Should You Worry About Twilio Inc.'s (NYSE:TWLO) CEO Pay Cheque?
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Jeff Lawson became the CEO of Twilio Inc. (NYSE:TWLO) in 2008. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. 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.
View our latest analysis for Twilio
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$18b, and is paying total annual CEO compensation of US$6.6m. (This is based on the year to December 2018). That's a notable increase of 17% on last year. While we always look at total compensation first, we note that the salary component is less, at US$131k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
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. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Twilio has changed from year to year.
Is Twilio Inc. Growing?
Twilio Inc. has increased its earnings per share (EPS) by an average of 16% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 71%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Twilio Inc. Been A Good Investment?
I think that the total shareholder return of 363%, over three years, would leave most Twilio Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
It looks like Twilio Inc. pays its CEO less than the average at large companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Jeff Lawson deserves a raise!
It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Twilio.
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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.
