Michelle Zatlyn
CloudflareAbout Michelle Zatlyn
Co‑founder of Cloudflare and President since December 2020; previously Chief Operating Officer (2016–February 2025), Head of User Experience (2009–2016), and Director since November 2009. Age 45; B.Sc. in Chemistry & Business (McGill) and MBA (Harvard). As of 2024, Cloudflare delivered 29% YoY revenue growth to $1,669.6M with 77.3% GAAP gross margin and positive free cash flow (10% of revenue), while GAAP net loss narrowed to $78.8M . Pay-versus-performance shows strong multi-year TSR dynamics; the 2024 “value of $100 invested” metric reached $631.18, with revenue $1,669,626k and net loss $(78,800)k .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cloudflare | Co‑Founder & Director | 2009–present | Founding leadership and board governance |
| Cloudflare | Head of User Experience | 2009–2016 | Early product/user experience leadership |
| Cloudflare | Chief Operating Officer | 2016–Feb 2025 | Scaled operations; transitioned to Co‑Chair in Feb 2025 |
| Cloudflare | President | Dec 2020–present | Executive leadership of company execution |
| Cloudflare | Co‑Chair of the Board | Feb 2025–present | Board leadership alongside CEO; dual-role governance |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Atlassian Corporation Plc | Director; Audit Committee member | Current | Cross-industry oversight; audit governance experience |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 | 2025 (as of Feb) |
|---|---|---|---|---|
| Annual Base Salary ($) | $400,000 | $400,000 | $400,000 | $550,000 (approved Feb 2025) |
| Perquisites (2024) | Amount ($) |
|---|---|
| Personal use of leased private aircraft (policy-required) | $953,709 |
| Other personal security | $6,750 |
| Policy context (air travel security requirement for Co‑Founders) | Board-approved private aircraft usage requirement |
Notes:
- No annual cash bonus program historically; 2024 had no cash bonus plan .
- Compensation committee uses independent consultant (Compensia); no conflicts found .
Performance Compensation
Time‑Based RSUs
| Grant Date | Shares (#) | Vesting Schedule | First Vest Date |
|---|---|---|---|
| 4/19/2023 | 172,959 | 16 quarterly installments following 2/15/2023, service-based | 2/15/2023 |
| 2/5/2025 | 259,672 | Quarterly over 5 years, service-based; double-trigger acceleration in CIC under Severance Policy | 5/15/2025 |
Performance‑Based RSUs (PSUs) – Granted Feb 5, 2025
| Tranche | Weight (%) | Shares (#) | Stock Price Goal ($) | Performance Period | Vesting Mechanics |
|---|---|---|---|---|---|
| 1 | 12.5 | 21,888 | 156.00 | Up to 7 years from 2/5/2025; rolling 90‑day VWAP; in CoC measured vs deal price | Upon meeting price goal, vests 1/6 each quarterly date (Feb/May/Aug/Nov) after certification; time-based waived in CoC; unachieved tranches do not vest |
| 2 | 12.5 | 21,889 | 203.00 | Same as above | Same as above |
| 3 | 12.5 | 21,889 | 263.00 | Same as above | Same as above |
| 4 | 12.5 | 21,889 | 343.00 | Same as above | Same as above |
| 5 | 25.0 | 43,778 | 446.00 | Same as above | Same as above |
| 6 | 25.0 | 43,778 | 579.00 | Same as above | Same as above |
Notes:
- PSUs emphasize stock price performance; time-based vesting is waived upon change-in-control, and vesting depends on performance measurement against transaction price; unvested/unelected tranches forfeit immediately prior to CoC if not achieved/not assumed .
Equity Ownership & Alignment
Beneficial Ownership (as of March 31, 2025)
| Class A Shares | Class B Shares | Options Exercisable ≤60 Days | RSUs Vesting ≤60 Days | Total Voting % |
|---|---|---|---|---|
| 51,815 | 9,521,457 | 2,410,244 Class B options (fully vested) | 32,200 Class A RSUs | 10.5% |
Outstanding Equity (12/31/2024)
| Instrument | Quantity | Key Terms |
|---|---|---|
| Stock Options (2017) | 2,594,852 | $2.04 strike; expires 8/7/2027; fully vested |
| Unvested RSUs (2023 grant) | 172,959 | 16 quarterly installments following 2/15/2023; double-trigger acceleration under Severance Policy |
2024 Insider Activity
| Option Exercises (#) | Value Realized on Exercise ($) | RSUs Vested (#) | Value Realized on Vesting ($) |
|---|---|---|---|
| 1,005,136 | $91,227,657 | 76,871 | $6,676,251 |
Alignment, Pledging, and Guidelines:
- Hedging/pledging prohibited absent waiver; insider trading policy restricts derivatives/margin accounts .
- Stock ownership guidelines: Co‑Founders must hold ≥5× base salary; compliance confirmed as of 12/31/2024 .
Employment Terms
Severance Policy (effective Sept 13, 2024): Outside Change‑in‑Control
| Cash Compensation ($) | Health Benefits ($) | Total ($) |
|---|---|---|
| 200,000 | 25,578 | 225,578 |
Severance Policy: Termination During Change‑in‑Control Period
| Cash Compensation ($) | Health Benefits ($) | Equity Acceleration ($) | Total ($) |
|---|---|---|---|
| 400,000 | 25,578 | 18,624,225 (unvested time‑based RSUs) | 19,049,803 |
Key terms:
- Double‑trigger required for severance payments and time‑based equity acceleration; PSUs/performance options exclude automatic acceleration (time‑based waived only; performance measured; unachieved forfeited) .
- Prorated target annual bonus included in CIC terms (no historical annual cash bonus program) .
- Clawback policy compliant with SEC/NYSE adopted; recovery of excess incentive comp on restatements .
- No excise tax gross‑ups; cut‑back to avoid 280G excise when value-maximizing .
Board Governance
- Role: Employee director; Co‑Chair of the Board (with CEO). Not independent under NYSE rules; independence mitigated via Lead Independent Director structure .
- Lead Independent Director: Scott Sandell (presides over independent sessions; liaison duties) .
- Committees: No standing committee assignments for Ms. Zatlyn; employee directors are not on audit/comp/nom‑gov .
- Executive sessions: Non‑employee directors meet in executive session at least twice per year .
- Years of service: Director since November 2009; Co‑Chair since February 2025 .
Director Compensation:
- Employee directors (CEO/President) receive no additional director compensation .
Compensation Peer Group and Say‑on‑Pay
- 2024/2025 peer group (representative): BILL, CrowdStrike, Datadog, DocuSign, Dynatrace, Elastic, HubSpot, MongoDB, Okta, Palantir, Paycom, Paylocity, Samsara, Snowflake, The Trade Desk, Twilio, UiPath, Unity, Zscaler .
- Say‑on‑Pay (2024): 81.2% approval, with continued alignment to pay-for-performance philosophy .
Performance & Track Record (Company Context, 2024)
| Metric | 2024 |
|---|---|
| Revenue ($M) | 1,669.6 |
| GAAP Gross Margin (%) | 77.3 |
| GAAP Operating Loss ($M) | (154.8) |
| Non‑GAAP Operating Income ($M) | 230.1 |
| GAAP Net Loss ($M) | (78.8) |
| Operating Cash Flow ($M) | 380.4 |
| Free Cash Flow ($M; % Revenue) | 166.9; 10% |
Risk Indicators & Red Flags
- No hedging/pledging allowed; adherence confirmed .
- Clawback policy in place; SEC/NYSE compliant .
- Dual-role governance risk (President + Co‑Chair) mitigated by Lead Independent Director and independent committees .
- Related party optics: Company leases aircraft from CEO’s affiliate under market-checked rates; policy requires private aircraft for Co‑Founders (Michelle’s personal use costs disclosed) .
Compensation Structure Analysis
- Mix shift toward long‑term equity (no annual cash bonus; 2025 added PSUs tied to stock price) reflecting higher at‑risk pay and performance sensitivity .
- Base salary increased in 2025 for Co‑Founders for first time since IPO; modest increase vs equity-heavy awards .
- No tax gross‑ups for CIC; double‑trigger requirement persists; independent consultant engaged; no consultant conflicts .
Investment Implications
- Alignment: Significant beneficial ownership (10.5% voting power) and large, multi‑year RSU/PSU program tie realized pay to stock performance; hedging/pledging prohibitions and ownership guidelines strengthen alignment .
- Retention and selling pressure: 2025 RSUs vest quarterly over five years; PSUs require aggressive stock price goals to vest; prior large option exercises in 2024 indicate liquidity events, but ongoing time‑based RSU cadence could create periodic selling flow depending on 10b5‑1 plans .
- Governance: Dual role (President + Co‑Chair) raises independence optics but mitigated by Lead Independent Director and fully independent audit/comp/nom‑gov committees; employee directors receive no board pay .
- Downside protection: No single‑trigger CIC benefits; PSUs do not auto‑accelerate; clawback policy and no gross‑ups limit shareholder-unfriendly features .