Toby Merchant
FOX FACTORY HOLDINGAbout Toby Merchant
Toby D. Merchant, age 46, is Chief Legal Officer, Chief Compliance Officer, and Secretary of Fox Factory Holding Corp. He joined FOX in April 2021 as its first CLO and Secretary and was appointed Chief Compliance Officer in August 2021; he holds a B.S. from Cornell University and a J.D. cum laude from Case Western Reserve University . He has 20+ years advising public and private companies across corporate governance, securities, and M&A, including roles at McKenna & Associates, Squire Patton Boggs (2006–2019), and Dinsmore & Shohl . During FY2024, FOX delivered net sales of $1,393.9M, adjusted EBITDA of $167.0M (12.0% margin), and experienced a 55.3% TSR decline; adjusted EBITDA fell 36% YoY and net sales decreased 4.8% YoY, reflecting the challenging operating environment .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| McKenna & Associates, LLC | Chief Operating Officer and General Counsel | Not disclosed | Operational and legal leadership at a boutique advisory firm managing proprietary capital |
| Squire Patton Boggs (US) LLP | Partner, Corporate & Financial Services | Oct 2006 – Nov 2019 | Led corporate governance, securities, M&A for public/private companies |
| Dinsmore & Shohl LLP | Associate, Corporate Practice | Not disclosed | Corporate legal work before joining Squire Patton Boggs |
External Roles
No external directorships or public company board roles for Mr. Merchant are disclosed in the proxy materials reviewed .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $420,000 | $439,615 | $459,702 |
| All Other Compensation ($) | $123,211 | $36,584 | $51,393 |
| Perquisites Detail ($ of All Other) | Not disclosed | Not disclosed | $41,043 (incl. $18,565 executive car program) |
| Base Salary Increase (%) | — | — | 4.5% (to $460,000 2024 base set by Committee) |
Notes:
- Mr. Merchant’s 2024 base salary approved by the Compensation Committee was $460,000 (+4.5% YoY) .
- CEO, CFO, CAO, CLO and Group Presidents are subject to stock ownership guidelines (3x base salary for CLO) and a 50% net share retention requirement until compliant .
Performance Compensation
Annual Cash Bonus (FY2024)
| Metric | Weighting | Threshold ($mm) | Target ($mm) | Max ($mm) | Actual ($mm) | Payout |
|---|---|---|---|---|---|---|
| Adjusted EBITDA | 75% | 200 | 250 | 300 | 167 | 0% |
| Individual Performance Goals | 25% | N/A | N/A | N/A | N/A (requires EBITDA ≥ threshold) | 0% |
| Target bonus opportunity for Mr. Merchant: 65% of base salary; payout 0% due to EBITDA below threshold . |
2024–2026 PSUs (One-year 2024 tranche goal assessment; vesting in early 2027)
| Metric (2024 tranche) | Weighting | Threshold | Target | Max | Actual | Payout |
|---|---|---|---|---|---|---|
| Adjusted EBITDA Margin (%) | 100% | 13.50% | 15.70% | 18.00% | 12.00% | 0% |
| 2024 PSU grant counts at target (one-third of cycle issued in 2024): 2,671 PSUs for Mr. Merchant . |
2022–2024 PSUs (Three-year cycle)
| Metric | Weighting | Threshold | Target | Max | Actual | Payout |
|---|---|---|---|---|---|---|
| 3-year average ROIC | 50% | 14.45% | 15.45% | 16.45% | 14.00% | 0% |
| Cumulative FCF ($mm) | 50% | 380 | 422 | 507 | 325 | 0% |
Revenue Growth Outperformance Award (Special 2024 grant)
| Feature | Details |
|---|---|
| Award Shares (Mr. Merchant) | 9,614 shares at target |
| Performance Condition | Revenue to reach ~$2.2B by end of 2027 (≈+50% from $1.46B FY2023) |
| Payout Profile | Binary (all-or-nothing), vests no earlier than early 2027 if earned |
| Status at FY2024 Year-End | Deemed improbable; no expense accrued; no such award in 2025 |
Equity Grant Mix and Vesting
- RSUs: 50% of LTI; vest ratably over 3 years (one-third per year) .
- PSUs: 50% of LTI; earned based on performance; cliff vest after 3-year period (2024–2026 cycle pays in early 2027 if earned) .
- 2024 grants: Mr. Merchant received 7,409 RSUs and 8,012 PSUs at target; PSUs are issued one-third annually as goals are set .
Equity Ownership & Alignment
| Category | As of | Amount | Notes |
|---|---|---|---|
| Beneficial Ownership (Common Shares) | Record Date 3/11/2025 | 6,250 | Less than 1% of 41,712,445 shares outstanding |
| Ownership % of Outstanding | Record Date 3/11/2025 | ~0.015% (6,250/41,712,445) | Computed from disclosed counts |
| RSUs Unvested (# / $) | 1/03/2025 | 10,179 / $307,100 | Valued at $30.17 per share |
| PSUs Unvested (# / $ at target) | 1/03/2025 | 20,567 / $620,506 | Valued at $30.17; shown at target |
| Stock Vested in FY2024 (Shares / $) | FY2024 | 2,208 / $107,491 | RSU vesting events in 2024 |
| Options | Company-wide | None outstanding under 2013/2022 Plans as of 3/11/2025 | No option awards disclosed for Mr. Merchant |
| Stock Ownership Guidelines | Ongoing | 3x base salary for CLO; 50% net share retention until compliant | All covered execs met or are on track |
| Hedging/Pledging | Policy | Hedging prohibited; pledging requires pre-approval by designated officers | No pledging disclosures for Mr. Merchant |
Employment Terms
| Term | Provision |
|---|---|
| Employment agreement date | April 2021 (upon appointment as CLO and Secretary) |
| Titles | CLO, Chief Compliance Officer (since Aug 2021), and Secretary |
| Non-solicitation | 2 years post-termination |
| Severance (without Cause or for Good Reason) | 1x annual base salary, pro-rata annual bonus for year of termination, benefit continuation during severance period; pro-rated PSUs if performance goals met |
| “Good Reason” (summary) | Reduction in base salary; material breach; material reduction in duties; (Mr. Tutton-specific relocation trigger) with cure periods |
| Change-of-Control equity treatment | If awards not assumed: accelerate vesting, performance deemed target; if assumed and terminated within 24 months without Cause or for Good Reason: accelerate vesting (double-trigger) |
| Clawback | 2023 Amended & Restated Clawback Policy complying with SEC/Nasdaq (for restatements) |
| Risk/constraints | No hedging; pledging requires pre-approval; no excise tax gross-ups; no repricing of stock awards |
Estimated Potential Payments (Scenario Table as of 1/03/2025)
| Scenario | Cash Comp ($) | Cash Bonus ($) | RSUs ($) | PSUs ($) | Benefits ($) | Total ($) |
|---|---|---|---|---|---|---|
| Mutual Agreement / For Cause / Voluntary | 17,692 | — | — | — | — | 17,692 |
| Death or Disability | 17,692 | — | — | — | — | 17,692 |
| Without Cause or for Good Reason (not in CoC) | 477,692 | — | — | — | 20,000 | 497,692 |
| CoC: Awards Not Assumed or Termination ≤24m Without Cause/Good Reason | 477,692 | — | 307,100 | 620,506 | 20,000 | 1,425,298 |
| CoC: No Termination; Awards Assumed | — | — | — | — | — | — |
Say-on-Pay and Compensation Governance Context
- Say-on-Pay approval: ≈90% stockholder support in May 2024; 5-year average support 94% .
- 2024 incentive outcomes reflected pay-for-performance: Mr. Merchant’s annual bonus paid 0%; 2022–2024 PSUs paid 0%; 2024 PSU tranche earned 0% .
- Compensation program uses adjusted EBITDA, adjusted EBITDA margin, ROIC and FCF as core metrics; majority of pay at risk; no discretion used in 2024 payouts .
- Pay governance practices: clawback, stock ownership guidelines, no excise tax gross-ups, no hedging, no option repricing .
Investment Implications
- Alignment signals: Mr. Merchant’s at-risk pay was fully levered to core financial metrics (adjusted EBITDA; adjusted EBITDA margin; multi-year ROIC/FCF), with zero payouts across 2024 annual bonus and PSU cycles, indicating strong pay-for-performance discipline amidst downturn; stock ownership guidelines and 50% net share retention further align incentives .
- Retention risk and supply overhang: Unvested RSUs (10,179) and PSUs (20,567 at target) plus vesting cadence (RSUs 1/3 annually; PSUs cliff after 3 years) imply predictable vesting events; retention requirements mitigate near-term selling pressure, but continued underperformance could impair PSU realizability and increase retention risk .
- Contractual protections: Standard severance (≈1x base) and double-trigger equity vesting on CoC when assumed, with single-trigger acceleration if not assumed; clawback in place; non-solicit for 2 years; governance practices avoid gross-ups and repricing—reducing shareholder-unfriendly risks .
- Execution track record: FY2024 metrics weakened (net sales −4.8% YoY; adjusted EBITDA −36% YoY; TSR −55.3%), consistent with zero incentive payouts; special revenue outperformance award is currently improbable, removing a potential incremental equity earnout vector unless revenue re-accelerates materially by 2027 .