Brandon Ridenour, 47, became CEO of ANGI Homeservices (ANGI) in November 2018 after serving as Chief Product Officer for just over 1 year. However, the ANGI board chose not to award any PSUs until after his annual review in February 2019, given his appointment came late in the year and the amount and estimated value of the stock awards that were given at the time was $15M (per 2020’s proxy filing).
For 2020, the Board’s compensation committee chose to grant 1,107,828 PSUs to Mr. Ridenour. The PSUs have two performance conditions: 1) “Market Price Test” and 2) “Results Test”.
Market Price Test: the market price of ANGI Class A common stock on February 15, 2023
Results Test: ANGI 2022 revenue and Adjusted EBITDA for the company’s North American results
The shares vest on a scale from zero to 200% according to whichever the greater number between the Market Price Test and the Results Test. For example, if the Market Price Test were to be worth a vesting of 50% of the PSUs and the Results Test were to only be worth a vesting of 25%, Mr. Ridenour would receive the 50% vesting based on the Market Price Test.
This means that Mr. Ridenour has multiple paths to personal compensation victory as he steers the company over the next 3 years.
The Market Price Test
Below is a table summarizing the Market Price Test, with the targets, vesting, award values, and what change in stock price would be required to meet it. As of Thursday’s (4/30/2020) closing price of $6.78, the award currently sits at a vesting of 50% for an annualized value of $1.25M.
Like much of the market, ANGI has already started to recover from its pandemic lows, but the stock has been on a fairly steady downward trend since Ridenour took over as CEO.
So, while meeting the lower end of the targets seems very achievable, he’ll have an uphill battle to max out on this specific test.
The Results Test will vest between 75%-200% based on varying levels of revenue (from $2.1 billion to $2.6 billion) and Adjusted EBITDA for the North American businesses (from $365 million to $490 million) for the 2022 fiscal year. ANGI’s full year revenue for 2019 was $1.33B, so Ridenour and team will have to roughly double that by end of fiscal year 2022. ANGI’s Q1 2020 guidance has them hitting revenue in the range of $340-$345M and adjusted EBITDA in the range of $30-$35M.
Given the underlying uncertainly driven by the pandemic, ANGI has withdrawn its fully year 2020 guidance. So, it remains to be seen how severely the pandemic will impact ANGI this year, and ultimately how that impacts the long-term health of the company. However, it’s clear what the team needs to do to achieve their personal performance targets, and if they do, they stand to be richly rewarded.