Under the guidance of CEO Jeff Lawson, Twilio Inc. (NYSE:TWLO) has performed reasonably well recently. As shareholders go into the upcoming AGM on 16 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.
How Does Total Compensation For Jeff Lawson Compare With Other Companies In The Industry?
Our data indicates that Twilio Inc. has a market capitalization of US$54b, and total annual CEO compensation was reported as US$14m for the year to December 2020. Notably, that's an increase of 12% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$134k.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$12m. So it looks like Twilio compensates Jeff Lawson in line with the median for the industry. Furthermore, Jeff Lawson directly owns US$1.9b worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Jeff Lawson as compared to non-salary compensation over the one-year period examined. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Twilio Inc.'s Growth
Over the last three years, Twilio Inc. has shrunk its earnings per share by 48% per year. Its revenue is up 57% over the last year.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Twilio Inc. Been A Good Investment?
Boasting a total shareholder return of 433% over three years, Twilio Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
Twilio primarily uses non-salary benefits to reward its CEO. Some shareholders will be pleased by the relatively good results, however, the results could still be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 4 warning signs for Twilio that investors should be aware of in a dynamic business environment.
Important note: Twilio is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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