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Table of Contents
Our executive compensation program is designed so that the sum of base pay plus total short- and long-term compensation is competitive with
market practices. Market practices—or benchmarks—are based on peer-group data and compensation survey data.
The past year, 2018, was our first year of developing a compensation peer group. Many of our direct industry competitors are either privately
held companies or are larger than us in revenue size, although very few have our growth trajectory. The Compensation and Nominating Committee, with the
assistance of its compensation consultant, Korn Ferry, reviewed and selected potential peer companies based on revenue size, industry focus, growth rates,
complexity of operations, customer base, and market for talent. With the assistance of its compensation consultant, the committee approved the following
compensation peer group in order to determine market pay levels and pay practices for fiscal year 2018:
¢ — 1-800-Flowers.com, Inc. * Overstock.com, Inc.
¢ America’s Car-Mart, Inc. * RH
* Cars.com Inc. * Sleep Number Corporation
* Etsy, Inc. ¢ TrueCar, Inc.
* Grubhub, Inc. * U.S. Auto Parts Network, Inc.
* MarineMax, Inc. ¢ Wayfair Inc.
* Monro, Inc. * Zillow Group, Inc.
Going forward, the Compensation and Nominating Committee expects to review our compensation peer group on an annual basis for continued
appropriateness, considering changes in both our size and business and the businesses of the companies in the peer group.
The committee also uses compensation survey data in its evaluation of executive pay for the NEOs. Survey data provides insight into positions
that may not generally be reported in proxy statements and information about the compensation of executives of non-public companies. To assist the
committee in evaluating fiscal year 2018 compensation levels, the committee reviewed both peer-group proxy data and information from survey databases,
utilizing appropriate subsets based on the size of the company.
In accordance with our overall compensation philosophy and program, executives are provided with a mix of base salary, short-term incentives,
long-term incentives and employee benefits. Our compensation philosophy places a significant portion of the potential total compensation for each NEO “at
risk” such that compensation will vary based on performance of Carvana. Variable compensation is a component of compensation for most of our
employees, but a higher proportion of our NEOs’ compensation is at risk than that of our general employee population. As shown in the pay mix chart
below, our compensation program is designed to be highly performance-based with approximately 80% of each of our NEO’s compensation tied to our
financial performance and stock price performance.
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