ACV Auctions Inc

Our executive compensation program generally consists of the following three principal components: base salary, short-term incentives through performance-based bonuses (payable in cash or equity at our discretion) and long-term equity incentive compensation. We also provide our NEOs with benefits available to all our employees, including retirement benefits under ACV’s 401(k) plan and participation in our employee health and welfare benefit plans. The chart below summarizes the three main elements of our executive compensation in 2024, their objectives and key features.

Our executive compensation program provides a market-competitive compensation package to our NEOs that includes significant short-term incentives for the achievement of measurable corporate objectives and long-term incentives that are time based and/or tied to our stock price. We believe that this approach provides an appropriate blend of short-term and long-term incentives to maximize shareholder value.

To maintain a competitive compensation program, we offer cash compensation in the form of base salaries as well as short-term incentives in the form of annual performance-based payments (payable in cash or equity at our discretion). We also grant our NEOs long-term incentive compensation in the form of both RSUs and performance stock units (“PSUs”).

For the 2024 compensation cycle, the Compensation Committee enhanced our long-term incentive program with the introduction of PSUs, a new form of award consisting ofat-risk performance-based compensation, to establish another link between the payout of long-term incentive awards and the performance of our business. The PSUs are subject to both service-based vesting conditions and a requirement that the average closing price of the Company’s Class A Common Stock, as measured over a period of 30 trading days commencing at the grant date and ending July 1, 2027, equals or exceeds a designated level (the “Stock Price Condition”). The PSUs will vest inone-third installments on each of July 1, 2025, 2026 and 2027, provided that the Stock Price Condition has been satisfied prior to the relevant date. If the Stock Price Condition has not yet been satisfied prior to the relevant date, then the PSUs that otherwise would have vested on such date will remain unvested unless and until the Stock Price Condition has been satisfied. If the Stock Price Condition has not been satisfied by July 1, 2027, then the PSUs will be forfeited on that date. In each circumstance, vesting is subject to the NEO’s continued service with the Company until the time of vesting. In 2024, the Share Price Condition was not met and there were no PSUs vested.

For 2024, 24% of our CEO’s long-term incentive award, and on average, 30% of other NEOs’ long term incentive awards were comprised of PSUs. By linking vesting of the PSUs awarded to the Stock Price Condition, we believe that we have advanced our goal of developing objective risk-based deferred compensation programs and further strengthened the link between shareholder value creation and compensation of our NEOs.

We believe that both RSUs and PSUs align the interests of our executives with our shareholders and provide a longer-term focus through either a multi-year vesting schedule for RSUs or cliff vesting over the course of a multi-year performance period for PSUs, while managing dilution to existing investors and providing greater predictability to our NEOs in the value of their compensation. We further believe the total compensation package for our executive officers aligned with market practices in our competitive markets.

For the fiscal year ending December 31, 2024, we used RSUs and PSUs to configure our long-term equity incentives for our executive officers, including our NEOs. Prior to our initial public offering in March 2021, we granted certain members of our management team, including some of our NEOs, long-term incentive compensation in the form of stock options. Since the time of the IPO until the 2024 fiscal year, our management team, including our NEOs received long-term equity incentives in the form of time-based RSUs, and in 2024, our NEOs also received PSUs to more closely align our compensation program with shareholder value.

During the fiscal year ended December 31, 2024, the Compensation Committee, with the assistance of our independent compensation consultant, Compensia, reviewed our executive compensation, including base salaries, short-term incentives, equity awards and benefit programs, to confirm the continued alignment of our compensation program with shareholder interests and appropriate rewards and incentives for our NEOs.