Meeting May 22, 2019

Total reported compensation for PayPal CEO for 2018 was $37,764,586.

The largest component of pay – over $35 million – came in stock awards. Included in that sum, an April 2018 performance-based award that will only be earned, according to the company, “with meaningful and sustained stock price performance.” The stock price on grant date was $77.84. Under the terms of the grant, half of it vests when the stock price has a 90-trading-day-closing-average of $105, and half vests when the stock price has a 90-trading-day-closing-average of $125.

It appears the first portion either has already vested or will vest shortly, as the stock has traded at over $100 since March and is now at $113. In a New York Times editorial entitled “CEO Pay, America’s Economic Miracle,” ISS calculates a number of specific figures including MOM (Multiple of Median). The test divides the company’s CEO pay (using the ISS TDC definition) by the median CEO pay of the ISS-selected peer group. A MOM score of 1.00 means that the company’s CEO was granted pay at the median of the ISS peer group; a MOM score of 2.00 means that the company’s CEO was granted double the pay of the median CEO in the ISS peer group. PayPal’s MOM score is 3.2 meaning Schulman was paid three times the median CEO in the peer group.

The stock price has increased, but Schulman will already be suitably (possibly disproportionately rewarded for that. Schulman has over 100,000 shares of options that vest at much lower levels, and stands to reap millions when he cashes those in. Bill Saporito wrote "Measured by a market in which the S & P 500 index has tripled since 2009, every chief executive is a managerial genius."

We do not believe Schulman’s “genius” requires the compensation committee to pay him three times what peer CEOs are paid.