What is the primary purpose of these new equity grants?

The primary purpose is to incentivize and retain key executive leadership, specifically CEO Adam Foroughi and CTO Vasily Shikin, by aligning their compensation with the long-term stock performance and growth of AppLovin Corporation. The performance-based nature of the PSUs directly links executive rewards to increases in shareholder value.

How will the performance-based restricted stock units (PSUs) vest?

The PSUs will vest in five equal tranches based on the achievement of specific stock price targets. These targets range from a minimum closing price of $36.00 over 30 consecutive trading days, up to $79.00, with intermediate targets in between. The measurement period for these targets is five years from the grant date, and the price must be sustained over a 30-day period to trigger vesting.

What are the holding period requirements for the awarded shares?

CEO Adam Foroughi is required to hold 100% of his awarded PSUs (6,902,000 shares) for five years from the grant date, regardless of whether they vest. CTO Vasily Shikin and other recipients must hold any after-tax shares received from vested PSUs for at least one year, with exceptions for change in control or certain termination scenarios.

Are these PSU grants the only performance-based equity awards the executives can receive?

The company intends for these PSUs to be the exclusive performance-based equity awards for Mr. Foroughi and Mr. Shikin for the next four years, unless there are significant unforeseen changes in the company's business or other factors that warrant additional grants. They will, however, continue to be eligible for time-based equity awards during this period.

APP 8-K: Leadership Changes

Summary

AppLovin Corporation (APP) filed an 8-K on March 13, 2023, detailing significant equity awards granted to its executive team. The company approved the grant of performance-based restricted stock units (PSUs) to CEO Adam Foroughi and CTO Vasily Shikin, as well as to other key employees. These PSUs are tied to achieving specific stock price targets over a five-year performance period, aligning executive compensation with long-term shareholder value creation. Additionally, both Mr. Foroughi and Mr. Shikin received time-based restricted stock units that vest in full on February 20, 2024, contingent on their continued service. The performance-based awards are structured with vesting contingent upon sustained increases in AppLovin's stock price, with targets ranging from $36.00 to $79.00 per share. This tiered structure aims to reward executives for significant and sustained market capitalization growth. A notable aspect of these grants is the extended holding period required for the awarded shares, designed to further reinforce the long-term commitment of key leadership to the company's success and to ensure alignment with shareholder interests.

Key Highlights

1AppLovin Corp granted performance-based restricted stock units (PSUs) to CEO Adam Foroughi and CTO Vasily Shikin, totaling 17,255,000 shares.
2The PSUs are contingent on achieving specific stock price targets over a five-year performance period, with vesting thresholds set from $36.00 to $79.00 per share.
3CEO Adam Foroughi and CTO Vasily Shikin also received additional restricted stock units covering 520,472 shares each, vesting on February 20, 2024, subject to continued employment.
4The PSU grant structure is designed to incentivize long-term growth and align executive compensation with shareholder value creation.
5A substantial holding period is imposed on executives: Mr. Foroughi must hold 100% of his awarded PSUs (6,902,000 shares) for five years, and Mr. Shikin must hold shares from vested PSUs for at least one year.
6The company's Compensation Committee, in consultation with an independent advisor, considered various factors including executive ownership, market data, and future contributions when approving these awards.

AppLovin Corp 8-K Report, Executive Changes (Mar 13, 2023)

Summary

Key Highlights

Frequently Asked Questions