Please ensure Javascript is enabled for purposes of website accessibility

Fitbit's CEO Took a Big Pay Cut Last Year

By Evan Niu, CFA - Apr 14, 2016 at 3:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Executives got a big payday in 2014, but less so in 2015.

Blaze. Image source: Fitbit.

Shares of fitness tracker specialist Fitbit (FIT) have had a poor year, with the stock down over 40% year to date. The freshly public company is under pressure to maintain its dominant position in the wearables market, defending its turf from new entrants and smartwatches that threaten to cannibalize the stand-alone fitness tracker category. However, shares jumped yesterday following some positive sentiments on the Street.

Ahead of its annual shareholder meeting next month, Fitbit has now filed its proxy statement for 2016. It looks like co-founder and CEO James Park took a big pay cut last year.

Park isn't alone
The main reason for the cut was that Park and a few other executives were granted sizable option awards in 2014. Both co-founder and CTO Eric Friedman and Park received $7.5 million in option awards.


2014 Total Compensation

2015 Total Compensation

CEO James Park

$7.8 million

$1.9 million

CTO Eric Friedman

$7.8 million


CFO William Zerella

$5 million


Data source: Proxy statement. Figures rounded.

Park's base salary more than doubled, though, to $525,000 in 2015. Going forward, Park's annual salary is $600,000 and Friedman's annual salary is $300,000.

Alta. Image source: Fitbit.

Of course, Fitbit's declining share prices will also negatively affect the value of those option grants that boosted the executives' reported 2014 compensation. Most of the shares related to the 2014 grants are not yet exercisable. As of the end of last year, Park and Friedman had 540,000 shares that were exercisable, and 2.7 million shares that were not exercisable related to the 2014 grant.

It's also worth noting that Fitbit is planning on increasing the amount of stock-based compensation that it awards employees. Total stock-based compensation was $41 million last year, which was a significant increase from 2014 mostly due to the IPO. But the company's outlook calls for fiscal 2016 stock-based compensation of $85 million to $95 million.

One of these days
Right now, Fitbit continues to enjoy its first-mover and top-dog advantages in the wearables market, but smartwatch competition is looming and Fitbit is keenly aware of this. That's precisely why the company continues to add new features and focus heavily on fashionable designs as a defensive strategy.

Basic fitness trackers used to be Fitbit's bread and butter, but the higher-end devices including the Charge, Charge HR, and Surge now account for nearly 80% of sales. Fitbit will have its work cut out to defend against smartwatches, but I still have my eye on it. One of these days, the valuation might be tempting.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fitbit, Inc. Stock Quote
Fitbit, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.