Luke Friang
TheRealRealAbout Luke Friang
Luke Friang, 54, has served as The RealReal’s Chief Technology and Product Officer (CTPO) since January 2023, with over 20 years of senior leadership experience in e‑commerce and retail across Zulily (CTPO), Lovevery (Head of Tech & Digital), Eddie Bauer, Spiegel, Costco, and Walgreens . He studied business administration, computer sciences, and internet technology at Edmonds Junior College and North Seattle College . During 2024, the company delivered its first positive Adjusted EBITDA ($9 million) and positive Free Cash Flow ($1 million), while one‑year TSR improved ~443%, providing a favorable performance backdrop for incentive alignment . Executive compensation is governed by robust policies including no hedging/pledging, stock ownership guidelines for certain executives, and a Nasdaq/Rule 10D‑1 compliant clawback adopted in July 2023 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Zulily | Chief Technology and Product Officer (original executive team member) | 2011–2021 | Scaled e‑commerce technology and product organization |
| Lovevery | Head of Tech & Digital | 2021–2022 | Led tech/digital functions at a consumer brand |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| None disclosed in company filings | — | — | — |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 415,000 | 427,450 |
| Target Bonus (% of Base) | 50% | 50% |
| Sign‑On Bonus ($) | 260,000 installment from $520,000 sign‑on, paid Jan 2023 | 260,000 installment from $520,000 sign‑on, paid Jan 2024 |
Performance Compensation
2024 Annual Cash Bonus Design and Payout (CTPO)
| Metric | Weighting | Target Definition | Actual 2024 | Payout % | Vesting/Timing |
|---|---|---|---|---|---|
| Adjusted EBITDA | 80% | Threshold −$10mm, Target $0mm, Stretch $10mm, Max ≥$15mm | $9.3mm | 147% | Single year; paid after certification |
| Individual Goals | 20% | Leadership, budget/opex management, department KPIs set by CEO | Met at target | 100% | Single year; paid after certification |
| Total Bonus Paid ($) | — | — | — | — | $292,284 (full‑year payout) |
Long‑Term Incentives (Granted 2024)
| Award Type | Grant Date | Units | Fair Value ($) | Key Performance Metric | Vesting Schedule |
|---|---|---|---|---|---|
| RSUs | Mar 4, 2024 | 245,000 | 784,000 | Time‑based | 12 equal quarterly installments; vesting commencement 2/20/2024 |
| PSUs | Mar 4, 2024 | Target: 105,000; Threshold: 52,500; Stretch: 157,500; Max: 210,000 | 336,000 (target valuation basis) | Free Cash Flow (unlevered), measured FY2026 year‑end | Cliff service vesting at 3 years; payout 50%/100%/150%/200% of target per FCF achievement |
Notes:
- The 2024 PSUs for Friang are not eligible to vest until completion of the FY2026 performance period; none vested in 2024 .
- RSUs for NEOs granted in Q1 2024 were formally approved with a grant date price context disclosed; vesting is quarterly over 3 years .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 175,329 shares as of April 14, 2025; consists of 158,890 shares held directly and 46,715 RSUs vesting within 60 days; <1% of outstanding shares |
| Outstanding RSUs (12/31/2024) | 183,750 unvested; market value $2,008,388 (at $10.93 close) |
| Outstanding PSUs (12/31/2024) | 52,500 unearned (threshold basis) |
| Options | None outstanding |
| Stock Ownership Guidelines | CEO: 5x salary; “Other Executives” (defined as CFO, CLO, CPO): 3x salary; compliance window 5 years from appointment |
| Hedging/Pledging | Prohibited for officers and directors (including margin accounts) unless Board approves pledging; Company policy bars hedging transactions |
| Clawback | Nasdaq Rule 10D‑1 compliant clawback adopted July 2023; recovers excess incentive comp upon restatements, regardless of officer fault |
Insider selling pressure indicators:
- Quarterly RSU vesting cadence (from 2023 and 2024 grants) may create regular share releases; actual Form 4 sales not disclosed in proxy . No hedging/pledging reduces misalignment risks .
Employment Terms
Standard Severance & Change‑in‑Control Framework (CTPO)
| Scenario | Salary Multiple | Bonus Multiple | Prorated Target Bonus | Equity | COBRA Subsidy |
|---|---|---|---|---|---|
| Qualifying Termination in CIC Protection Window (−3 months/+12 months) | 1.0x base salary | 1.0x target bonus | Yes (prorated) | Full acceleration; PSUs at target | 12 months |
| Qualifying Termination outside CIC Window | 0.5x base salary | 0.5x base salary (in lieu of target bonus multiple) | Yes (prorated) | N/A | 6 months |
| Agreement Term & Covenants | Standard severance/CIC agreement: 3‑year term, auto‑renewal; confidentiality, non‑compete, non‑solicit obligations |
Potential Payments (Illustrative, as of 12/31/2024)
| Scenario | Cash Severance ($) | Benefit Continuation ($) | RSUs ($) | PSUs ($) | Total ($) |
|---|---|---|---|---|---|
| Qualifying Termination + CIC | 853,590 | 30,033 | 4,006,534 | 1,147,650 | 6,037,807 |
| Qualifying Termination (non‑CIC) | 639,865 | 15,017 | — | — | 654,882 |
Compensation Structure Analysis
| Component ($) | 2023 | 2024 |
|---|---|---|
| Salary | 391,058 | 424,577 |
| Bonus (sign‑on installments, special) | 260,000 | 260,000 |
| Stock Awards (RSU/PSU grant date fair value) | 529,750 | 1,120,000 |
| Non‑Equity Incentive (Annual Bonus) | 358,151 | 292,284 |
| All Other Compensation | 1,000 | 2,000 |
| Total | 1,539,959 | 2,098,861 |
Observations:
- Shift toward larger equity refresh in 2024 (RSU+PSU), consistent with Company’s continued PSU program and alignment with cash flow targets .
- Annual bonus remained performance‑linked (Adjusted EBITDA/individual goals) with payout reduction from 2023 to 2024 alongside metric calibration and actual performance mix .
Performance Compensation (Detail)
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Adjusted EBITDA (2024 Bonus) | 80% | $0mm (Target); −$10mm (Threshold); $10mm (Stretch); ≥$15mm (Max) | $9.3mm | 147% (metric) | Single year; paid in 2025 after Board certification |
| Individual Goals (2024 Bonus) | 20% | Target set by CEO | Target achieved | 100% (metric) | Single year; paid in 2025 |
| 2024 PSUs (Free Cash Flow, FY2026) | — | Threshold 50%; Target 100%; Stretch 150%; Max 200% of target units | Not yet measured | N/A (future) | 3‑year service + performance; measures FY2026 year‑end |
Equity Awards Outstanding (as of 12/31/2024)
| Award | Grant Date | Vesting Commencement | Unvested Units (#) | Market/Payout Value ($) |
|---|---|---|---|---|
| RSU | Mar 3, 2023 | Feb 20, 2023 | 182,813 | 1,998,146 |
| RSU | Mar 4, 2024 | Feb 20, 2024 | 183,750 | 2,008,388 |
| PSU (Threshold basis) | Mar 4, 2024 | Feb 20, 2024 | 52,500 | 573,825 |
Employment Start and Tenure
- CTPO since January 2023 .
- Company does not use formal employment agreements for NEOs; severance/CIC terms standardized (May 2021 adoption; Oct 2024 amendments) .
Governance and Policies Impacting Alignment
- No hedging or pledging by officers/directors; approval required for any pledge; options timing not used to leverage MNPI; company has not awarded stock options since 2019 .
- Stock ownership guidelines apply to CEO (5x) and certain executives (3x for CFO/CLO/CPO) with 5‑year compliance horizon; CTPO not explicitly listed among “Other Executives” in guidelines .
- 2024 Say‑on‑Pay support ~88%; continued use of PSUs endorsed by investors .
Investment Implications
- Alignment: Quarterly RSU vesting and FY2026 free‑cash‑flow PSUs tie Friang’s realized pay to long‑term cash discipline and ongoing retention; CIC double‑trigger acceleration at target mitigates change‑of‑control uncertainty but could create event‑driven supply from RSU/PSU acceleration .
- Retention and risk: Standard CTPO severance (0.5x salary + 0.5x salary substitute for bonus plus prorated bonus, six months COBRA) outside CIC provides moderate retention; inside CIC, full acceleration and 1.0x multiples increase event‑risk sensitivity .
- Selling pressure: With two overlapping RSU schedules (2023 and 2024 grants) vesting quarterly, expect regular share releases; absence of options and anti‑hedging/pledging policy lowers leverage/misalignment risks; monitor Form 4s for any discretionary sales once RSUs settle .
- Execution signal: 2024 bonus paid under an Adjusted EBITDA framework with strong payout on the company metric and target on individual goals underscores operational focus; long‑dated FCF PSUs strengthen cash‑generation incentives through FY2026 .