GrowGeneration Corp

The following table sets forth information regarding the total compensation of our named executive officers, as determined under Item 402 of Regulation S-K, for the years ended December 31, 2023, 2022, and 2021.

Salary

Base salaries paid to our named executive officers are set forth in the “Salary” column of the SCT.

As noted under Compensation Overview above, the Company undertook several initiatives across the enterprise during 2022 and 2023 to reduce expenses as a result of a prolonged industry downturn. In connection with these initiatives, our NEOs also agreed to reduced base salary levels for 2023, as described immediately below.

First, our CEO and Co-Founder, Darren Lampert, and our President and Co-Founder, Michael Salaman, each entered into a new two-year employment agreement, effective January 1, 2023, that provided for reduced total compensation compared to their compensation in prior years, including base salary of $500,000 per year. The Compensation Committee believes such salary levels to be below market for similar executives of similar companies, however the Compensation Committee was supportive of Mr. Lampert’s and Mr. Salaman’s willingness to accept below-market salaries given the near-term, industry-wide pressures the Company has faced. Furthermore, the Compensation Committee believes that such below-market salaries do not create retention risk, as Mr. Lampert and Mr. Salaman have displayed steadfast dedication to the Company since its founding approximately 10 years ago.

Second, our CFO, Greg Sanders, agreed to forgo a portion of the guaranteed base salary increase provided for in his current employment agreement. Specifically, Mr. Sanders agreed to irrevocably waive his right to receive over $10,000 of base salary to which he was otherwise entitled in 2023.

Salaries paid to our named executive officers in 2022 and 2021 are set forth in the SCT.

Performance Bonus

The amounts set forth in the “Performance Bonus” column of the SCT consist of performance bonuses paid to executive officers, which are based on either an annual performance bonus program established by the Compensation Committee, a bonus program established in an employment agreement approved by the Compensation Committee, or discretionary bonuses awarded by the Compensation Committee.

No performance bonuses were paid to our NEOs with respect to fiscal year 2023. The performance bonus for our CEO and our President in 2022 and 2021 was an amount equal to 0.5% of revenue over $79.8 million in the given year, as provided in their respective employment agreements then in effect. For executive officers other than our CEO and our President, the performance bonus was discretionary for all years shown in the SCT, except that a portion of the 2023 performance bonus for our CFO was provided for in his employment agreement then in effect.

Under the Company’s annual cash incentive plan for fiscal year 2023 (“2023 Cash Bonus Plan”), short-term incentive compensation for NEOs was based on achievement of Adjusted EBITDA for the enterprise. (Refer to the Reconciliation of EBITDA and Adjusted EBITDA section in this Proxy Statement for the Company’s definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to GAAP net income (loss)). Each NEO’s target bonus is established in their respective employment agreements as an amount equal to 50% of base salary, which can be achieved by obtaining the target performance goal. In addition, highest bonus opportunity is an amount equal to 100% of base salary.

The Compensation Committee established positive Adjusted EBITDA targets for the 2023 Cash Bonus Plan. No bonuses were paid pursuant to the 2023 Cash Bonus Plan, however, due to negative Adjusted EBITDA achievement of the Company in fiscal year 2023 primarily resulting from challenging industry conditions.

The Compensation Committee recognizes that the use of a single performance goal in the 2023 Cash Bonus Plan is a departure from its practice in 2022 but believes it was appropriate and in the best interests of shareholders. In 2023, industry headwinds and market factors outside management’s control demanded a nimble approach to managing our business. As a result, the Compensation Committee sought to incentivize management to achieve a positive overall outcome for the Company in the near-term while also giving management flexibility to manage the business to rapidly evolving market conditions. The Compensation Committee chose Adjusted EBITDA as an appropriate overall performance goal that represents the culmination of numerous inputs that management would have the opportunity to affect and that also reflects appropriate adjustments for non-recurring items provoked by near-term market challenges.

For the Company’s annual cash incentive plan for fiscal year 2024, the Compensation Committee has determined it is in the best interests of the Company and its shareholders to return to using multiple performance goals, including Adjusted EBITDA, same-store-sales, and a non-financial goal to establish a program to monitor and reduce vehicle emissions from our delivery vehicle fleet. The Compensation Committee also approved a long-term cash incentive program over a three-year performance period beginning with fiscal year 2024, which is based on achievement of proprietary brand sales as a percentage of total Company sales.

The Company’s annual cash incentive plan for fiscal year 2022 (“2022 Cash Bonus Plan”) for its executive officers (other than the President and CEO, whose bonuses were established in their respective employment agreements in effect at the time) was based on achievement of three different financial goals, each of which is weighted, set forth in the list below:

•Enterprise generation of gross profit, weighted at 40% of target bonus opportunity;

•Adjusted EBITDA, weighted at 40% of target bonus opportunity; and

•Cash from operations, weighted at 20% of target bonus opportunity.

The Compensation Committee set a target bonus under the 2022 Cash Bonus Plan of an amount equal to 50% of base salary, which would be achieved by obtaining the target performance goal. In addition, highest bonus opportunity was an amount equal to 100% of base salary, and lowest bonus opportunity was an amount equal to 25% of base salary. Highest bonus would be achieved if actual performance is 120% or more of the target performance goal, and lowest bonus would be achieved if actual performance is 80% of the target performance goal. Bonus achievement varied for actual performance between 80% and 120% of target performance.

In 2021, the Compensation Committee awarded executive officers (other than the CEO and President, whose bonuses were established in their respective employment agreements in effect at the time) bonuses from a discretionary pool based on financial and stock price performance, as well as the executive’s role and performance, among other factor considered relevant by the Compensation Committee.

Bonus

The amounts set forth in the “Bonus” column of the SCT consist of cash awards made to the executive officers that are time-based awards in conjunction with employment agreements. Only one such award was paid to our former CFO in 2021.

Option Awards

The “Options Award” column of the SCT shows the value of stock options awarded to certain NEOs under our 2014 Equity Incentive Plan and Amended and Restated 2018 Equity Incentive Plan. No options were granted to our NEOs in 2023, 2022, or 2021.

Stock Awards

We awarded restricted shares and time-based restricted stock units (“RSUs”) to our NEOs under our 2014 Equity Incentive Plan and Amended and Restated 2018 Equity Incentive Plan. The amounts set forth in the “Stock Awards” column represent the value of such awards at the time of grant.

In 2023, our CEO and our President were each granted 200,000 RSUs pursuant to their respective employment agreements, which vest ratably on a biannual basis through December 2024. These awards were subject to an initial clerical error. The original award was effective January 1, 2023 and included 100,000 RSUs. This award was amended and corrected on June 15, 2023 to increase the total RSUs to 200,000.

In 2022, our CFO, Greg Sanders, was granted 90,000 RSUs on August 9, 2022 pursuant to his 2022 employment agreement, which vest ratably on a biannual basis over three years. As of June 15, 2023, Mr. Sanders entered into a new employment agreement that superseded and replaced his prior employment agreement, canceling the 75,000 unvested RSUs from the August 9, 2022 grant. The new employment agreement granted 180,000 RSUs on June 15, 2023, which vest 30,000 shares each six months of service beginning June 15, 2023. Stock awards in 2023 represent the incremental fair market value of the incremental 105,000 RSUs granted, net of the cancelled RSUs, with the new employment agreement. In addition, Mr. Sanders was granted 15,000 RSUs on January 5, 2022 as a discretionary award made when he was our Corporate Controller, which vest ratably on an annual basis through December 2025.

During 2021, Jeff Lasher was granted 60,000 RSUs on April 15, 2021 pursuant to his employment agreement in his former capacity as CFO, which were to vest ratably on a biannual basis through April 2024. Mr. Lasher was granted an additional 100,000 RSUs on January 5, 2022 as a discretionary award in his former capacity as CFO, which were to vest ratably on an annual basis through December 2025. Such awards were partially forfeited upon Mr. Lasher’s resignation on August 9, 2022, however Mr. Lasher was granted 30,000 RSUs on August 12, 2022 in connection with his separation and release agreement.

During 2021 Paul Rutenis was granted 40,000 RSUs on June 1, 2021 pursuant to his employment agreement in his former capacity as Chief Merchandising Officer, which were to vest ratably on a biannual basis through June 2024. Mr. Rutenis was granted an additional 65,000 RSUs on January 5, 2022 as a discretionary award in his former capacity as Chief Merchandising Officer, which were to vest ratably on an annual basis through December 2025. Such awards were partially forfeited upon Mr. Rutenis’s resignation on June 9, 2022, however Mr. Rutenis was granted 9,999 RSUs on June 9, 2022 in connection with his separation and release agreement.

All Other Compensation

The “All Other Compensation” column of the SCT shows compensation paid to our NEOs that is not already reflected in other columns of the SCT, which includes 401(k) matching contributions, health insurance contributions, and other employee benefits.

Our 401(k) Plan is our tax qualified retirement savings plan pursuant to which our U.S. employees, including NEOs, are able to make pre-tax contributions from their cash compensation. In 2024, the Company stopped making matching contributions for all plan participants, including NEOs, as part of its ongoing cost control measures. In 2023, 2022, and 2021, the Company made matching contributions for all participants each year equal to 100% of their elective deferrals up to 3% of their total eligible compensation and 50% of their elective deferrals from 3% to 5% of eligible annual compensation. The Internal Revenue Code limits the amount of compensation that can be deferred under the 401(k) Plan and also limits the amount of salary and bonus with respect to which matching contributions can be made under that plan.

We provide our NEOs with competitive benefits, and we generally do not provide perquisites or tax reimbursements or other benefits to NEOs that are not available to other employees. In addition to our 401(k) Plan described above, our NEOs are offered other benefits that are substantially the same as those offered to all of our U.S. employees. These benefits included medical, dental, and vision insurance. We also provide an enhanced long-term disability benefit to our executive officers. This benefit is designed to provide additional protection to our executive officers in the event of catastrophic illness or disability.