DEF 14A: FIGS, Inc. Files Proxy Statement for 2024 Annual Meeting, Outlines Executive Compensation and Governance Proposals

FIGS, Inc. has released its proxy statement detailing proposals for the upcoming 2024 Annual Meeting of Stockholders, including the election of directors, ratification of the independent auditor, and an advisory vote on executive compensation.

Summary

• FIGS, Inc. has filed a proxy statement for its 2024 Annual Meeting of Stockholders, scheduled for June 5, 2024.
• The meeting will be held virtually.
• Stockholders will vote on the election of three Class III Directors (A.G. Lafley, Jeffrey Wilke, and J. Martin Willhite), the ratification of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2024, and an advisory vote on the compensation of the named executive officers.
• The Board of Directors recommends voting FOR all proposals.
• As of April 10, 2024, there were 161,864,232 shares of Class A common stock and 8,283,641 shares of Class B common stock outstanding, representing approximately 49.4% and 50.6% of the voting power, respectively.
• The proxy statement includes details on corporate governance, executive compensation, director compensation, and related party transactions.
• The company is considered a controlled company due to the voting power held by Heather Hasson, Catherine Spear, and the Tull Parties.
• The proxy statement also details the company's corporate responsibility initiatives, including human capital management, diversity, equity, inclusion, and sustainability efforts.

Sentiment

Score: 7

Explanation: The document is primarily factual and informative, presenting proposals for the annual meeting and outlining governance and compensation practices. The tone is professional and optimistic, reflecting confidence in the company's direction and commitment to stakeholder engagement.

Positives

• The Board recommends voting FOR all proposals, indicating confidence in the company's direction.
• The company has a strong focus on corporate responsibility, including diversity, equity, inclusion, and sustainability.
• FIGS has a clawback policy in place for recovery of erroneously awarded compensation from executive officers.
• The company prohibits hedging and pledging of stock by directors, officers, and employees.
• FIGS is committed to enhancing the sustainability of its products and packing, targeting to have at least 75% of its scrub fabric be comprised of recycled and upcycled materials by 2030.

Negatives

• FIGS is considered a controlled company, which may limit stockholder protections.
• The company relies on exemptions from certain corporate governance requirements due to its controlled company status.

Risks

• The division of the Board into three classes with staggered three-year terms may delay or prevent a change of management or a change in control of the company.
• The company's reliance on a Voting Agreement means that a small group of individuals controls the election of directors.
• The company's forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Future Outlook

The document includes forward-looking statements regarding the company's investor outreach program, Board leadership structure, corporate responsibility initiatives, sustainability goals, and compensation programs. These statements are based on current expectations and projections about future events and financial trends.

Management Comments

• Catherine Spear, Chief Executive Officer, expressed gratitude for stockholders' support and urged them to vote their shares.
• The company believes that hosting a virtual meeting this year is in the best interest of the Company and its stockholders.

Industry Context

The document provides insight into FIGS' corporate governance practices, executive compensation, and sustainability initiatives, aligning with broader industry trends towards transparency and stakeholder engagement. The company's focus on diversity, equity, and inclusion also reflects a growing emphasis on social responsibility within the apparel and healthcare industries.

Comparison to Industry Standards

• The peer group used for executive compensation benchmarking includes companies like AllBirds, Beyond Meat, Bumble, Canada Goose, Chewy, Etsy, Freshpet, GoodRx, Peloton, Poshmark, Revolve Group, Stitch Fix, The Honest Company, The RealReal, Warby Parker, and YETI Holdings.
• FIGS' revenue percentile compared to its peer group was at the 23rd percentile, while its market cap was at the 28th percentile as of May 2023.
• The company's engagement index score of 73% is on par with the national average of organizations benchmarked.

Management Changes

Corporate Governance

Related Party Transactions

• The company has entered into a stockholders agreement with certain holders of its Common Stock, including Ms. Hasson and Ms. Spear, pursuant to which certain of these holders are entitled to certain rights relating to the registration of their shares and indemnification in certain circumstances.
• The company, Ms. Hasson and Ms. Spear, Tulco and certain related persons and trusts entered into a Voting Agreement in connection with the IPO, under which such parties agree to vote their shares for the election of each of Ms. Hasson, Ms. Spear and, for so long as Tulco and its permitted transferees hold, in the aggregate, at least 10% of the total number of outstanding shares of all classes of the company's Common Stock, an individual designated by Tulco to the Board, and to vote against their removal.
• In connection with the IPO, the company entered into an exchange agreement with Ms. Hasson and Ms. Spear, Tulco and certain related trusts pursuant to which an aggregate of 6,776,438 shares of Class A common stock held by Ms. Hasson and Ms. Spear and their respective affiliated trusts and 6,300,000 shares of Class A common stock then held by Tulco were exchanged into an equivalent number of shares of Class B common stock.
• Pursuant to an equity award exchange right agreement (the Equity Award Exchange Agreement) entered into between the company and Ms. Hasson and Ms. Spear in connection with the IPO, each of Ms. Hasson and Ms. Spear have a right to require the company to exchange any shares of Class A common stock received upon the exercise of stock options or the vesting and settlement of RSUs, in each case granted under the 2016 Plan and outstanding prior to the date of effectiveness of the registration statement related to the IPO, for an equivalent number of shares of Class B common stock (the Exchange Right).

Stakeholder Impact

• Stockholders are provided with information and a platform to vote on key company decisions.
• Employees are impacted by the company's compensation programs, benefits, and corporate responsibility initiatives.
• The company's sustainability efforts and ethical supply chain practices impact suppliers and the environment.
• The company's advocacy program and philanthropic initiatives support healthcare professionals and the communities they serve.

Next Steps

• Stockholders are encouraged to vote their shares by phone, internet, or mail.
• The company will announce preliminary voting results at the Annual Meeting and report the final results in a Current Report on Form 8-K.

Key Dates

Keywords

proxy statement, annual meeting, corporate governance, executive compensation, directors, voting, FIGS, stockholders