SSTK.NYSEShutterstock, INC
10-K/A: Shutterstock Files Amendment No. 1 to 2024 Form 10-K, Detailing Executive Compensation and Governance
Sentiment:
10-K/A Filing
Shutterstock's Amendment No. 1 to its 2024 Form 10-K provides detailed information on executive compensation, corporate governance, and related matters.
Worse than expectedNet income decreased 67% to $35.9 million.Operating cash flows decreased $107.9 million to $32.6 million.Adjusted free cash flow decreased $29.8 million to $108.7 million.
Summary
- Shutterstock filed Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
- The amendment includes information required by Part III of Form 10-K, which was previously omitted from the original filing.
- The document details the compensation of named executive officers (NEOs) including Jonathan Oringer, Paul Hennessy, Rik Powell, Jarrod Yahes (former CFO), and John Caine (former Chief Product and Digital Officer).
- The amendment outlines the company's executive compensation philosophy, objectives, and governance practices.
- It discusses the elements of compensation, including base salary, cash incentives, and long-term incentive compensation (stock options, RSUs, and PSUs).
- The document also covers director compensation, security ownership, related person transactions, and principal accountant fees and services.
- The amendment includes certifications from the CEO and CFO regarding the accuracy of the report.
- A merger agreement with Getty Images Holdings, Inc. was entered into on January 6, 2025, subject to closing conditions and stockholder approval.
Sentiment
Score: 5
Explanation: The document presents a mixed picture. While revenue increased, net income and cash flows decreased. The merger with Getty Images is a significant event, but its outcome is uncertain. The document is primarily factual and descriptive, with no strong positive or negative tone.
Positives
- Revenue increased by 7% to $935.3 million in 2024.
- Adjusted EBITDA increased by 3% to $247.1 million in 2024.
- The company maintains a completely independent Compensation Committee.
- The company has a clawback policy compliant with SEC and NYSE rules.
- The company's collection of content is one of the largest of its kind, with 800 million images and 59 million footage clips.
Negatives
- Net income decreased by 67% to $35.9 million in 2024.
- Operating cash flows decreased by $107.9 million to $32.6 million.
- Adjusted free cash flow decreased $29.8 million to $108.7 million.
- Revenue and Adjusted EBITDA targets for 2024 were not fully achieved, resulting in payout percentages below 100% for some executives.
Risks
- The closing of the Merger with Getty Images is subject to the satisfaction of closing conditions, including regulatory approvals and stockholder approval.
- The company's future performance is dependent on achieving ambitious revenue growth and adjusted EBITDA margin targets.
- The company faces risks related to attracting, engaging, motivating, and retaining highly talented individuals.
- The company's performance is subject to fluctuations in foreign currency exchange rates.
Future Outlook
The company is pursuing a merger with Getty Images, subject to regulatory and stockholder approvals. The company aims to continue driving growth and profitability through its executive compensation program and strategic business goals.
Industry Context
The document provides insights into Shutterstock's financial performance and executive compensation practices within the technology and software services industry. The merger with Getty Images indicates a trend towards consolidation in the visual content market.
Comparison to Industry Standards
- The peer group used for compensation decisions includes companies like Alarm.com Holdings, Inc., Envestnet, Inc., Magnite, Inc., Quotient Technology, Inc., Box, Inc., Etsy, Inc., New Relic, Inc., Stitch Fix, Inc., Cars.com Inc., Getty Images Holdings, Inc., Paycom Software, Inc., TrueCar, Inc., Dropbox, Inc., LivePerson, Inc., Pinterest, Inc., Vimeo, Inc., QuinStreet, Inc., and Yelp Inc.
- These companies are similar to Shutterstock in industry code, revenue, market capitalization, and sales growth.
- The document does not provide specific comparisons of executive compensation levels to these peer companies, but states that the Compensation Committee considers market data from these companies when making compensation decisions.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Financial Officer | Jarrod Yahes | Rik Powell | November 1, 2024 | Jarrod Yahes resigned. |
| Chief Product and Digital Officer | John Caine | August 23, 2024 | John Caine's employment ended. | |
| Chief Marketplace Officer | Matthew Furlong | January 2025 | New hire. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Clawback Policy | The company has a clawback policy designed to comply with Section 10D of the Exchange Act and NYSE listing standards, allowing for the recovery of erroneously awarded incentive-based compensation from executive officers following a financial restatement. | October 2023 | Aims to ensure accountability and align executive compensation with accurate financial reporting. |
| Director Independence | The Board determined that Ms. Bigley, Ms. Bhasin, Mr. Evans, Ms. Teevan and Mr. Upshaw are independent directors. | N/A | Ensures that the Board has independent oversight and decision-making capabilities. |
Stakeholder Impact
- The merger with Getty Images could impact shareholders, employees, customers, and suppliers.
- Executive compensation decisions are designed to align executive interests with those of stockholders.
- The company's performance impacts employee compensation and benefits.
Key Dates
| Date | Description |
|---|---|
| September 24, 2012 | Date of Jonathan Oringer's original employment agreement. |
| March 21, 2013 | Date of lease agreement between Shutterstock and Empire State Building Company LLC. |
| April 24, 2014 | Effective date of reduction of Jonathan Oringer's base salary to $1. |
| August 31, 2015 | Date of First Lease Modification Agreement. |
| January 8, 2016 | Date of Second Lease Modification and Extension Agreement. |
| July 19, 2016 | Date of Third Lease Modification Agreement. |
| August 5, 2019 | Date of Employment Agreement between the Company and Steven Ciardiello. |
| November 7, 2019 | Date of Employment Agreement between the Company and Jarrod Yahes. |
| February 11, 2020 | Date of Amendment to Employment Agreement and Severance and Change in Control Agreement with Jon Oringer. |
| April 1, 2020 | Stan Pavlovsky became CEO of the Company. |
| December 2020 | Alfonse Upshaw joined the Board. |
| May 6, 2022 | Date of Credit Agreement among Shutterstock, Inc., certain subsidiary guarantors, certain financial institutions, as lenders, and Bank of America, N.A., as administrative agent for such lenders. |
| May 8, 2022 | Date of Employment Agreement between the Company and Paul J. Hennessy. |
| July 1, 2022 | Paul Hennessy appointed Chief Executive Officer. |
| January 12, 2023 | Date of Employment Agreement between the Company and John Caine. |
| October 2023 | The Compensation Committee recommended, and the Board approved, a clawback policy. |
| May 1, 2024 | Date of Stock Purchase Agreement. |
| June 6, 2024 | The Companys stockholders approved the Amended and Restated 2022 Plan. |
| June 28, 2024 | Paul J. Hennessy's employment agreement was amended. |
| July 22, 2024 | Date of Amended and Restated Credit Agreement. |
| August 19, 2024 | The Company notified John Caine that his employment as Chief Product and Digital Officer of the Company would end. |
| August 23, 2024 | John Caine's employment as Chief Product and Digital Officer of the Company ended. |
| October 24, 2024 | Jarrod Yahes notified the Company of his resignation as Chief Financial Officer. |
| October 28, 2024 | Rik Powell was appointed as the Company's Chief Financial Officer. |
| October 30, 2024 | Date of Employment Agreement by and between Rik Powell and Shutterstock, Inc. |
| October 31, 2024 | Date of Transition Agreement by and between Jarrod Yahes and Shutterstock, Inc. |
| November 1, 2024 | Jarrod Yahes resigned as Chief Financial Officer, effective November 1, 2024 and Rik Powell became CFO. |
| December 31, 2024 | End of fiscal year 2024. |
| January 6, 2025 | Date of Agreement and Plan of Merger with Getty Images Holdings, Inc. |
| January 13, 2025 | Date of Employment Agreement between the Company and Matthew Furlong. |
| January 27, 2025 | The Compensation Committee approved changes to Mr. Powell's compensation. |
| February 5, 2025 | Date of Schedule 13G/A filed by Blackrock, Inc. |
| February 21, 2025 | 34,893,659 shares of the registrants common stock were outstanding. |
| February 25, 2025 | Original Form 10-K filed with the SEC. |
| March 19, 2025 | Date of Employment Agreement Amendment, dated March 19, 2025, by and between the Company and Matthew Furlong. |
| March 24, 2025 | Date for director and executive officer information. |
| March 28, 2025 | Date of filing of Amendment No. 1 to Form 10-K. |
| May 23, 2025 | Date to acquire shares in connection with stock options or vesting of RSUs. |
| July 1, 2025 | Vesting date of Mr. Hennessy's PSUs. |
| July 1, 2026 | Vesting date of Mr. Hennessy's RSUs. |
Keywords
executive compensation, corporate governance, financial performance, Shutterstock, Getty Images, merger, directors, EBITDA, revenue, stock options, RSUs, PSUs
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