Cricut (CRCT) DEF 14ADefinitive proxy

Ashish Arora

CEO

CRICUT, INC.
10855 South River Front Parkway
South Jordan, Utah 84095

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TABLE OF CONTENTS

CRICUT, INC.

PROXY STATEMENT

FOR 2022 ANNUAL MEETING OF STOCKHOLDERS
To be held at 10:00 a.m., Mountain Time, on Thursday, May 26, 2022

The information provided in the “question and answer” format below is for your convenience only and is merely a summary of the information contained in this proxy statement. You should read this entire proxy statement carefully.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING

Why am I receiving these materials?

This proxy statement and the form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at the 2022 annual meeting of stockholders of Cricut, Inc., a Delaware corporation, and any postponements, adjournments or continuations thereof. The annual meeting will be held on Thursday, May 26, 2022 at 10:00 a.m., Mountain Time. The annual meeting will be conducted virtually via live audio webcast. You will be able to attend the annual meeting virtually by visiting www.virtualshareholdermeeting.com/CRCT2022, where you will be able to listen to the meeting live, submit questions and vote online during the meeting.

The Notice of Internet Availability of Proxy Materials, or Notice of Internet Availability, containing instructions on how to access this proxy statement, the accompanying notice of annual meeting and form of proxy, and our annual report, is first being sent or given on or about April 15, 2022 to all stockholders of record as of March 29, 2022. The proxy materials and our annual report can be accessed as of April 15, 2022 by visiting www.proxyvote.com. If you receive a Notice of Internet Availability, then you will not receive a printed copy of the proxy materials or our annual report in the mail unless you specifically request these materials. Instructions for requesting a printed copy of the proxy materials and our annual report are set forth in the Notice of Internet Availability.

What proposals will be voted on at the annual meeting?

The following proposals will be voted on at the annual meeting:

How does the board of directors recommend that I vote on these proposals?

Our board of directors recommends that you vote your shares:

Who is entitled to vote at the annual meeting?

Holders of our Class A and Class B common stock as of the close of business on March 29, 2022, the record date for the annual meeting, may vote at the annual meeting. As of the record date, there were 40,182,147 shares of our Class A common stock outstanding and 181,738,377 shares of our Class B common stock outstanding. Our Class A common stock and Class B common stock will vote as a single class on all matters described in this proxy statement for which your vote is being solicited. Stockholders are not permitted to cumulate votes with respect to the election of directors. Each share of Class A common stock is entitled to one vote on each matter properly brought before the annual meeting and each share of Class B common stock is entitled to five votes on each matter properly brought before the annual meeting. Our Class A common stock and Class B common stock are collectively referred to in this proxy statement as our common stock.

Is there a list of registered stockholders entitled to vote at the annual meeting?

A list of registered stockholders entitled to vote at the annual meeting will be made available for examination by any stockholder for any purpose germane to the meeting for a period of at least ten days prior to the meeting between the hours of 9:00 a.m. and 4:30 p.m., Mountain Time, at our principal executive offices located at 10855 South River Front Parkway, South Jordan, Utah 84095 by contacting our corporate secretary. The list of registered stockholders entitled to vote at the annual meeting will also be available online during the annual meeting at www.virtualshareholdermeeting.com/CRCT2022, for those stockholders attending the annual meeting.

How many votes are needed for approval of each proposal?

What is the quorum requirement for the annual meeting?

A quorum is the minimum number of shares required to be present or represented at the annual meeting for the meeting to be properly held under our amended and restated bylaws and Delaware law. The presence, in person (including virtually) or by proxy, of a majority of the voting power of our capital stock issued and outstanding and entitled to vote will constitute a quorum to transact business at the annual meeting. Abstentions, choosing to withhold authority to vote and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. If there is no quorum, the chairperson of the meeting may adjourn the meeting to another time or place.

How do I vote and what are the voting deadlines?

What if I do not specify how my shares are to be voted or fail to provide timely directions to my broker, bank or other nominee?

In addition, if any other matters are properly brought before the annual meeting, the persons named as proxies will be authorized to vote or otherwise act on those matters in accordance with their judgment.

Can I change my vote or revoke my proxy?

What do I need to do to attend the annual meeting?

We will be hosting the annual meeting via live audio webcast only.

How can I get help if I have trouble checking in or listening to the annual meeting online?

If you encounter difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting log-in page.

What is the effect of giving a proxy?

Who will count the votes?

A representative of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspector of election.

How can I contact Cricut’s transfer agent?

You may contact our transfer agent, Computershare Trust Company, N.A., by telephone at (800) 942-5909, or by writing Computershare Trust Company, N.A., at 250 Royall Street, Canton, MA 02021. You may also access instructions with respect to certain stockholder matters (e.g., change of address) via the Internet at https://www-us.computershare.com/Investor/#Home.

How are proxies solicited for the annual meeting and who is paying for such solicitation?

Our board of directors is soliciting proxies for use at the annual meeting by means of the proxy materials. We will bear the entire cost of proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Copies of solicitation materials will also be made available upon request to brokers, banks and other nominees to forward to the beneficial owners of the shares held of record by such brokers, banks or other nominees. The original solicitation of proxies may be supplemented by solicitation by telephone, electronic communications or other means by our directors, officers or employees. No additional

Where can I find the voting results of the annual meeting?

We will disclose voting results on a Current Report on Form 8-K that we will file with the U.S. Securities and Exchange Commission, or SEC, within four business days after the meeting. If final voting results are not available to us in time to file a Form 8-K, we will file a Form 8-K to publish preliminary results and will provide the final results in an amendment to the Form 8-K as soon as they become available.

Why did I receive a Notice of Internet Availability instead of a full set of proxy materials?

In accordance with the rules of the SEC we have elected to furnish our proxy materials, including this proxy statement and our annual report, primarily via the Internet. As a result, we are mailing to our stockholders a Notice of Internet Availability instead of a paper copy of the proxy materials. The Notice of Internet Availability contains instructions on how to access our proxy materials on the Internet, how to vote on the proposals, how to request printed copies of the proxy materials and our annual report, and how to request to receive all future proxy materials in printed form by mail or electronically by e-mail. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce our costs and the environmental impact of our annual meetings.

What does it mean if I receive more than one Notice of Internet Availability or more than one set of printed proxy materials?

If you receive more than one Notice of Internet Availability or more than one set of printed proxy materials, then your shares may be registered in more than one name and/or are registered in different accounts. Please follow the voting instructions on each Notice of Internet Availability or each set of printed proxy materials, as applicable, to ensure that all of your shares are voted.

I share an address with another stockholder, and we received only one paper copy of the Notice of Internet Availability or proxy statement and annual report. How may I obtain an additional copy of the Notice of Internet Availability or proxy statement and annual report?

We have adopted a procedure approved by the SEC called “householding,” under which we can deliver a single copy of the Notice of Internet Availability and, if applicable, the proxy statement and annual report, to multiple stockholders who share the same address unless we receive contrary instructions from one or more stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice of Internet Availability and, if applicable, the proxy statement and annual report, to any stockholder at a shared address to which we delivered a single copy of these documents. To receive a separate copy, or, if you are receiving multiple copies, to request that we only send a single copy of next year’s Notice of Internet Availability or proxy statement and annual report, as applicable, you may contact us as follows:

Street name stockholders may contact their broker, bank or other nominee to request information about householding.

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Our board of directors currently consists of seven directors, three of whom are independent under the listing standards of The Nasdaq Stock Market LLC, or Nasdaq. At each annual meeting of stockholders, directors will be elected for a one-year term and until their successors are duly elected and qualified.

The following table sets forth the names, ages as of April 1, 2022, and certain other information for each of our directors and director nominees:

    

We believe Mr. Makler is qualified to serve as a member of our board of directors because of his perspective as a representative of our largest beneficial owner and his extensive financial background and expertise.

We believe Mr. Blackwell is qualified to serve as a member of our board of directors because of his extensive leadership experience in multiple industries and his experience in the private equity industry.

We believe Mr. Blasnik is qualified to serve as a member of our board of directors because of his perspective as a representative of our largest beneficial owner and his extensive financial background and expertise.

We believe Mr. Freeman is qualified to serve as a member of our board of directors because of his perspective as a representative of our largest beneficial owner and his extensive financial background and expertise.

We believe Ms. Reiff is qualified to serve as a member of our board of directors because of her particular knowledge and experience in retail, marketing, merchandising, operations, communication and leadership, as well as her experience as a CEO and director of public companies.

We believe Ms. Williamson is qualified to serve as a member of our board of directors because of her extensive board service for both public and private companies and her financial knowledge and expertise.

Petrus Trust Company, LTA, or Petrus, controls a majority of the voting power represented by our capital stock. As a result, we are a “controlled company” within the meaning of the corporate governance rules of Nasdaq. Under these corporate governance rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including requirements that:

Director Independence

Our Class A common stock is listed on Nasdaq. Under Nasdaq listing rules, a director will only qualify as an independent director if, in the opinion of that listed company’s board of directors, the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Our board of directors has undertaken a review of the independence of each of our directors. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Mr. Len Blackwell, Ms. Melissa Reiff, and Ms. Billie Williamson, representing three of our seven directors, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is an “independent director” as defined under the listing standards of Nasdaq.

In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section titled “Related Person Transactions.”

There are no family relationships among any of our directors, director nominees or executive officers.

Our board believes that it is currently appropriate to separate the roles of chairperson and chief executive officer. The chief executive officer is responsible for day-to-day leadership, while our chairperson, along with our independent directors, ensures that our board’s time and attention is focused on providing independent oversight of management and matters critical to our company. The board believes that Mr. Makler’s deep knowledge of the company and industry, as well as strong leadership and governance experience, enable him to lead our board effectively.

One of the key functions of our board of directors is informed oversight of our risk management process. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure. Our executive officers are responsible for the day-to-day management of the material risks we face. Our board of directors administers its oversight function directly as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. For example, our Audit Committee is responsible for overseeing the management of risks associated with our financial reporting, accounting and auditing matters, and our compensation committee oversees the management of risks associated with our compensation policies and programs.

Our board of directors has established the following standing committees of the board: audit committee and compensation committee. The composition and responsibilities of each of the committees of our board of directors is described below.

The current members of our audit committee are Len Blackwell, Melissa Reiff and Billie Williamson, with Ms. Williamson serving as Chairperson. Our board of directors has determined that each member of our audit committee meets the requirements for independence of audit committee members under the rules and regulations of the SEC and the listing standards of Nasdaq, and also meets the financial literacy requirements of the listing standards of Nasdaq. Our board of directors has determined that each of Mr. Blackwell, Ms. Reiff, and Ms. Williamson are audit committee financial experts within the meaning of Item 407(d) of Regulation S-K. Our audit committee is responsible for, among other things:

Our audit committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of Nasdaq. A copy of the charter of our audit committee is available on our website at https://investor.cricut.com/corporate-governance/governance-documents. During 2021, our audit committee held nine meetings.

The current members of our compensation committee are Steven Blasnik and Jason Makler, with Mr. Makler serving as Chairperson. Each member of the compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act. Our compensation committee is responsible for, among other things:

Our compensation committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of Nasdaq. A copy of the charter of our compensation committee is available on our website at https://investor.cricut.com/corporate-governance/governance-documents. During 2021, our compensation committee held five meetings.

Attendance at Board and Stockholder Meetings

During our fiscal year ended December 31, 2021, our board of directors, including for this purpose the board of managers of Cricut Holdings, held six meetings (including regularly scheduled and special meetings), and each director attended at least 75% of the aggregate of (1) the total number of meetings of the board of directors held during the period for which he or she has been a director and (2) the total number of meetings held by all committees on which he or she served during the periods that he or she served.

Our corporate governance guidelines state that each director is strongly encouraged to attend each annual meeting of stockholders. This annual meeting will be our first annual meeting of our stockholders.

Executive Sessions of Non-Employee and Independent Directors

Compensation Committee Interlocks and Insider Participation

Considerations in Evaluating Director Nominees

Our board of directors uses a variety of methods for identifying and evaluating potential director nominees. In its evaluation of director candidates, including the current directors eligible for re-election, our board of directors will consider the current size and composition of our board of directors and the needs of our board of directors and the respective committees of our board of directors and other director qualifications. While our board has not established minimum qualifications for board members, some of the factors that our board of directors considers in assessing director nominee qualifications include, without limitation, issues of character, integrity, judgment, corporate experience, diversity of experience, independence, area of expertise, length of service, potential conflicts of interest, and other commitments. Although our board of directors does not maintain a specific policy with respect to board diversity, our board of directors believes that the board should be a diverse body, and considers a broad range of perspectives, backgrounds and experiences.

If our board of directors determines that an additional or replacement director is required, then the board may take such measures as it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the committee, board or management.

After completing its review and evaluation of director candidates, our board of directors determines the selection of director candidates for nomination to our board.

Stockholder Recommendations and Nominations to our Board of Directors

Our board of directors will consider recommendations and nominations for candidates to our board of directors from stockholders in the same manner as candidates recommended to the board of directors from other sources, so long as such recommendations and nominations comply with our amended and restated certificate of incorporation and amended and restated bylaws, all applicable company policies and all applicable laws, rules and regulations, including those promulgated by the SEC. Our board of directors will evaluate such recommendations in accordance with its charter, our bylaws and corporate governance guidelines and the director nominee criteria described above.

A stockholder that wants to recommend a candidate to our board of directors should direct the recommendation in writing by letter to Cricut, Inc., 10855 South River Front Parkway, South Jordan, Utah 84095, Attention: General Counsel or Legal Department. Such recommendation must include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between the candidate and us

Communications with the Board of Directors

Stockholders and other interested parties wishing to communicate directly with our non-management directors, may do so by writing and sending the correspondence to our General Counsel by mail to our principal executive offices at Cricut, Inc., 10855 South River Front Parkway, South Jordan, Utah 84095. Our General Counsel or Legal Department, in consultation with appropriate directors as necessary, will review all incoming communications (except for mass mailings, product complaints or inquiries, job inquiries, business solicitations and patently offensive or otherwise inappropriate material) and will route such communications to the appropriate director(s) or, if none is specified, then to the chairperson of the board. These policies and procedures do not apply to communications to non-management directors from our officers or directors who are stockholders or stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act.

Corporate Governance Guidelines and Code of Business Conduct and Ethics

Our board of directors has adopted corporate governance guidelines. These guidelines address, among other items, the qualifications and responsibilities of our directors and director candidates, the structure and composition of our board of directors and corporate governance policies and standards applicable to us in general. In addition, our board of directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our chief executive officer, chief financial officer and other executive and senior financial officers. The full text of our corporate governance guidelines and code of business conduct and ethics are available on our website at https://investor.cricut.com/corporate-governance/governance-documents. We will post amendments to our code of business conduct and ethics or any waivers of our code of business conduct and ethics for directors and executive officers on the same website.

Director Compensation

In March 2021, we adopted, and our stockholders approved, an Outside Director Compensation Policy. Under the Outside Director Compensation Policy, each non-employee director will receive the cash and equity compensation for board services described below. Each non-employee director that is employed by Petrus or any of its affiliates has agreed to waive his or her right to receive any cash or equity compensation for services as a non-employee director for our 2021 and 2022 fiscal years. Mr. Blackwell has also agreed to waive his right to receive any cash or equity compensation for services as a non-employee director for our 2021 and 2022 fiscal years.

Our Outside Director Compensation Policy provides that all non-employee directors serving on the audit and compensation committees are entitled to receive the following cash compensation for their services on such committees:

Each non-employee director who serves as the chair of a committee will receive only the additional annual fee as the chair of the committee and will not receive the additional annual fee as a member of the committee. All cash payments to non-employee directors will be paid quarterly in arrears on a prorated basis.

Each person who first becomes a non-employee director will receive, on the first trading date on or after the date on which the person first becomes a non-employee director, an initial award of RSUs covering a number of shares of our Class A common stock having a grant date fair value (determined in accordance with GAAP) equal to $450,000, rounded to the nearest whole share. Each initial award will vest as to 1/5th of the underlying shares on each of the first five anniversaries of the date the individual became a non-employee director, subject to continued service through each relevant vesting date. If the person was a member of our board of directors and also an employee, becoming a non-employee director due to termination of employment will not entitle the non-employee director to an initial award.

On the date of each of our annual stockholder meetings, each non-employee director who is continuing as a director following our annual stockholder meeting automatically will be granted an annual award of RSUs having a grant date fair value (determined in accordance with GAAP) of $125,000, rounded to the nearest whole share. Each annual award will vest as to 1/4th of the underlying shares on each of the first four quarterly vesting dates after the award’s grant date (except that the fourth quarterly vesting date of each annual award will occur no later than the day before the date of the annual stockholder meeting following the date the annual award was granted), subject to continued service through each relevant vesting date.

In the event of a change in control of our company, all equity awards granted to a non-employee director (including those granted pursuant to our Outside Director Compensation Policy) will fully vest and become immediately exercisable (if applicable) and, with respect to equity awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, unless specifically provided otherwise under the applicable award agreement or other written agreement between the non-employee director and us.

Our Outside Director Compensation Policy also provides for the reimbursement of our non-employee directors for reasonable, customary and documented travel expenses to attend meetings of our board of directors and committees of our board of directors.

In any fiscal year, no non-employee director may be paid, issued or granted cash compensation and equity awards with a total value greater than $850,000, with the value of an equity award based on its grant date fair value for purposes of this limit, which is the annual director limit. Any cash compensation paid or equity awards granted to a non-employee director while he or she was an employee or consultant (other than a non-employee director) will not count toward the annual director limit.

In addition, our Outside Director Compensation Policy includes minimum equity ownership guidelines that require each non-employee director to hold equity interests that cover at least 25,000 shares. Each non-employee director must satisfy this requirement by the second anniversary of the later of (i) the effective date of our initial public offering or (ii) the date such individual becomes a non-employee director, and subsequently must continue to meet the requirement at all times while the individual remains a non-employee directors.

For purposes of this requirement, a non-employee director’s equity interests means shares (including unvested shares and shares covered by any other equity awards (other than options), whether such equity

Compensation for our non-employee directors is not limited to the equity awards and cash payments set forth in our Outside Director Compensation Policy. Our non-employee directors will remain eligible to receive equity awards and cash or other compensation outside of the Outside Director Compensation Policy, as may be provided from time to time at the discretion of our board of directors.

The following table lists all outstanding equity awards held by non-employee directors as of December 31, 2021:

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our board of directors currently consists of seven directors. At the annual meeting, seven directors will be elected for a one-year term and until their respective successors are duly elected and qualified or until their earlier death, resignation or removal.

Nominees

Messrs. Arora, Makler, Blackwell, Blasnik, and Freeman, and Mses. Reiff and Williamson have agreed to serve as directors if elected, and management has no reason to believe that they will be unavailable to serve. In the event a nominee is unable or declines to serve as a director at the time of the annual meeting, proxies will be voted for any nominee designated by the present board of directors to fill the vacancy.

Vote Required

Each director is elected by a plurality of the voting power of the shares present in person (including virtually) or represented by proxy at the meeting and entitled to vote on the election of directors. Because the outcome of this proposal will be determined by a plurality vote, any shares not voted FOR a particular nominee, whether as a result of choosing to WITHHOLD authority to vote or a broker non-vote, will have no effect on the outcome of the election.

Board Recommendation

PROPOSAL NO. 2

ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Pursuant to Section 14A of the Exchange Act, we are asking our stockholders to approve, on an advisory or non-binding basis, the compensation of our named executive officers as described in this proxy statement. This proposal, commonly referred to as the “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices described in this proxy statement.

The say-on-pay vote is advisory, and therefore is not binding on us, our compensation committee or our board of directors. The say-on-pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which our compensation committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our board of directors and our compensation committee value the opinions of our stockholders. To the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, we will endeavor to communicate with stockholders to better understand the concerns that influenced the vote and consider our stockholders’ concerns, and our compensation committee will evaluate whether any actions are necessary to address those concerns.

We are asking our stockholders to approve the compensation of our named executive officers as described in this proxy statement by voting for the following non-binding resolution:

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis, the compensation tables and the narrative discussion.”

Vote Required

The approval, on an advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the voting power of the shares cast. Abstentions and broker non-votes will have no effect on the outcome of the vote on this proposal.

As an advisory vote, the result of this proposal is non-binding. Although the vote is non-binding, our board of directors and our compensation committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

PROPOSAL NO. 3

ADVISORY VOTE ON THE FREQUENCY OF FUTURE STOCKHOLDER
ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Pursuant to Section 14A of the Exchange Act, we are asking our stockholders to provide their input with regard to the frequency of future stockholder advisory votes on our named executive compensation, such as the proposal contained in Proposal No. 2 of this proxy statement. In particular, we are asking our stockholders to indicate whether they would prefer an advisory vote on named executive officer compensation every one year, every two years or every three years.

After considering the benefits and consequences of each alternative, our board of directors recommends that the advisory vote on the compensation of our named executive officers be submitted to the stockholders every one year. In formulating its recommendation, our board of directors considered that compensation decisions are made annually and that an annual advisory vote on the compensation of our named executive officers will allow stockholders to provide more frequent and direct input on our compensation philosophy, policies and practices.

Vote Required

The choice of frequency, whether one year, two years or three years, that receives the most votes at the annual meeting will be considered to be the preferred frequency of our stockholders. Abstentions and broker non-votes will have no effect on this proposal.

As an advisory vote, the result of this proposal is non-binding. Although the vote is non-binding, our board of directors and our compensation committee value the opinions of our stockholders in this matter and, to the extent there is any significant vote in favor of one time period over another, will consider the outcome of this vote when making future decisions regarding the frequency of holding future say-on-pay votes.

PROPOSAL NO. 4

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our audit committee has appointed BDO USA, LLP as our independent registered public accounting firm to audit our consolidated financial statements for our fiscal year ending December 31, 2022. BDO USA, LLP served as our independent registered public accounting firm for the fiscal year ended December 31, 2021.

At the annual meeting, we are asking our stockholders to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022. Our audit committee is submitting the appointment of BDO USA, LLP to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Notwithstanding the appointment of BDO USA, LLP, and even if our stockholders ratify the appointment, our audit committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if our audit committee believes that such a change would be in the best interests of our company and our stockholders. If our stockholders do not ratify the appointment of BDO USA, LLP, then our audit committee may reconsider the appointment. One or more representatives of BDO USA, LLP are expected to be present at the annual meeting, and they will have an opportunity to make a statement and are expected to be available to respond to appropriate questions from our stockholders.

Fees Paid to the Independent Registered Public Accounting Firm

The following table presents fees for professional audit services and other services rendered to us by BDO USA, LLP for our fiscal years ended December 31, 2021 and 2020.

    

In 2021, there were no other professional services provided by BDO USA, LLP, other than those listed above, that would have required our audit committee to consider their compatibility with maintaining the independence of BDO USA, LLP.

Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

Our audit committee has established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our audit committee is required to pre-approve all services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the accounting firm’s independence. All services provided by BDO USA, LLP for our fiscal years ended December 31, 2021 and 2020 were pre-approved by our audit committee.

Vote Required

The ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022 requires the affirmative vote of a majority of the voting power of the shares cast. Abstentions will have no effect on the outcome of the vote on this proposal.

REPORT OF THE AUDIT COMMITTEE

The audit committee is a committee of the board of directors comprised solely of independent directors as required by Nasdaq listing rules and the rules and regulations of the SEC. The audit committee operates under a written charter adopted by the board of directors. This written charter is reviewed annually for changes, as appropriate. With respect to Cricut’s financial reporting process, Cricut’s management is responsible for (1) establishing and maintaining internal controls and (2) preparing Cricut’s consolidated financial statements. Cricut’s independent registered public accounting firm, BDO USA, LLP, is responsible for performing an independent audit of Cricut’s consolidated financial statements and the effectiveness of Cricut internal control over financial reporting. It is the responsibility of the audit committee to oversee these activities. It is not the responsibility of the audit committee to prepare Cricut’s financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the audit committee has:

Based on the review and discussions noted above, the audit committee recommended to the board of directors that the audited consolidated financial statements be included in Cricut’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the SEC.

EXECUTIVE OFFICERS

The following table sets forth certain information about our executive officers as of April 1, 2022.

EXECUTIVE COMPENSATION

This Compensation Discussion and Analysis (“CD&A”) includes a detailed discussion of compensation for the following current and former executive officers during the fiscal year ended December 31, 2021, whom we refer to as our named executive officers:

At Cricut, our mission is to help people lead creative lives. We have designed and built a creativity platform that enables our engaged and loyal community of millions of users to turn ideas into professional-looking handmade goods. With our highly versatile connected machines, design apps and accessories and materials, our users create everything from personalized birthday cards, mugs and T-shirts to large-scale interior decorations and more. Our cloud-based software enables us to update the functionality and features of existing physical and digital products and to release new products that seamlessly integrate with our platform. This makes our platform broadly extensible and empowers our users to unlock ever-expanding creative potential.

Our approach to executive compensation is designed to promote this mission by placing an emphasis on short-term and long-term incentives that are linked to our performance.

The compensation committee consists of Jason Makler (Chairman) and Steven Blasnik, each of whom is a long-tenured executive managing investments for Petrus Asset Management Company, our majority beneficial owner. Although our formal governance structures were different prior to our 2021 initial public offering (“IPO”), Mr. Makler and Mr. Blasnik played similar roles in setting executive compensation prior to our IPO. Based on their history and decades of experience as investors in public and private businesses, they have strong views on the appropriate ways to compensate our leadership team (see “Compensation Philosophy” below). Unlike many public companies, we have not engaged, and have no current plans to engage, an outside compensation consultant for setting executive compensation. We historically have taken a highly customized approach to executive compensation that emphasizes achievement of key business objectives, and places less of an emphasis on market data or norms. This approach has served us well by aligning the interests of our pre-IPO owners and our executives, and we intend to continue with a similar approach to executive compensation as a public company for the foreseeable future.

Our general compensation philosophy is to provide programs to attract, retain and motivate key employees who are critical to our long-term success and to tie a significant portion of their compensation to delivering business results. In addition, we seek to maximize alignment of incentives, and divide the business’ economic output, between employees and our stockholders. Our executive compensation program is designed with a mix of short-term and long-term components, and cash and equity elements in proportions that we believe provide

We endeavor to maintain compensation policies and practices that are consistent with sound governance standards. We believe it is important to provide competitive compensation packages and a high-quality work environment in order to hire, retain and motivate critical personnel, and we seek to ensure that our executive compensation program is consistent with our short-term and long-term goals given the nature of the market in which we compete for key personnel. The following policies and practices were in effect in 2021:     

Our 2021 executive compensation program reflected our transition from a late-stage private company to a new publicly-traded company. In 2021, our executive compensation program primarily was administered by our board of directors and compensation committee. Our Chief Executive Officer and other members of our management team have provided input at the direction of the board of directors or the compensation committee.

In setting 2021 executive compensation, our board of directors and compensation committee exercised their judgment to set a total compensation package for these executive officers that was competitive based on the executive officer’s performance and position as measured against our board members’ assessment of the market and their experience with other public and private companies at similar stages. We did not engage a compensation consultant or benchmark our executive compensation to any specific percentile.

Our board of directors and compensation committee approved 2021 compensation opportunities for our executive officers that would reward them for past and expected future contributions and provide incentives to remain with our company and drive growth in the value of our business.

We provide base salary to our executive officers to compensate them for services rendered during the fiscal year. Generally, our executive officers’ initial base salaries are established through arm’s-length negotiation when they are hired, taking into account their position, experience, qualifications, prior base salary, and the base salaries of our other executive officers. Thereafter, the base salaries of our executive officers are periodically reviewed and adjusted to reflect the scope of their position, responsibilities, performance, and contributions and prevailing market conditions.

In 2021, the compensation committee reviewed the base salaries of our executive officers, including our named executive officers, taking into consideration the factors described in the section above titled “Our Compensation-Setting Process.” Based on this review, the compensation committee approved increases to each of our named executive officers' base salary, effective as of March 1, 2021, in order to provide them with base salaries that the compensation committee deemed to be more competitive with the market. Accordingly, our named executive officers’ base salaries for 2021 were as follows:

Bonus

We provide cash bonus opportunities to our executive officers to motivate them to achieve our annual financial and operational objectives. Typically, near the beginning of each fiscal year, we adopt a cash bonus plan for that fiscal year, which identifies the participants in the plan and establishes the target bonus opportunity for each participant, the performance metrics to be used to determine the amount of any bonuses paid, and the associated target goals for each performance metric.

In 2021, we adopted a bonus plan, or our 2021 bonus plan, for our named executive officers. Under our 2021 bonus plan, each named executive officer was able to earn a cash bonus based on our achievement of 2021 annual targets for the particular performance criteria selected for the named executive officer from the following: (i) net new users, (ii) earnings before interest, taxes, depreciation, and amortization (“EBITDA”), (iii) net revenue, (iv) average revenue per user (“ARPU”) for subscriptions, (v) ARPU for accessories and materials, and (vi) engagement. The target goals for these performance criteria were as follows:

Mr. Arora’s bonus opportunity under our 2021 bonus plan consisted of the following two components: (i) a component based on the achievement of net new users and EBITDA and (ii) a component based on the achievement of net revenue, subscriptions ARPU, accessories and materials ARPU, and engagement.

The component based on achievement of net new users and EBITDA was structured similarly to the bonus opportunities for our other named executive officers (as described below), would be equal to the percentage of the target goal that was actually achieved, with each of these two performance criteria weighted equally. Mr. Arora’s target bonus opportunity for this component was equal to 100% of his weighted average salary for the year, which was $465,080, and was not subject to a maximum cap on the payout.

Under the other component, the four performance criteria were weighted equally, with the amount of the bonus for each performance criteria determined as follows:

If the achievement for any performance metric fell between the thresholds for receiving the target bonus of $140,000 and the maximum bonus of $210,000, the amount of the bonus for that performance metric would be determined based on linear interpolation.

The target bonus opportunities for these named executive officers were (i) $240,934 for Mr. Petersen, (ii) $95,337 for Mr. Olsen, and (iii) $46,100 for Mr. Rowberry. The amount of these named executive officers’ bonuses for each metric were calculated as follows:

In addition, the 2021 bonus plan included an accelerator that increased the amount of the bonus payout for a performance metric if we achieved 120% or more of the target goal for that performance metric, up to a maximum accelerator of 38%. For example, the amount of the bonus (calculated as described above) would be increased by (i) 5% if we achieved 120% of the target goal, (ii) 12% if we achieved 130% of the target goal, (iii) 19% if we achieved 140% of the target goal, (iv) 28% if we achieved 150% of the target goal, or (v) 38% if we achieved 160% or more of the target goal. The 2021 bonus plan did not include a maximum cap on the payout.

Actual Performance and Bonus Amounts

Based on these results, our named executive officers received the following payouts for 2021. For Mr. Arora, this amount listed below includes payouts under both of his components under the 2021 bonus plan:

Since much of Mr. Rowberry’s responsibilities are focused on sales of our products, he also participated in a sales commission plan under which he was eligible to receive quarterly commission payments based on the performance of his sales team. His quarterly commission targets in 2021 were $18,942 for the first quarter and $19,432 for each other quarter, and were not subject to a maximum cap on the payout.

For each quarter, Mr. Rowberry was eligible to receive a commission payment equal to (i) his target commission amount multiplied by (ii) the percentage of certain team members’ collective target amounts that were actually paid to such team members based on their performance. The sales team members’ commissions were based on (i) revenues from the retailers assigned to him or her, (ii) the contribution margin from the retailers assigned to him or her, and/or (iii) revenues from the retailers assigned to certain team members.

Based on the performance of Mr. Rowberry’s team, the amount of commission payments he received in 2021 was (i) $24,693 for the first quarter (which was 130% of target), (ii) $26,247 for the second quarter (which was 135% of target), (iii) $10,926 for the third quarter (which was 56% of target), and (iv) $14,277 for the fourth quarter (which was 73% of target).

We provide equity awards to our executive officers to incentivize and reward strong long-term corporate performance and to align their interests with those of our stockholders.

In connection with the “Corporate Reorganization” described below in the section titled “Adjustments to Outstanding Equity Awards in Connection with IPO,” we granted options to purchase shares of our Class A common stock to holders of certain outstanding incentive unit awards (including our named executive officers) to provide them with additional opportunity to realize the economic value for any future appreciation in our stock above the initial public offering price following the closing of our initial public offering. The number of shares covered by each option was equal to the difference between (i) the number of shares of our Class B common stock equivalent to the number of units covered by the corresponding incentive unit award as of the effective date of our initial public offering and (ii) the number of shares of our Class B common stock actually received in conversion of such incentive unit award in connection with the Corporate Reorganization. As a result, the number of shares covered by the options granted to our named executive officers were (i) 2,218,889 for Mr. Arora, (ii) 29,505 for Mr. Petersen, (iii) 13,804 for Mr. Olsen, and (iv) 3,038 for Mr. Rowberry. Each option has an exercise price per share equal to the initial public offering price and has the same vesting terms as the corresponding incentive unit award, and is subject to a ten-year term, subject to earlier termination under the applicable plan.

Historically, we have granted annual equity awards to our executive officers in the first quarter of each year. However, in 2021, we delayed the grant of annual equity awards to our named executive officers until after our initial public offering. Accordingly, in May 2021, we granted our named executive officers awards of RSUs. The 2021 annual equity awards were provided in the form of RSUs because we believe that full value awards, such as RSUs, better align the interest of executives with stockholders. RSUs never become underwater regardless of any future fluctuation in the market price of our Class A common stock, which means that, in the event of a decline in the market price, our named executive officers would continue to be incentivized to create stockholder value and the awards would continue to promote retention (since our named executive officers would still receive value from these awards).

The number of RSUs covered by these awards were: (i) 1,494,221 RSUs for Mr. Arora, (ii) 100,000 RSUs for Mr. Petersen, (iii) 30,000 RSUs for Mr. Olsen, and (iv) 25,000 RSUs for Mr. Rowberry. The number of RSUs granted to each of our named executive officers was determined by our compensation committee after taking into consideration the factors described in the section above titled “Our Compensation-Setting Process,” including the

Each RSU award vests in four equal annual installments beginning on May 15, 2022, subject to the applicable named executive officer’s continued service with us.

As discussed above, 2021 was a transition year for us, and the size and terms of the equity awards issued to our named executive officers reflects this. In 2022 and going forward, we expect to continuously review and assess our executive equity compensation program in order to incentivize and motivate our executives to achieve our business objectives and to provide compensation that strengthens the alignment between their interests and those of our stockholders. In 2022, we expect the size of annual equity awards for many executives, including Mr. Arora, to be smaller as compared to 2021.

In addition to the annual equity awards, in January 2022, the compensation committee granted Messrs. Arora and Olsen and certain other of our key employees awards of performance-based RSUs because it believed that performance should be a significant factor in our overall equity compensation program, in order to (i) provide greater incentive for these key employees to drive our long-term growth and thereby create additional stockholder value and (ii) promote long-term retention of these key employees. Mr. Arora’s award covered 1,970,000 RSUs, and Mr. Olsen’s award covered 190,000 RSUs.

Each of these RSU awards is eligible to vest in two tranches based on our achievement of total “EBTPS” during any eight consecutive completed fiscal quarters during the performance period beginning on January 1, 2022, and ending on December 31, 2026 (“Total EBTPS”), as follows:

Each tranche that becomes eligible to vest will vest on the first quarterly vesting date (February 15, May 15, August 15, and November 15) on or following the date that the compensation committee determines that the applicable total EBTPS goal was achieved, subject to the applicable named executive officer’s continued service.

For these purposes, “EBTPS” means (i) reported earnings per share multiplied by (ii) the ratio of (A) adjusted net income (which is GAAP net income adjusted to exclude (x) income tax expenses; and (y) stock-based compensation expense and payroll tax expense, in each case, related to the award and performance-based equity awards granted with the same vesting terms) divided by (B) our GAAP net income, as may be adjusted by the compensation committee in its discretion in recognition of unusual or nonrecurring items.

The targets for the 2022 LTIP awards are intended to incentivize the management team to aim high and these targets are achievable only through a sustained level of high performance. For comparison, our 2021 EBTPS was $0.88. The constant growth rate of annual EBTPS required to meet the targets would be 25.5% (to reach $4.93 in 2025-26) and 31.8% (to reach $6.16).

If a change in control occurs during the performance period and before a Total EBTPS goal for a tranche has been achieved, that tranche will instead vest upon the change in control based on the achievement of pro-rated total EBTPS goals during the last eight consecutive completed fiscal quarters before the change in control (the “CIC Total EBTPS”). If the CIC Total EBTPS is equal to the minimum CIC Total EBTPS goal, then 50% of the RSUs subject to the tranche will vest. If the CIC Total EBTPS equal or exceeds the target CIC Total EBTPS goal, then 100% of the RSUs subject to the tranche will vest. If the CIC Total EBTPS falls between the minimum CIC Total EBTPS goal and the target CIC Total EBTPS goal, the number of RSUs subject to the tranche that vest will be determined based on linear interpolation.

We have earmarked a total of 7 million shares to be awarded under the 2022 LTIP, over 90% of which were awarded in January 2022. In the future, we may implement other performance-based, programs like the 2022

Prior to the consummation of our initial public offering, we took a series of related corporate reorganization transactions that included the liquidation of Cricut Holdings, LLC (“Cricut Holdings”) in accordance with the terms and conditions of its then existing limited liability company agreement, with existing unitholders receiving 100% of our capital stock as a result of such liquidation. In connection with the Corporate Reorganization, incentive units of Cricut Holdings that were vested as of immediately before the consummation of the Corporate Reorganization were converted into shares of our Class B common stock, and incentive units that were unvested as of immediately before the consummation of the Corporate Reorganization were converted into shares of restricted stock of our company that are subject to the same vesting conditions that applied to the unvested incentive units. The vesting conditions that applied to our named executive officers’ unvested incentive units are described below.

Our named executive officers were previously granted awards of incentive units in Cricut Holdings, which were intended to qualify as profits interests for U.S. federal tax purposes and pursuant to which the holder could receive certain distributions with respect to any such incentive units that had vested once such distributions payable to holders or common units or incentive units in Cricut Holdings exceeded the specified participation threshold for the specific award of incentive units.

Prior to the tender offer described below, if a change in control occurred and the holder remained continuously employed or in service through the date of the change in control, all of his or her then-unvested incentive units would vest immediately before such change in control. Any termination in connection with a change in control as a result of any action of, or direction by, the acquirer would not be taken into account for purposes of determining continuous employment through the date of the change in control. Upon termination of the holder’s employment or service, his or her unvested incentive units would be immediately forfeited, and his or her vested units would be (i) immediately forfeited if such termination was for cause or (ii) subject to our right to redeem such incentive units at their then-current fair market value if such termination occurred for any other reason.

In March 2021, and prior to our IPO, we completed a tender offer whereby the incentive units of each employee who elected to participate in the tender offer (including our named executive officers) were amended to (i) remove the provisions described in the previous paragraph and (ii) add 100% accelerated vesting of the incentive units if the employee’s employment is terminated due to his or her death or by us due to his or her disability.

In connection with the corporate reorganization occurring in connection with our IPO, and described in the next paragraph, Mr. Arora’s CEO Performance Awards were treated in the same manner as other incentive units (as described above), including that Mr. Arora’s unvested incentive units in Cricut Holdings were converted into shares of restricted stock of our company, subject to the same vesting conditions that applied to the unvested incentive units, and his vested incentive units in Cricut Holdings were converted into shares of our Class B common stock.

For these purposes, and after taking into account that the specified vesting thresholds for each of the 2018 CEO Performance Award and the 2020 CEO Performance Award have been achieved, the number of shares of our Class B common stock and restricted stock of our company received with respect to the 2018 CEO Performance Award and the 2020 CEO Performance Award were calculated as if the threshold price per unit for an applicable category of incentive units under the 2018 CEO Performance Award was the vesting price hurdle (reduced by $0.15 after taking into account the impact of the one-time dividend paid in September 2020). Accordingly, the total number of shares of our Class B common stock (a portion of which was restricted stock of our company) that Mr. Arora received with respect to the 2018 CEO Performance Award and the 2020 CEO Performance Award equaled (i) 1,272,422 for the first category of incentive units under the 2018 CEO Performance Award, (ii) 1,127,430 for the second category of incentive units under the 2018 CEO Performance Award, (iii) 990,054 for the third category of incentive units under the 2018 CEO Performance Award, (iv) 266,562 for the first category of incentive units under the 2020 CEO Performance Award, (v) 217,787 for the third category of incentive units under the 2020 CEO Performance Award and (vi) 169,130 for the third category of incentive units under the 2020 CEO Performance Award.

All other terms of the 2018 CEO Performance Award and the 2020 CEO Performance Award remained the same.

In March 2021, we entered into an amended employment agreement with Mr. Arora that does not have a specific term and provides for Mr. Arora’s at-will employment, and written, at-will employment letters with each of our other executive officers. The amended employment agreement provides for accelerated vesting of Mr. Arora’s equity awards upon a change in control, as described below in the section titled “Potential Payments Upon Termination or Change in Control.” We provided this vesting acceleration provision to Mr. Arora in order to maintain the benefit that he historically received for his equity awards and to align his equity interests with those of our investors.

In March 2021, we adopted an Executive Change in Control and Severance Plan, or our Executive Severance Plan, pursuant to which our executive officers and certain other key employees are eligible to receive severance benefits in the event of a qualifying termination in connection with a change in control, as specified in and subject to the employee signing a participation agreement under our Executive Severance Plan. This

We believe that these protections serve our retention objectives by helping our named executive officers and other key employees maintain continued focus and dedication to their responsibilities to maximize stockholder value, including in the event of a transaction that could result in a change in control of our company. For more information, see the section titled “Potential Payments Upon Termination or Change in Control” beginning on page 39 of this proxy statement.

In addition, shares of restricted Class B common stock that our named executive officers received in conversion of their incentive unit awards in connection with the Corporate Reorganization will fully vest if the executive officer’s employment is terminated due to his death or by us due to his disability, as described above in the section titled “Incentive Units of Cricut Holdings, LLC.”

In light of his long history of employment with us and in order to facilitate a smooth transition, we entered into a separation agreement with Mr. Rowberry in connection with his resignation effective December 31, 2021. Pursuant to the separation agreement, we provided the payments and benefits described below in the section of this proxy statement titled “Potential Payments upon Termination or Change in Control.”

Other Compensation Information

We take financial reporting implications into consideration in designing compensation plans and arrangements for the members of our executive team, other employees and members of our board of directors. These accounting considerations include Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, the standard which governs the accounting treatment of stock-based compensation awards. That said, we will always decide based on business economics even if such choices result in lower levels for reported accounting metrics. Neither accounting nor tax considerations should trump business economics.

We have not provided any of our named executive officers with a gross-up or other reimbursement for tax amounts the individual might pay pursuant to Code Sections 280G, 4999 or 409A. Code Sections 280G and 4999 provide that named executive officers, directors who hold significant stockholder interests and certain other service providers could be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of our company that exceeds certain limits, and that we or our successor could lose a deduction on the amounts subject to the additional tax. Code Section 409A also imposes significant taxes on the individual in the event that an executive officer, director or other service provider receives “deferred compensation” that does not meet the requirements of Code Section 409A.

Under Code Section 162(m), we are subject to limits on the deductibility of executive compensation. Deductible compensation is limited to $1 million per year for the chief executive officer and certain of our current and former highly compensated executive officers (collectively “covered employees”). While we cannot predict how the deductibility limit may impact our compensation program in future years, we intend to maintain an approach to executive compensation that strongly links pay to performance. In addition, although we have not adopted a formal policy regarding tax deductibility of compensation paid to our named executive officers, we may consider tax deductibility under Code Section 162(m) as a factor in its compensation decisions.

Compensation Committee Report

The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis provided above. Based on its review and discussions, the compensation committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and Cricut’s Annual Report on Form 10-K for the year ended December 31, 2021.

Compensation Risk Assessment

We have undertaken a risk review of our employee compensation plans and arrangements in which our employees (including our executive officers) participate, to determine whether these plans and arrangements have any features that might create undue risks or encourage unnecessary and excessive risk-taking that could threaten our value. In our review, we considered numerous factors and design elements that manage and mitigate risk, without diminishing the effect of the incentive nature of compensation, including the following:

Policy Prohibiting Hedging or Pledging of Securities

We have established an Insider Trading Policy, which, among other things, prohibits short sales, engaging in transactions in publicly-traded options (such as puts and calls) and other derivative securities relating to our common stock. This prohibition extends to any hedging or similar transaction designed to decrease the risks associated with holding our securities. In addition, our executive officers are prohibited from pledging any of our securities as collateral for a loan and from holding any of our securities in a margin account.

The following table sets forth information regarding the compensation reportable for our named executive officers for fiscal 2021 and prior years where applicable, as determined under SEC rules.

    

The following table sets forth information, for each of our named executive officers, concerning grants of plan-based awards made during fiscal 2021.

    

(2)    RSUs granted on May 1, 2021 vest in four equal annual installments beginning on May 15, 2022.

(3)    Reflects the IPO option grants described above in “Compensation Discussion and Analysis—Executive Pay and 2021 Compensation.”

(4)    Reflects the aggregate grant-date fair value of RSUs and stock options granted to our named executive officers during 2021 computed in accordance with FASB ASC Topic 718, rather than the amounts paid or realized by the named executive officer. We provide information regarding the assumptions used to calculate the value of all stock options and RSUs and incentive unit awards made to our named executive officers in Note 11 to our consolidated financial statements included in our annual report on Form 10-K filed on March 9, 2022.

(5)    The RSUs granted to Mr. Rowberry on May 1, 2021 were forfeited in connection with his resignation. The entry dated December 31, 2021 reflects the incremental grant date fair value in connection with the continued vesting of the portion of each of his equity awards that were scheduled to vest in March 2022, as described below in the section of this proxy statement titled “Potential Payments upon Termination or Change in Control.”

The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2021.

    

    

Pension Benefits and Nonqualified Deferred Compensation

We do not provide a pension plan for our employees, and none of our named executive officers participated in a nonqualified deferred compensation plan during fiscal 2021.

Potential Payments upon Termination or Change in Control

In connection with Mr. Rowberry’s resignation effective December 31, 2021, we entered into a separation agreement. Pursuant to the terms of the separation agreement, Mr. Rowberry received the following: (i) a lump sum payment equal to the actual bonus under our 2021 bonus plan that he would have earned had he remained employed with us through the date bonuses are earned under such plan and (ii) continued vesting of the portion of each of his equity awards that was scheduled to vest in March 2022. The amount of the lump sum payment was the amount of his 2021 bonus described in the "Actual Performance and Bonus Amounts" section of this proxy above. The value of the vesting of Mr. Rowberry’s equity awards under the separation agreement is $844,344, which is calculated for each equity award by multiplying (i) the number of shares covered by the equity award that are eligible for continued vesting multiplied by (ii) the excess, if any, of the closing sales price per share of our Class A common stock on December 31, 2021 ($22.09) over the equity award’s exercise price.

The tables below list the estimated amount of compensation payable to each of the named executive officers for the events listed, except for Mr. Rowberry, whose actual compensation in connection with his resignation, effective December 31, 2021, is described in the previous paragraph. The amounts shown assume that such termination was effective as of December 31, 2021, and include all components of compensation, benefits and perquisites payable under the arrangements discussed above.

Estimated amounts for share-based compensation are based on the closing price of our Class A common stock on the Nasdaq on December 31, 2021, which was $22.09 per share, after the payment of any applicable exercise price. The actual amounts for all named executive officers to be paid out can only be determined at the time of such executive’s separation.

    

(1)    The weighted average exercise price does not take into account outstanding RSUs.

(2)    Excluded from this amount are 4,000,000 shares of Class A common stock available for future issuance under the 2021 Employee Stock Purchase Plan (“ESPP”), which is currently not active, as well as shares of Class A common stock that are automatically added to equity compensation plans on the first day of the fiscal year pursuant to such plans.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of our common stock as of April 1, 2022 by:

We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated, to our knowledge, the persons or entities identified in the table have sole voting power and sole investment power with respect to all shares shown as beneficially owned by them, subject to community property laws where applicable.

Unless otherwise indicated, the address for each person or entity listed in the table is c/o Cricut, Inc., 10855 South River Front Parkway, South Jordan, Utah 84095.

*    Represents beneficial ownership or voting power of less than 1% of the outstanding shares of our common stock.

+     The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis, such that each holder of Class B common stock beneficially owns an equivalent number of shares of Class A common stock.

(1)    Includes (i) 25,123,296 shares of Class B common stock held of record by Mr. Arora, (ii) 769,132 shares of Class B common stock held of record by the Ashish Chandra Arora 2021 GRAT, dated January 20, 2021, for which Mr. Arora serves as trustee, (iii) 769,132 shares held of record by the Mridu Vashist Arora 2021 GRAT, dated January 20, 2021, for which Mr. Arora’s spouse serves as trustee, (iv) 1,538,264 shares of Class B common stock held of record by the Rushil Arora Trust, dated January 20, 2021, for which Mr. Arora and his spouse serve as trustees, (v) 1,184,410 shares of Class A common stock issuable to Mr. Arora pursuant to options exercisable within 60 days of April 1, 2022, and (vi) 373,555 shares of Class A common stock issuable to Mr. Arora pursuant to RSUs vesting within 60 days of April 1, 2022.

(2)    Includes (i) 432,733 shares of Class B common stock held of record by Mr. Petersen, (ii) 1,785,865 shares of Class B common stock held of record by The Tartin Trust, dated March 10, 2021, for which Mr. Petersen serves as Investment Trustee, (iii) 700,000 shares of Class B common stock held of record by The Tartin Legacy Trust, dated November 2, 2021, for which Mr. Petersen serves as trustee, (iv) 11,646 shares of Class A common stock issuable to The Tartin Trust, dated March 10, 2021, for which Mr. Petersen serves as Investment Trustee, pursuant to options exercisable within 60 days of April 1, 2022, and (v) 25,000 shares of Class A common stock issuable to Mr. Petersen pursuant to RSUs vesting within 60 days of April 1, 2022.

(3)     Includes (i) 515,682 shares of Class A common stock held of record by Mr. Olsen, (ii) 93,270 shares of Class B common stock held of record by Mr. Olsen, (iii) 5,349 shares of Class A common stock issuable to Mr. Olsen pursuant to options exercisable within 60 days of April 1, 2022, and (iv) 7,500 shares of Class A common stock issuable to Mr. Olsen pursuant to RSUs vesting within 60 days of April 1, 2022.

(4)    Includes (i) 164,015 shares of Class A common stock held of record by Mr. Rowberry and (ii) 38,151 shares of Class B common stock held of record by Mr. Rowberry.

(5)    Includes (i) 580,706 shares of Class A common stock held of record by Mr. Shill, (ii) 7,731 shares of Class A common stock issuable to Mr. Shill pursuant to options exercisable within 60 days of April 1, 2022, and (iv) 25,000 shares of Class A common stock issuable to Mr. Shill pursuant to RSUs vesting within 60 days of April 1, 2022.

(6)    Includes 543,961 shares of Class B common stock held of record by the Jason and Alisa Makler Living Trust, dated July 10, 2020, for which Mr. Makler and his spouse serve as co-trustees.

(7)    Includes 1,508,047 shares of Class A common stock held of record by L&J Blackwell Partnership Ltd., or L&J Partnership. Mr. Blackwell serves as president of Continuous Asset Management LLC, the General Partner of L&J Partnership.

(8)    Includes (i) 2,530,714 shares of Class B common stock held of record by Mr. Blasnik, (ii) 200,000 shares of Class B common stock held of record by the Julie Blasnik 2020 Trust, for which Mr. Blasnik and his spouse serve as co-trustees, and (iii) 200,000 shares of Class B common stock held of record by the Sarah Blasnik 2020 Trust, for which Mr. Blasnik and his spouse serve as co-trustees.

(9)    Includes (i) 897,321 shares of Class A common stock held of record by Mr. Freeman and (ii) 261,125 shares of Class A common stock held of record by the Russell and Carolyn Freeman Living Trust, dated October 5, 2018, for which Mr. Freeman serves as co-trustee.

(10)    Includes 30,765 shares of Class B common stock held of record by Ms. Reiff.

(11)    Includes 53,440 shares of Class B common stock held of record by Ms. Williamson.

(12)    Includes (i) 3,762,881 shares of Class A common stock beneficially owned by our current executive officers and directors, (ii) 31,851,974 shares of Class B common stock beneficially owned by our current executive officers and directors, (iii) 1,197,490 shares of Class A common stock issuable to our directors and current executive officers pursuant to options exercisable within 60 days of April 1, 2022, and (iv) 406,055 shares of Class A common stock issuable to our directors and current executive officers pursuant to RSUs vesting within 60 days of April 1, 2022.

(13)    Based on a Schedule 13G filed with the SEC on February 14, 2022 and our records, includes (i) 120,882,351 shares of Class B common stock held of record by HWGAA, L.P. (HWGAA) and for which Petrus Capital Management, LLC (PCM) serves as the general partner and (ii) 6,083,578 shares of Class B common stock held of record by Petrus Employee Profit Share, L.P. (PAM2) and for which PAM Partners GP, LLC (PAM Partners GP) serves as the general partner. Petrus Trust Company, LTA (PTC) serves as an investment advisor to HWGAA and PAM2 and as trustee to the sole member of PAM Partners GP. An investment committee of PTC comprised of three individuals has voting and dispositive control over the Class B common stock held by HWGAA and PAM2. Each member of the investment committee has one vote, and the approval of two of the three members is required to approve an action of the investment committee; therefore, under the so-called “rule of three,” no one individual is deemed to have or share beneficial ownership of such shares. The address for these entities is c/o Petrus Trust Company, 3000 Turtle Creek Boulevard, Dallas, Texas 75219.

RELATED PERSON TRANSACTIONS

Policies and Procedures for Related Person Transactions

OTHER MATTERS

If a stockholder would like us to consider including a proposal in our proxy statement for our 2023 annual meeting pursuant to Rule 14a-8 of the Exchange Act, then the proposal must be received by our corporate secretary at our principal executive offices on or before December 16, 2022. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:

Our amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present a proposal or nominate a director at an annual meeting, but do not seek to include the proposal or director nominee in our proxy statement. In order to be properly brought before our 2023 annual meeting, the stockholder must provide timely written notice to our corporate secretary, at our principal executive offices, and any such proposal or nomination must constitute a proper matter for stockholder action. The written notice must contain the information specified in our amended and restated bylaws. To be timely, a stockholder’s written notice must be received by our corporate secretary at our principal executive offices:

In the event that we hold our 2023 annual meeting more or less than 25 days after the one-year anniversary of this year’s annual meeting, then such written notice must be received by our corporate secretary at our principal executive offices:

If a stockholder who has notified us of his, her or its intention to present a proposal at an annual meeting of stockholders does not appear to present his, her or its proposal at such annual meeting, then we are not required to present the proposal for a vote at such annual meeting.

Availability of Bylaws

A copy of our amended and restated bylaws is available on our website at https://investor.cricut.com/corporate-governance/governance-documents.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires that our directors and executive officers, and persons who own more than 10% of our common stock, file reports of ownership and changes in ownership with the SEC. Based on our review of such filings and written representations from certain reporting persons that no Form 5 is required, we believe that during the fiscal year ended December 31, 2021, all directors, executive officers and greater than 10% stockholders complied with all Section 16(a) filing requirements applicable to them, except that each Section 16 person at the time of our IPO filed their initial Form 3 one day late, and Mr. Blackwell inadvertently filed one Form 4 report for a transaction one day late.

2021 Annual Report

Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement, and references to our website address in this proxy statement are inactive textual references only.

The board of directors does not know of any other matters to be presented at the annual meeting. If any additional matters are properly presented at the annual meeting, the persons named in the proxy will have discretion to vote the shares of our common stock they represent in accordance with their own judgment on such matters.

It is important that your shares be represented at the annual meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote as promptly as possible to ensure your vote is recorded.

THE BOARD OF DIRECTORS

We calculate EBITDA as net income adjusted to exclude: interest expense, net; income taxes; and depreciation and amortization expense. Stock-based compensation is included in our EBITDA calculation.

We use EBITDA as a measure of operating performance in our business. We believe this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our results of operations for the following reasons:

Our use of EBITDA has limitations as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our financial results as reported under GAAP. Some of these limitations are, or may in the future be, as follows:

Because of these limitations, we believe EBITDA should be considered along with other operating and financial performance measures presented in accordance with GAAP.

Beginning the first quarter ending March 31, 2022, we will be able to provide year-over-year earnings per share comparisons post IPO. Therefore going forward, management will begin focusing on operating income and earnings per share as the key metrics for measuring operating performance and managing the long-term business. Fourth quarter 2021 was the last time we highlight EBITDA as a key metric. Note that operating income is closely aligned with how we have calculated EBITDA.

The following table presents a reconciliation of EBITDA to net income, the most directly comparable financial measure prepared in accordance with GAAP, for the period indicated: