Jeff Lawson became the CEO of Twilio Inc. (NYSE:TWLO) in 2008. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Jeff Lawson's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Twilio Inc. has a market cap of US$14b, and reported total annual CEO compensation of US$6.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$131k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
A first glance this seems like a real positive for shareholders, since Jeff Lawson is paid less than the average total compensation paid by other large companies. Though positive, it's important we delve into the performance of the actual business.
You can see, below, how CEO compensation at Twilio has changed over time.
Is Twilio Inc. Growing?
Twilio Inc. has reduced its earnings per share by an average of 37% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 80%.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has Twilio Inc. Been A Good Investment?
Boasting a total shareholder return of 230% over three years, Twilio Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It looks like Twilio Inc. pays its CEO less than the average at large companies.
Jeff Lawson receives relatively low remuneration compared to other large companies. And the returns to shareholders were great, over the last few years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. So you may want to check if insiders are buying Twilio shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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