NYSE:TWLO) in 2008, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.” data-reactid=”28″>Jeff Lawson became the CEO of Twilio Inc. (NYSE:TWLO) in 2008, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Twilio ” data-reactid=”29″>Check out our latest analysis for Twilio
Comparing Twilio Inc.’s CEO Compensation With the industry
According to our data, Twilio Inc. has a market capitalization of US$37b, and paid its CEO total annual compensation worth US$12m over the year to December 2019. Notably, that’s an increase of 86% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$134k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. This suggests that Twilio remunerates its CEO largely in line with the industry average. What’s more, Jeff Lawson holds US$1.7b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$134k | US$131k | 1% |
| Other | US$12m | US$6.5m | 99% |
| Total Compensation | US$12m | US$6.6m | 100% |
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. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
A Look at Twilio Inc.’s Growth Numbers
Over the last three years, Twilio Inc. has shrunk its earnings per share by 55% per year. Its revenue is up 58% over the last year.
this free visual depiction of what analysts expect for the future.” data-reactid=”54″>The reduction in earnings, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. 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?
We think that the total shareholder return of 760%, 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…
Twilio primarily uses non-salary benefits to reward its CEO. As we noted earlier, Twilio pays its CEO in line with similar-sized companies belonging to the same industry. Investors will be happy that Twilio has produced strong shareholder returns for the past three years. Revenues have also showed some positive momentum, recently. On a worrying note, its important to acknowledge that EPS growth has been negative recently. Overall, the company’s performance hasn’t been that disappointing for us to object the CEO compensation.
4 warning signs for Twilio that investors should be aware of in a dynamic business environment.” data-reactid=”59″>While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We’ve identified 4 warning signs for Twilio that investors should be aware of in a dynamic business environment.
list of high return, low debt companies is a great place to look.” data-reactid=”60″>Switching gears from Twilio, if you’re hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”65″>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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