Due to PayPal Holdings Inc’s inability to meet its financial goals, the outgoing CEO, Dan Schulman, had his compensation package for the previous year reduced by 32%.
Schulman’s compensation for 2022 amounts to approximately $22 million, with $20.2 million of that being in stock awards, compared to $32 million in the previous year.
The company’s board compensation committee stated that PayPal had not met its targets for key metrics such as revenue, adjusted operating margin, and net new active users.
Despite this, the committee commended Schulman for his leadership in navigating the company through a challenging period of macroeconomic uncertainty, geopolitical instability, slowing e-commerce growth, and a return to pre-pandemic consumer behaviors.
Schulman has announced his retirement at year-end, and the board has enlisted a search firm to find his successor. He is leaving the payments giant at a time when it is facing a slowdown in growth across its platforms and a months-long slump in its stock price.
PayPal’s shares remained mostly stable in the later trading period despite closing at $75.52 on Thursday with a 2.8% increase. This increase in share price resulted in the stock’s overall 6% gain for the year, which stands in contrast to the 5% decrease of the 73-company S&P 500 Financials Index.
PayPal will face a series of shareholder proposals related to its practices at its annual meeting next month. During an upcoming shareholder meeting, investors will vote on the proposed compensation packages for Schulman and other top executives at PayPal.
The Tara Health Foundation has urged shareholders to support a proposal that requires PayPal to provide a report on its efforts to comply with requests from law enforcement officials seeking to enforce state laws that make abortions illegal.
Dan Schulman Receives $22 Million from PayPal
PayPal stated that it consistently applies objective policies that are tailored to address the suspension and closure of accounts. These policies are designed to protect the safety of PayPal’s customers and uphold the company’s legitimate business interests. As such, PayPal is recommending that shareholders vote against this proposal.
The impact of the move to reduce Schulman’s pay by 32% is two-fold. Firstly, it signals that PayPal’s board is holding its top executives accountable for the company’s financial performance.
By reducing Schulman’s pay, the board is sending a message that financial targets must be met, and that executive compensation is tied to these targets. This may motivate executives to work harder to achieve these targets in the future.
Secondly, the move may also have an impact on morale among PayPal employees. When top executives are paid less, it may create a perception that the company is not doing well, which could lower morale among employees. Additionally, if employees see that their CEO is being paid less than before, they may feel that their own pay or job security could be affected.
PayPal is advising shareholders to reject this proposal, stating that the company only discloses customer information following proper legal procedures, and each request is thoroughly evaluated for its validity before any information is shared.
Another proposal that shareholders will vote on would require PayPal to disclose the decision-making process used for account suspensions and closures. This proposal was prompted by allegations that PayPal has unfairly banned legal sex workers from accessing its services.
Schulman’s retirement may also have an impact on the company. As he has been credited with leading PayPal through a challenging period of macroeconomic uncertainty, geopolitical instability, slowing e-commerce growth, and a return to pre-pandemic consumer behaviors, his successor will have big shoes to fill.
The search for a new CEO will be a critical time for the company, as it will need to find someone who can continue to navigate the challenges facing the payments industry and drive growth for the company.
