Carvana Co

This proposal asks shareholders to approve, on a non-binding advisory basis, the compensation paid to Carvana’s named executive officers as disclosed in the proxy statement. Management seeks this approval to validate its executive pay program — which emphasizes long-term, equity-based awards (predominantly time‑based RSUs) and aligns pay with shareholder returns — and to comply with Section 14A of the Exchange Act. The Compensation and Nominating Committee details a pay-for-performance approach, with approximately 88% of target NEO compensation at risk and tied to long-term equity incentives; recent 2025 grants were time-based RSUs. The Board recommends a "FOR" vote, citing record 2025 profitability, strong alignment of pay with performance metrics like Adjusted EBITDA and retail units sold, and governance measures including independent committees and a clawback policy. Potential considerations include the appropriateness of RSU-heavy pay versus performance‑contingent awards, limited PSUs in 2025, CEO pay set below market due to ownership, and the advisory nature of the vote which does not change pay practices directly. Analysts should weigh the strong recent financial performance and stock appreciation against governance concentration and the high reliance on equity compensation when assessing the merits of the proposal.

This management proposal requests shareholder approval of the Carvana Co. 2026 Omnibus Incentive Plan to replace the expiring 2017 Plan, preserving the existing share reserve and enabling continued equity-based compensation for employees, executives, and non-employee directors. Management argues the 2026 Plan is required to maintain alignment of employee incentives with long-term shareholder value, support talent retention and recruitment, and avoid shifting compensation to cash after the 2017 Plan expires in April 2027. The plan includes governance safeguards (limits on director awards, prohibition on discounted option repricing, automatic limited annual share increases of 2% of outstanding Class A shares for up to ten years, and clawback provisions) intended to mitigate dilution and governance concerns. The board recommends a “FOR” vote. Analysts should consider impacts on dilution, overhang, historical burn rates (notably elevated in past years), and the company’s heavy reliance on equity pay; weigh these against the company’s strong 2025 performance and need to retain talent in a competitive market.

Management seeks shareholder approval to amend the charter to effect a five-for-one forward stock split and proportionately increase the authorized shares of Class A and Class B common stock. The Board argues the split will reduce the trading price per share, making stock more accessible to employees and retail investors and improving liquidity; it will not change proportional ownership, voting power, or aggregate equity value. The action also requires parallel adjustments to LLC units and plan share counts. Approvals require multiple class and voting thresholds. Analysts should note potential anti‑takeover effects from the increase in authorized shares, the non-dilutive nature of the split itself, and the operational benefit to employee equity management; consider timing and market psychology around the split and automatic adjustments to plan reserves and outstanding awards.

Management requests ratification of Grant Thornton LLP as Carvana’s independent registered public accounting firm for 2026. The Audit Committee oversees the appointment and has reviewed the auditor’s fees, services, and independence, concluding the relationship is appropriate. The proposal is routine; the Board recommends a "FOR" vote. For analysts, this proposal is typically uncontroversial, but attention to auditor fees, tax services, and the audit committee’s oversight, especially given the company’s improving financial performance, remains prudent.

The stockholder proposal requests that Carvana's Board adopt a policy to separate the roles of Chairman and CEO and to designate an independent director as Chairman, arguing that such separation would improve corporate governance by providing independent oversight, mitigating conflicts of interest, and strengthening accountability. The proponent, John Chevedden, asserts that Carvana's governance scores and the entrenchment effects of staggered multi-year director terms justify a prescriptive governance change. Management opposes the proposal, asserting that the Board should retain flexibility to choose the leadership structure that best serves the company and that the existing independent Lead Director role and independent board committees provide adequate checks and balances. The Board recommends voting against the proposal. The controversy centers on governance philosophy (flexibility and unified leadership versus mandated separation) and the specifics of Carvana's controlled-company ownership structure and governance arrangements, including the Garcia Parties' concentrated voting power and existing Lead Director framework. Analysts should weigh the potential governance benefits of an independent chair against the Board’s rationale for flexibility and Carvana-specific governance realities, such as dual-class voting, controlled company status, and the effectiveness of the Lead Director role.