The top dogs at Chewy, the Broward County-founded online pet goods retailer, had quite the paydays last year.
Last month, WLRN reported that CEO Sumit Singh was the third highest paid boss of a publicly-traded company in South Florida in 2024. Now, an analysis done for WLRN shows that the company's CFO was among the best paid in the country.
David Reeder's reported total compensation was $27.8 million. He joined the company in February of last year.
Despite being one of the best paid chief financial officers in the country, Reeder is unlikely to collect his entire pay package. He's leaving Chewy before most of his compensation is due to him.
Chewy executive pay
Together, Chewy paid its two highest ranking executives a combined $57 million last year. A significant amount of the pay came in the form of stock to be earned over the next several years.
The compensation packages are disclosed annually in Chewy’s financial statements, as is required by law.
Executive compensation firm CEO C-Suite Comp analyzed the publicly available information from financial filings for WLRN.
The online pet supply store was founded in 2011 in Dania Beach. The firm now describes itself as “dually headquartered” in Plantation and Boston. It employs about 1,000 people in South Florida. Chewy’s total workforce was about 18,000 last year, with employees earning a median salary of $43,500.
The bulk of pay for Reeder and Singh was in the form of stock grants. Reeder’s stock package included $26.4 million in awards. Singh’s stock grants totaled $23.8 million.
Chewy stock jumped almost 42% last year. The shares do not pay a dividend. The rally far outpaced the 25% return of the S&P 500 or the 26% return of the SPDR Consumer Discretionary exchange traded fund, tracking the industry group to which Chewy belongs.
Despite the sizable compensation package, Reeder announced in May he would be resigning as CFO sometime in the second half of the year. His departure may mean he will forgo millions of dollars in stock awards. Singh has been CEO since 2018, leading the company through its initial public offering and quadrupling annual revenue.
Both executives were compensated well above the national median for chief executives in their positions. After falling below the previous record median pay, the median chief financial officer compensation rose 17% from the previous year to a new record $1.8 million. Median CEO pay was up 26% over the same period to $4.4 million.
"CFOs are critical in allocating resources to projects that will yield maximum long-term return to the firm," said C-Suite Comp founder Tanvir Hossain. "The CFO also ensures guardrails are in place against exuberant risk taking."
Chewy did not respond to an emailed request from WLRN for comment.
In its annual report to shareholders the firm wrote, “Our executive compensation program is designed to align total compensation with Company performance, while enabling us to attract, retain, and motivate individuals who can achieve sustained long-term growth and strong financial performance for our stockholders.”
Chewy CFO leaving
Reeder’s resignation comes less than a year and a half after he was hired to be the top finance executive at the company. He previously was CFO at semiconductor maker GlobalFoundries. His new position is as CEO of Entegris, an advanced materials manufacturer for the computer chip industry. He takes over in mid-August.
Reeder’s pay package at Chewy included $572,000 in base pay and $840,000 in incentives for exceeding certain short-term goals such as growing net sales and adjusted profits, but most of his total compensation package was made up of various stock grants. However, those stock awards come with restrictions.
By resigning, Reeder will miss more than half of the 1.3 million restricted stock units he was granted when he was hired. Companies stretch out the time for executives to earn all the stock awards granted to them as a strategy to retain them. In Reeder’s case, he would have had to be employed at Chewy until February 2028 to keep all of his stock awards.
He also may miss out on hundreds of thousands of more shares awarded as performance-achievement restricted stock units. While the company’s compensation committee acknowledged Reeder met the benchmarks necessary to be granted the units, he would have to remain with Chewy until early 2027 to own the shares. As of the end of the year, Reeder did not have an employment contract with Chewy.
Reeder was granted over a half million Chewy shares at the end of last year, worth an estimated $20 million.
It is not uncommon for experienced top executives to see big stock awards in their first year of employment with a new company.
“When you bounce around from one organization or another, the enticing company needs to reimburse you for money left on the table at previous employer,” said C-Suite Comp advisor and University of Colorado Finance Professor David Ikenberry. “Year one can have a big bump due to reimbursements and to dangle a carrot.”
About $42 million worth of Chewy stock that could be earned by Reeder was not owned by him yet as of early February, according to the company’s annual shareholder proxy statement filed with the Securities and Exchange Commission.
READ MORE: Who are the highest paid CEOs in South Florida?
Singh’s pay package made him the third highest paid CEO for publicly traded companies based in South Florida.
Chewy’s sales increased 8% in the first quarter. Its net profit fell by 6.6%. The firm expects sales to grow between 6% to 7% this year. Shares are up more than 20% year-to-date.
