UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant x☒ Filed by a Party other than the Registrant ¨☐
Check the appropriate box:
| Preliminary Proxy Statement | ||
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
| Definitive Proxy Statement | ||
| Definitive Additional Materials | ||
| Soliciting Material Pursuant to§240.14a-11(c) or§240.14a-2 | ||
TWITTER, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
| No fee required. | ||||
| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
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| (2) | Aggregate number of securities to which transaction applies:
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| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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| (4) | Proposed maximum aggregate value of transaction:
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| (5) | Total fee paid:
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| Fee paid previously with preliminary materials. | ||||
| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||||
| (1) | Amount Previously Paid:
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| (2) | Form, Schedule or Registration Statement No.:
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| (3) | Filing Party:
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TWITTER, INC.
1355 MARKET STREET, SUITE 900
SAN FRANCISCO, CALIFORNIA 94103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 2:0012:30 p.m. Pacific Time on Wednesday,Monday, May 25, 201620, 2019
Dear Stockholders of Twitter, Inc.:
The 20162019 annual meeting of stockholders (the “Annual Meeting”) of Twitter, Inc., a Delaware corporation (“Twitter”), will be held onWednesday,Monday, May 25, 201620, 2019 at 2:0012:30 p.m. Pacific Time,. The Annual Meeting will be a virtual meeting of stockholders, which will be conducted via live audio webcast. We believe that a virtual meeting provides expanded access, improved communication and cost savings for our stockholders and Twitter. Stockholders will be able to attend and listen to the Annual Meeting live, submit questions and vote their shares electronically at Yerba Buena Center for the Arts, YBCA Forum locatedAnnual Meeting from virtually any location around the world. In order to attend and vote at 701 Mission Street, San Francisco, California 94103,the Annual Meeting, please follow the instructions in the section titled “Questions and Answers About the Proxy Materials and Our Annual Meeting—What do I need to do to attend the Annual Meeting virtually?” on page 6.
We are holding the Annual Meeting for the following purposes, as more fully described in the accompanying proxy statement:
| 1. | To elect |
| 2. | To approve, on an advisory basis, the compensation of our named executive officers(“Say-on-Pay”); |
| 3. | To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, |
| 4. | To |
| 5. | To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. |
Our board of directors has fixed the close of business on March 30, 201627, 2019 as the record date (the “Record Date”) for the Annual Meeting. Stockholders of record as of the record dateRecord Date are entitled to notice of and to vote at the Annual Meeting. Further information regarding voting rights and the matters to be voted upon is presented in the accompanying proxy statement.
This proxy statement and our annual report can be accessed directly at the following Internet address: http://www.viewproxy.com/twitter/2016.www.proxyvote.com. You will be asked to enter the16-digit control number located on your proxy card.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to submit your vote via the Internet, telephone or mail.
We appreciate your continued support of Twitter and look forward to either greeting you in person at the Annual Meeting or receiving your proxy.Twitter.
By order of the Board of Directors,
Jack Dorsey
Chief Executive Officer and Director
San Francisco, California
April 15, 20168, 2019
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Board Leadership Structure and Role of | ||||
Stockholder Recommendations and Nominations to the Board of Directors | ||||
Corporate Governance Guidelines and Code of Business Conduct and Ethics | ||||
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PROPOSAL NO. 2 ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION | 31 | |||
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PROPOSAL NO. 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 32 | |||
Fees Paid to the Independent Registered Public Accounting Firm | 32 | |||
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TABLE OF CONTENTS
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PROPOSAL NO. 5 STOCKHOLDER PROPOSAL REGARDING A REPORT ON OUR CONTENT ENFORCEMENT POLICIES | 37 | ||||||
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PROPOSAL NO. 6 STOCKHOLDER PROPOSAL REGARDING BOARD QUALIFICATIONS | 40 | ||||||
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 69 | ||||||
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PROXY STATEMENT
FOR 20162019 ANNUAL MEETING OF STOCKHOLDERS
TWITTER, INC.
PROXY STATEMENT
FOR 20162019 ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 2:0012:30 p.m. Pacific Time on Wednesday,Monday, May 25, 201620, 2019
This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at the 20162019 annual meeting of stockholders of Twitter, Inc., a Delaware corporation (“Twitter”), and any postponements, adjournments or continuations thereof (the “Annual Meeting”). The Annual Meeting will be held on Wednesday,Monday, May 25, 201620, 2019 at 2:0012:30 p.m. Pacific Time,Time.
The Annual Meeting will be a virtual meeting of stockholders, which will be conducted via live audio webcast. You will be able to attend and listen to the Annual Meeting live, submit questions and vote your shares electronically at Yerba Buena Center for the Arts, YBCA Forum locatedAnnual Meeting. In order to attend and vote at 701 Mission Street, San Francisco, California 94103. the Annual Meeting, please follow the instructions in the section titled “Questions and Answers About the Proxy Materials and Our Annual Meeting—What do I need to do to attend the Annual Meeting virtually?” on page 6.
The Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our annual report is first being mailed on or about April 15, 20168, 2019 to all stockholders entitled to vote at the Annual Meeting.
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QUESTIONS AND ANSWERS ABOUT THE PROXY
MATERIALS AND OUR ANNUAL MEETING
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
The information provided in the “question and answer” format below is for your convenience only and is merely a summary of the information contained in this proxy statement. You should read this entire proxy statement carefully. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement and references to our website address in this proxy statement are inactive textual references only.
Why are you holding a virtual Annual Meeting?
Our Annual Meeting will be conducted via live audio webcast and online stockholder tools. We have implemented the virtual format in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. However, you will bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. We believe this is the right choice for a company with a global footprint. A virtual Annual Meeting makes it possible for more stockholders (regardless of size, resources or physical location) to have direct access to information more quickly, while saving the company and our stockholders time and money, especially as physical attendance at meetings has dwindled. We also believe that the online tools we have selected will increase stockholder communication. We remain very sensitive to concerns that virtual meetings may diminish stockholder voice or reduce accountability. Accordingly, we have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the Annual Meeting so they can ask questions of our board of directors or management. We do not place restrictions on the type or form of questions that may be asked; however, we reserve the right to edit profanity or other inappropriate language for publication. Just like we did when we heldin-person meetings, during the live Q&A session of the Annual Meeting, we answer questions as they come in and address those asked in advance, as time permits. A replay and a written transcript of the meeting will be made publicly available on our investor relations site.
What matters am I voting on and how does the board of directors recommend that I vote?
| PROPOSAL | TWITTER BOARD OF DIRECTORS | PAGE
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(Proposal No. 1) The election of | FOR each nominee | 29 | ||
(Proposal No. 2) The approval, on an advisory basis, of the compensation of our | FOR | 31 | ||
(Proposal No. 3) Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending | FOR | 32 | ||
(Proposal No. 4) | AGAINST | 35 | ||
(Proposal No. 5) A stockholder proposal regarding a report on our content | AGAINST | 37 | ||
(Proposal No. 6) A stockholder proposal regarding board qualifications, if properly | AGAINST | 40 |
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
Other than the foursix items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. You may be asked to consider any other business that properly comes before the Annual Meeting.
Who is entitled to vote?
Holders of our common stock as of the close of business on March 30, 2016,27, 2019, the date our board of directors has set as the record date (the “Record Date”), may vote at the Annual Meeting. As of the record date,Record Date, there were 700,177,123767,912,563 shares of our common stock outstanding. In deciding all matters at the Annual Meeting, each stockholder will be entitled to one vote for each share of our common stock held by them on the record date.Record Date. We do not have cumulative voting rights for the election of directors.
Registered Stockholders of Record
If shares of our common stock are registered directly in your name with our transfer agent, you are considered the stockholder of record with respect to those shares, and the Notice was provided to you directly by us. As the stockholder of record, you have the right to grant your voting proxy and indicate your voting choices directly to the individuals listed on the proxy card or to vote
in person virtually at the Annual Meeting. Throughout this proxy statement, we refer to these registered stockholders as “stockholders of record.”
Street Name Stockholders
If shares of our common stock are held on your behalf in a brokerage account or by a bank or other nominee, you are considered to be the beneficial owner of shares that are held in “street name,” and the Notice was forwarded to you by your broker, bank or nominee, who is considered the stockholder of record with respect to those shares.other nominee. As the beneficial owner, you have the right to direct your broker, bank or other nominee as to how to vote your shares. Beneficial owners are also invited to attendshares in the Annual Meeting. However, since a beneficial owner is notmanner provided in the stockholder of record,voting instructions you may not votereceive from your shares of our common stock in person at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy.broker, bank or other nominee. If you request a printed copy of our proxy materials by mail, your broker, bank or other nominee will provide a voting instruction form for you to use. Street name stockholders are also invited to attend the Annual Meeting. However, because a street name stockholder is not the stockholder of record, you may not vote your shares of our common stock virtually at the Annual Meeting unless you follow your broker, bank or other nominee’s procedures for obtaining a legal proxy. Throughout this proxy statement, we refer to stockholders who hold their shares through a broker, bank or other nominee as “street name stockholders.”
Both stockholders of record and street name stockholders will be able to attend the Annual Meeting via live audio webcast, submit their questions during the meeting and vote their shares electronically at the Annual Meeting. For more information on how to attend the Annual Meeting, please see the section titled “Questions and Answers About the Proxy Materials and Our Annual Meeting—What do I need to do to attend the Annual Meeting virtually?” on page 6.
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
How many votes are needed for approval of each proposal?
| PROPOSAL | VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTIONS AND BROKER NON-VOTES | |
(Proposal No. 1) The election of |
Our amended and restated bylaws (the “Bylaws”) provide for majority voting and our Corporate Governance Guidelines set forth the related director resignation policy for our director nominees. Our Bylaws state that to be elected in an uncontested election, a nominee must receive a majority of the
Abstentions will have no effect on the outcome of this proposal. Brokernon-votes will have no effect on the outcome of this proposal. Under our Corporate Governance Guidelines, each nominee submits, in advance of their nomination, an irrevocable resignation that will become effective if (i) the nominee fails to receive the required vote at the Annual Meeting and (ii) the board of directors accepts the resignation. The nominating and corporate governance committee promptly considers whether to accept the resignation of any nominee who fails to receive the required number of votes for election and submits such recommendation for consideration by the board of directors. In deciding whether to accept or reject the resignation, the nominating and corporate governance committee and the board of directors will consider any factors they deem relevant. Any nominee who tenders his or her resignation pursuant to our Corporate Governance Guidelines may not participate in the nominating and corporate governance committee recommendation or board of directors action regarding whether to accept the resignation offer. | |
(Proposal No. 2) The approval, on an advisory basis, of theSay-on-Pay. | The affirmative vote of a majority of the shares of our common stock present
Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” the proposal. Brokernon-votes will have no effect on the outcome of this proposal.
Because this proposal is an advisory vote, the result will not be binding on our board of directors or our company. Our board of directors and our compensation committee will consider the outcome of the vote when determining compensation decisions for our named executive officers. |
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
| PROPOSAL | VOTE NEEDED FOR APPROVAL AND EFFECT OF ABSTENTIONS AND BROKER NON-VOTES | |
(Proposal No. 3) Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, | The affirmative vote of a majority of the shares of our common stock present
Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” the proposal. Brokernon-votes will have no effect on the outcome of this proposal. | |
(Proposal No. 4) | The affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions are considered votes
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(Proposal No. 5) A stockholder proposal regarding a report on our content enforcement policies, if properly presented at the Annual Meeting. | The affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” the proposal. Brokernon-votes will have no effect on the outcome of this proposal. | |||
(Proposal No. 6) A stockholder proposal regarding board qualifications, if properly presented at the Annual Meeting. | ||||
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
The affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon.
Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” the proposal. Brokernon-votes will have no effect on the outcome of this proposal.
What is a quorum?
A quorum is the minimum number of shares required to be present at the Annual Meeting to properly hold an annual meeting and conduct business under our amended and restated bylawsBylaws and Delaware law. The presence, in personvirtually or by proxy, of a majority of all issued and outstanding shares of our common stock entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting. Abstentions, withholdagainst votes and brokernon-votes are counted as shares present and entitled to vote for purposes of determining a quorum.
How do I vote?
If you are a stockholder of record, there are four ways to vote:
(have your Notice or proxy card in hand when you visit the website); |
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
If you are a street name stockholder, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to direct your broker, bank or other nominee on how to vote your shares. Street name stockholders should generally be able to vote by returning a voting instruction form, or by telephone or on the Internet. However, the availability of telephone and Internet voting will depend on the voting process of your broker, bank or other nominee. As discussed above, if you are a street name stockholder, you may not vote your shares in personlive at the virtual Annual Meeting unless you obtain a legal proxy from your broker, bank or other nominee.
What do I need to do to attend the Annual Meeting virtually?
Both stockholders of record and street name stockholders will be able to attend the Annual Meeting via live audio webcast, submit their questions during the meeting and vote their shares electronically at the Annual Meeting by visiting www.virtualshareholdermeeting.com/TWTR2019. To participate in the Annual Meeting, you will need the control number included on your Notice or proxy card.
The Annual Meeting live audio webcast will begin promptly at 12:30 p.m. Pacific Time on Monday, May 20, 2019. We encourage you to access the meeting prior to the start time. Onlinecheck-in will begin at 12:15 p.m. Pacific Time, and you should allow ample time for thecheck-in procedures.
What if I have technical difficulties during thecheck-in time or during the Annual Meeting?
If you encounter any difficulties accessing the virtual meeting during thecheck-in or meeting time, please call the technical support number that will be posted on the login page at www.virtualshareholdermeeting.com/TWTR2019. Please be sure to check in by 12:15 p.m. Pacific Time on May 20, 2019, the day of the Annual Meeting, so we may address any technical difficulties before the Annual Meeting live audio webcast begins.
Can I change my vote?
Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by:
If you are a street name stockholder, your broker, bank or other nominee can provide you with instructions on how to change your vote.
What do I need to do to attend the Annual Meeting in person?
You are invited to attend the Annual Meeting if you are a registered stockholder or a street name stockholder as of the record date. In order to enter the Annual Meeting, you must present a form of photo identification acceptable to us, such as a valid driver’s license or passport, as well as proof of share ownership. Please note that since a street name stockholder is not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy.
Please note that seating is limited and we ask that you please allow ample time for check-in. Seating will begin at 1:00 p.m. and the Annual Meeting will begin at 2:00 p.m. Parking in the area is limited. Please consider using public transportation. For security reasons, stockholders should be prepared to pass through metal detectors prior to entering the Annual Meeting. Please note that large bags and packages will not be allowed at the Annual Meeting. Persons will be subject to search.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our board of directors. Jack Dorsey (our Chief Executive Officer), Anthony NotoNed Segal (our Chief Financial Officer) and Vijaya Gadde (our General Counsel, SecretaryChief Legal Officer and head of communications)Secretary) have been designated as proxy holders by our board of directors. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our board of directors as described above. If any matters not described in this proxy statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
vote the shares. If the Annual Meeting is adjourned, the proxy holders can vote the shares on the new Annual Meeting date as well, unless you have properly revoked your proxy instructions, as described above.
Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?
In accordance with the rules of the SEC,Securities and Exchange Commission (“SEC”), we have elected to furnish our proxy materials, including this proxy statement and our annual report, primarily via the Internet. The Notice containing instructions on how to access our proxy materials is first being mailed on or about April 15, 20168, 2019 to all stockholders entitled to vote at the Annual Meeting.
Stockholders may request to receive all future proxy materials in printed form by mail or electronically by e-mailemail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of our proxy materials on the Internet to help reduce the environmental impact and the costs of our annual meetings of stockholders.
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
How are proxies solicited for the Annual Meeting?
Our board of directors is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. We will reimburse brokers, orbanks and other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker, bank or other nominee holds shares of our common stock on your behalf. In addition, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Our directors and employees will not be paid any additional compensation for soliciting proxies.
How may my brokerage firm or other intermediary vote my shares if I fail to provide timely directions?
Brokerage firms and other intermediaries holding shares of our common stock in street name for their customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker, bank or other nominee will have discretion to vote your shares on our sole “routine” matter: the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Your broker, bank or other nominee will not have discretion
to vote on the election of directors, the advisory vote onSay-on-Pay or the approval of the Twitter, Inc. 2016 Equity Incentive Plan,stockholder proposals, which are “non-routine”“non-routine” matters, absent direction from you.
Where can I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form8-K within four business days after the Annual Meeting, we will file a Current Report on Form8-K to publish preliminary results and will provide the final results in an amendment to the Current Report onForm 8-K as soon as they become available.
I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
We have adopted aan SEC approved procedure called “householding,“householding.” which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, our proxy materials to multiple stockholders who share the same address unless we have received contrary instructions from one or more of such stockholders. This procedure reduces our printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice and, if applicable, our proxy materials to any stockholder at a shared address to which we delivered a single copy of any of these materials. To receive a separate copy, or, if a stockholder is receiving multiple copies, to request that we only send a single copy of the Notice and, if applicable, our proxy materials, such stockholder may contact us at the following address:as follows:
Twitter, Inc.
Attention: Investor Relations
1355 Market Street, Suite 900
San Francisco, California 94103
Tel: (415)222-9670
Street name stockholders may contact their broker, bank or other nominee to request information about householding.
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors?
Stockholder Proposals
Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at next year’s annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our 20172020 annual meeting of stockholders, our Secretary must receive the written proposal at our principal executive offices not later than December 16, 2016.10, 2019. In addition, stockholder proposals must comply with the requirements of Rule14a-8 regarding the inclusion of
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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
stockholder proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to:
Twitter, Inc.
Attention: Secretary
1355 Market Street, Suite 900
San Francisco, California 94103
Our amended and restated bylawsBylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders but do not intend for the proposal to be included in our proxy statement. Our amended and restated bylawsBylaws provide that the only business that may be conducted at an annual meeting of stockholders is business that is (i) specified in our proxy materials with respect to such meeting, (ii) otherwise properly brought before such meeting by or at the direction of our board of directors, or (iii) properly brought before such meeting by a stockholder of record entitled to vote at the annual meeting who has delivered timely written notice to our Secretary, which notice must contain the information specified in our amended and restated bylaws.Bylaws. To be timely for our 20172020 annual meeting of stockholders, our Secretary must receive the written notice at our principal executive offices:
In the event that we hold our 20172020 annual meeting of stockholders more than 30 days before or more than 60 days after theone-year anniversary of the Annual Meeting, notice of a stockholder proposal that is not intended to be included in our proxy statement must be received no earlier than the
close of business on the 120th day before our 20172020 annual meeting of stockholders and no later than the close of business on the later of the following two dates:
If a stockholder who has notified us of his, her or its intention to present a proposal at an annual meeting does not appear to present his, her or its proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting.
Recommendation or Nomination of Director Candidates
You may proposerecommend director candidates for consideration by our nominating and corporate governance committee.committee if you have held one percent (1%) of the fully diluted capitalization of the company for at least twelve (12) months prior to the date of the submission of the recommendation. Any such recommendations must comply with our amended and restated certificate of incorporation, Bylaws and applicable laws, rules and regulations, should include the nominee’s name and qualifications for membership on our board of directors, and should be directed to our Secretary at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see the section titled “Board of Directors and Corporate Governance—Stockholder Recommendations and Nominations to the Board of Directors.”
In addition, our amended and restated bylawsBylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To nominate a director, the stockholder must provide the information required by our amended and restated bylaws.Bylaws. In addition, the stockholder must give timely notice to our Secretary in accordance with our amended and restated bylaws,Bylaws, which, in general, require that the notice be received by our Secretary within the time periods described above under “Stockholder Proposals” for stockholder proposals that are not intended to be included in a proxy statement.
Availability of Bylaws
A copy of our amended and restated bylaws, which were approved by our board of directors and stockholders in October 2013,Bylaws is available on our website at http:https://investor.twitterinc.com. You may also contact our Secretary at the address set forth above for a copy of the relevant bylawBylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
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AND CORPORATE GOVERNANCE
Board of Directors and Corporate Governance
Our business affairs are managed under the direction of our board of directors, which is currently composed of tennine members. All of our directors, other than Mr. Dorsey, our Chief Executive Officer, and Mr. Kordestani, our Executive Chairman, are independent within the meaning of the listing standards of the New York Stock Exchange (the “NYSE”). Our board of directors is divided into three classes of directors each serving a staggered three-year term. At each annual meeting of stockholders, a class of directors is elected for a three-year term to succeed the class whose term is then expiring.
The following table sets forth the names, ages as of March 31, 2016,2019, and certain other information for each of the members of our board of directors with terms expiring at the Annual Meeting (who are also nominees for election as a director at the Annual Meeting) and for each of the continuing members of our board of directors. Peter Chernin and Peter Currie, current membersEvan Williams stepped down as a member of our board of directors will not be standing for re-election at the Annual Meeting.effective February 28, 2019 and Marjorie Scardino stepped down as a member of our board of directors effective December 31, 2018. Full biographical information is below.
| CLASS | AGE | POSITION | DIRECTOR SINCE | CURRENT TERM EXPIRES | EXPIRATION OF TERM FOR WHICH NOMINATED | INDEPENDENT | AUDIT COMMITTEE | COMP. COMMITTEE | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | CLASS
| AGE
| POSITION
| DIRECTOR
| CURRENT
| EXPIRATION
| INDEPENDENT
| AUDIT
| COMP.
| NOMINATING
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| Directors with Terms expiring at the Annual Meeting/Nominees | Directors with Terms expiring at the Annual Meeting/Nominees |
Directors with Terms expiring at the Annual Meeting/Nominees
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| Jack Dorsey | III | 39 | Chief Executive Officer and Director | 2007 | 2016 | 2019 |
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42
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2007
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| Hugh Johnston(1) | III | 54 | Director | 2016 | 2016 | 2019 | X |   | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrick Pichette(1)(L)
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III
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56
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Director
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2017
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2019
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Robert Zoellick(2) | III
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65
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Director
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2018
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2019
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2022
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| Continuing Directors | Continuing Directors |
Continuing Directors
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| Omid R. Kordestani | I | 52 | Executive Chairman | 2015 | 2017 | — |
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Executive
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| Peter Fenton | I | 43 | Director | 2009 | 2017 | — | X |  | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marjorie Scardino(2) | I | 69 | Director | 2013 | 2017 | — | X | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Martha Lane Fox | II | 43 | Director | 2016 | 2018 | — | X |
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45
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Director
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2016
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2021
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Debra Lee
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II
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64
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Director
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2016
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2021
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Ngozi Okonjo-Iweala(3)
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I
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64
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Director
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2018
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2020
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| David Rosenblatt | II | 48 | Director | 2010 | 2018 | — | X | | |
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51
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Director
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2010
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2021
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X
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| Evan Williams | II | 44 | Director | 2007 | 2018 | — | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bret Taylor
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I
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38
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Director
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2016
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2020
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| (1) | Mr. |
| (2) | Mr. Zoellick joined the board of directors on July 19, 2018. |
| (3) | Dr. Okonjo-Iweala joined the board of directors on July 19, 2018 and joined the audit committee |
| Ms. |
Chair | Chair | Member | Audit committee financial expert |
| TWITTER, INC. / | |||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Considerations in Evaluating Director Nominees
Board of Directors Experience
✓ Regulatory ✓ Data Privacy ✓ Information Quality ✓ Machine Learning ✓ Strategic Transformation
|
CONSIDERATIONS IN EVALUATING DIRECTOR NOMINEESConsiderations in Evaluating Director Nominees
Our board of directors follow an annual director nomination process that promotes thoughtful andin-depth review of our board and committee composition as well as each individual director throughout the year. Each year, at the beginning of the process, the nominating and corporate governance committee usesreviews current board and committee composition in context with the company’s strategy to confirm that the traits, attributes and qualifications are aligned with our long-term strategy and continue to promote effective board and committee performance. The outcome of the annual evaluations is used to inform director search priorities as applicable. Each year, the nominating and corporate governance committee reviews incumbent director nominees, evaluates any changes in circumstances that may impact their candidacy, and considers information from the board evaluation process. The nominating and corporate governance committee also identifies potential new director nominees, in some cases, using a variety of methodssearch firm that is paid a fee for identifyingits services, together with referrals and evaluating director nominees.suggestions from board members and stockholders. In its evaluation of director candidates,2018, our nominating and corporate governance committee will considerretained the current size and compositionservices of our board of directors and the needs of our board of directors and the respective committees ofan executive search firm to assist it in identifying potential new candidates to join our board of directors. Additional qualifications that ourThe nominating and corporate governance committee considers include,interviews potential director nominees to explore their qualifications, as applicable (including, without limitation, issues of character, ethics, integrity, judgment, diversity ofprofessional experience, independence, area of expertise, strategic vision, length of service, potential conflicts of interest, management, accounting and finance expertise, cybersecurity / cyber risk expertise,
| 10 | TWITTER, INC. / 2019 Proxy Statement |
| ||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Considerations in Evaluating Director Nominees
risk management, talent development and other commitments. commitments), interest and availability for board service. Our board believes that our board of directors should be a diverse body. Our Corporate Governance Guidelines require our nominating and corporate governance committee to consider a broad range of backgrounds, experiences and diversity (in all aspects of that word). Our annual director nomination process is illustrated below.
Nominees must also have the ability to offer advice and guidance to our management based on past experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Director candidatesNominees must understand the fiduciary
responsibilities that are required of directors and have
sufficient time available in the judgment of our nominating and corporate governance committee to perform all board of director and applicable committee responsibilities. Members of our board of directors are expected to prepare for, attend, and participate in all board of director and applicable committee meetings.
Other than the foregoing, there are no stated minimum criteria for director nominees, although our nominating and corporate governance committee may also consider such other factors as it may deem, from time to time, are in our and our stockholders’ best interests.
Our board of directors believes that our board of directors should be Upon a diverse body. Our Corporate Governance Guidelines require ourrecommendation
from the nominating and corporate governance committee, to consider a broad range of backgrounds, experiences and diversity (in all aspects of that word). After completing its review and evaluation of director candidates, our nominating and corporate governance committee recommends to our fullthe board of directors approves the nomination of director nominees for selection.election at the annual meeting of stockholders.
The experiences, qualifications and skills of each of the members of our board of directors with terms expiring at the Annual Meeting (who are also nominees for election as a director at the Annual Meeting) and for each of the continuing members of our board of directors that the board of directors considered in the nomination of such director are included below the directors’ individual biographies on the following pages. The board of directors concluded that each nominee should serve as a director based on the specific experience and attributes listed below and the direct personal knowledge of each nominee’s previous service on the board of directors, including the insight each nominee brings to the board of directors’ functions and deliberations.
In 2015, our nominating
| TWITTER, INC. / 2019 Proxy Statement | 11 | ||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Orientation and corporate governance committee retained the services of an executive search firm to assist it in identifying potential new candidates toEducation
Director Orientation and Education
All directors who join our board are required to participate in a “bootcamp” event following their appointment, typically before their first board of directors and/or asmeeting, which is a robust program designed to provide directors with access to a variety of information and resources on key issues affecting our Chief Executive Officer.business. Newly appointed directors meet with members of senior management and select members of the board of directors in order to understand the business and operations
of the company, and are given an overview of, among other things, our key priorities and strategies, products, teams, financials, and key corporate governance and legal matters. Our bootcamp event is designed to bring our newly appointed directors up to speed quickly on important developments and issues in the context of our business and help them “hit the ground running” with their board of director and committee duties and responsibilities.
| TWITTER, INC. / |
| |||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Nominees for Director
NOMINEES FOR DIRECTORNominees for Director
JACK DORSEY
Co-Founder and Chief Executive Officer of Twitter, Inc. and Square, Inc.
Director since 2007
Age 3942
Committees: None
Jack Dorseyis one of our founders and has served as our Chief Executive Officer since September 2015 and as a member of our board of directors since May 2007. Mr. Dorsey served as our interim Chief Executive Officer from July 2015 to September 2015 and as our President and Chief Executive Officer from May 2007 to October 2008. Mr. Dorsey served as the ChairmanChairperson of our board of directors from October 2008 to September 2015. Since February 2009, Mr. Dorsey has served asCo-Founder and Chief Executive Officer of Square, Inc., a provider of payment processing services.
Skills and Expertise:
Global business leadership, operational experience, and experience developing technology asco-founder and Chief Executive Officer of Twitter and Square, Inc. |
In-depth knowledge of the technology sector and experience in developing transformative business models. |
Unmatched familiarity with and knowledge of our technologies and product offerings. |
Offers us a unique perspective with respect to building and managing a global brand in rapidly-changing industries. |
Outside board experience as a director of |
Other Current Public Company Board Service: The Walt Disney Company, a multinational media and entertainment company (December 2013 – March 2018) and Square, Inc., a payments processing company.services company (February 2009 – Present)
HUGH JOHNSTONPATRICK PICHETTE
Former Senior Vice ChairmanPresident and Chief Financial Officer of PepsiCo, Inc.Google
Director since 20162017
Age 5456
Committees:Audit Committee (Chair, effective May 26, 2016)(Chair) and Compensation Committee
Hugh JohnstonPatrick Pichettehas served as a member of our board of directors since April 2016.December 2017. From August 2008 until May 2015, Mr. Johnston has beenPichette served as Senior Vice ChairmanPresident and Chief Financial Officer of Pepsico,Google Inc., an internet search company (“Google”). From January 2001 until July 2008, Mr. Pichette served as an executive officer of Bell Canada Enterprises Inc., a global foodtelecommunications company, including, in his last position, as President, Operations for Bell Canada, and beverage company, since July 2015 and March 2010, respectively. Mr. Johnston servedpreviously as Executive Vice President, at Pepsico from March 2010 to July 2015. He joined PepsiCo in 1987Chief Financial Officer, and has held a number of increasing leadership roles, including Executive Vice President Global Operations from 2009of Planning and Performance Management. From 1996 to 2010 and President, Pepsi-Cola North America Beverages from 20072000, Mr. Pichette was a principal at McKinsey & Company, a management consulting firm. From 1994 to 2009. Mr. Johnston left PepsiCo, Inc. from August 1999 through March 2002 to pursue a general management role1996, he served as Vice President Retail at Merck Medco, leading the company’s retail pharmacy card business. Mr. Johnston served on the boardand Chief Financial Officer of directors of AOLCall-Net Enterprises Inc., a global media technology company, from October 2012 to June 2015.Canadian telecommunications company. Mr. JohnstonPichette holds a B.S.M.A. in Philosophy, Politics, and Economics from SyracuseOxford University and an M.B.A.a B.A. in Business Administration from the University of Chicago.Université du Québec à Montréal.
Skills and Expertise:
Global business leadership and extensive financial and management expertise as former Senior Vice |
Financial expertise and significant audit and financial reporting knowledge. |
Outside board experience as a director of |
Other Current Public Company Board Service: NoneBombardier Inc., a manufacturer of airplanes and trains (October 2013 – November 2017)
| TWITTER, INC. / | |||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing DirectorsNominees for Director
ROBERT ZOELLICK
Former President of the World Bank Group
Director since 2018
Age 65
Committees: None
Robert Zoellickhas served as a member of our board of directors since July 2018. From May 2017 to April 2019, Mr. Zoellick served as the Chairman of the Board of Directors of AllianceBernstein Holding L.P., a global investment management firm. Since August 2013, Mr. Zoellick has served as a board member of Temasek Holdings (Private) Ltd., a Singaporean corporation principally engaged in the business of investment holding. Since May 2017, he has served as a Senior Counselor to the Brunswick Group, a global public affairs and communications firms. Since July 2012, he has also been a Senior Fellow at the Belfer Center for Science and International Affairs at Harvard University’s Kennedy School of Government.
From October 2013 until September 2016, Mr. Zoellick served as Chairman of the Board of International Advisors at the Goldman Sachs Group. From July 2007 until June 2012, he served as President of the World Bank Group. From 2006 to 2007, he served as Vice Chairman, international and a managing director of Goldman Sachs. Mr. Zoellick served as the Deputy Secretary for the U.S. Department of State from 2005 until 2006 and as the U.S. Trade Representative from 2001 to 2005. From 1985 to 1993, Mr. Zoellick held various posts in the U.S. government, including Counselor to the U.S. Secretary of the Treasury, Under Secretary of State, and Deputy Chief of Staff at the White House. Mr. Zoellick holds a J.D. from the Harvard Law School, an M.P.P. from Harvard’s Kennedy School of Government, and a B.A. from Swarthmore College.
Skills and Expertise:
| ✓ | Finance and accounting experience as the former Chairman of the Board of Directors of AllianceBernstein Holding L.P., various positions at Goldman Sachs, and as President of the World Bank Group. |
| ✓ | Government and public policy experience from several positions in the U.S. Government, as a Senior Fellow at Harvard University’s Kennedy School of Government, and as a Senior Counselor to the Brunswick Group. |
| ✓ | Global business leadership and operational experience as the former President of the World Bank Group. |
Other Public Company Board Service: AllianceBernstein Holding L.P., a global investment management firm (May 2017 – April 2019) and Laureate Education, Inc., a network offor-profit higher institutions (December 2013 – December 2017)
CONTINUING DIRECTORSContinuing Directors
OMID R. KORDESTANI
Executive Chairman of Twitter, Inc.
Director since 2015
Age 5255
Committees:Committees: None
Omid R. Kordestanihas served as the Executive Chairman of our board of directors since October 2015. From August 2014 to August 2015, Mr. Kordestani served as Senior Vice President and Chief Business Officer at Google Inc.Google. From May 1999 to April 2009, Mr. Kordestani served as Senior Vice President of Global Sales and Business Development at Google Inc.Google. From 1995 to 1999, Mr. Kordestani served as Vice President of Business Development at Netscape Communications Corporation. Prior to joining Netscape Communications Corporation, Mr. Kordestani held positions in business development, product management and marketing at The 3DO Company, Go Corporation and Hewlett-Packard Company. Mr. Kordestani holds a B.S. in Electrical Engineering from San Jose State University and an M.B.A. from Stanford University.
Skills and Expertise:
Global business leadership, operational and organizational experience, corporate strategy experience and management experience as former Senior Vice President and Chief Business Officer of |
First-hand experience in successfully leading and managing large, complex global sales, support and service organizations in the technology industry. |
Other Current Public Company Board Service: None
PETER FENTON
General Partner at Benchmark
Director since 2009
Age 43
Committees: Audit Committee and Compensation Committee (Chair)
Peter Fenton has served asVodafone Group plc, a member of our board of directors since February 2009. Since September 2006, Mr. Fenton has served as a General Partner of Benchmark, a venture capital firm. Frommultinational telecommunications company (March 2013 – October 1999 to May 2006, Mr. Fenton served as a Managing Partner at Accel Partners, a venture capital firm. Mr. Fenton holds a B.A. in Philosophy and an M.B.A. from Stanford University.
Skills and Expertise:
Other Current Public Company Board Service: Yelp, Inc., a local directory and user review service, Hortonworks, Inc., an enterprise data management platform, New Relic, Inc., a software analytics company, and Zendesk, Inc., a customer service platform.2014)
| TWITTER, INC. / |
| |||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors
MARTHA LANE FOX
Founder and Chairperson of Lucky Voice Group Ltd.
Chairperson of MakieWorld Ltd.
FormerCo-Founder and Managing Director of lastminute.com
Crossbench Peer in House of Lords
Director since 2016
Age 4345
Committees: NoneCommittees: Audit Committee and Nominating and Corporate Governance Committee
Martha Lane Foxhas served as a member of our board of directors since April 2016. Since August 2005, Ms. Lane Fox has served as the founderFounder and chairpersonChairperson of Lucky Voice Group Ltd., a private karaoke company, and since September 2012 as the chairpersonChairperson of MakieWorld Ltd., a 3D printing and game company. From 1998 to 2003, Ms. Lane Fox was the co-founderCo-Founder and managing directorManaging Director of lastminute.com, a travel and leisure website, and remained on the board of directors until 2005. Since December 2017, Ms. Lane Fox has served as a member of the Joint Committee for National Security Strategy. Since March 2013, Ms. Lane Fox has served as a crossbench peer in the United Kingdom House of Lords.
Since September 2015, Ms. Lane Fox has served as the founder and chair of doteveryone.org.uk, an organization advancing the understanding and use of Internet enabled technologies, and in September 2014 was appointed Chancellor of Open University. From July 2007 to April 2015, Ms. Lane Fox served on the board of directors of Marks and Spencer plc, a retail company, and has also served on various private company boards. Ms. Lane Fox holds a B.A. in Ancient History and Modern History from University of Oxford.
Skills and Expertise:
Global business leadership, operational experience, and management experience as former |
Outside board experience as a director of a large, complex global public company, as well as several private companies. |
| ✓ | Valuable experience in technology and consumer industries. |
| ✓ | Government insights as crossbench peer in the United Kingdom House of Lords. |
Other Public Company Board Service: Marks and Spencer plc, a multinational retailer (July 2007 – April 2015)
DEBRA LEE
Former Chairperson and Chief Executive Officer of BET Networks
Director since 2016
Age 64
Committees:Nominating and Corporate Governance Committee (Chair)
Debra Leehas served as a member of our board of directors since May 2016. Between January 2006 and May 2018, Ms. Lee served as Chairperson and Chief Executive Officer of BET Networks, a media and entertainment subsidiary of Viacom, Inc. that owns and operates BET Networks and several other ventures. Ms. Lee held a number of executive positions with BET Networks after she joined in 1986 before becoming Chairperson and Chief Executive Officer in January 2006, including President and Chief Executive Officer from June 2005 to January 2006, President and Chief Operating Officer from 1995 to 2005 and also served as Executive Vice President and General Counsel, and Vice President and General Counsel. Ms. Lee holds a B.A. from Brown University, a J.D. from Harvard Law School and an M.P.P. from Kennedy School of Government at Harvard University.
Skills and Expertise:
| ✓ | Global business leadership, operational experience, and experience developing technology as former Chairperson and Chief Executive Officer of BET Networks. |
| ✓ | Over 25 years of leadership experience running one of the world’s top media companies. |
| ✓ | Offers us a unique perspective with respect to building and managing a global brand in rapidly-changing industries. |
| ✓ | Outside board experience as a director of several large, complex global public companies, |
Other Current Public Company Board Service: None
MARJORIE SCARDINO
Former CEOMarriott International, Inc., a worldwide operator, franchisor, and licensor of Pearson plc
Director since 2013
Age 69
Committees: Audit Committeehotels and Compensation Committee
Marjorie Scardino has served astimeshare properties under numerous brand names (2000 – Present), WGL Holdings, Inc., an energy company (1999 – July 2018) and Revlon, Inc., a member of our board of directors since December 2013. From January 1997 to December 2012, Ms. Scardino served as Chief Executive Officercosmetics, skin care, fragrance, and as a member of the board of directors of Pearson plc, a publishing and education company. From 1985 to 1997, Ms. Scardino served in several roles at The Economist Group, a mediapersonal care company including as Chief Executive Officer. Ms. Scardino served on the board of directors of Nokia Corporation, a telecommunications company, from 2001 to April 2013. Ms. Scardino holds a B.A. in Psychology from Baylor University and a J.D. from the University of San Francisco School of Law.
Skills and Expertise:
Other Current Public Company Board Service: International Airlines Group, an airline group, and PureTech Health Plc.(January 2006 – June 2015)
| TWITTER, INC. / | |||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors
NGOZI OKONJO-IWEALA
Senior Advisor to Lazard, Ltd.
Director since 2018
Age 64
Committees: Audit Committee
Ngozi Okonjo-Iwealahas served as a member of our board of directors since July 2018. Since September 2015,Dr. Okonjo-Iweala has served as a Senior Advisor to Lazard, Ltd., a global financial advisory and asset management firm. Prior to joining Lazard, Dr. Okonjo-Iweala served as the Minister of Finance of Nigeria from July 2003 until June 2006 and as the Minister of Finance and Coordinating Minister for the Economy of Nigeria from August 2011 until May 2015. From 1982 until 2003 and then from December 2007 until August 2011, she held several positions at the World Bank, most recently as Managing Director from December 2007 until August 2011. Dr. Okonjo-Iweala holds a Ph.D. from the Massachusetts Institute of Technology and an A.B. from Harvard University.
Skills and Expertise:
| ✓ | Over 30 years of experience in international finance and development. |
| ✓ | Finance and accounting experience as a Senior Advisor to Lazard Ltd. |
| ✓ | Government experience as the former Minister of Finance of Nigeria |
| ✓ | Global business leadership and operational experience as a former Managing Director at the World Bank. |
Other Public Company Board Service: Standard Chartered plc, a multinational banking and financial services company (November 2017 – Present)
DAVID ROSENBLATT
CEOChief Executive Officer of 1stdibs.com, Inc.
Director since 2010
Age 4851
Committees:Committees: Compensation Committee (Chair) and Nominating and Corporate Governance Committee
David Rosenblatthas served as a member of our board of directors since December 2010. Since November 2011, Mr. Rosenblatt has served as Chief Executive Officer of 1stdibs.com, Inc., an online luxury marketplace. From October 2008 to May 2009, Mr. Rosenblatt served as President of Global Display Advertising at Google. Mr. Rosenblatt joined Google in March 2008 in connection with Google’s acquisition of DoubleClick, Inc., a provider of digital marketing technology and services. Mr. Rosenblatt joined DoubleClick in 1997 as part of its initial management team and served in several executive positions during his tenure, including as Chief Executive Officer from July 2005 to March 2008 and President from 2000 to July 2005. Mr. Rosenblatt holds a B.A. in East Asian Studies from Yale University and an M.B.A. from Stanford University.
Skills and Expertise:
Global business leadership and extensive financial and management expertise as Chief Executive Officer of 1stdibs.com, Inc. |
Offers us a unique perspective with respect to building and managing a global brand in rapidly-changing industries. |
Outside board experience as a director of a large, complex global public company, as well as several private companies, which provides us with important perspectives in an evaluation of our practices and processes. |
Other Current Public Company Board Service:IAC/InterActiveCorp, a media and internet company.
EVAN WILLIAMS
CEO of Medium and The Obvious Corporation
Director since 2007
Age 44
Committees: None
Evan Williams is one of our founders and has served as a member of our board of directors since May 2007. From Octobercompany (December 2008 to October 2010, Mr. Williams served as our President and Chief Executive Officer, from July 2009 to March 2010, as our Chief Financial Officer and from February 2008 to October 2008, as our Chief Product Officer. Since April 2011, Mr. Williams has served as Chief Executive Officer of Medium, an online publishing platform, and since October 2006, as Chief Executive Officer of The Obvious Corporation, a technology systems innovator.
Skills and Expertise:
Other Current Public Company Board Service: None– Present)
| TWITTER, INC. / |
| |||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors
BRET TAYLOR
President and Chief Product Officer of Salesforce.com, Inc.
Director since 2016
Age 38
Committees: Compensation Committee
Bret Taylor has served as a member of our board of directors since July 2016. Since November 2017, Mr. Taylor has served as the President and Chief Product Officer of Salesforce.com, Inc., a customer relationship management company. From September 2012 to November 2017, Mr. Taylor served as the Chief Executive Officer andco-founder of Quip, Inc., a productivity software company (acquired by Salesforce.com, Inc.). From August 2009 to July 2012, Mr. Taylor served as Chief Technology Officer of Facebook, Inc. From October 2007 to August 2009, Mr. Taylor served as the Chief Executive Officer of FriendFeed, Inc., a social network. From June 2007 to September 2007, Mr. Taylor served as anentrepreneur-in-residence at Benchmark, a venture capital firm, where heco-founded FriendFeed, Inc. Prior to June 2007, Mr. Taylor served as Group Product Manager at Google, where heco-created Google Maps and the Google Maps API. Mr. Taylor holds a B.S. and a Master’s Degree in Computer Science from Stanford University.
Skills and Expertise:
| ✓ | Global business leadership, operational experience, and experience developing technology as President and Chief Product Officer of Salesforce.com, Inc. |
| ✓ | In-depth knowledge of the technology sector. |
| ✓ | Extensive knowledge of our technologies and product offerings. |
| ✓ | Offers us a unique perspective with respect to building and managing a global brand in rapidly-changing industries. |
| ✓ | Outside board experience as a director of a large, complex global public company. |
Other Public Company Board Service:Axon Enterprise, Inc. (f/k/a TASER International, Inc.), a protection technologies company (June 2014 – Present)
Our common stock is listed on the NYSE. Under the listing standards of the NYSE, independent directors must comprise a majority of a listed company’s board of directors. In addition, the listing standards of the NYSE 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 listing standards of the NYSE, a director will only qualify as an “independent director” if, in the opinion of that listed company’s board of directors, that director has no material relationship with the listed company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company) and such director does not have a relationship that would interferespecified relationships with the exercise of independent judgment in carrying out the responsibilities of a director.company.
In addition, audit committee members must satisfy the additional independence criteria set forth inRule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the listing standards of the NYSE. Compensation committee members must also satisfy the additional independence criteria set forth inRule 10C-1 under the Exchange Act and the listing standards of the NYSE.
Our board of directors has undertaken a review of the independence of our directors. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Mses. Lane Fox and ScardinoLee and Dr. Okonjo-Iweala, and Messrs. Chernin, Currie, Fenton, Johnston,Pichette, Rosenblatt, Taylor and Williams do not have a material relationship with the company (either directly, or as a partner, shareholder or officer of an organization that has a relationship with the company) and that each of these directors isZoellick are “independent” as that term is defined under the listing standards of the NYSE. As discussed below, all members of our audit and compensation committees also satisfy the heightened independence standards applicable to those committees. In the case of Mr. Williams and Ms. Scardino, former members of our board of directors who served as directors in 2018, Mr. Williams, one of ourco-founders, had been independent since 2015, and Ms. Scardino was independent during the time she served on our board of directors. In making these determinations, our board of directors considered the current and prior relationships that eachnon-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including in assessing the materiality of a director’s relationship with the company, considering the issue from the standpoint of the organizations with which the director has an affiliation, and the transactions involving them described in the section titled “Related Person Transactions.”
| TWITTER, INC. / 2019 Proxy Statement | 17 | ||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Leadership Structure and Role of Our Lead Independent Director
Board Leadership Structure and Role of ourOur Lead Independent Director
We believe that the structure of our board of directors and its committees provides strong overall management of our company. Our
Separate Executive Chairman and Chief Executive Officer Roles. We have maintained separate Executive Chairman of ourthe board of directors and our Chief Executive Officer roles since October 2015. We treat these positions as separate, with the distinct responsibilities of each role detailed below.
RESPONSIBILITIES OF EXECUTIVE CHAIRMAN | RESPONSIBILITIES OF CHIEF EXECUTIVE OFFICER | |
• Provide guidance, advice and mentorship to the Chief Executive Officer and other executive officers. • Involvement in key corporate matters, such as recruiting, major transactions, and broader business, customer and government relationships. • Monitor the content, quality and timeliness of information sent to our board of directors. • Preside over, set agenda for and chair board meetings. • Coordinate with chairs of board of directors committees. • Assist the nominating and corporate governance committee with (i) the board of director’s annual evaluation and self-assessment and (ii) board of directors composition and evolution planning, including review of committee memberships. | • Develop, set and drive the strategic direction, imperatives and priorities of our company. • Oversee the general management and operation of our company. • Oversee the attainment of our strategic, operational and financial goals and strategic and operational planning. • Responsible for the guidance, development and oversight of senior management. • Chief spokesperson to our employees, users, partners and stockholders. |
Lead Independent Director. Each of the directors, other than Messrs. Dorsey and Kordestani, are separate andindependent. The board of directors believes that the independent directors provide effective oversight of management. In addition, our independent directors have appointed a Lead Independent Director. This structure enables each person to focus on different aspects of company leadership. Our Chief Executive Officer is responsible for setting the strategic direction of our company, the general management and operation of the business and the guidance and oversight of senior management. The Executive Chairman of our board of directors is involved in key matters, such as advising our executive officers, recruiting, major transactions, and broader business, customer and government relationships and monitors the content, quality and timeliness of information sent to our board of directors.
Peter Currie,Mr. Pichette as our current Lead Independent Director, is empowered to, among other things, preside over meetings ofa position he has held since December 31, 2018 (replacing Ms. Scardino, our independent directors, approve information to be sent to our board of directors if requested to do so by our board of directors, approve proposed meeting agendas and schedules and call meetings of our board of directors or independent directors. Mr. Currie also performs such additional duties as our board of directors may otherwise determine and delegate. Our board of directors will appoint aformer Lead Independent Director). As Lead Independent Director, to replace Mr. Currie prior to the Annual Meeting.Pichette’s responsibilities include:
RESPONSIBILITIES OF LEAD INDEPENDENT DIRECTOR |
• Preside over meetings of our independent directors. • Approve information to be sent to our board of directors if requested to do so by our board of directors. • Advise the Executive Chairman as to the quality, quantity, and timeliness of the flow of information from management that is necessary for the independent directors to perform their duties effectively and responsibly. • Approve proposed meeting agendas and schedules. • Call meetings of our board of directors or independent directors. • Act as the principal liaison between the independent directors and the Executive Chairman on sensitive issues. • Additional duties as our board of directors may otherwise determine and delegate to assist the board of directors in the fulfillment of its responsibilities. |
We believe this structure of a separate Executive Chairman of our board of directors and Chief Executive Officer, combined with a Lead Independent Director, enables each person to focus on different aspects of company leadership and reinforces the independence of our board of directors as a whole andwhole. We believe this structure also results in an effective balancing of responsibilities, experience and independent perspective that meets the current business strategy and corporate governance needs and oversight responsibilities of our board of directors.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Meetings and Committees
We have an active and engaged board of directors that is committed to fulfilling its fiduciary duty to act in good faith in the best interests of our company and all of our stockholders. During our fiscal year ended December 31, 2015,2018, our board of directors held nineteenseven meetings (including regularly scheduled and special meetings) and acted by written/electronic consent sixnine times, and each director attended at
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors
least 75% of the aggregate of (i) the total number of meetings of our board of directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served.served, except for Dr. Okonjo-Iweala and Mr. Zoellick, who each missed one of two meetings of our board of directors that were held during the portion of our fiscal year ended December 31, 2018 in which they were serving as directors due topre-existing commitments scheduled prior to their appointment to our board.
Although we do not have a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we encourage, but do not require, our directors to attend. FiveTwo directors attended our 20152018 annual meeting of stockholders.
Our board of directors has established an audit committee, a compensation 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 will serve on these committees until their resignation or until as otherwise determined by our board of directors.
AUDIT COMMITTEE
Our audit committee consists of Messrs. Currie, FentonMr. Pichette, Ms. Lane Fox and Johnston andDr. Okonjo-Iweala, with Mr. Pichette serving as Chairperson. Dr. Okonjo-Iweala was appointed to the audit committee effective December 31, 2018 replacing Ms. Scardino with Mr. Currie serving as Chairman. Mr. Johnston will become Chairman immediately following the Annual Meeting, replacing Mr. Currie.who resigned therefrom. Each of our audit committee members meets the requirements for independence for audit committee members under the listing standards of the NYSE and SEC rules and regulations. Each member of our audit committee also meetsregulations, and the financial literacy and sophistication requirements of the listing standards of the NYSE. In addition, our board of directors has determined that Messrs. Currie and Johnston areMr. Pichette is an audit committee financial expertsexpert within the meaning of Item 407(d) of RegulationS-K under the
Securities Act of 1933, as amended.amended (“Securities Act”). Among other responsibilities, our audit committee:
Our audit committee operates under a written charter that satisfies the applicable rules and regulations of the Securities and Exchange Commission (“SEC”)SEC and the listing standards of the NYSE. A copy of the charter of our audit committee is available on our website at http:https://investor.twitterinc.com. During fiscal 2015,2018, our audit committee held tenfive meetings and acted by written/electronic consent one time.
COMPENSATION COMMITTEE
Our compensation committee consists of Messrs. FentonRosenblatt, Pichette and Rosenblatt and Ms. Scardino,Taylor, with Mr. FentonRosenblatt serving as Chairman. Ms. Scardino joinedChairperson. Mr. Pichette was appointed to the compensation committee on May 1, 2015,effective December 31, 2018 replacing Mr. Chernin.Ms. Scardino. Each of our compensation committee members meets the requirements for independence for compensation committee members under the listing standards of the NYSE and SEC rules and regulations, including Rule 10C-1 under the Exchange Act.regulations. Each member of our compensation committee is also anon-employee director under Rule16b-3 promulgated under the Exchange Act,Act.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Meetings and an outside director under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Committees
Among other responsibilities, our compensation committee:
Our compensation committee operates under a written charter that satisfies the applicable rules and regulations of
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Compensation Committee
the SEC and the listing standards of the NYSE. A copy of the charter of our compensation committee is available on our website at http:https://investor.twitterinc.com. During fiscal 2015,2018, our compensation committee held sixthree meetings and acted by writtenwritten/electronic consent sixseven times.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Our nominating and corporate governance committee consists of Messrs. Chernin, CurrieMses. Lane Fox and Lee and Mr. Rosenblatt, with Mr. CherninMs. Lee serving as Chairman, eachChairperson. Each of our nominating and corporate governance committee members meets the requirements for independence under the listing standards of the NYSE and SEC rules and regulations. Mr. Chernin served as Chairman of our nominating and corporate governance committee beginning on May 1, 2015 replacing Mr. Currie. Our board of directors will appoint new members of the nominating and corporate governance committee to replace Messrs. Chernin and Currie prior to the Annual Meeting. rules.
Among other responsibilities, our nominating and corporate governance committee:
Our nominating and corporate governance committee operates under a written charter that satisfies the applicable listing standards of the NYSE. A copy of the charter of our
nominating and corporate governance committee is available on our website at http:https://investor.twitterinc.com. During fiscal 2015,2018, our nominating and corporate governance committee held one meetingthree meetings and acted by writtenwritten/electronic consent one time.
MAJORITY VOTING WITH DIRECTOR RESIGNATION POLICY
Our Bylaws provide for majority voting and our Corporate Governance Guidelines set forth the related director resignation policy for our director nominees. Our Bylaws state that to be elected in an uncontested election, a nominee must receive a majority of the votes cast with respect to such nominee (i.e., the number of shares voted “For” a nominee must exceed the number of shares voted “Against” for that nominee). Under our Corporate Governance Guidelines, each nominee submits, in advance of their nomination, an irrevocable resignation that will become effective if (i) the nominee fails to receive the required vote at the Annual Meeting and (ii) the board of directors accepts the resignation. The nominating and corporate governance committee promptly considers whether to accept the resignation of any nominee who fails to receive the required number of votes for election and submits such recommendation for consideration by the board of directors. In deciding whether to accept or reject the resignation, the nominating and corporate governance committee and the board of directors will consider any factors they deem relevant. Any nominee who tenders his or her resignation pursuant to our Corporate Governance Guidelines may not participate in the nominating and corporate governance committee recommendation or board of directors action regarding whether to accept the resignation offer.
Through this policy, the board of directors seeks to be accountable to all stockholders and respects the rights of
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Meetings and Committees
stockholders to express their views through their votes for nominees. However, the board of directors also deems it important to preserve sufficient flexibility to make sound evaluations based on the relevant circumstances in the event a nominee fails to receive a majority of the votes cast with respect to such nominee. For example, the board of directors may wish to assess whether the sudden resignation of one or more directors would materially impair the effective functioning of the board of directors. The board of directors’ policy is intended to allow the board of directors to react to situations that could arise if the resignation of multiple directors would prevent a key committee from achieving a quorum or if a resignation would otherwise impair the functioning of the committee. The policy also would allow the board of directors to assess whether a director was targeted for reasons unrelated to his or her performance as a director at the company. The policy requires that our nominating and corporate governance committee and our board of directors act promptly to consider a director nominee’s resignation.
Full details of our majority voting with director resignation policy for nominees are set forth in our Bylaws and our Corporate Governance Guidelines, available at https://investor.twitterinc.com.
Notwithstanding the foregoing, if the number of nominees exceeds the number of directors to be elected at the end of the applicable notice period set forth in Section 2.4 of Article II of our Bylaws (e.g., a contested election) the majority voting with director resignation policy shall not apply and instead nominees shall be elected by a plurality vote of the shares of our common stock present virtually or by proxy at an annual meeting and entitled to vote thereon. A plurality vote means that the nominees who receive the highest number of votes cast “For” are elected as directors. In such an election you may vote “For” or “Withhold” on each of the nominees for election as a director. Abstentions would have no effect on the outcome of this type of election. Brokernon-votes would have no effect on the outcome of this type of election.
BOARD AND COMMITTEE PERFORMANCE EVALUATIONS
Our board of directors and each of its committees conduct annual self-evaluations to determine whether they are functioning effectively and whether any changes are necessary to improve their performance. The nominating and corporate governance committee is responsible for establishing the evaluation criteria and implementing the process for the evaluation. Every year we conduct interviews of each director to obtain his or her assessment of the
effectiveness of the board of directors and the committees, individual director performance and board of directorsdirectors’ dynamics. The Lead Independent DirectorExecutive Chairman and our General CounselChief Legal Officer then report the results of these interviews at meetings of the nominating and corporate governance committee and our board of directors, where the results are discussed. In addition, the chair of each committee guides an annual committee self-evaluation discussion among the committee members. The results of the committee self-evaluations are also reported to our board of directors for review and discussion.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee during the last fiscal year is or has been an officer or employee of our company.company or had any relationship requiring disclosure under Item 404 of RegulationS-K, under the Securities Act. None of our executive officers currently serves, or in the past fiscal year has 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 compensation committee. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the 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.directors.
Stockholder Recommendations and Nominations to the Board of Directors
Our nominating and corporate governance committee will consider candidates for director recommended by stockholders holding at least one percent (1%) of the fully diluted capitalization of the company continuously for at least twelve (12) months prior to the date of the submission of the recommendation, so long as such recommendations comply with our amended and restated certificate of incorporation, amendedBylaws and restated bylaws and applicable
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board and Committee Performance Evaluations
laws, rules and regulations, including those promulgated by the SEC. Our nominating and corporate governance committee will evaluate such recommendations in accordance with its charter, our amended and restated bylaws,Bylaws, our policies and procedures for director candidates,nominees, as well as the regular director nominee criteria described above. This process is designed to ensure that our board of directors includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to our business.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Stockholder Recommendations and Nominations to the Board of Directors
Eligible stockholders wishing to recommend a candidate for nomination should contact our General Counsel or our Legal Department in writing.writing at Twitter, Inc., 1355 Market Street, Suite 900, San Francisco, California 94103. Such recommendations must include information about the candidate, a statement of support by the recommending stockholder, evidence of the recommending stockholder’s ownership of our common stock and a signed letter from the candidate confirming willingness to serve on our board of directors. Our nominating and corporate governance committee has discretion to decide which individuals to recommend for nomination as directors.
Under our amended and restated bylaws,Bylaws, stockholders may also nominate persons for our board of directors. Any nomination must comply with the requirements set forth in our amended and restated bylawsBylaws and should be sent in writing to our General Counsel or our Legal DepartmentSecretary at Twitter, Inc., 1355 Market Street, Suite 900, San Francisco, California 94103. To be timely for our 20172020 annual meeting of stockholders, our General Counsel or Legal DepartmentSecretary must receive the nomination no earlier than January 30, 201724, 2020 and no later than March 1, 2017.February 23, 2020.
Communications with the Board of Directors
Interested parties wishing to communicate with our board of directors or with an individual member or members of our board of directors may do so by writing to our board of directors or to the particular member or members of our board of directors, as applicable, and mailing the correspondence to our General Counsel at Twitter, Inc., 1355 Market Street, Suite 900, San Francisco, California 94103.
Each communication should set forth (i) the name and address of the stockholder, as it appears in our records, and if the shares of our common stock are held by a nominee, the name and address of the beneficial owner of such shares, and (ii) the number of shares of our common stock that are owned of record by the record holder and beneficially by the beneficial owner.
Our General Counsel, in consultation with appropriate members of our board of directors as necessary, will review all incoming communications and, if appropriate, all such communications will be forwarded to the appropriate member or members of our board of directors, or if none is specified, to the Executive Chairman of our board of directors.
We regularly monitor developments in the area of corporate governance and review our processes and procedures in light of such developments. As part of those efforts, we review federal laws affecting corporate governance, as well as rules adopted by the SEC and the NYSE.NYSE and we consider industry best practices for corporate governance. We believe that we have in place corporate governance procedures and practices that are designed to enhance our stockholders’ interests.
Corporate Governance Strengths
We are committed to good corporate governance, which promotes the long-term interests of our stockholders and strengthens our board of directors and management accountability and helps build public trust in Twitter. Highlights of our corporate governance practices include the following:
Over 75% of |
Separate CEO and Executive Chairman |
Lead |
Majority voting with director resignation policy for |
Compensation recovery (clawback) policy for cash-based incentive or performance-based equity compensation in the event of a financial restatement |
Thoughtful board refreshment process |
100% independent committee members |
| ✓ | Succession planning process |
| ✓ | Strict anti-hedging, anti-short sale and anti-pledging policies |
Robust Code of Business Conduct and Ethics and Corporate Governance Guidelines |
Director participation in orientation and continuing education |
Annual board of director and committee self-evaluations |
Expansive stockholder outreach program |
| ✓ | Periodic reviews of committee charters, Code of Business Conduct and Ethics and Corporate Governance Guidelines |
Robust director nominee selection process |
Risk oversight by full board and committees |
AnnualSay-on-Pay vote |
Roll-out of performance-based equity incentives |
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Stockholder OutreachCorporate Governance Overview
STOCKHOLDER OUTREACH
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Corporate Governance Overview
STOCKHOLDER OUTREACH
We believe that effective corporate governance should include regular, constructive conversations with our stockholders. During the past fiscal year, certainCertain members of our board and members of our executive team have continued to engageengaged with stockholders directly.directly throughout the year. Our board has also directed our management team to seek and encourage feedback from stockholders about our corporate governance practices by conducting additional stockholder outreach and engagement throughout the year. As a result,During the past fiscal year, our management team reached out to our top institutional investors collectively holding approximately 49% of our shares outstanding and met in person and through teleconference meetings with a wide rangeinstitutional investors holding approximately 29% of institutional stockholdersour shares outstanding to discuss our corporate governance and executive compensation programs and to answer questions and elicit feedback. These engagement efforts with our stockholders allowed us to better understand our stockholders’ priorities and perspectives, and provided us with useful input concerning our compensation and corporate governance practices. As a result of our stockholder outreach program in 2015, we (i) made changes to our executive compensation, as more fully described in the section titled “Executive Compensation—Compensation Discussion and Analysis—Executive Summary—Our Investor Outreach Program and Resulting Compensation Changes,” (ii) committed to implement majority voting with a director resignation policy for our 2017 annual meeting of stockholders (which would provide that, in an uncontested election, if any director nominee receives an equal or greater number of votes “WITHHELD” from his or her election as compared to votes “FOR” such election and no successor has been elected at such meeting, the director nominee must tender his or her resignation) and (iii) included more disclosure in this proxy statement around our corporate governance practices, including the experience of our directors, our corporate governance strengths and policies.
While we do not expect that we will always be able to address all of our stockholders’ feedback, we seek to optimize our corporate governance by continually refining our relevant policies, procedures and practices to align the needs of the company with evolving regulations and best practices, issues raised by our stockholders, and otherwise as circumstances warrant. We believe that our actions advanced our compensation practices and governance in a manner responsive to the input we received from our stockholders and in a manner appropriate for our company. We will continue to review our compensation and governance practices and engage in significant dialogue with our stockholders going forward.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
Our board of directors has adopted our Corporate Governance Guidelines that addressesaddress items such as:
• director qualifications; • director independence; • director responsibilities; • executive sessions and leadership roles; • conflicts of interest; • board of directors committees; • director access to management and advisors; • director compensation; | • director orientation training and continuing education; • leadership development and succession planning; • CEO evaluation; • stockholder communications with the board of directors; and • performance evaluation of the board of directors and its committees. |
In addition, our board of directors has adopted aour Code of Business Conduct and Ethics thatwhich applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer, and other executive and senior financial officers, that addresses items such as:
• our core values; • corporate opportunities; • fair dealing; • compliance with laws and policies; • confidentiality; • financial integrity and responsibility; | • protection and use of assets and intellectual property; • public communications and financial reporting; • reporting violations of law and policies; • accountability; and • no retaliation. |
The full text of our Corporate Governance Guidelines and our Code of Business Conduct and Ethics is posted on the Corporate Governance portion of our website at http:https://investor.twitterinc.com/.investor.twitterinc.com. We will post any amendments to our Corporate Governance Guidelines, Code of Business Conduct and Ethics and any waivers of our Code of Business Conduct and Ethics for directors and executive officers on the same website.
RISK MANAGEMENTRisk Management
Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, legal and compliance, and reputational. We have designed
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Risk Management
and implemented processes to manage such risks. Management is responsible for theday-to-day management of risks the company faces, while our board of directors, as a whole and assisted by its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are appropriate and functioning as designed.
Our board of directors believes that open communication between management and our board of directors is essential for effective risk management and oversight. Our board of directors meets with our Chief Executive Officer and other members of the senior management team at quarterly meetings of our board of directors, where, among other topics, they discuss strategy and risks facing the company, as well at such other times as they deemed appropriate. In addition, cybersecurity is a critical part of risk management at Twitter. Twitter’s Chief Information Security Officer regularly engages with our full board of directors and our audit committee on Twitter’s information security program and its related priorities and controls.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Risk Management
While our board of directors is ultimately responsible for risk oversight, our board committees assist our board of directors in fulfilling its oversight responsibilities in certain areas of risk, as summarized below. In addition, our full board of directors reviews strategic and operational risk in the context of reports from the management team, receives reports on all significant committee activities at each regular meeting, and evaluates the risks inherent in significant transactions.
BOARD/COMMITTEE | PRIMARY AREAS OF RISK OVERSIGHT | |
Full Board of Directors | Strategic, financial, business and operational, legal and compliance, and reputational risks and exposures associated with our business strategy, cybersecurity, privacy, user safety, product innovation and product road map, policy matters, significant litigation and regulatory exposures, significant transactions and other current matters that may present material risk to our financial performance, operations, infrastructure, plans, prospects or reputation, acquisitions and divestitures. | |
Audit Committee | Risks and exposures associated with financial matters, particularly financial reporting, disclosure controls and procedures, legal and regulatory compliance, financial risk exposures, cybersecurity, cyber risk, liquidity risk, tax, accounting, disclosure, internal control over financial reporting, investment guidelines and credit matters, our programs and policies relating to legal compliance and strategy, and our operational infrastructure, particularly reliability, business continuity and capacity.
Discussions with management and the independent auditor, guidelines and policies with respect to risk assessment and risk management. Receives regular reports from our Chief Information Security Officer on key cybersecurity, cyber risks and related issues, including secure processing, storage, and transmission of personal and confidential information, such as the personally identifiable information of our users. | |
Compensation Committee | Risks and exposures associated with leadership assessment, executive compensation programs and arrangements, including overall incentive and equity plans. | |
Nominating and Corporate Governance Committee | Risks and exposures associated with board organization, membership and structure, succession planning, corporate governance and overall board effectiveness. |
Management Succession Planning
Our board of directors believes that the directors and the Chief Executive Officer, should collaborate on succession planning and that the entire board should be involved in the critical aspects of the succession planning process, including
establishing selection criteria that reflect our business
strategies, identifying and evaluating potential internal candidates, reviewing the company’s leadership pipeline and talent strategies, and making key management succession decisions. Management succession is regularly discussed by the directors in board of directors meetings and in executive sessions of the board of directors. Our board of directors
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Risk Management Succession Planning
annually conducts a detailed review ofThe nominating and corporate governance committee has the company’s leadership pipeline, talent strategies andprimary responsibility to develop succession plans for key executive positions. the company’s management team, which it then presents and makes recommendations on to the full board of directors. Our board of directors’ and our nominating and corporate governance committee’s involvement in our annual succession planning process is outlined in our Corporate Governance Guidelines and the charter of our nominating and corporate governance committee available at https://investor.twitterinc.com.
Directors become familiar with potential successors for key management positions through various means, including the comprehensive annual talent review further described below, board dinners and presentations and informal meetings.
KEY OFFICER SUCCESSION PLANNING
In light of the critical importance of executive leadership to our success, we have a succession planning process. This process is focused on key leaders, including our Chief Executive Officer. Periodically, the full board of directors reviews these succession plans and any findings and recommendations as to succession in the event of each key officer’s termination of employment for any reason (including death or disability).
CEO SUCCESSION PLANNING
Our Chief Executive Officer provides an annual review to the board of directors assessing our key officers. This review includes a discussion about development plans for the company’s key officers to help prepare them for future succession, contingency plans and our Chief Executive Officer’s recommendation as to his successor.
In December 2013, our board of directors, upon the recommendation of our compensation committee, adopted our Outside Director Compensation Policy for the compensation of ournon-employee directors.
The Outside Director Compensation Policy was developed in consultation with Compensia, Inc., an independent compensation consulting firm (“Compensia”). Compensia provided recommendations and competitivenon-employee director compensation data and analyses. Our compensation committee considered and discussed these recommendations and data, and considered the specific duties and committee responsibilities of particular directors.
Our compensation committee recommended and our board of directors adopted Compensia’s recommendations when it approved ournon-employee director compensation program, which we believe provides ournon-employee directors with reasonable and appropriate compensation that is commensurate with the services they provide and competitive with compensation paid by our peers to theirnon-employee directors.
The compensation committee periodically reviews the type and form of compensation paid to ournon-employee directors, which includes a market assessment and analysis by Compensia. As part of this analysis, Compensia reviewsnon-employee director compensation trends and data from companies comprising the same executive compensation peer group used by the compensation committee in connection with its review of executive compensation.
Ournon-employee directors receive compensation in the form of equity grantedcompensation under the terms of our 2013 Equity Incentive Plan (the “2013 Plan”) and cash, as described below. The 2013 Plan contains maximum limits on the size of the equity awards that can be granted to each of ournon-employee directors in any fiscal year, but those maximum limits do not reflect the intended size of any potential grants or a commitment to make any equity award grants to ournon-employee directors in the future. These maximum limits under our 2013 Plan provide that nonon-employee director may be granted, in any fiscal year, (i) cash-settled awards having a grant-date fair value greater than $4,000,000, but that in the fiscal year that anon-employee director first joins our board of directors, he or she may be granted a cash-settled award with a grant-date fair value of up to $8,000,000; and (ii) stock-settled awards having a grant-date fair value greater than $4,000,000, but that in the fiscal year that an outside director first joins our board of directors, he or she may be granted stock-settled awards having a grant-date fair value of up to $8,000,000. The grant-date fair values are determined according to generally accepted accounting principles.
Directors may be reimbursed for their reasonable expenses for attending board and committee meetings. Directors who are also our employees receive no additional compensation for their service as directors.
During 2015,2018, only Mr. Costolo (during the period from January 1, 2015 to July 1, 2015), Mr. Dorsey (during the period from July 1, 2015 to December 31, 2015) and Mr. Kordestani (duringwere employees and, accordingly, did not receive compensation under the period from October 13, 2015 to December 31, 2015) were employees.Outside Director Compensation Policy. See the section titled “Executive Compensation” for additional information about their compensation.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Compensation
EQUITY COMPENSATION
On the date of each annual meeting of stockholders, each of ournon-employee directors is granted restricted stock units (“RSUs”) having a grant date fair value equal to $225,000, computed in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”), Topic 718.718 (other than Mr. Williams who elected to receive such amount in the form of cash). The shares of our common stock underlying the RSUs vest in quarterly installments beginning the first quarter following the date of grant (on the same day of the month as the date of grant) but will vest in full on the date of the next annual meeting of stockholders if not fully vested on such date, subject to continued service through each vesting date. If, asDirectors who are appointedmid-year receive apro-rated RSU grant based on the number of months between their appointment date and the date of our next annual meeting of stockholders.
As of the date of an annual meeting of stockholders, one of our this proxy statement, allnon-employee directors holds an equity award to acquire shares of our common stock that is not fully vested, the value of the new RSUs granted at such annual meeting of stockholders to such non-employee director will be reduced in accordance with the terms of our Outside Director Compensation Policy.
As of December 31, 2015, all non-employee directors who heldhold unvested equity awards would have beenbe subject to accelerated vesting if their services had beenwere to be terminated in connection with a change of control.
CASH COMPENSATION
Each of ournon-employee directors receives a quarterly cash fee of $12,500 in cash for serving on our board of directors. In addition, members of the three standing committees of our board of directors are entitled to the following quarterly cash fees:
| BOARD COMMITTEE | CHAIRPERSON FEE | MEMBER FEE | ||||||||||||||||||
| Audit Committee | $7,500 | $2,500 | ||||||||||||||||||
| Compensation Committee | $5,000 | $2,500 | ||||||||||||||||||
| Nominating and Corporate Governance Committee | $3,750 | $2,500 | ||||||||||||||||||
However, if a non-employee director held unvested equity awards with respect to shares of our common stock that were outstanding as of December 2, 2013, such director is not entitled to cash fees until the first month after he or she is fully vested in such equity awards.
BOARD COMMITTEE
|
CHAIRPERSON FEE
|
MEMBER FEE
| ||||||||||||||||||
Audit Committee
|
$7,500
| $2,500
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Compensation Committee
| $5,000
| $2,500
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Nominating and Corporate Governance Committee
| $3,750
| $2,500
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Ournon-employee directors may elect to receive any cash fees that they would otherwise be entitled to receive under our Outside Director Compensation Policy in the form of additional RSUs. Such election must be made no later than two weeks prior to the date of the annual meeting of stockholders on which the annual grant of RSUs described above will be made and the value of the RSUs granted at such annual meeting of stockholders will be increased by the amount of fees that would have otherwise been paid in cash.
Our 2013 Plan contains maximum limits on the size of the equity awards that can be granted to each of our non-employee directors in any fiscal year, but those maximum limits do not reflect the intended size of any potential grants or a commitment to make any equity award grants to our non-employee directors in the future.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Compensation for 2015
COMPENSATION FOR 20152018
The following table provides information regarding the total compensation that was earned by each of ournon-employee directors in 2015.2018.
| DIRECTOR | FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS ($) (1) | TOTAL ($) | ||||||||||||
| Richard Costolo (2) | — | — | — | ||||||||||||
| Jack Dorsey (3) | — | — | — | ||||||||||||
| Peter Chernin (4) | — | — | — | ||||||||||||
| Peter Currie (5) | — | 315,000 | 315,000 | ||||||||||||
| Peter Fenton (6) | — | 305,000 | 305,000 | ||||||||||||
| Marjorie Scardino (7) | — | 295,000 | 295,000 | ||||||||||||
| David Rosenblatt (8) | — | 295,000 | 295,000 | ||||||||||||
| Evan Williams | 131,250 | — | 131,250 | ||||||||||||
DIRECTOR
| FEES EARNED
| STOCK
| TOTAL
| ||||||||||||
Martha Lane Fox (2)
|
70,000
|
225,000
|
295,000
| ||||||||||||
Debra Lee (3)
|
65,000
|
225,000
|
290,000
| ||||||||||||
Ngozi Okonjo-Iweala (4)
|
22,715
|
206,250
|
228,965
| ||||||||||||
Patrick Pichette (5)
|
80,000
|
225,000
|
305,000
| ||||||||||||
David Rosenblatt (6)
|
80,000
|
225,000
|
305,000
| ||||||||||||
Marjorie Scardino (7)
|
—
|
295,000
|
295,000
| ||||||||||||
Bret Taylor (8)
|
—
|
285,000
|
285,000
| ||||||||||||
Evan Williams (9)
|
275,000
|
—
|
275,000
| ||||||||||||
Robert Zoellick (10)
|
22,715
|
206,250
|
228,965
| ||||||||||||
| (1) | The amounts reported represent the total value of RSUs |
| (2) | As of December 31, |
As of December 31, |
Dr. Okonjo-Iweala joined the board of directors effective as of July 19, 2018. As of December 31, |
Mr. Pichette joined the board of directors in December 2017 and in 2018 he was granted $93,750 of RSUs in respect of his service from his appointment date through the date of our next annual meeting in May 2018 in addition to the $225,000 of RSUs shown in the table above granted in respect of his service from the date of our annual meeting in May 2018 through the date of our next annual meeting in May 2019. As of December 31, |
| (6) | As of December 31, 2018, Mr. Rosenblatt held 3,274 RSUs which vest in quarterly installments such that the RSUs will vest in full on the earlier of the date of our Annual Meeting or May 30, 2019, subject to continued service through each such vesting date. As of December 31, 2018, Mr. Rosenblatt held an option to purchase a total of 270,000 shares of our common stock all of which were vested as of December 31, 2018. |
| (7) | Ms. Scardino elected to receive all cash fees in the form of RSUs. Ms. Scardino resigned as a member of the board of directors effective December 31, 2018 and forfeited 4,293 RSUs as a result of the service-based vesting conditions. |
| (8) | Mr. Taylor elected to receive all cash fees in the form of RSUs. As of December 31, 2018, Mr. Taylor held 4,147 RSUs which vest in quarterly installments such that the RSUs will vest in full on the earlier of the date of our Annual Meeting or May 30, 2019, subject to continued service through each such vesting date. |
| (9) | Mr. Williams elected to receive all outside director compensation in the form of cash. Mr. Williams resigned as a member of the board of directors effective February 28, 2019. |
| (10) | Mr. Zoellick joined the board of directors effective as of July 19, 2018. As of December 31, 2018, Mr. Zoellick held 3,603 RSUs which vest in quarterly installments such that the RSUs will vest in full on the earlier of the date of our Annual Meeting or July 26, 2019, subject to continued service through each such vesting date. |
| TWITTER, INC. / |
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Our board of directors is currently composed of tennine members. In accordance with our amended and restated certificate of incorporation, our board of directors is divided into three staggered classes of directors. At the Annual Meeting, twothree Class III directors will be elected for a three-year term to succeed the same classClass III directors whose term is then expiring. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation, or removal. Following the Annual Meeting, we expect to reduce the number of authorized directors to eight to eliminate the vacancies resulting following the expiration of the terms of Messrs. Chernin and Currie.
Our nominating and corporate governance committee has recommended, and our board of directors has approved, Jack Dorsey, Patrick Pichette and Hugh JohnstonRobert Zoellick as nominees for election as Class III directors at the Annual Meeting. If elected, each of Messrs. Dorsey, Pichette and JohnstonZoellick will serve as Class III directors until our 20192022 annual meeting of stockholders and until their successors are duly elected and qualified.qualified, or until their earlier death, resignation, or removal. Each of the nominees is currently a director of our company.company; however, Mr. Zoellick is standing for election by stockholders for the first time. For information concerning the nominees, please see the section titled “Board of Directors and Corporate Governance.”
If you are a stockholder of record and you sign your proxy card or vote by telephone or over the Internet but do not give instructions with respect to the voting of directors, your shares will be voted “FOR” the election of Messrs. Dorsey, Pichette and Johnston.Zoellick. We expect that each of Messrs. Dorsey, Pichette and JohnstonZoellick will accept such nomination; however, in the event that a director nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee designated by our board of directors to fill such vacancy. If you are a street name stockholder and you do not give voting instructions to your broker, bank or nominee, your broker, bank or other nominee will leavenot vote your shares unvoted on this matter.
TheOur Bylaws provide for majority voting and our Corporate Governance Guidelines set forth the related director resignation policy for our director nominees. Our Bylaws state that to be elected in an uncontested election, a nominee must receive a majority of the votes cast with
respect to such nominee (i.e., the number of shares voted “For” a nominee must exceed the number of shares voted “Against” for that nominee). Abstentions will have no effect on the outcome of this proposal. Brokernon-votes will have no effect on the outcome of this proposal.
Under our Corporate Governance Guidelines, each nominee submits, in advance of their nomination, an irrevocable resignation that will become effective if (i) the nominee fails to receive the required vote at the Annual Meeting and (ii) the board of directors accepts the resignation. The nominating and corporate governance committee promptly considers whether to accept the resignation of any nominee who fails to receive the required number of votes for election and submits such recommendation for consideration by the board of directors. In deciding whether to accept or reject the resignation, the nominating and corporate governance committee and the board of directors will consider any factors they deem relevant. Any nominee who tenders his or her resignation pursuant to our Corporate Governance Guidelines may not participate in the nominating and corporate governance committee recommendation or board of directors action regarding whether to accept the resignation offer.
Through this policy, the board of directors seeks to be accountable to all stockholders and respects the rights of stockholders to express their views through their votes for nominees. However, the board of directors also deems it important to preserve sufficient flexibility to make sound evaluations based on the relevant circumstances in the event a nominee fails to receive a majority of the votes cast with respect to such nominee. For example, the board of directors may wish to assess whether the sudden resignation of one or more directors would materially impair the effective functioning of the board of directors. The board of directors’ policy is intended to allow the board of directors to react to situations that could arise if the resignation of multiple directors would prevent a key committee from achieving a quorum or if a resignation would otherwise impair the functioning of the committee. The policy also would allow the board of directors to assess whether a director was targeted for reasons unrelated to his or her performance as a director at the company. The policy requires that our nominating and corporate governance committee and our board of directors act promptly to consider a director nominee’s resignation.
Full details of our majority voting with director resignation policy for nominees are set forth in our Bylaws and our
Corporate Governance Guidelines, available at http://investor.twitterinc.com.
| TWITTER, INC. / 2019 Proxy Statement | 29 | ||
PROPOSAL NO. 1 ELECTION OF DIRECTORS
Notwithstanding the foregoing, if the number of nominees exceeds the number of directors to be elected at the end of the applicable notice period set forth in Section 2.4 of Article II of our Bylaws (e.g., a contested election) the majority voting with director resignation policy shall not apply and instead nominees shall be elected by a plurality vote of the shares of our common stock present in personvirtually or by proxy at the Annual Meetingan annual meeting and entitled to vote thereon to be approved. Abstentionsthereon. The election of directors at the Annual Meeting is not a contested election, and broker non-votestherefore majority voting will have no effect on this proposal.apply.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR”
EACH OF THE NOMINEES
NAMED ABOVE.
| 30 | TWITTER, INC. / 2019 Proxy Statement |
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PROPOSAL NO. 2 ADVISORY VOTE ON NAMED
EXECUTIVE OFFICER COMPENSATION
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
The Dodd-Frank Act and Section 14A of the Exchange Act enable our stockholders to approve, on an advisory, ornon-binding, basis the compensation of our named executive officers as disclosed pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a “Say-on-Pay”“Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices described in this proxy statement. We currently holdSince 2014, we have held ourSay-on-Pay vote every year.
TheSay-on-Pay vote is advisory, and therefore is not binding on us, our board of directors or our compensation committee. TheSay-on-Pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the compensation committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our board of directors and our compensation committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will endeavor to communicate with stockholders to better understand the concerns that influenced the vote, consider our stockholders’ concerns and the compensation committee will evaluate whether any actions are necessary to address those concerns.
We believe that the information provided in the “Executive Compensation” section of this proxy statement, and in particular the information discussed in “Executive Compensation—Compensation Discussion and Analysis” below, demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to the named executive officers, as disclosed in the proxy statement for the 2016 Annual Meeting pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, compensation tables and narrative discussion, and other related disclosure.”
The approval, on an advisory basis, of theSay-on-Pay requires the affirmative vote of a majority of the shares of our common stock present in personvirtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and brokernon-votes will have no effect.
Although the vote isnon-binding, our board of directors and our compensation committee value the opinions of our stockholders in this matter and, to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will endeavor to communicate with stockholders to better understand the concerns that influenced the vote, consider our stockholders’ concerns and the compensation committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR”
THE APPROVAL, ON AN
ADVISORY BASIS, OF OUR
NAMED EXECUTIVE OFFICER
COMPENSATION.
| TWITTER, INC. / |
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PROPOSAL NO. 3 RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm, to audit our consolidated financial statements for our fiscal year ending December 31, 2016.2019. During our fiscal yearyears ended December 31, 2015,2018 and December 31, 2017, PwC served as our independent registered public accounting firm.
At the Annual Meeting, our stockholders are being asked to ratify the appointment of PwC as our independent registered public accounting firm for our fiscal year ending December 31, 2016.2019. Our audit committee is submitting the appointment of PwC to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Notwithstanding the appointment of PwC 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. Representatives of PwC will be present at the Annual Meeting, and they will have an opportunity to make a statement and will be available to respond to appropriate questions from our stockholders.
If our stockholders do not ratify the appointment of PwC, our board of directors may reconsider the appointment.
Fees Paid to the Independent Registered Public Accounting Firm
The following table presents fees for professional audit services and other services rendered to our company by PwC for our fiscal years ended December 31, 20142017 and 2015.2018.
| 2014 | 2015 |
2017
|
2018
| |||||||||||||||||
| (IN THOUSANDS) | (IN THOUSANDS)
| |||||||||||||||||||
| Audit Fees (1) | $ | 4,212 | $ | 4,976 | $ | 5,757 | $ | 5,926 | ||||||||||||
| Audit-Related Fees (2) | $ | 514 | $ | 726 | $ | 1,280 | $ | 1,316 | ||||||||||||
| Tax Fees (3) | $ | 773 | $ | 1,397 | $ | 1,307 | $ | 2,558 | ||||||||||||
| All Other Fees (4) | $ | 9 | $ | 35 | $ | 18 | $ | 18 | ||||||||||||
| Total Fees | $ | 5,508 | $ | 7,134 | $ | 8,362 | $ | 9,818 | ||||||||||||
|
|
|
| |||||||||||||||||
| (1) | Audit Fees consist of fees for professional services rendered in connection with the audit of our annual consolidated financial statements, |
including audited financial statements presented in our Annual Report on Form10-K and services that are normally provided by the independent registered public |
| (2) | Audit-Related Fees consist of fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include accounting consultations concerning financial accounting and reporting standards, due diligence procedures in connection with |
| (3) | Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include consultation on tax matters and assistance regarding federal, state and international tax compliance. |
| (4) | All Other Fees consist of fees for permitted products and services other than those that meet the criteria above. |
In our fiscal year ended December 31, 2015,2018, there were no other professional services provided by PwC, other than those listed above, that would have required our audit committee to consider their compatibility with maintaining the independence of PwC.
Audit Committee Policy onPre-Approval of Audit and PermissibleNon-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 topre-approve all audit andnon-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 PwC for our fiscal years ended December 31, 20142017 and 20152018 werepre-approved by our audit committee in accordance with this policy.
| 32 | TWITTER, INC. / 2019 Proxy Statement |
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PROPOSAL NO. 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The ratification of the appointment of PwC as our independent registered public accounting firm requires the affirmative vote of a majority of the shares of our common stock present in personvirtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and brokernon-votes will have no effect.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE
APPOINTMENT OF
PRICEWATERHOUSECOOPERS
LLP.
| TWITTER, INC. / 2019 Proxy Statement | 33 | ||
| 34 | TWITTER, INC. / 2019 Proxy Statement |
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PROPOSAL NO. 4 STOCKHOLDER PROPOSAL REGARDING SIMPLE MAJORITY VOTE
PROPOSAL NO. 4
STOCKHOLDER PROPOSAL REGARDING SIMPLE MAJORITY VOTE
James McRitchie, 9295 Yorkship Court, Elk Grove, CA 95758, has represented that he is the beneficial owner of 297 shares of Twitter’s common stock and has given notice of his intention to present the proposal below at the Annual Meeting. The proposal and the proponent’s supporting statement appear below.
The board of directors opposes adoption of the proposal and asks stockholders to review our opposition statement, which follows the proponent’s proposal and supporting statement.
Proposal and Supporting Statement by Stockholder Proponent
Proposal 4—Simple Majority Vote
RESOLVED, Twitter, Inc. (“Twitter” or “Company”) shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. This means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. It is also important that our company take each step necessary to avoid a failed vote on this proposal topic.
Supporting Statement: Shareowners are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have been found to be one of six entrenching mechanisms that are negatively related to company performance according to “What Matters in Corporate Governance” by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=593423).
Last year, for example, at Salesfore.com [sic] 80.1% of shares in favor of our proposal to move to a simple majority vote standard. Among large Twitter shareholders voting in favor of the similar proposal at Salesforce.com were the following: Fidelity, BlackRock, T. Rowe Price, SSgA, Morgan Stanley, First Trust Advisors, Northern Trust, Geode Capital, TIAA-CREF. In fact, 285 funds voted in favor while only 32 voted against and 3 abstained.
This proposal topic won from 59.2% to 80.1% of the vote at Kaman, DowDuPont, Ryder System and Salesforce.com in 2018. Prior to that, it won 74% to 99% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGraw-Hill, Macy’s, Ferro Arconic, and Cognizant Technology Solutions.
Currently a 1% special interest minority of shares can frustrate the will of shareholders casting 79% of shares in favor. In other words a 1% special interest minority could have the power to prevent shareholders from improving our corporate governance.
Please vote again to enhance shareholder value:
Simple Majority Vote—Proposal 4
The Company’s Statement of Opposition
Our Amended and Restated Certificate of Incorporation and Bylaws provide for a simple majority vote standard for all corporate matters submitted to a vote of our stockholders, except for a more stringent voting requirement with respect to amending our Certificate of Incorporation or Bylaws. These enhanced voting requirements for amending our Certificate of Incorporation or Bylaws are intended to protect the long-term interests of our stockholders and the company, rather than allowing changes that may be focused on short-term objectives or otherwise jeopardize the long-term success of the company. We believe that when amendments are proposed to our Certificate of Incorporation or Bylaws that could have a long-term impact on our company, a higher threshold of stockholder approval should be required to determine whether such changes are appropriate and are in the best interests of our stockholders and the company.
Additionally, as described above in the section titled “Board of Directors and Corporate Governance—Board Meetings and Committees—Majority Voting with Director Resignation Policy,” as a result of feedback from our shareholders, in 2017 we amended our Bylaws and Corporate Governance Guidelines to implement a majority voting standard for the election of directors in an uncontested election with a director resignation policy. Full details of our majority voting with director resignation policy for nominees are set forth in our Bylaws and our Corporate Governance Guidelines, available athttp://investor.twitterinc.com.
Furthermore, the amendment provisions in our Certificate of Incorporation and Bylaws were implemented before our
| TWITTER, INC. / 2019 Proxy Statement | 35 | ||
PROPOSAL NO. 4 STOCKHOLDER PROPOSAL REGARDING SIMPLE MAJORITY VOTE
initial public offering, and all of our investors who purchased shares of our common stock in our initial public offering and after were aware of these provisions.
For the above reasons, our board of directors believes that this proposal is not in the best interests of Twitter or our stockholders, and unanimously recommends that you vote “AGAINST” this proposal.
The approval of this Proposal No. 4 requires the affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and brokernon-votes will have no effect.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
“AGAINST” PROPOSAL NO. 4
| TWITTER, INC. / |
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PROPOSAL NO. 5 STOCKHOLDER PROPOSAL REGARDING A REPORT OF THE AUDIT COMMITTEEON OUR CONTENT ENFORCEMENT POLICIES
PROPOSAL NO. 5
STOCKHOLDER PROPOSAL REGARDING A REPORT ON OUR CONTENT ENFORCEMENT POLICIES
The New York State Common Retirement Fund(co-filer), 59 Maiden Lane, 30th Floor, New York, NY, 10038, has represented that it is the beneficial owner of 1,412,700 shares of Twitter’s common stock, and Arjuna Capital(co-filer), have together given notice of their intention to present the proposal below at the Annual Meeting. The proposal and the proponents’ supporting statement appear below.
The board of directors opposes adoption of the proposal and asks stockholders to review our opposition statement, which follows the proponents’ proposal and supporting statement.
Proposal and Supporting Statement by Stockholder Proponent
CONTENT GOVERNANCE
WHEREAS: Twitter faces continued global controversy regarding Russia’s reported interference in U.S. elections and the distribution by users of disinformation and hate speech that can threaten marginalized groups and undermine democracy.
Shareholders are concerned that Twitter’s failure to proactively address these issues has created regulatory, legal, and reputational risks. We believe Twitter has an obligation to demonstrate how it governs content to prevent violations of its terms of service.
The Company’s content governance policies appear to lack a strategic approach.
For example, in August 2018, even after Apple, Facebook, and YouTube banned conspiracy theorist Alex Jones, CEO Jack Dorsey defended a decision to permit Jones to remain on Twitter despite suspending Jones for inciting violence. One month later, Twitter banned Jones after he allegedly harassed other users.
Twitter’s policy against fact-checking fake news also remains a serious controversy. In thelead-up to the 2018 U.S. midterm elections, Oxford University researchers said Twitter had 5 percent more false content than during the 2016 American presidential election.
A 2018 Amnesty International report (“Toxic Twitter’’) concluded that “for many women, Twitter is a platform where violence and abuse against them flourishes, often with little accountability.” The report said Twitter was “inadequately investigating and responding to reports of violence and abuse in a transparent manner.” And while Twitter has announced a new “dehumanizing speech” policy, the efficacy of the policy is unclear.
In September 2018 CEO Dorsey told a Senate committee there will be “massive shifts” in how Twitter and other social media companies operate when attempting to stop election interference and deceptive messages. “We need to question the fundamental incentives that are in our product today,” Dorsey said. Twitter shares fell as much as 6.7 percent as he testified.
After Dorsey’s testimony to Congress in September, lawmakers wrote to Dorsey, noting: “we remain concerned that Twitter’s policies and terms of service, which should safeguard against [racially divisive content and misinformation] are vague and inconsistently applied.”
RESOLVED: Shareholders request Twitter issue a report to shareholders, at reasonable cost, omitting proprietary or legally privileged information, reviewing the efficacy of its enforcement of its terms of service related to content policies and assessing the risks posed by content governance controversies (including election interference, fake news, hate speech and sexual harassment) to the company’s finances, operations and reputation.
SUPPORTING STATEMENT: Proponents recommend the report include assessment of the scope of platform abuses, impacts on free speech, and address related ethical concerns.
The Company’s Statement of Opposition
Our board of directors has considered this proposal and believes the preparation of a report as requested by this proposal is unnecessary in light of our current practices, level of public transparency about these matters (including quarterly reporting on our efforts and progress to our investors), and our key initiatives. We further believe that the expanded disclosure requested by the proposal could reduce the effectiveness of our safety efforts by providing a roadmap for those bad actors who are seeking to evade abiding by our terms.
| TWITTER, INC. / 2019 Proxy Statement | 37 | ||
PROPOSAL NO. 5 STOCKHOLDER PROPOSAL REGARDING A REPORT ON OUR CONTENT ENFORCEMENT POLICIES
One of the fundamental purposes of Twitter is to give everyone the power to create and share ideas and information instantly, without barriers. In order to protect the experience and safety of people who use Twitter, there are some limitations on the type of content and behavior that we allow. These limitations are set forth in the Twitter Rules (along with all incorporated policies), Privacy Policy, and Terms of Service which collectively make up the “Twitter User Agreement” that governs a user’s access to and use of Twitter’s services. All individuals accessing or using Twitter’s services are required to adhere to the policies set forth in the Twitter User Agreement. Failure to do so may result in Twitter taking certain enforcement actions, including permanently suspending an account. The Twitter User Agreement contains robust content boundaries and restrictions on the use of Twitter including on violence, adult content, abuse, unwanted sexual advances, hateful conduct, hateful imagery, private information, intimate media, impersonation and spam. We have a rigorous framework and have devoted significant resources to enforcing the rules in the Twitter User Agreement. Improving the health of conversations on Twitter was one of our primary areas of focus in 2018 and continues to be going forward.
In 2018, we took important steps to increase the collective health, openness, and civility of the public conversation on Twitter, helping people see high-quality information, strengthening oursign-up and account verification processes, and preventing the abuse of Twitter data.
Specific actions we took in 2018 included: strengthening account security, updating our rules to more clearly address specific types of hateful conduct, taking new behavior-based signals into account when presenting and organizing Tweets, making it easier to see when a Tweet was removed for breaking our rules, and expanding our team through increased hiring and the acquisition of Smyte Inc., a Delaware corporation. In the fourth quarter, our machine learning efforts continued to improve, making it harder for malicious accounts to game our service through multiple accounts and evading suspension, resulting in the suspension of millions of spammy and suspicious accounts.
Our focus on improving the health of the public conversation on Twitter delivered promising results in 2018. As we have previously reported, we saw a 16% year-over-year decrease in abuse reports from people who had an interaction with their alleged abuser on Twitter, and enforcement on reported content that was 3 times more effective.
In 2019, we will take a more proactive approach to reducing abuse and its effects on Twitter, with the goal of reducing the burden on victims of abuse and, where possible, taking action before abuse is reported. Our initial focus will be on those types of abuse most likely to result in severe and immediate harm. We will also continue to strengthen our login andsign-up processes to make it more challenging for bad actors to take advantage of accounts for abusive or malicious purposes. We will continue to prioritize the health of the public conversation on Twitter so people feel safe being a part of the conversation and are able to find credible information on our service.
We also believe in being transparent with respect to our rules and how we enforce them, and have made significant progress in reporting out to all of our users on our progress. Specifically, we regularly share the progress we have made on our blog (available at: https://blog.twitter.com) in the following areas:
| 38 | TWITTER, INC. / 2019 Proxy Statement |
| ||
PROPOSAL NO. 5 STOCKHOLDER PROPOSAL REGARDING A REPORT ON OUR CONTENT ENFORCEMENT POLICIES
Based on feedback from our shareholders, we have made the above information easy to find in the “Health and Safety” section of our Investor Relations website at https://investor.twitterinc.com/corporate-governance.
We also publish our Twitter Transparency Report biannually (available at: https://transparency.twitter.com), which includes trends in legal requests, intellectual property-related requests, Twitter Rules enforcement, platform manipulation, and email privacy best practices. In 2018 we added a Twitter Rules enforcement section to our Twitter Transparency Report, which provides an overview of how and when we enforce our content policies, including enforcement information on abuse, hateful conduct, private information, child sexual exploitation, sensitive media, and violent threats. In 2018 we also added a new platform manipulation section, which includes metrics pertaining to our actions to fight malicious automation and spam.
For the above reasons, our board of directors believes that this proposal is not in the best interests of Twitter or our stockholders, and unanimously recommends that you vote “AGAINST” this proposal.
The approval of this Proposal No. 5 requires the affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and brokernon-votes will have no effect.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
“AGAINST” PROPOSAL NO. 5
| TWITTER, INC. / 2019 Proxy Statement | 39 | ||
PROPOSAL NO. 6 STOCKHOLDER PROPOSAL REGARDING BOARD QUALIFICATIONS
PROPOSAL NO. 6
STOCKHOLDER PROPOSAL REGARDING BOARD QUALIFICATIONS
The National Center for Public Policy Research, 20 F Street, NW Suite 700, Washington, DC 20001, has represented that it is the beneficial owner of at least $2,000 in market value of Twitter’s common stock and has given notice of its intention to present the proposal below at the Annual Meeting. The proposal and the proponent’s supporting statement appear below.
The board of directors opposes adoption of the proposal and asks stockholders to review our opposition statement, which follows the proponent’s proposal and supporting statement.
Proposal and Supporting Statement by Stockholder Proponent
True Diversity Board Policy
Resolved, that the shareholders of the [sic] Twitter, Inc. (the “Company”) request the Board adopt a policy to disclose to shareholders the following:
| 1. | A description of the specific minimum qualifications that the Board’s nominating committee believes must be met by a nominee to be on the board of directors; and |
| 2. | Each nominee’s skills, ideological perspectives, and experience presented in a chart or matrix form. |
The disclosure shall be presented to the shareholders through the annual proxy statement and the Company’s website within six (6) months of the date of the annual meeting and updated on an annual basis.
Supporting Statement
We believe that boards that incorporate diverse perspectives can think more critically and oversee corporate managers more effectively. By providing a meaningful disclosure about potential Board members, shareholders will be better able to judge how well-suited individual board nominees are for the Company and whether their listed skills, experience and attributes are appropriate in light of the Company’s overall business strategy.
The Company’s compliance with Item 407(c)(2)(v) of SEC RegulationS-K requires it to identify the minimum skills,
experience, and attributes that all board candidates are expected to possess.
Ideological diversity contemplates differences in political/policy beliefs.
True diversity comes from diversity of thought. There is ample evidence that the Company—and Silicon Valley generally—operate in ideological hegemony that eschews conservative people, thoughts, and values. This ideological echo chamber can result in groupthink that is the antithesis of diversity. This can be a major risk factor for shareholders.
We believe a diverse board is a good indicator of sound corporate governance and a well-functioning board. Diversity in board composition is best achieved through highly qualified candidates with a wide range of skills, experience, beliefs, and board independence from management.
We are requesting comprehensive disclosures about board composition and what qualifications the Company seeks for its Board, therefore we urge shareholders to vote FOR this proposal.
The Company’s Statement of Opposition
We believe that our board of directors should be a diverse body to reflect the global nature of our business and the diverse backgrounds and viewpoints of our users, customers, partners, employees and other stakeholders. Our Corporate Governance Guidelines require our nominating and corporate governance committee to consider a broad range of backgrounds, experiences and diversity (in all aspects of that word), including differences in professional background, education, skill, and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on our board of directors.
Our nominating and corporate governance committee evaluates each individual in the context of the membership of the board of directors as a group, with the objective of having a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of background and experience in the various areas. Our nominating and corporate governance committee interviews potential director nominees to explore their qualifications, including, without limitation, issues of character, ethics, integrity, judgment, professional experience, independence, area of expertise, strategic vision, length of service, potential
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PROPOSAL NO. 6 STOCKHOLDER PROPOSAL REGARDING BOARD QUALIFICATIONS
conflicts of interest, management, accounting and finance expertise, cybersecurity / cyber risk expertise, risk management, talent development and other commitments.
As described above in the section titled “Board of Directors and Corporate Governance—Considerations in Evaluating Director Nominees,” our board of directors follows an annual director nomination process that promotes thoughtful andin-depth review of our board composition as well as each individual director throughout the year. Each year, at the beginning of the process, our nominating and corporate governance committee reviews current board composition in context with the company’s strategy to confirm that the traits, attributes and qualifications are aligned with our long-term strategy and continue to promote effective board performance. The outcome of the annual evaluations is used to inform director search priorities as applicable. Each year, our nominating and corporate governance committee reviews incumbent director nominees, evaluates any changes in circumstances that may impact their candidacy, and considers information from the board evaluation process.
This nomination and evaluation process ensures that our board of directors represents a diverse mix of viewpoints and experience. For example, our directors have experience in global business leadership, finance and accounting, brand management, operational experience, risk management, outside service on boards of complex global public companies and government service. For more information regarding the skills, experience and diversity of our directors, please review the section above titled “Board of Directors and Corporate Governance.”
Our board of directors is also committed to using future refreshment opportunities to strengthen diversity. During 2018 we appointed two new highly qualified directors to our board of directors, Ngozi Okonjo-Iweala and Robert Zoellick.
At present, the Twitter board of directors includes directors from outside the United States, directors from backgrounds in public companies, public service and government, and three female directors.
Additionally, our board of directors believes that much of the information requested in this proposal is already disclosed in this proxy statement in the section above titled “Board of Directors and Corporate Governance.” Given our continued commitment to inclusion and diversity on our board of directors and our existing disclosures, our board of directors does not believe that implementing this proposal would benefit the company or our stockholders.
For the above reasons, our board of directors believes that this proposal is not in the best interests of Twitter or our stockholders, and unanimously recommends that you vote “AGAINST” this proposal.
The approval of this Proposal No. 6 requires the affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and brokernon-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” PROPOSAL NO. 6
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REPORT OF THE AUDIT COMMITTEE
The audit committee is a committee of the board of directors comprised solely of independent directors as required by the listing standards of the NYSE and rules and regulations of the SEC. The audit committee operates under a written charter approved by Twitter’s board of directors, which is available on Twitter’s web site at http:https://investor.twitterinc.com. The composition of the audit committee, the attributes of its members and the responsibilities of the audit committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees. The audit committee reviews and assesses the adequacy of its charter and the audit committee’s performance on an annual basis.
With respect to Twitter’s financial reporting process, Twitter’s management is responsible for (1) establishing and maintaining internal controls and (2) preparing Twitter’s consolidated financial statements. Twitter’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an independent audit of Twitter’s consolidated financial statements and of Twitter’s internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) 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 Twitter’s financial statements. TheseThose are the fundamental responsibilities of management. In the performance of its oversight function, the audit committee has:
Based on the audit committee’s review and discussions with management and PwC, the audit committee recommended to the board of directors that the audited financial statements be included in the Annual Report on Form10-K for the fiscal year ended December 31, 20152018 for filing with the Securities and Exchange Commission (“SEC”).
Respectfully submitted by the members of the audit committee of the board of directors:
Peter CurriePatrick Pichette (Chair)
Hugh JohnstonMartha Lane Fox
Peter Fenton
Marjorie ScardinoNgozi Okonjo-Iweala
This report of the audit committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Securities Exchange Act of 1934, as amended (“Exchange Act”), except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
In October 2015, our Co-Founder and Chief Executive Officer, Jack Dorsey, agreed to contribute 6,814,085 shares of his own Twitter common stock to Twitter to be granted to our employees. Mr. Dorsey and we believe our success is due to our highly talented employee base and that future success depends on the ability to attract and retain high caliber people. Mr. Dorsey’s share contribution is an investment in our employees and way to attract and retain them without any dilution to our stockholders.
We are asking our stockholders at the Annual Meeting to approve the Twitter, Inc. 2016 Equity Incentive Plan (the “2016 Plan”) to effect the contribution of the 6,814,085 shares from Mr. Dorsey to Twitter to allow us to fulfill Mr. Dorsey’s objectives of making his contributed shares available for grants to our employees. The 2016 Plan was adopted, subject to stockholder approval, by our board of directors on October 13, 2015. If the 2016 Plan is approved by our stockholders, 6,814,085 shares of our common stock will be available for making grants under the 2016 Plan. All of these shares will be contributed to the 2016 Plan, without any cost or charge to us, by our Chief Executive Officer pursuant to a Contribution Agreement (the “Contribution Agreement”) dated as of October 22, 2015, by and between Twitter and the Jack Dorsey Revocable Trust dated December 8, 2010 (the “Jack Dorsey Trust”), which we made available to stockholders on a Current Report on Form 8-K filed on October 23, 2015.As a result, our stockholders will not be diluted if the 2016 Plan is approved.
Highlights of the 2016 Plan
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The 2016 Plan also is designed to give us, if we deem appropriate or desirable, the ability to grant awards that are intended to allow us to deduct in full for federal income tax purposes the compensation recognized by certain of our executive officers in connection with certain awards that may be granted to them under the 2016 Plan. Section 162(m) of the Code (“Section 162(m)”), generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to the chief executive officer and certain other executive officers (excluding the chief financial officer). However, certain types of compensation, including performance-based compensation, are generally excluded from this deductibility limit if certain requirements are met. To enable compensation in connection with stock options, stock appreciation rights and certain full-value awards and performance awards under the 2016 Plan to qualify as “performance-based” within the meaning of Section 162(m), the 2016 Plan limits the sizes of awards that may be granted to a participant each calendar year as further described below (among other requirements).
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
By approving the 2016 Plan, our stockholders will be approving, among other things, eligibility requirements for participation in the 2016 Plan and the other material terms of the 2016 Plan and awards granted under the 2016 Plan, including limits on the numbers of shares or compensation that could be granted to a participant each calendar year, and re-approving, among other things, performance measures upon which specific performance goals applicable to certain awards would be based. Notwithstanding the foregoing, we retain the ability to grant awards under the 2016 Plan that do not qualify as “performance-based” compensation within the meaning of Section 162(m) and intend to continue our current practice of granting some awards with time-based vesting that do not qualify as “performance-based” compensation.
The primary goal of the 2016 Plan is to allow us to fulfill Mr. Dorsey’s objectives of making his 6,814,085 contributed shares available for grants to our employees. We believe our success is due to our highly talented employee base and that future success depends on the ability to attract and retain high caliber personnel. We compete for a limited pool of talent. The ability to grant equity awards is a necessary and powerful recruiting and retention tool for us to obtain the quality personnel we need to move our business forward. Our employees and other service providers are our most valuable asset, and we strive to provide them with compensation packages that are not only competitive but also that reward personal performance, help meet our retention needs and incentivize them to manage our business as owners, thereby aligning their interests with those of our stockholders. The 2016 Plan allows us to further these objectives without dilution to our shareholders.
Our board of directors believes that the proposed 2016 Plan is necessary for us fulfill Mr. Dorsey’s and our objectives and to continue to offer a competitive equity incentive program. Approximately 79.09% of outstanding awards as of December 31, 2015 are held by employees who are not executive officers or directors. In fiscal 2015, approximately 93.07% of all awards on a share basis were issued to employees who are not executive officers or directors. Our 2013 Plan currently is limited in the number of shares that are available for making future equity awards to our employees and other service providers. After considering such factors as we deemed relevant, including the historical annual rate at which we grant equity to our employees and other service providers, the available shares under our 2013 Plan (including any future increases to its share reserve), the estimated
forfeitures of existing awards, and our plans for potential growth, our board of directors believes the 2016 Plan, if approved, will be an important factor in attracting, retaining, and rewarding the high caliber personnel that are essential to our future success. If the stockholders do not approve the 2016 Plan, we believe it will be impossible for us to successfully attract and retain the best possible talent without further dilution to stockholders.
Members of our board of directors and our executive officers technically have an interest in this proposal because they are eligible to receive awards under the 2016 Plan. However, no awards have been made, granted or committed under the 2016 Plan.
The material features of the 2016 Plan are summarized below. This summary does not purport to be a complete description of all the provisions of the 2016 Plan, and this summary is qualified in its entirety by reference to the text of the 2016 Plan.
A full copy of the proposed 2016 Plan is attached to this proxy statement asAnnex A.
Our board of directors adopted, subject to stockholder approval, our 2016 Plan on October 13, 2015 and our stockholders are being asked to approve our 2016 Plan at the Annual Meeting, including eligibility, performance goals, and other material terms of the 2016 Plan, for the purpose of allowing us the ability to grant awards under the 2016 Plan that are intended to qualify as “performance-based” compensation under Section 162(m), if we deem appropriate or desirable. Our 2016 Plan will be effective contingent upon stockholder approval at the Annual Meeting. Our 2016 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees and employees of any of our parent and subsidiary corporations, and for the grant of nonstatutory stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants.
Authorized Shares. A total of 6,814,085 shares of our common stock have been reserved for issuance pursuant to our 2016 Plan. The 2016 Plan does not contain an annual “evergreen” provision that increases the number of shares available for issuance each year. The 2016 Plan authorizes a fixed number of shares so that stockholder approval is required for any increase to the maximum number of shares
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
that may be issued under the 2016 Plan. We are not requesting that our stockholders approve shares to be made available for award grants under the 2016 Plan, other than shares that will be contributed without any cost or charge by the Jack Dorsey Trust.As a result, our stockholders will not be diluted if the 2016 Plan is approved.
Plan Administration. Our board of directors or one or more committees appointed by our board of directors will administer our 2016 Plan. Our board of directors has delegated concurrent authority to administer our 2016 Plan to our compensation committee. In the case of awards intended to qualify as ‘‘performance-based compensation’’ within the meaning of Section 162(m), the committee will consist of two or more ‘‘outside directors’’ within the meaning of Section 162(m). In addition, if we determine it is desirable to qualify transactions under our 2016 Plan as exempt under Rule 16b-3 of the Exchange Act, such transactions will be structured to satisfy the requirements for exemption under Rule 16b-3 of the Exchange Act. Subject to the provisions of our 2016 Plan, the administrator has the power to administer our 2016 Plan, including but not limited to, the power to interpret the terms of our 2016 Plan and awards granted under it, to create, amend and revoke rules relating to our 2016 Plan, including creating sub-plans, and to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise. The administrator also has the authority to amend existing awards to reduce or increase their exercise prices, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type and/or cash.
Eligibility. We will be able to grant all types of awards under the 2016 Plan to our employees, consultants, and non-employee directors and employees and consultants of our parent or subsidiary corporations. While Jack Dorsey is eligible to receive awards under this 2016 Plan as an employee of Twitter, we do not expect him to be granted any awards under it. We will be able to grant incentive stock options under the 2016 Plan only to individuals who, as of the time of grant, are employees of ours or of any parent or subsidiary corporation of ours. As of March 30, 2016, we had 6 non-employee directors and approximately 3,800 employees (including 12 executive officers) of Twitter and its parent and subsidiary corporations.
Stock Options. Stock options may be granted under our 2016 Plan. The exercise price of options granted under our 2016 Plan must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years, except that with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. For nonstatutory stock options and incentive stock options granted to employees who do not own more than 10% of the voting power of all classes of our outstanding stock, the exercise price must equal at least 100% of the fair market value. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well as other types of consideration permitted by applicable law. After the termination of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option generally will remain exercisable for three months following the termination of service. An option may not be exercised later than the expiration of its term. However, if the exercise of an option is prevented by applicable law the exercise period may be extended by the administrator under certain circumstances. Subject to the provisions of our 2016 Plan, the administrator determines the other terms and conditions of options.
Stock Appreciation Rights. Stock appreciation rights may be granted under our 2016 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Stock appreciation rights may not have a term exceeding ten years. After the termination of service of an employee, director or consultant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her stock appreciation rights agreement. However, in no event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions of our 2016 Plan, the administrator determines the other terms and conditions of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant.
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
Restricted Stock. Restricted stock may be granted under our 2016 Plan. Restricted stock awards are grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee, director or consultant and, subject to the provisions of our 2016 Plan, will determine the terms and conditions of such awards. The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us); provided, however, that the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.
RSUs. RSUs may be granted under our 2016 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2016 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
Performance Units and Performance Shares. Performance units and performance shares may be granted under our 2016 Plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance criteria or other vesting provisions for such performance units or performance shares. Performance units shall have an initial dollar value established by the administrator on or prior to the grant date. Performance shares shall have an initial value equal to the fair market value of our common stock on the grant date. The administrator, in its sole discretion, may
pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof.
Section 162(m) Performance Awards. The 2016 Plan is designed to permit Twitter to issue awards that qualify as performance-based compensation under Section 162(m). Thus, the administrator may make performance goals applicable to a participant with respect to an award. At the administrator’s discretion, one or more of the following performance goals may apply: (i) cash flow (including operating cash flow or free cash flow), (ii) cash position, (iii) revenue (on an absolute basis or adjusted for currency effects), (iv) revenue growth, (v) contribution margin, (vi) gross margin, (vii) operating margin, (viii) operating expenses or operating expenses as a percentage of revenue, (ix) earnings (which may include earnings before interest, taxes, depreciation and amortization, earnings before taxes and net earnings), (x) earnings per share, (xi) operating income, (xii) net income, (xiii) stock price, (xiv) return on equity, (xv) total stockholder return, (xvi) growth in stockholder value relative to a specified publicly reported index (such as the S&P 500 Index), (xvii) return on capital, (xviii) return on assets or net assets, (xix) return on investment, (xx) economic value added, (xxi) operating profit or net operating profit, (xxii) market share, (xxiii) contract awards or backlog, (xxiv) overhead or other expense reduction, (xxv) credit rating, (xxvi) objective customer indicators, (xxvii) new product invention or innovation, (xxviii) attainment of research and development milestones, (xxix) improvements in productivity, (xxx) attainment of objective operating goals, and (xxxi) objective employee metrics. The performance goal(s) may differ from participant to participant and from award to award. Any performance goal(s) may be used to measure the performance of the company as a whole or, except with respect to stockholder return metrics, to a region, business unit, affiliate or business segment, and may be measured either on an absolute basis, a per share basis or relative to a pre-established target, to a previous period’s results or to a designated comparison group, and, with respect to financial metrics, which may be determined in accordance with accounting principles generally accepted in the United States (“GAAP”), in accordance with accounting principles established by the International Accounting Standards Board (“IASB Principles”) or which may be adjusted when established to either exclude any items otherwise includable under GAAP or under IASB Principles or include any items otherwise excludable under GAAP or under IASB Principles. Prior to the latest date that would meet the requirements under Section 162(m), the administrator will determine whether any significant elements
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
or items will be included or excluded from the calculation of performance goals with respect to any award recipient. Except as so determined otherwise by the administrator, performance goals will be calculated in accordance with our financial statements, generally accepted accounting principles, or under a methodology established by the administrator prior to the issuance of the award.
Outside Director Limits. Our 2016 Plan provides that all outside (non-employee) directors will be eligible to receive all types of awards (except for incentive stock options) under our 2016 Plan. To provide a maximum limit on the awards that can be made to our outside directors, our 2016 Plan provides that in any given year, an outside director (i) will not be granted cash-settled awards having a grant-date fair value greater than $1,000,000, but that in the fiscal year that an outside director first joins our board of directors, he or she may be granted a cash-settled award with a grant-date fair value of up to $2,000,000; and (ii) will not be granted stock-settled awards having a grant-date fair value greater than $1,000,000, but that in the fiscal year that an outside director first joins our board of directors, he or she may be granted stock-settled awards having a grant-date fair value of up to $2,000,000. The grant-date fair values will be determined according to GAAP. The maximum limits do not reflect the intended size of any potential grants or a commitment to make grants to our outside directors under our 2016 Plan in the future.
Certain Other Limits.
Our 2016 Plan contains annual grant limits intended to satisfy Section 162(m). Specifically, the maximum number of shares and/or dollars that could be issued to any one eligible individual (other than an outside director) under the 2016 Plan in any fiscal year is set forth below:
The maximum limits do not reflect the intended size of any potential grants or a commitment to make grants to our outside directors under our 2016 Plan in the future.
Non-Transferability of Awards. Unless the administrator provides otherwise, our 2016 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.
Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under our 2016 Plan, the administrator will adjust the number and class of shares that may be delivered under our 2016 Plan and/or the number, class and price of shares covered by each outstanding award, and the numerical share limits set forth in our 2016 Plan. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all awards will terminate immediately prior to the consummation of such proposed transaction.
Merger or Change of Control. Our 2016 Plan provides that in the event of a merger or change of control, as defined under our 2016 Plan, each outstanding award will be treated as the administrator determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate upon the expiration of the specified period of time. If the service of an outside director is terminated on or following a change of control, other than pursuant to a voluntary resignation, his or her options, RSUs and stock appreciation rights, if any, will vest fully and become immediately exercisable, all restrictions on his or her restricted stock will lapse and all performance goals or other vesting requirements for his or her performance shares and units will be deemed achieved at 100% of target levels, and all other terms and conditions met.
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
Amendment; Termination. The administrator has the authority to amend, suspend or terminate our 2016 Plan provided such action does not impair the existing rights of any participant. Our 2016 Plan automatically will terminate in 2026, unless we terminate it sooner.
Federal Income Tax Consequences
Incentive Stock Options. An optionee who is granted an incentive stock option does not recognize taxable income at the time the option is granted or upon its exercise, although the exercise may subject the optionee to the alternative minimum tax. Upon an optionee’s sale of the shares (assuming that the sale occurs at least two years after grant of the option and at least one year after exercise of the incentive stock option), any gain will be taxed to the optionee as long-term capital gain. If the optionee disposes of the shares prior to the expiration of the above holding periods, then the optionee will recognize ordinary income in an amount generally measured as the difference between the exercise price and the lower of the fair market value of the shares at the exercise date or the sale price of the shares. Any additional gain or loss recognized on such premature sale of the shares in excess of the amount treated as ordinary income will be characterized as capital gain or loss.
Nonstatutory Stock Options. An optionee does not recognize any taxable income at the time he or she is granted a nonstatutory stock option. Upon exercise, the optionee recognizes taxable income generally measured by the excess of the then fair market value of the shares over the exercise price. Upon a disposition of such shares by the optionee, any difference between the sale price and the optionee’s exercise price, to the extent not recognized as taxable income as provided above, is treated as long-term or short-term capital gain or loss, depending on the holding period.
Restricted Stock. If at the time of purchase, restricted stock is subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code, the purchaser will not recognize ordinary income at the time of purchase. Instead, the purchaser will recognize ordinary income on the dates when a stock ceases to be subject to a substantial risk of forfeiture. At such times, the purchaser will recognize ordinary income measured as the difference between the purchase price and the fair market value of the stock on the date the stock is no longer subject to a substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition of ordinary income, if any, and the beginning
of any capital gain holding period by timely filing an election pursuant to Section 83(b) of the Code. In such event, the ordinary income recognized, if any, is measured as the difference between the purchase price and the fair market value of the stock on the date of purchase, and the capital gain holding period commences on such date. The ordinary income recognized by a purchaser who is an employee will be subject to tax withholding by Twitter.
Stock Appreciation Rights. No income will be recognized by a recipient in connection with the grant of a stock appreciation right. When the stock appreciation right is exercised, the recipient will generally be required to include as taxable ordinary income in the year of exercise an amount equal to the sum of the amount of cash received and the fair market value of any common stock received upon the exercise.
RSUs. A recipient will not have taxable income upon grant. Instead, he or she will generally be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such recipient at the end of the applicable vesting period or, if later, the settlement date elected by the administrator or a recipient. Any additional gain or loss recognized upon any later disposition of any shares received would be capital gain or loss.
Performance Shares and Performance Unit Awards. A recipient generally will recognize no income upon the grant of a performance share or a performance unit award. Upon the settlement of such awards, recipients normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or unrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
Medicare Surtax. A recipient’s annual “net investment income”, as defined in Section 1411 of the Code, may be subject to a 3.8% federal surtax (generally referred to as the “Medicare Surtax”). Net investment income may include capital gain and/or loss arising from the disposition of shares subject to a participant’s awards under the 2016 Plan. Whether a recipient’s net investment income will be subject to the Medicare Surtax will depend on the recipient’s level of annual income and other factors.
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
Twitter Tax Deduction. We generally will be entitled to a tax deduction in connection with an award under the 2016 Plan in an amount equal to the ordinary income realized by a recipient and at the time the recipient recognizes such income (for example, the exercise of a non-qualified stock option). Special rules limit the deductibility of compensation paid to the Chief Executive Officer and to each of the three most highly compensated executive officers other than the Chief Executive Officer and the Chief Financial Officer. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. However, we can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met with respect to awards. These conditions include stockholder approval of the performance goals under the 2016 Plan, setting individual annual limits on each type of award, and for awards other than certain stock options and stock appreciation rights, establishing performance criteria that must be met before the award actually will vest or be paid. The 2016 Plan has been designed to permit the administrator to grant certain awards in its discretion that qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting us to receive a federal income tax deduction in connection with such awards.
Section 409A. Section 409A of the Code (“Section 409A”) provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the 2016 Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY UNDER THE 2016 PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF THE EMPLOYEE’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE MAY RESIDE.
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PROPOSAL NO. 4 APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN
Our named executive officers and directors have an interest in this proposal because they are eligible to participate in the 2016 Plan. Twitter has not approved any awards that are conditioned on stockholder approval of the 2016 Plan proposal. The number of awards that an employee, director or consultant may receive under the 2016 Plan is in the discretion of the administrator and therefore cannot be determined in advance. The following table sets forth: (i) the aggregate number of shares of common stock subject to options granted under existing plans during fiscal year 2015 to each of our named executive officers; executive officers, as a group; directors who are not executive officers, as a group; and all employees who are not executive officers, as a group; (ii) the average per share exercise price of such options; and (iii) the aggregate number of shares of restricted stock or restricted stock units granted under existing plans during fiscal year 2015 to each of our named executive officers; executive officers, as a group; directors who are not executive officers, as a group; and all employees who are not executive officers, as a group. Please also refer to the information about grants made to our named executive officers in the last fiscal year described under the section titled “Executive Compensation.” Grants made to our nonemployee directors in the last fiscal year are described in the section titled “Board of Directors and Corporate Governance—Director Compensation.”
| NAME AND PRINCIPAL POSITION | NUMBER OF SHARES SUBJECT TO OPTIONS GRANTED | AVERAGE PER SHARE EXERCISE PRICE OF OPTION GRANTS | NUMBER OF SHARES SUBJECT TO RESTRICTED STOCK UNITS GRANTED | DOLLAR VALUE OF SHARES SUBJECT TO RESTRICTED STOCK UNITS GRANTED | ||||||||||||||||
| Jack Dorsey | — | — | — | — | ||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||
| Omid R. Kordestani | 800,000 | $29.06 | — | — | ||||||||||||||||
Executive Chairman | ||||||||||||||||||||
| Richard Costolo | — | — | — | |||||||||||||||||
Former Chief Executive Officer | ||||||||||||||||||||
| Anthony Noto | — | — | — | — | ||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||
| Alex Roetter | — | — | 176,837 | $8,610,193.53 | ||||||||||||||||
Former Senior Vice President of Engineering | ||||||||||||||||||||
| Kevin Weil | — | — | 176,837 | $8,610,193.53 | ||||||||||||||||
Former Senior Vice President of Product | ||||||||||||||||||||
| Executive Officer Group (8 persons) | 800,000 | $29.06 | 353,674 | $17,220,387.06 | ||||||||||||||||
| Non-Employee Director Group (6 persons) | — | — | 47,462 | $1,756,094.00 | ||||||||||||||||
| Non-Executive Officer Employee Group | — | — | 18,092,118 | $636,590,206.35 | ||||||||||||||||
The approval of the 2016 Plan requires the affirmative vote of a majority of the votes cast on this proposal at the Annual Meeting. Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF TWITTER, INC. 2016 EQUITY INCENTIVE PLAN.
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EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The following table identifies certain information about our executive officers as of March 31, 2016.2019. Our executive officers are appointed by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers.
NAME | AGE | POSITION | ||
Jack Dorsey | 42 | Chief Executive Officer and Director | ||
Omid Kordestani | 55 | Executive Chairman | ||
Ned Segal | 44 | Chief Financial Officer | ||
Vijaya Gadde | 44 | Chief | ||
Matthew Derella | 41 | Customers Lead | ||
Michael Montano | 33 | Engineering Lead | ||
Jack Dorseyis one of our founders and has served as our Chief Executive Officer since September 2015 and as a member of our board of directors since May 2007. Mr. Dorsey served as our interim Chief Executive Officer from July 2015 to September 2015 and as our President and Chief Executive Officer from May 2007 to October 2008. Mr. Dorsey served as the ChairmanChairperson of our board of directors from October 2008 to September 2015. Since February 2009, Mr. Dorsey has served asCo-Founder and Chief Executive Officer of Square, Inc., a provider of payment processing services. Mr. Dorsey currently serves on the boardsboard of directors of The Walt Disney Company and Square, Inc.
Omid R. Kordestanihas served as the Executive Chairman of our board of directors since October 2015. From August 2014 to August 2015, Mr. Kordestani served as Senior Vice President and Chief Business Officer at Google Inc.Google. From May 1999 to April 2009, Mr. Kordestani served as Senior Vice President of Global Sales and Business Development at Google Inc.Google. From 1995 to 1999, Mr. Kordestani served as Vice President of Business Development at Netscape Communications Corporation. Prior to joining Netscape Communications Corporation, Mr. Kordestani held positions in business development, product management and marketing at The 3DO Company, Go Corporation and Hewlett-Packard Company. Mr. Kordestani holds a B.S. in Electrical Engineering from San Jose State University and an M.B.A. from Stanford University.
Anthony NotoNed Segalhas served as our Chief Financial Officer since August 2014.2017. From October 2010January 2015 to June 2014,August 2017, Mr. NotoSegal served as a Managing Director in the Technology, Media and Telecom Investment Banking GroupSenior Vice President of Finance of Intuit Inc. From April 2013 to January 2015, Mr. Segal served as Chief Financial Officer of RPX Corporation. From 1996 to April 2013, Mr. Segal held various positions at Goldman Sachs & Co. Mr. Noto served as Co-Head of Goldman Sachs’ Technology,
Media and Telecom Investment Banking group from September 2011 to May 2014. From February 2008 to September 2010, Mr. Noto served as the CFO of the National Football League. Mr. NotoSegal holds a B.S. in Mechanical EngineeringSpanish from the United States Military Academy and a M.B.A. from the Wharton School of the University of Pennsylvania.Georgetown University.
Adam BainVijaya Gaddehas served as our Chief OperatingLegal Officer since September 2015 and as our President, Global Revenue & Partnerships from September 2010 to October 2015. From September 1999 to September 2010, Mr. Bain served in several roles at News Corporation, a diversified media company, including as Executive Vice President of Products & Technology and as President of its advertising arm, Fox Audience Network, Inc. Mr. Bain holds a B.A. in English Journalism from Miami University.
Vijaya Gadde has served as our General CounselFebruary 2018 and Secretary since August 2013, as our
General Counsel from August 2013 to February 2018, as our head of communications sincefrom July 2015 to August 2016 and as our Director, Legal from July 2011 to August 2013. Ms. Gadde is also a member of the Board of Trustees of New York University School of Law. From October 2010 to July 2011, Ms. Gadde served as Senior Director and Associate General Counsel, Corporate, at Juniper Networks, Inc., a provider of network infrastructure products and services. From October 2000 to April 2010, Ms. Gadde was an attorney at Wilson Sonsini Goodrich & Rosati, P.C. Ms. Gadde holds a B.S. in Industrial and Labor Relations from Cornell University and a J.D. from New York University School of Law.
Adam MessingerMatthew Derellahas served as our head of engineering, product development (other than the product teams relatedCustomers Lead since February 2018, as Global VP, Twitter Client Solutions from July 2016 to monetization efforts, which reportFebruary 2018, as VP, US Direct Sales Organization from March 2013 to Mr. Bain) and design since JanuaryJuly 2016 and as Director, Agency Development and Brand Strategy from October 2012 to March 2013. Prior to joining Twitter, Mr. Derella served in various leadership roles at Google and also worked at The Weather Channel Companies leading marketing solutions for its largest revenue teams. Mr. Derella holds a B.A. in English from Georgetown University and is an inductee in the Advertising Hall of Achievement.
Michael Montanohas served as our Chief Technology OfficerEngineering Lead since July 2018. Before joining Twitter, Mr. Montanoco-founded BackType to focus on organizing online conversations and helping people follow what was being talked about. BackType created and open-sourced the Apache Storm project, a distributed realtime computation system. BackType was acquired by Twitter in 2011. Since joining Twitter, Mr. Montano has led teams across the platform, advertiser products and the consumer product. Mr. Montano holds a BASc Electrical and Computer Engineering from the University of Toronto.
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EXECUTIVE OFFICERS
March 2013 and served as our Vice President, Application Development from April 2012 to March 2013 and as our Vice President, Product Development from November 2011 to April 2012. Prior to that, Mr. Messinger was Vice President of Development at Oracle Corporation, a computer technology company, from January 2008 to November 2011.
Mr. Messinger holds a B.S. in Physics and Computer Science from Willamette University and a M.S. from Stanford University. Mr. Messinger currently serves on the boards of directors of Girls Who Code (a non-profit) and New Relic, Inc.
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EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) includes a detailed discussion of compensation for our current and former executive officers during the fiscal year ended December 31, 20152018 who were Named Executive Officers (“Named Executive Officers”).
Named Executive Officers for | Executive Compensation Highlights | |||
Jack Dorsey
| Chief Executive Officer (“CEO”) Chief Financial Officer (“CFO”)
|
•
•
•Independent Compensation Consultant. We utilized our independent compensation consulting firm on matters relating to compensation data and •Equity Stakes Tie Executive Pay to Company Long-term Company Performance. In 2019, approximately 95% of the total target compensation of our Named Executive Officers (excluding our CEO) is equity based. •2018 Equity Awards. We continued to phase in a performance-based equity
• Cash Compensation Below Market. Our total cash compensation target for executive officers continues to remain below market.
•
acceleration on equity awards. | ||
This CD&A is organized into four sections:
Page
Page
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Twitter gives everyone the power to create and share ideas and information instantly without barriers. Our service is live—live commentary, live connections and live conversations. Whether it is breaking news, entertainment, sports, or everyday topics, hearing about and watching a live event unfold is the fastest way to understand the power of
Twitter. Twitter has always been considered a “second screen” for what is happening in the world and we believe we can become the first screen for everything that is happening now. By doing so, we believe we can build the planet’s largest daily connected audience.
Our revenue grew to $2.22B in 2015, an increase of 58% year over year. We saw a significant increase in revenue driven by
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
our core business and also generated healthy revenue streams from third party publishers’ websites, applications and other offerings and data licensing. Mobile advertising made up over 85% of our 2015 revenue. Finally, we saw a 9% increase in our monthly active users in the three months ended December 31, 2015, as compared to the three months ended December 31, 2014, driven primarily by growth initiatives. Despite our 2015 financial growth, we saw a material decrease in our stock price over the course of the year. We refocused our efforts and committed to the following 2016 strategy in a letter to our stockholders:
•No Excise TaxGross-Ups.We •No Hedging or Pledging. We continue to •Clawback Policy. We adopted a |
Executive Summary Company Overview and Strategy. Twitter is what’s happening in the world and what people are talking about right now. From breaking news and entertainment, to sports, politics, and everyday interests, Twitter shows every side of the story. On Twitter you can join the open conversation and watch highlights, clips, or live-streaming events. Twitter is available in more than 40 languages around the world. The service can be accessed via twitter.com, mobile devices and applications, and SMS. In 2018, we took important steps to increase the collective health, openness, and civility of the public conversation on Twitter, helping people see high-quality information, strengthening oursign-up and account verification processes, and preventing the abuse of Twitter data. Specific actions we took in 2018 included: strengthening account security, updating our rules to more clearly address specific types of hateful conduct, taking new behavior-based signals into account when presenting and organizing Tweets, making it easier to see when a Tweet was removed for breaking our rules, and expanding our team through increased hiring and acquisition. In 2018, our machine learning efforts continued to improve, making it harder for malicious accounts to manipulate our service through multiple accounts and evading suspension, resulting in the suspension of millions of spammy and suspicious accounts. We also continued our work to make it easier to follow and discuss events as they are unfolding. Compensation Goals. |
To execute thison our strategy, we must attract and retain expert employees who are experts and executives who are agile enough to quickly innovate on our business strategy, and constantly enhance our product offerings.offerings and be cutting edge leaders in undefined spaces like safety and abuse. Our executive compensation program is designed to help us realize these objectives.
Specifically, the goals of our executive compensation program are to:
|
In response toWe reduced our evolving businessannual stock-based compensation expense on both an absolute basis and as a percentage of revenue in a year that we had significant changes to our senior leadership team in the form of a departing Chief Executive Officer, the appointment of our Executive Chairman and two promotions, we made the following compensation decisions in 2015:2018. We remain committed
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
to maintaining stock-based compensation as a percentage of revenue in line with our peers.
Challenges. We face challenges in hiring and retaining leadership due to a number of factors, including:
| • |
| • | Extremely Competitive Employee Retention Environment: In the technology industry, there is substantial and continuous competition for leadership with the experience and aptitude to motivate and lead product, engineering, sales, G&A and operations teams who are familiar with the technology industry. Our headquarters are located in the San Francisco Bay Area, where competition for leadership is particularly intense. Further, our brand name and successes have made our employees and executives more attractive as candidates for employment with other companies, and they are subject to significant ongoing recruiting efforts by other companies in the technology industry. We continue to invest in hiring key engineering roles and retaining talented employees to grow our business. We saw reduced levels of attrition in 2018, but we need to continue to focus on hiring and employee retention in order to be successful. We have also made, and intend to continue to make, acquisitions that add engineers, designers, product managers and other personnel with specific technology expertise. In addition, we must retain our high-performing personnel in order to continue to develop, sell and market our products and services and manage our business. |
| • | Executive Background: Typically, we hire experienced executives with specific skills in key functional areas who have worked in an environment similar to ours. The number of executives with the most desirable experience is relatively low and proven executives are difficult to find. We have expanded our recruiting efforts both geographically and into other industries and sectors, which leads to increased complexity in recruiting efforts and has required us to be more flexible with our executive compensation packages. |
Compensation Decisions in 2018. We made the following compensation decisions in 2018:
| • | Base Salary: For 2018, our compensation committee made adjustments to the base salaries of Mr. Derella and Mr. Montano as a result of their promotions to executive level positions. At his own recommendation to the compensation committee, Mr. Dorsey elected to forego any compensation for 2018 other than a base salary of $1.40. We recognize that the base salaries of all of our Named Executive Officers remain below market compared to our compensation peers and therefore, we expect to adjust base salaries over time to remain competitive. |
| • | Performance-Based Cash Compensation: Commencing in 2017, we implemented a broad-based short-term incentive plan for mostnon-sales incentive eligible employees to provide additional incentives for these employees to achieve our goal of sustained profitability as well as to better align pay mix to market and commitment to continue to maintain stock-based compensation as a percentage of revenue in line with our peers. Currently, our Named Executive Officers neither participate in this plan nor are they eligible for discretionary cash bonuses. Our Named Executive Officers do not participate in this plan because the compensation committee believes that it is important that equity compensation remains the core incentive to create alignment between our Named Executive Officers, the performance of the company and stockholder value creation. As a result of this incentive structure, total cash compensation for our Named Executive Officers remains significantly below market when compared to our compensation peers. Further, an increasing proportion of our Named Executive Officers’ equity awards are tied directly to company performance through our performance-based equity compensation program. In 2019, approximately 95% of the total target compensation of our Named Executive Officers on average as a group (excluding our CEO who declined all compensation other than a base salary of $1.40) is equity based. |
| • | Equity Grants Generally: Our executive compensation program continues to be heavily weighted towards equity compensation, |
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
| target total direct compensation (“TDC”) in future years, we |
| • | Performance-Based Equity: |
We launched the PRSU program in 2016 with two company performance goals, 2016 GAAP Revenue and 2016 Adjusted EBITDA, weighted equally. Commencing in 2017, we added a two year Total Shareholder Return (“TSR”) performance goal to our PRSU program in addition to the one year company performance goals, GAAP Revenue and Adjusted EBITDA (each as defined below) to ensure that we are incenting both absolute and relative performance over both a short and longer term time horizon. The TSR component is tied to the Nasdaq Internet Index in order to align us most closely to our compensation peers. Each year the compensation committee approves the weighting of the absolute and relative measures to determine the number of PRSUs allocated to each performance goal. In 2017 and 2018, the absolute measures (GAAP Revenue and Adjusted EBITDA performance goals) were weighted 60% and the relative measure (TSR performance goal) was weighted 40%. In 2019, we have replaced Adjusted EBITDA with GAAP Operating Income in order to bring our current plan design in better alignment with market practice, how we plan and give guidance and shareholder expectations. The absolute measure will continue to be weighted 60% and the relative measure (TSR) will continue to be weighted 40%.
| • | Change of Control and Severance Benefits: We believe that |
“Executive Compensation—Compensation Tables—Potential Payments Upon Termination or Change of |
| • | Clawback Policy: We believe that it is important to foster and |
We evaluate our executive compensation programs, including our mix of cash and equity compensation, on an annual basis or as circumstances require based on our business objectives and the competitive environment for talent. We will continue to increase cash compensation opportunities,consider making adjustments, where appropriate, in order to move closer to market relative to theremain competitive landscape and continueas we optimize our phase-in of our performance-based equity program.compensation mix.
Our Investor Outreach Program and Resulting Compensation Changes
We value the feedback of our stockholders. Following our 2018 annual meeting of stockholders, we continued our engagement initiative with our larger institutional stockholders to better understand their perspectives on our executive compensation practices and related governance topics. In 2015,2018, our management team reached out to our top 30 institutional investors as partcollectively holding approximately 49% of our shares outstanding and met with institutional investors holding approximately 29% of our shares outstanding. This effort supplemented ongoing stockholdercommunications between our management and stockholders regarding our financial performance, and expanded upon the outreach to offerstockholders prior to meet and discussin connection with our 2018 annual meeting of stockholders. Our objectives were to gain a better understanding of stockholders’ views on our executive compensation programs, corporatepractices and on executive compensation best practices generally, as well as related governance and general business topics. The Twitter participants in these meetings included our head of Human Resources, head of Compensation,VP, Total Rewards, head of Investor Relations, Associate General CounselVP, Inclusion and Diversity, and other members of our compensationlegal, operations and investor relations teams. Thematically, we heard from some of these stockholders that they were concerned that all of our equity granted to date had time-based vesting and no portion was linked to performance metrics. We also received feedback about our corporate governance and made corresponding changes, as more fully described in the section titled “Board of Directors and Corporate Governance—Corporate Governance Overview—Stockholder Outreach.”
The compensation committee considered the input we received from stockholders, along with other factors, and made changes to our executive compensation program. These changes, which have been primarily implemented for our fiscal year 2016 annual equity awards, consisted largely of the implementation of performance-based equity awards, including our PRSU grants.
The compensation committee and the board of directors are committed to maintaining apay-for-performance alignment in our executive compensation programs and will continue to solicit feedback from our stockholders regarding our programs and practices.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
2018“Say-on-Pay” Advisory Vote to Approve Executive Compensation
At last year’s annual meeting of stockholders held in May 2018, over 98% of the votes cast on oursay-on-pay proposal were cast in favor of the compensation of the Named Executive Officers on an advisory basis. In 2018, the
compensation committee considered the results of the“say-on-pay” vote as one factor when making its executive compensation decisions during 2018, including continuing thephase-in of our performance-based equity awards in order to remain market competitive and promote further alignment between the interests of our executives and our stockholders.
Elements of Pay and 2018 Compensation Decisions
Our executive compensation program is comprised of three primary components, listed in order of importance to us:
PAY COMPONENT | OBJECTIVE | BENEFIT TO STOCKHOLDERS | ||
| Equity Compensation | Provides a long-term incentive for executives to focus on stockholder value creation Vesting schedule encourages retention Performance-based grants encourage pay for performance | Value at time of vesting is based on long-term growth of Twitter’s stock price and/or, in the case of performance-based grants, meeting both absolute and relative objectives of the company • 60% based on absolute metrics - 30% GAAP Revenue - 30% Adjusted EBITDA1 • 40% based on TSR relative to Nasdaq Internet Index | ||
| Base Salary | Provides a measure of stable fixed compensation for performance ofday-to-day services Amount reflects individual’s performance and scope of responsibilities, as well as the competitive market for executive talent | Our base salary levels remain comparatively low but are still at levels that are competitive to help us attract and retain talented executives | ||
| Benefits and Perquisites | Provides for the health and welfare of our executives and their families, for protection from unexpected loss, as well as the opportunity to save for retirement | Competitive benefits help us attract and retain talented executives | ||
| 1 | For 2019, GAAP Operating Income will replace Adjusted EBITDA in order to bring our current plan design in better alignment with market practice, how we plan and give guidance and shareholder expectations |
We believe that awarding a significant portion of pay in the form of compensation that is directly linked to our stock price motivates our executive team to focus on growing our business over the long term and aligns our executives’ interests with those of our stockholders. We do not use specific formulas or weightings in determining the allocation
of the various pay elements; rather, each Named Executive Officer’s compensation has been individually designed to provide a combination ofat-risk and fixed compensation that is tied to achievement of Twitter’s short and long-term objectives.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following chart sets forth the relative weight of 2018 compensation attributable to equity compensation and base salary for our Named Executive Officers on average as a group (excluding our CEO who declined all compensation other than a base salary of $1.40).
Equity Compensation.
For 2018, the majority of the compensation opportunities for each of our executive officers, including each of our Named Executive Officers, is delivered through RSU and PRSU awards. As these awards have value to the recipient even in the absence of stock price appreciation, these awards help us retain and incentivize employees during periods of market volatility, and also result in our granting fewer shares of common stock than through stock options of equivalent grant date fair value. In addition to the initial equity grant that each executive officer receives as part of his or her new hire package, the compensation committee may grant our executive officers additional equity awards each year as business needs dictate given the nature of our rapidly changing business. Historically, when determining the number of shares subject to an equity grant to issue under both new hire and ongoing awards, we assess the value of the awards based on a variety of potential future stock prices to attempt to mitigate the risk of materially over-compensating our executives if our stock price increases significantly. We also factor in the weighting of the split between RSUs and PRSUs based on our phase in approach of performance-based equity over time. Awards that have been granted to our executive team, including our Named Executive Officers, have been determined based on our board of directors’ or compensation committee’s business judgment regarding the appropriate level of compensation for the position as compared to those in our compensation peers or those companies that we consider direct competitors for talent; the critical nature of the position and
the anticipated potential future impact; the size of each executive’s base salary due to the fact that we do not have a cash based bonus program for our executives; and the vested and unvested equity held by executives. On occasion, we issue options to purchase shares of Twitter stock to incentivize those executives who have a direct impact on our financial growth.
In 2018, we implemented a “stacked” grant framework for annual equity grants for all of our equity-eligible employees worldwide, including our executive officers (other than Mr. Dorsey), to better retain and motivate our employees while driving long-term stockholder value and aligning our compensation practices more closely with our compensation peers.
Under this stacked grant approach, we share with each of our employees our expectations of such employee’s annual targeted equity compensation (“TEC”) over the course of five years (including the current year). We then intend to issue RSU awards that, when combined with the employee’s outstanding grants, represent 100% of the value of an employee’s annual TEC for each of the first two years of the award, 75% in the third year, 50% in the fourth year and 25% in the fifth year. As we utilize this new approach, in each subsequent year, we intend to review, and may revise, such employee’s annual TEC for the next five years and as a result, may award our employees, including our executive officers (other than Mr. Dorsey), similarly-structured RSU awards, subject to individual performance, our performance and compensation peer practices. We determine the value of
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
these RSU awards using an average of our stock price over specified measurement periods to minimize the impact of short-term market volatility. Our goal is to provide our employees with certainty over the short term and visibility over the longer-term as to their expected compensation while at the same time aligning their interests with company performance and giving us the flexibility to adjust equity compensation if circumstances change.
While we are currently utilizing this stacked grant framework, we continue to review other equity compensation designs that may more closely align our compensation practices with our compensation peers and market practice.
2018 Equity Grants.
Jack Dorsey. Mr. Dorsey declined all equity compensation for 2018.
Ned Segal. We granted Mr. Segal a total of 55,556 PRSUs at target, of which (i) 33,334 PRSUs were tied to our 2018 fiscal year performance period (GAAP Revenue and Adjusted EBITDA performance goals) and (ii) 22,222 PRSUs were tied to our 2018-2019 fiscal year performance period (TSR performance goal).
Vijaya Gadde. We granted Ms. Gadde a total of 76,000 PRSUs at target, of which (i) 45,600 PRSUs were tied to our 2018 fiscal year performance period (GAAP Revenue and Adjusted EBITDA performance goals) and (ii) 30,400 PRSUs were tied to our 2018—2019 fiscal year performance period (TSR performance goal).
Matthew Derella. We granted Mr. Derella a total of 20,000 PRSUs at target, of which (i) 12,000 PRSUs were tied to our 2018 fiscal year performance period (GAAP Revenue and Adjusted EBITDA performance goals) and (ii) 8,000 PRSUs were tied to our 2018-2019 fiscal year performance period (TSR performance goal).
Michael Montano. We granted Mr. Montano a total of 158,473 PRSUs at target, of which (i) 53,897 PRSUs were tied to our 2018 fiscal year performance period (GAAP Revenue and
Adjusted EBITDA performance goals) and (ii) 104,576 PRSUs were tied to our 2018-2019 fiscal year performance period (TSR performance goal).
RSUs.
Our RSU awards typically vest over a four-year period and we believe that, like stock options, they help incentivize our executives to build value that can be sustained over time. For more information relating to the granting of these RSU awards, including the vesting schedules, see the section titled “Executive Compensation—Compensation Tables—Grants of Plan-Based Awards in Fiscal Year 2018” table below.
PRSUs.
For 2018, we continued thephase-in of our performance-based equity compensation program and our compensation committee’s goal of targeting 30% of each Named Executive Officer’s total target equity compensation for 2018 to be in the form of PRSUs. Subject to the terms of the 2013 Plan, the PRSUs were eligible to vest based upon our achievement of certain performance targets over aone-year ortwo-year performance period. The compensation committee set the performance targets for the performance period early in the first quarter of 2018 and assessed achievement against theone-year performance targets in February 2019. For 2018, we chose aone-year performance period for the GAAP Revenue and Adjusted EBITDA performance goals and atwo-year performance period for the TSR performance goal to assess the impact of the plan on performance. We intend to reassess the performance goals and performance period in future years.
For 2019, we have replaced Adjusted EBITDA with GAAP Operating Income in order to bring our current plan design in better alignment with market practice and shareholder expectations.
For more information relating to the granting of these PRSU awards, including the vesting schedules, see the section titled “Executive Compensation—Compensation Tables—Grants of Plan-Based Awards in Fiscal Year 2018” table below.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The compensation committee believed that these performance goals and the relative weighting of these goals as described below were appropriate to drive executive performance in achieving certain annual corporate performance goals that further our strategy and that are
used by investors to evaluate our financial performance. No vesting of the PRSUs would occur until a minimum performance threshold was achieved and the PRSUs had a maximum vesting payout capped at 2x target outlined below.
MEASURE
| WEIGHTING
| PERFORMANCE
| 0% MINIMUM
| 100%
| 200%
| ACTUAL
| ACTUAL VESTING
| |||||||||||||||||||
GAAP Revenue
| 30%
| Fiscal year 2018
| <= $2,495 million
| $2,675 million
| >= $3,035 million
| $3,042 million
| 200%
| |||||||||||||||||||
Adjusted EBITDA (before short term incentive target)
| 30%
| Fiscal year 2018
| <= $840 million
| $1,000 million
| >= $1,320 million
| $1,275 million
| 186%
| |||||||||||||||||||
| TSR(1) | 40%
| Fiscal year 2018—2019
| <= (33%) vs. Nasdaq Internet Index
| Equals Nasdaq Internet Index
| >= 50% vs. Nasdaq Internet Index
| N/A
| N/A
| |||||||||||||||||||
| 1 | The TSR measure Actual Performance target and Actual Vesting cannot be determined until the end of the performance period (January 1, 2018—December 31, 2019). |
| 2 | The payouts at lower performance thresholds are subject to a lower proportional return compared to results at higher performance thresholds. |
For these purposes:
“GAAP Revenue” is defined as our GAAP revenues, as may be adjusted for certain acquisitions during the specified performance period.
“Adjusted EBITDA” is defined as net loss (income) adjusted to exclude stock-based compensation expense, depreciation and amortization expense, interest and other expenses, provision (benefit) for income taxes and restructuring charges, but excluding recorded costs resulting from any business acquired by us (other than acquisitions with a total deal consideration as approved by the board of directors or one of its committees and set forth in a definitive agreement
(not including new stock based awards granted to target’s continuing employees) of less than $50 million) during the specified performance period.
“Total Shareholder Return or TSR” is defined as (a) (i) our share price at the end of period (December 31, 2019) minus (ii) our share price at the start of period (January 1, 2018) divided by (b) our share price at the start of period (January 1, 2018). This rate of return, loss or breakeven is then measured against the performance of the Nasdaq Internet Index during the same period and using the same methodology and compared against ourpre-established target levels as described above to determine the achievement of the performance goal.
| TWITTER, INC. / 2019 Proxy Statement | 51 | ||
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following tables sets forth the total PRSUs granted to our Named Executive Officers (other than Mr. Dorsey who declined all equity compensation in 2018) (i) at threshold, target and maximum award levels for the 2018 fiscal year performance period (GAAP Revenue and Adjusted EBITDA performance goals) and the 2018—2019 fiscal year
performance period (TSR performance goal) and (ii) the actual number of PRSUs that vested as a result of our performance against our targets for the 2018 fiscal year performance period for our GAAP Revenue and Adjusted EBITDA performance goals:
| NAMEDEXECUTIVEOFFICER12
| PRSU GRANT
| PRSUGRANTFOR ADJUSTED
| PRSUGRANT
| PRSUGRANT
| ||||||||||||||||
Jack Dorsey
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||||||
Ned Segal
|
| 0
|
|
| 33,334
|
|
| 66,668
|
|
| 64,335
|
| ||||||||
Vijaya Gadde |
| 0
|
|
| 45,600
|
|
| 91,200
|
|
| 88,008
|
| ||||||||
Matthew Derella
|
| 0
|
|
| 12,000
|
|
| 24,000
|
|
| 23,160
|
| ||||||||
Michael Montano
|
| 0
|
|
| 53,897
|
|
| 107,794
|
|
| 104,021
|
| ||||||||
| 1 | Mr. Dorsey declined all equity compensation in 2018. |
| NAMEDEXECUTIVEOFFICER12 | PRSUGRANT PERFORMANCE | PRSUGRANT PERFORMANCE | PRSUGRANT PERFORMANCE | PRSUGRANT PERFORMANCE | ||||||||||||||||
Jack Dorsey
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||||||
Ned Segal
|
| 0
|
|
| 22,222
|
|
| 44,444
|
|
| N/A
|
| ||||||||
Vijaya Gadde
|
| 0
|
|
| 30,400
|
|
| 60,800
|
|
| N/A
|
| ||||||||
Matthew Derella
|
| 0
|
|
| 8,000
|
|
| 16,000
|
|
| N/A
|
| ||||||||
Michael Montano
|
| 0
|
|
| 104,576
|
|
| 209,152
|
|
| N/A
|
| ||||||||
| 1 | Mr. Dorsey declined all equity compensation in 2018. |
| 2 | The actual performance for the PRSU grant for the 2018 – 2019 fiscal year performance period (TSR performance goal) cannot be determined until the end of the performance period (January 1, 2018 – December 31, 2019). |
Base Salary.Historically, the salaries of our executive team, including our Named Executive Officers, have remained below competitive market levels due to our desire to maintain internal pay equity between executive officers and other senior-level individuals. Starting in 2014, our compensation committee agreed that the base salaries for our executive team, including our Named Executive Officers, should gradually increase to market competitive levels and accordingly we made base salary adjustments in 2014 and again in 2016. In 2018, we increased the salaries of Mr. Derella and Mr. Montano as a result of their elevation to executive level positions. We also initiated a base salary of $1.40 for
Mr. Dorsey. The salaries of our remaining Named Executive Officers were unchanged from 2017.
The following table shows the annualized base salary rates in effect for 2018:
| NAME | 2018 BASE SALARY RATE ($) | ||||
Jack Dorsey | 1.40 | ||||
Ned Segal | 500,000 | ||||
Vijaya Gadde | 500,000 | ||||
Matthew Derella | 500,000 | ||||
Michael Montano | 350,000 | ||||
| 52 | TWITTER, INC. / 2019 Proxy Statement |
| ||
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Benefits.Our executive officers, including the Named Executive Officers, participate in the same benefits plans and programs that all other Twitter employees in the same geographies they are based. These plans include medical, dental, and vision care plans, flexible spending accounts for health and dependent care, life, accidental death and dismemberment, disability, and travel insurance, employee assistance programs, employee stock purchase plan and paid time off.
In addition, we maintain a tax qualified 401(k) retirement savings plan that contains both apre-tax and anafter-tax savings feature for the benefit of eligible U.S. employees, including our Named Executive Officers. In 2018, we continued a discretionary employer matching contribution program by which we made a contribution of $0.50 for every dollar an employee contributes in either thepre-tax orpost-tax Roth account up to a maximum company contribution of $3,000 per year per eligible employee, including our eligible Named Executive Officers. We believe that a company contribution encourages all eligible U.S. employees to contribute to long-term retirement savings. All 2018 contributions were fully vested as of their respective contribution dates and are deductible by us.
Perquisites. Consistent with the practices of many companies in our peer group, in the past we have provided limited perquisites, mainly in the form of personal security, to certain of our Named Executive Officers. None of these security related costs constituted taxable income to our Named Executive Officers. In 2018 we did not provide any perquisites to our Named Executive Officers.
Our Compensation-Setting Process
We have been undergoing a period of rapid growth, development and development bothchange as a private and public company in a highly competitive business and technological environment that dictates that we consider a number of factors in
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EXECUTIVE COMPENSATION
determining individual compensation arrangements with executives, including our Named Executive Officers, at the time we hire them:them, including:
Role of Our Compensation Committee.Our compensation committee is composed entirely of independent directors, and is responsible for overseeing our executive compensation program. Our compensation committee approves ongoing compensation arrangements for our executive officers, including our Named Executive Officers (other than our CEO) and makes recommendations to the full board of directors regarding our CEO’s compensation. In making its determination fordetermining compensation for our Named Executive Officers, our compensation committee considers the following factors: numerous factors, including:
There is no predetermined formula for weighting these factors. Instead, our compensation committee considers all of this information in light of our business objectives. Our compensation committee operates under a written charter adopted approved by our board of directors. The charter is available on our website.website at https://investor.twitterinc.com.
Role of Management. Each year, ourOur CEO, together with senior HR management, reviews our executive compensation practices against our compensation peers (described below), competitors for talent and market data. At the compensation committee’s request, our CEO then makes recommendations for target compensation opportunities for executive officers (other than himself). Our compensation committee believes that our CEO’s input for the compensation opportunities for other executives is highly valuable because of his daily involvement with the other members of our executive team and our business. No executive officer participates directly in the final deliberations or determinations regarding his or her own compensation package. Our current CEO, Mr. Dorsey, requested that he forego all compensation for 2015 and our board of directors followed that request. Our senior management team also provides input on, and helps negotiate, initial compensation packages for our newly hired executives. Our compensation committee seeks input from senior management during the
| TWITTER, INC. / 2019 Proxy Statement | 53 | ||
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
process of searching for and negotiating compensation packages, with new senior level hires and coordinates with our Chief Financial Officer and Chief Accounting Officer in determining the financial and accounting implications of our executive compensation programs and hiring decisions. Our CEO, Mr. Dorsey, requested and our board of directors approved that he forego all compensation for 2018 other than a base salary of $1.40.
Role of the Compensation Consultant. Our compensation committee has the authority to engage its own advisors to assist in carrying out its responsibilities. In 2015,2018, our compensation committee requested that management engage with Compensia Inc., a national compensation consulting firm, on matters relating to our compensation peers selection as well as to provide support and specific analyses with regard to compensation data and formulation of recommendations for executive compensation. The compensation committee intends to periodically reviewreviews the need to independently retain a compensation consultant.
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EXECUTIVE COMPENSATION
Use of Comparative Market Data. We established our compensation peers in October 2013 in conjunction with our initial public offering. Each year theour compensation committee reviews the current compensation peers along with the selection criteria for applicability in making the next yearsyear’s compensation decisions.
The compensation peers, used to inform 20152018 compensation decisions, were selected using four general selection parameters. The criteria are software (primary) and broad technology (secondary) companies located in the United States which are between one half (0.5x) and two and one half (2.5x) times our size in revenue with a market capitalization of one third (0.3x) to three (3.0x) times our market capitalization with a preference for companies with high growth and high market capitalization to revenue multiples. We also considered one other companyconsider cash and equity compensation data for Facebook as a reference peer, given that we directly compete with for key talent in orderwith Facebook.
For 2018, our compensation committee reviewed adjustments to better represent the current competitivecompensation peer group recommended by Compensia based on the criteria described above and talent environment. Of the original compensation peers selected in 2013, 15 of the original 17 remain; NetSuiteremoved Netflix and Verisign were removedPandora Media due to incomparable revenue thresholds and Adobemarket cap, and VMWare were added MatchGroup, Snap, and Symantec due to their similar market capitalization. Thesimilarities with the stated financial criteria. Accordingly, our 2018 compensation peers used to inform 2015 compensation decisions were:
Autodesk | ServiceNow | VMWare | ||||
Electronic Arts | ||||||
Square | Workday | |||||
Intuit | Snap | Yelp | ||||
MatchGroup | Splunk | Zillow Group | ||||
Palo Alto Networks | Symantec | |||||
Red Hat | ||||||
TripAdvisor |
Our compensation committee intends to continue to review our compensation peers and the underlying criteria annually to assess thatwhether it remains appropriate for review and comparison purposes. We also participate in surveys of market compensation practices in our industry and broadly across all industries, and undertake specialized studies of competitive market practices using the most relevant published survey sources and public filings.
When determining 20152018 executive officer compensation opportunities, management presented information to the compensation committee based on compensation peers and
market survey data. Our compensation committee considered this information in making its decision but did not engage in strict benchmarking to a fixed percentile. Instead, our compensation committee, taking into consideration the factors described above, relied on the business experience of its members and on the recommendations of management to craft compensation packages appropriate for our particular executives taking into consideration the factors described above.executives. We believe that the total compensation opportunities of our executive officers, including our Named Executive Officers, were competitive with market practices for similarly situated executives of our compensation peers.
| TWITTER, INC. / |
| |||
EXECUTIVE COMPENSATION
Elements of PayCompensation Discussion and 2015 Compensation Decisions
Our executive compensation program is comprised of three components, listed in order of importance:
| ||||
| ||||
We believe that awarding a significant portion of pay in the form of compensation that is directly linked to our stock price motivates our executive team to focus on growing our business over the long term and aligning our executives’ interests with those of our stockholders. We do not use specific formulas or weightings in determining the allocation
of the various pay elements; rather, each of our Named Executive Officer’s compensation has been individually designed to provide a combination of at-risk and fixed compensation that is tied to achievement of Twitter’s short-and long-term objectives.
The following chart sets forth the relative weight of 2015 compensation attributable to equity compensation and base salary for our Named Executive Officers.
| ||||
EXECUTIVE COMPENSATIONAnalysis
Equity Compensation. The majority of the compensation opportunities for each of our executive officers, including each of our Named Executive Officers, is delivered through RSU awards. The time vesting component of our RSU awards encourages retention over the long-term. In addition to the initial equity grant that each executive officer receives as part of his or her new hire package, the compensation committee may grant our executive officers additional equity awards each year as business needs dictate given the nature of our rapidly changing business. When determining the number of RSUs to issue under both new hire and ongoing awards, we assess the value of the awards based on a variety of potential future stock prices to attempt to mitigate the risk of materially over-compensating our executives if our stock price increases significantly. The size of awards that have been granted to our executive team, including our Named Executive Officers, have not been determined based on a specific formula, but rather on our board of directors’ or compensation committee’s business judgment regarding the appropriate level of compensation for the position as compared to those in our compensation peers or those companies that we consider direct competitors for talent; the critical nature of the position and the anticipated potential future impact; the size of each executive’s base salary due to the fact that we do not have a cash based bonus program; and the vested and unvested equity held by executives. On occasion, we issue options to purchase shares of Twitter stock, either in the form of incentive stock options or non-qualified stock options, to incentivize those executives who have a direct impact on our financial growth through a performance-based award. Mr. Kordestani received non-qualified stock options in 2015 as a form of inducement to join our company.
As discussed above, for 2016 we started to award long-term performance-based compensation in the form of PRSUs to our executive officers. Subject to the terms of the 2013 Plan, the PRSUs will be eligible to vest based upon our achievement of certain performance targets over a one-year performance period. The board of directors or the compensation committee will set the performance targets for the performance period prior to the end of the first quarter of
the performance year and will assess achievement against those performance targets in the first quarter of the following year. Given that this is our initial roll out of the plan, we chose a one year performance period to assess the impact of the plan on performance. We intend to reassess the performance period in future years. In anticipation of implementing a more broadly used PRSU plan, the compensation committee approved granting Mr. Kordestani PRSUs in 2015 as an additional form of inducement to join our company. In determining Mr. Kordestani’s total compensation target, we viewed his position and associated responsibilities as both an executive of the company and member of the senior management team as well as his position on the board. Mr. Kordestani is expected to oversee our strategic direction, including by serving as Executive Chairman of our board of directors, helping with board recruiting and composition, recruiting critical talent, leading executive team organization and coaching, and leading strategic initiatives.
Due to the size and vesting status of our executive team’s existing equity awards, and our desire to incent our executive team to focus on the long-term business objectives, the compensation committee, upon recommendation from our senior management, adopted a gap to market approach to vesting. Under this approach, we only issue time vested equity awards when a material gap to targeted total direct compensation exists based on the value of existing awards and the schedule by which the awards vest. Accordingly for 2015, we only issued RSU grants to Mr. Roetter and Mr. Weil in connection with their respective promotions to Senior Vice President, Engineering and Senior Vice President, Product. Based on the amount of equity vesting each year, the compensation committee granted an award to vest over 2015 when a small gap to targeted total direct compensation existed, and an award to vest over Q4 2017 through Q4 2019; when a material gap to targeted total direct compensation existed. We believe this approach will promote long-term retention by allowing for multiple years between the grant date and the vesting start date before an executive can begin to realize value on his or her equity award. An illustration of how we calculate the gap and determine vesting follows:
Targeted Total Direct Compensation (“TDC”): $5M per year
| 2016 | 2017 | 2018 | 2019 | |||||||||||||||||
| Current TDC with existing equity | $ | 5.2M | $4.8M | $2.0M | $300K | |||||||||||||||
| Proposed Equity Grant | -0- | $200K | $3.0M | $4.7M | ||||||||||||||||
| Vesting Schedule of Proposed Equity Grant | N/A | 25% per quarter, commencing Q1, 2017 | 25% per quarter, commencing Q1, 2018 | 25% per quarter commencing Q1, 2019 | ||||||||||||||||
| Total TDC | $ | 5.2M | $5.0M | $5.0M | $5.0M | |||||||||||||||
| ||||
EXECUTIVE COMPENSATION
For more information relating to the granting of these RSU awards, including the vesting schedules, see the section titled “Executive Compensation—Compensation Tables—Grants of Plan-Based Awards in Fiscal Year 2015” table below.
2015 Equity Grants.
Jack Dorsey.Mr. Dorsey declined all compensation for 2015 (including equity awards).
Anthony Noto.Mr. Noto did not receive any equity awards in 2015 because he had significant unvested value in his outstanding equity awards.
Omid Kordestani. As inducement to join our company as our executive chairman, Mr. Kordestani received a grant of 800,000 non-qualified stock options. The non-qualified stock options vest 25% on the first day of the month following Mr. Kordestani’s twelve month employment anniversary and 6.25% are subject to quarterly vesting thereafter based on continued employment over the remainder of the vesting period. Mr. Kordestani also received a grant of 400,000 PRSUs. Mr. Kordestani will be eligible to earn 100,000 PRSUs at target in each of 2016 through 2019, with the earned amount determined in the first quarter of the year following the end of the performance period once financial results are known and the final payout is approved by the compensation committee.
Richard Costolo.Mr. Costolo did not receive any equity awards in 2015.
Alex Roetter. In recognition of Mr. Roetter’s promotion to Senior Vice President, Engineering and his gap to targeted total direct compensation, he received a grant of 24,000 RSUs. These RSUs vested 50% on April 1, 2015 and 50% on July 1, 2015. Mr. Roetter also received an additional equity grant of 152,837 RSUs. These RSUs were subject to quarterly vesting based on continued employment over nine quarters with the first vest date on October 1, 2017. Mr. Roetter resigned from the company on February 4, 2016 and all unvested equity was forfeited as of his date of termination, including this 152,837 share RSU grant.
Kevin Weil.In recognition of Mr. Weil’s promotion to Senior Vice President, Product and his gap to targeted total direct compensation, he received a grant of 24,000 RSUs. These RSUs vested 50% on April 1, 2015 and 50% on July 1, 2015. Mr. Weil also received an additional equity grant of 152,837 RSUs. These RSUs were subject to quarterly vesting based on continued employment over nine quarters with the first vest
date on October 1, 2017. Mr. Weil resigned from the company on January 29, 2016 and all unvested equity was forfeited as of his date of termination, including this 152,837 share RSU grant.
Base Salary. The salaries of our executive team, including our Named Executive Officers, have remained significantly below market due to the fact that until October 2013, we were a privately-held company with the potential for significant equity upside coupled with our desire to maintain internal pay equity between executive officers and other senior level individuals. In 2014, our compensation committee agreed that the base salaries for our executive team, including our Named Executive Officers, should gradually increase to market competitive levels and accordingly in 2014, we raised base salaries to the lesser of 80% of market target or 150% of current base. In 2015, we made no further adjustments to base salaries as we believed that the 2014 increases were material in nature and continue to appropriately compensate our executive officers although they still remained well below our compensation peers. The following table shows the base salary rates in effect for 2015 (Mr. Dorsey declined a base salary for 2015):
Benefits. Twitter executives, including the Named Executive Officers, participate in the same benefits plans and programs that all other Twitter employees in the same geographies they are based. These plans include medical, dental, and vision care plans, flexible spending accounts for health and dependent care, life, accidental death and dismemberment, disability, and travel insurance, employee assistance programs, and paid time off.
In addition, we maintain a tax qualified 401(k) retirement savings plan that contains both a pre-tax and an after-tax savings feature for the benefit of eligible U.S. employees, including our Named Executive Officers. In 2015, we implemented a discretionary employer matching contribution program by which the company will make a contribution of $.50 for every dollar an employee contributes in either the pre-tax or post-tax Roth account up to a maximum company
| ||||
EXECUTIVE COMPENSATION
contribution of $1,500 per year per eligible employee, including our Named Executive Officers. In order to receive the company contribution, the employee must be employed as of December 31 of the applicable plan year and have at least 6 months of continuous service. We believe that a company contribution encourages all eligible U.S. employees to contribute to long-term retirement savings. The 2015 contribution was fully vested as of the December 31 contribution date and is deductible by us.
Perquisites. Consistent with the practices of many companies in our peer group, we provide limited perquisites, mainly in the form of personal security, to several of our Named Executive Officers. We believe that the personal safety of our Named Executive Officers is paramount to Twitter and believe that the cost of the security measures are appropriate and necessary. With respect to Mr. Dorsey and formerly to Mr. Costolo, we paid for the annual costs of security personnel as well as the maintenance of security measures for Mr. Costolo’s personal residence. None of the security related costs constitute taxable income to our Named Executive Officers.
Other Compensation Information
Employment Arrangements.Each of our Named Executive Officers has entered into a written,at-will employment offer letter with us. For a summary of the material terms and conditions of these employment offer letters, see the section titled “Executive Compensation—Compensation Discussion and Analysis—Other Compensation Information—Executive Officer Employment Letters.”
Post-Employment Compensation.Each of our Named Executive Officers participates in our Change of Control and Involuntary Termination Protection Policy (the “Severance Policy”), which provides standardized payments and benefits to the Named Executive Officers in the event of ana termination without “cause” by Twitter or termination for “good reason” by the participant, whether or not in connection with a change of control, to make these benefits consistent among the executives who have these arrangements. Our compensation committee approves all plan participants and the level of benefit applicable to each plan participant. We believe that the change of control benefits in the Severance Policy assist to maximize stockholder value and maintain executive focus in the immediate period prior to, during and after the change of control event.
The material terms of these post-employment arrangements are set forth in “Executive Compensation—
Compensation Tables—Potential Payments Upon Termination or Change of Control” below.
Clawback Policy. We believe that it is important to foster and maintain a culture that emphasizes integrity and accountability. Our Clawback Policy permits the company to require that any current or former officer of the company who is (or was) subject to Section 16 of the Exchange Act, repay certain cash-based incentive compensation or performance-based equity compensation to the company if the compensation committee determines that such participant’s actions caused or partially caused the company to restate all or a portion of its financial statements within the three-year period from the original filing date of the restated financial statements. If the compensation committee determines that any such cash-based incentive compensation or performance-based equity compensation would have been less had they been calculated based on the restated results, and further determines that fraud, gross negligence, or intentional misconduct by any such participant caused or partially caused such restatement and it is in the company’s
best interests to recover all or a portion of the excess amount of cash-based incentive compensation or performance-based equity compensation received (or to be received) by such participant, the compensation committee may seek to recover the difference between the amounts awarded or paid (or to be awarded or paid) and the amounts that would have been awarded or paid based on the restated results.
When the SEC adopts final clawback policy rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we will review and may revise our Clawback Policy to the extent required to comply with such rules.
Accounting Treatment. We recognize anon-cash charge to earnings for accounting purposes for equity awards. We expect that our compensation committee will continue to review and consider the accounting impact of equity awards in addition to considering the impact for dilution and overhang when deciding the amounts and terms of equity grants.
Deductibility of Executive Compensation.Code Section 162(m) may limit the amount that we may deduct from our federal income taxes for compensation paid to certain of our current or former executive officers who qualify as “covered employees” within the meaning of Code Section 162(m) to one million dollars per executive officer per year, unless certain requirements are met. The US Tax Cuts and Jobs Act (“Tax Reform”) modified the rules for executive compensation, including that once an executive becomes a “covered employee” under Code Section 162(m) provides an exception from this deduction limit for certain forms of performance-based compensation and for certain compensation paid duringthe individual will continue to be a transition period after our initial public offering. “covered employee” as long as they remain employed by the company.
While theywe are mindful of the benefit of the full deductibility of compensation, our board of directors and compensation committeewe believe that we should not be constrained by the requirements of the Code Section 162(m) exception where those requirements would impair our flexibility in compensating our executive officers in a manner that can best promote our corporate objectives. Therefore, our board of directors and compensation committeewe have not adopted a policy that would require that all compensation be deductible.deductible, though we do consider the deductibility of compensation when making compensation decisions. We may authorize compensation payments that are not fully tax deductible if we believe that such payments are appropriate to attract and retain executive talent or meet other business objectives.
| TWITTER, INC. / 2019 Proxy Statement | 55 | ||
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Taxation of Parachute Payments and Deferred Compensation.We do not provide, and have no obligation to provide, any executive officer, including any Named Executive Officer, with a “gross-up”“gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Section 280G, 4999, or 409A of the Code. 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 an excise tax if they receive payments or benefits in connection with a change of control that exceed certain limits prescribed by the Code, and that the employer may forfeit a deduction on the amounts subject to this additional tax. Section 409A of the Code also may impose significant taxes on a service provider in the event that he or she receives deferred compensation that does not comply with the requirements of Section 409A of the Code. We have structured our compensation arrangements with the intention of complying with or otherwise being exempt from the requirements of Section 409A of the Code.
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EXECUTIVE COMPENSATION
Hedging and Pledging Policies.We have established an Insider Trading Policy, which, among other things, prohibits short sales, engaging in transactions in publicly-traded options (such as puts and calls) and other derivative securities relating to our common stock. This prohibition extends to any hedging or similar transaction designed to decrease the risks associated with holding our securities. In addition, our Named Executive Officers are prohibited from pledging any of our securities as collateral for a loan and from holding any of our securities in a margin account.
Executive Officer Employment LettersLetters..
Jack Dorsey.Dorsey. We entered into an executive employment letter dated June 11, 2015 with Mr. Dorsey, our Chief Executive Officer. The letter has no specific term and provides forat-will employment. At the time Mr. Dorsey was appointed Chief Executive Officer, he declined all compensation and therefore,compensation. Mr. Dorsey’s current base salary is not currently subject to our Severance Policy.$1.40.
Omid Kordestani.Ned Segal. We entered into an executive employment letter dated October 13, 2015July 11, 2017 with Mr. Kordestani,Segal, our Executive Chairman.Chief Financial Officer. The letter has no specific term and provides forat-will employment. The letter provides that Mr. Kordestani’s currentSegal’s base salary is $50,000initially $500,000 per year, and outlines his $300,000sign-on bonus and initial grants of 800,000 non-qualified stock options794,444 RSUs and 400,000372,223 PRSUs. The non-qualified stock options vest 25%250,000 of the RSUs vested on the first day of the first month following his theone-year employment anniversary of Mr. Segal’s hire date and then44,444 RSUs will vest on December 1, 2018, 222,222
RSUs will vest quarterly thereafter for the remaining 12 quarters,over 2019, 138,889 RSUs will vest quarterly over 2020, and 138,889 RSUs will vest quarterly over 2021, subject to his continued employment on each vesting date. The PRSUs will have performance periods over our next four fiscal years beginning with our 20162017 fiscal year, with performance targets to be set for each performance period in advance of the end of the applicable performance period, and, achievement determined in the first quarter following each completed fiscal year. Mr. Kordestani’sSegal’s letter also specifies his severance arrangement if he is involuntarily terminated or terminates for “good reason” either in isolation or in connection with a change of control event, as described in the section titled “Executive Compensation—Compensation Tables—Potential Payments Upon Termination or Change of Control.”
Anthony Noto.Vijaya GaddeWe entered into an executive employment letter dated June 30, 2014 with Anthony Noto, our Chief Financial Officer. The letter has no specific term and provides for at-will employment. The letter provides that Mr. Noto’s base salary is $250,000 and outlines his grants of 1,500,000 RSUs and 500,000 non-qualified stock options, each vesting 25% on the first day of the month following his one-year employment anniversary (with 8/48th of the grant vesting as
of March 1, 2015) and then quarterly thereafter for the remaining 12 quarters. Mr. Noto’s letter also specifies his severance arrangement if he is involuntarily terminated or terminates for “good reason” either in isolation or in connection with a change of control event, as described in the section titled “Executive Compensation—Compensation Tables—Potential Payments Upon Termination or Change of Control.”
Richard Costolo.. We entered into an executive employment letter dated October 1, 2013 with Richard Costolo,Ms. Gadde, our former Chief Executive Officer.Legal Officer and Secretary. The letter has no specific term and provides forat-will employment. The letter supersedes all existing agreements and understandings Mr. Costolo may have concerning his employment relationship with us. The letter also provides that Mr. Costolo’s annual base salary is $14,000. For Mr. Costolo’s current base salary see the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of Pay and 2015 Compensation Decisions—Base Salary.”
Mr. Costolo resigned as our Chief Executive Officer on July 1, 2015 and as a member of our board of directors on September 30, 2015. In connection with his resignation as Chief Executive Officer, Mr. Costolo entered into a letter agreement with Twitter dated as of June 11, 2015 agreeing to cancel all of his remaining unvested equity after July 1, 2015.
Alex Roetter.Matthew Derella. We entered into an executive employment letter dated July 28, 2010October 1, 2012 with Alex Roetter,Mr. Derella, our Senior Vice President, Engineering.Customers Lead. The letter has no specific term and provides forat-will employment. The letter supersedes all existing agreements and understandingsIn 2018, Mr. Roetter may have concerning his employment relationship with us. The letter also provided thatDerella was eligible for certain variable compensation under a commission plan generally applicable to our sales employees. Mr. Roetter’s annual base salary was $150,000 (subsequently increasedDerella is not eligible to $375,000). Mr. Roetter resigned fromparticipate in the company on February 4, 2016.commission plan commencing in 2019.
Kevin Weil.Michael Montano. We entered into an executive employment letter dated May 26, 2009June 20, 2011 with Kevin Weil,Mr. Montano, our Senior Vice President, Product.Engineering Lead. The letter has no specific term and provides forat-will employment. The letter supersedes all existing agreements and understandings Mr. Weil may have concerning his employment relationship with us. The letter also provides that Mr. Weil’s annual base salary was $120,000 (subsequently increased to $375,000). Mr. Weil resigned from the company on January 29, 2016.
Compensation-Related Risk.
We have undertakenengaged Compensia to complete a risk review of our employee compensation policies and practices in which our employees
| ||||
EXECUTIVE COMPENSATION
(including (including our executive officers) participate, to determine whether these policies and practices have any features that might create undue risks or encourage unnecessary and excessive risk-taking that could threaten our value. In ourthe review, we consideredconsideration was given to numerous factors and design elements that manage and mitigate risk, without diminishing the effect of the incentive nature of compensation, including, but not limited to, the following:
| 56 | TWITTER, INC. / 2019 Proxy Statement |
| ||
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Based on our review of the analysis performed by Compensia, we concluded that any potential risks arising from our employee compensation policies and practices, including our executive compensation programs, are not reasonably likely to have a material adverse effect on Twitter. Our compensation committee has reviewed this assessment and agreed with management’s conclusions.our company.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis provided above. Based on its review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and Twitter’s Annual Report on Form10-K for the year ended December 31, 2015.2018.
Compensation Committee
Peter FentonDavid Rosenblatt (Chair)
Peter Chernin*Patrick Pichette
David Rosenblatt
Marjorie Scardino*Bret Taylor
| TWITTER, INC. / |
| ||
EXECUTIVE COMPENSATION
Compensation Tables
20152018 Summary Compensation Table
| NAME AND PRINCIPAL POSITION | YEAR | SALARY ($)(1) | BONUS ($)(2) | OPTION AWARDS ($)(3) | STOCK AWARDS ($)(4) | ALL OTHER COMPENSATION ($)(5) | TOTAL COMPENSATION ($) | ||||||||||||||||||||||||||||
| Jack Dorsey | 2015 | — | — | — | — | 68,506 | 68,506 | ||||||||||||||||||||||||||||
| Chief Executive Officer | |||||||||||||||||||||||||||||||||||
| Anthony Noto(6) | 2015 | 250,000 | — | — | — | 151,281 | 401,281 | ||||||||||||||||||||||||||||
| Chief Financial Officer | 2014 | 124,038 | — | 9,545,000 | 63,075,000 | 24,060 | 72,768,098 | ||||||||||||||||||||||||||||
| Omid Kordestani(7) | 2015 | 9,615 | — | 12,352,000 | — | — | 12,361,615 | ||||||||||||||||||||||||||||
| Executive Chairman | |||||||||||||||||||||||||||||||||||
| Richard Costolo | 2015 | 7,162 | — | — | — | 84,633 | 91,795 | ||||||||||||||||||||||||||||
| Former Chief Executive Officer | 2014 | 13,892 | — | — | — | 161,507 | 175,399 | ||||||||||||||||||||||||||||
| 2013 | 130,250 | — | — | — | — | 130,250 | |||||||||||||||||||||||||||||
| Alex Roetter(8) | 2015 | 375,000 | — | — | 8,610,193 | 1,500 | 8,986,693 | ||||||||||||||||||||||||||||
| Former Senior Vice President, | 2014 | 276,712 | — | — | 18,759,600 | 27,397 | 19,063,709 | ||||||||||||||||||||||||||||
| Engineering | |||||||||||||||||||||||||||||||||||
| Kevin Weil(9) | 2015 | 375,000 | — | — | 8,610,193 | 71,462 | 9,056,655 | ||||||||||||||||||||||||||||
| Former Senior Vice President, Product | 2014 | 252,056 | 2,500 | — | 12,733,800 | 15,997 | 13,004,353 | ||||||||||||||||||||||||||||
| NAME AND PRINCIPAL POSITION
| YEAR
| SALARY
| BONUS
| STOCK
|
ALL OTHER COMPENSATION
| TOTAL
| ||||||||||||||||||||||||
Jack Dorsey
|
|
2018
|
|
|
1.40
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.40
|
| ||||||||||||
Chief Executive Officer
|
| 2017
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||||||||||
|
| 2016
|
|
| —
|
|
| —
|
|
| —
|
|
| 56,551
|
|
| 56,551
|
| |||||||||||||
Ned Segal(5) |
| 2018
|
|
| 500,000
|
|
| —
|
|
| 4,460,054
|
|
| 3,000
|
|
| 4,963,054
|
| ||||||||||||
Chief Financial Officer
|
| 2017
|
|
| 165,385
|
|
| 300,000
|
|
| 13,832,643
|
|
| 1,500
|
|
| 14,299,528
|
| ||||||||||||
Vijaya Gadde |
| 2018
|
|
| 498,077
|
|
| —
|
|
| 11,298,824
|
|
| 3,000
|
|
| 11,799,901
|
| ||||||||||||
Chief Legal Officer and Secretary
|
| 2017
|
|
| 500,000
|
|
| —
|
|
| 406,560
|
|
| 1,500
|
|
| 908,060
|
| ||||||||||||
|
| 2016
|
|
| 498,000
|
|
| —
|
|
| 9,348,000
|
|
| 1,500
|
|
| 9,847,500
|
| |||||||||||||
Matthew Derella
|
| 2018
|
|
| 499,038
|
|
| 563,710
|
|
| 3,254,671
|
|
| 3,000
|
|
| 4,320,419
|
| ||||||||||||
Customers Lead
| ||||||||||||||||||||||||||||||
Michael Montano
| 2018 | 325,769 | 45,500 | 17,612,977 | — | 17,984,246 | ||||||||||||||||||||||||
Engineering Lead
| ||||||||||||||||||||||||||||||
| (1) | At his own recommendation to the compensation committee, Mr. Dorsey elected to forego any compensation for |
| (2) | Amounts disclosed in this column relate to |
| (3) | Amounts disclosed in this column relate to grants of |
Amounts disclosed in this column include (i) company contributions made to our Named Executive Officers’ 401(k) account, which contribution was made to all eligible employees generally and (ii) for Mr. |
Mr. |
Officer. Mr. |
| 58 | TWITTER, INC. / 2019 Proxy Statement |
| ||
EXECUTIVE COMPENSATION
Compensation Tables
CEO PAY RATIO
In accordance with Item 402 of Regulation S-K under the Securities Act (“Item 402”), below is the ratio of the total compensation of the median employee of the company to the annual total compensation of the CEO (the “Pay Ratio Disclosure”).
We determined that the median employee identified in our proxy last year was no longer representative because the employee was promoted and received an equity grant as a result of the promotion. Because the full value of the additional equity grant must be included as part of the median employee’s total annual compensation under Item 402 regardless of when vesting occurs, this new equity grant created annual total compensation for last year’s median employee that is non-representative of what a median employee at the company earns. Accordingly, we selected a new median employee.
In order to identify a new median employee, we examined the total taxable compensation in 2018 of all employees globally, including those employed on a full-time, part-time, seasonal or temporary basis by the company or any of its consolidated subsidiaries, as of December 31, 2018, and then converted into U.S. dollars and annualized for those employees who were not employed for the entire 2018 fiscal year. The total taxable compensation was determined from information derived from tax and/or payroll records. Using this methodology, it was determined that, for 2018, the median employee was an exempt, full-time employee located in the U.S.
Our CEO, Mr. Dorsey had annual total compensation for 2018, calculated using the requirements of Item 402 for purposes of the Pay Ratio Disclosure, of $1.40 (Mr. Dorsey declined all other compensation during 2018). The annual total compensation of the median employee of the company for 2018, calculated using the same requirements under Item 402 for purposes of the Pay Ratio Disclosure, which included base pay, incentive compensation, the grant date fair value of equity grants and the company’s matching contribution to that employee’s 401(k) plan, was $172,703. Accordingly, the ratio of the annual total compensation of the CEO to the annual total compensation of the median employee of the company was less than 0.0001.
The Pay Ratio Disclosure presented above is a reasonable estimate calculated in a manner consistent with Item 402. Because the SEC’s final regulations for identifying the median employee, calculating annual total compensation and determining the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, the company’s Pay Ratio Disclosure may not be comparable to that reported by other companies.
| TWITTER, INC. / | |||
EXECUTIVE COMPENSATION
Compensation Tables
Grants of Plan-Based Awards in Fiscal Year 20152018
The following table sets forth information regarding grants of plan-based equity awards made to our Named Executive Officers during fiscal year 2015.2018. We did not grant any plan-based cash awards or stock options to our Named Executive Officers during fiscal year 2015.2018.
| NAME | GRANT DATE | NUMBER OF SECURITIES UNDERLYING RESTRICTED STOCK UNITS (#) | NUMBER OF SECURITIES UNDERLYING OPTIONS (#) | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH) | GRANT DATE ($) (1) | ||||||||||||||||||||
| Jack Dorsey | — | — | — | — | — | ||||||||||||||||||||
| Anthony Noto | — | — | — | — | — | ||||||||||||||||||||
| Omid Kordestani | 10/29/2015 | (2) | — | 800,000 | 29.06 | 12,352,000 | |||||||||||||||||||
| Richard Costolo | — | — | — | — | — | ||||||||||||||||||||
| Alex Roetter | 2/24/2015 | (3) | 152,837 | — | — | 7,441,633 | |||||||||||||||||||
| 2/24/2015 | (3) | 24,000 | — | — | 1,168,560 | ||||||||||||||||||||
| Kevin Weil | 2/24/2015 | (3) | 152,837 | — | — | 7,441,633 | |||||||||||||||||||
| 2/24/2015 | (3) | 24,000 | — | — | 1,168,560 | ||||||||||||||||||||
NAME
| GRANT DATE
| ESTIMATED FUTURE PAYOUTS UNDER
|
ALL OTHER STOCK UNITS (#)
| GRANT DATE
| ||||||||||||||||||||||||||
THRESHOLD (#)
| TARGET (#)
| MAXIMUM (#)
| ||||||||||||||||||||||||||||
| Jack Dorsey |
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||||||||||
Ned Segal |
|
5/30/2018
|
(2)
|
| 64,857
|
|
| 2,228,487
|
| |||||||||||||||||||||
|
5/30/2018
|
(3)
|
| 0
|
|
| 33,334
|
|
| 66,668
|
|
| 1,145,356
|
| ||||||||||||||||
|
5/30/2018
|
(3)
|
| 0
|
|
| 22,222
|
|
| 44,444
|
|
|
1,086,211
|
| ||||||||||||||||
Vijaya Gadde |
| 5/30/2018
| (2)
|
| 0
|
|
| 239,990
|
|
|
8,246,056
|
| ||||||||||||||||||
|
| 5/30/2018
| (3)
|
| 0
|
|
| 45,600
|
|
| 91,200
|
|
| 1,566,816
|
| ||||||||||||||||
|
5/30/2018
|
(3)
|
| 0
|
|
| 30,400
|
|
| 60,800
|
|
| 1,485,952
|
| ||||||||||||||||
Matthew Derella |
|
5/30/2018
|
(2)
|
| 0
|
|
| 71,342
|
|
|
2,451,311
|
| ||||||||||||||||||
|
5/30/2018
|
(3)
|
| 0
|
|
| 12,000
|
|
| 24,000
|
|
| 412,320
|
| ||||||||||||||||
|
5/30/2018
|
(3)
|
| 0
|
|
| 8,000
|
|
| 16,000
|
|
|
391,040
|
| ||||||||||||||||
Michael Montano |
|
4/4/2018
|
(2)
|
| 0
|
|
| 98,489
|
|
|
2,782,314
|
| ||||||||||||||||||
|
7/26/2018
|
(2)
|
| 0
|
|
| 125,877
|
|
|
5,405,158
|
| |||||||||||||||||||
|
7/26/2018
|
(3)
|
| 0
|
|
| 53,897
|
|
| 107,794
|
|
|
2,314,337
|
| ||||||||||||||||
|
7/26/2018
|
(3)
|
| 0
|
|
| 104,576
|
|
| 209,152
|
|
|
7,111,168
|
| ||||||||||||||||
| (1) | Reflects grant date fair value of |
| (2) | Reflects the award of |
| (3) | Reflects the award of |
| TWITTER, INC. / |
| |||
EXECUTIVE COMPENSATION
Compensation Tables
Outstanding Equity Awards at 20152018 FiscalYear-End
The following table lists all outstanding equity awards held by our Named Executive Officers as of December 31, 2015. These equity amounts have been adjusted, as applicable, to reflect, (i) a three-for-one forward stock split completed in May 2010 and (ii) a two-for-one forward stock split completed in May 2011.2018. See the section titled “Executive Compensation—Compensation Tables—Potential Payments Upon Termination or Change of Control” for information regarding the impact of certain employment termination scenarios on outstanding equity awards.
| OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||||||||||
| NAME | GRANT DATE (1) | NUMBER OF (#) | NUMBER OF (#) | OPTION ($) (2) | OPTION EXPIRATION DATE | NUMBER OF SHARES OF STOCK THAT HAVE NOT VESTED (#) | MARKET VALUE OF SHARES OF STOCK THAT HAVE NOT VESTED ($) (3) | ||||||||||||||||||||||||||||
| Jack Dorsey | 5/11/2011 | (4) | 2,000,000 | — | 3.115 | 05/10/2021 | — | — | |||||||||||||||||||||||||||
| Anthony Noto | 7/1/2014 | (5) | 156,250 | 343,750 | 42.05 | 06/30/2024 | — | — | |||||||||||||||||||||||||||
| 7/1/2014 | (6) | 1,031,250 | 23,863,125 | ||||||||||||||||||||||||||||||||
| Omid Kordestani | 10/29/2015 | (7) | — | 800,000 | 29.06 | 10/29/2025 | — | — | |||||||||||||||||||||||||||
| Richard Costolo | 11/23/2010 | (8) | 1,074,786 | — | 1.8300 | 11/23/2020 | — | — | |||||||||||||||||||||||||||
| 4/12/2012 | (9) | 169,941 | — | 14.4200 | 04/11/2022 | — | — | ||||||||||||||||||||||||||||
| Alex Roetter | 2/10/2012 | (10) | — | — | — | — | 6,250 | 144,625 | |||||||||||||||||||||||||||
| 9/27/2012 | (11) | — | — | — | — | 9,375 | 216,938 | ||||||||||||||||||||||||||||
| 3/8/2013 | (12) | — | — | — | — | 70,313 | 1,627,043 | ||||||||||||||||||||||||||||
| 8/9/2013 | (13) | — | — | — | — | 262,500 | 6,074,250 | ||||||||||||||||||||||||||||
| 9/12/2014 | (14) | — | — | — | — | 100,000 | 2,314,000 | ||||||||||||||||||||||||||||
| 9/12/2014 | (15) | — | — | — | — | 160,000 | 3,702,400 | ||||||||||||||||||||||||||||
| 2/24/2015 | (16) | 152,837 | 3,536,648 | ||||||||||||||||||||||||||||||||
| Kevin Weil | 7/7/2009 | (17) | 16,000 | — | 0.1989 | 07/06/2019 | — | — | |||||||||||||||||||||||||||
| 1/26/2011 | (18) | 28,238 | — | 2.2750 | 01/25/2021 | — | — | ||||||||||||||||||||||||||||
| 1/26/2011 | (19) | 540 | — | 2.2750 | 01/25/2021 | — | — | ||||||||||||||||||||||||||||
| 3/8/2013 | (20) | — | — | — | — | 39,063 | 903,918 | ||||||||||||||||||||||||||||
| 8/9/2013 | (21) | — | — | — | — | 65,625 | 1,518,563 | ||||||||||||||||||||||||||||
| 8/9/2013 | (22) | — | — | — | — | 252,000 | 5,831,280 | ||||||||||||||||||||||||||||
| 9/12/2014 | (23) | — | — | — | — | 60,000 | 1,388,400 | ||||||||||||||||||||||||||||
| 11/21/2014 | (24) | — | — | — | — | 120,000 | 2,776,800 | ||||||||||||||||||||||||||||
| 2/24/2015 | (25) | 152,837 | 3,536,648 | ||||||||||||||||||||||||||||||||
OPTION AWARDS
| STOCK AWARDS
| ||||||||||||||||||||||||||||||||||
NAME
| GRANT
| NUMBER OF
| NUMBEROF
| OPTION ($) (2)
| OPTION
| NUMBER
| MARKET OF STOCK NOT
| ||||||||||||||||||||||||||||
Jack Dorsey
|
|
5/11/2011
|
(5)
|
|
2,000,000
|
|
|
—
|
|
|
3.115
|
|
|
5/10/2021
|
|
|
—
|
|
|
—
|
| ||||||||||||||
Ned Segal
|
| 8/25/2017
| (6)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 500,000
|
|
| 14,370,000
|
| ||||||||||||||
|
| 8/25/2017
| (7)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 15,400
|
|
| 442,596
|
| |||||||||||||||
|
| 5/30/2018
| (8)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 64,857
|
|
| 1,863,990
|
| |||||||||||||||
|
| 5/30/2018
| (9)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 64,335
|
|
| 1,848,988
|
| |||||||||||||||
|
| 5/30/2018
| (10)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 44,444
|
|
| 1,277,321
|
| |||||||||||||||
Vijaya Gadde
|
|
9/12/2014
|
(11)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64,445
|
|
|
1,852,149
|
| ||||||||||||||
|
| 2/10/2016
| (12)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 120,000
|
|
| 3,448,800
|
| |||||||||||||||
|
| 3/12/2017
| (13)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 10,560
|
|
| 303,494
|
| |||||||||||||||
|
| 5/30/2018
| (14)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 239,990
|
|
| 6,897,313
|
| |||||||||||||||
|
| 5/30/2018
| (15)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 88,008
|
|
| 2,529,350
|
| |||||||||||||||
|
| 5/30/2018
| (16)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 60,800
|
|
| 1,747,392
|
| |||||||||||||||
Matthew Derella
|
|
12/9/2015
|
(17)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,000
|
|
|
1,149,600
|
| ||||||||||||||
|
| 5/25/2016
| (18)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 34,286
|
|
| 985,380
|
| |||||||||||||||
|
| 11/21/2016
| (19)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 315,000
|
|
| 9,053,100
|
| |||||||||||||||
|
| 5/30/2018
| (20)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 71,342
|
|
| 2,050,369
|
| |||||||||||||||
|
| 5/30/2018
| (21)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 23,160
|
|
| 665,618
|
| |||||||||||||||
|
| 5/30/2018
| (22)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 16,000
|
|
| 459,840
|
| |||||||||||||||
Michael Montano
|
|
3/17/2015
|
(23)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| 2,400
|
|
| 68,976
|
| ||||||||||||||
|
| 10/25/2016
| (24)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 5,000
|
|
| 143,700
|
| |||||||||||||||
|
| 4/14/2017
| (25)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 3,640
|
|
| 104,614
|
| |||||||||||||||
|
| 4/14/2017
| (26)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 1,000
|
|
| 28,740
|
| |||||||||||||||
|
| 7/27/2017
| (27)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 210,000
|
|
| 6,035,400
|
| |||||||||||||||
|
| 4/4/2018
| (28)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 90,362
|
|
| 2,597,004
|
| |||||||||||||||
|
| 7/26/2018
| (29)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 125,877
|
|
| 3,617,705
|
| |||||||||||||||
|
| 7/26/2018
| (30)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 104,021
|
|
| 2,989,564
|
| |||||||||||||||
|
| 7/26/2018
| (31)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 209,152
|
|
| 6,011,028
|
| |||||||||||||||
| TWITTER, INC. / 2019 Proxy Statement | 61 | ||
EXECUTIVE COMPENSATION
Compensation Tables
| (1) | Each of the outstanding equity awards was granted pursuant to our 2007 Plan or 2013 Plan. |
| (2) | The exercise price for stock options granted was the fair market value of a share of common stock on the date of grant. |
| (3) | This column represents the fair market value of the shares of our common stock underlying the RSUs and PRSUs as of December 31, |
| (4) | Excludes PRSUs allocated but not granted for Messrs. Segal, Derella and Montano and Ms. Gadde for which performance targets have not yet been set and determined for fiscal years 2019—2021. |
| (5) | All of the shares of common stock subject to this option were fully vested as of May 9, 2015. |
| (6) | 250,000 shares of our common stock |
| ||||
EXECUTIVE COMPENSATION
| (7) | PRSU granted for 2017-2018 performance period (TSR performance goal) reported at the actual payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of Pay and 2018 Compensation Decisions—Equity Compensation” on page 49 for more information. |
| (8) | 25% of |
| (9) | PRSU granted for 2018 performance period (GAAP Revenue and Adjusted EBITDA performance goals) reported at the actual payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of |
| (10) | PRSU granted for 2018-2019 performance period (TSR performance goal) reported at the maximum payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of |
| (11) |
11.11% of the shares of our common stock underlying the 145,000 RSUs |
25% of the shares of our common stock underlying 280,000 RSUs vested on May 1, 2016, and then 12.5% of the shares of our common stock underlying 280,000 RSUs |
PRSU granted for 2017-2018 performance period (TSR performance goal) reported at the actual payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of |
| (14) | 25% of 162,162 shares of our common stock |
| (15) | PRSU granted for 2018 performance period (GAAP Revenue and Adjusted EBITDA performance goals) reported at the actual payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of Pay and 2018 Compensation Decisions—Equity Compensation” on page 49 for more information. |
| (16) | PRSU granted for 2018-2019 performance period (TSR performance goal) reported at the maximum payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of Pay and 2018 Compensation Decisions—Equity Compensation” on page 49 for more information. |
| (17) | 5,000 RSUs vested |
| (18) | 120,000 RSUs vesting ratably (7.14%) over 14 quarters with the first vest date on August 1, 2016, subject to continued service through each such vesting date. |
| (19) |
25% of |
| remaining 3 quarters; 25% of |
25% of |
PRSU granted for 2018 performance period (GAAP Revenue and Adjusted EBITDA performance goals) reported at the actual payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of |
| TWITTER, INC. / |
| |||
EXECUTIVE COMPENSATION
Compensation Tables
PRSU granted for 2018-2019 performance period (TSR performance goal) reported at the maximum payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of Pay and 2018 Compensation Decisions—Equity Compensation” on page 49 for more information. |
| (23) | 12,000 RSUs vesting ratably (10%) over 10 quarters with the |
| (24) | 10,000 RSUs vesting ratably (6.25%) over 16 quarters with the first vest date |
| (25) | 3,640 RSUs vesting ratably (25%) over 4 quarters with the first vest date on February 1, 2020, subject to continued service through each such vesting date. |
| (26) | 1,000 RSUs vesting ratably (25%) over 4 quarters with the first vest date on February 1, 2019, subject to continued service through each such vesting date. |
| (27) | 25% of 35,000 shares of our common stock underlying the RSUs vested on February 1, 2018, and then quarterly thereafter for the remaining 3 quarters; 25% of 105,000 shares of our common stock underlying the RSUs will vest on February 1, 2019, and then quarterly thereafter for the remaining 3 quarters; and 25% of 105,000 shares of our common stock underlying the RSUs will vest on February 1, 2020, and then quarterly thereafter for the remaining 3 quarters, subject to continued service through each such vesting date. |
| (28) | 33.33% of 8,127 shares of our common stock underlying the RSUs vested on May 1, 2018, and then quarterly thereafter for the remaining 2 quarters; 25% of 7,103 shares of our common stock underlying the RSUs will vest on February 1, 2019, and then quarterly thereafter for the remaining 3 quarters; 25% of 5,170 shares of our common stock underlying the RSUs will vest on February 1, 2020, and then quarterly thereafter for the remaining 3 quarters, 25% of 52,059 shares of our common stock underlying the RSUs will vest on February 1, 2021, and then quarterly thereafter for the remaining 3 quarters, and 25% of 26,030 shares of our common stock underlying the RSUs will vest on February 1, 2022, and then quarterly thereafter for the remaining 3 quarters, subject to continued service through each such vesting date. |
| (29) | 25% of 56,863 shares of our common stock underlying the RSUs will vest on February 1, 2020, and then quarterly thereafter for the remaining 3 quarters, 25% of 50,350 shares of our common stock underlying the RSUs will vest on February 1, 2021, and then quarterly thereafter for the remaining 3 quarters, and 25% of 18,664 shares of our common stock underlying the RSUs will vest on February 1, 2022, and then quarterly thereafter for the remaining 3 quarters, subject to continued service through each such vesting date. |
| (30) | PRSU granted for 2018 performance period (GAAP Revenue and Adjusted EBITDA performance goals) reported at the actual payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of Pay and 2018 Compensation Decisions—Equity Compensation” on page 49 for more information. |
| (31) | PRSU granted for 2018-2019 performance period (TSR performance goal) reported at the maximum payout level. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Elements of Pay and 2018 Compensation Decisions—Equity Compensation” on page 49 for more information. |
| TWITTER, INC. / 2019 Proxy Statement | 63 | ||
EXECUTIVE COMPENSATION
Compensation Tables
Option Exercises and Stock Vested in 20152018
The following table sets forth the number of shares of common stock acquired during 20152018 by our Named Executive Officers upon the exercise of stock options and the vesting of restricted stock unitRSU and PRSU awards and the value realized upon such exercise or vesting.
OPTIONS AWARDS | STOCK AWARDS | |||||||||||||||||||
| NAME | NUMBER OF SHARES ACQUIRED ON EXERCISE (#)(1) | VALUE REALIZED ON EXERCISE ($)(2) | NUMBER OF SHARES ACQUIRED ON VESTING (#)(3) | VALUE REALIZED ON VESTING ($)(4) | ||||||||||||||||
| Jack Dorsey | — | — | — | — | ||||||||||||||||
| Anthony Noto | — | — | 468,750 | 19,073,125 | ||||||||||||||||
| Omid Kordestani | — | — | — | — | ||||||||||||||||
| Richard Costolo | 7,061,104 | 189,075,906 | 204,863 | 7,086,968 | ||||||||||||||||
| Alex Roetter | — | — | 336,500 | 11,975,263 | ||||||||||||||||
| Kevin Weil | — | — | 320,750 | 11,465,748 | ||||||||||||||||
OPTIONS AWARDS
| STOCK AWARDS
| |||||||||||||||||||
NAME
| NUMBER
| VALUE REALIZED
| NUMBER
| VALUE ($)(4)
| ||||||||||||||||
Jack Dorsey
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||
Ned Segal |
|
—
|
|
|
—
|
|
|
345,349
|
|
| 11,796,780
|
| ||||||||
Vijaya Gadde
|
|
—
|
|
|
—
|
|
|
301,844
|
|
|
9,331,766
|
| ||||||||
Matthew Derella
|
| —
|
|
|
—
|
|
|
195,330
|
|
|
6,000,383
|
| ||||||||
Michael Montano
|
|
—
|
|
|
—
|
|
|
117,857
|
|
|
3,573,362
|
| ||||||||
| (1) | Reflects the aggregate number of shares of common stock underlying the stock options that were exercised in |
| (2) | Calculated by multiplying (i) the fair market value of common stock on the exercise date, which was determined using the closing price on the NYSE of a share of common stock on the date of exercise, or if such day is a holiday, on the immediately preceding trading day, or the disposition price if the shares are disposed of in a disqualified disposition, minus the exercise price, by (ii) the number of shares of common stock acquired upon exercise. |
| (3) | Reflects the aggregate number of shares of common stock underlying |
| (4) | Calculated by multiplying (i) the fair market value of common stock on the vesting date, which was determined using the closing price on the NYSE of a share of common stock on the date of vest (until May 14, 2014) and the date prior to the day of vesting |
Pension Benefits
Aside from our 401(k) plan, we do not maintain any pension plan or arrangement under which our Named Executive Officers are entitled to participate or receive post-retirement benefits.
Non-Qualified Deferred Compensation
We do not maintain any nonqualified deferred compensation plans or arrangements under which our Named Executive Officers are entitled to participate.
Potential Payments Upon Termination or Change of Control
All of our Named Executive Officers (other than Mr. Dorsey) participate in our Severance Policy, which provides standardized payments and benefits to the Named Executive Officers in the event of an Involuntary Termination (as defined below) either in connection with a Change of Control (as defined below) or during normal course of business in order to make these benefits consistent among the executives who have these arrangements. The compensation committee approves all participants under the Severance Policy and the level of benefit applicable to each participant. In the case of a Change of Control event, we believe that these arrangements
| 64 | TWITTER, INC. / 2019 Proxy Statement |
| ||||||
EXECUTIVE COMPENSATION
Compensation Table
believe that these arrangements assist to maximize stockholder value and maintain executive focus in the immediate period prior to, during and after the Change of Control event. We do not have any requirement to make payments simply based on the occurrence of a Change of Control (“single trigger” provisions). The Severance Policy does include a “double” trigger provision meaning that both a Change of Control and termination of employment must occur for the participant to receive the benefit. The material terms of these post-employment arrangements are set forth below, but generally each of our Named Executive Officers who signs and does not revoke our standard separation agreement and release of claims, which currently includesnon-solicitation,non-disparagement and confidentiality conditions in connection with an Involuntary Termination of employment would be entitled to benefits, as specified in the participation agreement between that eligible employee and Twitter, as follows: (i) a lump sum severance payment equal to 100% of such eligible employee’s annual base salary in connection with a Change of Control, and a lump sum
severance payment equal to at least 50%100% of such eligible employee’s annual base salary not in connection with a Change of Control, (ii) payment for up to 12 months under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“Cobra”COBRA”) premiums to continue health insurance coverage for such eligible employee and his or her eligible dependents that were covered under our healthcare plan in connection with a Change of Control, and 6 months of such premiums upon a qualifying employment termination not in connection with a Change of Control, and (iii) acceleration of vesting of 50% (or 100% in the case of our former CEO, CFO and Executive Chairman)CFO) of the shares underlying all unvested equity awards held by such eligible employee immediately prior to such Involuntary Termination in connection with a Change of Control, and at least 12.5% for all eligible employees (including Twitter’s former CEO, CFO and Executive Chairman) for a qualifying employment termination not in connection with a Change of Control. The compensation committee reviews the equity acceleration percentage for each participant and will adjust as and when necessary to align with peer company practices. Mr. Dorsey declined to participate in our Severance Policy.
| NAME | % OF BASE SALARY UPON TERMINATION AS A RESULT OF A CIC | % OF ACCELERATED VESTING UPON TERMINATION AS A RESULT OF A CIC | % OF BASE SALARY UPON TERMINATION NOT IN CONNECTION WITH A CIC | % OF ACCELERATED VESTING UPON TERMINATION NOT IN CONNECTION WITH A CIC | ||||||||||||||||
| Jack Dorsey | N/A | N/A | N/A | N/A | ||||||||||||||||
| Anthony Noto | 100 | % | 100 | % | 50 | % | 12.5 | % | ||||||||||||
| Omid Kordestani | 100 | % | 100 | % | 100 | % | 12.5 | % | ||||||||||||
| Richard Costolo | 100 | % | 100 | % | 100 | % | 12.5 | % | ||||||||||||
| Alex Roetter | 100 | % | 50 | % | 100 | % | 12.5 | % | ||||||||||||
| Kevin Weil | 100 | % | 50 | % | 100 | % | 12.5 | % | ||||||||||||
NAME
| % OF BASE
| % OF
| % OF BASE
|
% OF ACCELERATED UPON
| ||||||||||||||||
Ned Segal
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
12.5
|
%
| ||||||||
Vijaya Gadde
|
| 100
| %
|
| 50
| %
|
| 100
| %
|
| 12.5
| %
| ||||||||
Matthew Derella
|
| 100
| %
|
| 50
| %
|
| 100
| %
|
| 12.5
| %
| ||||||||
Michael Montano
|
| 100
| %
|
| 50
| %
|
| 100
| %
|
| 12.5
| %
| ||||||||
Specific to Jack Dorsey, as he elected to take no compensation for 2015 and has no unvested equity, he is ineligible to receive any benefits under the Severance Policy.
Specific to Richard Costolo, upon his termination as Chief Executive Officer on July 1, 2015, he received no additional compensation under the Severance Policy except for the pro-rata amount of base salary earned through the date of termination and therefore is not included in the termination table below.
“Involuntary Termination” means a termination of employment by Twitter other than for Cause, death or disability or a termination of employment by the employee for Good Reason.
“Good Reason” means termination of employment within thirty (30) days following the “notice and cure period” in the next paragraph following the occurrence of one or more of the following events, without the employee’s express written consent: (a) a material adverse change in the nature or scope of the employee’s authority, powers, functions, duties, responsibilities, or reporting relationship (including ceasing to directly report to the chief executive officer or board of directors of a publicly traded entity, as applicable); (b) a material reduction by Twitter in the employee’s rate of annual base salary; (c) the failure of Twitter to continue any material compensation plan in which the employee is
participating, unless the employee is permitted to participate in other plans providing the employee with substantially comparable compensation-related benefits, or the taking of any action by Twitter which would adversely affect the
| ||||
EXECUTIVE COMPENSATION
employee’s participation in or materially reduce the employee’s compensation-related benefits under any such plan; or (d) the failure of Twitter to obtain from any successor or transferee of Twitter an express written and unconditional assumption of Twitter’s obligations under the Severance Policy.
Employment may be terminated by the employee for Good Reason only if an event or circumstance set forth in the Good Reason definitions as specified in (a) through (d) above shall have occurred and the employee provides Twitter with written notice thereof within ninety (90) days after the employee has knowledge of the occurrence or existence of
| TWITTER, INC. / 2019 Proxy Statement | 65 | ||
EXECUTIVE COMPENSATION
Compensation Tables
such event or circumstance, which notice shall specifically identify the event or circumstance that the employee believes constitutes Good Reason, Twitter fails to correct the circumstance or event so identified within thirty (30) days after the receipt of such notice, and the employee resigns after the expiration of the cure period referenced in the preceding clause.
“Cause” means (a) the unauthorized use or disclosure of Twitter’s confidential information or trade secrets, which use or disclosure causes material harm to Twitter; (b) the breach of any agreement between the employee and Twitter; (c) the failure to comply with Twitter’s written policies or rules, including its code of conduct; (d) the conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof; (e) gross negligence or willful misconduct in the performance of the employee’s duties; (f) the continuing failure to perform assigned duties after receiving written notification of the failure from the board of directors (or for eligible employees other than the Chief Executive Officer, from the Chief Executive Officer); or (g) the failure to cooperate in good faith with a governmental or internal investigation of Twitter or its directors, officers or employees, if Twitter has requested cooperation; provided, however, that “Cause” will not be deemed to exist in the event of subsections (b), (c) or (f) above unless the employee has been provided with (i) 30 days’ written notice by the board of directors or the act or omission constituting “Cause” and (ii) 30 days’ opportunity to cure such act or omission, if capable of cure.
“Change of Control” means the occurrence of any of the following events:
A. Change in Ownership of Twitter. A change in the ownership of Twitter which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of Twitter that, together with the stock held by such Person,
constitutes more than fifty percent (50%) of the total voting power of the stock of Twitter; provided, however, that the acquisition of additional stock by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the stock of Twitter will not be considered a Change of Control; or
B. Change in Effective Control of Twitter. If Twitter has a class of securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control of Twitter which occurs on the date that a majority of
members of the board of directors is replaced during any 12 month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors prior to the date of the appointment or election. For purposes of this clause (B), if any Person is considered to be in effective control of Twitter, the acquisition of additional control of Twitter by the same Person will not be considered a Change of Control; or
C. Change in Ownership of a Substantial Portion of Twitter’s Assets. A change in the ownership of a substantial portion of Twitter’s assets which occurs on the date that any Person acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) assets from Twitter that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of Twitter immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection, the following will not constitute a change in the ownership of a substantial portion of Twitter’s assets: (i) a transfer to an entity that is controlled by Twitter’s stockholders immediately after the transfer, or (ii) a transfer of assets by Twitter to: (a) a stockholder of Twitter (immediately before the asset transfer) in exchange for or with respect to Twitter’s stock, (b) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by Twitter, (c) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of Twitter, or (d) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person.
Notwithstanding the foregoing, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change of control event within the meaning of Section 409A of the Code.
| ||||
EXECUTIVE COMPENSATION
The table below outlines the estimated amount of payments and benefits that we would provide to our Named Executive Officers assuming that their employment was terminated as of December 31, 20152018 (including in connection with a Change of Control) and the price per share of common stock was $23.14,$28.74, the closing market price on December 31, 20152018 (the last trading day of 2015)2018). None of our Named Executive Officers are currently entitled to retirement benefits or additional benefits upon voluntary termination, death or disability.
| 66 | TWITTER, INC. / 2019 Proxy Statement |
| ||
EXECUTIVE COMPENSATION
Compensation Tables
The employment of the Named Executive Officers did not actually terminate on December 31, 2015,2018, nor did Twitter incur a Change of Control on December 31, 2015.2018. As a result, the Named Executive Officers did not receive any of the
amounts shown in the table below. The actual amounts to be paid to a Named Executive Officer in connection with a termination event or a Change of Control event can only be determined at the time of such termination event.
Each Named Executive Officer is entitled to receive amounts earned during the term of employment regardless of the manner of termination. These amounts include accrued base salary and other employee benefits to which the Named Executive Officer was entitled on the date of termination, and are not shown in the table below.
| EXECUTIVE | PAYMENT ELEMENTS | INVOLUNTARY TERMINATION AS A RESULT OF A CIC ($) | INVOLUNTARY TERMINATION NOT IN CONNECTION WITH A CIC ($) | VOLUNTARY TERMINATION ($) | ||||||||||||||||
| Jack Dorsey | Salary | — | — | — | ||||||||||||||||
| Stock Options | — | — | — | |||||||||||||||||
| Restricted Stock Units | — | — | — | |||||||||||||||||
| Health Coverage (1) | — | — | — | |||||||||||||||||
| Total | — | — | — | |||||||||||||||||
| Anthony Noto | Salary | 250,000 | 125,000 | — | ||||||||||||||||
| Stock Options | — | — | — | |||||||||||||||||
| Restricted Stock Units | 23,863,125 | 2,982,891 | — | |||||||||||||||||
| Health Coverage (1) | 22,510 | 11,255 | — | |||||||||||||||||
| Total | 24,135,635 | 3,119,146 | — | |||||||||||||||||
| Omid Kordestani | Salary | 50,000 | 50,000 | — | ||||||||||||||||
| Stock Options | — | — | — | |||||||||||||||||
| PRSUs(2) | 4,628,000 | 1,157,000 | — | |||||||||||||||||
| Health Coverage (1) | 22,510 | 11,255 | ||||||||||||||||||
| Total | 4,700,510 | 1,218,255 | — | |||||||||||||||||
| Alex Roetter | Salary | 375,000 | 375,000 | — | ||||||||||||||||
| Stock Options | — | — | — | |||||||||||||||||
| Restricted Stock Units | 8,807,952 | 2,201,988 | — | |||||||||||||||||
| Health Coverage (1) | 22,510 | 11,255 | — | |||||||||||||||||
| Total | 9,205,462 | 2,588,243 | — | |||||||||||||||||
| Kevin Weil | Salary | 375,000 | 375,000 | — | ||||||||||||||||
| Stock Options | — | |||||||||||||||||||
| Restricted Stock Units | 7,997,809 | 1,994,451 | — | |||||||||||||||||
| Health Coverage (1) | 17,734 | 8,867 | — | |||||||||||||||||
| Total | 8,390,543 | 2,378,318 | — | |||||||||||||||||
EXECUTIVE
| PAYMENT ELEMENTS
|
INVOLUNTARY TERMINATION
| INVOLUNTARY
| VOLUNTARY
| ||||||||||||||||
Ned Segal |
Salary
|
|
500,000
|
|
|
500,000
|
|
|
—
|
| ||||||||||
| PRSUs (1)
|
| 9,915,329
|
|
| 1,239,416
|
|
| —
|
| |||||||||||
| RSUs
|
| 16,233,990
|
|
| 2,029,949
|
|
| —
|
| |||||||||||
| Health Coverage (2)
|
| 24,916
|
|
| 12,458
|
|
| —
|
| |||||||||||
| Total
|
| 26,674,235
|
|
| 3,781,823
|
|
| —
|
| |||||||||||
Vijaya Gadde |
Salary
|
|
500,000
|
|
|
500,000
|
|
|
—
|
| ||||||||||
| PRSUs (1)
|
| 6,006,660
|
|
| 1,501,665
|
|
| —
|
| |||||||||||
| RSUs
|
| 6,099,131
|
|
| 1,524,783
|
|
| —
|
| |||||||||||
| Health Coverage (2)
|
| 24,739
|
|
| 12,370
|
|
| —
|
| |||||||||||
| Total
|
| 12,630,530
|
|
| 3,538,818
|
|
| —
|
| |||||||||||
Matthew Derella |
Salary
|
|
500,000
|
|
|
500,000
|
|
|
—
|
| ||||||||||
| PRSUs (1)
|
| 862,200
|
|
| 215,550
|
|
| —
|
| |||||||||||
| RSUs
|
| 6,619,224
|
|
| 1,654,806
|
|
| —
|
| |||||||||||
| Health Coverage (2)
|
| 26,603
|
|
| 13,302
|
|
| —
|
| |||||||||||
| Total
|
| 8,008,027
|
|
| 2,383,658
|
|
| —
|
| |||||||||||
Michael Montano |
Salary
|
|
350,000
|
|
|
350,000
|
|
|
—
|
| ||||||||||
| PRSUs (1)
|
| 2,277,257
|
|
| 569,314
|
|
| —
|
| |||||||||||
| RSUs
|
| 6,298,069
|
|
| 1,574,517
|
|
| —
|
| |||||||||||
| Health Coverage (2)
|
| 8,210
|
|
| 4,105
|
|
| —
|
| |||||||||||
| Total
|
| 8,933,536
|
|
| 2,497,936
|
|
| —
|
| |||||||||||
| (1) |
Represents conversion of target number of |
| (2) | Represents six months of Twitter-paid insurance coverage under COBRA in the case of an Involuntary Termination not associated with a CIC and twelve months of Twitter paid insurance coverage in the case of an Involuntary Termination associated with a CIC. |
| TWITTER, INC. / |
| ||
EQUITY COMPENSATION PLAN INFORMATION
EQUITY COMPENSATION PLAN INFORMATION
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about shares of our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 31, 2015,2018, including our Twitter, Inc. Employee Stock Purchase Plan (the “Purchase Plan”). No warrants are outstanding under any of the foregoing plans. We refer to these plans and grants collectively as our “Equity Compensation Plans.”
| PLAN CATEGORY | (A) NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS | (B) WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS | (C) NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) | (A) NUMBER OF
| (B) WEIGHTED
|
(C) NUMBER OF FUTURE ISSUANCE UNDER EQUITY (EXCLUDING
| ||||||||||||||||||||||||
| Equity compensation plans approved by security holders | 52,334,720 | (1) | $ | 7.42 | (2) | 113,304,026 | (3) |
|
34,967,499
|
(1)
|
$
|
9.52
|
(2)
|
|
212,984,887
|
(3)
| ||||||||||||||
| Equity compensation plans not approved by security holders (4) | 2,006,086 | $ | 2.62 |
|
313,604
|
|
$
|
2.01
|
| |||||||||||||||||||||
| Total | 54,340,806 | $ | 6.55 | 113,304,026 |
|
35,281,103
|
|
$
|
8.88
|
|
| 212,984,887
|
| |||||||||||||||||
| (1) | This amount includes the following shares that may be issued under the 2007 Equity Incentive Plan (“2007 Plan”), 2013 Plan and |
shares that may be issued in connection with outstanding stock options; and
shares that may be issued in connection with stock awards; and
awards.
| (2) | Indicates a weighted average price for |
| (3) | As of December 31, |
| (4) | Includes the following plans: Afterlive.tv Inc. 2010 |
| 68 | TWITTER, INC. / 2019 Proxy Statement |
| ||||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of shares of our common stock as of March 30, 2016the Record Date for:
each of our directors and nominees for director;
each of our Named Executive Officers;
all of our current directors and executive officers as a group; and
each person or group who beneficially owned more than 5% of our common stock.
We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable.
We have based our calculation of the percentage of beneficial ownership on 700,177,123767,912,563 shares of our common stock outstanding as of March 30, 2016.the Record Date. We have deemed shares of our common stock subject to stock options that are currently exercisable or exercisable within 60 days of March 30, 2016the Record Date or issuable pursuant to RSUs and PRSUs which are subject to vesting conditions expected to occur within 60 days of March 30, 2016the Record Date to be outstanding and to be beneficially owned by the person holding the stock option, RSU or RSUPRSU for the purpose of computing the percentage ownership of that person. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Twitter, Inc., 1355 Market Street, Suite 900, San Francisco, California 94103. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted.
| NAME OF BENEFICIAL OWNER | NUMBER OF SHARES BENEFICIALLY OWNED | PERCENTAGE OF SHARES BENEFICIALLY OWNED | ||||||||
| Named Executive Officers and Directors: | ||||||||||
| Jack Dorsey (1) | 23,856,513 | 3.40 | % | |||||||
| Omid R. Kordestani (2) | 122,250 | * | ||||||||
| Richard Costolo (3) | 936,634 | * | ||||||||
| Anthony Noto (4) | 602,578 | |||||||||
| Alex Roetter (5) | 80,804 | * | ||||||||
| Kevin Weil (6) | 226,946 | * | ||||||||
| Peter Chernin (7) | 162,500 | * | ||||||||
| Peter Currie (8) | 3,730,916 | * | ||||||||
| Peter Fenton (9) | 3,727,417 | * | ||||||||
| Martha Lane Fox | 0 | * | ||||||||
| Hugh Johnston | 0 | * | ||||||||
| Marjorie Scardino (10) | 12,359 | * | ||||||||
| David Rosenblatt (11) | 375,632 | * | ||||||||
| Evan Williams (12) | 43,675,288 | 6.24 | % | |||||||
| All executive officers and directors as a group (12 persons) (13) | 76,165,374 | 10.79 | % | |||||||
| Other 5% Stockholders: | ||||||||||
| HRH Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud (14) | 34,948,975 | 4.99 | % | |||||||
NAME OF BENEFICIAL OWNER
| NUMBER OF
|
PERCENTAGE OF SHARES
| ||||||||
Named Executive Officers and Directors:
| ||||||||||
Jack Dorsey (1)
| 18,042,428 | 2.34% | ||||||||
Omid R. Kordestani (2)
| 1,053,350 | * | ||||||||
Ned Segal
| 212,226 | * | ||||||||
Vijaya Gadde (3)
| 459,210 | * | ||||||||
Matthew Derella (4)
| 60,621 | * | ||||||||
Michael Montano (5)
| 145,018 | * | ||||||||
Martha Lane Fox (6)
| 31,954 | * | ||||||||
Debra Lee (7)
| 34,696 | * | ||||||||
Ngozi Okonjo-Iweala (8)
| 4,803 | * | ||||||||
Patrick Pichette (9)
| 9,039 | * | ||||||||
David Rosenblatt (10)
| 318,941 | * | ||||||||
Bret Taylor (11)
| 35,229 | * | ||||||||
Robert Zoellick (12)
| 4,803 | * | ||||||||
All executive officers and directors as a group (14 persons) (13)
| 20,412,318 | 2.65% | ||||||||
Other 5% Stockholders:
| ||||||||||
The Vanguard Group (14)
| 73,062,801 | 9.51 | % | |||||||
BlackRock, Inc. (15)
| 46,144,230 | 6.01 | % | |||||||
Morgan Stanley and Morgan Stanley Investment Management, Inc. (16)
| 43,313,009 | 5.64 | % | |||||||
| TWITTER, INC. / |
| ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
| * | Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock. |
| (1) | Consists of (i) |
| (2) | Consists of |
| (3) | Consists of (i) 413,099 shares held of record by Ms. Gadde and (ii) 46,111 shares issuable upon vesting of RSUs within 60 days of the Record Date. |
| (4) | Consists of (i) |
| (5) | Consists of (i) 114,917 shares held of record by Mr. Montano and (ii) 30,101 shares issuable upon vesting of RSUs within 60 days of the Record Date. |
| (6) | Consists of (i) 30,317 shares held of record by Ms. Lane Fox and (ii) 1,637 shares issuable upon vesting of RSUs within 60 days of the Record Date. |
| (7) | Consists of (i) 33,059 shares held of record by Ms. Lee and (ii) 1,637 shares issuable upon vesting of RSUs within 60 days of the Record Date. |
| (8) | Consists of (i) 2,401 shares held of record by Dr. Okonjo-Iweala and (ii) 2,402 shares issuable upon vesting of RSUs within 60 days of the Record Date. |
| (9) | Consists of (i) 7,402 shares held of record by Mr. Pichette and (ii) 1,637 shares issuable upon vesting of RSUs within 60 days of the Record Date. |
| (10) | Consists of (i) 47,304 shares held of record by Mr. Rosenblatt, (ii) 270,000 shares issuable pursuant to outstanding stock options which are exercisable within 60 days of |
Consists of |
Consists of |
Consists of |
| (14) | According to the information reported by |
| (15) | According to the information reported by BlackRock, Inc. (“BlackRock”) on a Schedule 13G filed with the SEC on February |
| (16) | According to the information reported by Morgan Stanley and Morgan Stanley Investment Management, Inc. on a Schedule 13G jointly filed with the SEC on February 13, 2019, (i) Morgan Stanley beneficially owns an aggregate of |
| 70 | TWITTER, INC. / 2019 Proxy Statement |
| ||||||
RELATED PERSON TRANSACTIONS
We describe below transactions and series of similar transactions, since the beginning of our last fiscal year, to which we were a party or will be a party, in which:
We have entered into the Contribution Agreement with the Jack Dorsey Trust, for which Mr. Dorsey, our Chief Executive Officer and a member of our board of directors, serves as trustee. See the section titled “Proposal No. 4 – Approval of Twitter, Inc. 2016 Equity Incentive Plan” for a description of the Contribution Agreement.
The sister of Vijaya Gadde, our General Counsel,Chief Legal Officer and Secretary, and head of communications, is employed by us as Senior Manager, Strategic Publisher Manager.Management. Her annual salary and other cash compensation is approximately $130,000,$240,000, and she receives benefits consistent with other employees serving in the same capacity. In addition, she received a grant of 750grants totaling 3,442 RSUs during the year ended December 31, 2015.2018.
Other than as described above, since January 1, 2015,2018, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related person where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will have a direct or indirect material interest. We believe the terms of the transactions described above were comparable to terms we could have obtained inarm’s-length dealings with unrelated third parties.
Policies and Procedures for Related Person Transactions
Our audit committee has the primary responsibility for reviewing and approving or ratifying related person transactions. We have a formal written policy providing that a related person transaction is any transaction between us and an executive officer, director, nominee for director, beneficial owner of more than 5% of any class of our capital stock, or any member of the immediate family of any of the foregoing persons, in which such party has a direct or indirect material interest and the aggregate amount involved exceeds $120,000. In reviewing any related person transaction, our audit committee is to consider the relevant facts and circumstances available to our audit committee, including, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, and the extent of the related person’s interest in the transaction. Our audit committee has determined that certain transactions will be deemed to bepre-approved by our audit committee, including certain executive officer and director compensation, transactions with another company at which a related person’s only relationship is as anon-executive employee, director or beneficial owner of less than 10% of that company’s shares and the aggregate amount involved does not exceed the greater of $200,000 or 2% of the company’s total revenues, transactions where a related person’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis, and transactions available to all employees generally. If advance approval of a transaction is not feasible, the chair of our audit committee may approve the transaction and the transaction may be ratified by our audit committee in accordance with our formal written policy.
| TWITTER, INC. / |
| ||
OTHER MATTERS
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our executive officers and directors, and persons who own more than 10% of our common stock, file reports of ownership and changes of ownership with the SEC. Such directors, executive officers and 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
SEC regulations require us to identify in this proxy statement anyone who filed a required report late during the most recent fiscal year. Based on our review of forms we received, or written representations from reporting persons stating that they were not required to file these forms, we believe that during our fiscal ended December December��31, 2015,2018, all Section 16(a) filing requirements were satisfied on a timely basis, except with respect to the following three failures to timely file, each of which was filed one day late: (i) a Form 4 for Gordon Lee (filed with the SEC on March 6, 2015), (ii) a Form 4 for Robert Kaiden (filed with the SEC on December 30, 2015)June 28, 2018), (ii) a Form 4 for Martha Lane Fox (filed with the SEC on September 5, 2018) and (iii) a Form 4 for Vijaya GaddePatrick Pichette (filed with the SEC on NovemberSeptember 5, 2015), in each case, due to administrative error.2018).
Fiscal Year 20152018 Annual Report and SEC Filings
Our financial statements for our fiscal year ended December 31, 20152018 are included in our Annual Report on Form10-K, which we will make available to stockholders at the same time as this proxy statement. This proxy statement and our annual report are posted on our website at http:
https://investor.twitterinc.com and are available from the SEC at its website at https://www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to Twitter, Inc., Attention: Investor Relations, 1355 Market Street, Suite 900, San Francisco, California 94103.
Special Note Regarding Forward-Looking Statements
This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this proxy statement include, but are not limited to, statements about Twitter’s future financial and operating performance, expectations regarding its strategies, product, and business plans, including its revenue and operational priorities, product initiatives, and product experiments; strategies for improving safety and expectations regarding the application of its abuse rules.
* * *
The board of directors does not know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have discretion to vote the shares of our common stock they represent in accordance with their own judgment on such matters.
It is important that your shares of our common stock be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the enclosed proxy card or execute and return, at your earliest convenience, the enclosed proxy card in the envelope that has also been provided.
THE BOARD OF DIRECTORS
San Francisco, California
April 15, 20168, 2019
| ||||
ANNEX A
ANNEX A
TWITTER, INC.
2016 EQUITY INCENTIVE PLAN
(subject to, and effective as of, stockholder approval at the 2016 Annual Meeting)
1.Purposes of the Plan. The purposes of this Plan are:
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.
2.Definitions. As used herein, the following definitions will apply:
(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.
(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards and the related issuance of Shares under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable securities or exchange control laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.
(c) “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares.
(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(e) “Board” means the Board of Directors of the Company.
(f) “Change in Control” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
| ||||
ANNEX A
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(g) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(h) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized committee of the Board, in accordance with Section 4 hereof.
(i) “Common Stock” means the common stock of the Company.
(j) “Company” means Twitter, Inc., a Delaware corporation, or any successor thereto.
(k) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.
(l) “Determination Date” means the latest possible date that will not jeopardize the qualification of an Award granted under the Plan as “performance-based compensation” under Code Section 162(m).
(m) “Director” means a member of the Board.
(n) “Disability” means total and permanent disability as defined in Code Section 22(e)(3), provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and
| TWITTER, INC. / |
| |||
ANNEX A
total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.
(o) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(p) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
(q) “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is increased or reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.
(r) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported inThe Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported inThe Wall Street Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.
Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs on a weekend or holiday, the Fair Market Value will be the price as determined in accordance with subsections (i) through (iv) above (as applicable) on the immediately preceding business day, unless otherwise determined by the Administrator.
(s) “Fiscal Year” means the fiscal year of the Company.
(t) “Incentive Stock Option” means an Option that by its terms qualifies and is intended to qualify as an incentive stock option within the meaning of Code Section 422 and the regulations promulgated thereunder.
(u) “Inside Director” means a Director who is an Employee.
(v) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
(w) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(x) “Option” means a stock option granted pursuant to the Plan.
(y) “Outside Director” means a Director who is not an Employee.
| ||||
ANNEX A
(z) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Code Section 424(e).
(aa) “Participant” means the holder of an outstanding Award.
(bb) “Performance Goals” will have the meaning set forth in Section 11 of the Plan
(cc) “Performance Period” means any Fiscal Year of the Company or such other period as determined by the Administrator in its sole discretion.
(dd) “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section 10 of the Plan.
(ee) “Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10 of the Plan.
(ff) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.
(gg) “Plan” means this Twitter, Inc. 2016 Equity Incentive Plan.
(hh) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option.
(ii) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8 of the Plan. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
(jj) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
(kk) “Section 16(b)” means Section 16(b) of the Exchange Act.
(ll) “Service Provider” means an Employee, Director or Consultant.
(mm) “Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan.
(nn) “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 of the Plan is designated as a Stock Appreciation Right.
(oo) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Code Section 424(f).
3.Stock Subject to the Plan.
(a)Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 6,814,085 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.
| ||||
ANNEX A
(b)Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued (i.e., the net Shares issued) pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 15 of the Plan, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in subsection 3(a), plus, to the extent allowable under Code Section 422 and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to subsection 3(b).
(c)Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.
4.Administration of the Plan.
(a)Procedure.
(i)Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.
(ii)Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Code Section 162(m), the Plan will be administered by a Committee of two (2) or more “outside directors” within the meaning of Code Section 162(m).
(iii)Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.
(iv)Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.
(b)Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be
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ANNEX A
exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;
(vi) to institute and determine the terms and conditions of an Exchange Program;
(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws;
(ix) to modify or amend each Award (subject to Section 20 of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an Option (subject to Section 6(b) of the Plan regarding Incentive Stock Options);
(x) to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 16 of the Plan;
(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; and
(xiii) to make all other determinations deemed necessary or advisable for administering the Plan.
(c)Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.
5.Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
6.Stock Options.
(a)Limitations.
(i) Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.
(ii) Subject to Section 15 of the Plan, the following limitations will apply to grants of Options:
(1) No Service Provider will be granted, in any Fiscal Year, Options to purchase more than 2,000,000 Shares.
(2) In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 1,000,000 Shares that will not be counted against the limit set forth in subsection (1) above.
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(3) The foregoing limitations will be adjusted proportionately in connection with any change in the Company’s capitalization, as described in Section 15 of the Plan.
(4) If an Option is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 15 of the Plan), the cancelled Option will be counted against the limits set forth in subsections (1) and (2) above. For this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option.
(b)Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
(c)Option Exercise Price and Consideration.
(i)Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:
(1) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Code Section 424(a).
(ii)Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.
(iii)Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment.
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(d)Exercise of Option.
(i)Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.
An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan.
Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
(ii)Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination, but in no event later than the expiration of the term of such Option as set forth in the Award Agreement. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(iii)Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination, but in no event later than the expiration of the term of such Option as set forth in the Award Agreement. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(iv)Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided the right to designate a beneficiary is set forth in the Award Agreement and such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the
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ANNEX A
person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death, but in no event later than the expiration of the term of such Option as set forth in the Award Agreement. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(v)Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth in subsection 6(d) is prevented by the provisions of Section 22 below, the Option shall remain exercisable until thirty (30) days (or such longer period of time as determined by the Administrator, in its discretion) after the date the Participant is notified by the Company that the Option is exercisable (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).
7.Restricted Stock.
(a)Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine, provided that during any Fiscal Year no Participant will receive more than an aggregate of 1,000,000 Shares of Restricted Stock, subject to Section 15 of the Plan. Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted an aggregate of up to an additional 1,000,000 Shares of Restricted Stock.
(b)Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.
(c)Transferability. Except as provided in this Section 7 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.
(d)Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
(e)Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.
(f)Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.
(g)Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.
(h)Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.
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ANNEX A
(i)Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock as “performance-based compensation” under Code Section 162(m), the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock that is intended to qualify under Code Section 162(m), the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Code Section 162(m) (e.g., in determining the Performance Goals).
8.Restricted Stock Units.
(a)Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator, provided that during any Fiscal Year no Participant will receive Restricted Stock Units covering more than 1,000,000 Shares, subject to Section 15 of the Plan. Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted Restricted Stock Units covering up to an additional 1,000,000 Shares. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.
(b)Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion.
(c)Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.
(d)Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may only settle earned Restricted Stock Units in cash, Shares, or a combination of both.
(e)Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.
(f)Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Code Section 162(m), the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock Units which are intended to qualify under Code Section 162(m), the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Code Section 162(m) (e.g., in determining the Performance Goals).
9.Stock Appreciation Rights.
(a)Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion, provided that during any Fiscal Year, no Participant will be granted Stock Appreciation Rights covering more than 2,000,000 Shares, subject to Section 15 of the Plan. Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted Stock Appreciation Rights covering up to an additional 1,000,000 Shares.
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ANNEX A
(b)Number of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider.
(c)Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.
(d)Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(e)Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(b) relating to the maximum term and Section 6(d) relating to exercise also will apply to Stock Appreciation Rights.
(f)Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:
(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.
At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
10.Performance Units and Performance Shares.
(a)Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. Subject to Section 15 of the Plan, the Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant, provided that during any Fiscal Year, (i) no Participant will receive Performance Units having an initial value greater than $2,500,000 and (iii) no Participant will receive more than 1,000,000 Performance Shares. Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted up to an additional 1,000,000 Performance Shares.
(b)Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.
(c)Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.
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ANNEX A
(d)Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.
(e)Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.
(f)Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.
(g)Section 162(m) Performance Restrictions. For purposes of qualifying grants of Performance Units/Shares as “performance-based compensation” under Code Section 162(m), the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Performance Units/Shares which are intended to qualify under Code Section 162(m), the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Code Section 162(m) (e.g., in determining the Performance Goals).
11.Performance-Based Compensation Under Code Section 162(m).
(a)General. If the Administrator, in its discretion, decides to grant an Award intended to qualify as “performance-based compensation” under Code Section 162(m), the provisions of this Section 11 will control over any contrary provision in the Plan; provided, however, that the Administrator may in its discretion grant Awards that are not intended to qualify as “performance-based compensation” under Code Section 162(m) to such Participants that are based on Performance Goals or other specific criteria or goals but that do not satisfy the requirements of this Section 11.
(b)Performance Goals. The granting and/or vesting of Awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units and other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Code Section 162(m) and may provide for a targeted level or levels of achievement (“Performance Goals”) including (i) cash flow (including operating cash flow or free cash flow), (ii) cash position, (iii) revenue (on an absolute basis or adjusted for currency effects), (iv) revenue growth, (v) contribution margin, (vi) gross margin, (vii) operating margin, (viii) operating expenses or operating expenses as a percentage of revenue, (ix) earnings (which may include earnings before interest, taxes, depreciation and amortization, earnings before taxes and net earnings), (x) earnings per share, (xi) operating income, (xii) net income, (xiii) stock price, (xiv) return on equity, (xv) total stockholder return, (xvi) growth in stockholder value relative to a specified publicly reported index (such as the S&P 500 Index), (xvii) return on capital, (xviii) return on assets or net assets, (xix) return on investment, (xx) economic value added, (xxi) operating profit or net operating profit, (xxii) market share, (xxiii) contract awards or backlog, (xxiv) overhead or other expense reduction, (xxv) credit rating, (xxvi) objective customer indicators, (xxvii) new product invention or innovation, (xxviii) attainment of research and development milestones, (xxix) improvements in productivity, (xxx) attainment of objective operating goals, and (xxxi) objective employee metrics. Any Performance Goals may be used to measure the performance of the Company as a whole or, except with respect to stockholder return metrics, to a region, business unit, affiliate or business segment, and may be measured either on an absolute basis, a per share basis or relative to a pre-established target, to a previous period’s results or to a designated comparison group, and, with respect to financial metrics, which may be determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”), in accordance with accounting principles established by the International Accounting Standards Board (“IASB Principles”) or which may be adjusted when established to either exclude any items otherwise includable under GAAP or under IASB Principles or include any items otherwise excludable under
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ANNEX A
GAAP or under IASB Principles. In all other respects, Performance Goals will be calculated in accordance with the Company’s financial statements, generally accepted accounting principles, or under a methodology established by the Administrator prior to or at the time of the issuance of an Award and which is consistently applied with respect to a Performance Goal in the relevant Performance Period. In addition, the Administrator will adjust any performance criteria, Performance Goal or other feature of an Award that relates to or is wholly or partially based on the number of, or the value of, any stock of the Company, to reflect any stock dividend or split, repurchase, recapitalization, combination, or exchange of shares or other similar changes in such stock. The Performance Goals may differ from Participant to Participant and from Award to Award. Prior to the Determination Date, the Administrator will determine whether any significant element(s) will be included in or excluded from the calculation of any Performance Goal with respect to any Participant.
(c)Procedures. To the extent necessary to comply with the performance-based compensation provisions of Code Section 162(m), with respect to any Award granted subject to Performance Goals, within the first twenty five percent (25%) of the Performance Period, but in no event more than ninety (90) days following the commencement of any Performance Period (or such other time as may be required or permitted by Code Section 162(m)), the Administrator will, in writing, (i) designate one or more Participants to whom an Award will be made, (ii) select the Performance Goals applicable to the Performance Period, (iii) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (iv) specify the relationship between Performance Goals and the amounts of such Awards, as applicable, to be earned by each Participant for such Performance Period. Following the completion of each Performance Period, the Administrator will certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amounts earned by a Participant, the Administrator will have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the Performance Period. A Participant will be eligible to receive payment pursuant to an Award for a Performance Period only if the Performance Goals for such period are achieved.
(d)Additional Limitations. Notwithstanding any other provision of the Plan, any Award which is granted to a Participant and is intended to constitute qualified performance based compensation under Code Section 162(m) will be subject to any additional limitations set forth in the Code (including any amendment to Code Section 162(m)) or any regulations and ruling issued thereunder that are requirements for qualification as qualified performance-based compensation as described in Code Section 162(m), and the Plan will be deemed amended to the extent necessary to conform to such requirements.
12.Outside Director Limitations.
(a)Cash-Settled Awards. No Outside Director may be granted, in any fiscal year of the Company, cash-settled Awards with a grant date fair value (determined in accordance with GAAP) of more than $1,000,000, increased to $2,000,000 in connection with his or her initial service.
(b)Stock-Settled Awards. No Outside Director may be granted, in any fiscal year of the Company, stock-settled Awards with a grant date fair value (determined in accordance with GAAP) of more than $1,000,000, increased to $2,000,000 in connection with his or her initial service.
13.Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.
14.Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be
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ANNEX A
exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.
15.Adjustments; Dissolution or Liquidation; Merger or Change in Control.
(a)Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits in Sections 3, 6, 7, 8, 9, and 10 of the Plan.
(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.
(c)Change in Control. In the event of a merger of the Company with or into another corporation or other entity or a Change in Control, each outstanding Award will be treated as the Administrator determines, including, without limitation, that (i) Awards may be assumed, or substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a Participant, that the Participant’s Awards will terminate upon or immediately prior to the consummation of such merger or Change in Control; (iii) outstanding Awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such merger or Change in Control, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of such merger or Change in Control; (iv) (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion; or (v) any combination of the foregoing. In taking any of the actions permitted under this subsection 15(c), the Administrator will not be required to treat all Awards similarly in the transaction.
In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.
For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received
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ANNEX A
upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.
Notwithstanding anything in this Section 15(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.
(d)Outside Director Awards. With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.
16.Tax.
(a)Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any tax withholding obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).
(b)Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash (including cash from the sale of Shares issued to Participant) or Shares having a fair market value equal to the minimum statutory amount required to be withheld, or (c) delivering to the Company already-owned Shares having a fair market value equal to the minimum statutory amount required to be withheld. The fair market value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
(c)Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A.
17.No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company or any Parent or Subsidiary of the Company, nor will they interfere in any way with the Participant’s right or the Company’s right, or Parent’s or Subsidiary’s right, to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
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ANNEX A
18.Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
19.Term of Plan. Subject to Section 23 of the Plan, the Plan will become effective upon stockholder approval at the 2016 Annual Meeting of Stockholders. It will continue in effect for a term of ten (10) years from the date adopted by the Board, unless terminated earlier under Section 20 of the Plan.
20.Amendment and Termination of the Plan.
(a)Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.
(b)Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c)Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
21.Conditions Upon Issuance of Shares.
(a)Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
(b)Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
22.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any state, federal or foreign law or under the rules and regulations of the Securities and Exchange Commission, the stock exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained.
23.Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
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TWITTER, INC.
Annual 1355 MARKET STREET
SUITE 900
SAN FRANCISCO, CA 94103
VOTE BY INTERNET
BeforeTheMeeting- Go towww.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of Stockholders
information up until 11:59 p.m. Eastern Time on May 25, 2016 at 2:00 PM PDT
This Proxy is solicited on behalf of19, 2019. Have your proxy card in hand when you access the Board of Directors of Twitter, Inc.
The stockholder(s) hereby appoint(s) Jack Dorsey, Anthony Notowebsite and Vijaya Gadde, or any of them, as proxies, each withfollow the powerinstructions to appoint his or her substitute, and hereby authorize(s) them to representobtain your records and to create an electronic voting instruction form.
DuringTheMeeting- Go towww.virtualshareholdermeeting.com/TWTR2019
You may attend the meeting via the Internet and vote as designated onduring the reverse side of this ballot, all ofmeeting. Have the shares of common stock of TWITTER, INC.information that is printed in the stockholder(s) is/are entitledbox marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to vote at the Annual Meeting of Stockholders to be held at 2:00 PM PDTtransmit your voting instructions up until 11:59 p.m. Eastern Time on May 25, 2016, at Yerba Buena Center for19, 2019. Have your proxy card in hand when you call and then follow the Arts, YBCA Forum, 701 Mission Street, San Francisco, California 94103instructions.
VOTE BY MAIL
Mark, sign and any adjournment or postponement thereof.
Thisdate your proxy when properly executed, will be votedcard and return it in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
CONTINUED AND TO BE MARKED, DATED AND SIGNED ON THE OTHER SIDE
p PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.p
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at
http://www.viewproxy.com/Twitter/2016
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | ||||||||||||||||||||||
TWITTER, INC. | ||||||||||||||||||||||||||||
TheBoardofDirectorsrecommendsyouvoteFORthefollowingproposals: | ||||||||||||||||||||||||||||
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Nominees: | For | Against | Abstain | TheBoardofDirectorsrecommendsyouvoteAGAINSTthefollowingproposals: | For
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1a. Jack Dorsey | ☐ | ☐ | ☐ | 4. | A stockholder proposal regarding simple majority vote. | ☐ | ☐ | ☐ | ||||||||||||||||||||
1b. Patrick Pichette | ☐ | ☐ | ☐ | 5. | A stockholder proposal regarding a report on our content enforcement policies. | ☐ | ☐ | ☐ | ||||||||||||||||||||
1c. Robert Zoellick | ☐ | ☐ | ☐ | 6. | A stockholder proposal regarding board qualifications. | ☐ | ☐ | ☐ | ||||||||||||||||||||
2. To approve, on an advisory basis, the compensation of our named executive officers. | ☐ | ☐ | ☐ | NOTE:Such other business as may properly come before the meeting or any adjournment thereof. | ||||||||||||||||||||||||
3. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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PROXY VOTING INSTRUCTIONS
Please have your 11-digit control number ready when voting by Internet or Telephone
TWITTER, INC.
May 20, 2019 12:30 PM This proxy is solicited by the Board of Directors | |||||||||||||||
Thisproxy,whenproperlyexecuted,willbevotedinthemannerdirectedherein.Ifnosuchdirectionismade,this proxy willbe votedinaccordancewiththeBoardofDirectors’recommendations. | |||||||||||||||
Continued and to be signed on reverse side
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Call 1 (888) 693-8683
Go towww.cesvote.com
Have your proxy card available when you access the above website. Follow the prompts to vote your shares.
Use any touch-tone telephone to vote your shares. Have your proxy card available when you call. Follow the voting instructions to vote your shares.
