the enhancements made to its executive compensation program. While revenue performance fell slightly short of expectations, the overall tone is optimistic and forward-looking.

Positives

• Coursera has actively responded to stockholder feedback by enhancing its executive compensation program.
• The introduction of PSUs aligns executive compensation with the company's revenue performance, a key indicator of success.
• Stock ownership guidelines further align the interests of executives and board members with those of long-term stockholders.
• The addition of Adjusted EBITDA as a performance metric balances growth with operational efficiency and profitability.
• The company is committed to annually evaluating its executive compensation program.
• The 2024 Executive Incentive Compensation Plan paid out at 104.0% of target.

Negatives

• The 2024 PSUs paid out at 83.8% of target based on 2024 revenue performance, which fell short of the high expectations set on a one-year basis.

Risks

• The uncertain business environment could impact the company's ability to achieve its revenue targets and, consequently, the payout of PSUs.
• The company faces the risk of not being able to attract and retain key executive officers if the compensation program is not competitive.
• Competitive harm may result from disclosure based on the nature of those performance targets, particularly in respect to the disclosure of revenue targets related to new student degree revenue.

Future Outlook

Coursera will continue to evaluate its executive compensation program annually and welcomes continued dialogue with stockholders to refine the program.

Management Comments

• The HRC Committee took actions in response to stockholder feedback.
• We deeply value the continued interest of and feedback of our stockholders, and as a result, the outcome of the Say-on-Pay proposal is important to the Company, the Board, and the Human Resources and Compensation Committee (the HRC Committee) of the Board.
• Our compensation program has thoughtfully evolved to balance attracting and retaining key executive officers while adapting to changes in the Company's senior leadership.

Industry Context

The document notes that Coursera's decision to implement the PSU program at its stage of development puts the performance orientation of its long-term incentive program ahead of the curve relative to other companies that went public via an IPO in the 2020/2021 timeframe.

Comparison to Industry Standards

• The document mentions reviewing competitive data provided by a compensation consultant to determine the appropriate weighting of the PSU program.
• The company considered market norms and good governance practices for a company of its size, industry, and maturity when designing its compensation program.
• The document notes that the four-year vesting schedule for PSUs, rather than the three-year performance period that is common in more established public companies.

Management Changes

Stakeholder Impact

• Stockholders: The changes to the compensation program are intended to better align executive pay with company performance and stockholder value creation.
• Employees: The compensation program is designed to attract and retain key executive officers, ensuring continuity of leadership.
• Executives: The introduction of PSUs and stock ownership guidelines directly impacts the compensation and equity ownership of NEOs.

Next Steps

• Stockholder vote on the Say-on-Pay proposal at the 2025 Annual Meeting.
• Continued evaluation and refinement of the executive compensation program by the HRC Committee.
• Continued dialogue with stockholders regarding the compensation program.

Key Dates

Keywords

executive compensation, stockholder feedback, PSUs, stock ownership guidelines, Adjusted EBITDA, NEOs, HRC Committee, revenue milestones, Say-on-Pay, 2025 Annual Meeting