CVNA 2019 Proxy Statement

- 28 - EBITDA Margin ex-Gift 20% Net loss before interest expense, income tax expense, depreciation and amortization expense, and t he compensation expense related to the 100k Milestone Gift , as a percentage of total revenues. We believe that EBITDAMargin ex-Gift is an important measure of the leverage in our business and a useful measure to us and to our investors because it focuses specifically on operational performance. At the beginning of 2018, the committee established financial performance goals that were challenging and reflective of Carvana’s fiscal 2018 operating plan, economic and market conditions, and forecasts at the time the performance goals were established. The target performance goal of each metric is significantly above fiscal 2017’s actual results: over 92,000 retail units sold, a 108% increase over fiscal year 2017’s retail units sold of 44,252; over $2,100 for gross profit per unit ex-Gift, a $561 increase over fiscal year 2017’s gross profit per unit ex-Gift of $1,539; and EBITDA margin ex-Gift of less than (7.2)%, a 9.7 percentage point improvement over fiscal year 2017’s EBTIDA margin ex-Gift of (16.9)%. Total Payouts Based on the committee’s evaluation of our 2018 actual performance against the annual incentive plan goals, 88% of the target annual bonuses were paid out, amounting to 59% of the NEOs’ respective base salaries. The annual incentive bonus received by each of the NEOs is included in the “Non-Equity Performance Incentive Plan Compensation” column in the 2018 Summary Compensation Table in this proxy statement. Each of the annual incentive metrics provided a payout range of 0%–199% as a percent of the target. For Retail Units Sold, weighted 40% of the total, the target was over 92,000, and our actual performance was 94,108, resulting in a payout of 118% of the target payout. For gross profit per unit ex- Gift, weighted 40% of the total, the target was over $2,100 and our actual performance was $2,133, resulting in a payout of 103% of the target. For EBITDAMargin ex-Gift, weighted 20% of the total, our target was less than (7.2)% and our actual performance was (9.9)%, resulting in no payout. Aggregating each of the respective payouts, weighted accordingly, resulted in a total payout of 88% of target. Applying the payout of 88% of target to each of our NEOs respective target bonuses, Mr. Garcia achieved a $235,733 payout amount; Messrs. Jenkins and Huston achieved a payout of $221,000 each, and Messrs. Keeton and Gill achieved a payout of $194,480 each. LONG-TERM INCENTIVE PROGRAM The Compensation and Nominating Committee believes that stock-based performance compensation is essential to align the interests of Carvana’s management and its shareholders in enhancing the long-term value of our equity and to encourage executives to remain with the company. Among the varied types of equity awards the committee is authorized to use under the equity plan, stock options are the ones that the committee has determined are preferable for use with NEOs, because their