Dan Rosensweig
CHEGGAbout Dan Rosensweig
Dan Rosensweig is Executive Chairman and Co‑Chairperson of the Board at Chegg (since June 1, 2024), after serving as President & CEO from February 2010 to June 2024; he has been a director since March 2010 and is age 63 with a B.A. in Political Science from Hobart & William Smith Colleges . In 2024, Chegg reported total net revenues of $617.6M and adjusted EBITDA of $149.7M; 2024 PSUs paid out at 17.4% of target as revenue and free cash flow missed thresholds while adjusted EBITDA met threshold at 52.1% of target . Chegg disclosed that 2021 absolute TSR PSUs paid zero due to failure to meet share price hurdles over the 3‑year period, highlighting stock underperformance across that window .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Chegg, Inc. | President & CEO; Chairperson (until July 2018) | 2010–2024 CEO; 2010–2018 Chair | Led transition to subscription services; long‑tenured operating leadership . |
| Chegg, Inc. | Executive Chairman; Co‑Chairperson | 2024–present | Continuity of strategy; governance leadership alongside independent co‑chair . |
| Activision Publishing (RedOctane) | President & CEO | 2009–2010 | Operated Guitar Hero business; consumer tech ops experience . |
| Quadrangle Group | Operating Principal | 2007–2009 | Investment/operator perspective in media/tech . |
| Yahoo! Inc. | Chief Operating Officer | 2002–2009 | Scaled internet services; large‑scale ops . |
| CNET Networks / ZDNet | President; CEO/President (pre‑acquisition) | Pre‑2002 | Digital media operations and leadership . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Adobe Systems Incorporated | Director | Current | Cross‑industry insights; technology governance . |
Fixed Compensation
| Item | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary ($) | 1,075,000 | 1,100,000 | 954,167 (partial year; Exec Chair from 6/1/24) |
| Role‑based salary rates ($) | — | — | $850,000 Exec Chair rate; prior CEO rate $1,100,000 |
| Cash bonus | Not typical (Company generally does not grant annual cash bonuses) | Not typical | Not typical |
| Other comp (401(k) etc.) ($) | 12,200 | 13,200 | 13,800 |
| Stock awards ($) | 10,999,964 | 3,666,649 | 1,436,250 |
| Total ($) | 12,087,164 | 4,779,849 | 2,404,217 |
Notes
- Chegg’s executive pay design emphasizes equity over cash and generally does not include annual cash incentives, relying on RSUs/PSUs to align with shareholder outcomes .
Performance Compensation
| Award | Grant date | Shares (target) | Grant-date fair value ($) | Metrics & weighting | Targets | Actual 2024 | Payout % | Vesting schedule |
|---|---|---|---|---|---|---|---|---|
| 2024 PSUs | 6/1/2024 | 93,750 | 359,063 | 1/3 Total Net Revenues; 1/3 Adjusted EBITDA; 1/3 Free Cash Flow | Rev: $660.0M; EBITDA: $165.0M; FCF: $85.0M (thresholds: Rev $627.5M; EBITDA $149.0M; FCF $68.0M; max levels specified) | Rev: $617.6M; EBITDA: $149.7M; FCF: $50.3M | 17.4% weighted payout | Earned portion vests 1/3 on 6/12/2025, 1/3 on 6/12/2026, 1/3 on 6/12/2027 (service required) |
| 2024 RSUs | 6/1/2024 | 281,250 | 1,077,188 | Time‑based retention | — | — | — | 50% on 6/12/2025; remaining 50% in eight equal quarterly installments through 6/12/2027 |
| Legacy TSR PSUs (2021) | 3/1/2021 | — | — | Absolute TSR growth 25–75% over 3 years from $99.05 reference price | — | Goals not met | 0% | 4‑year time schedule, but no performance earned |
Additional details
- 2024 PSU payout mechanics: 0–150% linearly per metric; blended result 17.4% without discretionary adjustments .
- Company emphasizes pay for performance via PSU metrics synchronized to the Board‑approved plan; RSUs serve retention .
Equity Ownership & Alignment
| Ownership item | Detail |
|---|---|
| Beneficial ownership | 2,007,330 shares (1.9% of outstanding) |
| Components | 1,792,863 direct; 25,000 Rosensweig Family Revocable Trust; 48,842 Rosensweig 2012 Irrevocable Children’s Trust; 140,625 RSUs vesting within 60 days of 4/7/2025 |
| Outstanding/Unvested awards (12/31/2024) | RSUs: 281,250 unvested; PSUs: 93,750 subject to 2024 metrics over three‑year schedule |
| Stock ownership guidelines (executives) | CEO 3x salary; other executives 1x salary; all then‑serving executives met guidelines as of 12/31/2024 |
| Hedging/Pledging | Hedging and short‑term monetization transactions prohibited; pledging generally prohibited absent preclearance; options/short sales restricted |
| Clawback policy | Adopted Oct 2023; recovers incentive comp after restatement per NYSE/SEC rules (3-year lookback) |
Insider selling pressure indicators
- Upcoming supply from scheduled RSU/PSU vesting dates (6/12/2025, 6/12/2026, 6/12/2027) may create selling pressure if shares are liquidated to cover taxes; 2024 PSUs paid at 17.4% limiting near‑term incremental vesting volume .
Employment Terms
| Provision | Dan Rosensweig (Exec Chairman Agreement) | Company Severance Plan (NEOs, adopted 10/17/2024) |
|---|---|---|
| Employment term | At‑will; agreement effective 6/1/2024 | Plan coverage for NEOs other than Rosensweig |
| Severance triggers | Cash severance and equity acceleration available upon specified terminations, including change‑of‑control; double‑trigger protections (service & transaction) | Double‑trigger acceleration; single‑trigger not provided; no excise tax gross‑ups |
| Multiples (illustrative) | Specific multiples not disclosed in the agreement text provided | CEO: 1.5x salary and 1.5x target bonus in CIC scenarios; 1.25x or 1.0x otherwise by timing; COBRA 12–18 months per scenario; NEOs 1.25x/1.0x salary and target bonus (per timing); COBRA 12–15 months |
| Acceleration detail | Time‑based and performance‑satisfied awards fully accelerate in CIC double‑trigger; performance‑subject awards accelerate at target or actual if determinable | |
| Estimated payouts (as of 12/31/2024) | Illustrative tables provided for current CEO and CFO; reflect cash severance, bonus, COBRA, and accelerated equity value at $1.61/share |
Other terms
- Insider Trading Policy governs director/officer transactions; compliance emphasized .
Board Governance
- Role: Executive Chairman; Co‑Chairperson of the Board since July 2018; presides over board meetings alongside independent co‑chair; other Co‑Chair was Richard Sarnoff (independent); Board expects to appoint Marne Levine as Lead Independent Director prior to the 2025 Annual Meeting as Sarnoff steps away from Co‑Chair role while remaining on the Board .
- Independence: Chegg affirmatively determined independence for all non‑employee directors; executive roles are not independent; all Audit, Compensation, and Governance & Sustainability Committee members are independent per NYSE and SEC rules .
- Committees: Audit (Budig—Chair; Martin; Sarnoff; Schlein), Compensation (Whelan—Chair; Budig; Levine), Governance & Sustainability (Levine—Chair; Schlein; York) with 2024 meeting counts (Audit 5; Compensation 10; Governance 5) .
- Attendance: In 2024, the Board held 8 meetings; each director attended at least 75% of Board and committee meetings during the period served; all directors attended the 2024 Annual Meeting .
- Executive sessions: Non‑employee directors meet in executive sessions; presiding director was Co‑Chair Sarnoff .
- Dual‑role implications: Co‑Chair structure with an independent Co‑Chair and planned Lead Independent Director mitigates potential CEO/Chair or Executive Chair concentration of power, supporting oversight and independence .
Director Compensation
| Element | Non‑employee directors | Executive Chairman (Rosensweig) |
|---|---|---|
| Annual cash retainer | $40,000 Board; $10,000 committee member; $20,000 committee chair; in 2024, $75,000 cash retainer for non‑employee Co‑Chairpersons in lieu of RSU | Executives do not receive director fees; compensation via executive pay program |
| Annual equity | RSU grant $200,000 FV; 2024 RSU: 54,347 shares; accelerates on change‑of‑control | Not applicable |
| Ownership guideline | 3x annual cash retainer; all non‑employee directors compliant | Executive guidelines covered separately (see Equity Ownership) |
Say‑on‑Pay & Peer Group
- 2024 Say‑on‑Pay approval: 82.0% support; Compensation Committee interprets as broad alignment with program .
- Compensation consultant: Aon (2024) independent; FW Cook (2023) for peer development .
- 2024 peer group (19 companies) includes 2U, Coursera, PowerSchool, Udemy, Box, RingCentral, Stride, ZipRecruiter, etc.; Chegg considered software/SaaS and education tech comparables rather than GICS Education Services alone .
- Equity program governance: No evergreen, no repricing, double‑trigger CIC vesting, clawback, director compensation caps .
Performance & Track Record
- 2024 operational context: Chegg advanced AI integration into its learning stack and brand activation but later initiated a strategic review in 2025 due to Google AI Overviews reducing inbound traffic, affecting acquisitions, revenue, and employees .
- Financial/metric outcomes linked to pay: 2024 adjusted EBITDA $149.7M met threshold; total net revenues $617.6M and free cash flow $50.3M below thresholds, producing 17.4% PSU payout .
- Legacy TSR PSUs from 2021 paid zero due to failure to meet share price targets over the three‑year performance period .
Financial Context (for pay‑for‑performance alignment)
| Metric ($USD) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues | 766.9M* | 716.3M* | 617.6M* |
| EBITDA | 100.6M* | 44.1M* | 59.7M* |
*Values retrieved from S&P Global.
Compensation Structure Analysis
- Increased weighting to time‑based RSUs for Executive Chair (75% RSU / 25% PSU mix) vs. CEO’s 50/50, emphasizing retention amid strategic uncertainty .
- Performance metrics tightened to include free cash flow alongside revenue and adjusted EBITDA, elevating cash generation discipline; payout rules capped at 150% per metric with linear interpolation; no discretionary uplift in 2024 .
- No options granted; Company explicitly does not grant option‑like instruments under Item 402(x)(1) .
- Equity burn rate averaged 5.1% gross (2022–2024), 3.2% adjusted for returned shares; proposed 5,000,000 share increase (≈4.7% of outstanding) to sustain retention through 2026 meeting, resulting in total potential overhang ≈22.2% post‑increase .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; no excise tax gross‑ups; double‑trigger only; no option repricing; change‑in‑control definition not “liberal” .
- Related party transactions: None requiring Item 404(a) disclosure since 1/1/2024 .
- Board and committee independence maintained; compensation consultant independence affirmed .
- Section 16 compliance: One late report covering two transactions for Nathan Schultz and Dan Rosensweig noted; Form 8‑K will disclose Annual Meeting voting results including say‑on‑pay .
Equity Ownership & Vesting Schedule Detail (near‑term supply)
| Date | Instrument | Shares | Notes |
|---|---|---|---|
| 6/12/2025 | 2024 RSUs | 140,625 | 50% of 281,250 RSUs |
| 6/12/2025 | 2024 PSUs | 1/3 of earned | Earned at 17.4% of 93,750 target; vests one‑third |
| 6/12/2026 | 2024 RSUs | Quarterly installments | Remaining RSUs in eight quarterly tranches through 6/12/2027 |
| 6/12/2026 | 2024 PSUs | 1/3 of earned | Based on 2024 certified attainment; service‑based |
| 6/12/2027 | 2024 PSUs | 1/3 of earned | Service‑based |
Investment Implications
- Pay‑for‑performance is functioning: 2024 PSU payout at 17.4% reinforces downside alignment to fundamentals; near‑term equity realizable value is constrained by stock price and performance certification, reducing forced selling risk vs. full‑target vesting .
- Upcoming RSU tranches and partial PSU vesting represent identifiable supply dates; monitor Form 4 activity around 6/12/2025/2026/2027 for potential trading signals and tax sales .
- Governance mitigants around dual‑role Executive Chair include independent Co‑Chair and expected Lead Independent Director; preserves oversight and offsets independence concerns while retaining Rosensweig’s strategic continuity .
- Retention risk is actively managed via increased RSU weighting and proposed equity share reserve expansion amid strategic review; equity burn rate and overhang should be weighed against dilution sensitivity and talent market needs .
- 2024 Say‑on‑Pay at 82% suggests shareholder tolerance for equity‑heavy packages; however, continued underperformance (e.g., prior TSR PSU zero payout) keeps execution risk elevated; watch strategic review outcomes and traffic dynamics tied to AI Overviews .