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Item 9A. Controls and Procedures

2024-03-13 compared with 2023-03-02 · 45 added, 45 removed, 136 unchanged (40% of the section changed)

8 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, using the criteria described in Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022.

Management excluded Unitas Holdings Corp., including its wholly owned subsidiaries United PanAm Financial Corp.

and United Auto Credit Corporation, from its assessment of internal control over financial reporting as of December 31, 2022 because it was acquired in a business combination on February 1, 2022.

Total assets and total revenue that were excluded from management's assessment represented approximately 34% and 9%, respectively, of consolidated total assets and total revenue, as of and for the year ended December 31, 2022.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Item 8 of this Annual Report on Form 10-K.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, using the criteria described in Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Item 8 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarterly period ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

During the year ended December 31, 2023, we completed the process of incorporating the internal controls of Unitas Holdings Corp., including its wholly owned subsidiaries United PanAm Financial Corp.

and United Auto Credit Corporation, into our internal control over financial reporting and extending our Section 404 compliance program under the Sarbanes-Oxley Act and the applicable rules and regulations under such law to include such entities.

Except for the foregoing, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarterly period ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information

Not applicable.

a) Disclosure in lieu of reporting on a Current Report on Form 8-K.

On March 8, 2024 (the “Effective Date”), the Compensation Committee (the “Committee”) of the Board of Directors of Vroom, Inc.

(the “Company”) approved retention letter agreements (each, a “Retention Agreement”) with each of Thomas Shortt, Robert Krakowiak and Patricia Moran providing for:

(i) an amendment to each executive’s outstanding restricted stock units which are scheduled to vest in 2024, 2025 and 2026 to vest in full between March 17, 2025 and March 20, 2025, subject to the executive’s continued employment through such date (the “RSU Vesting Amendment”) or earlier acceleration on a termination without Cause or for Good Reason (each as defined in the Retention Agreement), (ii) in consideration of the executives’ agreement to the RSU Vesting Amendment, a grant of additional restricted stock units with respect to 2,250, 1,085, and 531 shares of common stock, respectively, with the same vesting terms, and (iii) an

extension of the post-termination exercise period of any outstanding vested stock options held by such executive in the event of the executive’s termination without Cause or for Good Reason through the original expiration date of such options.

In addition, Mr.

Shortt’s Retention Agreement provides that he will be eligible to earn a retention bonus of $1,000,000, which will be payable in five equal installments on or shortly following each date of filing of the Company’s annual report on Form 10-K for fiscal year 2023, the quarterly reports on Form 10-Q for each of the first three fiscal quarters of fiscal year 2024, and the Company’s annual report on Form 10-K for fiscal year 2024, subject to his continued service with the Company on the applicable payment date or on an earlier termination without Cause or for Good Reason.

The Committee also determined to increase the base salaries of Mr.

Krakowiak and Ms.

Moran to $650,000 and $600,000, respectively, effective as of February 1, 2024.

In addition, the Committee approved an amendment and restatement of the Company's Amended and Restated Executive Severance Plan (the "Executive Severance Plan") which:

(i) clarifies that a Competing Business (as defined in the Executive Severance Plan) includes a business engaged in financing motor vehicles in order to reflect changes to the Company’s business activities since the effective date of the Executive Severance Plan, (ii) makes certain other clarifying changes, including to reflect the severance terms previously agreed to with the Company’s Chief Executive Officer Mr.

Shortt in his employment letter with the Company dated May 9, 2022;

and (iii) provides that the severance payments payable on a qualifying termination (outside of the Change in Control Period (as defined in the Executive Severance Plan)) will be paid in substantially equal installments over a period of four months (rather than the original eighteen- or twelve- month periods, as applicable).

The foregoing summary of the amendment and restatement to the Executive Severance Plan and Retention Agreements is not complete and is qualified in its entirety by reference to the full text of the amended and restated Executive Severance Plan, a copy of which is attached as Exhibit 10.15 and the Retention Agreements, a copy of which are attached as Exhibits 10.25, 10.26 and 10.27.

b) Insider Trading Arrangements and Policies.

During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

1 unchanged sentence

Directors, Executive Off icers, and Corporate Governance

We have adopted a written code of ethics, entitled “Code of Business Conduct and Ethics,”

that applies to all of our directors, executive officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions.

We have adopted a written code of ethics, entitled “Code of Business Conduct and Ethics,” that applies to all of our directors, executive officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions.

We make available our code of ethics free of charge through our investor relations website which is located at ir.vroom.com .

We intend to post on our website all disclosures that are required by law or Nasdaq listing standards concerning any amendments to, or waivers from, any provision of our code of ethics.

The information concerning our executive offers and directors required by this Item 10 is contained under the caption “Information about our Executive Officers and Directors”

at the end of Part I of this Annual Report on Form 10-K.

The remaining information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022, under the headings "Our Board of Directors," "Our Executive Officers," "Corporate Governance," and, if applicable, "Delinquent Section 16(a) Reports".

The information concerning our executive offers and directors required by this Item 10 is contained under the caption “Information about our Executive Officers and Directors” at the end of Part I of this Annual Report on Form 10-K.

The remaining information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2023, under the headings "Our Board of Directors," "Our Executive Officers," "Corporate Governance," and, if applicable, "Delinquent Section 16(a) Reports".

Executi ve Compensation

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022, under the headings "Executive Compensation" and "Compensation Committee Interlocks and Insider Participation".

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2023, under the headings "Executive Compensation" and "Compensation Committee Interlocks and Insider Participation".

Security Ownership of Certain Beneficial Own ers and Management and Related Stockholder Matters

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022, under the headings "Security Ownership of Certain Beneficial Owners and Management" and "Securities Authorized for Issuance under Equity Compensation Plans".

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2023, under the headings "Security Ownership of Certain Beneficial Owners and Management" and "Securities Authorized for Issuance under Equity Compensation Plans".

Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022, under the headings "Certain Relationships and Related Person Transactions" and "Corporate Governance".

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2023, under the headings "Certain Relationships and Related Person Transactions" and "Corporate Governance".

Principal Accou nting Fees and Services

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2022, under the subheading "Principal Accountant Fees and Services".

The information required by this item is incorporated by reference to Vroom’s Proxy Statement for its 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2023, under the subheading "Principal Accountant Fees and Services".

Exhibits and Financial Statement Schedules

12 unchanged sentences

August 13, 2020

Certificate of Amendment of Amended and Restated Certificate of Incorporation of Vroom, Inc., dated February 13, 2024.

February 14, 2024

Amended and Restated Bylaws of Vroom, Inc.

6 unchanged sentences

June 21, 2021

Eighth Amended and Restated Investors’

Rights Agreement, dated as of November 21, 2019, by and among Vroom, Inc.

Eighth Amended and Restated Investors’ Rights Agreement, dated as of November 21, 2019, by and among Vroom, Inc.

and certain holders of its capital stock

Description of Registrant’s Securities

March 3, 2021

22 unchanged sentences

Form of Indemnification Agreement

Amended and Restated Executive Severance Plan

Commercial Lease Agreement, dated August 10, 2009, as

amended, by and between Texas Direct Auto and Robert P.

Development Agreement, dated June 28, 2011, as amended, by and between The City of Meadows Place, Texas and Left Gate Property Holding, Inc.

d/b/a Texas Direct Auto and Vroom

Inventory Financing and Security Agreement, dated March 6, 2020, by and among Ally Bank, Ally Financial Inc., Left Gate Property Holding, LLC and Vroom, Inc.

First Amendment to Inventory Financing and Security Agreement, dated June 19, 2020, by and among Ally Bank, Ally Financial Inc., Left Gate Property Holding, LLC and Vroom, Inc.

August 13, 2020

Second Amendment to Inventory Financing and Security Agreement, dated October 1, 2020 by and among Ally Bank, Ally Financial, Inc., Left Gate Property Holding, LLC and Vroom, Inc.

November 12, 2020

Third Amendment to Inventory Financing and Security Agreement, dated December 16, 2021 by and among Ally Bank, Ally Financial, Inc., Vroom Automotive, LLC and Vroom, Inc.

December 20, 2021

Fourth Amendment to Inventory Financing and Security Agreement, dated February 24, 2022 by and among Ally Bank, Ally Financial, Inc., Vroom Automotive, LLC and Vroom, Inc.

March 1, 2022

Amended and Restated Executive Severance Plan, as amended and restated

Amended and Restated Inventory Financing and Security Agreement, dated November 4, 2022 by and among Ally Bank, Ally Financial Inc., Vroom Automotive, LLC and Vroom, Inc.

November 7, 2022

Retail Reconditioning Services Agreement, dated May 20, 2020, by and between Manheim Remarketing, Inc d/b/a Manheim Retail Solutions and Left Gate Property Holding, LLC d/b/a Vroom

Employment Agreement, dated June 8, 2016, by and between Vroom, Inc.

Employment Offer Letter, dated January 6, 2019, by and between Vroom, Inc.

and Mark Roszkowski

Separation Agreement, dated as of June 30, 2022, by and between Mark E.

Roszkowski and Vroom, Inc.

First Amendment to Amended and Restated Inventory Financing and Security Agreement, dated August 1, 2023, by and among Ally Bank, Ally Financial Inc., Vroom Automotive, LLC and Vroom, Inc.

August 8, 2023

Second Amendment to Amended and Restated Inventory Financing and Security Agreement, dated January 19, 2024, by and among Ally Bank, Ally Financial Inc., Vroom Automotive, LLC and Vroom, Inc.

Agreement of Termination of Amended and Restated Inventory Financing and Security Agreement and Credit Balance Agreement, dated March 12, 2024 by and among Ally Bank, Ally Financial Inc., Vroom Automotive, LLC and Vroom, Inc.

Employment Offer Letter, dated December 29, 2018, by and between Vroom, Inc.

10 unchanged sentences

December 17, 2021

Letter Agreement dated as of March 11, 2024, by and between Thomas Shortt and Vroom, Inc.

Letter Agreement dated as of March 11, 2024, by and between Robert Ronald Krakowiak and Vroom, Inc.

Letter Agreement dated as of March 11, 2024, by and between Patricia Moran and Vroom, Inc.

Employment Letter, dated as of May 9, 2022, by and between Thomas Shortt and Vroom, Inc.

Nominee and Indemnity Agreement, dated September 1, 2020, by and among Catterton Management Company, L.L.C.

as investment manager of CGP2 Lone Star, L.P., Scott Dahnke and Vroom, Inc.

September 8, 2020

Nominee and Indemnity Agreement, dated September 1, 2020, by and among Catterton Management Company, L.L.C.

as investment manager of CGP2 Lone Star, L.P., Michael Farello and Vroom, Inc.

12 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Policy for Recovery of Erroneously Awarded Compensation

Inline XBRL Instance Document

35 unchanged sentences

March 13, 2024

O’Shaughnessy

March 13, 2024

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures