{ "docId": "019dd923-622c-750b-8b99-4fdf89a4b224", "docSlug": "bcbeb3ac7b21", "documentTitle": "Progyny, Inc. (PGNY)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2023-02-07 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 28, "pageCount": 100, "prevPage": 27, "nextPage": 29, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 6, "notes": "Uses a red flag icon to denote a warning or area of concern.", "elementsJson": [ "headline_text", "callout_box", "paragraph", "screenshot" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-4fdf89a4b224/28", "deckHref": "/decks/019dd923-622c-750b-8b99-4fdf89a4b224", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-4fdf89a4b224.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-4fdf89a4b224#slide-28", "components": [ { "bbox": { "h": 0.27, "w": 0.18, "x": 0.79, "y": 0.53 }, "kind": "callout", "text": "As shown on the previous slide, unbilled revenue recorded in 1Q22, 2Q22, and 3Q22 were $7.6M, $4.9M, and $29.5M, respectively. Has the use of unbilled revenues thus far in FY22 put management on track to trigger further compensation?", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "777ea2e6-ffb8-4035-80c3-4950e14d4796", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.85, "x": 0.11, "y": 0.17 }, "kind": "callout", "text": "Schlanger and Anevski were recently issued PSUs on January 1, 2022 that vest upon a “rigorous revenue target” over any four consecutive fiscal quarters until 2027. We are puzzled why revenue targets would be permitted over four consecutive quarters rather than being based on annual audited financials. Does this allow management to use the revenue recognition levers we have noted in this report? Given the past and present accounting irregularities we have identified in this report, we think the compensation committee needs to reevaluate any management compensation tied to revenues.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "da2c6816-7819-4008-8ce4-a1f3188cde89", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.65, "x": 0.18, "y": 0.37 }, "kind": "paragraph", "text": "Excerpt from PGNY FY21 Proxy Regarding Equity and Option Grant Vesting", "attrs": null, "subkind": "description", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "eb71b92c-4638-4496-8623-243968f295e1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.48, "w": 0.73, "x": 0.05, "y": 0.42 }, "kind": "paragraph", "text": "Messrs. Schlanger and Anevski did not receive any equity awards during fiscal 2021 and had not received any equity awards since 2019. Rather, in connection with the transition of their roles and in order to continue to retain and incentivize these key executives given that the significant majority of their outstanding equity awards were fully vested, on January 1, 2022 Messrs. Schlanger and Anevski received grants of 333,000 and 1,000,000 options at an exercise price of $50.35, 84,000 and 250,000 restricted stock units, and 83,000 and 250,000 PSUs, respectively. Each such option and restricted stock unit award vests as to 25% on the first anniversary of the vesting commencement date of January 1, 2022 with the remaining 75% of such award vesting in equal quarterly installments on each quarterly anniversary thereafter over the next three years, subject to the executive’s continued service through each applicable vesting date. The PSUs vest and are earned, if at all, in two tranches in the event that specified sustained revenue targets are achieved (as determined by the compensation committee). The first tranche of PSUs vests if a certain “rigorous revenue target amount is sustained over any four consecutive fiscal quarters between the grant date and the fifth anniversary of the grant date and the second tranche of PSUs vests if a certain “stretch” revenue goal target amount is sustained over any four consecutive quarters between the grant date and the fifth anniversary of the grant date, in each case subject to the executive’s continued service through each applicable vesting date. Each tranche of PSUs may be earned at any point prior to the fifth anniversary of the grant date; provided that if either or both tranches have not been earned prior to such date they will be forfeited for no consideration. The design of the PSUs serves to align certain of our key executives’ interests with those of long-term stockholders, incentivize the achievement of sustained and strong Company financial performance and create retentive value.", "attrs": null, "subkind": "description", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f0a45b4e-67c6-4088-8a57-4a42aa6f67da", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.15, "x": 0.05, "y": 0.96 }, "kind": "source-note", "text": "Source: PGNY FY21 Proxy", "attrs": null, "subkind": "source-note", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "20a8931a-75e7-4b02-af22-9a1c00464010", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.31, "y": 0.05 }, "kind": "title", "text": "Were PGNY's Aggressive Practices Driven by Management Compensation Considerations?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "03aa5b0b-c69e-44f0-a4d3-3a333f9abe81", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "7ee620ef-9d5d-41d5-91c1-226f7c4915b0", "evidence": "Contrasts management's stated goal of 'aligning interests' with the activist's claim of 'accounting irregularities' and 'revenue recognition levers'.", "confidence": 0.85 } ], "arcBeats": [ { "to": 40, "from": 21, "beatId": "efa521e2-cd08-467d-b8d4-34bf61077d48", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Evidence", "beatSlug": "evidence", "evidence": "The document presents various evidence to support its claims, including financial data and industry comparisons.", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 40, "from": 21, "name": "Analogy", "slug": "08-analogy", "bestFor": "Complex concepts, new markets, technical explanations for non-experts", "matchId": "4e433b19-425e-470c-ae68-d0798fdfcf36", "evidence": "The document uses industry comparisons to highlight PGNY's weaknesses.", "position": 1, "objective": "How does PGNY's business model compare to its competitors?", "structure": "The Familiar Domain -> Key Parallel -> Applied to Our Situation -> Insight", "confidence": 0.7, "description": "Explain the unfamiliar through a well-understood parallel domain" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }