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PROPOSAL NO. 3

NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

        Section 14A of the 2016 Plan may be authorized but unissued shares, or shares reacquired byExchange Act requires that we provide our stockholders with the Company. Toopportunity to vote to approve, on a non-binding, advisory basis, not less frequently than once every three years, the extent that sharescompensation of Class A common stock underlying awardsour named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC. As described in detail under the 2016 Plan orheading "Executive Compensation—Compensation Discussion and Analysis," we seek to closely align the interests of our named executive officers with the interests of our stockholders.

        Our compensation programs are designed to effectively align our executives' interests with the interests of our stockholders by focusing on long-term equity incentives that correlate with the growth of sustainable long-term value for our stockholders.

        Stockholders are urged to read the section titled "Executive Compensation" and, in particular, the section titled "Executive Compensation—Compensation Discussion and Analysis" in this proxy statement, which discusses how our executive compensation policies and practices implement our compensation philosophy and contains tabular information and narrative discussion about the compensation of our named executive officers. Our board of directors and our compensation committee believe that these policies and practices are effective in implementing our compensation philosophy and in achieving our compensation program goals.

        The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC.

        Accordingly, we are asking our stockholders to vote on the following resolution at the Annual Meeting:

RESOLVED, that the stockholders hereby approve, on a non-binding advisory basis, the compensation paid to the Company's 2008 Stock Option Plan,named executive officers, as amended and restated (the "2008 Plan") (as converted from Class B common stockdisclosed in the Company's proxy statement for the 2018 Annual Meeting of the Company) are forfeited, canceled, held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise), such shares will be added back to the shares of Class A common stock available for issuance under the 2016 Plan. In the event the Company repurchases shares of Class A common stock on the open market, such shares shall not be added to the shares of Class A common stock available for issuance under the 2016 Plan. In addition, subject to adjustment for stock splits, stock dividends and similar events, the maximum number of shares of Class A common stock of the Company that may be issuedStockholders, pursuant to the exercise of incentive stock options under the 2016 Plan is 11,500,000, cumulatively increased on January 1, 2017 and on each January 1 thereafter by the lessercompensation disclosure rules of the Annual Increase for such year or 5,750,000 shares of Class A common stock ofSEC, including in the Company.

        Based solely uponCompensation Discussion and Analysis, the closing price of the Company's Class A common stock as reported on the New York Stock Exchange on December 30, 2016compensation tables and the maximum number of shares of Class A common stock of the Companynarrative discussions that would have been available for awards as of such date, the maximum aggregate market value of the securities to be issued under the 2016 Plan would be $328,757,550.

        We believe that the stock-based awards available for grant under the 2016 Plan can play an important role in the success of the Company by encouraging and enabling our officers, employees, non-employee directors and consultants, upon whose judgment, initiative and efforts we depend on for the successful conduct of our business, to acquire a proprietary interest in the Company. We believe that it is important to maintain the flexibility to preserve our tax deduction for awards under the 2016 Plan that qualify as "performance-based compensation" under Section 162(m).

Qualified Performance-Based Compensation under Section 162(m) of the Code

        To ensure that certain awards granted under the 2016 Plan to covered employees are eligible to qualify as "performance-based compensation" under Section 162(m), the 2016 Plan provides thataccompany the compensation committee may require that the vesting or attainment of such awards be conditioned on the satisfaction of performance criteria that may include any or all of the following: (1) sales or revenue or bookings; (2) sales or revenue or bookings mix; (3) sales or market shares; (4) expense; (5) margins; (6) operating efficiency; (7) earnings before interest, taxes, depreciation and amortization; (8) net income (loss) (either before or after interest, taxes, depreciation and/or amortization); (9) operating income (loss); (10) earnings (loss) per share of Class A common stock of the Company; (11) working capital; (12) operating cash flow (funds from operations) and free cash flow; (13) customer satisfaction, (14) Net Promoter Score; (15) customer churn; (16) number of customers; (17) customer retention and expansion; (18) return on sales, gross or net profit levels; (19) return on capital, assets, equity, or investment; (20) changes in the market price of the Company's Class A common stock; (21) total stockholder return; (22) quality and reliability; (23) productivity; (24) economic value-added; and (25) acquisitions or strategic transactions, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The compensation committee will select the particular performance criteria within 90 days following the commencement of a performance cycle. A performance cycle is a period of no less than 12 months. Subject to adjustments for stock splits and similar events, the maximum award that may be granted to any one covered employee that is intended to qualify as "performance-based compensation" will not exceed 11,500,000 shares for any performance cycle and stock options or stock appreciation rights with respect to no more than 11,500,000 shares of Class A common stock of the Company (subject to adjustment for stock splits and similar events) may be granted to any one




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individual during any one calendar-year period. If a performance-based award is payable in cash, it cannot exceed $5 million for any one covered employee for any performance cycle.

Summary of the 2016 Plan

        The following description of certain features of the 2016 Plan is intended to be a summary only. The summary is qualified in its entirety by the full text of the 2016 Plan attached hereto asAppendix A and incorporated herein by reference.

        Administration.    The 2016 Plan is administered by the compensation committee. The compensation committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2016 Plan. The compensation committee may, in its discretion, delegate to the Chief Executive Officer of the Company or a committee comprised of the Chief Executive Officer of the Company and one or more other officer of the Company, all or part of its authority and duties with respect to the granting certain awards to individuals who are not subject to the reporting and other provisions of Section 16 of the Securities Exchange Act of 1934, as amended, or who are not covered employees.

        Eligibility.    All full-time and part-time officers, employees, non-employee directors and other key persons, including consultants, of the Company and its subsidiaries are eligible to participate in the 2016 Plan, subject to the discretion of the compensation committee. As of December 31, 2016, the number of individuals potentially eligible to participate in the 2016 Plan is approximately 737 persons.

        Limitations on Grants.    Subject to adjustments for stock splits and similar events:

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stock options and stock appreciation rights with respect to no more than 11,500,000 shares of Class A common stock of the Company may be granted to any one individual in any one calendar year;



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the maximum number of shares of Class A common stock of the Company that may be issued as incentive stock options may not exceed the 11,500,000, cumulatively increased on January 1, 2017 and on each January 1 thereafter by the lesser of the Annual Increase for such year, or 5,750,000 shares of Class A common stock of the Company;



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the maximum award that may be granted to any one covered employee that is intended to qualify as "performance-based compensation" will not exceed 11,500,000 shares for any performance cycle; if a performance-based award is payable in cash, it cannot exceed $5 million for any one covered employee for any performance cycle; and



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the value of all awards issued under the 2016 Plan and all other cash compensation paid by the Company to any non-employee director in any calendar year cannot exceed $750,000.

        Stock Options.    Stock options granted under the 2016 Plan may be either incentive stock options within the meaning of Section 422 of the Code, or non-qualified stock options. Incentive stock options may be granted only to employees of the Company or any subsidiary. Stock options granted under the 2016 Plan will be non-qualified stock options if they (i) fail to qualify as incentive stock options, (ii) are granted to someone who is not an employee, or (iii) otherwise so provide. Non-qualified stock options may be granted to persons eligible to receive incentive stock options and to non-employee directors and other key persons.

        The compensation committee has authority to determine the terms and conditions of stock options granted under the 2016 Plan. However, the per share exercise price of such stock options will not be less than 100% of the fair market value of a share of Class A common stock of the Company on the date or grant. If an employee owns or is deemed to own (pursuant to Section 424(d) of the Code)




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more than 10% of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation (a "10% Owner"), then the per share exercise price of any incentive stock option granted to that employee will not be less than 110% of the fair market value of a share of Class A common stock of the Company on the date of grant. The term of each stock option will be fixed by the compensation committee and may not exceed ten years from the date of grant (five years from the date of grant for a 10% Owner). The compensation committee will determine at what time or times each stock option may be exercised and the period of time, if any, after death, disability, or termination of employment during which stock options may be exercised. In the absence of such determinations by the compensation committee, the exercise periods are as set forth in the applicable stock option agreements under the 2016 Plan. Stock options may be made exercisable in installments, and the exercisability of options may be accelerated upon the occurrence of certain events or from time to time in the discretion of the compensation committee. In general, unless otherwise permitted by the compensation committee, no stock option granted under the 2016 Plan is transferable by the optionee other than by will or by the laws of descent and distribution, and stock options may be exercised during the optionee's lifetime only by the optionee, or by the optionee's legal representative or guardian in the case of the optionee's incapacity.

        Stock options granted under the 2016 Plan may be exercised for cash or, if permitted by the compensation committee, by transfer to the Company (either actually or by attestation) of shares of Class A common stock of the Company that are not then subject to restrictions under any Company plan, and that have a fair market value equivalent to the aggregate stock option exercise price of the shares being purchased, or, subject to applicable law, by compliance with certain provisions pursuant to which a securities broker delivers the purchase price for the shares to the Company.

        To qualify as incentive stock options, stock options must meet additional federal tax requirements, including a $100,000 limit on the value of shares of Class A common stock subject to incentive stock options which first become exercisable in any one calendar year, and a shorter term and higher minimum exercise price in the case of 10% Owners.

        Stock Appreciation Rights.    The compensation committee may award a stock appreciation right either as a freestanding award or in tandem with a stock option. A stock appreciation right is an award entitling the recipient to receive shares of Class A common stock of the Company having a value equal to the excess of the fair market value of the Class A common stock of the Company on the date of exercise over the exercise price of the stock appreciation right, which price may not be less than 100 percent of the fair market value of the Class A common stock of the Company on the date of grant (or more than the option exercise price per share, if the stock appreciation right was granted in tandem with a stock option) multiplied by the number of shares of Class A common stock of the Company with respect to which the stock appreciation right was exercised. All stock appreciation rights are exercisable during the grantee's lifetime only by the grantee or the grantee's legal representative.

        Restricted Stock Awards.    The compensation committee may grant shares of Class A common stock subject to such conditions and restrictions as the compensation committee may determine. These conditions and restrictions may include the achievement of pre-established performance goals and/or continued employment with the Company through a specified vesting period. The vesting period is determined by the compensation committee. If the applicable performance goals and other restrictions are not attained, the holder will forfeit his or her restricted stock award. Holders of restricted stock have the rights of a stockholder with respect to the voting of the shares of restricted stock and receipt of dividends, subject to such conditions contained in the award agreement evidencing the restricted stock award; provided, that if the lapse of restrictions with respect to the restricted stock award is tied to the attainment of performance goals, any dividends paid by the Company during the applicable performance period will accrue and will not be paid to the holder until and to the extent the performance goals are met with respect to the restricted stock award.




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        Unrestricted Stock Awards.    The compensation committee may also grant shares of Class A common stock of the Company that are free from any restrictions under the 2016 Plan. Unrestricted stock may be granted in recognition of past services or other valid consideration, and may be issued in lieu of cash compensation.

        Restricted Stock Units.    The compensation committee may grant restricted stock units. The restricted stock units are ultimately payable in the form of shares of Class A common stock of the Company and may be subject to such conditions and restrictions as the compensation committee may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified vesting period. During the vesting period, subject to terms and conditions imposed by the compensation committee, the restricted stock units may be credited with dividend equivalent rights (discussed below). Subject to the consent of the compensation committee, a participant may make an advance election to receive a portion of his or her cash compensation otherwise due in the form of a restricted stock unit. A restricted unit award may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of during the deferral period.

        Performance Share Awards.    The compensation committee may grant performance share awards that entitles the grantee to receive shares of Class A common stock of the Company upon the achievement of specified performance goals. The compensation committee may make performance share awards independent of or in connection with the granting of any other award under the 2016 Plan. The compensation committee in its sole discretion will determine whether and to whom performance share awards are made, the performance goals, the periods during which performance is to be measured, and all other limitations and conditions.

        Performance-Based Compensation.    The compensation committee may grant awards of restricted stock, restricted stock units, performance share awards or cash-based awards under the 2016 Plan that are intended to qualify as "performance-based compensation" under Section 162(m). Such awards will only vest or become payable upon the attainment of performance goals that are established by the compensation committee and relate to one or more performance criteria listed above.

        Cash-Based Awards.    The compensation committee may grant cash bonuses under the 2016 Plan. The cash bonuses may be subject to the achievement of certain performance goals.

        Dividend Equivalent Rights.    The compensation committee may grant dividend equivalent rights that provide credits for cash dividends that would be paid if the holder had held specified shares of Class A common stock of the Company. Dividend equivalent rights may be granted as a component of another award or as a freestanding award. Dividend equivalent rights credited under the 2016 Plan may be paid currently or be deemed to be reinvested in additional shares of Class A common stock of the Company, which may thereafter accrue additional dividend equivalent rights. Dividend equivalent rights may be settled in cash, shares of Class A common stock of the Company, or a combination thereof, in a single installment or installments, as specified in the award. A dividend equivalent right granted as a component of an award of restricted stock units or performance share award will provide that such dividend equivalent right will be settled only upon settlement or payment of, or lapse of restrictions on, such other award, and that such dividend equivalent right will expire or be forfeited or annulled under the same conditions as such other award.

        Tax Withholding.    Participants under the 2016 Plan are responsible for the payment of any federal, state, or local taxes that we are required by law to withhold upon any option exercise or vesting of other awards. The Company and its subsidiaries will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant and/or to direct that the proceeds from a sale of Class A common stock of the Company on behalf of a participant be paid over to the Company to satisfy any such tax withholding obligations. Subject to approval by the




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compensation committee, a participant may elect to have the Company's minimum required tax withholding obligation be satisfied, in whole or in part, by authorizing the Company to withhold from shares of Class A common stock of the Company to be issued pursuant to any award a number of shares with an aggregate fair market value (as of the date the withholding is effected) that would satisfy the withholding amount due. The compensation committee may also require awards to be subject to mandatory share withholding up to the required withholding amount.

        Sale Event.    The 2016 Plan provides that upon the effectiveness of a "sale event" (as defined in the 2016 Plan), an acquirer or successor entity may assume, continue or substitute for the outstanding awards under the 2016 Plan. To the extent that awards granted under the 2016 Plan are not assumed or continued or substituted by the successor entity, all unvested awards granted under the 2016 Plan will terminate. In such case, except as may be otherwise provided in the relevant award agreement, all options and stock appreciation rights with time-based vesting, conditions or restrictions that are not exercisable immediately prior to the sale event will become fully exercisable as of the sale event, all other awards with time-based vesting, conditions or restrictions will become fully vested and nonforfeitable as of the sale event, and all awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with the sale event in the compensation committee's discretion or to the extent specified in the relevant award agreement. In the event of such termination, participants holding options and stock appreciation rights will be permitted to exercise such options and stock appreciation rights (to the extent exercisable) prior to the sale event. In addition, in connection with the termination of the 2016 Plan upon a sale event, we may make or provide for a cash payment to participants holding vested and exercisable options and stock appreciation rights equal to the difference between the per share cash consideration payable to stockholders in the sale event and the exercise price of the options or stock appreciation rights.

        Amendments and Termination.    The board of directors may amend or discontinue the 2016 Plan and the compensation committee will be able to amend or cancel outstanding awards for purposes of satisfying changes in law or any other lawful purpose, but no such action may adversely affect rights under an award without the holder's consent. The compensation committee is specifically authorized to exercise its discretion to reduce the exercise price of outstanding stock options or stock appreciation rights or effect the repricing of such awards through cancellation and re-grants. Certain amendments to the 2016 Plan will require the approval of our stockholders. No grants may be made under the 2016 Plan after the tenth anniversary of its effective date, provided that no Incentive Stock Options may be made under the Plan after the tenth anniversary of the date that it is approved by the board of directors.

New Plan Benefits

        We are not asking stockholders to approve of any additional shares of Class A common stock to be reserved for issuance under the 2016 Plan. Because the grant of awards under the 2016 Plan is within the discretion of the compensation committee, the Company cannot determine the dollar value or number of shares of Class A common stock of the Company that will in the future be received by or allocated to any participant in the 2016 Plan. Accordingly, in lieu of providing information regarding benefits that will be received under the 2016 Plan, the following table provides information concerning the benefits that were received by the following persons and groups during 2016: each named executive officer; all current executive officers, as a group; all current directors who are not executive officers, as a group; and all current employees who are not executive officers, as a group.




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2016 Plan

Name and Position		Dollar Value ($)(1)			Number of Units
Jeff Lawson			—			—
Lee Kirkpatrick			—			—
Karyn Smith			—			—
All current executive officers, as a group			—			—
All current directors who are not executive officers, as a group			—			—
All current employees who are not executive officers, as a group			38,309,711			1,349,730

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(1)

Value is based on $28.85, which was the closing market price of our Class A common stock on December 30, 2016.

Tax Aspects under the U.S. Internal Revenue Code

        The following is a summary of the principal federal income tax consequences of transactions under the 2016 Plan. It does not describe all federal tax consequences under the 2016 Plan, nor does it describe state or local tax consequences.

        Incentive Stock Options.    No taxable income is generally realized by the optionee upon the grant or exercise of an incentive stock option. If shares of Class A common stock of the Company issued to an optionee pursuant to the exercise of an incentive stock option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then (i) upon sale of such shares, any amount realized in excess of the exercise price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (ii) there will be no deduction for the Company for federal income tax purposes. The exercise of an incentive stock option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee. An optionee will not have any additional FICA (Social Security) taxes upon exercise of an incentive stock option.

        Shares of Class A common stock of the Company acquired upon the exercise of an incentive stock option must be held by the optionee until at least two years after the date the stock option was granted and at least one year after the stock option was exercised. If such shares are disposed of prior to the expiration of the holding periods described above, generally (i) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares of Class A common stock of the Company at exercise (or, if less, the amount realized on a sale of such shares of Class A common stock of the Company) over the exercise price, and (ii) the Company will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the incentive stock option is paid by tendering shares of Class A common stock of the Company.

        If an incentive stock option is exercised at a time when it no longer qualifies for the tax treatment described above, the stock option is treated as a non-qualified stock option. Generally, an incentive stock option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, the three-month rule does not apply.

        Non-Qualified Stock Options.    With respect to non-qualified stock options under the 2016 Plan, no income is realized by the optionee at the time the stock option is granted. Generally (i) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the exercise price and the fair market value of the shares of Class A common stock of the Company on the date of exercise, and the Company receives a tax deduction for the same amount, and (ii) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term




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capital gain or loss depending on how long the shares of Class A common stock of the Company have been held. Special rules will apply where all or a portion of the exercise price of the non-qualified stock option is paid by tendering shares of Class A common stock of the Company. Upon exercise, the optionee will also be subject to FICA taxes on the excess of the fair market value over the exercise price of the stock option.

        Stock Appreciation Rights.    No income will be recognized by a recipient upon the grant of either tandem or freestanding stock appreciation rights. For the year in which the stock appreciation right is exercised, the recipient will generally be taxed at ordinary income rates on the amount equal to the cash received plus the fair market value of any unrestricted shares received on the exercise.

        Unrestricted Stock Awards.    The recipient of an unrestricted stock award will generally be taxed at ordinary income rates on the difference between: (i) the fair market value of the shares of Class A common stock of the Company on the grant date, and (ii) the purchase price, if any, of the shares.

        Restricted Stock Awards.    The recipient of a restricted stock award will generally be taxed at ordinary income rates on the fair market value of the restricted shares (reduced by any amount paid by the recipient for such restricted shares) at such time as the shares are no longer subject to restrictions. However, a recipient may elect under Section 83(b) of the Code (the election must be filed with the IRS within 30 days of the grant date) to be taxed at ordinary income rates on the difference between: (i) the fair market value of such Class A shares of the Company on the grant date, and (ii) the purchase price, if any, of the shares. If a Section 83(b) election has not been made, dividends received with respect to restricted shares will generally be taxed as ordinary income to the recipient. If a Section 83(b) election has been made, dividends will be taxed at dividend rates.

        Restricted Stock Units.    The recipient of a restricted stock unit will generally be taxed at ordinary income rates on the fair market value of the shares of Class A common stock of the Company awarded on the transfer date (reduced by any amount paid by the recipient for such shares). The capital gains/loss holding period for such shares will also commence on such date.

        Performance Share Awards.    Performance share awards are generally taxed in the same manner as restricted stock awards, the only difference being that with respect to performance share awards the restrictions are performance-based, whereas with respect to restricted stock awards, the restrictions are time-based.

        Dividend Equivalent Rights.    Dividend equivalent rights may be paid currently or credited to the recipient's account to purchase additional stock appreciation rights or restricted stock units. If paid currently, then the dividend equivalent rights are also taxed currently. If credited to the recipient's account, the dividend equivalent rights are not taxed at the time of grant, but rather will be taxed as the stock appreciation rights or the restricted stock units that they were used to purchase.

        Parachute Payments.    The vesting of any portion of any stock option or other award that is accelerated due to the occurrence of a change of control may cause a portion of the payments with respect to such accelerated awards to be treated as "parachute payments" as defined in the Code. Any such parachute payments may be non-deductible to the Company, in whole or in part, and may subject the recipient to a non-deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).

        Limitation on the Company's Deductions.    As a result of Section 162(m), the Company's deduction for certain awards under the 2016 Plan may be limited to the extent that a covered employee receives compensation in excess of $1 million in such taxable year of the Company (other than performance-based compensation that otherwise meets the requirements of Section 162(m)).




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Vote Required

        Under our amended and restated certificate of incorporation and amended and restated bylaws, theThe approval of Proposal No. 3this advisory non-binding proposal requires thatthe affirmative vote of a majority of the voting power of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon vote "FOR" this proposal.thereon. Abstentions are considered shares present and entitled to vote on this proposal and will have the effect of a vote against this proposal. Brokerproposal, and broker non-votes will have no effect.

        The vote is advisory, which means that the vote is not affectbinding on the outcomeCompany, our board of directors or our compensation committee. To the extent there is any significant vote against our named executive officer compensation as disclosed in this proposal. In addition,proxy statement, our compensation committee will evaluate whether any actions are necessary to address the rulesconcerns of stockholders.

Recommendation of the New York Stock Exchange require that a majority of the votes properly cast vote "FOR" this proposal. The New York Stock Exchange treats abstentions both as shares entitled to vote and as votes cast, but does not treat broker non-votes as votes cast. Because this proposal is a non-routine matter under the rules of the New York Stock Exchange, brokerage firms, banks and other nominees who hold shares on behalf of clients in "street name" are not permitted to vote the shares if the client does not provide instructions.Board

THE BOARD OF DIRECTORS RECOMMENDS ATHAT YOU VOTE "FOR" THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROPOSAL.PROXY STATEMENT.




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PROPOSAL NO. 4


NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF FUTURE NON-BINDING ADVISORY VOTES TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS


        Section 14A of the Exchange Act provides that stockholders must be given the opportunity to vote, on a non-binding advisory basis, for their preference as to how frequently we should seek future non-binding advisory votes to approve the compensation of our named executive officers, as disclosed in accordance with the compensation disclosure rules of the SEC, which we refer to as an advisory vote to approve the compensation of our named executive officers.

        By voting with respect to this proposal, stockholders may indicate whether they would prefer that we conduct future non-binding advisory votes to approve the compensation of our named executive officers every one, two or three years. Stockholders also may, if they wish, abstain from casting a vote on this proposal. Our board of directors has determined that an annual non-binding advisory vote to approve the compensation of our named executive officers will allow our stockholders to provide timely and direct input on the Company's executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. The board of directors believes that an annual vote is therefore consistent with the Company's efforts to engage in an ongoing dialogue with our stockholders on executive compensation and corporate governance matters.

Vote Required

        Stockholders will not be voting to approve or disapprove of the recommendation of our board of directors. The proxy card provides stockholders with the opportunity to choose among four options with respect to this proposal (holding the vote every one, two or three years, or abstaining). The option that receives the highest number of votes from the voting power of shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon will be deemed to be the frequency preferred by our stockholders. Abstentions and broker non-votes will have no effect on this proposal.

        As an advisory vote, this proposal will not be binding on the Company, our board of directors or our compensation committee in any way. As such, the results of the vote will not be construed to create or imply any change to the fiduciary duties of our board of directors. Our board of directors may decide that it is in the best interests of our stockholders and the Company to hold a non-binding advisory vote on our named executive officer compensation more or less frequently than the option approved by our stockholders. Notwithstanding the non-binding advisory nature of this vote, the Company recognizes that the stockholders may have different views as to the best approach for the Company and looks forward to hearing from stockholders as to their preferences on the frequency of a non-binding advisory vote on executive compensation.

Recommendation of the Board

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE OPTION OF "ONE YEAR" AS THE PREFERRED FREQUENCY FOR FUTURE NON-BINDING ADVISORY VOTES TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.




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REPORT OF THE AUDIT COMMITTEE


        The audit committee is a committee of the board of directors comprised solely of independent directors as required by the listing standards of theThe New York Stock Exchange and rules and regulations of the Securities and Exchange Commission ("SEC"SEC"). The audit committee operates under a written charter approved by our board of directors, which is available on our web site at https://investors.twilio.com/. The composition of the audit committee, the attributes of its members and the responsibilities of the audit committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees. The audit committee reviews and assesses the adequacy of its charter and the audit committee's performance on an annual basis.

        With respect to our financial reporting process, our management is responsible for (1) establishing and maintaining internal controls and (2) preparing our consolidated financial statements. Our independent registered public accounting firm, KPMG LLP ("KPMG"), is responsible for performing an independent audit of our consolidated financial statements.statements in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) ("PCAOB") and our internal control over financing reporting, expressing an opinion on the conformity of our audited consolidated financial statements with generally accepted accounting principles as well as the effectiveness of our internal control over financial reporting. It is the responsibility of the audit committee to oversee these activities. It is not the responsibility of the audit committee to prepare our financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the audit committee has:

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reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2017 and management's report on internal control over financial reporting with management and KPMG;



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discussed with KPMG the matters required to be discussed by the statement on Auditing Standards No. 61,1301, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), and as adopted by the Public Company Accounting Oversight Board ("PCAOB") in Rule 3200T; and



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received the written disclosures and the letter from KPMG required by applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence and has discussed with KPMG its independence.

        Based on the audit committee's review and discussions with management and KPMG, the audit committee recommended to the board of directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 20162017 for filing with the SEC.

        Respectfully submitted by the members of the audit committee of the board of directors:

JimJeffrey Epstein (Chair)
James McGeever (Chair)
Scott Raney
Erika Rottenberg

This report of the audit committee is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended ("Securities Act"), or under the Securities Exchange Act, of 1934, as amended ("Exchange Act"), except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.




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EXECUTIVE OFFICERS


        The following table identifies certain information about our executive officers as of March 31, 2017.2018. Our executive officers are appointed by, and serve at the discretion of, our board of directors and holdshold office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. There are no family relationships among any of our directors or executive officers.

Name		Age			Position
Jeff Lawson			3940		Co-Founder, Chief Executive Officer and Chairperson
Lee Kirkpatrick			5657		Chief Financial Officer
George Hu			4243		Chief Operating Officer
Karyn Smith			5253		General Counsel and Corporate Secretary

Executive Officers

        Jeff Lawson.    Mr. Lawson is one of our founders and has served as our Chief Executive Officer and as a member of our board of directors since April 2008 and has served as the Chairperson of our board of directors since November 2015. From 2001 to 2008, Mr. Lawson served as founder and Chief Technology Officer of Nine Star, Inc., a multi-channel retailer of equipment and apparel to the action sports industry. From 2004 to 2005, Mr. Lawson served as Technical Product Manager of Amazon.com, Inc., an electronic commerce and cloud computing company. In 2000, Mr. Lawson served as Chief Technology Officer of StubHub, Inc., an online marketplace for live entertainment events. From 1998 to 2000, Mr. Lawson served in several roles at Versity.com, Inc., a website for college lecture notes, including as founder, Chief Executive Officer and Chief Technology Officer. Mr. Lawson holds a B.S. in Computer Science and Film/Video from the University of Michigan.

        Mr. Lawson was selected to serve on our board of directors because of the perspective and experience he brings as our Chief Executive Officer, one of our founders and as one of our largest stockholders, as well as his extensive experience as an executive with other technology companies.

        Lee Kirkpatrick.    Mr. Kirkpatrick has served as our Chief Financial Officer since May 2012. From November 2010 to December 2011, Mr. Kirkpatrick served as Chief Financial Officer of SAY Media, Inc., a digital media and advertising firm formed by the combination of VideoEgg, Inc. and SixApart, Ltd. From 2007 to 2010, Mr. Kirkpatrick served as Chief Operating Officer and Chief Financial Officer of VideoEgg, Inc., an online advertising network. From 2005 to 2006, Mr. Kirkpatrick served as Chief Operating Officer of Kodak Imaging Network at the Eastman Kodak Company, an imaging company. From 2000 to 2005, Mr. Kirkpatrick served in several roles at Ofoto Inc., an online photography service, which was acquired by Eastman Kodak Company in 2001, including as Chief Operating Officer and Chief Financial Officer. From 1998 to 2000, Mr. Kirkpatrick served as Chief Financial Officer of iOwn, Inc., an online real estate services website, which was acquired by CitiMortgage, Inc. in 2001. From 1997 to 1998, Mr. Kirkpatrick served as Chief Financial Officer of HyperParallel, Inc., a data mining software company, which was acquired by Yahoo! Inc. in 1998. From 1988 to 1997, Mr. Kirkpatrick served in several roles at Reuters Group PLC, a financial information and news service company, including as Manager of Special Projects, District Finance Manager and Director of Finance and Operations. Mr. Kirkpatrick holds a B.S. in Business Administration from the University of Southern California and an M.B.A. from Columbia University. On February 13, 2018, we announced that Mr. Kirkpatrick had informed us and our board of directors of his decision to retire from the Company. To ensure an orderly transition and continuity of operations, Mr. Kirkpatrick is expected to continue to serve as our Chief Financial Officer until his successor is found and has moved into the role.

        George Hu.    Mr. Hu has served as our Chief Operating Officer since February 2017. From December 2014 to April 2016, Mr. Hu founded and served as Chief Executive Officer at Peer, a




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workplace feedback startup that was acquired by Twitter in 2016. Prior to that, from November 2011 to December 2014, Mr. Hu served as Chief Operating Officer of salesforce.com, inc.Salesforce.com, Inc., a leading provider of enterprise cloud computing applications. From 2001 to 2011, Mr. Hu served in a variety of other




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management roles at salesforce.com,Salesforce.com, Inc., including Vice President of Product Marketing, Senior Vice President of Applications, Executive Vice President of Products, and Chief Marketing Officer. Mr. Hu holds an A.B. in Economics from Harvard College and an M.B.A. in Business Administration from the Stanford Graduate School of Business.

        Karyn Smith.    Ms. Smith has served as our General Counsel since September 2014. From October 2013 to August 2014, Ms. Smith served as Chief Operating Officer and General Counsel at Peek, Aren't You Curious, Inc., a children's clothing company. From January 2013 to August 2013, Ms. Smith served as General Counsel at Meltwater Group Inc., a software-as-a-service company. From August 2009 to June 2012, Ms. Smith served as Vice President and Deputy General Counsel at Zynga Inc., an online video game company. Prior to Zynga, Ms. Smith was a partner at Cooley LLP, a law firm, where she practiced law for 10 years. Ms. Smith holds a Bachelor of Journalism from the University of Missouri, Columbia and a J.D. from Santa Clara University School of Law.




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EXECUTIVE COMPENSATION


Compensation Discussion and Analysis

        This Compensation Discussion and Analysis describes the compensation program for our named executive officers. During the fiscal year ending December 31, 2017, these individuals were:

•

Jeff Lawson, our Chief Executive Officer and Chairperson of our Board of Directors;



•

Lee Kirkpatrick, our Chief Financial Officer;



•

George Hu, our Chief Operating Officer; and



•

Karyn Smith, our General Counsel.

        This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 2017. It also provides an overview of our executive compensation philosophy and objectives. Finally, it discusses how our compensation committee of our board of directors arrived at the specific compensation decisions for our executive officers, including our named executive officers, for 2017, including the key factors that our compensation committee considered in determining their compensation.

Chief Financial Officer Transition

        On February 13, 2018, we announced that Mr. Kirkpatrick, who has served as our Chief Financial Officer since May 2012, had informed us and our board of directors of his decision to retire from the Company. To ensure an orderly transition and continuity of operations, Mr. Kirkpatrick is expected to continue to serve as our Chief Financial Officer until his successor is found and has moved into the role. The search process has begun and is expected to be completed before the end of the fiscal year.

Executive Summary

        Business Overview

        We are the leader in the Cloud Communications Platform category. We believe the future of communications will be written in software, by the developers of the world—our customers. By empowering them, our mission is to fuel the future of communications.

        We enable developers to build, scale and operate real-time communications within their software applications via our simple-to-use Application Programming Interfaces ("APIs"). The power, flexibility and reliability offered by our software building blocks empower companies of virtually every shape and size to build world-class engagement into their customer experience.

        Our platform consists of three layers: our Engagement Cloud, Programmable Communications Cloud and Super Network. Our Engagement Cloud software is a set of APIs that handles the higher level communication logic needed for nearly every type of customer engagement. These APIs are focused on the business challenges that a developer is looking to address, allowing our customers to more quickly and easily build better ways to engage with their customers throughout their journey. Our Programmable Communications Cloud software is a set of APIs that enables developers to embed voice, messaging and video capabilities into their applications. The Programmable Communications Cloud is designed to support almost all the fundamental ways humans communicate, unlocking innovators to address just about any communication market. Our Super Network is our software layer that allows our customers' software to communicate with connected devices globally. It interconnects with communications networks around the world and continually analyzes data to optimize the quality and cost of communications that flow through our platform. The Super Network also contains a set of APIs that gives our customers access to more foundational components of our platform, such as telephone numbers.




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        As of December 31, 2017, our customers' applications that are embedded with our products could reach users via voice, messaging and video in nearly every country in the world, and our platform offered customers local telephone numbers in over 100 countries and text-to-speech functionality in 26 languages. We support our global business through 27 cloud data centers in nine regions around the world and have developed contractual relationships with network service providers globally.

        Fiscal 2017 Performance Highlights

        During 2017, we continued to grow revenue and diversify our business:

•

We recorded total revenue of $399.0 million for the full year, up 44% from the full year 2016 revenue of $277.3 million;



•

We recorded Base Revenue of $365.5 million for the full year, up 49% from the full year 2016 base revenue of $245.5 million;



•

We recorded a GAAP loss from operations of $66.1 million for the full year, compared with a GAAP loss from operations of $41.3 million for the full year 2016. Our non-GAAP loss from operations was $20.1 million for the full year, compared with a non-GAAP loss from operations of $12.2 million for the full year 2016; and



•

We had 48,979 Active Customer Accounts as of December 31, 2017, compared to 36,606 Active Customer Accounts as of December 31, 2016.

        Please refer to Appendix A of this proxy statement for a more detailed discussion of how we measure Base Revenue, Active Customer Accounts and other key business metrics and for a reconciliation of GAAP loss from operations to non-GAAP loss from operations.

        Executive Compensation Highlights

        Based on our overall operating environment and these results, our compensation committee took the following key actions with respect to the compensation of our named executive officers for 2017:

•

Base Salary—Approved annual base salary increases ranging from 18.5% to 31.6% as we continue to move the target total cash compensation of our named executive officers (other than our Chief Executive Officer) closer to the market median and, at our Chief Executive Officer's request, approved his base salary to remain at its 2016 level.



•

Long-Term Incentive Compensation—Granted long-term incentive compensation opportunities to our named executive officers (other than our Chief Executive Officer and our Chief Operating Officer) in the form of time-based stock options to purchase shares of our Class A common stock and time-based RSUs that may be settled for shares of our Class A common stock, with aggregate grant date fair values ranging from approximately $1,903,755 to approximately $3,067,190, as well as a time-based stock option to purchase shares of our Class A common stock and time-based RSUs that may be settled for shares of our Class A common stock for our Chief Executive Officer with an aggregate grant date fair value of approximately $5,288,274.



•

No Annual Cash Bonus Program—Since July 1, 2015, we have not maintained a formal annual cash bonus plan for any of our executive officers, including our named executive officers.



•

Special Bonus for Ms. Smith—On June 12, 2017, our compensation committee approved the award of a special, one-time cash bonus to Ms. Smith, our General Counsel, in the amount of $125,000. This bonus was awarded to Ms. Smith in recognition of her services and contributions to us as our interim Chief People Officer during the period between May 2016 and June 2017.




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•

Appointment of Chief Operating Officer—On February 28, 2017, Mr. Hu was hired as our Chief Operating Officer. In connection with his appointment, we entered into an employment offer letter with him providing for the following compensation arrangements:



•

An initial annual base salary of $600,000;



•

The grant of a time-based stock option to purchase 900,000 shares of our Class A common stock with an exercise price of $31.72 per share, generally vesting over four years, subject to his continued employment with us through each applicable vesting date, and subject further to certain vesting acceleration provisions;



•

The grant of time-based RSUs that may be settled for 100,000 shares of our Class A common stock, generally vesting over four years, subject to his continued employment with us through each applicable vesting date, and subject further to certain vesting acceleration provisions;



•

The grant of three performance-based stock options to purchase an aggregate of 555,000 shares of our Class A common stock, each with an exercise price of $31.72 per share. Each such performance-based stock option will only begin to vest if certain pre-established target levels tied to our revenue are achieved by certain specified dates. If the performance conditions applicable to each performance-based stock option are satisfied, then the stock option will immediately vest with respect to 50% of the shares subject thereto and will thereafter vest in equal monthly installments over 24 months with respect to the remaining shares subject thereto. If the applicable revenue target is not achieved by the applicable date, then the relevant performance-based stock option will be forfeited at that time. Such performance-based stock options are subject to certain vesting acceleration provisions; and



•

Participation in our Amended and Restated Executive Severance Plan (as described further in "Potential Payments Upon Termination or Change in Control—Amended and Restated Executive Severance Plan" below).

        Mr. Hu's employment offer letter was negotiated on our behalf by our Chief Executive Officer. In establishing the compensation arrangements for Mr. Hu, we took into consideration several factors, including (i) the requisite experience and skills that a qualified chief operating officer candidate for our Company would need to lead and manage a growing business in a dynamic and ever-changing environment, (ii) the competitive market for superior candidates at other comparable companies based on a review of competitive market data, including data drawn from the companies in our compensation peer group, various aspirational companies and selected compensation surveys, (iii) his then-current compensation at his prior employer, including the estimated amount of compensation he would forfeit by accepting employment with us, (iv) the need to integrate our new chief operating officer into our existing executive compensation structure, balancing both competitive and internal equity considerations as well as his existing compensation package and (v) the advice of Compensia, our compensation committee's independent compensation consultant. Following negotiations with Mr. Hu, whom our Chief Executive Officer, compensation committee and our board of directors as a whole, believed was the strongest candidate to help our Company achieve its short-term and long-term "go-to-market" strategy and expansion goals, our compensation committee approved Mr. Hu's compensation arrangements and granted him the performance-based stock options described above. Given that our sales function would report directly to Mr. Hu as Chief Operating Officer, the compensation committee believed that directly tying some of his initial equity grant to our revenue growth over a multi-year (four-year) period was another way to closely align his interests with those of our stockholders.




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        The terms and conditions of the Amended and Restated Executive Severance Plan and Mr. Hu's employment offer letter as they relate to his post-employment compensation arrangements are described in the sections titled "Post-Employment Compensation Arrangements", "Employment Agreements or Offer Letters with Named Executive Officers" and "Potential Payments Upon Termination or Change in Control" below.

        Pay-for-Performance Analysis

        We believe our executive compensation program is reasonable and competitive, and appropriately balances the goals of attracting, motivating, rewarding and retaining our executive officers with the goal of aligning their interests with those of our stockholders. The annual compensation of our executive officers, including our named executive officers, varies from year to year based on our corporate financial and operational results and individual performance. While we do not determine either "variable" or "fixed" pay for each named executive officer with reference to a specific percentage of target total direct compensation, consistent with our "pay-for-performance" philosophy, our executive compensation program emphasizes "variable" pay over "fixed" pay.

        In 2017, the majority of the target total direct compensation of our Chief Executive Officer consisted of variable pay in the form of long-term incentive compensation opportunities. Fixed pay, primarily consisting of base salary, made up only 2.5% of our Chief Executive Officer's target total direct compensation, while contingent ("variable") pay, consisting of long-term incentive compensation in the form of equity awards, made up 97.5% of his target total direct compensation. Similar allocations applied to our other executive officers, including our other named executive officers. The following charts show the percentages of target variable pay versus target fixed pay for our Chief Executive Officer and our other named executive officers in 2017:

Chief Executive Officer Target Pay Mix		Average Other Named Executive Officer Target Pay Mix

        We believe that this approach provides balanced incentives for our executive officers to drive our Company's financial performance and long-term growth.

        Executive Compensation Policies and Practices

        We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. Our compensation committee evaluates our executive compensation program on at least an annual basis to ensure that it is consistent with our short-term and long-term goals given the




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dynamic nature of our business and the market in which we compete for executive talent. The following summarizes our executive compensation and related policies and practices:

​	​	​	​	​	​	​	​	​	​
			What We Do				What We Don't Do
​	​	​	​	​	​	​	​	​	​
			Use a Pay-for-Performance Philosophy. The majority of our executive officers' target total direct compensation is directly linked to the performance of our stock price.				No Retirement Plans. We do not currently offer pension arrangements, nonqualified deferred compensation arrangements or retirement plans to our executive officers other than a 401(k) retirement plan that is generally available to all our U.S. employees.
​	​	​	​	​	​	​	​	​	​
			Compensation "At-Risk." Our executive compensation program is designed so that a significant portion of our executive officers' target total direct compensation is equity-based, and therefore "at risk," to align the interests of our executive officers and stockholders.				No Short-Term Cash Bonus Program or Guaranteed Bonuses. We do not maintain a formal cash bonus program for our executive officers, nor do we provide guaranteed bonuses to our executive officers.
​	​	​	​	​	​	​	​	​	​
			"Double-Trigger" Change-in-Control Arrangements. With the exception of certain equity awards granted to one named executive officer, the terms of which were determined through arm's length negotiations at the time of hire, all of our post-employment compensation arrangements in the event of a change in control of the Company are "double-trigger" arrangements that require both a change in control of the Company plus a qualifying termination of employment before payments and benefits are paid. All such payments and benefits are also subject to the execution and delivery of an effective release of claims in favor of our Company.				Limited Perquisites or Other Personal Benefits. We provide limited perquisites and other personal benefits to our executive officers, which, in 2017, consisted of individual supplemental long-term disability insurance, reimbursements for our Chief Executive Officer's costs incurred in connection with his filing under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 ("HSR") and reimbursements for our Chief Operating Officer's legal costs incurred in connection with the negotiation of his employment offer letter.
​	​	​	​	​	​	​	​	​	​
			Maintain an Independent Compensation Committee. Our compensation committee consists solely of independent directors.				Limited Tax Payments on Perquisites. We generally do not provide any tax reimbursement payments (including "gross-ups") on any perquisites or other personal benefits except that, in 2017, we provided a tax gross-up to our Chief Executive Officer with respect to the income that he recognized as a result of our payment for his HSR filing.
​	​	​	​	​	​	​	​	​	​




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​	​	​	​	​	​	​	​	​	​
			What We Do				What We Don't Do
​	​	​	​	​	​	​	​	​	​
			Retain an Independent Compensation Advisor. Our compensation committee has engaged its own independent compensation advisor to provide information, analysis and other advice on executive compensation independent of management.				No Excise Tax Payments on Future Post-Employment Compensation Arrangements. We do not provide any excise tax reimbursement payments (including "gross-ups") with respect to payments or benefits contingent upon a change in control of our Company.
​	​	​	​	​	​	​	​	​	​
			Annual Executive Compensation Review. Our compensation committee conducts an annual review of our compensation strategy, including a review of our compensation peer group used for comparative purposes.				No Hedging. We prohibit our employees, including our executive officers, and the non-employee members of our board of directors from engaging in certain derivative transactions relating to our securities.
​	​	​	​	​	​	​	​	​	​
			Annual Compensation-Related Risk Assessment. Our compensation committee reviews, on an annual basis, our compensation-related risk profile.				No Pledging. We prohibit our executive officers and the non-employee members of our board of directors from holding our securities in a margin account or pledging our securities as collateral for a loan.	��
​	​	​	​	​	​	​	​	​	​
			Stock Ownership Policy. We maintain a stock ownership policy for our Chief Executive Officer, our other named executive officers and the non-employee members of our board of directors.				No Special Welfare or Health Benefits. We do not provide our executive officers with any special welfare or health benefit programs, other than individual supplemental long-term disability insurance and participation on the same basis as all of our full-time employees in the employee programs that are standard in our industry sector.
​	​	​	​	​	​	​	​	​	​

Say-on-Pay Vote on Executive Compensation

        In prior years, we were an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and were not required to hold a non-binding, advisory vote on the compensation of our named executive officers (a "Say-on-Pay vote"). At the 2018 Annual Meeting of Stockholders, we will be conducting our first Say-on-Pay vote as described in Proposal No. 3 of this proxy statement. Because we value the opinions of our stockholders, the board of directors and our compensation committee will consider the outcome of the Say-on-Pay vote, and the related Say-on-Frequency vote described in Proposal No. 4 of this proxy statement, as well as feedback received throughout the year, when making compensation decisions for our named executive officers in the future.

Executive Compensation Philosophy

        Our executive compensation programs areprogram is guided by our overarching philosophy of paying for demonstrable performance and aligning the compensation of our executive officers with the long-term interests of our stockholders. Consistent with this philosophy, we have designed to:our executive compensation program to achieve the following primary objectives:

•

attract, motivate, incentivize and retain employees at the executive level who contribute to our long-term success;



•

provide compensation packages to our executivesexecutive officers that are competitive and reward the achievement of our business objectivesobjectives; and effectively align their interests with those




Table of our stockholders; andContents



•

effectively align our executives'executive officers' interests with thosethe interests of our stockholders by focusing on long-term equity incentives that correlate with the growth of sustainable long-term value for our stockholders.

        Our compensation committee is responsible for the executive compensation programsBecause we do not have a cash bonus program for our executive officers, generally, our compensation committee has sought to set base salaries at the higher end of the competitive market range to provide what it believes to be reasonable cash compensation levels and reportswill serve to attract and retain our executives. Further, our compensation committee tends to weight the target total direct compensation opportunities of our executive officers more heavily towards equity compensation.

Oversight of Executive Compensation Program

        Role of the Compensation Committee

        Our compensation committee discharges many of the responsibilities of our board of directors relating to the compensation of our executive officers, including our named executive officers, and the non-employee members of our board of directors (as described further in "Board of Directors and Corporate Governance—Non-Employee Director Compensation" above). Our compensation committee has overall responsibility for overseeing our compensation structure, policies and programs generally, and overseeing and evaluating the compensation plans, policies and practices applicable to our executive officers. Our compensation committee has the authority to retain, and has retained, an independent compensation consultant to provide support to the committee in its review and assessment of our compensation programs.

        Compensation-Setting Process

        Our compensation committee determines the target total direct compensation opportunities for our executive officers, including our named executive officers. Our compensation committee does not use a single method or measure in developing its recommendations, nor does it establish specific targets for the total direct compensation opportunities of our executive officers. Nonetheless, as it continues to position the compensation of our named executive officers to levels that are more consistent with those of a public company, generally, our compensation committee begins its deliberations on its discussions, decisionscash and other actions. Our Chief Executive Officer makesequity compensation levels with reference to various percentile levels for cash compensation and target total direct compensation as reflected in competitive market data.

        When formulating its recommendations for the respectiveamount of each compensation element and approving each compensation element and the target total direct compensation opportunity for our executive officers, that report to him toour compensation committee considers the following factors:

•

our performance against the financial and operational objectives established by our compensation committee and typically attendsour board of directors;



•

our financial performance relative to our compensation committee meetings. Ourpeer group;



•

the compensation levels and practices of our compensation peer group;



•

each individual executive officer's skills, experience and qualifications relative to other similarly-situated executives at the companies in our compensation peer group;



•

the scope of each individual executive officer's role compared to other similarly-situated executives at the companies in our compensation peer group;



•

the performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function and ability to work as part of a team, all of which reflect our core values;



•

compensation parity among our individual executive officers; and




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•

the recommendations provided by our Chief Executive Officer makes suchwith respect to the compensation of our other executive officers.

        These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting pay levels, nor was the impact of any factor on the determination of pay levels quantifiable. Our compensation committee reviews the base salary levels and long-term incentive compensation opportunities of our executive officers, including our named executive officers, each fiscal year at the beginning of the year, or more frequently as warranted. Long-term incentive compensation is granted on a regularly-scheduled basis, as described in "Other Compensation Policies and Practices—Equity Awards Grant Policy" below.

        Role of Chief Executive Officer

        In discharging its responsibilities, our compensation committee works with members of our management, including our Chief Executive Officer. Our management assists our compensation committee by providing information on corporate and individual performance, market compensation data and management's perspective on compensation matters. Our compensation committee solicits and reviews our Chief Executive Officer's recommendations and proposals with respect to adjustments to annual cash compensation, long-term incentive compensation opportunities, program structures and other compensation-related matters for our executive officers (other than with respect to himself) regarding base salary,his own compensation).

        Our compensation committee reviews and short-termdiscusses these recommendations and long-termproposals with our Chief Executive Officer and considers them as one factor in determining the compensation including equity incentives, for our executive officers, based onincluding our results, another named executive officer's individual contribution toward these results, the executive officer's role and performance of his or her duties and his or her achievement of individual goals.officers. Our compensation committee then reviews the recommendations and other data, including various compensation survey data and publicly-available data of our peers, and makes decisions as to the target total direct compensation for each executive officer, including our Chief Executive Officer as well as each individual compensation element. While our Chief Executive Officer typically attends meetingsrecuses himself from all discussions and recommendations regarding his own compensation.

        Role of the compensation committee, the compensation committee meets outside the presence of our Chief Executive Officer when discussing his compensation and when discussing certain other matters, as well.Compensation Consultant

        Our compensation committee is authorizedengages an external independent compensation consultant to retain the services of one or more executive compensation advisors, asassist it sees fit, in connection with the establishment of our executive compensation programs and related policies. In fiscal year 2016, the compensation committee continued to retain Compensia Inc., a national compensation consulting firm with compensation expertise relating to technology companies, to provide it with marketby providing information, analysis and other advice relating to our executive compensation on an ongoing basis. Theprogram and the decisions resulting from its annual executive compensation review. For 2017, our compensation committee engaged Compensia Inc.as its compensation consultant to among other things, assist inadvise on executive compensation matters, including competitive market pay practices for our executive officers, the selection of our compensation peer group, and data analysis. For 2017, the scope of Compensia's engagement included:

•

researching, developing, an appropriate group ofand reviewing our compensation peer companies to help us determinegroup;



•

reviewing and analyzing the appropriate level of overall compensation for our executive officers, including our named executive officers;



•

supporting the design and implementation of changes to our executive long-term incentive strategy;



•

providing analysis of market practice and supporting the consideration and finalization of changes to our Amended and Restated Executive Severance Plan;



•

reviewing and providing input on the Compensation Discussion and Analysis section of our proxy statement for our 2018 Annual Meeting of Stockholders;



•

providing competitive market data and analysis to support the determination of the compensation arrangements that we negotiated in connection with the hiring of our Chief Operating Officer; and



•

supporting otherad hoc matters throughout the year.




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        The terms of Compensia's engagement included reporting directly to our compensation committee and to our compensation committee chair. Compensia also coordinated with our management for data collection and job matching for our executive officers. In 2017, Compensia did not provide any other services to us. In April 2017, our compensation committee evaluated Compensia's independence pursuant to the NYSE Listing Standards and the relevant SEC rules and determined that no conflict of interest had arisen as a result of the work performed by Compensia.

        Competitive Positioning

        For purposes of comparing our executive compensation against the competitive market, our compensation committee reviews and considers the compensation levels and practices of a group of peer companies. This compensation peer group consists of technology companies that are similar to us in terms of industry, revenue and market capitalization.

        In developing the compensation peer group for 2017, the following criteria were observed in identifying comparable companies:

•

similar industry and competitive market for talent;



•

within a range of 0.5x to 2.0x of our revenue; and



•

within a range of 0.3x to 3.0x of our market capitalization.

        Our compensation committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.

        At the beginning of 2017, our compensation committee used the following compensation peer group to assist with the determination of compensation for our executive officers. Our compensation committee approved this peer group in December 2016 following a review that included input from Compensia.

Acacia Communications		New Relic		ServiceNow
Box		Nutanix		Splunk
Cornerstone OnDemand		Paycom Software		Tableau Software
FireEye		Paylocity Holding		Veeva Systems
Guidewire Software		Proofpoint		Workday
HubSpot		RingCentral		Zendesk
LogMeIn

        In June 2017, our compensation committee, upon the recommendation of Compensia, added Mulesoft to the compensation peer group.

        Our compensation committee uses data drawn from our compensation peer group, as well as data from the Radford Global Technology executive compensation survey (the "Radford Survey"), to assessevaluate the competitive market when formulating its recommendation for the total direct compensation packages for our executive officers, including base salary and long-term incentive compensation opportunities. The Radford Survey provides compensation market intelligence and is widely used within the technology industry.

        In addition, subsets of the Radford Survey were incorporated into the competitive assessment prepared by Compensia and used by our compensation committee to evaluate the compensation of our executive officers. Specifically, our compensation committee received a custom report of survey results reflecting only companies from our compensation peer group in addition to survey results tailored solely based on revenue. The Radford Survey data supplements the compensation peer group data and




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provides additional information for our named executive officers and other vice president positions for which there is less public comparable data available.

Individual Compensation Elements

        In 2017, the principal elements of our executive compensation program, and the purposes for each separateelement, were as follows:

Element		Compensation Element		Objective
Base Salary		Cash		Designed to attract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market and reward performance.
Long-Term Incentives		Equity awards in the form of stock options to purchase shares of our Class A common stock and RSUs that may be settled for shares of our Class A common stock		Designed to align the interests of our executive officers and our stockholders by motivating them to achieve long-term stockholder value creation. Also designed to achieve our retention objectives for our executive officers.

        Base Salary

        Base salary represents the fixed portion of the compensation of our executive officers, including our named executive officers, and is an important element of compensation intended to attract and retain highly-talented individuals.

        Using the competitive market data provided by its compensation consultant, our compensation committee reviews and develops recommendations for adjusting the base salaries for each of our executive officers, including our named executive officers, as part of its annual executive compensation review. In addition, the base salaries of our executive officers may be adjusted by our compensation committee in the event of a promotion or significant change in responsibilities.

        Generally, our compensation committee sets base salaries with reference to various percentile levels of the competitive range of our compensation peer group and applicable executive compensation survey data. Since our initial public offering, we have evaluated the base salaries of our executive officers in the context of establishing their total cash compensation at levels that are consistent with the target total cash compensation of executive officers holding comparable positions at a goalpublic company.

        In February 2017, consistent with the recommendation of ensuringour Chief Executive Officer, our compensation committee determined to increase the base salaries of our executive officers, including our named executive officers (other than our Chief Executive Officer). In making these decisions, our compensation committee considered the current risks and challenges facing us, our decision to forego the adoption of an annual cash bonus program, its objective of gradually positioning the target total cash compensation of our executive officers at levels that are more consistent with those of a public company in our industry, as well as the factors described in "Oversight of Executive Compensation Program—Compensation-Setting Process" above. At our Chief Executive Officer's request, and to weight more of his target total direct compensation to variable pay in the form of long-term incentive compensation, the compensation committee determined to maintain the base salary of our Chief Executive Officer at its 2016 level.




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        The base salaries of our named executive officers for 2017 were adjusted as follows:

Named Executive Officer		2016 Base Salary			2017 Base Salary(1)			Percentage Adjustment
Mr. Lawson		$	133,700		$	133,700			—
Mr. Kirkpatrick		$	380,000		$	500,000			31.6	%
Mr. Hu(2)			—		$	600,000			—
Ms. Smith		$	337,500		$	400,000			18.5	%

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(1)

These annual base salary adjustments were effective retroactively to January 1, 2017.



(2)

Mr. Hu joined our Company in February 2017.

        The actual base salaries paid to our named executive officers in 2017 are set forth in the "Summary Compensation Table" below.

        Long-Term Incentive Compensation

        We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our executive officers, including our named executive officers, to create value for our stockholders. Equity awards also help us retain qualified executive officers in a competitive market.

        Long-term incentive compensation opportunities in the form of equity awards are granted by our compensation committee on a regularly-scheduled basis, as described in "Other Compensation Policies and Practices—Equity Awards Grant Policy" below. The amount and forms of such equity awards are determined by our compensation committee after considering the factors described in "Oversight of Executive Compensation Program—Compensation-Setting Process" above. The amounts of the equity awards are also intended to provide competitively-sized awards and resulting target total direct compensation opportunities that are competitive with the compensation opportunities offered by the companies in our compensation peer group and Radford Survey data for similar roles and positions for each of our executive officers, taking into consideration the factors described in "Oversight of Executive Compensation Program—Compensation-Setting Process" above.

        In February 2017, prior to the hiring of our Chief Operating Officer, our compensation committee determined that the compensation we offerequity awards to be granted to our executive officers individuallyshould be in the form of time-based stock options to purchase shares of our Class A common stock and time-based RSUs that may be settled for shares of our Class A common stock. After considering the factors described in "Oversight of Executive Compensation Program—Compensation-Setting Process" above, our compensation committee approved the following equity awards for our then-existing named executive officers in 2017 as part of its annual executive compensation review:

Named Executive Officer		Stock Options to Purchase Shares of Class A Common Stock (number of shares)			Time-Based RSUs (number of shares)			Aggregate Grant Date Fair Value ($)
Jeff Lawson			163,890			87,271		$	5,288,274
Lee Kirkpatrick			95,056			50,617		$	3,067,190
Karyn Smith			59,000			31,417		$	1,903,755




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        In connection with the appointment of Mr. Hu as our Chief Operating Officer, our compensation committee approved the grant of the equity awards described in the section titled "Executive Summary—Executive Compensation Highlights—Appointment of Chief Operating Officer" above.

Stock Options

        We believe that stock options provide a strong reward for growth in the market price of our common stock as their entire value depends on future stock price appreciation, as well as a strong incentive for our executive officers to remain employed with our Company as they require continued employment through the vesting period. The stock options to purchase shares of our Class A common stock generally have a 10-year term and generally vest as to one-quarter of such shares on the first anniversary of the "vesting commencement date" and thereafter as to 1/48^th of the shares subject to the stock option each month, subject to the named executive officer's continued employment with us through each applicable vesting date. Consistent with our compensation objectives, we believe this approach aligns our executive officers' efforts and contributions with our long-term interests and allows them to participate in any future appreciation in value of our common stock.

        Pursuant to our Chief Operating Officer's employment offer letter, he was granted time-based stock options for a seven-year term and performance-based stock options to purchase shares of our Class A common stock, for reasons described in "Executive Summary—Executive Compensation Highlights—Appointment of Chief Operating Officer" above. The performance-based stock options will only begin to vest if certain pre-established target levels tied to our revenue are achieved by certain specified dates, the disclosure of which would cause potential significant competitive harm to us without adding meaningfully to the understanding of our business, since our revenue projections are based on our internal forecasts and confidential information about our business. However, the compensation committee has set such performance-based metrics at definitive, rigorous and objective levels which we believe are sufficiently high so as to require substantial effort and achievement by our Chief Operating Officer to be attained. We believe it would be difficult, though not unattainable, for such revenue targets to be reached. To date, we have only granted performance-based stock options to our Chief Operating Officer in connection with his hiring for the reasons described in "Executive Summary—Executive Compensation Highlights—Appointment of Chief Operating Officer" above. Our Chief Operating Officer's employment offer letter, including the terms of his performance-based stock options, were established after arms' length negotiations with him and our consideration, at the time of his hire, of the requisite experience and skills that a qualified Chief Operating Officer candidate for the Company would need, as well as the competitive market for similar positions at other comparable companies, as described in more detail in "Executive Summary—Executive Compensation Highlights—Appointment of Chief Operating Officer" above. In addition, we believe that it was appropriate to grant our Chief Operating Officer these performance-based stock options as a way to further align him with our stockholders, as the value of any amount earned pursuant to the performance-based stock options is directly tied to our revenue over a long-term period (at least four years). A portion of such performance-based stock options vest over time as well, which incentivizes retention.

Time-Based RSUs

        We believe time-based RSUs also provide a strong retention incentive for our executive officers, provide a moderate reward for growth in the value of our common stock and, because they use fewer shares than stock options, are less dilutive to our stockholders. The time-based RSUs that may be settled for shares of our Class A common stock generally vest as to 13/48^th of the shares subject to the award on the first anniversary of the applicable "vesting commencement date", as to 1/16^th of the shares subject to the award as of the end of each of the next 11 fiscal quarters and as to 1/24^th of the shares subject to the award as of the end of the next fiscal quarter thereafter, subject to the named executive officer's continued employment with us through each applicable vesting date. The time-based




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RSUs for Mr. Hu vest as to 25% of the shares subject to the award on the first anniversary of the applicable "vesting commencement date" and as to 1/16^th of the shares subject to the award as of the end of each of the next 12 quarters thereafter, subject to Mr. Hu's continued employment with us through each applicable vesting date.

        The equity awards granted to our named executive officers in 2017 are set forth in the "Summary Compensation Table" and the "Grants of Plan-Based Awards Table" below.

        One-Time Cash Bonus

        On June 12, 2017, our compensation committee approved an award of a special one-time cash bonus to Ms. Smith in the amount of $125,000 in recognition of her services and contribution to us as our interim Chief People Officer during the period between May 2016 and June 2017.

        The cash bonus paid to Ms. Smith in 2017 is set forth in the "Summary Compensation Table" below.

        Health and Welfare Benefits

        Our executive officers, including our named executive officers, are eligible to receive the same employee benefits that are generally available to all our full-time employees, subject to the satisfaction of certain eligibility requirements. These benefits include our medical, dental and vision insurance and life and disability insurance plans. In structuring these benefit plans, we seek to provide an aggregate level of benefits that are comparable to those provided by similar companies.

        In addition, we maintain a tax-qualified 401(k) retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Plan participants are able to defer eligible compensation subject to the applicable annual limits set forth in the Code. In 2017, we matched 50% of each dollar contributed by participants in the 401(k) plan up to an annual maximum of $2,500. We have the ability to make discretionary contributions to the 401(k) plan but have not done so to date. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the plan's related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.

        Perquisites and Other Personal Benefits

        Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our executive officers, including our named executive officers, except as generally made available to our employees, or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective and for recruitment and retention purposes.

        For example, in addition to the standard group plan available to all U.S. employees, we pay the premiums for individual supplemental long-term disability insurance for employees who qualify for the plan, including our executive officers and employees above a certain salary threshold. The additional individual long-term disability insurance premiums we offer provides up to an additional $5,000 per month per individual and brings the total long-term disability insurance benefit for our executive officers closer to the level of coverage offered to other employees who do not participate in the plan.

        During 2017, none of our named executive officers received perquisites or other personal benefits that were, in the aggregate, $10,000 or more for each individual, except our Chief Executive Officer, for whom we paid his filing fee under HSR, as well as a tax gross-up related to such fee and except our Chief Operating Officer, for whom we reimbursed legal fees associated with the negotiation of his




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employment offer letter. We believe that reimbursing our Chief Executive Officer for the HSR filing fee and its related tax consequences was consistent with our decision to continue to compensate him almost entirely through equity-compensation arrangements. Absent this regulatory filing, our Chief Executive Officer would not be able to participate in our long-term incentive compensation program and, therefore, we determined that it was appropriate for us to reimburse him for this filing fee and any related tax liabilities. In addition, we believe that reimbursing Mr. Hu for his legal fees in connection with the negotiation of his employment offer letter was appropriate and necessary to recruit him.

        In the future, we may provide perquisites or other personal benefits in limited circumstances. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by our compensation committee.

Post-Employment Compensation Arrangements

        We believe that having in place reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly-qualified executive officers. We included certain provisions for payments and benefits in the event of a termination of employment, including an involuntary termination of employment in connection with a change in control of our Company, in the initial employment offer letters and equity award agreements with certain of our named executive officers. However, in connection with our initial public offering, we adopted an executive severance plan (as amended and restated in June 2017, the "Amended and Restated Executive Severance Plan") to provide more standardized severance payments and benefits to our executive officers and to supersede and replace the severance provisions in their employment offer letters or equity award agreements, if any, with payments and benefits that are aligned with competitive market practices as reflected by our compensation peer group.

        The Amended and Restated Executive Severance Plan, as discussed in more detail in "Potential Payments Upon Termination or Change in Control—Amended and Restated Executive Severance Plan" below is competitivedesigned to help ensure the continued service of key executive officers in an acquisition context, to provide reasonable compensation to executive officers who leave our employ under specified circumstances and fair.to align the interests of our executive officers and our stockholders when considering our long-term future.

        We believe that the severance payments and benefits provided to our executive officers under the Amended and Restated Executive Severance Plan (and for our Chief Operating Officer, such plan and his employment offer letter) are appropriate in light of the post-employment compensation protections available to similarly-situated executive officers at companies in our compensation peer group and are an important component of each executive officer's overall compensation as they help us to attract and retain our key executives who could have other job alternatives that may appear to them to be more attractive absent these protections.

        We also believe that the occurrence or potential occurrence of a change in control transaction will create uncertainty regarding the continued employment of our executive officers. In order to encourage them to remain employed with us during an important time when their prospects for continued employment following the transaction are often uncertain, we provide our executive officers with the opportunity to receive additional severance protections during a change in control protection period. In addition, we provide additional payment and benefit protections if an executive officer voluntarily terminates employment with us for good reason in connection with a change in control of our Company, because we believe that a voluntary termination of employment for good reason is essentially equivalent to an involuntary termination of employment by us without cause. The primary purpose of these arrangements is to keep our most senior executive officers focused on pursuing potential corporate transactions that are in the best interests of our stockholders regardless of whether those




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transactions may result in their own job loss. Reasonable post-acquisition payments and benefits should serve the interests of both the executive officer and our stockholders.

        To protect the Company's interests, we require all participants of the Amended and Restated Severance Plan to sign our standard form of release prior to receiving any severance payments or benefits under the plan.

        In addition, except with respect to the equity awards granted to our Chief Operating Officer in connection with his employment offer letter, all payments and benefits provided in the event of a change in control of the Company are payable only if there is a qualifying loss of employment by a named executive officer (commonly referred to as a "double-trigger" arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the Company and to avoid windfalls, both of which could occur if the vesting of equity awards accelerated automatically as a result of the transaction.

        As a result of arm's length negotiations at the time of hire, a portion of our Chief Operating Officer's performance-based stock options vest in the event of a change in control of our Company. Specifically, if the conditions applicable to a performance-based stock option are satisfied, then the stock option will immediately vest with respect to 50% of the shares subject thereto and will thereafter vest in equal monthly installments over 24 months with respect to the remaining shares subject thereto, in each case, subject to our Chief Operating Officer's continued employment with us through each applicable vesting date.

        We do not believeprovide excise tax payments (or "gross-ups") relating to a change in control of our Company and have no such obligations in place with respect to any of our named executive officers.

        For detailed descriptions of the retentionpost-employment compensation arrangements we maintain with our named executive officers, as well as an estimate of the potential payments and benefits payable to our named executive officers under their post-employment compensation arrangements, see "Employment Agreements or Offer Letters with Named Executive Officers" and "Potential Payments Upon Termination or Change in Control" below.

Other Compensation Policies and Practices

        Equity Awards Grant Policy

        Under our Amended and Restated Equity Award Grant Policy, we generally grant equity awards on a regularly scheduled basis to enhance the effectiveness of our internal control over our equity award grant process and to alleviate several of the burdens related to accounting for such equity awards, as follows:

•

Any grants of equity awards made in conjunction with the hiring of a new employee or the promotion of an existing employee will be made, if at all, regularly (either monthly or quarterly) and will be effective on the date such grant is approved by our board of directors or our compensation committee or such future date as is approved by our board of directors or our compensation committee. In no event will the effective date of an equity award made in conjunction with the hiring of a new employee precede the first date of employment.



•

Any grants of equity awards to existing employees (other than in connection with a promotion) will generally be made, if at all, on an annual or quarterly basis. Any such annual or quarterly grant will be effective on the date on which such grant is approved or such future date as is approved by our board of directors or our compensation committee.



•

All equity awards will be priced on the effective date of the award. The exercise price of all stock options will be equal to the closing market price on The New York Stock Exchange of one




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share of our Class A common stock on the effective date of grant, or, if no closing price is reported for such date, the closing price on the next immediately following date for which a closing price is reported. If the grant of restricted stock or of RSUs is denominated in dollars, the number of shares of restricted stock or RSUs that are granted will generally be calculated by dividing the dollar value of the approved award by the average closing market price on The New York Stock Exchange of one share of our Class A common stock over the trailing 30-day period ending on the last day of the month immediately prior to the month of the grant date, with such total number of shares to be granted per recipient rounded up to the nearest whole share.

•

Our board of directors or our compensation committee may delegate to a committee comprised of at least two of our executive officers all or part of the authority with respect to the granting of certain equity awards to employees (other than to such delegates), subject to certain limitations and requirements. Our board of directors and compensation committee have currently not delegated such authority.

        Policy Prohibiting Hedging and Pledging of Equity Securities

        Our Insider Trading Policy prohibits our employees, including our executive officers, and the non-employee members of our board of directors from engaging in any short sale and from buying or selling puts, calls, other derivative securities of our Company or any derivative securities that provide the economic equivalent of ownership of any of our Company's securities or an opportunity, direct or indirect, to profit from any change in the value of our Company's securities or engage in any other hedging transaction with respect to our Company's securities, at any time. In addition, our Insider Trading Policy prohibits our employees, including our executive officers, and the non-employee members of our board of directors from using our Company's securities as collateral in a margin account or from pledging our Company's securities as collateral for a loan.

        Stock Ownership Policy

        To further align the interests of our executive officers with those of our stockholders and to promote a long-term perspective in managing our Company, in April 2018, we adopted a stock ownership policy for our Chief Executive Officer and executive officers subject to Section 16 of the Exchange Act ("Section 16 Officers"), including each of our named executive officers. Our stock ownership policy requires each named executive officer to acquire and hold the lesser of (i) a number of shares of our Company's common stock equal in value to a multiple of such named executive officer's annual base salary or (ii) 48,500 shares of our Company's common stock for our Chief Executive Officer and 15,500 shares of our Company's common stock for our other named executive officers, in each case, until he or she ceases to be our Chief Executive Officer or a Section 16 Officer, as applicable. The multiple for our Chief Executive Officer is four times his annual base salary and the multiple for our other named executive officers is one times his or her annual base salary. For purposes of our stock ownership policy, we only count directly and beneficially owned shares, including shares purchased through our Company's ESPP or 401(k) Plan, if applicable, shares underlying vested RSUs that are held or deferred and shares underlying vested and unexercised in-the-money stock options. Each named executive officer has three years from the later of his or her designation as our Chief Executive Officer or Section 16 Officer, as applicable, or from the effective date of the policy to obtain the required ownership level.

Tax and Accounting Considerations

        Deductibility of Executive Compensation

        Generally, Section 162(m) of the Code ("Section 162(m)") disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid in any fiscal year to




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certain specified executive officers. For taxable years beginning before January 1, 2018 (i) these executive officers consisted of a public corporation's chief executive officer and up to three other executive officers (other than the chief financial officer) whose compensation is required to be disclosed to stockholders under the Exchange Act because they are our most highly-compensated executive officers and (ii) qualifying "performance-based compensation" was not subject to this deduction limit if specified requirements are met.

        Pursuant to the Tax Cuts and Jobs Act of 2017, which was signed into law on December 22, 2017 (the "Tax Act"), for taxable years beginning after December 31, 2017, the remuneration of a public corporation's chief financial officer is also subject to the deduction limit. In addition, subject to certain transition rules (which apply to remuneration provided pursuant to written binding contracts which were in effect on November 2, 2017 and which are not subsequently modified in any material respect), for taxable years beginning after December 31, 2017, the exemption from the deduction limit for "performance-based compensation" is no longer available. Consequently, for fiscal years beginning after December 31, 2017, all remuneration in excess of $1 million paid to a specified executive will not be deductible. These changes will cause more of our compensation to be non-deductible under Section 162(m) in the future and will eliminate the Company's ability to structure performance-based awards to be exempt from Section 162(m).

        In designing our executive compensation program and determining the compensation of our executive officers, including our named executive officers, our compensation committee considers a variety of factors, including the potential impact of the Section 162(m) deduction limit. However, our compensation committee will not necessarily limit executive compensation to that which is or may be deductible under Section 162(m). The deductibility of some types of compensation depends upon the timing of an executive officer's vesting or exercise of previously granted rights. Further, interpretations of and changes in the worktax laws, and other factors beyond our compensation committee's control also affect the deductibility of compensation. Our compensation committee will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent consistent with its compensation goals and will continue to monitor developments under Section 162(m).

        To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and long-term corporate goals, our compensation committee has not adopted a policy that all compensation must be deductible. Our compensation committee believes that our stockholders' interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expense.

        Taxation of "Parachute" Payments

        Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the Company that exceeds certain prescribed limits, and that the Company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer, including any named executive officer, with a "gross-up" or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Code.

        Section 409A of the Internal Revenue Code

        Section 409A of the Code imposes additional significant taxes in the event that an executive officer, director or service provider receives "deferred compensation" that does not satisfy the requirements of Section 409A of the Code. Although we do not maintain a traditional nonqualified deferred compensation plan for our executive officers, Section 409A of the Code does apply to certain severance arrangements, bonus arrangements and equity awards, and we have structured all such arrangements and awards in a manner to either avoid or comply with the applicable requirements of Section 409A of the Code. For our non-employee directors, we provide a Non-Employee Directors' Deferred Compensation Program, which has been structured to comply with the applicable requirements of Section 409A of the Code.




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        Accounting for Stock-Based Compensation

        We follow the Financial Accounting Standard Board's Accounting Standards Codification Topic 718 ("FASB ASC Topic 718") for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and non-employee members of our board of directors, including options to purchase shares of our common stock and other stock awards, based on the grant date "fair value" of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from such awards.

Compensation Risk Assessment

        In consultation with management and Compensia, Inc. creates any conflictour compensation committee's independent compensation consultant, in March 2018, our compensation committee assessed our compensation plans, policies and practices for named executive officers and other employees and concluded that they do not create risks that are reasonably likely to have a material adverse effect on our Company. This risk assessment included, among other things, a review of interest.our cash and equity incentive-based compensation plans to ensure that they are aligned with our Company performance goals and overall target total direct compensation to ensure an appropriate balance between fixed and variable pay components. Our compensation committee conducts this assessment annually.

Summary Compensation Table

        The compensation provided to our named executive officers for the fiscal year ended December 31, 2016 is set forth in the Summary Compensation Table below and accompanying footnotes and narrative that follow this section.

        Our named executive officers for the fiscal year ended December 31, 2016, which consisted of our Chief Executive Officer and our two most highly compensated executive officers other than our Chief Executive Officer, were:

•

Jeff Lawson, our Chief Executive Officer and Chairperson;




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•

Lee Kirkpatrick, our Chief Financial Officer; and



•

Karyn Smith, our General Counsel.

        The following table provides information regarding the total compensation, for services rendered in all capacities, that was paid or earned by our named executive officers during the fiscal years ended December 31, 2015, December 31, 2016, and December 31, 2016.2017.

Name and principal position		Year			Salary ($)			Bonus ($)			Stock awards ($)(1)			Option awards ($)(2)			Nonequity incentive compensation ($)			All other compensation ($)		Total ($)				Year			Salary ($)			Bonus ($)			Stock awards ($)(1)			Option awards ($)(2)			Non- equity incentive compensation ($)			All other compensation ($)			Total ($)
Jeff Lawson			2016			133,700			—			1,917,100			—			—		—			2,050,800				2017			133,700			—			2,789,181			2,499,093			—			204,427	(3)		5,626,401
Chief Executive Officer and			2015			299,783	(3)		15,000	(4)		—			1,897,644			41,125	(5)	—			2,253,552				2016			133,700			—			1,917,100			—			—			—			2,050,800
Chairperson																											2015			299,783	(4)		15,000	(5)		—			1,897,644			41,125	(6)		—			2,253,552
Lee Kirkpatrick			2016			380,000			—			882,875			—			—		—			1,262,875				2017			500,000			—			1,617,719			1,449,471			—			4,816	(3)		3,572,006
Chief Financial Officer			2015			327,500	(3)		15,000	(4)		—			873,915			48,125	(5)	—			1,264,540				2016			380,000			—			882,875			—			—			—			1,262,875
																											2015			327,500	(4)		15,000	(5)		—			873,915			48,125	(6)		—			1,264,540
George Hu(7)																											2017			502,308			—			3,172,000			17,691,850			—			29,143	(3)		21,395,301
Chief Operating Officer
Karyn Smith			2016			337,500			—			303,376			—			—		—			640,876				2017			400,000			125,000	(8)		1,004,087			899,667			—			4,716	(3)		2,433,470
General Counsel			2015			293,750	(3)		15,000	(4)		—			300,302			43,750	(5)	—			652,802				2016			337,500			—			303,376			—			—			—			640,876
																											2015			293,750	(4)		15,000	(5)		—			300,302			43,750	(6)		—			652,802

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(1)

The amounts reported in this column represent the aggregate grant date fair value of the RSUs awarded to the named executive officers in the fiscal yearyears ended December 31, 2015, December 31, 2016 and December 31, 2017, as applicable, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the Securities and Exchange CommissionSEC on February 22, 2017.March 1, 2018. The amounts reflect the accounting cost for the RSUs and do not correspond to the actual economic value that may be received by the named executive officers upon vesting or settlement of the RSUs.




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(2)

The amounts reported in this column represent the aggregate grant date fair value of the stock options awarded to the named executive officer in the fiscal yearyears ended December 31, 2015, December 31, 2016 and December 31, 2017, as applicable, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the Securities and Exchange CommissionSEC on February 22, 2017.March 1, 2018. The amounts reported in this column reflect the accounting cost for thethese stock options and do not correspond to the actual economic value that may be received by the named executive officers upon exercise of the stock options or sale of the shares of common stock underlying such stock options. Mr. Hu's 2017 amount includes the aggregate grant date fair value of his performance-based stock options, equal to an aggregate grant date fair value of $5,947,750, based upon the probable outcome of the applicable performance conditions, which is the maximum outcome.



(3)

For Mr. Lawson, consists of a reimbursement from the Company for a $125,000 HSR filing fee related to Mr. Lawson's stock ownership and $75,256 for the related tax gross-up, $1,670 for supplemental long-term disability insurance premiums, as well as $2,500 for our Company's matching contributions to his 401(k) account in 2017. For Mr. Hu, consists of a reimbursement from our Company for $25,000 for legal fees incurred in connection with the negotiation of his employment offer letter, $1,643 for supplemental long-term disability insurance premiums, as well as $2,500 for our Company's matching contributions to his 401(k) account in 2017. For each of Mr. Kirkpatrick and Ms. Smith, consists of $2,500 for our Company's matching contributions to his or her respective 401(k) account in 2017 as well as $2,316 and $2,216 for supplemental long-term disability insurance premiums for Mr. Kirkpatrick and Ms. Smith, respectively, in 2017.



(4)

Effective July 1, 2015, we terminated our 2015 Bonus Plan. In connection with the termination of the 2015 Bonus Plan, each of our named executive officers received an increase in annual base salary during the fiscal year ended December 31, 2015. Effective July 1, 2015, Mr. Lawson's annual base salary increased from $235,000 to $480,000; however effective November 1, 2015, upon Mr. Lawson's request, his annual base salary decreased to $133,700. Effective July 1, 2015, Mr. Kirkpatrick's annual base salary increased from $275,000 to $380,000 and Ms. Smith's annual base salary increased from $250,000 to $337,500.



(4)(5)

During the fiscal year ended December 31, 2015, each of our named executive officers earnedfor 2015 received a discretionary bonus equal to $15,000 in connection with the termination of our 2015 Bonus Plan. The discretionary bonus was paid to each of our named executive officers in the fiscal year ended December 31, 2016.



(5)(6)

Amounts for Messrs. Lawson and Kirkpatrick and Ms. Smith were earned based on our achievement of certain performance goals, including total revenue, base revenue, gross margin and non-GAAP operating income, in accordance with our 2015 Bonus Plan. Since the 2015 Bonus Plan was terminated effective July 1, 2015, each of our named executive officers received a pro-rata portion of his or her 2015 bonus under the plan.



Narrative

(7)
Mr. Hu joined our Company on February 28, 2017 and was therefore not a named executive officer for 2016 or 2015. Mr. Hu's 2017 salary was pro-rated to Summary Compensation Table

Base Salaries

        For the year ended December 31, 2016, the annual base salaries for each of Messrs. Lawson and Kirkpatrick andhis start date.



(8)
In June 2017, Ms. Smith were $133,700, $380,000received a special, one-time cash bonus in recognition of her services and $337,500 respectively.
contributions to us as our interim Chief People Officer during the period between May 2016 to June 2017.



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        ForGrants of Plan-Based Awards Table

        The following table sets forth certain information with respect to all plan-based awards granted to the named executive officers during the fiscal year endedending December 31, 2015,2017.

																			All Other Option Awards: Number of Securities Underlying Options (#)
							Estimated Future Payouts Under Equity Incentive Plan Awards(1)									All Other Stock Awards: Number of Shares of Stock or Units (#)						Exercise or Base Price of Option Awards ($/sh)
																									Grant Date Fair Value of Option Awards ($)(2)
Name		Type of Award		Grant Date			Threshold ($)			Target ($)			Maximum ($)
Jeff Lawson		Time-Based Stock Option			2/10/2017			—			—			—			—			163,890	(3)		31.96			2,499,093
		Time-Based RSUs			2/10/2017			—			—			—			87,271	(4)		—			—			2,789,181
Lee Kirkpatrick		Time-Based Stock Option			2/10/2017			—			—			—			—			95,056	(3)		31.96			1,449,471
		Time-Based RSUs			2/10/2017			—			—			—			50,617	(4)		—			—			1,617,719
George Hu		Time-Based Stock Option			2/28/2017			—			—			—			—			900,000	(3)		31.72			11,744,100
		Performance-Based Stock Option			2/28/2017			—			185,000	(5)		—			—			—			31.72			2,493,800
		Performance-Based Stock Option			2/28/2017			—			185,000	(5)		—			—			—			31.72			1,898,100
		Performance-Based Stock Option			2/28/2017			—			185,000	(5)		—			—			—			31.72			1,555,850
		Time-Based RSUs			2/28/2017			—			—			—			100,000	(4)		—			—			3,172,000
Karyn Smith		Time-Based Stock Option			2/10/2017			—			—			—			—			59,000	(3)		31.96			899,667
		Time-Based RSUs			2/10/2017			—			—			—			31,417	(4)		—			—			1,004,087

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(1)

The performance-based stock options do not have a "Threshold" or "Maximum". The "Target" column reflects the annual base salaries for eachnumber of Messrs. Lawsonperformance-based stock options that may vest assuming all performance conditions are achieved.



(2)

The amounts reported in this column represent the aggregate grant date fair value of the RSUs and Kirkpatrick and Ms. Smith priorstock options, as applicable, awarded to July 1, 2015 were $235,000, $275,000 and $250,000, respectively. Effective July 1, 2015, the annual base salaries for each of Messrs. Lawson and Kirkpatrick and Ms. Smith were increased to $480,000, $380,000 and $337,500, respectively. While our compensation committee recommended an increasenamed executive officer in Mr. Lawson's annual base salary, Mr. Lawson requested that it be decreased. Therefore Mr. Lawson's annual base salary was subsequently decreased to $133,700, effective November 1, 2015, in accordance with his request.

Annual Bonuses

        During the fiscal year ended December 31, 2016, we did2017, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not paytake into account any cash bonusesestimated forfeitures related to service-vesting conditions. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included our Annual Report on Form 10-K filed with the SEC on March 1, 2018. The amounts reported in this column reflect the accounting cost for these RSUs and stock options, as applicable, and do not correspond to the actual economic value that may be received by the named executive officers since our compensation committee discontinued our cash bonus plan in 2015 (as described below).

        Duringupon the fiscal year ended December 31, 2015, we maintained a 2015 Bonus Plan, which we terminated effective July 1, 2015. Prior to the terminationvesting or settlement of the 2015 Bonus Plan, forRSUs or the first halfexercise of fiscal year 2015 (from January 1, 2015 through June 30, 2015), eachthe stock options or sale of our named executive officers was eligible to receive a pro-rata portionthe shares of an annual bonus based on our achievementcommon stock underlying such stock options, as applicable. Mr. Hu's 2017 amount includes the aggregate grant date fair value of certain performance goals, consisting of total revenue, base revenue, gross margin and non-GAAP operating income, pursuant to our 2015 Bonus Plan. Our compensation committee had sole discretion to determine the calculations of total revenue, base revenue, gross margin and non-GAAP operating income; provided, that such calculations were determined in a reasonable manner. Bonus amounts may not have been increased at the discretion of our compensation committee. For fiscal year 2015, the target annual bonuses for Messrs. Lawson and Kirkpatrick and Ms. Smith were eachhis performance-based stock options, equal to 35%an aggregate grant date fair value of $5,947,750, based upon the probable outcome of the applicable named executive officer's base salary. Based onperformance conditions, which is the Company's achievement ofmaximum outcome.



(3)

The stock option is subject to time-based vesting, as described in the relevant performance goals under the 2015 Bonus Plan, our compensation committee determined that the bonuses would be paid at 100% of target for each named executive officer. Such amount was then pro-ratedfootnotes to reflect the fact that the bonus was paid for less than a full year's performance. As a result of the termination of the 2015 Bonus Plan, which was unrelated to the performance of our named executive officers, each of our named executive officers received an increase in annual base salary during the fiscal year ended December 31, 2015 (as described above).

Equity Compensation

        During the fiscal year ended December 31, 2016, we granted RSUs to each of our named executive officers, as shown in more detail in the "Outstanding Equity Awards at Fiscal 2016 Year-End Table" below.

        Prior



(4)

The RSUs are subject to fiscal 2016, we granted only optionstime-based vesting, as described in the footnotes to purchase shares of our common stock to each of our named executive officers, as shown in more detail in the "Outstanding Equity Awards at Fiscal 2016 Year-End Table" below.

401(k) Plan

        We maintain a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Plan participants are able to defer eligible compensation



(5)

The stock option is subject to applicable annual Code limits. We haveperformance-based vesting, as described in the ability to make discretionary contributionsfootnotes to the 401(k) plan but have not done so to date. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan's related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.

"Outstanding Equity Awards at Fiscal Year-End Table" below.




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Health and Welfare Benefits

        Our named executive officers are eligible to participate in all of our employee benefit plans, including our medical, dental, life and disability insurance plans, in each case on the same basis as other employees of the same status.

Perquisites and Personal Benefits

        We generally do not provide perquisites or personal benefits to our named executive officers.

Outstanding Equity Awards at Fiscal 2016 Year-End Table

        The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2016:2017. Except as described below, all stock options and RSUs are subject to certain vesting acceleration provisions as provided in our Amended and Restated Executive Severance Plan (and for our Chief Operating Officer, in such plan as well as his employment offer letter).

					Option Awards(1)(2)											Stock Awards(1)(2)										Option Awards(1)(2)															Stock Awards(1)(2)
Name		Grant date			Number of securities underlying unexercised options (#) exerciseable			Number of securities underlying unexercised options (#) unexerciseable		Option exercise price ($)(3)			Option expiration date			Number of shares or units of stock that have not vested (#)			Market value of shares or units of stock that have not vested ($)(4)				Grant date			Number of securities underlying unexercised options (#) exercisable			Number of securities underlying unexercised options (#) unexercisable			Equity incentive plan awards: number of securities underlying unexercised unearned options (#)			Option exercise price ($)(3)			Option expiration date			Number of shares or units of stock that have not vested (#)			Market value of shares or units of stock that have not vested ($)(4)
Jeff Lawson			12/31/2015			316,667	(5)	—			10.09			12/30/2025			—			—				12/31/2015			316,667	(5)		—			—			10.09			12/30/2025			—			—
Chief Executive Officer and			2/4/2016			—		—			—			—			154,375	(6)	$	4,453,719				2/10/2017			—			163,890	(6)		—			31.96			2/9/2027			—			—
Chairperson																								2/4/2016			—			—			—			—			—			106,875	(7)	$	2,522,250
																								2/10/2017			—			—			—			—			—			87,271	(8)	$	2,059,596
Lee Kirkpatrick			5/17/2012			516,525	(7)	—			1.24			05/16/2022			—			—				5/17/2012			387,076	(9)		—			—			1.24			05/16/2022			—			—
Chief Financial Officer			12/31/2015			175,000	(8)	—			10.09			12/30/2025			—			—				12/31/2015			175,000	(10)		—			—			10.09			12/30/2025			—			—
																								2/10/2017			—			95,056	(6)		—			31.96			2/9/2027			—			—
																								2/4/2016			—			—			—			—			—			43,750	(11)	$	1,032,500
																								2/10/2017			—			—			—			—			—			50,617	(8)	$	1,194,561
George Hu																								2/28/2017			—			900,000	(12)		—			31.72			2/27/2027			—			—
Chief Operating Officer																								2/28/2017			—			—			555,000	(13)		31.72			2/27/2024			—			—
			2/4/2016			—		—			—			—			72,917	(9)	$	2,103,655				2/28/2017			—			—			—			—			—			100,000	(14)	$	2,360,000
Karyn Smith			10/29/2014			215,458	(10)	—			4.73			10/28/2024			—			—				10/29/2014			198,952	(15)		—			—			4.73			10/28/2024			—			—
General Counsel			12/31/2015			51,765	(11)	—			10.09			12/30/2025			—			—				12/31/2015			36,069	(16)		—			—			10.09			12/30/2025			—			—
			2/4/2016			—		—			—			—			24,430	(6)	$	704,806				2/10/2017			—			59,000	(6)		—			31.96			2/9/2027			—			—
																								2/4/2016			—			—			—			—			—			16,913	(7)	$	399,147
																								2/10/2017			—			—			—			—			—			31,417	(8)	$	741,441

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(1)

Each equity award wasEquity awards granted prior to June 21, 2016 were granted pursuant to our 2008 Stock Option Plan or(as amended and restated, the "2008 Plan"). Each stock option under the 2008 Plan. Each stock optionPlan is immediately exercisable. To the extent a named executive officer exercises his or her option2008 Plan stock options prior to vesting, the shares of our common stock that he or she will receive will be unvested and subject to the Company's right of repurchase, which will lapse in accordance with the original vesting schedule of the stock option. No named executive officer has early exercised his or her stock options.



(2)

Unless otherwise described in the footnotes below, the vesting of each equity award on a vesting date is subject to the equity award holder's provision of serviceapplicable named executive officer's continued employment with the Company through such vesting date.



(3)

This column represents the fair market value of a share of our common stock on the date of the grant, as determined by the administrator of our board of directors.2008 Plan or 2016 Plan, as applicable.



(4)

This column represents the market value of the shares of our Class A common stock underlying the RSUs as of December 30, 2016,31, 2017, based on the closing price of our Class A common stock, as reported on theThe New York Stock Exchange, of $28.85$23.60 per share on December 30, 2016.29, 2017 (the last trading day of 2017). These values assume that the fair market value of the Class B common stock underlying certain of the RSUs, which is not listed or approved for trading on or with any securities exchange or association, is equal to the fair market value of our Class A common stock.



(5)

The shares subject to the stock option vest in equal monthly installments over 48 months following January 15, 2016. In the event of a "change in control," as defined in the applicable option agreement, where the successor corporation assumes or substitutes the option, if Mr. Lawson is terminated by us without "cause," as defined in the applicable option agreement, or he resigns for "good reason," as defined in the applicable option agreement, in each case within the period beginning 30 days prior to and ending 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.



(6)

The shares underlyingsubject to the stock option vest as follows: 1/4th of the shares vested on January 1, 2018 and 1/48th of the shares vest monthly thereafter.



(7)

The RSUs will vest in sixteen equal quarterly installments following January 15, 2016.



(7)(8)

25%The RSUs vest as follows: 13/48 of the RSUs vested on February 15, 2018, after which 1/16 of the RSUs vest quarterly for the next 11 quarters, with 1/24 of the RSUs vesting in the next quarter thereafter.



(9)

The shares subject to the stock option vest as follows: 25% of the shares vested on May 7, 2013 and 1/48^th48th of the shares subject to the option will vest on the seventh day of each month thereafter. In the event of a "change in control," as defined in the 2008 Plan, if Mr. Kirkpatrick is subject to an "involuntary termination," as defined in Mr. Kirkpatrick's offer letter, within 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.



(8)(10)

The shares subject to the stock option vest in equal monthly installments over 34 months following June 15, 2016. In the event of a "change in control," as defined in the applicable option agreement, where the successor corporation assumes or substitutes the option, if Mr. Kirkpatrick is terminated by us without "cause," as defined in the applicable option agreement, or he resigns for "good reason," as defined in the applicable option agreement, in each case within the period beginning 30 days prior to and ending 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.



(9)(11)

The shares underlying the RSUs will vest in twelve equal quarterly installments following June 15, 2016.



(12)

The shares subject to the stock option vest as follows: 25% of the shares vested on February 28, 2018 and the remaining shares vest in equal monthly installments over the following three years.



(13)

Consists of three performance-based stock options, each to purchase 185,000 shares of our Class A common stock. 50% of the shares subject to each stock option will vest if a certain pre-established target level tied to the Company's revenue is achieved by a certain specified date. The remaining 50% of the shares subject to each stock option will thereafter vest in 24 equal monthly installments. If the Company's revenue




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(10)

25% of

target for the applicable performance-based stock option is not achieved by the applicable date, then the 185,000 shares subject to the stock option will be forfeited at such time.

(14)

The RSUs vest as follows: 25% of the RSUs vested on February 28, 2018 and the remaining RSUs vest in equal quarterly installments over the following three years, in each case on May 15, August 15, November 15 and February 15.



(15)

The shares subject to the stock option vest as follows: 25% of the shares vested on September 2, 2015 and 1/48^th48th of the shares subject to the option will vest on the second day of each month thereafter. In the event of a transfer of the Company where the successor corporation assumes or substitutes the option, if Ms. Smith is terminated by us without "cause," as defined in Ms. Smith's offer letter, or she resigns for "good reason," as defined in Ms. Smith's offer letter, in each case within 12 months following such transfer, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.



(11)(16)

The shares subject to the stock option vest in equal monthly installments over 48 months following January 15, 2016. In the event of a "change in control," as defined in the applicable option agreement, where the successor corporation assumes or substitutes the option, if Ms. Smith is terminated by us without "cause," as defined in the applicable option agreement, or she resigns for "good reason," as defined in the applicable option agreement, in each case within the period beginning 30 days prior to and ending 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.

        In February 2017,2018, our board of directorscompensation committee approved athe grant of a stock option to purchase shares of our Class A common stock and a grant of RSUs to each of our named executive officers. Such stock options and RSUs are subject to time-based vesting conditions and full acceleration of vesting ifonly upon both a change in control of the applicableCompany plus a qualifying termination of employment in accordance with our Amended and Restated Executive Severance Plan.

Option Exercises and Stock Vested Table

        The following table presents, for each of the named executive officer is either terminated by us for any reason other than for "cause" (as defined inofficers, the applicable award agreement), death or disability, or resigns for "good reason" (as defined inshares of our common stock that were acquired upon the applicable award agreement), in each caseexercise of stock options and vesting of RSUs and the related value realized during the period beginning 30 days priorfiscal year ending December 31, 2017.

		Option Awards						Stock Awards
Name		Number of Shares Acquired on Exercise (#)			Value Realized on Exercise ($)(1)(2)			Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)(1)(3)
Jeff Lawson			—			—			47,500			1,425,713
Lee Kirkpatrick			129,449			3,608,441			29,167			825,575
George Hu			—			—			—			—
Karyn Smith			32,202			693,984			7,517			225,622

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(1)

These values assume that the fair market value of the Class B common stock underlying certain of the stock options and RSUs, which is not listed or approved for trading on or with any securities exchange or association, is equal to and ending 12 months after,the fair market value of our Class A common stock. Each share of Class B common stock is convertible into one share of Class A Common Stock at any time at the option of the holder or upon certain transfers of such shares.



(2)

The aggregate value realized upon the exercise of a stock option represents the difference between the aggregate market price of the shares of our Class A common stock or Class B common stock (which is assumed to be equal to our Class A common stock as described in footnote (1) above), as applicable, on the date of a "changeexercise and the aggregate exercise price of the stock option.



(3)

The aggregate value realized upon the vesting and settlement of the RSUs represents the aggregate market price of the shares of our Class A common stock or Class B common stock (which is assumed to be equal to our Class A common stock as described in control" (as defined infootnote (1) above), as applicable, on the applicable award agreement).

date of settlement.

Employment Agreements or Offer Letters with Named Executive Officers

        WePrior to our initial public offering, we initially entered into employment offer letters with each of theour named executive officers, except for Mr. Lawson,our Chief Executive Officer, in connection with his or her employment with us, which set forth the terms and conditions of employment of each individual, including his or her initial base salary, initial target annual bonus opportunity and standard employee benefit plan participation. In addition, these employment offer letters provided for certain payments and benefits in the event of an involuntary termination of employment following a change in control of




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the Company. In connection with our initial public offering, we adopted an executive severance plan, orwhich was subsequently amended and restated (i.e., the Amended and Restated Executive Severance Plan,Plan), in order to provide more standardized severance benefits to our named executive officers and to supersede and replace any existing severance arrangements with benefits that were aligned with our peer group practices. For named executive officers hired after our initial public offering, we did not provide for any severance or change in control payments or benefits in their employment offer letters (except for limited vesting acceleration provisions in our Chief Operating Officer's employment offer letter). Each of theour named executive officers, including Mr. Lawson, will participateour Chief Executive Officer and Chief Operating Officer, is a participant in the Amended and Restated Executive Severance Plan, as further described below. The Amended and Restated Executive Severance Plan provides for certain payments and benefits in the event of a termination of employment, including an involuntary termination of employment in connection with a change in control of the Company, and replaced the severance provisions in theour named executive officers' employment offer letters and award agreements, if any.any, entered into prior to our initial public offering.

Jeff Lawson

        We have not entered into an employment offer letter or employment agreement with Mr. Lawson.

Lee Kirkpatrick

        On April 24, 2012, we entered into an employment offer letter with Mr. Kirkpatrick, who currently serves as our Chief Financial Officer. The employment offer letter provided for Mr. Kirkpatrick's at-will employment and set forth his initial annual base salary, target bonus and an initial option grant, as well as his eligibility to participate in our benefit plans generally. Mr. Kirkpatrick is subject to our standard employment, confidential information, invention assignment and arbitration agreement.

        On February 13, 2018, we announced that Mr. Kirkpatrick had informed us and our board of directors of his decision to retire from the Company. To ensure an orderly transition and continuity of operations, Mr. Kirkpatrick is expected to continue to serve as Chief Financial Officer until his successor is found and has moved into the role. The search process has begun and is expected to be completed before the end of the fiscal year.

George Hu

        On February 28, 2017, we entered into an employment offer letter with Mr. Hu, who currently serves as our Chief Operating Officer. The employment offer letter provided for Mr. Hu's at-will employment and set forth his initial annual base salary and initial stock option and RSU grants, as well as his eligibility to participate in our benefit plans generally. Details regarding Mr. Hu's initial stock option and RSU grants are described above in the section titled "Executive Summary—Executive Compensation Highlights—Appointment of Chief Operating Officer" above. Pursuant to the employment offer letter, we also agreed to provide Mr. Hu with reimbursements for his legal fees in connection with the negotiation of such employment offer letter, up to a maximum aggregate amount of $25,000. Mr. Hu is subject to our standard employment, confidential information, invention assignment and arbitration agreement.

        The equity award agreements for Mr. Hu's time-based stock option and time-based RSUs provide that if his employment is terminated by us for any reason other than for "cause" (as such term is defined in his employment offer letter), death or disability or he resigns for "good reason" (as such term is defined in his employment offer letter) (each, a "Termination Event"), in either case, within the first two years of his employment with us, then, subject to his delivery of an effective release of claims in our favor, the vesting of such awards will be accelerated to the extent necessary to cause 50% of the




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original number of shares subject to each such award to be vested on the date of such termination of employment.

        The stock option agreements for Mr. Hu's performance-based stock options provide that if a Termination Event occurs within the first two years of his employment with us, then, subject to his delivery of an effective release of claims in our favor, the vesting of such stock options will be accelerated to the extent that the applicable Company revenue targets are within a certain percentage of attainment as of the end of the quarter in which such termination occurs. Upon a "Sale Event" (as such term is defined in the 2016 Plan), the applicable performance condition will be deemed met with respect to any outstanding performance-based stock options, such that 50% of the shares subject thereto will vest and the other 50% of the shares subject thereto will be subject to time-based vesting in 24 equal monthly installments thereafter, subject to Mr. Hu's continued employment with the Company or its successor through each applicable vesting date.

Karyn Smith

        On July 30, 2014, we entered into an employment offer letter with Ms. Smith, who currently serves as our General Counsel. The employment offer letter provided for Ms. Smith's at-will employment and set forth her initial annual base salary, target bonus and an initial option grant, as well as her eligibility to participate in our benefit plans generally. The offer letter also provided Ms. Smith with the following severance




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benefits if she is terminated by us without "cause," as defined in the offer letter, or she resigns for "good reason," as defined in the offer letter, each on or within 12 months following a "change in control," as defined in the offer letter, subject to the delivery of an effective release of claims in favor of the Company and its affiliates: (i) a lump sum cash payment equal to three months' base salary; and (ii) up to three months of Company-paid monthly premiums for COBRA continuation. Ms. Smith is subject to our standard employment, confidential information, invention assignment and arbitration agreement.

Potential Payments Upon Termination or Change in Control

Amended and Restated Executive Severance Plan

        The Amended and Restated Executive Severance Plan provides that upon a termination of employment by us for any reason other than for "cause,""cause" (as defined in the Amended and Restated Executive Severance Plan except that for our Chief Operating Officer, "cause" will be as defined in the Executive Severance Plan,his employment offer letter), death or disability, in each case, outside of the change in control period (i.e., the period beginning 30 daysthree months prior to and ending 12 months after, a "change in control," as defined in the Amended and Restated Executive Severance Plan), an eligible participant will be entitled to receive, subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to nine months of base salary for our Chief Executive Officer, and six months of base salary for theour other participants,named executive officers, and (ii) a monthly cash payment equal to our contribution towards COBRA health insurance for up to nine months for our Chief Executive Officer and up to six months for theour other participants.named executive officers.

        The Amended and Restated Executive Severance Plan also provides that upon a (i) termination of employment by us other than fordue to cause, death or disability or (ii) a resignation of employment for "good reason,"reason" (as defined in the Amended and Restated Executive Severance Plan except that for our Chief Operating Officer, "good reason" will be as defined in the Executive Severance Plan,his employment offer letter), in each case, within the change in control period, an eligible participant will be entitled to receive, in lieu of the payments and benefits above and subject to the execution and delivery of an effective release of claims in favor of the Company, (i)(1) a lump sum cash payment equal to 18 months of base salary for our Chief Executive Officer and 12 months of base salary for theour other participants, (ii)named executive officers, (2) a monthly cash payment equal to our contribution towards COBRA health insurance for up to 18 months for our Chief Executive Officer and up to 12 months for theour other participantsnamed executive officers and (iii)(3) full accelerated vesting of all outstanding and unvested equity awardawards held by such participant;our named executive officers; provided, that the performance conditions applicable to any unvested and outstanding equitystock-based awards subject to performance conditions will be deemed satisfied at the target levelslevel specified in the terms of the applicable award agreements.agreement.




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        The payments and benefits provided under the Amended and Restated Executive Severance Plan in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Internal Revenue Code. These payments and benefits may also subject an eligible participant, including the named executive officers, to an excise tax under Section 4999 of the Internal Revenue Code. If the payments or benefits payable to an eligible participant in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to him or her.

Other Change in Control and Severance Arrangements

        In addition to participation in the Amended and Restated Executive Severance Plan, Mr. Hu's equity awards are also subject to certain acceleration of vesting provisions, as described in "Employment Agreements or Offer Letters with Named Executive Officers—George Hu" above.

        The following table presents information concerning estimated payments and benefits that would be provided in the circumstances described above for each of the named executive officers serving as of the end of the fiscal year ending December 31, 2017. The payments and benefits set forth below are estimated assuming that the termination or change in control event occurred on the last business day of our fiscal year ending December 31, 2017. Actual payments and benefits could be different if such events were to occur on any other date or at any other price or if any other assumptions are used to estimate potential payments and benefits.

		Qualifying Termination Not in Connection with a Change in Control(1)												Qualifying Termination in Connection with a Change in Control(2)
Name		Cash Severance ($)			Continued Benefits ($)			Equity Acceleration ($)(3)			Total ($)			Cash Severance ($)			Continued Benefits ($)			Equity Acceleration ($)(3)(4)			Total ($)
Jeff Lawson			100,275	(5)		14,090	(6)		—			114,365			200,550	(7)		28,179	(8)		7,255,704			7,484,433
Lee Kirkpatrick			250,000	(9)		7,574	(10)		—			257,574			500,000	(11)		15,148	(12)		3,339,664			3,854,812
George Hu(14)			300,000	(9)		9,393	(10)		1,180,000	(13)		1,489,393			600,000	(11)		18,786	(12)		2,360,000			2,978,786
Karyn Smith			200,000	(9)		5,609	(10)		—			205,609			400,000	(11)		11,217	(12)		2,411,941			2,823,158

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(1)

A "qualifying termination" means a termination other than due to cause, death or disability and "not in connection with a change in control" means outside of the change in control period.



(2)

A "qualifying termination" means a termination other than due to cause, death or disability or a resignation for good reason and "in connection with a change in control" means within the change in control period.



(3)

Represents the market value of the shares underlying the stock options and RSUs as of December 31, 2017, based on the closing price of our Class A common stock, as reported on The New York Stock Exchange, of $23.60 on December 29, 2017 (the last trading day of 2017). These values assume that the fair market value of the Class B common stock underlying certain of the stock options and RSUs, which is not listed or approved for trading on or with any securities exchange or association, is equal to the fair market value of our Class A common stock. Each share of Class B common stock is convertible into one share of Class A common stock at any time at the option of the holder or upon certain transfers of such shares.



(4)

Represents acceleration of vesting of 100% of the total number of shares underlying outstanding and unvested stock options and RSUs. Because the per share exercise price of certain stock options granted in 2017 was greater than the fair market value of a share of our Class A common stock on December 29, 2017 ($23.60) (the last trading day of 2017), no amounts have been included with respect to such stock options.



(5)

Represents nine months of our Chief Executive Officer's annual base salary.



(6)

Represents nine months of our contribution towards COBRA health insurance, based on our actual costs to provide health insurance to our Chief Executive Officer immediately prior to termination.



(7)

Represents 18 months of our Chief Executive Officer's annual base salary.



(8)

Represents 18 months of our contribution towards COBRA health insurance, based on our actual costs to provide health insurance to our Chief Executive Officer immediately prior to termination.



(9)

Represents six months of the applicable named executive officer's annual base salary.



(10)

Represents six months of our contribution towards COBRA health insurance, based on our actual costs to provide health insurance to the applicable named executive officer immediately prior to termination.




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(11)

Represents 12 months of the applicable named executive officer's annual base salary.



(12)

Represents 12 months of our contribution towards COBRA health insurance, based on our actual costs to provide health insurance to the applicable named executive officer immediately prior to termination.



(13)

Assumes the occurrence of a Termination Event in accordance with Mr. Hu's employment offer letter and represents acceleration of vesting as of December 31, 2017 of the following: (i) 50% of the total number of shares underlying Mr. Hu's time-based stock options and time-based RSUs outstanding as of December 31, 2017 and (ii) 100% of one of Mr. Hu's three performance-based stock options, since Mr. Hu was within a certain percentage of attaining the applicable performance condition for such stock option as of the end of the quarter in which such termination occurs. Because the per share exercise price of Mr. Hu's time-based and performance-based stock options was greater than the fair market value of a share of our Class A common stock as of December 29, 2017 ($23.60) (the last trading day of 2017), no amount has been included with respect to such stock options.



(14)

Pursuant to Mr. Hu's employment offer letter, in the event of a "Sale Event" (as such term is defined in the 2016 Plan) while Mr. Hu is still employed by us, the performance conditions under his performance-based stock options will be deemed met with respect to any outstanding performance-based stock options and will result in acceleration of vesting of 50% of the underlying shares, with the remaining 50% of the shares subject to time-based vesting in 24 equal monthly installments thereafter, subject to Mr. Hu's continued employment with the Company or its successor through each applicable vesting date. Because the per share exercise price of Mr. Hu's performance-based stock options was greater than the fair market value of a share of our common stock on December 29, 2017 ($23.60) (the last trading day of 2017), assuming the occurrence of a "Sale Event" (as such term is defined in the 2016 Plan), the value of the acceleration of vesting of 50% of the shares subject to such performance-based stock option would have been $0 as of December 31, 2017.


COMPENSATION COMMITTEE REPORT


        TheOur compensation committee has reviewed and discussed the section titled "Executive Compensation""Compensation Discussion and Analysis" with management. Based on such review and discussion, theour compensation committee has recommended to the board of directors that the section titled "Executive Compensation""Compensation Discussion and Analysis" be included in this proxy statement.

        Respectfully submitted by the members of theour compensation committee of the board of directors:

Compensation Committee

Elena Donio (Chair)
JimJames McGeever
Erika Rottenberg




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EQUITY COMPENSATION PLAN INFORMATION


        The following table provides information as of December 31, 20162017 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.

Plan Category		(a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights			(b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights			(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))				(a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights			(b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights			(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Equity compensation plans approved by stockholders(1)			16,681,100	(2)	$	6.1379	(3)		13,795,409	(4)			10,710,427	(2)	$	11.4167	(3)		12,678,532	(4)
Equity compensation plans not approved by stockholders			—			—			—				—			—			—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total			16,681,100		$	6.1379			13,795,409				10,710,427		$	11.4167			12,678,532
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

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(1)

Includes the following plans: our 2008 Stock Option Plan, as amended and restated, or 2008 Plan, our 2016 Stock Option and Incentive Plan, or 2016 Plan, and our 2016 Employee Stock Purchase Plan, or ESPP.



(2)

Excludes 2,031,8245,665,459 shares that may be issued under restricted stock unit awardsRSUs as of December 31, 2016.2017.



(3)

Excludes 2,031,8245,665,459 shares that may be issued under restricted stock unit awardsRSUs as of December 31, 2016.2017 since such shares subject to RSU awards have no exercise price.



(4)

As of December 31, 2016,2017, a total of 11,482,40015,862,427 shares of our Class A common stock have beenwere reserved for issuance pursuant to the 2016 Plan, which number excludes the 4,362,4274,698,490 shares that were added to the 2016 Plan as a result of the automatic annual increase on January 1, 2017.2018. The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase each January 1, beginning on January 1, 2017, by 5% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. The shares of Class A and Class B common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated, other than by exercise, under the 2016 Plan and the 2008 Plan will be added back to the shares of Class A common stock available for issuance under the 2016 Plan (provided, that any such shares of Class B common stock will first be converted into shares of Class A common stock). The Company no longer makes grants under the 2008 Plan. As of December 31, 2016,2017, a total of 2,400,0002,478,343 shares of our Class A common stock have been reservedwere available for future issuance pursuant to the ESPP, which number includes shares subject to purchase during the current purchase period, which commenced on November 16, 2017 (the exact number of which will not be known until the purchase date on May 15, 2018) but excludes the 872,485939,698 shares that were added to the ESPP as a result of the automatic annual increase on January 1, 2017.2018. Subject to the number of shares remaining in the share reserve, the maximum number of shares purchasable by any participant on any one purchase date for any purchase period, including the current purchase period may not exceed 5,000 shares. The ESPP provides that the number of shares reserved and available for issuance under the ESPP will automatically increase each January 1, beginning on January 1, 2017, by the lesser of 1,800,000 shares of our Class A common stock, 1% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.




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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


        The following table sets forth certain information available to us with respect to the beneficial ownership of our capital stock as of March 31, 2017,2018, for:

•

each of our named executive officers;



•

each of our directors;



•

all of our current directors and executive officers as a group; and



•

each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our Class A or Class B common stock.

        We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable.

        We have based our calculation of percentage ownership of our common stock on 61,549,59771,748,415 shares of our Class A common stock and 28,658,03223,943,253 shares of our Class B common stock outstanding on March 31, 2017.2018. We have deemed shares of our capital stock subject to stock options that are currently exercisable or exercisable within 60 days of March 31, 20172018 to be outstanding and to be beneficially owned by the person holding the stock option for the purpose of computing the percentage ownership of that person. We have deemed shares of our capital stock subject to restricted stock unitsRSUs for which the service condition has been satisfied or would be satisfied within 60 days of March 31, 20172018 to be outstanding and to be beneficially owned by the person holding the restricted stock unitsRSUs for the purpose of computing the percentage ownership of that person. However, we did not deem these shares subject to stock options or restricted stock unitsRSUs outstanding for the purpose of computing the percentage ownership of any other person.




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        Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Twilio Inc., 375 Beale Street, Suite 300, San Francisco, California 94105.

		Shares Beneficially Owned
		Class A						Class B
														Voting %†
Name of Beneficial Owner		Shares			%			Shares			%						Ownership %
Named Executive Officers and Directors:
Jeff Lawson(1)			—			—			7,489,166			25.8			21.3			8.3
Lee Kirkpatrick(2)			4,535			*			714,563			2.4			2.0			*
Karyn Smith(3)			—			—			281,989			1.0			*			*
Richard Dalzell(4)			—			—			147,500			*			*			*
Byron Deeter(5)			176,181			*			11,310,389			39.5			32.5			12.7
Elena Donio(6)			—			—			12,302			*			*			*
James McGeever(7)			—			—			412,883			1.4			1.2			*
Scott Raney(8)			—			—			2,028,411			7.1			5.8			2.2
Erika Rottenberg			—			—			—			—			—			—
All executive officers and directors as a group (9 persons)(9):			180,716			*			22,397,203			74.5			61.9			24.6
5% Stockholders:
Bessemer Venture Partners and Related Entities(10)			—			—			11,310,389			39.5			32.5			12.5
Entities affiliated with Redpoint(11)			—			—			2,028,411			7.1			5.8			2.2
Entities affiliated with Fidelity(12)			5,067,582			8.2			—			—			1.5			5.6
T. Rowe Price(13)			9,811,600			15.9			—			—			2.8			10.9

		Shares Beneficially Owned
		Class A						Class B
														Voting %†
Name of Beneficial Owner		Shares			%			Shares			%						Ownership %
Named Executive Officers and Directors:
Jeff Lawson(1)			194,450			*			7,506,069			30.9			23.9			8.0
Lee Kirkpatrick(2)			145,633			*			500,603			2.0			1.6			*
George Hu(3)			284,786			*			—			—			*			*
Karyn Smith(4)			29,813			*			211,062			*			*			*
Richard Dalzell(5)			—			—			120,000			*			*			*
Byron Deeter(6)			230,142			*			9,253,955			38.6			29.8			9.9
Elena Donio(7)			—			—			22,262			*			*			*
Jeff Epstein(8)			13,486			*			—			—			*			*
James McGeever(9)			10,000			*			412,883			1.7			1.3			*
Erika Rottenberg(10)			—			—			15,163			*			*			*
All executive officers and directors as a group (10 persons)(11):			908,310			1.3			18,041,997			71.9			56.1			19.5
5% Stockholders:
Bessemer Venture Partners and Related Entities(12)			—			—			9,253,955			38.6			29.7			9.7
Entities affiliated with Fidelity(13)			6,477,055			9.0			—			—			2.1			6.8
The Vanguard Group(14)			5,445,927			7.6			—			—			1.8			5.7
BlackRock, Inc.(15)			4,091,535			5.7			—			—			1.3			4.3
The Bank of New York Mellon(16)			3,900,747			5.4			—			—			1.3			4.1
John Wolthuis(17)			—			—			2,238,474			9.3			7.2			2.3

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*

Represents beneficial ownership of less than one percent (1%) of the outstanding shares.



†

Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class A common stock are entitled to one vote per share, and holders of our Class B common stock are entitled to ten votes per share.



(1)

Consists of (i) 6,097,090115,281 shares of Class A common stock held of record by Mr. Lawson, as trustee of the Lawson Revocable Trust, (ii) 6,113,993 shares of Class B common stock held of record by Mr. Lawson, as trustee of the Lawson Revocable Trust, (ii)(iii) 323,170 shares of Class B common stock held of record by The Lawson 2014 Irrevocable Trust, J.P. Morgan Trust Company, as trustee, (iii)(iv) 740,364 shares of Class B common stock held of record by Mr. Lawson, as trustee of the Lawson 2014 GRAT, (iv)(v) 67,353 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2018, (vi) 316,667 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of March 31, 20172018, (vii) 11,816 shares of Class A common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2018 and (v) (viii)11,875 shares of Class B common stock issuable upon the settlement of Restricted Stock Units ("RSUs")RSUs releasable within 60 days of March 31, 2017.2018.



(2)

Consists of (i) 4,535110,785 shares of Class A common stock held of record by Mr. Kirkpatrick as Trustee of the Kirkpatrick Family Trust, (ii) 48,48731,685 shares of Class BA common stock held of record by Mr. Kirkpatrick and (iii) 666,076 shares of Class B Common stock subject to outstanding options that are exercisable within 60 days of March 31, 2017.2018, (iii) 500,603 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of




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March 31, 2018 and (iv) 3,163 shares of Class A common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2018.

(3)

Consists of (i) 12,8871,004 shares of Class A common stock held of record by Mr. Hu, (ii) 268,513 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2018, (iii) 15,269 shares of Class A common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2018.



(4)

Consists of (i) 2,412 shares of Class A common stock held of record by Ms. Smith, (ii) 1,172 shares of Class B common stock held of record by Ms. Smith, as trustee of The Karyn Smith Revocable Trust u/a/d 9/15/06, amended 12/23/11, (ii) 267,223(iii) 23,514 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2018, (iv) 208,011 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of March 31, 20172018, (v) 3,887 shares of Class A common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2018 and (iii)(vi) 1,879 shares of Class B common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2017.2018.



(4)(5)

Consists of 147,500120,000 shares of Class B common stock subject to outstanding options that are exercisable by Mr. Dalzell within 60 days of March 31, 2017.2018.



(5)(6)

Consists of (i) 176,181230,142 shares of Class A common stock held by Byron B. Deeter and Allison K. Deeter Trustees UTD July 28, 2000 and (ii) shares held by the BVP entities identified in footnote 10.12. Byron B. Deeter, one of our directors, Robert P. Goodman, Jeremy S. Levine, J. Edmund Colloton, David J. Cowan and Robert M. Stavis are the directors of Deer VII & Co. Ltd. ("Deer VII Ltd.") and hold the voting and dispositive power for the BVP Entities identified in footnote 10.12. Investment and voting decisions with respect to the shares held by the BVP entities are made by the directors of Deer VII Ltd. acting as an investment committee. Mr. Deeter, a member of our board of directors, disclaims beneficial ownership of such shares held by the BVP Entities except to the extent of his pecuniary interest in such shares.



(6)(7)

Consists of (i) 9,81219,772 shares of Class B common stock held of record by Ms. Donio and (ii) 2,490 shares of Class B common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2017.2018.



(7)(8)

Consists of 13,486 shares of Class A common stock held of record by Mr. Epstein.



(9)

Consists of (i) 10,000 shares of Class A common stock held of record my Mr. McGeever, as trustee of the James and Linda McGeever Revocable Trust, (ii) 199,470 shares of Class B common stock held of record by Mr. McGeever and (ii) 213,413 shares of Class B common stock held of record by The James and Linda McGeever Revocable Trust.






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(8)(10)

Consists of (i) 12,978 shares of Class B common stock held of record by Ms. Rottenberg and (ii) 2,185 shares of Class B common stock issuable upon the Redpoint Entities identified in footnote 11. Mr. Raney, onesettlement of our directors, is oneRSUs releasable within 60 days of the managing directors of Redpoint Omega II, LLC and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega II, L.P. Mr. Raney is one of the managers of Redpoint Omega Associates II and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega Associates II.March 31, 2018.



(9)(11)

Consists of: (i) 180,716483,110 shares of Class A common stock held of record, (ii) 20,983,49316,878,287 shares of Class B common stock held of record, (iii) 1,397,466391,065 shares of Class A common stock subject to outstanding stock options that are exercisable within 60 days of March 31, 2018, (iv) 1,145,281 shares of Class B common stock subject to outstanding stock options that are exercisable within 60 days of March 31, 20172018, (v) 34,135 shares of Class A common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2018 and (iv) 16,244(vi) 18,429 shares of Class B common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2017.2018.



(10)(12)

Consists of (i) 1,552,6771,270,372 shares of Class B common stock held of record by Bessemer Venture Partners VII Institutional L.P., (ii) 5,988,9004,900,009 shares of Class B common stock held of record by BVP VII Special Opportunity Fund L.P., (iii) 3,548,9752,903,707 shares of Class B common stock held of




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record by Bessemer Venture Partners VII L.P. and (iv) 219,837179,867 shares of Class B Common stock held of record by 15 Angels LLC, a wholly owned subsidiary of Bessemer Venture Partners VII Institutional L.P. (collectively, the "BVP Entities"). Each of Deer VII & Co. L.P. ("Deer VII L.P"), the general partner of the BVP Entities, and Deer VII & Co. Ltd. ("Deer VII Ltd."), the general partner of Deer VII L.P., has voting and dispositive power over the shares held by the BVP Entities. J. Edmund Colloton, David J. Cowan, Byron B. Deeter, Robert P. Goodman, Jeremy S. Levine and Robert M. Stavis are the directors of Deer VII Ltd. Investment and voting decisions with respect to the shares held by the BVP Entities are made by the directors of Deer VII Ltd. acting as an investment committee. The address for each of these entities is c/o Bessemer Venture Partners, 1865 Palmer Avenue, Suite 104, Larchmont, New York 10538.

(11)

Consists of (i) 60,851 shares of Class B common stock held of record by Redpoint Omega Associates II, LLC and (ii) 1,967,560 shares of Class B common stock held of record by Redpoint Omega II, LP (collectively, the "Redpoint Entities"). Redpoint Omega II, LLC is the general partner of Redpoint Omega II, LP. Mr. Raney, one of our directors, is one of the managing directors of Redpoint Omega II, LLC and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega II, LP. Mr. Raney is one of the managers of Redpoint Omega Associates II, LLC and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega Associates II, LLC.

(12)(13)

Based on information reported by FMR LLC on Schedule 13G filed with the SEC on February 14, 2017.January 10, 2018. Of the shares of Class A common stock beneficially owned, FMR LLC reported that it has sole dispositive power with respect to 5,067,5826,477,055 shares and sole voting power with respect to 210,419121,110 shares. FMR LLC listed its address as 245 Summer Street, Boston, Massachusetts 02210.



(13)(14)

Based on information reported by T. Rowe Price Associates, Inc. and T. Rowe Price New Horizons Fund, Inc.The Vanguard Group on Schedule 13G filed with the SEC on March 10, 2017.February 9, 2018. Of the shares of Class A common stock beneficially owned, T. Rowe Price AssociatesThe Vanguard Group reported that it has sole dispositive power with respect to 9,811,6005,313,201 shares, shared dispositive power with respect to 132,726 shares, sole voting power with respect to 122,957 shares and shared voting power with respect to 14,600 shares. The Vanguard Group listed their address as 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.



(15)

Based on information reported by BlackRock, Inc. on Schedule 13G filed with the SEC on February 1, 2018. Of the shares of Class A common stock beneficially owned, BlackRock, Inc. reported that it has sole dispositive power with respect to 4,091,535 shares and sole voting power with respect to 2,044,6553,969,655 shares. BlackRock, Inc. listed their address as 55 East 52^nd Street, New York, New York 10055.



(16)

Based on information reported by The Bank of New York Mellon on Schedule 13G filed with the SEC on February 7, 2018. Of the shares and T. Rowe Priceof Class A common stock beneficially owned, The Bank of New Horizons Fund, Inc.York Mellon reported that it has sole dispositive power with respect to 3,870,047 shares, shared dispositive power with respect to 30,700 shares, sole voting power with respect to 5,122,2283,697,977 shares and shared voting power with respect to 26,950 shares. T. Rowe Price Associates Inc., and T. Rowe PriceThe Bank of New Horizons Fund, Inc.York Mellon listed their address as 100 E. Pratt225 Liberty Street, Baltimore, Maryland 21202.New York, New York 10286.



(17)

Based on information reported by John Wolthuis on Schedule 13G filed with the SEC on February 12, 2018.




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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS


        In addition to the compensation arrangements, including employment, termination of employment and change in control arrangements, discussed in the section titled "Executive Compensation" the following is a description of each transaction since the beginning of our last fiscal year, and each currently proposed transaction in which:

•

we have been or are to be a participant;



•

the amount involved exceeded or exceeds $120,000; and



•

any of our directors, executive officers, or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.

Investors' Rights Agreement

        We are party to an investors' rights agreement which provides, among other things, that certain holders of our capital stock have the right to demand that we file a registration statement or request that their shares of our capital stock be covered by a registration statement that we are otherwise filing. The parties to the investors' rights agreement include entities affiliated with Jeff Lawson and James McGeever, both our current directors, Evan Cooke, a former director, and entities affiliated with Fidelity, Bessemer Venture Partners, Redpoint Ventures and Union Square Ventures.

Other Transactions

        We have granted stock options and RSUs to our named executive officers and certain of our directors. See the section titled "Executive Compensation—Individual Compensation Arrangements—Long-Term Incentive Compensation" and "Executive Compensation—Outstanding Equity Awards at 2016 Year-End Table" for a description of these stock options and RSUs.

        We have entered into severance and change in control agreementsarrangements with certain of our executive officers pursuant to employment offer letters and/or our change in control severance policyplan that, among other things, provides for certain severance and change in control payments and benefits. See the sectionsections titled "Executive Compensation—Executive Severance Plan.Post-Employment Compensation Arrangements" and "Executive Compensation—Potential Payments Upon Termination or Change in Control."

        Other than as described above under this section titled "Certain Relationships and Related Party Transactions," since January 1, 2016,2017, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related party where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will have a direct or indirect material interest. We believe the terms of the transactions described above were comparable to terms we could have obtained in arm's-length dealings with unrelated third parties.

Indemnification of Officers and Directors

        Our amended and restated certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:

•

any breach of their duty of loyalty to our Company or our stockholders;



•

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;




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•

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or



•

any transaction from which they derived an improper personal benefit.




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        Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.

        In addition, our amended and restated bylaws provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. Our amended and restated bylaws provide that we may indemnify our employees and agents to the fullest extent permittednot prohibited by law any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trustDelaware General Corporation Law or other enterprise.applicable law. Our amended and restated bylaws also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to limited exceptions.

        Further, we have entered into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

        The limitation of liability and indemnification provisions that are included in our amended and restated certificate of incorporation, amended and restated bylaws and in indemnification agreements that we have entered into with our directors and executive officers may discourage stockholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

        We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law.

        Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our board of directors.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our Company pursuant to the foregoing provisions, we have




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been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.




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Policies and Procedures for Related Party Transactions

        Our audit committee has the primary responsibility for reviewing and approving or disapproving "related party transactions," which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. Our policy regarding transactions between us and related persons will provide that a related person is defined as a director, executive officer, nominee for director or greater than 5% beneficial owner of our Class A and Class B common stock, in each case since the beginning of the most recently completed year, and any of their immediate family members. Our audit committee charter provides that our audit committee shall review and approve or disapprove any related party transactions.




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OTHER MATTERS


Section 16(A) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our executive officers and directors, and persons who own more than 10% of our common stock, file reports of ownership and changes of ownership with the SEC. Such directors, executive officers and 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

        SEC regulations require us to identify in this proxy statement anyone who filed a required report late during the most recent year. Based on our review of forms we received, or written representations from reporting persons stating that they were not required to file these forms, we believe that during 2016,2017, all Section 16(a) filing requirements were satisfied on a timely basis, except that one form to report the conversion of Class B common stock to Class A common stock by Union Square Ventures 2008 LP was filed late because of an inadvertent administrative error. Such late filings did not result in any liability under Section 16(b) of the Securities Exchange Act of 1934, as amended.basis.

20162017 Annual Report and SEC Filings

        Our financial statements for the year ended December 31, 20162017 are included in our annual report on Form 10-K, which we will make available to stockholders at the same time as this proxy statement. Our annual report and this proxy statement are posted on our website at https://investors.twilio.com and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to Investor Relations, Twilio Inc., 375 Beale Street, Suite 300, San Francisco, California 94105.

*                *                *

        The board of directors does not know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have discretion to vote shares they represent in accordance with their own judgment on such matters.

        It is important that your shares be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the enclosed proxy card or execute and return, at your earliest convenience, the enclosed proxy card in the envelope that has also been provided.

		THE BOARD OF DIRECTORS
		San Francisco, California April 24, 201727, 2018




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APPENDIX A


TWILIO INC.

2016 STOCK OPTIONKEY BUSINESS METRICS AND INCENTIVE PLANNON-GAAP FINANCIAL MEASURE INFORMATION


        Set forth below in this Appendix A is important information about how we measure Base Revenue, Active Customer Accounts and other key business metrics as well as a reconciliation of our non-GAAP to GAAP financial measures.

SECTION 1.Number of Active Customer Accounts    GENERAL PURPOSE OF THE PLAN; DEFINITIONS

        The nameWe believe that the number of our Active Customer Accounts is an important indicator of the plan isgrowth of our business, the Twilio Inc. 2016 Stock Optionmarket acceptance of our platform and Incentive Plan (the "Plan"). The purposefuture revenue trends. We define an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, for which we have recognized at least $5 of revenue in the last month of the Plan is to encourage and enableperiod. We believe that the officers, employees, Non-Employee Directors and Consultantsuse of Twilio Inc. (the "Company") and its Subsidiaries upon whose judgment, initiative and effortsour platform by our customers at or above the Company largely depends for the successful conduct of its businesses to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company and its stockholders, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company.

        The following terms shall be defined as set forth below:

"Act" means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

"Administrator" means either the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation committee and which is comprised of not less than two Non-Employee Directors who are independent.

"Award" or"Awards," except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights.

"Award Certificate" means a written or electronic document setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.

"Board" means the Board of Directors of the Company.

"Cash-Based Award" means an Award entitling the recipient to receive a cash-denominated payment.

"Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

"Consultant" means any natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities.

"Covered Employee" means an employee who$5 per month threshold is a "Covered Employee" within the meaningstronger indicator of Section 162(m)potential future engagement than trial usage of the Code.

"Dividend Equivalent Right" means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to whichour platform or usage at levels below $5 per month. A single organization may constitute multiple unique Active Customer Accounts if it relates) if such shares had been issued to and held by the grantee.

"Effective Date" means the date on which the Plan becomes effective as set forth in Section 21.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

"Fair Market Value" of the Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator; provided, however, that if the Stock is admitted to




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quotation on the New York Stock Exchange (the "NYSE") or another national securities exchange, the determination shall be made by reference to market quotations. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations; provided further, however, that if the date for which Fair Market Value is determined is the first day when trading prices for the Stock are reported on the NYSE or another national securities exchange, the Fair Market Value shall be the "Price to the Public" (or equivalent) set forth on the cover page for the final prospectus relating to the Company's Initial Public Offering.

"Incentive Stock Option" means any Stock Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code.

"Initial Public Offering" means the first underwritten, firm commitment public offering pursuant to an effective registration statement under the Act covering the offer and sale by the Company of its equity securities, or such other event as a result of or following which the Stock shall be publicly held.

"Non-Employee Director" means a member of the Board who is not also an employee of the Company or any Subsidiary.

"Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option.

"Option" or"Stock Option" means any option to purchase shares of Stock granted pursuant to Section 5.

"Performance-Based Award" means any Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award granted to a Covered Employee that is intended to qualify as "performance-based compensation" under Section 162(m) of the Code and the regulations promulgated thereunder.

"Performance Criteria" means the criteria that the Administrator selects for purposes of establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle. The Performance Criteria (which shall be applicable to the organizational level specified by the Administrator, including, but not limited to, the Company or a unit, division, group, or Subsidiary of the Company) that will be used to establish Performance Goals are limited to the following: sales or revenue or bookings; sales or revenue or bookings mix; sales or market shares; expense; margins; operating efficiency; earnings before interest, taxes, depreciation and amortization; net income (loss) (either before or after interest, taxes, depreciation and/or amortization); operating income (loss); earnings (loss) per share of Stock; working capital; operating cash flow (funds from operations) and free cash flow; customer satisfaction, Net Promoter Score; customer churn; number of customers; customer retention and expansion; return on sales, gross or net profit levels; return on capital, assets, equity, or investment; changes in the market price of the Stock; total shareholder return; quality and reliability; productivity; economic value-added; and acquisitions or strategic transactions, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The Committee may appropriately adjust any evaluation performance under a Performance Criterion to exclude any of the following events that occurs during a Performance Cycle: (i) asset write-downs or impairments, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reporting results, (iv) accruals for reorganizations and restructuring programs, and (v) any item of an unusual nature or of a type that indicates infrequency of occurrence, or both, including those described in the Financial Accounting Standards Board's authoritative guidance and/or in management's discussion and analysis of financial condition of operations appearing the Company's annual report to stockholders for the applicable year.

"Performance Cycle" means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantee's right to and the payment of a




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Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award, the vesting and/or paymenthas multiple account identifiers, each of which is subjecttreated as a separate Active Customer Account.

        In the years ended December 31, 2017, 2016 and 2015, revenue from Active Customer Accounts represented over 99% of total revenue in each period.

Base Revenue

        We monitor Base Revenue as one of the more reliable indicators of future revenue trends. Base Revenue consists of all revenue other than revenue from large Active Customer Accounts that have never entered into 12-month minimum revenue commitment contracts with us, which we refer to as Variable Customer Accounts. While almost all of our customer accounts exhibit some level of variability in the attainmentusage of oneour products, based on our experience, we believe that Variable Customer Accounts are more likely to have significant fluctuations in usage of our products from period to period, and therefore that revenue from Variable Customer Accounts may also fluctuate significantly from period to period. This behavior is best evidenced by the decision of such customers not to enter into contracts with us that contain minimum revenue commitments, even though they may spend significant amounts on the use of our products and they may be foregoing more favorable terms often available to customers that enter into committed contracts with us. This variability adversely affects our ability to rely upon revenue from Variable Customer Accounts when analyzing expected trends in future revenue.

        For historical periods through March 31, 2016, we defined a Variable Customer Account as an Active Customer Account that (i) had never signed a minimum revenue commitment contract with us for a term of at least 12 months and (ii) had met or more Performance Goals. Eachexceeded 1% of our revenue in any quarter in the periods presented through March 31, 2016. To allow for consistent period-to-period comparisons, in the event a customer account qualified as a Variable Customer Account as of March 31, 2016, or a previously Variable Customer Account ceased to be an Active Customer Account as of such date, we included such customer account as a Variable Customer Account in all periods presented. For reporting periods starting with the three months ended June 30, 2016, we define a Variable Customer Account as a customer account that (a) has been categorized as a Variable Customer Account in any prior quarter, as well as (b) any new customer account that (i) is with a customer that has never signed a minimum revenue commitment contract with us for a term of at least 12 months and (ii) meets or exceeds 1% of our revenue in a quarter. Once a customer account is deemed to be a Variable Customer Account in any period, shall not be less thanit remains a Variable Customer Account in subsequent periods unless such customer enters into a minimum revenue commitment contract with us for a term of at least 12 months.

        "Performance Goals" means, for a Performance Cycle,In the specific goals established in writing by the Administrator for a Performance Cycle based upon the Performance Criteria.

"Performance Share Award" means an Award entitling the recipient to acquire sharesyears ended December 31, 2017, 2016 and 2015, we had six, eight and nine Variable Customer Accounts, which represented 8%, 11% and 18% , respectively, of Stock upon the attainment of specified performance goals.

"Restricted Shares" means the shares of Stock underlying a Restricted Stock Award that remain subject to a risk of forfeiture or the Company's right of repurchase.

"Restricted Stock Award" means an Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.

"Restricted Stock Units" means an Award of stock units subject to such restrictions and conditions as the Administrator may determine at the time of grant.

"Sale Event" shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company's outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company's outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.

        "Sale Price" means the value as determined by the Administrator of the consideration payable, or otherwise to be received by stockholders, per share of Stock pursuant to a Sale Event.

"Section 409A" means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

"Stock" means the Class A common stock, par value $0.001 per share, of the Company, subject to adjustments pursuant to Section 3.

"Stock Appreciation Right" means an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.

"Subsidiary" means any corporation or other entity (other than the Company) in which the Company has at least a 50 percent interest, either directly or indirectly.

"Ten Percent Owner" means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation.

"Unrestricted Stock Award" means an Award of shares of Stock free of any restrictions.our total revenue.




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SECTION 2.    ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDSNon-GAAP Financial Measures

        (a)    Administration of Plan.    The Plan shall be administered by the Administrator.

        (b)    Powers of Administrator.    The Administrator shall have        We use the powerfollowing non-GAAP financial information, collectively, to evaluate our ongoing operations and authority to grant Awards consistent with the terms of the Plan, including the powerfor internal planning and authority:

          (i)  to select the individuals to whom Awards may from time to time be granted;

         (ii)  to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;

        (iii)  to determine the number of shares of Stock to be covered by any Award;

        (iv)  to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the forms of Award Certificates;

         (v)  to accelerate at any time the exercisability or vesting of all or any portion of any Award;

        (vi)  subject to the provisions of Section 5(c), to extend at any time the period in which Stock Optionsforecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be exercised;helpful to investors because it provides consistency and

       (vii)  at any time comparability with past financial performance, facilitates period-to-period comparisons of results of operations, and assists in comparisons with other companies, many of which use similar non-GAAP financial information to adopt, altersupplement their GAAP results. Non-GAAP financial information is presented for supplemental informational purposes only, and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

        All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.

        (c)    Delegation of Authority to Grant Awards.    Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer or a committee comprised of the Chief Executive Officer and one or more other officer of the Company, all or part of the Administrator's authority and duties with respect to the granting of Awards to individuals who are (i) not subject to the reporting and other provisions of Section 16 of the Exchange Act and (ii) not Covered Employees. Any such delegation by the Administrator shall include a limitation as to the amount of Stock underlying Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator's delegate or delegates that were consistent with the terms of the Plan.

        (d)    Award Certificate.    Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service terminates.

        (e)    Indemnification.    Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable




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attorneys' fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company's articles or bylaws or any directors' and officers' liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.

        (f)    Non-U.S. Award Recipients.    Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.

SECTION 3.    STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

        (a)    Stock Issuable.    The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 11,500,000 shares (the "Initial Limit"), plus on January 1, 2017 and each January 1 thereafter, the number of shares of Stock reserved and available for issuance under the Plan shall be cumulatively increased by 5 percent of the number of shares of Class A and Class B common stock of the Company issued and outstanding on the immediately preceding December 31 or such lesser number of shares of Stock as determined by the Administrator in its sole discretion (the "Annual Increase"), subject, in each case, to adjustment as provided in Section 3(c). Subject to such overall limitation, the maximum aggregate number of shares of Stock that may be issued in the form of Incentive Stock Options shall not exceed the Initial Limit cumulatively increased on January 1, 2017 and on each January 1 thereafter by the lesser of the Annual Increase for such year or 5,750,000 shares of Stock, subject in all cases to adjustment as provided in this Section 3. For purposes of this limitation, the shares of Stock underlying any Awards under the Plan or the shares of Class B common stock of the Company under the Company's 2008 Stock Option Plan, as amended and restated, that are forfeited, canceled, held back upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan (provided, that any such shares of Class B common stock of the Company shall first be converted to shares of Class A common stock of the Company). In the event the Company repurchases shares of stock on the open market, such shares shallshould not be added to the shares of Stock availableconsidered a substitute for issuance under the Plan. Subject to such overall limitations, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that Stock Options or Stock Appreciation Rights with respect to no more than 11,500,000 shares of Stock may be granted to any one individual grantee during any one calendar year period. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.

        (b)    Maximum Awards to Non-Employee Directors.    Notwithstanding anything to the contrary in this Plan, the value of all Awards awarded under this Plan and all other cash compensation paid by the Company to any Non-Employee Director in any calendar year shall not exceed $750,000. For the purpose of this limitation, the value of any Award shall be its grant date fair value, as determinedfinancial information presented in accordance with ASC 718 or successor provision but excluding the impact of estimated forfeitures related to service-based vesting provisions.




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        (c)    Changes in Stock.    Subject to Section 3(d) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company's capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, including the maximum number of shares thatgenerally accepted accounting principles, and may be issued in the form of Incentive Stock Options, (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual grantee and the maximum number of shares that may be granted underdifferent from similarly-titled non-GAAP measures used by other companies. Whenever we use a Performance-Based Award, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price, if any, per share subject to each outstanding Restricted Stock Award, and (v) the exercise price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable. The Administrator shall also make equitable or proportionate adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may makenon-GAAP financial measure, a cash payment in lieu of fractional shares.

        (d)    Mergers and Other Transactions.    In the case of and subjectreconciliation is provided to the consummation of a Sale Event, the parties thereto may cause the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree. To the extent the parties to such Sale Event do not provide for the assumption, continuation or substitution of Awards, upon the effective time of the Sale Event, the Plan and all outstanding Awards granted hereunder shall terminate. In the event of such termination, except as may be otherwise provided in the relevant Award Certificate, all Options and Stock Appreciation Rights with time-based vesting, conditions or restrictions that are not vested and/or exercisable immediately prior to the effective time of the Sale Event shall become fully vested and exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event, and all Awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with a Sale Event in the Administrator's discretion or to the extent specified in the relevant Award Certificate. In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation Rights; or (ii) each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights (to the extent then exercisable) held by such grantee. The Company shall also have the option (in its sole discretion) to




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make or provide for a payment, in cash or in kind, to the grantees holding other Awards in an amount equal to the Sale Price multiplied by the number of vested shares of Stock under such Awards.

SECTION 4.    ELIGIBILITY

        Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.

SECTION 5.    STOCK OPTIONS

        (a)    Award of Stock Options.    The Administrator may grant Stock Options under the Plan. Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.

        Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a "subsidiary corporation" within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.

        Stock Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionee's election, subject to such terms and conditions as the Administrator may establish.

        (b)    Exercise Price.    The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the option price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date.

        (c)    Option Term.    The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than ten years after the date the Stock Option is granted. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.

        (d)    Exercisability; Rights of a Stockholder.    Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. The Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.

        (e)    Method of Exercise.    Stock Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods except to the extent otherwise provided in the Option Award Certificate:

          (i)  In cash, by certified or bank check or other instrument acceptable to the Administrator;

         (ii)  Through the delivery (or attestation to the ownership following such procedures as the Company may prescribe) of shares of Stock that are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date;

        (iii)  By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check




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payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or

        (iv)  With respect to Stock Options that are not Incentive Stock Options, by a "net exercise" arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.

Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his steadmost closely applicable financial measure stated in accordance with generally accepted accounting principles. Investors are encouraged to review the provisions of the Stock Option) by the Company of the full purchase price for such sharesrelated GAAP financial measures and the fulfillmentreconciliation of any other requirements contained in the Option Award Certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligatedthese non-GAAP financial measures to withhold with respect to the optionee). In the event an optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.their most directly comparable GAAP financial measures.

        (f)    Annual Limit on Incentive Stock Options.    To the extent required for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

SECTION 6.    STOCK APPRECIATION RIGHTS

        (a)    Award of Stock Appreciation Rights.    The Administrator may grant Stock Appreciation Rights under the Plan. A Stock Appreciation Right is an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.

        (b)    Exercise Price of Stock Appreciation Rights.    The exercise price of a Stock Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant.

        (c)    Grant and Exercise of Stock Appreciation Rights.    Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.

        (d)    Terms and Conditions of Stock Appreciation Rights.    Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Administrator. The term of a Stock Appreciation Right may not exceed ten years.

SECTION 7.    RESTRICTED STOCK AWARDS

        (a)    Nature of Restricted Stock Awards.    The Administrator may grant Restricted Stock Awards under the Plan. A Restricted Stock Award is any Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established




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performance goals and objectives. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.

        (b)    Rights as a Stockholder.    Upon the grant of the Restricted Stock Award and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Shares and receipt of dividends; provided that if the lapse of restrictions with respect to the Restricted Stock Award is tied to the attainment of performance goals, any dividends paid by the Company during the performance period shall accrue and shall not be paid to the grantee until and to the extent the performance goals are met with respect to the Restricted Stock Award. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d) below, and (ii) certificated Restricted Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.

        (c)    Restrictions.    Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award Certificate. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, if a grantee's employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee's legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder. Following such deemed reacquisition of Restricted Shares that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.

        (d)    Vesting of Restricted Shares.    The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Shares and the Company's right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Shares and shall be deemed "vested."

SECTION 8.    RESTRICTED STOCK UNITS

        (a)    Nature of Restricted Stock Units.    The Administrator may grant Restricted Stock Units under the Plan. A Restricted Stock Unit is an Award of stock units that may be settled in shares of Stock upon the satisfaction of such restrictions and conditions at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. Except in the case of Restricted Stock Units with a deferred settlement date that complies with Section 409A, at the end of the vesting period, the Restricted Stock Units, to the extent vested, shall be settled in the form of shares of Stock. Restricted Stock Units with deferred settlement dates are subject to Section 409A and shall contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order to comply with the requirements of Section 409A.

        (b)    Election to Receive Restricted Stock Units in Lieu of Compensation.    The Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of future cash compensation otherwise due to such grantee in the form of an award of Restricted Stock Units. Any such election




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shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the Administrator. Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of Restricted Stock Units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the grantee if such payment had not been deferred as provided herein. The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate. Any Restricted Stock Units that are elected to be received in lieu of cash compensation shall be fully vested, unless otherwise provided in the Award Certificate.

        (c)    Rights as a Stockholder.    A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement of Restricted Stock Units; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the stock units underlying his Restricted Stock Units, subject to the provisions of Section 11 and such terms and conditions as the Administrator may determine.

        (d)    Termination.    Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee's right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantee's termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

SECTION 9.    UNRESTRICTED STOCK AWARDS

        Grant or Sale of Unrestricted Stock.Non-GAAP Loss from Operations and Non-GAAP Operating Margin    The Administrator may grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Stock Award under the Plan. An Unrestricted Stock Award is an Award pursuant to which the grantee may receive shares of Stock free of any restrictions under the Plan. Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.

SECTION 10.    CASH-BASED AWARDS

        Grant of Cash-Based Awards.    The Administrator may grant Cash-Based Awards under the Plan. A Cash-Based Award is an Award that entitles the grantee to a payment in cash upon the attainment of specified Performance Goals. The Administrator shall determine the maximum duration of the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Administrator shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Administrator. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash.

SECTION 11.    PERFORMANCE SHARE AWARDS

        (a)    Nature of Performance Share Awards.    The Administrator may grant Performance Share Awards under the Plan. A Performance Share Award is an Award entitling the grantee to receive shares of Stock upon the attainment of performance goals. The Administrator shall determine whether and to whom Performance Share Awards shall be granted, the performance goals,        For the periods during which performance ispresented, we define non-GAAP loss from operations and non-GAAP operating margin as GAAP loss from operations and GAAP operating margin, respectively, adjusted to be measured, which may not be less than one year except in the caseexclude stock-based compensation, amortization of a Sale Event,acquired intangibles, acquisition-related expenses, release of tax liability upon obligation settlement, charitable contribution, gain on lease termination and such other limitations and conditions as the Administrator shall determine.payroll taxes related to stock-based compensation.




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        (b)    Rights as a Stockholder.    A grantee receiving a Performance Share Award shall have the rights of a stockholder only as to shares of Stock actually received by the grantee under the Plan and not with respect to shares subject to the Award but not actually received by the grantee. A grantee shall be entitled to receive shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share Award Certificate (or in a performance plan adopted by the Administrator).

        (c)    Termination.    Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 18 below, in writing after the Award is issued, a grantee's rights in all Performance Share Awards shall automatically terminate upon the grantee's termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

SECTION 12.    PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

        (a)    Performance-Based Awards.    The Administrator may grant one or more Performance-Based Awards in the form of a Restricted Stock Award, Restricted Stock Units, Performance Share Awards or Cash-Based Award payable upon the attainment of Performance Goals that are established by the Administrator and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Administrator. The Administrator shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for any Performance Cycle. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual. Each Performance-Based Award shall comply with the provisions set forth below.

        (b)    Grant of Performance-Based Awards.    With respect to each Performance-Based Award granted to a Covered Employee, the Administrator shall select, within the first 90 days of a Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the Performance Criteria for such grant, and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award). Each Performance-Based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets. The Performance Criteria established by the Administrator may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to different Covered Employees.

        (c)    Payment of Performance-Based Awards.    Following the completion of a Performance Cycle, the Administrator shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-Based Awards earned for the Performance Cycle. The Administrator shall then determine the actual size of each Covered Employee's Performance-Based Award.

        (d)    Maximum Award Payable.    The maximum Performance-Based Award payable to any one Covered Employee under the Plan for a Performance Cycle is 11,500,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) or $5,000,000 in the case of a Performance-Based Award that is a Cash-Based Award.

SECTION 13.    DIVIDEND EQUIVALENT RIGHTS

        (a)    Dividend Equivalent Rights.    The Administrator may grant Dividend Equivalent Rights under the Plan. A Dividend Equivalent Right is an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other Award to which it relates) if such shares had been issued to the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee as a component of an award of Restricted Stock Units or Performance Share Award or as a freestanding award. The terms and conditions of




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Dividend Equivalent Rights shall be specified in the Award Certificate. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of an Award of Restricted Stock Units or Performance Share Award shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.

        (b)    Termination.    Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee's rights in all Dividend Equivalent Rights shall automatically terminate upon the grantee's termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

SECTION 14.    TRANSFERABILITY OF AWARDS

        (a)    Transferability.    Except as provided in Section 14(b) below, during a grantee's lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee's legal representative or guardian in the event of the grantee's incapacity. No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.

        (b)    Administrator Action.    Notwithstanding Section 14(a), the Administrator, in its discretion, may provide either in the Award Certificate regarding a given Award or by subsequent written approval that the grantee (who is an employee or director) may transfer his or her Non-Qualified Stock Options to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award. In no event may an Award be transferred by a grantee for value.

        (c)    Family Member.    For purposes of Section 14(b), "family member" shall mean a grantee's child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee's household (other than a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50 percent of the voting interests.

        (d)    Designation of Beneficiary.    To the extent permitted by the Company, each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee's death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee's estate.

SECTION 15.    TAX WITHHOLDING

        (a)    Payment by Grantee.    Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross




		Year Ended December 31,
		2017			2016
		(in thousands)
Reconciliation:
Loss from operations		$	(66,074	)	$	(41,315	)
Non-GAAP adjustments:
Stock-based compensation			49,619			24,225
Amortization of acquired intangibles			5,620			880
Acquisition-related expenses			310			499
Release of tax liability upon obligation settlement			(13,365	)		(805	)
Charitable contribution			1,172			3,860
Gain on lease termination			(295	)		—
Payroll taxes related to stock-based compensation			2,950			434
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Non-GAAP loss from operations		$	(20,063	)	$	(12,222	)
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Non-GAAP operating margin			(5	)%		(4	)%

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income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee and/or to direct that the proceeds from a sale of Stock on behalf of a grantee be paid over to the Company to satisfy any such tax withholding obligations. The Company's obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.

        (b)    Payment in Stock.    Subject to approval by the Administrator, a grantee may elect to have the Company's minimum required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount. For purposes of share withholding, the Fair Market Value of withheld shares shall be determined in the same manner as the value of Stock includible in income of the Participants.

SECTION 16.    SECTION 409A AWARDS

        To the extent that any Award is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A (a "409A Award"), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A. In this regard, if any amount under a 409A Award is payable upon a "separation from service" (within the meaning of Section 409A) to a grantee who is then considered a "specified employee" (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee's separation from service, or (ii) the grantee's death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

SECTION 17.    TERMINATION OF EMPLOYMENT, TRANSFER, LEAVE OF ABSENCE, ETC.

        (a)    Termination of Employment.    If the grantee's employer ceases to be a Subsidiary, the grantee shall be deemed to have terminated employment for purposes of the Plan.

        (b)   For purposes of the Plan, the following events shall not be deemed a termination of employment:

          (i)  a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or

         (ii)  an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.

SECTION 18.    AMENDMENTS AND TERMINATION

        The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder's consent. The Administrator is specifically authorized to exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect the repricing of such Awards through cancellation and re-grants. To the extent required under the rules of any securities exchange or market system on which the Stock is listed, to the extent determined by the




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Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code, or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 18 shall limit the Administrator's authority to take any action permitted pursuant to Section 3(c) or 3(d).

SECTION 19.    STATUS OF PLAN

        With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.

SECTION 20.    GENERAL PROVISIONS

        (a)    No Distribution.    The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.

        (b)    Delivery of Stock Certificates.    Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee's last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee's last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic "book entry" records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.

        (c)    Stockholder Rights.    Until Stock is deemed delivered in accordance with Section 20(b), no right to vote or receive dividends or any other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Option or any other action by the grantee with respect to an Award.




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        (d)    Other Compensation Arrangements; No Employment Rights.    Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.

        (e)    Trading Policy Restrictions.    Option exercises and other Awards under the Plan shall be subject to the Company's insider trading policies and procedures, as in effect from time to time.

        (f)    Clawback Policy.    Awards under the Plan shall be subject to the Company's clawback policy, as in effect from time to time.

SECTION 21.    EFFECTIVE DATE OF PLAN

        This Plan shall become effective upon the date immediately preceding the date on which the Company's Registration Statement on Form S-1 becomes effective. No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the Effective Date and no grants of Incentive Stock Options may be made hereunder after the tenth anniversary of the date the Plan is approved by the Board.

SECTION 22.    GOVERNING LAW

        This Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of California, applied without regard to conflict of law principles.




 

If you would like to reduce the costs incurred by our company in mailing proxy 1234567 VOTE BY MAIL 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For Withhold AllAll For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the The Board of Directors recommends you vote FOR the following: nominee(s) on the line below. 0 0 0 1. To elect two Class I directors to serve until the 2020 annual meeting of stockholders and until their successors are duly elected and qualified. Nominees 01 Richard Dalzell 02 Erika Rottenberg The Board of Directors recommends you vote FOR proposals 2 and 3. 2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017. 3. To ratify our 2016 Stock Option and Incentive Plan to preserve our ability to receive corporate income tax deductions that may become available pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended. For 0 0 Against 0 0 Abstain 0 0 NOTE: To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. John Sample attorney, executor, administrator, or other fiduciary, please give full TWILIO INC. 375 BEALE STREET, SUITE 300 SAN FRANCISCO, CALIFORNIA 94105 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000335295_1 R1.0.1.15 Please sign exactly as your name(s) appear(s) hereon. When signing as title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 1234 ANYWHERE STREET SHARES CUSIP # JOB #SEQUENCE #2345678 1234567 2345678 1234567 2345678 1234567 234567 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.1 OF 1 1 VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 John Sample 234567P.M.P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. 12345672 Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON CONTROL # SHARES 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS AA123,456,789,012.12345 THE COMPANY NAME INC. - CLASS BB123,456,789,012.12345 THE COMPANY NAME INC. - CLASS CC123,456,789,012.12345 THE COMPANY NAME INC. - CLASS DD123,456,789,012.12345 THE COMPANY NAME INC. - CLASS EE123,456,789,012.12345 THE COMPANY NAME INC. - CLASS FF123,456,789,012.12345 THE COMPA N Y NAME INC. - 401 K CONTROL #  SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345K123,456,789,012.12345 x PAGE1TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: PAGE 1 OF 2 TWILIO INC. 375 BEALE STREET, SUITE 300 SAN FRANCISCO, CALIFORNIA 94105KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY The Board of Directors recommends you vote FOR 0000000000 For Withhold For All 02 To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. 1. To elect three Class II directors to serve until the 2021 annual meeting of stockholders and until their successors are duly elected and qualified. Nominees 000 01 Byron Deeter 02 Jeffrey Epstein 03 Jeff Lawson The Board of Directors recommends you vote FOR proposals 2 and 3. ForAgainst Abstain 2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2018. 3. To approve, on a non-binding advisory basis, the compensation of our named executive officers. 000 000 NOTE: To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. The Board of Directors recommends you vote 1 YEAR for proposal 4. 1 year 2 years 3 years Abstain 0000380704_1 R1.0.1.17 non-binding stockholder advisory votes on the compensation of our named executive officers. 0000 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. JOB # John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567SHARES CUSIP # SEQUENCE # Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date



 




0000380704_2 R1.0.1.17 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/are available at www.proxyvote.com TWILIO INC. Annual Meeting of Stockholders June 12, 201714, 2018 9:00 AM Pacific Time This proxy is solicited by the Board of Directors The undersigned hereby appoints Jeff Lawson, Lee Kirkpatrick, and Karyn Smith as proxies and attorneys-in-fact of the undersigned, each with the power to act without the other and with the power of substitution, and hereby authorizes them to represent and vote, as designated on the reverse side of this ballot, all of the shares of Class A common stock and Class B common stock of Twilio Inc. (the "Company") standing in the name of the undersigned on April 17, 2017,16, 2018, with all powers which the undersigned would possess if present at the 20172018 Annual Meeting of Stockholders of the Company to be held on June 12, 201714, 2018 or at any adjournment, continuation, or postponement thereof. Receipt of the Notice of the 20172018 Annual Meeting of Stockholders and Proxy Statement and the 20162017 Annual Report is hereby acknowledged. This proxy, when properly executed, will be voted in the manner directed by you. If you do not haveprovide any direction, thethis proxy will be voted (i) "FOR"in accordance with the electionBoard of each of the nominees for director; (ii) "FOR" the ratification of KPMG LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2017; (iii) "FOR" the ratification of the Company's 2016 Stock OptionDirectors’ recommendations and Incentive Plan to preserve the Company's ability to receive corporate income tax deductions that may become available pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, and (iv) in the discretion of the proxies upon such other mattersbusiness as may properly come before the 2017 Annual Meeting of Stockholders.meeting or any adjournment or postponement thereof. Continued and to be signed on reverse side 0000335295_2 R1.0.1.15