8-KLeadership Changes

Roblox Corp 8-K Report, Executive Changes (Mar 4, 2024)

Filed March 4, 2024For Securities:RBLX

Summary

Roblox Corporation (RBLX) has filed an 8-K detailing a significant change in its CEO's compensation structure. Effective March 1, 2024, the company's Leadership Development and Compensation Committee (LDCC) approved the cancellation of the CEO Long-Term Performance (LTP) Award previously granted to CEO David Baszucki. This original award, granted in 2021, was designed with rigorous stock price goals, none of which have been met to date, and it was intended to be Baszucki's sole compensation through 2027. The cancellation reflects a shift towards an annual compensation program that the LDCC believes better aligns with the company's current objectives and market conditions. Consequently, Mr. Baszucki's compensation for 2024 will consist solely of an equity award valued at a target of $25 million. This award is composed of 75% performance-based restricted stock units (PSUs) tied to cumulative bookings and adjusted EBITDA, and 25% time-based restricted stock units (RSUs) that vest over three years. Importantly, Mr. Baszucki will continue to receive no base salary or cash bonus.

Key Highlights

  • 1CEO David Baszucki's prior long-term performance award (CEO LTP Award) has been cancelled as performance conditions were not met.
  • 2Roblox is transitioning CEO compensation to an annual equity award structure.
  • 3The 2024 CEO compensation package is valued at a target of $25 million, entirely in equity.
  • 4The new award comprises 75% performance-based RSUs (PSUs) and 25% time-based RSUs (RSUs).
  • 5PSUs are tied to achieving cumulative bookings and adjusted EBITDA goals over a two-year period (ending Dec 31, 2025).
  • 6CEO Baszucki's base salary remains $0, with no cash bonus component.
  • 7The change aims to better align executive incentives with shareholder value creation and retention through a pay-for-performance model.

Frequently Asked Questions

The CEO LTP Award was cancelled because none of the rigorous stock price goals associated with it were achieved. The LDCC determined that the award was no longer satisfying the company's compensation objectives and decided to transition to an annual compensation program.

The CEO's 2024 compensation is entirely in the form of equity, with a target value of $25 million. It consists of 75% performance-based restricted stock units (PSUs) and 25% time-based restricted stock units (RSUs). His base salary remains $0, and there is no cash compensation or bonus.

The PSUs are tied to the achievement of cumulative bookings and cumulative adjusted EBITDA goals over a two-year performance period ending December 31, 2025. Payouts are capped at 200% of target and vest over time following performance certification.

The filing indicates that the change in compensation structure for the CEO is part of a broader shift towards performance measurements based on bookings growth and covenant adjusted EBITDA for executive officer performance-based equity compensation, which began in April 2023 for executives other than the CEO.