UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(Name of Registrant as Specified In Its Charter) |
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| | DROPBOX, INC.
333 BRANNAN
1800 OWENS STREET
SAN FRANCISCO,
CALIFORNIA 9410794158 |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held at 9:
3000 am Pacific Time on Thursday, May
23, 201916, 2024
Dear Stockholders of Dropbox, Inc.:
We cordially invite you to attend the 20192024 annual meeting of stockholders (the “Annual Meeting”) of Dropbox, Inc., a Delaware corporation, to be held on May 23, 201916, 2024 at 9:3000 am Pacific Time, at our offices located at 333 Brannan Street, San Francisco, California 94107.Time. The Annual Meeting will be conducted virtually via live audio webcast. You may alsowill be able to attend the Annual Meeting virtually by visiting www.virtualshareholdermeeting.com/DBX2019,DBX2024, where you will be able to listen to the meeting live, submit questions and vote online.
Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the meeting. Therefore, we urge you to promptly vote and submit your proxy via the Internet, by telephone, or by mail.
We are holding the Annual Meeting for the following purposes, as more fully described in the accompanying proxy statement:
| 1. | To elect eight directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified; |
1.To elect nine directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified;
| 2. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019; |
2.To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024;
| 3. | To approve, on an advisory basis, the compensation of our named executive officers; |
3.To approve, on an advisory basis, the compensation of our named executive officers; and
| 4. | To approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers; and |
4.To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
| 5. | To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. |
Our board of directors has fixed the close of business on March 25, 201921, 2024 as the record date for the Annual Meeting. Stockholders of record on March 25, 201921, 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 is presented in the accompanying proxy statement.
The accompanying proxy statement and our annual report can be accessed by visiting: www.proxyvote.com. You will be asked to enter the 16-digit control number located on your proxy card.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to submit your vote via the
Internet, telephone,, or mail as soon as possible to ensure your shares are represented. For additional instructions on voting by telephone or the Internet, please refer to your proxy card. Returning the proxy does not deprive you of your right to attend the Annual Meeting and to vote your shares at the Annual Meeting.By order of the Board of Directors,
Andrew W. Houston
Chief Executive Officer, Co-Founder, and ChairmanChair of the Board
San Francisco, California
Dropbox, Inc.Proxy Statement and Notice of 20192024 Annual Meeting of Stockholders
TABLE OF CONTENTS (continued)
PROXY STATEMENT
FOR 2019THE 2024 ANNUAL MEETING OF STOCKHOLDERS
to be held at 9:3000 am Pacific Time on Thursday,
This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at the 20192024 annual meeting of stockholders of Dropbox, Inc., a Delaware corporation, and any postponements, adjournments or continuations thereof (the “Annual Meeting”). The Annual Meeting will be held on Thursday, May 23, 201916, 2024 at 9:3000 am Pacific Time, at our offices located at 333 Brannan Street, San Francisco, California 94107.Time. The Annual Meeting will be conducted virtually via live audio webcast. You may alsowill be able to attend the Annual Meeting virtually by visiting www.virtualshareholdermeeting.com/DBX2019,DBX2024, where you will be able to listen to the meeting live, submit questions and vote online. 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 9, 20192, 2024 to all stockholders entitled to vote at the Annual Meeting. The proxy materials and our 20182023 annual report can be accessed by following the instructions in the Notice. The information provided in the “question and answer” format below is for your convenience only and is merely a summary of the information contained in this proxy statement. You should read this entire proxy statement carefully. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement and references to our website address in this proxy statement are inactive textual references only.
What matters am I voting on?
You are being asked to vote on:
•the election of eightnine directors to serve until the next annual meeting of stockholders andor until their successors are duly elected and qualified;
•a proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019;2024;
•a proposal to approve, on an advisory basis, the compensation of our named executive officers; and
a proposal to approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers; and
•any other business as may properly come before the Annual Meeting.
How does the board of directors recommend I vote on these proposals?
Our board of directors recommends a vote:
•“FOR” the election of each director nominee named in this proxy statement;
•“FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019;2024; and
•“FOR” the approval, on an advisory basis, of the compensation of our named executive officers; andofficers.
to hold future stockholder advisory votes on the compensation of our named executive officers every “ONE YEAR.”
How many votes are needed for approval of each proposal?
•Proposal No. 1: Each director is elected by a plurality of the votes of the shares present in person (including virtually)virtually or represented by proxy at the meeting and entitled to vote on the election of directors at the Annual Meeting. Abstentions and broker non-votes will have no effect on the outcome of the vote. “Plurality” means that the eight nominees who receive the largest number of votes cast
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 1
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GENERAL INFORMATION (continued)
“for” “for” such nominees are elected as directors. As a result, any shares not voted “for” a particular nominee (whether as a result of a withhold vote or a broker non-vote) will not be counted in such nominee’s favor and will have no effect on the outcome of the election. You may vote “for”“For” or “Withhold” on each of the nominees for election as a director.
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GENERAL INFORMATION (continued)
•Proposal No. 2:The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019,2024, requires the affirmative “for” vote of a majority of the voting power of the shares of our common stock present in person (including virtually)virtually or represented by proxy at the Annual Meeting and entitled to vote thereonthereon. You may vote “For,” “Against,” or “Abstain” with respect to be approved.this proposal. Abstentions are considered shares present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” this proposal. Broker non-votes will have no effect on the outcome of this proposal.
•Proposal No. 3:The approval, on an advisory basis, of the compensation of our named executive officers requires the affirmative vote of at least a majority of the voting power of our common stock present in person (including virtually)virtually or represented by proxy at the Annual Meeting and entitled to vote thereon to be approved.thereon. You may vote “For,” “Against,” or “Abstain” with respect to this proposal. Abstentions are considered shares present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” this proposal. Broker non-votes will have no effect on the outcome of this proposal. Because this proposal is an advisory vote, the result will not be binding on our board of directors or our company. Our board of directors and our talent and compensation committee will consider the outcome of the vote when determining named executive officer compensation.
Proposal No. 4: For the approval, on an advisory basis, of the frequency of future stockholder advisory votes on the compensation of our named executive officers, the frequency (1-year, 2-years or 3-years) receiving the highest number of votes cast at the Annual Meeting by stockholders entitled to vote thereon will be considered the frequency preferred by the stockholders. If you “Abstain” from voting on this proposal, it will have no effect on the outcome. Broker non-votes also will have no effect on the outcome of this proposal. Because this proposal is an advisory vote, the result will not be binding on our board of directors or our company. Our board of directors and our compensation committee will consider the outcome of the vote when determining how often we should submit to stockholders an advisory vote to approve the compensation of our named executive officers.
Who is entitled to vote?
Holders of our Class A and Class B common stock as of the close of business on March
25, 2019,21, 2024, the record date for the Annual Meeting, may vote at the Annual Meeting. As of the record date, there were
238,878,368258,367,529 shares of our Class A common stock outstanding and
187,280,29180,017,765 shares of our 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 Stockcommon 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.”
Registered Stockholders. If shares of our common stock are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to those shares, and the Notice was provided to you directly by us. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote live at the Annual Meeting. Throughout this proxy statement, we refer to these registered stockholders as “stockholders of record.” Street Name Stockholders. If shares of our common stock are held on your behalf in a brokerage account or by a bank or other nominee, you are considered to be the beneficial owner of shares that are held in “street name,” and the Notice was forwarded to you by your broker 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 live at the Annual Meeting unless you follow your broker’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 name stockholders.” Are a certain number of shares required to be present
atin order to hold the Annual Meeting?
A quorum is the minimum number of
sharesvoting power required to be present at the Annual Meeting to properly hold an annual meeting of stockholders and conduct business under our amended and restated bylaws and Delaware law. The presence,
in person (including2 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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GENERAL INFORMATION (continued)
virtually)virtually or by proxy, 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, withhold votes, and broker non-votes are counted as shares present and entitled to vote for purposes of determining a quorum.
If you are a stockholder of record, there are fiveseveral ways to vote:
•by Internet prior to the Annual Meeting at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on May 22, 201915, 2024 for shares held directly and by 11:59 p.m. Eastern Time on May 13, 2024 for shares held in a Dropbox, Inc. employee stock ownership plan (a “Plan”) (have your Notice or proxy card in hand when you visit the website);
•by toll-free telephone at 1-800-690-6903, until 11:59 p.m. Eastern Time on May 22, 201915, 2024 for shares held directly and by 11:59 p.m. Eastern Time on May 13, 2024 for shares held in a Plan (have your Notice or proxy card in hand when you call);
•by completing and mailing your proxy card (if you received printed proxy materials); or
•by attending the Annual Meeting virtually by visiting www.virtualshareholdermeeting.com/DBX2019,DBX2024, where you may vote and submit questions during the meeting (please have your Notice or proxy card in hand when you visit the website); or.
by attending the Annual Meeting in person, you may vote by delivering your completed proxy card in person or by completing and submitting a ballot, which will be provided at the annual meeting. | | | | | |
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GENERAL INFORMATION (continued)
Even if you plan to attend the Annual Meeting, we recommend that you also vote by proxy so that your vote will be counted if you later decide not to attend the Annual Meeting.
If you are a street name stockholder, you will receive voting instructions from your broker, bank, or other nominee. You must follow the voting instructions provided by your broker, bank, or other nominee in order to direct your broker, bank, or other nominee on how to vote your shares. Street name stockholders should generally be able to vote by returning a voting instruction form, or by telephone or on the Internet. However, the availability of telephone and Internet voting will depend on the voting process of your broker, bank, or other nominee. As discussed above, if you are a street name stockholder, you may not vote your shares live at the
virtual Annual Meeting unless you obtain a legal proxy from your broker, bank, or other nominee.
How may my brokerage firm or other intermediary vote my shares if I fail to provide timely directions?
Brokerage firms and other intermediaries holding shares of our common stock in street name for their customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker will have discretion to vote your shares on our sole “routine” matter: the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31,
2019.2024. Your broker will not have discretion to vote on any other proposals, which are “non-routine” matters, absent direction from you (and failure to provide instructions on these matters will result in a “broker non-vote”).
Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by:
•entering a new vote by Internet or by telephone;
•completing and returning a later-dated proxy card;
•notifying the Corporate Secretary of Dropbox, Inc., in writing, at Dropbox, Inc., 333 Brannan1800 Owens Street, San Francisco, California 94107;94158; or
•you may also change your vote by attending and voting in person (including virtually), at the Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy).
If you are a street name stockholder, your broker, bank, or other nominee can provide you with instructions on how to change your vote.
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GENERAL INFORMATION (continued)
What do I need to do to attend the Annual Meeting?
Attending Virtually.
You will be able to attend the Annual Meeting virtually, submit your questions during the meeting and vote your shares electronically at the meeting by visiting www.virtualshareholdermeeting.com/
DBX2019.DBX2024. To participate in the Annual Meeting, you will need the control number included on your Notice or proxy card. The Annual Meeting webcast will begin promptly at 9:
3000 am Pacific Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at
9:158:45 am Pacific Time, and you should allow ample time for the check-in procedures.
Stockholder of Record: Shares Registered in Your Name.If you were a stockholder of record at the close of business on the record date you may also attend the Annual Meeting in person. To attend the meeting in person, you must present valid government-issued photo identification (e.g., driver’s license or passport) for admission to the Annual Meeting.
Beneficial Owner of Shares Held in “Street Name”: Shares Registered in the Name of a Broker, Bank or Other Nominee.If you were a beneficial owner at the close of business on the record date, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” from your broker, bank or other nominee who is the stockholder of record with respect to your shares. You may still attend the annual meeting even if you do not have a legal proxy. For in-person admission to the Annual Meeting, you must provide proof of beneficial ownership as of the record date (e.g., your most recent account statement reflecting your stock ownership as of the record date) and you must present valid government-issued photo identification.
Please note that no cameras, recording equipment, large bags, briefcases, or packages will be permitted in the Annual Meeting.
Directions to the Annual Meeting may be found in the section entitled “Other Matters—Directions to Annual Meeting” below.
Will the annual meeting be webcast?
We are giving stockholders the option to attend the Annual Meeting virtually where they can listen to the audio of the meeting live via the Internet by visiting www.virtualshareholdermeeting.com/DBX2019.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our board of directors. Andrew W. Houston and
Ajay V. VasheeTimothy Regan 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 the proxy is dated and signed, but no specific instructions are given, 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.
Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?
In accordance with the rules of the Securities and Exchange Commission (“SEC”), we have elected to furnish our proxy materials, including this proxy statement and our annual report, primarily via the Internet. The Notice containing instructions on how to access our proxy materials is first being mailed on or about April 9, 20192, 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-mail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of
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Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 3 |
GENERAL INFORMATION (continued)
our proxy materials on the Internet to help reduce the environmental impact and cost of our annual meetings of stockholders.
How are proxies solicited for the Annual Meeting?
Our board of directors is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. We will reimburse brokers or other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker, bank, or other nominee holds shares of our common stock on your behalf. In addition, our directors and employees may also solicit proxies
in person, by telephone,
by electronic communication or by other means of communication. Our directors and employees will not be paid any additional compensation for soliciting proxies.
4 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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GENERAL INFORMATION (continued)
Where can I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we will file a Form 8-K to publish preliminary results and will provide the final results in an amendment to the Form 8-K as soon as they become available.
I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I
obtain an additional copy of the proxy materials?We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, our proxy materials, to multiple stockholders who share the same address, unless we have received contrary instructions from one or more of such stockholders. This procedure reduces our printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice and, if applicable, our proxy materials, to any stockholder at a shared address to which we delivered a single copy of any of these materials. To receive a separate copy, or, if a stockholder is receiving multiple copies, to request that we only send a single copy of the Notice and, if applicable, our proxy materials, such stockholder may contact us at:
Dropbox, Inc.
Attention: Investor Relations
333 BrannanCorporate Secretary
1800 Owens Street
San Francisco, California
9410794158
IR@dropbox.com
Street name stockholders may contact their broker, bank, or other nominee to request information about householding.
What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to
nominate individuals to serve as directors?Stockholders may present
proper proposals for inclusion in our proxy statement and for consideration at next year’s annual meeting of stockholders by submitting their proposals in writing to our Corporate Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for the
20202025 annual meeting of stockholders, our
Corporate Secretary must receive the written proposal at our principal executive offices not later than December
11, 2019.3, 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:
Dropbox, Inc.
Attention: Corporate Secretary
333 Brannan
1800 Owens Street
San Francisco, California
9410794158
IR@dropbox.com
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GENERAL INFORMATION (continued)
Our 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 in our proxy materials with respect to suchnotice of annual meeting (or any supplement thereto), (ii) otherwise properly brought before such annual meeting by or at the direction of our board of directors, or (iii) properly brought before such meeting by a stockholder of record entitled to vote at 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 20202025 annual meeting of stockholders, our Corporate Secretary must receive the written notice at our principal executive offices:
•not earlier than January 25, 2020;16, 2025; and
•not later than February 24, 2020.15, 2025.
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GENERAL INFORMATION (continued)
In the event that we hold the 20202025 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary of the Annual Meeting, a notice of a stockholder proposal that is not intended to be included in our proxy statement must be received no earlier than the close of business on the 120th day before the 20202025 annual meeting of stockholders and no later than the close of business on the later of the following two dates:
•the 90th day prior to the 20202025 annual meeting of stockholders; or
•the 10th day following the day on which public announcement of the date of the 20202025 annual meeting of stockholders is first made.
If a stockholder who has notified us of his, her, or its intention to present a proposal at an annual meeting of stockholders does not appear to present his, her, or its proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting.
Recommendation or Nomination of Director Candidates
Holders of 1% of our fully diluted capitalization for at least 12 months prior to the submission of the recommendation may recommend director candidates for consideration by our nominating and corporate governance committee. Any such recommendations should include the nominee’s name and qualifications for membership on our board of directors and should be directed to our Corporate Secretary or legal department at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see the section titled “Board of Directorsand Corporate Governance—Stockholder Recommendations and Nominations to the Board of Directors.”In addition, our
Our 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” for stockholder proposals that are not intended to be included in a proxy statement. In addition, a stockholder who desires to nominate director candidates for election at the 2025 Annual Meeting, which is expected to be held in or about May 2025, must comply with the requirements of newly enacted Rule 14a-19 by notifying our Corporate Secretary with regard to the intent to solicit proxies in support of director nominees (other than our nominees) as required by Rule 14a-19 no later than March 17, 2025. Please note that the notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under the advance notice provisions of our amended and restated bylaws as described above.
A copy of our amended and restated bylaws is available via the SEC’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.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our business affairs are managed under the direction of our board of directors. OurAs of March 21, 2024, our board of directors consistsconsisted of eightnine directors, sixeight of whom qualifyqualified as “independent” under the listing standardsrules of the NASDAQ Global SelectNasdaq Stock Market (“Nasdaq”).
Until the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of
our common stock, we will have a single class of directors who are each elected for one-year terms and until their successors are duly elected and qualified. When the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of
our common stock, we will have a classified board of directors consisting of three classes of approximately equal size, each serving staggered three-year terms. Our directors will be assigned by the then-current board of directors to a class.
In determining the composition of our board, our board of directors and nominating and corporate governance committee are committed to ensuring that our directors maintain effective and independent oversight of our business and that they capably represent the interests of our stockholders. As part of this commitment, our nominating and corporate governance committee considers the diversity of director nominees with respect to gender, race, ethnicity, sexual orientation, gender identity, viewpoints and perspectives, experience, and backgrounds. The following tablecharts provide summary information about our director nominees with respect to diversity, based on self-identification, independence, and tenure. For additional information regarding our criteria for evaluating director nominees, see the section titled “Considerations in Evaluating Director Nominees.”
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Board Diversity Matrix (As of March 21, 2024)(1) |
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| Total Number of Directors | 9 |
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| Female | Male | Non-Binary | Did Not Disclose Gender |
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| Gender Identity |
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| Directors | 3 | 6 | | |
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| Number of Directors who identify in any of the categories below |
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| African American or Black | | 1 | | |
| Alaskan Native or Native American | | | | |
| Asian | 1 | 1 | | |
| Hispanic or Latinx | | | | |
| Native Hawaiian or Pacific Islander | | | | |
| White | 2 | 4 | | |
| Two or More Races or Ethnicities | | | | |
| LGBTQ+ | | | | |
| Did Not Disclose Demographic Background | | | | |
(1) The Board Diversity Matrix above presents our board's diversity statistics in the format prescribed by the Nasdaq rules. | | | | | |
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
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| 8 of 9 |
Director nominees
who are independent |
| | |
| 5.4 Years |
Average tenure of
director nominees |
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 7 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
Nominees for Director
The following provides summary information about each of our director nominees as of March
15, 2019:Name | Age | Position | Director Since | Independent |
Andrew W. Houston | | 36 | | Chief Executive Officer, Co-Founder, and Chairman | 2007 | No |
Arash Ferdowsi | | 33 | | Co-Founder and Director | 2007 | No |
Donald W. Blair(1) | | 60 | | Director | 2017 | Yes |
Paul E. Jacobs(3) | | 56 | | Director | 2016 | Yes |
Robert J. Mylod, Jr.(2)(5) | | 52 | | Director | 2014 | Yes |
Condoleezza Rice(4)(6) | | 64 | | Director | 2014 | Yes |
R. Bryan Schreier(1)(2) | | 40 | | Director | 2009 | Yes |
Margaret C. Whitman(7) | | 62 | | Director | 2017 | Yes |
| | | | | | | | |
| | (1)ANDREW W. HOUSTON |
| | |
| | MemberAGE: 41 DIRECTOR SINCE: 2007 COMMITTEES: None CHAIR OF THE BOARD EXPERIENCE: Mr. Houston is one of our audit committee |
| (2) | Memberco-founders and has served as a member of our compensation committee |
| (3) | Memberboard of directors and our Chief Executive Officer since June 2007. Mr. Houston also currently serves as a member of the board of directors of Meta Platforms, Inc. Mr. Houston holds a B.S. in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology. Mr. Houston was selected to serve on our board of directors because of the perspective and experience he brings as our Chief Executive Officer and as one of our nominating and corporate governance committeeco-founders. |
| | | | | | | | |
| | DONALD W. BLAIR |
| | |
| | (4)Lead independent director |
AGE: 65
| (5) | DIRECTOR SINCE: 2017 COMMITTEES: Audit (Chair) LEAD INDEPENDENT DIRECTOR EXPERIENCE: Mr. Blair has served as a member of our audit committeeBoard of Directors since December 2017. From November 1999 to October 2015, Mr. Blair served as Executive Vice President and Chief Financial Officer for NIKE, Inc., or NIKE, a global footwear and apparel company. Prior to joining NIKE, for fifteen years, Mr. Blair served in a number of senior executive-level corporate and operating unit financial assignments for PepsiCo, Inc., or PepsiCo, a food and beverage company, including Chief Financial Officer for PepsiCo Japan (based in Tokyo) and Pepsi-Cola International’s Asia Division (based in Hong Kong). Mr. Blair currently serves as a member of the board of directors for Corning Incorporated, a global manufacturing company. Mr. Blair holds an M.B.A. and a B.S. in Economics from the University of Pennsylvania. Mr. Blair was selected to serve on our board of directors because of his extensive financial expertise, and business management and governance experience. |
| | | | | |
| 8 | (6) | ChairDropbox, Inc. Proxy Statement and Notice of our compensation committee2024 Annual Meeting of Stockholders |
| (7) | Chair of our nominating and corporate governance committee |
Nominees for Director
Andrew W. Houston. Mr. Houston is one of our co-founders and has served as a member of our board of directors and our Chief Executive Officer since June 2007. Mr. Houston holds a B.S. in Computer Science from the Massachusetts Institute of Technology. Mr. Houston was selected to serve on our board of directors because of the perspective and experience he brings as our Chief Executive Officer and as one of our co-founders.
Arash Ferdowsi. Mr. Ferdowsi is one of our co-founders and has served as a member of our board of directors since June 2007. From June 2007 to October 2016, Mr. Ferdowsi served as our chief technology officer. Mr. Ferdowsi attended the Massachusetts Institute of Technology. Mr. Ferdowsi was selected to serve on our board of directors because of the perspective and experience he brings as one of our co-founders.
Donald W. Blair. Mr. Blair has served as a member of our board of directors since December 2017. From November 1999 to October 2015, Mr. Blair served as Executive Vice President and Chief Financial Officer for NIKE, Inc., or NIKE, a global footwear and apparel company. Prior to joining NIKE, for fifteen years, Mr. Blair served in a number of senior executive-level corporate and operating unit financial assignments for PepsiCo, Inc., or PepsiCo, a food and beverage company, including Chief Financial Officer for PepsiCo Japan (based in Tokyo) and Pepsi-Cola International’s Asia Division (based in Hong Kong). Mr. Blair currently serves as a member of the board of directors for Corning Incorporated, a global manufacturing company. Mr. Blair holds an M.B.A. and a B.S. in Economics from the University of Pennsylvania. Mr. Blair was selected to serve on our board of directors because of his extensive financial expertise, and business management and governance experience.
Paul E. Jacobs, Ph.D. Dr. Jacobs has served as a member of our board of directors since April 2016. Since April 2018, Dr. Jacobs has served as Chairman and Chief Executive Officer of XCOM Labs, Inc., a wireless technology company. From March 2014 to March 2018, Dr. Jacobs served as Executive Chairman for Qualcomm Incorporated, a semiconductor and telecommunications equipment company, or Qualcomm. From March 2009 to March 2018, Dr. Jacobs served as Chairman of the board of directors for Qualcomm. From July 2005 to
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 7
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
March 2014, Dr. Jacobs served as Chief Executive Officer for Qualcomm. Dr. Jacobs also currently serves as a member of the board of directors for a number of private companies. Dr. Jacobs holds a Ph.D. in Electrical Engineering and Computer Science, a M.S. in Electrical Engineering, and a B.S. in Electrical Engineering and Computer Science from the University of California, Berkeley. Dr. Jacobs was selected to serve on our board of directors because of his extensive business, operations, and management experience.
Robert J. Mylod Jr. Mr. Mylod has served as a member of our board of directors since September 2014. Mr. Mylod served as Managing Partner for Annox Capital Management, a venture capital firm that Mr. Mylod founded, since January 2013. Mr. Mylod served as Head of Worldwide Strategy & Planning and Vice Chairman for Bookings Holdings, Inc. (f/k/a The Priceline Group), an online travel services provider, from January 2009 to March 2011 and as its Chief Financial Officer and Vice Chairman from November 2000 to January 2009. Mr. Mylod currently serves as the Chairman of the board of directors for Redfin Corporation, a real estate company that provides web-based real estate database and brokerage services, and as a member of the board of directors for Bookings Holdings, Inc. and a number of private companies. Mr. Mylod holds an MBA from the University of Chicago Booth School of Business and an A.B. in English from the University of Michigan. Mr. Mylod was selected to serve on our board of directors because of his financial expertise and global business experience.
Condoleezza Rice, Ph.D. Dr. Rice has served as a member of our board of directors since April 2014. Since September 2010, Dr. Rice has served as the Denning Professor of Global Business and the Economy for the Stanford Graduate School of Business. Since March 2009, Dr. Rice has served as a Senior Fellow of Public Policy for the Hoover Institution, Stanford University, as a Senior Fellow for the Freeman Spogli Institute for International Studies, Stanford University, and as a Professor of Political Science for Stanford University. Dr. Rice has served as a partner at RiceHadleyGates LLC, an international strategic consulting firm that Dr. Rice founded, since November 2009. From January 2005 to January 2009, Dr. Rice served as the Secretary of State of the United States of America. From January 2001 to January 2005, Dr. Rice served as Chief National Security Advisor to President George W. Bush. Beginning in 1981, she served in various roles at Stanford University, including serving as Provost from 1993-1999. Dr. Rice previously served as a member of the board of directors of Charles Schwab Corporation, a bank and brokerage firm, Chevron Corporation, a multinational energy corporation, Transamerica Corporation, a life insurance and investment company, and KiOR, Inc., a renewable fuels company. Dr. Rice currently serves as an advisor for a number of other public companies, and as a member of the board directors for a number of private companies, including C3IoT and Makena Capital Management, LLC. Dr. Rice holds a Ph.D. in Political Science from the University of Denver, an M.A. in Political Science from the University of Notre Dame and a B.A in Political Science from the University of Denver. Dr. Rice was selected to serve on our board of directors because of her deep global expertise and business experience from her prior roles as a director of multiple public companies and her background in policymaking, education, and innovation.
R. Bryan Schreier. Mr. Schreier has served as a member of our board of directors since July 2009. Since March 2008, Mr. Schreier has served as a partner for Sequoia Capital, a venture capital firm. Mr. Schreier currently serves as a member of the board of directors for a number of private companies, including Clever, Domino Data Lab, Front, Hearsay Systems, Thumbtack, and Zūm. He previously served on the board of directors of Qualtrics until it was acquired by SAP in January 2019. Mr. Schreier holds a B.A. in Computer Science from Princeton University. Mr. Schreier was selected to serve on our board of directors because of his financial and managerial experience.
Margaret C. Whitman. Ms. Whitman has served as a member of our board of directors since September 2017. Since March 2018, Ms. Whitman has served as Chief Executive Officer for Quibi, Inc., a mobile media company. From June 2017 to February 2018, Ms. Whitman served as Chief Executive Officer for Hewlett Packard Enterprise Company, or HPE, a multinational enterprise information technology company, and as its President and Chief Executive Officer from November 2015 to June 2017. From July 2014 to November 2015, Ms. Whitman served as President, Chief Executive Officer, and Chairman for Hewlett-Packard Company (now known as HP Inc.), the former parent of Hewlett Packard Enterprise Company, and as its President and Chief Executive Officer from September 2011 to November 2015. Prior to joining HP Inc., Ms. Whitman was the Republican Party’s nominee for the 2010 gubernatorial race in California. From March 2011 to September 2011, Ms. Whitman served as a part-time strategic advisor to Kleiner Perkins Caufield & Byers, a private equity firm. From 1998 to 2008, Ms. Whitman served as President and Chief Executive Officer of eBay Inc., an online marketplace and payments company. Ms. Whitman also currently serves as a member of the board of directors for The Procter & Gamble Company, a consumer goods company. Ms. Whitman previously served as a member of the board of directors for HPE, as well as HP Inc., DXC Technology Company, an information technology and consulting services company, and for a number of private companies. Ms. Whitman holds an M.B.A from Harvard Business School and an A.B. in Economics from Princeton University. Ms. Whitman was selected to serve on our Board of Directors because of her extensive leadership, strategy, risk management, and consumer industry experience.
(continued) | | | | | | | | |
| | LISA CAMPBELL |
| | |
| | AGE: 60 DIRECTOR SINCE: 2019 COMMITTEES: Audit; Nominating & Corporate Governance INDEPENDENT DIRECTOR EXPERIENCE: Ms. Campbell has served as a member of our board of directors since August 2019. Since July 2021, Ms. Campbell has served as Chief Marketing Officer and Partner for OneTrust. From August 2017 to July 2021, Ms. Campbell served as Chief Marketing Officer and Senior Vice President of Business Strategy for Autodesk, Inc. From January 2015 to August 2017, Ms. Campbell served as Vice President, Industry Strategy and Marketing – Manufacturing at Autodesk, and she served as its Vice President, Industry Strategy and Marketing – Architecture, Engineering and Construction from February 2012 through January 2015. She has also held other senior positions at Autodesk, including managing its Global eCommerce business and Autodesk.com, and managing its Geospatial Business and infrastructure business. Prior to joining Autodesk in 2003, Ms. Campbell served in executive-level marketing positions at Evolve (now Oracle), Sterling Software Inc., and Digital Equipment Corporation. Ms. Campbell holds an M.B.A. from Babson College and a B.A. in Mathematics and Computer Science from Boston College. She was selected to serve on our board of directors because of her valuable expertise in business, industry, and marketing strategy. |
| | | | | | | | |
| | PAUL E. JACOBS, Ph.D |
| | |
| | AGE: 61 DIRECTOR SINCE: 2016 COMMITTEES: Nominating & Corporate Governance (Chair) INDEPENDENT DIRECTOR EXPERIENCE: Dr. Jacobs has served as a member of our board of directors since April 2016. Since August 2023, Dr. Jacobs has served as Chief Executive Officer of Globalstar, Inc., or Globalstar, a telecom infrastructure provider. Since April 2018, Dr. Jacobs has also served as Chair and Chief Executive Officer of VIREWIRX, Inc., formerly XCOM Labs, Inc., a wireless technology company. From March 2014 to March 2018, Dr. Jacobs served as Executive Chair for Qualcomm Incorporated, a semiconductor and telecommunications equipment company, or Qualcomm. From March 2009 to March 2018, Dr. Jacobs served as Chair of the board of directors for Qualcomm. From July 2005 to March 2014, Dr. Jacobs served as Chief Executive Officer for Qualcomm. Dr. Jacobs currently serves as a member of the board of directors of Globalstar and Arm Holdings plc, a microchip design company. Dr. Jacobs holds a Ph.D. in Electrical Engineering and Computer Science, an M.S. in Electrical Engineering, and a B.S. in Electrical Engineering and Computer Science from the University of California, Berkeley. Dr. Jacobs was selected to serve on our board of directors because of his extensive business, operations, and management experience. |
8 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 9 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
| | | | | | | | |
| | SARA MATHEW |
| | |
| | AGE: 68 DIRECTOR SINCE: 2021 COMMITTEES: Audit; Talent and Compensation (Chair) INDEPENDENT DIRECTOR EXPERIENCE: Ms. Mathew has served as a member of our board of directors since July 2021. From January 2010 to October 2013, Ms. Mathew served as Chief Executive Officer of Dun and Bradstreet Corporation, or Dun and Bradstreet, a commercial data analytics company, as its President and Chief Operating Officer from March 2007 to January 2010 and as its Chief Financial Officer from August 2001 to March 2007. Ms. Mathew also served as a member of the board of directors of Dun and Bradstreet from January 2008 to October 2013, including as Chair from July 2010 to October 2013. Prior to joining Dun and Bradstreet, Ms. Mathew served for eighteen years in a number of executive-level finance positions for the Procter & Gamble Company, or P&G, a consumer goods company. Ms. Mathew currently serves as a member of the board of directors for Carnival Corporation & plc, a global leisure travel company and State Street Corporation, a financial services company. Ms. Mathew previously served as a member of the board of directors of Federal Home Loan Mortgage Company, a government-sponsored mortgage securitization company, XOS, Inc., a manufacturer of electric trucks, Reckitt Benckiser, a consumer products company, Avon Products, Inc. a beauty, household and personal care products manufacturer, Campbell Soup Company, Inc., a consumer food company, and Shire PLC, a biopharmaceutical company. Ms. Mathew holds an M.B.A. from Xavier University, a graduate degree in accounting from the Institute of Cost and Works Accountants from India, and a B.S. in physics, mathematics and chemistry from the University of Madras. Ms. Mathew was selected to serve on our board of directors because of her experience leading multi-national enterprises and valuable financial, strategy and operational expertise. |
| | | | | | | | |
| | ANDREW MOORE, Ph.D |
| | |
| | AGE: 59 DIRECTOR SINCE: 2023 COMMITTEES: Audit INDEPENDENT DIRECTOR EXPERIENCE: Dr. Moore has served as a member of our board of directors since December 2023. Since March 2023, Dr. Moore has served as the Founder and CEO of Lovelace AI, a startup AI company building products for national security. From January 2019 to January 2023, Dr. Moore served as General Manager and VP of Google Cloud Artificial Intelligence & Industry Solutions at Google LLC, a wholly owned subsidiary of Alphabet Inc., or Google. From September 2014 to January 2019, Dr. Moore served as the Dean of the School of Computer Science and as Professor of Computer Science and Robotics at Carnegie Mellon University. From October 2011 to July 2014, Dr. Moore served as VP of Engineering, Google Commerce at Google and from January 2006 to October 2011, he served as a Founding Director of Google’s Pittsburgh Engineering office. Prior to joining Google, Dr. Moore was an assistant professor and also professor of Computer Science and Robotics at Carnegie Mellon University from 1993-2006. Dr. Moore holds a Ph.D. in Computer Science and a B.A. in Mathematics and Computer Science from the University of Cambridge. Mr. Moore was selected to serve on our board of directors because of his deep academic experience, product knowledge, and engineering leadership. |
| | | | | |
| 10 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
| | | | | | | | |
| | ABHAY PARASNIS |
| | |
| | AGE: 49 DIRECTOR SINCE: 2022 COMMITTEES: Talent and Compensation INDEPENDENT DIRECTOR EXPERIENCE: Mr. Parasnis has served as a member of our board of directors since March 2022. Since May 2022, Mr. Parasnis has served as Chief Executive Officer of Typeface Inc., a company that provides enterprise AI solutions. From July 2015 to February 2022, Mr. Parasnis served as Chief Technology Officer of Adobe Inc., or Adobe, during which time Mr. Parasnis also held additional titles, including Executive Vice President from January 2016 to February 2022, Chief Strategy Officer from February 2020 to December 2020, and Chief Product Officer from December 2020 to February 2022. Prior to joining Adobe, Mr. Parasnis served in executive level positions with Kony, Inc., Oracle Corporation and Microsoft Corporation. Mr. Parasnis also serves as a member of the board of directors of Schneider Electric SE, a French digital automation and energy management company traded on the Euronext (Paris) exchange. Mr. Parasnis holds a B.S. in Electronics & Telecommunications from the College of Engineering Pune in Pune, India and an Advanced Diploma in Computer Science from the National Institute of Information Technology. Mr. Parasnis was selected to serve on our board of directors because of his extensive technical, product, and operational expertise and his experience leading and growing a multi-product portfolio. |
| | | | | | | | |
| | KAREN PEACOCK |
| | |
| | AGE: 51 DIRECTOR SINCE: 2019 COMMITTEES: Talent and Compensation INDEPENDENT DIRECTOR EXPERIENCE: Ms. Peacock has served as a member of our board of directors since August 2019. From July 2020 to October 2022, Ms. Peacock served as Chief Executive Officer for Intercom, Inc., or Intercom, a corporation that develops and markets business messaging and communication software, and from May 2017 to July 2020, Ms. Peacock served as Chief Operating Officer for Intercom. From January 2016 to March 2017, Ms. Peacock served as Senior Vice President, Small Business at Intuit Inc., or Intuit, and from 2014 to January 2016, she served as VP, General Manager of Intuit’s Employee Management Solutions division. Ms. Peacock has also held other senior roles at Intuit, including Vice President of Marketing and Product Management. Prior to joining Intuit in 2002, Ms. Peacock was Director of Product Management at Allegis Corporation and prior to that, was a management consultant with the Boston Consulting Group. Ms. Peacock holds an M.B.A. from Stanford Graduate School of Business and a B.A. in Applied Mathematics from Harvard University. She was selected to serve on our board of directors because of her valuable expertise in business, industry, and her extensive experience in executive-level operational roles. |
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 11 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
| | | | | | | | |
| | MICHAEL SEIBEL |
| | |
| | AGE: 41 DIRECTOR SINCE: 2020 COMMITTEES: Talent and Compensation INDEPENDENT DIRECTOR EXPERIENCE: Mr. Seibel has served as a member of our board of directors since December 2020. Mr. Seibel has served as a Partner at Y Combinator, an accelerator and investment company for early-stage technology companies since October 2014 and is the former Managing Director of YC Early Stage. From February 2012 to August 2012, Mr. Seibel served as Chief Executive Officer of Socialcam, Inc., a social media company, and from June 2007 to October 2011, Mr. Seibel served as Chief Executive Officer of Justin.tv (now known as Twitch.tv), an online video broadcasting company. Mr. Seibel currently serves on the board of directors of Reddit, Inc., a community and discussion platform. Mr. Seibel holds a B.A. in Political Science from Yale University. Mr. Seibel was selected to serve on our board of directors because of his financial and managerial experience. |
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| 12 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
Under the listing rules of Nasdaq, independent directors must comprise a majority of a listed company’s board of directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit,
talent and compensation, and nominating and corporate governance committees be independent. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of the company’s board of directors, the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
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 Drs. RiceJacobs and Jacobs,Moore, Messrs. Blair, Mylod,Parasnis and Schreier,Seibel, and Ms. Whitman,Mss. Campbell, Mathew and Peacock 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 Nasdaq listing rules. 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, if any, described in the section titled “Certain Relationships and Related Party Transactions.”
Board Leadership Structure and Role of the Lead Independent Director
Mr. Houston currently serves as both the
chairmanchair of our board of directors and as our
chief executive officer.Chief Executive Officer. As our co-founder, Mr. Houston is best positioned to identify strategic priorities, lead critical discussion, and execute our business plans.
Our board of directors has adopted Corporate Governance Guidelines that provide that one of our independent directors should serve as our lead independent director at any time when the chairmanchair of our board of directors is not independent, including when our chief executive officerChief Executive Officer serves as the chairmanchair of our board of directors. Because Mr. Houston is our chairmanchair and is not an “independent” director as defined in Nasdaq’s listing standards,rules, our board of directors has appointed Dr. Ricedetermined that it is advisable and in the best interests of stockholders to servehave a lead independent director to, among other things, preside over meetings of the independent directors and help set the agenda for board meetings. Mr. Blair has served as our lead independent director.director since March 2020. As our lead independent director, Dr. RiceMr. Blair presides over periodic meetings of our independent directors, servesconsults with Mr. Houston on the agenda for meetings of the board, serves as a liaison between Mr. Houston and our independent directors, and performs such additional duties as our board of directors may otherwise determine and delegate. Mr. Blair has extensive executive and board leadership experience and is involved in setting the agenda of the board and guiding discussion to ensure that appropriate time and attention is allocated to the board's risk oversight functions as further described below. The lead independent director’s responsibilities include:
•presiding over all meetings of the board of directors at which the chair is not present;
•calling separate meetings of the independent directors and determining the agenda and serving as chair of meetings of independent directors;
•reporting to our Chief Executive Officer and chair regarding feedback from executive sessions; and
•serving as spokesperson for the company if requested.
Only independent directors serve on the audit committee, the
talent and compensation committee, and the nominating and corporate governance committee of our board of directors. Our independent directors meet at least quarterly in executive sessions chaired by the lead independent director, which include discussions and recommendations regarding guidance to be provided to the
chief executive officer,Chief Executive Officer, and such topics as the independent directors may determine.
As a result of the board of directors’ committee system and the existence of a majority of independent directors,
combined with a strong lead independent director with significant responsibilities and the company’s robust corporate governance policies and procedures, the board of directors
believes it maintains effective oversight of our business operations, including independent oversight of our financial statements
and risk management, executive compensation, selection of director candidates, and corporate governance programs. We believe that the leadership structure of our board of directors, including
Dr. Rice’sMr. Blair’s role as lead independent director, as well as the strong independent committees of our board of directors is appropriate and enhances our board of directors’ ability to effectively carry out its roles and responsibilities on behalf of our
stockholders, whilestockholders. Mr. Houston’s combined role
leverages his deep involvement with the company’s business, and his history as a co-founder of the company with knowledge of the company’s development and culture enables strong leadership, creates clear accountability and enhances our ability to communicate our message and strategy clearly and consistently to stockholders.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 13 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
Our board of directors has established an audit committee, a
talent and compensation committee, and a nominating and corporate governance committee. The composition and responsibilities of each of the committees of our board of directors is described below. Members will serve on these committees until their resignation or until as otherwise determined by our board of directors.
| | | | | | | | | | | |
| | | |
| Director | Audit | Talent and Compensation | Nominating and Corporate Governance |
| | | |
| Andrew W. Houston | | | |
| Donald W. Blair | | | |
| Lisa Campbell | | | |
| Paul E. Jacobs, Ph.D | | | |
| Sara Mathew | | | |
| Andrew Moore, Ph.D | | | |
| Abhay Parasnis | | | |
| Karen Peacock | | | |
| Michael Seibel | | | |
| Number of Meetings | 5 | 4 | 4 |
 Committee member |  Committee chair |  Financial expert | |
Our audit committee consists of
Messrs.Mr. Blair,
Mylod,Dr. Moore and
Schreier,Mss. Campbell and Mathew, with Mr.
MylodBlair serving as
chairperson. Ms. Whitman served as a member of ourchair. Dr. Moore was appointed to the audit committee
throughout 2018, with Mr. Schreier assuming the role in
February 2019.December 2023. Each of the members of the audit committee meets the requirements for independence of audit committee members under Nasdaq listing
standardsrules and SEC rules
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 9
TABLE OF CONTENTS
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
and regulations and also meets the financial literacy and sophistication requirements of the Nasdaq listing standards.rules. Our board of directors has determined that Messrs.Mr. Blair and MylodMs. Mathew are audit committee financial experts within the meaning of Item 407(d) of Regulation S-K .S-K. Our audit committee is responsible for, among other things:
•selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;
•helping to ensure the independence and overseeing performance of the independent registered public accounting firm;
•reviewing and discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management, internal audit and the independent registered public accounting firm, our interim and year-end operating results;
•reviewing our financial statements and our critical accounting policies and estimates;
•overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;
•overseeing programs and policies with respect to assessing and managing risks pertaining to our operational infrastructure, particularly reliability, business continuity, cybersecurity, and data privacy;
•reviewing and approving any amendments to the internal audit charter;
•reviewing the design, implementation, adequacy, and effectiveness of our internal controls;
•overseeing the performance of our internal audit department, which functionally reports to the audit committee;
developing•establishing and overseeing procedures for employees to submit concerns anonymously about questionable accounting, internal accounting controls, or audit matters;
•overseeing management’s assessment and mitigation of enterprise risks;
•overseeing compliance with our code of business conduct and ethics;
•reviewing and approving related party transactions; and
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| 14 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
•pre-approving all audit and all permissible 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 Nasdaq. A copy of the charter for our audit committee is available on our website at investors.dropbox.com. During 2018,2023, our audit committee held five meetings.
Talent and Compensation Committee
Our talent and compensation committee consists of Dr. RiceMss. Mathew and Peacock and Messrs. MylodParasnis and Schreier,Seibel, with Dr. RiceMs. Mathew serving as chairperson.chair. Each member of the talent and compensation committee meets the requirements for independence for talent and compensation committee members under the listing standards of Nasdaq. Each member of our talent and compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), or Rule 16b-3. Our talent and compensation committee is responsible for, among other things:
•reviewing, approving, and determining, or making recommendations to our board of directors regarding, the compensation of our executive officers, including our chief executive officer;Chief Executive Officer;
administering our equity compensation plans;
•reviewing, approving, and administering incentive compensation and equity compensation plans;
•reviewing and approving our overall compensation philosophy; and
•making recommendations regarding non-employee director compensation to our full board of directors.directors; and
•reviewing our human capital management disclosures and activities, including assisting our board with matters related to talent acquisition, management and development, employee engagement, and diversity and inclusion.
Our
talent and compensation committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of Nasdaq. A copy of the charter for our
talent and compensation committee is available on our website at investors.dropbox.com. During
2018,2023, our
talent and compensation committee held four meetings.
10 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Ms. WhitmanCampbell and Dr. Jacobs, with Ms. WhitmanDr. Jacobs serving as chairperson, eachchair. Each member of whom meetthe nominating and corporate governance committee meets the requirements for independence under the listing standards of Nasdaq. Our nominating and corporate governance committee is responsible for, among other things:
•identifying, evaluating, and selecting, or making recommendations to our board of directors regarding nominees for election to our board of directors and its committees;
•overseeing the evaluation of the performance of our board of directors and of individual directors;
•considering and making recommendations to our board of directors regarding the composition of our board of directors and its committees;
•overseeing our corporate governance practices;
•reviewing succession planning processes for executive officers, including the CEO and assisting the board in the succession planning process;
contributing to succession planning; and
•developing and making recommendations to our board of directors regarding corporate governance guidelines and matters.matters; and
•overseeing our environmental, social and governance (“ESG”) activities, programs and disclosures.
Our nominating and corporate governance committee operates under a written charter that satisfies the applicable Nasdaq listing standards. A copy of the charter for our nominating and corporate governance committee is available on our website at investors.dropbox.com. During
2018,2023, our nominating and corporate governance committee held
twofour meetings.
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Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 15 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
Attendance at Board and Stockholder Meetings
During our fiscal year ended December 31,
2018,2023, our board of directors held eight 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 has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served.
Although we do not have a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we strongly encourage, but do not require, our directors to attend.
The Annual Meeting will beAll except one of our
firstdirectors who then served on the board attended our 2023 annual meeting of our stockholders.
Compensation Committee Interlocks and Insider Participation
None of the members of our
talent and 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
talent and 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
talent and compensation committee.
Considerations in Evaluating Director Nominees
Our nominating and corporate governance committee uses a variety of methods,
including engaging the services of outside consultants and search firms, to identify and evaluate director nominees. In its evaluation of director candidates, our nominating and corporate governance committee
will considerconsiders the current size and composition, organization, and governance 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, integrity, judgment, business experience, and diversity, and with respect to diversity, such factors as gender, race, ethnicity,
sexual orientation, gender identity, differences in professional background, education, skill and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the board of directors, potential conflicts of interest and other commitments. Nominees must also have the highest personal and professional ethics and the ability to offer advice and guidance to our
chief executive officerChief Executive Officer and other members of management based on proven achievement and leadership in the companies or institutions with which they
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
are affiliated. Director candidates must understand the fiduciary responsibilities that are required of a member of our board of directors and have sufficient time available, in the judgment of our nominating and corporate governance committee, to perform all board of director and applicable committee responsibilities. Members of our board of directors are expected to prepare for, attend, and participate in all board of directors and applicable committee meetings. Our nominating and corporate governance committee may also consider such other factors as it may deem, from time to time, are in our and our stockholders’ best interests.
Our board of directors conducts an annual evaluation of the performance of individual directors, the board as a whole, and each of the board’s standing committees, including an evaluation of the qualifications of individual members of the board and its committees. The evaluation is conducted via oral interviews by our lead independent director in close partnership with our in-house legal team, using as a basis for discussion a list of questions that are provided to each director in advance. The results of the evaluation and any recommendations for improvement are provided orally to our board of directors and the other standing committees of the board either by the lead independent director or a member of our in-house legal team.
The nominating and corporate governance committee considers the suitability of each director candidate, including current directors, in light of the current size and composition of our board. Although we do 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 director and committee evaluations. After completing its review and evaluation of director candidates,
including incumbent directors, our nominating and corporate governance committee recommends to our full board of directors the director nominees for selection.
Board Evaluations
The effectiveness of our board of directors and its committees is critical to our success. To maintain and improve that effectiveness, our nominating and corporate governance committee, in partnership with our lead independent director, oversees the design and implementation of an annual assessment of our board and its committees.
Our board of directors engaged a third-party board governance consultant (the “Consultant”) to help enhance this assessment process. Our board of directors believes that the third-party Consultant strengthens the board's effectiveness as the Consultant brings broad market insight and an objective, candid perspective on a wide range of governance matters, including board dynamics, structure and composition, meeting agendas, decision-making and overall effectiveness. The Consultant prepared a written survey in close partnership with our nominating and governance committee, in-house legal team, and lead independent director. This survey contained a mix of statements and open-ended questions. The Consultant then consolidated this feedback and led a discussion with the board regarding results and opportunities to increase effectiveness.
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(continued)
Our board of directors and its committees implement improvements and take further actions, as appropriate, based on opportunities identified during its evaluation.
Stockholder Recommendations and Nominations to the Board of Directors
Our nominating and corporate governance committee will consider director candidates recommended by stockholders holding at least one percent (1%) of the fully diluted capitalization of
Dropbox, Inc.the company continuously for at least 12 months prior to the date of the submission of the recommendation, so long as such recommendations comply with our amended and restated certificate of incorporation, amended and restated bylaws, and applicable laws, rules and regulations, including those promulgated by the SEC. Our nominating and corporate governance committee will evaluate such recommendations in accordance with its charter, our amended and restated bylaws and our policies and procedures for director candidates, as well as the regular director nominee criteria described above. This process is designed to ensure that our board of directors includes members with diverse backgrounds, skills, and experience, including appropriate financial and other expertise relevant to our business. Eligible stockholders wishing to recommend a candidate for nomination should contact our Corporate Secretary or legal department in writing. Such recommendations must include information about the candidate, a statement of support by the recommending stockholder, evidence of the recommending stockholder’s ownership of our capital stock, a signed letter from the candidate confirming willingness to serve on our board of directors and any additional information required by our amended and restated bylaws. Our nominating and corporate governance committee has discretion to decide which individuals to recommend for nomination as directors.
Under our amended and restated bylaws, stockholders may also directly nominate persons for our board of directors. Any nomination must comply with the requirements set forth in our amended and restated bylaws and should be sent in writing to our Corporate Secretary at Dropbox, Inc., 333 Brannan1800 Owens Street San Francisco, California 94107.94158. To be timely for the 20202025 annual meeting of stockholders, nominations must be received by our Corporate Secretary observing the same deadlines for stockholder proposals discussed above under “What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors? – Stockholder Proposals.”
Communications with the Board of Directors
Interested parties wishing to communicate with non-management members of our board of directors may do so by writing and mailing the correspondence to our Corporate Secretary at Dropbox, Inc.,
333 Brannan1800 Owens Street, San Francisco, California
94107.94158. Each communication should set forth (i) the name and address of the stockholder, as it appears on our books, and if the shares of our common stock are held by a
broker, bank or nominee, the name and address of the beneficial owner of such shares, and (ii) the class and number of shares of our common stock that are owned of record by the record holder and beneficially by the beneficial owner.
12 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
Our Corporate Secretary or legal department, in consultation with appropriate members of our board of directors as necessary, will review all incoming communications and, if appropriate, such communications will be forwarded to the appropriate member or members of our board of directors, or if none are specified, to the chairmanchair of our board of directors.
This procedure does not apply to (i) communications to non-management directors from our officers or directors who are stockholders or (ii) stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act, which are discussed further in the section entitledtitled “What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors?—Stockholder Proposals” described abovein this proxy statement.
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, including independence standards, 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,
independent contractors and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. The full text of our Corporate Governance Guidelines and our Code of Business Conduct and Ethics is posted on our website at investors.dropbox.com. We will post amendments to our Code of Business Conduct and Ethics or any waivers of our Code of Business Conduct and Ethics for directors and executive officers on the same website or in filings under the Exchange Act.
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(continued)
Stock Ownership Guidelines
The talent and compensation committee of our board of directors adopted stock ownership guidelines for our independent directors and executive officers. Under these guidelines, all independent directors are required to acquire and own stock or stock equivalents in an amount equal to five times their annual cash retainers for service on the board, excluding any cash retainers for committee or chair service or service as lead independent director. For these purposes, owned stock includes any shares of stock owned directly or indirectly by the covered individual, but does not include unexercised, unvested or unearned equity awards (including unexercised stock options). Independent directors are required to meet the ownership requirements within five years of the later of (i) December 1, 2023, or such later date as specified in the stock ownership guidelines or (ii) such independent director's appointment or election date, as applicable. All of our independent directors are in compliance with the applicable ownership requirements or are not yet required to meet the applicable ownership requirements pursuant to the stock ownership guidelines. For a description of the stock ownership guidelines applicable to our executive officers, refer to "Executive Compensation — Compensation Discussion and Analysis — Stock Ownership Guidelines".
Role of Board in Risk Oversight Process
Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, legal and compliance, and reputational, in the pursuit and achievement of our strategic objectives. We have designed and implemented processes to manage risk in our operations. Management is responsible for the day-to-day oversight and management of
strategic, operational, legal and compliance, cybersecurity, and financialthese risks, while our board of directors, as a whole and assisted by its committees, has responsibility for the oversight of our risk management framework, which is designed to identify, assess, and manage risks to which our company is exposed, as well as
to foster a corporate culture of integrity. Consistent with this approach, our board
and its committees regularly
reviewsreview our strategic and operational risks in the context of discussions with management, question and answer sessions, and reports from the management team,
at each regular board meeting. Our board also receives regular reports on all significant committee activities at each regular board meeting,outside advisors, and
evaluates the risks inherent in significant transactions.consultants.
In addition, our board has
tasked designated standing committees with oversight of certain categories of risk
management. Our audit committee assists our board 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 also, among other things, discusses with management and the independent auditor guidelines and policies with respect to risk assessment and risk management. The audit committee further oversees our initiatives related to cybersecurity, including prevention and monitoring, as well as oversight of our enterprise-risk management program. Our compensation committee assesses risks relating to our executive compensation plans and arrangements, and whether our compensation policies and programs have the potential to encourage excessive risk-taking. Our nominating and corporate governance committee assesses risks relating to our corporate governance practices, the independence of the board, and potential conflicts of interest. These committees providereceives regular reports on
our risk management efforts to thesignificant risk-related committee activities at full
board.board meetings. Delegated committee oversight of specific risks is below.
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| |
Audit
Committee |
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| Our audit committee assists our board in fulfilling its oversight responsibilities with respect to risk management in the areas of internal control over financial reporting and disclosure controls and procedures, as well as legal and regulatory compliance. The audit committee further oversees our initiatives related to our operational infrastructure, particularly reliability, business continuity, cybersecurity, and data privacy. Our audit committee also, among other things, discusses with management and the independent auditor guidelines with respect to risk assessment and risk management. |
| |
Talent and Compensation
Committee | Nominating and
Corporate Governance Committee |
| |
| Our talent and compensation committee assesses risks relating to our executive compensation plans and arrangements, and whether our compensation policies and programs have the potential to encourage excessive risk-taking. Our talent and compensation committee also oversees our human capital management activities and related risks. | Our nominating and corporate governance committee assesses risks relating to our corporate governance practices and the independence of the board. Our nominating and corporate governance committee also generally oversees our ESG activities and related risks. |
Our board of
directordirectors believes its current leadership structure supports the risk oversight function of the board.
Cybersecurity and Data Privacy Governance
Our Guiding Value
Being Worthy of Trust is our guiding value and serves as the foundation of our relationship with the millions of people and businesses around the world who rely on Dropbox to protect their most valuable content. Protecting our users’ information through robust data privacy and cybersecurity programs is one of our top priorities. Effective governance of these programs is a priority for our board.
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| 18 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
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(continued)
Board and Management Oversight
Our board of directors is actively involved in overseeing cybersecurity risk management. At least once a year, the board of directors discusses our programs and policies related to cybersecurity and risk initiatives and considers them closely both from a risk management perspective and as part of Dropbox’s business strategy. Additionally, our audit committee oversees programs and policies related to cybersecurity risks and initiatives. Our audit committee is comprised entirely of independent directors who evaluate these issues at least quarterly.
We have also established a cross-functional leadership team to oversee our information security and privacy programs and practices, as well as to assess, identify and mitigate security and privacy risks. Members of this team also report periodically to the board of directors, audit committee, and members of our senior leadership team. This team includes senior leaders from our legal, privacy, information security, information technology, infrastructure, and compliance teams, including our Chief Privacy Officer, VP, Business Foundations, our Head of Security, and our Chief Legal Officer.
We have also established an Office of Data Protection Officer (the “ODPO”) to provide independent oversight of our privacy program and guidance on privacy issues; the ODPO is headed by the VP, Data Protection Officer and acts as the single point of contact for privacy-related requests for users subject to the General Data Protection Regulation, as well as for regulatory authorities. The ODPO reports periodically to management, the board of directors, and the audit committee on privacy risks to provide an independent assessment of our privacy program.
We also have a privacy policy that describes how we collect, use, store, share, and protect customer data, as well as how customers can access and manage their personal data. We are committed to upholding the legal protections safeguarding the privacy of our customers’ data as well as outlining our policies and practices pertaining to government requests for customer data; as part of that commitment, we have publicly disclosed our guiding principles in responding to government requests and, since 2012, we have published quantitative data on government requests that we received.
External Auditing Standards
Several of our security and privacy management systems are independently examined and/or certified according to internationally recognized standards:
•Our primary information security management system is independently examined on an annual basis and is ISO 27001 certified.
•Our primary privacy information management system is independently examined on an annual basis and is ISO 27701 certified.
•Our primary cloud security controls are ISO 27017 certified and our cloud privacy and data protection controls are ISO 27018 certified.
•Our primary incident-response policies and procedures are examined as part of SOC 2, ISO 27001, and other security assessments.
Employee Training
All employees are required to complete annual information security and privacy training. They also receive ongoing security awareness education via informational emails, talks and presentations, and resources available on our intranet.
Environmental, Social and Governance Matters
At Dropbox, our mission is to create a more enlightened way of working. We believe Dropbox’s long-term success will be strengthened by helping to create a more equitable and sustainable world for our stakeholders.
We are committed to conducting business in an ethical and transparent way, and to being accountable to our customers, our employees, our stockholders, the communities in which we operate, and all our other stakeholders for the manner in which we run our business.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
ESG Governance and Oversight
The committees of our board of directors play important roles in overseeing our ESG matters:
| | | | | | | | |
| | |
Nominating and Corporate
Governance Committee | Talent and Compensation Committee | Audit Committee |
| | |
| | |
| Our nominating and corporate governance committee generally oversees Dropbox’s ESG activities, programs, and disclosures, other than such activities specifically delegated to another standing committee. | Our talent and compensation committee oversees Dropbox’s human capital management activities. | Our audit committee oversees initiatives related to our operational infrastructure, particularly reliability, business continuity, cybersecurity, and data privacy, and business ethics, as well as our enterprise-risk management program. |
Multiple teams, with oversight from our board of directors and its committees, play a role in executing Dropbox’s ESG strategy and programs. Our Social Impact and Sustainability team leads Dropbox’s internal ESG working group, which reports to members of our senior leadership team who are responsible for overseeing the direction of our ESG program.
Environmental Sustainability
•We have announced company-wide environmental sustainability goals that we plan to accomplish by 2030:
•Achieve carbon neutrality with respect to scope 1, scope 2 and scope 3 business travel emissions.
•Source 100% renewable electricity for our operations, including our data centers.
•In addition, we are committed to supporting nonprofits focused on sustainability and climate change in partnership with the Dropbox Foundation (the “Dropbox Foundation”) by empowering our employees to volunteer with organizations focused on environmental sustainability, and supporting internal sustainability employee interest groups.
Social
Employee Wellness and Development
•In 2020, we announced our Virtual First work model pursuant to which remote work has become the primary experience for all of our employees; as part of our Virtual First workforce strategy, we strive to support our employees by:
•Providing a quarterly allowance that gives employees the flexibility to focus this benefit towards what really matters to them; this may include health and wellness, family and caregiver support, productivity and ergonomics, learning and development programs or financial wellness.
•Empowering our employees to adopt flexible working arrangements and providing tools for efficient remote collaboration.
•Continuing to provide opportunities for in-person collaboration at our “Dropbox Studios” locations and “On-Demand Spaces” and through team offsites and events.
•We are committed to supporting the well-being of our employees by providing paid parental leave for all eligible employees, as well as mental and physical wellness benefits.
•Dropbox is committed to a safe and healthy work environment for employees and considers it a key component of continued success. This commitment is led by the Global Physical Security and Safety team, which includes a Global Security Operations Center (“GSOC”). GSOC helps employees whenever there’s an emergency or incident and is the main contact during a crisis response by Dropbox. GSOC provides around-the-clock support for employees whether they’re in a studio, on a business trip, or at home.
•With the shift to our Virtual First work model, we remain committed to supporting employee wellness and development:
•We provide subsidized dependent care and access to dependent care resources, as well as supporting flexible working arrangements for our employees with caregiving obligations.
•We offer a program to help employees and their dependents manage their mental health through coaching, therapy, and on-demand resources.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
•We continue to offer robust learning and development opportunities for our employees and managers, which includes skill-building workshops as well as coaching pods to support connection and peer learning in a remote context.
•We conduct a bi-annual employee engagement survey, the results of which are used by management to refine our employee wellness and development initiatives.
Diversity, Equity and Inclusion
•We provide resources and training to employees at all levels to ensure that we are cultivating diverse and inclusive teams, as well as sponsor a number of professional development opportunities.
•Our Employee Resource Groups, or ERGs, provide support for different identity groups within our workforce by fostering an inclusive environment and providing professional development and community-building opportunities; each ERG has an executive-level sponsor who champions ERG initiatives and programs.
Social Impact
•At Dropbox, we’re committed to leveraging our people, products, and resources for good, which we believe positively contributes to our work culture and helps us recruit and retain talented employees.
•We partner closely with the Dropbox Foundation in its work with nonprofit organizations to defend human rights in communities around the world. We encourage Dropbox employees to support these organizations and other causes they’re passionate about through skills-based volunteering, donations, and by raising awareness of their missions through internal talks and other advocacy.
•We empower our employees to give back to their communities by providing paid volunteer time off, matching a portion of employee donations to nonprofits and making Dropbox product donations to nonprofit organizations that are nominated by our employees.
Accessibility
•Our mission is to design a more enlightened way of working—for everyone who uses our products. Inclusion is at the heart of our mission. The Dropbox for All initiative is a commitment to making Dropbox more inclusive and broadens the possibilities of who can work together, how they can contribute, and what it means to be part of a team.
Governance
AI Principles
•We have a dedicated website disclosing AI principles that will continue to guide our teams as we develop AI products and features responsibly in the years to come.
Business Conduct and Ethics; Human and Labor Rights
•We have a Worldwide Code of Business Conduct and Ethics (the “Code of Conduct”) that is applicable to all our employees, officers, directors and independent contractors, as well as written policies addressing insider trading, anti-corruption, financial controls and maintaining confidentiality.
•The Code of Conduct and our internal policies are reviewed on an annual basis and updated as necessary.
•All employees are required to complete a training course on the Code of Conduct and related policies on an annual basis; additional trainings on select topics are provided to certain employees based on their roles.
•Trust is one of our core values and we seek to maintain that trust through empowering employees to report any potential violations of our Code of Conduct, our policies or applicable laws through our confidential whistleblower hotline; we do not tolerate any retaliation against employees who report potential violations in good faith or participate in investigations into such violations.
•We prohibit all forms of slavery, human trafficking, and discrimination in our operations, and we strive to ensure that our policies and procedures are reflective of our commitment to human and labor rights.
•Our Supplier Code of Conduct establishes our expectations of a supplier’s commitment to safeguarding human rights in their own operations.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
(continued)
Director Compensation
In February 2018, we
We have adopted a compensation policy for our non-employee
directors, effective as of the effective date of our registration statement in connection with our initial public offering.directors. Under this director compensation policy, each non-employee director
will receivereceives the cash and equity compensation for board services described below. We
will also
continue to reimburse our non-employee directors for reasonable, customary, and documented travel expenses to board meetings. The director compensation policy
washas been developed in consultation with Compensia, Inc., or Compensia, an independent national compensation consulting firm. Compensia provided recommendations and competitive non-employee director compensation data and analyses. We considered and discussed these
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
recommendations and data and considered the specific duties and committee responsibilities of particular directors. We adopted Compensia’s recommendations when we approvedinitially adopted the director compensation policy whichin connection with our initial public offering, and we believe the policy provides our non-employee directors with reasonable and appropriate compensation that is commensurate with the services they provide and competitive with compensation paid by our peer group companies to their non-employee directors.
The Compensia has also advised on subsequent amendments to the policy. Our director compensation policy includes a maximum annual limit of $1,200,000 of cash compensation and equity awards that may be paid, issued, or granted to a non-employee director in any fiscal year. For purposes of this limitation, the value of equity awards is based on the grant date fair value (determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Any cash compensation paid or equity awards granted to a person for his or her services as an employee, or for his or her services as a consultant (other than as a non-employee director), will not count for purposes of the limitation. The maximum limit does not reflect the intended size of any potential compensation or equity awards to our non-employee directors.
Equity Compensation
Initial Award. Each person who first becomes a non-employee director will receive, on the first trading date or after the date on which the person first becomes a non-employee director, an initial award of restricted stock units (“RSUs”), or the Initial Award. The Initial Award covers a number of shares of our Class A common stock having a grant date fair value (determined in accordance with GAAP) equal to $300,000 multiplied by the fraction obtained by dividing (a) the number of full months during the period beginning on the date the person first becomes a non-employee director and ending on the one-year anniversary of the date of the then-most recent annual meeting of the company’s stockholders, or the Initial Award Vesting Period by (b) 12, rounded to the nearest whole share. The Initial Award will vest on the last day of the Initial Award Vesting Period or, if earlier, on the day before the annual meeting of our stockholders that follows the principles listed below.
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| Principle | Description |
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| Pay Mix | Our director compensation policy consists of a balance of cash and equity, with an emphasis on equity over cash, in order to better align the interests of our directors with that of our stockholders. |
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| Total Compensation Limit | Our director compensation policy includes a maximum annual limit of $1,200,000 of cash compensation and equity awards that may be paid, issued, or granted to a non-employee director in any fiscal year. The maximum limit does not reflect the intended size of any potential compensation or equity awards to our non-employee directors. Any cash compensation paid or equity awards granted to a person for his or her services as an employee, or for his or her services as a consultant (other than as a non-employee director), will not count for purposes of the limitation. For purposes of this limitation, the value of equity awards is based on the grant date fair value (determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”)). |
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| Regular Review | With advice from Compensia, our talent and compensation committee regularly reviews the amount and form of director compensation to ensure consistency with prudent governance practices and comparability with our peer group. |
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| Board Leadership Compensation | Our director compensation policy provides additional compensation for leadership positions on the board of directors, including lead independent director and committee chair roles, to account for the added time and effort associated with these positions. |
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(continued)
Components of
the Initial Award, subject to the non-employee director continuing to provide services to us through the applicable vesting date. If the person was a member of the board of directors and also an employee, becoming a non-employee director due to termination of employment will not entitle the non-employee director to an Initial Award.Annual Award. Each non-employee director will automatically receive, on the date of each annual meeting of stockholders following the effective date of the policy, an annual award of RSUs, each of which we refer to as an Annual Award, covering a number of shares of our Class A common stock having a grant date fair value (determined in accordance with GAAP) of $300,000, rounded to the nearest whole share. The Annual Award will vest on the one-year anniversary of the grant date of the Annual Award or, if earlier, the day before our annual meeting of stockholders that follows the grant date of the Annual Award, subject to the non-employee director continuing to provide services to us through the applicable vesting date.
Each non-employee director may elect to defer the delivery of the settlement of any Initial Award or Annual Award that would otherwise be delivered to such non-employee director on or following the date such award vests pursuant to the terms of a deferral election such non-employee director makes in accordance with the policy.
In the event of a “change in control” (as defined in our 2018 Equity Incentive Plan), each non-employee director will fully vest in his or her outstanding company equity awards, including any Initial Award or Annual Award, provided that the non-employee director continues to be a non-employee director through such date.
Cash Compensation
Under our
Our director compensation policy
each non-employee director is paidconsists of a cash component and an
annual cash retainer of $50,000, which is paid quarterly in arrears on a prorated basis.equity component. There are no per-meeting attendance fees for attending board meetings.
Under the policy in fiscal 2018, each non-employee director was entitled to Directors who are also our employees receive the following cashno additional compensation for their additional services:
$20,000 per year for service as a lead independent director;directors. The components of our director compensation policy, as currently in effect, are described below.
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| Component | Description |
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| Cash Compensation |
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| Annual Cash Retainer | $50,000, paid quarterly in arrears on a prorated basis. |
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| Committee and Board Leadership Compensation | Under the policy in fiscal 2023, each non-employee director was entitled to receive the following cash compensation for their additional services: •$35,000 per year for service as a lead independent director; •$30,000 per year for service as chair of the audit committee; •$12,500 per year for service as a member of the audit committee; •$20,000 per year for service as chair of the talent and compensation committee; •$10,000 per year for service as a member of the talent and compensation committee; •$15,000 per year for service as chair of the nominating and corporate governance committee; and •$5,000 per year for service as a member of the nominating and corporate governance committee. Directors who serve as the chair of a committee will receive only the annual fee as the chair of the committee and not any additional fees for serving as a member of that committee. |
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| Equity Compensation |
| |
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| Initial Award | Each person who first becomes a non-employee director receives, on the first trading date on or after the date on which the person first becomes a non-employee director, an initial award of restricted stock units (“RSUs”), or the Initial Award. An employee director who becomes a non-employee director due to termination of employment will not be entitled to an Initial Award. Number of Shares The Initial Award covers a number of shares of our Class A common stock having a grant date fair value (determined in accordance with GAAP) equal to $250,000 multiplied by the fraction obtained by dividing (a) the number of full months during the period beginning on the date the person first becomes a non-employee director and ending on the one-year anniversary of the date of the then-most recent annual meeting of the company’s stockholders, or the Initial Award Vesting Period by (b) 12, rounded to the nearest whole share. Vesting of Award The Initial Award vests on the last day of the Initial Award Vesting Period or, if earlier, on the day before the annual meeting of our stockholders that follows the grant date of the Initial Award, subject to the non-employee director continuing to provide services to us through the applicable vesting date. |
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$25,000 per year for service as chair of the audit committee;
$12,500 per year for service as a member of the audit committee;
$20,000 per year for service as chair of the compensation committee;
14 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
$10,000 per year for service as a member of the compensation committee;(continued)
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| Component | Description |
| |
| |
| Annual Award | Each non-employee director will automatically receive, on the date of each annual meeting of stockholders following the effective date of the policy, an annual award of RSUs, each of which we refer to as an Annual Award. Number of Shares Each Annual Award covers a number of shares of our Class A common stock having a grant date fair value (determined in accordance with GAAP) of $250,000, rounded to the nearest whole share. Vesting of Award The Annual Award will vest on the one-year anniversary of the grant date of the Annual Award or, if earlier, the day before our annual meeting of stockholders that follows the grant date of the Annual Award, subject to the non-employee director continuing to provide services to us through the applicable vesting date. |
| |
| |
| Deferral of Awards | Each non-employee director may elect to defer the delivery of the settlement of any Initial Award or Annual Award that would otherwise be delivered to such non-employee director on or following the date such award vests pursuant to the terms of a deferral election such non-employee director makes in accordance with the policy. |
| |
| |
| Change in Control | In the event of a “change in control” (as defined in our 2018 Equity Incentive Plan), each non-employee director will fully vest in his or her outstanding company equity awards, including any Initial Award or Annual Award, provided that the non-employee director continues to be a non-employee director through such date. |
$10,000 per year for service as chair of the nominating and corporate governance committee; and2023 Compensation
$5,000 per year for service as a member of the nominating and corporate governance committee.
In addition, under the policy in fiscal 2018, each non-employee director who served as the chair of a committee received both the additional annual fee as the chair of the committee and the additional annual fee as a member of the committee.
In December 2018, we amended our director compensation policy, effective as of January 1, 2019, following a review of an analysis performed by Compensia, to adjust cash compensation fees under the policy. The changes increased cash compensation fees to our lead independent director and certain of our committee chairs, but provided that each non-employee director who serves as the chair of a committee will receive only the annual fee as the chair of the committee without the additional annual fee as a member of the committee. Under our amended director compensation policy, our lead independent director and committee chairs are entitled to receive the following cash compensation for their services:
$35,000 per year for service as a lead independent director;
$30,000 per year for service as chair of the audit committee;
$20,000 per year for service as chair of the compensation committee; and
$15,000 per year for service as chair of the nominating and corporate governance committee.
2018 Compensation
The following table provides information regarding compensation of our non-employee directors for their service as directors, for the fiscal year ended December 31, 2018.2023. Directors who are also our employees receive no additional compensation for their service as directors. During 2018, Messrs.2023, Mr. Houston was an employee and Ferdowsi were employees.executive officer of the company and therefore, did not receive compensation as a director. See “Executive Compensation” for additional information regarding theirMr. Houston’s compensation.
Name | Fees Paid or
Earned in
Cash($) | Stock
awards($)(1)(2) | All Other
Compensation | Total($) |
Donald W. Blair | | 48,416 | | | 916,261 | (3) | | — | | | 964,677 | |
Paul E. Jacobs | | 42,606 | | | 300,006 | | | — | | | 342,612 | |
Robert J. Mylod, Jr. | | 75,529 | | | 300,006 | | | — | | | 375,535 | |
Condoleezza Rice | | 71,973 | | | 300,006 | | | — | | | 371,979 | |
R. Bryan Schreier | | 46,479 | | | 300,006 | | | — | | | 346,485 | |
Margaret C. Whitman | | 60,036 | | | — | | | — | | | 60,036 | |
| | | | | | | | | | | | | | | | | |
| | | | | |
| Name | Fees Paid
or
Earned in
Cash ($) | Stock Awards ($)(1)(2) | | All Other
Compensation ($) | Total ($) |
| | | | | |
| Donald W. Blair | 115,000 | 247,349 | | — | 362,349 |
| Lisa Campbell | 67,500 | 247,349 | | — | 314,849 |
| Paul E. Jacobs | 65,000 | 247,349 | | — | 312,349 |
| Sara Mathew | 86,192 | 247,349 | | — | 333,541 |
| Andrew Moore | — | 104,167 | (3) | — | 104,167 |
| Abhay Parasnis | 60,000 | 247,349 |
| — | 307,349 |
| Karen Peacock | 62,500 | 247,349 | | — | 309,849 |
| Michael Seibel | 60,000 | 247,349 | | — | 307,349 |
(1)Amounts shown do not reflect compensation actually received by the director, and there can be no assurance that these amounts will ever be realized by the non-employee directors. Instead, the amount shown is the grant date fair value of the RSU awards granted in fiscal 2023 computed in accordance with ASC Topic 718 — Compensation — Stock Compensation (“ASC Topic 718”), disregarding forfeiture assumptions. The grant date fair value of the RSU awards is based on the closing price for a share of our Class A common stock as reported by Nasdaq on the day immediately preceding the grant date. Unless otherwise described in the footnotes below, the grant date fair value of the RSU awards is $22.33, which represents the closing price for a share of our Class A common stock as reported by Nasdaq on May 17, 2023.
(2)100% of the shares of our Class A common stock underlying the RSUs vest on May 18, 2024 or the day before the next annual meeting of our stockholders, if earlier, subject to the director’s continued service with us. See “Director Compensation” above.
(3)Dr. Moore's Initial Award was granted on December 13, 2023. The grant date fair value of his Initial Award is based on a price of $28.72, which represents the closing price for a share of our Class A common stock as reported by Nasdaq on December 12, 2023.
| | | | | |
| 24 | (1) | Amounts shown do not reflect compensation actually received by the director,Dropbox, Inc. Proxy Statement and there can be no assurance that these amounts will ever be realized by the non-employee directors. Instead, the amount shown is the grant date fair valueNotice of the RSU awards granted in fiscal 2018 computed in accordance with ASC Topic 718 — Compensation — Stock Compensation (“ASC Topic 718”), disregarding forfeiture assumptions.2024 Annual Meeting of Stockholders |
| (2) | Unless otherwise indicated, 100% of the shares of our Class A common stock underlying the RSUs vest on May 15, 2019 or the next annual meeting of our stockholders, if earlier, subject to the director’s continued service with us. See “Director Compensation—Equity Compensation” above. |
| (3) | Mr. Blair became a member of our board of directors in December 2017. 50% of the shares of our Class A common stock underlying the RSUs vested on November 15, 2018 and 50% will vest on November 15, 2019, subject to continued service through each such vesting date. |
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 15
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE (continued)
The following table lists all outstanding equity awards held by non-employee directors as of December 31, 2018:2023:
| | | | | | | | | | | |
| | | |
| Name | Date of Grant(1) | Number of Shares
Underlying
Unvested Stock Awards (#) | |
| | | |
| Donald W. Blair | 5/18/2023 | 11,077 | |
| Lisa Campbell | 5/18/2023 | 11,077 | |
| Paul E. Jacobs | 5/18/2023 | 11,077 | |
| Sara Mathew | 5/18/2023 | 17,657 | (2) |
| Andrew Moore | 12/13/2023 | 3,627 | |
| Abhay Parasnis | 5/18/2023 | 11,077 | |
| Karen Peacock | 5/18/2023 | 11,077 | |
| Michael Seibel | 5/18/2023 | 25,044 | (3) |
(1)100% of the shares of our Class A common stock underlying the RSUs vest on May 18, 2024 or the day before the next annual meeting of our stockholders, if earlier, subject to the director’s continued service with us. See “Director Compensation” above.
(2)Includes 6,580 vested RSUs granted on July 28, 2021 that were deferred at time of grant. These vested RSUs will be settled upon the earlier of (a) immediately prior to a Change in Control or (b) within 60 days of Ms. Mathew's separation from the board or death.
(3)Includes 4,632 vested RSUs granted on December 11, 2020 and 9,335 vested RSUs granted on May 20, 2021 that were deferred at time of grant. These vested RSUs will be settled upon the earlier of (a) immediately prior to a Change in Control or (b) within 60 days of Mr. Seibel’s separation from the board or death.
| Name
| Date of
grant(1)
| Number of shares underlying
unvested stock awards
| | |
Donald W. BlairDropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders
| | 2/22/2018
| (2)
| | 26,666
| |
Paul E. Jacobs
| | 3/22/2018
| | | 14,286
| |
Robert J. Mylod, Jr.
| | 3/22/2018
| | | 14,286
| |
Condoleezza Rice
| | 3/22/2018
| | | 14,286
| |
R. Bryan Schreier
| | 3/22/2018
| | | 14,286
| |
Margaret C. Whitman
| | 9/8/2017
| (3)
| | 26,666
| 25 |
| (1) | Unless otherwise indicated, 100% of the shares of our Class A common stock underlying the RSUs vest on May 15, 2019 or the next annual meeting of our stockholders, if earlier, subject to the director’s continued service with us. See “Director Compensation—Equity Compensation” above. |
| (2) | Mr. Blair became a member of our board of directors in December 2017. 50% of the shares of our Class A common stock underlying his initial RSU award vested on November 15, 2018 and 50% will vest on November 15, 2019, subject to continued service through each such vesting date. |
| (3) | Ms. Whitman became a member of our board of directors in September 2017. 50% of the shares of our Class A common stock underlying her initial RSU award vested on August 15, 2018 and 50% will vest on August 15, 2019, subject to continued service through each such vesting date. |
16 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
PROPOSAL NO. 1—ELECTION OF DIRECTORS
OurAs of March 21, 2024, our board of directors is composedconsisted of eight members.nine directors. Until the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock, we will have a single class of directors with each director elected for a one-year term and until their successor is duly elected and qualified, or until their earlier resignation or removal.
Our nominating and corporate governance committee has recommended, and our board of directors has approved, Andrew W. Houston, Arash Ferdowsi, Donald W. Blair, Lisa Campbell, Paul E. Jacobs, Robert J. Mylod, Jr., Condoleezza Rice, R. Bryan Schreier,Sara Mathew, Andrew Moore, Abhay Parasnis, Karen Peacock and Margaret C. WhitmanMichael Seibel as nominees for election as directors at the Annual Meeting. Each of the nominees is an incumbent director. If elected, each of Drs. Rice and Jacobs, Messrs. Houston, Ferdowsi, Blair, Mylod, and Schreier, and Ms. Whitmanthe nominees will serve as directors until the 20202025 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 “Board of Directors and Corporate Governance.” We expect that each of Drs. RiceJacobs and Jacobs,Moore, Messrs. Houston, Ferdowsi, Blair, Mylod,Parasnis and Schreier,Seibel, and Ms. WhitmanMss. Campbell, Mathew and Peacock will accept such nomination; however, in the event that a director nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee designated by our board of directors to fill such vacancy. If you are a 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 Drs.
RiceJacobs and
Jacobs,Moore, Messrs. Houston,
Ferdowsi, Blair,
Mylod,Parasnis and
Schreier,Seibel, and
Ms. Whitman.Mss. Campbell, Mathew and Peacock. 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.
Each director is elected by a plurality of the votes of the shares present
in person (including virtually)virtually or represented by proxy at the meeting and entitled to vote on the election of directors at the Annual Meeting. “Plurality” means that the
eightnine 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 a withhold vote or a broker non-vote) will not be counted in such nominee’s favor and will have no effect on the outcome of the election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES NAMED ABOVE.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 17
| | | | | |
| 26 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
PROPOSAL NO. 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has appointed Ernst & Young LLP, an independent registered public accounting firm, to audit our consolidated financial statements for our fiscal year ending December 31, 2019.2024. Ernst & Young LLP has served as our independent registered public accounting firm since 2013.
At the Annual Meeting, our stockholders are being asked to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31,
2019.2024. Our audit committee is submitting the appointment of Ernst & Young LLP to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Notwithstanding the appointment of Ernst & Young LLP, 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. If our stockholders do not ratify the appointment of Ernst & Young LLP, our board of directors may reconsider the appointment. Representatives of Ernst & Young LLP 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.
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 Ernst & Young LLP for our fiscal years ended December 31,
20182023 and
2017. | 2018 | 2017 |
Audit Fees(1) | $ | 2,749,000 | | $ | 3,937,000 | |
Audit-Related Fees(2) | $ | 856,000 | | $ | 522,000 | |
Tax Fees(3) | $ | 81,000 | | $ | — | |
All Other Fees(4) | $ | 2,950 | | $ | 2,500 | |
Total Fees | $ | 3,688,950 | | $ | 4,461,500 | |
| | | | | | | | |
| | |
| 2023 | 2022 |
| | |
Audit Fees(1) | $ | 3,900,000 | | $ | 3,879,000 | |
Audit-Related Fees(2) | $ | 1,950,000 | | $ | 1,183,000 | |
Tax Fees(3) | $ | 260,000 | | $ | 426,000 | |
All Other Fees(4) | $ | 7,000 | | $ | 6,000 | |
| Total Fees | $ | 6,117,000 | | $ | 5,494,000 | |
(1)Consists of fees billed for professional services rendered in connection with the audit of our consolidated financial statements, audit of our internal controls over financial reporting, reviews of our quarterly consolidated financial statements, related accounting consultations, and statutory audits of our international subsidiaries.
(2)Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements, audit of our internal controls over financial reporting, and not reported under “Audit Fees”. This includes fees for professional services with respect to the Statement on Standards for Attestation Engagements (SSAE) No. 18 and other service organization control related examinations, certifications, and assessments, and for fiscal year 2022, due diligence services related to mergers and acquisitions.
(3)Tax Fees consist of fees for professional services for domestic and international tax advisory services.
(4)Consists of aggregate fees billed for products and services provided by the independent registered public accounting firm other than those disclosed above, which relate to subscription fees paid for access to online accounting research software applications.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | (1) | Consists of fees billed for professional services rendered in connection with the audit of our consolidated financial statements, reviews of our quarterly consolidated financial statements, related accounting consultations, and statutory audits of our international subsidiaries. This category also includes fees for services incurred in connection with our initial public offering.27 |
| (2) | Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and not reported under “Audit Fees”. For fiscal 2017 and fiscal 2018, this includes fees for professional services with respect to the Statement on Standards for Attestation Engagements (SSAE) No. 16 and other service organization control related examinations, certifications, and assessments. Fiscal 2018 also includes fees for services in connection with preparation for compliance with Section 404 the Sarbanes-Oxley Act of 2002 and due diligence services related to mergers and acquisitions. |
| (3) | Tax Fees consist of fees for professional services for domestic and international tax advisory services. |
| (4) | Consists of aggregate fees billed for products and services provided by the independent registered public accounting firm other than those disclosed above, which relate to subscription fees paid for access to online accounting research software applications. |
18 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
PROPOSAL NO. 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued)
In our fiscal year ended December 31,
2018,2023, there were no other professional services provided by Ernst & Young LLP, other than those listed above, that would have required our audit committee to consider their compatibility with maintaining the independence of Ernst & Young LLP.
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 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 Ernst & Young LLP for our fiscal years ended December 31,
20172022 and
20182023 were pre-approved by our audit committee.
The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31,
20192024 requires the affirmative vote of a majority of the voting power of the shares of our common stock present
in personvirtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote against this proposal, and broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 19
| | | | | |
| 28 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
REPORT OF THE AUDIT COMMITTEE
The audit committee is a committee of the board of directors comprised solely of independent directors as required by Nasdaq listing standards and SEC rules and regulations. 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. With respect to Dropbox’s financial reporting process, Dropbox’s management is responsible for (1) establishing and maintaining internal controls and (2) preparing Dropbox’s consolidated financial statements. Dropbox’s independent registered public accounting firm, Ernst & Young LLP (“Ernst & Young”), is responsible for performing an independent audit of Dropbox’s consolidated financial statements.statements and the effectiveness of the company’s internal control over financial reporting. It is the responsibility of the audit committee to oversee these activities. It is not the responsibility of the audit committee to prepare Dropbox’s 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 consolidated financial statements with management, internal audit and Ernst & Young;
| • | discussed with Ernst & Young the matters required to be discussed by Auditing Standards No. 1301, “Communications with Audit Committees” issued by the Public Company Accounting Oversight Board (“PCAOB”); and |
•discussed with Ernst & Young the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”); and
•received the written disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with Ernst & Young its independence.
Based on the audit committee’s review and discussions with management and Ernst & Young, 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, 20182023 for filing with the SEC.
Respectfully submitted by the members of the audit committee of the board of directors:
Robert J. Mylod, Jr. (Chair)
Donald W. Blair
R. Bryan Schreier (Chair)
Lisa Campbell
Sara Mathew
Andrew Moore
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 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.
20 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 29 |
PROPOSAL NO. 3—ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and SEC rules, we are providing our stockholders with the opportunity to vote to approve, on an advisory or non-binding basis, the compensation of our named executive officers as disclosed pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices described in this proxy statement.
The Say-on-Pay vote is advisory, and therefore is not binding on us, our
talent and compensation committee, or our board of directors. The Say-on-Pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which our
talent and compensation committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our board of directors and our
talent and compensation committee value the opinions of our stockholders. To the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, we will endeavor to communicate with stockholders to better understand the concerns that influenced the vote and consider our stockholders’ concerns, and our
talent and compensation committee will evaluate whether any actions are necessary to address those concerns.
We believe that the information provided in the section titled “Executive Compensation,” and in particular the information discussed in the section titled “Executive Compensation—Compensation Philosophy,” demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed in the proxy statement for the Annual Meeting pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, compensation tables and narrative discussion and other related disclosure.”
The approval, on an advisory basis, of the compensation of our named executive officers, requires the affirmative vote of a majority of the voting power of the shares of our common stock present
in personvirtually or by proxy at the Annual Meeting and entitled to vote
thereon to be approved.thereon. Abstentions will have the effect of a vote against this proposal, and broker non-votes will have no effect.
As an advisory vote, the result of this proposal is non-binding. Although the vote is non-binding, our board of directors and our
talent and compensation committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
We currently hold our advisory vote on executive compensation annually. Accordingly, the next advisory vote on executive compensation will be held at our 2025 annual meeting of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 21
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| 30 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
PROPOSAL NO. 4—ADVISORY VOTE ON THE FREQUENCY OF FUTURE STOCKHOLDER ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In accordance with the Dodd-Frank Act and SEC rules, at least once every six years, we must provide our stockholders with the opportunity to indicate their preference regarding how frequently we should hold the Say-on-Pay vote. Accordingly, we are asking our stockholders to indicate whether they would prefer an advisory vote every one year, two years or three years. Alternatively, stockholders may abstain from casting a vote.
After considering the benefits and consequences of each alternative, our board of directors recommends that the Say-on-Pay vote be submitted to the stockholders every year. In formulating its recommendation, our board of directors considered that compensation decisions are made annually and that an annual advisory vote on the compensation of our named executive officers will allow stockholders to provide more frequent and direct input on our compensation philosophy, policies and practices.
Vote Required
The option among one year, two years, or three years that receives the highest number of votes cast at the Annual Meeting by stockholders entitled to vote thereon will be deemed to be the frequency preferred by our stockholders. Abstentions and broker non-votes will have no effect on this proposal.
While our board of directors believes that its recommendation is appropriate at this time, the stockholders are not voting to approve or disapprove that recommendation, but are instead asked to indicate their preference, on an advisory basis, as to whether non-binding future stockholder advisory votes on the compensation of our named executive officers should be held every year, two years or three years.
As an advisory vote, the result of this proposal is non-binding. Although the vote is non-binding, our board of directors and our compensation committee value the opinions of our stockholders in this matter and, to the extent there is any significant vote in favor of one time period over another, will consider the outcome of this vote when making future decisions regarding the frequency of holding future stockholder advisory votes on the compensation of our named executive officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD FUTURE STOCKHOLDER ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS EVERY “ONE YEAR.”
22 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
TABLE OF CONTENTS
The following table identifies certain information about our executive officers as of March 15, 2019.21, 2024. Our executive officers are appointed by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers.
| | | | | | | | |
| | |
| Name | Age | Position |
| | |
| Andrew W. Houston | 36
41 | Chief Executive Officer, Co-Founder, and Chairman Chair |
| Timothy Regan | 47 | Chief Financial Officer |
| Bart E. Volkmer | 49 | Chief Legal Officer |
Arash FerdowsiEric Cox(1)
| 33
53 | Co-Founder
|
Quentin J. Clark
| 47
| Chief Technology Officer and Senior Vice President, Engineering, Product, and Design(1)
|
Yamini Rangan
| 45
| Chief Customer Officer |
Ajay V. Vashee
| 35
| Chief Financial Officer
|
Bart E. Volkmer
| 44
| General Counsel
|
| (1) | Mr. Clark has served as our chief technology officer since March 2019, and as our senior vice president, engineering, product, and design since September 2017. |
For Messrs. Houston’s and Ferdowsi’s biographies, see “Nominees for Director.”
Quentin J. Clark. (1)Mr. Clark has served as our Chief Technology Officer since March 2019, and as our Senior Vice President, Engineering, Product and Design since September 2017. From November 2014 to September 2016, Mr. Clark served as Executive Vice President for SAP America, Inc., a developer of business software solutions, as its Chief Business Officer from October 2015 to September 2016, and as its Chief Technology Officer from November 2014 to October 2015. Prior to joining SAP, Mr. Clark served at Microsoft Corporation, a global technology company, and as a Corporate Vice President of enterprise business units since 2011, and held various engineering and product leadership roles at Microsoft since 1994. Mr. Clark holds a B.S. in Physics from the University of Massachusetts Amherst.
Yamini Rangan. Ms. RanganCox has served as our Chief Customer Officer since August 2018. Ms. Rangan joined DropboxDecember 2023.
For Mr. Houston’s biography, see “Nominees for Director.”
Timothy Regan. Timothy Regan, CPA, has served as Dropbox’s Chief Financial Officer since September 2020. Previously, he served as Dropbox’s Chief Accounting Officer from December 2016 to September 2020. From January 2011 to December 2016, he served as VP Finance Controller at Pandora Media, Inc., or Pandora. Prior to joining Pandora, he held senior positions at Dolby Laboratories, Inc., and Ernst and Young LLP. Mr. Regan received his Bachelor of Arts in January 2016, serving as our VPAccounting from Georgetown University in 1999 and his Master of Business Strategy and OperationsAdministration from January 2016 to August 2018. Ms. Rangan has 20 years of experience across sales, marketing, and operations. Prior to Dropbox, she led Global Sales Strategy and Operations at Workday, after serving in senior roles at Appirio and SAP. Ms. Rangan holds an M.B.A. fromthe University of California, Berkeley an M.S.Haas School of Business, in Computer Engineering from Clemson University, and a B.S. in Computer Engineering from Bharathiar University.Ajay V. Vashee2011.
Bart E. Volkmer. Mr. Vashee Bart Volkmer has served as our Chief FinancialLegal Officer since September 2016.January 2020. From February 2015June 2016 to September 2016,January 2020, Mr. Vashee served as our Head of Corporate Development. From April 2012 to February 2015, Mr. Vashee served as our Head of Finance. Mr. Vashee holds a B.A. in Economics and Political Science from Columbia University.Bart E. Volkmer. Mr. Volkmer has served as our General Counsel since June 2016. Fromand from August 2011 to June 2016, Mr. Volkmer served as our Head of Litigation & Regulatory. Prior to joining Dropbox, Mr. Volkmer practiced law at Wilson Sonsini Goodrich & Rosati, a law firm, from 2003-2011,2003 to 2011, where he counseled early-stage and established technology companies. Mr. Volkmer holds a J.D. from Santa Clara University School of Law and a B.A. in English from Creighton University.
Eric Cox. Eric Cox has served as our Chief Customer Officer since December 2023. Prior to joining Dropbox, he served as the Chief Operating Officer at Vimeo, Inc., or Vimeo, from March 2023 to November 2023, and from December 2021 to February 2023, served as Vimeo’s Chief Revenue Officer. Prior to joining Vimeo, Mr. Cox held various senior positions at Adobe, Inc., including Vice President of Digital Media for Business from January 2021 to December 2021, Vice President, Digital Media GTM & Sales – Americas from April 2019 to January 2021, Vice President, Digital Media GTM Strategy & Operations from January 2017 to March 2019, and Senior Director, Consumer and Business WW Strategy & Sales Operations from August 2012 to January 2017. Mr. Cox received his Bachelor’s of Science degree in Business Management from Bryant University in 1992.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 23
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 31 |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes the material elements of our executive compensation program during
2018.2023. It also provides an overview of our executive compensation philosophy, including our principal compensation policies and practices. Finally, it analyzes how and why our
talent and compensation committee arrived at the specific compensation decisions for our executive officers, including our named executive officers in
2018,2023, and discusses the key factors that our
talent and compensation committee considered in determining their compensation.
Our named executive officers for 20182023 were:
| | | | | |
| |
| Named Executive Officer | Title |
| |
| Andrew W. Houston | Chief Executive Officer |
| Timothy Regan | Chief Financial Officer |
Ajay V. VasheeTimothy Young(1)
| Former President |
| Bart E. Volkmer | Chief FinancialLegal Officer |
Quentin J. ClarkEric Cox(2)
| Chief Technology Officer and Senior Vice President, Engineering, Product, and Design
|
Yamini Rangan
| Chief Customer Officer |
Bart E. Volkmer
| General Counsel
|
Dennis M. Woodside(1)
| Former Chief Operating Officer
|
(1)Mr. Young resigned as President of the company effective February 1, 2023 and remained employed with the company as a non-executive employee until March 15, 2023.
(2)Mr. Cox has served as our Chief Customer Officer since December 2023.
| (1) | Mr. Woodside resigned as our chief operating officer in September 2018. |
Executive Summary
Who We Are
We are a leading global collaboration platform that
Dropbox is
transforming the
way peopleone place to keep life organized and keep work
together, from the smallest business to the largest enterprise. With over 500 million registered users across more than 180 countries, our products are designed to establish a more enlightened way of working.moving.
We were founded in 2007 with a simple idea: Life would be a lot better if everyone could access their most important information anytime from any device. Over the past decade,
we havewe’ve largely accomplished that
mission—butmission by building tools to help people work from anywhere—and along the way we recognized that for most of our users, sharing and collaborating on
the Dropbox
platform was even more valuable than storing files.
Our market opportunity
has growngrew as we’ve expanded from keeping files in sync to keeping teams in sync. Today, we are well-positioned to reimagine the way work gets done.
We are focusedWe're focusing on reducing the inordinate amount of time and energy the world
wastesspends on “work about work”—tedious tasks like searching for content, switching between applications, and managing workflows. We believe the need for our platform will continue to grow as teams become more fluid and global, and content is increasingly fragmented across incompatible tools and devices.
We breakThe Dropbox platform breaks down silos by centralizing the flow of information between the products and services our users prefer, even if they’re not our own.
In a world where using technology at work can be fragmented and distracting, the Dropbox platform makes it easy to focus on the work that matters.
The popularity of our platform
drives viral growth, which has allowedallows us to scale rapidly and efficiently.
We haveWe’ve built a thriving global business with
12.718.12 million paying users
and more than 400,000 business teams.2018 Business Results
In 2018, we delivered strong execution, driving healthy top line growth and expanding free cash flow margins. Combined with our ecosystemas of best-in-class partners, we continued to be an even more central part of our customers’ workflows.
In 2018, we achieved several significant financial and operational results:
Total revenue was $1,391.7 million, an increase of 26% year over year.December 31, 2023.
Paying users totaled 12.7 million, as compared to 11.0 million for the same period last year. Average revenue per paying user was $117.64, as compared to $111.91 in the prior year.
GAAP gross margin was 71.6%, as compared to 66.7% in the prior year.
24 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
| | | | | |
| 32 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
2018 Executive Compensation Highlights
2018 was our first year as a publicly traded company,2023 Business Results and we took the following key actions with respect to the compensation of our named executive officers:
Business Strategy | | | | | | | | | | | | | | | | | |
| Business Results | | Business Strategy |
| | | | | |
| | | $2,501.6 | | |
| $2,324.9 | | | •From our founding, we've focused on simplifying the lives of our users. In a world where business software can be frustrating to use, challenging to integrate, and expensive to sell, we take a different approach. •While traditional tools developed in the desktop age have struggled to keep up with evolving user demands, Dropbox was designed for the cloud era. We build simple, beautiful products that bring joy to our users and make it easier for them to do their best work. •Every year, millions of users sign up for Dropbox. Bottom-up adoption within organizations has been critical to our strategy and success as users increasingly choose their own tools at work. We generate over 90% of our revenue from self-serve channels-users who purchase a subscription through our app or website. •Dropbox allows individuals, teams, and organizations to collaborate more effectively and focus on the work that matters. Anyone can sign up for free through our website or app, and upgrade to a paid subscription plan for premium features. |
| Revenue ($M) | | |
| | |
| | | | |
| 2022 | | 2023 | |
| | | | |
| | | 18.12 | |
| 17.77 | | |
Paying
Users (M) | | |
| | |
| | | | |
| 2022 | | 2023 | |
| | | | |
| | | $139.38 | |
| $134.51 | | |
Average Revenue
per Paying User | | |
| | |
| | | | |
| 2022 | | 2023 | |
| | | | |
| | | 32.8% | |
| 30.9% | | |
Non-GAAP
Operating Margin | | |
| | |
| | | | |
| 2022 | | 2023 | |
| | | | |
| $763.5 | | | |
| | $759.4 | |
Free Cash
Flow ($M) | | |
| | | | |
| 2022 | | 2023 | |
*A reconciliation of GAAP to non-GAAP results is provided in Appendix A. |
| Category
| Action Item
| | | |
Base SalariesDropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders
| We set annual base salaries between $450,000 to $550,000, or $700,000 in the case of our chief executive officer.
|
Annual Cash Bonuses
| We approved annual cash bonuses ranging from 125% to 187% of our named executive officers’ target annual cash bonus opportunities, including an annual cash bonus for our chief executive officer in the amount of $548,049, equal to 125% of his target annual cash bonus opportunity.
|
Long-Term Equity Incentive Compensation
| We granted time-based RSU awards to Messrs. Vashee, Volkmer, and Woodside in the amounts of approximately $5,200,000, approximately $2,570,000, and approximately $7,500,000, respectively. Upon Mr. Woodside’s resignation, the entire amount of his award was forfeited; however, he received a smaller award in connection with his termination as described in the “Executive Team Transition” section immediately below. Mr. Houston did not receive any additional equity awards in 2018, as the compensation committee believes that his existing ownership position sufficiently aligns his interests to those of our stockholders. Mr. Clark did not receive any additional equity awards in 2018 given that he received a new hire award when he joined Dropbox in September 2017.
|
Executive Team Transition
| We promoted Ms. Rangan to chief customer officer in September 2018, and made increases to her annual base salary and target annual cash bonus opportunity, and granted her a time-based RSU award, all described in this “Compensation Discussion and Analysis.”
|
| We entered into a Separation and Release Agreement with Mr. Woodside in connection with his resignation, and granted him a fully vested RSU award covering 37,743 shares of our Class A common stock with a value of $1 million. For a summary of the terms and conditions of the Separation and Release Agreement, see “Post-Employment Compensation—Mr. Woodside’s Separation” below.
33 |
Pay-for-Performance
We believe our executive compensation program is reasonable, competitive, and appropriately balances the goals of attracting, motivating, rewarding, and retaining our executive officers with the goal of aligning their interests with those of our stockholders. To ensure this alignment and to motivate and reward individual initiative and effort, a substantial portion of our executive officers’ target annual total direct compensation opportunity is both variable in nature and “at-risk.”
We emphasize variable compensation that appropriately rewards our executive officers, including our named executive officers, through two separate compensation elements:
First, we provide the opportunity to participate in our annual cash bonus plan, which provides cash payments if our executive officers produce short-term financial, operational, and strategic results that meet or exceed the objectives set forth in our annual operating plan.
In addition, we grant restricted stock unit awards, which comprise a majority of our executive officers’ target total direct compensation opportunities, the value of which depends entirely on the value of our common stock, thereby incentivizing them to build sustainable long-term value for the benefit of our stockholders.
These variable pay elements are intended to result in a substantial portion of our executive officers’ annual target total direct compensation being contingent (rather than fixed) in nature, with the amounts ultimately payable subject to variability above or below target levels commensurate with our actual performance.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 25
EXECUTIVE COMPENSATION (continued)
We believe that this design provides balanced incentives for our executive officers to drive financial performance and long-term growth. Our compensation committee regularly evaluates the relationship between the reported values of the equity awards granted to our executive officers and the amount of compensation realizable (and, ultimately, realized) from such awards in subsequent years.
Executive Compensation Policies and Practices
We endeavor to maintain sound governance standards consistent with our executive compensation policies
Our talent and practices. Our compensation committee evaluates our executive compensation program on a regular basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the competitive market in which we compete for executive talent. The following summarizes our executive compensation program and related policies and practices:
| | | | | | | | |
| What we do | |
What we don’t do |
| | |
| | |
✔Maintain an Independent Talent and Compensation Committee.Committee. The
talent and compensation committee consists solely of independent
directors who establish our compensation practices.
✔Retain an Independent Compensation Advisor.Advisor. The
talent and compensation committee has engaged its own compensation
consultant to provide information, analysis, and other advice
�� on executive compensation independent of management. This
consultant performed no other consulting or other services for
us in 2018.
2023. ✔Stock Ownership Guidelines. We maintain robust stock ownership guidelines for our Chief Executive Officer, our executive officers and independent directors. ✔Compensation Clawback Policy. We maintain a Nasdaq-compliant clawback policy covering both cash and equity compensation. ✔Annual Executive Compensation Review. Review. The
talent and compensation committee conducts an annual review and
approval of our compensation strategy including a review and
determination of our compensation peer group used for
comparative purposes and a review of our compensation-
relatedcompensation-related risk profile to ensure that our compensation programs
do not encourage excessive or inappropriate risk-taking and
that the level of risk that they do encourage is not reasonably
likely to have a material adverse effect on us.
risk-taking. ✔Compensation At-Risk. At-Risk. Our executive compensation
program is designed so that a significant portion of our
executive officer’sofficers' compensation is “at risk” based on
corporate performance, as well as equity-based, to align the
interests of our executive officers and stockholders.
✔Use a Pay-for-Performance Philosophy.Philosophy. The majority of
our executive officers’ compensation is directly linked to
corporate performance; we also structure their target total
direct compensation opportunities with a significant long-term
equity component, thereby making a substantial portion of
each executive officer’s target total direct compensation
dependent upon our stock price and/or total stockholder
return.
✔Succession Planning.Planning. We review the risks associated with
our key executive officer positions to ensure adequate
succession plans are in place.
| | ✗No Guaranteed Bonuses.Bonuses. We do not provide guaranteed
bonuses to our executive officers.
✗No Executive Retirement Plans.Plans. We do not currently offer,
nor do we have plans to offer defined benefit pension plans or
any non-qualified deferred compensation plans or
arrangements to our executive officers, other than the plans
and arrangements that are available to all employees. Our
executive officers are eligible to participate in our
Section 401(k) retirement savings plan on the same basis as
our other employees.
✗No Hedging or Pledging.Pledging. We prohibit our employees
(including our executive officers) and the non-employee
members of our board of directors from hedging or pledging
our securities.
✗No Tax Payments on Perquisites.Perquisites. We do not provide any
tax reimbursement payments (including “gross-ups”) on any
perquisites or other personal benefits.
✗No Excise Tax Payments on Future Post-Employment
Compensation Arrangements.Arrangements. We do not provide any
excise tax reimbursement payments (including “gross-ups”) on
payments or benefits contingent upon a change in control of
the company.
✗No Special Welfare or Health Benefits.Benefits. We do not provide
our executive officers with any welfare or health benefit
programs, other than participation in our broad-based
employee programs. All highly compensated employees are
eligible for special long-term disability.
✗ No Stock Option Re-Pricing. We do not permit options to
purchase shares of our common stock to be re-priced to a
lower exercise price without the approval of our stockholders. |
| | | | | |
| 34 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
26 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION (continued)
Stockholder Advisory Vote on Frequency of Future Stockholder Advisory Votes on Named Executive Officer Compensation
At the Annual Meeting of Stockholders, we will be conducting a non-binding vote on the frequency of future stockholder advisory votes on the compensation of our named executive officers (commonly known as a “Say-When-on-Pay” vote).
Our board of directors is recommending that we hold future stockholder advisory votes on the compensation of our named executive officers (commonly known as a “Say-on-Pay” vote) on an annual, rather than a biennial or triennial, basis. For additional information about the Say-When-on-Pay vote, see Proposal 4 above.
Executive Compensation Philosophy and Objectives
Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary objectives:
Provision of market competitive•Provide market-competitive compensation and benefit levels that will attract, retain, motivate, and reward a highly-talented team of executive officers within the context of responsible cost management;
Establishment of•Establish a direct link between our financial, operational, and strategic objectives and results, as well as our values, and the compensation of our executive officers; and
Alignment of•Align the interests and objectives of our executive officers with those of our stockholders by linking the long-term equity incentive compensation opportunities to stockholder value creation and their cash incentives to our annual performance;performance.
Pay-for-Performance
We believe our executive compensation program is reasonable, competitive, and appropriately balances the goals of attracting, motivating, rewarding, and retaining our executive officers with the goal of aligning their interests with those of our stockholders. To achieve this alignment and to motivate and reward individual initiative and effort, a substantial portion of our executive officers’ target annual total direct compensation opportunity is both variable in nature and “at-risk.”
We emphasize variable compensation that appropriately rewards our executive officers through two separate compensation elements:
Offering•Our annual cash bonus plan provides cash payments if our executive officers produce short-term financial, operational, and/or strategic results that meet or exceed the objectives set forth in our annual operating plan.
•Equity-based awards, which represent a majority of our executive officers’ target total direct compensation opportunities, the value of which depends entirely on the value of our common stock, incentivize our executive officers to build sustainable long-term value for the benefit of our stockholders.
These variable pay elements are intended to result in a substantial portion of our executive officers’ annual target total direct compensation being contingent (rather than fixed) in nature, with the amounts ultimately payable subject to variability above or below target levels commensurate with our actual performance.
We believe that this design provides balanced incentives for our executive officers to drive financial performance and long-term growth. Our talent and compensation committee regularly evaluates the relationship between the reported values of the equity awards granted to our executive officers that are competitive and fair.the amount of realizable and realized value from such awards in subsequent years.
Compensation-Setting Process
Role of
Talent and Compensation Committee and the Stock Committee
The
talent and compensation committee discharges many of the responsibilities of our board of directors relating to the compensation of our
executive officers, including our named executive officers,executives and
the non-employee
members of our board of directors. The
talent and compensation committee has overall responsibility for overseeing our compensation and benefits policies generally, and overseeing and evaluating the compensation plans, policies and practices applicable to our
chief executive officerChief Executive Officer and other executive officers.
The
talent and compensation committee makes all final decisions regarding the compensation of our
chief executive officerChief Executive Officer and our other executive officers.
In carrying out its responsibilities, the
talent and compensation committee evaluates our compensation policies and practices with a focus on the degree to which these policies and practices reflect our executive compensation philosophy, develops strategies and makes decisions that it believes further our philosophy or align with developments in
bestexecutive compensation practices, and reviews the performance of our executive officers.
The
talent and compensation committee’s authority, duties, and responsibilities are further described in its charter, which is reviewed annually and revised and updated as warranted. The charter is available on our investor relations website at investors.dropbox.com.
We
have also formed a stock committee,
which is currently composed of our
chief executive officer,Chief Financial Officer, our
co-founder,Chief People Officer, and
anothera non-employee director appointed by our
board. Mr. Schreier currently serves as the non-employee director on the stocktalent and compensation committee. The stock committee has authority to grant equity
and cash awards to (a) employees who
hold a title below vice presidentare not executive officers and (b) consultants subject to certain limitations established from time to time by the
talent and compensation committee.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 35 |
EXECUTIVE COMPENSATION (continued)
Role of Compensation Consultant
The
talent and compensation committee engages an external compensation consultant to assist the committee by providing information, analysis, and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. The compensation consultant reports directly to the
talent and compensation committee and its chair and serves at the discretion of the
talent and compensation committee, which reviews the engagement annually.
Dropbox, Inc. Proxy StatementFor 2023, the talent and Notice of 2019 Annual Meeting of Stockholders 27
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
For 2018, the compensation committee retained Compensia to serve as its compensation advisor to advise on executive and director compensation matters, including competitive market pay practices for our executive officers, and data analysis and selection of the compensation peer group.
During 2018,2023, Compensia attended the meetings of thetalent and compensation committee both with and without management present, as requested,meetings and provided the following services:
Consultation•Consulted with the talent and compensation committee chair and other members between talent and compensation committee meetings;
Provision of•Provided competitive market data based on the compensation peer group for our executive officer positions, and evaluation of how the compensation we pay our executive officers compares both to our performance and to how the companies in our compensation peer group compensate their executives;
Provision of•Provided competitive market data based on the compensation peer group for non-employee directors, and evaluation of how the compensation we pay our non-employee directors compares to companies in our compensation peer group;
Review•Reviewed and analysis of theanalyzed base salary levels, annual incentive bonus opportunities, and long-term equity incentive compensation opportunities of our executive officers;
Assessment of•Assessed executive compensation trends within our industry, and updates on corporate governance and regulatory issues and developments;
Review of•Reviewed our executive compensation disclosure;
Assessment of•Assessed compensation risk to determine whether our compensation policies and practices are reasonably likely to have a material adverse impact on the company; and
•Supported on other ad hoc matters throughout the year.
| • | Support on other ad hoc matters throughout the year. |
Compensia did not provide any services to us other than the consulting services to the talent and compensation committee. The talent and compensation committee regularly reviews the objectivity and independence of the advice provided by its compensation consultant on executive compensation matters. The talent and compensation committee has evaluated Compensia’s engagement, and based on the six factors for assessing independence and identifying potential conflicts of interest that are set forth in Exchange Act Rule 10C-1(b)(4), of the Exchange Act, Rule 5605(d)(3)(D) of the Nasdaq Marketplace Rules, and such other factors as were deemed relevant under the circumstances, has determined that its relationship with Compensia and the work of Compensia on behalf of the talent and compensation committee did not raise any conflict of interest, and that Compensia is independent as defined in Rule 5605(a)(2) of the Nasdaq Marketplace Rules.
In discharging its responsibilities, the
talent and compensation committee also works with members of our management, including our
chief executive officer.Chief Executive Officer. Our management assists the
talent and compensation committee by providing information on corporate and individual performance, competitive market data, and management’s perspective and recommendations on compensation matters.
Typically, our chief executive officer will makeChief Executive Officer makes recommendations to the talent and compensation committee regarding compensation matters, including adjustments to annual cash compensation, long-term equity incentive compensation opportunities, and program structures, for our executive officers, except with respect to his own compensation. At the beginning of each year, our chief executive officerChief Executive Officer reviews the performance of our other executive officers, including our other named executive officers, based on such individual’s level of success in accomplishing the business objectives established for him or her for the prior year and their overall performance during that year, and then shares these evaluations with, and makes recommendations to, the talent and compensation committee for each element of compensation as described above.
The
talent and compensation committee reviews and discusses these recommendations and proposals with our
chief executive officerChief Executive Officer and uses them as one factor in determining and approving the compensation for our executive officers.
28 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
Our chief executive officerChief Executive Officer also attends meetings of our board of directors and the talent and compensation committee at which executive compensation matters are addressed, except with respect to discussions involving his own compensation.
| | | | | |
| 36 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
Decisions with respect to our
chief executive officer’sChief Executive Officer’s compensation are made by our
talent and compensation committee, which is comprised entirely of independent members of our board of directors.
For purposes of assessing our executive compensation against the competitive market, the
talent and compensation committee reviews and considers the compensation levels and practices of a select group of peer companies. This compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, geographical location, and industry sector.
The companies in the compensation peer group for 20182023 were approved in September 2017August 2022 on the basis of their similarity to us, as determined using the following criteria:criteria, each as of July 2022:
•revenue – approximately 0.33x0.4x to approximately 3.0x2.5x our last four fiscal quarter revenue of approximately $1.35$2.2 billion (approximately $450$883 million to $4.0$5.5 billion);
•market capitalization – approximately 0.25x to approximately 4.0x our market capitalization of approximately $10.0$8.2 billion (approximately $2.5$2.0 billion to $40.0$32.6 billion);
•industry sector – internet software and services, software, communication equipment, internet and direct marketing retail, and certain SaaS companies not classified as such; and
•relevance – software-as-a-service model or product similarity.
In selecting the 20182023 compensation peer group, the objective was to choosewe chose companies that resulted in us being near the median of the group as of July 2022, in terms of both revenue and market capitalization.
Our 2018 compensation peer group was:
| • Akamai Technologies
| | | | | | | |
| | |
| 2022 Compensation Peer Group | • Nutanix
Changes to Peer Group | • The Ultimate Software2023 Compensation Peer Group
|
| | |
| Box | • athenahealthAdded:
| •Affirm Holdings
|
| Citrix Systems | Affirm Holdings | AppLovin |
| Cloudera | AppLovin | Box |
| DocuSign | Dolby Laboratories | Citrix Systems |
| Fortinet | Etsy | DocuSign |
| GoDaddy | F5 | Dolby Laboratories |
| Nutanix | HubSpot | Etsy |
| Okta | Paycom Software | F5 |
| Palo Alto Networks | • TripAdvisor
Roku | GoDaddy |
• Autodesk
Pinterest | • RedHat
Teradata | • Twitter
HubSpot |
• Citrix Systems
Proofpoint | | • ServiceNow
• Veeva Systems
Nutanix |
| Pure Storage | • CoStar GroupRemoved:
| • Snap
| • Workday
Okta |
• Fortinet
RingCentral | • Splunk
Cloudera | • Zillow Group
Paycom Software |
• LogMeIn
Slack Technologies | • Tableau Software
Fortinet | Pinterest |
| Splunk | Palo Alto Networks | Pure Storage |
| Zendesk | Proofpoint | RingCentral |
| Slack Technologies | Roku |
| | Splunk |
| | Teradata |
| | Zendesk |
The compensation practices of the compensation peer group were the primary guide used by the talent and compensation committee in 20182023 to compare the competitiveness of each compensation element and overalltarget total direct compensation levels (base salary, target annual cash bonus opportunities, and long-term equity incentive compensation).
To analyze the compensation practices of our compensation peer group, Compensia gathered data from public filings
(primarily proxy statements) of the peer group companies, as well as from the Radford
High-Technology Executive Survey database.Global Technology Survey. This market data was then used as a reference point for the
talent and compensation committee to assess our current compensation levels in the course of its deliberations on compensation forms and amounts.
The talent and compensation committee does not engage in formal
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 37 |
EXECUTIVE COMPENSATION (continued)
benchmarking against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation recommendations with respect to our executive officers, including our named executive officers.
The talent and compensation committee reviews our compensation peer group each year
(unless there have been significant changes to either our business model our market capitalization) and
makes adjustments toadjusts its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.
We review the base salary levels, annual cash bonus opportunities, and long-term equity incentive compensation opportunities of our executive officers
including our named executive officers, and all related performance criteria at the beginning of each year, or more frequently as warranted.
Adjustments are generally effective on February 1st of the fiscal year.Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 29
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
We do not establish a specific target for formulating the target total direct compensation opportunities of our executive officers, including our named executive officers.
In making decisions about the compensation of our executive officers, the talent and compensation committee relies primarily on its general experience and subjective considerations of various factors, including the following:
| | | | | |
| |
•Our executive compensation program objectives;
•Our performance against the financial, operational, and
strategic objectives established by the talent and compensation
committee and our board of directors;
•Each individual executive officer’s knowledge, skills,
experience, qualifications, and tenure relative to other
similarly-situated executives at the companies in our
compensation peer group;
•The scope of each executive officer’s role and responsibilities
compared to other similarly-situated executives at the
companies in our compensation peer group;
•The prior performance of each individual executive officer,
based on a subjective assessment of their contributions to our
overall performance, ability to lead their business unit or
function, and work as part of a team, all of which reflect our
core values; | •The potential of each individual executive officer to contribute
to our long-term financial, operational, and strategic
objectives;
•Our chief executive officer’sChief Executive Officer’s compensation relative to that of
our executive officers, and compensation parity among our
executive officers;
•Our financial performance and profile relative to our compensation and
performance peers;
•The compensation practices of our compensation peer group
and the positioning of each executive officer’s compensation in
a ranking of peer company compensation levels based on an
analysis of competitive market data; and
•The recommendations of our chief executive officerChief Executive Officer with
respect to the compensation of ourother executive officers. |
| |
These factors provide the framework for compensation decision-making for each executive officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable.
We do not weight these factors in any predetermined manner, nor do we apply any formulas in developing our compensation recommendations. The members of the
talent and compensation committee consider all of this information in light of their individual experience, knowledge of management, knowledge of the competitive market, knowledge of each executive officer, and business judgment in making their recommendations.
In addition, the talent and compensation committee considered feedback from our stockholders and the result of our most recent Say-on-Pay vote. Our fiscal 2023 Say-on-Pay vote reflected 98.6% support from our stockholders, based on the percentage of the stockholder votes present and entitled to vote on the proposal. The talent and compensation committee believes this indicates that our stockholders support the philosophy, strategy, objectives, and administration of our executive compensation programs.
We also consider the potential risks in our business when designing and administering our executive compensation program, and we believe our balanced approach to performance measurement and pay delivery serves to avoid misaligned incentives for individuals to undertake excessive or inappropriate risk.
The compensation committee does not engage in formal benchmarking against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation recommendations with respect to our executive officers, including our named executive officers. Instead, in making its determinations, the compensation committee reviews information summarizing the compensation paid at a representative group of peer companies, to the extent that the executive positions at these companies are considered comparable to our positions and informative of the competitive environment, and more broad-based compensation surveys, to gain a general understanding of market compensation levels.
30 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
| | | | | |
| 38 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
In 2018,2023, the principal elements of our executive compensation program, and the purposes for each element, were as follows:
| | | | | | | | | | | |
| | | |
| Element | Type of Element | Compensation Element | Objective |
| | | |
| | | |
| Base Salary | Fixed | Cash | Designed to attractAttract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market and reward performance.
|
| | | |
| | | |
Annual Cash Bonus Awards | Variable | Cash | Designed to motivateMotivate our executives to achieve annual business objectives as containedset forth in our annual operating plan and provide financial incentives when we meet or exceed these annual objectives.
|
| | | |
| | | |
| Long-Term Equity Incentive Compensation | Variable | RSU awards covering shares of our Class A common stock
Equity | Designed to alignAlign the interests of our executives and our stockholders by motivating them to create sustainable long-term stockholder value.
|
| | | |
Mix of Pay
Our primary focus in compensating executive officers is on the longer-term and performance-based elements of target total direct compensation. Under our 2023 executive compensation program, approximately 88% of target total direct compensation to our named executive officers (excluding our CEO and Messrs. Cox and Young, who were not named executive officers for all of 2023) was variable in the form of annual cash bonus and long-term equity incentive compensation. Our CEO’s mix of pay is weighted equally between base salary and annual bonus. Mr. Houston does not receive annual equity awards due to his significant holdings as a co-founder and the “Co-Founder Grant” (in the form of a restricted stock award) he received in December 2017 prior to our IPO. Details of Mr. Houston’s Co-Founder Grant are further described in “Co-Founder Grant” below.
We use base salary to provide
eachour executive
officerofficers with a specified level of cash compensation during the year with the expectation that they will perform their responsibilities to the best of their ability and in our best interests.
Generally, we establish the initial base salaries of our executive officers through arm’s-length
negotiationnegotiations at the time we hire
the individual executive officer,them, taking into account their position, qualifications, experience,
prior salary level, and the base salaries of our other executive officers. Thereafter, the
talent and compensation committee reviews the base salaries of our executive officers each year as part of its annual compensation review, with input from our
chief executive officerChief Executive Officer (except with respect to his own base salary) and makes adjustments as it determines to be reasonable and necessary to reflect the scope of an executive officer’s performance, individual contributions and responsibilities, position in the case of a promotion, and market conditions.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 39 |
EXECUTIVE COMPENSATION (continued)
In February 2018,March 2023, the talent and compensation committee reviewed the base salaries of our then-current executive officers, including our named executive officers (other than Ms. Rangan), taking into consideration a competitive market analysis and the recommendations of our chief executive officer,Chief Executive Officer, as well as the other factors described in “Compensation-Setting Process—Compensation Setting Target Total Direct Compensation,” above. The compensation committee also emphasized our pending initial public offering and its objective in aligningIn connection with public company practice on base salaries. Following this review, in February 2018,Mr. Volkmer's salary was increased to $520,000 effective April 1, 2023 to maintain competitiveness with the compensation committee approvedmarket. The base salary increases for eachsalaries of our executive officers, including each of ourremaining named executive officers (other than Ms. Rangan), effective February 1, 2018, to bringMr. Cox) did not change from 2022 levels because the talent and compensation committee felt their current base salaries to levels that were comparable to those of similarly-situated executives atremained appropriate after considering a competitive market analysis and the companiesother factors described in our“Compensation-Setting Process—Compensation Setting” above.
In determining Mr. Cox's base salary, the talent and compensation peer group.committee referenced a competitive market analysis and the other factors described in “Compensation-Setting Process—Compensation Setting” above. Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 31
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
The base salaries of our named executive officers (other than Ms. Rangan) for 20182023 were:
Named Executive Officer | 2017 Base Salary | 2018 Base Salary | Percentage Increase |
Andrew W. Houston | $ | 400,000 | | $ | 700,000 | | 75% |
Ajay V. Vashee | $ | 400,000 | | $ | 500,000 | | 20% |
Quentin J. Clark | $ | 400,000 | | $ | 550,000 | | 37.5% |
Bart E. Volkmer | $ | 400,000 | | $ | 450,000 | | 12.5% |
Dennis M. Woodside | $ | 400,000 | | $ | 550,000 | | 37.5% |
| | | | | | | | | | | |
| | | |
| Named Executive Officer | Base Salary as of End of 2022 ($) | Base Salary as of End of 2023 ($) | Percentage
(Decrease) /
Increase |
| | | |
| Andrew W. Houston | 625,000 | 625,000 | 0% |
| Timothy Regan | 560,000 | 560,000 | 0% |
| Timothy Young | 600,000 | — (1) | N/A |
| Bart E. Volkmer | 475,000 | 520,000 | 9% |
| Eric Cox | — | 500,000(2) | N/A |
In connection
(1)Mr. Young's employment with her appointmentthe company ended on March 15, 2023.
(2)Mr. Cox has served as our chief customer officer, the compensation committee increased the annual base salary of Ms. Rangan from $380,041 to $500,000, an increase of 31.6%, effective August 1, 2018, in order to reflect her increased responsibilities and align Ms. Rangan with similarly-situated executives.Chief Customer Officer since December 2023.
The base salaries paid to our named executive officers during 20182023 are set forth in the “Summary Compensation Table for Fiscal 2018Year 2023” below. In June 2018,March 2023, the talent and compensation committee, with input from management, adopted our 20182023 annual cash bonus plan (the “20182023 Cash Bonus Plan”), which was designed to provide financial incentives for us to meet or exceed the pre-established target levellevels for net revenue and operating margin established under our 20182023 annual operating plan. The 20182023 Cash Bonus Plan is funded based on our actual achievement against the pre-established target levellevels for the corporate performance measure.
Target Annual Cash Bonus Opportunities
For purposes of
Under the 20182023 Cash Bonus Plan, cash bonus payments were based upon an eligible percentage of each participant’s base salary. In February 2018,March 2023, the talent and compensation committee reviewed and approved the target annual cash bonus opportunities of our then-current executive officers, takingtaking into consideration the recommendations of our chief executive officerChief Executive Officer (except with respect to his own target annual cash bonus opportunity) as well as the other factors described in “Compensation-Setting Process—Compensation Setting Target Total Direct Compensation” above. FollowingBased on this review, the talent and compensation committee decided to maintainincrease the target annual cash bonus opportunities of our executive officers at their 2017 levels. The dollar value of each named executive officer’s target annual cash bonus opportunity increased, however,(as a percentage of base salary) of Messrs. Regan and Volkmer to 85% and 75%, respectively.
In determining Mr. Cox's annual cash bonus opportunity (as a percentage of base salary), the talent and compensation committee referenced a competitive market analysis as a result ofwell as the increases to their base salaries.other factors described in “
Compensation-Setting Process— Compensation Setting” above. The
20182023 target annual cash bonus opportunities for our named executive officers (other than
Ms. Rangan)for Mr. Cox and for Mr. Young, prior to his termination of employment) were:
Named Executive Officer | 2018 Target Annual Cash
Bonus Opportunity
(as a percentage of base salary) | 2018 Target Annual Cash
Bonus Opportunity($) |
Andrew W. Houston | | 65% | | $ | 438,438 | |
Ajay V. Vashee | | 65% | | $ | 319,480 | |
Quentin J. Clark | | 65% | | $ | 349,220 | |
Bart E. Volkmer | | 65% | | $ | 289,740 | |
Dennis M. Woodside | | 65% | | $ | 349,220 | |
| | | | | | | | | | | |
| | | |
| Named Executive Officer | Target Annual
Cash Bonus Opportunity
(as a Percentage of Base Salary) | 2023 Target Annual Cash Bonus Opportunity ($)(1) | |
| | | |
| Andrew W. Houston | 100% | 625,000 | |
| Timothy Regan | 85% | 448,383 |
|
| Timothy Young | 100% | — | |
| Bart E. Volkmer | 75% | 369,965 |
|
| Eric Cox | — | — | |
In connection with her appointment as our chief customer officer in August 2018,
| | | | | |
| 40 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
(1)Target annual cash bonus amounts are prorated for salary changes and target bonus changes throughout 2023.
Mr. Young was not eligible for a 2023 annual cash bonus due to the
compensation committee increased Ms. Rangan’stermination of his employment and the percentage shown above reflects his target annual cash bonus
opportunity from 50%percentage prior to
65% of Ms. Rangan’shis termination. Mr. Cox was not eligible for a 2023 annual
base salary effective August 1, 2018.cash bonus because he joined the company in December 2023.
Potential annual cash bonus payments for our executive officers under the
20182023 Cash Bonus Plan
(other than Messrs. Cox and Young) ranged from zero to 187.5% of their target annual cash bonus opportunity.
32 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Individual Bonus Target % of Salary | | Corporate Performance 0% - 125% | | Individual Performance 0% -150% | | Bonus Payout 0% - 187.5% of Target |
| | | | | | | | | | |
| | | | | | | | | | |
| | |
| | | | | | | | | | |
| Revenue (67% weight) | | Non-GAAP Operating Margin (33% weight) | | | |
| | | | | | | | | | |
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
Corporate Performance Measure
The
talent and compensation committee approved annual
net revenue
(weighted 67%) and non-GAAP operating margin (weighted 33%) as
components of the corporate performance measure under the
20182023 Cash Bonus Plan because we
believedbelieve incorporating both annual
net revenue
continued to be the best indicator ofand non-GAAP operating margin aligns with our
successful execution of our annual operating plan.emphasis on driving profitable growth. For purposes of the
20182023 Cash Bonus Plan,
“net“annual revenue” was
to be calculated
asby excluding the impact of foreign exchange from our annual revenue reflected in our audited financial statements for
2018.the 2023 fiscal year. For purposes of the 2023 Cash Bonus plan, “non-GAAP operating margin” was calculated by excluding the impact of stock-based compensation expense, acquisition-related and other expenses, amortization of acquired intangible assets, workforce reduction expenses and net gains and losses on real estate assets.
In
June 2018,April 2023, the
talent and compensation committee set the target performance
level for annual net revenue at $1.347 millionlevels under the
20182023 Cash Bonus Plan
at (i) $2,584 million for annual revenue and
(ii) 31.0% for non-GAAP operating margin. In addition, the talent and compensation committee approved the performance matrix for funding the
20182023 Cash Bonus Plan
as(as described
below.Upon achievement of target level ± 0.5%below), with a 10% reduction to actual payouts to our named executive officers if the company’s stock-based compensation expense exceeded $353 million for the 2023 fiscal year.
With respect to the annual revenue component, the bonus funding
was 0% if we did not achieve annual revenue at the threshold revenue performance level. At 97% of the target revenue performance level, the annual revenue bonus funding percentage
is 100%was 75%.
If For annual net revenue wasabove the 97% of target performance level and below 98% the target performance level, we had to achievethe annual net revenue at the threshold performance level of 98% of the target performance level for the 2018 Cash Bonus Plan to fund. At the threshold performance level, the bonus funding percentage was 50%. For annual net revenue above the threshold performance level and below the target performance level, the bonus funding percentage increased linearly up to aan annual revenue bonus funding percentage of 83% at95%. For revenue performance ± 2% of the next 1.0% achievement abovetarget revenue number, the thresholdannual revenue bonus funding percentage increased linearly from 95% to 105%. For revenue performance from 102% of the target revenue performance level and from that point,to 103% of the target revenue performance level, the annual revenue bonus funding percentage increased linearly up to a125%. The maximum annual revenue bonus funding percentage is 125%.
With respect to the non-GAAP operating margin component, the bonus funding was 0% if we did not achieve non-GAAP operating margin at the threshold performance level of
100% at 1.5% achievement28%. At the threshold non-GAAP operating margin performance level, the non-GAAP operating margin bonus funding percentage was 75%. For non-GAAP operating margin above the threshold performance
level.If annual net revenue was above the target performance level, the bonus funding percentage began to increase linearly for annual net revenue starting at +0.5% achievement above target performance level up to a bonus funding percentage of 108% at 1.0% achievement above the target performance level and from that point, thenon-GAAP operating margin bonus funding percentage increased linearly up to athe maximum non-GAAP operating margin bonus funding percentage of 125% at 2.0% achievement or more above the target performance level. The maximum bonus funding percentage is 125%.
| | | | | | | | | | | | | | |
| Weight | Threshold | Target | Maximum |
| Revenue ($M) | 67% | $2,506 | $2,584 | $2,662 |
| Non-GAAP Operating Margin | 33% | 28.0% | 31.0% | 34.0% |
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 41 |
EXECUTIVE COMPENSATION (continued)
Individual Performance Factor
In determining the amount of annual cash bonus payments under the
20182023 Cash Bonus Plan, the
talent and compensation committee considered an evaluation of each
bonus eligible executive officer’s individual performance for the year. Generally, this evaluation involved, in the case of our
chief executive officer,Chief Executive Officer, an evaluation of his performance by the
talent and compensation committee and, in the case of our other executive officers, an evaluation by our
chief executive officer.Chief Executive Officer. These evaluations were based on
an overall subjective assessment of each executive officer's performance based on company priorities for the year, and no single factor was determinative in setting bonus payout levels, nor was the impact of any individual factor on the bonus quantifiable. Dropbox operates in a
reviewhighly competitive industry and we set a high bar for performance expectations for each one of
the various individual performance goals established for our
named executive officers. Our named executive officers
as part of our annualare evaluated based on their overall performance,
evaluation process. For our executive officers other than our chief executive officer, these goals were established, after consultation with each executive officer. These performance goals were not intended to be formulaic, but rather to serve as the framework upon which our chief executive officer could evaluate the executive officer’s overall performance. Such performance goals were established with reference to each individual executive officer’s position or function within the companyimpact, and
included operational metrics that could reflect corporate or departmental goals or could include specific operational goals with respect to their area of responsibility.2018results.
2023 Annual Cash Bonus Decisions
In March
2019,2024, the
talent and compensation committee, based on its evaluation,
as well as the recommendation of our chief executive officer, determined the size of the bonus pool based on our performance during
20182023 and determined the cash bonus payments for our
bonus eligible executive officers, including
certain of our named executive officers, pursuant to the
20182023 Cash Bonus Plan. The
talent and compensation committee reviewed our actual
netannual revenue performance for
20182023 and determined that we had achieved
netannual revenue of
$1,392$2,541 million, which was
103.3%98% of our
netannual revenue target for the year.
This resulted inIn addition, the
talent and compensation committee determined that we had achieved non-GAAP operating margin of 32.8% compared to our target of 31.0% for the year. The talent and compensation committee approved a bonus
pool being funded at 125%funding percentage of 99.1% with respect to the corporate performance measure.
Our
chief executive officerChief Executive Officer evaluated the achievement of each
other bonus eligible executive officer
against his or her individual performance objectives and formulated a recommendation for each such executive officer’s annual cash bonus payment for consideration by the
talent and compensation committee. These recommendations were based on our
chief executive officer’sChief Executive Officer’s subjective assessment of each individual’s contributions
against the personal performance objectives duringtaking into account company priorities for the year. In the case of our
chief executive officer,Chief Executive Officer, the
talent and compensation committee evaluated our financial and operational performance for
20182023 and formulated a recommended annual cash bonus payment for
him.him based on the subjective assessment of his performance.Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 33
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
Based on these evaluations, the talent and compensation committee approved the following annual cash bonus payments for our bonus eligible named executive officers for 2018:
Named Executive Officer | Target Annual Cash
Bonus Payment | Annual Cash Bonus
Payment | Percentage of
Target Annual Cash
Bonus Actually Paid |
Andrew W. Houston | $ | 438,438 | | $ | 548,049 | | | 125.00% | |
Ajay V. Vashee | $ | 319,480 | | $ | 599,025 | | | 187.50% | |
Quentin J. Clark | $ | 349,220 | | $ | 436,525 | | | 125.00% | |
Yamini Rangan | $ | 245,597 | | $ | 383,745 | | | 156.25% | |
Bart E. Volkmer | $ | 289,740 | | $ | 452,719 | | | 156.25% | |
| | | | | | | | | | | |
| | | |
| Named Executive Officer | Target Annual Cash
Bonus Payment ($) | Annual Cash Bonus
Payment ($) | Percentage of Target Annual
Cash Bonus Actually Paid |
| | | |
| Andrew W. Houston | 625,000 | 485,000 | 77.6% |
| Timothy Regan | 448,383 | 348,000 | 77.6% |
| Timothy Young | — | — | — |
| Bart E. Volkmer | 369,965 | 287,000 | 77.6% |
| Eric Cox | — | — | — |
The annual cash bonus payments made to our named executive officers for 20182023 are set forth in the “Summary Compensation Table for Fiscal 2018Year 2023” below. | | | | | |
| 42 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
Long-Term Equity Incentive Compensation
We view long-term equity incentive compensation
in the form of equity awards as a critical element of our executive compensation program. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our executive officers
including our named executive officers, to create value for our stockholders. Equity awards also help us retain qualified executive officers in a competitive market.
The amount and forms of the equity awards granted to our executive officers including our named executive officers, are determined after considering the factors described in “Compensation-Setting ProcessProcess—Compensation Setting” above. The size of the equity awards is also intended to be competitive and result in target total direct compensation opportunities that we believe are reasonable and appropriate taking into consideration the factors described in the preceding sentence. In FebruaryMarch 2023, the talent and March 2018, the compensation committee approved equity grants in the form of restricted stock unit awards (“RSUs”) to Messrs. Regan and Volkmer, each of which were effective April 1, 2023. Mr. Young did not receive a 2023 RSU awards settled for sharesgrant due to his termination of our Class A common stock to certain of our executive officers, including our named executive officers.employment in March 2023. The number of shares of our Class A common stock subject to the RSU awards granted to our executive officers was determined by thetalent and compensation committee after consideringapproved an equity grant in the factors describedform of an RSU to Mr. Cox in “Compensation-Setting Process” above.December 2023, which was granted effective January 1, 2024.
Differentiation was made among our executive officers based on the
talent and compensation committee’s review of the competitive market data for their respective positions,
internal equity, past performance, and expected future contributions. Mr. Houston did not receive an equity grant in 2023 in light of his significant ownership position in the
size of the equity awards previously granted to them in anticipation of our initial public offering,company and the
committee’s desire to smooth transition to a normalized annual grant program.Co-Founder Grant he received in 2017. The RSUequity awards granted to our named executive officers in February and March 20182023 were as follows:
Named Executive Officer | Restricted Stock
Unit Award
(number of shares) | Aggregate Grant
Date Fair Value |
Andrew W. Houston | | — | | | — | |
Ajay V. Vashee | | 302,765 | | $ | 5,201,503 | |
Bart E. Volkmer | | 149,636 | | $ | 2,570,746 | |
Quentin J. Clark | | — | | | — | |
Dennis M. Woodside | | 436,554 | | $ | 7,499,998 | |
| | | | | | | | |
| | |
| Named Executive Officer | RSUs(1) | Aggregate Grant
Date Fair Value ($) |
| | |
| Andrew W. Houston | — | — |
| Timothy Regan | 220,222 | 4,761,200 |
| Timothy Young | — | — |
| Bart E. Volkmer | 159,049 | 3,438,639 |
Eric Cox(2) | — | — |
(1)The time-based RSU awards granted to Messrs. VasheeRegan and Volkmer vest over a three-yearfour-year period with one-half of the shares of our Class A common stock subject to the award vesting quarterly during 2019 and the remaining shares vesting in equal quarterly installments overinstallments.
(2)Mr. Cox joined the next two years, contingent upon the named executive officer remaining continuouslycompany in service with us through each applicable vesting date. 34 Dropbox, Inc. Proxy StatementDecember 2023 and, Notice of 2019 Annual Meeting of Stockholders
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
The time-based RSU award granted to Mr. Woodside were to vest over a four-year period, with two-thirds of the shares of our Class A common stock subject to the award vesting quarterly during 2020 and the remaining shares vesting in equal quarterly installments during 2021. Upon Mr. Woodside’s resignation the entire amount of this award was forfeited. In addition, in connection with the finalization of the Separation Agreement (defined below), the compensation committeehis hiring, he was granted Mr. Woodsidean equity award in September 2018 a fully vested RSU award covering 37,743 shares of our Class A common stock to settle additional amounts owed to him. See “Post-Employment Compensation — Mr. Woodside’s Separation” below.
In connection with her appointment as our chief customer officer, the compensation committee granted Ms. Rangan a time-based RSU for 103,962 shares of our Class A common stock, with a grant date fair value of $2,791,380. This time-based RSU award vests over a four-year period, with such shares vesting in equal quarterly installments from the award grant date contingent upon Ms. Rangan remaining continuously in service with us through each applicable vesting date. This award was in addition to the time-based RSU award made as part of our regular annual focal cycle in February 2018 prior to Ms. Rangan’s appointment to chief customer officer.
January 2024.
The equity awards granted to our named executive officers during 20182023 are set forth in the “Summary Compensation Table for Fiscal 2018Year 2023” and under “Grants of Plan-Based Awards in 20182023” below. Performance Achievement of Mr. Houston’s Co-Founder Grant
In December 2017, our board approved a grant to Mr. Houston (our co-founder, Chief Executive Officer and chair of the board of directors) of an RSA with respect to 10.3 million shares of Class A common stock in the aggregate (the “Co-Founder Grant”). The Co-Founder Grant has service-based, market-based, and performance-based vesting conditions. The Co-Founder Grant is eligible to vest over the ten-year period following the closing of our initial public offering. The Co-Founder Grant is comprised of nine tranches that are eligible to vest based on the achievement of stock price goals (each, a “Stock Price Target”), measured over a consecutive thirty-day trading period during the Performance Period (defined below), as follows:
| | | | | | | | |
| | |
| Company Stock Price Target | Shares Eligible to
Vest for
Mr. Houston |
| | |
| $30.00 | 2,066,667(1) | |
| $37.50 | 1,033,334 | |
| $45.00 | 1,033,334 | |
| $52.50 | 1,033,333 | |
| $60.00 | 1,033,333 | |
| $67.50 | 1,033,333 | |
| $75.00 | 1,033,333 | |
| $82.50 | 1,033,333 | |
| $90.00 | 1,033,333 | |
(1)This tranche was vested and achieved on November 15, 2021.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 43 |
EXECUTIVE COMPENSATION (continued)
The Performance Period began on January 2, 2019, and ends on the earliest to occur of: (i) the date on which all shares subject to the Co-Founder Grant vests, (ii) the date Mr. Houston ceases to satisfy the service-based vesting condition, and (iii) March 23, 2028 (“Performance Period”). During 2021, the $30.00 Stock Price Target was achieved and as a result, on November 15, 2021, Mr. Houston vested into 2,066,667 shares. The remaining tranches covering 8,266,666 shares remain outstanding and eligible to vest based on the achievement of the applicable stock price goals and fulfilling the service-based condition.
Performance Achievement of Mr. Young’s Performance RSA
In December 2020, Mr. Young was granted a performance-based RSA in connection with his promotion to President. The performance-based RSA granted to Mr. Young was subject to service-based and market-based vesting conditions and could become eligible to vest over an approximately three-year performance period beginning January 1, 2021. The target number of shares subject to the performance-based RSA were divided into three equal tranches, and the shares subject to a tranche could become eligible to vest based on the achievement of stock price targets measured over a consecutive thirty-day trading period during a twelve-month measurement period that began one month following the one-year anniversary of the grant date of the performance-based RSA (or in the case of the first measurement period, one month following the grant date) and ended one month following the next anniversary of the grant date, as indicated in the tables below.
The measurement period for the second tranche was completed on December 31, 2022, and 100% of the target number of shares covered by the second tranche became eligible to vest based on the achievement of the $21.50 stock price target. As a result, Mr. Young vested in 176,522 shares on February 15, 2023. The remaining outstanding shares subject to Mr. Young’s award were forfeited upon his departure on March 15, 2023.
| | | | | | | | | | | | | | | | | |
| | | | | |
First Tranche Measurement Period: 1/1/2021 – 12/31/2021 Earned at 200% target | Second Tranche Measurement Period: 1/1/2022 – 12/31/2022 Earned at 100% of target | Third Tranche Measurement Period: 1/1/2023 – 12/31/2023 Forfeited upon termination |
| | | | | |
| | | | | |
| Price Target | Multiplier | Price Target | Multiplier | Price Target | Multiplier |
| | | | | |
| Less than $10.00 | 0% | Less than $10.00 | 0% | Less than $10.00 | 0% |
| $10.00 | 25% | $10.00 | 25% | $10.00 | 25% |
| $15.00 | 50% | $15.00 | 50% | $15.00 | 50% |
| $20.00 | 100% | $21.50 | 100% | $23.50 | 100% |
| $25.00 | 150% | $25.00 | 150% | $25.00 | 150% |
| $30.00 | 200% | $30.00 | 200% | $30.00 | 200% |
| $35.00 | 250% | $35.00 | 250% | $35.00 | 250% |
| $40.00 | 300% | $40.00 | 300% | $40.00 | 300% |
Welfare and Health Benefits
We have established a tax-qualified Section 401(k) retirement savings plan for our executive officers, including our named executive officers, and other employees who satisfy certain eligibility requirements. Under this plan, participants may elect to make pre-tax contributions not to exceed the statutory income tax limitation, which was $18,500 in 2018. Currently, we match contributions made by participants in the plan as follows: dollar for dollar up to $1,500 each quarter up to a maximum of $6,000. $6,000 per calendar year.
We intend for the plan to qualify under Section 401(a) of the Internal Revenue Code (the “Code”), so that contributions by participants to the plan, and income earned on plan contributions, are not taxable to participants until withdrawn from the plan. Additional benefits received by our
executive officers, including our named executive officers include medical, dental, and vision insurance, fertility benefits, an employee assistance program, commuter and wellness reimbursement programs, health and dependent care flexible spending accounts,
a commuter benefit program, health savings accounts, basic and voluntary life and accidental death and dismemberment insurance and
disability insurance. Employees who earn over $260,000 per year are provided with voluntary supplemental long-term disability insurance. All of these benefits are provided to our executive officers on the same basis as to all of our employees.
We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed, based upon regular monitoring of applicable laws and practices,
changes to the working arrangements of our employees and the competitive market.
Perquisites and Other Personal Benefits
Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our executive officers including our named executive officers, except as
| | | | | |
| 44 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
generally made available to our employees, or in situations where we believe it is appropriate to assist an individual in the performance of their duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2018, none
In 2023, the talent and compensation committee approved the provision of our named executive officers received perquisites or othersecurity measures to Mr. Houston. We consider the security measures provided to Mr. Houston to be reasonable and necessary expenses for the benefit of the company and not a personal benefits that were,benefit. However, in accordance with SEC disclosure rules, the aggregate incremental cost of these services is reported in the aggregate, $10,000 or more“Summary Compensation Table.” Mr. Houston participates in a security program with an annual limit of $500,000 in 2023. The talent and compensation committee periodically reviews the nature and cost of this program in relation to Mr. Houston’s security profile. The cost of the security services for each individual, except that we reimburse Mr. Clark for the costs of commuting to and from our officesHouston in San Francisco.2023 was $423,577.
In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding
paragraph.paragraphs. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the
talent and compensation committee.
Stock Ownership Guidelines
The talent and compensation committee of our board adopted stock ownership guidelines for our independent directors and executive officers, including our Chief Executive Officer. Under these guidelines (i) our Chief Executive Officer is required to acquire and own stock or stock equivalents in an amount equal to five times his annual base salary and (ii) our executive officers (other than our Chief Executive Officer) are required to acquire and own stock or stock equivalents in an amount equal to two times their base annual salary.
For these purposes, owned stock includes shares of stock owned directly or indirectly by the covered individual, but does not include unexercised, unvested or unearned equity awards (including unexercised stock options). Executive officers (including our Chief Executive Officer) are required to meet the applicable ownership requirements within five years of the later of (i) December 1, 2023 or (ii) such executive officer's hire, appointment, promotion or election date, as applicable. At the end of fiscal 2023, all of our then-current named executive officers have met, exceeded, or are on track to meet, these guidelines based on their current rate of stock accumulations in the time frames set out in the stock ownership guidelines.
Compensation Recovery Policy
In August 2023, the talent and compensation committee adopted a compensation recovery ("clawback") policy in compliance with Nasdaq and SEC requirements. Consistent with the requirements, for compensation received after October 2, 2023 and during the applicable covered period (which generally includes the three completed fiscal years prior to the restatement date), the clawback policy requires the company to recover excess incentive-based compensation from current and former executives that is granted, earned or vested based upon the attainment of a financial reporting measure in the event of an accounting restatement due to material non-compliance with any financial reporting requirement under U.S. securities laws that was in excess of what would have been received had the incentive-based compensation been determined based on the restated amounts.
We have entered into written employment letters with our
chief executive officerChief Executive Officer and each of our other
executive officers, including our other named executive officers. Each of these arrangements was approved on our behalf by the
talent and compensation committee or our board of directors.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 35
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
In filling each of our executive positions, our board of directors or the talent and compensation committee, as applicable, recognized that we would need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, our board of directors and the talent and compensation committee were sensitive to the need to integrate new executive officers into the executive compensation structure, balancing both competitive and internal equity considerations.
Each of our employment arrangements provides for “at will” employment (meaning that either we or the executive officer may terminate the employment relationship at any time with or without cause) and sets forth the initial compensation arrangements for the executive officer, including an initial base salary, participation in our employee benefit programs, an equity award recommendation, and, in some cases, sign-on bonuses and reimbursement or payment of relocation expenses. These employment arrangements also prohibit the executive officer from engaging directly or indirectly in competition with us during their employment, diverting our customers to a competitor, or disclosing our confidential information or business practices, and recruiting or soliciting any of our employees for a period after their employment.
Our named executive officers are also eligible to enter into change in control and severance agreements with the company. These post-employment compensation terms are discussed in “Post-Employment Compensation” below. | | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 45 |
EXECUTIVE COMPENSATION (continued)
Post-Employment Compensation
We have entered into change in control and severance agreements with each of our executive officers, including each of our named executive officers. These agreements provide these individuals with certain protection in the event of their termination of employment under specified circumstances, including following a change in control of the company.
We believe that these protections were necessary to induce these individuals to accept a demanding position with the company and help retain them. These arrangements provide reasonable compensation to an executive officer if they leave our employ under certain circumstances to facilitate transition to new employment. Further, in some instances, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive officer to sign a separation and release agreement as a condition to receiving post-employment compensation payments or benefits. We also believe that these arrangements help maintain our executive officers’ continued focus and dedication to their assigned duties to maximize stockholder value if there is a potential transaction that could involve a change in control of the company. The terms and conditions were approved by our board of directors after an analysis of competitive market data.
All payments and benefits in the event of a change in control of the company are payable only if there is a subsequent loss of employment by an executive officer (a so-called “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the company, and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.
In
Mr. Houston’s Co-Founder Grant (as described below) vests in connection with our acquisition, and as noted above, prior to the event of a change in controltermination of the company,award in connection with Mr. Young’s resignation, the performance-based RSA granted to the extent Section 280G Mr. Young in November 2020 was eligible to vest in connection with certain terminations of Mr. Young’s employment and/or 4999 of the Code is applicable to an executive officer, including a named executive officer, such individual is entitled to receive whichever of the following results“change in him or her receiving a higher amount after taking into account all federal, state, and local income, excise and employment taxes:payment of the full amounts specifiedcontrol” (as defined in the policy to which they are entitled; or
payment of such lesser amount that doesour 2018 Equity Incentive Plan). Mr. Young’s resignation did not trigger any accelerated vesting of his RSA. See the excise tax imposed by Section 4999.
We have no obligation to provide Section 280G gross-up payments.
We believe that having in place reasonable and competitive post-employment compensation arrangements in the event of a change in control are essential to attracting and retaining highly-qualified executive officers. We do not consider the specific amounts payable under the post-employment compensation arrangements when determining the annual compensation for our executive officers. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive.
36 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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EXECUTIVE COMPENSATION (continued)
For a summary of the post-employment compensation arrangements that were in effect with our named executive officers during 2018, as well as an estimate of the potential payments and benefits that they would have been eligible to receive if a trigger event had occurred on December 31, 2018, seesection titled “Potential Payments Uponon Termination or Change in Control” below.
Mr. Woodside’s Separation
In connection with Mr. Woodside’s resignation as our chief operating officer, we entered into a separation and release agreement (the “Separation Agreement’’) with him in August 2018. The Separation Agreement was substantially consistent with the severance arrangements previously negotiated as part of Mr. Woodside’s offer of employment. Under the Separation Agreement, Mr. Woodside received:
an amount equal to 12 months of his then-current base salary, payable in the form of salary continuation;below for additional details.
payment of the premiums for COBRA continuation coverage until the earlier of (i) 12 months after the date of his separation from service, (ii) the date he becomes covered under another employer’s group health plan, or (iii) the date he ceases to be eligible for COBRA continuation coverage for any reason; and
accelerated vesting of all of his outstanding and unvested equity awards as if he had remained employed for an additional six months from the date of his separation from service.
In exchange for these payments, Mr. Woodside executed a general release of claims in favor of Dropbox Inc. and its affiliates and, as set forth in the Separation Agreement, confirmed his confidentiality obligations to us. The Separation Agreement also contained customary non-disparagement covenants.
In addition, in connection with the finalization of the Separation Agreement, the compensation committee granted Mr. Woodside in September 2018 a fully vested RSU award covering 37,743 shares of our Class A common stock to settle additional amounts owed to him.
The following table sets forth the payments Mr. Woodside was entitled to receive in connection with his Separation Agreement.
Executive | Base Salary
Component | Cash Bonus
Component | Value of
Accelerated
Equity Awards(1) | Additional
Equity
Grant(2) | Value of
Benefits | Total |
Dennis M. Woodside | $ | 550,000 | | | — | | $ | 10,013,699 | | $ | 1,012,645 | | $ | 25,132 | | $ | 11,601,476 | |
| (1) | Value based on a per share price of $26.96, which was the closing price as reported on September 4, 2018, the date of acceleration. |
| (2) | Represents the grant-date fair value of the RSUs calculated in accordance with ASC Topic 718. |
Other Compensation Policies
Equity Award Grant Policy
Our board of directors approved a policy for granting RSUs and other equity awards covering shares of our Class A common stock under our 2018 Equity Incentive Plan and such other equity compensation plans as it may adopt from time to time (other than other than automatic, nondiscretionary equity awards granted to non-employee members of the board of directors, which are made pursuant to our separate director compensation policy, see “Director Compensation” above). New hire grants are generally granted on a monthly basis, and annual grants of equity awards are made to employees once per year, except that each committee and the board have authority to grant occasional retention, promotion or merit equity during the year in a manner that is otherwise consistent with the terms of the policy. Annual equity awards to Section 16 officers are generally scheduled to be approved at a meeting of the compensation committee the first quarter after the fourth fiscal quarter earnings announcement. If an equity award is approved in a month, it generally is granted effective as of first day of the following month, other than awards that are approved or otherwise issued by means of an assumption of or substitution for equity awards pursuant to a merger, acquisition, or other corporate transaction, in which case such awards shall be issued in accordance with the definitive agreement governing such corporate transaction. Unless otherwise determined by the compensation committee or the board, the formula for determining the number of shares subject to each equity award that constitutes an RSU award will be: the “award value” divided by the weighted average closing price of a share for the trading days occurring in the month prior to the month of the grant date, as reported on Nasdaq.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 37
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
Hedging and Pledging Prohibitions
As part of our Insider Trading Policy, our employees (including our executive officers and the non-employee members of our board of directors) are prohibited from trading in publicly-traded options, such as puts and calls, and other derivative securities with respect to our securities. This includes any hedging or similar transaction designed to decrease the risks associated with holding shares of our common stock.
In addition, our employees (including our executive officers and the non-employee members of our board of directors) are prohibited from holding our common stock in a margin account or pledging our securities as collateral for a loan.
Tax and Accounting Considerations
We take the applicable tax and accounting requirements into consideration in designing and operating our executive compensation program.
Deductibility of Executive Compensation
Generally, Section 162(m) of the Code disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to their chief executive officerChief Executive Officer and certain other current and former executive officers that are “covered employees” within the meaning of Section 162(m) of the Code, subject to certain exceptions. The regulations promulgated under Section 162(m) of the Code currently contain a transition rule that applies to companies, such as ours, that become subject to Section 162(m) of the Code by reason of becoming publicly held. Under this rule,exceptions, including certain compensation granted during a transition period (and, with respectpaid pursuant to RSU awards, that is paid out before the end of the transition period) currently is not counted toward the deduction limitations of Section 162(m) of the Code if the compensation is paid under a compensation arrangement that wasplan in existence before the effective date of theour initial public offering,offering.
The talent and
certain other requirements are met. While certain of our equity awards may be eligible to be excluded from our deductibility limitation of Section 162(m) of the Code pursuant to this transition rule, the compensation committee has not adopted a policy that all equity or other compensation must be deductible.
In approving the amount and form of compensation for our executive officers, the talent and compensation committee considers all elements of our cost of providing such compensation, including the potential impact of Section 162(m) of the Code. The talent and compensation committee may, in its judgment, approve compensation that may not be deductible for federal income tax purposes when it believes that such compensation is in our best interests or the best interests of our stockholders.
While the transition rule for newly-public companies may help minimize the effect of the Section 162(m) deduction limit in the short-term, it is possible, going forward, that some portion of our executive officer compensation might not be fully deductible by us for federal income tax purposes.
Taxation of Parachute Payments and Deferred Compensation
We do not provide, and have no obligation to provide, any of our named executive officers with a “gross-up” payment for any tax liability he or she might owe because of the application of Sections 280G, 4999 or 409A of the Code. If any of the payments or benefits provided for under the change in control and severance agreements or otherwise payable to a named executive officer would constitute “parachute payments” within the meaning of Section 280G of the Code and could be subject to the related excise tax, he or she would receive either full payment of such payments and benefits or such lesser amount that would cause no portion of the payments and benefits being subject to the excise tax, whichever results in the greater after-tax benefits to our named executive officer.
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| 46 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
Accounting for Stock-Based Compensation
Our
talent and compensation committee considers accounting effects in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is ASC Topic 718, the standard which governs the accounting treatment of stock-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options,
restricted stock units and restricted stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may realize no value from their awards. ASC Topic 718 also requires companies to recognize the compensation cost of their share-based payment awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.
38 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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EXECUTIVE COMPENSATION (continued)
In December 2017, the board of directors approved a grant to our co-founders of restricted stock awards, or RSAs, with respect to 14.7 million shares of Class A common stock in the aggregate, or collectively, the Co-Founder Grants, of which 10.3 million RSAs were granted to Mr. Houston, our co-founder and chief executive officer, and 4.4 million RSAs were granted to Mr. Ferdowsi, our co-founder and director. These Co-Founder Grants have service-based, market-based, and performance-based vesting conditions. The Co-Founder Grants are eligible to vest over the ten-year period following the date Dropbox’s shares of Class A common stock began trading on Nasdaq in connection with our IPO, which occurred on March 23, 2018. The Co-Founder Grants comprise nine tranches that are eligible to vest based on the achievement of stock price goals (each, a “Stock Price Target”), measured over a consecutive thirty-day trading period during the Performance Period, which will begin on January 1, 2019. See “Co-Founder Grants” below.
We estimated the grant date fair value of theMr. Houston’s Co-Founder GrantsGrant using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the Stock Price Targets may not be satisfied. The average grant date fair value of eachthe Co-Founder Grant was estimated to be $10.60 per share, and we will recognize total stock-based compensation expense of $156.2$109.6 million over the requisite service period of each tranche, which ranged from 2.9 to 6.9 years, using the accelerated attribution method. If the Stock Price Targets are met sooner than the derived service period, we will adjust our stock-based compensation to reflect the cumulative expense associated with the vested awards. We will recognize stock-based compensation expense if the requisite service period is provided, regardless of whether the market conditions are achieved.
The fair value of the Co-Founder Grant, whereby vesting is contingent on meeting certain market conditions was estimated using the following assumptions:
| | | | | |
| Grant date | 12/12/2017 |
| Expected IPO date | 3/31/2018 |
| Lock-up period | 1/1/2019 |
| Expiration date | 3/31/2028 |
| Grant price | $17.15 |
| Expected volatility | 40.0% |
| Risk-free interest rate (continuous) | 2.38% |
| Expected dividends | 0% |
Expected grant date, expected IPO date, lock-up period, and expiration date. The Grant Date, expected IPO date, and the expiration of the lock-up period were estimates at the time of the valuation and correspond to the terms defined in the Restricted Stock Award Agreement.
Grant price. The grant price is based on the valuation of Common Stock as of December 12, 2017.
Expected volatility. Expected volatility is based on the average of the implied volatility of the longer at-the-money call option and the annualized daily return volatility over the greater of the trading history or the term for each one of the guideline companies. The concluded volatility is then based on the median of the comparable companies.
Risk-free interest rate. The risk-free interest rate is interpolated based on the U.S. Treasury rates sourced from S&P Capital IQ with a term commensurate with the remaining performance period.
Expected dividend. The company has not paid and does not expect to pay dividends. Consequently, the company uses an expected dividend yield of zero.
We estimated the grant date fair value of the performance-based RSA granted to Mr. Young in December 2020 using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the potential stock price goals that could be achieved during each measurement period. We would have recognized approximately $19.1 million in stock-based compensation expense associated with this award using the accelerated attribution method through February 15, 2024. We would have recognized stock-based compensation expense if the requisite service period was provided, regardless of whether the market conditions were achieved. Mr. Young’s employment with us ended on March 15, 2023, and as a result, the stock-based compensation expense associated with the unvested tranche was reversed and any future stock-based compensation expense that would have been taken was cancelled from the grant date through February 15, 2024.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 39
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Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 47 |
EXECUTIVE COMPENSATION
(continued)The fair value of Mr. Young's RSA, whereby vesting is contingent on meeting certain market conditions was estimated using the following assumptions:
| | | | | |
| Grant date | 12/1/2020 |
| Stock price | $20.17 |
| Risk-free interest rate | 0.07% - 1.66% |
| Expected volatility | 48.38% |
| Expected dividends | 0% |
Stock price. The stock price used in a Monte Carlo simulation is based on the closing stock price of our Class A common stock as of the valuation date, December 1, 2020.
Risk-free interest rate. The risk-free rate used in a Monte Carlo simulation is interpolated based on the U.S. Treasury rates sourced from Department of the Treasury as of December 1, 2020 with a term commensurate with the remaining performance period.
Expected volatility. The expected volatility used in a Monte Carlo simulation is based on the company's historical and implied volatility. Expected volatility is based on the equally weighted historical volatility of 45.50% and implied volatility of 51.26%. Historical volatility was estimated based on the company’s closing stock prices during the period September 26, 2018 to December 1, 2020. The implied volatility was retrieved from Bloomberg for the company’s at-the-money options with maturity on December 29, 2023.
Expected dividend. The Company has not paid and does not expect to pay dividends. Consequently, the company uses an expected dividend yield of zero.
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| 48 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
Report of the Compensation Committee
The
talent and compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis provided above. Based on its review and discussions, the
talent and compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and Dropbox’s Annual Report on Form 10-K for our fiscal year ended December 31,
2018.Compensation Committee
Condoleezza Rice2023.
Respectfully submitted by the members of the talent and compensation committee of the board of directors:
Sara Mathew (Chair)
Robert J. Mylod, Jr.
R. Bryan Schreier
Abhay Parasnis
Karen Peacock
Michael Seibel
40 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 49 |
EXECUTIVE COMPENSATION (continued)
Compensation Risk Assessment
Our management regularly assesses and discusses with the
talent and compensation committee our compensation programs, policies, and practices for our employees as they relate to our risk management. In this regard, we undertake a risk review of our employee compensation programs, policies, and practices (including our executive compensation program) each year to determine whether these programs, policies, and practices contain features that might create undue risks or encourage unnecessary and excessive risk-taking that could threaten our value. Based upon this review, we believe that any risks arising from such programs, policies, and practices are not reasonably likely to have a material adverse effect on us.
Our employees’ base salaries are fixed in amount and thus we do not believe that they encourage excessive risk-taking. While performance-based cash bonuses and sales commissions focus on achievement of short-term or annual goals, which may encourage the taking of short-term risks at the expense of long-term results, we believe that our compensation policies and the risk mitigation features of our cash bonus plans help mitigate this risk and our performance-based cash bonuses and sales commissions are limited, representing a small portion of the total compensation opportunities available to most non-executive employees. We also believe that our performance-based cash bonuses and sales commissions appropriately balance risk and the desire to focus our employees on specific short-term goals important to our success, and do not encourage unnecessary or excessive risk-taking.
A significant proportion of the compensation provided to most of our employees involves long-term incentive compensation in the form of equity awards that we believe are important to help further align our employees’ interests with those of our stockholders. These equity awards directly tie their expectations of compensation to their contributions to the long-term value of our company. We do not believe that these equity awards encourage unnecessary or excessive risk-taking given their multi-year vesting schedules and since their ultimate value is tied to our stock price.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 41
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| 50 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
Summary Compensation Table for Fiscal Year 2018
Name and principal position | Year | Salary
($) | Bonus
($) | Stock
awards
($)(1) | Non-equity
incentive plan
compensation
($)(2) | All other
compensation
($)(3) | Total
($) |
Andrew W. Houston
Chief Executive Officer and Co-Founder |
| | 2018 | | | 675,000 | | | — | | | — | | | 548,049 | | | 6,000 | | | 1,229,049 | |
| | 2017 | | | 400,000 | | | — | | | 109,569,500 | (4) | | 260,000 | | | 3,000 | | | 110,232,500 | |
| | 2016 | | | 325,000 | | | — | | | — | | | 210,000 | | | 3,000 | | | 538,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Ajay V. Vashee
Chief Financial Officer |
| | 2018 | | | 491,667 | | | — | | | 5,201,503 | | | 599,025 | | | 6,000 | | | 6,298,195 | |
| | 2017 | | | 400,000 | | | — | | | 1,217,544 | | | 260,000 | | | 3,000 | | | 1,880,544 | |
| | 2016 | | | 276,782 | | | 58,812 | (5) | | 8,373,630 | | | 210,000 | | | 3,000 | | | 8,922,224 | |
| | | | | | | | | | | | | | | | | | | | | |
Quentin J. Clark(6)
Chief Technology Officer and Senior Vice President, Engineering, Product, and Design |
| | 2018 | | | 514,553 | | | — | | | — | | | 436,525 | | | 61,354 | (7) | | 1,012,432 | |
| | 2017 | | | 130,513 | | | 340,000 | (8) | | 34,080,000 | | | 84,055 | | | 16,136 | (9) | | 34,650,704 | |
| | | | | | | | | | | | | | | | | | | | | |
Yamini Rangan(10)
Chief Customer Officer |
| | 2018 | | | 428,054 | | | — | | | 3,391,546 | | | 383,745 | | | 6,000 | | | 4,209,345 | |
| | | | | | | | | | | | | | | | | | | | | |
Bart E. Volkmer
General Counsel |
| | 2018 | | | 445,833 | | | 58,813 | (11) | | 2,570,746 | | | 452,719 | | | 6,000 | | | 3,534,111 | |
| | 2017 | | | 400,000 | | | 117,625 | | | 760,965 | | | 325,000 | | | 3,000 | | | 1,606,590 | |
| | 2016 | | | 300,686 | | | 58,812 | | | 3,941,995 | | | 262,500 | | | 3,000 | | | 4,566,993 | |
Dennis M. Woodside
Former Chief Operating Officer |
| | 2018 | | | 908,397 | (12) | | — | | | 8,512,643 | | | — | | | 10,042,622 | (13) | | 19,463,662 | |
| | 2017 | | | 400,000 | | | — | | | 19,785,090 | | | 260,000 | | | 3,000 | | | 20,448,090 | |
| | 2016 | | | 337,500 | | | — | | | 37,683,998 | | | 210,000 | | | 3,000 | | | 38,234,498 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Name and Principal Position | Year | Salary
($) | Bonus
($) | Stock Awards ($)(1) | Non-equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total
($) |
| | | | | | | | | |
Andrew W. Houston Chief Executive Officer and Co-Founder | 2023 | 625,000 | — | — | | 485,000 | 429,577 | (4) | 1,539,577 |
| 2022 | 625,000 | — | — | | 500,000 | 21,000 | (4) | 1,146,000 |
| 2021 | 606,250 | — | — | | 883,679 | 25,340 | (4) | 1,515,269 |
Timothy Regan Chief Financial Officer | 2023 | 560,000 | | 4,761,200 | (1) | 348,000 | 6,000 | | 5,675,200 |
| 2022 | 518,333 | | 4,692,710 | (1) | 270,000 | 6,000 | | 5,487,043 |
| 2021 | 470,833 | — | 4,671,019 | (1) | 515,012 | 6,000 | | 5,662,864 |
Timothy Young President | 2023 | 125,000 | — | — | | — | — |
| 125,000 |
| 2022 | 600,000 | — | — | | 468,600 | 10,000 | (4) | 1,078,600 |
| 2021 | 600,000 | — | — | | 874,200 | 23,500 | (4) | 1,497,700 |
Bart E. Volkmer Chief Legal Officer | 2023 | 508,570 | — | 3,438,639 | (1) | 287,000 | 6,000 | | 4,240,209 |
| 2022 | 475,000 | — | 3,128,474 | (1) | 245,000 | 6,000 | | 3,854,474 |
| 2021 | 475,000 | — | 3,113,995 | (1) | 517,326 | 6,000 | | 4,112,321 |
Eric Cox Chief Commercial Officer | 2023 | 20,833 | — | — | | — | — |
| 20,833 |
| 2022 | — | — | — | | — | — |
| — |
| 2021 | — | — | — | | — | — |
| — |
(1)Unless otherwise described in the footnotes below, the amounts reported represent the aggregate grant date fair value of the stock awards based on the closing price for a share of our Class A common stock as reported by Nasdaq on the day immediately preceding the grant date, calculated in accordance with ASC Topic 718.
(2)The amounts reported represent the amounts payable under our cash bonus plans for 2021, 2022, and 2023, respectively. See “Compensation Elements—Annual Cash Bonuses” above.
(3)Unless otherwise noted, the amount reported reflects matching 401(k) contributions in 2021, 2022 and 2023.
(4)Includes expenses related to security programs and related costs.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | (1) | Unless otherwise described in the footnotes below, the amounts reported represent the aggregate grant-date fair value of RSUs calculated in accordance with ASC Topic 718.51 |
| (2) | The amounts reported represent the amounts payable under our cash bonus plans for 2016, 2017, and 2018, respectively. See “Compensation Elements—Cash Bonuses” above. |
| (3) | Unless otherwise noted, the amount reported reflects matching 401(k) contributions of $3,000 in 2016 and 2017 and $6,000 in 2018. |
| (4) | The amount reported represents the aggregate grant-date fair value of RSAs calculated in accordance with ASC Topic 718. RSAs are eligible to vest over a period of up to ten years based on the achievement of certain stock price goals measured over a consecutive thirty-day trading period during a performance period. We calculated the grant date fair value based on multiple stock price paths developed through the use of a Monte Carlo simulation. The assumptions used in calculating the grant-date fair value of the RSAs reported in this column are set forth in “Accounting for Stock-Based Compensation” above. |
42 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION (continued)
| (5) | Amount reported reflects partial payment of a retention cash bonus granted to Mr. Vashee. Concurrent with his promotion to chief financial officer, Mr. Vashee entered into an agreement cancelling all future installments of his retention cash bonus. |
| (6) | Mr. Clark joined us in September 2017, and therefore his salary and non-equity incentive plan compensation set forth in the table above were prorated for the portion of 2017 in which he was employed with us. |
| (7) | Amount reported represents a transportation allowance (to and from work) of $55,354, as well as a matching 401(k) contribution of $6,000. |
| (8) | Amount reported represents a one-time signing bonus paid in connection with Mr. Clark’s hiring in 2017. |
| (9) | Amount reported represents a transportation allowance (to and from work) of $13,136 as well as a matching 401(k) contribution of $3,000. |
| (10) | In connection with her appointment as our chief customer officer in September 2018, Ms. Rangan (1) received a salary increase to $500,000; (2) increased her target bonus to 65%; and (3) received a time-based RSU award with a grant date fair value of $2,791,380, with such shares vesting in equal quarterly installments over four years from the award grant date, contingent upon her remaining continuously employed by us through each applicable vesting date. |
| (11) | Amounts reported in all years under “Bonus” for Mr. Volkmer represent payments of a retention cash bonus. |
| (12) | Mr. Woodside stepped down as our chief operating officer on September 4, 2018. Amount reported represents Mr. Woodside’s salary prorated for the portion of 2018 in which he was employed with us, plus severance benefits equal to 100% of his annual base salary. |
| (13) | Amount reported represents a matching 401(k) contribution of $3,791 and the following additional severance benefits: (1) payment of the premiums for COBRA continuation coverage for 12 months equal to $25,132 and (2) accelerated vesting of all of Mr. Woodside’s outstanding and unvested equity awards as if he had remained employed for an additional six months from the date of his separation from service, equal to $10,013,699. See “Post-Employment Compensation—Mr. Woodside’s Separation” above. |
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 43
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
Grants of Plan-Based Awards in 2018
2023
The following table shows all plan-based awards granted to our named executive officers during fiscal
2018. | | Estimated Future Payouts Under Non-
Equity Incentive Plan Award($)(1) | Equity Grants |
Name | Grant Date | Threshold | Target | Maximum | Number of Units | Grant Date Fair
Value($)(2) |
Andrew W. Houston | 2/22/18 | | 109,610 | | | 438,438 | | | 822,071 | | | — | | | — | |
Ajay V. Vashee | 2/22/18 | | — | | | — | | | — | | | 302,765 | | | 5,201,503 | |
| 2/22/18 | | 79,870 | | | 319,480 | | | 599,025 | | | — | | | — | |
Quentin J. Clark | 2/22/18 | | 87,305 | | | 349,220 | | | 654,788 | | | — | | | — | |
Yamini Rangan | 2/22/18 | | — | | | — | | | — | | | 34,934 | | | 600,166 | |
| 2/22/18 | | 61,399 | | | 245,597 | | | 460,494 | | | — | | | — | |
| 9/1/18 | | — | | | — | | | — | | | 103,962 | | | 2,791,380 | |
Bart E. Volkmer | 2/22/18 | | — | | | — | | | — | | | 149,636 | | | 2,570,746 | |
| 2/22/18 | | 72,435 | | | 289,740 | | | 543,263 | | | — | | | — | |
Dennis M. Woodside | 2/22/18 | | 87,305 | | | 349,220 | | | 654,788 | | | — | | | — | |
| 3/9/18 | | — | | | — | | | — | | | 436,554 | (3) | | 7,499,998 | |
| 10/1/18 | | — | | | — | | | — | | | 37,743 | | | 1,012,645 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(1) | All Other
Stock
Awards:
Number of
Shares (#) | Grant Date Fair Value ($)(2) |
| Name | Grant Date | Threshold | Target | Maximum |
| | | | | | | |
| Andrew W. Houston | — | — | 234,375 | 625,000 | 1,171,875 | — | — |
| Timothy Regan | — | — | 168,143 | 448,383 | 840,718 | — | — |
| 4/1/2023 | 3/1/2023 | | | | 220,222 | 4,761,200 |
| Timothy Young | — | — | — | — | — | — | — |
| Bart E. Volkmer | — | — | 138,736 | 369,965 | 693,684 | — | — |
| 4/1/2023 | 3/1/2023 | | | | 159,049 | 3,438,639 |
| Eric Cox | — | — | — | — | — | — | — |
(1)Each of these grants were made pursuant to our 2023 Cash Bonus Plan, as described in greater detail under “Compensation Elements – Annual Cash Bonuses” above.
(2)Amounts reported represent the aggregate grant date fair value of the RSUs based on the closing price for a share of our Class A common stock as reported by Nasdaq on the day immediately preceding the grant date, calculated in accordance with ASC Topic 718.
| | | | | |
| 52 | (1) | EachDropbox, Inc. Proxy Statement and Notice of these grants was made pursuant to our 2018 Cash Bonus Plan, as described in greater detail under “Compensation Elements—Cash Bonus” above.2024 Annual Meeting of Stockholders |
| (2) | Amounts reported represent the aggregate grant-date fair value of RSUs calculated in accordance with ASC Topic 718. |
| (3) | The entire amount of this award was forfeited upon Mr. Woodside’s resignation in September 2018. |
44 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION (continued)
Outstanding Equity Awards at 20182023 Year-End
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31,
2018.Name | Grant date | Option awards | | | Stock Awards |
Number of
Securities
Underlying
Unexercised
Options
Exercisable | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | Option
Exercise
Price
($) | 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 ($)(1) |
Andrew W. Houston | | 12/12/17(2 | ) | | — | | | — | | | — | | | — | | | 10,333,333 | | | 211,109,993 | |
Ajay V. Vashee | | 6/21/2014(3 | ) | | — | | | — | | | — | | | — | | | 4,444 | | | 90,791 | |
| | 5/29/2015(4 | ) | | — | | | — | | | — | | | — | | | 1,222 | | | 24,965 | |
| | 5/4/2017(5 | ) | | — | | | — | | | — | | | — | | | 53,332 | | | 1,089,573 | |
| | 2/22/2018(6 | ) | | — | | | — | | | — | | | — | | | 302,765 | | | 6,185,489 | |
Quentin J. Clark | | 9/8/17(7 | ) | | — | | | — | | | — | | | — | | | 1,375,000 | | | 28,091,250 | |
Yamini Rangan | | 1/28/2016(8 | ) | | — | | | — | | | — | | | — | | | 41,664 | | | 851,196 | |
| | 3/8/2017(9 | ) | | — | | | — | | | — | | | — | | | 16,664 | | | 340,446 | |
| | 9/8/2017(9 | ) | | — | | | — | | | — | | | — | | | 12,836 | | | 262,239 | |
| | 2/22/2018(9 | ) | | — | | | — | | | — | | | — | | | 28,382 | | | 579,844 | |
| | 9/1/2018(9 | ) | | — | | | — | | | — | | | — | | | 97,464 | | | 1,991,190 | |
Bart E. Volkmer | | 3/11/2013 | | | 90,133 | | | — | | | 4.28 | | | 3/10/2023 | | | — | | | — | |
| | 6/21/2014(3 | ) | | — | | | — | | | — | | | — | | | 1,556 | | | 31,789 | |
| | 5/29/2015(4 | ) | | — | | | — | | | — | | | — | | | 1,312 | | | 26,804 | |
| | 12/14/2015(9 | ) | | — | | | — | | | — | | | — | | | 9,999 | | | 204,280 | |
| | 5/4/2017(5 | ) | | — | | | — | | | — | | | — | | | 33,332 | | | 680,973 | |
| | 2/22/2018(6 | ) | | — | | | — | | | — | | | — | | | 149,636 | | | 3,057,063 | |
Dennis M. Woodside | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Name | Grant date | Option awards | | | Stock Awards |
| | | | | | |
| | | | | | |
Number of
Securities
Underlying
Unexercised
Options
Exercisable | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | Option
Exercise
Price ($) | 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 ($)(1) |
| | | | | | | | |
| Andrew W. Houston | 12/12/17(2) | — | — | — | — | 8,266,666 | | 243,701,314 | |
| Timothy Regan | 4/1/2020(3) | — | — | — | — | 3,486 | | 102,767 | |
| 10/1/2020(3) | — | — | — | — | 37,832 | | 1,115,287 | |
| 4/1/2021(3) | — | — | — | — | 54,752 | | 1,614,089 | |
| 4/1/2022(3) | — | — | — | — | 113,533 | | 3,346,953 | |
| 4/1/2023(3) | — | — | — | — | 178,930 | | 5,274,856 | |
| Timothy Young | | — | — | — | — | — | | | — | |
| Bart E. Volkmer | 4/1/2020(3) | — | — | — | — | 8,365 | | 246,600 | |
| 4/1/2021(3) | — | — | — | — | 36,501 | | 1,076,049 | |
| 4/1/2022(3) | — | — | — | — | 75,689 | | 2,231,312 | |
| 4/1/2023(3) | — | — | — | — | 129,227 | | 3,809,612 | |
| Eric Cox | | — | — | — | — | — | | | — | |
| (1) | The closing price of our Class A common stock on December 31, 2018 was $20.43. |
(1)The closing price of our Class A common stock on December 29, 2023, the last trading day of the year, was $29.48.
| (2) | This award represents RSAs granted to Mr. Houston pursuant to a stand-alone restricted stock award agreement. The shares underlying the RSAs are Class A common stock. RSAs vest over a period of up to ten years upon achievement of service-based, market-based, and liquidity event-related performance vesting conditions. See “Co-Founder Grants” below. |
(2)This award represents RSAs granted to Mr. Houston pursuant to a stand-alone restricted stock award agreement. The shares underlying the RSAs are Class A common stock. RSAs vest over a period of up to ten years upon achievement of service-based, market-based, and liquidity event-related performance vesting conditions. See “Co-Founder Grant” below.
| (3) | 20% of the shares of our Class B common stock underlying the RSUs vested on April 1, 2015, and an additional 1/20th of the total number of shares of our Class A common stock underlying the RSUs vests in equal quarterly installments on February 15, May 15, August 15, and November 15 (the “Quarterly Vesting Dates”) thereafter, subject to continued service through each such Quarterly Vesting Date. |
(3)1/16th of the total number of shares of our Class A common stock underlying the RSUs vests in equal quarterly installments on the Quarterly Vesting Dates, subject to continued service through each such vesting date.
| (4) | Approximately 77% of the shares of our Class B common stock underlying the RSUs vested on March 23, 2018, when the liquidity event-related performance vesting condition was satisfied in connection with our initial public offering, and an additional 1/16th of the total number of shares of our Class A common stock underlying the RSUs vests in equal quarterly installments on the Quarterly Vesting Dates, subject to continued service through each such vesting date. |
| (5) | 1/12th of the total number of shares of our Class B common stock underlying the RSUs vests in equal quarterly installments on the Quarterly Vesting Dates, subject to continued service through each such vesting date. |
| (6) | 1/8th of the total number of shares of our Class A common stock underlying the RSUs vest in equal quarterly installments on the Quarterly Vesting Dates between February 15, 2019 and February 15, 2020, and an additional 1/16th of the total number of shares of our Class A common stock underlying the RSUs vests in equal quarterly installments on the Quarterly Vesting Dates thereafter, subject to continued service through each such vesting date. |
| (7) | 25% of the shares of our Class A common stock underlying the RSUs vested on August 15, 2018, and an additional 1/16th of the total number of shares of our Class A common stock underlying the RSUs vests in equal quarterly installments on the Quarterly Vesting Dates, subject to continued service through each such vesting date. |
| (8) | 25% of the shares of our Class B common stock underlying the RSUs vested on January 15, 2017, and an additional 1/16th of the total number of shares of our Class B common stock underlying the RSUs vests in equal quarterly installments on the Quarterly Vesting Dates, subject to continued service through each such vesting date. |
| (9) | 1/16th of the total number of shares of our Class A common stock underlying the RSUs vests in equal quarterly installments on the Quarterly Vesting Dates, subject to continued service through each such vesting date. |
Co-Founder GrantDropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 45
TABLE OF CONTENTS
EXECUTIVE COMPENSATION (continued)
Co-Founder Grants
In December 2017, our board of directors approved a grant to our co-founders of RSAs with respect to 14.7 million shares of Class A common stock in the aggregate (the “Co-Founder Grants”) of which 10.3 million RSAs were granted to Mr. Houston, our co-founder and chief executive officer, and 4.4 million RSAs were granted to Mr. Ferdowsi, our co-founder and director. TheseGrant. The Co-Founder Grants haveGrant has service-based, market-based, and performance-based vesting conditions. Theseconditions as described above in “Performance Achievement of Mr. Houston’s Co-Founder Grants have certain stockholder rights, such as the right to vote the shares immediately upon grant and prior to their vesting. The Co-Founder Grants are eligible to vest over the ten-year period following the closing of this offering. The Co-Founder Grants comprise nine tranches that are eligible to vest based on the achievement of stock price goals (each, a “Stock Price TargetGrant”), measured over a consecutive thirty-day trading period during the Performance Period, as follows:
.The Performance Period began on August 27, 2018, and ends on the earliest to occur of: (i) the date on which all shares subject to the Co-Founder Grants vest, (ii) the date the applicable co-founder ceases to satisfy the service-based vesting condition, and (iii) the tenth anniversary of the IPO Date.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 53 |
During the first four years of the Performance Period, no more than 20% of the shares subject to each Co-Founder Grant are eligible to vest in any calendar year. After the first four years, all shares are eligible to vest based on the achievement of the Company Stock Price Targets.
We estimated the grant date fair value of the Co-Founder Grants using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the Stock Price Targets may not be satisfied. The average grant date fair value of each Co-Founder Grant was estimated to be $10.60 per share, and we will recognize total stock-based compensation expense of $156.2 million over the requisite service period of each tranche, which ranged from 2.9 to 6.9 years, using the accelerated attribution method. If the Stock Price Targets are met sooner than the derived service period, we will adjust our stock-based compensation to reflect the cumulative expense associated with the vested awards. We will recognize stock-based compensation expense if the requisite service period is provided, regardless of whether the market conditions are achieved.
In the period the relevant performance vesting condition becomes probable, we will recognize the cumulative unrecognized expense of our two-tier RSUs and Co-Founder Grants, which will increase our cost of revenue and operating expenses with respect to our two-tier RSUs, and will increase our general and administrative expenses with respect to our Co-Founder Grants, for the quarter and year of our initial public offering. We expect that our research and development expenses will be the line item most significantly impacted by the cumulative expense to be recognized.
See “Accounting for Stock-Based Compensation” above for more information.
46 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
EXECUTIVE COMPENSATION (continued)
Option Exercises and Stock Vested in 2018
2023
The following table shows all stock awards vested, and value realized upon vesting, by our named executive officers during fiscal 2018. No named executive officer exercised2023.
| | | | | | | | | | | | | | |
| | | | |
| Option Awards | Stock Awards |
| | | | |
| | | | |
| Name | Option Awards –
Shares Acquired on
Exercise | Option Awards – Value Realized on Exercise ($) | Number of Shares
Acquired on
Vesting | Value Realized on Vesting ($)(1) |
| | | | |
| Andrew W. Houston | — | — | — | — |
| Timothy Regan | — | — | 203,005 | 5,180,392 |
| Timothy Young | — | — | 242,341 | 5,816,184 |
| Bart E. Volkmer | — | — | 132,813 | 3,383,788 |
| Eric Cox | — | — | — | — |
(1)The value realized upon vesting of RSAs or RSUs, as applicable, is calculated by multiplying the number of shares vested by the closing price for a share of our Class A common stock options during fiscal 2018.Name | Number of Shares
Acquired on
Vesting | Value Realized
on Vesting ($)(1) |
Andrew W. Houston | | — | | | — | |
Ajay V. Vashee | | 509,520 | | | 11,585,403 | |
Quentin J. Clark | | 625,000 | | | 17,430,000 | |
Yamini Rangan | | 80,228 | | | 2,010,373 | |
Bart E. Volkmer | | 464,254 | | | 9,079,760 | |
Dennis M. Woodside | | 1,779,578 | | | 42,908,188 | |
| (1) | The value realized upon vesting of RSUs is calculated by multiplying the number of shares vested by the closing price of Dropbox’s Class A common stock on the vest date (or, in the event the vest date occurs on a holiday or weekend, the closing price of Dropbox’s Class A common stock on the immediately preceding trading day). |
Potential Payments on Termination or Change in Control
Change in Control and Severance Agreements
In order to recruit and maintain a stable and effective management team, the talent and compensation committee believes it is appropriate and necessary to provide assurance of certain severance and change in control benefits approved by the talent and compensation committee, in consultation with Compensia. We entered into change in control and severance agreements with each of our named executive officers that provide for the severance and change in control benefits described below. In April 2019, we entered into an amendedAs noted above, Mr. Young’s employment ended on March 15, 2023, and restatedhe is no longer eligible to receive any benefit under his change in control and severance agreement with certain of our named executive officers that provides for the material amendments described below (the “April 2019 Amendment”).agreement.
If a named executive officer’s employment is terminated by us other than for “cause,” death, or “disability” or they resign for “good reason” (as such terms are defined in their change in control and severance agreement), in either case, outside the Change in Control Period (as defined below), they will be eligible to receive the following payments and benefits:
•a lump-sum payment equal to 50% of annual base salary as of immediately before their termination (or, if the termination is due to a resignation for good reason based on a material reduction in base salary, then as of immediately before such reduction);
•if they elect to continue health insurance coverage for themselves and their eligible dependents under COBRA, our payment of the monthly premium for such COBRA continuation coverage for up to 6 months (or monthly taxable payments to the NEOhim or her in lieu of our payment of such premiums);
•in the case of Messrs.Mr. Volkmer, and Vashee, 25% accelerated vesting of all outstanding equity awards and, with respect to equity awards with performance-based vesting, unless otherwise specified in the award agreements governing such equity awards, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels; and
•in the case of Mr. ClarkCox, with respect to equity awards with performance-based vesting, as specified in the award agreements governing such equity awards; and Ms. Rangan, 6 months
•in the case of Mr. Regan and Mr. Cox and, prior to his departure, Mr. Young, 3 months’ accelerated vesting of the unvested portion of outstanding time-based equity awards. This accelerated vesting provisions were added by the April 2019 Amendment. Prior to the April 2019 Amendment, Mr. Clark and Ms. Rangan were not entitled to vesting acceleration benefits under a qualified termination outside the Change in Control Period.
The receipt of the payments and benefits above is conditioned on the named executive officer timely signing and not revoking a release of claims, returning all documents and property belonging to us, and resigning from all officer and director positions with us.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 47
| | | | | |
| 54 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
The following table describes the potential payments that would have been provided to each of our named executive officers (other than Mr. Woodside, as he resigned from the companyChange in September 2018) in the event that they were involuntarily terminated by Dropbox without cause or resigned for good reason outside of a change of control context, assuming such termination occurred on December 31, 2018. For a summary of the material terms of Mr. Woodside’s severance agreement and the payments Mr. Woodside was entitled to receive, see “Post-Employment Compensation—Mr. Woodside’s Separation” above.
Name | Base Salary
Component ($) | Cash Bonus
Component | Value of
Accelerated
Equity Awards ($)(1) | Value of
Benefits ($) | Total ($) |
Andrew W. Houston | | 350,000 | | | N/A | | | N/A | | | 3,556 | | | 353,556 | |
Ajay V. Vashee | | 250,000 | | | N/A | | | 1,847,705 | | | 6,574 | | | 2,104,279 | |
Quentin J. Clark | | 275,000 | | | N/A | | | N/A | | | 12,566 | | | 287,566 | |
Yamini Rangan | | 250,000 | | | N/A | | | N/A | | | 11,088 | | | 261,088 | |
Bart E. Volkmer | | 225,000 | | | N/A | | | 1,000,227 | | | 12,566 | | | 1,237,793 | |
| (1) | Value based on a per share price of $20.43, which was the closing price as reported on December 31, 2018. |
Change of Control Severance
If, within the three-month period beforeprior to a change in control or afterduring the 12-month period following a change in control (such period, the “Change in Control Period”), a named executive officer’s employment is terminated by us other than for cause, death, or disability or they resign for “good reason” (as defined in their change in control and severance agreement), they will be entitled to the following benefits:
•a lump-sum payment equal to 100% of their annual base salary as of immediately before their termination (or if the termination is due to a resignation for good reason based on a material reduction in base salary, then as of immediately before such reduction) or, if such amount is greater, as of immediately before the change in control;
•a lump-sum payment equal to 100% of their target annual bonus (for the year of their termination);
•if they elect to continue health insurance coverage for themselves and their eligible dependents under COBRA, our payment of the monthly premium for such COBRA continuation coverage for up to 12 months (or monthly taxable payments to him or her in lieu of our payment of such premiums); and
•100% accelerated vesting of all outstanding equity awards, and, with respect to equity awards with performance-based vesting, unless otherwise specified in the award agreements governing such equity awards, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels.
The receipt of the payments and benefits above is conditioned on the named executive officer timely signing and not revoking a release of claims, returning all documents and property belonging to us, and resigning from all officer and director positions with us.
In addition, if any of the payments or benefits provided for under a change in control and severance agreement or otherwise payable to a named executive officer would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax, the named executive officer would be entitled to receive either full payment of such payments and benefits or such lesser amount that would result in no portion of the payments and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the named executive officer. The change in control and severance agreements do not require us to provide any tax gross-up payments to our named executive officers.
Certain Equity Awards
Andrew Houston Co-Founder Grant
In the event of an acquisition of the company before the end of the Performance Period, Mr. Houston’s Co-Founder Grant may be eligible to vest in additional tranche(s) of shares if the per share deal price in the acquisition causes a Stock Price Target that has not previously been achieved to be satisfied, in which case the tranche(s) of shares corresponding to that Stock Price Target will vest. Additionally, if the acquisition price falls between a Stock Price Target that has been achieved and one that has not, then a portion of that tranche of shares will vest based on a linear interpolation between each of these Stock Price Targets. See “Co-Founder Grant” above.
Timothy Young 2020 Performance-Based Restricted Stock Award
The vesting acceleration provisions under Mr. Young’s change in control and severance agreement described above did not apply to the performance-based RSA granted to Mr. Young in December 2020, and instead, the shares subject to the performance-based RSA could vest in connection with certain terminations of Mr. Young’s employment and/or a “change in control” (as defined in our 2018 Equity Incentive Plan). Mr. Young’s performance-based RSA award terminated in connection with the end of his employment on March 15, 2023, and no additional shares subject to the award vested in connection with his departure.
48 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 55 |
EXECUTIVE COMPENSATION (continued)
Amount of Payments Upon Termination at 2023 Year-End
The following table describes the potentialpayments that would have been provided to each of our named executive officers in the event that they were involuntarily terminated by Dropbox without cause or resigned for good reason outside of a change in control context, assuming such termination occurred on December 31, 2023. As noted above, Mr. Young’s employment ended on March 15, 2023, and he did not receive any severance or vesting acceleration in connection with his departure.
| | | | | | | | | | | | | | | | | |
| | | | | |
| Name | Base Salary
Component
($) | Cash Bonus
Component
($) | Value of Accelerated Equity Awards ($)(1) | Value of
Benefits
($) | Total ($) |
| | | | | |
| Andrew W. Houston | 312,500 | — | — | 14,530 | 327,030 | |
| Timothy Regan | 280,000 | — | 1,574,998 | 15,313 | 1,870,311 | |
| Timothy Young | 300,000 | — | — | 9,053 | 309,053 | |
| Bart E. Volkmer | 260,000 | — | 1,840,893 | 15,313 | 2,116,206 | |
| Eric Cox | — | — | — | 15,313 | 15,313 | |
(1)Value based on a per share price of $29.48, which was the closing price for a share of our Class A common stock, as reported on December 29, 2023, the last trading day of the year.
The following table describes the payments that would have been provided for each of our named executive officers
(other than Mr. Woodside, as he resigned from the company in September 2018 and did not receive any such benefits) upon termination of employment in connection with a change
ofin control of Dropbox as described above, assuming such termination had occurred on December 31,
2018.Name(1) | Base Salary
Component ($) | Cash Bonus
Component ($) | Value of
Accelerated
Equity Awards ($)(2) | 280G
Gross-up | Value of
Benefits ($) | Total ($) |
Andrew W. Houston | | 700,000 | | | 438,438 | | | 0 | (3) | | N/A | | | 7,113 | | | 1,145,551 | |
Ajay V. Vashee | | 500,000 | | | 319,480 | | | 7,390,818 | | | N/A | | | 13,149 | | | 8,223,447 | |
Quentin J. Clark | | 550,000 | | | 349,220 | | | 28,091,250 | | | N/A | | | 25,132 | | | 29,015,602 | |
Yamini Rangan | | 500,000 | | | 245,597 | | | 4,024,915 | | | N/A | | | 22,177 | | | 4,792,689 | |
Bart E. Volkmer | | 450,000 | | | 289,740 | | | 4,000,909 | | | N/A | | | 25,132 | | | 4,765,781 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Name(1) | Base Salary
Component
($) | Cash Bonus
Component
($) | Value of Accelerated Equity Awards ($)(2) | 280G
Gross-up
($) | Value of
Benefits
($) | Total ($) |
| | | | | | | |
| Andrew W. Houston | 625,000 | 625,000 | — | (3) | — | 29,060 | 1,279,060 | |
| Timothy Regan | 560,000 | 448,383 | 11,453,953 | | — | 30,626 | 12,492,962 | |
| Timothy Young | 600,000 | 600,000 | — | | — | 18,108 | 1,218,108 | |
| Bart E. Volkmer | 520,000 | 369,965 | 7,363,573 | | — | 30,626 | 8,284,164 | |
| Eric Cox | — | — | — | | — | 30,626 | 30,626 | |
(1)All of our named executive officers are subject to a better-after-tax provision whereby Dropbox would either pay such person (i) the full amount of their severance benefits or, alternatively (ii) an amount of certain severance benefits otherwise payable to them such that the severance benefits will not be subject to the tax imposed by Section 4999 of the Code, whichever produces the better after-tax result for such named executive officer.
(2)Unless otherwise noted, the value is based on a per share price of $29.48, which was the closing price for a share of our Class A common stock as reported on December 29, 2023, the last trading day of the year.
(3)Excludes 8,266,666 shares of Class A common stock underlying RSAs subject to Mr. Houston’s Co-Founder Grant. See “Potential Payments on Termination or Change in Control—Certain Equity Awards” above for additional information regarding the terms of Mr. Houston’s Co-Founder Grant in connection with a change in control.
| | | | | |
| 56 | (1) | AllDropbox, Inc. Proxy Statement and Notice of our named executive officers are subject to a better-after-tax provision whereby Dropbox would either pay such person (i) the full amount2024 Annual Meeting of their severance benefits or, alternatively (ii) an amount of certain severance benefits otherwise payable to them such that the severance benefits will not be subject to the tax imposed by Section 4999 of the Code, whichever produces the better after-tax result for such named executive officer.Stockholders |
| (2) | Value based on a per share price of $20.43, which was the closing price as reported on December 31, 2018. |
| (3) | Excludes 10,333,333 shares of Class A common stock underlying RSAs subject to Mr. Houston’s Co-Founder Grant. In the event of an acquisition of Dropbox before the end of the performance period of the Co-Founder Grant, the grant may be eligible to vest into additional of shares if the per share deal price in the acquisition causes a stock price target that has not previously been achieved to be satisfied, in which case the tranche(s) of shares corresponding to such stock price target will vest. Additionally, if the acquisition price falls between a stock price target that has been achieved and one that has not, then a portion of that tranche of shares will vest based on a linear interpolation between each of these stock price targets. See “Co-Founder Grants” above for more information. |
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 49
EXECUTIVE COMPENSATION (continued)
CEO Pay Ratio
In accordance with Item 402 of Regulation S-K under the Securities Act (“Item 402”), below is the ratio of the total compensation of the median employee of the company to the annual total compensation of the CEO (the “Pay Ratio Disclosure”).
| | | | | | | | | | | | | | |
| | | | |
| $1,539,577 | | $279,645 | | 6:1 |
CEO Total Annual
Compensation | | Median Employee Total
Compensation | | CEO Pay Ratio |
| | | | |
In order to identify our median employee, we examined the total compensation in 2023 of all employees globally, including those employed on a full-time, part-time, seasonal or temporary basis by the company as of December 31, 2023, and then such compensation is converted into U.S. dollars. We did not annualize compensation for employees who were not employed for the entire 2023 fiscal year. We chose total compensation to use as our consistently applied compensation measure. Total compensation includes each employee’s base salary, bonuses, sales commissions paid and the grant date fair market value of equity awards granted during the 12-month period from January 1, 2023 through December 31, 2023.
Our CEO had annual total compensation for 2023, calculated using the requirements of Item 402 for purposes of the Pay Ratio Disclosure, of $1,539,577. The annual total compensation of the median employee of the company for 2023, calculated using the same requirements under Item 402 for purposes of the Pay Ratio Disclosure, which included base pay, incentive compensation, the grant date fair value of equity grants and the company’s matching contribution to that employee’s 401(k) plan, was $279,645. Accordingly, the ratio of the annual total compensation of the CEO to the annual total compensation of the median employee of the company was 6 to 1.
The Pay Ratio Disclosure presented above is a reasonable estimate calculated in a manner consistent with Item 402. Because the SEC’s final regulations for identifying the median employee, calculating annual total compensation and determining the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, the company’s Pay Ratio Disclosure may not be comparable to that reported by other companies.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 57 |
EXECUTIVE COMPENSATION (continued)
Pay Versus Performance
In accordance with Item 402, below is the comparison of the total compensation actually paid to company performance (the “Pay Versus Performance Disclosure”). For further information concerning our variable pay-for-performance philosophy and how we align executive compensation with the company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.”
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
| | | | | | | | |
| | | | | | | | |
| Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(2) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) | Average Compensation Actually Paid to Non-PEO NEOs ($)(4) | Value of Initial Fixed $100
Investment Based On: | Net Income ($M)(7) | Revenue ($M)(8) |
| |
Total Company Shareholder Return ($)(5) | Peer Group Total Shareholder Return ($)(6) |
| | | | | | | | |
| 2023 | 1,539,577 | 19,457,888 | 2,515,311 | 1,165,036 | 164.60 | 221.06 | 453.6 | 2,541 |
| 2022 | 1,146,000 | -22,783,000 | 3,473,372 | 528,487 | 124.96 | 132.79 | 553.2 | 2,357 |
| 2021 | 1,515,269 | 25,163,611 | 2,832,378 | 1,261,953 | 137.02 | 206.76 | 335.8 | 2,149 |
| 2020 | 1,268,889 | 39,123,889 | 10,219,177 | 10,392,482 | 123.90 | 149.98 | -256.3 | 1,915 |
(1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Houston, our Chief Executive Officer (“PEO”), for each corresponding year in the “Total” column of the applicable “Summary Compensation Table.” Refer to “Executive Compensation – Summary Compensation Table.”
(2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Houston, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Houston during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Houston’s total compensation for each year to determine the compensation actually paid:
| | | | | | | | | | | | | | |
| | | | |
| Year | Reported
Summary
Compensation
Table Total for PEO ($) | Reported Value of Equity Awards ($)(a) | Equity Award Adjustments ($)(b) | Compensation
Actually
Paid to PEO ($) |
| | | | |
| 2023 | 1,539,577 | 0 | 17,918,311 | 19,457,888 |
| 2022 | 1,146,000 | 0 | -23,929,000 | -22,783,000 |
| 2021 | 1,515,269 | 0 | 23,648,342 | 25,163,611 |
| 2020 | 1,268,889 | 0 | 37,855,000 | 39,123,889 |
(a)The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the “Summary Compensation Table” for the applicable year.
(b)The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year 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 the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. Fair values were computed as of the end of the respective fiscal year, other than with regards to fair values of awards that vest in each covered
| | | | | |
| 58 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
year, which are valued as of the applicable vesting date. The amounts deducted or added in calculating the equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Year | Year End
Fair Value
of Equity
Awards ($) | Year over Year
Change in Fair
Value of
Outstanding
and Unvested
Equity
Awards ($) | Fair Value as
of Vesting
Date of Equity
Awards
Granted and
Vested in the
Year ($) | Year over
Year Change
in Fair Value
of Equity
Awards
Granted in
Prior Years
that Vested in
the Year ($) | Fair Value at
the End of the
Prior Year of
Equity
Awards that
Failed to Meet
Vesting
Conditions in
the Year ($) | Value of Dividends
or other Earnings
Paid on Stock or
Option Awards not
Otherwise
Reflected in Fair
Value or Total
Compensation ($) | Total
Equity
Award
Adjustments ($) |
| | | | | | | |
| 2023 | 0 | 17,918,311 | 0 | 0 | 0 | 0 | 17,918,311 |
| 2022 | 0 | -23,929,000 | 0 | 0 | 0 | 0 | -23,929,000 |
| 2021 | 0 | 8,238,085 | 0 | 15,410,257 | 0 | 0 | 23,648,342 |
| 2020 | 0 | 37,855,000 | 0 | 0 | 0 | 0 | 37,855,000 |
(3) The dollar amounts reported in column (d) represent the average of the amounts reported for the company’s named executive officers (“NEOs”) as a group (excluding Mr. Houston) in the “Total” column of the “Summary Compensation Table” in each applicable year. The names of each of the NEOs (excluding Mr. Houston) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Timothy Young, Tim Regan, Bart Volkmer, and Eric Cox; (ii) for 2022, Timothy Young, Tim Regan and Bart Volkmer; (iii) for 2021, Timothy Young, Tim Regan, Bart Volkmer, and Olivia Nottebohm; and (iv) for 2020, Timothy Young, Tim Regan, Bart Volkmer, Olivia Nottebohm, and Ajay Vashee.
(4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Houston), 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 (excluding Mr. Houston) during the applicable year. 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 (excluding Mr. Houston) for each year to determine the compensation actually paid, using the same methodology described above in Note 2:
| | | | | | | | | | | | | | |
| | | | |
| Year | Average
Reported Summary
Compensation Table
Total for Non-PEO
NEOs ($) | Average Reported
Value of Equity
Awards($) | Average Equity Award Adjustments ($)(a) | Average Compensation
Actually Paid to Non-
PEO NEOs ($) |
| | | | |
| 2023 | 2,515,311 | 2,049,960 | 699,685 | 1,165,036 |
| 2022 | 3,473,372 | 2,607,061 | -337,824 | 528,487 |
| 2021 | 2,832,378 | 1,946,253 | 375,828 | 1,261,953 |
| 2020 | 10,219,177 | 9,424,859 | 9,598,164 | 10,392,482 |
(a)The amounts deducted or added in calculating the total average equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Year | (a) | (b) | (c) | (d) | (e) | (f) | Total Average Equity Award Adjustments ($)(a) |
| | | | | |
Average
Year End
Fair Value of
Equity
Awards ($) | Year over
Year Average
Change in
Fair Value of
Outstanding
and Unvested
Equity
Awards ($) | Average
Fair Value
as of Vesting
Date of
Equity Awards
Granted
and Vested
in the
Year ($) | Year over
Year Average
Change in
Fair Value of
Equity
Awards
Granted in
Prior Years
that Vested in
the Year ($) | Average Fair
Value at the End
of the Prior Year
of Equity
Awards that
Failed to Meet
Vesting
Conditions in
the Year ($) | Average Value of
Dividends or
other Earnings
Paid on Stock or
Option Awards
not Otherwise
Reflected in Fair
Value or Total
Compensation ($) |
| | | | | | | |
| 2023 | 2,271,117 | 586,030 | 460,877 | 299,187 | -2,917,528 | 0 | 699,685 |
| 2022 | 2,038,975 | -2,637,402 | 479,292 | -218,688 | 0 | 0 | -337,824 |
| 2021 | 1,455,584 | 1,400,515 | 385,547 | 648,906 | 3,514,724 | 0 | 375,828 |
| 2020 | 9,833,673 | 796,740 | 307,618 | 148,905 | 1,488,772 | 0 | 9,598,164 |
(a)The total average equity award adjustment is calculated by adding the values in columns (a), (b), (c), (d), and (f) less (e). Due to rounding, the total average equity award may not equal the total obtained by adding and subtracting the applicable columns.
(5) Cumulative total shareholder return (“TSR”) is calculated as the difference between the company’s share price at the end and the beginning of the measurement period divided by the company’s share price at the beginning of the measurement period.
(6) The peer group used for this purpose is the following published industry index: Nasdaq Computer Index.
(7) The dollar amounts reported represent the amount of net income reflected in the company’s audited financial statements for the applicable year.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 59 |
EXECUTIVE COMPENSATION (continued)
(8) Annual revenue was calculated to exclude the impact of foreign exchange from our annual revenue reflected in our audited financial statements for the applicable fiscal year by applying the prior year weighted average exchange rate to the applicable period’s results.
Financial Performance Measures
As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the company’s executive compensation program reflects a variable pay-for-performance philosophy. The measures that the company uses in its short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our shareholders. The most important financial performance measures used by the company to link executive compensation actually paid to the company’s NEOs, for the most recently completed fiscal year, to the company’s performance are as follows (not listed in any order of importance):
•Revenue
•Non-GAAP operating margin
•Stock-based compensation expense
•Stock price
Analysis of the Information Presented in the Pay versus Performance Table
As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the company’s executive compensation program reflects a variable pay-for-performance philosophy. While the company utilizes several performance measures to align executive compensation with company performance, not all of those company measures are presented in the “Pay Versus Performance” table. Moreover, the company generally seeks to incentivize long-term performance, and therefore does not specifically align the company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the company is providing the following descriptions of the relationships between information presented in the “Pay Versus Performance” table.
Compensation Actually Paid and Cumulative TSR
As demonstrated by the following graph, the amount of compensation actually paid to Mr. Houston decreased between 2020 and 2022 and increased between 2022 and 2023. Similarly, the average amount of compensation actually paid to the company’s NEOs as a group (excluding Mr. Houston) decreased between 2020 and 2022 and increased between 2022 and 2023. During that four-year period, total shareholder return has been positive. The variance in compensation actually paid over the four-year period is because a significant portion of compensation actually paid is comprised of equity awards, and in the case of Mr. Houston, vesting of equity awards is contingent upon achieving stock price targets as described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis”.
Compensation Actually Paid and Net Income
As demonstrated by the following graph, the amount of compensation actually paid to Mr. Houston decreased between 2020 and 2022 and increased between 2022 and 2023, while the company's net income stabilized at a strong position over the same period. Similarly, the average amount of compensation actually paid to the company’s NEOs as a group (excluding Mr.
| | | | | |
| 60 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EXECUTIVE COMPENSATION (continued)
Houston) decreased between 2020 and 2022 and increased between 2022 and 2023, while the company's net income stabilized at a strong position over the same period. We do not use net income as a performance measure in our short or long-term incentive programs and as further discussed in the section “Executive Compensation – Compensation Discussion and Analysis”, a majority of the total compensation for the company’s NEOs is in the form of equity and therefore tied to stock price performance.
Compensation Actually Paid and Revenue
As demonstrated by the following graph, the amount of compensation actually paid to Mr. Houston decreased between 2020 and 2022 and increased between 2022 and 2023 while the company's revenue increased over the same period. Similarly, the average amount of compensation actually paid to the company’s NEOs as a group (excluding Mr. Houston) decreased between 2020 and 2022 and increased between 2022 and 2023 while the company’s revenue increased over the same period. The company has determined that revenue is the financial performance measure that, in the company’s assessment, represents the most important financial measure used by the company to link compensation actually paid to the company’s NEOs, for the most recently completed fiscal year, to company performance. As further discussed above in the section “Executive Compensation – Compensation Discussion and Analysis”, revenue represents two-thirds of the corporate multiplier of the short-term incentive plan.
Cumulative TSR of the Company and Cumulative TSR of the Peer Group
As demonstrated by the following graph, the company’s cumulative TSR over the four-year period presented in the table grew by 65%, while the cumulative TSR of the peer group presented for this purpose, the Nasdaq Computer Index, was 121% over the four years presented in the graph. For more information regarding the company’s performance and the
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 61 |
EXECUTIVE COMPENSATION (continued)
companies that the talent and compensation committee considers when determining compensation, refer to “Executive Compensation – Compensation Discussion and Analysis.”
| | | | | |
| 62 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes our equity compensation plan information as of December 31, 2018.2023. Information is included for equity compensation plans approved by our stockholders. We do not have any equity compensation plans not approved by our stockholders. The table does not include information with respect to shares subject to outstanding awards assumed by Dropbox in connection with acquisitions of the companies that originally granted those awards.awards, nor does it include shares underlying the RSAs granted to Mr. Houston pursuant to the Co-Founder Grant. As of December 31, 2023, 87,874 shares of Class A common stock were issuable upon exercise of outstanding options and release of restricted stock units assumed in connection with acquisitions. The weighted average exercise price of such outstanding options was $7.53 per share. No additional equity awards may be granted under any assumed arrangement.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Plan Category | Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and Rights | Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in the First Column) |
| | | | | | |
Equity compensation plans approved by security holders(1) | 30,475,699 | (2) | 23.80 | (3) | 78,626,853 | (4)(5) |
(1)Includes our 2008 Equity Incentive Plan (“2008 Plan”) and 2018 noEquity Incentive Plan (“2018 Plan”). Our 2008 Plan was terminated effective March 7, 2017.
(2)Includes 30,475,699 shares subject to options and RSUs outstanding as of December 31, 2023 that were issued under the 2008 Plan and 2018 Plan.
(3)RSUs, which do not have an exercise price, are excluded in the calculation of weighted-average exercise price.
(4)As of December 31, 2023, an aggregate of 109,102,552 shares of Class A common stock were available for issuance under our 2018 Plan.
(5)This table does not include equity awards that have been assumed by the company in connection with the acquisition of other companies. As of December 31, 2023, the following assumed equity awards were outstanding.outstanding: 85,105 shares issuable upon exercise of outstanding options and 2,769 shares issuable upon vesting of restricted stock units. The weighted average exercise price of such outstanding options was $7.53 per share. No additional equity awards may be granted under any assumed arrangement.
| Plan Category
| Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights
| Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and Rights
| Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in the First Column)
| |
Equity compensation plans approved by security holders(1)Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders
| | 26,205,049(2
| )
| $
| 14.68(3
| )
| | 30,928,489(4
| )
63 |
| (1) | Includes our 2008 Equity Incentive Plan (“2008 Plan”), 2017 Equity Incentive Plan (“2017 Plan”) and 2018 Equity Incentive Plan (“2018 Plan”). Our 2008 Plan was terminated effective March 7, 2017 and our 2017 Plan was terminated effective March 20, 2018. |
| (2) | Includes 26,205,049 shares subject to options and RSUs outstanding as of December 31, 2018 that were issued under the 2008 Plan, 2017 Plan, and 2018 Plan. |
| (3) | RSUs, which do not have an exercise price, are excluded in the calculation of weighted-average exercise price. |
| (4) | As of December 31, 2018, an aggregate of 57,133,538 shares of Class A common stock were available for issuance under our 2018 Plan. |
50 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 15, 201921, 2024 for:
•each of our directors;
•each of our named executive officers;
•all of our current directors, named executive officers and executive officers as a group; and
•each person or group known by us to be the beneficial owner of more than 5% 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 the percentage of beneficial ownershipownership on 238,779,695258,367,529 shares of our Class A common stock, 187,367,04080,017,765 shares of our Class B common stock, and no shares of our Class C common stock outstanding as of March 15, 2019.21, 2024. We have deemed shares of our common stock subject to stock options that are currently exercisable or exercisable within 60 days of March 15, 201921, 2024 or issuable pursuant to RSUs which are subject to vesting and settlement conditions expected to occur within 60 days of March 15, 2019,21, 2024, to be outstanding and to be beneficially owned by the person holding the stock option or RSU for the purpose of computing the percentage ownership of that person. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Dropbox, Inc.,
333 Brannan1800 Owens Street San Francisco, California
94107.94158. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted.
| Amount and nature of beneficial ownership | % of total
voting power# |
Name of beneficial owner | Class A
Common shares | % | Class B
Common shares† | % |
Named executive officers and directors:
| | | | | | | | | | | | | | | |
Andrew W. Houston(1) | | 11,146,461 | | | 4.7% | | | 83,193,914 | | | 44.4% | | | 39.9% | |
Arash Ferdowsi(2) | | 4,800,000 | | | 2% | | | 31,902,033 | | | 17% | | | 15.3% | |
Quentin J. Clark | | 271,802 | | | | * | | — | | | — | | | | * |
Yamini Rangan | | 79,828 | | | | * | | — | | | — | | | | * |
Bart E. Volkmer | | 149 | | | | * | | 363,250 | (3) | | | * | | | * |
Ajay V. Vashee | | 47,551 | | | | * | | 376,857 | | | | * | | | * |
Dennis M. Woodside | | 1,854,237 | | | | * | | — | | | — | | | | * |
Donald W. Blair | | 26,667 | | | | * | | — | | | — | | | | * |
Paul E. Jacobs(4) | | 226,044 | | | | * | | — | | | — | | | | * |
Robert J. Mylod, Jr.(5) | | 168,797 | | | | * | | — | | | — | | | | * |
Condoleezza Rice | | 52,766 | | | | * | | — | | | — | | | | * |
R. Bryan Schreier(6) | | 223,955 | | | | * | | — | | | — | | | | * |
Margaret C. Whitman(7) | | 26,667 | | | | * | | 34,901 | | | | * | | | * |
All current executive officers and directors as a group (12 persons) | | 17,070,687 | (8) | | 7.15% | | | 115,870,955 | (9) | | 61.8% | | | 55.6% | |
| | | | | | | | | | | | | | | | | |
| | | | | |
| Amount and nature of beneficial ownership | % of total voting power# |
| | | | |
| | | | |
| Name of beneficial owner | Class A
Common Stock | % | Class B
Common Stock | % |
| | | | | |
| Named executive officers and directors: | | | | | |
Andrew W. Houston(1) | 9,427,838 | 3.65 | 78,923,893 | 98.63 | 75.45 |
| Timothy Regan | 238,554 | * | — | — | * |
Timothy Young(2) | 112,762 | * | — | — | * |
| Bart E. Volkmer | 114,701 | * | 63,120 | * | * |
| Eric Cox | 15,262 | * | — | — | * |
| Donald W. Blair | 89,560 | * | — | — | * |
| Lisa Campbell | 6,149 | * | — | — | * |
Paul E. Jacobs(3) | 291,904 | * | — | — | * |
| Sara Mathew | 12,297 | * | — | — | * |
| Andrew Moore | — | — | — | — | — |
| Abhay Parasnis | 14,088 | * | — | — | * |
| Karen Peacock | 12,297 | * | — | — | * |
| Michael Seibel | 12,297 | * | — | — | * |
| All current directors, named executive officers and executive officers as a group (13 persons) | 10,347,709 | 4.01 | 78,987,013 | 98.71 | 75.60 |
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 51
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| 64 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (continued)
| Amount and nature of beneficial ownership | % of total
voting power# |
Name of beneficial owner | Class A
Common shares | % | Class B
Common shares† | % |
Greater than 5% stockholders
| | | | | | | | | | | | | | | |
Entities affiliated with Sequoia Capital(10) | | 14,104 | | | | * | | 65,378,585 | | | 34.9% | | | 30.9% | |
Entities affiliated with Accel(11) | | 16,189,638 | | | 6.7% | | | — | | | — | | | | * |
Entities affiliated with FMR(12) | | 12,737,377 | | | 5.3% | | | — | | | — | | | | * |
| | | | | | | | | | | | | | | | | |
| | | | | |
| Amount and nature of beneficial ownership | % of total voting power# |
| | | | |
| | | | |
| Name of beneficial owner | Class A
Common Stock | % | Class B
Common Stock | % |
| | | | | |
| Greater than 5% stockholders | | | | | |
Entities affiliated with The Vanguard Group(4) | 27,274,282 | 10.56 | — | — | 2.58 |
Entities affiliated with BlackRock, Inc.(5) | 35,534,669 | 13.75 | — | — | 3.36 |
Ameriprise Financial, Inc.(6) | 19,144,616 | 7.41 | — | — | 1.81 |
Columbia Management Investment Advisers, LLC(7) | 18,085,218 | 7.00 | — | — | 1.71 |
†The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis, such that each holder of Class B common stock beneficially owns an equivalent number of Class A common stock.
#Percentage 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. Each holder of Class B common stock shall be entitled to ten votes per share of Class B common stock and each holder of Class A common stock shall be entitled to one vote per share of Class A common stock on all matters submitted to our stockholders for a vote. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law.
*Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock.
(1)Consists of (i) 716,728 shares of Class A Common Stock and 7,743,764 shares of Class B Common Stock held by the Houston Remainder Trust u/a/ 12/30/2010, for which Mr. Houston serves as trustee, (ii) 70,679,629 shares of Class B Common Stock were held by Andrew Houston Revocable Trust u/a/d 9/7/2011, for which Mr. Houston serves as trustee, (iii) 500,500 shares of Class B common stock held by the Houston 2012 Irrevocable Children’s Trust dated 4/12/2012, for which Mr. Houston serves as trustee, (iv) 444,444 shares of Class A Common Stock held by the Erin Yu Revocable Trust u/a/d 1/18/2024, for which Mr. Houston's spouse serves as a trustee, and (v) 8,266,666 shares of Class A common stock underlying RSAs subject to Mr. Houston’s Co-Founder Grant.
(2)According to the company's records as of June 14, 2023.
(3)Consists of (i) 178,058 shares of Class A common stock held by the Paul E. Jacobs Trust dated November 7, 2014, for which Mr. Jacobs serves as trustee, and (ii) 113,846 shares of Class A common stock held by Mr. Jacobs.
(4)Consists of shares of Class A common stock beneficially owned as of December 29, 2023 according to a Schedule 13G/A filed with the SEC by The Vanguard Group, Inc. (“Vanguard”) on February 13, 2024. Vanguard has beneficial ownership of 27,274,282 shares of Class A common stock. The Schedule 13G/A reports that Vanguard has shared voting power with respect to 189,842 shares of Class A common stock, sole dispositive power with respect to 26,873,363 shares of Class A common stock and shared dispositive power over 400,919 shares of Class A common stock. The address for Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.
(5)Consists of shares of Class A common stock beneficially owned as of December 31, 2023 according to a Schedule 13G filed with the SEC by BlackRock, Inc. (“BlackRock”) on January 23, 2024. BlackRock has beneficial ownership of 35,534,669 shares of Class A common stock. The address for BlackRock is 50 Hudson Yards, New York, New York 10001.
(6)Consists of shares of Class A common stock beneficially owned as of December 31, 2023 according to a Schedule 13G filed with the SEC by Ameriprise Financial, Inc. (“Ameriprise”) on February 14, 2024. Ameriprise has beneficial ownership of 19,144,616 shares of Class A common stock. The address for Ameriprise is 145 Ameriprise Financial Center, Minneapolis, MN 55474.
(7)Consists of shares of Class A common stock beneficially owned as of December 31, 2023 according to a Schedule 13G filed with the SEC by Columbia Management Investment Advisers, LLC (“Columbia”) on February 14, 2024. Columbia has beneficial ownership of 18,085,218 shares of Class A common stock. The address for Columbia is 290 Congress Street, Boston, MA 02210.
| | | | | |
Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | † | The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis, such that each holder of Class B common stock beneficially owns an equivalent number of Class A common stock.65 |
| # | Percentage 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. Each holder of Class B common stock shall be entitled to ten votes per share of Class B common stock and each holder of Class A common stock shall be entitled to one vote per share of Class A common stock on all matters submitted to our stockholders for a vote. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law. |
| * | Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock. |
| (1) | Consists of (i) 716,728 shares of Class A common stock and 7,893,764 shares of Class B common stock held by the Houston Remainder Trust dated 12/30/2010, for which Mr. Houston serves as trustee, (ii) 73,103,073 shares of Class B common stock held by the Andrew W. Houston Revocable Trust dated 9/7/2011, for which Mr. Houston serves as trustee, (iii) 500,500 shares of Class B common stock held by the Houston 2012 Irrevocable Children’s Trust dated 4/12/2012, for which Mr. Houston serves as trustee, (iv) 10,333,333 shares of Class A common stock underlying RSAs, and (v) 96,400 shares of Class A common stock and 1,696,577 shares of Class B common stock subject to certain proxy agreements, in which Mr. Houston has voting power over the shares. |
| (2) | Consists of (i) 400,000 shares of Class A common stock and 2,900,802 shares of Class B common stock held by the Arash Ferdowsi Remainder Trust dated 3/21/2011, for which Mr. Ferdowsi serves as trustee, (ii) 28,636,583 shares of Class B common stock held by the Arash Ferdowsi Revocable Trust dated 4/20/2012, for which Mr. Ferdowsi serves as trustee, (iii) 4,400,000 shares of Class A common stock underlying RSAs, and (iv) 364,648 shares of Class B common stock subject to certain proxy agreements, in which Mr. Ferdowsi has voting power over the shares. |
| (3) | Consists of (i) 273,117 shares of Class B common stock held by Mr. Volkmer and (ii) 90,133 shares of Class B common stock subject to options that are immediately exercisable within 60 days of March 15, 2019. |
| (4) | Consists of (i) 172,711 shares of Class A common stock held by the Paul E. Jacobs Trust dated November 7, 2014, for which Mr. Jacobs serves as trustee, (ii) and 53,333 shares of Class A common stock held by Mr. Jacobs. |
| (5) | Consists of (i) 122,698 shares of Class A common stock held by Annox Capital, LLC, or Annox, and (ii) 46,099 shares of Class A common stock held by Mr. Mylod. Mr. Mylod, one of our directors, is the managing member of Annox and has sole voting and investment control over the shares held by Annox. |
| (6) | Consists of 223,955 shares of Class A common stock held by family trust. Excludes shares listed in footnote 9 below, which are held by entities affiliated with Sequoia Capital. Mr. Schreier, one of our directors, is a non-managing member of SC XII LLC. |
| (7) | Consists of (i) 34,901 shares of Class B common stock held by held by Sweetwater Trust UAD 10/15/1999, for which Ms. Whitman and her spouse serve as trustees, and (ii) 26,667 shares of Class A common stock held by Ms. Whitman. |
| (8) | Consists of (i) 17,070,687 shares of Class A common stock beneficially owned by our executive officers and directors. |
| (9) | Consists of (i) 115,780,822 shares of Class B common stock beneficially owned by our executive officers and directors, (ii) 90,133 shares of Class B common stock subject to options that are immediately exercisable within 60 days of March 15, 2019. |
| (10) | Consists of (i) 57,134,359 shares of Class B common stock held by Sequoia Capital XII, L.P., or SC XII, (ii) 6,106,357 shares of Class B common stock held by Sequoia Capital XII Principals Fund, LLC, or SC XII PF, (iii) 2,137,869 shares of Class B common stock held by Sequoia Technology Partners XII, L.P., or STP XII, and (iv) 14,104 shares of Class A common stock held by Sequoia Capital U.S. Venture 2010 – Seed Fund, L.P.. SC XII Management, LLC, or SC XII LLC, is the general partner of each of SC XII and STP XII, and the managing member of SC XII PF. As a result, and by virtue of the relationships described in this footnote, SC XII LLC may be deemed to share beneficial ownership of the shares held by SC XII, SC XII PF, and STP XII. The address for these entities is 2800 Sand Hill Road #101, Menlo Park, California 94025. |
| (11) | Based on information reported, as of December 31, 2018, on Schedule 13G filed with the SEC on February 13, 2019 by Accel X L.P., a Delaware limited partnership, Accel X Strategic Partners L.P., a Delaware limited partnership, Accel X Associates L.L.C., a Delaware limited liability company, Accel Investors 2008 L.L.C., a Delaware limited liability company, Accel Investors 2010 L.L.C., a Delaware limited liability company, Accel XI L.P., a Delaware limited partnership, Accel XI Strategic Partners L.P., a Delaware limited partnership, Accel XI Associates L.L.C., a Delaware limited liability company, Accel Investors 2013 L.L.C., a Delaware limited liability company, Accel Leaders Fund L.P., a Delaware limited partnership, Accel Leaders Fund Associates L.L.C., a Delaware limited liability company, and Accel Leaders Fund Investors 2016 L.L.C., a Delaware limited liability company. The address listed for these entities is 500 University Avenue, Palo Alto, California 94301. |
| (12) | Based on information reported, as of December 31, 2018, on Schedule 13G filed with the SEC on February 13, 2019 by FMR LLC. The address listed is 245 Summer Street, Boston, Massachusetts 02210. |
52 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
CERTAIN RELATIONSHIPS, RELATED PARTY AND OTHER TRANSACTIONS
We describe below transactions and series of similar transactions, sinceSince the beginning of our last fiscal year to which we were a party or will be a party,have not engaged in which:
the amounts involved exceeded or will exceed $120,000;any transactions that would require disclosure under Item 404(a) of Regulation S-K, and are not aware of any such transactions currently proposed.
any of our directors, nominees for director, executive officers or beneficial holders of more than 5% of any class of our outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest.
Amended and Restated Investors’ Rights Agreement
We are party to our amended and restated investors’ rights agreement, or IRA, dated as of January 30, 2014, which provides, among other things, that certain holders of our capital stock, including entities affiliated with each of Sequoia Capital, Accel, and T. Rowe Price, have a right to include shares in a registration statement that we are otherwise filing. Mr. Schreier is affiliated with Sequoia Capital.
Commercial Arrangement
We also have a commercial relationship with HPE, of which Ms. Whitman served as chief executive officer from November 2015 to February 2018. The commercial relationship includes infrastructure equipment under capital leases, the purchase of commercial products and other services, and a multi-year subscription agreement for access to the Dropbox platform. During 2018, we received payments of $2.1 million for services rendered to HPE. During 2018, we made payments of $79.1 million for capital leases and commercial products and services provided by HPE.
Policies and Procedures for Related Person Transactions
Our audit committee has the primary responsibility for reviewing and approving or disapproving “related party transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. Our policy regarding transactions between us and related persons provides that a related person is defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and any of their immediate family members. Our audit committee charter provides that our audit committee shall review and approve or disapprove any related party transactions.
Under this policy, all related person transactions may be consummated or continued only if approved or ratified by our audit committee. In determining whether to approve or ratify any such proposal, our audit committee will take into account, among other factors it deems appropriate, (i) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party and (ii) the extent of the related person’s interest in the transaction. The policy grants standing pre-approval of certain transactions, including (i) executive compensation governed by our standard compensation and benefits policies, (ii) director compensation arrangements governed by our standard director compensation policies, (iii) transactions with another company at which a related person’s only relationship is as an employee other(other than an executive officer orofficer), director, or beneficial owner of less than 10% equity interest of that company, if the aggregate amount involved does not exceed the greater of $200,000 or 2% of the recipient’s consolidated gross revenues, (iv) charitable contributions, grants or endowments by us to a charitable organization, foundation or university where the related person’s only relationship is as an employee other(other than an executive officerofficer), or director, if the aggregate amount involved does not exceed the lesser of $100,000$1,000,000 or 2% of the charitable organization’s total annual receipts, (v) any transaction available to all U.S. employees generally, and (vi) transactions where a related person’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis.
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 53
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| 66 | Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders |
Delinquent Section 16(a)
Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act requires that our executive officers and directors, and persons who own more than 10% of our common stock, file reports of ownership and changes of ownership with the SEC. Such directors, executive officers and 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
SEC regulations require us to identify in this proxy statement anyone who filed a required report late during the most recent fiscal year. Based solely on our review of copies of such forms that we have received, or written representations from reporting persons, stating that they were not required to file these forms, we believe that during ourthe fiscal year ended December 31, 2018,2023, all Section 16(a)executive officers, directors and greater than 10% stockholders complied with all applicable SEC filing requirements, were satisfiedwith the exceptions noted below.
•Due to an administrative error, a late Form 4 was filed for Bart Volkmer on March 16, 2023 to report a timely basis.sale of 11,506 shares of our Class A common stock on March 13th, 2023.
Fiscal Year
20182023 Annual Report and SEC Filings
Our financial statements for our fiscal year ended December 31,
20182023 are included in our Annual Report on Form 10-K, which we will make available to stockholders at the same time as this proxy statement. This proxy statement and our annual report are posted on our website at investors.dropbox.com and are available from the SEC
aton its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to Dropbox, Inc., Attention:
Investor Relations, 333 BrannanCorporate Secretary, 1800 Owens Street, San Francisco, California
94107.94158.
The board of directors does not know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have discretion to vote the shares of our common stock they represent in accordance with their own judgment on such matters.
It is important that your shares of our common stock be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the enclosed proxy card or execute and return, at your earliest convenience, the enclosed proxy card in the envelope that has also been provided.
THE BOARD OF DIRECTORS
San Francisco, California
April 9, 20192, 2024
54 Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders
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Dropbox, Inc. Proxy Statement and Notice of 2024 Annual Meeting of Stockholders | 67 |
TABLE OF CONTENTSDirections to Dropbox, Inc.
Corporate Headquarters
Sevtember Conference Room
333 Brannan St.
San Francisco, CA 94107
From San Francisco Airport and points south:
APPENDIX A Travel north on Highway 101
Take Exit 430A toward Downtown San FranciscoReconciliation of GAAP financial measures to non-GAAP financial measures
Merge onto Interstate 280 N
Take Exit 57 for Sixth Street
Turn Right on Brannan Street
Dropbox’s Corporate Headquarters will be on the right side
From Oakland AirportThis proxy statement contains information regarding two non-GAAP financial measures: non-GAAP operating margin and the East Bay:
Travel north on Interstate 880 N
Take the Interstate 80 exit towards San Francisco
Merge onto Interstate 80 W
Take Exit 2B toward Harrison St./Embarcadero
Turn left on Harrison Street
Turn right on Brannan Street
Dropbox’s Corporate Headquarters will be on the left side
Dropbox, Inc. Proxy Statement and Notice of 2019 Annual Meeting of Stockholders 55
TABLE OF CONTENTS
DROPBOX, INC.333 BRANNAN STREET SAN FRANCISCO, CA 94107 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 22, 2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/DBX2019 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 22, 2019. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY E54739-P16392 DROPBOX, INC. The Board of Directors recommends you vote FORfree cash flow, each of the following nominees: 1. The election of eight directors to serve until the next annual meeting of stockholders and until their successorswhich are duly elected and qualified; Nominees: 01) Andrew W. Houston 02) Arash Ferdowsi 03) Donald W. Blair 04) Paul E. Jacobs 05) Robert J. Mylod, Jr. 06) Condoleezza Rice 07) R. Bryan Schreier 08) Margaret C. Whitman The Board of Directors recommends you vote FOR proposals 2 and 3. 2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019; For Against Abstain 3. To approve, on an advisory basis, the compensation of our named executive officers; For Against Abstain The Board of Directors recommends you vote 1 YEAR on the following proposal: 4. To approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers; and 1 Year 2 Years 3 Years Abstain NOTE: The proxy holders will vote, in their discretion on any other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. HOUSEHOLDING ELECTION - Please indicate if you consent to receive certain future investor communications in a single package per household. DROPBOX, INC. Yes No Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
TABLE OF CONTENTS
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and 10-K Wrap are available at www.proxyvote.com. DROPBOX, INC. CLASS A COMMON STOCK AND CLASS B COMMON STOCK Annual Meeting of Stockholders May 23, 2019 9:30 AM, PDT This proxy is solicited by the Board of DirectorsThe stockholder(s) hereby appoint(s) Andrew W. Houston and Ajay V. Vashee, or either of them, as proxies, each with the power to appoint (his/her) substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Class A Common Stock and Class B Common Stock of DROPBOX, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 9:30 AM, PDT on May 23, 2019, at 333 Brannan Street, San Francisco, CA 94107, and via the internet at www.virtualshareholdermeeting.com/DBX2019, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be votednot calculated in accordance with GAAP. Non-GAAP operating margin is calculated as our non-GAAP income (loss) from operations divided by revenue. Non-GAAP income (loss) from operations differs from GAAP in that it excludes stock-based compensation expense, amortization of acquired intangible assets, other acquisition-related expenses, which include third-party diligence costs and expenses related to key employee holdback agreements, net (gain) loss on real estate assets, and expenses related to our reduction in workforce. Free cash flow differs from GAAP net cash provided by operating activities in that it treats capital expenditures as a reduction to net cash provided by operating activities.
We believe that these non-GAAP financial measures are appropriate to enhance an overall understanding of our fiscal 2022 performance in relation to the Boardprincipal elements of Directors' recommendations. E54740-P16392Dropbox’s annual executive compensation program considered by the talent and compensation committee, as described in the “Compensation Discussion and Analysis” section of this proxy statement.
The use of non-GAAP operating margin and free cash flow has certain limitations as they do not reflect all items of income, expense, and cash expenditures, as applicable, that affect Dropbox’s operations. Dropbox compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages stockholders and others to review Dropbox’s financial information in its entirety and not rely on a single financial measure.
Stockholders should review the reconciliation of non-GAAP operating margin and free cash flow to their most directly comparable GAAP financial measures, as provided in the following tables (in millions, except for percentages, which may not foot due to rounding):
Non-GAAP operating margin
| | | | | | | | |
| | |
| Twelve Months Ended December 31, |
| | |
| | |
| 2023 | 2022 |
| | |
| GAAP income (loss) from operations | $538.7 | $181.3 |
| GAAP operating margin | 21.5% | 7.8% |
| Plus: | | |
| Stock-based compensation | 338.0 | 330.7 |
| Acquisition-related and other expenses | 30.9 | 18.0 |
| Amortization of acquired intangible assets | 28.2 | 13.8 |
| Net (gain) loss on real estate assets | (155.2) | 175.2 |
| Reduction workforce expense | 39.3 | — |
| Non-GAAP income (loss) from operations | 819.9 | 719.0 |
| Non-GAAP operating margin | 32.8% | 30.9% |
Free cash flow
| | | | | | | | |
| | |
| Twelve Months Ended December 31, |
| | |
| | |
| 2023 | 2022 |
| | |
| Net cash provided by operating activities | 783.7 | $797.3 |
| Less: | | |
| Capital expenditures | (24.3) | (33.8) |
| Free cash flow | 759.4 | 763.5 |
