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6, 2024 help make this meeting format as efficient as possible. ” ” What is a quorum? Meeting by visiting www.virtualshareholdermeeting.com/TWLO2024 (have your Notice or proxy card in hand when you visit the website). physical mail to help ensure prompt receipt of any communications related to voting. online? the technical support telephone number posted on the virtual meeting website login page. you; these unvoted shares are counted as “broker non-votes.” Proposals 1, 3, 4, and 5 are considered to be “non-routine” under NYSE rules and we therefore expect broker non-votes to exist in connection with those proposals. Proposal 2 is a “routine” matter and therefore broker non-votes are not expected to exist in connection with this proposal. : 12, 2025. In addition, our Directors with Terms Expiring at the Annual Meeting/Nominees Richard Dalzell(1) Scott Raney†(2) Erika Rottenberg(1)(2)(3) Continuing Directors Jeff Lawson Byron Deeter Elena Donio(3) James McGeever(2)(3)
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ContentsTWILIO INC.375 BEALE STREET, SUITE 300SAN FRANCISCO, CALIFORNIA 94105NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Annual Meeting of Stockholders98:30 a.m. Pacific Time on Monday, June 12, 2017
20172024 annual meeting of stockholders (the "Annual Meeting"“Annual Meeting”) of Twilio Inc., a Delaware corporation, which will be held virtually onMonday,June 12, 20176, 2024 at 98:30 a.m. Pacific Time via live audio webcast at Four Embarcadero Center, Promenade Level, Stanford Room, San Francisco, CA 94111www.virtualshareholdermeeting.com/TWLO2024, for the following purposes, as more fully described in the accompanying proxy statement: 1. To elect two Class I directors to serve until the 2020 annual meeting of stockholders and until their successors are duly elected and qualified; 2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017; 3. To ratify our 2016 Stock Option and Incentive Plan to preserve our ability to receive corporate income tax deductions that may become available pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"); and 
1. To elect the three Class II directors named in the proxy statement to serve until the 2027 annual meeting of stockholders and until their successors are duly elected and qualified; 
2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024; 
3. To approve, on a non-binding advisory basis, the compensation of our named executive officers; 
4. To indicate, on a non-binding advisory basis, the preferred frequency of future non-binding advisory votes to approve the compensation of our named executive officers; 
5. To approve a management proposal to amend our certificate of incorporation to declassify the board of directors; and 
6. To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. any adjournments or postponements thereof. With respectby mail to the election of the Class I directors, Scott Raney has notified our board of directors that he will not stand for reelection to the board of directors at the Annual Meeting. Mr. Raney has served on our board of directors since 2013, and we thank him for his years of service.17, 201715, 2024 as the record date for the Annual Meeting. Only stockholders of record on April 17, 201715, 2024 are entitled to notice of and to vote at the Annual Meeting. Further information regarding voting rights and the matters to be voted upon isare presented in the accompanying proxy statement. On or about April 24, 2017, we expect to mail to our stockholders a Notice of Internet Availability of Proxy Materials (the "Notice") containing instructions on how to access ourfor our 2017 Annual Meeting of Stockholders (the "Proxy Statement") and our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the "Annual Report"). The Proxy Statement and the Annual Reportannual report can be accessed directly at the following Internet address: http://materials.proxyvote.com/90138F. All you havewww.proxyvote.com. You will be asked to do is enter the 16-digit control number located on your proxy card.via the Internet, telephone or mail as soon as possible to ensure that your shares are represented. For additional instructions on voting by telephone or the Internet,how to vote your shares, please refer to your proxy card. ReturningVoting your shares by proxy prior to the proxyAnnual Meeting does not deprive you of your right to attend the Annual Meeting and to vote your shares at the Annual Meeting. We appreciate your continued support of Twilio.By order of the Board of Directors,
Jeff LawsonCo-Founder, Chief Executive Officer and Chairperson of the BoardSan Francisco, CaliforniaApril 24, 2017By order of the board of directors, PROCEDURAL MATTERS 1 
2024 Proxy Statement
Table of Contents
2024 Proxy Statement TWILIO INC.PROXY STATEMENTFOR2017 ANNUAL MEETINGTABLE OF STOCKHOLDERSCONTENTS
20172024 annual meeting of stockholders of Twilio Inc., a Delaware corporation (the "Company"(referred to in this proxy statement as “Twilio,” the “Company,” “we,” “us,” or “our”), and any postponements, adjournments or continuations thereof (the "Annual Meeting"“Annual Meeting”). The Annual Meeting will be held on Monday, June 12, 2017, at 9:00 a.m. Pacific Time at Four Embarcadero Center, Promenade Level, Stanford Room, San Francisco, CA 94111. 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 24, 2017 to all stockholders entitled to vote at the Annual Meeting. The information provided in the "question and answer" format below is for your convenience only and is merely aof thehighlights information contained elsewhere in this proxy statement. YouThis summary does not contain all of the information you should consider, and you should read thisthe entire proxy statement carefully.carefully before voting. 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.What matters am I voting on?
Management Proposals 1. The election of Jeff Epstein, Khozema Shipchandler and Andrew Stafman as Class II directors. FOR 2. The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024. FOR 3. The approval, on a non-binding advisory basis, of the compensation of our named executive officers. FOR 4. The non-binding, advisory indication of the preferred frequency of future non-binding advisory votes to approve the compensation of our named executive officers. ONE YEAR 5. To approve a management proposal to amend our certificate of incorporation to declassify the board of directors. FOR 2024 Proxy Statement Proxy Statement Summary • • • • • • • • 2024 Proxy Statement Proxy Statement Summary • • • (1) Organic revenue growth, Communications organic revenue growth, Segment organic revenue growth, non-GAAP income (loss) from operations, and free cash flow are non-GAAP financial measures. Refer to Appendix B for their definitions and a reconciliation of each non-GAAP measure to its most directly comparable GAAP measure. 2024 Proxy Statement Proxy Statement Summary * Excludes Mr. Deeter, who is not standing for re-election at the Annual Meeting. on:rights. 2024 Proxy Statement • 
2024 Proxy Statement Stockholder Engagement 
2024 Proxy Statement Stockholder Engagement What We Heard How We Responded Company Strategy Increase share repurchase program Enhance financial reporting disclosures 2024 Proxy Statement Stockholder Engagement What We Heard How We Responded Executive Compensation Incorporate longer performance periods for PSU awards Incorporate profitability metrics in compensation program Adopt a short-term incentive plan Corporate Governance Sunset our dual class structure Separate CEO and Board Chair roles 2024 Proxy Statement Stockholder Engagement What We Heard How We Responded Environmental, Social, and Other Continue commitment to environmental and social issues Continue commitment to stockholder engagement (1) Non-GAAP income (loss) from operations and free cash flow are non-GAAP financial measures. Refer to Appendix B for their definitions and a reconciliation of each non-GAAP measure to its most directly comparable GAAP measure. 2024 Proxy Statement 
2024 Proxy Statement Our Commitment to Environmental, Social and Governance Matters 
2024 Proxy Statement Our Commitment to Environmental, Social and Governance Matters 
2024 Proxy Statement 
(1) Includes directors who identify in any of the following categories: African American or Black, Hispanic or Latinx, Asian, Native American or Alaskan Native, Native Hawaiian or Other Pacific Islander, or North African or Middle Eastern. (2) We have added four new independent directors since 2021. * Each of the graphics above excludes Mr. Deeter, who is not standing for re-election at the Annual Meeting. 2024 Proxy Statement Board of Directors and Corporate Governance Class Age Independent Directors with Terms Expiring at the Annual Meeting/Nominees Jeff Epstein II 67 2017 2024 2027 
Khozema Shipchandler II 50 2024 2024 2027 Andrew Stafman II 36 2024 2024 2027 
Continuing Directors Charles Bell I 66 2023 2026 — Donna Dubinsky III 68 2018 2025 — Jeffrey Immelt I 68 2019 2026 — Deval Patrick III 67 2021 2025 — Erika Rottenberg I 61 2016 2026 — Miyuki Suzuki III 63 2022 2025 — Byron Deeter II 49 2010 2024 Committee Chair Committee Member Independent Board Chair 2024 Proxy Statement Board of Directors and Corporate Governance Bell Dubinsky Epstein Immelt Patrick Rottenberg Shipchandler Stafman Suzuki 
2024 Proxy Statement Board of Directors and Corporate Governance 
2024 Proxy Statement Board of Directors and Corporate Governance 
2024 Proxy Statement Board of Directors and Corporate Governance 
2024 Proxy Statement Board of Directors and Corporate Governance 
2024 Proxy Statement Board of Directors and Corporate Governance 
2024 Proxy Statement Board of Directors and Corporate Governance 2024 Proxy Statement Board of Directors and Corporate Governance Board of Directors Independent Audit Committee Charles Bell Byron Deeter Donna Dubinsky Jeff Epstein Jeffrey Immelt Deval Patrick Erika Rottenberg Khozema Shipchandler Andrew Stafman Miyuki Suzuki Independent Director Committee Member Committee Chair 2024 Proxy Statement Board of Directors and Corporate Governance Audit Committee
No member of our audit committee may simultaneously serve on the audit committee of more than three public companies unless our board of directors determines that such simultaneous service would not impair the ability of such member to effectively serve on our audit committee.
Our audit committee, among other things:
Our audit committee held eight meetings during 2023. 2024 Proxy Statement Board of Directors and Corporate Governance Compensation and Talent Management Committee
Our compensation committee held six meetings during 2023. 2024 Proxy Statement Board of Directors and Corporate Governance Nominating and Corporate Governance Committee
Our nominating and corporate governance committee held four meetings during 2023. 2024 Proxy Statement Board of Directors and Corporate Governance 2024 Proxy Statement Board of Directors and Corporate Governance 2024 Proxy Statement Board of Directors and Corporate Governance 
2024 Proxy Statement Board of Directors and Corporate Governance 2024 Proxy Statement Board of Directors and Corporate Governance 2024 Proxy Statement Board of Directors and Corporate Governance Annual Equity Retainer for Board Membership (the “Annual Board Retainer”) $45,000 $30,000 Additional Annual Equity Retainer for Committee Membership: Chair Retainer Member Retainer Audit Committee $26,000 $13,000 Compensation and Talent Management Committee $20,000 $10,000 Nominating and Corporate Governance Committee $12,000 (1) In 2024, following the separation of the roles of Board Chair and Chief Executive Officer, our compensation committee conducted a review with Compensia of peer company board compensation trends, and our Non-Employee Director Compensation Policy was amended to provide a $75,000 annual retainer for the newly created role of Independent Board Chair. 2024 Proxy Statement Board of Directors and Corporate Governance 2024 Proxy Statement Board of Directors and Corporate Governance Name Total ($) 636,395 636,395 Byron Deeter 325,158 325,158 Donna Dubinsky 332,740 332,740 Jeff Epstein 390,048 390,048 Jeffrey Immelt 340,374 340,374 Deval Patrick 318,791 318,791 Erika Rottenberg 345,807 345,807 Miyuki Suzuki 329,518 329,518 159,561 159,561 (1) Stock awards consist solely of RSUs. Annual Equity Grants and Annual Equity Retainers vest immediately upon grant. Initial Equity Grants vest in equal annual installments over three years, subject to any pro-ration as described above. The amounts reported in this column represent the aggregate grant date fair value of the RSUs awarded to the non-employee directors in 2023, calculated in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024. Each of Ms. Dubinsky and Messrs. Bell, Epstein and Patrick elected to defer a portion of the RSUs issued pursuant to each of their Quarterly Grants, which DSUs are reflected in the table above and shown separately in the table below. (2) As of December 31, 2023, the non-employee directors who served on our board of directors during 2023 had the following outstanding equity awards, in addition to the DSUs set forth in the table below: Mr. Bell held 5,744 RSUs; Mr. Patrick held 423 RSUs; and Ms. Suzuki held 4,406 RSUs. (3) Mr. Bell was appointed to our board of directors on March 28, 2023 and received an Initial Equity Grant of 6,428 RSUs. (4) Mr. Dalzell did not stand for re-election at the 2023 Annual Meeting of Stockholders. Accordingly, his service as a director ended on June 13, 2023. Name Accumulated DSUs Charles Bell 4,162 Donna Dubinsky 8,745 Jeff Epstein 28,901 Deval Patrick 8,496 2024 Proxy Statement twohis or her successor, or such director’s earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in the control of our company.III directors toat the Annual Meeting. If elected, each of Messrs. Epstein, Shipchandler and Stafman will serve as Class II directors until the 20202027 annual meeting of stockholders and until their successors are duly elected and qualified. Each of the nominees is currently a director of our company. For information concerning the nominees, please see the section titled “Board of Directors and Corporate Governance.” The Board of Directors recommends a vote “FOR” each of the nominees named above. 2024 Proxy Statement 2022 2023 (in thousands) $3,836 $5,655 311 — 40 — All Other Fees — — Total Fees $4,187 $5,655 (1) Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K and services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years, and the review of the financial statements included in our quarterly reports. Fees for fiscal year 2022 also consisted of fees related to consent filings and included work related to our equity method investment, impairment of long-lived assets, legacy system testwork and statutory audit of one of our international subsidiaries. Fees for fiscal year 2023 also included work related to our reportable segments, revenue of our Segment business unit, and restructurings. (2) Audit-Related Fees for fiscal year 2022 consisted of professional services rendered in connection with the due diligence of transactions or events, including equity method investment, and enterprise resource planning implementation. (3) Tax Fees for fiscal year 2022 consisted of fees billed for professional services for tax compliance, tax advice and tax planning. These services included assistance regarding federal and state tax compliance. 2024 Proxy Statement 2024 Proxy Statement The Board of Directors recommends a vote “FOR” the approval, on a non-binding advisory basis, of the compensation of our named executive officers. 2024 Proxy Statement The Board of Directors recommends that you vote for “ONE YEAR” as the preferred frequency of future non-binding advisory votes to approve the compensation of our named executive officers. 2024 Proxy Statement The Board of Directors recommends a vote “FOR” the management proposal to amend our Certificate of Incorporation to declassify the Board of Directors. 2024 Proxy Statement 2024 Proxy Statement Name Age Position Khozema Shipchandler 50 Aidan Viggiano 45 Dana Wagner 48 Chief Legal Officer, Chief Compliance Officer and Corporate Secretary (1) Mr. Shipchandler served as our Chief Financial Officer from November 2018 to October 2021, our Chief Operating Officer from October 2021 to March 1, 2023 and our President, Twilio Communications from March 1, 2023 to January 8, 2024, at which time he became Chief Executive Officer. (2) Ms. Viggiano served as our Senior Vice President, Finance from November 2021 to March 1, 2023, at which time she became Chief Financial Officer. 2024 Proxy Statement • • • • • 2024 Proxy Statement • • • • • • • • • • • (1) Organic revenue growth, Communications organic revenue growth, Segment organic revenue growth, non-GAAP income (loss) from operations, and free cash flow are non-GAAP financial measures. Refer to Appendix B for their definitions and a reconciliation of each non-GAAP measure to its most directly comparable GAAP measure. 2024 Proxy Statement • • • Element 2023 Design Rationale Base Salary Reduced from $134,000 to $65,535, effective March 1, 2023 In consideration of stockholder feedback, recent company performance, and the magnitude of his 2022 PSU award, our Chief Executive Officer’s base salary was reduced and he did not receive any additional equity or performance-based cash awards in 2023. Annual Cash-Based Incentive None None 2024 Proxy Statement Element 2023 Design Rationale Base Salary Consistent with the recommendation of our Chief Executive Officer, our compensation committee did not increase the base salaries of any of our named executive officers from their 2022 levels, other than for Ms. Viggiano, whose base salary was increased in connection with her promotion to Chief Financial Officer.
2024 Proxy Statement 
2024 Proxy Statement What We Heard How We Responded Pay and performance alignment Incorporate longer performance periods for PSU awards • In 2024, our compensation committee determined to reintroduce PSU awards and to incorporate a cumulative three-year performance period. The compensation committee’s rationale for reintroducing PSUs in 2024 is further discussed below in “2024 Executive Compensation Program Changes”. Incorporate profitability metrics in compensation program Adopt a short-term incentive plan 2024 Proxy Statement Element Rationale Reintroduced PSU grants in 2024 to support our talent and business strategy Go-forward PSU design aligns with stockholder preferences Cash compensation is transitioning to a more market-normative structure We continued to evolve our peer group to match our business profile and size In late 2023, our compensation committee further refined our peer group referenced in setting 2024 compensation, adding more companies within the broader communications industry that also maintain software offerings to better align with our two business units and removing several companies that significantly exceeded our market capitalization range, which had the effect of reducing our market compensation benchmarks. 2024 Proxy Statement Element Compensation Element Objective Base Salary Cash Attract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market and reward performance. Performance-based cash awards Strengthen the performance-based core of our compensation program and enhance retention. Motivate executive officers to achieve annual performance goals that serve as the basis for long-term performance and stockholder value creation. Cash serves as an effective motivator in periods of market volatility while also reducing compensation-related stockholder dilution. Equity awards generally in the form of RSUs and PSUs Align the interests of executive officers and stockholders by motivating our executive officers to achieve long-term stockholder value creation. Strengthen pay-for-performance and enhance retention. 2024 Proxy Statement 
WHAT WE DO WHAT WE DON’T DO 2024 Proxy Statement WHAT WE DO WHAT WE DON’T DO 2024 Proxy Statement 2024 Proxy Statement 2024 Proxy Statement 2024 Proxy Statement Ansys, Inc. Fortinet, Inc. Shopify Inc. Veeva Systems Inc. Arista Networks, Inc. Okta, Inc. Snap Inc. Workday, Inc. Autodesk, Inc. Palo Alto Networks, Inc. Snowflake Inc. Zoom Video Communications, Inc. Block, Inc. Paycom Software, Inc. Splunk Inc. CrowdStrike Holdings, Inc. RingCentral, Inc. Synopsys, Inc. DocuSign, Inc. ServiceNow, Inc. The Trade Desk, Inc. 2024 Proxy Statement Named Executive Officer Jeff Lawson Aidan Viggiano Khozema Shipchandler $1,100,000 $1,100,000 Dana Wagner Elena Donio (1) Mr. Lawson’s base salary was reduced from $134,000 to $65,535 per year, effective March 1, 2023. (2) Ms. Viggiano’s base salary was increased to $850,000 per year, effective March 1, 2023, in connection with her promotion to Chief Financial Officer. Ms. Viggiano served as Senior Vice President of Finance from 2021 until her appointment as Chief Financial Officer in March 2023, and in 2022 Ms. Viggiano was not a named executive officer. (3) Ms. Donio stepped down from our board of directors and joined us as President of Revenue in May 2022; her base salary was established at that time. Ms. Donio’s 2023 base salary remained in effect during her continued employment following her stepping down as President, Twilio Data & Applications effective December 15, 2023. 2024 Proxy Statement Named Executive Officer Jeff Lawson — Aidan Viggiano $2,750,000 Khozema Shipchandler $3,000,000 Dana Wagner $1,500,000 Elena Donio $3,000,000 Payout Level Target ≥$250 million 100% Threshold $200 million 50% <$200 million 0% * Subject to linear interpolation for performance between threshold and target. (1) Non-GAAP income from operations is a non-GAAP financial measure. Refer to Appendix B for its definition and a reconciliation of non-GAAP income from operations to its most directly comparable GAAP measure. 2024 Proxy Statement Named Executive Officer Aidan Viggiano $2,750,000 Khozema Shipchandler $3,000,000 Dana Wagner $1,500,000 Elena Donio $3,000,000 2024 Proxy Statement Named Executive Officer — — — 46,395 92,789 9,176,401 Khozema Shipchandler 50,613 101,225 10,010,679 Elena Donio 50,613 101,225 10,010,679 Dana Wagner 25,307 50,613 5,005,406 (1) The amounts reported in this column represent the aggregate grant date fair value of the RSUs granted to the named executive officer in 2023, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. These amounts do not reflect the actual economic value that may be realized from such awards. The amounts reported for the RSUs were calculated using the closing price of our common stock on the date of grant. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024. (2) Mr. Lawson did not receive any 2023 Annual RSUs. (3) Excludes the award issued to Ms. Viggiano in March 2023 in connection with her promotion to Chief Financial Officer. See “—2023 Chief Financial Officer Promotional Award” for more information on such award. 2024 Proxy Statement Payout Level Maximum 40% ≥$1.00 200% Target 30% ≥$1.00 100% Threshold 20% ≥$1.00 50% <20% ≥$1.00 0% * Subject to linear interpolation for performance between threshold, target and maximum. (1) Organic revenue growth and non-GAAP income from operations are non-GAAP financial measures. Refer to Appendix B for their definitions and a reconciliation of organic revenue growth and non-GAAP income from operations to their most directly comparable GAAP measures. 2024 Proxy Statement 2024 Proxy Statement 2024 Proxy Statement Position Minimum Value Chief Executive Officer 6x base salary Other Named Executive Officers 3x base salary 2024 Proxy Statement 2024 Proxy Statement 2024 Proxy Statement Name and principal position Year 2023 74,918 — — — — 1,941 76,859 2022 134,000 — 49,228,812 — — 14,657 49,377,469 2021 133,990 — 6,926,889 7,000,586 — 564,280 14,625,745 2023 793,462 — — 2,750,000 9,900 15,500,055 2023 1,100,000 — 10,010,679 — 3,000,000 9,900 14,120,579 2022 1,100,000 — 28,552,689 — — 8,304 29,660,993 2021 744,362 — 5,909,608 6,021,278 — 8,700 12,683,948 2023 600,000 — 5,005,406 — 1,500,000 9,900 7,115,306 2022 600,000 — 25,552,061 — — 9,150 26,161,211 2021 11,538 250,000 — — — — 261,569 2023 1,000,000 — 10,010,679 — 3,000,000 9,900 14,020,579 2022 665,385 — 25,451,960 8,467,018 — 63,559 34,647,922 (1) The amounts reported in this column represent the aggregate grant date fair value of RSUs awarded to the named executive officers in 2021, 2022 and 2023, and PSUs awarded to the named executive officers in 2022, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. These amounts do not reflect the actual economic value that may be realized from such awards. The amounts reported for the RSUs were calculated using the closing price of our common stock on the date of grant. The amounts reported for the PSUs assume the probable outcome of the applicable performance conditions on the date of grant (i.e., based on 100% of target level performance) and are estimated using the closing price of our common stock on the date of grant. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024. If the PSUs were instead valued based on the maximum outcome of the applicable performance conditions, the grant date fair value of the PSUs granted in this column for 2022 would be as follows: Mr. Lawson: $74,827,768; Mr. Shipchandler: $43,321,190; and Mr. Wagner: $19,691,651. Ms. Donio did not receive a PSU award. (2) The amounts reported in this column represent the aggregate grant date fair value of stock options granted in the applicable year computed in accordance with calculated in accordance with FASB ASC Topic 718. These amounts do not reflect the actual economic value that may be realized from such awards. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024. (3) The amounts reported in this column for 2023 represent matching contributions to each of our named executive officers’ 401(k) retirement plan accounts. (4) Mr. Lawson stepped down as our Chief Executive Officer and board chair effective January 8, 2024, and his employment with the Company ended on January 12, 2024. (5) Ms. Viggiano served as Senior Vice President of Finance from 2021 until March 1, 2023, at which time she became our Chief Financial Officer. The table reflects an increase in Ms. Viggiano’s base salary and additional equity awards issued in connection with her appointment as Chief Financial Officer in March 2023. (6) This amount includes one-time equity awards issued in March 2023 in connection with Ms. Viggiano’s appointment as Chief Financial Officer consisting of RSUs with a grant date fair value of $2,770,291. (7) Mr. Shipchandler served as Chief Financial Officer from 2018 to 2021, Chief Operating Officer from October 27, 2021 until March 1, 2023, and President, Twilio Communications from March 1, 2023 until his appointment as Chief Executive Officer effective January 8, 2024. The table reflects an increase in Mr. Shipchandler’s base salary and additional equity awards issued in connection with his appointment as Chief Operating Officer in October 2021. (8) Ms. Donio was appointed as our President of Revenue effective May 4, 2022 (after stepping down from our board of directors on April 29, 2022) and served as our President of Revenue until March 1, 2023, at which time she became our President, Twilio Data & Applications. Ms. Donio stepped down from her role as President, Twilio Data & Applications effective December 15, 2023, after which she remained employed in an advisory role until March 31, 2024. The table reflects salary amounts for 2022 for Ms. Donio that are prorated based on the number of days in 2022 during which she was employed by us and additional equity awards issued in June 2022 in connection with her appointment as President of Revenue. All of Ms. Donio’s compensation for 2022 relating to her service as a director is set forth in the “All Other Compensation” column. 2024 Proxy Statement Executive Compensation Tables Name Type of Award Aidan Viggiano 2/22/2023 2/22/2023 — — — 92,789 6,117,579 2/22/2023 2/22/2023 — — — 46,395 3,058,822 2/22/2023 2/22/2023 1,375,000 2,750,000 2,750,000 — — 3/20/2023 3/15/2023 — — — 44,268 2,770,291 Khozema Shipchandler 2/22/2023 2/22/2023 — — — 101,225 6,673,764 2/22/2023 2/22/2023 — — — 50,613 3,336,915 2/22/2023 2/22/2023 1,500,000 3,000,000 3,000,000 — — Dana Wagner 2/22/2023 2/22/2023 — — — 50,613 3,336,915 2/22/2023 2/22/2023 — — — 25,307 1,668,491 2/22/2023 2/22/2023 750,000 1,500,000 1,500,000 — — Elena Donio 2/22/2023 2/22/2023 — — — 101,225 6,673,764 2/22/2023 2/22/2023 — — — 50,613 3,336,915 2/22/2023 2/22/2023 1,500,000 3,000,000 3,000,000 — — (1) The amounts reported in this column reflect the 2023 performance-based cash awards, which were granted under the 2016 Plan. For a description of the performance-based cash awards, including information on the threshold, target, maximum and actual award level achievement, as well as descriptions of the performance goals, see the section titled “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements—Annual Cash Incentives—2023 Performance-Based Cash Awards.” (2) For Ms. Donio and Messrs. Shipchandler and Wagner, the amounts reported in this column reflect the 2023 Annual RSUs, which were granted under the 2016 Plan. For Ms. Viggiano, the amounts reported in this column also reflect Ms. Viggiano’s promotional equity award, granted under the 2016 Plan to Ms. Viggiano in March 2023 connection with her appointment as Chief Financial Officer, as described in the section titled “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements—2023 Additional Executive Officer Promotional Award.” (3) The amounts reported in this column represent the aggregate grant date fair value of the RSUs granted to the named executive officers in 2023, calculated in accordance with FASB ASC Topic 718. Assumptions underlying the valuations are set forth in footnote 1 to the Summary Compensation Table above. These amounts do not reflect the actual economic value that may be realized from such awards. 2024 Proxy Statement Executive Compensation Tables Name Jeff Lawson 316,667 — 10.09 12/30/2025 — — — — 163,890 — 31.96 2/9/2027 — — — — 203,589 — 33.01 2/19/2028 — — — — 110,697 — 111.32 1/30/2029 — — — — 114,767 — 117.94 2/21/2030 — — — — 22,526 11,606 377.59 2/24/2031 — — — — — — — — 6,238 473,277 — — — — — — 50,280 3,814,744 — — — — — — — — 158,427 12,019,856 Aidan Viggiano 3,794 272 126.71 2/20/2030 — — — — — — — — 202 15,326 — — 1,483 569 367.65 4/20/2031 — — — — — — — — 354 26,858 — — — — — — 5,764 437,315 — — — — — — 1,848 140,208 — — — — — — 8,380 635,791 — — — — — — — — 29,185 2,214,266 — — — — 92,789 7,039,901 — — — — — — 38,734 2,938,749 — — Khozema Shipchandler 35,418 — 76.63 10/31/2028 — — — — 44,158 — 117.94 2/21/2030 — — — — 11,964 6,162 377.59 2/24/2031 — — — — — — — — 3,314 251,433 — — 4,476 9,089 298.00 11/11/2031 — — — — — — — — 5,017 380,640 — — — — — — 29,329 2,225,191 — — — — — — — — 91,721 6,958,872 — — — — 101,225 7,679,941 — — Dana Wagner — — — — 32,961 2,500,751 — — — — — — 12,570 953,686 — — — — — — — — 41,692 3,163,172 — — — — 50,613 3,840,008 — — Elena Donio 62,680 104,470 85.17 6/21/2032 — — — — — — — — 186,351 14,138,450 — — — — — — 101,225 7,679,941 — — (1) Equity awards granted prior to June 21, 2016 were granted pursuant to our 2008 Stock Option Plan (as amended and restated, the “2008 Plan”). Each stock option under the 2008 Plan is immediately exercisable. Equity awards granted on or after June 21, 2016 were granted pursuant to our 2016 Plan. 2024 Proxy Statement Executive Compensation Tables (2) Unless otherwise described in the footnotes below, the vesting of each equity award on a vesting date is subject to the applicable named executive officer’s continued employment with us through such vesting date. (3) This column represents the fair market value of a share of our common stock on the date of the grant, as determined by the administrator of our 2008 Plan or 2016 Plan, as applicable. (4) The market values of the unvested RSUs and unearned PSUs are calculated by multiplying the number of unvested or unearned units, respectively, by the closing price of our common stock, as reported on the NYSE, of $75.87 per share on December 29, 2023 (the last trading day of 2023). (5) The shares subject to the stock option are fully vested. (6) The shares subject to the stock option vest as follows: 33% of the shares subject to the stock option vest in equal quarterly installments between the first and second anniversaries of December 31, 2020, 33% of the shares subject to the stock option vest in equal quarterly installments between the second and third anniversaries of December 31, 2020 and 34% of the shares subject to the stock option vest in equal quarterly installments between the third and fourth anniversaries of December 31, 2020. In connection with the termination of Mr. Lawson’s employment as of January 12, 2024, all unvested stock options held by Mr. Lawson as of that date vested. (7) The RSUs vest as follows: 33% of the RSUs vest in equal quarterly installments between the first and second anniversaries of December 31, 2020, 33% of the RSUs vest in equal quarterly installments between the second and third anniversaries of December 31, 2020 and 34% of the RSUs vest in equal quarterly installments between the third and fourth anniversaries of December 31, 2020. In connection with the termination of Mr. Lawson’s employment as of January 12, 2024, all unvested RSUs held by Mr. Lawson as of that date vested. (8) The RSUs vest as follows: 33% of the RSUs vest in equal quarterly installments between the first and second anniversaries of January 1, 2022, 33% of the RSUs vest in equal quarterly installments between the second and third anniversaries of January 1, 2022, and 34% of the RSUs vest in equal quarterly installments between the third and fourth anniversaries of January 1, 2022. In connection with the termination of Mr. Lawson’s employment as of January 12, 2024, all unvested RSUs held by Mr. Lawson as of that date vested. (9) The PSUs vest in three tranches subject to the achievement of certain performance metrics for 2022, 2023 and 2024. The 2023 and 2024 tranches are eligible to vest if both (i) the minimum organic revenue growth threshold and (ii) the non-GAAP income from operations threshold are achieved for 2023 and 2024, respectively. Vesting of these PSUs will range up to 100% above the target based on levels of performance. On February 16, 2024, none of the 2023 tranche of PSUs subject to these awards were deemed earned and vested based on our performance for 2023. As a result, the following number of PSUs were outstanding as of December 31, 2023 but were forfeited on February 16, 2024 based on our performance for 2023: 14,592 of these PSUs for Ms. Viggiano, 45,860 of these PSUs for Mr. Shipchandler, and 20,846 of these PSUs for Mr. Wagner. In connection with the termination of Mr. Lawson’s employment as of January 12, 2024, all unvested PSUs held by Mr. Lawson as of that date were forfeited to us. (10) (11) (12) (13) (14) (15) (16) The RSUs vest as follows: 33% of the RSUs vest in equal quarterly installments between the first and second anniversaries of January 1, 2023, 33% of the RSUs vest in equal quarterly installments between the second and third anniversaries of January 1, 2023, and 34% of the RSUs vest in equal quarterly installments between the third and fourth anniversaries of January 1, 2023. (17) (18) The shares subject to the stock option vest as follows: 33% of the shares subject to the stock option vest in equal quarterly installments between the first and second anniversaries of December 31, 2021, 33% of the shares subject to the stock option vest in equal quarterly installments between the second and third anniversaries of December 31, 2021 and 34% of the shares subject to the stock option vest in equal quarterly installments between the third and fourth anniversaries of December 31, 2021. (19) The RSUs vest as follows: 33% of the RSUs vest in equal quarterly installments between the first and second anniversaries of December 31, 2021, 33% of the RSUs vest in equal quarterly installments between the second and third anniversaries of December 31, 2021 and 34% of the RSUs vest in equal quarterly installments between the third and fourth anniversaries of December 31, 2021. (20) The RSUs vest as follows: 29.17% of the RSUs vest on February 15, 2023 and the remaining RSUs vest quarterly over the next eleven quarters on February 15, May 15, August 15 and November 15, with a final vesting of 2.08% of the RSUs on February 15, 2026. (21) (22) 2024 Proxy Statement Executive Compensation Tables Option Awards Stock Awards Name Jeff Lawson — — 128,309 8,471,120 Aidan Viggiano — — 79,090 5,142,449 Khozema Shipchandler — — 125,869 8,317,305 Elena Donio — — 125,153 7,761,629 Dana Wagner — — 67,853 4,374,418 (1) The aggregate value realized upon the vesting and settlement of the RSUs and PSUs represents the aggregate market price of the shares of our common stock that vested on the date of settlement. 2024 Proxy Statement Executive Compensation Tables 2024 Proxy Statement Executive Compensation Tables 2024 Proxy Statement Executive Compensation Tables Name Payment Elements Jeff Lawson Salary — Continued Benefits — Total 2,584,199 16,617,313 6,009,890 Aidan Viggiano Salary — — Continued Benefits — Performance-Based Cash — — Total 869,886 17,503,242 1,107,095 Salary — — Continued Benefits — Performance-Based Cash — — Total 1,119,886 22,175,906 3,479,398 Dana Wagner Salary — — Continued Benefits — Performance-Based Cash — — Total 608,041 12,869,679 1,581,586 Elena Donio Salary — — Continued Benefits — Performance-Based Cash — — Total 1,019,886 26,348,220 — (1) A “qualifying termination” means a termination other than due to cause, death or disability (or a resignation for good reason) and “not in connection with a change in control” means outside of the change in control period. (2) A “qualifying termination” means a termination other than due to cause, death or disability or a resignation for good reason and “in connection with a change in control” means within the change in control period. Assumes that in connection with the change in control, outstanding equity awards and the 2023 performance-based cash awards would have otherwise been assumed, substituted or continued by the successor entity. (3) Represents the market value of the shares underlying the stock options, RSUs and PSUs as of December 31, 2023, based on the closing price of our common stock, as reported on the NYSE, of $75.87 per share on December 29, 2023 (the last trading day of 2023). 2024 Proxy Statement Executive Compensation Tables (4) See “—Other Compensation Policies and Practices—Death Equity Acceleration Policy” which discusses the treatment of equity awards upon the termination due to death of an employee’s or non-employee director’s employment or other service relationship with us or any of our subsidiaries. (5) Represents 18 months of our Chief Executive Officer’s 2022 annual base salary. (6) Represents 24 months of our Chief Executive Officer’s 2022 annual base salary. (7) Represents 12 months of accelerated vesting for outstanding and unvested time-based equity awards. (8) Represents acceleration of vesting of 100% of the total number of shares underlying outstanding and unvested time-based equity awards, and vesting of PSUs for the 2023 and 2024 performance periods based on the target level of performance. (9) Represents the vesting of outstanding PSUs for the fiscal year 2023 performance period upon a change in control and assumes such PSUs vest at the target level of performance. (10) Represents 18 months of our contribution towards health insurance, based on our actual costs to provide health insurance to the applicable named executive officer immediately prior to termination. (11) Represents 24 months of our contribution towards health insurance, based on our actual costs to provide health insurance to our Chief Executive Officer immediately prior to termination. (12) Represents 12 months of the applicable named executive officer’s 2023 annual base salary as in effect immediately prior to termination. (13) Represents 18 months of the applicable named executive officer’s 2023 annual base salary as in effect immediately prior to termination. (14) Represents 12 months of our contribution toward health insurance, based on our actual costs to provide health insurance to the applicable named executive officer immediately prior to termination. (15) Represents 100% of the cash payment for the applicable named executive officer’s 2023 performance cash award. (16) Represents payments and benefits to which Mr. Shipchandler was entitled as of December 31, 2023 pursuant to the Senior Executive Severance Plan. Following the CEO Transition, Mr. Shipchandler is party to the Amended Chief Executive Officer Severance Plan. 2024 Proxy Statement 2024 Proxy Statement Year (a) (b) (c) (d) (e) (f) (g) (h) (i) 2023 $12,689,130 $16,376,998 $219 ($1,015) $533.0 2022 $49,377,469 $29,982,991 $139 ($1,256) 2021 $14,625,745 $14,523,754 $268 $194 2020 $13,786,872 $121,274,654 $74,018,467 $344 $144 (1) Jeff Lawson served as our PEO for the entirety of 2023, 2022, 2021 and 2020. The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Lawson for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Executive Compensation Tables—Summary Compensation Table.” (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Lawson, as computed in accordance with Item 402(v) of Regulation S-K. The company has not paid dividends historically and does not sponsor any pension arrangements; thus no adjustments are made for these items. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Lawson during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Lawson’s total compensation for 2023 to determine the compensation actually paid: Year 2023 $76,859 — $2,416,839 $2,493,698 (a) The reported value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for 2023. 2024 Proxy Statement Pay Versus Performance (b) The equity award adjustments for 2023 include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in 2023 that are outstanding and unvested as of the end of 2023; (ii) the amount of change as of the end of 2023 (from the end of 2022) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of 2023; (iii) for awards that are granted and vest in 2023, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in 2023, the amount equal to the change as of the vesting date (from the end of 2022) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during 2023, a deduction for the amount equal to the fair value at the end of 2022; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in 2023 prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for 2023. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: Year 2023 — ($132,725) — $2,549,564 — — $2,416,839 (3) The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group (other than Mr. Lawson) in the “Total” column of the Summary Compensation Table in each applicable year. Our NEOs included in this calculation for each year are: (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (other than Mr. Lawson), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (other than Mr. Lawson) during the applicable year. The company has not paid dividends historically and does not sponsor any pension arrangements; thus no adjustments are made for these items. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (other than Mr. Lawson) for 2023 to determine the compensation actually paid, using the same methodology described above in Note 2: Year 2023 $12,689,130 ($9,243,364) $12,931,233 $16,376,998 (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows: Year 2023 $7,294,635 $1,813,018 $2,945,681 $877,898 — — $12,931,233 (5) TSR is determined based on the value of an initial fixed investment of $100 in our Class A common stock on December 31, 2019, assuming the reinvestment of any dividends. (6) The peer group used for this purpose is the following published industry index: S&P 500 Information Technology Index, which is an industry index reported in our most recent Annual Report on Form 10-K. (7) The dollar amounts reported represent the amount of net income reflected in our audited financial statements for the applicable year. 2024 Proxy Statement Pay Versus Performance (8) Non-GAAP income from operations is a non-GAAP financial measure. Refer to Appendix B for its definition. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that non-GAAP income from operations is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the company to link compensation actually paid to our NEOs, for the most recently completed fiscal year, to company performance. 
2024 Proxy Statement Plan Category 213,957 $42.97 — Total 20,478,399 $71.13 28,410,961 (1) Includes the following plans: our 2008 Plan, 2016 Plan, and our ESPP. We no longer make grants subject to our 2008 Plan. (2) Consists of stock options, RSUs, PSUs and DSUs. The number of PSUs included in this amount for the 2023 and 2024 performance periods reflects the number of shares that would be earned assuming 100% of target level performance. However, in February 2024, upon certification by the compensation committee of performance for the 2023 performance period, no shares were earned, and the actual number of shares that will be issued for the 2024 performance period depends on the performance over the 2024 performance period. (3) Excludes shares issuable upon vesting of outstanding RSUs, PSUs and DSUs as of December 31, 2023, since they have no exercise price. (4) As of December 31, 2023, a total of 19,869,260 shares of our common stock were reserved for issuance pursuant to the 2016 Plan. This number includes 3,783,548 shares of our common stock reserved and available for issuance under the SendGrid 2009 Plan, the SendGrid 2012 Plan and the SendGrid 2017 Plan that we assumed, which were approved by the stockholders of SendGrid, but not by a separate vote of our stockholders; such shares became available for issuance under our 2016 Plan, but awards using such shares may not be granted to individuals who were employed, immediately prior to the acquisition, by us or our subsidiaries. The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase each January 1, beginning on January 1, 2017, by 5% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee. As of December 31, 2023, a total of 8,541,701 shares of our common stock were available for future issuance pursuant to the ESPP, including shares of our common stock subject to purchase during the current purchase period as of such date, which commenced on November 16, 2023 (the exact number of which will not be known until the purchase date on May 15, 2024). The ESPP provides that the number of shares reserved and available for issuance under the ESPP will automatically increase each January 1, beginning on January 1, 2017, by the lesser of 1,800,000 shares of our common stock, 1% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee. (5) Includes shares of our common stock to be issued upon outstanding stock option and RSU awards under the following plans, which awards were assumed in connection with our acquisitions of SendGrid, Segment.io, Inc. (“Segment”) and Zipwhip Inc. (“Zipwhip”): SendGrid’s Amended and Restated 2009 Equity Incentive Plan, Amended and Restated 2012 Equity Incentive Plan, and Amended and Restated 2017 Equity Incentive Plan; Segment’s Fifth Amended and Restated 2013 Stock Option and Grant Plan; and Zipwhip’s 2008 Stock Plan and 2018 Equity Incentive Plan. No further grants may be made under any of these plans. 2024 Proxy Statement Shares of Common Stock Beneficially Owned Name of Beneficial Owner # % Named Executive Officers and Directors: 189,507 * * * 6,931,219 3.9% * Charles Bell — — 533,113 * 9,451 * 26,484 * Jeffrey Immelt 27,231 * Deval Patrick 2,058 * 33,612 * 2024 Proxy Statement Security Ownership of Certain Beneficial Owners and Management Shares of Common Stock Beneficially Owned Name of Beneficial Owner # % Andrew Stafman — — Miyuki Suzuki 8,250 * 5% Stockholders: 17,809,500 10.0% 10,512,625 5.9% * Represents less than 1%. (1) Consists of (i) 90,832 shares of Class A common stock held by Mr. Shipchandler and (ii) 98,675 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2024. (2) Consists of (i) 35,307 shares of Class A common stock held by Ms. Viggiano, (ii) 5,768 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2024, and (iii) 3,892 shares of Class A common stock issuable upon the settlement of RSUs that are releasable within 60 days of March 31, 2024. (3) Consists of (i) 46,141 shares of Class A common stock held by Mr. Wagner and (ii) 3,956 shares of Class A common stock issuable upon the settlement of RSUs that are releasable within 60 days of March 31, 2024. (4) Consists of (i) 4,964,772 shares of Class A common stock held by Mr. Lawson and Erica Freeman Lawson, as trustees of the Lawson Revocable Trust dated 10/2/11, (ii) 1,022,705 shares of Class A common stock held by J.P. Morgan Trust Company, as trustee of the Lawson 2014 Irrevocable Trust dated 12/29/2014, and (iii) 943,742 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2024. (5) Consists of (i) 125,604 shares of Class A common stock held by Ms. Donio and (ii) 73,126 shares of Class A common stock subject to outstanding options that are exercisable within 60 days of March 31, 2024. (6) Consists of (i) 25,853 shares of Class A common stock held by Mr. Deeter and (ii) 507,260 shares of Class A common stock held by Mr. Deeter and Allison K. Deeter, as trustees of the Deeter Family Trust dated 07/28/2000. (7) Consists of 9,451 shares of Class A Common stock held by Ms. Dubinsky, as trustee of the Shustek-Dubinsky Family Trust. (8) Consists of 26,484 shares of Class A common stock held by Mr. Epstein, as trustee of the Epstein Family Revocable Trust. (9) Consists of 33,612 shares of Class A common stock held of record by Ms. Rottenberg, as trustee of the Erika Rottenberg Revocable Trust dated 1/28/2016. (10) Consists of (i) 6,925,560 shares of Class A common stock, (ii) 1,121,311 shares of Class A common stock subject to outstanding stock options that are exercisable within 60 days of March 31, 2024, and (iii) 7,848 shares of Class A common stock issuable upon the settlement of RSUs that are releasable within 60 days of March 31, 2024. (11) Based on information reported by The Vanguard Group on Schedule 13G/A filed with the SEC on February 13, 2024. Of the shares of Class A common stock beneficially owned, The Vanguard Group reported that it has sole dispositive power with respect to 17,423,882 shares, shared dispositive power with respect to 385,618 shares and shared voting power with respect to 117,782 shares. The Vanguard Group listed its address as 100 Vanguard Blvd., Malvern, Pennsylvania 19355. (12) Based on information reported by BlackRock, Inc. on Schedule 13G/A filed with the SEC on January 29, 2024. Of the shares of Class A common stock beneficially owned, Blackrock, Inc. reported that it has sole dispositive power with respect to 10,512,625 shares and sole voting power with respect to 9,486,684 shares. BlackRock, Inc. listed its address as 50 Hudson Yards, New York, New York 10001. 2024 Proxy Statement •2017;•ratifyapprove, on a non-binding advisory basis, the compensation of our 2016 Stock Optionnamed executive officers; Incentive Plan to preserve our ability to receive corporate income tax deductions that may become available pursuant to Section 162(m) of the Code; and•any•"FOR" the election of Richard Dalzell and Erika Rottenberg as Class I directors;•"FOR" the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017; and•"FOR" the ratification of our 2016 Stock Option and Incentive Plan.• • • • • either class of our Class A common stock as of the close of business on April 17, 2017,15, 2024, the record date for the Annual Meeting, may vote at the Annual Meeting. As of the record date, there were 61,580,643174,630,253 shares of our Class A common stock outstanding and there were 28,653,832 shares ofour Class B common stock outstanding. Our Class A common stock and Class B common stock will vote as a single class on all matters described in this proxy statement for which your vote is being solicited. Stockholders are not permitted to cumulate votes with respect to the election of directors. Each share of Class A common stock is entitled to one vote on each proposal and each share of Class B common stock is entitled to 10 votes on each proposal. Our Class A common stock and Class B common stock are collectively referred to in this proxy statement as our "common stock."2024 Proxy Statement liveby Internet at the Annual Meeting. Throughout this proxy statement, we refer to these registered stockholders as "stockholders“stockholders of record.""street“street name,"” and the Notice was forwarded to you by your broker or nominee, who is considered the stockholder of record with respect to those shares. 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 attend the Annual Meeting. However, since a beneficial owner is not the stockholder of record, you may not vote your shares of our common stock liveby Internet at the Annual Meeting unless you follow your broker'sbroker’s procedures for obtaining a legal proxy. 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. Throughout this proxy statement, we refer to stockholders who hold their shares through a broker, bank or other nominee as "street“street name stockholders."•Proposal No. 1: The election of directors requires• • • • • 2024 Proxy Statement stock present in person or by proxy at the Annual Meeting and entitled to vote thereon to be approved. "Plurality" means that the nominees who receive the largest number of votes cast "For" such nominees are elected as directors. As a result, any shares not voted "For" a particular nominee (whether as a result of stockholder abstention or a broker non-vote) will not be counted in such nominee's favor and will have no effect on the outcome of the election.stock. You may vote "For"“For,” “Against” or "Withhold" on each of the nominees for election as a director.•Proposal No. 2: The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017 requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person or by proxy at the Annual Meeting“Abstain” with respect to this proposal. Abstentions and entitled to vote thereon to be approved. Abstentionsbroker non-votes are considered shares present and entitled to vote on this proposal, and thus, will have the same effect as a vote "Against"“Against” this proposal. Broker non-votes will have no effect on the outcome of this proposal.•Proposal No. 3. Under our amended and restated certificate of incorporation and amended and restated bylaws, the ratification of our 2016 Stock Option and Incentive Plan, or 2016 Plan, to preserve our ability to receive corporate income tax deductions that may become available pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, or Code, requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Abstentions are considered shares present and entitled to vote on this proposal, and thus, will have the same effect as a vote "Against" this proposal. Broker non-votes will have no effect on the outcome of this proposal. In addition, the rules of the New York Stock Exchangerequire that an additional threshold be met for this proposal to be approved: votes for this proposal must be at least a majority of all of the votes cast on this proposal. The New York Stock Exchange treats abstentions both as shares entitled to vote and as votes cast, but does not treat broker non-votes as votes cast. Because this proposal is a non-routine matter under the rules of the New York Stock Exchange, brokerage firms, banks and other nominees who hold shares on behalf of clients in "street name" are not permitted to vote the shares if the client does not provide instructions.amended and restated bylaws and Delaware law. The presence, in personvirtually or by proxy, of the holders of a majority of the voting power 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, withholdwithheld votes and broker non-votes are counted as shares present and entitled to vote for purposes of determining a quorum.•11:8:59 p.m. EasternPacific Time on June 11, 20175, 2024 (have your Notice or proxy card in hand when you visit the website);• toll-free telephone at 1-800-690-6903, until 11:8:59 p.m. EasternPacific Time on June 11, 20175, 2024 (have your Notice or proxy card in hand when you call);•mailingreturning your proxy card by mail prior to 8:59 p.m. Pacific Time on June 5, 2024 (if you received printed proxy materials); or•written ballot atInternet during the Annual Meeting.telephoneInternet or on the Internet.telephone. However, the availability of telephoneInternet and Internettelephone 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 personby Internet at the Annual Meeting unless you obtain a legal proxy from your broker, bank or other nominee.•••Twilio Inc., 375 Beale101 Spear Street, Suite 300,Fifth Floor, San Francisco, California 94105; or•2024 Proxy Statement dobe able to attend the Annual Meeting in person?plan to attend the meeting, you must beare a holder of Company sharesstockholder as of the record date of April 17, 2017. On15, 2024 and wish to virtually attend the day of the meeting, each stockholder will be required to present the following:•valid government photo identification, such as a driver's license or passport; and•street name stockholders holding their shares through a broker, bank, trustee, or other nomineeAnnual Meeting, you will need to bring proofthe 16-digit control number located on your Notice of beneficial ownership asInternet Availability of April 17, 2017, the record date, such as their most recent account statement reflecting their stock ownership prior to April 17, 2017,Proxy Materials or on your proxy card (if you receive a printed copy of the voting instruction card providedproxy materials). If you are a street name stockholder, you may not vote your shares of our common stock by their broker, bank, trustee, or other nominee, or similar evidence of ownership. Seating will begin at 8:00 a.m. and the meeting will begin at 9:00 a.m. Please note that seating is limited and you will be permitted entry on a first-come, first-served basis. Use of cameras, recording devices, computers and other personal electronic devices will not be permittedInternet at the Annual Meeting as all photography and video are prohibited atunless you follow your broker’s procedures for obtaining a legal proxy. Instructions on how to participate in the Annual Meeting. AllowMeeting are also posted online at www.proxyvote.com. The webcast will start at 8:30 a.m. Pacific Time on June 6, 2024. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:15 a.m. Pacific Time, and you should allow ample time for check-in. Parking is limited. Please consider using public transportation. For security reasons, large bags and packages will not be allowed at the Annual Meeting. Persons may be subjectcheck-in procedures.search.Jeff Lawson, Lee KirkpatrickKhozema Shipchandler, our Chief Executive Officer and Karyn SmithDirector, and Dana Wagner, our Chief Legal Officer, Chief Compliance Officer and Corporate 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 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.("SEC"(“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 24, 201726, 2024 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 cost of our annual meetings of stockholders. 2024 Proxy Statement Table of ContentsTABLE OF CONTENTS "routine"“routine” matter: the proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017.2024. Your broker will not have discretion to vote your shares on any other proposals, which are "non-routine"“non-routine” matters, absent direction from you."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 promptly deliver promptly a separate copy of the Notice and, if applicable, our proxy materials, to any stockholder of record 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 of record 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:TwilioBroadridge Financial Solutions, Inc.Attention: Investor Relations375 Beale Street, Suite 300San Francisco, California 941052024 Proxy Statement Table of ContentsTABLE OF CONTENTS year'syear’s annual meeting of stockholders or to nominate individuals to serve as directors?year'syear’s annual meeting of stockholders by submitting their proposals in writing to our Corporate Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for the 20182025 annual meeting of stockholders, our Corporate Secretary must receive the written proposal at our principal executive offices not later than March 10, 2018.December 27, 2024. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to:375 BealeSuite 300
Fifth Floor amended and restated bylaws 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 bylaws provide that the only business that may be conducted at an annual meeting of stockholders is business that is (i) specified inbrought pursuant to our proxy materials with respect to such annual meeting, (ii) otherwise properly brought before such annual meeting by or at the direction of our board of directors or (iii) properly brought before such annual meeting by a stockholder of record entitled to vote at such annual meeting who has delivered timely written notice to our Corporate Secretary, which notice must contain the information specified in our amended and restated bylaws. To be timely for the 20182025 annual meeting of stockholders, our Corporate Secretary must receive the written notice at our principal executive offices:•the close of business on February 8, 2018;10, 2025; and•the close of business on March 10, 2018.20182025 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary of the Annual Meeting, then, for notice by the stockholder to be timely, it must be received by the secretaryCorporate Secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting, or the tenth10th day following the day on which public announcement of the date of such annual meeting is first made.nominee'snominee’s name and qualifications for membership on our board of directors and should be directed to our General Counsel or legal departmentChief Legal Officer at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see the section titled "Board“Board of Directors and Corporate Governance—Stockholder Recommendations and Nominations to the Board of Directors."” amended and restated bylaws 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. In addition, the stockholder must give timely notice to our Corporate Secretary in accordance with our amended and restated bylaws, which, in general, require that the notice be received by our Corporate Secretary within the time periods described above under the section titled "Stockholder Proposals"“Stockholder Proposals” for stockholder proposals that are not intended to be included in a proxy statement. 2024 Proxy Statement amended and restated bylaws is available via the SEC'sSEC’s website at http://www.sec.gov. You may also contact our Corporate Secretary at the address set forth above for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.2024 Proxy Statement BOARD OF DIRECTORS AND CORPORATE GOVERNANCE Our business and affairs are managed under the direction of our board of directors. Our board of directors consists of seven directors, all of whom, other than Messrs. Lawson and Deeter, qualify as "independent" under the listing standards of the New York Stock Exchange. Our board of directors is divided into three staggered classes of directors. At each annual meeting of stockholders, a class of directors will be 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, 2017, and certain other information for each of the members of our board of directors with terms expiring at the Annual Meeting (who, with the exception of Mr. Raney, are also nominees for election as a director at the Annual Meeting) and for each of the continuing members of our board of directors: Class Age Position Director
Since Current
Term
Expires Expiration
of Term
For Which
Nominated I 60 Director 2014 2017 2020 I 47 Director 2013 2017 — I 54 Director 2016 2017 2020
II 39 Co-Founder, Chief Executive Officer and Chairperson 2008 2018 — II 42 Director 2010 2018 — III 47 Director 2016 2019 — III 50 Director 2012 2019 —
†On April 12, 2017, Mr. Raney notified us of his decision not to stand for reelection to our board of directors at the Annual Meeting.(1)Member of the nominating and corporate governance committee(2)Member of the audit committee(3)Member of the compensation committee
Nominees for Director
Richard Dalzell. Mr. Dalzell has served as a member of our board of directors since 2014. From 1997 to 2007, Mr. Dalzell served in several roles at Amazon.com, Inc., including as Senior Vice President of Worldwide Architecture and Platform Software and Chief Information Officer. From 1990 to 1997, Mr. Dalzell served in several roles at Wal-Mart Stores, Inc., a discount retailer, including as Vice President of the Information Systems Division. Mr. Dalzell currently serves on the board of directors of Intuit Inc., a software company. Mr. Dalzell previously served on the board of directors of AOL Inc. Mr. Dalzell holds a B.S. in Engineering from the United States Military Academy.
Mr. Dalzell was selected to serve on our board of directors because of his experience as an executive and director of technology companies.
Erika Rottenberg. Ms. Rottenberg has served as a member of our board of directors since 2016. From 2008 to 2014, Ms. Rottenberg served as Vice President, General Counsel and Secretary at LinkedIn Corporation, a professional networking company. From 2004 to 2008, Ms. Rottenberg served as Senior Vice President, General Counsel and Secretary at SumTotal Systems, Inc., a talent management enterprise software company. From 1996 to 2002, Ms. Rottenberg served in several roles at Creative Labs, Inc., a computer peripheral and digital entertainment product company, including as
Table of ContentsTABLE OF CONTENTS
Vice President, Strategic Development and General Counsel. From 1993 to 1996, Ms. Rottenberg served as an attorney at Cooley LLP, a law firm. Ms. Rottenberg currently serves on the board of directors of Wix.com Ltd., a cloud-based web development platform. Ms. Rottenberg holds a B.S. in Special and Elementary Education from the State University of New York at Geneseo and a J.D. from the University of California, Berkeley, Boalt Hall School of Law.
Ms. Rottenberg was selected to serve on our board of directors because of her experience as a senior executive of technology companies and as a director of publicly-held technology companies.
Continuing Directors
Jeff Lawson. See the section titled "Executive Officers" for Mr. Lawson's biographical information.
Byron Deeter. Mr. Deeter has served as a member of our board of directors since 2010. Since 2005, Mr. Deeter has served as a partner of Bessemer Venture Partners, a venture capital firm. From 2004 to 2005, Mr. Deeter served as a director at International Business Machines Corporation, or IBM, a technology and consulting company. From 2000 to 2004, Mr. Deeter served in several roles, including co-founder, President, Chief Executive Officer and Vice President of Business Development, at Trigo Technologies, Inc., a product information management company, which was acquired by IBM in 2004. From 1998 to 2000, Mr. Deeter served as an Associate at TA Associates, a private equity firm. From 1996 to 1998, Mr. Deeter served as an Analyst at McKinsey & Company, a business consulting firm. Mr. Deeter previously served on the board of directors of Cornerstone OnDemand, Inc., a talent management software company and Instructure, Inc., an educational technology company. Mr. Deeter holds a B.A. in Political Economy from the University of California, Berkeley.
Mr. Deeter was selected to serve on our board of directors because of his experience in the venture capital industry and as a director of publicly-held and privately-held technology companies.
Elena Donio. Ms. Donio has served as a member of our board of directors since 2016. Since 2016, Ms. Donio has served as Chief Executive Officer at Axiom Global, a leading provider of tech-enabled legal services. From 1998 to 2016, Ms. Donio served in several roles, including as President, Executive Vice President and General Manager of Worldwide Small and Mid-Sized Businesses, at Concur Technologies, Inc., a business travel and expense management software company, which was acquired by SAP SE in 2014. From 1995 to 1997, Ms. Donio served as Senior Manager at Deloitte Consulting LLP, a professional services firm. From 1992 to 1995, Ms. Donio served as Senior Consultant at Andersen Consulting LLP, a business consulting firm. Ms. Donio holds a B.A. in Economics from the University of California, San Diego.
Ms. Donio was selected to serve on our board of directors because of her experience as a senior executive of a technology company and her industry experience.
James McGeever. Mr. McGeever has served as a member of our board of directors since 2012. Since 2016, Mr. McGeever has served as Executive Vice President at Oracle Corp., an enterprise software company. From 2000 to 2016, Mr. McGeever served in several roles, including Chief Financial Officer, Chief Operating Officer and President, at NetSuite Inc., a software company, which was acquired by Oracle in 2016. From 1998 to 2000, Mr. McGeever served as Controller for Clontech Laboratories, Inc., a biotechnology company, which was acquired by Becton, Dickinson and Company in 1999. From 1994 to 1998, Mr. McGeever served as Corporate Controller for Photon Dynamics, Inc., a capital equipment maker. Mr. McGeever holds a B.Sc. from the London School of Economics.
Mr. McGeever was selected to serve on our board of directors because of his operating and management experience with technology companies, including in the areas of finance and accounting.
Non-Continuing Directors
Scott Raney. Mr. Raney has served as a member of our board of directors since 2013. Since 2000, Mr. Raney has served as a partner of Redpoint Ventures, a venture capital firm. Prior to joining Redpoint, Mr. Raney served as Senior Manager of New Products of NorthPoint Communications Group Inc., a data transmission company. Prior to Northpoint, Mr. Raney served as a Consultant for Bain & Company, a business consulting firm. Earlier in his career, Mr. Raney served as Director of Engineering for VideoPort Technologies, Inc., a developer of videoconferencing hardware, and as a member of the Advanced Technology Group of Accenture, a business consulting firm. Mr. Raney holds a B.S.E.E. from Duke University and an M.B.A. from the Harvard Business School. On April 12, 2017, Mr. Raney notified us of his decision not to stand for reelection to our board of directors at the Annual Meeting.
Mr. Raney was selected to serve on our board of directors because of his experience in the venture capital industry and as a director of publicly-held and privately-held technology companies.
Director Independence
Our Class A common stock is listed on the New York Stock Exchange. Under the listing standards of the New York Stock Exchange, independent directors must comprise a majority of a listed company's board of directors. In addition, the listing standards of the New York Stock Exchange 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 New York Stock Exchange, a director will only qualify as an "independent director" if, in the opinion of that listed company's board of directors, that director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Audit committee members must also satisfy the additional independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the listing standards of the New York Stock Exchange. Compensation committee members must also satisfy the additional independence criteria set forth in Rule 10C-1 under the Exchange Act and the listing standards of the New York Stock Exchange.
Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Messrs. Dalzell, McGeever and Raney and Mses. Donio and Rottenberg do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is "independent" as that term is defined under the listing standards of the New York Stock Exchange. In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section titled "Certain
Board Leadership Structure
Mr. Lawson currently serves as both the Chairperson of our board of directors and as our Chief Executive Officer. Our non-management directors bring experience, oversight and expertise from outside of our Company, while Mr. Lawson brings Company-specific experience and expertise. As our co-founder, Mr. Lawson is best positioned to identify strategic priorities, lead critical discussion and execute our business plans. We believe that the structure of our board of directors and committees of our board of directors provides effective independent oversight of management while Mr. Lawson's
combined role enables strong leadership, creates clear accountability and enhances our ability to communicate our message and strategy clearly and consistently to stockholders.
We do not have a lead independent director. Rather, our independent directors, who are the sole members of each of our board committees, provide strong independent leadership for each of these committees. Our independent directors meet in executive session after each meeting of the board of directors. At each such meeting, the presiding director for each executive session of our board of directors rotates among each member of our independent directors.
Board Meetings and Committees
Our board of directors may establish the authorized number of directors from time to time by resolution. Our board of directors currently consists of seven members. On April 12, 2017, Mr. Raney notified us of his decision not to stand for reelection to our board of directors at the Annual Meeting.
During our fiscal year ended December 31, 2016, our board of directors held nine meetings (including regularly scheduled and special meetings), and each director attended at 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 had 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, except Mr. McGeever, who attended 60% of such meetings.
Although our Corporate Governance Guidelines 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.
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 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. McGeever and Raney and Ms. Rottenberg, with Mr. McGeever serving as Chairperson. Mr. Raney, who is not standing for reelection to our board of directors at the Annual Meeting, will cease being a member of our board of directors effective immediately after the Annual Meeting. Each member of our audit committee meets the requirements for independence under the listing standards of the New York Stock Exchange and SEC rules and regulations. Each member of our audit committee also meets the financial literacy and sophistication requirements of the listing standards of the New York Stock Exchange. In addition, our board of directors has determined that Mr. McGeever is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended, or the Securities Act. Our audit committee, among other things:
•selects a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;•helps to ensure the independence and performance of the independent registered public accounting firm;•discusses the scope and results of the audit with the independent registered public accounting firm, and reviews, with management and the independent registered public accounting firm, our interim and year-end results of operations;•develops procedures for employees to submit concerns anonymously about questionable accounting or audit matters;
•reviews our policies on risk assessment and risk management;•reviews related party transactions; and•approves or, as required, pre-approves, all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm.
Our audit committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. A copy of the charter of our audit committee is available on our website at https://investors.twilio.com/.
Our audit committee held five meetings during fiscal year 2016.
Compensation Committee
Our compensation committee consists of Mses. Donio and Rottenberg and Mr. McGeever, with Ms. Donio serving as Chairperson. Each member of our compensation committee meets the requirements for independence under the listing standards of the New York Stock Exchange and SEC rules and regulations. Each member of our compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act, or Rule 16b-3, and an outside director, as defined pursuant to Section 162(m) of the Code, or Section 162(m). Our compensation committee, among other things:
•reviews, approves and determines, or makes recommendations to our board of directors regarding, the compensation of our executive officers;•administers our stock and equity compensation plans;•reviews and approves, or makes recommendations to our board of directors, regarding incentive compensation and equity compensation plans; and•establishes and reviews general policies relating to compensation and benefits of our employees.
Our compensation committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. A copy of the charter of our compensation committee is available on our website https://investors.twilio.com/.
Pursuant to our 2016 Plan, our compensation committee may delegate to our Chief Executive Officer, or a committee comprised of the Chief Executive Officer and one or more other officer of the Company, all or part of its authority to approve certain grants of equity awards to certain individuals, subject to certain limitations including the amount of awards that can be granted pursuant to such delegated authority. To date, our compensation committee has not delegated any of its authority.
Our compensation committee held eight meetings during fiscal year 2016.
Nominating and Corporate Governance Committee
Our nominating and governance committee consists of Ms. Rottenberg and Mr. Dalzell, with Ms. Rottenberg serving as Chairperson. Each member of our nominating and governance committee meets the requirements for independence under the listing standards of the New York Stock Exchange and SEC rules and regulations. Our nominating and corporate governance committee, among other things:
•identifies, evaluates and selects, or makes recommendations to our board of directors regarding, nominees for election to our board of directors and its committees;•considers and makes recommendations to our board of directors regarding the composition of our board of directors and its committees;
•reviews and assesses the adequacy of our corporate governance guidelines and recommends any proposed changes to our board of directors; and•evaluates the performance of our board of directors and of individual directors.
Our nominating and corporate governance committee operates under a written charter that satisfies the applicable listing standards of the New York Stock Exchange. A copy of the charter of our nominating and corporate governance committee is available on our website at https://investors.twilio.com/.
Our nominating and corporate governance committee held one meeting during fiscal year 2016.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee is or has been an officer or employee of our Company. None of our executive officers currently serves, or in the past 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 board of directors or compensation committee. See the section titled "Certain Relationships and Related Party Transactions" for information about related party transactions involving members of our compensation committee or their affiliates.
Identifying and Evaluating Director Nominees
The board of directors has delegated to the nominating and corporate governance committee the responsibility of identifying suitable candidates for nomination to the board of directors (including candidates to fill any vacancies that may occur) and assessing their qualifications in light of the policies and principles in these corporate governance guidelines and the committee's charter. The nominating and corporate governance committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating and corporate governance committee deems to be appropriate in the evaluation process. The nominating and corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the board of directors. Based on the results of the evaluation process, the nominating and corporate governance committee recommends candidates for the board of director's approval as director nominees for election to the board of directors.
Minimum Qualifications
Our nominating and corporate governance committee uses a variety of methods for identifying and evaluating director nominees and will consider all facts and circumstances that it deems appropriate or advisable. In its identification and evaluation of director candidates, our nominating and corporate governance committee will consider the current size and composition of our board of directors and the needs of our board of directors and the respective committees of our board of directors. Some of the qualifications that our nominating and corporate governance committee considers include, without limitation, issues of character, ethics, integrity, judgment, diversity of experience, independence, skills, education, expertise, business acumen, length of service, understanding of our business and industry, potential conflicts of interest and other commitments. Nominees must also have proven achievement and competence in their field, the ability to offer advice and guidance to our management team, the ability to make significant contributions to our success, and an understanding of the fiduciary responsibilities that are required of a director. Director candidates must have sufficient time available in the judgment of our nominating and corporate governance committee to perform all board of director and 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.
Although our board of directors does not maintain a specific policy with respect to board diversity, our board of directors believes that our board of directors should be a diverse body, and our nominating and corporate governance committee considers a broad range of backgrounds and experiences. In making determinations regarding nominations of directors, our nominating and corporate governance committee may take into account the benefits of diverse viewpoints. Our nominating and corporate governance committee also considers these and other factors as it oversees the annual board of directors and committee evaluations. After completing its review and evaluation of director candidates, our nominating and corporate governance committee recommends to our full board of directors the director nominees for selection.
Stockholder Recommendations and Nominations to the Board of Directors
Stockholders may submit recommendations for director candidates to the nominating and corporate governance committee by sending the individual's name and qualifications to our General Counsel at Twilio Inc., 375 Beale Street, Suite 300, San Francisco, CA 94105, who will forward all recommendations to the nominating and corporate governance committee. The nominating and corporate governance committee will evaluate any candidates recommended by stockholders against the same criteria and pursuant to the same policies and procedures applicable to the evaluation of candidates proposed by directors or management.
Stockholder and Other Interested Party Communications
The board of directors provides to every stockholder and any other interested parties the ability to communicate with the board of directors, as a whole, and with individual directors on the board of directors through an established process for stockholder communication. For a stockholder communication directed to the board of directors as a whole, stockholders and other interested parties may send such communication to our General Counsel via U.S. Mail or Expedited Delivery Service to: Twilio Inc., 375 Beale Street, Suite 300, San Francisco, CA 94105, Attn: Board of Directors c/o General Counsel.
For a stockholder or other interested party communication directed to an individual director in his or her capacity as a member of the board of directors, stockholders and other interested parties may send such communication to the attention of the individual director via U.S. Mail or Expedited Delivery Service to: Twilio Inc., 375 Beale Street, Suite 300, San Francisco, CA 94105, Attn: [Name of Individual Director].
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 Chairperson of our board of directors.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
Our board of directors has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. In addition, our board of directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors including our Chief Executive Officer, Chief Financial Officer, and other executive and senior financial officers. A copy of our Corporate Governance Guidelines and Code of Business Conduct and Ethics is available on our Internet website at https://investors.twilio.com and may also be obtained without
charge by contacting our Corporate Secretary at Twilio Inc., 375 Beale Street, Suite 300, San Francisco, CA 94105. We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website or in filings under the Exchange Act, as required by the applicable rules and exchange requirements. During fiscal year 2016, no waivers were granted from any provision of the code of business conduct and ethics.
Risk 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 and implemented processes to manage risk in our operations. Management is responsible for the day-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.
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. Our audit committee assists our board of directors in fulfilling its oversight responsibilities with respect to risk management in the areas of internal control over financial reporting and disclosure controls and procedures, legal and regulatory compliance, and discusses with management and the independent auditor guidelines and policies with respect to risk assessment and risk management. Our audit committee also reviews our major financial risk exposures and the steps management has taken to monitor and control these exposures. Our audit committee also monitors certain key risks on a regular basis throughout the fiscal year, such as risk associated with internal control over financial reporting and liquidity risk. Our nominating and corporate governance committee assists our board of directors in fulfilling its oversight responsibilities with respect to the management of risk associated with board organization, membership and structure, and corporate governance. Our compensation committee assesses risks created by the incentives inherent in our compensation policies. Finally, 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.
Non-Employee Director Compensation
In May 2016, our board of directors, upon the recommendation of our compensation committee, adopted our Non-Employee Director Compensation Policy for the compensation of our non-employee
directors. Our non-employee directors receive compensation in the form of the following cash retainers and equity awards:
Annual Retainer for Board Membership | ||||
Annual service on the board of directors | $ | 30,000 | ||
Additional Annual Retainer for Committee Membership | ||||
Annual service as member of the audit committee (other than chair) | $ | 9,000 | ||
Annual service as chair of the audit committee | $ | 18,000 | ||
Annual service as member of the compensation committee (other than chair) | $ | 5,000 | ||
Annual service as chair of the compensation committee | $ | 10,000 | ||
Annual service as member of the nominating and corporate governance committee (other than chair) | $ | 3,500 | ||
Annual service as chair of the nominating and corporate governance committee | $ | 7,000 |
Our policy during fiscal year 2016 provided that, upon initial election to our board of directors, each non-employee director would be granted restricted stock units ("RSUs") having a value of $300,000 (the "Initial Grant"). In addition, on the date of each of our annual meetings of stockholders, each non-employee director who had been a member of the board of directors for at least six months and would continue as a member of our board of directors would be granted an annual award of RSUs having a value of $150,000 (the "Annual Grant"). The number of the RSUs for the Initial Grant and the Annual Grant were determined by dividing such applicable values by the fair market value of one share of the Company's Class A common stock on the date of grant. The Initial Grant vests in equal annual installments over three years, subject to continued service as a director through the applicable vesting dates. The Annual Grant vests in full on the earlier of (i) the anniversary of the grant date or (ii) our next annual meeting of stockholders, subject to continued service as a director through the applicable vesting date. Such awards are subject to full accelerated vesting upon a "sale event," as defined in the 2016 Plan.
In 2017, we amended and restated our Non-Employee Director Compensation Policy to provide the same cash retainers and equity awards above, except that the Annual Grant will be made on the date of each of our annual meeting of stockholders to each non-employee director who will continue as a member of the board of directors following such annual meeting of stockholders, instead of only to each continuing non-employee director who had been a member of our board of directors for at least six months. In addition, the amended and restated Non-Employee Director Compensation Policy provides that the number of RSUs for the Initial Grant and the Annual Grant will be determined by dividing the applicable values by the average closing market price on the New York Stock Exchange (or such other market on which the Company's Class A common stock is then principally listed) of one share of the Company's Class A common stock over the trailing 30-day period ending on the last day of the month immediately prior to the month of the grant date. The amended and restated Non-Employee Director Compensation Policy also provides that, pursuant to the 2016 Plan, the aggregate amount of compensation, including both equity compensation and cash compensation, paid to any non-employee director in a calendar year will not exceed $750,000 (or such other limit as may be set forth in the 2016 Plan or any similar provision of a successor plan).
Employee directors will receive no additional compensation for their service as a director.
We will reimburse all reasonable out-of-pocket expenses incurred by directors for their attendance at meetings of our board of directors or any committee thereof.
Non-Employee Director Compensation Table
The following table provides information regarding the total compensation that was earned by or paid to each of our non-employee directors in fiscal year 2016. Mr. Lawson, who is our Chief Executive
Officer, did not receive any additional compensation for his service as a director. The compensation received by Mr. Lawson, as a named executive officer of the Company, is presented in "Executive Compensation—Summary Compensation Table".
| Name | Fees earned or paid in cash ($) | Stock awards ($)(1) | Total ($) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Richard Dalzell(2) | 16,750 | — | 16,750 | |||||||
Byron Deeter(3) | 18,500 | — | 18,500 | |||||||
Elena Donio(4) | 20,000 | 300,006 | (4) | 320,006 | ||||||
James McGeever(3) | 26,500 | — | 26,500 | |||||||
Scott Raney(3) | 19,500 | — | 19,500 | |||||||
Erika Rottenberg(5) | 22,000 | 300,001 | (5) | 322,001 | ||||||
(1)The amounts reported represent the aggregate grant date fair values of the RSUs awarded to the directors in the fiscal year ended December 31, 2016, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service-based vesting conditions. The valuation assumptions used in determining such amounts are described in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed on February 22, 2017. The amounts reflect the accounting cost for the RSUs and do not correspond to the actual economic value that may be received by the directors upon vesting or settlement of the RSUs.(2)As of December 31, 2016, Mr. Dalzell held an outstanding option to purchase a total of 150,000 shares of our Class B common stock.(3)As of December 31, 2016, Messrs. Deeter, McGeever and Raney each held no outstanding equity awards.(4)As of December 31, 2016, Ms. Donio held 29,733 RSUs. Of these RSUs, 33% vested on February 4, 2017, and the remaining RSUs vest in eight equal quarterly installments over the next two years, such that all the RSUs will vest in full on February 4, 2019, subject to continued service through each such vesting date.(5)As of December 31, 2016, Ms. Rottenberg held 26,087 RSUs. Of these RSUs, 33% vest on August 15, 2017, and the remaining RSUs vest in eight equal quarterly installments over the next two years, such that all the RSUs will vest in full on August 15, 2019, subject to continued service through each such vesting date.
PROPOSAL NO. 1ELECTION OF DIRECTORS
Our board of directors is currently composed of seven 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, two Class I directors will be elected for a three-year term to succeed the same class 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. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in the control of our Company.
Nominees
Our nominating and corporate governance committee has recommended, and our board of directors has approved, Richard Dalzell and Erika Rottenberg as nominees for election as Class I directors at the Annual Meeting. If elected, each of Mr. Dalzell and Ms. Rottenberg will serve as Class I directors until the 2020 annual meeting of stockholders and until their successors are duly elected and qualified. Each of the nominees is currently a director of our Company. 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 Mr. Dalzell and Ms. Rottenberg. We expect that Mr. Dalzell and Ms. Rottenberg will each 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 or nominee, your broker will leave your shares unvoted on this matter.
Vote Required
The election of directors requires a plurality of the voting power of the shares of our common stock be present in person or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Broker non-votes will have no effect on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE NOMINEES NAMED ABOVE.
PROPOSAL NO. 2RATIFICATION OF APPOINTMENT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has appointed KPMG LLP ("KPMG"), an independent registered public accounting firm, to audit our consolidated financial statements for our fiscal year ending December 31, 2017. During our fiscal year ended December 31, 2016, KPMG served as our independent registered public accounting firm.
Notwithstanding the appointment of KPMG, and even if our stockholders ratify the appointment, our audit committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if our audit committee believes that such a change would be in the best interests of our Company and our stockholders. At the Annual Meeting, our stockholders are being asked to ratify the appointment of KPMG as our independent registered public accounting firm for our fiscal year ending December 31, 2017. Our audit committee is submitting the appointment of KPMG to our stockholders because we value our stockholders' views on our independent registered public accounting firm and as a matter of good corporate governance. Representatives of KPMG 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 KPMG, 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 KPMG for our fiscal years ended December 31, 2015 and 2016.
| | 2015 | 2016 | |||||
|---|---|---|---|---|---|---|---|
| | (In Thousands) | ||||||
Audit Fees(1) | $ | 1,791 | $ | 1,776 | |||
Audit-Related Fees | $ | — | $ | — | |||
Tax Fees(2) | $ | 390 | $ | 129 | |||
All Other Fees | $ | — | $ | — | |||
| | | | | | | | |
Total Fees | $ | 2,181 | $ | 1,905 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(1)Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K and services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years. Fees for fiscal 2016 also consisted of professional services rendered in connection with our Registration Statements on Form S-1 related to the initial public offering and follow-on offering of our Class A common stock completed in June 2016 and October 2016, respectively.(2)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.
Auditor Independence
In our fiscal year ended December 31, 2016, there were no other professional services provided by KPMG, other than those listed above, that would have required our audit committee to consider their compatibility with maintaining the independence of KPMG.
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our audit committee has established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our audit committee is required to pre-approve all audit, internal control-related services and permissible non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the public accountants' independence. All services provided by KPMG for our fiscal years ended December 31, 2015 and 2016 were pre-approved by our audit committee and were compatible with maintaining KPMG's independence.
Vote Required
The ratification of the appointment of KPMG as our independent registered public accounting firm for our fiscal year ending December 31, 2017 requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote against this proposal, and broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
PROPOSAL NO. 3RATIFICATION OF 2016 STOCK OPTION AND INCENTIVE PLAN
Our 2016 Stock Option and Incentive Plan (the "2016 Plan") became effective in 2016 in connection with our initial public offering. The 2016 Plan provides for the grant of awards to our eligible officers, employees, non-employee directors and consultants in the form of stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights.
Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)"), we generally may not deduct for federal income tax purposes compensation paid to certain executive officers to the extent that any of these persons receives more than $1 million in compensation in any single year. Compensation includes both cash compensation and compensation derived from equity awards. The executive officers whose compensation is subject to deduction limitation are those that constitute "covered employees" within the meaning of Section 162(m), which generally includes our Chief Executive Officer and certain of our most highly-compensated officers other than our Chief Financial Officer. However, if compensation qualifies as "performance-based" for Section 162(m) purposes, we may deduct it for federal income tax purposes even if it exceeds $1 million in a single year. Certain awards under the 2016 Plan can be designed to qualify as "performance-based" compensation within the meaning of Section 162(m). Certain awards made to our covered employees under the 2016 Plan that are granted and/or vest prior to our 2020 annual meeting of stockholders should not be subject to the cap on our tax deduction imposed by Section 162(m). However, for awards that are granted and/or become vested under our 2016 Plan to potentially qualify as "performance-based" compensation under Section 162(m) after our 2020 annual meeting of stockholders, our stockholders must approve the material terms, share limits, performance award dollar limit, and performance criteria of the 2016 Plan on or before such annual meeting.
Therefore, our board of directors is seeking stockholder ratification of the 2016 Plan so that certain awards made to covered employees under the 2016 Plan, including stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash-based awards and performance share awards subject to performance-based vesting, will continue to qualify as "performance-based compensation" under Section 162(m) beyond our 2020 annual meeting and therefore be eligible to be exempt from the cap on the Company's tax deduction imposed by Section 162(m).
Because of the fact-based nature of the performance-based compensation exception under Section 162(m), we cannot guarantee that any awards under the 2016 Plan will qualify for exemption under Section 162(m). However, the 2016 Plan is structured with the intention that our compensation committee will have the discretion to make awards under the 2016 Plan that may qualify as "performance-based" compensation under Section 162(m). Subject to the requirements of Section 162(m), if the material terms under our 2016 Plan, including the annual equity grant share limitations, the performance award dollar limit and the performance criteria under which performance-based awards may be granted, are not approved by our stockholders, we will not make any further grants under the 2016 Plan to our "covered employees", or their successors, until such time, if any, as stockholder approval of a subsequent similar proposal is obtained.
We are not seeking to change the number of shares of Class A common stock of the Company available for issuance under the 2016 Plan. Subject to adjustment for stock splits, stock dividends and similar events, the total number of shares of Class A common stock of the Company that can be issued under the 2016 Plan is 11,500,000 shares, as increased on January 1, 2017 and each January 1 thereafter by 5 percent of the number of shares of Class A and Class B common stock of the Company issued and outstanding on the immediately preceding December 31 (the "Annual Increase") or such lesser number of shares of Class A common stock of the Company as determined by the compensation committee in its sole discretion. The shares of Class A common stock issued by the Company under
the 2016 Plan may be authorized but unissued shares, or shares reacquired by the Company. To the extent that shares of Class A common stock underlying awards under the 2016 Plan or the Company's 2008 Stock Option Plan, as amended and restated (the "2008 Plan") (as converted from Class B common stock of the Company) are forfeited, canceled, held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise), such shares will be added back to the shares of Class A common stock available for issuance under the 2016 Plan. In the event the Company repurchases shares of Class A common stock on the open market, such shares shall not be added to the shares of Class A common stock available for issuance under the 2016 Plan. In addition, subject to adjustment for stock splits, stock dividends and similar events, the maximum number of shares of Class A common stock of the Company that may be issued pursuant to the exercise of incentive stock options under the 2016 Plan is 11,500,000, cumulatively increased on January 1, 2017 and on each January 1 thereafter by the lesser of the Annual Increase for such year or 5,750,000 shares of Class A common stock of the Company.
Based solely upon the closing price of the Company's Class A common stock as reported on the New York Stock Exchange on December 30, 2016 and the maximum number of shares of Class A common stock of the Company that would have been available for awards as of such date, the maximum aggregate market value of the securities to be issued under the 2016 Plan would be $328,757,550.
We believe that the stock-based awards available for grant under the 2016 Plan can play an important role in the success of the Company by encouraging and enabling our officers, employees, non-employee directors and consultants, upon whose judgment, initiative and efforts we depend on for the successful conduct of our business, to acquire a proprietary interest in the Company. We believe that it is important to maintain the flexibility to preserve our tax deduction for awards under the 2016 Plan that qualify as "performance-based compensation" under Section 162(m).
Qualified Performance-Based Compensation under Section 162(m) of the Code
To ensure that certain awards granted under the 2016 Plan to covered employees are eligible to qualify as "performance-based compensation" under Section 162(m), the 2016 Plan provides that the compensation committee may require that the vesting or attainment of such awards be conditioned on the satisfaction of performance criteria that may include any or all of the following: (1) sales or revenue or bookings; (2) sales or revenue or bookings mix; (3) sales or market shares; (4) expense; (5) margins; (6) operating efficiency; (7) earnings before interest, taxes, depreciation and amortization; (8) net income (loss) (either before or after interest, taxes, depreciation and/or amortization); (9) operating income (loss); (10) earnings (loss) per share of Class A common stock of the Company; (11) working capital; (12) operating cash flow (funds from operations) and free cash flow; (13) customer satisfaction, (14) Net Promoter Score; (15) customer churn; (16) number of customers; (17) customer retention and expansion; (18) return on sales, gross or net profit levels; (19) return on capital, assets, equity, or investment; (20) changes in the market price of the Company's Class A common stock; (21) total stockholder return; (22) quality and reliability; (23) productivity; (24) economic value-added; and (25) acquisitions or strategic transactions, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The compensation committee will select the particular performance criteria within 90 days following the commencement of a performance cycle. A performance cycle is a period of no less than 12 months. Subject to adjustments for stock splits and similar events, the maximum award that may be granted to any one covered employee that is intended to qualify as "performance-based compensation" will not exceed 11,500,000 shares for any performance cycle and stock options or stock appreciation rights with respect to no more than 11,500,000 shares of Class A common stock of the Company (subject to adjustment for stock splits and similar events) may be granted to any one
individual during any one calendar-year period. If a performance-based award is payable in cash, it cannot exceed $5 million for any one covered employee for any performance cycle.
Summary of the 2016 Plan
The following description of certain features of the 2016 Plan is intended to be a summary only. The summary is qualified in its entirety by the full text of the 2016 Plan attached hereto asAppendix A and incorporated herein by reference.
Administration. The 2016 Plan is administered by the compensation committee. The compensation committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2016 Plan. The compensation committee may, in its discretion, delegate to the Chief Executive Officer of the Company or a committee comprised of the Chief Executive Officer of the Company and one or more other officer of the Company, all or part of its authority and duties with respect to the granting certain awards to individuals who are not subject to the reporting and other provisions of Section 16 of the Securities Exchange Act of 1934, as amended, or who are not covered employees.
Eligibility. All full-time and part-time officers, employees, non-employee directors and other key persons, including consultants, of the Company and its subsidiaries are eligible to participate in the 2016 Plan, subject to the discretion of the compensation committee. As of December 31, 2016, the number of individuals potentially eligible to participate in the 2016 Plan is approximately 737 persons.
Limitations on Grants. Subject to adjustments for stock splits and similar events:
•stock options and stock appreciation rights with respect to no more than 11,500,000 shares of Class A common stock of the Company may be granted to any one individual in any one calendar year;•the maximum number of shares of Class A common stock of the Company that may be issued as incentive stock options may not exceed the 11,500,000, cumulatively increased on January 1, 2017 and on each January 1 thereafter by the lesser of the Annual Increase for such year, or 5,750,000 shares of Class A common stock of the Company;•the maximum award that may be granted to any one covered employee that is intended to qualify as "performance-based compensation" will not exceed 11,500,000 shares for any performance cycle; if a performance-based award is payable in cash, it cannot exceed $5 million for any one covered employee for any performance cycle; and•the value of all awards issued under the 2016 Plan and all other cash compensation paid by the Company to any non-employee director in any calendar year cannot exceed $750,000.
Stock Options. Stock options granted under the 2016 Plan may be either incentive stock options within the meaning of Section 422 of the Code, or non-qualified stock options. Incentive stock options may be granted only to employees of the Company or any subsidiary. Stock options granted under the 2016 Plan will be non-qualified stock options if they (i) fail to qualify as incentive stock options, (ii) are granted to someone who is not an employee, or (iii) otherwise so provide. Non-qualified stock options may be granted to persons eligible to receive incentive stock options and to non-employee directors and other key persons.
The compensation committee has authority to determine the terms and conditions of stock options granted under the 2016 Plan. However, the per share exercise price of such stock options will not be less than 100% of the fair market value of a share of Class A common stock of the Company on the date or grant. If an employee owns or is deemed to own (pursuant to Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation (a "10% Owner"), then the per share exercise price of any incentive stock option granted to that employee will not be less than 110% of the fair market value of a share of Class A common stock of the Company on the date of grant. The term of each stock option will be fixed by the compensation committee and may not exceed ten years from the date of grant (five years from the date of grant for a 10% Owner). The compensation committee will determine at what time or times each stock option may be exercised and the period of time, if any, after death, disability, or termination of employment during which stock options may be exercised. In the absence of such determinations by the compensation committee, the exercise periods are as set forth in the applicable stock option agreements under the 2016 Plan. Stock options may be made exercisable in installments, and the exercisability of options may be accelerated upon the occurrence of certain events or from time to time in the discretion of the compensation committee. In general, unless otherwise permitted by the compensation committee, no stock option granted under the 2016 Plan is transferable by the optionee other than by will or by the laws of descent and distribution, and stock options may be exercised during the optionee's lifetime only by the optionee, or by the optionee's legal representative or guardian in the case of the optionee's incapacity.
Stock options granted under the 2016 Plan may be exercised for cash or, if permitted by the compensation committee, by transfer to the Company (either actually or by attestation) of shares of Class A common stock of the Company that are not then subject to restrictions under any Company plan, and that have a fair market value equivalent to the aggregate stock option exercise price of the shares being purchased, or, subject to applicable law, by compliance with certain provisions pursuant to which a securities broker delivers the purchase price for the shares to the Company.
To qualify as incentive stock options, stock options must meet additional federal tax requirements, including a $100,000 limit on the value of shares of Class A common stock subject to incentive stock options which first become exercisable in any one calendar year, and a shorter term and higher minimum exercise price in the case of 10% Owners.
Stock Appreciation Rights. The compensation committee may award a stock appreciation right either as a freestanding award or in tandem with a stock option. A stock appreciation right is an award entitling the recipient to receive shares of Class A common stock of the Company having a value equal to the excess of the fair market value of the Class A common stock of the Company on the date of exercise over the exercise price of the stock appreciation right, which price may not be less than 100 percent of the fair market value of the Class A common stock of the Company on the date of grant (or more than the option exercise price per share, if the stock appreciation right was granted in tandem with a stock option) multiplied by the number of shares of Class A common stock of the Company with respect to which the stock appreciation right was exercised. All stock appreciation rights are exercisable during the grantee's lifetime only by the grantee or the grantee's legal representative.
Restricted Stock Awards. The compensation committee may grant shares of Class A common stock subject to such conditions and restrictions as the compensation committee may determine. These conditions and restrictions may include the achievement of pre-established performance goals and/or continued employment with the Company through a specified vesting period. The vesting period is determined by the compensation committee. If the applicable performance goals and other restrictions are not attained, the holder will forfeit his or her restricted stock award. Holders of restricted stock have the rights of a stockholder with respect to the voting of the shares of restricted stock and receipt of dividends, subject to such conditions contained in the award agreement evidencing the restricted stock award; provided, that if the lapse of restrictions with respect to the restricted stock award is tied to the attainment of performance goals, any dividends paid by the Company during the applicable performance period will accrue and will not be paid to the holder until and to the extent the performance goals are met with respect to the restricted stock award.
Unrestricted Stock Awards. The compensation committee may also grant shares of Class A common stock of the Company that are free from any restrictions under the 2016 Plan. Unrestricted stock may be granted in recognition of past services or other valid consideration, and may be issued in lieu of cash compensation.
Restricted Stock Units. The compensation committee may grant restricted stock units. The restricted stock units are ultimately payable in the form of shares of Class A common stock of the Company and may be subject to such conditions and restrictions as the compensation committee may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified vesting period. During the vesting period, subject to terms and conditions imposed by the compensation committee, the restricted stock units may be credited with dividend equivalent rights (discussed below). Subject to the consent of the compensation committee, a participant may make an advance election to receive a portion of his or her cash compensation otherwise due in the form of a restricted stock unit. A restricted unit award may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of during the deferral period.
Performance Share Awards. The compensation committee may grant performance share awards that entitles the grantee to receive shares of Class A common stock of the Company upon the achievement of specified performance goals. The compensation committee may make performance share awards independent of or in connection with the granting of any other award under the 2016 Plan. The compensation committee in its sole discretion will determine whether and to whom performance share awards are made, the performance goals, the periods during which performance is to be measured, and all other limitations and conditions.
Performance-Based Compensation. The compensation committee may grant awards of restricted stock, restricted stock units, performance share awards or cash-based awards under the 2016 Plan that are intended to qualify as "performance-based compensation" under Section 162(m). Such awards will only vest or become payable upon the attainment of performance goals that are established by the compensation committee and relate to one or more performance criteria listed above.
Cash-Based Awards. The compensation committee may grant cash bonuses under the 2016 Plan. The cash bonuses may be subject to the achievement of certain performance goals.
Dividend Equivalent Rights. The compensation committee may grant dividend equivalent rights that provide credits for cash dividends that would be paid if the holder had held specified shares of Class A common stock of the Company. Dividend equivalent rights may be granted as a component of another award or as a freestanding award. Dividend equivalent rights credited under the 2016 Plan may be paid currently or be deemed to be reinvested in additional shares of Class A common stock of the Company, which may thereafter accrue additional dividend equivalent rights. Dividend equivalent rights may be settled in cash, shares of Class A common stock of the Company, or a combination thereof, in a single installment or installments, as specified in the award. A dividend equivalent right granted as a component of an award of restricted stock units or performance share award will provide that such dividend equivalent right will be settled only upon settlement or payment of, or lapse of restrictions on, such other award, and that such dividend equivalent right will expire or be forfeited or annulled under the same conditions as such other award.
Tax Withholding. Participants under the 2016 Plan are responsible for the payment of any federal, state, or local taxes that we are required by law to withhold upon any option exercise or vesting of other awards. The Company and its subsidiaries will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant and/or to direct that the proceeds from a sale of Class A common stock of the Company on behalf of a participant be paid over to the Company to satisfy any such tax withholding obligations. Subject to approval by the
compensation committee, a participant may elect to have the Company's minimum required tax withholding obligation be satisfied, in whole or in part, by authorizing the Company to withhold from shares of Class A common stock of the Company to be issued pursuant to any award a number of shares with an aggregate fair market value (as of the date the withholding is effected) that would satisfy the withholding amount due. The compensation committee may also require awards to be subject to mandatory share withholding up to the required withholding amount.
Sale Event. The 2016 Plan provides that upon the effectiveness of a "sale event" (as defined in the 2016 Plan), an acquirer or successor entity may assume, continue or substitute for the outstanding awards under the 2016 Plan. To the extent that awards granted under the 2016 Plan are not assumed or continued or substituted by the successor entity, all unvested awards granted under the 2016 Plan will terminate. In such case, except as may be otherwise provided in the relevant award agreement, all options and stock appreciation rights with time-based vesting, conditions or restrictions that are not exercisable immediately prior to the sale event will become fully exercisable as of the sale event, all other awards with time-based vesting, conditions or restrictions will become fully vested and nonforfeitable as of the sale event, and all awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with the sale event in the compensation committee's discretion or to the extent specified in the relevant award agreement. In the event of such termination, participants holding options and stock appreciation rights will be permitted to exercise such options and stock appreciation rights (to the extent exercisable) prior to the sale event. In addition, in connection with the termination of the 2016 Plan upon a sale event, we may make or provide for a cash payment to participants holding vested and exercisable options and stock appreciation rights equal to the difference between the per share cash consideration payable to stockholders in the sale event and the exercise price of the options or stock appreciation rights.
Amendments and Termination. The board of directors may amend or discontinue the 2016 Plan and the compensation committee will be able to amend or cancel outstanding awards for purposes of satisfying changes in law or any other lawful purpose, but no such action may adversely affect rights under an award without the holder's consent. The compensation committee is specifically authorized to exercise its discretion to reduce the exercise price of outstanding stock options or stock appreciation rights or effect the repricing of such awards through cancellation and re-grants. Certain amendments to the 2016 Plan will require the approval of our stockholders. No grants may be made under the 2016 Plan after the tenth anniversary of its effective date, provided that no Incentive Stock Options may be made under the Plan after the tenth anniversary of the date that it is approved by the board of directors.
New Plan Benefits
We are not asking stockholders to approve of any additional shares of Class A common stock to be reserved for issuance under the 2016 Plan. Because the grant of awards under the 2016 Plan is within the discretion of the compensation committee, the Company cannot determine the dollar value or number of shares of Class A common stock of the Company that will in the future be received by or allocated to any participant in the 2016 Plan. Accordingly, in lieu of providing information regarding benefits that will be received under the 2016 Plan, the following table provides information concerning the benefits that were received by the following persons and groups during 2016: each named executive officer; all current executive officers, as a group; all current directors who are not executive officers, as a group; and all current employees who are not executive officers, as a group.
2016 Plan
Name and Position | Dollar Value ($)(1) | Number of Units | |||||
|---|---|---|---|---|---|---|---|
Jeff Lawson | — | — | |||||
Lee Kirkpatrick | — | — | |||||
Karyn Smith | — | — | |||||
All current executive officers, as a group | — | — | |||||
All current directors who are not executive officers, as a group | — | — | |||||
All current employees who are not executive officers, as a group | 38,309,711 | 1,349,730 | |||||
(1)Value is based on $28.85, which was the closing market price of our Class A common stock on December 30, 2016.
Tax Aspects under the U.S. Internal Revenue Code
The following is a summary of the principal federal income tax consequences of transactions under the 2016 Plan. It does not describe all federal tax consequences under the 2016 Plan, nor does it describe state or local tax consequences.
Incentive Stock Options. No taxable income is generally realized by the optionee upon the grant or exercise of an incentive stock option. If shares of Class A common stock of the Company issued to an optionee pursuant to the exercise of an incentive stock option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then (i) upon sale of such shares, any amount realized in excess of the exercise price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (ii) there will be no deduction for the Company for federal income tax purposes. The exercise of an incentive stock option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee. An optionee will not have any additional FICA (Social Security) taxes upon exercise of an incentive stock option.
Shares of Class A common stock of the Company acquired upon the exercise of an incentive stock option must be held by the optionee until at least two years after the date the stock option was granted and at least one year after the stock option was exercised. If such shares are disposed of prior to the expiration of the holding periods described above, generally (i) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares of Class A common stock of the Company at exercise (or, if less, the amount realized on a sale of such shares of Class A common stock of the Company) over the exercise price, and (ii) the Company will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the incentive stock option is paid by tendering shares of Class A common stock of the Company.
If an incentive stock option is exercised at a time when it no longer qualifies for the tax treatment described above, the stock option is treated as a non-qualified stock option. Generally, an incentive stock option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, the three-month rule does not apply.
Non-Qualified Stock Options. With respect to non-qualified stock options under the 2016 Plan, no income is realized by the optionee at the time the stock option is granted. Generally (i) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the exercise price and the fair market value of the shares of Class A common stock of the Company on the date of exercise, and the Company receives a tax deduction for the same amount, and (ii) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term
capital gain or loss depending on how long the shares of Class A common stock of the Company have been held. Special rules will apply where all or a portion of the exercise price of the non-qualified stock option is paid by tendering shares of Class A common stock of the Company. Upon exercise, the optionee will also be subject to FICA taxes on the excess of the fair market value over the exercise price of the stock option.
Stock Appreciation Rights. No income will be recognized by a recipient upon the grant of either tandem or freestanding stock appreciation rights. For the year in which the stock appreciation right is exercised, the recipient will generally be taxed at ordinary income rates on the amount equal to the cash received plus the fair market value of any unrestricted shares received on the exercise.
Unrestricted Stock Awards. The recipient of an unrestricted stock award will generally be taxed at ordinary income rates on the difference between: (i) the fair market value of the shares of Class A common stock of the Company on the grant date, and (ii) the purchase price, if any, of the shares.
Restricted Stock Awards. The recipient of a restricted stock award will generally be taxed at ordinary income rates on the fair market value of the restricted shares (reduced by any amount paid by the recipient for such restricted shares) at such time as the shares are no longer subject to restrictions. However, a recipient may elect under Section 83(b) of the Code (the election must be filed with the IRS within 30 days of the grant date) to be taxed at ordinary income rates on the difference between: (i) the fair market value of such Class A shares of the Company on the grant date, and (ii) the purchase price, if any, of the shares. If a Section 83(b) election has not been made, dividends received with respect to restricted shares will generally be taxed as ordinary income to the recipient. If a Section 83(b) election has been made, dividends will be taxed at dividend rates.
Restricted Stock Units. The recipient of a restricted stock unit will generally be taxed at ordinary income rates on the fair market value of the shares of Class A common stock of the Company awarded on the transfer date (reduced by any amount paid by the recipient for such shares). The capital gains/loss holding period for such shares will also commence on such date.
Performance Share Awards. Performance share awards are generally taxed in the same manner as restricted stock awards, the only difference being that with respect to performance share awards the restrictions are performance-based, whereas with respect to restricted stock awards, the restrictions are time-based.
Dividend Equivalent Rights. Dividend equivalent rights may be paid currently or credited to the recipient's account to purchase additional stock appreciation rights or restricted stock units. If paid currently, then the dividend equivalent rights are also taxed currently. If credited to the recipient's account, the dividend equivalent rights are not taxed at the time of grant, but rather will be taxed as the stock appreciation rights or the restricted stock units that they were used to purchase.
Parachute Payments. The vesting of any portion of any stock option or other award that is accelerated due to the occurrence of a change of control may cause a portion of the payments with respect to such accelerated awards to be treated as "parachute payments" as defined in the Code. Any such parachute payments may be non-deductible to the Company, in whole or in part, and may subject the recipient to a non-deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).
Limitation on the Company's Deductions. As a result of Section 162(m), the Company's deduction for certain awards under the 2016 Plan may be limited to the extent that a covered employee receives compensation in excess of $1 million in such taxable year of the Company (other than performance-based compensation that otherwise meets the requirements of Section 162(m)).
Vote Required
Under our amended and restated certificate of incorporation and amended and restated bylaws, the approval of Proposal No. 3 requires that a majority of the voting power of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon vote "FOR" this proposal. Abstentions are considered shares present and entitled to vote on this proposal and will have the effect of a vote against this proposal. Broker non-votes will not affect the outcome of this proposal. In addition, the rules of the New York Stock Exchange require that a majority of the votes properly cast vote "FOR" this proposal. The New York Stock Exchange treats abstentions both as shares entitled to vote and as votes cast, but does not treat broker non-votes as votes cast. Because this proposal is a non-routine matter under the rules of the New York Stock Exchange, brokerage firms, banks and other nominees who hold shares on behalf of clients in "street name" are not permitted to vote the shares if the client does not provide instructions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
The audit committee is a committee of the board of directors comprised solely of independent directors as required by the listing standards of the New York Stock Exchange and rules and regulations of the Securities and Exchange Commission ("SEC"). The audit committee operates under a written charter approved by our board of directors, which is available on our web site at https://investors.twilio.com/. The composition of the audit committee, the attributes of its members and the responsibilities of the audit committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees. The audit committee reviews and assesses the adequacy of its charter and the audit committee's performance on an annual basis.
With respect to our financial reporting process, our management is responsible for (1) establishing and maintaining internal controls and (2) preparing our consolidated financial statements. Our independent registered public accounting firm, KPMG LLP ("KPMG"), is responsible for performing an independent audit of our consolidated financial statements. It is the responsibility of the audit committee to oversee these activities. It is not the responsibility of the audit committee to prepare our financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the audit committee has:
•reviewed and discussed the audited financial statements with management and KPMG;•discussed with KPMG the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), and as adopted by the Public Company Accounting Oversight Board ("PCAOB") in Rule 3200T; and•received the written disclosures and the letter from KPMG required by applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence, and has discussed with KPMG its independence.
Based on the audit committee's review and discussions with management and KPMG, the audit committee recommended to the board of directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for filing with the SEC.
Respectfully submitted by the members of the audit committee of the board of directors:
Jim McGeever (Chair)Scott RaneyErika Rottenberg
This report of the audit committee is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended ("Securities Act"), or under the Securities Exchange Act of 1934, as amended ("Exchange Act"), except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.
The following table identifies certain information about our executive officers as of March 31, 2017. Our executive officers are appointed by, and serve at the discretion of, our board of directors and holds office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. There are no family relationships among any of our directors or executive officers.
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Executive Officers
Jeff Lawson. Mr. Lawson is one of our founders and has served as our Chief Executive Officer and as a member of our board of directors since April 2008 and has served as the Chairperson of our board of directors since November 2015. From 2001 to 2008, Mr. Lawson served as founder and Chief Technology Officer of Nine Star, Inc., a multi-channel retailer of equipment and apparel to the action sports industry. From 2004 to 2005, Mr. Lawson served as Technical Product Manager of Amazon.com, Inc., an electronic commerce and cloud computing company. In 2000, Mr. Lawson served as Chief Technology Officer of StubHub, Inc., an online marketplace for live entertainment events. From 1998 to 2000, Mr. Lawson served in several roles at Versity.com, Inc., a website for college lecture notes, including as founder, Chief Executive Officer and Chief Technology Officer. Mr. Lawson holds a B.S. in Computer Science and Film/Video from the University of Michigan.
Mr. Lawson was selected to serve on our board of directors because of the perspective and experience he brings as our Chief Executive Officer, one of our founders and as one of our largest stockholders, as well as his extensive experience as an executive with other technology companies.
Lee Kirkpatrick. Mr. Kirkpatrick has served as our Chief Financial Officer since May 2012. From November 2010 to December 2011, Mr. Kirkpatrick served as Chief Financial Officer of SAY Media, Inc., a digital media and advertising firm formed by the combination of VideoEgg, Inc. and SixApart, Ltd. From 2007 to 2010, Mr. Kirkpatrick served as Chief Operating Officer and Chief Financial Officer of VideoEgg, Inc., an online advertising network. From 2005 to 2006, Mr. Kirkpatrick served as Chief Operating Officer of Kodak Imaging Network at the Eastman Kodak Company, an imaging company. From 2000 to 2005, Mr. Kirkpatrick served in several roles at Ofoto Inc., an online photography service, which was acquired by Eastman Kodak Company in 2001, including as Chief Operating Officer and Chief Financial Officer. From 1998 to 2000, Mr. Kirkpatrick served as Chief Financial Officer of iOwn, Inc., an online real estate services website, which was acquired by CitiMortgage, Inc. in 2001. From 1997 to 1998, Mr. Kirkpatrick served as Chief Financial Officer of HyperParallel, Inc., a data mining software company, which was acquired by Yahoo! Inc. in 1998. From 1988 to 1997, Mr. Kirkpatrick served in several roles at Reuters Group PLC, a financial information and news service company, including as Manager of Special Projects, District Finance Manager and Director of Finance and Operations. Mr. Kirkpatrick holds a B.S. in Business Administration from the University of Southern California and an M.B.A. from Columbia University.
George Hu. Mr. Hu has served as our Chief Operating Officer since February 2017. From December 2014 to April 2016, Mr. Hu founded and served as Chief Executive Officer at Peer, a workplace feedback startup that was acquired by Twitter in 2016. Prior to that, from November 2011 to December 2014, Mr. Hu served as Chief Operating Officer of salesforce.com, inc., a leading provider of enterprise cloud computing applications. From 2001 to 2011, Mr. Hu served in a variety of other
management roles at salesforce.com, including Vice President of Product Marketing, Senior Vice President of Applications, Executive Vice President of Products, and Chief Marketing Officer. Mr. Hu holds an A.B. in Economics from Harvard College and an M.B.A. in Business Administration from the Stanford Graduate School of Business.
Karyn Smith. Ms. Smith has served as our General Counsel since September 2014. From October 2013 to August 2014, Ms. Smith served as Chief Operating Officer and General Counsel at Peek, Aren't You Curious, Inc., a children's clothing company. From January 2013 to August 2013, Ms. Smith served as General Counsel at Meltwater Group Inc., a software-as-a-service company. From August 2009 to June 2012, Ms. Smith served as Vice President and Deputy General Counsel at Zynga Inc., an online video game company. Prior to Zynga, Ms. Smith was a partner at Cooley LLP, a law firm, where she practiced law for 10 years. Ms. Smith holds a Bachelor of Journalism from the University of Missouri, Columbia and a J.D. from Santa Clara University School of Law.
Overview
Our compensation programs are designed to:
•attract, motivate, incentivize and retain employees at the executive level who contribute to our long-term success;•provide compensation packages to our executives that are competitive and reward the achievement of our business objectives and effectively align their interests with those of our stockholders; and•effectively align our executives' interests with those of our stockholders by focusing on long-term equity incentives that correlate with the growth of sustainable long-term value for our stockholders.
Our compensation committee is responsible for the executive compensation programs for our executive officers and reports to our board of directors on its discussions, decisions and other actions. Our Chief Executive Officer makes recommendations for the respective executive officers that report to him to our compensation committee and typically attends compensation committee meetings. Our Chief Executive Officer makes such recommendations (other than with respect to himself) regarding base salary, and short-term and long-term compensation, including equity incentives, for our executive officers based on our results, an executive officer's individual contribution toward these results, the executive officer's role and performance of his or her duties and his or her achievement of individual goals. Our compensation committee then reviews the recommendations and other data, including various compensation survey data and publicly-available data of our peers, and makes decisions as to the target total direct compensation for each executive officer, including our Chief Executive Officer, as well as each individual compensation element. While our Chief Executive Officer typically attends meetings of the compensation committee, the compensation committee meets outside the presence of our Chief Executive Officer when discussing his compensation and when discussing certain other matters, as well.
Our compensation committee is authorized to retain the services of one or more executive compensation advisors, as it sees fit, in connection with the establishment of our executive compensation programs and related policies. In fiscal year 2016, the compensation committee continued to retain Compensia Inc., a national compensation consulting firm with compensation expertise relating to technology companies, to provide it with market information, analysis and other advice relating to executive compensation on an ongoing basis. The compensation committee engaged Compensia Inc. to, among other things, assist in developing an appropriate group of peer companies to help us determine the appropriate level of overall compensation for our executive officers, as well as to assess each separate element of compensation, with a goal of ensuring that the compensation we offer to our executive officers, individually as well as in the aggregate, is competitive and fair. We do not believe the retention of, and the work performed by, Compensia Inc. creates any conflict of interest.
Summary Compensation Table
The compensation provided to our named executive officers for the fiscal year ended December 31, 2016 is set forth in the Summary Compensation Table below and accompanying footnotes and narrative that follow this section.
Our named executive officers for the fiscal year ended December 31, 2016, which consisted of our Chief Executive Officer and our two most highly compensated executive officers other than our Chief Executive Officer, were:
•Jeff Lawson, our Chief Executive Officer and Chairperson;
•Lee Kirkpatrick, our Chief Financial Officer; and•Karyn Smith, our General Counsel.
The following table provides information regarding the total compensation, for services rendered in all capacities, that was paid or earned by our named executive officers during the fiscal years ended December 31, 2015 and December 31, 2016.
| Name and principal position | Year | Salary ($) | Bonus ($) | Stock awards ($)(1) | Option awards ($)(2) | Nonequity incentive compensation ($) | All other compensation ($) | Total ($) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jeff Lawson | 2016 | 133,700 | — | 1,917,100 | — | — | — | 2,050,800 | ||||||||||||||||
Chief Executive Officer and | 2015 | 299,783 | (3) | 15,000 | (4) | — | 1,897,644 | 41,125 | (5) | — | 2,253,552 | |||||||||||||
Chairperson | ||||||||||||||||||||||||
Lee Kirkpatrick | 2016 | 380,000 | — | 882,875 | — | — | — | 1,262,875 | ||||||||||||||||
Chief Financial Officer | 2015 | 327,500 | (3) | 15,000 | (4) | — | 873,915 | 48,125 | (5) | — | 1,264,540 | |||||||||||||
Karyn Smith | 2016 | 337,500 | — | 303,376 | — | — | — | 640,876 | ||||||||||||||||
General Counsel | 2015 | 293,750 | (3) | 15,000 | (4) | — | 300,302 | 43,750 | (5) | — | 652,802 | |||||||||||||
(1)The amounts reported in this column represent the aggregate grant date fair value of the RSUs awarded to the named executive officers in the fiscal year ended December 31, 2016, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017. The amounts reflect the accounting cost for the RSUs and do not correspond to the actual economic value that may be received by the named executive officers upon vesting or settlement of the RSUs.(2)The amounts reported in this column represent the aggregate grant date fair value of the stock options awarded to the named executive officer in the fiscal year ended December 31, 2015, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The valuation assumptions used in determining such amounts are described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017. The amounts reflect the accounting cost for the stock options and do not correspond to the actual economic value that may be received by the named executive officers upon exercise of the stock options.(3)Effective July 1, 2015, we terminated our 2015 Bonus Plan. In connection with the termination of the 2015 Bonus Plan, each of our named executive officers received an increase in annual base salary during the fiscal year ended December 31, 2015. Effective July 1, 2015, Mr. Lawson's annual base salary increased from $235,000 to $480,000; however, effective November 1, 2015, upon Mr. Lawson's request, his annual base salary decreased to $133,700. Effective July 1, 2015, Mr. Kirkpatrick's annual base salary increased from $275,000 to $380,000 and Ms. Smith's annual base salary increased from $250,000 to $337,500.(4)During the fiscal year ended December 31, 2015, each of our named executive officers earned a discretionary bonus equal to $15,000 in connection with the termination of our 2015 Bonus Plan. The discretionary bonus was paid to each of our named executive officers in fiscal 2016.(5)Amounts for Messrs. Lawson and Kirkpatrick and Ms. Smith were earned based on our achievement of certain performance goals, including total revenue, base revenue, gross margin and non-GAAP operating income, in accordance with our 2015 Bonus Plan. Since the 2015 Bonus Plan was terminated effective July 1, 2015, each of our named executive officers received a pro-rata portion of his or her 2015 bonus under the plan.
Narrative to Summary Compensation Table
Base Salaries
For the year ended December 31, 2016, the annual base salaries for each of Messrs. Lawson and Kirkpatrick and Ms. Smith were $133,700, $380,000 and $337,500 respectively.
For the year ended December 31, 2015, the annual base salaries for each of Messrs. Lawson and Kirkpatrick and Ms. Smith prior to July 1, 2015 were $235,000, $275,000 and $250,000, respectively. Effective July 1, 2015, the annual base salaries for each of Messrs. Lawson and Kirkpatrick and Ms. Smith were increased to $480,000, $380,000 and $337,500, respectively. While our compensation committee recommended an increase in Mr. Lawson's annual base salary, Mr. Lawson requested that it be decreased. Therefore Mr. Lawson's annual base salary was subsequently decreased to $133,700, effective November 1, 2015, in accordance with his request.
Annual Bonuses
During the fiscal year ended December 31, 2016, we did not pay any cash bonuses to our named executive officers, since our compensation committee discontinued our cash bonus plan in 2015 (as described below).
During the fiscal year ended December 31, 2015, we maintained a 2015 Bonus Plan, which we terminated effective July 1, 2015. Prior to the termination of the 2015 Bonus Plan, for the first half of fiscal year 2015 (from January 1, 2015 through June 30, 2015), each of our named executive officers was eligible to receive a pro-rata portion of an annual bonus based on our achievement of certain performance goals, consisting of total revenue, base revenue, gross margin and non-GAAP operating income, pursuant to our 2015 Bonus Plan. Our compensation committee had sole discretion to determine the calculations of total revenue, base revenue, gross margin and non-GAAP operating income; provided, that such calculations were determined in a reasonable manner. Bonus amounts may not have been increased at the discretion of our compensation committee. For fiscal year 2015, the target annual bonuses for Messrs. Lawson and Kirkpatrick and Ms. Smith were each equal to 35% of the applicable named executive officer's base salary. Based on the Company's achievement of the relevant performance goals under the 2015 Bonus Plan, our compensation committee determined that the bonuses would be paid at 100% of target for each named executive officer. Such amount was then pro-rated to reflect the fact that the bonus was paid for less than a full year's performance. As a result of the termination of the 2015 Bonus Plan, which was unrelated to the performance of our named executive officers, each of our named executive officers received an increase in annual base salary during the fiscal year ended December 31, 2015 (as described above).
Equity Compensation
During the fiscal year ended December 31, 2016, we granted RSUs to each of our named executive officers, as shown in more detail in the "Outstanding Equity Awards at Fiscal 2016 Year-End Table" below.
Prior to fiscal 2016, we granted only options to purchase shares of our common stock to each of our named executive officers, as shown in more detail in the "Outstanding Equity Awards at Fiscal 2016 Year-End Table" below.
401(k) Plan
We maintain a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Plan participants are able to defer eligible compensation subject to applicable annual Code limits. We have the ability to make discretionary contributions to the 401(k) plan but have not done so to date. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan's related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.
Health and Welfare Benefits
Our named executive officers are eligible to participate in all of our employee benefit plans, including our medical, dental, life and disability insurance plans, in each case on the same basis as other employees of the same status.
Perquisites and Personal Benefits
We generally do not provide perquisites or personal benefits to our named executive officers.
Outstanding Equity Awards at Fiscal 2016 Year-End Table
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2016:
| | | Option Awards(1)(2) | Stock Awards(1)(2) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Grant date | Number of securities underlying unexercised options (#) exerciseable | Number of securities underlying unexercised options (#) unexerciseable | Option exercise price ($)(3) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(4) | ||||||||||||||
Jeff Lawson | 12/31/2015 | 316,667 | (5) | — | 10.09 | 12/30/2025 | — | — | |||||||||||||
Chief Executive Officer and | 2/4/2016 | — | — | — | — | 154,375 | (6) | $ | 4,453,719 | ||||||||||||
Chairperson | |||||||||||||||||||||
Lee Kirkpatrick | 5/17/2012 | 516,525 | (7) | — | 1.24 | 05/16/2022 | — | — | |||||||||||||
Chief Financial Officer | 12/31/2015 | 175,000 | (8) | — | 10.09 | 12/30/2025 | — | — | |||||||||||||
| 2/4/2016 | — | — | — | — | 72,917 | (9) | $ | 2,103,655 | |||||||||||||
Karyn Smith | 10/29/2014 | 215,458 | (10) | — | 4.73 | 10/28/2024 | — | — | |||||||||||||
General Counsel | 12/31/2015 | 51,765 | (11) | — | 10.09 | 12/30/2025 | — | — | |||||||||||||
| 2/4/2016 | — | — | — | — | 24,430 | (6) | $ | 704,806 | |||||||||||||
(1)Each equity award was granted pursuant to our 2008 Stock Option Plan, or the 2008 Plan. Each stock option is immediately exercisable. To the extent a named executive officer exercises his or her option prior to vesting, the shares of our common stock that he or she will receive will be unvested and subject to the Company's right of repurchase, which will lapse in accordance with the original vesting schedule of the option. No named executive officer has early exercised his or her options.(2)Unless otherwise described in the footnotes below, the vesting of each equity award on a vesting date is subject to the equity award holder's provision of service through such vesting date.(3)This column represents the fair market value of a share of our common stock on the date of the grant, as determined by our board of directors.(4)This column represents the market value of the shares of our Class A common stock underlying the RSUs as of December 30, 2016, based on the closing price of our Class A common stock, as reported on the New York Stock Exchange, of $28.85 per share on December 30, 2016.(5)The shares subject to the option vest in equal monthly installments over 48 months following January 15, 2016. In the event of a "change in control," as defined in the applicable option agreement, where the successor corporation assumes or substitutes the option, if Mr. Lawson is terminated by us without "cause," as defined in the applicable option agreement, or he resigns for "good reason," as defined in the applicable option agreement, in each case within the period beginning 30 days prior to and ending 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.(6)The shares underlying the RSUs will vest in sixteen equal quarterly installments following January 15, 2016.(7)25% of the shares subject to the option vested on May 7, 2013 and 1/48thof the shares subject to the option will vest on the seventh day of each month thereafter. In the event of a "change in control," as defined in the 2008 Plan, if Mr. Kirkpatrick is subject to an "involuntary termination," as defined in Mr. Kirkpatrick's offer letter, within 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.(8)The shares subject to the option vest in equal monthly installments over 34 months following June 15, 2016. In the event of a "change in control," as defined in the applicable option agreement, where the successor corporation assumes or substitutes the option, if Mr. Kirkpatrick is terminated by us without "cause," as defined in the applicable option agreement, or he resigns for "good reason," as defined in the applicable option agreement, in each case within the period beginning 30 days prior to and ending 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.(9)The shares underlying the RSUs will vest in twelve equal quarterly installments following June 15, 2016.
(10)25% of the shares subject to the option vested on September 2, 2015 and 1/48thof the shares subject to the option will vest on the second day of each month thereafter. In the event of a transfer of the Company where the successor corporation assumes or substitutes the option, if Ms. Smith is terminated by us without "cause," as defined in Ms. Smith's offer letter, or she resigns for "good reason," as defined in Ms. Smith's offer letter, in each case within 12 months following such transfer, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.(11)The shares subject to the option vest in equal monthly installments over 48 months following January 15, 2016. In the event of a "change in control," as defined in the applicable option agreement, where the successor corporation assumes or substitutes the option, if Ms. Smith is terminated by us without "cause," as defined in the applicable option agreement, or she resigns for "good reason," as defined in the applicable option agreement, in each case within the period beginning 30 days prior to and ending 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested. To the extent the successor corporation does not assume or substitute the option in connection with a change in control, the then-unvested portion of the option and underlying shares of common stock will fully vest.
In February 2017, our board of directors approved a grant of a stock option to purchase shares of our Class A common stock and a grant of RSUs to each of our named executive officers. Such stock options and RSUs are subject to time-based vesting conditions and full acceleration of vesting if the applicable named executive officer is either terminated by us for any reason other than for "cause" (as defined in the applicable award agreement), death or disability, or resigns for "good reason" (as defined in the applicable award agreement), in each case during the period beginning 30 days prior to, and ending 12 months after, the date of a "change in control" (as defined in the applicable award agreement).
Employment Agreements with Named Executive Officers
We initially entered into offer letters with each of the named executive officers, except for Mr. Lawson, in connection with his or her employment with us, which set forth the terms and conditions of employment of each individual, including his or her initial base salary, initial target annual bonus opportunity and standard employee benefit plan participation. In addition, these offer letters provided for certain payments and benefits in the event of an involuntary termination of employment following a change in control of the Company. In connection with our initial public offering, we adopted an executive severance plan, or the Executive Severance Plan, in order to provide more standardized severance benefits to our named executive officers and to supersede and replace any existing severance arrangements with benefits that were aligned with our peer group practices. Each of the named executive officers, including Mr. Lawson, will participate in the Executive Severance Plan, as further described below. The Executive Severance Plan provides for certain payments and benefits in the event of a termination of employment, including an involuntary termination of employment in connection with a change in control of the Company, and replaced the severance provisions in the named executive officers' offer letters, if any.
Jeff Lawson
We have not entered into an offer letter or employment agreement with Mr. Lawson.
Lee Kirkpatrick
On April 24, 2012, we entered into an offer letter with Mr. Kirkpatrick, who currently serves as our Chief Financial Officer. The offer letter provided for Mr. Kirkpatrick's at-will employment and set forth his initial annual base salary, target bonus and an initial option grant, as well as his eligibility to participate in our benefit plans generally. Mr. Kirkpatrick is subject to our standard employment, confidential information, invention assignment and arbitration agreement.
Karyn Smith
On July 30, 2014, we entered into an offer letter with Ms. Smith, who currently serves as our General Counsel. The offer letter provided for Ms. Smith's at-will employment and set forth her initial annual base salary, target bonus and an initial option grant, as well as her eligibility to participate in our benefit plans generally. The offer letter also provided Ms. Smith with the following severance
benefits if she is terminated by us without "cause," as defined in the offer letter, or she resigns for "good reason," as defined in the offer letter, each on or within 12 months following a "change in control," as defined in the offer letter, subject to the delivery of an effective release of claims in favor of the Company and its affiliates: (i) a lump sum cash payment equal to three months' base salary; and (ii) up to three months of Company-paid monthly premiums for COBRA continuation. Ms. Smith is subject to our standard employment, confidential information, invention assignment and arbitration agreement.
Executive Severance Plan
The Executive Severance Plan provides that upon a termination of employment by us for any reason other than for "cause," as defined in the Executive Severance Plan, death or disability outside of the change in control period (i.e., the period beginning 30 days prior to and ending 12 months after, a "change in control," as defined in the Executive Severance Plan), an eligible participant will be entitled to receive, subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to nine months of base salary for our Chief Executive Officer and six months of base salary for the other participants, and (ii) a monthly cash payment equal to our contribution towards health insurance for up to nine months for our Chief Executive Officer and up to six months for the other participants.
The Executive Severance Plan also provides that upon a (i) termination of employment by us other than for cause, death or disability or (ii) a resignation of employment for "good reason," as defined in the Executive Severance Plan, in each case within the change in control period, an eligible participant will be entitled to receive, in lieu of the payments and benefits above and subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to 18 months of base salary for our Chief Executive Officer and 12 months of base salary for the other participants, (ii) a monthly cash payment equal to our contribution towards health insurance for up to 18 months for our Chief Executive Officer and up to 12 months for the other participants and (iii) full accelerated vesting of all outstanding and unvested equity award held by such participant; provided, that any unvested and outstanding equity awards subject to performance conditions will be deemed satisfied at the target levels specified in the applicable award agreements.
The payments and benefits provided under the Executive Severance Plan in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Internal Revenue Code. These payments and benefits may also subject an eligible participant, including the named executive officers, to an excise tax under Section 4999 of the Internal Revenue Code. If the payments or benefits payable to an eligible participant in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to him or her.
The compensation committee has reviewed and discussed the section titled "Executive Compensation" with management. Based on such review and discussion, the compensation committee has recommended to the board of directors that the section titled "Executive Compensation" be included in this proxy statement.
Respectfully submitted by the members of the compensation committee of the board of directors:
Compensation Committee
Elena Donio (Chair)Jim McGeeverErika Rottenberg
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2016 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.
Plan Category | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by stockholders(1) | 16,681,100 | (2) | $ | 6.1379 | (3) | 13,795,409 | (4) | |||
Equity compensation plans not approved by stockholders | — | — | — | |||||||
| | | | | | | | | | | |
Total | 16,681,100 | $ | 6.1379 | 13,795,409 | ||||||
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(1)Includes the following plans: our 2008 Stock Option Plan, as amended and restated, or 2008 Plan, our 2016 Stock Option and Incentive Plan, or 2016 Plan, and our 2016 Employee Stock Purchase Plan, or ESPP.(2)Excludes 2,031,824 shares that may be issued under restricted stock unit awards as of December 31, 2016.(3)Excludes 2,031,824 shares that may be issued under restricted stock unit awards as of December 31, 2016.(4)As of December 31, 2016, a total of 11,482,400 shares of our Class A common stock have been reserved for issuance pursuant to the 2016 Plan, which number excludes the 4,362,427 shares that were added to the 2016 Plan as a result of the automatic annual increase on January 1, 2017. The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase each January 1, beginning on January 1, 2017, by 5% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. The shares of Class A and Class B common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated, other than by exercise, under the 2016 Plan and the 2008 Plan will be added back to the shares of Class A common stock available for issuance under the 2016 Plan (provided, that any such shares of Class B common stock will first be converted into shares of Class A common stock). The Company no longer makes grants under the 2008 Plan. As of December 31, 2016, a total of 2,400,000 shares of our Class A common stock have been reserved for issuance pursuant to the ESPP, which number excludes the 872,485 shares that were added to the ESPP as a result of the automatic annual increase on January 1, 2017. The ESPP provides that the number of shares reserved and available for issuance under the ESPP will automatically increase each January 1, beginning on January 1, 2017, by the lesser of 1,800,000 shares of our Class A common stock, 1% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to us with respect to the beneficial ownership of our capital stock as of March 31, 2017, for:
•each of our named executive officers;•each of our directors;•all of our current directors and executive officers as a group; and•each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our Class A or Class B common stock.
We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable.
We have based our calculation of percentage ownership of our common stock on 61,549,597 shares of our Class A common stock and 28,658,032 shares of our Class B common stock outstanding on March 31, 2017. We have deemed shares of our capital stock subject to stock options that are currently exercisable or exercisable within 60 days of March 31, 2017 to be outstanding and to be beneficially owned by the person holding the stock option for the purpose of computing the percentage ownership of that person. We have deemed shares of our capital stock subject to restricted stock units for which the service condition has been satisfied or would be satisfied within 60 days of March 31, 2017 to be outstanding and to be beneficially owned by the person holding the restricted stock units for the purpose of computing the percentage ownership of that person. However, we did not deem these shares subject to stock options or restricted stock units outstanding 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 Twilio Inc., 375 Beale Street, Suite 300, San Francisco, California 94105.
| | Shares Beneficially Owned | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Class A | Class B | | | |||||||||||||||
| | Voting %† | | |||||||||||||||||
| Name of Beneficial Owner | Shares | % | Shares | % | Ownership % | ||||||||||||||
Named Executive Officers and Directors: | |||||||||||||||||||
Jeff Lawson(1) | — | — | 7,489,166 | 25.8 | 21.3 | 8.3 | |||||||||||||
Lee Kirkpatrick(2) | 4,535 | * | 714,563 | 2.4 | 2.0 | * | |||||||||||||
Karyn Smith(3) | — | — | 281,989 | 1.0 | * | * | |||||||||||||
Richard Dalzell(4) | — | — | 147,500 | * | * | * | |||||||||||||
Byron Deeter(5) | 176,181 | * | 11,310,389 | 39.5 | 32.5 | 12.7 | |||||||||||||
Elena Donio(6) | — | — | 12,302 | * | * | * | |||||||||||||
James McGeever(7) | — | — | 412,883 | 1.4 | 1.2 | * | |||||||||||||
Scott Raney(8) | — | — | 2,028,411 | 7.1 | 5.8 | 2.2 | |||||||||||||
Erika Rottenberg | — | — | — | — | — | — | |||||||||||||
All executive officers and directors as a group (9 persons)(9): | 180,716 | * | 22,397,203 | 74.5 | 61.9 | 24.6 | |||||||||||||
5% Stockholders: | |||||||||||||||||||
Bessemer Venture Partners and Related Entities(10) | — | — | 11,310,389 | 39.5 | 32.5 | 12.5 | |||||||||||||
Entities affiliated with Redpoint(11) | — | — | 2,028,411 | 7.1 | 5.8 | 2.2 | |||||||||||||
Entities affiliated with Fidelity(12) | 5,067,582 | 8.2 | — | — | 1.5 | 5.6 | |||||||||||||
T. Rowe Price(13) | 9,811,600 | 15.9 | — | — | 2.8 | 10.9 | |||||||||||||
*Represents beneficial ownership of less than one percent (1%) of the outstanding shares.†Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class A common stock are entitled to one vote per share, and holders of our Class B common stock are entitled to ten votes per share.(1)Consists of (i) 6,097,090 shares of Class B common stock held of record by Mr. Lawson, as trustee of the Lawson Revocable Trust, (ii) 323,170 shares of Class B common stock held of record by The Lawson 2014 Irrevocable Trust, J.P. Morgan Trust Company, as trustee, (iii) 740,364 shares of Class B common stock held of record by Mr. Lawson, as trustee of the Lawson 2014 GRAT, (iv) 316,667 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of March 31, 2017 and (v) 11,875 shares of Class B common stock issuable upon the settlement of Restricted Stock Units ("RSUs") releasable within 60 days of March 31, 2017.(2)Consists of (i) 4,535 shares of Class A common stock held of record by Mr. Kirkpatrick, (ii) 48,487 shares of Class B common stock held of record by Mr. Kirkpatrick and (iii) 666,076 shares of Class B Common stock subject to outstanding options that are exercisable within 60 days of March 31, 2017.(3)Consists of (i) 12,887 shares of Class B common stock held of record by Ms. Smith, as trustee of The Karyn Smith Revocable Trust u/a/d 9/15/06, amended 12/23/11, (ii) 267,223 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of March 31, 2017 and (iii) 1,879 shares of Class B common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2017.(4)Consists of 147,500 shares of Class B common stock subject to outstanding options that are exercisable by Mr. Dalzell within 60 days of March 31, 2017.(5)Consists of (i) 176,181 shares of Class A common stock held by Byron B. Deeter and Allison K. Deeter Trustees UTD July 28, 2000 and (ii) shares held by the BVP entities identified in footnote 10. Byron B. Deeter, one of our directors, Robert P. Goodman, Jeremy S. Levine, Edmund Colloton, David Cowan and Robert M. Stavis are the directors of Deer VII & Co. Ltd. ("Deer VII Ltd.") and hold the voting and dispositive power for the BVP Entities identified in footnote 10. Investment and voting decisions with respect to the shares held by the BVP entities are made by the directors of Deer VII Ltd. acting as an investment committee.(6)Consists of (i) 9,812 shares of Class B common stock held of record by Ms. Donio and (ii) 2,490 shares of Class B common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2017.(7)Consists of (i) 199,470 shares of Class B common stock held of record by Mr. McGeever and (ii) 213,413 shares of Class B common stock held of record by The James and Linda McGeever Revocable Trust.
(8)Consists of shares held by the Redpoint Entities identified in footnote 11. Mr. Raney, one of our directors, is one of the managing directors of Redpoint Omega II, LLC and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega II, L.P. Mr. Raney is one of the managers of Redpoint Omega Associates II and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega Associates II.(9)Consists of: (i) 180,716 shares of Class A common stock held of record, (ii) 20,983,493 shares of Class B common stock held of record, (iii) 1,397,466 shares of Class B common stock subject to outstanding stock options that are exercisable within 60 days of March 31, 2017 and (iv) 16,244 shares of Class B common stock issuable upon the settlement of RSUs releasable within 60 days of March 31, 2017.(10)Consists of (i) 1,552,677 shares of Class B common stock held of record by Bessemer Venture Partners VII Institutional L.P., (ii) 5,988,900 shares of Class B common stock held of record by BVP VII Special Opportunity Fund L.P., (iii) 3,548,975 shares of Class B common stock held of record by Bessemer Venture Partners VII L.P. and (iv) 219,837 shares of Class B Common stock held of record by 15 Angels LLC, a wholly owned subsidiary of Bessemer Venture Partners VII Institutional L.P. (collectively, the "BVP Entities"). Each of Deer VII & Co. L.P. ("Deer VII L.P"), the general partner of the BVP Entities, and Deer VII & Co. Ltd. ("Deer VII Ltd."), the general partner of Deer VII L.P., has voting and dispositive power over the shares held by the BVP Entities. J. Edmund Colloton, David J. Cowan, Byron B. Deeter, Robert P. Goodman, Jeremy S. Levine and Robert M. Stavis are the directors of Deer VII Ltd. Investment and voting decisions with respect to the shares held by the BVP Entities are made by the directors of Deer VII Ltd. acting as an investment committee. The address for each of these entities is c/o Bessemer Venture Partners, 1865 Palmer Avenue, Suite 104, Larchmont, New York 10538.(11)Consists of (i) 60,851 shares of Class B common stock held of record by Redpoint Omega Associates II, LLC and (ii) 1,967,560 shares of Class B common stock held of record by Redpoint Omega II, LP (collectively, the "Redpoint Entities"). Redpoint Omega II, LLC is the general partner of Redpoint Omega II, LP. Mr. Raney, one of our directors, is one of the managing directors of Redpoint Omega II, LLC and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega II, LP. Mr. Raney is one of the managers of Redpoint Omega Associates II, LLC and shares voting and dispositive power with respect to the shares held directly by Redpoint Omega Associates II, LLC.(12)Based on information reported by FMR LLC on Schedule 13G filed with the SEC on February 14, 2017. Of the shares of Class A common stock beneficially owned, FMR LLC reported that it has sole dispositive power with respect to 5,067,582 shares and sole voting power with respect to 210,419 shares. FMR LLC listed its address as 245 Summer Street, Boston, Massachusetts 02210.(13)Based on information reported by T. Rowe Price Associates, Inc. and T. Rowe Price New Horizons Fund, Inc. on Schedule 13G filed with the SEC on March 10, 2017. Of the shares of Class A common stock beneficially owned, T. Rowe Price Associates reported that it has sole dispositive power with respect to 9,811,600 shares and sole voting power with respect to 2,044,655 shares and T. Rowe Price New Horizons Fund, Inc. reported that it has sole voting power with respect to 5,122,228 shares. T. Rowe Price Associates Inc., and T. Rowe Price New Horizons Fund, Inc. listed their address as 100 E. Pratt Street, Baltimore, Maryland 21202.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the compensation arrangements discussed in the section titled “Executive Compensation,” including employment, termination of employment and change in control arrangements, discussed in the section titled "Executive Compensation" the following is a description of each transaction since the beginning of our last fiscal year, and each currently proposed transaction in which:
•
Investors' Rights Agreement
We are party
Other Transactions
We have granted stock options and RSUs to our named executive officers and certain of our directors. See the section titled "Executive Compensation—Outstanding Equity Awards at 2016 Year-End Table" for a description of these stock options and RSUs.
We have entered into change in control agreements with certain of our executive officers pursuant to offer letters and/or our change in control severance policy that, among other things, provides for certain severance and change in control benefits. See the section titled "Executive Compensation—Executive Severance Plan."
Other than as described above under this section titled "Certain Relationships and Related Party Transactions," since January 1, 2016, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related party where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will have a direct or indirect material interest. We believe the terms of the transactions described above were comparable to terms we could have obtained in arm's-length dealings with unrelated third parties.
Indemnification of Officers and Directors
Our amended and restated certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:
•any breach of their duty of loyalty to our Company or our stockholders;•any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;•unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or•any transaction from which they derived an improper personal benefit.
Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.
In addition, our amended and restated bylaws provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. Our amended and restated bylaws provide that we may indemnify to the fullest extent permitted by law any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Our amended and restated bylaws also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to limited exceptions.
Further, we have entered into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.
The limitation of liability and indemnification provisions that are included in our amended and restated certificate of incorporation, amended and restated bylaws and in indemnification agreements that we have entered into with our directors and executive officers may discourage stockholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law.
Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as membersmember of our board of directors.
Insofardirectors, serves as indemnification for liabilities arisingthe Board Chair of Numenta (and served as its Chief Executive Officer until 2022). The sublease was entered into on terms no less favorable than terms generally available to an unaffiliated third party under the Securities Act may be permittedsame or similar circumstances and at market rates. The sublease provided for an initial 12-month term, commencing on August 1, 2021, and gave Numenta the option to directors, officers or persons controlling our Company pursuantrenew for two 12-month extension periods. In January 2022, Numenta exercised its option to renew the foregoing provisions, we have
been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Policies and Procedures for Related Party Transactions
Our
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