Chegg 2013 Annual Report Download - page 39

TRANSACTIONS WITH RELATED PARTIES, FOUNDERS AND CONTROL PERSONS
In addition to the compensation arrangements, including employment, termination of employment and
change of control arrangements and indemnification arrangements, discussed, when required, above in the
section entitled “Executive Compensation,” The following is a description of each transaction since January 1,
2013 and each currently proposed transaction in which:
• we have been or are to be a participant;
• the amount involved exceeded or exceeds $120,000; and
• any of our directors, executive officers or holders of more than 5% of our capital stock, or any
immediate family member of or person sharing the household with any of these individuals, had or will
have a direct or indirect material interest.
Employment and Advisory Service Agreements with Aayush Phumbhra
We entered into an Employment Agreement with Aayush Phumbhra, our former Co-Founder and Senior
Vice President and a former member of our board of directors, in December 2008, which we amended in May
2012 and December 2012. Under his Employment Agreement, as amended, Mr. Phumbhra resigned as an
employee and a member of our board of directors, effective May 15, 2013, and upon resignation, received all of
his earned but unpaid base salary and bonus through the date of termination, a lump-sum payment equal to nine
months of his then-current base salary, a lump-sum payment for all of his days of personal time off accrued up to
the date of resignation, and a lump-sum payment equal to nine times the average monthly portion of his health
insurance coverage paid by us during the 9 months prior to his resignation, subject to his delivery of a general
release of claims in our favor. These amounts totaled to $304,075. Prior to his resignation, we had paid
Mr. Phumbhra $147,701 in salary and bonus.
At the time of his resignation, we entered into an Advisory Service Agreement with Mr. Phumbhra and
agreed to pay him $5,000 per month for consulting services, permit the continued vesting of his outstanding
options to purchase common stock for so long as he provides consulting services under the Advisory Service
Agreement and permit him to participate in our Designated IPO Equity Incentive Program, as summarized above
under “Executive Compensation—Designated IPO Equity Incentive Program.” The Advisory Service Agreement
is effective for a period of 15 months, following May 15, 2013, subject to earlier termination for breach as
described in the Advisory Service Agreement. During 2013, we paid Mr. Phumbhra a total of $37,500 in
accordance with his Advisory Service Agreement. On November 12, 2013, Mr. Phumbhra was granted an option
to purchase 82,220 shares of our common stock at an exercise price of $12.50 per share and 41,668 RSUs
pursuant to our Designated IPO Equity Incentive Program. Both equity awards were fully vested on the grant
date. The grant date fair value of these awards was $670,104 and $520,850, respectively.
Review, Approval or Ratification of Transactions with Related Parties
In September 2013, in connection with our IPO, our board of directors adopted a related-party transactions
policy that requires approval of transactions to which we are a party and in which an officer, director, nominee
for director, stockholder beneficially owning more than five percent of our outstanding capital stock or an
immediate family member of such person has a material interest. Any transaction that we intend to undertake
with such persons, irrespective of the amounts involved (unless such transaction is subject to standing pre-
approval as provided under the policy or pursuant to a resolution adopted by our compensation committee), will
be submitted to our ethics counselor for his or her determination of what approvals are required under the related-
party transactions policy. The ethics counselor will refer to the chair of our audit committee (or another member
of our audit committee if the chair is a party to the transaction) any such transaction for review. In the event our
ethics counselor becomes aware of a transaction with a related person that has not been previously approved or
previously ratified under the related-party transactions policy that required such approval, it will be submitted
33