Form 4: DraftKings CEO Enters Prepaid Variable Forward Sale Contract for 715,551 Shares

DraftKings CEO Jason Robins entered into a prepaid variable forward sale contract, agreeing to potentially sell up to 715,551 shares of Class A Common Stock by March 2030 in exchange for $17,005,516.73.

Summary

• DraftKings CEO Jason Robins entered into a prepaid variable forward sale contract on March 14, 2025, with an unaffiliated third party.
• The contract involves the potential sale of up to 715,551 shares of DraftKings' Class A Common Stock (the 'Base Amount').
• The settlement date, or 'Maturity Date', is set for March 14, 2030.
• In exchange for this obligation, Robins will receive a cash payment of $17,005,516.73 on March 17, 2025.
• Robins has pledged 715,551 shares of Class A Common Stock as collateral but retains voting rights during the pledge term.
• He is obligated to pay the buyer the economic benefits of dividends during the term of the pledge.
• The number of shares to be delivered depends on the closing price of DraftKings' Class A Common Stock on the Maturity Date.
• If the Settlement Price is between $29.25 ('Floor Level') and $75.00 ('Cap Level'), the number of shares delivered will be adjusted based on a ratio of the Floor Level to the Settlement Price.
• If the Settlement Price is at or above $75.00, the number of shares delivered will be adjusted based on a formula considering the Floor Level, the Settlement Price exceeding the Cap Level, and the Settlement Price.
• If the Settlement Price is at or below $29.25, Robins will deliver the full Base Amount of 715,551 shares.
• Jason Robins also holds 393,013,951 shares of Class B Common Stock, which are not registered securities.

Sentiment

Score: 5

Explanation: Neutral. This is a standard financial transaction for executives. The impact depends on market perception and the future stock performance of DraftKings.

Risks

• The ultimate number of shares delivered depends on the stock price of DraftKings on the maturity date, which introduces market risk.
• If the stock price is below $29.25 on March 14, 2030, Robins will have to deliver the full 715,551 shares.
• The transaction could be perceived negatively by the market if investors believe the CEO is reducing his stake due to a lack of confidence in the company's future performance.

Future Outlook

The number of shares to be delivered in 2030 will depend on DraftKings' stock price at that time, ranging from a full delivery of 715,551 shares if the price is at or below $29.25, to a reduced number if the price is higher, based on the contract's formula.

Industry Context

Executives sometimes use forward sale contracts for personal financial planning, allowing them to monetize a portion of their holdings while potentially retaining some upside. The specific terms of the contract (floor, cap) will influence the ultimate outcome for both the executive and the counterparty.

Comparison to Industry Standards

• Prepaid variable forward sales are a fairly common tool used by executives to diversify their holdings or manage personal finances.
• Similar transactions have been undertaken by executives at companies like Tesla (Elon Musk), Facebook (Mark Zuckerberg), and Amazon (Jeff Bezos).
• The terms of these contracts, such as the floor and cap prices, are tailored to the individual's risk tolerance and financial goals.

Stakeholder Impact

• Shareholders may react to the news depending on their interpretation of the CEO's motives.
• The transaction itself does not directly impact employees, customers, suppliers, or creditors.

Key Dates