SCHEDULE: Nerdy Inc. Insiders Boost Stakes

Nerdy Inc. Chairman and CEO Charles Cohn and Allison Cohn have increased their beneficial ownership in the company through recent open market purchases, now holding 48.7% and 9.8% respectively.

Summary

• Charles Cohn and Allison Cohn, Chairman/CEO and his spouse, have filed an Amendment No. 8 to their Schedule 13D, updating their beneficial ownership in Nerdy Inc.
• Charles Cohn beneficially owns 77,937,477 shares of Class A Common Stock, representing 48.7% of the class, and disclaims beneficial ownership of Ms. Cohn's shares.
• Allison Cohn beneficially owns 12,601,127 shares of Class A Common Stock, representing 9.8% of the class, and disclaims beneficial ownership of Mr. Cohn's shares.
• Both reporting persons made significant open market purchases of Class A Common Stock in the 60 days prior to the filing date, with Charles Cohn purchasing 1,361,865 shares and Allison Cohn purchasing 1,157,782 shares.
• The shares were initially acquired as consideration in a Business Combination on September 20, 2021, or through subsequent open market or privately negotiated purchases.
• The filing details existing agreements including a Stockholders' Agreement, a Founder Equity Award Agreement for Charles Cohn with stock price vesting hurdles up to $42.00 per share, and a Tax Receivable Agreement.

Sentiment

Score: 7

Explanation: The significant open market purchases by the CEO and his spouse, coupled with the performance-based equity award tied to high stock price targets, indicate strong insider confidence in the company's future prospects and valuation potential. This is generally a positive signal for investors.

Positives

• Significant insider buying by both Charles and Allison Cohn, totaling over 2.5 million shares in the past 60 days, indicates strong confidence in the company's future prospects.
• Charles Cohn, as CEO and Chairman, increasing his stake aligns management's interests directly with long-term shareholder value creation.
• The Founder Equity Award Agreement incentivizes Charles Cohn to achieve substantial stock price growth, with vesting hurdles set at $18.00, $22.00, $26.00, $30.00, $34.00, $38.00, and $42.00 per share over a seven-year period.

Risks

• Charles Cohn's Founder Equity Award vesting is contingent on achieving specific stock price goals ($18.00, $22.00, $26.00, $30.00, $34.00, $38.00, and $42.00 per share) over a seven-year period, which may not be met.
• Transfer restrictions apply to Charles Cohn's net after-tax shares from the Founder Equity Award for two years following vesting, except for estate planning purposes.
• The Stockholders' Agreement includes a six-month lock-up provision on Class A Common Stock transfers, limiting immediate liquidity for certain shareholders.
• The OpCo LLC Agreement also includes a six-month lock-up provision on the redemption right for OpCo Units, which could affect the timing of conversions to Class A Common Stock.

Future Outlook

The Reporting Persons acquired shares for investment purposes and may, from time to time, acquire additional shares or dispose of existing shares in the open market or privately negotiated transactions. These potential actions will depend on various factors, including stock price levels, general market and economic conditions, ongoing evaluation of the Company's business, financial condition, operating results and prospects, and the relative attractiveness of alternative business and investment opportunities.

Management Comments

• The Reporting Persons acquired the Common Stock for investment purposes.
• Any actions the Reporting Persons might undertake will be dependent upon the Reporting Persons' review of numerous factors, including, among other things, the price levels of the Common Stock; general market and economic conditions; ongoing evaluation of the Company's business, financial condition, operating results and prospects; the relative attractiveness of alternative business and investment opportunities; and other future developments.

Industry Context

This filing primarily concerns insider ownership and corporate governance structures following a business combination. While it does not directly provide information on broader industry trends, the company operates in the online learning (EdTech) sector. Increased insider ownership, particularly by the CEO, is generally viewed as a positive signal across industries, suggesting strong management confidence in the company's future performance and strategic direction.

Comparison to Industry Standards

• NA

Corporate Governance

Related Party Transactions

• The Business Combination involved Charles Cohn exchanging Nerdy LLC common units for consideration from the Company, establishing a foundational related-party transaction.
• The Tax Receivable Agreement provides for payments from the Company to TRA Holders, including Charles Cohn, based on tax savings realized by the Company.
• The Stockholders' Agreement and OpCo LLC Agreement define rights and obligations between the Company, Charles Cohn, Allison Cohn, and other significant shareholders/unit holders, governing their ongoing relationship and control.

Stakeholder Impact

• Shareholders: Increased insider ownership may signal strong confidence in the company's future, potentially positively influencing investor sentiment and the stock price. The CEO's performance award aligns his interests with long-term shareholder value creation.
• Management/Employees: The CEO's performance award provides a strong incentive for achieving high stock price targets, potentially motivating the broader management team.
• Creditors: The Tax Receivable Agreement could impact the company's cash flow by requiring payments to TRA Holders, which may affect the company's liquidity and financial flexibility.

Next Steps

• Reporting Persons may acquire or dispose of additional shares in the future based on market conditions and company performance.
• Charles Cohn's Founder and CEO Performance Award will vest upon satisfaction of service conditions and achievement of specific stock price goals over a seven-year period.
• Payments under the Tax Receivable Agreement will be made as the Company realizes actual cash tax savings in periods after the Business Combination.

Key Dates

Recommendation

The significant open market purchases by the CEO and his spouse, totaling over 2.5 million shares in the past 60 days, demonstrate strong conviction in Nerdy Inc.'s valuation and future prospects. This insider buying, especially at varying price points, signals management's belief that the stock is undervalued. Furthermore, the CEO's performance-based equity award, with vesting hurdles extending up to $42.00 per share, provides a powerful incentive for long-term value creation and aligns management's interests directly with shareholders. These factors collectively suggest a positive outlook and make a 'buy' recommendation appropriate for a seasoned investor.

Keywords

Nerdy Inc., Charles Cohn, Allison Cohn, Schedule 13D, Insider Ownership, Stock Purchases, Beneficial Ownership, Corporate Governance, Founder Equity Award, Tax Receivable Agreement, Online Learning, EdTech