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Filed by the Registrant ☒ | | | Filed by a party other than the Registrant ☐ |
☒ | | | No fee required |
☐ | | | Fee paid previously with preliminary materials |
☐ | | | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14A-6(i)(1) and 0-11 |
| | TWILIO INC. 101 Spear Street, Fifth Floor San Francisco, California 94105 |
| | Date June 6, 2024 | | | | | Time 8:30 a.m. Pacific Time | | | | | Virtually at www.virtualshareholder meeting.com/TWLO2024 | | | | | Record Date Close of Business on April 15, 2024 |
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| | 1. To elect the three Class | | |
| | 2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024; | | |
| | 3. To approve, on a non-binding advisory basis, the compensation of our named executive officers; | | |
| | 4. To indicate, on a non-binding advisory basis, the preferred frequency of future non-binding advisory votes to approve the compensation of our named executive officers; | | |
| | 5. To approve a management proposal to amend our certificate of incorporation to declassify the board of directors; and | | |
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By order of the board of directors, | | | | | ||
Dana Wagner Chief Legal Officer, Chief Compliance Officer and Corporate Secretary San Francisco, California April 26, 2024 | | | | | We appreciate your continued support of Twilio. |
2024 Proxy Statement | | | Twilio Inc. i |
| | By Phone 1-800-690-6903 Vote must be received by 8:59 p.m. Pacific Time, June | | | | | www.proxyvote.com Vote must be received by 8:59 p.m. Pacific Time, June | |||
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| | By Mail Return your completed proxy card in the prepaid envelope Vote must be received by 8:59 p.m. Pacific Time, June | | | | | www.virtualshareholdermeeting.com/ Vote must be submitted before the polls close during the Annual Meeting |
Business Overview We enable businesses of all sizes to revolutionize how they engage with their customers by delivering seamless, trusted and personalized customer experiences at scale. Our Over the past year and a half, amid an evolving operating environment, we took robust proactive action to better position our business
Leadership Transitions In January 2024, we appointed Khozema Shipchandler as our Chief Executive Officer, succeeding Jeff Lawson, our co-founder, who stepped down as Chief Executive Officer and as a member of our board of directors (the “CEO Transition”). Mr. Shipchandler had most recently served as President, Twilio Communications, where he successfully pivoted the business to optimize for profitable growth. Prior to serving in this role, Mr. Shipchandler served as Twilio’s Chief Operating Officer and Chief Financial Officer, and previously spent over two decades at General Electric Company (“General Electric”). This transition was part of our long-term leadership development and succession planning strategy, which is overseen by our compensation and talent management committee (“compensation committee”). Our succession planning process is further discussed in “Board of Directors and Corporate Governance—Executive Talent Management and Succession Planning”.
Contemporaneous with our CEO Transition, our board of directors separated the roles of Board Chair and Chief Executive Officer and appointed Jeff Epstein, an independent director and formerly our lead independent director, to fill the newly created role of Independent Board Chair. Our board structure is further discussed in “Board of Directors and Corporate Governance—Board Leadership Structure”. Financial Performance and Capital Allocation Our top priority is creating long-term value for our stockholders by driving Twilio towards durable, profitable growth. Our 2023 financial highlights include the following: Revenue of $4.15 billion, up 9% year-over-year. Communications revenue of $3.86 billion, up 9% year-over-year. Segment revenue of $295.3 million, up 7% year-over-year.
GAAP loss from operations of $876.5 million in 2023, compared with GAAP loss from operations of $1.21 billion in 2022.
Communications non-GAAP income from operations of $842.0 million. Segment non-GAAP loss from operations of $72.4 million. Net cash provided by operating activities of $414.8 million in 2023, compared with net cash used in operating activities of $254.4 million in 2022.
Reduced stock-based compensation expense as a percentage of revenue by over 450 basis points for 2023 as compared to 2022.
Additionally, as announced in connection with the conclusion of the operational review of Segment in March 2024, we accelerated our target timeline to achieve GAAP operating profitability on a consolidated basis to the fourth quarter of 2025 and we are targeting break-even non-GAAP income from operations for our Segment business by the second quarter of 2025. Given the strength of our balance sheet and the improving free cash flow generation in our business, in February 2023, our board of directors authorized a $1 billion share repurchase program, and in March 2024, our board of directors announced an additional $2 billion share repurchase program. As of March 31, 2024, we have completed over $1.05 billion of repurchases and we are targeting to complete the remaining authorization by the end of 2024. We believe that these capital return programs create value for stockholders while reducing dilution from stock-based compensation.
Our corporate governance practices are described in the section titled “Board of
Twilio is committed to strong corporate governance. We believe that robust corporate governance policies and practices are critical to the effective management of our business, helping ensure that our business functions at its best and serves the long-term interests of our stockholders. Since becoming a In January 2024, Khozema Shipchandler was appointed Chief Executive Officer, an appointment which reflected the In 2023, our dual class common stock structure was sunset, providing all stockholders with identical voting rights. We are also seeking stockholder approval at the Annual Meeting to An important consideration in all of our corporate governance decisions is stockholder feedback. In 2022 and We are committed to ensuring that our corporate governance practices, as part of our broader strategy and maturation process, best position Twilio for future success. We will continue to evaluate and evolve our corporate governance profile, taking into account the best interests of the
We have a robust, board-led stockholder engagement program that we use to ensure the perspectives of our stockholders are understood and incorporated into Twilio’s decision-making. Throughout the year, our board of directors and management regularly review and consider feedback received from our stockholders, including through meetings with stockholders, voting results, and other routine communications. Annual Stockholder Engagement Cycle In 2023, we enhanced our stockholder engagement program, shifting to a more regular outreach and feedback process in the spring and fall. This expanded dialogue facilitates transparency, helps us better understand the perspectives of our stockholders and allows our board of directors to make better-informed decisions throughout the year.
Response to Stockholder Feedback In the course of our discussions with stockholders, we have received valuable feedback on our business strategy and performance, compensation and corporate governance practices, and other matters, as summarized in the chart below. This feedback was conveyed to our full board of directors and relevant committees for consideration in their decision-making. Our consideration of the feedback from stockholders regarding our compensation of our named executive officers is further discussed in “Executive Compensation—Compensation Discussion and Analysis—Stockholder Engagement and Our Say-on-Pay Vote”.
Governance Matters As a company, we recognize the impact that a business can have on its surrounding community and environment, and we are committed to being a responsible corporate citizen. We also value our employees Board Oversight of ESG We are committed to Our nominating and corporate governance committee has primary responsibility for oversight of our ESG activities, programs and disclosure. Members of our management provide our nominating and corporate governance committee with formal updates on our ESG activities and programs. Our audit committee provides oversight of our enterprise risk management framework and processes. Our audit committee also oversees matters related to privacy, cybersecurity, and information and technology security, including reviewing the Our compensation committee oversees a range of
Board of Directors and Corporate Governance Our business and affairs are managed under the direction of a highly independent, experienced, qualified and diverse board of directors. Our board of directors, through our nominating and corporate governance committee, proactively evaluates its composition in the context of our company’s evolving business needs and has taken a thoughtful approach to board composition. Our board of directors and the nominating and corporate governance committee believe the skills, qualities, attributes, experience and diversity of backgrounds (including diversity of gender and race/ethnicity) of our directors provide us with the right range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders. Our board of directors also oversees our stockholder engagement program and reviews investor feedback, which allows us to better understand the perspectives of our stockholders and to take this feedback into account as we shape the composition of our board of directors.
Our board of directors currently consists of ten directors. Our board of directors will be reduced to nine directors, effective as of immediately prior to the Annual Meeting. All of our board members, other than Mr.
The following table sets forth the names, ages as of March 31,
Board Skills and Experience Matrix Our nominating and corporate governance committee periodically evaluates the composition of our board of directors
Continuing Directors
Our Class A common stock (“common stock”) is listed on the New York Stock Exchange (“NYSE”). Under the listing standards of the NYSE (the “NYSE Listing Standards”), independent directors must comprise a majority of a listed company’s board of directors. In addition, the NYSE Listing Standards require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Under the NYSE Listing Standards, a director will only qualify as an “independent director” if, in the opinion of that listed company’s board of directors, that director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Audit committee members must also satisfy the additional independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the NYSE Listing Standards. Compensation Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Messrs. Bell, Our board of directors periodically reviews its leadership structure. In January 2024, our board of directors decided that it would be in the best interests of our Company and our stockholders to separate the positions of board chair and Chief Executive Officer. As a result, the roles are currently separated, and Mr. Epstein, an independent director and formerly our lead independent director, is now serving as board chair. We believe that the structure of our board of directors, with Mr. In accordance with our corporate governance guidelines, if our board chair were not an independent director, our board of directors would appoint an independent director to serve as lead independent director. Independent Board Chair As board chair, Mr. Epstein presides over meetings of our board of directors, works with senior management to prepare agendas for such meetings, serves as a liaison to facilitate and promote communication between senior management and the board of directors, leads engagement with stockholders on behalf of the board, assists in the board’s oversight of key governance matters, and undertakes such additional duties as the board of directors determines. Mr. Epstein is an experienced director who has served as an empowered, independent voice on our board of directors since 2017. Having served as our lead independent director
Independent Directors and Committees Our board of directors believes that Mr. Epstein is a strong and effective board chair, serving as Our independent directors regularly meet in executive sessions led by the Only independent directors serve on the audit committee, the nominating and corporate governance committee and the compensation Our board of directors may establish the authorized number of directors from time to time by resolution. Our board of directors currently consists of ten members. Our board of directors will be reduced to nine directors, effective as of immediately prior to the Annual Meeting. During Although our Our board of directors has established an audit committee, a compensation and talent management committee and a nominating and corporate governance committee. The composition and responsibilities of each of the committees of our board of directors is described below. Members serve on these committees until their resignation or until as otherwise determined by our board of directors. Mr.
The board of directors has delegated to the nominating and corporate governance committee the responsibility of identifying suitable candidates for nomination to the board of directors (including candidates to fill any vacancies that may occur) and assessing their qualifications in light of the policies and principles in our corporate governance guidelines and the committee’s charter. The nominating and corporate governance committee uses a variety of methods for identifying and evaluating director nominees, including retaining a third-party search firm from time to time to identify and review candidates for membership on our board of directors. The nominating and corporate governance committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating and corporate governance committee deems to be appropriate in the evaluation process. The nominating and corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the board of directors. Based on the results of the evaluation process, the nominating and corporate governance committee recommends candidates for the board of directors’ approval as director nominees for election to the board of directors. We have a highly effective and engaged board of directors, and members of our board of directors are expected to prepare for, attend, and participate in all board of directors and applicable committee meetings and are encouraged to attend our annual meetings of stockholders. The board of directors does not believe that explicit limits on the number of other boards of directors on which the directors may serve, or on other activities the directors may pursue, are appropriate. Rather, we believe that our directors’ service on other companies’ boards enables them to contribute valuable knowledge and perspective to our board of directors. Nonetheless, the board of directors recognizes that carrying out the duties of a director requires a significant commitment of time and attention, and excessive time commitments—whether other board service or otherwise—may interfere with the ability to fulfill our board of director responsibilities. Our Our board of directors has delegated to our nominating and corporate governance committee the responsibility of identifying suitable candidates for nomination to our board of directors (including candidates to fill any vacancies that may occur) and assessing their qualifications in light of the policies and principles in our integrity, judgment and adherence to high personal ethics and character; demonstrated achievement and competence in their fields, business acumen, understanding of our business and industry, the ability to offer advice and guidance to our management team, the ability to make significant contributions to our success, and an understanding of the fiduciary responsibilities that are required of a director; diversity, including in breadth and quality of experience, personal and professional experience, expertise, skills, education and expertise; independence and potential conflicts of interest; and the scope and breadth of other commitments.
In addition to the above criteria, and although there are no further stated minimum criteria for director nominees, our nominating and corporate governance committee may also consider such other factors as it may deem, from time to time, Our nominating and corporate governance committee reviews the totality of the circumstances of each nominee and each board member to assess the ability of such individuals to devote the requisite time to fulfilling the responsibilities of service on our board of directors and applicable committees. Our nominating and corporate governance committee evaluates many factors when assessing the effectiveness and active involvement of each director, including the director’s attendance at board and committee meetings, participation and level of engagement during these meetings, the role played by the director on our board of directors, as well as on the other boards, including committee membership and chair designation, and the experience and expertise of the director, including both relevant industry experience and service on other public company boards, which enable the director to serve on multiple boards effectively. Annually, our nominating and corporate governance committee works with an outside advisor to conduct a comprehensive evaluation of our board of directors, its committees and its individual members. The evaluation aims (i) to find opportunities where our board of directors and committees can improve their performance and effectiveness, (ii) to assess any need to evolve the composition and expertise of our board of directors and (iii) to assure that our board of directors and committees are operating in accordance with our The nominating and corporate governance committee is responsible for designing the evaluation process and establishing the evaluation criteria. During the evaluation process, the outside advisor collects feedback from each director and members of our senior management team, and then the results of the evaluation and any recommendations for improvement are provided to our nominating and corporate governance committee and our board of directors. The board of directors and senior executives of the company review and discuss the evaluation results and any actions to be taken as a result of the discussion. Our board of directors, including our nominating and corporate governance committee,
Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, cybersecurity, legal and compliance, and reputational. We have designed and implemented processes to manage risk in our operations as part of our enterprise risk management
Cybersecurity and Information Security Risk Oversight Our board of directors recognizes the critical importance of maintaining the trust and confidence of our customers, clients, business partners and employees. Our board of directors is actively involved in oversight of our risk management program, and cybersecurity represents an important component of our overall approach to ERM. Our board of directors’ oversight of cybersecurity risk is supported by our audit committee, which regularly interacts with our ERM function, our Chief Digital Officer, our Chief Information Security Officer, other members of management, and relevant committees and working groups in its oversight of cybersecurity-related risks. Our board of directors, in coordination with our audit committee, is responsible for monitoring and assessing strategic risk exposure. Our audit committee Our board of directors values senior management development and views succession planning as critical to creating long-term stockholder value. In coordination with our Chief Executive Officer and other appropriate members of management, our compensation committee evaluates the performance of, and Our board of directors has adopted corporate governance guidelines that address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in Compliance and Ethics Our culture of integrity starts with our Furthermore, in order to promote a high standard of ethical and professional conduct within our company, we have engaged with an impartial third party to administer an ethics reporting hotline where, as permitted by law, employees, contractors, customers and vendors may address any issues on a confidential and anonymous basis. Employees may choose the method with which they are most comfortable to discuss any issues or complaints, whether it is through their manager, our human resources partners, or the reporting hotline. In addition, our
Under our third amended and bylaws, as well as the additional information required by Rule 14a-19(b) under the Exchange Act. In addition, For a stockholder or other interested party communication directed to an individual director, including our non-management directors, in his or her capacity as a member of the board of directors, We encourage stockholders to email any such communications to us at Non-Employee Director Compensation Policy We have adopted a compensation policy for our non-employee directors (as amended and restated from time to time, the “Non-Employee Director Compensation Policy”) to attract, retain and award these individuals and align their long-term interests with those of our company and our stockholders. Our non-employee directors are paid in the form of restricted stock units (“RSUs”) only and do not receive cash compensation. Employee directors receive no additional compensation for their service as a director. Decisions regarding the Non-Employee Director Compensation Policy are approved by our board of directors based on recommendations from our compensation During
For purposes of the amounts described in this section, the values are calculated as set forth in the Non-Employee Director Compensation Policy. For the aggregate grant date fair value of the RSUs awarded to the non-employee directors in Annual Equity Grant and Annual Equity Retainer For Each non-employee director also receives an annual equity retainer for board and committee membership, the values of which are as set forth below. The aggregate amount that each non-employee director receives for such director’s membership on our board of directors, as a member
The Annual Equity Grant and Annual Equity Retainer are granted in four quarterly installments over the course of the year that commences on the date of each annual meeting of stockholders, with such grants to be made on each of September 15, December 15, March 15, and the earlier of (i) June 15 or (ii) the day that is immediately prior to the next subsequent annual meeting of stockholders (each such date, a “Quarterly Date,” and each such grant, a “Quarterly Grant”). The value of each Quarterly Grant is equal to the value of the portion of the Annual Equity Retainer and Annual Equity Grant applicable to the period beginning on the day after the immediately preceding Quarterly Date and ending on the then-current Quarterly Date (the “Quarterly Period”), based on the board and committee roles held by the non-employee director during such Quarterly Period. The number of RSUs granted for each Quarterly Grant is determined by dividing the applicable values by the average closing market price on Initial Equity Grants Our Non-Employee Director Compensation Policy during During
Other Non-Employee Director Compensation Terms Awards granted under our Non-Employee Director Compensation Policy are subject to full accelerated vesting upon a “sale event,” as defined in our 2016 Stock Option and Incentive Plan (as amended and restated, the “2016 Plan”). Our Non-Employee Director Compensation Policy also provides that, pursuant to the 2016 Plan, the aggregate amount of compensation, including both equity compensation and cash compensation but excluding expense reimbursement, paid to any non-employee director in a calendar year will not exceed $750,000 (or such other limit as may be set forth in the 2016 Plan or any similar provision of a successor plan). We also reimburse all reasonable out-of-pocket expenses incurred by our non-employee directors for their attendance at meetings of our board of directors or any committee thereof. Non-Employee Directors’ Deferred Compensation Program In July 2017, we implemented a Non-Employee Directors’ Deferred Compensation Program to offer our non-employee directors the ability to defer the receipt of any RSUs granted to them from Initial Equity Grants or Annual Equity Grants under the 2016 Plan. In advance of an award of RSUs and in compliance with the program’s requirements, a non-employee director may elect to defer the receipt of all of his or her RSUs until the earliest of (i) 90 days after such non-employee director ceases to serve as a member of our board of directors; (ii) the consummation of a “sale event”; or (iii) 90 days after the non-employee director’s death (such earliest date, the “Payment Event”). Upon the vesting of the RSUs, any amounts that would otherwise have been paid in shares of our Death Equity Acceleration Policy See “Executive Compensation—Other Compensation Policies and Practices—Death Equity Acceleration Policy” for a discussion of the treatment of equity awards upon the termination due to death of an employee’s or non-employee director’s employment or other service relationship with us or any of our subsidiaries. Stock Ownership Policy In April 2018, we adopted a stock ownership policy for our non-employee directors, which was amended and restated in September 2020 and March 2022. Our stock ownership policy (as amended, the “Stock Ownership Policy”), requires our non-employee directors to acquire and hold a number of shares of our common stock equal in value to five times
2023 Non-Employee Director Compensation Table The following table provides information regarding the total compensation that was earned by or paid to each of our non-employee directors in
The following table sets forth the aggregate number of DSUs accumulated in each director’s deferral account as of December 31,
During 2023, Ms. Suzuki and Messrs. Immelt and Epstein served on the compensation committee. None of the members of our compensation committee is or has been an officer or employee of our company. None of our executive officers currently serve, or in the past year have served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on our board of directors or compensation committee.
Our board of directors is currently composed of ten members. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in the control of our company. Our nominating and corporate governance committee has recommended, and our board of directors has approved, If you are a stockholder of record and you do not vote your shares or do not specify your voting instructions with respect to the voting of directors, your shares will be voted “FOR” the election of Messrs. Each director is elected by a plurality of the voting power of the shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote thereon to be approved. “Withhold” votes and broker non-votes will have no effect on the outcome of this proposal. See “Procedural Matters—How many votes are needed for approval of each proposal?” for further information.
Our audit committee has appointed KPMG LLP (“KPMG”), an independent registered public accounting firm, to audit our consolidated financial statements for our fiscal year ending December 31, Notwithstanding the appointment of KPMG, and even if our stockholders ratify the appointment, our audit committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if our audit committee believes that such a change would be in the best interests of our company and our stockholders. At the Annual Meeting, our stockholders are being asked to ratify the appointment of KPMG as our independent registered public accounting firm for our fiscal year ending December 31, If our stockholders do not ratify the appointment of KPMG, our audit committee may reconsider the appointment. The following table presents fees for professional audit services and other services rendered to our company by KPMG for our fiscal years ended December 31,
In our fiscal year ended December 31,
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm Our audit committee has established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our audit committee is required to pre-approve all audit, internal control-related services and permissible non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the public accountants’ independence. All services provided by KPMG for our fiscal years ended December 31, The ratification of the appointment of KPMG as our independent registered public accounting firm for our fiscal year ending December 31,
Pursuant to Section 14A of the Exchange Act, we are asking our stockholders to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. 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. The Say-on-Pay vote is advisory, and therefore is not binding on us, our compensation As described in detail under the heading “Executive Compensation—Compensation Discussion and Analysis,” our compensation programs are designed to effectively align the interests of our named executive officers with the interests of our stockholders by focusing on long-term 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 program 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 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 named executive officers, as disclosed in the Company’s proxy statement for the The approval of this advisory non-binding proposal requires the affirmative vote of a majority of the voting power of the shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote “against” this proposal, and broker non-votes will have no effect.
The Dodd-Frank Act and Section 14A of the Exchange Act enable our stockholders to indicate their preference at least once every six years regarding how frequently we should seek future non-binding advisory votes to approve the compensation of our named executive officers, as disclosed in our proxy statement. Accordingly, we are asking our stockholders to indicate whether they would prefer an advisory vote every one year, every two years, or every three years. Alternatively, stockholders may abstain from casting a vote. After considering the benefits and consequences of each alternative, our board of directors recommends that the non-binding advisory vote to approve the compensation of our named executive officers continue to be submitted to the stockholders every year. In reaching this recommendation, our board of directors considered that compensation decisions are made annually and that an annual advisory vote on executive compensation will allow our stockholders to provide timely and direct input on our executive compensation philosophy, policies and practices. The board of directors believes that an annual vote is therefore consistent with our efforts to engage in an ongoing dialogue with our stockholders on executive compensation and corporate governance matters. Vote Required While our board of directors believes that its recommendation is appropriate at this time, the stockholders will not be voting to approve or disapprove of the recommendation of our board of directors. Instead, 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 will have the same effect as votes against each of the proposed voting frequencies and broker non-votes will have no effect on this proposal. As an advisory vote, this proposal will not be binding. Although the vote is non-binding, our board of directors and our compensation committee value the opinions of our stockholders on this matter and, to the extent there is any significant vote of one time period over another, will consider the outcome of this vote when making future decisions regarding the frequency of holding future say-on-pay votes.
Under our certificate of incorporation and bylaws, our board of directors is divided into three classes. Directors in each class serve on the board of directors until the third succeeding annual meeting of stockholders after their election, such that the term of office of one class expires at each annual meeting. Proposal No. 5 would amend our certificate of incorporation to begin declassification of our board of directors at our 2025 annual meeting of stockholders (the “2025 Annual Meeting”) if this Proposal No. 5 is approved by the requisite vote of our stockholders at the Annual Meeting. Directors elected at this Annual Meeting will be elected to three-year terms expiring at the annual meeting of stockholders held in 2027. If the proposed amendments are approved at this Annual Meeting, then, beginning with the class of directors standing for election at the 2025 Annual Meeting, directors will be elected to one-year terms of office. Directors currently serving terms that expire at the annual meetings of stockholders to be held in 2025 and 2026 will (subject to their earlier resignation or removal) serve the remainder of their respective terms, and thereafter their successors will be elected to one-year terms. At the 2027 annual meeting of stockholders and annual meetings thereafter, all directors will stand for election annually, and the board of directors will no longer be classified. Any director appointed to fill a vacancy will be appointed for a term expiring upon the expiration of the term of the director whose place is filled, except that any director appointed to fill a vacancy arising from an increase in the size of the board of directors will be appointed for a term expiring at the earliest annual meeting of stockholders that follows their appointment. Our board of directors has approved certain conforming changes to our bylaws, contingent on the effectiveness of these proposed amendments to our certificate of incorporation. With respect to Proposal No. 5, the proposed amendments to our certificate of incorporation are included with this proxy statement as Appendix A. This description of the proposed amendments to our certificate of incorporation is qualified in its entirety by reference to the text of the amendments as set forth in Appendix A. In proposing these amendments to our certificate of incorporation and seeking to evolve our governance structure, our board of directors has considered feedback from our stockholders and evolving governance practices. Our board of directors unanimously concluded, on the recommendation of the nominating and corporate governance committee, that the proposed changes contemplated by this Proposal No. 5 are advisable and in the best interest of the Company and our stockholders. If this Proposal No. 5 is approved by the requisite vote of our stockholders at the Annual Meeting, the proposed amendments to our certificate of incorporation would become effective upon the filing of an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware, which we would file promptly following the Annual Meeting if our stockholders approve the amendments. If this Proposal No. 5 is not approved by the requisite votes of our stockholders at the Annual Meeting, the amendments to our certificate of incorporation described in this Proposal No. 5 would not become effective and the provisions that require a classified board would continue to apply. Vote Required The approval of this Proposal No. 5 and the amendments to our certificate of incorporation to declassify the board of directors requires the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of the outstanding shares of our common stock. Abstentions and broker non-votes will have the effect of a vote against this proposal.
Report of the Audit Committee The audit committee is a committee of the board of directors composed solely of independent directors as required by the listing standards of the New York Stock Exchange and rules of the 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 and our internal control over financing reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), and to issue a report thereon. 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: reviewed and discussed the audited financial statements for the fiscal year ended December 31, discussed with KPMG the matters required to be discussed by the statement on Auditing Standards No. 1301, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), and as adopted by the PCAOB in Rule 3200T; and 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, Respectfully submitted by the audit committee of the board of directors: Jeff Epstein (Chair) Donna Dubinsky 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 or under the 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.
Executive Officers The following table identifies certain information about our executive officers as of March 31,
Dana Wagner. Mr. Wagner has served as our Chief Legal Officer, Chief Compliance Officer and Corporate Secretary since December 2021. From 2018 to 2021, Mr. Wagner served as the Chief Legal Officer of Impossible Foods Inc., a company that develops plant-based substitutes for meat products. From 2018 to 2020, he was an Adjunct Professor at Northwestern University, and he has taught and lectured at Berkeley Law periodically since 2019. From 2011 to 2016, Mr. Wagner served as General Counsel of Square, Inc. (now Block, Inc.), a financial technology company. From 2007 to 2011, Mr. Wagner served in various legal positions at Google Inc., a multinational technology company,
Executive Compensation This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 2023 and certain aspects of our compensation program for 2024. It also provides an overview of our executive compensation philosophy and objectives. Finally, it discusses how our compensation committee arrived at the specific compensation decisions for our executive officers, including our named executive
In January 2024, we appointed Khozema Shipchandler as our Chief Executive Officer, succeeding Jeff Lawson, our co-founder, who stepped down as Chief Executive Officer and This transition was part of our Contemporaneous with the CEO Transition, our board of directors separated the roles of Board Chair and Chief Executive Officer and appointed Jeff Epstein, an independent director and formerly our lead independent director, to fill the newly created role of Independent Board Chair. Our board structure is further discussed in “Board of Directors and Corporate Governance—Board Leadership Structure”. Ms. Viggiano served as Senior Vice President of Finance from 2021 until March 1, 2023, at Ms. Donio served as our
Executive Summary Business
Financial Performance and Our Revenue of $4.15 billion, up 9% year-over-year. Communications revenue of $3.86 billion, up 9% year-over-year. Segment revenue of $295.3 million, up 7% year-over-year.
GAAP loss from operations of $876.5 million in 2023, compared with GAAP loss from operations of $1.21 billion in 2022.
Communications non-GAAP income from operations of $842.0 million. Segment non-GAAP loss from operations of $72.4 million. Net cash provided by operating activities of $414.8 million in 2023, compared with net cash used in operating activities of $254.4 million in 2022.
Reduced stock-based compensation expense as
2023 Executive Compensation Program Highlights In 2023, in consideration of our
We engaged with our stockholders to understand their perspectives on our 2022 compensation program and to develop appropriate responsiveness actions. We heard concerns about the magnitude of pay, based largely on the front-loaded PSU awards granted to executives in 2022, as well as a desire to see a more normalized structure of the executive compensation program with an annual incentive program. In 2023, we did not grant additional PSUs to our executives and did not raise base salaries except in connection with promotions, which is reflected in the significant decline in the reported compensation for 2023. Additionally, we began a transition to a performance-based cash incentive program by granting our named executive officers (other than our Chief Executive Officer) a performance-based cash award based on non-GAAP income from operations targets. We also updated our peer group in both 2022 and 2023
Our compensation committee reduced our Chief Executive Officer’s annual base salary by more than 50% from $134,000 to $65,535, effective March 1, 2023.
Chief Executive Officer Our compensation committee took the following key actions with respect to the compensation of Jeff Lawson, our Chief Executive Officer for 2023:
Other Named Executive Officers To manage retention and Our compensation committee took the following key actions with respect to the compensation of our named executive officers (other than our Chief Executive Officer) for
2023 Performance Program Outcomes The performance-based cash awards granted in 2023 paid out at 100% of target as a result of non-GAAP income from operations for 2023 being $533 million, which exceeded our $250 million target (payouts were capped at 100%). The 2023 tranche of the PSUs granted in 2022 resulted in 0% payout due to organic revenue growth for 2023 being 10%, which was 1/3 of the target amount and 1/2 of the threshold amount, evidencing the rigorous targets set by our compensation committee.
Stockholder Engagement and Our Say-on-Pay Vote We value our stockholders’ feedback and are committed to maintaining a regular dialogue to understand the perspectives of our stockholders. We believe that ongoing engagement builds mutual trust and alignment with our stockholders.
In the course of our discussions with stockholders, we received valuable feedback on our compensation program, with key themes summarized in the chart below. This feedback was conveyed to our full board of directors and our compensation committee for consideration in their decision-making. Key feedback we received from stockholders and our responses is described in the chart below.
2024 Executive Compensation Program Changes In 2024, in response to stockholder feedback, our compensation committee made the following key changes to our executive compensation program for 2024:
We are committed to strong executive compensation practices. Our approach 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. Over the past few years, our executive compensation program has evolved to reflect our maturation as a company, industry standards, practices of our peers, and stockholder feedback. In 2022, we first introduced PSUs and, in 2024, we transitioned our PSU structure to a cumulative three-year performance period. In 2023, we introduced performance-based cash awards and, in 2024, we formalized a short-term incentive program in the form of an annual cash bonus plan. Additionally, we have not increased the base salaries of our named executive officers in 2023 or 2024, except in connection with promotions.
In 2023, we adopted a compensation structure that was intended to be a transitional year to support the retention and stability of our leadership team. In 2024, we evolved our program to a more standard compensation structure that we expect to be more reflective of our go-forward executive compensation program. We believe that these changes further align the interests of our named executive officers and our stockholders. In making these changes, our compensation committee considered the feedback we received from stockholders during outreach efforts in 2023. Our compensation committee continues to assess our incentive compensation practices in light of our continued growth and maturation as well as discussions with stockholders. Executive Compensation Policies and Practices 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. In 2023, the principal elements of our executive compensation program, and the purposes for each element, were as follows:
While we do not determine either contingent (“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 heavily emphasizes In
We believe that this approach provides balanced incentives for our executive officers to drive our financial performance and create long-term stockholder value. See the section titled “Individual Compensation Elements” for information about the principal elements of our executive compensation program, and the purposes for each element. We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. Our compensation
Executive Compensation Philosophy We operate in an extremely competitive market where there is substantial and continuous competition for leadership with the experience and skill to lead in a dynamic and innovative industry. Our executive compensation program 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 designed 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; and provide compensation packages to our executive officers that are competitive and reward the achievement of our business Our compensation committee tends to weight the target total direct compensation opportunities of our executive officers more heavily towards equity compensation. We understand the importance of linking the individual performance of our executive officers and the financial and operational performance of our company to our overall executive compensation program. We believe our strong focus on, and heavy weighting toward, equity compensation, Oversight of Executive Compensation Role of the Compensation and Talent Management Committee Our compensation Compensation-Setting Process Our compensation
considering competitive market data regarding compensation amounts and practices with an intent to weight compensation more heavily towards equity compensation. Our compensation When formulating its recommendations for the amount of each compensation element and approving (or recommending for approval) each compensation element and the target total direct compensation opportunity for our executive officers, our compensation our performance against the financial and operational objectives established by our compensation our financial performance relative to our compensation peer 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 and in selected broad-based compensation surveys; our desire to retain experienced and talented executives in a highly competitive the scope of each individual executive officer’s role compared to other similarly situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; 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; objectives with respect to reduction of compensation-related stockholder dilution; and the recommendations provided by our Chief Executive Officer with 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 Role of Chief Executive Officer In discharging its responsibilities, our compensation Our compensation
Role of Compensation Consultant Our compensation researching, developing and reviewing our compensation peer group; reviewing and analyzing the compensation for our executive officers, including our named executive officers; reviewing and providing input on the Compensation Discussion and Analysis section of our proxy statement for our reviewing and analyzing the compensation of the non-employee members of our board of directors; reviewing short-term and long-term incentive compensation practices and considerations; advising on executive severance and change in control practices; reviewing our executive compensation philosophy; conducting a compensation risk assessment; and supporting other ad hoc matters throughout the year. The terms of Compensia’s engagement included reporting directly to our compensation Use of Market Data For purposes of comparing our executive compensation against the competitive market, our compensation Our compensation In developing the compensation peer group for similar industry and competitive market for talent; within a range of within a range of In September
comparable to us in terms of market capitalization and
Our compensation In addition, subsets of the Radford Survey were incorporated into the competitive assessment prepared by Compensia and used by our compensation 2024 Peer Group Changes In response to stockholder feedback received in 2023, our compensation committee further refined our peer group in September 2023 for reference in setting 2024 compensation, adding more companies within the broader communications industry that also maintain software offerings to better align with our two business units and removing several companies that significantly exceeded our market capitalization range. The updates include removing Block, Inc., Palo Alto Networks, Inc., Paycom Software, Inc., ServiceNow, Inc., Shopify Inc., Synopsys, Inc., The Trade Desk, Inc., Veeva Systems Inc. and Workday, Inc., and adding Akamai Technologies, Inc., AppLovin Corporation, Cloudflare, Inc., Dropbox, Inc., Dynatrace, Inc., GoDaddy Inc., HubSpot, Inc., Nutanix, Inc. and Ubiquiti Inc. Compensation Risk Assessment In consultation with management and Compensia, our compensation committee’s independent compensation consultant, in March 2023, 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 us. This risk assessment included, among other things, a review of our cash and equity incentive-based compensation plans to ensure that they are aligned with our 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. Individual Compensation Elements In 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 Generally, our compensation In The base salaries of our named executive officers for
The actual CEO Incentive Compensation Other than his reduced base salary, our Chief Executive Officer did not receive any equity or cash awards in 2023. Our compensation committee determined not to grant any additional equity or cash awards to our Chief Executive Officer in 2023, in consideration of stockholder feedback, recent company performance and the magnitude of his 2022 compensation package. Annual Cash Incentives 2023 Performance-Based Cash Awards Our compensation committee resolved to include an annual incentive element in our executive compensation program for 2023 consisting of performance-based cash awards. While we continue to focus on and heavily weight target total direct compensation towards equity compensation, this decision was made upon consideration of a number of factors, including stockholder feedback, our goal of driving our executives to achieve forecastable near-term results in addition to the long-term
objectives of our long-term incentive compensation program, our desire to further our retention objectives, taking into account our competitive environment, market volatility and recent stock price performance, as well as our desire to reduce the dilutive impact to stockholders of our executive compensation program in response to stockholder feedback. We structured the cash award as performance-based, in line with stockholder feedback in favor of performance-based compensation and in order to further our incentivization goals. Our compensation committee determined that these cash awards would serve as an effective supplement to equity awards given the current market and competitive environment and that tying these awards directly to specific company performance objectives would benefit the company and our stockholders, while also reducing the dilutive impact to our stockholders. Our compensation committee determined not to grant a 2023 performance-based cash award to our Chief Executive Officer, in consideration of stockholder feedback, recent company performance and the magnitude of his 2022 compensation package. The target amounts of the 2023 performance-based cash awards for our named executive officers were as follows:
After evaluation of multiple potential metrics, our compensation committee determined that non-GAAP income from operations was the strongest incentive metric for the 2023 performance-based cash award. Our compensation committee considered, among other factors, that the measure serves as a forecastable near-term objective in furtherance of our profitability and free cash flow generation goals, as well as stockholder feedback. Our compensation committee aimed to set targets that took into account the significant ongoing volatility in the market, setting targets that it deemed challenging but achievable and capping payments at 100% of target to mitigate the risk of windfall payments in the event of overachievement. The 2023 non-GAAP income from operations payout levels were as follows:
Non-GAAP income from operations for 2023 was $533 million, which exceeded our $250 million target and resulted in a 100% payout (of target) for the 2023 performance-based cash awards (payouts were capped at 100%). Our compensation committee certified performance in February 2024. The payouts to our named executive officers were as follows:
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 In 2023, each named executive officer (other than our Chief Executive Officer) received an award of time-based RSUs (the In determining the Our compensation
The following table sets forth the
2022 We believe PSUs The 2022 The
Organic revenue growth for 2023 was 10% and non-GAAP income from operations was $533 million which resulted in 0% payout for the 2023 tranche of the 2022 2023 Chief Financial Officer In 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 of 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 Internal Revenue Code of 1986, as amended (the “Code”). In
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, company. During In the future, we may provide perquisites or other personal benefits in limited circumstances. Post-Employment Compensation Arrangements We believe that having in place reasonable and competitive post-employment compensation arrangements The Executive Severance Plans, as discussed in more detail in We believe that the severance payments and benefits provided to our named executive officers under the Executive Severance Plans 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 named 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 named 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 named 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 a named executive officer voluntarily terminates employment with us for good reason, 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 transactions may result in their own job loss. Reasonable post-acquisition payments and benefits should serve the interests of both the named executive officer and our stockholders. To protect our interests, we require all participants of the Executive Severance Plans to sign a standard form of general release in favor of us prior to receiving any severance payments or benefits under the applicable plan. In addition, under the Executive Severance Plans, all payments and benefits provided in the event of a change in control of our 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 subject only to time-based vesting, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of our company and to avoid windfalls, both of which could occur if the vesting of time-based equity awards accelerated automatically as a result of the transaction. We do not provide 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 post-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
As described above, Mr. Lawson’s service as our Chief Executive Officer terminated effective January 8, 2024, and his employment with the Company ended on January 12, 2024. For additional information, see “Executive Compensation Tables—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 generally 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 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 All equity awards will be priced on the effective date of the award. The exercise price of all stock options will be equal to (or, if specified in the approval of the award, greater than) the closing market price on the NYSE of one share of our Our board of directors or our compensation Death Equity Acceleration Policy In December 2020, Policy Prohibiting Hedging and Pledging of Equity Securities Our Amended and Restated Policy on Insider Trading and Disclosure (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 or any derivative securities that provide the economic equivalent of
ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engage in any other hedging transaction with respect to our 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 securities as collateral in a margin account or from pledging our 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 our Stock Ownership Policy, which applies to 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. We most recently amended and restated Our Stock Ownership Policy requires each named executive officer to acquire and hold a number of shares of our common stock equal in value to a multiple of such named executive officer’s annual base salary until he or she ceases to be our Chief Executive Officer or a Section 16 Officer, as applicable. The
For purposes of our Stock Ownership Policy, we only count directly and beneficially owned shares, including shares purchased through our ESPP or 401(k) Plan, if applicable, shares underlying vested RSUs, and shares held following settlement of As of December 31, Compensation Recovery Policy Tax and Accounting Considerations Deductibility of Executive Compensation Under Section 162(m) of the Internal Code (“Section 162(m)”), compensation paid to each of our “covered employees” that exceeds $1 million per taxable year is generally non-deductible. Although our compensation 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 our company that exceeds certain prescribed limits, and that our 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. 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 cost is recognized as an expense following the straight-line attribution method over the requisite service period. 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 Our compensation and talent management committee has reviewed and discussed the section titled “Compensation Discussion and Analysis” with management. Based on such review and discussion, our compensation and talent management committee has recommended to the board of directors that the section titled “Compensation Discussion and Analysis” be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, Respectfully submitted by the members of our compensation and talent management committee of the board of directors: Compensation and Talent Management Committee Jeffrey Immelt (Chair) Jeff Epstein Miyuki Suzuki
Executive Compensation Tables The following table provides information regarding the total compensation, for services rendered in all capacities, that was paid to or earned by our named executive officers during
The following table sets forth certain information with respect to all plan-based awards granted to our named executive officers during
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31,
The following table presents, for each of our named executive officers, the shares of our common stock that were acquired upon the exercise of stock options and vesting of RSUs and PSUs and the related value realized during
We have entered into employment offer letters or promotion letters with each of our named executive officers, except Jeff Lawson We have not entered into an employment offer letter or employment agreement with Mr. Lawson. See “—Potential Payments Upon Termination or Change in Control” below for a description of the separation agreement entered into with Mr. Lawson in connection with the CEO Transition. Mr. Lawson’s service as our Chief Executive Officer terminated effective January 8, 2024, and his employment with the Company terminated on January 12, 2024. On Khozema Shipchandler On January 7, 2024, we entered into an employment agreement with Mr. Shipchandler in connection with his employment as Chief Executive Officer in connection with the CEO Transition. The employment agreement provides for Mr. Shipchandler’s “at-will” employment and sets forth his initial annual base salary, target bonus opportunity and RSU
Dana Wagner On October 5, 2021, we entered into an employment offer letter with Mr. Wagner, who currently serves as our Chief Legal Officer, Chief Compliance Officer and Corporate Secretary. The employment offer letter provided for Mr. Wagner’s “at-will” employment and set forth his initial annual base salary, sign-on bonus, and an initial RSU award, as well as his eligibility to participate in our benefit plans generally. Mr. Wagner is subject to our standard employment, confidential information, invention assignment and arbitration agreement. Elena Donio On April 29, 2022, we entered into an employment offer letter with Ms. Donio, who served as our President of Revenue until March 1, 2023, at which time she became our President, Twilio Data & Applications. The employment offer letter provided for Ms. Donio’s “at-will” employment and set forth her initial annual base salary, Executive Severance Plans In
officer if he or she had remained employed by us, and (3) full accelerated vesting of all outstanding and unvested equity awards held by our named executive officers; provided, that the performance conditions applicable to any stock-based awards subject to performance conditions will be deemed satisfied at the target level specified in the terms of the applicable award agreement. The payments and benefits provided under the severance plans 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 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 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 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 Arrangements The 2022 The 2023 Performance-Based Cash Award agreement for our non-Chief Executive Officer named executive officers provides that, upon a Sale Event (as defined in the 2016 Plan) where the performance-based cash award was not assumed, continued or substituted (a “Non-Assumption Sale Event”), 100% of the cash payment would vest and become payable. In the event of a Sale Event other than a Non-Assumption Sale Event, the amount of the cash payment would be calculated based on actual performance through the last day of our 2023 fiscal year, provided, however, that if prior to that date, the recipient’s employment were to be terminated (i) by us for any reason other than “cause” (as defined in the Senior Executive Severance Plan), death or disability or (ii) by the recipient for “good reason” (as defined in the Senior Executive Severance Plan), and the termination were to occur during the “change in control period” (as defined in the Senior Executive Severance Plan), then, subject to the execution and delivery of an effective release of claims in our favor, the recipient would receive 100% of the cash payment. In connection with the CEO Transition, we entered into a separation agreement with Mr. Lawson dated January 7, 2024 (the “Lawson Separation Agreement”). The Lawson Separation Agreement contains a customary release of claims and as consideration for the agreement provides that Mr. Lawson will (1) receive a lump sum cash payment equal to $99,840, (2) have his outstanding and unvested equity awards covering 68,124 shares of common stock that are subject to time-based vesting immediately vest in full and, if applicable, become exercisable as to 100% of those awards, (3) receive an extension of the exercise period of his vested stock options until the earliest to occur of: (i) the three-year anniversary of his separation date, (ii) the applicable expiration date of the applicable stock option, or (iii) such earlier date as provided or permitted under the applicable equity plan, and (4) be eligible for cash payment equal to 18 months of the employer portion of Mr. Lawson’s monthly COBRA premiums. Based on the closing market price of our stock on January 12, 2024, the effective date of the acceleration, the estimated value of Mr. Lawson’s equity acceleration is equal to $4,137,683. Based on the COBRA premium in effect as of Mr. Lawson’s termination of employment, and assuming Mr. Lawson’s election of and continued eligibility for COBRA participation, the estimated value of Mr. Lawson’s COBRA payments is $45,949. In determining the benefits and payments to be paid to Mr. Lawson pursuant to the Lawson Separation Agreement, our compensation committee intended to provide a reasonable and balanced outcome for Mr. Lawson as well as our stockholders to facilitate an effective transition.
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 who were serving as named executive officers as of the end of 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
CEO Pay Ratio Pursuant to SEC rules, we are required to provide information regarding the relationship between the annual total compensation of our Chief Executive Officer, and the annual total compensation of our employees (other than our Chief Executive Officer) for the annual total compensation of our median employee was the annual total compensation of our Chief Executive Officer Based on this information, for The SEC’s rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. We believe our methodologies are reasonable and best reflect how we view these metrics. However, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of our company. For further information concerning our variable pay-for-performance philosophy and how we align executive compensation with our company’s performance, refer to “Executive Compensation—Compensation Discussion and Analysis.” In determining the “compensation actually paid” to our named executive officers (our “NEOs”), we are required to make various adjustments to amounts that have been previously reported in the Summary Compensation Table in each such previous year, as the valuation methods for this disclosure under Item 402(v) differ from those required in reporting the compensation information in the Summary Compensation Table. For our NEOs other than our principal executive officer (our “PEO”), compensation is reported as an average.
Note that due to rounding, the number shown in the “Compensation Actually Paid to PEO” column may not match the exact number obtained by adding and subtracting the numbers in the prior columns or shown above. Please see the proxy statement filed for use at our 2023 annual meeting and filed with the SEC on April 26, 2023, for the adjustments made to Mr. Lawson’s total compensation for each of 2020, 2021 and 2022.
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| Year | | | Year End Fair Value of Equity Awards Granted in the Year | | | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | | Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | | | Total Equity Award Adjustments | |
| 2023 | | | — | | | ($132,725) | | | — | | | $2,549,564 | | | — | | | — | | | $2,416,839 | |
| Year | | | Year End Fair Value of Equity Awards Granted in the Year | | | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | | | Total Equity Award Adjustments | |
| 2022 | | | $15,250,786 | | | ($15,054,968) | | | — | | | ($20,339,240) | | | — | | | — | | | ($20,143,422) | |
| 2021 | | | $8,699,619 | | | ($13,838,026) | | | — | | | ($3,313,645) | | | — | | | — | | | ($8,452,051) | |
| 2020 | | | $48,536,748 | | | $46,236,918 | | | — | | | $26,208,183 | | | — | | | — | | | $120,981,849 | |
(3) | The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group (other than Mr. Lawson) in the “Total” column of the Summary Compensation Table in each applicable year. Our NEOs included in this calculation for each year are: |
(4) | The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (other than Mr. Lawson), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (other than Mr. Lawson) during the applicable year. The company has not paid dividends historically and does not sponsor any pension arrangements; thus no adjustments are made for these items. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (other than Mr. Lawson) for |
| Year | | | Average Reported Summary Compensation Table Total for Non-PEO NEOs | | | Average Reported Value of Equity Awards | | | Average Equity Award Adjustments(a) | | | Average Compensation Actually Paid to Non-PEO NEOs | |
| 2022 | | | $29,982,991 | | | ($29,144,104) | | | ($2,395,952) | | | ($1,557,065) | |
| 2021 | | | $14,523,754 | | | ($14,002,103) | | | ($2,931,455) | | | ($2,409,804) | |
| 2020 | | | $6,839,349 | | | ($6,264,774) | | | $73,443,892 | | | $74,018,467 | |
| Year | | | Average Reported Summary Compensation Table Total for Non-PEO NEOs | | | Average Reported Value of Equity Awards | | | Average Equity Award Adjustments(a) | | | Average Compensation Actually Paid to Non-PEO NEOs | |
| 2023 | | | $12,689,130 | | | ($9,243,364) | | | $12,931,233 | | | $16,376,998 | |
(a) | The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
| Year | | | Average Year End Fair Value of Equity Awards Granted in the Year | | | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | | | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | | | Total Average Equity Award Adjustments | |
| 2022 | | | $10,365,057 | | | ($9,028,324) | | | $1,203,198 | | | ($4,935,883) | | | — | | | — | | | ($2,395,952) | |
| 2021 | | | $10,773,567 | | | ($3,580,668) | | | $284,963 | | | $394,588 | | | ($10,803,904) | | | — | | | ($2,931,455) | |
| 2020 | | | $22,533,770 | | | $31,808,770 | | | — | | | $19,101,352 | | | — | | | — | | | $73,443,892 | |
| Year | | | Average Year End Fair Value of Equity Awards Granted in the Year | | | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | | | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | | Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | | | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | | | Total Average Equity Award Adjustments | |
| 2023 | | | $7,294,635 | | | $1,813,018 | | | $2,945,681 | | | $877,898 | | | — | | | — | | | $12,931,233 | |
(5) | TSR is determined based on the value of an initial fixed investment of $100 in our Class A common stock on December 31, 2019, assuming the reinvestment of any dividends. |
(6) | The peer group used for this purpose is the following published industry index: S&P 500 Information Technology Index, which is an industry index reported in our most recent Annual Report on Form 10-K. |
(7) | The dollar amounts reported represent the amount of net income reflected in our audited financial statements for the applicable year. |
2024 Proxy Statement | | | Twilio Inc. 77 |
Pay Versus Performance | | |
(8) |
78Twilio Inc. | | | 2024 Proxy Statement |
| 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)) | |
| Equity compensation plans approved by stockholders(1) | | | 24,935,455(2) | | | $81.5285(3) | | | 27,499,828(4) | |
| Equity compensation plans not approved by stockholders(5) | | | 405,350 | | | $44.6041 | | | — | |
| Total | | | 25,340,805 | | | $75.5383 | | | 27,499,828 | |
| 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)) | |
| Equity compensation plans approved by stockholders(1) | | | 20,264,442(2) | | | $74.93(3) | | | 28,410,961(4) | |
| Equity compensation plans not approved by stockholders(5) | | | 213,957 | | | $42.97 | | | — | |
| Total | | | 20,478,399 | | | $71.13 | | | 28,410,961 | |
(1) | Includes the following plans: our 2008 Plan, 2016 Plan, and our ESPP. We no longer make grants subject to our 2008 Plan. |
(2) | Consists of stock options, RSUs, PSUs and DSUs. The number of PSUs included in |
(3) | Excludes shares issuable upon vesting of outstanding RSUs, PSUs and DSUs as of December 31, |
(4) | As of December 31, |
(5) | Includes shares of our |
80Twilio Inc. | | | 2024 Proxy Statement |
| | | Shares of Common Stock Beneficially Owned | | |||||||||||||||||||
| Name of Beneficial Owner | | | # | | | % | | |||||||||||||||
| Named Executive Officers and Directors: | | | | | | |||||||||||||||||
| Khozema Shipchandler(1) | | | | | * | | ||||||||||||||||
| | | | | * | | |||||||||||||||||
| | | 50,097 | | | * | | ||||||||||||||||
| Jeff Lawson | | | | | | |||||||||||||||||
| |||||||||||||||||||||||
| Elena Donio | ||||||||||||||||||||||
| | | | | * | | |||||||||||||||||
| Charles Bell | | | — | | | — | ||||||||||||||||
| |||||||||||||||||||||||
| Byron Deeter | | | | | * | | ||||||||||||||||
| Donna Dubinsky | | | | | * | | ||||||||||||||||
| Jeff Epstein | | | | | * | | ||||||||||||||||
| Jeffrey Immelt | | | | | * | | ||||||||||||||||
| Deval Patrick | | | | | * | | ||||||||||||||||
| Erika Rottenberg | | | 33,612 | | | * | |
2024 Proxy Statement | | | ||||||||||||||||||
Security Ownership of Certain Beneficial Owners and Management | | |
| | | Shares Beneficially Owned | | | | Shares of Common Stock Beneficially Owned | | ||||||||||||||||||||
| | | Class A Common Stock | | | Class B Common Stock | | | | Name of Beneficial Owner | | # | | % | | |||||||||||||
| Name of Beneficial Owner | | Shares | | % | | Shares | | % | | Voting %† | | Ownership % | | Andrew Stafman | | — | | — | | ||||||||
| All executive officers and directors as a group (13 persons)(11): | | 1,771,505 | | 1.0% | | 6,030,246 | | 60.2% | | 22.4% | | 4.2% | | Miyuki Suzuki | | 8,250 | | * | | ||||||||
| 5% Stockholders: | | | | | | | | All executive officers and directors as a group (13 persons)(10): | | 8,054,719 | | 4.5% | | ||||||||||||||
| The Vanguard Group(12) | | 16,537,284 | | 9.4% | | — | | — | | 6.1% | | 8.9% | | 5% Stockholders: | | | | ||||||||||
| BlackRock, Inc.(13) | | 11,262,428 | | 6.4% | | — | | — | | 4.1% | | 6.1% | | The Vanguard Group(11) | | 17,809,500 | | 10.0% | | ||||||||
| Amazon.com NV Investment Holdings LLC(14) | | — | | — | | 1,768,346 | | 18.4% | | 6.5% | | * | | BlackRock, Inc.(12) | | 10,512,625 | | 5.9% | | ||||||||
| John Wolthuis(15) | | — | | — | | 1,278,474 | | 13.3% | | 4.7% | | * | | ||||||||||||||
| Evan M. Cooke(16) | | — | | — | | 906,274 | | 9.4% | | 3.3% | | * | |
* | Represents less than 1%. |
(1) | Consists of (i) |
(2) | Consists of (i) 35,307 shares of Class A common stock held by Ms. Viggiano, (ii) 5,768 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2024, and (iii) 3,892 shares of Class A common stock issuable upon the settlement of RSUs that are releasable within 60 days of March 31, 2024. |
(3) | Consists of (i) 46,141 shares of Class A common stock held by Mr. Wagner and (ii) 3,956 shares of Class A common stock issuable upon the settlement of RSUs that are releasable within 60 days of March 31, 2024. |
(4) | Consists of (i) 4,964,772 shares of Class A common stock held by Mr. Lawson and Erica Freeman Lawson, as trustees of the Lawson Revocable Trust dated 10/2/11, (ii) |
Consists of (i) |
(6) | Consists of (i) |
Consists of 9,451 shares of Class A Common stock held by Ms. Dubinsky, as trustee of the Shustek-Dubinsky Family Trust. |
Consists of 26,484 shares of Class A common stock held by Mr. Epstein, as trustee of the Epstein Family Revocable Trust. |
Consists of |
Consists of (i) |
Based on information reported by The Vanguard Group on Schedule 13G/A filed with the SEC on February |
Based on information reported by BlackRock, Inc. on Schedule 13G/A filed with the SEC on |
82Twilio Inc. | | | 2024 Proxy Statement |
• | “FOR” the election of Jeff Epstein, Khozema Shipchandler and Andrew Stafman as Class II directors; |
“FOR” the ratification of the appointment of KPMG LLP as our |
“FOR” the approval, on a non-binding advisory basis, of |
“ONE YEAR” with respect to the non-binding, advisory indication of the |
• | “FOR” the approval of the management proposal to amend our certificate of incorporation to declassify the board of directors. |
2024 Proxy Statement | | | Twilio Inc. 83 |
Questions and | | |
• | Proposal No. 1: Each director is elected by a plurality of the voting power of the shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote thereon to be approved. “Plurality” means that the nominees who receive the largest number of “For” votes cast are elected as directors. As a result, any shares not voted “For” a particular nominee (whether as a result of a “Withhold” vote or a broker non-vote) will not be counted in such nominee’s favor and will have no effect on the outcome of the election. You may vote “For” or “Withhold” on each of the nominees for election as a director. |
• | Proposal No. 2: The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024 requires the affirmative vote of a majority of the voting power of the shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote thereon to be approved. You may vote “For,” “Against” or “Abstain” with respect to this proposal. Abstentions are considered shares present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” this proposal. This proposal is a “routine” matter under NYSE rules. Therefore, if you hold your shares in street name and do not provide voting instructions to your broker, bank, or other agent that holds your shares, your broker, bank, or other agent has discretionary authority to vote your shares on this proposal. |
• | Proposal No. 3: The approval, on a non-binding advisory basis, of the compensation of our named executive officers requires a majority of the voting power of the shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote thereon. You may vote “For,” “Against” or “Abstain” with respect to this proposal. Abstentions are considered shares present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” this proposal. Broker non-votes will have no effect on the outcome of this proposal. Since this proposal is an advisory vote, the result will not be binding on our board of directors, our compensation committee, or the Company. The board of directors and our compensation committee will consider the outcome of the vote when determining the compensation of our named executive officers. |
• | Proposal No. 4: The frequency receiving the highest number of votes from the voting power of shares of our common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote thereon will be considered the frequency preferred by the stockholders. You may vote for “One Year”, “Two Years”, or “Three Years” or “Abstain” with respect to this proposal. Abstentions are considered shares present and entitled to vote on this proposal, and thus, will have the same effect as votes “Against” each of the proposed voting frequencies. Broker non-votes will have no effect on the outcome of this proposal. Since this proposal is an advisory vote, the result will not be binding on our board of directors, our compensation committee, or the Company. The board of directors and our compensation committee will consider the outcome of the vote when determining how often we should submit to stockholders future advisory votes to approve the compensation of our named executive officers. |
• | Proposal No. 5: The approval of a management proposal to amend our certificate of incorporation to declassify the board of directors requires the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting |
84Twilio Inc. | | | 2024 Proxy Statement |
| | PROCEDURAL MATTERS Questions and Answers About the Proxy Materials and Our Annual Meeting |
2024 Proxy Statement | | | Twilio Inc. 85 |
PROCEDURAL MATTERS Questions and Answers About the Proxy Materials and Our Annual Meeting | | |
86Twilio Inc. | | | 2024 Proxy Statement |
| | PROCEDURAL MATTERS Questions and Answers About the Proxy Materials and Our Annual Meeting |
2024 Proxy Statement | | | Twilio Inc. 87 |
PROCEDURAL MATTERS Questions and Answers About the Proxy Materials and Our Annual Meeting | | |
88Twilio Inc. | | | 2024 Proxy Statement |
| | PROCEDURAL MATTERS Questions and Answers About the Proxy Materials and Our Annual Meeting |
2024 Proxy Statement | | | Twilio Inc. 89 |
90Twilio Inc. | | | 2024 Proxy Statement |
| |
2024 Proxy Statement | | | Twilio Inc. 91 |
2024 Proxy Statement | | | Twilio Inc. A-1 |
| |
A-2Twilio Inc. | | | 2024 Proxy Statement |
| | APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) |
2024 Proxy Statement | | | Twilio Inc. A-3 |
APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) | | |
A-4Twilio Inc. | | | 2024 Proxy Statement |
| | APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) |
2024 Proxy Statement | | | Twilio Inc. A-5 |
APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) | | |
A-6Twilio Inc. | | | 2024 Proxy Statement |
| | APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) |
2024 Proxy Statement | | | Twilio Inc. A-7 |
APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) | | |
A-8Twilio Inc. | | | 2024 Proxy Statement |
| | APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) |
2024 Proxy Statement | | | Twilio Inc. A-9 |
APPENDIX A Proposed Amendments to Our Certificate of Incorporation (Proposal No. 5) | | |
| | TWILIO INC. | ||||
| | | | |||
| | By: | | | ||
| | | | Khozema Shipchandler Chief Executive Officer |
A-10Twilio Inc. | | | 2024 Proxy Statement |
2024 Proxy Statement | | | Twilio Inc. B-1 |
NON-GAAP Financial Measures | | |
| | Year Ended December 31 | | | | Year Ended December 31 | | |||||||||
| | 2021 | | 2022 | | | | 2023 | | 2022 | | |||||
| | (in thousands) | | | (in thousands) | | ||||||||||
| GAAP loss from operations | | $(1,205,308) | | $(915,584) | | GAAP loss from operations | | $(876,541) | | $(1,205,308) | | ||||
| Non-GAAP adjustments: | | — | | — | | Non-GAAP adjustments: | | — | | — | | ||||
| Stock-based compensation | | 784,285 | | 632,285 | | Stock-based compensation | | 662,842 | | 784,285 | | ||||
| Amortization of acquired intangibles | | 206,181 | | 198,784 | | Amortization of acquired intangibles | | 192,307 | | 206,181 | | ||||
| Acquisition-related expenses | | 2,621 | | 7,449 | | Acquisition and divestiture related expenses | | 5,555 | | 2,621 | | ||||
| Charitable contributions | | 9,541 | | 31,169 | | Charitable contributions | | 17,346 | | 9,541 | | ||||
| Payroll taxes related to stock-based compensation | | 23,832 | | 48,417 | | Payroll taxes related to stock-based compensation | | 12,985 | | 23,832 | | ||||
| Restructuring costs | | 76,636 | | — | | Loss on net assets divested | | 32,277 | | — | | ||||
| Impairment of long-lived assets | | 97,722 | | — | | Restructuring costs | | 165,733 | | 76,636 | | ||||
| Non-GAAP income (loss) from operations | | $(4,490) | | $2,520 | | Impairment of long-lived assets | | 320,504 | | 97,722 | | ||||
| Non-GAAP income (loss) from operations | | $533,008 | | $(4,490) | |
| | | Year Ended December 31 | | |||||||
| | | 2022 | | | 2021 | | | 2020 | | |
| | | (in thousands) | | |||||||
| GAAP Revenue | | | $3,826,321 | | | $2,841,839 | | | $1,761,776 | |
| Less: Acquisition revenue | | | $128,619 | | | $320,127 | | | $82,920 | |
| Less: A2P 10DLC revenue | | | $86,338 | | | $110,241 | | | $35,505 | |
| Organic revenue | | | $3,611,364 | | | $2,411,472 | | | $1,643,351 | |
| GAAP revenue growth | | | 35% | | | 61% | | | 55% | |
| Organic revenue growth | | | 30%(1) | | | 42%(2) | | | 49%(3) | |
| | | Year Ended December 31 | | |
| | | 2023 | | |
| | | (in thousands) | | |
| GAAP Revenue | | | $4,153,945 | |
| Less: Acquisition revenue | | | 2,088 | |
| Less: A2P 10DLC revenue | | | — | |
| Less: Divestiture revenue | | | 6,142 | |
| Organic revenue | | | $4,145,715 | |
| GAAP revenue growth | | | 9% | |
| Organic revenue growth | | | 10%(1) | |
(1) | Organic revenue for the year ended December 31, |
B-2Twilio Inc. | | | 2024 Proxy Statement |
| | APPENDIX B NON-GAAP Financial Measures |
| | | Year Ended December 31 | | |
| | | 2023 | | |
| | | (in thousands) | | |
| GAAP Communications Revenue | | | $3,858,693 | |
| Less: Acquisition revenue | | | 2,088 | |
| Less: Divestiture revenue | | | 6,142 | |
| Communications organic revenue | | | $3,850,463 | |
| GAAP Communications revenue growth | | | 9% | |
| Communications organic revenue growth | | | 11%(1) | |
| | | Year Ended December 31 | | ||||
| | | 2023 | | | 2022 | | |
| | | (in thousands) | | ||||
| Net cash provided by (used in) operating activities | | | $414,752 | | | $(254,368) | |
| Less: Capitalized software development costs | | | 39,925 | | | 45,761 | |
| Less: Purchase of long-lived and intangible assets | | | 11,310 | | | 34,421 | |
| Free cash flow | | | $363,517 | | | $(334,550) | |
2024 Proxy Statement | | | Twilio Inc. B-3 |
NON-GAAP Financial Measures | | |
| | | Year Ended December 31 | | |
| | | 2023 | | |
| | | (in thousands) | | |
| Revenue: | | | | |
| Communications | | | $3,858,693 | |
| Segment | | | 295,252 | |
| Total | | | $4,153,945 | |
| Non-GAAP income (loss) from operations: | | | | |
| Communications | | | $841,990 | |
| Segment | | | (72,430) | |
| Corporate costs | | | (236,552) | |
| Total | | | $533,008 | |
| Reconciliation of non-GAAP income (loss) from operations to loss from operations: | | | | |
| Total non-GAAP income (loss) from operations | | | $533,008 | |
| Stock-based compensation | | | (662,842) | |
| Amortization of acquired intangibles | | | (192,307) | |
| Acquisition and divestiture related expenses | | | (5,555) | |
| Loss on net assets divested | | | (32,277) | |
| Payroll taxes related to stock-based compensation | | | (12,985) | |
| Charitable contributions | | | (17,346) | |
| Restructuring costs | | | (165,733) | |
| Impairment of long-lived assets | | | (320,504) | |
| Loss from operations | | | (876,541) | |
| Other expenses, net | | | (120,188) | |
| Loss before provision for income taxes | | | $(996,729) | |
B-4Twilio Inc. | | | 2024 Proxy Statement |