Filed by the Registrant ☑
Filed by a Party other than the Registrant ☐
Check the appropriate box:
Filed by the Registrant | Filed by a Party other than the |
Check the appropriate box: |
PayPal Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ||||
Preliminary Proxy Statement | ||||
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||
Definitive Proxy Statement | ||||
Definitive Additional Materials | ||||
Soliciting Material under §240.14a-12 |
Payment of Filing Fee (Check all boxes that apply): |
No fee required. | ||||
|
| |||
| ||||
| ||||
| ||||
| ||||
| ||||
| Fee paid previously with preliminary materials. | |||
|
| |||
| ||||
| ||||
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and0-11. |
20202023 Notice of Annual Meeting of Stockholders and Proxy Statement 2022 Annual Report
Our Two-sided Platform Serves Merchants and Consumers Merchants Power all aspects of digital checkout online and in store Provide access to seamless credit solutions to enable growth Protect against fraud and improve risk management Offer tools and insights to attract new customers and increase sales Consumers Help people manage and move money domestically and internationally Offer credit and installment pay services that are accessible and cost effective Facilitate simple, secure payments across devices Deliver flexibility with payment options globally, across platforms and merchants Our Payment Solutions Checkout Processing Digital Wallets Consumer Financial Services P2P Savings Giving Crypto Bill Pay Credit and Debit Cards Shopping and Rewards Rewards Deals Loyalty Merchant Services Risk Management and Fraud Protection Payouts 2022 Key Performance Metrics Growing Payment Volume: $1.36 Trillion of Total Payment Volume 9% from 2021 Increasing Activity: 22.3 Billion Payment Transactions 16% from 2021 Expanding Network Scale: Active Accounts of 435 Million 2% from 2021
MESSAGE FROM OUR PRESIDENT AND
Message from Our President and CEO | ||||||
Dear Colleagues, Customers, Partners and Stockholders:
FiveIn 2022, PayPal continued to navigate a global macroeconomic environment marked by high levels of disruption and uncertainty. A slowing economy, inflation and geopolitical unrest put significant pressure on both consumers and businesses around the world. Despite this backdrop, we again rose to every challenge and opportunity presented over the past year, and I could not be prouder of our team’s work.
We have taken many essential steps to right-size our cost structure, streamline our operating model and sharpen our focus, and we believe this has set the stage for our next phase of growth. While some of these decisions have been difficult, we have made significant progress in our transformation efforts, and our fourth quarter results demonstrate that we hit a positive inflection point at the end of 2022. Although many of the challenges that we faced last year will continue into 2023, I’m more confident than ever that PayPal is poised to emerge from this period in a position of increased strength.
Looking Ahead
Looking forward to 2023 and beyond, I want to reiterate the key priorities that will ultimately enable us to better serve our customers, leverage our competitive advantages to increase our market share and deliver long-term, sustainable growth for our stockholders. First, branded checkout is at the core of what we do, and continually improving this experience will remain our highest priority. Next, we are building on the redesign of our digital wallets that we undertook last year to
innovate and improve our current offerings – including Buy Now, Pay Later and Rewards – to provide even more value for our customers. We are also continuing our work to extend our platform into in-person contexts, so that customers have a seamless experience between our PayPal and Venmo branded cards and our apps. We are doubling down on Braintree, and fully ramping PayPal Complete Payments to provide powerful payment processing capabilities to merchants of all sizes. Lastly, we are continuing to strengthen foundational capabilities that enable and support our expanding value proposition for both consumers and merchants to ensure that our technical infrastructure and collaboration tools remain best-in-class.
My Retirement as CEO of PayPal
As I shared in early February, I informed the Board that I plan to retire as PayPal’s President and CEO at the end of this year. I plan to devote more time to my passions outside of the workplace. When I joined PayPal in 2014 – then part of eBay – I was looking for a company with passionate, engaged employees who wanted to make a real difference. Looking back, it is incredible to reflect on the tremendous growth that we have achieved together since PayPal became an independent, publicly traded company. Since that time almost nine years ago, our revenues, total payment volume and cash flow have roughly tripled in size. We have launched countless products, partnerships and improvements to better serve our customers and expand into new markets.
Today, we set outare empowering hundreds of millions of consumers and merchants to create a new PayPal. What was once a checkout button has been transformed into a financial services and commerce platform driven by a mission to help merchants and consumers join and thrive in the global economy.economy, and we’re contributing every day to expanding economic opportunity for customers and communities around the world. Together, we have established PayPal as the global leader in digital payments, one of the most trusted brands and a company that truly makes a difference in the world. The past year and a half has not been easy for our employees or shareholders as we adjusted to a more challenging macroeconomic environment and significant geopolitical uncertainty. Before I made the decision to move on to my next chapter, I wanted to be sure that PayPal had positive momentum and was well-positioned to deliver a strong year of performance. We have made considerable progress and I fully believe we have reached that point. I have complete trust in the Board to conduct a bold visionthorough search for the future of commerce withbest possible leader and ensure a smooth, thoughtful transition – and I look forward to continuing to serve on the capabilitiesBoard following the transition.
Profit and resources to execute on our ambitious goals.Purpose
AsPayPal is proof that profit and purpose go hand-in-hand and leading a company and as a community, the past year was a period of meaningful progress in advancing our mission and becoming a truly great company. I’m pleased to share with you some of PayPal’s 2019 accomplishments.
Investing in Our Employees
PayPal President and CEO Dan Schulman visited employees in Omaha, Nebraska to discuss the company’s recently implemented programs to support the financial healththat delivers results for all of its employees.
Our employees are one of our company’s greatest competitive advantages. It wasstakeholders has truly been the highlight of my career. I am proud of the ways that we have leaned into the bold aspirations of our mission and our values to support our employees, customers and the broader communities in which we live, work and serve.
In the last year, we have continued to announce that PayPal would launch a comprehensive programadvance our employee financial wellness initiative to strengthen the financial security of our workforce. We provided financial wellness awards to hourly and entry-level employees and changed the vesting schedule of our restricted stock unit grants to give employees earlier and more frequent access to their shares. We introduced our Leadership Principles to help us grow as leaders and foster stronger connections between our employees feel more financially secure. We raised wagesteams – whether in-person or virtually. In 2023, we launched Global Collaboration Days where appropriate, loweredwe regularly gather in our offices for formal and informal collaboration that complement our hybrid working model and preserves the cost of healthcare for some employees by an average of 58%, enhanced our benefits and gave every employee an ownership stake in PayPal by granting equity awards – regardless of level, location or tenure. We also are providing employees with new tools and resources to help guide their long-term financial planning and decisions. These steps wereflexibility that we know is important to ensure that everyone atour employees. Stronger connections between our teams, deep collaboration and professional development opportunities are all important elements to successfully executing against our strategic priorities.
We have also lived our mission and values, using the power of the PayPal feelsplatform and community to support our merchants, consumers and those in need. Since Russia invaded Ukraine more than one year ago, the same sensePayPal community has rallied to provide aid to Ukrainians, and our own employees stepped up to expedite the expansion of accountability, responsibilityPayPal services to Ukrainian customers. Over the past year, more than $600 million was donated on our platform to charities responding to the ongoing humanitarian crisis, and passionwe have helped Ukrainian citizens receive and send more than $600 million in person-to-person payments and money transfers, for servinga total of $1.2 billion in monetary support facilitated through our customers.
Investingplatform. In the wake of the destructive earthquakes in our employees will help us better serveTurkey and Syria, and the devastating effects of Hurricane Ian, we mobilized our customers and ultimately drive long-term value. It’s been amazing to see the worldwide employee reception to this initiative. In 2020 and beyond, we’ll continue building on these initiatives and challenging other members of the business community to consider the obligations we all have to our employees.
Driving Record Results with Strong Growth
Across our business we delivered another strong year of financial performance. For the year, we delivered $17.8 billion in revenue, growing 19% on anFX-neutral basis(1), adjusted for our 2018 credit receivables sale to Synchrony(2). Our strong revenue growth, combined with disciplined expense management, enabled 28% year-over-year growth in ournon-GAAP earnings per share to $3.10(3). We ended the year with a record 305 million active accounts on our platform, including 24 million merchant accounts. Engagement grew by 10% to an average of 40.6 transactions per active account.
Redefining Our Market Opportunity
In 2019, we significantly expanded our total addressable market with the acquisition of Guofubao Information Technology Co., Ltd. (GoPay) and the announcement of our acquisition of Honey Science Corporation, and our commercial partnerships with Uber and MercadoLibre.
The addition of Honey to our platform enables a significant step forward in our commitment to provide powerful services and tools for merchants and consumers, move beyond our core checkout proposition and significantly enhance the shopping experience for our customers.
With the acquisition of GoPay, PayPal became the first foreign payment platform licensed to provide online payment services in China. This important step allows us to be a stronger partner to Chinese financial institutions and technology platforms. Our initial focus is on providing cross-border payment solutions to China’s merchants and consumers, linking China’s commerce ecosystem to PayPal’s globaltwo-sided network.
We both solidified and extended our global partnership with Uber, and also announced that we intend to explore future commercial payment collaborations including the development of Uber’s digital wallet. We also signed a commercial agreement with MercadoLibre following our strategic investment earlier in the year, significantly expanding our market opportunity in Latin America.
Responsibly and Prudently Deploying Capital Resources
Throughout 2019, we were able to strategically deploy our capital to ensure that we remain well positioned – financially and technologically – to deliver value to all of our stakeholders. Our strong performance has enabled us to utilize the debt markets to raise capital and ensure that our capital structure takes full advantage of low rates and the strong support for our business.
Our PayPal Ventures unit continues to thrive by identifying, evaluating and making disciplined strategic investments in early tomid-stage companies to drive growth and long-term innovation.
PayPal President and CEO Dan Schulman delivered remarks during the 2019 United Nations General Assembly on progress towards financial inclusion and the challenges and opportunities that lie ahead.
Leveraging Our Platform to Maximize Global Good
PayPal has always strived to demonstrate that our values are not just words on a page, but the driving force of our company. When 2019 began, the longest federal government shutdown in U.S. history caused thousands of furloughed employees to struggle to paylaunch disaster relief campaigns. In 2022 alone, we processed $20 billion for groceries, rent, gas, medicationscharitable organizations and other everyday necessities. We committed $25 million in interest-free cash advances to furloughed U.S. government employees – stepping incauses, demonstrating the strength we have as a global community and taking action when the government was at a standstill.
In our second annual Global Impact Report, we set the goal of using 100% renewable energy in our data centers by 2023 and joined other companies in taking measurable action.
I’m continually inspired by the generosity of the expanding PayPal community, which continues to reach new heights. PayPal processed a record $10 billion in donations to charities around the world in 2019, and more than $1 billion in the month of December alone. We remain committed to harnessing the power of driving social impact through our technologycore business.
Thank You
I want to extend my deepest gratitude to our talented employees – as well as the customers, partners, regulators and scalestockholders we work with every day – for their support over the past year and throughout my tenure at PayPal. It is an honor to providelead this company and see the difference PayPal makes to expand opportunities within the global financial system and build a more inclusive digital economy. I am energized for the year ahead and excited to welcome a new ways for people to give to the causes they care about – and to help charitable organizations raise mission-critical funds that make a difference for communities around the world.
Looking Ahead
We release this year’s annual report amidst the backdrop of unprecedented amount of change and uncertainty in the world. The coronavirus pandemic has no boundaries or geographic lines. The new circumstances weleader, who I’m confident will build on all are navigating have illuminated how interconnected our world is and how we need to work together to take care of each other and our communities, and especially those who are most vulnerable.
All of us at PayPal are committed to supporting our customers as they manage through the impact of the coronavirus, and we feel fortunate that we are in a position to help. Our products and services are more important to our customers and communities than ever before, and we remain steadfast in our mission. I’ve been leading PayPal forhave accomplished over the past five years and I’ve never been more inspired aboutcontinue to seize the difference we can make for our customers, or more excited about our future.immense opportunity ahead of us.
Thank you for your support and confidence.you.
Dan Schulman
President and CEO,
PayPal Holdings, Inc.
April 13, 2023
Message from Our Independent Board Chair | ||||||
Dear PayPal Stockholders:
NOTES:
1 All growth rates represent year-over-year comparisons, except as otherwise noted.FX-neutral results are calculated by translatingIn 2022, the current period’s local currency resultsBoard actively worked with management to navigate the prior period’s exchange rate.FX-neutral growth rates are calculated by comparing the current periodFX-neutral resultsdifficult macroeconomic environment to help ensure PayPal is well positioned for future growth. We also continued to proactively engage with the prior period’s results, excluding the impact from hedging activities.
2 Adjustedstockholders and responsibly oversee strategy and risks for the saleCompany. This was a year of transformation for PayPal, as we increased our operating discipline while continuing to invest in innovation at scale.
Board Composition & Oversight
Our Board’s balanced mix of diversity, skills and experience enables it to effectively perform its oversight responsibilities. In 2022, 50% of our U.S. consumer credit receivables portfolioBoard members standing for election were women or from diverse ethnic groups. Our focus on diversity and inclusion extends to Synchrony, which was completedthe Company’s current executive officers, 50% of whom are women and/or from diverse ethnic groups. We continually review and assess the skills and knowledge of our Board members and provide ongoing opportunities for director education on emerging trends. The Board also exercised its responsibility to oversee PayPal’s enterprise risk framework, including the evolution of its risk taxonomy in July 2018. Full year 2019 revenue growth included an expected decline2022. In addition, The Board continues to oversee PayPal’s environmental, social and governance (“ESG”) strategy and related risks and opportunities as a full Board and through its Board Committees.
Stakeholder Engagement
We regularly engage with our stockholders, customers, employees, regulators and other stakeholders to ensure that we understand and thoughtfully consider their perspectives and priorities. Throughout 2022, we engaged with investors as part of our extensive stockholder engagement program, reaching out to investors representing approximately 3.5 percentage points for full year 2019 related52% of our common stock, with 25% choosing to this sale.engage with PayPal throughout the year. These discussions provide the Board and management with invaluable perspectives, insights and feedback. We look forward to our continued dialogues with our stockholders and other stakeholders.
3Non-GAAP earnings per share is a financial measure not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). For a reconciliation ofnon-GAAPSuccession Planning
In February, Dan Schulman announced his intention to GAAP earnings per share, please see “Appendix A – Reconciliation of non-GAAP Financial Measures” in the attached proxy statement.
Message from Our Independent Chairmanretire as President and CEO at year-end. On behalf of the Board,
April 8, 2020
Dear I would like to acknowledge the positive and lasting impact Dan has made on PayPal Stockholders,and our people. Under his leadership, PayPal has become one of the world’s most trusted brands and a leader in digital payments and commerce, delivering value for our stockholders and other stakeholders. We thank Dan for his nearly nine years of service and his commitment to supporting a smooth transition as we conduct a thorough and rigorous search to identify his successor. We look forward to Dan’s continued service as a vital member of PayPal’s Board of Directors, providing oversight of the persistent execution of our mission and vision.
On behalf of theour Board, thank you for your investment in PayPal. 2019 was another strong year for PayPal as we continued to execute on our strategic initiatives and deliver long-term, sustainable value to our stockholders. We are also proud of the progress we have made in key areas of corporate governance, including the increasing diversity of our directors, enhancing stockholder engagement, and expanding our environmental and social impact programs that align with PayPal’s mission, vision and values.
Board Composition and Diversity.We are proud to have a dynamic, well-functioning Board with the right mix of skills, experiences, diversity and backgrounds for PayPal. The Board is committed to ensuring that our corporate governance framework supports effective oversight of our Company, strong management accountability, public trust and the ability to adapt to the continuously evolving competitive environment in which we operate.
We have a strong commitment to diversity and inclusion at every level of PayPal, including our Board and our Executive Staff. Since 2015, we have added five directors to our Board, all from diverse backgrounds with strong and relevant experience.Forty-five percent of Board members standing for re-election are women or from underrepresented ethnic minorities.
Stockholder Engagement.Proactive engagement with our stockholders is an essential part of our Board’s commitment to robust governance. Our year-round stockholder engagement program and regular discussions with our stockholders on topics including operating performance, corporate governance, and environmental and social issues provide valuable insights into emerging issues and feedback on our efforts. In 2019, we contacted investors representing approximately 59% of our common stock, and ultimately engaged with holders of almost 45% of our common stock. Our Compensation Committee Chair, Dave Dorman, and Committee member Jonathan Christodoro participated in calls with investors representing 30% of our common stock.
Environmental, Social and Governance (“ESG”) Leadership.We are committed to responsibly managing our key environmental, social, and governance (ESG) opportunities and risks in a manner consistent with our mission and vision to democratize financial services. Our Board recognizes the importance of effective risk oversight and risk management, including with respect to cybersecurity, information security and privacy-related risks, as well as other ESG topics, and we devote significant time and attention to oversight of these risks. We also appreciate that our success is heavily dependent on our people. Our human capital management strategy focuses on the whole employee lifecycle, incorporates apay-for performance compensation program, and provides employees with comprehensive benefits and opportunities for advancement.
Please Join Us at Our 2020 Annual Meeting.I look forward to discussing these developments further with you at the 20202023 Annual Meeting on May 24, which will again be held via live webcast atwww.virtualshareholdermeeting.com/PYPL2020PYPL2023.
Sincerely yours,
/s/ John J. Donahoe
John J. Donahoe
Chairman of theIndependent Board Chair
April 13, 2023
|
Table of Contents
Index of | Information | |||
Audit and Other Professional Fees | ||||
22 | Board Committees | |||
21 | Board Leadership | |||
26 | Board Oversight | |||
55 | Compensation Framework and Decisions | |||
67 | Compensation Peer Group | |||
71 | Compensation Tables | |||
15 | Director Biographies | |||
22 | Director Independence | |||
13 | Director Skills Matrix | |||
38 | ESG Governance Structure | |||
45 | Executive Officer Biographies | |||
41 | Human Capital Management | |||
50 | Named Executive Officers | |||
27 | Risk Oversight | |||
31 | Stockholder Engagement | |||
116 |
Forward-Looking Statements
This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans or intentions (such as those relating to future business, future results of operations or financial condition, new or planned features or services, mergers or acquisitions, or management strategies). These forward-looking statements can be identified by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “continue,” “strategy,” “future,” “opportunity,” “plan,” “project,” “forecast” and other similar expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results and financial condition to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in the “Risk Factors,” “Quantitative and Qualitative Disclosures about Market Risk” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We do not intend, and undertake no obligation except as required by law, to update any of our forward-looking statements after the date of this proxy statement to reflect actual results, new information or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Incorporation By Reference
All website addresses contained in this proxy statement are intended to provide inactive, textual references only. The content on, or accessible through, any website identified in this proxy statement is not a part of, and is not incorporated by reference into, this proxy statement or in any other report or document that we file with the Securities and Exchange Commission.
Notice of 2023 Annual Meeting
of Stockholders
Wednesday, May 24, 2023
8:00 a.m. Pacific Time
Online at: www.virtualshareholdermeeting.com/PYPL2023
There is no physical location for the 2023 Annual Meeting.
ITEMS OF BUSINESS
1. | Election of the 12 director nominees named in this proxy statement. |
2. | Advisory vote to approve named executive officer compensation. |
3. | Approval of the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as Amended and Restated. |
4. | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditor for |
5. | ||||
Consideration of |
6. | ||||
Such other business as may properly come before the Annual Meeting. |
RECORD DATE
Thursday, March 30, 2023 (the “Record Date”)
Only stockholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting.
PARTICIPATION IN VIRTUAL ANNUAL MEETING
We are pleased to invite you to participate in our Annual Meeting, which will be conducted exclusively online at www.virtualshareholdermeeting.com/PYPL2023. See “Important Information About PayPal’s Virtual Annual Meeting” on the following page for additional information.
The Annual Meeting will begin promptly at 8:00 a.m. Pacific Time. The virtual meeting room will open at 7:45 a.m. Pacific Time for registration.
VOTING
Your vote is very important to us. Please act as soon as possible to vote your shares, even if you plan to participate in the Annual Meeting. For specific instructions on how to vote your shares, see “Frequently Asked Questions – Voting Information” beginning on page 109 of this proxy statement.
REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF THREE WAYS:
| ||||||||||
|
| |||||||||
BY TELEPHONE Call the telephone number on your | BY MAIL Sign, date and return your proxy card in the |
| ||||||||||
Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.
| ||||||||||
By Order of the Board of Directors
Brian Y. Yamasaki
Corporate Secretary
April 13, 2023
This notice of Annual Meeting and proxy statement and form of proxy are being distributed and made available on or about April 8, 2020.13, 2023.
Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 21, 202024, 2023
This proxy statement and PayPal Holdings, Inc.’s 20192022 Annual Report are available electronically at
https://investor.paypal-corp.com/financial-information/annual-reportsinvestor.pypl.com/financials/annual-reports/default.aspx and with(with your16-digit control number by visitingnumber) at www.proxyvote.com.
•2023 Proxy Statement | ||||||
1 |
|
Important Information About PayPal’s
Virtual Annual Meeting
PayPal’s 20202023 Annual Meeting will be conducted online only, via live video webcast. Stockholders will be able to access the meeting live by visitingwww.virtualshareholdermeeting.com/PYPL2020PYPL2023. We are utilizing thehave adopted a virtual meeting format to enhancebroaden stockholder access and encourage participation and communication with our management.
We have an established track record of conductingconducted efficient and effective virtual meetings since becomingPayPal became an independent company in 2015 and will2015. We intend to continue to ensure that our stockholders are afforded the same rights and opportunities to participate virtually as they would at anin-person meeting. We believe thisthe virtual format facilitates stockholder attendance and participation by enabling allmakes it easier for stockholders to attend, and participate fully and equally usingin, the Annual Meeting because they can join with any Internet-connected device from any location around the world at no cost. Our virtual meeting format increases our ability tohelps us engage with all stockholders regardless of size, resources or physical location, reduces our environmental impact, protects the health and safety of attendees saves the Company’s and stockholders’saves time and money, and reduces our environmental impact.money.
Participating in the Virtual Annual Meeting.Meeting
• | Instructions on how to attend the virtual Annual Meeting are posted at www.virtualshareholdermeeting.com/ |
Stockholders may begin to log into the meeting platform beginning at 7:45 a.m. Pacific Time on May 21, 2020. The meeting will begin promptly at 8:00 a.m. Pacific Time on May 21, 2020.
• | You may log in to the meeting platform beginning at 7:45 a.m. Pacific Time on May 24, 2023. The meeting will begin promptly at 8:00 a.m. Pacific Time. |
• |
|
Stockholders of record and beneficial owners as of the March 27, 2020 Record Date may vote their shares electronically live during the virtual Annual Meeting.
• | Stockholders of record and beneficial owners as of the March 30, 2023 Record Date may vote their shares electronically during the virtual Annual Meeting. |
• | On the date of the Annual Meeting, if you have questions about how to attend and participate, or encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call 1-844-986-0822 (U.S.) or 1-303-562-9302 (International). |
On the date of the Annual Meeting, stockholders with questions regarding how to attend and participate in the virtual meeting, or stockholders encountering any difficulties accessing the virtual meeting duringthe check-in or meeting timemay call 1-800-586-1548 (US) or1-303-562-9288 (International).
Additional Information About the Virtual Annual Meeting.Meeting
• | Stockholders may submit questions |
During the live Q&A session of the meeting, members of our executive management team and our Chairman of the Board will answer questions as they come in and address those asked in advance, as time permits.
Our rules of conduct and procedure governing our virtual annual meeting generally provide that:
|
|
• | Our rules of conduct and procedure for the meeting generally provide that: |
• | Management will answer stockholder questions after the formal meeting has concluded. |
• | We limit each stockholder to |
We do not intend to address any questions that are, among other things: irrelevant to the business of the Company or to the business of the Annual Meeting; related to material non-public information of the Company; related to personal matters or grievances; derogatory or otherwise in bad taste; repetitious statements already made by another stockholder; in furtherance of the stockholder’s personal or business interests; or out of order or not otherwise suitable for the conduct of the Annual Meeting, in each case as determined by the Board Chair or Corporate Secretary in their reasonable discretion. |
• | If there are matters of individual concern to a stockholder and not of general concern to all stockholders, or if |
We have committed to posting our Q&A on our Investor Relations website as soon as practicable following the conclusion of the Annual Meeting. In addition, although the webcast is available only to stockholders at the time of the meeting, a replay of the meeting is made publicly available on our Investor Relations site after the meeting concludes.
• | We will post questions and answers if applicable to the Company’s business on our Investor Relations website as soon as practicable after the Annual Meeting. In addition, a replay of the meeting will be publicly available on our Investor Relations website after the meeting concludes. |
2 |
| |||||
PROXY STATEMENT SUMMARY
|
This summary highlights certain information contained elsewhere in this proxy statement for the 20202023 Annual Meeting of Stockholders (the “Annual Meeting”). This summary does not contain all the information that you should consider, and you should read the entire proxy statement carefully before voting. References to “PayPal,” the “Company,” “we,” “us,” or “our” refer to PayPal Holdings, Inc.
20202023 Annual Meeting Information
TIME AND DATE 8:00 a.m. Pacific Time on May | ||||
PLACE Online atwww.virtualshareholdermeeting.com/ There is no physical location for the Annual Meeting. | ||||
RECORD DATE March |
Proposals to be Voted on and Board Voting Recommendations
Proposal | Recommendation of the Board | Page | ||||
1. | Election of 11 director nominees named in this proxy statement | FOR each of the nominees | 10 | |||
2. | Advisory vote to approve named executive officer compensation | FOR | 44 | |||
3. | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditor for 2020 | FOR | 83 | |||
4. | Vote on Stockholder Proposal – Stockholder Right to Act By Written Consent | AGAINST | 86 | |||
5. | Vote on Stockholder Proposal – Human and Indigenous Peoples’ Rights | AGAINST | 88 |
Proposal | Recommendation of the Board | Page | ||||
1 | Election of the 12 Director Nominees Named in this Proxy Statement | FOR each of the nominees | 12 | |||
2 | Advisory Vote to Approve Named Executive Officer Compensation (“say-on-pay” vote) | FOR | 49 | |||
3 | Approval of the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as Amended and Restated | FOR | 85 | |||
4 | Ratification of the Appointment of PricewaterhouseCoopers LLP as Our Independent Auditor for 2023 | FOR | 95 | |||
5 | Stockholder Proposal – Provision of Services in Conflict Zones | AGAINST | 98 | |||
6 | Stockholder Proposal – Reproductive Rights and Data Privacy | AGAINST | 100 | |||
7 | Stockholder Proposal – PayPal Transparency Reports | AGAINST | 102 | |||
8 | Stockholder Proposal – Report on Ensuring Respect for Civil Liberties | AGAINST | 105 | |||
9 | Stockholder Proposal – Adopt Majority Vote Standard for Director Elections | AGAINST | 107 |
Who We AreOur 2022 Key Highlights
Sound Financial and What We Do
PayPal Holdings, Inc. is a leading technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. We provide safer and simpler ways for businesses of all sizes to accept payments from merchant websites, mobile devices, and applications, and at offline retail locations, through a wide range of payment solutions.
We are committed to democratizing financial services and empowering people and businesses to join and thrive in the global economy. Our goal is to enable our consumers and merchants to manage and move their money anywhere in the world, anytime, on any platform and using any device. Our combined payment solutions, including our PayPal, PayPal Credit, Braintree, Venmo, Xoom, and iZettle products, compose our proprietary Payments Platform.
2019Operational Performance Highlights
In 2019,2022, we delivered another yearsolid financial and operating results across our key performance metrics. This was accomplished during a challenging period of strong performance.macroeconomic uncertainty, slowing ecommerce growth and geopolitical instability. We meaningfully improved and expanded the PayPal platform, strengthened our value proposition for consumers and merchants, expanded our international scope and scale, and announced transformative, strategic acquisitions, investments, and commercial agreements. We added more than 37 million net new active accounts, and ended the year with 305435 million active accounts. Engagement grewconsumer and merchant accounts and our revenue increased by 8% to an average of 40.6$27.5 billion compared to 2021. In 2022, we processed 22.3 billion payment transactions per active account as we extendedand $1.36 trillion in total payment volume across our platform, capabilitiesrepresenting year-over-year increases of 16% and 9%, respectively. We returned $4.2 billion to stockholders through share repurchases in 2022, representing more than 80% of our free cash flow. Importantly, we also narrowed our focus on key strategic initiatives and identified areas to operate more efficiently, reducing both costs and complexity throughout the organization. These combined efforts resulted in over $900 million of savings across both transaction and non-transaction related expenses, contributing to a return to non-GAAP operating margin expansion and non-GAAP earnings per share growth in the fourth quarter of 2022.
This progress is a direct result of our sharpened focus, responsible innovation and enhanced cost discipline, which enable us to execute on our core strategic priorities. In 2022, we created better checkout experiences, enhanced our digital wallet, expanded our global pay later solutions and grew our unbranded processing business with leading merchants around the world, launched innovative strategic relationships with some of the world’s largest marketplaces and platforms, and deepened our partnerships with financial institutions while continuing to invest in our business.
Through our acquisition of a 70% equity interest in Guofubao Information Technology Co., Ltd. (GoPay), PayPal became the first foreign payments platform to be licensed to provide online payments services in China. We believe that our acquisition of Honey Science Corporation enables PayPal’s entry into the earliest stages of customers’ commerce experience, enhances our value proposition for both consumers and merchants, and allows us to significantly deepen our engagement and play a more meaningful role in the daily lives of our customers.
The following summarizes our key financial and operational performance results for 2019. We use certain of these key metrics as the performance measures in our incentive compensation programs and believe these measures help to align the interests of our executives with those of our stockholders.globe.
•2023 Proxy Statement | ||||||
3 |
PROXY STATEMENT SUMMARY Our 2022 Key Highlights
|
Performance Highlights
1 | Non-GAAP |
|
Highlights:
Our three-year total stockholder return* was 174.1%, and ourone-year total stockholder return** was 28.6%.
Our engagement grew 10% year over year to an average of 40.6 transactions per active account.
Venmo delivered over $102 billion in total payment volume in 2019, and ended the year with over 52 million active accounts.
We accessed the debt capital markets for the first time and raised $5 billion in debt financing.
We continued to partner with many of the largest and most influential companies in finance, retail, and technology.
4 | •2023 Proxy Statement |
PROXY STATEMENT SUMMARY
Our 2022 Key Highlights
Our Stock Price Performance
PayPal has a track record of creating stockholder value, and despite market volatility over the past year, the Company has returned approximately 86% since becoming an independent public company. Our one-year* and three-year** total stockholder return were -62% and -34%, respectively.
Total Stockholder Return (“TSR”) as an Independent Public Company***
* | Measured from December |
** | Measured from December 31, |
*** | Assumes $100 was invested in 2015. |
^ | Market cap weighted peer index consists of ADBE, GOOG, AMZN, AXP, AAPL, SQ, DFS, FIS, FISV, GPN, INTU, JPM, MA, META, NFLX, ORCL, CRM, NOW, V. |
To learn more about how our 20192022 performance and how it relates to our executive compensation program, see the Compensation Discussion and Analysis beginning on page 46.50 of this proxy statement.
Driving Progress on our Mission, Vision and Values
Over the past year, we remained focused on furthering our mission to build a more financially inclusive and interconnected world. Our teams worked quickly together to enable $600 million in peer-to-peer payments and money transfers to support Ukrainian citizens and refugees. PayPal and its partners also helped to raise over $600 million through our platform for organizations towards Ukrainian relief efforts. We also provided helpful products to small businesses, entrepreneurs and consumers to improve their financial flexibility and resiliency to weather the uncertain economy. Through our merchant lending services, we provided access to more than $4 billion in capital, expanded our Zettle Terminal to merchants in the U.S., launched PayPal Rewards and Honey extension for consumers to save money on everyday purchases and enabled secure, passwordless login to PayPal accounts across platforms and devices with passkeys.
We have also continued to pursue initiatives to strengthen the financial security of our workforce and support a flexible workplace. This included financial wellness awards to hourly and entry-level employees and a revised vesting schedule of our restricted stock unit grants to give employees earlier and more frequent access to their shares. We launched our Leadership Principles, which promote behaviors to support our next chapter of growth and drive deeper understanding of our core values of Inclusion, Innovation, Wellness and Collaboration. We continue to have success with our hybrid working model, which preserves the flexibility that is important to our employees while also providing opportunities for in-person collaboration and professional development.
•2023 Proxy Statement | 5 | |||||
2023 Director Nominees
2023 Director Nominees
The following tables provide summary information about our director nominees. All our 2023 director nominees are independent except Mr. Schulman, PayPal’s President and CEO. Directors are elected annually by a majority of votes cast. The Board of Directors recommends that you vote “FOR” the election of each of the 12 nominees. See page 12 of this proxy statement for this proposal.
Directors |
| Occupation | Diversity | Age | Director Since | Independent | Other Public Company Boards |
| Committee Memberships | |||||||||||||
ARC | COMP | GOV | ||||||||||||||||||||
Rodney C. Adkins | President, 3RAM Group LLC | D | 64 | 2017 | 3 | |||||||||||||||||
Jonathan Christodoro | Partner, Patriot Global Management, LP |
| 46 | 2015 | - |
|
| |||||||||||||||
John J. | President and CEO, Nike, Inc. |
| 62 | 2015 | 1 |
|
|
|
| |||||||||||||
David W. | Former Non-Executive Board Chair of CVS Health Corporation |
| 69 | 2015 | 1 |
|
| |||||||||||||||
Belinda J. Johnson | Former Chief Operating Officer, Airbnb, Inc. | W | 56 | 2017 | 1 |
|
|
| ||||||||||||||
Enrique Lores | President and CEO, HP Inc. | D | 57 | 2021 | 1 |
|
|
| ||||||||||||||
Gail J. McGovern | President and CEO, American Red Cross | W | 71 | 2015 | 1 |
|
| |||||||||||||||
Deborah M. Messemer | Former Major Market Managing Partner, KPMG (retired) | W | 65 | 2019 | 2 |
|
|
|
Independent Board Chair Committee Chair
ARC = Audit, Risk and Compliance Committee (“ARC Committee”)
COMP = Compensation Committee
GOV = Corporate Governance and Nominating Committee
W = Woman
D = Diverse Ethnicity
6 |
•2023 Proxy Statement |
2020PROXY STATEMENT SUMMARY
2023 Director Nominees
NAME/AGE/INDEPENDENCE | DIRECTOR SINCE | OCCUPATION | COMMITTEE MEMBERSHIPS* | OTHER PUBLIC COMPANY BOARDS | ||||||||||
GOV | COMP | ARC | ||||||||||||
Rodney C. Adkins, 61 Independent | 2017 | President, 3RAM Group LLC | ◾ | ◾ | 3 | |||||||||
Jonathan Christodoro, 43 Independent | 2015 | Partner, Patriot Global Management, L.P. | ◾ | ◾ | 4 | |||||||||
John J. Donahoe, 59 Independent, Chairman of the Board | 2015 | President and CEO, Nike, Inc. | 2** | |||||||||||
David W. Dorman, 66 Independent | 2015 | Former Chairman and CEO, AT&T Corporation (retired) | ◾ | C | 1 | |||||||||
Belinda J. Johnson, 53 Independent | 2017 | Former Chief Operating Officer, Airbnb, Inc. | ◾ | 0 | ||||||||||
Gail J. McGovern, 68 Independent | 2015 | President and CEO, American Red Cross | C | ◾ | 1 | |||||||||
Deborah M. Messemer, 62 Independent | 2019 | Former Managing Partner, KPMG (retired) | ◾ | 1 | ||||||||||
David M. Moffett, 68 Independent | 2015 | Former CEO, Federal Home Loan Mortgage Corp. (retired) | C | 2 | ||||||||||
Ann M. Sarnoff, 58 Independent | 2017 | Chair and CEO, Warner Bros. | ◾ | 0 | ||||||||||
Daniel H. Schulman, 62 Non-Independent | 2015 | President and CEO, PayPal Holdings, Inc. | 1 | |||||||||||
Frank D. Yeary, 56 Independent | 2015 | Managing Member, Darwin Capital Advisors, LLC | ◾ | 1 |
Directors |
| Occupation | Diversity | Age | Director Since | Independent | Other Public Company Boards |
| Committee Memberships | |||||||||||||
ARC | COMP | GOV | ||||||||||||||||||||
David M. | Former CEO, Federal Home Loan Mortgage Corp. (retired) |
| 71 | 2015 | 1 |
|
|
| ||||||||||||||
Ann M. | Former Board Chair and CEO, WarnerMedia Studios & Networks Group | W | 61 | 2017 | - |
|
|
| ||||||||||||||
Daniel H. Schulman | President and CEO, PayPal Holdings, Inc. |
| 65 | 2015 |
| 1 |
|
|
|
| ||||||||||||
Frank D. | Managing Member, Darwin Capital Advisors, LLC |
| 59 | 2015 | 2 |
|
|
|
Independent Board Chair Committee Chair
ARC = Audit, Risk and Compliance Committee (“ARC Committee”)
COMP = Compensation Committee
GOV = Corporate Governance and Nominating Committee
W = Woman
D = Diverse Ethnicity
|
|
|
Board Diversity Matrix (As of April 13, 2023) | ||||||
Total Number of Directors | 12 | |||||
Part I: Gender Identity | ||||||
Female | Male | |||||
Directors | 4 | 8 | ||||
Part II: Demographic Background | ||||||
African American or Black | - | 1 | ||||
White | 4 | 5 | ||||
Two or More Races or Ethnicities | - | 1 | ||||
Did Not Disclose Demographic Background | - | 1 |
The Board and the Corporate Governance and Nominating Committee (the “Governance Committee”) are committed to ensuring that the Board of Directors of PayPal (the “Board” or the “PayPal Board”) is composed of directorsindividuals who possesshave highly relevant skills, professional experience and backgrounds, bring diverse viewpoints and perspectives and effectively represent the long-term interests of stockholders. The following providesBelow is a snapshot of the diversity, skills and experience of our director nominees. For more information on the skills and experiences ofabout our Board members, please see the section entitled “Director Skills,Experience, Expertise and Attributes” beginning on page 1113 of this proxy statement.
NOMINEE SKILLS & EXPERIENCES | ||||||||||||||||||||
7 | 9 | 11 | 11 | 10 | 11 | 10 | 11 | 7 | 4 | 10 | ||||||||||
Payments, Financial Services and FinTech | Technology and Innovation | Business Development and Strategy | Senior Leadership | Legal / Regulatory / Governmental | Global Business | Other Public Company Board Service | Finance / Accounting | Consumer / Sales / Marketing / Brand Management | Cybersecurity / Information Security | Human Capital Management |
•2023 Proxy Statement | 7 |
PROXY STATEMENT SUMMARY
2023 Director Nominees
1 | PayPal became an independent public company in July 2015. |
Nominee Skills & Experience
8 | •2023 Proxy Statement |
PROXY STATEMENT SUMMARY
Corporate Governance Highlights
Corporate Governance Highlights
Corporate governance at PayPal is designed to promote the long-term interests of our stockholders, strengthen Board and management accountability, foster responsible decision-making, and engender public trust. We believe strong corporate governance practices that provide meaningful rights to our stockholderstrust and ensure Board and management accountability are essential to our long-term success.
The following are the key governance provisions that demonstrate PayPal’s commitment to transparency, accountability, independence and diversity:diversity.
• | ||||||
Independent |
All directors stand for annual election |
Simple majority vote standard for charter/bylaw amendments and mergers/business combinations |
Diverse Board in which 6 of 12 director nominees are women and/or from a diverse ethnic group |
• | Diverse characteristics considered in assessing Board composition include sexual orientation, ethnicity, nationality and cultural background |
• | Committed to actively seeking highly qualified women and individuals from underrepresented communities to include in the initial pool from which director nominees are chosen |
• | Annual performance self-evaluations by the full Board and each committee |
• | Majority vote standard for uncontested director elections |
• | Stockholder right to call a special meeting |
• | Regular review of Board and executive succession planning |
• | Strong stockholder engagement practices |
• | Director service limited to no more than four public company boards, including the PayPal Board |
• | Proxy access for qualifying stockholders |
• | Robust stock ownership requirements for our executives and directors |
• | Prohibition on hedging and pledging transactions by executive officers and directors |
To learn more about our corporate governance programs,practices and policies, see page 28.21 of this proxy statement.
Stockholder Engagement
•2023 Proxy Statement | 9 |
PROXY STATEMENT SUMMARY
Executive Compensation Highlights
OUR COMPENSATION PROGRAM
We completed another strong year of Company performance, during which we set new benchmarks and expanded our value proposition for our customers. For 2019, theExecutive Compensation Highlights
The Compensation Committee of the Board approved anhas designed our executive compensation program based on our “pay for performance” philosophy that is designed to align our executive officers’ compensation with the key drivers of profitable short-term and long-termsupport PayPal’s growth with the goals of properly incentivizing and rewarding our executives for performance that exceeds expectations, providing transparency for our executives and our stockholders, and positioning us competitively to enable us to attract and retain our executives.
OUR 2019 NEO PAY
strategy. The Compensation Committee believes that long-term incentives in the form of equity awards should comprise the majoritymake up a significant portion of our NEOs’ target total direct compensation opportunity. We believe that ournamed executive compensation program effectively incentivized results in 2019 by appropriately aligningofficers’ (“NEOs”) Target Total Direct Compensation opportunity because such awards help align pay and performance.
|
performance and the interests of our executives with those of our stockholders.
The following charts show the 20192022 Target Total Direct Compensation1 mix for our CEO, Mr. Schulman, and the average 20192022 Target Total Direct Compensation mix for our other NEOs who were executive officers as of December 31, 2019. Target Total Direct Compensation is the sum of (i) 2019 base salary, (ii) target 2019 annual incentive award (based on the grant date fair value for the portion of the award delivered as PBRSUs), and (iii) target annual long-term incentive award (based on the grant date fair value).NEOs.2 To learn more about our executive compensation program, see the Compensation Discussion and Analysis beginning on page 46.50 of this proxy statement.
2022 Total Target Direct Compensation Mix
OUR PAY PRACTICES
We are committed to maintaining strong governance standards with respect to our executive compensation program, policies, and practices. Consistent with this focus, we maintain the following policies and practices that we believe demonstrate our commitment to executive compensation best practices.
1 |
2 | ||||
rewards cycle. | ||||
10 | ||||||
|
•2023 Proxy Statement | ||||
SUPPORTING OUR EXECUTIVE COMPENSATION PROGRAM
PROXY STATEMENT SUMMARY
ESG Governance & 2022 Highlights
ESG Governance & 2022 Highlights
Our governance framework is designed to provide sound company oversight, drive Board and management accountability and demonstrate PayPal’s commitment to transparency, independence and diversity. We take a decentralized approach to management of ESG within the organization, led by oversight from our Board and strategy-setting from senior leadership. The Compensation Committee designed our executive compensation program to support PayPal’s growthentire Board engages on ESG matters that impact business strategy, and is well-alignedBoard committees are tasked with creating long-term stockholder value.
To learn more about ouroversight of specific matters. Management briefs Board committees and executive compensation program, seemanagement on ESG topics on a quarterly basis and meets with a subcommittee of the Compensation DiscussionEnterprise Risk Management (“ERM”) Committee at least annually to review current and Analysis beginning on page 46.emerging ESG-related risk topics.
|
ESG Oversight and Highlights
PayPal recognizes its responsibility as a global citizen to operatethe importance of operating our business in a responsible and sustainable manner aligned with our mission to build a more financially inclusive and interconnected world.global economy. We remain focused on managing material environmental, social, and governance (ESG) factors that support ourvalues-led culture based on Collaboration, Inclusion, Innovation, and Wellness. Thebelieve the effective management of keynon-financial risks and opportunities such as global talent recruitment, retention, and development, as well as workforce inclusion, social innovation, environmental sustainability, and responsible business practices are essential components ofplays a role in furthering our strategy and long-term performance.helps to create value for our stakeholders. To that end, in 2022, we continued to demonstrate progress across the four dimensions of our ESG strategy.
Priority
Responsible Business Practices |
Strengthened our proactive cybersecurity program through our ISO 27001 certified information security program and educated and protected consumers and employees against fraud. |
Social Innovation |
Facilitated access to $4.2 billion in capital for entrepreneurs and small businesses. |
Employees & Culture |
Reached 56% overall diverse workforce representation and continued to build on our global talent strategy to attract, develop and retain top talent. |
Environmental Sustainability |
Demonstrated progress towards our science-based climate targets across our value chain and maintained 100% renewable energy for our data centers. |
For more information on our ESG Programs & Progress
In the Company’s annual ESG report, thestrategy and program, see “ESG Oversight and Highlights” beginning on page 38 of this proxy statement, and our most recent Global Impact Report,, PayPal highlights its programs and progress on key ESG topics:
Social Innovation– including reporting on annual social impact metrics, product and service enhancements, research and thought leadership, and partnerships to improve financial health, power charitable giving, and strengthen local communities
Employees and Culture – including executing an effective human capital management strategy to support the recruitment, retention and development of our workforce, and diversity and inclusion metrics and initiatives that demonstrate our commitment to equality and inclusion
Environmental Sustainability–including responsibly managing our resources, addressing climate change, and improving our water and waste management practices
Responsible Business Practices – including establishing policies and practices to safeguard trust, ensuring ethical and compliant business operations, and securing and protecting customer information
As we continue to evolve our ESG efforts, we’re committed to sharing progress through subsequent reports and updates. For further information and to access theGlobal Impact Report, visit: which is available at https://www.paypal.com/us/webapps/mpp/globalimpactinvestor.pypl.com/esg-strategy.
•2023 Proxy Statement | ||||||
11 |
PROPOSAL 1: ELECTION OF DIRECTORS
|
Election of Directors
Based upon a review of thetheir skills, qualifications, skills, attributesexpertise and experience of each ofcharacteristics, the 11 director nominees listed below, our Board has nominated all of the director nomineesour current directors for election at the Annual Meeting, to serve until our 20212024 Annual Meeting of Stockholders and until their successors are elected and qualified. AllEach director nominee is independent except Mr. Schulman, our President and CEO. Each of the director nominees are currently members of the Board and haveour current directors has been previously elected by our stockholders. Each director nominee is independent under the listing standards of NASDAQ Global Select Market (“Nasdaq”), except Mr. Schulman. As previously disclosed, Mr. Casares has informed the Company that he will not stand for re-election as a director at the Annual Meeting. The Board has determined to reduce the size of the Board to 11 directors effective immediately before the Annual Meeting.
We expect that each director nominee will be able to serve if elected. If any director nominee is unable or unwilling to serve as a nominee at the time of the Annual Meeting, the individuals named as proxiescurrent Board may vote foridentify a substitute nominee chosen by the present Board to fill the vacancy. Alternatively, the Board mayvacancy, reduce the size of the Board or the proxies may vote just for the remaining nominees, leavingleave a vacancy that the Board mayto fill at a later date.
MAJORITY VOTE STANDARD
Under our Amended and Restated Bylaws (“Bylaws”), directorsDirectors must be elected by a majority of the votes cast in uncontested elections, such as the election of directors at the Annual Meeting.which has been our voting standard since we became an independent public company in July 2015. This means that the number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. For(For more information, on the vote required for the election of directors and the choices available for casting your vote, please see “Frequently Asked Questions —– Voting Information” on page 92.
Under our Bylaws and the Governance Guidelines109 of the Board (the “Corporate Governance Guidelines”this proxy statement.), each Each director has submitted an advance, contingent, irrevocable resignation that the Board may accept if stockholders do notre-elect that director. Within 90 days ofAfter the certification of theany such stockholder vote, (subject to an additional90-day period in certain circumstances), the Governance and Nominating Committee (the “Governance Committee”), or a committee composed solely of independent directors that does not include such incumbentthe director wouldwho was not re-elected will determine whether to accept the director’s resignation in accordance with our Bylaws, and we wouldresignation. We will publicly disclose any such decision and the rationale behind it.
DIRECTOR NOMINEES
The Governance Committee and the Board have evaluated each of the director nominees against the factors and principles used to select director nominees. Based on this evaluation, the Governance Committee and the Board have concluded that it is in the best interests of the Company and its stockholders for each of the proposed director nominees on pages 13-23 below to continue to serve as a director of the Company. The Board believes that each of the director nominees has a strong track record of being a responsible steward of stockholders’ interests and brings extraordinarily valuable insight, perspective, and expertise to the Board.Director Nominees
The Governance Committee is responsible for recommending to the Board the qualifications for Board membership and for identifying, assessing and recommending qualified director candidates for the Board’s consideration. The Board’s membership qualifications and nomination procedures are set forth in the Corporate Governance Guidelines.Guidelines for the Board of Directors (“Governance Guidelines”). Nominees may be suggested by directors, management, stockholders or by a third-party firm.
The
|
|
|
|
|
|
|
|
|
Based on this evaluation, the Governance Committee and the Board believe thathave evaluated each of the director nominees exhibitsand concluded that it is in the best interests of the Company and its stockholders for each of these individuals to continue to serve as a director. The Board believes that each director nominee has a strong track record of being a responsible steward of stockholders’ interests and brings extraordinarily valuable insight, perspective and expertise to the Board.
FOCUS ON BOARD REFRESHMENT AND DIVERSITYTo ensure that the Board continues to evolve and be refreshed in a manner that serves the changing business and strategic needs of the Company, the Governance Committee annually reviews with the Board the applicable skills, qualifications, expertise and characteristics of Board nominees in the context of the current Board composition and Company circumstances. The Governance Committee evaluates whether each director demonstrates several key attributes and provides significant and meaningful contributions to the Board. These factors include:
• | Highly relevant professional experience in payments, financial services, financial technology (“FinTech”), technology, innovation, global business, business development, strategy, legal, regulatory, government, cybersecurity, information security, finance, accounting, consumer, sales, marketing, brand management, talent (human capital) management and/or ESG matters; |
• | Relevant senior leadership/CEO experience; |
• | Experience and expertise that complement the skill sets of the other director nominees; |
• | High degree of character and integrity and ability to contribute to strong Board dynamics; |
• | Highly engaged and able to commit the time and resources needed to provide active oversight of PayPal and its management; |
• | Sound business judgment; and |
• | Commitment to enhancing stockholder value. |
In addressing the overall composition of the Board, the Governance Committee considers how each director contributes to the Board’s diversity in terms of gender, sexual orientation, race, ethnicity, nationality, cultural background and age, in addition to the skills, qualifications and expertise that they bring to the Board.
12 | •2023 Proxy Statement
| |||
Since 2016, we have added four new directors to the Board, with a strong mix of skills, qualifications, backgrounds and experience. Forty-five percent of Board members standing for re-election are women or from underrepresented ethnic groups.
PROPOSAL 1: ELECTION OF DIRECTORS
Director Nominees
Director Skills,Experience, Expertise and Attributes
Listed below areOur 2023 Board skills matrix identifies the core skills, expertise and attributes of each director that we consider most relevant to our Board of Directors in light of our current business strategy and structure.
PAYMENTS, FINANCIAL SERVICES, AND FINTECH
Experience in the payments, financial services, and FinTech industries, which is critical to oversight of PayPal’s business and strategy in these complex and dynamic industries.
TECHNOLOGY AND INNOVATION
Experience and knowledge in developing technology businesses, anticipating technological trends, and driving innovation and product development, which are relevant to PayPal as a technology platform and digital payments company.
BUSINESS DEVELOPMENT AND STRATEGY
Experience in strategy, business development, and evaluating potential acquisitions, strategic investments and partnerships, which is relevant in helping PayPal to grow its business and expand its value proposition and assess the fit of potential targets and partners with its strategy and culture.
SENIOR LEADERSHIP
Significant senior leadership and/or CEO experience, with a practical understanding of organizations, processes, strategic planning and risk management to assess, develop, and implement our business strategy and operating plan.
LEGAL / REGULATORY / GOVERNMENTAL
Knowledge and experience with legal and regulatory issues, compliance obligations and governmental policies, including practical business experience working collaboratively with governments, regulators and agencies, which is relevant to PayPal as we operate globally in a rapidly evolving legal and regulatory environment which impacts key aspects of our business.
|
GLOBAL BUSINESS
Experience in international markets, with an understanding of diverse business environments, economic conditions, cultures, and regulatory frameworks, which is relevant to PayPal as a global business operating in over 200 markets around the world.
OTHER PUBLIC COMPANY BOARD SERVICE
Service on a public company board to develop insights about ensuring strong board and management accountability, protecting stockholder interests, and observing appropriate governance practices.
FINANCE / ACCOUNTING
Experience with financial reporting, capital allocation, and accounting, which is relevant to the oversight of PayPal’s capital structure, financing, and investing activities, as well as our financial reporting and internal controls.
CONSUMER, SALES, MARKETING, AND BRAND MANAGEMENT
Experience in developing strategies to grow sales and market share, build brand awareness and overall preference among customers, and enhance PayPal’s reputation, which is relevant to the growth of PayPal’s business.
CYBERSECURITY / INFORMATION SECURITY
Expertise in overseeing cybersecurity and information security programs and managing associated risks, which is vital to protecting PayPal’s technology infrastructure and payments platform, maintaining the trust of our customers and keeping their information secure.
HUMAN CAPITAL MANAGEMENT
Experience in attracting, motivating, developing, and retaining qualified personnel, fostering a corporate culture that encourages and promotes accountability, performance, diversity, equity and ownership, and understanding and overseeing the health of a company’s human capital, which is particularly important for PayPal within the context of the highly competitive market to attract and retain talent in which we operate.
Our 2020 Board skills matrix is set forth below. A mark indicates a specific area of focus or expertise on which the Board particularly relies. We do not believe that each director nominee needs to have all of these skills, and not having a mark does not mean the director nominee does not possess that specific skill. For more information on specific experience, skills andthe qualifications that each director nominee brings to our Board, that are particularly relevant to PayPal, please see the nominee biographies for the director nominees beginning on page 13.15 of this proxy statement.
| ||||||||||||||||||||||||||
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
President of 3RAM Group LLC, a privately held company specializing in capital investments, business consulting services and property management, since January 2015
Former Senior Vice President of International Business Machines Corporation (IBM), a leading manufacturer of information technologies, from 2007 until 2014; in his over30-year career with IBM, Mr. Adkins held a number of development and management roles, including Senior Vice President of Corporate Strategy from April 2013 to April 2014, Senior Vice President of Systems and Technology Group from October 2009 to April 2013, Senior Vice President of Development & Manufacturing from May 2007 to October 2009, and Vice President of Development of IBM Systems and Technology Group from December 2003 to May 2007
Former director of PPL Corporation from August 2014 to May 2019
B.A. in Physics from Rollins College and B.S. and M.S. degrees in Electrical Engineering from Georgia Tech
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
Partner at Patriot Global Management, L.P., an investment management firm, since March 2019
Former Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds, from July 2012 to February 2017
Served in various investment and research roles from March 2007 to July 2012
Former director of eBay Inc. from March 2015 to July 2015
Began his career as an investment banking analyst at Morgan Stanley, where he focused on merger and acquisition transactions across a variety of industries
Former director of Lyft, Inc. from May 2015 to March 2019
M.B.A. from the University of Pennsylvania’s Wharton School of Business; B.S. in Applied Economics and Management Magna Cum Laude from Cornell University
Served in the United States Marine Corps
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
President and Chief Executive Officer of Nike, Inc., a designer and distributor of athletic footwear and apparel, since January 2020
Former President and Chief Executive Officer of ServiceNow, Inc., a cloud computing company, from April 2017 to December 2019
Former President and Chief Executive Officer of eBay from March 2008 to July 2015, and former director of eBay from January 2008 to July 2015
Former President, eBay Marketplaces from March 2005 to January 2008
Former Worldwide Managing Director of Bain & Company from January 2000 to February 2005
M.B.A. from the Stanford Graduate School of Business; B.A. in Economics from Dartmouth College
*Mr. Donahoe will step down from the ServiceNow Board of Directors when his term expires at ServiceNow’s annual meeting of shareholders in June 2020.
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
Non-Executive Chairman of the Board of CVS Health Corporation, a pharmacy and healthcare services provider, since May 2011
Founding Partner of Centerview Capital Technology Fund, a private investment firm, since July 2013
Chairman of the Board of InfoWorks, a portfolio company of Centerview, as of January 2019
FormerNon-Executive Chairman of the Board of Motorola Solutions, Inc. (formerly Motorola, Inc.), a leading provider of business and mission-critical communication products and services for enterprise and government customers
FormerNon-Executive Chairman of the Board of Motorola, Inc. from May 2008 until the separation of its mobile devices and home businesses in January 2011
Former Senior Advisor and Managing Director to Warburg Pincus LLC, a global private equity firm, from October 2006 to May 2008
Former President and a director of AT&T Corporation from November 2005 until January 2006
Former Chairman of the Board and Chief Executive Officer of AT&T Corporation from November 2002 until November 2005
Former President of AT&T Corporation from 2000 to 2002 and the Chief Executive Officer of Concert Communications Services, a former global venture created by AT&T Corporation and British Telecommunications plc, from 1999 to 2000
Former director of eBay Inc. from June 2014 to July 2015
Served as a Trustee for Georgia Tech Foundation, Inc.
B.S. in industrial management from Georgia Institute of Technology
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
Former Chief Operating Officer of Airbnb, Inc., a global community marketplace which provides access to unique accommodations and experiences, from February 2018 to March 2020, and a director of Airbnb since March 2020
Former Chief Business Affairs and Legal Officer of Airbnb, Inc., from July 2015 to February 2018, having joined as General Counsel in December 2011
Former Senior Vice President and Deputy General Counsel of Yahoo! Inc., a digital information platform, until August 2011; Ms. Johnson also served in other positions at Yahoo! Inc. from August 1999
Former General Counsel of Broadcast.com, Inc., an internet broadcasting company, from November 1996 to August 1999
B.A. from The University of Texas at Austin; J.D. from The University of Texas Law School
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
President and Chief Executive Officer of the American Red Cross, a humanitarian organization, since June 2008
Faculty member at the Harvard Business School, from 2002 to 2008
Former President of Fidelity Personal Investments, from 1998 to 2002
Former Executive Vice President, Consumer Markets Division at AT&T Corporation, from 1997 to 1998
Former director of eBay Inc., from March 2015 to July 2015
Serves as a trustee of Johns Hopkins Medicine
B.A. in quantitative sciences from Johns Hopkins University; M.B.A. from Columbia University
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
Former Major Market Managing Partner for KPMG, one of the world’s leading professional services firms, from 2008 through her retirement in September 2018
Started her career in KPMG’s audit practice in 1982 and was admitted into the partnership in 1995; served as Audit Partner or Senior Account Executive for KPMG clients in a variety of industry sectors, including financial services and technology
Also serves on the Board of Directors of Carbon, Inc.
B.B.A. (Accounting) from The University of Texas at Arlington
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
Former Lead Independent Director of PayPal from July 2015 through December 2018
Former director of eBay from July 2007 to July 2015
Former Chief Executive Officer of Federal Home Loan Mortgage Corp. (“Freddie Mac”) from September 2008 until his retirement in March 2009
Former director of Freddie Mac from December 2008 to March 2009
Former Chief Financial Officer of Star Banc Corporation, a bank holding company, starting in 1993. During his tenure, played an integral role in the acquisition of Firstar Corporation in 1998 and later U.S. Bancorp in 2001. Mr. Moffett remained Chief Financial Officer of U.S. Bancorp until 2007
Trustee for Columbia Atlantic Mutual Funds and University of Oklahoma Foundation; consultant to various financial services companies
B.A. from the University of Oklahoma; M.B.A. from Southern Methodist University
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
Chair and Chief Executive Officer of Warner Bros. Entertainment, a global leader in entertainment and consumer products, since August 2019
Former President of BBC Studios Americas, from August 2015 to August 2019
Served as Chief Operating Officer of BBC Worldwide North America from 2010 through July 2015
Former Chair of the board of BritBox, a joint venture subscription streaming service launched in partnership with ITV in March of 2017
Served on the board, operating committee, and editorial committee of BBC America, a joint venture with AMC Networks
Member of the board of directors of Georgetown University and the vice chair of the McDonough School of Business at Georgetown
Previously served on the Board of HSN, Inc., an interactive multichannel retailer, from December 2012 to December 2017
B.S. from Georgetown University’s McDonough School of Business; MBA from Harvard Business School
|
|
|
|
Key Qualifications and Experience:
|
|
Biography:
President and Chief Executive Officer of PayPal since July 2015; served as the President andCEO-Designee of PayPal from September 2014 until July 2015
Former Group President, Enterprise Group of American Express Company, a financial services company, from August 2010 to August 2014
Former President, Prepaid Group of Sprint Nextel Corporation, a cellular phone service provider, from November 2009 until August 2010, when Sprint Nextel acquired Virgin Mobile, USA, a cellular phone service provider
Former Chairman of the Board of NortonLifeLock (formally known as Symantec Corporation), from January 2013 to December 2019
B.A. from Middlebury College; M.B.A. from New York University’s Leonard N. Stern School of Business
| ||||||||
Experience, Expertise and Attributes | |||||
|
| |||||||||||||||||||||||||||
|
| • | • | • | • | • | • | • |
| Technology / Innovation Because PayPal is a technology platform and | • | • | • | • | • | • | • | • | • | • | |||||||||||||||
| Global Business An understanding of diverse business environments, economic conditions, cultures and regulatory frameworks is relevant to PayPal as a global business operating in | • | • | • | • | • | • | • | • | • | • | • | • | |||||||||||||
Senior Leadership Significant senior leadership and/or CEO experience, with a practical understanding of organizations, processes, strategic planning and | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||
Business Development and Strategy This experience is relevant in helping PayPal to grow its business, expand its value proposition and assess whether potential targets and partners are a good strategic and cultural fit. | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||
Legal / Regulatory / Governmental Knowledge and experience with legal and regulatory issues, compliance obligations and governmental policies is relevant because we operate globally in a complex and rapidly evolving legal and regulatory environment. | • | • | • | • | • | • | • | • | • | |||||||||||||||||
Cybersecurity / Information Security This experience is vital to protecting PayPal’s technology infrastructure and payments platform, maintaining the trust of our customers and keeping customer information secure. | • | • | • | • | ||||||||||||||||||||||
Finance / Accounting This experience is relevant to the oversight of PayPal’s capital structure, financing and investing activities, as well as our financial reporting and internal controls. | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||
Consumer / Sales / Marketing / Brand Management Experience in developing strategies to grow sales and market share, build brand awareness and overall preference among customers and enhance PayPal’s reputation is relevant to the growth of our business. | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||
ESG An understanding of effective management and disclosure of environmental, social and/or governance (“ESG”) risks and opportunities is essential to ensure appropriate oversight of ESG at PayPal and create long-term value for our stakeholders. | • | • | • | • | • | • | • | • | • | • | • | |||||||||||||||
Talent Management This experience | • | • | • | • | • | • | • | • | • | • | • | |||||||||||||||
Other Public Company Board Service Service on a
| • | • | • | • | • | • | • | • | • | • | • | • |
Key Qualifications and Experience:
•
|
|
Biography:
PROPOSAL 1: ELECTION OF DIRECTORS
Former director of eBay Inc., from January 2015 to July 2015
Managing Member at Darwin Capital Advisors, LLC, a private investment firm, since October 2018 and a Member since 2012
Former Executive Chairman of CamberView Partners, LLC, a corporate advisory firm, from 2012 until 2018
Former Vice Chancellor of the University of California, Berkeley, a public university, from 2008 to 2012, where he led and implemented changes to the university’s financial and operating strategy
Prior to 2008, Mr. Yeary spent 25 years in the finance industry, most recently including as Managing Director Global Head of Mergers and Acquisitions and as a member of the Management Committee at Citigroup Investment Banking, a financial services company
B.A. in History and Economics from the University of California, Berkeley
Nominees
TheFocus on Board Refreshment and the Governance Committee believe that the combination of the various qualifications, skills, and experience of the director nominees will contribute to an effective and well-functioning Board and that, individually and collectively, the director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management.
The Board recommends a voteFOR each of the Named Director Nominees.
|
CONSIDERATION OF DIRECTOR NOMINEES
Stockholder Recommendations and NominationsDiversity
The Governance Committee is responsibleregularly oversees and plans for recommendingdirector succession and Board refreshment. The Board values succession and refreshment over time as critical components to maintaining an appropriate balance of tenure, diversity, skills and experience needed to promote and support the Company’s long-term strategy. The Board believes that having a mix of experienced directors with a deep understanding of the Company and newer directors who bring fresh perspectives and innovative ideas provides significant benefits to the Company in driving and overseeing its strategy and operations and managing key risks. The Board does not believe in a specific limit for the overall length of time a director may serve. Directors who have served on the Board for an extended period can provide valuable insight into the operations and future of the Company based on their experience with, and understanding of, the Company’s history, policies and objectives.
The Governance Committee values diversity as a factor in selecting nominees. When searching for new directors, the Governance Committee actively seeks out highly qualified women and individuals from underrepresented communities to include in the initial pool from which Board nominees are chosen. In keeping with this commitment to diversity and inclusion, our 12 director nominees include four people who identify as women, one person who identifies as African American or Black and one person who identifies as Hispanic or Latinx and White.
Our active Board refreshment process has resulted in a strong mix of diversity and independence, which contributes to effective oversight of management and the Company. Since 2017, we have added five diverse directors to the Board, each of whom possesses a slatestrong mix of nominees for election at each annual meetingskills, qualifications, backgrounds and experience, and has significantly contributed to and enhanced the overall effectiveness of stockholders. Nominees may be suggested by directors, members of management, stockholders, or by a third-party firm. In evaluating potential director nominees, the Governance Committee considers a wide range of factors, including the criteria described below under “Director Selection ProcessBoard.
Stockholder Recommendations and Qualifications.”Nominations
Stockholders who would like the Governance Committee to consider their recommendations for director nominees should submit their recommendations in writing by mail to the Governance Committee in care of our Corporate Secretary at PayPal Holdings, Inc., 2211 North First Street, San Jose, California 95131, stating the candidate’s name and qualifications for Board membership. RecommendationsAny such recommendation by stockholders that are made in accordance with these proceduresa stockholder will receive the same consideration by the Governance Committee as other suggested nominees.
In addition, our Restated Certificate of Incorporation (“Certificate of Incorporation”) and Bylaws provide proxy access rights that permit eligible stockholders to nominate candidates for election to the Board in the Company’s proxy statement. These proxy access rights permit a stockholder, or group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials director nominees constituting up to 20% of the Board, provided that the stockholder(s) and nominee(s) satisfy the requirements and procedures described in our Restated Certificate of Incorporation and Bylaws.
Director Selection Process and Qualifications
The Governance Committee evaluates whether each director demonstrates several key attributes and provides significant and meaningful contributions to the Board. Specifically, these factors include:
14 | •2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
Director Biographies
In particular, the Governance Committee values diversity as a factor in selecting nominees. When searching for new directors, the Governance Committee actively seeks out qualified women and individuals from underrepresented ethnic groups to include in the pool from which Board nominees are chosen. In keeping with this commitment to inclusion and diversity, 45% of Board members standing for re-election are women or from underrepresented ethnic groups.
From time to time, the Governance Committee may retain an executive search firm to assist in identifying, screening, and evaluating potential candidates.
| ||||||||||
RODNEY C. ADKINS President of 3RAM Group LLC INDEPENDENT | ||||||||||
Board Committees:
• ARC
• Governance
| Director since: September 2017 | Age: 64 |
Key Qualifications and Experience:
Reasons for Nomination: Mr. Adkins brings extensive leadership experience driving innovation and business solutions, as well as expertise in technology strategy, corporate finance and global business operations. |
Other Public Company Boards:
Former Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
• | In-depth expertise in corporate governance matters as a board member of other public companies |
The Compensation Committee is responsible for reviewing
2019 DIRECTOR COMPENSATION
For 2019, eachnon-employee director of the Company received the following annual retainers on the first trading day after January 1, 2019:Biography:
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
Anon-employee director who serves as the Board Chair and/or as the chair of a committee was entitled to receive the Board Chair annual retainer and/or committee chair annual retainer in addition to thenon-employee director annual retainer, but was not entitled to the committee member annual retainer for serving as a member of that specific committee.
Anon-employee director could elect to receive 100% of his/her annual retainer(s) in fully vested stock awards of PayPal common stock having a value equal to the annual retainer(s), in lieu of cash.
If anon-employee director was appointed or elected to serve as a member of the Board (or appointed to serve as a member of a committee or as a chair of a committee in which he/she was not a member or chair prior to such appointment) following the annual retainer payment date (i.e., the first trading day of the year), thenon-employee director received a prorated annual retainer, based on the number of days from the appointment or election date to December 31 of the year.
2019 Equity Awards:
In addition to the annual retainers, allnon-employee directors of PayPal received the following fully vested stock awards of PayPal common stock following PayPal’s 2019 Annual Meeting of Stockholders:
| ||
|
|
The number of shares of PayPal common stock subject to the stock award is determined by dividing the amount of the annual equity award by the per share fair market value (i.e., the closing price of our common stock) on the date of the annual stockholders meeting, rounded up to the nearest whole share.
For 2019, if anon-employee director was appointed or elected at any time other than at an annual stockholders meeting, such director was eligible to receive a prorated annual equity award, as of the date of his or her appointment or election, for the period prior to the first annual stockholders meeting following his or her appointment or election, determined by (i) multiplying the amount of the annual equity award (i.e., $275,000 and, with respect to the additional equity award to the Board Chair, $50,000) by a fraction, the numerator of which was the number of days from the date of appointment or election to the first anniversary of the most recent annual stockholders meeting, and the denominator of which was 365, and (ii) dividing such amount by the per share fair market value on the date of appointment or election, rounded up to the nearest whole share.
| ||||||||||
JONATHAN CHRISTODORO Partner at Patriot Global Management, LP INDEPENDENT | ||||||||||
Board Committees: • Compensation • Governance | Director since: July 2015 | Age: 46 |
Key Qualifications and Experience:
Reasons for Nomination: In addition to bringing a seasoned investor’s perspective to the Board, PayPal benefits from Mr. Christodoro’s substantial financial and M&A experience. |
Other Public Company Boards:
Former Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
•2023 Proxy Statement | 15 |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
|
2020 DIRECTOR COMPENSATION
For 2020, the Compensation Committee did not make any changes to the annual retainers or equity awards to be paid tonon-employee directors under our director compensation program.
DEFERRED COMPENSATION
Ournon-employee directors are eligible to defer 5% to 100% of their annual retainers and equity awards pursuant to the PayPal Holdings, Inc. Deferred Compensation Plan (“DCP”), ournon-qualified deferred compensation plan. The DCP allows participants to set asidetax-deferred amounts. The investment return on any deferred cash amounts is linked to the performance of a range of market-based investment choices made available pursuant to the DCP, and the investment return on any deferred equity awards is linked to the performance of PayPal common stock. Ournon-employee directors can elect to begin distributions from the DCP following the termination of their services to PayPal or in a specified year (provided that a director’s DCP account will be distributed if the director’s service terminates prior to the specified year). Ournon-employee directors can also elect to receive their distributions as either a lump sum or annual installments over a period of 2 to 15 years.
2019 DIRECTOR COMPENSATION TABLE
The following table summarizes the total compensation earned by or paid tonon-employee directors for the fiscal year ended December 31, 2019.
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Option Awards ($) | All Other ($) | Total ($)(3) | |||||||||||||||
Rodney C. Adkins | 110,000 | 275,102 | — | — | 385,102 | |||||||||||||||
Wences Casares | 98,000 | 275,102 | — | — | 373,102 | |||||||||||||||
Jonathan Christodoro | 98,000 | 275,102 | — | — | 373,102 | |||||||||||||||
John J. Donahoe | 130,000 | 325,038 | — | — | 455,038 | |||||||||||||||
David W. Dorman | 110,000 | 275,102 | — | — | 385,102 | |||||||||||||||
Belinda J. Johnson | 100,000 | 275,102 | — | — | 375,102 | |||||||||||||||
Gail J. McGovern | 118,000 | 275,102 | — | — | 393,102 | |||||||||||||||
Deborah M. Messemer(4) | 95,890 | 95,711 | — | — | 191,601 | |||||||||||||||
David M. Moffett | 120,000 | 275,102 | — | — | 395,102 | |||||||||||||||
Ann M. Sarnoff | 100,000 | 275,102 | — | — | 375,102 | |||||||||||||||
Frank D. Yeary | 100,000 | 275,102 | — | — | 375,102 |
|
Name | Fees Forgone ($) | Shares Received (#) | ||||||
Wences Casares | 98,000 | 1,143 | ||||||
John J. Donahoe | 130,000 | 1,517 | ||||||
David W. Dorman | 110,000 | 1,283 | ||||||
Belinda J. Johnson | 100,000 | 1,167 | ||||||
David M. Moffett | 120,000 | 1,400 | ||||||
Ann M. Sarnoff | 100,000 | 1,167 | ||||||
Frank D. Yeary | 100,000 | 1,167 |
|
|
|
| |||||||
| ||||||||
JOHN J. DONAHOE President and Chief Executive Officer of Nike, Inc. INDEPENDENT | ||||||||
• None | Director since: July 2015 | |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
Key Qualifications and Experience:
Reasons for Nomination: Mr. Donahoe brings significant experience as a public company CEO leading global business, executive-level expertise in payments, FinTech and technology and a deep knowledge of the |
|
Other Public Company Boards:
Former Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
| ||||||||
DAVID W. DORMAN Former Non-Executive Board Chair of CVS Health Corporation INDEPENDENT | ||||||||
Board Committees: • Compensation (Chair) • Governance | Director since: June 2015 | Age: 69 |
Key Qualifications and Experience:
Reasons for Nomination: Mr. Dorman brings strong board- and executive-level experience leading global businesses in regulated industries, together with finance, strategic planning, talent management and executive compensation expertise, to PayPal’s Board and his role as Compensation Committee Chair. |
Other Public Company Boards:
Former Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
• |
Biography:
• | Served on the Board of Directors of CVS Health Corporation from March 2006 until May 2022 and served as Non-Executive Board Chair from March 2011 until May 2022 |
• | Non-Executive Board Chair of Motorola, Inc., from May 2008 to January 2011 |
16 | •2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
|
BELINDA J. JOHNSON Former Chief Operating Officer of Airbnb, Inc. INDEPENDENT | ||||||||
Board Committees: • ARC | Director since: January 2017 | Age: 56 |
Key Qualifications and Experience:
Reasons for Nomination: PayPal benefits from Ms. Johnson’s experience overseeing legal, regulatory and government affairs and operational matters for innovative global technology companies. |
Other Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
ENRIQUE LORES President and CEO, HP Inc. INDEPENDENT | ||||||||
Board Committees: • ARC | Director since: June 2021 | Age: 57 |
Key Qualifications and Experience:
Reasons for Nomination: As President and CEO of HP Inc., Mr. Lores provides an enhanced global perspective based on his international business and leadership experience, as well as technology industry, product and operational expertise. |
Other Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
•2023 Proxy Statement | 17 |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
GAIL J. MCGOVERN President and Chief Executive Officer of the American Red Cross INDEPENDENT | ||||||||
Board Committees: • Compensation • Governance (Chair) | Director since: June 2015 | Age: 71 |
Key Qualifications and Experience:
Reasons for Nomination: Ms. McGovern brings a unique perspective to the Board and her role as Governance Chair based on her leadership experience in regulated industries and mission-driven organizations, including through her current role as President and CEO of the American Red Cross. |
Other Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
DEBORAH M. MESSEMER Former Major Market Managing Partner at KPMG INDEPENDENT | ||||||||
Board Committees: • ARC (Audit Committee | Director since: January 2019 | Age: 65 |
Key Qualifications and Experience:
Reasons for Nomination: Based on her extensive experience at KPMG for clients in industries including financial services and technology, Ms. Messemer provides strong strategic and finance expertise, including with respect to financial reporting and internal controls. |
Other Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
18 | •2023 Proxy Statement |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
DAVID M. MOFFETT Former Chief Executive Officer of Federal INDEPENDENT | ||||||||||
Board Committees: • ARC (Chair) (Audit Committee Financial Expert) | Director since: June 2015 | Age: 71 |
Key Qualifications and Experience:
Reasons for Nomination: PayPal benefits from Mr. Moffett’s significant leadership experience in financial services and his strong financial reporting, audit, risk and compliance, capital allocation and M&A expertise is directly relevant to his role as ARC Committee Chair. |
Other Public Company Boards:
Former Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
ANN M. SARNOFF Former Board Chair and Chief Executive Officer of WarnerMedia Studios & Networks Group INDEPENDENT | ||||||||||
Board Committees: • ARC | Director since: June 2017 | Age: 61 |
Key Qualifications and Experience:
Reasons for Nomination: Ms. Sarnoff brings substantial experience creating innovative partnerships and technology-focused solutions across platforms, as well as expertise in consumer engagement and global business development. |
Other Public Company Boards:
Former Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
•2023 Proxy Statement | 19 |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
DANIEL H. SCHULMAN President and Chief Executive Officer of PayPal | ||||||||||
Board Committees: • None | Director since: July 2015 | Age: 65 |
Key Qualifications and Experience:
Reasons for Nomination: As PayPal’s CEO, Mr. Schulman brings deep leadership experience in payments, financial services, technology, regulatory and cybersecurity, as well as in-depth knowledge of the Company. |
Other Public Company Boards:
Former Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
FRANK D. YEARY Managing Member at Darwin Capital Advisors, LLC INDEPENDENT | ||||||||||
Board Committees: • ARC | Director since: July 2015 | Age: 59 |
Key Qualifications and Experience:
Reasons for Nomination: Mr. Yeary brings deep financial acumen and global M&A expertise to the Board, as well as robust corporate governance expertise and a strong understanding of investor perspectives. |
Other Public Company Boards:
Experience, Skills and Qualifications of Particular Relevance to PayPal:
Biography:
The Board and the Governance Committee believe that the combination of our director nominees’ qualifications, skills and experience will contribute to an effective Board and that, individually and collectively, the director nominees have the necessary qualifications to provide effective oversight of the business and quality advice and counsel to management.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES. |
20 | •2023 Proxy Statement |
CORPORATE GOVERNANCE
Corporate Governance
Corporate governance at PayPal is designed to promote the long-term interests of our stockholders, strengthen Board and management accountability, oversee risk assessment and management strategies, foster responsible decision-making and engender public trust. We believe that strong corporate governance practices that provide meaningful rights to our stockholders and ensure Board and management accountability are essential to our long-term success.
Stockholder EngagementBoard Leadership
The Board’s leadership structure is designed to promote Board effectiveness and to appropriately allocate authority and responsibility between the Board and management. The Board believes that separating the Chair and CEO positions continues to be the appropriate leadership structure for the Company at this time, as it provides the Company and the Board with strong leadership and independent oversight of management and allows the CEO to focus primarily on the management and operation of our business. Factors that the Board considers in reviewing its leadership structure and making this determination include, but are not limited to, the current composition of the Board, the policies and practices in place to provide independent Board oversight of management, the Company’s circumstances and the views of our stockholders and other stakeholders. Changes in the Board’s leadership structure will be reflected on our website shortly after becoming effective and disclosed in compliance with applicable regulatory requirements.
Independent Chair
| ||
JOHN J. DONAHOE |
Mr. Donahoe has served as the Board Chair since PayPal became an independent public company in July 2015. The Board has concluded that Mr. Donahoe is an independent director under the listing standards of the Nasdaq Global Select Market (“Nasdaq”) and the Governance Guidelines. Mr. Donahoe possesses extensive Robust Independent Chair Responsibilities • Calls meetings of the Board and independent directors • Sets the agenda for Board meetings in consultation with other directors and the CEO • Provides management with input as to the quality, quantity and timeliness of the flow of information that is necessary for the independent directors to effectively and responsibly perform their duties • Chairs executive sessions of the independent directors • Acts as a liaison between the independent directors and the CEO on sensitive issues • Leads the Board’s annual CEO performance evaluation • Leads the Board’s review of the results of the annual self-evaluation process, including acting on director feedback as needed • Engages and |
Feedback received from stockholders is shared with
•2023 Proxy Statement | 21 |
CORPORATE GOVERNANCE
Director Independence
Director Independence
Under the Nasdaq listing standards and our Governance Guidelines, the Board must consist of a majority of independent directors. Annually, each director completes a questionnaire designed to assist the Board in determining whether the director is independent, and its principal committees throughoutwhether members of the yearARC Committee and servesthe Compensation Committee satisfy additional Securities and Exchange Commission (“SEC”) and Nasdaq independence requirements. The Board has adopted guidelines setting forth certain categories of transactions, relationships and arrangements that it has deemed immaterial for purposes of determining independence.
Based on the review and recommendation by the Governance Committee, the Board analyzed the independence of each director and has determined that Mses. Johnson, McGovern, Messemer and Sarnoff and Messrs. Adkins, Christodoro, Donahoe, Dorman, Lores, Moffett and Yeary meet the standards of independence under the Nasdaq listing standards and the Governance Guidelines, including that each director is free of any relationship that would interfere with their individual exercise of independent judgment.
Our Governance Guidelines prohibit Company directors from serving as a director or as an inputofficer of another company that may cause a significant conflict of interest. Our Governance Guidelines also provide that any director who has previously been determined to be independent must inform the Board Chair and our Corporate Secretary of any significant change in personal circumstances that may cause their status as an independent director to change, including a change in principal occupation, change in professional roles and responsibilities, status as a member of the board of another public company or retirement, in each case including changes that may affect the continued appropriateness of Board or committee membership. In such situations, the Governance Committee makes a recommendation to the Board on the continued appropriateness of such director’s Board or committee membership(s).
Board Committees
The Board has three principal standing committees: the ARC Committee, the Compensation Committee and the Governance Committee. Each committee has a written charter that addresses, among other matters, the committee’s purposes and policy, composition and organization, duties and responsibilities and meetings. The committee charters are available in the governance section of our Board’s deliberationsInvestor Relations website at https://investor.pypl.com/governance. Each charter permits the applicable committee, in its discretion, to delegate all or a portion of its duties and decision-making process.responsibilities to a subcommittee or any member of the committee. Subject to applicable law, listing standards and the terms of its charter, the Compensation Committee also may delegate duties and responsibilities to any officer(s) of the Company.
22 | •2023 Proxy Statement |
CORPORATE GOVERNANCE
Board Committees
Below is a description of each principal committee of the Board.
ARC Committee | ||||||||||
DAVID M. MOFFETT Chair | Committee Meetings in 2022:12 |
Other Members: Rodney C. Adkins Belinda J. Johnson Enrique Lores Deborah M. Messemer Ann M. Sarnoff Frank D. Yeary | Primary Responsibilities Provide assistance and guidance to the Board in fulfilling its oversight responsibilities with respect to: • PayPal’s corporate accounting and financial reporting practices and the audit of PayPal’s financial statements; • The independent auditors, including their qualifications and independence; • The performance of PayPal’s internal audit function and independent auditor; • The quality and integrity of PayPal’s financial statements and reports; • PayPal’s overall risk framework and risk appetite framework, including risks associated with cybersecurity, information security and privacy; and • PayPal’s compliance with legal and regulatory obligations. The ARC Committee is also responsible for reviewing and approving all audit engagement fees and terms, as well as all non-audit engagements, with the independent auditor and producing the Audit Committee Report for inclusion in our proxy statement. Independence The Board has determined that each member of the ARC Committee meets the independence requirements of Nasdaq and the SEC and otherwise satisfies the requirements for audit committee service imposed by the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board has also determined that each member of the ARC Committee is financially literate, and that Mr. Moffett and Ms. Messemer satisfy the requirements for an “audit committee financial expert” set forth in the SEC rules. | |||||||||
Recent Activities & Focus Areas
• Evaluated the quality and integrity of the Company’s financial statements and reports, the effectiveness of internal accounting and financial reporting controls and the results of the annual audit. • Engaged regularly with our Chief Risk and Compliance Officer on key and emerging risks facing the Company, including cybersecurity and geopolitical and macroeconomic instability. • Invited internal and external experts to discuss evolving risks and trends pertinent to the Company, including cybersecurity and government regulation. |
An overview of the key areas of focus and feedback provided by our stockholders during these meetings is provided in the table below:
•2023 Proxy Statement | 23 |
CORPORATE GOVERNANCE
Board Committees
Compensation Committee | ||||||||||
DAVID W. DORMAN Chair | Committee Meetings in 2022: 7 | |||||||||
Other Members: Jonathan Christodoro Gail J. McGovern | Primary Responsibilities • • • Review, determine and approve the compensation for the CEO and our other executive officers; • Review and discuss the Compensation Discussion and Analysis contained in our proxy statement and prepare the Compensation Committee Report for inclusion in our proxy statement and our Annual Report on Form 10-K; • Oversee and monitor the Company’s strategies and responsibilities related to human capital • Review and approve, and oversee and monitor compliance with, policies with respect to the recovery or “clawback” of compensation; • Review and consider the results of any advisory stockholder votes on named executive officer compensation; and • Oversee and monitor compliance with the Company’s stock ownership guidelines applicable to non-employee directors and executive officers. Independence The Board has determined that each member of the Compensation Committee meets the independence requirements of Nasdaq and the SEC. Additionally, the Compensation Committee assesses on an annual basis the independence of its compensation consultant and other compensation advisers. Additional information regarding the role of the Compensation Committee in compensation matters, including Compensation Committee Interlocks and Insider Participation None of the members of the Compensation Committee is or has been an employee of PayPal. None of our executive officers served on the board of directors or compensation committee of another entity that has an executive officer serving on the Board or the Compensation Committee. | |||||||||
| ||||||||||
| ||||||||||
Recent Activities & Focus Areas • Oversaw the Company’s launch of the Leadership Principles and enhancements to our talent management strategies. • Advised management on compensation considerations with respect to executive leadership transitions. • Supported compensation programs focused on promoting employee wellness and retention strategies. |
24 | • |
• Interested in discussing gender pay gap, including public disclosure
CORPORATE GOVERNANCE
Board Committees
Governance Committee | ||||||||||
GAIL J. MCGOVERN Chair | Committee Meetings in | |||||||||
Other Members: Rodney C. Adkins Jonathan Christodoro David W. Dorman | Primary Responsibilities • Make recommendations to the Board as to the appropriate size of the Board or any Board committee; • Identify individuals believed to be qualified to become Board members; • Make recommendations to the Board on potential Board and Board committee members, whether as a result of any vacancy or as part of the annual election cycle, taking into consideration the criteria set forth in the “Board Member Criteria” and “Guiding Principles for Board Development and Succession” sections of the Governance Guidelines; • Review and, if necessary, update, our Governance Guidelines at least annually; • Establish procedures to exercise oversight of the evaluation of the Board; • Exercise general oversight of the Company’s management of topics related to ESG matters, including overall ESG strategy, risk and opportunities, stakeholder engagement and reporting programs, initiatives in social innovation and environmental sustainability and the Company’s Global Impact Report; and • Review and discuss with management, at least annually, PayPal’s
| |||||||||
|
| |||||||||
Recent Activities & Focus Areas • Stayed informed on feedback from investor outreach program and corporate governance developments. • Reviewed the Company’s medium-term ESG strategy and annual political expenditures. • Assessed the qualifications and independence of director nominees. |
•2023 Proxy Statement |
|
The
CORPORATE GOVERNANCE
Board has adopted Corporate Governance Guidelines to serve as a framework within which the Oversight
Board conducts its business. Our Corporate Governance Guidelines, charters of our principal Board committees, our Code of Business Conduct and Ethics (“Code of Business Conduct”), and other key corporate governance documents and materials are available on our Investor Relations website athttps://investor.paypal-corp.com/corporate-governance.cfm.
The following sections provide an overview of PayPal’s corporate governance practices.
The Board’s Role and ResponsibilitiesOversight
The Board is responsible for providing advice and oversight of thePayPal’s strategic and operational direction of the Company and overseeing its executive management to support the long-term interests of the Company and its stockholders.
STRATEGIC OVERSIGHT
Strategic Oversight
One of the Board’s primary responsibilities is overseeing management’s establishment and execution of the Company’s strategy. The Board works with management to respond to the dynamically changing,dynamic, competitive environment in which PayPal operates. At least quarterly, the CEO and senior executivesexecutive management provide detailed business and strategy updates to the Board. AtBoard, and at least annually, the Board conducts anin-depth review of the Company’s overall strategy. AtIn these reviews,meetings, the Board engages with the senior leadership teamexecutive management and other business leaders regarding, among other topics, business objectives; the Company’s budget, capital allocation plan, and financial and operating performance; the competitive landscape; product and technology updates; and potential acquisitions, investments and partnerships. regarding:
• | business objectives; |
• | the competitive landscape; |
• | the Company’s budget, capital allocation plan and financial and operating performance; |
• | product and technology updates; |
• | potential acquisitions, strategic investments and partnerships; |
• | information security and data privacy; |
• | risk management and compliance reviews; and |
• | other special topics. |
The Board looks to the focused expertise of its committees to inform strategic oversight in their areas of focus.responsibility.
26 | ||||||
•2023 Proxy Statement |
CORPORATE GOVERNANCE Board Oversight
|
RISK OVERSIGHTRisk Oversight
PayPal operates in overmore than 200 markets globally in a rapidly evolving regulatory environment characterized by a heightened regulatory focus on all aspects of the payments industry andindustry. Accordingly, our business is subject to the risks inherent in the payments business and the industry.industry generally. A sound risk management and oversight program is critical to the successful operation of our business and the protection of our Company, customers, employees customers and other stakeholders. Management is responsible for assessing and managing risk and views it as a top priority. The Board is responsible for overall risk assessment and management oversight and executes its responsibility directlyas a group and through its committees.committees, which report at least quarterly to the full Board. The Board and its Committees consult with external advisors, including outside counsel, consultants, auditors and industry experts, to help ensure that they are well informed about the risks and opportunities pertinent to the Company.
In addition to their ongoing oversight responsibilities, throughout 2022, the Board and its committees regularly reviewed and discussed with management the implications of Directors
Overall responsibility for risk oversightgeopolitical instability (including the Russia and assessmentUkraine conflict), supply chain shortages, higher inflation and rising interest rates, macroeconomic uncertainty and the continued impact of the CompanyCOVID-19 pandemic. As part of these reviews, the Board considered management’s ongoing strategies and initiatives to respond to and mitigate the adverse effects of geopolitical instability, macroeconomic conditions and the continued effects of the pandemic.
Below are the key measures taken by eachARC Committee to oversee risk.
Audit, Risk and Compliance Committee
The ARC Committee takesis primarily responsible for the following actionsoversight of the Company’s risk framework and reports to the full Board on the following matters on a regular basis onbasis:
Financial and Audit Risk: Meets with the following matters:independent auditor, Chief Financial Officer, Chief Accounting Officer and other members of the management team quarterly and as needed, including in executive sessions, to review the following:
• |
|
|
|
|
• | audit of the Company’s financial |
|
|
Enterprise-Wide Risk and Compliance: Periodically reviews and approves the framework for the ERCM Program and other key risk management policies. Meets with the Chief Risk and Compliance Officer, quarterly and as needed, including in executive sessions, to review and discuss the following:
• |
|
|
|
|
|
• |
|
• | periodic reports from the |
Internal Audit: Meets with the Vice President, Internal Audit, quarterly and as needed, including in executive sessions, to discuss the performance of the Company’s internal audit function and the independent auditor. Reviews and approves the annual risk-based audit plan and any significant changes to such plan.
Legal and Regulatory: Meets with the General Counsel and the Chief Risk and Compliance Officer, quarterly and as needed, including in executive sessions, to review significant legal, regulatory or compliance matters that could have a material impact on our financial statements, business or compliance policies.
Compensation Committee
The Compensation Committee takesis primarily responsible for the following actionsareas and reports to the full Board on these matters on a regular basis:
• |
|
• |
|
•2023 Proxy Statement | 27 |
CORPORATE GOVERNANCE
Board Oversight
• |
|
|
• | oversees executive succession planning. |
Corporate Governance and Nominating Committee
The Governance Committee takesis primarily responsible for the following actionsareas and reports to the full Board on these matters on a regular basis:
• |
|
|
|
Management’s risk and compliance framework is designed to enable the ARC Committee to effectively oversee the Company’s risk management practices and capabilities.
|
|
|
| ||
|
|
| ||
|
|
| ||
|
|
|
oversees ESG matters generally, including overall ESG strategy, risks and |
• | oversees political activities and expenditures. |
CYBERSECURITY, INFORMATION SECURITY, AND PRIVACYManagement’s Risk and Compliance Framework
As a global payments company, PayPal is aware ofManagement regularly reviews and discusses with the risks associated with our systems andARC Committee the data with which we are entrusted. Trust in the security and safety of payments and protection of our customers’ data are key foundations to our business. Our Board recognizes the importance of effective risk oversight and risk management, including with respect to cybersecurity, information security, and privacy-related risks and devotes significant time and attention to oversight of these risks.
PayPal routinely assesses the adequacy of our cybersecurity, information security, and privacy controls and overall reliability, resiliency, and effectiveness of, our technology infrastructure. We expectand ongoing enhancements to, continue to invest significant resources to bolster our protections against cybersecurity threats and to continue to improve our overall technology infrastructure.the ERCM Program.
BOARD AND COMMITTEE EVALUATIONS
Board and committee evaluations play a critical role in ensuring the effective functioning of our Board. The Board and its principal committees perform an annual self-evaluation to assess their performance and effectiveness and to identify opportunities to improve Board and committee performance. Each director completes a questionnaire that addresses Board and committee composition, organization, meetings and oversight responsibilities. In addition, our Chief Business Affairs and Legal Officer conducts aone-on-one interview with each Board member focused on: reviewing the Board’s and its committees’ performance over the prior year and identifying areas to improve Board effectiveness going forward. The Chief Business Affairs and Legal Officer reviews the questionnaires and anonymized interview responses with the full Board, and committee self-evaluation results are reviewed by each committee, in each case in executive session. The Governance Committee annually reviews the self-evaluation process to ensure that it is operating effectively.
28 | ||||||
•2023 Proxy Statement |
CORPORATE GOVERNANCE Executive Succession Planning
|
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
Our director orientation program familiarizes new directors with the Company’s businesses, strategies, and policies, and assists them in developing the skills and knowledge required for their service on the Board and any committees on which they serve. All other directors are also invited to attend the orientation programs. From time to time, management provides, or invites outside experts to attend Board meetings to provide, educational briefings to the Board on business, corporate governance, regulatory and compliance, and other matters to help enhance skills and knowledge relevant to their service as a director of the Company. In addition, Board members may attend at the Company’s expense accredited director education programs.
SUCCESSION PLANNINGExecutive Succession Planning
The Board recognizes the importance of effective executive leadership to PayPal’s success and annually reviews executive succession planning.planning at least annually. As part of this process, the Board reviews and discusses the capabilities of our senior leadership,executive management, as well as succession planning and potential successors for the CEO and our other executive officers. The process includes consideration of organizational and operational needs, competitive challenges, leadership/management potential and development and emergency situations.
CODE OF BUSINESS CONDUCT AND ETHICSIn 2022, we were proud to welcome new leaders, including Archie Deskus, Blake Jorgensen and John Kim, to our senior leadership team. In light of Mr. Schulman’s announced intention to retire from PayPal as President and CEO at year-end, the Board has formed a CEO search committee and retained a search firm to help identify Mr. Schulman’s successor.
Director Orientation and Continuing Education
Upon joining the Board, directors participate in a robust orientation program to help ensure that they have the tools, resources and knowledge to provide effective oversight of the Company and management. Our director orientation program familiarizes new directors with the Company’s business, strategy, operations and culture, among other areas, and assists them in developing the skills and knowledge required to serve on the Board and any assigned Board committees. New directors meet with members of our executive leadership team and other key leaders to gain a deeper understanding of the Company’s business and operations. Directors regularly engage, formally and informally, with other directors and senior leaders to share ideas, build stronger working relationships, gain broader perspectives and strengthen their working knowledge of the Company’s business and strategies. From time to time, management provides, or invites outside experts to provide, educational briefings to the Board on business, corporate governance, regulatory and compliance matters and other topics to help enhance skills and knowledge relevant to their service as a PayPal director. In addition, directors are encouraged to attend accredited director education programs at the Company’s expense.
Board and Committee Evaluations
Our Board is committed to continuous corporate governance improvement, and the Board and committee self-evaluations play a critical role in ensuring the overall effectiveness of our Board and each committee. The Board and its principal committees perform an annual self-evaluation to assess their performance and effectiveness and to identify opportunities to improve. As appropriate, the self-evaluations result in updates or changes to our practices as well as commitments to continue existing practices that our directors believe contribute positively to the effective functioning of our Board and its committees. The Governance Committee annually reviews the self-evaluation process to ensure it is operating effectively.
•2023 Proxy Statement | 29 |
CORPORATE GOVERNANCE
Board and Committee Meetings and Attendance
Board and Committee Meetings and Attendance
Our Board typically holds at least four regularly scheduled meetings each year, in addition to special meetings scheduled as appropriate. At each regularly scheduled Board meeting, a member of each principal Board committee reports on any significant matters addressed by the committee since the last regular meeting, and the independent directors have the opportunity to meet in executive session without management or the other directors present. The Board expects that its members will rigorously prepare for, attend and participate in all Board and applicable Board committee meetings.
Our Board met 12 times during 2022. Each director nominee who served in 2022 attended at least 75% of all our Board meetings and meetings of the Board committees on which they served.
All directors are encouraged to attend the Annual Meeting. Last year, all directors serving at the time of our 2022 Annual Meeting of Stockholders attended that meeting.
Outside Advisors
The Board may retain outside legal, financial or other advisors as it deems necessary or appropriate at the Company’s expense and without obtaining management’s consent. Each principal Board committee may also retain outside legal, financial or other advisors as it deems necessary, at the Company’s expense and without obtaining the Board’s or management’s consent.
30 | •2023 Proxy Statement |
CORPORATE GOVERNANCE
Stockholder Engagement
Stockholder Engagement
We expectrecognize the value of a robust stockholder outreach program. We engage in regular, constructive dialogue with our directors, officers,stockholders on matters relevant to our business, including corporate governance, ESG issues and employeesexecutive compensation, so we can better understand their views and interests and share our perspectives on these important subjects.
In addition to conduct themselvesthe outreach conducted in the weeks leading up to our 2022 Annual Meeting of Stockholders, we also reached out to our investors to solicit feedback following that meeting. In 2022, we contacted investors representing approximately 52% of our common stock, and holders of approximately 25% of our common stock engaged with us. As part of this engagement, we conducted an ESG-focused investor perception survey to understand how investors evaluate ESG factors in their decision-making, PayPal’s approach to ESG and associated non-financial reporting and our communications and engagement strategy. We considered this feedback as part of the highest degreeannual review of integrity, ethics,our ESG significance assessment and honesty. our annual disclosures.
•2023 Proxy Statement | 31 |
CORPORATE GOVERNANCE
Stockholder Engagement
The table below provides an overview of the key topics, areas of stockholder focus and management’s responses covered during our 2022 and early 2023 stockholder outreach meetings.
Key Topic | Area of Stockholder Focus | How We Responded | ||
Board Composition and Succession Planning | • Board diversity, skills and refreshment; board and executive succession planning | • Since 2017, we have added five diverse directors to the Board, each of whom possess a strong mix of skills, qualifications, backgrounds and experience and has contributed to and enhanced the overall effectiveness of the Board. • The Governance Committee regularly oversees and plans for director succession and Board refreshment, and the full Board oversees executive succession planning. The Board reviews executive succession planning at least annually. | ||
Risk Management and Oversight | • Board and ARC Committee risk oversight; governance structure and program management of cybersecurity, data privacy and data management; responsible AI practices; administration of user policies | • The Board is committed to robust and effective oversight of our ERCM Program. Each of the Board committees has oversight responsibility for clearly defined risks outlined in each of their respective committee charters. The ARC Committee oversees and reviews our overall risk management framework and reports to the full Board on risk matters, including cybersecurity and data privacy, on a regular basis. • We discussed our commitment to preserving the integrity of our platform and to ensuring the safety, security and privacy of our customers and others. • Managing key risks, including cybersecurity and data privacy, is a vital component of our enterprise-wide ERCM Program and includes oversight and management by our Chief Information Security Officer and Chief Privacy Officer. • We focus on integrating appropriate data management and security controls across our business, conduct privacy impact assessments, certify our information security management system to ISO 27001 and require mandatory employee and contractor training. | ||
Executive Compensation | • Performance metrics in compensation program; incorporation of ESG considerations, including DIE&B considerations, into executive compensation | • The Compensation Committee evaluates the appropriateness of the Company’s compensation-related performance metrics at least annually, taking into consideration the Company’s overall strategy and stockholder feedback. • We continued our multi-year process to incorporate DIE&B considerations into our executive compensation program, and assessed the actions taken by our leaders intended to drive measurable outcomes over time, including increasing the representation of women and minorities within our leadership and general employee population. For 2022, the Company’s near-term focus was on strengthening the foundation for a more inclusive and diverse culture, including by evaluating our senior leaders’ actions to promote DIE&B across the organization and throughout the full employee lifecycle. | ||
ESG Matters | • Board oversight of ESG strategy; climate change strategy and reporting under established frameworks; financial inclusion initiatives; employee wellness; global talent and DIE&B strategies | • We continued to enhance our non-financial reporting efforts and aligned our ESG disclosures with established frameworks, including IFRS Foundation’s Sustainability Accounting Standards Board (“SASB”) standards and Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations. • We made progress on our 2025 science-based targets to reduce our greenhouse gas emissions and encourage climate actions across our supply chain, important steps toward our long-term goal to reach net-zero GHG emissions by 2040. • Discussed our approach to global talent management in an evolving workplace, including our focus on promoting a culture of flexibility and community, enhancements to our employee total wellness initiatives and intersections of our global talent and DIE&B strategies. |
32 | •2023 Proxy Statement |
CORPORATE GOVERNANCE
Corporate Governance Documents
Corporate Governance Documents
Code of Business Conduct and Ethics
Our credibility and reputation depend upon the good judgment, ethical standards and personal integrity of each director, executive officer and employee. PayPal’s Code of Business Conduct and Ethics (“Code of Conduct”) requires that our directors, executive officers and all other employees disclose actual or potential conflicts of interest and recuse themselves from related decisions. Directors, executive officers and other employees are expected to avoid any activity that is or has the appearance of being a conflict of interest with the Company. This includes refraining from engaging in activities that compete with, or are adverse to, the Company, or that interfere with the proper performance of an individual’s duties or responsibilities to the Company. In addition, our Code of Business Conduct restrictsprohibits the use of confidential company information, company assets or position at the Company for personal gain.
We regularly review theour Code of Business Conduct and related policies to ensure that they provide clear guidanceguidance. Additionally, to our directors, executive officers,foster a strong culture of compliance and employees. Theethics, we conduct local outreach and awareness sessions, as well as annual risk and compliance training for all employees and contractors, which covers areas such as our Code of Business Conduct, is available athttps://investor.paypal-corp.com/corporate-governance.cfm. anti-money laundering, information protection awareness, data privacy, safety and security and sexual harassment prevention. In addition, upon joining PayPal and annually thereafter, our employees must certify that they understand and will comply with our Code of Conduct. In 2022, PayPal achieved 100% completion for its annual risk and compliance training for the seventh consecutive year.
Concerns about accounting or auditing matters or possible violations of our Code of Business Conduct should be reported under the procedures outlined in theour Code of Business Conduct. We also provide a global Integrity Helpline, which is available 24 hours a day, seven days a week in multiple languages. Reports to the Integrity Helpline are confidential and can be made anonymously.
Under the listing standards of Nasdaq and our Corporate Governance Guidelines of the Board must consist of a majority of independent directors. Annually, each director completes a questionnaire designed to provide information to assist the Board in determining whether the director is independent under the listing standards of Nasdaq and our Corporate Governance Guidelines, and whether members of the ARC Committee and Compensation Committee satisfy additional Securities and Exchange Commission (“SEC”) and Nasdaq independence requirements. Directors
The Board has adopted guidelines setting forth certain categoriesGovernance Guidelines to serve as a framework to aid the Board in effectively conducting its business. The Governance Guidelines cover many of transactions, relationships,the policies and arrangements that it has deemed immaterialpractices discussed in this proxy statement, including Board member criteria, Board composition, leadership, development and succession, expectations for purposes of making determinations regarding a director’s independence,meeting attendance and the Board does not consider any of those transactions, relationships, and arrangements in determining director independence.
Based on its review, the Board has determined that eachroles of the following directors is independent under the listing standards of Nasdaq and our Corporate Governance Guidelines and is free of any relationship that would interfere with his or her individual exercise of independent judgment: Mr. Adkins, Mr. Casares, Mr. Christodoro, Mr. Donahoe, Mr. Dorman, Ms. Johnson, Ms. McGovern, Ms. Messemer, Mr. Moffett, Ms. Sarnoff, and Mr. Yeary. Because Mr. Schulman is employed by PayPal, he does not qualify as independent.
The Board limits membership on its ARC Committee, Compensation Committee, and Governance Committee to independent directors. Our Corporate Governance Guidelines prohibit directors from serving on the board of directors, or as an officer, of another company that may cause a significant conflict of interest. Our Corporate Governance Guidelines also provide that any director who has previously been determined to be independent must inform the Chairman of the Board and our Corporate Secretary of any significant change in personal circumstances, including a change in principal occupation, change in professional roles and responsibilities or status as a member of the board of another public company, including retirement, as well as any change in circumstance that may cause his or her status as an independent director to change.Board’s standing committees. The Governance Committee is advised of any suchreviews the Governance Guidelines each year and recommends changes and makes a recommendation to the Board on the continued appropriateness of Boardfor consideration and approval as necessary or committee membership of such director.appropriate in response to changing regulatory requirements, evolving best practices and other considerations.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONWhere to Find Our Governance Documents
None of the members of the Compensation Committee is or has been an employee of PayPal. NoneOur Governance Guidelines, charters of our executive officers servedprincipal Board committees, our Code of Conduct and other key corporate governance documents and materials are available on the board of directors or compensation committee of another entity which has an executive officer serving on the Board or the Compensation Committee.
|
In accordance with our Bylaws, our Board elects our Chairman of the Board and our CEO. Our Corporate Governance Guidelines provide that the Chairman and CEO roles should be held by separate individuals as an aid in the Board’s oversight of management and to allow the CEO to focus primarily on management responsibilities. Our current Board leadership structure provides effective and independent oversight of management and the Company.
|
|
|
|
The Board has three principal standing committees: the Audit, Risk and Compliance (“ARC”) Committee, the Compensation Committee, and the Governance and Nominating Committee (“Governance Committee”). Each committee has a written charter which addresses, among other matters, the committee’s purposes and policy, composition and organization, duties and responsibilities and meetings and is available in the governance section of our Investor Relations website athttps://investor.paypal-corp.com/corporate-governance.cfminvestor.pypl.com/governance/governance-overview/. The table below provides the current membership for each principal Board committee.
|
|
| ||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
|
|
OUTSIDE ADVISORS
The Board may retain outside legal, accounting, or other advisors as it deems necessary or appropriate at the Company’s expense and without obtaining management’s consent. Each principal committee of the Board may also retain outside legal or other advisors as it deems necessary or appropriate, at the Company’s expense and without obtaining the Board’s or management’s consent.
|
Below is a description of each principal committee of the Board.
| ||
|
| |
| ||
|
|
|
| ||
|
|
Board and Committee Meetings and Attendance
Our Board typically holds eight regularly scheduled meetings in addition to special meetings scheduled as appropriate. At each regularly scheduled quarterly,in-person Board meeting, a member of each principal Board committee reports on any significant matters addressed by the committee since the last quarterly,in-person Board meeting. In addition, the independent directors have the opportunity to meet without our management or the other directors as part of each regularly scheduled Board meeting. The Board expects that its members will rigorously prepare for, attend and participate in, all Board and applicable Board committee meetings.
Our Board met seven times during 2019. Each director nominee who served in 2019 attended at least 75% of all of our Board meetings and committee meetings for committees on which he or she served in 2019.
All directors are encouraged to attend the Annual Meeting. Last year, 11 of the 12 directors serving on our Board at the time of our 2019 Annual Meeting of Stockholders attended that meeting.
RELATED-PERSON TRANSACTION POLICY
OurThe Board has adopted a written related-person transaction policy governing the review and approval of related person transactions. The policy, which is administered by the ARC Committee, applies to any transaction or series of transactions in which (1) the Company or its consolidated subsidiary is a participant, (2) the amount involved is or is reasonably expected to be more than $120,000 and (3) a related person under the policy has a direct or indirect material interest. The policy defines a “related person” to include directors, director nominees, executive officers, beneficial owners of more than 5% of PayPal’s outstanding common stock or an immediate family member of any of these persons.
Under the policy, transactions requiring review are referred to the ARC Committee forpre-approval, ratification or other action. Management will provide the ARC Committee with a description of any related-person transaction proposed to be approved or ratified. This description will includeratified, including the terms of the transaction, the business purpose of the transaction and the benefits to PayPal and to the relevant related person. In determining whether to approve or ratify a related-person transaction, the ARC Committee will consider the following factors:
whether the terms of the transaction are fair to the Company, and at least as favorable to the Company as would apply if the transaction did not involve a related person;
• | whether the terms of the transaction are fair to the Company, and at least as favorable to the Company as they would be if the transaction did not involve a related person; |
whether there are demonstrable business reasons for the Company to enter into the transaction;
whether the transaction would impair the independence of an outside director under the Company’s director independence standards; and
• | whether there are demonstrable business reasons for the Company to enter into the transaction; |
•2023 Proxy Statement | 33 |
CORPORATE GOVERNANCE
Related Person Transactions
• |
|
whether the transaction would present an improper conflict of interest for any director or executive officer, taking into account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of the related person’s interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the committee deems relevant.
• | whether the transaction would present an improper conflict of interest for any director or executive officer, taking into account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of the related person’s interest in the transaction, the ongoing nature of any proposed relationship and any other factors the ARC Committee deems relevant. |
The Company also has practices that address potential conflicts in circumstances where anon-employee director is a control person of one or morean investment fundsfund that desires to make an investment in or acquire a company that may compete with one of the Company’s businesses. Under those circumstances, the director is required to notify the Company’s CEO, General Counsel and Chief Business Affairs and Legal OfficerCorporate Secretary of the proposed transaction, and the Company’s CEO and Chief Business Affairs and Legal Officerwho then assess the nature and degree to which the investee company is competitive with one of the Company’s businesses, as well as the potential overlaps between the Company and the investee company. If the Company’s CEO and Chief Business Affairs and Legal Officer determinesit is determined that the competitive situation and potential overlaps between PayPal and the investee company are acceptable, approval ofthe Company may approve the transaction, by the Company would be conditioned upon the director agreeing to certain limitations. Such limitations (includingmay include refraining from joining the board of directors of, serving as an advisor to or being directly involved in the business of the investee company orcompany; not conveying any confidential or proprietary information regarding the investee company to the Company or regarding the Company’s line of business with which the investee competes to the investee company,company; abstaining from being the primary decision-maker for the investment fund with respect to the investee company,company; recusing himself/herselfthemselves from portions of investee company meetings that cover confidential competitive information reasonably pertinent to the Company’s lines of business with which the investee company competescompetes; and agreeing to any additional limitations deemed to bethe CEO or General Counsel deems reasonably necessary or appropriate by the Company’s CEO or Chief Business Affairs and Legal Officer as circumstances change).change. All transactions by investment funds in which anon-employee director is a control person also remain subject in all respects to the Board’s written policy for the review of related person transactions, discussed above.
TRANSACTIONS WITH RELATED PERSONS
Two immediate family members of Gary Marino, our former Executive Vice President, Chief Commercial Officer, were employed by the Company during 2019. Mr. Marino’s son, Steve Marino, is a senior project manager in credit technology and received total compensation of approximately $392,056 in 2019. Mr. Marino’sdaughter-in-law (and Steve Marino’s spouse), Kerri Marino, is a marketing manager and received total compensation of approximately $146,799 in 2019. Both Steve Marino and Kerri Marino received standard benefits applicable to similarly situated employees. These related person transactions were approved by theThe ARC Committee.
TheCommittee charter of the ARC Committee requires it to review and approve all related person transactions that are required to be disclosed under Item 404(a) of RegulationS-K. There were no transactions required to be reported in this proxy statement since the beginning of fiscal 2019year 2022, where our written related-person transaction policy did not require review, approval or ratification or where this policy was not followed.
34 | •2023 Proxy Statement |
DIRECTOR COMPENSATION
Director Compensation
The Compensation Committee is responsible for reviewing and making recommendations to the Board regarding compensation paid to non-employee directors for their Board and Board committee service. On an annual basis, the Compensation Committee reviews the non-employee director compensation program, receiving input from the Compensation Committee’s independent compensation consultant regarding market practices and the competitiveness of the non-employee director compensation program in relation to the general market and the Company’s peer group.
2022 Director Compensation
In late 2021, the Compensation Committee, after consultation with its independent compensation consultant, approved certain adjustments to the 2022 director compensation program based on market practices. To bring the overall director compensation for the Non-Executive Board Chair and the Compensation Committee Chair more in line with the Company’s compensation peer group, effective January 1, 2022, (a) the Non-Executive Board Chair’s (i) additional annual retainer was increased by $12,500 and (ii) additional annual equity award grant date value was increased by $12,500, and (b) the Compensation Committee Chair’s additional annual retainer was increased by $5,000.
Each non-employee director of the Company was provided the following annual retainers following the first trading day after January 1, 2022:
2022 Annual Retainers: | ||||
All Non-Employee Directors | $80,000/year | |||
Non-Executive Board Chair | $87,500/year | |||
Lead Independent Director | $75,000/year | |||
ARC Committee Chair | $40,000/year | |||
Compensation Committee Chair | $25,000/year | |||
Governance Committee Chair | $20,000/year | |||
ARC Committee Member | $20,000/year | |||
Compensation Committee Member | $18,000/year | |||
Governance Committee Member | $10,000/year |
A non-employee director who served as the Non-Executive Board Chair and/or as the chair of a committee is entitled to receive the Non-Executive Board Chair annual retainer and/or committee chair annual retainer, as applicable, in addition to the non-employee director annual retainer. Board committee chairs, however, are not entitled to receive the committee member annual retainer in addition to the committee chair annual retainer.
If, following the annual retainer payment date, a non-employee director is appointed or elected to serve as a member of the Board (or appointed to serve as a member of a committee or as a chair of a committee for which they were not a member or chair prior to such appointment), the non-employee director receives a prorated annual retainer, based on the number of days from the appointment or election date to December 31 of that year.
2022 Equity Awards
In addition to the annual retainers, all non-employee directors received the following fully vested awards of PayPal common stock following the 2022 Annual Meeting of Stockholders.
2022 Equity Awards: | ||||
All Non-Employee Directors | $275,000 in PayPal common stock | |||
Non-Executive Board Chair | Additional $87,500 in PayPal common stock |
The number of shares of PayPal common stock subject to the equity award is determined by dividing the value of the annual equity award by the closing price of our common stock on the date of the annual stockholders meeting, rounded up to the nearest whole share.
•2023 Proxy Statement | 35 |
DIRECTOR COMPENSATION
2022 Director Compensation
Deferred Compensation
Our non-employee directors are eligible to defer 5% to 100% of their annual retainers and equity awards pursuant to the PayPal Holdings, Inc. Deferred Compensation Plan (“DCP”), our non-qualified deferred compensation plan. The DCP allows participants to set aside tax-deferred amounts. The investment return on any deferred cash amounts is linked to the performance of a range of market-based investment choices made available pursuant to the DCP, and the investment return on any deferred equity awards is linked to the performance of PayPal common stock. Our non-employee directors can elect to begin distributions from the DCP following the termination of their services to PayPal or in a specified year (provided that a director’s DCP account will be distributed if the director’s service on the Board terminates prior to the specified year). Our non-employee directors can elect to receive their distributions as either a lump sum or annual installments over a period ranging from two to 15 years.
Director Stock Ownership Guidelines
Our non-employee directors are subject to rigorous stock ownership guidelines. Each non-employee director is required to hold an amount of PayPal common stock valued at five times the annual retainer for all non-employee directors within five years of joining the Board and is expected to continuously own sufficient shares to meet the stock ownership guidelines. As of the Record Date, each non-employee director met the stock ownership guidelines.
Shares that count toward satisfaction of the stock ownership guidelines include the following:
• | shares owned outright by the director or their immediate family members residing in the same household; |
• | shares held in trusts, limited liability companies, or similar entities for the benefit of the director or their immediate family members; and |
• | deferred shares, vested deferred stock units (“DSUs”), deferred restricted stock units (“RSUs”), or deferred performance stock units that may only be settled in shares of our common stock. |
Our stock ownership guidelines are available on the governance section of our Investor Relations website at https://investor.pypl.com/governance/governance-overview/.
36 | •2023 Proxy Statement |
DIRECTOR COMPENSATION
2022 Director Compensation Table
2022 Director Compensation Table
The following table summarizes the total compensation earned by or paid to our non-employee directors for the fiscal year ended December 31, 2022.
Name | Fees Earned or Paid in Cash1 ($) | Stock Awards2 ($) | All Other Compensation ($) | Total3 ($) | ||||||||||||
Rodney C. Adkins | 110,000 | 275,028 | — | 385,028 | ||||||||||||
Jonathan Christodoro | 108,192 | 275,028 | — | 383,220 | ||||||||||||
John J. Donahoe | 167,648 | 362,554 | — | 530,202 | ||||||||||||
David W. Dorman | 115,015 | 275,028 | — | 390,043 | ||||||||||||
Belinda J. Johnson | 100,004 | 275,028 | — | 375,032 | ||||||||||||
Enrique Lores | 100,004 | 275,028 | — | 375,032 | ||||||||||||
Gail J. McGovern | 118,000 | 275,028 | — | 393,028 | ||||||||||||
Debbie M. Messemer | 100,000 | 275,028 | — | 375,028 | ||||||||||||
David M. Moffett | 120,083 | 275,028 | — | 395,111 | ||||||||||||
Ann M. Sarnoff | 100,004 | 275,028 | — | 375,032 | ||||||||||||
Frank D. Yeary | 100,004 | 275,028 | — | 375,032 |
1 | The amounts reported in the Fees Earned or Paid in Cash column reflect the annual cash retainer amounts earned by each non-employee director in 2022, which includes annual retainer amounts for which the following directors elected to receive fully vested shares of PayPal common stock in lieu of cash: |
Name | Fees Forgone ($) | Shares Received (#) | ||||||
Jonathan Christodoro | 108,000 | 555 | ||||||
John J. Donahoe | 167,500 | 860 | ||||||
David W. Dorman | 115,000 | 590 | ||||||
Belinda J. Johnson | 100,000 | 513 | ||||||
Enrique Lores | 100,000 | 513 | ||||||
David M. Moffett | 120,000 | 616 | ||||||
Ann M. Sarnoff | 100,000 | 513 | ||||||
Frank D. Yeary | 100,000 | 513 |
2 | Amounts shown represent the grant date fair value of the equity awards granted on June 2, 2022 to our non-employee directors following our 2022 Annual Meeting of Stockholders, as computed in accordance with FASB ASC Topic 718. |
3 | The amounts reported in the Fees Earned or Paid in Cash, Stock Awards and Total columns include amounts deferred under the DCP. |
•2023 Proxy Statement | 37 |
ESG OVERSIGHT AND HIGHLIGHTS
ESG Oversight and Highlights
PayPal recognizes its responsibility as a global citizen to operate in a responsible and sustainable manner aligned with ourPayPal’s mission to build a more financially inclusive and interconnected world. The Company remains focused on managing material environmental, social,world guides our efforts to make the movement and governance (ESG) factors that support itsvalues-led culture based on Collaboration,management of money as simple, secure and affordable as possible. Our business strategy is supported by our core values of Inclusion, Innovation, Collaboration and Wellness. TheIn 2022, we developed 12 Leadership Principles that establish a common set of expectations for all employees, translating our values into practical steps to support our growth and drive value for our stockholders and other stakeholders.
Our Leadership Principles
Responsibly managing our global business helps us create value for stockholders, customers, employees, partners and communities. We believe that effective management of keynon-financialESG risks and opportunities such as global talent recruitment, retention,plays a role in furthering the long-term interests of our stockholders and development, as well as workforce inclusion, social innovation, environmental sustainability,other stakeholders. Accordingly, we strive to maintain the highest standards of ESG governance and responsible business practices are essential components of the Company’s long-term performance and strategy.
ESG Governance Structure
The oversight, executive management, and program implementation of the Company’s ESG efforts are structured to ensure these topics are integrated into the foundation of its strong governance framework. The Company established quarterly briefings for Board Committees and Senior Leadership on ESG topics and recently began at least annual discussions with a subcommittee of the Company’s ERMC to discuss current and emergingESG-related risk topics.
Priority ESG Programs & Progress
In the Company’s annual ESG report, theGlobal Impact Report, PayPal highlights its programs and progress on key ESG topics:
Social Innovation– includingprovide regular, non-financial reporting on annual social impact metrics, productour progress and service enhancements, research and thought leadership, and partnerships to improve financial health, power charitable giving and strengthen local communities
Employees and Culture – including executing an effective human capital management strategy to support the recruitment, retention and development of our workforce, and diversity and inclusion metrics and initiatives that demonstrate our commitment to equality and inclusion
Environmental Sustainability–including responsibly managing our resources, addressing climate change, and improving our water and waste management practices
Responsible Business Practices – including establishing policies and practices to safeguard trust, ensuring ethical and compliant business operations, and securing and protecting customer information
|
Global Talent Strategy
The Company recognizes the fundamental importance of ensuring we attract, recruit, retain, and develop top global talent in order to create innovative products and services for our customers. Our ability to deliver on our mission to democratize financial services starts by building a global team of diverse employees that reflect the communities where we work and live, and the diversity of the customers we serve. PayPal’s human capital management strategy focuses on the whole employee lifecycle, follows apay-for performance compensation program and provides employees with comprehensive benefits and opportunities for advancement. The Company established regular reporting mechanisms and employee engagement surveys for formal performance reviews and informal peer feedback to recognize key talent and build a culture of continuous improvement. PayPal’s concerted efforts to create an enduring culture of total wellness is foundational to executing on an effective business strategy.
Consideration of Industry Trends & Stakeholder Feedback
The Company continuously assesses industry trends, research and standards such as the Sustainable Accounting Standards Board (SASB), UN Sustainable Development Goals (SDGs), Taskforce for Climate Related Financial Disclosures (TCFD) and other frameworks in the development and execution of its ESG strategy. For example, the Company provided an initial high-level mapping to the 17 SDGs and continues to refine its approach to integrating these international standards into its strategies and disclosures.
PayPal also receives regular feedback from investors, employees, regulators, customers, and other stakeholders for consideration as the Company continues to develop its ESG reporting and strategy efforts. In 2019, the Company conducted an industry-leading governance perception survey to better understand how global investors consider ESG information in their decision-making and engagement strategies, current perspectives of PayPal’s ESG performance, and recommendations for future activities. The Company engaged with 24 investors with approximately $4.2 trillion in assets under management from North America, Europe, and Asia. These results will play a critical role as PayPal conducts its inaugural ESG materiality/prioritization assessment and enhances its disclosures and initiatives.
As we continue to evolve our ESG efforts, we’rewe are committed to sharing progress through subsequent reports and updates. For further information, and to access thesee our latest annual Global Impact Report, visit: available at https://www.paypal.com/us/webapps/mpp/globalimpactinvestor.pypl.com/esg-strategy.
ESG Governance Structure
PayPal recognizes the importance of upholding our values across the organization, including by promoting diverse viewpoints through our Board, our leadership and our workforce. Executive management is regularly engaged on PayPal’s priority ESG-related risks and opportunities.
38 | ||||||
•2023 Proxy Statement |
ESG OVERSIGHT AND HIGHLIGHTS ESG Governance Structure
|
Information About Our Executive Officers
overall governance framework is designed to drive strong oversight, create Board and management accountability and demonstrate PayPal’s commitment to transparency, independence and diversity. We seek to apply the same approach to the oversight, management and implementation of the Company’s ESG strategy. Our cross-functional ESG program is managed by executive officers are elected annuallyleaders and implemented through the guidance and direction provided by the ESG steering committee. Representatives from the ESG steering committee brief Board committees and serve at the discretionexecutive management on ESG issues on a quarterly basis and meet with a subcommittee of the Board. Set forth belowERM Committee at least annually to review current and emerging ESG-related risk topics.
ESG Strategy
PayPal’s ESG strategy supports our mission to promote financial wellness and to empower those who are underserved by the financial system. We focus on managing key non-financial risks and opportunities that can impact our business and stakeholders across four core dimensions – Responsible Business Practices, Social Innovation, Employees & Culture and Environmental Sustainability. Reflective of our business, mission and values, and taking into account ongoing stakeholder feedback, this integrated approach is information regarding our executive officersdesigned to support and complement enterprise priorities to drive and protect brand value, manage risk, demonstrate competitive differentiation, position PayPal as an employer of the Record Date.choice and support future opportunities for growth and innovation.
ESG Pillars
•2023 Proxy Statement | 39 |
ESG OVERSIGHT AND HIGHLIGHTS
ESG Strategy
ESG Significance Assessment
Building on PayPal’s comprehensive ESG significance* assessment conducted in 2020, we review our ESG significance map annually to help us focus on the topics that are most important to our business and stakeholders. In 2022, we reaffirmed our 18 key ESG topics, including 8 priority risks and opportunities that have been noted as significant for PayPal to drive long-term business performance and impact based on stockholder and other feedback. The findings from our ESG significance assessment serve as an important input to inform how we strategically deploy resources across the enterprise and refine our programs.
* | As used in this proxy statement in reference to ESG matters, the term “significance” and variations thereof refer to significance within the context of our ESG strategies, activities, progress, metrics and performance. Such term is distinct from, and does not refer to, concepts of materiality used in securities or other applicable law, and use of such term is not an indication that PayPal deems related information to be material or important to an understanding of the business or an investment decision with respect to PayPal securities. |
ESG Reporting Frameworks
As part of our commitment to transparency, we periodically consider enhancements to our ESG disclosures and reporting and strive for alignment with those frameworks most applicable to our business and most important to our stakeholders. Our Global Impact Report provides specific reporting of our ESG programs, policies and metrics mapped to Global Reporting Initiative standards and Sustainability Accounting Standards Board standards, as applicable.
We continue to develop our climate-related disclosures in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) and seek to provide clear reporting on the governance, strategy, risk management and targets through our TCFD Index and our annual CDP climate change questionnaire. We recently enhanced our index to include initial findings of our first climate risk scenario assessment, which identified short-, medium- and long-term risks for the Company, including physical, operational, regulatory and reputational risks.
40 | •2023 Proxy Statement |
ESG OVERSIGHT AND HIGHLIGHTS
ESG Strategy
2022 ESG Performance Highlights
Our annual Global Impact Report highlights PayPal’s programs and progress across our four ESG pillars:
We continued to
| ||||||
| ||||||
|
Social Innovation |
| |||||||
• Launching new ways for consumers to save and manage their money through products that support financial flexibility including PayPal Rewards, expanded global pay later solutions and more seamless options at checkout. • Facilitating efficient access to $4.2 billion in capital for entrepreneurs and small businesses. • Promoting consumer data protection through education and tools, including the introduction of passwordless authentication with passkeys. • Accelerating more seamless giving across PayPal’s four giving channels, which enabled our customers to donate more than $20 billion to support global non-profits, charities and causes, including more than $600 million for the humanitarian crisis in Ukraine. |
We strived to create a positive, supportive and |
| |||||||
| ||||||||
|
Environmental Sustainability | ||
We sought to responsibly manage our environmental impact and focus on addressing climate change, managing natural resources, exploring environmental innovation and engaging partners across our value chain on environmental action, including by: • Demonstrating progress towards our goal to reach net-zero greenhouse gas emissions across our value chain by 2040 and meet our interim science-based targets by 2025. • Maintaining 100% renewable energy use in our global data centers. |
Human Capital Management
Global Talent Strategy
PayPal recognizes the fundamental importance to our business of attracting, recruiting, developing and retaining diverse talent through a comprehensive approach to managing our global talent (human capital) to enable us to create innovative products and services for our customers and to serve our stockholders and other stakeholders. The Compensation Committee oversees our approach to global talent, which is managed by our EVP, People and Sourcing. The Board and executive management receive regular reports on our approach and results with respect to our global talent strategy.
We remain focused on supporting our employees across the full employee lifecycle from recruitment, onboarding and development to offboarding. We do this by striving to actively listen to our workforce, broaden our talent pipeline, promote the physical, mental and financial wellness of our employees and enable flexibility and collaboration in an evolving work environment. In 2022, we began integrating the Leadership Principles across our global talent strategy to help shape our programs through the employee lifecycle and achieve key business priorities.
•2023 Proxy Statement | ||||||
41 |
Human Capital Management
Employee Engagement
We use employee feedback to inform the ongoing development of our employee programs and resources. In our 2022 employee engagement survey, we heard from 83% of PayPal’s employees globally, an increase from 2021 and above our peer benchmark. Our engagement score declined slightly to 79 from 2021, which reflects whether employees would recommend PayPal to their peers and/or are happy at PayPal. Additionally, our score measuring an employee’s intention to work at the Company in two years also declined slightly to 78 from 2021. At the same time, we observed improvements in employee scores regarding collaboration and manager support, which were targeted areas of focus for 2022 on an enterprise-wide basis.
Our 2022 survey also included enhancements to help gauge views on the employee experience, our Leadership Principles and DIE&B efforts. The detailed scores are shared across the organization and analyzed to understand differences by geography, demographics, business function and job level, and to help identify opportunities for further improvement.
In addition to the annual survey, we also conducted specific surveys to gather direct employee feedback on topics such as our internal communications approach and employee workplace preferences. This data, along with feedback gathered from employees through other channels, such as peer-to-peer meetings and all-hands conversations, helps to generate actionable insights.
Talent Acquisition, Development & Retention
As a leading technology platform that enables digital payments and simplifies commerce experiences, we compete for talent around the world. We are focused on creating an employee experience that actively engages our people at every phase of their career and supports the acquisition, development and retention of top talent.
In 2022, we enhanced our Global Talent Acquisition strategy with the goal of creating a candidate-centric and inclusive experience for prospective talent, while enabling efficiencies for our managers through new tools and resources. We also implemented programs focused on inclusive hiring practices and extended our talent pipeline through targeted partnerships with universities and nonprofit organizations. In addition, we implemented strategic updates to our talent development and retention strategies by providing new resources for managers, individual coaching and mentorship programs and new directed career and leadership trainings to support employees’ individual career paths.
Employee Total Wellness
PayPal remained focused on promoting the holistic well-being of our employees through resources, programs and services in support of their physical, mental and financial wellness. We aim to foster a flexible, balanced work culture, and to take a comprehensive approach to leave and benefits.
In 2022, our initiatives included extending our Global Wellness Days for all employees to take time to rest and recharge, providing resources, trainings and workshops to promote emotional well-being, preserving workplace flexibility through Crisis Leave and other programs and strategically extending employee benefits to additional global markets.
42 | •2023 Proxy Statement |
ESG OVERSIGHT AND HIGHLIGHTS
Human Capital Management
We also continued our efforts to strengthen employee financial wellness, including by providing financial wellness equity grants to hourly and entry-level employees and applying a more frequent vesting schedule for service-based equity awards granted on or after January 1, 2022 to give employees more opportunities to access their vested equity. We also offered individual employee financial coaching, promoted the prioritization of employee financial health across the private sector through the Worker Financial Wellness Initiative and improved our internal measurement and evaluation approaches to identify targeted opportunities for further enhancements.
Through our global community impact program, we support our employees’ individual passions and communities by matching eligible employee donations to nonprofit organizations up to $2,500 annually per employee. In 2022, our employees supported more than 4,000 nonprofits globally with their own time and resources.
Diversity, Inclusion, Equity & Belonging Strategy
We believe that advancing DIE&B is critical to our global talent strategy and to building a culture that embraces individual characteristics and experiences, values diversity, minimizes barriers and enhances feelings of security and support across the workplace. We are committed to equal pay for equal work, promoting enterprise-wide inclusive learning opportunities and further integrating DIE&B considerations into our talent strategy.
Led by PayPal’s Global Head of DIE&B and a dedicated DIE&B team, in partnership with functional leadership through our DIE&B Business Council, we are working to strengthen existing efforts and pilot new initiatives to continue to promote an inclusive culture. For example, in 2022, we released new learning modules to promote effective sponsorship and inclusive performance management and developed an enterprise sponsorship program. We also continued to incorporate DIE&B considerations into the individual performance portion of our 2022 Annual Incentive Program for our senior executives. PayPal also empowers eight employee resource groups to drive engagement, champion DIE&B-related causes and activities and support our business and talent strategies.
Our DIE&B commitment is evident through diverse representation across our organization – from our Board of Directors to our executive leadership team to our global workforce. As of March 30, 2023, 50% of our Board and 50% of our current executive officers identified as women and/or from a diverse ethnic group. Across our workforce, we reached 56% overall diverse workforce representation, including 44% global gender diversity and 54% U.S. ethnic diversity, as of December 31, 2022.
Additional workforce diversity metrics can be found in our public U.S. EEO-1 reports and annual Global Impact Report available at https://about.pypl.com/values-in-action/reporting/default.aspx.
•2023 Proxy Statement
| 43 |
STOCK OWNERSHIP INFORMATION
The following tables set forth certain information known to us with respect to (1) each stockholder known to us to be the beneficial owner of 5% or more of our common stock as of December 31, 2019,2022, and (2) the beneficial ownership of our common stock by each director and director nominee, by each executive officer named in the 20192022 Summary Compensation Table and by all executive officers and directors (including nominees) as a group as of the Record Date. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated in the footnotes to these tables, the entities and personsindividuals named in the tables have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.
Five Percent Owners of Common Stock
Shares Beneficially Owned | ||||||||
Name and Mailing Address | Number | Percent | ||||||
The Vanguard Group1 100 Vanguard Blvd., Malvern, PA 19355 | 93,255,613 | 7.94% | ||||||
BlackRock, Inc.2 55 East 52nd Street, New York, NY 10055 | 74,091,392 | 6.30% | ||||||
FMR LLC3 245 Summer Street, Boston, MA 02210 | 60,521,481 | 5.15% |
Shares Beneficially Owned | ||||||||
Name and Mailing Address | Number | Percent | ||||||
The Vanguard Group1 | 95,722,682 | 8.40% | ||||||
BlackRock, Inc.2 | 76,250,033 | 6.70% |
1 | Based solely on information on Schedule 13G/A (Amendment No. |
2 | Based solely on information on Schedule 13G/A (Amendment No. |
|
Security Ownership of Executive Officers and Directors
Shares Beneficially Owned | ||||||||
Name | Number3 | Percent of Class | ||||||
Daniel H. Schulman | * | |||||||
John D. Rainey | | | * | |||||
Blake Jorgensen | — | * | ||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
| * | |||||||
David M. Moffett | 76,771 | * | ||||||
Ann M. Sarnoff | 17,572 | * | ||||||
Frank D. Yeary | * | |||||||
All | * |
* | Less than one percent |
|
1 | c/o PayPal Holdings, Inc., 2211 North First Street, San Jose, California 95131. |
2 | Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of March |
3 |
|
Includes |
44 | •2023 Proxy Statement |
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information About Our Executive Officers
* | As of March 30, 2023 |
Executive Officer Biographies
DANIEL H. SCHULMAN President | Age: 65 | In current position since July 2015 |
Biography Mr. Schulman’s biography is set forth on page 20 of this proxy statement under the heading “Proposal 1: Election of Directors – Director Biographies.” |
PEGGY ALFORD • Executive Vice President, | Age: 51 | In current position since March 2018 |
Biography PayPal’s Senior Vice President, Core Markets, from March 2019 to March 2020. Chief Financial Officer and Head of Operations for the Chan Zuckerberg Initiative, a philanthropic organization, from September 2017 to February 2019. Held a variety of senior positions at PayPal, from May 2011 to August 2017, including Senior Vice President, Core Markets; Senior Vice President of People Operations; Chief Operating Officer for Asia Pacific Region and Global Cross-Border Trade; and Vice President and Chief Financial Officer for the Americas Region. Prior to joining PayPal in 2011, Ms. Alford worked at Rent.com, a national internet real estate listing service and former subsidiary of eBay Inc., where she served in positions of increasing responsibility, including President, General Manager and Chief Financial Officer. Member of the Board of Directors of the Macerich Company, since June 2018 and Meta, Inc., since May 2019. |
Diverse Ethnicity• Woman
•2023 Proxy Statement | 45 |
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Executive Officer Biographies
JONATHAN AUERBACH Executive Vice President, Chief Strategy, Growth and Data Officer | Age: 60 | In current position since January 2018 |
Biography PayPal’s Executive Vice President, Chief Strategy and Growth Officer, from September 2016 to January 2018. PayPal’s Senior Vice President, Chief Strategy and Growth Officer, from July 2015 to September 2016. CEO of Group Digital Life at Singapore Telecommunication Limited (Singtel), where he led the company’s global portfolio of digital businesses as well as its venture fund, from September 2014 to May 2015. Worked as a management consultant and held a variety of executive roles with McKinsey & Company, a global management consulting firm, from 1987 to 2014. Member of the Board of Directors of Principal Financial Group, since 2019. |
AARON KARCZMER Executive Vice President, Chief Enterprise Services Officer | Age: 51 | In current position since May 2022 |
Biography PayPal’s Executive Vice President, Risk, Platform Services and Legal, from January 2022 to May 2022. PayPal’s Chief Risk Officer and Executive Vice President, Risk and Platforms, from March 2020 to December 2021. PayPal’s Chief Risk Officer and Executive Vice President, Risk, Regulatory and Protection Services, from April 2017 to March 2020. PayPal’s Senior Vice President, Chief Compliance and Ethics Officer, from September 2016 to March 2017. PayPal’s Senior Vice President, Chief Compliance Officer, from May 2016 to September 2016. Held a variety of leadership roles at American Express, from September 2007 to April 2016, including Senior Vice President, Deputy Chief Compliance Officer and Head of Global Financial Crime Compliance, from 2013 to April 2016. Earlier in his career, worked at the New York County District Attorney’s office, including as Unit Chief and co-founder of the Identity Theft Unit, responsible for investigating and prosecuting financial crime, data breaches and cyber-crime. Founding member of the World Economic Forum’s Chief Risk Officers Community. |
JOHN KIM Executive Vice President, | Age: 52 | In current position since September 2022 |
Biography President, Marketplace at Expedia Group, Inc. from June 2021 to September 2022, President of Platform & Marketplaces from December 2019 to June 2021, President of Vrbo/Homeway from March 2019 to December 2019 and Chief Product Officer of Expedia Brands from July 2011 to March 2016. Vice President, Product Management and Marketing at Pelago from August 2008 to May 2011. Vice President, Product Management and Marketing at Medio from August 2007 to August 2008. Senior Director, Strategic and Product Marketing at Yahoo! Inc. from December 2001 to August 2007. Member of the Board of Directors of Owlet Baby Care, Inc., since April 2021 |
Diverse Ethnicity• Woman
46 | •2023 Proxy Statement |
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Executive Officer Biographies
GABRIELLE RABINOVITCH • Acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer | Age: 44 | In current position since September 2022 |
Biography PayPal’s Interim CFO and Senior Vice President, Corporate Finance and Investor Relations from May 2022 to September 2022. PayPal’s Senior Vice President, Corporate Finance and Investor Relations, from August 2021 to May 2022. PayPal’s Vice President, Corporate Finance and Investor Relations, from April 2016 to August 2021. Vice President, Investor Relations at Williams-Sonoma, Inc. from February 2012 to March 2016. |
Former Executive Officers
MARK BRITTO Former Executive Vice President, Chief Product Officer | Age: 58 | |||||
Biography PayPal’s Former Executive Vice President, Chief Product Officer, from March 2020 to September 2022. PayPal’s Executive Vice President of Global Sales and Credit, from February 2019 to March 2020. PayPal’s Senior Vice President of Global Credit and Core Markets, from July 2017 to February 2019. Co-founder and CEO of Boku, Inc., the world’s largest independent carrier billing company, from January 2009 to March 2014. CEO of Ingenio, a service marketplace and performance advertising company, from July 2002 to December 2007, which he led to a 2007 acquisition by AT&T. Senior Vice President of Worldwide Services and Sales at Amazon, from May 1999 to June 2002, following the acquisition in 1999 of his first company, Accept.com, which served as the primary backbone of Amazon’s global payments platform. Began his career in senior credit and risk management roles at leading national banks, First USA and Bank of America. Non-Executive Chair of Boku, Inc., since 2009. |
BLAKE JORGENSEN Former Executive Vice President, Chief Financial Officer | Age: 63 | |||||
Biography PayPal’s Former Executive Vice President, Chief Financial Officer, from August 2022 to March 2023. Executive Vice President of Special Projects at Electronic Arts Inc., from March 2022 to July 2022; CFO, from September 2012 to March 2022; and COO from April 2018 to October 2021. Chief Financial Officer of Levi Strauss & Co. from July 2009 to August 2012 Chief Financial Officer of Yahoo! Inc. from June 2007 to June 2009. Chief Operating Officer and Co-Director of Investment Banking at Thomas Weisel Partners from 1998 to 2007 Member of the Board of Directors of Hasbro, Inc., since April 2021 |
Diverse Ethnicity • Woman
•2023 Proxy Statement | 47 |
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Former Executive Officers
JOHN D. RAINEY Former Chief Financial Officer and Executive Vice President, Global Customer Operations | Age: 52 | |||||
Biography PayPal’s Former Chief Financial Officer and Executive Vice Present, Global Customer Operations, from January 2018 to May 2022. PayPal’s Executive Vice President, Chief Financial Officer, from September 2016 to January 2018. PayPal’s Senior Vice President, Chief Financial Officer, from August 2015 to September 2016. Executive Vice President and Chief Financial Officer at United Airlines, from April 2012 to July 2015. Senior Vice President of Financial Planning and Analysis at United Continental Holdings, Inc., from October 2010 to April 2012. Former Member of the Board of Directors of Nasdaq, Inc., from July 2017 to February 2023. |
Diverse Ethnicity • Woman
| •2023 Proxy Statement |
PROPOSAL 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION (“SAY-ON-PAY” VOTE)
Advisory Vote to Approve Named Executive
Officer Compensation (“say-on-pay” vote)
In accordance with the requirements of Section 14A of the Exchange Act,Each year, we are askingask our stockholders to vote on an advisory basis to approve the compensation paid to our NEOsnamed executive officers (“say-on-pay”), as described in the Compensation Discussion and Analysis and the compensation table sections of this proxy statement.
As discussed in the Compensation Discussion and Analysis, theThe Compensation Committee is committed to an executive compensation program that createsis transparent, appropriately incentivizes our executive officers and simple programs that appropriately incentivize our executives, alignaligns with stockholder interests and external expectations and enableenables us to effectively compete for, attract and winretain top talent and toso we can build the strongest possible leadership team for PayPal. The Compensation Committee believes that the goals of our executive compensation program are appropriate and that the program is properly structured to achieve those goals. In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis and the compensation table sections of this proxy statement.
The Board recommends that stockholders vote “FOR” the following resolution:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 20192022 Summary Compensation Table and the other related tables and disclosures.”
This“say-on-pay”say-on-pay vote is advisory, and therefore not binding on the Company, the Board or the Compensation Committee. However, the Board and the Compensation Committee value the opinions of our stockholders and will take into account the outcome of this vote in considering future compensation arrangements. We hold our advisory“say-on-pay” vote every year and expect that theThe next“say-on-pay”say-on-pay vote will occur at PayPal’s 20212024 annual meeting of stockholders.
The Board recommends a voteFOR Proposal 2.
|
Letter from the Compensation Committee
Dear PayPal Stockholders:
In 2019, we took tangible, important steps toward fulfilling our mission to provide consumers around the world with access to affordable financial services and improve global financial health. Over the course of the year, we meaningfully enhanced and expanded the PayPal platform, strengthened our value proposition for consumers and merchants, increased our international scope and scale and announced transformative strategic acquisitions, investments and commercial agreements. As a result, PayPal achieved record active user growth and ended the year with record results across numerous key customer and financial metrics.
The Compensation Committee strives to maintain an executive compensation program that aligns with the key drivers of profitable and sustainable short-term and long-term growth and value creation for our stockholders, as well as our mission, vision, and values – an approach that we believe will reward our stockholders for their decision to invest in PayPal.
We believe that the executive compensation program should evolve to reflect changes in our corporate strategy and competitive environment. Accordingly, we actively evaluate PayPal’s pay structures each year and we continue to make changes over time aligned with the Company’s strategic objectives. Our current compensation program reflects this careful assessment.
Given our strong focus on maintaining a compensation program that tightly aligns with stockholders’ interests, we took into consideration the input gathered through direct conversations with our investors and employees, and the results of our annualsay-on-pay vote. Through extensive discussions with our stockholders both leading up to and following our 2019 Annual Meeting, it became clear that stockholders who voted against our 2019say-on-pay proposal were concerned primarily about the possibility of the continued use ofone-time awards to the CEO. While stockholders were generally supportive of the rationale for the performance-based restricted stock unit award granted to the CEO in April 2018 (the “CEO PSU Award”) and appreciated the stockholder-aligned safeguards established by the Compensation Committee for that specific award (as discussed in our proxy statement last year), they indicated that they wanted reassurance that the CEO PSU Award to Mr. Schulman would truly beone-time in nature.
When discussing the terms and structure of the CEO PSU Award at the time it was approved, the Compensation Committee’s clear expectation was that the grant would be aone-time occurrence, and that no other such supplemental grant would be made to Mr. Schulman going forward. We have formally affirmed that commitment in this proxy statement.The Compensation Committee has committednot to grant any special awards to Mr. Schulman outside of the regular compensation program for the remainder of his employment with the Company.
In addition to this commitment, we have continued to enhance our disclosure throughout the Compensation Discussion & Analysis, with additional information provided regarding our incentive plan metrics and results, consistent with feedback gathered through our ongoing dialogue with our stockholders.
PayPal is at the forefront of the digital payments revolution, and our growth strategy is designed to keep us in a position of leadership. The Compensation Committee remains focused on ensuring strong alignment between our strategic goals and our executive compensation program to drive long-term stockholder value creation.
The Compensation Committee of the Board of Directors
David W. Dorman (Chair)
Wences Casares
Jonathan Christodoro
Gail J. McGovern
|
Compensation Discussion and Analysis
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 2. |
•2023 Proxy Statement | 49 | |||||
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) describes the material compensation elements for each of PayPal’s named executive officers (“NEOs”)NEOs and provides an overview of our executivethe compensation policies and practices applicable to our NEOs.
2022 NEOs1
| ||
| ||
| ||
| ||
| ||
| ||
|
In 2019, we delivered another year of strong performance. We meaningfully improved and expanded the PayPal platform, strengthened our value proposition for consumers and merchants, expanded our international scope and scale, and announced transformative, strategic acquisitions, investments, and commercial agreements. We added more than 37 million net new active accounts, and ended the year with 305 million active accounts. Engagement grew to an average of 40.6 transactions per active account as we extended our platform capabilities around the world, launched innovative strategic relationships with some of the world’s largest marketplaces and platforms, and deepened our partnerships with financial institutions while continuing to invest in our business.
Through our acquisition of a 70% equity interest in Guofubao Information Technology Co., Ltd. (GoPay) (the “GoPay Acquisition”), PayPal became the first foreign payments platform to be licensed to provide online payments services in China. We believe that our acquisition of Honey Science Corporation (“Honey”) (the “Honey Acquisition”) enables PayPal’s entry into the earliest stages of customers’ commerce experience, enhances our value proposition for both consumers and merchants, and allows us to significantly deepen our engagement and play a more meaningful role in the daily lives of our customers.
The following summarizes our key financial and operational performance results for 2019. We use certain of these key metrics as the performance measures in our incentive compensation programs and believe these measures help to align the interests of our executives with those of our stockholders.
Daniel H. Schulman | Peggy Alford | Jonathan Auerbach | Aaron Karczmer | |||||
President and Chief | Acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer | Executive Vice President, Global Sales | Executive Vice President, Chief Strategy, Growth and Data Officer | Executive Vice President, Chief Enterprise Services Officer |
1 | The following were also NEOs for 2022: |
• | John Rainey resigned from his role as Chief Financial Officer and Executive Vice President, Global Customer Operations, effective May 23, 2022. | |
• | Blake Jorgensen was appointed as Chief Financial Officer effective as of August 3, 2022. On September 14, 2022, the Company announced that Mr. Jorgensen was taking a leave of absence for health reasons. Mr. Jorgensen stepped down from his position as Chief Financial Officer effective as of March 7, 2023, and is expected to continue to serve as a senior advisor to the Company through September 15, 2023. | |
• | Mark Britto stepped down from his role as Chief Product Officer effective September 26, 2022. Pursuant to a planned transition in connection with an internal restructuring, Mr. Britto’s employment with the Company terminated on February 28, 2023. |
| •2023 Proxy Statement |
COMPENSATION DISCUSSIONAND ANALYSIS
Executive Summary
Executive Summary
2022 Financial and Operational Performance Highlights
1 | Non-GAAP |
|
Highlights:
Our three-year total stockholder return*In 2022, we delivered solid financial and operating results across our key performance metrics. This was 174.1%,accomplished during a challenging period of macroeconomic uncertainty, slowing ecommerce growth and ourone-year total stockholder return** was 28.6%.
Our engagement grew 10%geopolitical instability. We ended the year over yearwith 435 million active consumer and merchant accounts and our revenue increased by 8% to an average of 40.6$27.5 billion compared to 2021. In 2022, we processed 22.3 billion payment transactions per active account.
Venmo delivered over $102 billionand $1.36 trillion in total payment volume in 2019,across our platform, representing year-over-year increases of 16% and ended9%, respectively.
This progress is a direct result of our sharpened focus, responsible innovation and enhanced cost discipline to execute on our core strategic priorities. In 2022, we created better checkout experiences, enhanced our digital wallet, expanded our global pay later solutions and grew our unbranded processing business with leading merchants around the year with over 52 million active accounts.globe.
We accessedalso experienced several important leadership transitions in 2022. In March, we appointed Archie Deskus as our Chief Information Officer to oversee PayPal’s global information technology operations. In September 2022, we brought on John Kim to serve as our new Chief Product Officer. Mr. Kim brings extensive innovation, product management and technical experience to his role in leading the debt capital marketsproduct organization. Mr. Kim succeeded Mark Britto, who helped to ensure a smooth transition. And Gabrielle Rabinovitch seamlessly stepped into the role of interim Chief Financial Officer upon John Rainey’s departure in May 2022, and acting Chief Financial Officer beginning in September 2022 when Blake Jorgensen took a medical leave.
2022 NEO Compensation Program Elements
For 2022, the Compensation Committee approved an executive compensation program based on our “pay for performance” philosophy that is designed to align our executive officers’ compensation with the first timekey drivers of profitable growth. The ultimate goals of our executive compensation program are to properly incentivize and raised $5 billionreward our executives for performance that exceeds expectations, provide transparency for our executives and our stockholders and position PayPal competitively to enable us to attract and retain highly capable leaders in debt financing.an intensely competitive talent market.
We continued to partner with many of the largest and most influential companies in finance, retail and technology.
•2023 Proxy Statement |
|
COMPENSATION DISCUSSIONAND ANALYSIS Executive Summary |
The following is an overview of the 2022 compensation program elements for our NEOs.
Form of Payment | Performance Period | Performance Criteria | Objectives | For More Information | ||||||||
Salary |
| |||||||||||
Cash | Ongoing | • Compensates for expected day-to-day performance • Rewards individuals’ current contributions • Reflect scope of roles and responsibilities | Page 55 | |||||||||
Annual Incentive Plan (“AIP”) | PBRSUs | One year | Revenue and Non-GAAP Operating Margin, with Net New Actives modifier | • Rewards successful annual performance • Motivates achievement of short-term performance goals designed to enhance value of the Company • Significant equity portion to further align with stockholder interests | Page 56 | |||||||
Cash | One year | Individual Performance | ||||||||||
Long-Term Incentive Plan (“LTI”) | PBRSUs | Three years | FX-Neutral Revenue Compound Annual Growth Rate (“CAGR”) and Free Cash Flow CAGR | • Rewards successful achievement of three-year performance goals designed to enhance long-term value of the Company • Intended to satisfy long-term retention objectives | Page 62 | |||||||
RSUs | Vests over three years | Service-based vesting; ultimate value based on stock price performance | • Rewards the creation of long-term value • Recognizes potential future contributions • Intended to satisfy long-term retention objectives | Page 64 |
52 | •2023 Proxy Statement |
COMPENSATION DISCUSSIONAND ANALYSIS
Executive Summary
Key Compensation Policies and Practices
We maintain the following policies and practices that we believe demonstrate our commitment to good corporate governance and executive compensation best practices.
| 53 |
COMPENSATION DISCUSSIONAND ANALYSIS
Executive Summary
At our 2022 Annual Meeting of Stockholders, over 88% of the votes cast supported our say-on-pay proposal. Following the 2022 Annual Meeting of Stockholders, we engaged in proactive outreach efforts with stockholders representing approximately 52% of our common stock. For more information on our engagement efforts and feedback received through these conversations, see “Corporate Governance – Stockholder Engagement,” on page 31 of this proxy statement.
After considering the 2022 say-on-pay results as well as the feedback received through our stockholder engagement program, the Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate and did not make any changes to the Company’s executive compensation program in response to the 2022 say-on-pay vote.
Executive Compensation Program Design
Our key guiding principle for executive compensation is to closely align the compensation of our executives with the creation of long-term value for our stockholders. We do so by tying a significant portion of our executives’ target total direct compensationTarget Total Direct Compensation opportunity to the Company’s performance.
In designing our executive compensation program, the Compensation Committee prioritizes the following compensation philosophy andfour goals:
54 | •2023 Proxy Statement |
Simplicity, Transparency,
COMPENSATION DISCUSSIONAND ANALYSIS
Alignment of Compensation with Performance Results
Alignment of Compensation with Performance Results
CEO Compensation and Clarity – enable executivesPerformance Trends
The following charts demonstrate the alignment of our revenue and indexed TSR with CEO pay (as reported in the “2022 Summary Compensation Table”) for fiscal years 2020 to see the direct link between2022. Our Compensation Committee determines CEO pay each year based on various factors, including Company and individual performance and pay, and enable stockholders to see the direct link between returns on their investment and pay outcomes for the executive team;
One Team – maintain unified goals and objectives of the annual short- and long-term incentive programs for the entire executive leadership team to drive operational decisions and Company performance;
Winning the War for Talent– recognize the unique FinTech space in which we compete and prioritize nimble and aggressive compensation strategies to attract and retain key talent; and
Individual Performance– ensure compensation is commensurate with results, both on the upside and downside, and that leaders are held accountable for their performance, including with respect to risk and compliance within for their respective organizations.
Compensation Aligned with Performance Results
The following chart demonstrates the alignment between our Revenue, Indexed TSR (as defined below) and CEO Pay (as reported in the “Summary Compensation Table”) for calendar years 2016-2019.potential. Revenue is a key measure of our financial performance. Indexed TSR is defined as the total stockholder return on our common stock during the period from December 31, 20152019 through December 31, 2019,2022, assuming $100 was invested on December 31, 2015.2019. The charts below provide supplemental disclosure and should not be viewed as a substitute for the “Pay versus Performance” disclosure included beginning on page 80 of this proxy statement.
|
Based on our 2022 results for revenue and Non-GAAP Operating Margin, the company performance portion of the 2022 Annual Incentive Plan (“AIP”) paid out at 0% of target. Based on the compound annual growth rates of FX-neutral revenue and Free Cash Flow for the three-year period of January 1, 2020 to December 31, 2022, the 2020-2022 PBRSUs paid out at 145% of target. The Compensation Committee continued its historical practice of supplementing the primary performance measures under the AIP and long-term incentive (“LTI”) program with additional performance measures to strike an appropriate balance between incentivizing top-line growth, profitability, non-financial business initiatives and stockholder value creation over both the short-term and long-term horizons.
Stockholder Engagement2022 Compensation Framework and Board ResponsivenessDecisions
Since 2015 when we became an independent publicly-held company,When designing our stockholder outreachexecutive compensation program, has concentrated on fostering strong stockholder relationships that lead to mutual understanding of issues and ultimately give us insight into stockholder perspectives. In connection with this program, in the fall/winter of 2018 we reached out to stockholders representing approximately 60%Compensation Committee assessed competitive market data obtained from the public filings of our outstanding shares,compensation peer group companies and held discussions with stockholders representing approximately 35%general industry data for comparable technology and financial companies that are included in proprietary third-party compensation surveys. For more information, see “Our Structure for Setting Compensation.”
Base Salary
At the beginning of our outstanding shares.
Stockholder Engagementeach year, the Compensation Committee reviews and approves each then-serving executive officer’s base salary for the year. In making its determinations, the Compensation Committee considered competitive market data and certain individual factors, including the executive’s individual performance, level of responsibility, breadth of knowledge and prior experience. At the time of hire or promotion, the Compensation Committee approves the compensation of the newly appointed or promoted executive officer based on the competitive market data, prior
•2023 Proxy Statement |
|
COMPENSATION DISCUSSIONAND ANALYSIS
2022 Compensation Framework and Decisions
experience, the compensation received at the executive officer’s prior employer (if publicly available or voluntarily disclosed) and the compensation received by the executive officer’s predecessor at the Company. The following table shows the 2022 annual base salary for each NEO.
NEO | Base Salary for 2022 ($) | Base Salary for 2021 ($) | ||||||
Daniel H. Schulman | 1,250,000 | 1,250,000 | ||||||
Gabrielle Rabinovitch1 | 750,000 | 450,000 | ||||||
Peggy Alford2 | 750,000 | 700,000 | ||||||
Jonathan Auerbach | 750,000 | 750,000 | ||||||
Aaron Karczmer | 750,000 | 700,000 | ||||||
Blake Jorgensen3 | 750,000 | — | ||||||
John D. Rainey4 | 750,000 | 750,000 | ||||||
Mark Britto | 750,000 | 750,000 |
1 | Ms. Rabinovitch’s base salary was increased to
|
2 | In January 2022, the Compensation Committee |
3 | Mr. Jorgensen’s base salary was established at the time he joined the Company in |
4 | Mr. Rainey’s base salary reflects his annualized rate of |
Feedback from these discussions with our stockholders was presented to, and discussed in detail with, the Board and theHow We Determine Incentive Compensation Committee on multiple occasions. Through this extensive engagement process, we received a variety of valuable perspectives, which directly informed the changes and disclosure enhancements summarized below.
|
|
| ||||
|
We value the views and perspectives of our stockholders related to our executive compensation program and will continue to consider the outcome of futuresay-on-pay votes, as well as feedback received from our stockholders throughout the year, when making compensation decisions for our executive officers. For more information on our stockholder engagement program, please see “Corporate Governance – Stockholder Engagement” beginning on page 28 of this proxy statement.
2019 NEO Compensation Program Elements
The following is an overview of the compensation program elements for our NEOs:
|
| |||||||
|
| |||||||
| ||||||||
|
| |||||||
|
|
|
The Compensation Committee believes that long-term incentives in the form of equity awards should comprise the majority of our NEOs’ target total direct compensation opportunity. We believe that our executive compensation program effectively incentivized results in 2019 by appropriately aligning pay and performance.
The following charts show the 2019 Target Total Direct Compensation mix for our CEO, Mr. Schulman, and the average 2019 Target Total Direct Compensation mix for our other NEOs who were executive officers as of December 31, 2019. Target Total Direct Compensation is the sum of (i) 2019 base salary, (ii) target 2019 annual incentive award (based on the grant date fair value for the portion of the award delivered as PBRSUs), and (iii) target annual long-term incentive award (based on the grant date fair value).
Key 2019 Compensation Outcomes
In early 2020, the Compensation Committee approved the specific annual incentive payments earned under the 2019 AIP based upon Company performance with respect to Revenue,Non-GAAP Operating Margin, and Net New Actives performance, as well as each executive’s individual performance, as further discussed under “Compensation Framework – Incentive (Performance-Based) Compensation for 2019 – Annual Incentive Plan.” Based on our 2019 financial results, the Compensation Committee determined that the achievement level of the Company performance component under the 2019 AIP was 136% of target. The 2019 AIP payments to our NEOs were higher than their respective 2019 annual incentive targets due to our strong financial and operational performance during the year, which exceeded our approved budget and operating plan for 2019.
In early 2017, the Compensation Committee granted our NEOs long-term performance-based incentive awards in the form of PBRSUs (the “2017-2019 PBRSUs”), subject to a three-year performance period from January 1, 2017 to December 31, 2019. The performance measures for the 2017-2019 PBRSUs (which were equally weighted) were the compound annual growth rates ofFX-Neutral Revenue and Free Cash Flow over the three-year performance period, as further discussed under “Compensation Framework – Incentive (Performance-Based) Compensation for 2019 – Long-Term Incentive Components”. Based on our financial results for the three-year performance period, the Compensation Committee determined that the achievement level of the 2017-2019 PBRSUs was 200% of target.
|
Key Compensation Policies and Practices
We are committed to maintaining strong governance standards with respect to our executive compensation program, policies, and practices. Consistent with this focus, we maintain the following policies and practices that we believe demonstrate our commitment to executive compensation best practices.
|
| ||||
Incentive(Performance-Based) Compensation for 2019
When deciding the target amount and formforms of each element ofincentive compensation for each of our NEOs, the Compensation Committee consideredconsiders the size and complexity of the NEO’s position and business unit or function, as well as the following factors (which we refer to as the “Incentive Compensation Factors”):
leadership;
• | leadership; |
performance against financial, strategic, and operational objectives and performance measures;
• | performance against financial, strategic and operational objectives and performance measures; |
defining and executing against strategy and roadmaps for the business unit or function, as well as against budgets;
• | defining and executing against strategy, roadmaps and budgets; |
championing and advancing the Company’s set of core values of collaboration, innovation, wellness, and inclusion;
• | driving innovation for the business unit or function; |
organizational development and human capital management, including hiring, development, and retention for the business unit or function, enhancing diversity and inclusion efforts, implementing processes regarding pay equity, and executing employee financial wellness initiatives;
• | negotiating, closing and integrating or implementing strategic transactions and partnerships; |
driving innovation and execution for the business unit or function; and
• | championing and advancing the Company’s set of core values of inclusion, innovation, collaboration and wellness; and |
negotiating, closing, and integrating or implementing strategic transactions and partnerships.
• | organizational development and human capital management, including hiring, development and retention for the business unit or function by supporting and enhancing DIE&B efforts. |
Individual performance wasis evaluated based on a holistic and subjective assessment of each individual NEO’s performance against these factors.
The 20192022 AIP provided each of our NEOs with the opportunity to earn annual incentive compensation based on Company performance and individual performance. A substantial portionThe majority of our NEOs’ 20192022 AIP awards iswas in the form of performance-based restricted stock units (“PBRSUs”), which arePBRSUs, to be settled in shares of PayPal common stock as described below.based on Company achievement of the applicable performance criteria.
The Compensation Committee believes that our executives’ annual incentives should be tied primarily to our overall Company performance, with individual compensation differentiated based on individual performance. As a reflection of our Company’s commitment to DIE&B, the Compensation Committee has incorporated DIE&B considerations into the individual performance portion of our NEOs’ 2022 AIP awards, as discussed further below.
56 |
| |||||
|
COMPENSATION DISCUSSIONAND ANALYSIS
Target Annual Incentive Amounts
The 2019 AIP target annual incentive opportunity (expressed as a percentage of base salary) for each NEO was determined:Plan
with reference to the Compensation Committee’s assessment of data from public filings of our compensation peer group companies and general industry data for comparable technology companies included in proprietary third-party compensation surveys (the specific identity of survey respondents are not provided to the Compensation Committee or the Company);
based on each NEO’s role and responsibilities within the Company; and
taking into account the Incentive Compensation Factors.
For 2019, the Compensation Committee did not make any changes to the target annual incentive opportunity percentages set for 2018 for each NEO.
The following table sets forth the 2019 AIP2022 target annual incentive opportunity (the “Target Incentive Amount”) for our NEOs,each participating NEO, which is expressed as a percentage of their 2019the NEO’s base salary and in dollars. Seventy-five percent (75%)salary.
NEO | 2022 AIP Annual Target as Percentage of Base Salary | 2021 AIP Annual Target as Percentage of Base Salary | ||||||
Daniel H. Schulman | 200 | % | 200% | |||||
Gabrielle Rabinovitch1 | 125 | % | 75% | |||||
Peggy Alford | 125 | % | 125% | |||||
Jonathan Auerbach | 125 | % | 125% | |||||
Aaron Karczmer | 125 | % | 125% | |||||
Blake Jorgensen2 | 125 | % | — | |||||
John D. Rainey3 | 125 | % | 125% | |||||
Mark Britto | 125 | % | 125% |
1 | Ms. Rabinovitch’s 2022 AIP Annual Target was changed from 75% to 125% at the time she assumed the role of acting Chief Financial Officer. |
2 | Mr. Jorgensen’s 2022 AIP Annual Target was established at the time he joined the Company, and he was eligible for a prorated 2022 AIP based on his start date relative to the performance period. |
3 | Mr. Rainey ceased to participate in the 2022 AIP upon his resignation from the Company. |
75% of the Target Incentive Amount for each NEO was allocated to Company performance, with the remaining 25% allocated to individual performance.
Name | Annual Incentive Target as Percentage of Base Salary | Target Incentive Amount ($) | ||||||
Daniel H. Schulman | 200% | 2,000,000 | ||||||
John D. Rainey | 100% | 750,000 | ||||||
Jonathan Auerbach | 100% | 650,000 | ||||||
Aaron Karczmer | 100% | 650,000 | ||||||
Louise Pentland | 100% | 750,000 | ||||||
William J. Ready | 100% | 750,000 |
The actual amount of an NEO’s 2019 AIP award was determined by the following formula:
The Company performance portion of the 2019 AIP was issueddelivered in the form of PBRSUs with aone-year performance period, (calendar year 2019). The following table sets forthwith the Target Incentive Amount under the 2019 AIP for our NEOs; thefinal payout to be determined based on Company performance portion is expressed as the target number of PBRSUs and the individual performance portion is expressed as the target cash amount.for 2022.
Name | Target Incentive Amount ($) | Target PBRSUs1 (75% of Target Incentive Amount) (In Shares) | Target Cash (25% of Target Incentive Amount) ($) | |||||||||
Daniel H. Schulman | 2,000,000 | 16,515 | 500,000 | |||||||||
John D. Rainey | 750,000 | 6,193 | 187,500 | |||||||||
Jonathan Auerbach | 650,000 | 5,368 | 162,500 | |||||||||
Aaron Karczmer | 650,000 | 5,368 | 162,500 | |||||||||
Louise Pentland | 750,000 | 6,193 | 187,500 | |||||||||
William J. Ready | 750,000 | 6,193 | 187,500 |
NEO | Base Salary Used to Calculate PBRSU Target1 ($) | PBRSU Target Incentive Amount ($) | PBRSU Target2 (Shares) | |||
Daniel H. Schulman | 1,250,000 | 1,875,000 | 11,715 | |||
Gabrielle Rabinovitch1 | 450,000 | 253,125 | 1,582 | |||
Peggy Alford | 750,000 | 703,125 | 4,393 | |||
Jonathan Auerbach | 750,000 | 703,125 | 4,393 | |||
Aaron Karczmer | 750,000 | 703,125 | 4,393 | |||
Blake Jorgensen1 | 750,000 | 294,735 | 3,070 | |||
John D. Rainey3 | 750,000 | 703,125 | 4,393 | |||
Mark Britto | 750,000 | 703,125 | 4,393 |
1 | In accordance with the terms of the 2022 AIP, each then-serving NEO’s base salary and AIP Annual Target as of April 1, 2022 was used to calculate the Target Incentive Amount applicable to the PBRSUs granted pursuant to the 2022 AIP. For Ms. Rabinovitch, her base salary and her AIP Annual Target (i.e., 75%) prior to becoming an NEO was used to calculate her Target Incentive Amount applicable to the PBRSUs granted. For Mr. Jorgensen, his starting base salary was used to calculate his Target Incentive Amount applicable to the PBRSUs, which was prorated based on his start date relative to the performance period. |
2 | The target number of PBRSUs was determined by dividing (i) the |
3 | Mr. Rainey forfeited his 2022 AIP award upon his resignation from the Company. |
The remaining 25% of the Target Incentive Amount for each NEO was determined based on individual performance, to be delivered in cash, in each case as described below.
NEO | Base Salary Used to Calculate Cash Target Incentive Amount1 ($) | Target Cash ($) | ||||||
Daniel H. Schulman | 1,250,000 | 625,000 | ||||||
Gabrielle Rabinovitch | 750,000 | 234,375 | ||||||
Peggy Alford | 750,000 | 234,375 | ||||||
Jonathan Auerbach | 750,000 | 234,375 | ||||||
Aaron Karczmer | 750,000 | 234,375 | ||||||
Blake Jorgensen2 | 750,000 | 98,245 | ||||||
John D. Rainey | 750,000 | 234,375 | ||||||
Mark Britto | 750,000 | 234,375 |
•2023 Proxy Statement | ||||||
57 |
Annual Incentive Plan
1 | In accordance with the terms of the 2022 AIP, each NEO’s base salary and AIP Annual Target as of December 1, 2022 was used to calculate the Target Incentive Amount applicable to the cash portion of the 2022 AIP. |
2 | ||
Mr. Jorgensen’s Target Cash was prorated based on his start date relative to the 2022 AIP performance period.
|
The actual amount of each participating NEO’s 2022 AIP award was determined by the following formula (and for Mr. Jorgensen, prorated based on his start date relative to the performance period, in accordance with the terms of the 2022 AIP applicable to employees hired during the performance period):
Company Performance Measures
In early 2019,When designing the Company’s 2022 executive compensation program, the Compensation Committee selectedevaluated a range of performance metrics for purposes of the Company’s incentive programs and considered input from management and its independent compensation consultant. The Compensation Committee initially determined the performance targets and criteria related to the AIP in early 2022, based on the information available at that time. In April 2022, due to macroeconomic pressures, the Company revised its financial guidance for full year 2022. Based on this revised guidance, and after considering a number of factors, including the potential impact on employees and to support retention, the Compensation Committee adjusted the performance measures for the Company performance portion of the 2022 AIP for all employees other than the Company’s CEO, Executive Vice Presidents and acting CFO. In addition, the Compensation Committee determined that the 2022 AIP would be paid fully in cash for all eligible employees below the level of Vice President to whom the adjusted performances measures applied. The Compensation Committee did not adjust the performance measures with respect to the NEOs and there was no payout to any NEO under the 2019 AIP to create strong alignment between Company performance and NEO annual incentive payouts, as described inportion of the following table. 2022 AIP.
The NNA potential modifier did not impact the NEOs’ 2022 AIP payout. The Compensation Committee removed this modifier when it adjusted the performance measures for non-NEO employees.
The minimum threshold for either the Revenuerevenue or theNon-GAAP Operating Margin performance measures must be met to trigger any payments under the 2019 AIP.
| ||||
| ||||
The Compensation Committee determined that the threshold for funding the 2019 AIP would be a minimum Revenue threshold of $16.88 billion (the “2019 AIP Funding Threshold”). In addition, at least one of the minimum thresholds for Revenue andNon-GAAP Operating Margin would needneeded to be met to trigger any payments under the Company performance component of the 20192022 AIP. If the 2019 AIP Funding Threshold was met, Revenue andNon-GAAP Operating Margin would be applied aswere weighted equally weighted Company performance measures to determine the payout of the Company performance component of the 2019 AIP, with the Company performance payment level ranging from a minimum level of 25% to a maximum level of 200%.2022 AIP. The NNAs operational performance measure would serveserved as a modifier to adjustthat would have increased the Company performance payout by one percentage point for each 2.5 million increase ofin NNAs above the target. In no event willThe maximum possible payout for the Company performance payment level exceed 200%portion of the target applicable to the Company performance component of the 2019 AIP. If the 2019 AIP Funding Threshold was met, 75% of the Target Incentive Amount would be determined based on our Revenue andNon-GAAP Operating Margin financial performance as measured against thepre-established performance levels, subject to the NNAs modifier, and the remaining 25% of the Target Incentive Amount would be determined based on individual performance.200%.
The table below shows the following with respect to the 2019 AIP Company performance measures:
The threshold, target, and maximum performance levels established by the Compensation Committee.
|
The actual performance levels achieved in 2019.
The resulting Company Performance Score, defined as a payout percentage based on our performance as measured against thepre-established performance levels for the 2019 AIP.
58 |
| |||||
COMPENSATION DISCUSSIONAND ANALYSIS Annual Incentive Plan
|
Company Measure1 | Threshold | Target | Maximum | 2019 Actual | Percentage of Target Achieved2 | |||||||||||||||
Revenue3 | $ | 17.50 | $ | 18.10 | $ | 18.70 | $ | 17.77 | 73% | |||||||||||
Non-GAAP Operating Margin | 21.1 | % | 22.1 | % | 23.1 | % | 23.2 | % | 200% | |||||||||||
Net New Actives | 35 | 37.3 | 0% | |||||||||||||||||
Company Performance Score | 136% |
In January 2022, the Compensation Committee established threshold, target and maximum performance goals for the revenue and Non-GAAP Operating Margin measures and a target goal for the NNA measure, based primarily on our approved budget and operating plan for the year and full year guidance provided to the investment community. The table below shows the performance goals for the 2022 AIP applicable to the NEOs and the actual performance achieved. There was no payout with respect to the Company performance portion of the 2022 AIP for our NEOs because the minimum thresholds for the revenue and Non-GAAP Operating Margin performance measures were not met.
|
|
|
Individual Performance Measures
To facilitate differentiation based on individual performance, 25% of the Target Incentive Amounttarget incentive amount for our NEOs was based on an individual performance score ranging from 0% to 200% (the “Individual Performance Score”). At the beginning of 2019,2022, the Compensation Committee discussed with Mr. Schulman the key factors for determining awards under the 20192022 AIP, with Mr. Schulman, and the NEO’s
as well as our then-serving NEOs’ expected contributions to that performance and thetheir respective individual business objectives (collectively, “Objectives”). To determine each NEO’s Individual Performance Score, inobjectives. In early 2020,2023, Mr. Schulman presented to the Compensation Committee his assessment of each of the then-serving NEO’s individual performance during 20192022 against his or her Objectivestheir objectives for the year. The Compensation Committee then assessed Mr. Schulman’s individual performance during 20192022 against his Objectivesobjectives for the year.
Key NEOThe NEOs’ key accomplishments against Objectives for 2019:2022 are discussed below.
NEO | Key Performance Against Objectives | |||
Daniel H. Schulman | ||||
Provided strategic leadership and Led comprehensive operational review to identify substantial efficiency opportunities and growth initiatives. Oversaw capital allocation initiatives, including | ||||
Oversaw efforts to innovate at scale, including advances in branded checkout, enhanced digital wallet proposition and introduction of more ways to accelerate merchant growth. Oversaw enterprise-wide adoption of Leadership Principles based on our four core values that establish a | ||||
Oversaw continuing evolution of employee work experience, including normalizing post-COVID working conditions (including balancing work from home and office reopenings), furthering employee wellness initiatives and providing support to | ||||
•2023 Proxy Statement | ||||||
59 |
Annual Incentive Plan
NEO | Key Performance Against Objectives | |
|
Served as interim CFO upon Mr. Rainey’s departure from the Company from May 2022 to August 2022, and as acting CFO upon Mr. Jorgensen’s leave of absence in September 2022.
Peggy Alford | Oversaw the continued growth of the Company’s active merchant base. Added and expanded strategic relationships with leading global merchants, including the Company becoming an exclusive or primary provider of unbranded processing in multiple instances. Increased operating leverage through focused organizational improvements and increased sales productivity globally. | ||||
Jonathan Auerbach | Furthered the Company’s growth and strategic and operational goals through the development and execution of the Company’s acquisition and PayPal Ventures investment strategy in innovative companies focused on FinTech, commerce enablement and digital infrastructure. Oversaw the Company’s expansion of our payment services in China, including the successful renewal of our foreign payments platform license. Chaired the Operating Group for the Company which was responsible for leading the organization through our business and workforce transformation, and product and partnership investment decisions to accelerate offerings and solutions to our merchants and consumers. | ||||
Aaron Karczmer | Oversaw expanded remit as Chief Enterprise Services Officer, including control functions, operational services, Legal and ESG, in addition to Risk and Compliance. Oversaw the Company’s geolocation strategy to streamline and Oversaw continued development | ||||
Blake Jorgensen | |||||
Mark Britto | Led the | ||||
Removed complexity and streamlined decision-making, to | |||||
Managed the | |||||
In determining the Individual Performance Score for each NEO, who was an executive officer as of December 31, 2019, the Compensation Committee, with Mr. Schulman’s input, conducted a thorough review of each NEO’s performance against the Objectives,their various business objectives, taking into account the relative importance of each objective to the Company of each Objective.Company. Mr. Schulman then recommended to the Compensation Committee each NEO’s Individual Performance Score other than his own.
|
After considering Mr. Schulman’s recommendations regarding the other NEOs’ Individual Performance Scores, reviewing each individual’s performance with respect to the Objectives, taking into account each NEO’s risk and compliance ratings based on the risk and compliance reviews and independent observation and judgment of the Company’s risk and compliance officers, and considering its own observations and assessments of the performance of each NEO and the Company, theThe Compensation Committee made a final determination, in its sole discretion, as to the Individual Performance Score for each NEO based on this review and Mr. Schulman’s recommendations. The Compensation Committee also reviewed Mr. Schulman’s performance and determined, in its sole discretion, the Individual Performance Score for Mr. Schulman.
60 | •2023 Proxy Statement |
COMPENSATION DISCUSSIONAND ANALYSIS
Annual Incentive Plan
Additional AIP Considerations – DIE&B and Risk and Compliance
The Compensation Committee also included in its consideration each NEO’s individual performance ratings based on (1) each NEO’s demonstrated commitment to the Company’s DIE&B strategy and goals, pursuant to the independent observation and judgment of the Company’s human resources leadership and its DIE&B team; and (2) the risk and compliance reviews by, and independent observation and judgment of, the Company’s risk and compliance officers, as well as its own observations and assessments of the performance of each NEO.
In 2022, we continued our multi-year process to incorporate DIE&B into our executive compensation program, and assessed the actions taken by our leaders with the intent to drive measurable outcomes over time, including increasing the representation of underrepresented groups within our leadership and general employee population. For 2022, the Company’s near-term focus was on strengthening the foundation for a more inclusive and diverse culture, including by evaluating our senior leaders’ success in promoting DIE&B across the organization and throughout the full employee cycle. The Compensation Committee assessed each NEO’s participation in our DIE&B program based on demonstrable and objective actions taken by the NEO. The Compensation Committee approved an Individual Performance Score of 150% for each of Messrs. Rainey, Karczmerbelieves that the Company’s executive compensation program should appropriately support the Company’s multi-year, long-term DIE&B strategy, and Auerbachintends to continue incorporating and Ms. Pentland, as recommended by Mr. Schulman. For Mr. Schulman,enhancing DIE&B considerations in the Compensation Committee approved an Individual Performance Score of 150%.executive compensation program in future years.
2019
2022 AIP PaymentPayments
The following table shows the 20192022 AIP PBRSU Payout (in shares of Company common stock) and the Cash Payout (in dollars) for each participating NEO. Due to the termination of his employment as of December 31, 2019, pursuant to the Ready Separation Agreement, Mr. Ready’s 2019 AIP was paid out based on actual Company performance for Mr. Ready’s Company performance portion and at target for Mr. Ready’s individual performance portion.1
NEO1 | Target (in Shares) | x | 75% (Company Performance Score) | = | (a) 2019 AIP PBRSU Payout (in Shares)1 | + | Target Cash ($) | x | 25% (Individual Performance Score) | = | (b) ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NEO | Target (Shares) | x | Company Performance Score | = | 2022 (Shares) | + | Target Cash ($) | x | Individual Performance Score | = | 2022 AIP Cash Payment ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel H. Schulman | 16,515 | 136% | 22,461 | 500,000 | 150% | 750,000 | 11,715 | 0 | 0 | 625,000 | 50% | 312,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John D. Rainey | 6,193 | 136% | 8,423 | 187,500 | 150% | 281,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gabrielle Rabinovitch | 1,582 | 0 | 0 | 234,375 | 90% | 210,938 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Peggy Alford | 4,393 | 0 | 0 | 234,375 | 85% | 199,219 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan Auerbach | 5,368 | 136% | 7,301 | 162,500 | 150% | 243,750 | 4,393 | 0 | 0 | 234,375 | 70% | 164,063 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aaron Karczmer | 5,368 | 136% | 7,301 | 162,500 | 150% | 243,750 | 4,393 | 0 | 0 | 234,375 | 80% | 187,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Louise Pentland | 6,193 | 136% | 8,423 | 187,500 | 150% | 281,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Blake Jorgensen | 3,070 | 0 | 0 | 98,245 | 75% | 73,684 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mark Britto | 4,393 | 0 | 0 | 234,375 | 70% | 164,063 |
1 |
|
Long-Term Incentive ComponentsCompensation
Long-Term Incentive Award Type and Annual Target ValueValues
In making its determination on the long-term incentive (“LTI”)LTI annual target valuevalues for 2019,our NEOs for 2022, the Compensation Committee set equity award guidelines and target levels for individual awards by position based on the following:
equity compensation practices of technology companies in our compensation peer group, as disclosed in their public filings (see “Other Compensation Practices and Policies – Our Compensation Peer Group” below for our 2019 peer group) and in proprietary third-party compensation surveys (the specific identity of survey respondents are not provided to the Compensation Committee or the Company);
• | equity compensation practices of technology companies in our compensation peer group, as disclosed in their public filings (see “Our Compensation Peer Group” below for our 2022 peer group) and in proprietary third-party compensation surveys; |
individual performance and potential;
• | individual performance and potential; |
the Incentive Compensation Factors;
• | the Incentive Compensation Factors (see “How We Determine Incentive Compensation” above); |
expansion of scope of role and responsibilities; and
• | any changes to or expansion of scope of role and responsibilities; and |
the need to retain individuals in a highly competitive market for proven executive talent and based on their prospective contributions to the Company.
• | the need to retain qualified individuals in a highly competitive market for proven executive talent taking into account their prospective contributions to the Company. |
•2023 Proxy Statement | ||||||
61 |
COMPENSATION DISCUSSIONAND ANALYSIS Annual Incentive Plan
|
The Compensation Committee determines each of our NEO’s annual target values based on information available at the beginning of the year (or, if later, at the time of appointment), including company and individual performance and potential and competitive market data. The 2022 LTI awards for our NEOs were divided equally into (i) PBRSUs with a three-year performance period and (ii) service-based RSUs that vest over three years (with one-third of the RSUs vesting on the first anniversary of the grant date, and the remainder vesting ratably each subsequent quarter over the remaining vesting period). Based on thesethe above guidelines, in January 2022, the Compensation Committee approved the following annual target values (in dollars) for the 20192022 LTI awards for each NEO:our then-serving NEOs. See the “CFO-Transition Related Compensation” section for a discussion of the grants made to Mr. Jorgensen and Ms. Rabinovitch in connection with their appointments to the CFO role.
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
NEO | 2022 Target LTI Grant Value ($) | 2022 (Shares) | 2022 Service-Based RSUs (Shares) | |||||||||
Daniel H. Schulman | $24,000,000 | 2 | 88,396 | 88,396 | ||||||||
Gabrielle Rabinovitch | $ 2,750,000 | 3 | 10,129 | 10,129 | ||||||||
Peggy Alford | $10,000,000 | 36,832 | 36,832 | |||||||||
Jonathan Auerbach | $10,000,000 | 36,832 | 36,832 | |||||||||
Aaron Karczmer | $10,000,000 | 36,832 | 36,832 | |||||||||
John D. Rainey4 | $10,000,000 | 36,832 | 36,832 | |||||||||
Mark Britto | $15,000,000 | 55,248 | 55,248 |
1 |
|
|
|
|
Once the annual target values for the 2019 LTI awards were set for each NEO, the grant value was allocated equally between PBRSUs and service-based RSUs.
|
The table below shows the resulting number of shares of Company common stock subject to the 2019 LTI target PBRSUs and RSUs:
NEO | 2019 Target PBRSUs1 | 2019 RSUs1 | ||||||
Daniel H. Schulman | 112,790 | 112,790 | ||||||
John D. Rainey | 48,339 | 48,339 | ||||||
Jonathan Auerbach | 32,226 | 32,226 | ||||||
Aaron Karczmer | 37,597 | 37,597 | ||||||
Louise Pentland | 48,339 | 48,339 | ||||||
William J. Ready2 | 48,339 | 48,339 |
The target number of PBRSUs and number of service-based RSUs granted were determined by dividing the total grant value of the award by the Average Closing Price. The |
2 |
|
3 | Ms. Rabinovitch was awarded her 2022 LTI awards prior to becoming an NEO. She received two sets of LTI awards on March 1, 2022: her annual award with a |
4 | Mr. |
The following describes the two components of our 2019 LTI program: PBRSUs and RSUs.
Performance-Based Restricted Stock Units (PBRSUs)
In January 2019,2022, the Compensation Committee approved the following structure for the multi-year PBRSUs granted in 2019.
To emphasize the importance of long-term, sustained strategic growth, the Compensation Committee approved a three-year performance period from January 1, 2019 through December 31, 2021, with each award to be settled for the number of shares of Company common stock earned pursuant to the award following the end of the performance period, subject to the Compensation Committee’s approval of the level of achievement against thepre-established target levels for the selected performance measures2022 (the “2019-2021“2022-2024 PBRSUs”).
In light of the five-year term of the Operating Agreement with eBay expiring in July 2020, the Compensation Committee determined that for the 2019-2021 PBRSUs, separate targets should be set for the eBay marketplaces business. The Compensation Committee believed that separate targets would enhance our ability to set appropriately rigorous performance goals for our executives while minimizing the disproportionate effect that the eBay business and operational performance could have on the Company’s overall plan results, especially in consideration of the uncertainty and limited visibility regarding eBay’s planned expansion of its initiative to intermediate payments following the expiration of the Operating Agreement,
• | Three-year performance period from January 1, 2022 through December 31, 2024, to emphasize the importance of long-term, sustained strategic growth. |
• | ||||||
Awards to be settled in shares of PayPal common stock, subject to the Compensation |
Performance Measures and Rationales
The Compensation Committee approved the 2019-2021 PBRSU performance measures, which are the CAGR ofFX-Neutral Revenue and Free Cash Flow over the three-year performance period from January 1, 2019 to December 31, 2021, as equally-weighted measures, for each of the eBay marketplaces business and the rest of PayPal. The Compensation Committee believes that measuring CAGR over the three-year performance period is an appropriate performance measure as it is aligned with our long-term goal of growing our revenue and free cash flow.
The following table summarizesdescribes the two performance measures for the 2019-20212022-2024 PBRSUs and the Compensation Committee’s rationale for their selection:selection.
| ||||
|
COMPENSATION DISCUSSIONAND ANALYSIS
Annual Incentive Plan
PBRSU Mechanics and Targets
Each year, in establishing performance goals for the new three-year performance period, the Compensation Committee takes into considerationconsiders a number of key factors, including:including PayPal’s:
PayPal’s medium-term business plan
• | medium-term business plan; |
Medium-term outlook provided to the investment community
• | medium-term outlook provided to investors; |
Potential extraordinary events that could have a disproportionate impact on the alignment of performance and compensation
• | strategic direction and initiatives; |
PayPal’s strategic direction and initiatives
• | historical performance and goals set for prior performance periods; and |
Historical performance and goals set for prior performance periods
• | potential extraordinary events that could have a disproportionate impact on the alignment of performance and compensation. |
The targets set by the Compensation Committee are intended to be rigorous and consistent with the medium-term outlook provided to the investment community and our medium-term business plan. Accordingly, the Compensation Committee set the target levelsThe specific goals for the 2019-20212022-2024 PBRSUs at a levelare intended to be challenging but attainable and providingto provide appropriate incentives for our executive officers to continue to grow our business. The Compensation Committee believes that achievement of maximum performance against the target levels would require sustained exceptional performance over the performance period.
To earn any of the shares of PayPal common stock subject to the 2019-2021 PBRSUs, at least one of theFX-Neutral Revenue CAGR or Free Cash Flow CAGRThe two LTI performance thresholds must be met. Each of the performance thresholds forFX-Neutral Revenue CAGR and Free Cash Flow CAGR is independent, and ifmeasures are independent. If either threshold goal is met, the award isawards will be earned with respect to that performance measure based on the percentages shown in the table below.above. If the performance threshold for eitherFX-Neutral Revenue CAGR or Free Cash Flow CAGRa measure is not met, there iswill be no payment attributable to that performance measure. If neither performance threshold is met, no shares of PayPal common stock subject to the 2022-2024 PBRSUs will be awarded.
We do not disclose the specific performance goals for the 2022-2024 PBRSUs in this proxy statement for competitive reasons. For each measure, performance at the threshold level will result in a payout of 50% of target, performance at the target level will result in a payout of 100% of target and performance at the maximum level will result in a payout of 200% of target. Linear interpolation is applied to performance between threshold, target and maximum levels. The performance targets and achievement levels for the 2020-2022 PBRSUs are shown below to provide insight into the rigor of the targets the Compensation Committee sets.
Settlement of Previously Awarded 2020-2022 PBRSUs
The Compensation Committee set the targets for the 2020-2022 PBRSUs at the beginning of the performance period. It was unclear at that time the impact that the COVID-19 pandemic would have on our financial profile. We were able to maintain strong operating income and Free Cash Flow generation during this period, despite facing macroeconomic headwinds.
Beginning with the fourth quarter of 2022, we reclassified certain cash flows related to derivative collateral for foreign currency hedging. These cash flows had previously been classified as cash flows from operating activities, and were reclassified as cash flows from investing and financing activities, which we believe provides a more meaningful representation of cash flows from operating activities for a given period to our investors. At the time the targets for the 2020-2022 PBRSUs were determined, our Free Cash Flow forecast was based on the prior methodology. Because the 2020-2022 PBRSU targets were set under the prior methodology, the Compensation Committee based the performance achievement for the Free Cash Flow CAGR for the 2020-2022 PBRSUs on our historical presentation of Free Cash Flow, as indicated below. The percentage of target achieved for the 2020-2022 PBRSUs was 145% (under the revised methodology, the target achieved would have been 97%).
The following chart shows the minimum, target and maximum vesting levels forFX-Neutral Revenue CAGR and Free Cash Flow CAGR. Linear interpolation applies to performance between threshold, target, and maximum levels, and there is no funding for performance below the threshold level.
| ||||||||||||
|
While the performance targets for ongoing performance periods are not disclosed for competitive reasons, performance targets and achievement levels for the 2017-2019 PBRSUs are provided below.
|
Settlement of Previously Awarded 2017-2019 PBRSUs
The 2017-2019 PBRSUs were earned based on the CAGRs ofFX-Neutral Revenue and Free Cash Flow over the three-year performance period from January 1, 2017 to December 31, 2019, as equally weighted measures. To earn any of the shares of PayPal common stock subject to the 2017-2019 PBRSUs, at least one of theFX-Neutral Revenue CAGR or Free Cash Flow CAGR performance thresholds must be met. Each of the performance thresholds forFX-Neutral Revenue CAGR and Free Cash Flow CAGR was independent, and if either threshold was met,for the award was earned in respect of that performance measure.
The following chart shows the minimum, target, and maximum vesting levels forFX-Neutral Revenue CAGR and Free Cash Flow CAGR set by the Compensation Committee at the beginning of the 2017-2019 performance period,2020-2022 PBRSUs, the actual results for each measure and the corresponding percentage of target achieved.
Measure | Threshold | Target | Maximum | Actual | Percentage of Target Achieved | |||||||||||||||
Target Payout Percentage | 50% | 100% | 200% | |||||||||||||||||
FX-Neutral Revenue CAGR | 13% | 16% | 18% | 20% | 200% | |||||||||||||||
Free Cash Flow CAGR1 | 13% | 16% | 18% | 18% | 200% |
•2023 Proxy Statement | 63 |
1 For the 2017-2019 PBRSUs, the Compensation Committee approved an adjustment to actual Free Cash Flow performance to take into consideration the negative impact from taxes related to the acquisition of iZettle.
COMPENSATION DISCUSSIONAND ANALYSIS
Annual Incentive Plan
PayPal Performance
The following table shows the number of shares of PayPal common stock earned and vested pursuant to the 2017-20192020-2022 PBRSUs for each NEO.participating NEO based on achievement of 145% of target.1
NEO | Target (in Shares) | x | Percentage of Target | = | Number of Shares | Target (Shares) | x | Percentage of Target Achieved | = | Number of Shares Earned | ||||||||||||||||||||||||||||||
Daniel H. Schulman | 181,941 | 200% | 363,882 | 89,678 | 145% | 130,034 | ||||||||||||||||||||||||||||||||||
John D. Rainey | 60,647 | 200% | 121,294 | |||||||||||||||||||||||||||||||||||||
Gabrielle Rabinovitch | 9,784 | 145% | 14,188 | |||||||||||||||||||||||||||||||||||||
Peggy Alford | 25,623 | 145% | 37,154 | |||||||||||||||||||||||||||||||||||||
Jonathan Auerbach | 36,389 | 200% | 72,778 | 29,893 | 145% | 43,345 | ||||||||||||||||||||||||||||||||||
Aaron Karczmer | 48,518 | 200% | 97,036 | 32,028 | 145% | 46,441 | ||||||||||||||||||||||||||||||||||
Louise Pentland | 60,647 | 200% | 121,294 | |||||||||||||||||||||||||||||||||||||
William J. Ready | 97,035 | 200% | 194,070 |
1 | Mr. Rainey forfeited his 2020-2022 PBRSUs in connection with his resignation. |
Restricted Stock Units (RSUs)
Our 20192022 LTI awards also included service-based RSUs with a three-year annual vesting schedule, which aligns the vesting period of the RSUs with the three-year performance period of the 2019-2021 PBRSUs granted in 2019.2022-2024 PBRSUs. These RSU awards vest one-third on the first anniversary of the grant date, with the remainder vesting ratably each following quarter over the remaining vesting period, subject to the continued employment of the NEO. Service-based RSUs have value regardless of whether our stock price increases or decreases, and thereforeare designed to help to secure and retain our executive officers and provide an appropriate incentive for them to remain with us during the vesting period.
Performance-Based Restricted Stock Unit Award – Mr. AuerbachOther Compensation Elements
CFO Transition-Related Compensation
In December 2019,April 2022, the Company announced Mr. Rainey’s impending departure from PayPal. At that time, Mr. Rainey was eligible to take a sabbatical under the Company’s sabbatical program. To facilitate an effective transition of duties prior to his departure, the Compensation Committee grantedapproved a performance-based restricted stock unit award (the “Performance Award”)$100,000 cash transition bonus, which was subject to Mr. AuerbachRainey remaining continuously employed with a grant date value of $500,000. In determining to grant the Performance AwardCompany until May 23, 2022, without taking any time off. The transition bonus was payable to Mr. Auerbach,Rainey within two and a half months following his employment termination date. Mr. Rainey was not eligible for any severance or equity acceleration in connection with his departure.
In April 2022, the Board appointed Ms. Rabinovitch to serve as interim CFO effective upon Mr. Rainey’s departure. In June 2022, the Compensation Committee considered Mr. Auerbach’s keyapproved the following retention package for Ms. Rabinovitch, given the potential retention risks, and her materially expanded duties and responsibilities and critical role inat the creation and development of an innovative strategy and his instrumental stewardship and dedication in working to implement this strategy over a multi-year period, which culminated in: (i) the GoPay Acquisition, which enabled PayPal to become the first foreign payments platform to provide online payments services in China; and (ii) the Honey Acquisition, which enables PayPal’s entry into the earliest stages of the customers’ commerce experience, enhances our value proposition for both consumers and merchants, and allows us to significantly deepen our engagement and play a more meaningful role in the daily lives of our customers.Company:
50% of the Performance Award is earned upon the completion of the GoPay Acquisition, and the remaining 50% is earned upon the completion of the Honey Acquisition. Any portion of the Performance Award that is earned will vest ratably on the first, second and third anniversary of the grant date, subject to Mr. Auerbach’s continuous employment with the Company on each applicable vesting date.
• | A service-based RSU award granted on June 15, 2022, with a grant date value of $1.5 million, subject to the three-year vesting schedule applicable to RSUs under the Company’s LTI program. |
• | A PBRSU award granted on June 15, 2022, with a grant date target value of $1.5 million, scheduled to vest on March 1, 2025 based on the Company’s achievement of the performance conditions for the 2022-2024 PBRSUs. |
64 | ||||||
•2023 Proxy Statement |
|
COMPENSATION DISCUSSIONAND ANALYSIS
At the beginning of each year, the Compensation Committee meets to review and approve each executive officer’s base salary for the year after considering competitive market data and the individual factors described below. For 2019, the Compensation Committee assessed competitive market data on base salaries drawn from the public filings of our compensation peer group companies and general industry data for comparable technology and financial companies that are included in proprietary third-party compensation surveys (the specific identity of survey respondents are not provided to the Compensation Committee or the Company). The Compensation Committee also considered individual factors such as individual performance, levels of responsibility, breadth of knowledge, and prior experience in its evaluation of base salary adjustments.
Based on this review, the Compensation Committee determined not to make any changes in 2019 to the base salaries for our NEOs:
|
| Eligibility to participate as an executive vice president under the PayPal Holdings, Inc. Executive Change in Control and Severance Plan (the “Executive Severance Plan”) during the transition period between the departure of Mr. Rainey and the six-month period following the start date of the successor CFO, contingent on Ms. Rabinovitch’s transition support to the successor CFO. |
In August 2022, the Board appointed Mr. Jorgensen as Executive Vice President, Chief Financial Officer effective August 3, 2022. The Compensation Committee approved the following as part of his new hire compensation, which was determined after considering a review of the competitive market, compensation received by Mr. Jorgensen’s predecessor and compensation received at Mr. Jorgensen’s prior employer:
| A new hire service-based RSU award granted on September 15, 2022, with a grant date value of $1 million, subject to the three-year vesting schedule applicable to RSUs under the Company’s LTI program. |
| A new hire PBRSU award granted on September 15, 2022, with a grant date target value of $1 million, to be vested on March 1, 2025 based on the Company’s achievement of the performance conditions for the 2022-2024 PBRSUs under the Company’s LTI program. |
| A supplemental new hire service-based RSU award granted on September 15, 2022, with a grant date value of $8 million, subject to the three-year vesting schedule applicable to RSUs under the Company’s LTI program. |
| A new hire cash retention bonus of $6 million, with one-half paid shortly following his employment start date, $1 million paid in November 2022 and the remainder to be paid following the one-year anniversary of his employment start date, subject to Mr. Jorgensen’s continued employment with the Company on each applicable payment date. |
As previously disclosed, Mr. Jorgensen went on a leave of absence in September 2022 due to health reasons. The Board appointed Ms. Rabinovitch to serve as acting CFO during Mr. Jorgensen’s leave. In connection with this appointment, the Compensation Committee approved the following additional retention package for Ms. Rabinovitch:
• | A service-based RSU award granted on October 15, 2022, with a grant date value of $1.25 million, subject to the three-year vesting schedule applicable to RSUs under the Company’s LTI program. |
| A PBRSU award granted on March 1, 2023, with a grant date target value of $1.25 million, scheduled to vest on March 1, 2026 based on the Company’s achievement of the performance conditions for the 2023-2025 performance period. |
Eligibility to participate as an executive vice president under the Executive Severance Plan while Ms. Rabinovitch serves as acting CFO, and for six months thereafter, contingent on Ms. Rabinovitch’s continuous reasonable best efforts to support the Company’s CFO in their transition to the CFO role during the six months following the period Ms. Rabinovitch serves as acting CFO. |
The PayPal Holdings, Inc. Deferred Compensation Plan (“DCP”),DCP, ournon-qualified deferred compensation plan, provides our U.S.-based executive officers the opportunity to defer compensation in excess of the amounts that are legally permitted to be deferred under ourtax-qualified 401(k) savings plan (the “401(k) Plan”). Each of the 401(k) Plan and the DCP allows participants to set asidetax-deferred amounts. The Compensation Committee believes the opportunity to defer compensation is a competitive benefit that enhances our ability to attract and retain talented executives while building plan participants’ long-term commitment to the Company. The investment return on the deferred amounts is linked to the performance of a range of market-based investment choices made available pursuant to the DCP.choices. None of our NEOs participated in or had a balance in the DCP during 2019.2022.
|
Perquisites
We provide certain executive officers with perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with our overall executive compensation program and philosophy. These benefits are provided tophilosophy and that will help us attract and retain these executive officers.officers, as set forth below. The Compensation Committee periodically reviews the levels of these benefits provided to our executive officers. In 2019,
CEO Security Program
We maintain a comprehensive security policy, and we offeredmay determine that in certain circumstances, certain executive officers should be required to have personal security protection. We require these executives to accept such personal security protection because we believe it is in the following perquisitesbest interests of the Company and our stockholders that our executives and their family members not be vulnerable to our NEOs:security threats.
•2023 Proxy Statement | 65 |
COMPENSATION DISCUSSIONAND ANALYSIS
Other Compensation Elements
Because PayPal is a highly visible company, the Compensation Committee authorized a CEO security program for Mr. Schulman to address safety concerns, which include specific threats to his safety arising directly as a result of his position as our President and CEO. We paid to procure, install and maintain a comprehensive security policy, and as a component of this policy, we may determine that in certain circumstances, certain executive officers should be required to have personal security protection. Under our security policy, we require that the executive accept such personal security protection because we believe it is in the best interests of the Company and its stockholders that the executive not be vulnerable to security threats to the executive or his or her family members.
Because of the high visibility of the Company, the Compensation Committee authorized a CEO Security Program for Mr. Schulman to address safety concerns, which include specific threats to his safety arising directly as a result of his position as our President and CEO. We paid for the procurement, installation, and maintenance of personal residential security measures for Mr. Schulman and for the costs of security personnel during personal travel. In addition, the Compensation Committee has approved Mr. Schulman’s use of our corporate aircraft for personal travel in connection with his overall security program.
We believe that the costs of this overall security program are reasonable, appropriate, and for the Company’s benefit. Although we do not consider Mr. Schulman’s overall security program to be a perquisite for his benefit for the reasons described above, the costs related to personal residential security measures for Mr. Schulman at his residence and during personal travel, as well as the costs of our corporate aircraft for personal travel pursuant to his overall security program, are reported in the “All Other Compensation” column in the 2019 Summary Compensation Table below.
Severance and Change in Control Provisions
Executive Severance Plan
Each of our NEOs is eligible to receive payments and benefits in the event of a qualifying termination of employment, including a termination of employment in connection with a change in controlhis overall security program.
We believe the costs of this overall security program are reasonable, appropriate and benefit the Company (the “Executive Severance Provisions”), either through specific provisions included in individual agreements with the Company or substantially similar provisions provided under our SVP and Above Standard Severance Plan and Change in Control Severance Plan for Key Employees. In December 2019, the Compensation Committee approved the PayPal Holdings, Inc. Executive Change in Control and Severance Plan (the “Executive Severance Plan”). The Executive Severance Plan replaces and supersedes all prior provisions providing for severance payments and benefits, including those included in individual agreements and severance plans. Under the Executive Severance Plan, an NEO is eligible to receive payments and benefits in the event of certain terminations of employment, including without limitation, a termination of employment by the Company without cause or by the executive for good reason. No payments or benefits are provided under the Executive Severance Plan if there is a change in control of the Company without an accompanying qualifying termination of employment (i.e.,Company. Although we do not provide any “single-trigger” payments). We do not provide anyconsider Mr. Schulman’s overall security program to be a perquisite for his benefit for the reasons described above, the costs related to personal security measures for Mr. Schulman at his residence and during personal travel, as well as the costs of our NEOs with any excise tax“gross-ups” or other payment or reimbursement of excise taxes on severance in connection with a change in control of the Company.
|
The Compensation Committee believes that the Executive Severance Plan is essential to fulfill our objective to recruit, retain, and develop key, high-quality management talentcorporate aircraft for personal travel, are reported in the competitive market because these arrangements provide reasonable protection to the executive officer“All Other Compensation” column in the event that he or she is not retained under specific circumstances. The Executive Severance Plan is also intended to facilitate changes in the leadership team by setting terms2022 Summary Compensation Table below.
Our Structure for the termination of the employment of an NEO in advance, which allows for a smooth transition of responsibilities when it is deemed to be in the best interest of the Company. The change in control provisions in the Executive Severance Plan are intended to allow the executives to focus their attention on our business operations in the face of the potentially disruptive impact of a proposedchange-in-control transaction, to assess takeover bids objectively without regard to the potential impact on their individual job security, and to allow for a seamless transition in the event of a change in control of the Company. These considerations are especially important in light of the executives’ key leadership roles.Setting Compensation
See “Potential Payments Upon Termination or Change in Control” below for a description of these arrangements and the estimated payments and benefits payable under the Executive Severance Plan.
Mr. Ready Separation Agreement
Pursuant to a planned transition announced in June 2019, Mr. Ready’s employment with the Company terminated on December 31, 2019. In connection with his termination, Mr. Ready received severance payments and benefits pursuant to the terms of the PayPal Holdings, Inc. SVP and Above Standard Severance Plan for a Qualifying Termination, as set forth in the Ready Separation Agreement entered into with Mr. Ready. Mr. Ready did not receive any additional compensation outside of the terms of our SVP and Above Standard Severance Plan. See “Potential Payments Upon Termination or Change in Control” below for a description of these payments and benefits.
Other Compensation Practices and Policies
Our executive compensation program is designed and administered under the direction and control of the Compensation Committee, which is comprisedmade up solely of independent directors. The Compensation Committee reviews and approves our overall executive compensation program, policies and practices and sets the compensation of our executive officers, including our NEOs.
The Compensation Committee’s independent compensation consultant provides the Compensation Committee with advice and resources to help itthe Compensation Committee assess the effectiveness of our executive compensation strategy and program. The compensation consultant reports directly to the Compensation Committee, and the Compensation Committee has the sole power to terminate or replace the consultant at any time. In 2019, Compensia has served as the Compensation Committee’s independent compensation consultant.consultant since 2016.
As part of Compensia’s engagement, theThe Compensation Committee directed Compensia to work withhelp members of management to obtain the information necessary for management to formulate recommendations to the Compensation Committee, which are evaluated by Compensia. A representative of Compensia also meets with theattends Compensation Committee during its regular meetings, in executive session with no members of management present, and meets with the Chairchair and members of the Compensation Committee outside of its regular meetings.
As part of its engagement in 2019,2022, Compensia provided an environmental scan of executive compensation, evaluated our compensation peer group composition, evaluated executive cash and equity compensation levels at our compensation peer group companies, for our executive officers, reviewed proposed compensation adjustments and changes to existing arrangements, (including the Executive Severance Plan), advised on the framework for our annual and long-term incentive awards, (including awards to specific NEOs taking into account their individual contributions, performance, and retention considerations), assessed executive perquisites relative to peer and broader market practices and reviewed proposed compensation arrangements for new executives, as well as the compensation of ournon-employee directors. Compensia did not provide any other services to us in 2019.2022.
The Compensation Committee recognizes that it is essential to receiveRecognizing the importance of objective advice, from its compensation consultant. To that end, the Compensation Committee closely examines the procedures and safeguards of its compensation consultant to ensure that its services are objective. The Compensation Committee has assessed the independence of Compensia pursuant to the applicable Nasdaq listing standards and SEC rules and concluded that itsCompensia’s work for the Compensation Committee does not raise any conflict of interest.
CEO and the Human Resources Department
The Compensation Committee works with members of our management team, including Mr. Schulman and Kausik Rajgopal, our CEO, Ms. PentlandEVP, People and our Vice President, Global Rewards,Sourcing, to formulate the specific plan and award designs, including performance measures and performance target levels, necessary to align our executive compensation program with our business objectives and strategies.
|
Our CEOMr. Schulman reviews with the Compensation Committee his performance evaluations of each of our other NEOs together with his recommendations regarding base salary adjustments, annual incentive awards and long-term incentives to ensure thatallow the Compensation Committee’s decisionsCommittee to consider our financial and operational results as well as individual performance.performance in its compensation decisions. The Compensation Committee makes all final decisions regarding the compensation of all of our NEOs.
66 | •2023 Proxy Statement |
COMPENSATION DISCUSSIONAND ANALYSIS
Our Structure for Setting Compensation
While certain members of management attended the meetings of the Compensation Committee in 2019 upon2022 by invitation, they did not attend executive sessions of the meetings or the portionportions of Compensation Committee meetings during which their ownindividual compensation was discussed.discussed or approved.
Our compensation peer group is comprisedmade up of technology companies and financial companies. This mix is intended to provide the Compensation Committee with insight into the differences across these two business sectors in which we generally compete for executive talent.
In deciding whether a company should be included in our compensation peer group, the Compensation Committee generally considers the following screening criteria:
revenue;
• | revenue; |
market capitalization;
• | market capitalization; |
historical growth rates;
• | historical growth rates; |
primary line of business;
• | primary line of business; |
whether the company has a recognizable and well-regarded brand; and
• | whether the company has a recognizable and well-regarded brand; and |
• | whether we compete with the company for executive talent. |
whether we compete with the company for talent, particularly in the competitive San Francisco Bay Area talent market.
For eachEach member of the compensation peer group was chosen based on one or more of the factors listed above, wasbut not all factors were relevant for inclusion inevery peer company. While some of the group, and similarly, one or more of these factors may not have been relevant for inclusion in the group. Some of our compensation peer group members may be significantly larger than the CompanyPayPal in terms of revenue or market capitalization;capitalization, the Compensation Committee has determined that such companies should be included in the peer group primarily because the Company competeswe compete with them for talent, particularly in the competitive San Francisco Bay Area talent market.talent.
Our compensation peer group for 2019 is2022 was composed of 1211 technology companies which(which generally reflect theare companies with which we directly compete for talent,talent) and eight financial companies which(which generally reflect theare companies with which we both compete for talent and that more closely comparematch our financial performance. There were no changes inperformance). Applying the criteria described above, the Compensation Committee removed The Western Union Company from our compensation peer group from our 2018 peer group.
Peer Group Companies
|
| |||||||||
|
| |||||||||
In contemplating our executive compensation program for 20192022 and going forward, the Compensation Committee considered the compensation programs of our compensation peer group as well as our goals of rewarding performance and retaining core top talent. We also compare our performance against the performance of acompanies in our compensation peer group of companies that we consider tobelieve have relatively comparable business models. Our executive compensation program is generally designed to roughly parallel the programs of members of our compensation peer group because our employees have historically been recruited by these competitors and we compete against them for talent.competitors.
•2023 Proxy Statement | ||||||
67 |
COMPENSATION DISCUSSIONAND ANALYSIS Other Compensation Practices and Policies
|
Other Compensation Practices and Policies
Stock Ownership Guidelines
Our Board has adopted robust stock ownership guidelines designed to closely align the interests of ournon-employee directors and senior leadership team (including our executive officersofficers) with the long-term interests of our stockholders. Under these guidelines, our executive officers are required to achieve ownership of our common stock valued at the following multiple of their annual base salary, as applicable:
CEO — six times base salary
• | CEO: six times base salary |
EVPs — three times base salary
• | Executive Vice Presidents (including all executive officers other than the CEO): three times base salary |
Each executive officer is expected to meet his or herthe applicable guideline level within five years of his or her appointmentbecoming subject to his or her position,these requirements and to continuously own sufficient shares to meet the guideline level once attained for as long as he or she remainsthey remain an executive officer.
Prior to our executiveExecutive officers satisfyingwho have not yet satisfied their applicable guideline level they are required to retain an amount equal to 25% of the net shares of our common stock receivedthat they receive as the result of the exercise, vesting or payment of any equity awards granted to them.
Ournon-employee directors are also subject to our stock ownership guidelines. The guideline level for eachnon-employee director is five times his or her annual retainer (not including any additional retainer paid as a result of service as a Board chair, lead independent director, committee chair, or committee member). Ournon-employee directors are required to satisfy their guideline level within five years of joining the Board, and are expected to continuously own sufficient shares to meet their guideline level once attained for as long as they remain a Board member.
Shares that count towards satisfaction of the stock ownership guidelines for ournon-employee directors and executive officers include the following:
shares owned outright by the director or executive officer, or his or her immediate family members residing in the same household;
• | shares owned outright by the executive officer or their immediate family members residing in the same household; |
shares held in trust for the benefit of the director or executive officer, or his or her immediate family members; and
• | shares held in trusts, limited liability companies or similar entities for the benefit of the executive officer or their immediate family members; and |
deferred shares and vested deferred stock units, deferred restricted stock units, or deferred performance stock units that may only be settled in shares of our common stock.
• | deferred shares, vested DSUs, deferred RSUs or deferred PBRSUs that may only be settled in shares of our common stock. |
Our stock ownership guidelines are available on the Governance section of our Investor Relations website athttps://investor.paypal-corp.com/corporate-governance.cfm.investor.pypl.com/governance/governance-overview/default.aspx.
Our insider trading policy prohibits all Board members,directors, executive officers and employees from entering (directly or indirectly) into any hedging or monetization transactions relating to our securities, including prepaid variable forward contracts, equity swaps, collars and exchange funds, or any other transaction that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of PayPal securities owned directly or indirectly by such person. Additionally, Board members,directors, executive officers and employees are prohibited from using PayPal derivative securities as collateral in a margin account or for any loan or extension of credit, or otherwise trading in any instrument relating to the future price of our securities, such as a put or call option, futures contract, short sale (including a short sale “against the box”), collar, or other derivative security. Our insider trading policy also prohibits all Board membersdirectors and executive officers from pledging our common stock as collateral for loans. All otherOther employees are strongly discouraged from pledging PayPal securities as collateral for loans.
We have a clawback policy that covers our NEOs and other officers in a vice president or more senior position (who we refer to as “covered employees”). The clawback policy applies to incentive compensation (including cash or equity-based awards) paid or awarded to any NEO or other officer in a vice president or more senior position (“covered employee while he or she is a covered employee.employees”). The occurrence of any of the following events will trigger the policy:
a covered employee materially violates our Code of Business Conduct;
a covered employee causes material financial or reputational harm to the Company; or
a material restatement of all or a portion of our financial statements that is caused by a supervisory or other failure by a covered employee in a senior vice president (or more senior) position or a covered employee who is a vice president in the Company’s finance function.
• | ||||||
|
• | a covered employee causes material financial or reputational harm to the Company; or |
• | a material restatement of all or a portion of our financial statements due to a supervisory or other failure by a covered employee in a senior vice president (or more senior) position or any covered employee who is a vice president in the Company’s finance function. |
The clawback policy provides that the Compensation Committee will determine in its discretion whether any of the above triggering events has occurred, and if so, whether to require the full or partial forfeiture and/or repayment of any incentive compensation covered by the policy based on the facts and circumstances. The forfeiture and/or repayment may include the following:
• | any incentive compensation that is greater than the amount that would have been paid to the covered employee had the triggering event been known; |
68 | •2023 Proxy Statement |
COMPENSATION DISCUSSIONAND ANALYSIS
Other Compensation Practices and Policies
• | any outstanding or unpaid incentive compensation, whether vested or unvested, that was awarded to the covered employee; and/or |
• | any incentive compensation that was paid to or received by the covered employee (including gains realized through the exercise of stock options) during the 12-month period preceding the date on which we had actual knowledge of the triggering event or the full impact of the triggering event was known (or such longer period of time as may be required by any applicable statute or government regulation). |
The Company continues to monitor this policy to ensure that it is consistent with applicable laws and will review and modify the policy as necessary to reflect the final Nasdaq listing rules adopted to implement the compensation recovery requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Severance and Change in Control Provisions
Executive Severance Plan
The Company maintains the Executive Severance Plan, which replaced and superseded all prior plans and agreements providing for severance payments and benefits, including those in individual agreements and severance plans. Under the Executive Severance Plan, each NEO is eligible to receive payments and benefits in the event of certain terminations of employment, including an involuntary termination of employment by the Company without cause or by the executive for good reason. The Executive Severance Plan includes the Executive Long Term Incentive Program adopted by the Compensation Committee effective July 1, 2021, which provides additional severance benefits to NEOs, including equity vesting provisions upon retirement, job elimination, death or disability.
No payments or benefits are provided under the Executive Severance Plan if there is a change in control of the Company without an accompanying qualifying termination of employment (i.e., we do not provide any “single-trigger” change in control payments). We also do not provide any of our NEOs with any excise tax “gross-ups” or other payment or reimbursement of excise taxes on severance or other payments in connection with a change in control of the Company.
The Compensation Committee believes that the Executive Severance Plan is essential to fulfill the Company’s objective of recruiting, developing and retaining key, high-quality management talent in a competitive market because these arrangements provide reasonable protection to executives in the event they are not retained under specific circumstances. The Executive Severance Plan is also intended to facilitate changes in the leadership team by setting terms for the termination of the employment of an NEO in advance, which allows for a smoother transition of responsibilities when it is deemed to be in the Company’s best interest. The change in control provisions in the Executive Severance Plan are intended to allow our executives to focus their attention on our business operations despite the potentially disruptive impact of a proposed change-in-control transaction, to assess takeover bids objectively without regard to the covered employee hadpotential impact on their individual job security and to allow for a seamless transition in the triggering event been known;of a change in control of the Company. These considerations are especially important in light of the executives’ key leadership roles.
Mr. Rainey was ineligible to receive any outstanding or unpaid incentive compensation, whether vested or unvested, that was awardedbenefits under the Executive Severance Plan in connection with his resignation, effective May 23, 2022. As disclosed by the Company in February 2023, in connection with an internal management restructuring, Mr. Britto’s employment with the Company terminated effective February 28, 2023. As disclosed by the Company in March 2023, Mr. Jorgensen stepped down from his position as the Company’s CFO as of March 7, 2023 and is expected to continue to serve as a senior advisor to the covered employee; and/or
any incentive compensation that was paidCompany through September 15, 2023. Mr. Britto’s separation constituted, and Mr. Jorgensen’s separation will constitute, a qualifying involuntary termination without cause under the Executive Severance Plan, and each is eligible to or receivedreceive severance payments and benefits pursuant to the terms and subject to the conditions of the Executive Severance Plan.
As disclosed by the covered employee (including gains realized throughCompany in February 2023, Mr. Schulman informed the exerciseBoard that he plans to retire as PayPal’s President and CEO at the end of stock options) duringthis year. Upon his retirement from the12-month period preceding Company, Mr. Schulman will be eligible for the date on which we had actual knowledgeretirement benefits provided under the Executive Severance Plan.
See “Potential Payments Upon Termination or Change in Control” below for a description of these arrangements and the triggering event orestimated payments and benefits payable under the full impact of the triggering event was known (or such longer period of time as may be required by any applicable statute or government regulation).Executive Severance Plan.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code (as amended, “Section 162(m)”) generally limits tax deductibility of compensation paid by a public company to its chief executive officer, chief financial officer and certain other current and former executive officers in any year to $1 million in the year compensation becomes taxable to the executive officer. Prior to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), certain compensation was exempt from this deduction limit to the extent it met the requirements to be considered “qualified performance-based compensation” as previously defined in Section 162(m). The Tax Act eliminated that exemption and expanded the scope of persons covered by the limitations on deductibility under Section 162(m). The new rules generally apply to taxable years beginning after December 31, 2017, but provide an exception for compensation provided pursuant to a written binding contract in effect on November 2, 2017 that has not subsequently been modified in any material respect. While the Compensation Committee has historically used the requirements of Section 162(m) as a guideline, deductibility is not the sole factor it considers in assessing the appropriate levels and types of executive compensation. Accordingly, the Compensation Committee will awardnon-deductible compensation where it believes doing so is in our and our stockholders’ best interests.interests, regardless of its deductibility.
•2023 Proxy Statement | 69 |
COMPENSATION DISCUSSIONAND ANALYSIS
Other Compensation Practices and Policies
We account for stock-based compensation in accordance with FASB ASC Topic 718, which requires us to recognize compensation expense for share-based payments, including stock options, restricted stock units, performance-based restricted stock units,RSUs, PBRSUs, shares of Company common stock and other forms of equity compensation.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management. Based on its review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s 20192022 Annual Report on Form10-K.
The Compensation Committee of the Board
David W. Dorman (Chairman)
Wences Casares(Chair)
Jonathan Christodoro
Gail J. McGovern
70 | ||||||
•2023 Proxy Statement |
|
COMPENSATION TABLES
20192022 Summary Compensation Table
Compensation Tables
2022 Summary Compensation Table
The following table summarizes the total compensation paid to and received and earned by each of our NEOs for the fiscal year ended December 31, 20192022 and, to the extent required under SEC rules, the fiscal years ended December 31, 20172021 and December 31, 2018.2020.
Name and Principal Position (a) | Year (b) | Salary ($) (c) | Bonus ($) | Stock Awards ($) (e) | Option Awards ($) (f) | Non-Equity Incentive Plan Compensation ($) (g) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) (h) | All Other Compensation ($) (i) | Total ($) | |||||||||||||||||||||||||||
Daniel H. Schulman President and Chief Executive Officer |
| 2019 |
|
| 1,000,000 |
|
| — |
|
| 23,854,743 |
|
| — |
|
| 750,000 |
|
| — |
|
| 220,730 |
|
| 25,825,473 |
| |||||||||
| 2018 |
|
| 1,000,000 |
|
| — |
|
| 35,275,516 |
|
| — |
|
| 875,000 |
|
| — |
|
| 614,072 |
|
| 37,764,588 |
| ||||||||||
| 2017 |
|
| 1,000,000 |
|
| — |
|
| 16,976,017 |
|
| — |
|
| 1,000,000 |
|
| — |
|
| 242,617 |
|
| 19,218,634 |
| ||||||||||
John D. Rainey Chief Financial Officer and Executive Vice President, Global Customer Operations |
| 2019 |
|
| 750,000 |
|
| — |
|
| 10,139,564 |
|
| — |
|
| 281,250 |
|
| — |
|
| 11,200 |
|
| 11,182,014 |
| |||||||||
| 2018 |
|
| 721,154 |
|
| — |
|
| 8,463,911 |
|
| — |
|
| 328,125 |
|
| — |
|
| 11,000 |
|
| 9,524,190 |
| ||||||||||
| 2017 |
|
| 650,000 |
|
| — |
|
| 5,645,887 |
|
| — |
|
| 325,000 |
|
| — |
|
| 2,010,800 |
|
| 8,631,687 |
| ||||||||||
Jonathan Auerbach Executive Vice President, Chief Strategy, Growth and Data Officer |
| 2019 |
|
| 650,000 |
|
| — |
|
| 7,403,928 |
|
| — |
|
| 243,750 |
|
| — |
|
| 59,855 |
|
| 8,357,533 |
| |||||||||
Aaron Karczmer Chief Risk Officer and Executive Vice President, Risk and Platforms | 2019 | 650,000 | — | 7,938,645 | — | 243,750 | — | 11,200 | 8,843,595 | |||||||||||||||||||||||||||
Louise Pentland |
| 2019 |
|
| 750,000 |
|
| — |
|
| 10,139,564 |
|
| — |
|
| 281,250 |
|
| — |
|
| 14,200 |
|
| 11,185,014 |
| |||||||||
Executive Vice President, Chief Business Affairs |
| 2018 |
|
| 713,942 |
|
| — |
|
| 8,463,911 |
|
| — |
|
| 328,125 |
|
| — |
|
| 11,000 |
|
| 9,516,978 |
| |||||||||
and Legal Officer |
| 2017 |
|
| 625,000 |
|
| — |
|
| 5,626,669 |
|
| — |
|
| 312,500 |
|
| — |
|
| 10,800 |
|
| 6,574,969 |
| |||||||||
William J. Ready(1) Former Executive Vice President, Chief Operating Officer |
| 2019 |
|
| 750,000 |
|
| — |
|
| 30,062,813 | (2) |
| — |
|
| 187,500 |
|
| 1,538,867 |
|
| 32,539,180 |
| ||||||||||||
| 2018 |
|
| 721,154 |
|
| — |
|
| 8,463,911 |
|
| — |
|
| 328,125 |
|
| — |
|
| 11,000 |
|
| 9,524,190 |
| ||||||||||
| 2017 |
|
| 650,000 |
|
| — |
|
| 25,202,553 |
|
| — |
|
| 325,000 |
|
| — |
|
| 10,800 |
|
| 26,188,353 |
|
Name and Principal Position1 (a) | Year (b) | Salary ($)(c) | Bonus ($)(d) | Stock Awards ($)(e) | Option Awards ($)(f) | Non-Equity Incentive Plan Compensation ($)(g) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)(h) | All Other Compensation ($)(i) | Total ($) | |||||||||||||||||||||||||||
Daniel H. Schulman President and Chief Executive Officer |
| 2022 |
|
| 1,250,000 |
| — | 20,182,730 | — | 312,500 | — | 212,692 | 21,957,922 | |||||||||||||||||||||||
2021 | 1,122,115 | — | 29,920,381 | — | 625,000 | — | 402,857 | 32,070,353 | ||||||||||||||||||||||||||||
2020 | 1,038,462 | — | 20,957,193 | — | 1,000,000 | — | 366,417 | 23,362,072 | ||||||||||||||||||||||||||||
Blake Jorgensen Former Chief Financial Officer | 2022 | 302,885 | 4,000,000 | 2 | 10,336,008 | — | 73,684 | — | — | 14,712,576 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
John D. Rainey3 Former Chief Financial Officer and EVP, Global Customer Operations | 2022 | 305,769 | 100,000 | 4 | 8,353,168 | 5 | — | — | — | 29,064 | 8,788,002 | |||||||||||||||||||||||||
2021 | 750,000 | — | 11,258,002 | — | 234,375 | — | 11,600 | 12,253,977 | ||||||||||||||||||||||||||||
2020 | 778,846 | — | 8,896,739 | — | 328,125 | — | 11,400 | 10,015,110 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Gabrielle Rabinovitch Acting Chief Financial Officer | 2022 | 534,231 | 1,035,000 | 6 | 6,233,422 | — | 210,938 | — | — | 8,013,590 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Peggy Alford EVP, Global Sales |
|
2022 |
|
|
736,731 |
7 |
|
— |
|
|
8,353,168 |
|
|
— |
|
|
199,219 |
|
|
— |
|
|
12,200 |
|
|
9,301,318 |
| |||||||||
2021 | 674,423 | 250,000 | 9,377,300 | — | 325,000 | — | 11,600 | 10,638,323 | ||||||||||||||||||||||||||||
2020 | 653,846 | 1,175,000 | 6,050,368 | — | 325,000 | — | 11,400 | 8,215,614 | ||||||||||||||||||||||||||||
Jonathan Auerbach EVP, Chief Strategy, Growth & Data Officer |
|
2022 |
|
|
750,000 |
|
|
— |
|
|
8,353,168 |
|
|
— |
|
|
164,063 |
|
|
— |
|
|
— |
|
|
9,267,231 |
| |||||||||
2021 | 698,846 | — | 11,146,113 | — | 292,969 | — | — | 12,137,928 | ||||||||||||||||||||||||||||
2020 | 675,000 | — | 6,972,602 | — | 325,000 | — | — | 7,972,602 | ||||||||||||||||||||||||||||
Mark Britto Former EVP, Chief Product Officer | 2022 | 750,000 | — | 12,276,145 | — | 164,063 | — | 12,200 | 13,202,407 | |||||||||||||||||||||||||||
2021 | 698,846 | — | 16,355,481 | — | 292,969 | — | 11,600 | 17,358,896 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Aaron Karczmer EVP, Chief Enterprise Services Officer | 2022 | 736,731 | 7 | — | 8,353,168 | — | 187,500 | — | 12,200 | 9,289,599 | ||||||||||||||||||||||||||
2021 | 674,423 | — | 9,377,300 | — | 325,000 | — | 11,600 | 10,388,323 | ||||||||||||||||||||||||||||
2020 | 675,000 | — | 7,433,719 | — | 325,000 | — | 11,400 | 8,445,119 |
1 |
|
2 | This amount represents the new hire cash retention bonus payments made to |
3 | Effective May 23, 2022, Mr. Rainey resigned from his role as Chief Financial Officer and Executive Vice President, Global Customer Operations. |
4 | This amount represents the cash transition bonus offered to Mr. Rainey in connection with the transition of his duties to Ms. Rabinovitch as the interim CFO and Mr. Rainey’s accrued paid time off as of |
Mr. Rainey forfeited all of his 2022 stock awards upon his resignation effective May 23, 2022. |
6 | This amount represents (i) |
7 | The salary amount for Ms. Alford and Mr. Karczmer is less than their respective 2022 annual base salary because their 2022 annual base salary became effective in |
STOCK AWARDS
•2023 Proxy Statement | 71 |
COMPENSATION TABLES
2022 Summary Compensation Table
Stock Awards – COLUMNColumn (e)
Amounts shown represent the grant date fair value of RSUs and PBRSUs (including PBRSUs under the Company’s annual incentive plan for 2019 (the “2019 AIP”))2022 AIP) granted to each of our NEOs as computed in accordance with FASB ASC Topic 718. For Mr. Ready, the amounts also include the incremental fair value associated with modifications to his outstanding equity awards in 2019, as described in footnote 2 above. The grant date fair value of RSUs is determined using the fair value of the underlying common stock on the grant date.
The assumptions used by the Company in calculating the grant date fair value of the stock awards are incorporated herein by reference to Note 15 to the consolidated financial statements contained in the Company’s 20192022 Annual Report on Form10-K (the “2019Form 10-K”).10-K. The estimated fair value of PBRSUs is calculated based on the probable outcome of the performance measures for the applicable performance period as of the grant date of the award for accounting purposes.
|
Assuming the highest level of performance is achieved under the applicable performance measures for the 20192022 AIP PBRSUs and the 2019-20212022-2024 PBRSUs, the maximum possible value of the awards using the fair value of the underlying common stock on the date that the awards were granted for accounting purposes is presented below:
Name | Maximum Value of 2019 AIP PBRSUs (as of Grant Date for Accounting Purposes) ($) | Maximum Value of 2019-2021 PBRSUs (as of Grant Date for Accounting Purposes) ($) | ||||||
Mr. Schulman | 3,134,877 | 22,287,304 | ||||||
Mr. Rainey | 1,175,555 | 9,551,786 | ||||||
Mr. Auerbach | 1,018,954 | 6,367,858 | ||||||
Mr. Karczmer | 1,018,954 | 7,429,167 | ||||||
Ms. Pentland | 1,175,555 | 9,551,786 | ||||||
Mr. Ready | 1,175,555 | 9,551,786 |
Name | Maximum Value of 2022 AIP PBRSUs (as of Grant Date for Accounting Purposes) ($) | Maximum Value of 2022-2024 AIP PBRSUs (as of Grant Date for Accounting Purposes) ($) | ||||||
Daniel H. Schulman | 2,705,228 | 18,830,116 | ||||||
Blake Jorgensen | 591,896 | 2,008,012 | ||||||
John D. Rainey | 1,014,432 | 7,845,953 | ||||||
Gabrielle Rabinovitch | 365,315 | 4,938,669 | ||||||
Peggy Alford | 1,014,432 | 7,845,953 | ||||||
Jonathan Auerbach | 1,014,432 | 7,845,953 | ||||||
Mark Britto | 1,014,432 | 11,768,929 | ||||||
Aaron Karczmer | 1,014,432 | 7,845,953 |
Pursuant to the Ready Separation Agreement, Mr. Ready’s 2019 AIP was paid out based on actual Company performance for Mr. Ready’s Company performance portion and at target for Mr. Ready’s individual performance portion.
The amount shown in the “Stock Awards” column for Mr. Auerbach includes the grant date fair value of the Performance Award.
NON-EQUITY INCENTIVE PLAN COMPENSATIONNon-Equity Incentive Plan Compensation – COLUMNColumn (g)
Amounts represent cash(non-equity) performance-based compensation earned under the individual performance portion of the 20192022 AIP. The Company performance portion of the annual incentive payout was delivered in PBRSUs and is reflected in the “Stock Awards” column. See “Compensation Discussion and Analysis – 2022 Compensation Framework and Decisions – Annual Incentive (Performance-Based) Compensation for 2019”Plan” above for a more detailed discussion.
Pursuant to the Ready Separation Agreement, Mr. Ready’s 2019 AIP was paid out based on actual Company performance for Mr. Ready’s Company performance portion and at target for Mr. Ready’s individual performance portion.
ALL OTHER COMPENSATIONAll Other Compensation – COLUMNColumn (i)
The dollar amounts for each perquisite and each other item of compensation shown in the “All Other Compensation” column and in this footnote represent the Company’s incremental cost of providing the perquisite or other benefit to our NEOs, net of any amounts reimbursed by our NEOs and are valued based on the amounts accrued for payment or paid to the service provider or NEO, or, in the case of perquisites or other benefits, the aggregate incremental cost to the Company, as applicable. See “Compensation Discussion and Analysis – Other Compensation FrameworkElements – Other Compensation Elements”Benefits” above for additional details on these benefits. Amounts include the following perquisites and other compensation provided to our NEOs in 2019.2022.
Name | 401(k) Match(1) ($) | Perquisites and Other Benefits ($) | Total ($) | |||||||||
Mr. Schulman | 11,200 | 209,530 | (2) | 220,730 | ||||||||
Mr. Rainey | 11,200 | — | 11,200 | |||||||||
Mr. Auerbach | — | 59,855 | (3) | 59,855 | ||||||||
Mr. Karczmer | 11,200 | — | 11,200 | |||||||||
Ms. Pentland | 11,200 | 3,000 | (4) | 14,200 | ||||||||
Mr. Ready | 11,200 | 1,527,667 | (5) | 1,538,867 |
Name | 401(k) Match1 ($) | Perquisites and Other Benefits ($) | Total ($) | |||||||||
Daniel H. Schulman | 12,200 | 200,492 | 2 | 212,692 | ||||||||
Blake Jorgensen | — | — | — | |||||||||
John D. Rainey | 12,200 | 16,864 | 3 | 29,064 | ||||||||
Gabrielle Rabinovitch | — | — | — | |||||||||
Peggy Alford | 12,200 | — | 12,200 | |||||||||
Jonathan Auerbach | — | — | — | |||||||||
Mark Britto | 12,200 | — | 12,200 | |||||||||
Aaron Karczmer | 12,200 | — | 12,200 |
1 | Represents matching contributions under the Company 401(k) |
2 | Represents costs related to Mr. Schulman’s overall security program, which |
Costs of $164,837 related to the procurement, installation, and maintenance of personal residential security measures for Mr. Schulman.
Costs of $5,779 related to security personnel during personal travel.
Costs of $38,914 related to personal use of our corporate aircraft, calculated based on the incremental cost to the Company and include fuel costs, landing and parking fees, in-flight catering, crew expenses, en route navigation fees, and international handling fees, as applicable.
|
|
|
A lump sum severance payment of $1,500,000.
A lump sum payment of $24,000 for health insurance costs.
• | Costs of $165,134 related to the procurement, installation and maintenance of personal security measures for Mr. Schulman. | |
• | Costs of $35,358 related to personal use of our corporate aircraft, calculated based on the aggregate incremental cost to the Company. Includes fuel costs, landing and parking fees, in-flight catering, crew expenses, en route navigation fees and international handling fees, as applicable. |
3 | Represents the payment of Mr. Rainey’s accrued paid time off upon his resignation from the Company. |
| •2023 Proxy Statement |
COMPENSATION TABLES
2022 Grants of Plan-Based Awards Table
2022 Grants ofPlan-Based Awards Table
The following table sets forth information regarding grants of plan-based awards to each of our NEOs for the fiscal year ended December 31, 2019.2022.
Approval Date (b) | Grant Date (c) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) (#)(j) | All Other Option Awards: Number of Securities Underlying Options (#)(k) | Exercise or Base Price of Option Awards | Grant Date Fair Value(4) ($)(m) | |||||||||||||||||||||||||||||||||||||||||
Name (a) | Threshold ($)(d) | Target ($)(e) | Maximum ($)(f) | Threshold (#)(g) | Target (#)(h) | Maximum (#)(i) | ||||||||||||||||||||||||||||||||||||||||||
Daniel H. Schulman | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP – Cash | — | 500,000 | 1,000,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
2019 AIP – PBRSUs | 1/16/2019 | 2/15/2019 | — | — | — | 4,129 | 16,515 | 33,030 | — | — | — | 1,567,439 | ||||||||||||||||||||||||||||||||||||
2019-2021 PBRSUs | 1/16/2019 | 3/1/2019 | — | — | — | 28,198 | 112,790 | 225,580 | — | — | — | 11,143,652 | ||||||||||||||||||||||||||||||||||||
RSUs | 1/16/2019 | 3/1/2019 | — | — | — | — | — | — | 112,790 | — | — | 11,143,652 | ||||||||||||||||||||||||||||||||||||
John D. Rainey | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP – Cash | — | 187,500 | 375,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
2019 AIP – PBRSUs | 1/16/2019 | 2/15/2019 | — | — | — | 1,548 | 6,193 | 12,386 | — | — | — | 587,778 | ||||||||||||||||||||||||||||||||||||
2019-2021 PBRSUs | 1/16/2019 | 3/1/2019 | — | — | — | 12,085 | 48,339 | 96,678 | — | — | — | 4,775,893 | ||||||||||||||||||||||||||||||||||||
RSUs | 1/16/2019 | 3/1/2019 | — | — | — | — | — | — | 48,339 | — | — | 4,775,893 | ||||||||||||||||||||||||||||||||||||
Jonathan Auerbach | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP – Cash | — | 162,500 | 325,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
2019 AIP – PBRSUs | 1/16/2019 | 2/15/2019 | — | — | — | 1,342 | 5,368 | 10,736 | — | — | — | 509,477 | ||||||||||||||||||||||||||||||||||||
2019-2021 PBRSUs | 1/16/2019 | 3/1/2019 | — | — | — | 8,057 | 32,226 | 64,452 | — | — | — | 3,183,929 | ||||||||||||||||||||||||||||||||||||
RSUs | 1/16/2019 | 3/1/2019 | — | — | — | — | — | — | 32,226 | — | — | 3,183,929 | ||||||||||||||||||||||||||||||||||||
Performance Award | 12/16/19 | 12/16/19 | — | — | — | 2,403 | 4,806 | 4,806 | — | — | 526,593 | |||||||||||||||||||||||||||||||||||||
Aaron Karczmer | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP – Cash | 162,500 | 325,000 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
2019 AIP – PBRSUs | 1/16/2019 | 2/15/2019 | 1,342 | 5,368 | 10,736 | — | — | 509,477 | ||||||||||||||||||||||||||||||||||||||||
2019-2021 PBRSUs | 1/16/2019 | 3/1/2019 | 9,399 | 37,597 | 75,194 | — | — | 3,714,584 | ||||||||||||||||||||||||||||||||||||||||
RSUs | 1/16/2019 | 3/1/2019 | — | — | — | — | — | — | 37,597 | — | — | 3,714,584 | ||||||||||||||||||||||||||||||||||||
Louise Pentland | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP – Cash | — | 187,500 | 375,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
2019 AIP – PBRSUs | 1/16/2019 | 2/15/2019 | — | — | — | 1,548 | 6,193 | 12,386 | — | — | — | 587,778 | ||||||||||||||||||||||||||||||||||||
2019-2021 PBRSUs | 1/16/2019 | 3/1/2019 | — | — | — | 12,085 | 48,339 | 96,678 | — | — | — | 4,775,893 | ||||||||||||||||||||||||||||||||||||
RSUs | 1/16/2019 | 3/1/2019 | — | — | — | — | — | — | 48,339 | — | — | 4,775,893 | ||||||||||||||||||||||||||||||||||||
William J. Ready | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP – Cash | — | 187,500 | 375,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
2019 AIP – PBRSUs | 1/16/2019 | 2/15/2019 | — | — | — | 1,548 | 6,193 | 12,386 | — | — | — | 587,778 | ||||||||||||||||||||||||||||||||||||
2019-2021 PBRSUs | 1/16/2019 | 3/1/2019 | — | — | — | 12,085 | 48,339 | 96,678 | — | — | — | 4,775,893 | ||||||||||||||||||||||||||||||||||||
RSUs | 1/16/2019 | 3/1/2019 | — | — | — | — | — | — | 48,339 | — | — | 4,775,893 | ||||||||||||||||||||||||||||||||||||
Modified Equity Awards(5) | 19,923,249 | (5) |
|
|
|
Estimated Future Payouts |
|
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units3 (#)(j) | All Other Option Awards: Number of Securities Underlying Options (#)(k) | Exercise or Base Price of Option Awards ($/Sh)(l) | Grant Date Fair Value of Stock and Option Awards4 ($)(m) | |||||||||||||||||||||||||||||||||||||||||||
Name(a) | Approval Date(b) | Grant Date(c) | Threshold ($)(d) | Target ($)(e) | Maximum ($)(f) |
| Threshold (#)(g) | Target (#)(h) | Maximum (#)(i) | |||||||||||||||||||||||||||||||||||||||||||
Daniel H. Schulman |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 625,000 | 1,250,000 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 1/25/2022 | 2/15/2022 | — | — | — |
|
|
| 2,929 | 11,715 | 23,430 | — | — | — | 1,352,614 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| 22,099 | 88,396 | 176,792 | — | — | — | 9,415,058 | |||||||||||||||||||||||||||||||||||||
RSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 88,396 | — | — | 9,415,058 | |||||||||||||||||||||||||||||||||||||
Blake Jorgensen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 98,245 | 196,490 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 7/12/2022 | 9/15/2022 | — | — | — |
|
|
| 768 | 3,070 | 6,140 | — | — | — | 295,948 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 7/12/2022 | 9/15/2022 | — | — | — |
|
|
| 2,604 | 10,415 | 20,830 | — | — | — | 1,004,006 | |||||||||||||||||||||||||||||||||||||
RSUs | 7/12/2022 | 9/15/2022 | — | — | — |
|
|
| — | — | — | 10,415 | — | — | 1,004,006 | |||||||||||||||||||||||||||||||||||||
Supplemental New Hire RSUs | 7/12/2022 | 9/15/2022 | — | — | — |
|
|
| — | — | — | 83,320 | — | — | 8,032,048 | |||||||||||||||||||||||||||||||||||||
John D. Rainey5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 234,375 | 468,750 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 1/25/2022 | 2/15/2022 | — | — | — |
|
|
| 1,098 | 4,393 | 8,786 | — | — | — | 507,216 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| 9,208 | 36,832 | 73,664 | — | — | — | 3,922,976 | |||||||||||||||||||||||||||||||||||||
RSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 36,832 | — | — | 3,922,976 | |||||||||||||||||||||||||||||||||||||
Gabrielle Rabinovitch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 234,375 | 468,750 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 2/14/2022 | 2/15/2022 | — | — | — |
|
|
| 396 | 1,582 | 3,164 | — | — | — | 182,658 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 2/28/2022 | 3/1/2022 | — | — | — |
|
|
| 2,302 | 9,208 | 18,416 | — | — | — | 980,744 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs6 | 2/28/2022 | 3/1/2022 | — | — | — |
|
|
| 230 | 921 | 1,842 | — | — | — | 98,096 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs7 | 6/15/2022 | 6/15/2022 | — | — | — |
|
|
| 4,584 | 18,337 | 36,674 | — | — | — | 1,390,495 | |||||||||||||||||||||||||||||||||||||
RSUs | 2/28/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 9,208 | — | — | 980,744 | |||||||||||||||||||||||||||||||||||||
RSUs6 | 2/28/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 921 | — | — | 98,096 | |||||||||||||||||||||||||||||||||||||
RSUs7 | 6/15/2022 | 6/15/2022 | — | — | — |
|
|
| — | — | — | 18,337 | — | — | 1,390,495 | |||||||||||||||||||||||||||||||||||||
RSUs8 | 9/27/2022 | 10/15/2022 | — | — | — |
|
|
| — | — | — | 13,820 | — | — | 1,112,095 | |||||||||||||||||||||||||||||||||||||
Peggy Alford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 234,375 | 468,750 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 1/25/2022 | 2/15/2022 | — | — | — |
|
|
| 1,098 | 4,393 | 8,786 | — | — | — | 507,216 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| 9,208 | 36,832 | 73,664 | — | — | — | 3,922,976 | |||||||||||||||||||||||||||||||||||||
RSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 36,832 | — | — | 3,922,976 |
•2023 Proxy Statement | 73 |
COMPENSATION TABLES
2022 Grants of Plan-Based Awards Table
|
|
|
Estimated Future Payouts |
|
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units3 (#)(j) | All Other Option Awards: Number of Securities Underlying Options (#)(k) | Exercise or Base Price of Option Awards ($/Sh)(l) | Grant Date Fair Value of Stock and Option Awards4 ($)(m) | |||||||||||||||||||||||||||||||||||||||||||
Name(a) | Approval Date(b) | Grant Date(c) | Threshold ($)(d) | Target ($)(e) | Maximum ($)(f) |
| Threshold (#)(g) | Target (#)(h) | Maximum (#)(i) | |||||||||||||||||||||||||||||||||||||||||||
Jonathan Auerbach |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 234,375 | 468,750 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 1/25/2022 | 2/15/2022 | — | — | — |
|
|
| 1,098 | 4,393 | 8,786 | — | — | — | 507,216 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| 9,208 | 36,832 | 73,664 | — | — | — | 3,922,976 | |||||||||||||||||||||||||||||||||||||
RSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 36,832 | — | — | 3,922,976 | |||||||||||||||||||||||||||||||||||||
Mark Britto |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 234,375 | 468,750 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 1/25/2022 | 2/15/2022 | — | — | — |
|
|
| 1,098 | 4,393 | 8,786 | — | — | — | 507,216 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| 13,812 | 55,248 | 110,496 | — | — | — | 5,884,464 | |||||||||||||||||||||||||||||||||||||
RSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 55,248 | — | — | 5,884,464 | |||||||||||||||||||||||||||||||||||||
Aaron Karczmer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2022 AIP – Cash |
|
|
|
|
|
| — | 234,375 | 468,750 |
|
|
| — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
2022 AIP – PBRSUs | 1/25/2022 | 2/15/2022 | — | — | — |
|
|
| 1,098 | 4,393 | 8,786 | — | — | — | 507,216 | |||||||||||||||||||||||||||||||||||||
2022-2024 PBRSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| 9,208 | 36,832 | 73,664 | — | — | — | 3,922,976 | |||||||||||||||||||||||||||||||||||||
RSUs | 2/14/2022 | 3/1/2022 | — | — | — |
|
|
| — | — | — | 36,832 | — | — | 3,922,976 |
1 | The amounts shown represent potentialnon-equity incentive plan awards under the individual performance portion of the |
2 | The amounts shown in the |
|
The amounts shown in the |
|
3 | The amounts shown represent service-based RSUs granted in |
4 | Represents the grant date fair value determined in accordance with FASB ASC Topic 718. The grant date fair value was calculated by multiplying the closing price of the underlying common stock on the date of grant (or, if there is no closing price on such date, the closing price on the immediately preceding day with a reported closing price) by the number of stock awards granted. For the |
5 |
|
6 | These amounts represent key talent equity |
7 | These amounts represent the equity awards granted to Ms. Rabinovitch in connection with her appointment as interim CFO effective upon Mr. Rainey’s departure. |
8 | These amounts represent the equity award granted to Ms. Rabinovitch in connection with her appointment as acting CFO during Mr. Jorgensen’s leave of absence. |
74 | ||||||
•2023 Proxy Statement |
|
COMPENSATION TABLES
20192022 Outstanding Equity Awards at FiscalYear-End Table
2022 Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information regarding outstanding equity awards forheld by each of our NEOs as of December 31, 2019.2022. Mr. Rainey forfeited all outstanding equity awards upon his resignation from the Company.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(#) | Option Exercise Price($) | Option Grant Date | 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 ($)1 | Stock Award Grant Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)1 | |||||||||||||||||||||||||||||||||
Daniel H. Schulman | 60,646 | 2 | 6,560,078 | 3/1/2017 | ||||||||||||||||||||||||||||||||||||||||
181,941 | 4 | 19,680,558 | 3/1/2017 | |||||||||||||||||||||||||||||||||||||||||
75,447 | 2 | 8,161,102 | 3/1/2018 | |||||||||||||||||||||||||||||||||||||||||
189,555 | 7 | 20,504,164 | 4/1/2018 | |||||||||||||||||||||||||||||||||||||||||
112,790 | 2 | 12,200,494 | 3/1/2019 | |||||||||||||||||||||||||||||||||||||||||
16,515 | 3 | 1,786,428 | 2/15/2019 | |||||||||||||||||||||||||||||||||||||||||
113,173 | 5 | 12,241,923 | ||||||||||||||||||||||||||||||||||||||||||
112,790 | 6 | 12,200,494 | ||||||||||||||||||||||||||||||||||||||||||
189,555 | 9 | 20,504,164 | ||||||||||||||||||||||||||||||||||||||||||
John D. Rainey | ||||||||||||||||||||||||||||||||||||||||||||
20,215 | 2 | 2,186,657 | 3/1/2017 | |||||||||||||||||||||||||||||||||||||||||
60,647 | 4 | 6,560,186 | 3/1/2017 | |||||||||||||||||||||||||||||||||||||||||
33,532 | 2 | 3,627,156 | 3/1/2018 | |||||||||||||||||||||||||||||||||||||||||
48,339 | 2 | 5,228,830 | 3/1/2019 | |||||||||||||||||||||||||||||||||||||||||
6,193 | 3 | 669,897 | 2/15/2019 | |||||||||||||||||||||||||||||||||||||||||
50,300 | 5 | 5,440,951 | ||||||||||||||||||||||||||||||||||||||||||
48,339 | 6 | 5,228,830 | ||||||||||||||||||||||||||||||||||||||||||
Jonathan Auerbach | 81,498 | 37.31 | 5/15/2015 | 5/15/2022 | ||||||||||||||||||||||||||||||||||||||||
12,129 | 2 | 1,311,994 | 3/1/2017 | |||||||||||||||||||||||||||||||||||||||||
36,389 | 4 | 3,936,198 | 3/1/2017 | |||||||||||||||||||||||||||||||||||||||||
16,766 | 2 | 1,813,578 | 3/1/2018 | |||||||||||||||||||||||||||||||||||||||||
32,226 | 2 | 3,485,886 | 3/1/2019 | |||||||||||||||||||||||||||||||||||||||||
5,368 | 3 | 580,657 | 2/15/2019 | |||||||||||||||||||||||||||||||||||||||||
2,403 | 8 | 259,933 | 12/16/2019 | |||||||||||||||||||||||||||||||||||||||||
25,150 | 5 | 2,720,476 | ||||||||||||||||||||||||||||||||||||||||||
32,226 | 6 | 3,485,886 | ||||||||||||||||||||||||||||||||||||||||||
2,403 | 10 | 259,933 | ||||||||||||||||||||||||||||||||||||||||||
Aaron Karczmer | 16,172 | 2 | 1,749,325 | 3/1/2017 | ||||||||||||||||||||||||||||||||||||||||
48,518 | 4 | 5,248,192 | 3/1/2017 | |||||||||||||||||||||||||||||||||||||||||
20,957 | 2 | 2,266,919 | 3/1/2018 | |||||||||||||||||||||||||||||||||||||||||
37,597 | 2 | 4,066,867 | 3/1/2019 | |||||||||||||||||||||||||||||||||||||||||
5,368 | 3 | 580,657 | 2/15/2019 | |||||||||||||||||||||||||||||||||||||||||
31,437 | 5 | 3,400,540 | ||||||||||||||||||||||||||||||||||||||||||
37,597 | 6 | 4,066,867 |
| Stock Awards | |||||||||||||||||||
Name | Number of Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested1 ($) | Stock Award Grant Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||
Daniel H. Schulman | 126,370 | 8 | 9,000,071 | 4/1/2018 |
|
|
|
|
|
| ||||||||||
| 29,892 | 2 | 2,128,908 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 34,268 | 2 | 2,440,567 | 3/1/2021 |
|
|
|
|
|
| ||||||||||
| 88,396 | 3 | 6,295,563 | 3/1/2022 |
|
|
|
|
|
| ||||||||||
| 11,715 | 4 | 834,342 | 2/15/2022 |
|
|
|
|
|
| ||||||||||
| 130,034 | 5 | 9,261,021 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
| 51,404 | 6 | 3,660,993 | ||||||||
|
|
|
|
|
|
|
|
|
| 88,396 | 7 | 6,295,563 | ||||||||
Blake Jorgensen | 10,415 | 3 | 741,756 | 9/15/2022 |
|
|
|
|
|
| ||||||||||
| 83,320 | 3 | 5,934,050 | 9/15/2022 |
|
|
|
|
|
| ||||||||||
| 3,070 | 4 | 218,645 | 9/15/2022 |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
| 10,415 | 7 | 741,756 | ||||||||
Gabrielle Rabinovitch | 693 | 2 | 49,355 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 1,441 | 2 | 102,628 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 7,647 | 2 | 544,619 | 3/15/2020 |
|
|
|
|
|
| ||||||||||
| 2,189 | 2 | 155,901 | 3/1/2021 |
|
|
|
|
|
| ||||||||||
| 666 | 2 | 47,433 | 3/1/2021 |
|
|
|
|
|
| ||||||||||
| 1,192 | 2 | 84,894 | 9/15/2021 |
|
|
|
|
|
| ||||||||||
| 9,208 | 3 | 655,794 | 3/1/2022 |
|
|
|
|
|
| ||||||||||
| 921 | 3 | 65,594 | 3/1/2022 |
|
|
|
|
|
| ||||||||||
| 18,337 | 3 | 1,305,961 | 6/15/2022 |
|
|
|
|
|
| ||||||||||
| 13,820 | 3 | 984,260 | 10/15/2022 |
|
|
|
|
|
| ||||||||||
| 1,582 | 4 | 112,670 | 2/15/2022 |
|
|
|
|
|
| ||||||||||
| 1,007 | 5 | 71,719 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 2,091 | 5 | 148,921 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 11,090 | 5 | 789,830 | 3/15/2020 |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
| 1,095 | 6 | 77,986 | ||||||||
|
|
|
|
|
|
|
|
|
| 334 | 6 | 23,787 | ||||||||
|
|
|
|
|
|
|
|
|
| 1,789 | 6 | 127,413 | ||||||||
|
|
|
|
|
|
|
|
|
| 9,208 | 7 | 655,794 | ||||||||
|
|
|
|
|
|
|
|
|
| 921 | 7 | 65,594 | ||||||||
|
|
|
|
|
|
|
|
|
| 18,337 | 7 | 1,305,961 |
•2023 Proxy Statement | 75 | |||||
COMPENSATION TABLES 2022 Outstanding Equity Awards at Fiscal Year-End Table
|
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(#) | Option Exercise Price($) | Option Grant Date | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#) | Market Value of Shares or Units of Stock That Have Not Vested ($)1 | Stock Award Grant Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)1 | |||||||||||||||||||||||||||||||||
Louise Pentland | 20,215 | 2 | 2,186,657 | 3/1/2017 | ||||||||||||||||||||||||||||||||||||||||
60,647 | 4 | 6,560,186 | 3/1/2017 | |||||||||||||||||||||||||||||||||||||||||
33,532 | 2 | 3,627,156 | 3/1/2018 | |||||||||||||||||||||||||||||||||||||||||
48,339 | 2 | 5,228,830 | 3/1/2019 | |||||||||||||||||||||||||||||||||||||||||
6,193 | 3 | 669,897 | 2/15/2019 | |||||||||||||||||||||||||||||||||||||||||
50,300 | 5 | 5,440,951 | ||||||||||||||||||||||||||||||||||||||||||
48,339 | 6 | 5,228,830 | ||||||||||||||||||||||||||||||||||||||||||
William J. Ready | 97,035 | 4 | 10,496,276 | 3/1/2017 | ||||||||||||||||||||||||||||||||||||||||
6,193 | 3 | 669,897 | 2/15/2019 | |||||||||||||||||||||||||||||||||||||||||
50,300 | 5 | 5,440,951 |
| Stock Awards | |||||||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Vested1 ($) | Stock Award Grant Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||
Peggy Alford | 8,540 | 2 | 608,219 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 11,423 | 2 | 813,546 | 3/1/2021 |
|
|
|
|
|
| ||||||||||
| 36,832 | 3 | 2,623,175 | 3/1/2022 |
|
|
|
|
|
| ||||||||||
| 4,393 | 4 | 312,869 | 2/15/2022 |
|
|
|
|
|
| ||||||||||
| 37,154 | 5 | 2,646,108 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
| 17,135 | 6 | 1,220,355 | ||||||||
|
|
|
|
|
|
|
|
|
| 36,832 | 7 | 2,623,175 | ||||||||
Jonathan Auerbach | 9,964 | 2 | 709,636 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 12,692 | 2 | 903,924 | 3/1/2021 |
|
|
|
|
|
| ||||||||||
| 36,832 | 3 | 2,623,175 | 3/1/2022 |
|
|
|
|
|
| ||||||||||
| 4,393 | 4 | 312,869 | 2/15/2022 |
|
|
|
|
|
| ||||||||||
| 43,345 | 5 | 3,087,031 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
| 19,039 | 6 | 1,355,958 | ||||||||
|
|
|
|
|
|
|
|
|
| 36,832 | 7 | 2,623,175 | ||||||||
Mark Britto | 19,038 | 2 | 1,355,886 | 3/1/2021 |
|
|
|
|
|
| ||||||||||
| 55,248 | 3 | 3,934,763 | 3/1/2022 |
|
|
|
|
|
| ||||||||||
| 4,393 | 4 | 312,869 | 2/15/2022 |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
| 28,558 | 6 | 2,033,901 | ||||||||
|
|
|
|
|
|
|
|
|
| 55,248 | 7 | 3,934,763 | ||||||||
Aaron Karczmer | 10,675 | 2 | 760,274 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
| 11,423 | 2 | 813,546 | 3/1/2021 |
|
|
|
|
|
| ||||||||||
| 36,832 | 3 | 2,623,175 | 3/1/2022 |
|
|
|
|
|
| ||||||||||
| 4,393 | 4 | 312,869 | 2/15/2022 |
|
|
|
|
|
| ||||||||||
| 46,441 | 5 | 3,307,528 | 3/1/2020 |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
| 17,135 | 6 | 1,220,355 | ||||||||
|
|
|
|
|
|
|
|
|
| 36,832 | 7 | 2,623,175 |
1 | Market value is calculated based on |
2 | Becomes fully vested over three years, withone-third |
3 |
|
4 | Represents unvested |
|
5 | The amounts reported in this row |
6 | The amounts reported in this row assume achievement of target performance goals for the 2021-2023 PBRSU awards granted in 2021, as performance for the 2021-2023 performance period is measured on a cumulative basis and is not determinable until the end of the three-year performance period. The PBRSU awards vest based on the Company’s performance over the three-year performance period with respect to theFX-Neutral Revenue CAGR and Free Cash Flow CAGR goals. |
The amounts reported in this row |
|
|
|
76 | ||||||
•2023 Proxy Statement |
COMPENSATION TABLES
|
|
20192022 Option Exercises and Stock Vested Table
2022 Option Exercises and Stock Vested Table
The following table sets forth the number of shares acquired, and the value realized, upon exercise of stock options and the vesting of stock awards by each of our NEOs for the fiscal year ended December 31, 2019.2022.
Option Awards | Stock Awards | Option Awards |
| Stock Awards | ||||||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise1 ($) |
| Number of Shares Acquired on Vesting (#) | Value Realized on Vesting2 ($) | |||||||||||||||||||||||||||
Daniel H. Schulman | 175,719 | 12,145,628 | 556,303 | 55,434,556 | — | — |
| 424,382 | 46,517,048 | |||||||||||||||||||||||||||
Blake Jorgensen | — | — |
| — | — | |||||||||||||||||||||||||||||||
John D. Rainey | 18,207 | 1,245,914 | 183,698 | 18,316,534 | — | — |
| 126,868 | 13,527,809 | |||||||||||||||||||||||||||
Gabrielle Rabinovitch | — | — |
| 19,008 | 1,974,778 | |||||||||||||||||||||||||||||||
Peggy Alford | — | — |
| 78,536 | 8,285,705 | |||||||||||||||||||||||||||||||
Jonathan Auerbach | — | — | 144,955 | 14,835,806 | 40,749 | 2,579,668 |
| 90,057 | 9,545,381 | |||||||||||||||||||||||||||
Mark Britto | — | — |
| 81,664 | 8,711,118 | |||||||||||||||||||||||||||||||
Aaron Karczmer | — | — | 96,662 | 9,673,228 | — | — |
| 100,313 | 10,697,423 | |||||||||||||||||||||||||||
Louise Pentland | 6,113 | 380,555 | 206,053 | 20,858,270 | ||||||||||||||||||||||||||||||||
William J. Ready | 7,397 | 512,663 | 464,059 | 48,226,095 |
1 | Value realized for option awards is calculated based on the price per share at the time the option was exercised. |
2 | Value realized for stock awards is calculated based on the closing price per share on each applicable vesting date. |
2022 Non-Qualified Deferred Compensation Table
All NEOs are eligible to participate in the PayPal Holdings, Inc. Deferred Compensation Plan (the “DCP”);DCP; however, none of our NEOs participated in the DCP in 2019.
The DCP is anon-qualified voluntary deferred compensation plan that allows participants to defer certain amounts of compensation. The DCP provides a supplement to our 401(k) Plan2022. For more information, see “Compensation Discussion and permits personal savings beyond the IRS contribution limits on qualified plans. Each participant is permitted to elect to defer annually. All amounts deferred under the DCP are fully vested. The DCP has been designed so that federal and state income taxes on the monies deferred are not due until such time as the account balance is paid to a participant. Participants can elect distribution of their account balances from a given year to be paid to them while they are still working, or they can elect to have payments made to them in the event of their separation from service with us. Payments can be made in a lump sum payment or as annual installments over a period of greater than two years and less than fifteen years.
The return on the deferred amounts is linked to the performance of market-based investment choices made available to participants under the DCP. While the deferred dollars are not actually invested in the investment fund(s), earnings or losses of the tracking fund are applied to the participant’s deferral dollars as if they were invested in the fund(s)Analysis – Other Compensation Elements – Deferred Compensation”.
|
Potential Payments Upon Termination or Change in Control Table
The following table, footnotes and narrative set forth our payment obligations pursuant to the compensation arrangements for each of our NEOs serving as of the Record Date, under the circumstances described below, assuming that his or hertheir employment was terminated or a change in control of the Company occurred on December 31, 2019.2022. Because our executive compensation program is heavily weighted towards equity-based compensation, a significant percentage of the compensation tothat would be received by our NEOs upon a termination of employment under the circumstances described below relates to the settlement of outstanding equity awards. Please seeSee the 20192022 Outstanding Equity Awards at FiscalYear-End table Table above for further information regarding outstanding equity awards granted to the NEOs in 20192022 and in prior years.
Name | Voluntary Termination ($)(a)(1)(2)(3) | Involuntary Termination Outside of Change in Control Period ($)(b)(2)(3) | Involuntary Termination Within Change in Control Period ($)(c)(2)(3) | Death or Disability ($)(d)(2)(3)(4) | ||||||||||||
Daniel H. Schulman(5) | 24,484,496 | 23,887,200 | 60,763,233 | 35,096,838 | ||||||||||||
John D. Rainey | — | 9,185,596 | 25,904,733 | 14,740,759 | ||||||||||||
Jonathan Auerbach | — | 5,912,103 | 16,359,003 | 8,170,080 | ||||||||||||
Aaron Karczmer | — | 5,832,866 | 18,494,870 | 10,128,065 | ||||||||||||
Louise Pentland | — | 9,185,596 | 25,904,733 | 14,740,759 | ||||||||||||
William J. Ready | — | 24,516,507 | — | — |
Name | Voluntary Termination or Retirement1,2 ($)(a) | Involuntary Termination Outside of Change in Control Period2 ($)(b) | Involuntary Termination Within Change in Control Period2 ($)(c) | Death or Disability2 ($)(d) | ||||||||||||
Daniel H. Schulman | 20,863,288 | 30,488,360 | 30,485,152 | 29,821,666 | ||||||||||||
Blake Jorgensen | — | 7,703,527 | 7,690,630 | 7,417,563 | ||||||||||||
Gabrielle Rabinovitch | — | 6,487,349 | 6,487,349 | 6,252,974 | ||||||||||||
Peggy Alford | — | 8,184,375 | 8,179,642 | 7,888,470 | ||||||||||||
Jonathan Auerbach | 8,215,868 | 8,450,243 | 8,450,243 | 8,215,868 | ||||||||||||
Mark Britto | — | 11,535,603 | 11,532,379 | 11,259,312 | ||||||||||||
Aaron Karczmer | — | 8,336,109 | 8,331,401 | 8,040,524 |
1 | For Mr. Schulman and Mr. Auerbach, the amount reflects |
2 | Amounts do not take into account (i) potential reductions due to “best net pay” |
|
|
|
VOLUNTARY TERMINATION
•2023 Proxy Statement | 77 |
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
Voluntary Termination – COLUMNColumn (a)
Retirement Benefits for Mr. Schulman
Mr. Schulman isand Mr. Auerbach are retirement-eligible under the 2017-2019, 2018-2020 and 2019-2021their respective 2021-2023 PBRSU award agreements. Pursuant to the PBRSU award agreement provisions, in the event Mr. Schulmanthe NEO voluntarily resigns, at a time when he has attained at least 60 years of age and completed at least five years of service (“Retires” or “Retirement”), the PBRSUs will vestwould accelerate vesting on a prorated basis based on the number of full months of service during the performance period and actual performance during the entire performance period and willwould be settled following the completion of the performance period. Mr. Schulman isand Mr. Auerbach would also be eligible for prorated vesting of RSUs.service-based RSUs granted prior to July 1, 2021. If Mr. Schulman and/or Mr. Auerbach Retires, he would receive prorated vesting of the next tranche of service-based RSUs that would have vested following his Retirement.
INVOLUNTARY TERMINATION OTHER THAN FOR CAUSEIn addition, Mr. Schulman and Mr. Auerbach are retirement-eligible under the Executive Long Term Incentive Program (“ELTIP”) portion of our Executive Severance Plan. The ELTIP provides for the following benefits because each of Mr. Schulman and Mr. Auerbach has attained at least 60 years of age and completed at least seven years of service, subject to the NEO providing sufficient advance notice to the Company and the retirement having terms and conditions mutually agreed to by the Company and the NEO:
• | Eligibility for continued vesting of all outstanding equity awards, other than the performance-based CEO PSU Award that the Company granted to Mr. Schulman on April 1, 2018. Any outstanding time-based restricted stock awards would be eligible to continue vesting in accordance with their original schedule; however, if any such awards were scheduled to vest more frequently than annually, each scheduled vesting date not falling on an anniversary of the grant date would be treated as though that vesting date were on the next following anniversary of the grant date. Any outstanding PBRSUs (other than PBRSUs awarded pursuant to an Annual Incentive Plan) would remain outstanding and eligible to vest, based solely on the achievement of the applicable Company performance targets for the applicable performance period. |
• | COBRA premium payments (or payments in lieu thereof) for the period during which any equity award continues to vest under the ELTIP. |
We refer to the ELTIP benefits described above as the “ELTIP Benefits.” The CEO PSU Award is not eligible for any continued vesting under the ELTIP. All continued vesting under the ELTIP is subject to the NEO’s execution of a release of claims in favor of the Company and required attestations and compliance with the restrictive covenants set forth in the Executive Severance Plan.
Involuntary Termination Other than for Cause – COLUMNColumn (b)
Severance Arrangements for Involuntary Termination Other Than for Cause Outside a Change in Control Period for Messrs. Schulman, Rainey and Auerbach and Ms. Pentland
Each of Messrs. Schulman, Rainey, and Auerbach and Ms. Pentland has entered into separate agreements with the Company. Assuming a termination date of December 31, 2019, each of Messrs. Schulman, Rainey, and Auerbach and Ms. Pentland would be entitled to the following underUnder the terms of their respective agreementsthe Executive Severance Plan, each NEO is eligible for severance payments and benefits in the event that his or herthe NEO’s employment with us wasis terminated outside of thea “change in control period,” which is defined as more than 90 days prior to or more than 24 months following a “change in control” (as defined in the Equity Plan),Plan and the Inducement Plan, as applicable) of the Company, either (a) by us for any reason other than for “cause”, “disability”, or deathdue to “disability” or (b) by Messrs. Schulman, Rainey and Auerbach and Ms. Pentlandthe NEO for “good reason” (as each term is(each as defined in the respective agreements)Executive Severance Plan), subject to the executive’sNEO’s execution of a release of claims in favor of the Company, as follows:
For Mr. Schulman, a cash payment equal to two times the sum of (i) annual base salary and (ii) target bonus amount; for Mr. Rainey, a cash payment equal to 1.5 times the sum of (i) annual base salary and (ii) target bonus amount; and for
• | ||||||
A lump sum cash payment equal to the product of (i) the sum of annual base salary and target bonus amount and (ii) a multiple (2x for Mr. Schulman and 1.5x for our other NEOs).
|
• |
|
• | For awards granted prior to July 1, 2021: accelerated vesting of service-based equity awards that would have otherwise become vested pursuant to their ordinary vesting schedule within the 12 months following the employment termination date; performance-based equity awards subject to a performance period that ends within the 12 months following the employment termination date would remain outstanding and eligible to vest, based solely on the achievement of the Company performance targets. For awards granted on or after July 1, 2021: eligibility to continue to vest in service-based and performance-based equity awards scheduled to vest within the 12 months following the employment termination date, subject to the NEO’s execution of a release of claims in favor of the Company and required attestations and compliance with the restrictive covenants set forth in the Executive Severance Plan. |
• | If the NEO is employed by the Company in the U.S., participates in the Company’s health insurance program and is eligible to continue to participate in the program under COBRA, the Company will provide COBRA premium payments for 18 months for Mr. Schulman and 12 months for our other NEOs. |
78 | •2023 Proxy Statement |
A prorated annual cash bonus
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
In addition, each NEO would be eligible for the year of termination based on actual company performance (“Prorated Cash Incentive Award”).
For Messrs. Schulman, Rainey and Auerbach and Ms. Pentland,ELTIP Benefits in the event the NEO’s employment was involuntarily terminated by the Company due to a cash payment equaljob elimination or role restructuring. All continued vesting would be subject to the valueNEO’s execution of any equity awards that are outstanding and unvested that otherwise would have become vested within 12 months following the datea release of termination of employment (where value is determined using the average closing priceclaims in favor of the Company’s common stock forCompany and required attestations and compliance with the 10 consecutive trading days ending on and including the trading day immediately prior to the termination date (the “Average Closing Price”) and the Valuation Assumptions as definedrestrictive covenants set forth in the respective agreements).Executive Severance Plan.
Involuntary Termination with a Change in Control – Column (c)
Severance Arrangements for an Involuntary Termination Other than for Cause for Participants in Connection with a Change in Control
Under the PayPal Holdings, Inc. SVP and Above Standardterms of the Executive Severance Plan,
As of December 31, 2019, Mr. Karczmer was each NEO is eligible to participate in the PayPal Holdings, Inc. SVP and Above Standard Severance Plan (the “Severance Plan”).
The Severance Plan provides eligible employees withfor severance payments and benefits in the event that an eligible employee’sa “change in control” of the Company occurred as of December 31, 2022 and the NEO’s employment with us or one of our subsidiaries, affiliates, or a successor company is involuntarily terminated without “cause” (as defined in the Severance Plan) by us outside ofterminates within the “change in control period” (as defined above),period,” either (a) by us other than for “cause” or due to “disability,” or (b) by the NEO for “good reason,” subject to the employee’sNEO’s execution of a release of claims in favor of the Company, as follows:
A cash payment equal to one times