Khozema Shipchandler
TWILIOAbout Khozema Shipchandler
Khozema Shipchandler (age 51) is Twilio’s Chief Executive Officer and a director, appointed CEO on January 8, 2024; he holds a B.A. in English and Biology from Indiana University Bloomington . Under his leadership in 2024, Twilio delivered 7% revenue growth to $4.46B, non‑GAAP operating income of $714.4M, free cash flow of $657.5M, and a 57% TSR from his January 2024 appointment through year‑end 2024, outpacing the S&P 500 and the company’s peer median . The board separated the CEO and Chair roles in January 2024, appointing independent director Jeff Epstein as Chair; all board committees are fully independent, mitigating dual‑role governance risks .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Twilio | President, Twilio Communications | 2023–2024 | Successfully pivoted Communications to optimize for profitable growth . |
| Twilio | Chief Operating Officer | 2021–2023 | Senior operating leadership across the business . |
| Twilio | Chief Financial Officer | 2018–2021 | Financial leadership during scaling phase . |
| GE Digital (General Electric) | CFO & EVP Corporate Development | 2015–2018 | Senior financial and corporate development leadership in operational tech and infrastructure software . |
| General Electric | Various roles incl. CFO, Middle East, North Africa and Turkey | 1996–2015 (CFO MENAT 2011–2013) | Global finance and operating leadership . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Smartsheet Inc. | Director | 2023–2025 | Public company directorship; served while CEO of Twilio . |
Fixed Compensation
- Salary and target bonus: In connection with his CEO appointment, Shipchandler’s base salary was set at $1,100,000 and target annual bonus at 100% of salary (maximum 150%); 2024 base salaries were not increased, and 2025 CEO equity target was reduced to $20.5M (60% PSUs/40% RSUs) from $25.0M approved in 2024 .
- Employee directors receive no additional board compensation .
Multi‑year compensation summary:
| Metric ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 1,100,000 | 1,100,000 | 1,100,000 |
| Stock Awards (RSUs/PSUs grant‑date fair value) | 28,552,689 | 10,010,679 | 24,388,514 |
| Non‑Equity Incentive (cash) | — | 3,000,000 | 1,507,000 |
| All Other Compensation | 8,304 | 9,900 | 214,949 |
| Total | 29,660,993 | 14,120,579 | 27,210,463 |
Performance Compensation
2024 Annual Cash Bonus Plan (paid at 137.0% of target)
| Metric | Weight | Threshold | Target | Maximum | Actual 2024 | Payout |
|---|---|---|---|---|---|---|
| Organic revenue growth | 50% | 5.0% | 7.5% | 10.0% | 8.7% | 137.0% total plan payout (metric payouts capped at 150%) |
| Non‑GAAP income from operations | 50% | $550M | $600M | $700M | $714.4M | 137.0% total plan payout |
- CEO bonus mechanics: Target 100% of salary ($1.1M); actual paid $1,507,000 at 137% .
2024 Long‑Term Equity Awards and Vesting
| Element | Grant date | Target/Granted | Design / Vesting |
|---|---|---|---|
| PSUs | 4/10/2024 | 245,716 target shares; up to 491,432 at max; grant‑date fair value $16,490,496 | 3‑year cumulative performance (2024–2026): 70% free cash flow; 30% relative TSR vs S&P 500; no vesting until 2027 . |
| RSUs | 2/20/2024 | 139,344 shares; grant‑date fair value $7,898,018 | Time‑based; vests in 16 equal quarterly installments from 3/31/2024 through 3/31/2028, subject to service . |
Legacy PSU outcome:
- 2022 PSU program (front‑loaded; annual tranches): 2024 tranche paid 0% due to 8.7% organic growth below the 20% threshold; overall <33% of target vested across 2022–2024 tranches .
Equity Ownership & Alignment
Ownership and awards (as of March 31, 2025 and December 31, 2024 where noted):
| Item | Detail |
|---|---|
| Beneficial ownership | 177,566 shares (69,759 shares held + 107,807 options exercisable within 60 days); <1% of outstanding shares (153,254,342) . |
| Options outstanding | 35,418 (exercisable) @ $76.63 exp. 10/31/2028; 44,158 (exercisable) @ $117.94 exp. 2/21/2030; 18,126 (exercisable) @ $377.59 exp. 2/24/2031; 8,952 (exercisable) + 4,613 (unexercisable) @ $298.00 exp. 11/11/2031 . |
| Option moneyness at 12/31/2024 | Only the $76.63 grant was in‑the‑money vs $108.08 close; the $117.94, $298.00 and $377.59 grants were out‑of‑the‑money at that date . |
| RSUs unvested (selected) | 104,508 (2024 grant); 67,821 (2023 grant); 14,882 (2022 grant); plus 2,546 (2021 grant) . |
| PSUs unearned | 319,431 (2024 PSU grant outstanding at year‑end); 22,931 (2022 PSU 2024 tranche outstanding at year‑end but forfeited in Feb‑2025) . |
| 2024 shares vested | 88,472 shares vested for Shipchandler; value realized $6,442,132 (RSUs/PSUs) . |
| Ownership guidelines (executives) | CEO must hold stock equal to 6x base salary; five‑year phase‑in; executives were in compliance or within phase‑in as of 12/31/2024 . |
| Hedging/pledging | Company policy prohibits hedging, pledging and short sales of Twilio stock by employees and directors . |
Vesting cadence and potential supply: CEO RSUs vest quarterly (1/16 per quarter), which can create regular settlement events; 2024 vested 88,472 shares for the CEO; PSUs do not vest until 2027 (one cliff), limiting near‑term PSU‑related supply .
Employment Terms
Severance framework (Amended CEO Severance Plan; most recently amended September 2024):
- Termination without cause/for good reason outside CIC period: lump sum cash equal to 18 months of base salary; up to 18 months of COBRA‑equivalent benefits; 12 months’ additional vesting credit on outstanding time‑based equity (CEO only) .
- Double‑trigger in connection with a CIC (within CIC period): lump sum cash equal to 24 months of base salary and 200% of target annual bonus; up to 24 months of COBRA‑equivalent benefits; full vesting of all unvested equity awards, with performance awards vesting at target .
- Company does not provide excise tax gross‑ups; change‑in‑control benefits are double‑trigger only; clawback policy compliant with SEC/NYSE .
Illustrative estimated CEO payouts if terminated at 12/31/2024 (based on $108.08 share price): $10.94M outside CIC; $64.43M with double‑trigger CIC; $4.96M equity value on CIC without termination (company assumption per table) .
Other contractual terms: At‑will employment; standard proprietary information, inventions, non‑compete and non‑solicit agreement; arbitration agreement; personal security may be provided on a tax‑neutral basis .
Board Governance & Director Service
- Director since 2024 (Class II; current term runs to 2027); no board committees; employee director (non‑independent) .
- Independent Chair (Jeff Epstein) since January 2024; 100% independent audit, compensation, and nominating committees; regular executive sessions of independent directors .
- Board independence: 8/9 directors independent as of 2025 proxy; board refreshment ongoing .
- Meeting attendance: all directors attended ≥75% of board and applicable committee meetings in 2024 .
- Employee directors do not receive director compensation .
Director Compensation (for context)
- Non‑employee directors receive RSUs only (no cash) with an annual equity grant ($250,000) plus equity retainers for board/committee roles; independent Chair retainer $75,000 in 2024 (increased to $100,000 in April 2025); grants made quarterly and fully vested at grant; initial director grants vest over three years .
- Deferral program allows conversion of vested RSUs into DSUs until departure or change in control .
Compensation Structure Analysis
- Pay mix and at‑risk orientation: CEO’s 2024 equity weighting was 60% PSUs/40% RSUs; base salaries were not increased in 2024; 2025 CEO equity target was reduced to $20.5M (60% PSUs/40% RSUs), reinforcing performance orientation and moderation of grant magnitude following the promotional year .
- Metric evolution: 2024 reintroduced PSUs with longer 3‑year performance period (FCF and relative TSR) and implemented a normalized annual cash bonus using organic revenue growth and non‑GAAP operating income (evenly weighted), aligning to investor feedback and industry standards .
- Rigor of goals: 2024 cash plan required above‑midpoint performance for target payout and capped at 150%; legacy 2022 PSU program paid 0% for the 2024 tranche (threshold organic revenue growth was 20%), evidencing stretch targets .
- Governance safeguards: double‑trigger CIC; no tax gross‑ups; no option repricing without shareholder approval; SEC/NYSE‑compliant clawback; prohibitions on hedging and pledging .
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑Pay approval improved to ~84% at the 2024 annual meeting (for 2023 compensation), versus ~68% support in 2023 (for 2022 compensation) .
- Company responses included: introducing a normalized annual cash bonus plan, lengthening PSU performance periods to 3 years, incorporating profitability and FCF metrics, updating the peer group to align with size and business profile, and reducing 2025 CEO equity target value .
Risk Indicators & Red Flags
- Positive indicators: separation of Chair/CEO; strong independence across committees; double‑trigger CIC; robust clawback; anti‑hedging/anti‑pledging; improved free cash flow and capital returns (repurchased $2.3B of stock in 2024, reducing shares outstanding by 16%) .
- Items to monitor: Quarterly RSU vesting creates recurring settlement events (88,472 CEO shares vested in 2024), which can coincide with 10b5‑1 activity; significant unvested RSUs outstanding; PSU outcomes tied to multi‑year FCF and relative TSR beginning in 2027 .
Performance & Track Record
- 2024 results: Revenue $4.46B (+7% YoY); non‑GAAP operating income $714.4M; FCF $657.5M; first quarter of GAAP operating profitability achieved in Q4 2024; net cash from operations $716.2M .
- Capital allocation: Completed $3B of repurchase authorizations in 2023–2024, repurchasing $2.3B and reducing shares outstanding by 16% in 2024; authorized an additional $2B in Jan‑2025 (expires end of 2027) .
- TSR: +57% from Shipchandler’s appointment in January 2024 through year‑end 2024 .
Compensation Committee & Advisors
- Compensation and Talent Management Committee: Jeff Immelt (Chair), Miyuki Suzuki, Jeff Epstein; all independent and non‑employee per NYSE/SEC; retained Compensia as independent advisor; committee meets at least annually and conducts risk assessments; Compensia independence affirmed (no conflicts) .
Quantitative Exhibits
2024 Grants and Outstanding Awards (CEO)
| Award | Shares/Units | Key terms |
|---|---|---|
| 2024 PSUs | 245,716 target (up to 491,432 max); grant‑date FV $16,490,496 | 70% 3‑yr cumulative FCF, 30% 3‑yr relative TSR vs S&P 500; cliff vest in 2027 if achieved . |
| 2024 RSUs | 139,344; grant‑date FV $7,898,018 | 16 equal quarterly installments from 3/31/2024 to 3/31/2028 . |
| Options (selected) | 35,418 @ $76.63 (exercisable; exp. 10/31/2028); 44,158 @ $117.94 (exercisable; exp. 2/21/2030); 18,126 @ $377.59 (exercisable; exp. 2/24/2031); 8,952 + 4,613 @ $298.00 (2021 grant; partial unvested; exp. 11/11/2031) | Earlier options fully vested; 11/11/2021 option vests ratably across years 1–4 post‑grant . |
CEO Beneficial Ownership Detail
| Component | Shares |
|---|---|
| Shares held directly | 69,759 |
| Options exercisable within 60 days | 107,807 |
| Total beneficial ownership | 177,566 (<1% of 153,254,342 outstanding) |
Investment Implications
- Alignment and rigor: 2024 program shifts (normalized annual bonus and 3‑year PSUs with FCF/relative TSR) strengthen pay‑for‑performance alignment; legacy 2022 PSUs missing payout in 2024 underscores goal rigor .
- Supply/timing: Quarterly RSU vesting and large outstanding time‑based equity create predictable settlement windows; PSU cliff in 2027 limits near‑term PSU supply; options are largely out‑of‑the‑money at 12/31/2024 except the 2018 grant, limiting exercise‑driven supply .
- Retention and protection: Double‑trigger CIC with 24 months’ salary + 200% target bonus and full equity acceleration provides competitive protection while avoiding gross‑ups; clawback and anti‑pledging reduce governance risk .
- Execution track: 2024 operating improvements (profitability inflection, strong FCF, significant buybacks) and +57% TSR in year one are supportive, but multi‑year PSU outcomes hinge on sustaining FCF and relative TSR through 2026–2027, keeping performance pressure high .