Andrew Houston
DROPBOXAbout Andrew Houston
Andrew W. Houston (“Drew”) is Dropbox’s co‑founder, Chief Executive Officer, and Chair of the Board, serving in these roles since June 2007; he is 42 years old and holds a B.S. in Electrical Engineering & Computer Science from MIT . Under his tenure, Dropbox reported 2024 revenue of $2,545 million (FX‑adjusted, used for incentive funding), non‑GAAP operating margin of 36.4%, and free cash flow of $871.6 million . Over the 5‑year “pay versus performance” period, a $100 initial investment in Dropbox grew to $167.73 versus $301.44 for the Nasdaq Computer Index peer group, and 2024 net income was $452.3 million . Houston controls approximately 78.48% of Dropbox’s total voting power via Class B super‑voting shares and trusts, reinforcing strategic continuity alongside dual‑class governance considerations .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Dropbox, Inc. | Co‑Founder; Chief Executive Officer; Chair of the Board | Since 2007 | Founding leadership; long‑term product and operational execution; strategic oversight |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Meta Platforms, Inc. | Director | Current | Cross‑industry network; governance experience at large‑cap technology firm |
Fixed Compensation
Multi‑year CEO compensation summary (reported):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 625,000 | 625,000 | 756,250 |
| Non‑Equity Incentive Plan Payout ($) | 500,000 | 485,000 | 551,480 |
| Stock Awards ($) | — | — | — |
| All Other Compensation ($) | 21,000 | 429,577 | 398,775 |
| Total ($) | 1,146,000 | 1,539,577 | 1,706,505 |
- 2024 base salary increased to $800,000 effective April 1, 2024 (salary was last adjusted in 2021) .
- 2024 perquisites include a company‑funded personal security program; the program cost was $392,775 in 2024 and is considered a company benefit; reported “All Other Compensation” also includes standard items (e.g., 401(k) match) .
- CEO pay ratio for 2024 was 7:1 (CEO $1,706,505 vs median employee $228,805) .
Performance Compensation
2024 Annual Cash Bonus Plan (structure and outcome)
| Component | Weighting | Threshold | Target | Maximum | Actual 2024 | Corporate Payout |
|---|---|---|---|---|---|---|
| Revenue ($M) | 67% | 2,488 | 2,565 | 2,642 | 2,545 | 100% (capped) |
| Non‑GAAP Operating Margin (%) | 33% | 29.8% | 33.1% | 36.4% | 36.1% | 100% (capped) |
| CEO Target Bonus (% of Salary) | — | — | 100% | 187.5% max | Prorated target $756,489 | CEO payout 73% of target ($551,480) |
- Plan funding initially computed at 104.5% based on performance but the Compensation Committee exercised negative discretion to cap corporate payout at 100% because part of operating margin outperformance was driven by workforce reduction savings .
Co‑Founder Grant (restricted stock award with market/service vesting)
| Stock Price Target | Shares Eligible to Vest | Status |
|---|---|---|
| $30.00 | 2,066,667 | Achieved/vested Nov 15, 2021 |
| $37.50 | 1,033,334 | Outstanding/eligible |
| $45.00 | 1,033,334 | Outstanding/eligible |
| $52.50 | 1,033,333 | Outstanding/eligible |
| $60.00 | 1,033,333 | Outstanding/eligible |
| $67.50 | 1,033,333 | Outstanding/eligible |
| $75.00 | 1,033,333 | Outstanding/eligible |
| $82.50 | 1,033,333 | Outstanding/eligible |
| $90.00 | 1,033,333 | Outstanding/eligible |
- As of 12/31/2024, 8,266,666 Co‑Founder Grant shares remained unvested (market value $248,330,647 at $30.04) .
- In a change‑in‑control, additional Co‑Founder Grant tranches may vest if the per‑share deal price hits unmet stock price targets; partial vesting is possible via linear interpolation between achieved and unmet targets .
Company performance context (selected metrics)
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Revenue ($M, FX‑adjusted for incentive) | 2,541 | 2,545 |
| Non‑GAAP Operating Margin (%) | 32.8% | 36.4% |
| Free Cash Flow ($M) | 759.4 | 871.6 |
| Paying Users (M) | 18.12 | 18.22 |
| ARPU ($) | 140.23 | 139.38 |
| TSR – $100 initial investment ($) | 164.60 | 167.73 |
| Peer Group TSR – $100 initial investment ($) | 221.06 | 301.44 |
| Net Income ($M) | 453.6 | 452.3 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (Class A) | 9,427,838 shares |
| Beneficial Ownership (Class B) | 75,987,893 shares |
| Total Voting Power | 78.48% |
| Ownership Vehicles | Includes Houston Remainder Trust, Andrew Houston Revocable Trust, Houston 2012 Irrevocable Children’s Trust, spouse’s trust; plus Co‑Founder Grant RSAs |
| Vested vs Unvested (Co‑Founder Grant) | Vested: 2,066,667 shares (at $30 target); Unvested: 8,266,666 shares |
| Options (Exercisable/Unexercisable) | None disclosed for CEO at year‑end 2024 |
| Stock Ownership Guidelines | CEO required to hold ≥5x base salary; execs ≥2x; status: met/exceeded/on‑track for applicable officers at FY2024 end |
| Hedging/Pledging | Prohibited for employees/directors; no pledging allowed |
| Insider Trading Policy | Adopted and filed as Exhibit 19.1 to 2024 Form 10‑K |
Employment Terms
| Provision | Outside CIC | In CIC (double‑trigger) |
|---|---|---|
| Salary Severance | 50% of annual base salary: $400,000 (as of 12/31/2024 scenario) | 100% of annual base salary: $800,000 |
| Bonus Severance | — | 100% of target annual bonus: $756,489 (prorated target for 2024) |
| COBRA Benefits | Company pays premiums up to 6 months (or taxable equivalent) | Company pays premiums up to 12 months (or taxable equivalent) |
| Equity Acceleration | Not specified for CEO outside CIC | 100% acceleration of outstanding equity awards (performance awards deemed at 100% unless specified); Co‑Founder Grant may vest further based on deal price targets |
| Triggers | Termination without cause/death/disability or resignation for good reason | Termination without cause/death/disability or resignation for good reason within 3 months pre‑CIC or 12 months post‑CIC |
| Tax Gross‑Ups | None; “better‑after‑tax” cutback applies if 280G excise tax would reduce after‑tax benefit | |
| Employment Nature | At‑will; includes confidentiality and non‑solicit provisions; competitive restrictions during employment |
Board Governance
- Role and independence: Houston serves as both CEO and Chair (non‑independent); Dropbox employs a Lead Independent Director to offset dual‑role concentration—Karen Peacock to succeed Donald Blair as Lead Independent Director following the 2025 Annual Meeting . The Lead Independent Director presides over independent sessions, sets agendas with the Chair, and liaises between independent directors and management; executive sessions of independent directors occur at least quarterly .
- Committees: Houston serves on no board committees; independent directors populate Audit, Talent & Compensation, and Nominating & Corporate Governance .
- Board attendance: All directors attended ≥75% of board/committee meetings in FY2024 .
- Director compensation: Employee directors receive no director compensation; non‑employee director cash retainer is $50,000 plus leadership/committee fees; annual RSU grants have a grant‑date fair value of $250,000, vesting annually; change‑in‑control fully vests director awards . Houston, as CEO, received no director compensation .
Compensation Governance and Market Benchmarks
- Pay philosophy: Majority of NEO compensation is at‑risk; CEO’s mix is salary + annual bonus; no guaranteed bonuses; clawback policy adopted August 2023 compliant with Nasdaq/SEC rules .
- Peer group: 2024 compensation peer group includes Affirm, AppLovin, Box, DocuSign, Dolby, Elastic, Etsy, F5, GoDaddy, HubSpot, Informatica, Nutanix, Okta, Paycom, Pinterest, Pure Storage, RingCentral, Roku, Splunk, Teradata, Zoom .
- Say‑on‑Pay: FY2024 Say‑on‑Pay support was 98.3% .
- Related parties: No related‑party transactions requiring disclosure since beginning of last fiscal year .
Additional Risk Indicators
- Dual‑class governance: Class B shares carry 10 votes each; combined with Houston’s holdings, this concentrates control; board asserts mitigants via independent committees and Lead Independent Director .
- Leadership transitions: Announced departure of Chief Customer Officer in 2025; transition ongoing through mid‑August 2025 .
- Equity award practices: No option repricing; no SARs ever granted to NEOs; no hedging/pledging permitted .
Investment Implications
- Pay‑for‑performance alignment: CEO cash incentives are tied to revenue (67%) and non‑GAAP operating margin (33%) with committee discretion used to cap payouts; 2024 CEO bonus was 73% of target despite above‑target operating margin due to workforce reduction‑related cost savings—suggesting added discipline and balanced incentives .
- Supply/vesting overhang: The Co‑Founder Grant leaves 8.27 million shares eligible to vest upon stock price targets or change‑in‑control price levels; vesting could expand the tradable float over time and warrants monitoring around price thresholds and corporate actions .
- Governance/retention: With 78.48% voting power, Houston’s control supports strategic continuity and lowers near‑term CEO retention risk; clawback, ownership guidelines, and hedging/pledging prohibitions improve alignment; absence of excise tax gross‑ups is shareholder‑friendly .
- Relative performance: Company TSR trails the Nasdaq Computer Index over the 5‑year period; however, FCF and margin improved in 2024; continued execution on profitable growth and AI/product initiatives will be key to closing the performance gap .