DEF 14A 1 nc10010090x1_def14a.htm DEF 14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒        Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12
SQUARE, INC.
(Name of Registrant as Specified In Its Charter)
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Proxy Statement
Notice of 2020 Annual Meeting of Stockholders
JUNE 16, 2020

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SQUARE, INC.
1455 MARKET STREET, SUITE 600
SAN FRANCISCO, CALIFORNIA 94103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 10:00 a.m. Pacific Time on Tuesday, June 16, 2020
Dear Stockholders of Square, Inc.:
We cordially invite you to attend the 2020 annual meeting of stockholders (the “Annual Meeting”) of Square, Inc., a Delaware corporation, which will be held virtually on Tuesday, June 16, 2020, at 10:00 a.m. Pacific Time. You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/SQ2020, where you will be able to listen to the meeting live, submit questions and vote your shares online during the meeting, just as you could at an in-person meeting.
We are holding the Annual Meeting for the following purposes, as more fully described in the accompanying proxy statement:
1. To elect three Class II directors to serve until the 2023 annual meeting of stockholders and until their successors are duly elected and qualified;
2. To approve, on an advisory basis, the compensation of our named executive officers;
3. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2020;
4. To vote upon a proposal submitted by one of our stockholders regarding employee representation on the board of directors, if properly presented at the annual meeting; and
5. To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
Our board of directors has fixed the close of business on April 20, 2020 as the record date for the Annual Meeting. Only stockholders of record on April 20, 2020 are entitled to notice of, and to vote at, the Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting will be available for examination during ordinary business hours for 10 days prior to the Annual Meeting at our headquarters located at 1455 Market Street, Suite 600, San Francisco, California 94103. Reasonable accommodations will be made if the Company cannot make the list available at its headquarters. The stockholder list will also be available online during the Annual Meeting. Further information regarding voting rights, the matters to be voted upon and instructions to attend the Annual Meeting is presented in the accompanying proxy statement.
The Notice of Internet Availability of Proxy Materials containing instructions on how to access the proxy statement and our annual report is first being mailed on or about April 24, 2020 to all stockholders entitled to vote at the Annual Meeting. The accompanying proxy statement and our annual report can be accessed by visiting www.proxyvote.com. You will be asked to enter the 16-digit control number located on your Notice of Internet Availability of Proxy Materials, your proxy card or the instructions that accompanied your proxy materials to attend the Annual Meeting.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to submit your vote via the Internet, telephone or mail as soon as possible to ensure your shares are represented. For additional instructions on attending the Annual Meeting or voting your shares, please refer to the section titled “Questions and Answers About Our Proxy Materials and Annual Meeting” in this proxy statement. Returning the proxy does not deprive you of your right to attend the Annual Meeting and to vote your shares at the Annual Meeting.
We appreciate your continued support of Square.
By order of the Board of Directors,

Jack Dorsey
President, Chief Executive Officer and
Chairman of the Board
San Francisco, California
April 24, 2020

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EXECUTIVE SUMMARY
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
Information about our 2020 Annual Meeting of Stockholders
Date and Time: Tuesday, June 16, 2020, at 10:00 a.m. Pacific Time.
Location: The Annual Meeting will be a completely virtual meeting. You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/SQ2020, where you will be able to listen to the meeting live, submit questions and vote your shares online during the meeting.
Record Date: April 20, 2020
Voting Matters
 
Proposals
Board
Recommendation
Page Number for
Additional Information
1
The election of Roelof Botha, Amy Brooks and James McKelvey as Class II directors.
FOR
2
The approval, on an advisory basis, of the compensation of our named executive officers.
FOR
3
The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2020.
FOR
4
To vote upon a proposal submitted by one of our stockholders regarding employee representation on the board of directors, if properly presented at the Annual Meeting.
AGAINST
We will also transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. As of the date of this proxy statement, we have not received notice of any such business.
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Corporate Governance Highlights
We are committed to having sound corporate governance principles that we believe promote long-term value and serve the best interest of all our stockholders, sellers, customers and other stakeholders. Some highlights of our corporate governance practices are listed below:
Proactive approach to board pipeline management
8 out of 10 directors are independent
3 out of 10 directors are women
4 out of 6 executive officers are women
Separate lead independent director and Chairman
Regular executive sessions of independent directors
Strong risk oversight by full board and committees
Annual board of director and committee evaluations
Significant stock ownership requirements for directors and executive officers
Insider Trading policy prohibits hedging and pledging transactions
All board committees are 100% independent
Each director attended at least 75% of board and committee meetings
Our 2020 Director Nominees
Our Class II director nominees demonstrate a mix of experiences and perspectives.
 
Name
Director
Since
Experience
Indepen-
dence
Board and Committee
Positions
Other
Current
Public
Company
Boards


Roelof Botha
2011
Partner at Sequoia Capital
Audit and Risk Committee
Compensation Committee
Eventbrite, Inc.

MongoDB, Inc.

Natera, Inc.


Amy Brooks
2019
President, Team Marketing & Business Operations and Chief Innovation Officer of the National Basketball Association
Nominating and Corporate
Governance Committee
None


James McKelvey
2009
Co-Founder of Square
General Partner of FinTop Capital
None
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Executive Compensation Philosophy and Highlights
Our Compensation Philosophy
Square stands for economic empowerment, and everything we do is intended to give our sellers accessible, affordable tools designed to help them start, run and grow their businesses to fully participate in the economy. Similarly, with Cash App, we have built a parallel ecosystem of financial services to help individuals manage their money. Our customers inspire us in how they innovate, take risks and take ownership. We want our employees, like our customers, to act like owners. Our compensation approach reflects this philosophy.
To this end, our compensation programs are designed to attract, retain and grow the best teams while reflecting the core tenets of our culture:
Fairness: By designing and delivering compensation programs that are equitable across similarly situated employees, our employees are motivated to work collaboratively to achieve our long-term business objectives and serve our sellers.
Simplicity: By providing compensation programs that are simple and do not distract from their day-to-day responsibilities, our employees are able to focus on growing our business and are rewarded when Square is successful.
Performance-driven: By creating compensation programs that reward individual performance and achievement of corporate objectives, our employees are incentivized to perform their best work and receive financial awards for their impact on Square and our business.
Executive Compensation Highlights
CEO Compensation. At his request, our chief executive officer receives no cash or equity compensation except for an annual salary of $2.75.
Annual Say-on-Pay Vote. We conduct an annual non-binding advisory vote on the compensation of our named executive officers. At our 2019 annual meeting of stockholders, more than 99% of the votes cast on the say-on-pay proposal were voted in favor of the named executive officers’ compensation.
Clawback Policy. Our executives are subject to a clawback policy, which permits our board to require forfeiture or reimbursement of incentive compensation if an executive engages in certain misconduct.
Independent Compensation Consultant. Our compensation
committee engages its own independent compensation consultant to advise on executive and non-employee director compensation matters.
Alignment with Company Success. A substantial percentage of our executive’s compensation aligns with the long-term success of the company through grants of stock options and restricted stock-based awards.
Risk Oversight. Risk and exposures mitigated by strong oversight by our compensation committee.
Stock Ownership Guidelines. Our stock ownership guidelines require significant stock ownership levels and are designed to align the long-term interests of our executives and non-employee directors with those of our stockholders.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Square, Inc., a Delaware corporation (referred to herein as the “Company”, “Square”, “we”, “us” or “our”), is committed to having sound corporate governance principles. Our business affairs are managed under the direction of our board of directors, which is currently composed of 10 members. All of our directors, other than Messrs. Dorsey and McKelvey, are independent within the meaning of the listing standards of the New York Stock Exchange. Former directors Mr. Naveen Rao and Dr. Ruth Simmons were each determined to be independent within the meaning of the New York Stock Exchange listing standards during the periods in which each served on our board of directors. Our board of directors is divided into three staggered classes of directors. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose term is then expiring.
The following table sets forth the names, ages as of March 31, 2020 and certain other information for each of the members of our board of directors with terms expiring at our 2020 annual meeting of stockholders (and any postponements, adjournments or continuations thereof (the “Annual Meeting”)), who are also nominees for election as a director at the Annual Meeting, and for each of the continuing members of our board of directors:
Name
Class
Age
Position
Director
Since
Current
Term
Expires
Expiration of Term
For Which
Nominated
Directors with Terms Expiring at the Annual Meeting/Nominees
 
 
 
 
 
 
Roelof Botha(1)(2)
II
46
Director
2011
2020
2023
Amy Brooks(3)
II
45
Director
2019
2020
2023
James McKelvey
II
54
Director
2009
2020
2023
Continuing Directors
 
 
 
 
 
 
Jack Dorsey
I
43
President, Chief Executive Officer and Chairman
2009
2022
David Viniar(1)(3)
I
64
Lead Independent Director
2013
2022
Paul Deighton(2)(4)
I
64
Director
2016
2022
Anna Patterson(1)(4)
I
54
Director
2017
2022
Randy Garutti(3)
III
44
Director
2017
2021
Mary Meeker(2)
III
60
Director
2011
2021
Lawrence Summers(1)
III
65
Director
2011
2021
(1)
Member of our audit and risk committee
(2)
Member of our compensation committee
(3)
Member of our nominating and corporate governance committee
(4)
Member of Capital compliance and governance committee
Nominees for Director
Roelof Botha has served as a member of our board of directors since January 2011. Since January 2003, Mr. Botha has served in various positions at Sequoia Capital, a venture capital firm, including as a Managing Member of Sequoia Capital Operations, LLC. From 2000 to 2003, Mr. Botha served in various positions at PayPal, Inc., including as Chief Financial Officer. Mr. Botha currently serves on the boards of directors of Eventbrite, Inc., Natera, Inc. and MongoDB, Inc. and
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a number of privately-held companies, and previously served on the board of directors of Xoom Corporation until it was acquired by PayPal, Inc. in November 2015. Mr. Botha holds a B.S. in Actuarial Science, Economics and Statistics from the University of Cape Town and an M.B.A. from the Stanford Graduate School of Business.
Mr. Botha was selected to serve on our board of directors because of his financial and managerial experience.
Amy Brooks has served as a member of our board of directors since October 2019. Since November 2017, Ms. Brooks has served as President, Team Marketing & Business Operations and Chief Innovation Officer at the National Basketball Association (“NBA”), after serving as Executive Vice President from May 2014 to November 2017 and Senior Vice President from January 2010 to May 2014. She has served in roles of increasing responsibility at the NBA since January 2005. Ms. Brooks also currently serves on the board of the Positive Coaching Alliance and on the board of directors of a privately-held company. Ms. Brooks holds a B.A. in Political Science and Communication from Stanford University and an M.B.A. from the Stanford Graduate School of Business.
Ms. Brooks was selected to serve on our board of directors because of her sales and marketing experience, as well as her expertise in growing a global brand.
James McKelvey is our co-founder and has served as a member of our board of directors since July 2009. Since July 2013, Mr. McKelvey has served as a Managing Director of SixThirty FinTech Accelerator, LLC, a financial technology accelerator. Since January 2018, Mr. McKelvey has served as a General Partner of FinTop Capital, a venture capital firm. From March 2012 to December 2017, he served as a General Partner of Cultivation Capital, a venture capital firm. Since January 1990, Mr. McKelvey has served in various positions at Mira Smart Conferencing, a digital conferencing company. Mr. McKelvey currently serves on the boards of directors of a number of privately-held companies, as well as the Federal Reserve Bank of St. Louis. Mr. McKelvey holds a B.S. in Computer Science and a B.A. in Economics from Washington University in St. Louis.
Mr. McKelvey was selected to serve on our board of directors because of the perspective and experience he brings as one of our founders.
Continuing Directors
Jack Dorsey is our co-founder and has served as our President and Chief Executive Officer and as a member of our board of directors since July 2009. From May 2007 to October 2008, Mr. Dorsey served as President and Chief Executive Officer of Twitter, Inc. In July 2015, Mr. Dorsey returned to Twitter and serves as Chief Executive Officer. He has served as a director of Twitter since May 2007. Mr. Dorsey is committed to his chief executive officer roles at both Square and Twitter. While he does not have minimum time commitments at either company, he devotes significant time, attention and efforts to each of them. He generally divides his time roughly equally between them several days a week, and he retains flexibility to ensure he can re-allocate his time based on the needs of each business. The particulars of his time-allocation strategy may change over time. Mr. Dorsey also served as a member of the board of directors of The Walt Disney Company until March 2018.
Mr. Dorsey was selected to serve on our board of directors because of the perspective and experience he provides as our President and Chief Executive Officer and one of our founders, as well as his extensive experience with technology companies and innovation.
David Viniar has served as a member of our board of directors since October 2013. From August 1980 until his retirement in January 2013, Mr. Viniar served in various positions at The Goldman Sachs Group, including as Chief Financial Officer, Executive Vice President and Head of the Operations,
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Technology, Finance and Services Division. Mr. Viniar currently serves on the boards of directors of The Goldman Sachs Group and a number of privately-held companies. Mr. Viniar holds a B.A. in Economics from Union College and an M.B.A. from Harvard Business School.
Mr. Viniar was selected to serve on our board of directors because of his financial, risk management and business expertise.
Paul Deighton has served as a member of our board of directors since May 2016. Mr. Deighton has served as the non-executive chairman of The Economist Group since June 2018 and of Heathrow Airport Holdings Limited, the owner of Heathrow Airport in the United Kingdom, since June 2016. From December 2012 to May 2015, Mr. Deighton served as Commercial Secretary to the Treasury and as a member of the House of Lords in the United Kingdom. Mr. Deighton previously served as the Chief Executive Officer of the London Organising Committee of the Olympic and Paralympic Games and held various roles at The Goldman Sachs Group, an investment bank. Mr. Deighton currently serves on the board of the Holdingham Group, an advisory firm, and as a member of the Parliamentary Committee overseeing the restoration of the Houses of Parliament. Mr. Deighton holds a B.A. in Economics from Trinity College, Cambridge University.
Mr. Deighton was selected to serve on our board of directors because of his financial and business expertise, as well as his international perspective and his government and regulatory experience.
Anna Patterson has served as a member of our board of directors since November 2017. Since April 2017, Ms. Patterson has served as Founder and Managing Partner at Gradient Ventures, Google’s artificial intelligence-focused venture fund, and since September 2010, as a Vice President of Engineering at Google. Prior to that, from January 2007 to September 2010, Ms. Patterson served as Co-Founder and President at Cuil, and from February 2004 to January 2007, as Director of Engineering at Google. Ms. Patterson also currently serves on the National Council at the School of Engineering and Applied Science at Washington University in St. Louis and on the boards of directors of a number of privately-held companies. Ms. Patterson holds a B.S. in Computer Science and Electrical Engineering from Washington University in St. Louis and a Ph.D. in Computer Science from the University of Illinois at Urbana-Champaign.
Ms. Patterson was selected to serve on our board of directors because of her engineering and business experience as well as her financial expertise as a founder of a venture fund.
Randy Garutti has served as a member of our board of directors since July 2017. Since April 2012, Mr. Garutti has served as Chief Executive Officer and on the board of directors of Shake Shack. Prior to becoming Chief Executive Officer, Mr. Garutti served as Chief Operating Officer of Shake Shack since January 2010. Before Shake Shack, Mr. Garutti was the Director of Operations for Union Square Hospitality Group, LLC, overseeing the operations for all its restaurants. Additionally, Mr. Garutti currently serves on the board of directors of the Columbus Avenue Business Improvement District, a not-for-profit organization. Mr. Garutti holds a B.S. from Cornell University’s School of Hotel Administration.
Mr. Garutti was selected to serve on our board of directors because of his business expertise and leadership of a global brand.
Mary Meeker has served as a member of our board of directors since June 2011. Since January 2019, Ms. Meeker has served as a General Partner of Bond Capital. From December 2010 to December 2018, Ms. Meeker served as a General Partner of Kleiner Perkins Caufield & Byers. From 1991 to 2010, Ms. Meeker worked at Morgan Stanley as a Managing Director and Research Analyst. Ms. Meeker previously served on the boards of directors of LendingClub Corporation from June 2012 to June 2019 and DocuSign from June 2012 to June 2019, and currently serves on the boards of directors of a number of privately-held companies. Ms. Meeker holds a B.A. in Psychology from DePauw University and an M.B.A. from Cornell University.
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Ms. Meeker was selected to serve on our board of directors because of her extensive experience advising and analyzing technology companies.
Dr. Lawrence Summers has served as a member of our board of directors since June 2011. Since January 2011, Dr. Summers has served as the Charles W. Eliot University Professor & President Emeritus of Harvard University and the Weil Director of the Mossavar-Rahmani Center for Business & Government at the Harvard Kennedy School. From January 2009 to December 2010, Dr. Summers served as Director of the National Economic Council for President Obama. Dr. Summers previously served as President of Harvard University, and he has also served in various other senior policy positions, including as Secretary of the Treasury and Vice President of Development Economics and Chief Economist of the World Bank. Dr. Summers currently serves as the Chairman of the International Advisory Board at Santander Bank and on the boards of directors of a number of privately-held companies. Dr. Summers holds a B.S. in Economics from Massachusetts Institute of Technology and a Ph.D. in Economics from Harvard University.
Dr. Summers was selected to serve on our board of directors because of his extensive policy experience and in-depth knowledge of macroeconomic trends.
Director Independence
Our Class A common stock is listed on the New York Stock Exchange. Under the listing standards of the New York Stock Exchange, independent directors must comprise a majority of a listed company’s board of directors. In addition, the listing standards of the New York Stock Exchange require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Under the listing standards of the New York Stock Exchange, a director will only qualify as an “independent director” if, in the opinion of that listed company’s board of directors, that director does not have a material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). As noted in the commentary to the listing standards, the concern is independence from management.
Audit and risk committee members must also satisfy the additional independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the listing standards of the New York Stock Exchange. Compensation committee members must also satisfy the additional independence criteria set forth in Rule 10C-1 under the Exchange Act and the listing standards of the New York Stock Exchange.
Our board of directors has undertaken a review of the independence of each of our directors. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that none of Mses. Brooks, Meeker and Patterson, Messrs. Botha, Deighton, Garutti and Viniar and Dr. Summers has a material relationship with the Company and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and the listing standards of the New York Stock Exchange. Former directors Mr. Rao and Dr. Simmons were each determined to be independent within the meaning of the New York Stock Exchange listing standards during the periods in which each served on our board of directors. In making the determination of the independence of our directors, the board of directors considered relevant transactions between Square and entities associated with our directors or members of their immediate families, including transactions involving Square and payments made to or from companies and entities in the ordinary course of business where our directors or members of their immediate families serve as partners, directors or as a member of the executive management of the other party to the transaction, and determined that none of these relationships constitute material relationships that would impair the independence of our directors.
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Board Leadership Structure and Role of Our Lead Independent Director
Mr. Dorsey currently serves as both the Chairman of our board of directors and as our Chief Executive Officer. Our independent directors bring experience, oversight and expertise from outside of our company, while Mr. Dorsey brings current company-specific experience, leadership and insight. As our co-founder and Chief Executive Officer, Mr. Dorsey is best positioned to identify strategic priorities, oversee product development, lead critical discussions and execute our business plans.
Our board of directors has adopted Corporate Governance Guidelines that provide that one of our independent directors should serve as our Lead Independent Director at any time when the Chairman of our board of directors is not independent, including when our Chief Executive Officer serves as the Chairman of our board of directors. Because Mr. Dorsey is our Chairman and is not an “independent” director as defined in the listing standards of the New York Stock Exchange, our board of directors has appointed Mr. Viniar to serve as our Lead Independent Director. As our Lead Independent Director, Mr. Viniar is responsible for calling separate sessions of the independent directors, determining the agenda and serving as chairperson of meetings of independent directors, providing feedback to the Company’s Chief Executive Officer and Chairman of the board regarding the executive sessions, serving as spokesperson for the Company as requested, and performing such other responsibilities as may be designated by a majority of the independent directors from time to time. We believe that the leadership structure of Mr. Dorsey’s combined role and Mr. Viniar as Lead Independent Director enables strong leadership, creates clear accountability and enhances our ability to communicate our message and strategy clearly and consistently to stockholders while ensuring robust, independent oversight by the board of directors and Lead Independent Director.
Board Meetings and Committees
During our fiscal year ended December 31, 2019, our board of directors held five meetings (including regularly scheduled and special meetings), and each director attended at least 75% of the aggregate of (i) the total number of meetings of our board of directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served.
Although our Corporate Governance Guidelines do not have a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we encourage, but do not require, our directors to attend. All of our directors attended our 2019 annual meeting of stockholders.
Our board of directors has established an audit and risk committee, a compensation committee, a nominating and corporate governance committee and a Capital compliance and governance committee. The composition and responsibilities of each of the committees of our board of directors is described below. Members will serve on these committees until their resignation or until otherwise determined by our board of directors.
Audit and Risk Committee
Our audit and risk committee consists of Ms. Patterson, Messrs. Botha and Viniar and Dr. Summers, with Mr. Viniar serving as Chair. Each of our audit and risk committee members meets the requirements for independence for audit committee members under the listing standards of the New York Stock Exchange and SEC rules and regulations. Each member of our audit and risk committee also meets the financial literacy and sophistication requirements of the listing standards of the New York Stock Exchange. In addition, our board of directors has
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determined that Mr. Viniar is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended (“Regulation S-K”). Our audit and risk committee is, among other things, responsible for the following:
selecting and hiring a qualified independent registered public accounting firm to audit our financial statements;
helping to ensure the independence and performance of the independent registered public accounting firm;
reviewing our financial statements and discussing the scope and results of the independent audit and quarterly reviews with the independent registered public accounting firm, and reviewing, with management and the independent registered public accounting firm, our interim and year-end results of operations and the reports and certifications regarding internal controls over financial reporting and disclosure controls;
preparing, reviewing and approving the audit and risk committee report that the SEC requires to be included in our annual proxy statement;
reviewing the adequacy and effectiveness of our disclosure controls and procedures, and developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;
reviewing our program and policies on risk assessment and risk management, including risks associated with data privacy and cybersecurity;
reviewing and overseeing related party transactions for which review or oversight is required by applicable law or required to be disclosed in our financial statements or SEC filings; and
approving or, as required, pre-approving, all audit and all permissible non-audit services and fees to be performed by the independent registered public accounting firm.
Our audit and risk committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. A copy of the charter of our audit and risk committee is available on our website at https://squareup.com/about/investors. During 2019, our audit and risk committee held six meetings.
Compensation Committee
Our compensation committee consists of Ms. Meeker and Messrs. Botha and Deighton, with Ms. Meeker serving as Chair. Mr. Rao served as a member of the committee during 2019 and 2020 until his resignation from our board of directors in April 2020. Each of our compensation committee members meets the requirements for independence for compensation committee members under the listing standards of the New York Stock Exchange and SEC rules and regulations, including Rule 10C-1 under the Exchange Act, as did Mr. Rao during the period in which he was a member of our compensation committee. Each of Ms. Meeker and Mr. Deighton is also a “non-employee director,” as defined pursuant to Rule 16b-3 promulgated under the Exchange Act. Our compensation committee is, among other things, responsible for the following:
reviewing, approving and determining, or making recommendations to our board of directors regarding, the compensation of our executive officers;
overseeing our overall compensation philosophy and compensation policies, plans and benefits programs, including those for our executive officers;
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administering our equity compensation plans; and
reviewing, approving and making recommendations to our board of directors regarding incentive compensation and equity compensation plans.
Our compensation committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. A copy of the charter of our compensation committee is available on our website https://squareup.com/about/investors. During 2019, our compensation committee held five meetings.
Our compensation committee may delegate its authority and duties as it deems appropriate in accordance with applicable laws and regulations. Our compensation committee has delegated authority to our management equity committee, which consists of our Chief Executive Officer and People Lead, to make equity grants within predetermined guidelines to employees and consultants who are not our Section 16 officers or members of our management equity committee. In addition, our compensation committee has a subcommittee comprised entirely of members of the compensation committee that meet the requirements of a “non-employee director,” as such term is used at the beginning of this section. This subcommittee has the nonexclusive authority to grant equity and other awards under our compensation plans that comply with Section 16 of the Exchange Act, to the extent applicable.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Ms. Brooks and Messrs. Garutti and Viniar, with Mr. Garutti serving as Chair. Ms. Brooks joined the nominating and corporate governance committee in October 2019. Dr. Simmons served as Chair of the committee during 2019 and 2020 until her resignation from our board of directors in February 2020. Each of our nominating and corporate governance committee members meets the requirements for independence under the listing standards of the New York Stock Exchange and SEC rules and regulations, as did Dr. Simmons during the period in which she was a member of the committee. Our nominating and corporate governance committee is, among other things, responsible for the following:
identifying, evaluating and making recommendations to our board of directors regarding nominees for election to our board of directors and its committees;
evaluating the performance of our board of directors, individual directors and our Chief Executive Officer;
considering and making recommendations to our board of directors regarding the composition of our board of directors and its committees;
overseeing, reviewing and making recommendations to our board of directors regarding our corporate governance practices, including our Corporate Governance Guidelines;
overseeing the Company’s process for stockholder communications with the board of directors;
conducting a periodic review of environmental and corporate responsibility matters of significance to us;
reviewing and monitoring compliance with our Code of Business Conduct and Ethics and other actual and potential conflicts of interest, other than transactions with related parties reviewed by the audit and risk committee; and
reviewing the succession planning for our Chief Executive Officer, as well as each of our other members of our executive management team.
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Our nominating and corporate governance committee operates under a written charter that satisfies the applicable listing standards of the New York Stock Exchange. A copy of the charter of our nominating and corporate governance committee is available on our website at https://squareup.com/about/investors. During 2019, our nominating and corporate governance committee held six meetings.
Capital Compliance and Governance Committee
Our Capital compliance and governance committee consists of Mr. Deighton and Ms. Patterson, with Mr. Deighton serving as Chair. Ms. Patterson joined the Capital compliance and governance committee in April 2019. Dr. Simmons served as a member of the committee during 2019 and 2020 until her resignation from our board of directors in February 2020. Each of our Capital compliance and governance committee members meets the requirements for independence under the listing standards of the New York Stock Exchange and SEC rules and regulations, as did Dr. Simmons during the period in which she was a member of the committee. Our Capital compliance and governance committee is, among other things, responsible for the following:
overseeing the governance and compliance practices of Square Capital, LLC, a wholly owned subsidiary of the Company, and its related products (“Square Capital”), including reviewing Square Capital’s practices with respect to compliance testing and monitoring, complaints, third party audits, self-identified issues and regulatory changes;
reviewing and discussing with management the overall adequacy and effectiveness of Square Capital’s legal, regulatory and ethical compliance programs;
overseeing the review of Square Capital’s major financial and other risk exposures and the steps taken to monitor and control those exposures; and
reviewing and assisting in the selection of Square Capital’s Chief Compliance Officer and Bank Secrecy Act / Anti-Money Laundering Officer and periodically reviewing any issues encountered in the course of his or her work.
Our Capital compliance and governance committee operates under a written charter. During 2019, our Capital compliance and governance committee held four meetings.
Compensation Committee Interlocks and Insider Participation
None of the current members of our compensation committee, or any member that served during the past fiscal year, is or has been an officer or employee of our company. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on our compensation committee. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the compensation committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on our board of directors.
Considerations in Evaluating Director Nominees
Our nominating and corporate governance committee uses a variety of methods for identifying and evaluating director nominees. In its evaluation of director candidates, our nominating and corporate governance committee will consider the current size and composition, organization and governance of our board of directors and the needs of our board of directors and the respective committees of our board of directors. Some of the qualifications that our nominating and corporate governance committee considers include, without limitation, issues of
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character, integrity, judgment, diversity, and with respect to diversity, such factors as gender, race, ethnicity and experience, area of expertise, potential conflicts of interest and other commitments and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on our board of directors. Nominees must also have the highest personal and professional ethics and the ability to offer advice and guidance to our Chief Executive Officer and other members of management based on proven achievement and leadership in the companies or institutions with which they are, or have been, affiliated. Director candidates must understand the fiduciary responsibilities that are required of a member of our board of directors and have sufficient time available in the judgment of our nominating and corporate governance committee to perform all board of director and committee responsibilities. Members of our board of directors are expected to prepare for, attend and participate in all board of director and applicable committee meetings. Our nominating and corporate governance committee may also consider such other factors as it may deem, from time to time, are in our and our stockholders’ best interests. Additionally, our nominating and corporate governance committee has retained a third-party executive search firm from time to time to identify and review candidates for membership on our board of directors.
Although our board of directors does not have specific requirements with respect to board diversity, it believes that our board should be a diverse body, as described above. While factors relating to diversity were considered for our current directors, no single factor was determinative with respect to any of our current directors. After completing its review and evaluation of director candidates, our nominating and corporate governance committee recommends to our full board of directors the director nominees for selection.
Stockholder Recommendations and Nominations to the Board of Directors
Our nominating and corporate governance committee will consider director candidates recommended by stockholders holding at least $2,000 in market value or one percent (1%) on a fully diluted basis of the company’s securities continuously for at least twelve (12) months prior to the date of the submission of the recommendation, so long as such recommendations comply with our amended and restated certificate of incorporation, amended and restated bylaws and applicable laws, rules and regulations, including those promulgated by the SEC. Our nominating and corporate governance committee will evaluate such recommendations in accordance with its charter, our amended and restated bylaws and our policies and procedures for director candidates, as well as the director nominee criteria described above that is applicable to all director candidates. This process is designed to ensure that our board of directors includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to our business. Eligible stockholders wishing to recommend a candidate for nomination should contact our General Counsel or legal department in writing. Such recommendations must include information about the candidate, a statement of support by the recommending stockholder, evidence of the recommending stockholder’s ownership of our capital stock, a signed letter from the candidate confirming willingness to serve on our board of directors and any additional information required by our amended and restated bylaws. Our nominating and corporate governance committee has discretion to decide which individuals to recommend for nomination as directors.
Under our amended and restated bylaws, stockholders may also directly nominate persons for our board of directors. Any nomination must comply with the requirements set forth in our amended and restated bylaws and should be sent in writing to our Corporate Secretary at Square, Inc., 1455 Market Street, Suite 600, San Francisco, California 94103. To be timely for the 2021 annual meeting of stockholders, our Corporate Secretary must receive the nomination no earlier than the close of business on February 16, 2021 and no later than the close of business on March 18, 2021, or in the event that we hold the 2021 annual meeting of stockholders more than 30 days before or more
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than 60 days after the one-year anniversary of the Annual Meeting, no earlier than the close of business on the 120th day before the 2021 annual meeting of stockholders and no later than the close of business on the later of either (i) the 90th day prior to the 2021 annual meeting of stockholders or (ii) the 10th day following the day on which public announcement of the date of the 2021 annual meeting of stockholders is first made if such first public announcement is less than 100 days prior to the date of the 2021 annual meeting of stockholders.
Communications with the Board of Directors
Interested parties wishing to communicate with our board of directors or with an individual member or members of our board of directors may do so by writing to our board of directors or to the particular member or members of our board of directors, and mailing the correspondence to our General Counsel at Square, Inc., 1455 Market Street, Suite 600, San Francisco, California 94103. Each communication should set forth (i) the name and address of the stockholder, as it appears on our books, and if the shares of our common stock are held by a nominee, the name and address of the beneficial owner of such shares, and (ii) the class and number of shares of our common stock that are owned of record by the record holder and beneficially by the beneficial owner.
Our General Counsel or legal department, in consultation with appropriate members of our board of directors as necessary, will review all incoming communications and, if appropriate, such communications will be forwarded to the appropriate member or members of our board of directors, or if none is specified, to the Chairman of our board of directors or the Lead Independent Director if the Chairman of our board of directors is not independent.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
Our board of directors has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of our directors and director candidates, including independence standards and corporate governance policies and standards applicable to us in general. In addition, our board of directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. The full text of each of our Corporate Governance Guidelines and our Code of Business Conduct and Ethics is posted on our website at https://squareup.com/about/investors. We will post amendments to our Corporate Governance Guidelines and our Code of Business Conduct and Ethics or any waivers of our Code of Business Conduct and Ethics for directors and executive officers on the same website.
Stock Ownership Guidelines
Our board of directors has adopted stock ownership guidelines to ensure ongoing alignment of the interests of our directors and executive officers with the long-term interests of our stockholders. Our guidelines require that (i) each non-employee director own a number of shares of our common stock with a value equal to at least five times his or her annual cash retainer, (ii) each executive officer (other than the Chief Executive Officer) own a number of shares of our common stock with a value equal to at least three times his or her annual base salary and (iii) the Chief Executive Officer own a number of shares of our common stock with a value equal to at least the greater of (x) five times his or her annual base salary and (y) $2 million. Each non-employee director and executive officer is required to comply with our stock ownership guidelines by the later of April 30, 2022 or five years from his or her promotion or hiring as an executive officer or election to our board of directors. Until a non-employee director or executive officer has satisfied his or her applicable level of ownership, he or she is required to retain an amount equal to fifty percent (50%) of the net shares received from any new equity award granted after the adoption of the guidelines. As of December 31, 2019, all of our non-employee directors and executive officers had met or were on track to comply with these stock ownership guidelines within the applicable time periods.
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Risk Management
Our board of directors recognizes the oversight of risk management as one of its primary responsibilities and central to maintaining an effective, risk aware and accountable organization. This includes the oversight of our Enterprise Risk Assessment (“ERA”) framework, which is supported and enabled by our audit and risk committee. While our board of directors maintains ultimate responsibility for the oversight of risk, it has implemented a multi-layered approach which delegates certain responsibilities to the appropriate board committees to ensure that these primary areas of focus are thoroughly discussed and that a pervasive understanding of such focus areas is obtained. These primary risk focus areas are defined by the board of directors, management and leaders of our ERA review as strategic, operational, people, financial and compliance and consist of risks such as cybersecurity, financial reporting and competition. Our board of directors may delegate additional risk areas in the future. Our board of directors and its committees oversee risks associated with their respective areas of responsibility, as summarized below. Each board committee meets in executive session with key management personnel and representatives of outside advisors as required or requested.
Board/
Committee
Primary Areas of Risk Oversight
 
 
Full Board of Directors
Strategic, financial and execution risks and exposures associated with our business strategy, policy matters, succession planning, conflicts of interest, significant litigation and regulatory exposures and other current matters that may present material risk to our financial performance, operations, infrastructure, plans, prospects or reputation, acquisitions and divestitures and our operational infrastructure.
 
 
Audit and Risk Committee
Risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure controls and procedures, internal control over financial reporting, investment guidelines and credit and liquidity matters, our programs and policies relating to legal and regulatory compliance, data privacy, data security, cybersecurity and operational security and reliability, as well as matters of oversight related to our bank, Square Financial Services, which is expected to launch in 2021.
 
 
Nominating and Corporate Governance Committee
Risks and exposures associated with director succession planning, corporate governance, environmental and corporate responsibility matters and overall board and committee effectiveness and composition.
 
 
Compensation Committee
Risks and exposures associated with leadership assessment, retention and succession, executive compensation programs and arrangements and our compensation philosophy and practices.
 
 
Capital Compliance and Governance Committee
Risks and exposures associated with Square Capital’s products, legal and compliance requirements, governance structure and regulatory matters.
The oversight responsibility of our board of directors and its committees is enabled by management reporting processes that are designed to provide visibility to our board of directors regarding the identification, assessment and management of risks and management’s strategic
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approach to risk mitigation. As part of our overall risk management process, we conduct an enterprise risk assessment on an annual basis, which is shared and discussed with our board of directors. Our lead independent director and Chair of our audit and risk committee meets with our internal auditor, Chief Compliance Officer and General Counsel on a regular cadence to identify and discuss risks and exposures and escalates potential issues to our audit and risk committee or board of directors, as appropriate. In addition, our board of directors’ responsibilities related to oversight of the ERA framework include a routine evaluation of the processes, as well as discussions with key management and representatives of outside advisors as appropriate, used to identify, assess, monitor and report on risks across the organization and the setting and communication of the organization’s implementation and measurement of risk tolerances, limits and mitigation.
Board’s Role in Data Privacy and Cybersecurity Oversight
Our board of directors is committed to mitigating data privacy and cybersecurity risks and recognizes this issue’s importance as part of our risk management framework. While the board of directors maintains ultimate responsibility for the oversight of our data privacy and cybersecurity program and risks, it has delegated certain responsibilities to our audit and risk committee. This committee-level focused attention on data privacy and cybersecurity allows the board to further enhance its understanding of these issues. The audit and risk committee assists the board of directors in its oversight of our data privacy and cybersecurity needs by staying apprised of our data privacy and information security programs, strategy, policies, standards, architecture, processes and material risks.
Our board of directors and audit and risk committee’s principal role is one of oversight, recognizing that management is responsible for the design, implementation and maintenance of an effective program for protecting against and mitigating data privacy and cybersecurity risks. The full board of directors undergoes annual information security and privacy training by our Chief Information Security Officer and our Chief Privacy Officer, which covers board oversight obligations and the privacy and security programs in place at Square. Our audit and risk committee receives updates, at least quarterly, on material data privacy and security risks, including any material incidents, relevant industry developments, threat vectors and material risks identified in periodic penetration tests or vulnerability scans. The committee’s updates also include material legal and legislative developments concerning data privacy and security, Square’s approach to complying with applicable law and material engagement with regulators concerning data privacy and cybersecurity. Members of the board of directors provide guidance to management as appropriate in order to address the effectiveness of our overall data privacy and cybersecurity program and stay apprised of the rapidly evolving cyber threat landscape.
Corporate Responsibility and Sustainability
Our nominating and corporate governance committee oversees Square’s corporate responsibility initiatives. We believe that as a commerce ecosystem that helps our sellers start, run and grow their businesses, Square has a tremendous opportunity to empower businesses and individuals to participate in the economy and create a better, more prosperous world. We are committed to managing the risks and opportunities that arise from environmental, social and governance (“ESG”) issues and focusing on sustainability.
Square takes an integrated approach to managing ESG performance and disclosure:
Functional Leadership: Corporate responsibility is managed at a functional level across each of Square’s platforms, with responsibility for oversight rolling up to our senior executives.
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Sustainability Committee: This cross-functional working group coordinates Square’s environmental and sustainability efforts — including evaluating how to build products and packaging in an environmentally responsible way, overseeing sustainability in our supply chain and the ways we use our office spaces and getting employees out into the community through neighborhood engagement efforts.
Social Responsibility Committee: With representation from senior leaders across functional areas, this committee serves as the central coordinating body for our responsibility strategy, benchmarking and reporting.
Board Oversight: Our nominating and corporate governance committee is responsible for conducting a periodic review of environmental and corporate responsibility matters of significance to Square.
Corporate Social Responsibility Report: In 2019, we released our first annual Corporate Social Responsibility Report (“CSR Report”), which was prepared to highlight information regarding our ESG programs. The CSR Report provides an overview of Square’s global operations with respect to the four key priority areas discussed below.
Key areas of focus for Square’s ESG strategy include:
Social Impact: Square is committed to getting involved with our local communities and mobilizing our employees to give back.
Environmental Responsibility: As we build tools for economic empowerment, we’re committed to doing so in a way that is mindful and respectful of our environment. With the choices we make about our products, our office spaces, and our community engagement, we seek to be sustainable and regularly reevaluate where we can do better across all areas.
Employees and Culture: Square offers employees a strong package of compensation, benefits, perks, office amenities, and engagement programs in order to attract and retain the best talent in a competitive labor market.
Corporate Governance: Our approach to corporate governance is designed to ensure board of directors and management accountability to our stakeholders, foster responsible decision-making and engender public trust. Further, our board of directors have adopted Corporate Governance Guidelines that are grounded in Square’s values and mission.
Director Compensation
Pursuant to our Outside Director Compensation Policy, which was last amended effective January 1, 2019, our non-employee directors will receive compensation in the form of equity granted under the terms of our 2015 Equity Incentive Plan, as amended and restated (the “2015 Plan”), and cash, as described below. Our 2015 Plan contains maximum limits on the size of the equity awards that can be granted to each of our non-employee directors in any fiscal year, but those maximum limits do not reflect the intended size of any potential grants or a commitment to make any equity award grants to our non-employee directors in the future. The only commitment to make equity award grants to our non-employee directors is under our Outside Director Compensation Policy, as it may be amended from time to time. The maximum limits under our 2015 Plan provide that no non-employee director may be granted, in any fiscal year, equity awards having a grant date fair value (determined in accordance with GAAP) of more than $1 million, provided, that, the limit is $2 million for awards granted in connection with the director’s initial service as a non-employee director. Equity awards granted to an individual while he or she was an employee or a consultant, but not a non-employee director, do not count for purposes of these limits.
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Our compensation committee periodically reviews our Outside Director Compensation Policy, including review of competitive practices provided by Compensia, Inc., an independent compensation consulting firm (“Compensia”). In 2019, based on data provided by Compensia, our average total direct compensation per director (including annual cash retainer and equity awards) approximated the 40th percentile amongst our compensation peer group identified below in the section titled “Executive Compensation—Compensation-Setting Process—Competitive Positioning.”
Equity Compensation.
Initial Award. Subject to any limits in our 2015 Plan, each person who first becomes a non-employee director will receive an initial grant of restricted stock units (“RSUs”) on the date of his or her appointment having a grant date fair value (determined in accordance with generally accepted accounting principles (“GAAP”)) equal to $250,000 multiplied by a fraction (i) the numerator of which is (x) 12 minus (y) the number of months between the date of the last annual meeting of stockholders and the date the non-employee director becomes a member of our board of directors and (ii) the denominator of which is 12. The shares of our Class A common stock underlying the RSUs vest in full upon the earlier of (i) the first anniversary of the grant date or (ii) the date of the next annual meeting of stockholders, in each case subject to continued service through the vesting date.
Annual Award. On the date of each annual meeting of stockholders, and subject to any limits in our 2015 Plan, each of our non-employee directors is granted RSUs having a grant date fair value (determined in accordance with GAAP) equal to $250,000. The shares of our Class A common stock underlying the RSUs vest in full upon the earlier of (i) the first anniversary of the grant date or (ii) on the date of the next annual meeting of stockholders, in each case subject to continued service through the vesting date.
Our Lead Independent Director will receive an annual grant of RSUs, in addition to the annual grant provided to all non-employee directors, on the date of each annual meeting of stockholders having a grant date fair value (determined in accordance with GAAP) of $70,000, subject to any limits in our 2015 Plan. The shares of our Class A common stock underlying the RSUs vest in full upon the earlier of (i) the first anniversary of the grant date or (ii) the date of the next annual meeting of stockholders, in each case subject to continued service through the vesting date.
The awards granted to a non-employee director under our Outside Director Compensation Policy will become fully vested upon a “change in control” as defined in our 2015 Plan.
Cash Compensation. Each of our non-employee directors receives an annual cash retainer of $40,000 for serving on our board of directors. In addition, each year, non-employee directors are eligible to receive the following cash fees for service on the committees of our board of directors:
Board Committee
Chairperson Fee
Member Fee
Audit and Risk Committee
$20,000
$10,000
Compensation Committee
$15,000
$5,000
Nominating and Corporate Governance Committee
$10,000
$2,500
Capital Compliance and Governance Committee
$15,000
$5,000
Subject to any limits under our 2015 Plan, each non-employee director may elect to convert any cash compensation that they would otherwise be entitled to receive under our Outside Director Compensation Policy into an award of RSUs under our 2015 Plan. If the non-employee
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director makes this election in accordance with the policy, each such award of RSUs will be granted on the first business day following the date that the corresponding cash compensation otherwise would be paid under the policy, will be fully vested on the grant date and will cover a number of shares equal to (A) the aggregate amount of cash compensation otherwise payable to the non-employee director on that date divided by (B) the closing price per share as of the last day of the fiscal quarter for which the grant relates.
2019 Compensation
The following table provides information regarding the total compensation that was earned by each of our non-employee directors in 2019.
Director
Fees Earned or
Paid in Cash
($)
Stock Awards
($)(1)(2)(3)
Total
($)
Roelof Botha
305,369
305,369
Amy Brooks
166,618
166,618
Paul Deighton
60,000
249,934
309,934
Randy Garutti
42,500
249,934
292,434
James McKelvey
290,217
290,217
Mary Meeker
305,369
305,369
Anna Patterson
12,500
289,692
302,192
Naveen Rao(4)
45,000
249,934
294,934
Ruth Simmons(5)
304,054
304,054
Lawrence Summers
62,500
249,934
312,434
David Viniar(6)
382,931
382,931
(1)
The amounts included in the “Stock Awards” column represent the aggregate grant date fair value of RSU awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). The amount does not necessarily correspond to the actual value recognized by the non-employee director. The valuation assumptions used in determining such amounts are described in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
The amounts under the “Stock Awards” column represent the aggregate of initial or annual equity compensation provided under the Outside Director Compensation Policy, and equity grants made in lieu of cash compensation, each as detailed in footnotes 2 and 3, respectively.
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(2)
The amounts included in the “Stock Awards” column representing the annual awards or initial awards, as applicable, granted to our non-employee directors in 2019 are detailed below. Each of these awards vests and settles on the earlier of the first anniversary of the grant date or the date of our Annual Meeting, subject to the director’s continued service through the vesting date.
Name
Grant Date
Number of RSUs
Granted and
Outstanding as of
December 31, 2019
Grant Date Fair
Value ($)
Roelof Botha
June 18, 2019
3,480
249,934
Amy Brooks
October 23, 2019
2,855
166,618
Paul Deighton
June 18, 2019
3,480
249,934
Randy Garutti
June 18, 2019
3,480
249,934
James McKelvey
June 18, 2019
3,480
249,934
Mary Meeker
June 18, 2019
3,480
249,934
Anna Patterson
June 18, 2019
3,480
249,934
Naveen Rao
June 18, 2019
3,480
249,934
Ruth Simmons
June 18, 2019
3,480
249,934
Lawrence Summers
June 18, 2019
3,480
249,934
David Viniar
June 18, 2019
4,454
319,886
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(3)
The amounts included in the “Stock Awards” column representing the awards of RSUs granted to our non-employee directors in lieu of cash retainers in 2019 are described below. Each of these awards vested and settled in full on the grant date.
Name
Grant Date
Number of RSUs
Granted
Grant Date Fair
Value ($)
Total Cash Retainer
Forgone ($)
Roelof Botha
January 2, 2019
245
14,014
13,750
April 1, 2019
183
13,967
13,750
July 1, 2019
189
13,835
13,750
October 1, 2019
221
13,620
13,750
 
 
 
 
 
James McKelvey
January 2, 2019
178
10,182
10,000
April 1, 2019
133
10,151
10,000
July 1, 2019
137
10,028
10,000
October 1, 2019
161
9,922
10,000
 
 
 
 
 
Mary Meeker
January 2, 2019
245
14,014
13,750
April 1, 2019
183
13,967
13,750
July 1, 2019
189
13,835
13,750
October 1, 2019
221
13,620
13,750
 
 
 
 
 
Anna Patterson
April 1, 2019
166
12,669
12,500
July 1, 2019
184
13,469
13,416
October 1, 2019
221
13,620
13,750
 
 
 
 
 
Ruth Simmons
January 2, 2019
222
12,698
12,500
April 1, 2019
183
13,967
13,750
July 1, 2019
189
13,835
13,750
October 1, 2019
221
13,620
13,750
 
 
 
 
 
David Viniar
January 2, 2019
278
15,902
15,625
April 1, 2019
208
15,875
15,625
July 1, 2019
215
15,738
15,625
October 1, 2019
252
15,531
15,625
(4)
Mr. Rao resigned as a member of our board of directors in April 2020.
(5)
Dr. Simmons resigned as a member of our board of directors in February 2020. As of December 31, 2019, Dr. Simmons also held a fully vested option to purchase 38,000 shares of our Class B common stock.
(6)
As of December 31, 2019, Mr. Viniar also held a fully vested option to purchase 326,950 shares of our Class B common stock.
Directors may be reimbursed for their reasonable expenses for attending board and committee meetings. Directors who are also our employees receive no additional compensation for their service as directors. During 2019, only Mr. Dorsey was an employee. See the section titled “Executive Compensation” for additional information about his compensation.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our board of directors is currently composed of 10 members. In accordance with our amended and restated certificate of incorporation, our board of directors is divided into three staggered classes of directors. At the Annual Meeting, three Class II directors will be elected for a three-year term to succeed the same class whose term is then expiring.
Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in the control of our company.
Nominees
Our nominating and corporate governance committee has recommended, and our board of directors has approved, Roelof Botha, Amy Brooks and James McKelvey as nominees for election as Class II directors at the Annual Meeting. If elected, each of Ms. Brooks and Messrs. Botha and McKelvey will serve as Class II directors until the 2023 annual meeting of stockholders and until their successors are duly elected and qualified. Each of the nominees is currently a director of our company. Ms. Brooks is standing for election by our stockholders for the first time. For information concerning the nominees, please see the section titled “Board of Directors and Corporate Governance.”
If you are a stockholder of record and you sign your proxy card or vote by telephone or over the Internet but do not give instructions with respect to the voting of directors, your shares will be voted “FOR” the election of Ms. Brooks and Messrs. Botha and McKelvey. We expect that each of Ms. Brooks and Messrs. Botha and McKelvey will agree to serve as a director; however, in the event that a director nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee designated by our board of directors to fill such vacancy. If you are a street name stockholder and you do not give voting instructions to your broker or nominee, your broker will leave your shares unvoted on this matter.
Vote Required
The election of directors requires a plurality of the voting power of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Broker non-votes will have no effect on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES NAMED ABOVE.
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PROPOSAL NO. 2
ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), enables our stockholders to approve, on an advisory or non-binding basis, the compensation of our named executive officers as disclosed pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices described in this proxy statement. We currently hold our Say-on-Pay vote every year.
The Say-on-Pay vote is advisory, and therefore is not binding on us, our compensation committee or our board of directors. The Say-on-Pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which our compensation committee will consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our board of directors and our compensation committee value the opinions of our stockholders. To the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, we will endeavor to communicate with stockholders to better understand the concerns that influenced the vote and consider our stockholders’ concerns, and our compensation committee will evaluate whether any actions are necessary to address those concerns.
We believe that the information provided in the section titled “Executive Compensation,” and in particular the information discussed in the section titled “Executive Compensation—Compensation Philosophy,” demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed in the proxy statement for the Annual Meeting pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, compensation tables and narrative discussion and other related disclosure.”
Vote Required
The approval, on an advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the voting power of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Abstentions will have the effect of a vote against this proposal, and broker non-votes will have no effect.
As an advisory vote, the result of this proposal is non-binding. Although the vote is non-binding, our board of directors and our compensation committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our independent registered public accounting firm for the fiscal year ended December 31, 2018 was KPMG LLP (“KPMG”). After considering a change in our independent registered accounting firm, our audit and risk committee appointed Ernst & Young LLP (“EY”) as our independent registered public accounting firm to audit our consolidated financial statements for our fiscal year ended December 31, 2019 and ending December 31, 2020. During our fiscal year ended December 31, 2019, EY served as our independent registered public accounting firm.
Notwithstanding the appointment of EY, and even if our stockholders ratify the appointment, our audit and risk committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if our audit and risk committee believes that such a change would be in the best interests of our company and our stockholders. At the Annual Meeting, our stockholders are being asked to ratify the appointment of EY as our independent registered public accounting firm for our fiscal year ending December 31, 2020. Although not required by applicable law or listing rules, our audit and risk committee is submitting the appointment of EY to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Representatives of EY will be present at the Annual Meeting, and they will have an opportunity to make a statement and will be available to respond to appropriate questions from our stockholders.
If our stockholders do not ratify the appointment of EY, our audit and risk committee may reconsider the appointment.
Change in Independent Registered Public Accounting Firm
On June 13, 2019, our audit and risk committee dismissed KPMG as our independent registered public accounting firm effective as of that date and approved, effective immediately, the engagement of EY as our independent registered public accounting firm for the fiscal year ended December 31, 2019 and ending December 31, 2020.
KPMG’s audit reports on our consolidated financial statements for the fiscal years ended December 31, 2018 and December 31, 2017 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except as follows:
KPMG’s report on the consolidated financial statements of the Company as of and for the years ended December 31, 2018 and December 31, 2017, contained a separate paragraph stating that “As discussed in Note 2 to the consolidated financial statements, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, effective January 1, 2018.”
During the fiscal years ended December 31, 2018 and December 31, 2017, and the subsequent interim period from January 1, 2019 through June 13, 2019, there were (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to KPMG’s satisfaction, would have caused KPMG to make reference to the subject matter of the disagreements in connection with its reports on the Company’s consolidated financial statements for such years, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
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We previously provided KPMG with a copy of the disclosures above and requested that KPMG furnish us with a letter addressed to the SEC stating whether it agrees with the statements and, if not, stating the respects in which it does not agree. A copy of KPMG’s letter, dated June 17, 2019, was filed as Exhibit 16.1 with our Current Report on Form 8-K filed with the SEC on June 17, 2019.
Fees Paid to the Independent Registered Public Accounting Firm
The following table presents fees for professional audit services and other services rendered to our company by KPMG and EY for our fiscal years ended December 31, 2018 and December 31, 2019, respectively.
 
2018
2019
 
(In Thousands)
 
 
 
Audit Fees(1)
$   4,476
$   3,339
Audit-Related Fees(2)
Tax Fees(3)
638
All Other Fees(4)
$3
$
Total Fees
$4,479
$3,977
(1)
Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K for the fiscal years ended December 31, 2018 and 2019 and services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years.
(2)
Audit-Related Fees consist of fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services could include accounting consultations concerning financial accounting and reporting standards, due diligence procedures in connection with acquisition and procedures related to other attestation services.
(3)
Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include consultation on tax matters and assistance regarding federal, state and international tax compliance. In the year ended December 31, 2019, $0.4 million of the Tax Fees were associated with EY prior to their engagement as our independent registered public accounting firm.
(4)
All Other Fees consist of license fees for the use of accounting research software.
Auditor Independence
In our fiscal year ended December 31, 2019, there were no other professional services provided by EY, other than those listed above, that would have required our audit and risk committee to consider their compatibility with maintaining the independence of EY.
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Audit and Risk Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our audit and risk committee has established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our audit and risk committee is required to pre-approve all audit, internal control-related services and permissible non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the public accountants’ independence. All services provided by EY for our fiscal year ended December 31, 2019 were pre-approved by our audit and risk committee.
Vote Required
The ratification of the appointment of EY as our independent registered public accounting firm for our fiscal year ending December 31, 2020 requires the affirmative vote of a majority of the voting power of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote against this proposal, and broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
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PROPOSAL NO. 4
STOCKHOLDER PROPOSAL REGARDING
EMPLOYEE REPRESENTATION ON THE BOARD OF DIRECTORS
We have been notified that NorthStar Asset Management, Inc. Funded Pension Plan, PO Box 301840, Boston, Massachusetts 02130, which reports that it is the beneficial owner of 206 shares of our Class A common stock, intends to present the proposal below for consideration at the Annual Meeting. The proposal and the supporting statement appear below as received by us. We are not responsible for the accuracy or content of the proposal and supporting statement.
Employee Representation on the Board of Directors
WHEREAS: Our company’s employees are crucial to our ability to offer shareholders continued return on their investment. A 2018 Forbes article emphasized the need for retaining top employees by “focus[ing] on excellence in engagement”;
In August 2019, the Business Roundtable, an association of chief executive officers of America’s leading companies, issued a new Statement on the Purpose of a Corporation which emphasized “a fundamental commitment to all of our stakeholders.” Shareholders believe that part of fulfilling the Roundtable’s commitment to “invest[] in our employees” could come from a direct line of communication between employees and the board;
In 2018, the Accountable Capitalism Act was introduced into the U.S. Congress to combat “America’s fundamental economic problems” such as companies’ failure to reinvest proceeds in their operations, including employees. The Act would require that “boards ... include substantial employee participation ... ensur[ing] that no fewer than 40% of [a board’s] directors are selected by the corporation’s employees”;
Several European countries require employee representation on boards. Academic analysis of one such policy stated that it “offer[s] advantages for technical efficiency, skill development and knowledge generation through its protection of specific human capital investments”;
A recent poll found that a majority of Americans “would support allowing employees at large companies to elect representatives to those companies’ boards of directors ... “;
Competitiveness in our sector is intense. An IMF report states that “technology and science jobs in the United States outnumbered qualified workers by roughly 3 million as of 2016 ... By 2030, there will be a global shortage of more than 85 million tech workers.” With such a shortfall and competition for tech talent, it is crucial that our company work to attract and retain quality talent;
Shareholders believe that our company can advance long-term value creation through a board that includes non-management employee representation.
RESOLVED: Shareholders of Square, Inc. urge the Board of Directors to prepare a report to shareholders describing opportunities for the company to encourage the inclusion of non-management employee representation on the Board.
SUPPORTING STATEMENT: The report should be prepared within one year, at reasonable cost and excluding proprietary and privileged information. The Board is encouraged to assess:
1.
Any legal, technical, practical, or organizational impediments to non-management employees gaining board nomination;
2.
Benefits and challenges associated with board membership of non-management employees;
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3.
Opportunities or procedures through which non-management employees could gain nomination to the board, such as allocation of board slots or special board nomination processes for non-management employees, and any needed changes to corporate governance documents to accomplish such changes.
For purposes of this proposal, the term “non-management employees” should be understood to be employees that are neither management nor company executives.
Board of Directors’ Recommendation Against and Statement of Opposition to Stockholder Proposal
The board of directors has carefully considered this proposal and has concluded that its adoption is unnecessary in light of our existing procedures for evaluating and nominating director candidates and our commitment to employee engagement, as described below. Accordingly, the board of directors recommends a vote AGAINST this proposal.
Role of Our Nominating and Corporate Governance Committee. As described elsewhere in this proxy statement in the section titled “Board of Directors and Corporate Governance — Nominating and Corporate Governance Committee,” our nominating and corporate governance committee, along with the full board of directors, evaluates and recommends director nominees. In doing so, they assess the specific qualifications of each candidate and assess whether the candidate would contribute to an effective board of directors that operates openly and collaboratively to serve the best interests of the Company and our stockholders.
We carefully designed our present director selection process to identify, evaluate and nominate high quality, qualified and diverse candidates from all available sources, which can include our own employees. We believe an employee director candidate should be evaluated by the same standards and criteria as any other candidate. Granting non-management employees a dedicated position on the board of directors, a different process for board representation or a different set of qualifications, would undercut the role of the nominating and corporate governance committee, and the board of directors, in one of the most important elements of corporate governance: the selection of director candidates.
When evaluating potential director candidates, our nominating and corporate governance committee has a fiduciary duty to act in good faith and in the best interests of the Company and our stockholders. To help guide the selection process and ensure our candidate pipeline is comprised of individuals with a diverse and complementary blend of experiences, expertise, skills and perspectives, our board of directors adopted Corporate Governance Guidelines that set forth qualifications for potential candidates. We believe these existing procedures ensure our nominating and corporate governance committee identifies desirable candidates and achieves the optimal balance of skills, backgrounds and qualifications to best serve the Company and our stockholders.
Stockholder nominations. As set forth in our amended and restated bylaws, a stockholder can recommend a prospective director candidate for the board of director’s consideration — this includes prospective candidates who are employees of the Company. The section titled “Board of Directors and Corporate Governance—Stockholder Recommendations and Nominations to the Board of Directors” appearing elsewhere in this proxy statement describes the procedures regarding how such a nomination can be made. The nominating and corporate governance committee will consider and evaluate nominees proposed by stockholders in the same manner as a nominee recommended by a member of the board of directors, management, search firm or any other source.
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Independence. Having an independent board of directors is a core element of our governance philosophy. Our Corporate Governance Guidelines require that a majority of our directors be independent. Presently, except for our CEO Jack Dorsey and our co-founder Jim McKelvey, all of our directors are independent. As employees are per se considered not independent under the rules of the New York Stock Exchange, mandating that the board of directors add another director employed by the Company would decrease the proportion of directors who qualify as independent and potentially impair the board of directors’ ability to exercise sound, independent judgment on business matters.
Employee Engagement. Engaging employees with the Company and our leadership is a priority for us. We work to ensure that our employees feel included in the direction of the Company and how the business is progressing, and that they are given the opportunity to provide feedback to senior management and the board of directors. We believe that establishing an innovative, inclusive work environment in which our employees feel heard is critical to our continued success.
To do this, we place an emphasis on open and respectful communication, and we have multiple channels for all employees to be heard and exert influence outside of board representation. Some of our employee engagement programs include:
Town Square. We hold a monthly global all-hands meeting called “Town Square” that is simultaneously broadcast to all of the Company’s offices and made available for viewing afterwards. This meeting typically includes reports on business developments and provides an opportunity for employees to ask questions of senior management, including our CEO Jack Dorsey, either in writing, via video conferencing or live in person. After meetings of our board of directors, our CEO provides a synopsis of the meeting for the employees at the following Town Square and takes questions from employees about the meeting. Our CFO Amrita Ahuja performs a similar recap after each of the Company’s quarterly earnings. In addition to Town Square, we also host office-wide meetings called “City Square,” which are similar in format but provide a more localized feedback loop for each local office, and also frequently include a portion for questions to senior management.
Engagement with Senior Management. In addition to Town Square, our senior management engage in roundtable question-and-answer sessions, serve as executive sponsors for various employee community affinity groups and periodically host “Ask Me Anything” sessions on internal channels to discuss issues.
Engagement with the Board. We host question-and-answer sessions with members of our board of directors, which are broadcast to all offices, where employees have the opportunity to pose questions about the Company, the board of directors or any other topic. Typically, a recording of the session is also available internally after the event. Also, when directors travel to offices for board meetings, we will frequently host a gathering where employees are invited to meet the directors in a more informal setting. As stated in the section “Board of Directors and Corporate Governance — Communications with the Board of Directors,” there is also a formal mechanism for our employee stockholders to communicate with the board of directors.
Moderator. Employees can ask questions of the Company, anonymously if they wish, at any time through our “Moderator” platform, which provides them a response within two weeks. This provides an opportunity for employees to receive an answer to any relevant topic facing the Company. The tool also provides the ability for employees to vote on questions so leadership can understand the topics that matter most to employees.
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Surveys. We poll our entire employee population multiple times a year to collect feedback on management, strategy, culture, compensation and a variety of other areas. For example, our biannual “Pulse Survey” assesses employee satisfaction, our “Inclusion Survey” measures our ability to foster an inclusive workplace, and our “Experience Survey” assesses our employees’ opinions about our existing employee engagement programs and internal resources. We benchmark these survey results against prior years and our industry peers to make responsive, informed policy decisions. Additionally, we share these results and planned next steps with employees, both in small group discussions and in discussion at our all-hands meetings. Key takeaways from these surveys are shared with our board and senior management, and often provide meaningful feedback that has resulted in direct action from the Company — our decision to increase our retirement benefits options last year was in response to one such survey.
Feedback Cycles. We have employee feedback cycles twice a year, which allow employees to provide feedback to their supervisors, as well as give and receive feedback from peers. Additionally, these cycles provide the opportunity for employees to provide holistic feedback on the leadership, direction and culture of their respective organizations.
People Report. Every quarter, management from our People team provides the board of directors with an update regarding key employee matters, including the results of recent surveys, attrition, retention and more. This update from our People team provides another method for the board of directors to stay apprised of employee trends and issues that impact our workforce.
The Company takes the information communicated through these venues very seriously, including feedback about culture, diversity, business practices, management, strategy, compensation and compliance, and regularly provides responses and updates on issues that employees raise. Our board of directors believes employees are a critical aspect of the long-term success of our business and make a concerted effort to consider our employees’ interests as part of the long-term success of the Company. We believe these mechanisms provide ample opportunity for employees to provide feedback and impact the direction of the Company without mandated board representation.
Vote Required
This stockholder proposal requires the affirmative vote of a majority of the voting power of the shares of our common stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote against this proposal, and broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THIS STOCKHOLDER PROPOSAL.
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REPORT OF THE AUDIT AND RISK COMMITTEE
The audit and risk committee is a committee of the board of directors comprised solely of independent directors as required by the listing standards of the New York Stock Exchange and rules and regulations of the Securities and Exchange Commission (“SEC”). The composition of the audit and risk committee, the attributes of its members and the responsibilities of the audit and risk committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit and risk committees. With respect to Square’s financial reporting process, Square’s management is responsible for (1) establishing and maintaining internal controls and (2) preparing Square’s consolidated financial statements. Square’s independent registered public accounting firm, Ernst & Young LLP (“EY”), is responsible for performing an independent audit of Square’s consolidated financial statements. It is the responsibility of the audit and risk committee to oversee these activities. It is not the responsibility of the audit and risk committee to prepare Square’s financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the audit and risk committee has:
reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2019 with management and EY;
discussed with EY the matters required to be discussed by the applicable requirements of the Public Accounting Oversight Board (“PCAOB”) and the SEC; and
received the written disclosures and the letter from EY required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit and risk committee concerning independence, and has discussed with EY its independence.
Based on the audit and risk committee’s review and discussions with management and EY, the audit and risk committee recommended to the board of directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for filing with the SEC.
Respectfully submitted by the members of the audit and risk committee of the board of directors:
David Viniar (Chair)
Roelof Botha
Anna Patterson
Lawrence Summers
This report of the audit and risk committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Securities Exchange Act of 1934, as amended (“Exchange Act”), except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.
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EXECUTIVE OFFICERS
The following table identifies certain information about our executive officers as of March 31, 2020. Our executive officers are appointed by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers.
Name
Age
Position
Jack Dorsey
43
President, Chief Executive Officer and Chairman
Amrita Ahuja
40
Chief Financial Officer
Sivan Whiteley
43
General Counsel and Corporate Secretary
Jacqueline Reses
50
Square Capital Lead
Alyssa Henry
49
Seller Lead
Brian Grassadonia
37
Cash App Lead
Jack Dorsey, see above under “Board of Directors and Corporate Governance” for biographical information for Mr. Dorsey.
Amrita Ahuja has served as our Chief Financial Officer since January 2019. From March 2018 to January 2019, Ms. Ahuja served as the Chief Financial Officer of Blizzard Entertainment, Inc., a division of Activision Blizzard, Inc. Beginning in June 2010, she served in various positions at Activision Blizzard, Inc., including as Senior Vice President of Investor Relations from January 2015 to May 2018, Vice President, Finance and Operations from August 2012 to January 2015 and Vice President, Strategy and Business Development from June 2010 to August 2012. Prior to that, she was a Director of Business Development at Fox Networks Group, served in strategic planning at the Walt Disney Company from 2003 to 2005 and worked in investment banking at Morgan Stanley from 2001 to 2003. She holds an M.B.A. from Harvard Business School and an A.B. from Duke University.
Sivan Whiteley has served as our General Counsel and Corporate Secretary since March 2018. From January 2016 to March 2018, Ms. Whiteley served as our Associate General Counsel, as well as acting Co-General Counsel from September 2016 to December 2016. She joined the Company as Counsel in March 2013 and was Director, Counsel from September 2013 to December 2015. Prior to that, Ms. Whiteley served as Associate General Counsel at Better Place, Inc., as Commercial and Product Counsel at eBay Inc., and was a litigator at Bingham McCutchen LLC. Ms. Whiteley holds a B.A., magna cum laude, in Political Science from the University of California, San Diego, and a J.D., cum laude, from Harvard Law School.
Jacqueline Reses has served as our Square Capital Lead since October 2015 and Executive Chairwoman of the board of directors for Square Financial Services, Inc. since April 2020. From February 2016 to July 2018, Ms. Reses also served as our People Lead. From September 2012 to October 2015, Ms. Reses served as Chief Development Officer of Yahoo! Inc. In this role, she focused on mergers and acquisitions, partnerships, managing Asian assets and related tax transactions, and human resources. Prior to Yahoo, Ms. Reses led the U.S. media group as a Partner at Apax Partners Worldwide LLP, a global private equity firm, which she joined in 2001. Ms. Reses previously served on the board of directors of Intelsat SA, Alibaba Group Holding Limited and Social Capital Hedosophia Holdings Corp. She is currently on the boards of directors of a number of privately-held companies, as well as the Economic Advisory Council of the Federal Reserve Bank of San Francisco. Ms. Reses holds a B.S. in Economics with honors from the Wharton School of the University of Pennsylvania.
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Alyssa Henry has served as our Seller Lead since October 2014. From May 2014 to October 2014, Ms. Henry served as our Engineering Lead, Infrastructure. From April 2006 to April 2014, Ms. Henry served in various positions at Amazon.com, Inc., including as Vice President, Amazon Web Services Storage Services, and as General Manager of Amazon S3. Prior to Amazon, Ms. Henry held technical and leadership roles at Microsoft from 1994 to 2006. Ms. Henry currently serves on the boards of directors of Intel Corporation and a privately-held company. Ms. Henry holds a B.S. in Mathematics-Applied Science with a Specialization in Computing from the University of California, Los Angeles.
Brian Grassadonia has served as our Cash App Lead since January 2013. From May 2012 to January 2013. Mr. Grassadonia served as our Director of Product Development, as well as our Director of Growth from February 2011 to May 2012. He joined the Company in September 2010 and served as Product Manager until February 2011. Mr. Grassadonia currently serves on the board of directors of a privately-held company. Mr. Grassadonia holds a Bachelor of Applied Science (BASc) in Management Science from the University of California, San Diego.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis summarizes the material components of our executive compensation program and our executive compensation policies, practices and material compensation decisions for 2019 for our “named executive officers.” Pursuant to the U.S. federal securities laws, those who served as our Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers for the fiscal year ended December 31, 2019 are our named executive officers. Our named executive officers for 2019 are:
Jack Dorsey
Chief Executive Officer (our “CEO”)
Amrita Ahuja
Chief Financial Officer
Alyssa Henry
Seller Lead
Jacqueline Reses
Square Capital Lead
Sivan Whiteley
General Counsel and Corporate Secretary
Mohit Daswani(1)(2)
Former Interim Co-Chief Financial Officer and former Finance & Strategy Lead
Timothy Murphy(2)
Former Interim Co-Chief Financial Officer and current Treasury Lead
(1)
Mr. Daswani resigned from his position as Finance and Strategy Lead, effective as of December 20, 2019.
(2)
Messrs. Daswani and Murphy served as interim Co-Chief Financial Officers from November 16, 2018 until Amrita Ahuja was appointed Chief Financial Officer, effective as of January 22, 2019. After Ms. Ahuja’s appointment as Chief Financial Officer, Messrs. Daswani and Murphy resumed their roles as our Finance and Strategy Lead and our Treasury Lead, respectively. Messrs. Daswani and Murphy are collectively referred to herein as our “interim co-CFOs.”
Compensation Philosophy
Square stands for economic empowerment, and everything we do is intended to give our sellers accessible, affordable tools to help them start, run and grow their businesses to fully participate in the economy. Similarly, with Cash App, we have built a parallel ecosystem of financial services to help individuals manage their money. Our sellers and customers inspire us in how they innovate, take risks and take ownership. We want our employees, like our sellers and customers, to act like owners. Our compensation approach reflects this philosophy.
To this end, our compensation programs are designed to attract, retain and grow the best teams while reflecting the core tenets of our culture:
Fairness: By designing and delivering compensation programs that are equitable across similarly situated employees, our employees are motivated to work collaboratively to achieve our long-term business objectives and serve our sellers.
Simplicity: By providing compensation programs that are simple and do not distract from their day-to-day responsibilities, our employees are able to focus on growing our business and are rewarded when Square is successful.
Performance-driven: By creating compensation programs that reward individual performance and achievement of corporate objectives, our employees are incentivized to perform their best work and receive financial awards for their impact on the Company and our business.
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Compensation Design and Objectives
In 2019, we continued to maintain a simplified approach to employee and executive compensation. Compensation for our named executive officers consists largely of base salary and equity awards intended to align incentives to grow our business. Equity incentives are provided through a combination of stock options and restricted stock-based awards (including grants of RSUs and restricted stock awards (“RSAs”)) for our executive officers. We believe that this combination provides an appropriate mix of performance-driven appreciation opportunities through stock options, and alignment of rewards with the long-term interests of our stockholders through restricted stock-based awards. We have not implemented a company-wide performance-based cash incentive plan for our employees, including our named executive officers, in order to conserve cash and maintain a simplified compensation program that focuses on delivering long-term growth rather than short-term results.
The primary objective of our executive compensation program is to drive long-term stockholder value. We seek to achieve this objective by designing our executive compensation programs to:
recruit and retain talented individuals who can develop, implement and deliver on long-term value creation strategies by using reasonable and competitive pay packages focused on long-term executive retention;
motivate our executives to deliver the highest level of individual, team and company performance; and
provide heavier weighting (over 90% of aggregate named executive officer compensation during 2019) towards equity-based compensation directly tied to the long-term value and growth of our company and to align the interests of our executives with those of our stockholders.
For 2019, we made the following executive compensation decisions:
CEO Compensation: Mr. Dorsey requested that the compensation committee continue to provide him with no cash or equity compensation except for an annual base salary of $2.75. The compensation committee considered Mr. Dorsey’s request in light of his significant ownership position, determined that Mr. Dorsey’s financial incentives are strongly aligned with the interests of long-term stockholders without further compensation and, therefore, approved Mr. Dorsey’s request. Mr. Dorsey continues to participate in several company-wide benefit programs, such as our healthcare and other insurance coverages, on the same basis as our other salaried, full-time employees.
Base Salaries: In April 2019, we adjusted the base salary levels of Mses. Henry, Reses and Whiteley, after consideration of a competitive market analysis, and after taking into consideration each executive’s performance and contributions over the prior year and our desire to retain our highly qualified executive team. The base salaries of Messrs. Daswani and Murphy were not adjusted in conjunction with their service as interim co-CFOs. While cash compensation for our executives remains lower compared to our competitive market, these adjustments improve the competitive alignment of executive base salaries.
Equity Awards: Annual equity awards were made through a combination of stock options, RSUs and RSAs, to each of our named executive officers (other than our CEO) to provide them with additional incentives to remain with us and to maintain alignment of our total compensation programs with the competitive market.
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New Named Executive Officer Hire: After engaging in arm’s-length negotiations with Ms. Ahuja and taking into consideration a competitive market analysis performed by Compensia, we offered Ms. Ahuja a competitive total compensation package comprised of a base salary, signing bonus, relocation assistance and equity compensation in connection with her hire as our Chief Financial Officer.
We conduct a comprehensive review of our compensation philosophy, objectives and design, including a review of our executive compensation program, on an annual cycle. We may implement new compensation plans and arrangements for our named executive officers and/or employees where we deem necessary or appropriate, including to attract or retain high-caliber talent to our organization or provide incentives for them to drive Square’s success.
Impact of 2019 Stockholder Advisory Vote on Executive Compensation
In June 2019, we conducted a non-binding, advisory vote on the compensation of our named executive officers, commonly referred to as a “say-on-pay” vote, at our 2019 annual meeting of stockholders. Our stockholders overwhelmingly voted to approve the compensation of the named executive officers, with approximately 99.1% of the votes cast in favor of our executive compensation program.
The compensation committee was mindful of this strong support, and after considering this advisory vote result and evaluating our executive compensation policies and practices throughout 2019, determined that we should maintain the compensation philosophy and objectives from prior years and retain our general approach to executive compensation. As a result, the compensation committee decided to continue to provide compensation with an emphasis on equity compensation that rewards our most senior executives when they deliver value for our stockholders.
Consistent with the recommendation of our board of directors and the approval of our stockholders in connection with the advisory vote on the frequency of future say-on-pay votes conducted at our 2016 annual meeting of stockholders, the board of directors has adopted a policy providing for annual advisory votes on the compensation of our named executive officers. The next say-on-pay vote will occur at the Annual Meeting.
Compensation-Setting Process
Role of Our Compensation Committee
Our compensation committee administers and determines the parameters of the executive compensation program. Our compensation committee currently consists of Ms. Meeker and Messrs. Botha and Deighton, with Ms. Meeker serving as Chair. Mr. Rao served as a member of the committee during 2019 and 2020 until his resignation from our board of directors in April 2020. Each member qualifies as an “independent director” for purposes of the listing standards of the New York Stock Exchange, as did Mr. Rao during the period in which he was a member of the committee. Ms. Meeker and Mr. Deighton each qualify as a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act. The compensation committee has established a sub-committee, currently consisting of Ms. Meeker and Mr. Deighton, which has been granted the nonexclusive authority to grant and administer equity awards, in order to help promote compliance with Section 16 of the Exchange Act. For purposes of the discussion below, references to “compensation committee” shall mean the “subcommittee” for all actions taken with respect to such awards in 2019, except as otherwise noted.
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Under its charter, our compensation committee reviews, approves and determines, or makes recommendations to our board of directors regarding, executive officer compensation. For additional information on our compensation committee, including its authority, see “Board of Directors and Corporate Governance—Board Meetings and Committees—Compensation Committee” elsewhere in this proxy statement.
Role of Management
Our CEO, People Lead and members of our People team provide our compensation committee with information on corporate and individual performance, market data and their perspectives and recommendations on compensation matters. No named executive officer participates in deliberations regarding his or her own compensation.
For named executive officers that are hired externally, their initial compensation arrangements are determined through negotiations with each named executive officer. Typically, our CEO provides input on the terms of these arrangements, with the oversight and final approval of our board of directors or our compensation committee. Compensation for individuals promoted into named executive officer positions is recommended by the CEO and the People Lead, and reviewed and approved by the compensation committee.
In reviewing compensation for existing named executive officers, our compensation committee solicits input from our CEO and our People Lead (with our CEO alone providing input on our People Lead’s compensation). Our compensation committee reviews their input on capability, job complexity and overall assessment of individual performance and contributions of each executive. Our compensation committee values our CEO’s perspective and input on each named executive officer’s performance and contributions to our business. The input of our CEO is an important factor that our compensation committee uses in making its executive compensation decisions, along with input from our external compensation advisors on market trends.
Role of Compensation Consultant
Our compensation committee has the authority to engage its own advisors to assist in carrying out its responsibilities. In 2019, our compensation committee continued to engage Compensia, an independent compensation consultant, to assist with its duties, including providing advice relating to our compensation peer group selection as well as providing support and specific analyses with regard to compensation data and formulation of recommendations for executive and non-employee director compensation. Compensia reports directly to our compensation committee and not to management, is independent from us and has provided no other services to us.
Our compensation committee has assessed the independence of Compensia taking into account, among other things, the enhanced independence standards and factors set forth in Exchange Act Rule 10C-1 and the applicable listing standards of the New York Stock Exchange, and concluded that there are no conflicts of interest regarding the work that Compensia performs for our compensation committee.
Competitive Positioning
In determining the compensation for our named executive officers, our compensation committee, with assistance from Compensia, reviews the compensation practices and levels of our compensation peer group. This compensation peer group analysis is used to assess whether our executive compensation program and individual compensation levels for our named executive officers are appropriately positioned to attract and retain high performing talent.
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Our compensation peer group is set forth below and was established for 2019 with input from Compensia. The compensation peer group was developed using a rules-based/mechanical approach, similar to the Institutional Shareholder Services (ISS) methodology, and reflects publicly traded companies with similar industry, geography and financial characteristics as us (including revenues of approximately forty percent (0.4x) to two and one half times (2.5x) and a market capitalization of approximately one quarter (0.25x) to four times (4.0x) Square’s respective levels at the time the peer group was selected). The group was further refined to include companies with one-year revenue growth greater than 10% or market capitalization per employee greater than $3 million. Our compensation committee intends to regularly review our compensation peer group and the underlying criteria to assess that it remains appropriate for review and comparison purposes.
In reviewing our compensation peer group for appropriateness for 2019, as compared to 2018, we used the same general methodology above in 2018 and 2019. A number of companies that met the above criteria in 2018 did not meet those same criteria in 2019, and vice versa, as a result of Square’s growth in the past year. Companies included in our peer group in 2018 but not in 2019 were Broadridge Financial Solutions, DST Systems, Euronet Worldwide, j2 Global, LogMeIn, SS&C Technologies, Tableau Software, The Ultimate Software Group, Total System Services, Tyler Technologies, Vantiv and Yelp. Similarly, companies that were outside our scoping metrics in 2018, but were within them in 2019, were added to our compensation peer group. Those companies are noted by a * in the list below. Accordingly, the compensation peer group used to inform our 2019 compensation decisions were:
ANSYS
Fortinet
ServiceNow
VeriSign
Autodesk*
GoDaddy
Splunk
Wayfair
CoStar Group
IAC/InteractiveCorp*
Symantec
WEX
Dropbox*
Intuit*
Synopsys
Workday
Electronic Arts*
Match Group
Take-Two Interactive
Software
Worldpay*
FleetCor Technologies
Red Hat
Twitter
Zillow Group
Relative to our compensation peer group above, at the time of approval of our peer group in February 2019, Square ranked at the 65th percentile on a trailing four quarters revenue basis and at the 96th percentile on a market capitalization basis.
In addition to the companies listed above, the compensation committee reviewed the executive compensation programs and practices of Alphabet, Amazon, Apple, Facebook, Intel, IBM, Microsoft, and salesforce.com for reference purposes only. We compete for talent with these reference companies, and the compensation committee believed it was important to understand their compensation practices in order to remain competitive.
Our compensation committee supplemented the compensation data from our compensation peer group with analysis of data from the Radford Compensation Survey. For this additional analysis, our compensation committee reviewed aggregate data from the Radford survey participants that were also members of our compensation peer group.
Though its analysis of competitive market data informs its decisions, our compensation committee also applies its subjective judgment in determining the pay levels of individual named executive officers. Additional factors our compensation committee considers when making its
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compensation decisions include input from our CEO and our People Lead, company performance, individual performance and experience, individual skills and expertise, each named executive officer’s role and/or retention and incentive objectives.
Elements of Executive Compensation
Consistent with our compensation philosophy, our executive compensation program consists of only two primary elements: base salary and long-term incentive compensation in the form of equity awards. During 2019, we provided no cash-based incentive compensation opportunities to our named executive officers (other than the bonuses to Ms. Ahuja described below), instead focusing on linking compensation to stockholder value by using equity awards as the primary means of incentive compensation. We do not use specific formulas or weightings in determining the allocation between base salary and long-term incentive compensation; instead, each named executive officer’s compensation has been individually designed to provide a combination of fixed and at-risk compensation to provide incentives to achieve our objectives.
Except with respect to our interim co-CFOs, we also provide severance and change of control benefits for our named executive officers as part of our executive compensation program. To remain consistent with our compensation goals of fairness and simplicity, each named executive officer (other than our CEO and our interim co-CFOs) is entitled to severance and change of control benefits based on the same formulas.
Our named executive officers also participate in several company-wide health and welfare benefit plans that are generally available to our other employees.
Base Salary
Base salary for our named executive officers is the fixed component of our executive compensation program. We use base salary to compensate our named executive officers for services rendered during the year and to recognize the experience, skills, knowledge and responsibilities required of each named executive officer. We apply no specific formula to determine adjustments to base salary. Adjustments to base salary have been made to reflect our economic condition and future expected performance. We continue to provide base salaries that are conservative relative to competitive market pay levels.
In April 2019, our compensation committee reviewed the base salaries of Mses. Henry, Reses and Whiteley, taking into consideration a competitive market analysis performed by Compensia, the recommendations of our CEO and our People Lead, the desire to retain our highly qualified executive team and the other factors described above. Following this review, our compensation committee approved an increase in the annual base salary levels for Mses. Henry, Reses and Whiteley to $450,000, in each case effective as of April 1, 2019, in order to improve competitive alignment with our peers. In addition, our compensation committee determined that it was appropriate to leave our CEO’s 2019 base salary level at $2.75 per year, at the request of our CEO and with compensation committee approval.
Ms. Ahuja’s salary was set at $450,000 upon her hire in January 2019. Ms. Ahuja’s base salary was determined based on arm’s-length negotiations and evaluated relative to an analysis of competitive compensation practices performed by Compensia and in light of internal pay equity considerations in keeping with our general executive compensation philosophy.
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The annualized base salaries of our named executive officers as of December 31, 2019 compared to December 31, 2018 were:
Named Executive Officer
Annual Base
Salary as of
December 31,
2018
Annual Base
Salary as of
December 31,
2019
Percentage
Increase
Mr. Dorsey
$2.75
$2.75
0%
Ms. Ahuja
N/A
$450,000
N/A
Ms. Henry
$400,000
$450,000
12.5%
Ms. Reses
$400,000
$450,000
12.5%
Ms. Whiteley
$400,000
$450,000
12.5%
Mr. Daswani(1)(2)
$300,000
$315,000
5%
Mr. Murphy(1)
$    295,000
$    309,800
5%
(1)
The base salaries of Messrs. Daswani and Murphy were not adjusted in conjunction with their service as interim co-CFOs. Salary adjustments for Messrs. Daswani and Murphy made in April 2019, after their service as co-CFOs ended, were made as part of the company-wide compensation review program. Their salary adjustments were recommended by their direct manager and approved by the People Lead. Messrs. Daswani and Murphy’s annualized base salaries at the time of their appointment as interim co-CFOs were $300,000 and $295,000, respectively.
(2)
Mr. Daswani resigned from his position as Finance and Strategy Lead effective as of December 20, 2019, at which time his annual base salary was $315,000.
Signing Bonuses
In connection with Ms. Ahuja’s hiring as our Chief Financial Officer in January 2019, we provided Ms. Ahuja with a $315,000 cash signing bonus that was paid shortly following the commencement of her employment with us and an additional $150,000 cash signing bonus paid on the one-year anniversary of her hire date. These signing bonuses were an important part of the total compensation package we offered to her, which was essential to her successful recruitment. The amounts of Ms. Ahuja’s cash signing bonuses were determined based on arm’s-length negotiations and evaluated relative to an analysis of competitive compensation practices performed by Compensia.
Equity Compensation
We believe that sustainable long-term corporate performance is achieved with a corporate culture that encourages a long-term focus by all of our employees. We seek to incentivize this behavior for our employees, including our named executive officers, through the use of equity-based awards, the value of which depends on the performance of our stock.
Equity awards are central to our executive compensation program that is designed to promote fairness, maintain simplicity and provide rewards based on demonstrable performance. Equity ownership aligns the interests of our named executive officers with the interests of our stockholders by enabling them to participate in the long-term appreciation of the value of our common stock. Additionally, equity awards provide an important tool for us to retain our named executive officers, as awards are subject to vesting over a multi-year period subject to continued service with the company. Typically, these awards vest over four years, contingent on continued service, and the awards to our named executive officers in 2019 followed this practice.
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Our executive compensation program provides equity incentives through a mix of stock options and restricted stock-based awards (awarded through either RSUs or RSAs). Stock options provide executives with an opportunity to participate in stock price appreciation, creating incentives to continue to drive growth. Awards of RSUs and RSAs create alignment with our long-term stockholders by providing both upside and downside tied to company performance. A mix of award types is also consistent with competitive practice among our peers. In determining the mix of stock options and restricted stock-based awards for 2019, our compensation committee, with input from our CEO, People Lead and Compensia, considered competitive market practices and the retention and performance incentives of outstanding equity holdings and determined that a mix of approximately 50% stock options and 50% restricted stock-based awards, based on the target grant value of the awards, provided appropriate incentives for the named executive officers in 2019. Messrs. Daswani and Murphy were not serving as interim co-CFOs at the time the equity compensation for our other named executive officers was reviewed. As such, they were treated consistent with other employees during their annual compensation review and their equity compensation was comprised of 100% RSUs.
We do not have an established set of criteria for granting equity awards. Instead, our compensation committee has exercised its judgment and discretion, in consultation with our CEO and our People Lead, and considered, among other factors, the role and responsibility of each named executive officer, competitive factors, the amount of equity compensation already held by our named executive officer (and the extent to which it was vested) and the cash compensation to be received by our named executive officer, to determine and approve the size and terms of new equity awards. Messrs. Daswani and Murphy were not serving as interim co-CFOs and did not report to the CEO at the time of their 2019 equity awards, and therefore the size and terms of their new equity awards were determined as part of the company-wide compensation review program where new equity awards are recommended by direct managers, reviewed by the People Lead and approved by our compensation committee.
In 2019, we granted new equity awards to our named executive officers described in the table below. In determining the size and terms of these equity awards for Mses. Henry, Reses and Whiteley, our compensation committee, with input from our CEO, our People Lead and Compensia, considered the past and expected future key contributions of each of these named executive officers, the extent to which their existing equity awards were vested and the competitive market data for similarly situated executives. Our compensation committee believed it was appropriate to grant each of them new equity awards to help achieve our retention goals and further align their compensation with the competitive market.
The size of Ms. Ahuja’s new hire equity award was determined based on arm’s-length negotiations and evaluated relative to an analysis of competitive compensation practices performed by Compensia.
Named Executive Officer
Number of Securities
Underlying Options (#)
RSUs or RSAs(#)
Grant Date
Fair Value ($)
Ms. Ahuja
97,701 (3)
121,721 (5)
12,000,077
Ms. Henry
99,224 (4)
39,690 (6)
5,889,956
Ms. Reses
82,687 (4)
33,075 (6)
4,908,306
Ms. Whiteley
66,149 (4)
26,460 (6)
3,926,627
Mr. Daswani(1)(2)
9,592 (7)
694,940
Mr. Murphy(2)
10,254 (7)
742,902
(1)
Mr. Daswani resigned from his position as Finance and Strategy Lead, effective as of December 20, 2019.
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(2)
Messrs. Daswani and Murphy did not receive any additional equity awards in conjunction with their service as interim co-CFOs. Messrs. Daswani and Murphy were granted equity awards in April 2019, after their service as interim co-CFOs ended, as part of the company-wide compensation review program. Their grants were recommended by their direct manager, reviewed by the People Lead and approved by our compensation committee.
(3)
One-fourth of the shares subject to the option vest on the first anniversary of the option’s vesting commencement date and one forty-eighth of the shares vest monthly thereafter, subject to continued service with the Company. The award is subject to certain acceleration of vesting provisions under Ms. Ahuja’s change of control and severance agreement.
(4)
One forty-eighth of the shares subject to the option vest monthly from the date of the vesting commencement date, subject to continued service with the Company. The award is subject to certain acceleration of vesting provisions under Mses. Henry’s, Reses’s and Whiteley’s change of control and severance agreements.
(5)
With respect to the Restricted Stock Awards (RSAs), one-fourth of the total RSAs vests on February 1, 2020, and one-sixteenth of the total RSAs vest in equal quarterly installments over three years, subject to continued service with the Company. The award is subject to certain acceleration of vesting provisions under Ms. Ahuja’s change of control and severance agreement.
(6)
With respect to the Restricted Stock Award (RSAs), one-sixteenth of the total RSAs vest in equal quarterly installments over four years from July 1, 2019, subject to continued service with the Company. The award is subject to certain acceleration of vesting provisions under Mses. Henry’s, Reses’s and Whiteley’s change of control and severance agreements.
(7)
With respect to the Restricted Stock Units (RSUs), one-sixteenth of the total RSUs vest in equal quarterly installments over four years from July 1, 2019, subject to continued service with the Company.
Mr. Dorsey did not receive any equity awards in 2019 at his request, and because our compensation committee believed that his existing equity ownership position sufficiently aligned his interests with those of our stockholders.
No Special Retirement, Health or Welfare Benefits
Our named executive officers are eligible to participate in our employee benefit programs on the same basis as our other salaried employees. We maintain a tax-qualified retirement plan (“401(k) Plan”) that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. Eligible employees are able to participate in the 401(k) Plan as of the first day of the month following the date they meet the 401(k) Plan’s eligibility requirements, and participants are able to defer up to 75% of their eligible compensation subject to applicable annual tax limits. All participants’ interests in their deferrals are 100% vested when contributed. The 401(k) Plan permits us to make matching contributions and profit sharing contributions. Effective as of January 1, 2019, we made a matching contribution equal to 50% of participants’ contributions to the 401(k) Plan, up to a maximum amount of matching contribution of $4,000 per participant. Effective as of January 1, 2020, Square will make a matching contribution equal to 100% of participants’ pre-tax and Roth contributions up to $2,000 and after that, 50% of participants’ pre-tax and Roth contributions up to a maximum matching contribution of $5,000 per participant. We have not made any profit sharing contributions to date.
Our health and welfare benefits include medical, dental and vision benefits, disability insurance, basic life insurance coverage, accidental death and dismemberment insurance and a monthly wellness allowance. We design our employee benefits programs to be affordable and competitive in relation to the market and compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon changes in applicable laws and market practices.
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Limited Perquisites and Other Personal Benefits
We do not provide perquisites or other personal benefits to our named executive officers, except in limited situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our named executive officers more efficient and effective and for recruitment and retention purposes.
During 2019, we subsidized the cost of commuting expenses for Mses. Ahuja, Reses and Whiteley, including by providing tax gross-up payments on the subsidies, to help facilitate their access to our company headquarters, which we believe helps contribute to employee morale and the overall success of our organization. Our named executive officers also receive reimbursement for certain on-site meals, which is a program generally available to our employees working at our corporate headquarters. In addition, as part of the arm’s-length negotiation with Ms. Ahuja to attract her to Square, she was provided with access to our relocation services provider for her reasonable relocation needs, the costs of which were covered by Square, including by providing tax gross-up payments with respect to the relocation services provided to her.
Employment Agreements with Named Executive Officers
Jack Dorsey
We have entered into a confirmatory employment letter with Jack Dorsey, our CEO. The confirmatory employment letter has no specific term and provides for at-will employment. Mr. Dorsey’s annual base salary as of December 31, 2019 was $2.75.
Amrita Ahuja
We have entered into an employment offer letter with Amrita Ahuja, our Chief Financial Officer. The employment letter has no specific term and provides for at-will employment. Ms. Ahuja’s annual base salary as of December 31, 2019 was $450,000.
Alyssa Henry
We have entered into a confirmatory employment letter with Alyssa Henry, our Seller Lead. The confirmatory employment letter has no specific term and provides for at-will employment. Ms. Henry’s annual base salary as of December 31, 2019 was $450,000.
Jacqueline Reses
We have entered into an employment offer letter with Jacqueline D. Reses, our Square Capital Lead. The employment offer letter has no specific term and provides for at-will employment. Ms. Reses’ annual base salary as of December 31, 2019 was $450,000.
Sivan Whiteley
We have entered into an employment offer letter with Sivan Whiteley, our General Counsel and Corporate Secretary. The employment offer letter has no specific term and provides for at-will employment. Ms. Whiteley’s annual base salary as of December 31, 2019 was $450,000.
Mohit Daswani
We had an employment offer letter with Mohit Daswani, our former Interim Co-Chief Financial Officer and former Finance and Strategy Lead. The employment offer letter had no specific term and provided for at-will employment. Mr. Daswani resigned from his position as Finance and Strategy Lead, effective as of December 20, 2019, at which time his annual base salary was $315,000.
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Timothy Murphy
We have entered into an employment offer letter with Timothy Murphy, our former Interim Co-Chief Financial Officer and current Treasury Lead. The employment offer letter has no specific term and provides for at-will employment. Mr. Murphy’s annual base salary as of December 31, 2019 was $309,800.
Post-Employment Compensation
Except with respect to our interim co-CFOs, we have entered into change of control and severance agreements with our named executive officers that provide for certain specified payments and benefits if a termination of employment occurs under specified circumstances, including following a change of control of our company. We believe that these protections are necessary to provide our valuable executives with incentives to forego other employment opportunities and remain employed with us and to maintain continued focus and dedication to their responsibilities to maximize stockholder value, including if there is a potential transaction that could involve a change of control. In addition, these protections are available only if a named executive officer executes and does not revoke a general release of claims in favor of us. The terms of these agreements were determined by our compensation committee, with input from our management team, following a review of analysis prepared by Compensia of relevant market data for other companies with whom we compete for executive talent. These agreements are reviewed annually by our compensation committee and were most recently amended and restated for executives other than our CEO in January 2020. The Compensation Committee approved the amended and restated change of control and severance agreements after reviewing the Company’s existing change of control and severance agreements and consulting with its independent compensation consultant regarding competitive market practices. In addition, these agreements were amended and restated to, among other things, provide us with the ability to require, as a condition to severance benefits, the executive to provide a transition period if the applicable termination occurs before a change of control.
In July 2019, the Compensation Committee approved a death/disability equity award acceleration policy that applies to all holders of Company equity awards other than (1) employees who are parties to a change of control and severance agreement with us, (2) members of the Board of Directors, and (3) consultants or independent contractors to us or our subsidiaries (the “Death/Disability Acceleration Policy”), in order to provide assurances for their families in the case of the unfortunate event of the employee’s death or disability. In 2019, the only named executive officers to whom this policy applied were our interim co-CFOs, as each other named executive officer is a party of a change of control and severance agreement.
For a summary of the material terms of the change of control and severance agreements and an estimate of the payments and benefits that may be received by our named executive officers under these arrangements, see “—Potential Payments on Termination or Change of Control” below.
Other Compensation Information
Hedging and Pledging Prohibitions
We have an Insider Trading Policy, which, among other things, prohibits our employees, including officers, or directors from making short sales, engaging in transactions in publicly-traded options (such as puts and calls) and other derivative securities relating to our common stock, pledging any of our securities as collateral for a loan and holding any of our
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securities in a margin account, whether such securities are granted as compensation or are held, directly or indirectly, by the employee or director. This prohibition extends to any hedging or similar transaction designed to decrease the risks associated with holding our securities.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally limits the amount we may deduct from our federal income taxes for compensation paid to our CEO and certain other executive officers to $1 million per executive officer per year, subject to certain exceptions. The regulations promulgated under Section 162(m) of the Code contain a transition rule that applies to companies, such as ours, that become subject to Section 162(m) of the Code by reason of becoming publicly held. Pursuant to this rule, certain compensation granted during a transition period (and, with respect to RSUs, that are paid out before the end of the transition period) is not counted toward the deduction limitations of Section 162(m) of the Code if the compensation is paid under a compensation arrangement that was in existence before the effective date of the initial public offering and certain other requirements are met. While certain of our equity awards may be eligible to be excluded from our deductibility limitation of Section 162(m) of the Code pursuant to this transition rule, neither our compensation committee nor its authorized committee has adopted a policy that all equity or other compensation must be deductible.
Our transition period expired at our annual meeting of stockholders held on June 18, 2019. Accordingly, when approving the amount and form of compensation for our executive officers after the expiration of this transition period, we generally consider all elements of the cost to us of providing such compensation, including the potential impact of Section 162(m) of the Code, as well as our need to maintain flexibility in compensating executive officers in a manner designed to promote our goals. Our compensation committee or its authorized subcommittee, as applicable, may, in its judgment, authorize compensation payments that will or may not be deductible when it believes that such payments are appropriate to attract, retain or motivate executive talent.
Taxation of Parachute Payments and Deferred Compensation
We do not provide, and have no obligation to provide, any of our named executive officers with a “gross-up” or other reimbursement payment for any tax liability he or she might owe because of the application of Sections 280G, 4999 or 409A of the Code. If any of the payments or benefits provided for under the change of control and severance agreements or otherwise payable to a named executive officer would constitute “parachute payments” within the meaning of Section 280G of the Code and could be subject to the related excise tax, he or she would receive either full payment of such payments and benefits or such lesser amount that would cause no portion of the payments and benefits being subject to the excise tax, whichever results in the greater after-tax benefits to our named executive officer.
Accounting for Stock-Based Compensation
Our compensation committee considers accounting effects in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is ASC 718, the standard which governs the accounting treatment of stock-based compensation awards. ASC 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and restricted stock-based awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive
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officers may realize no value from their awards. ASC 718 also requires companies to recognize the compensation cost of their share-based payment awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.
Stock Ownership Guidelines
We maintain stock ownership guidelines for our executive officers to ensure ongoing alignment of the interests of our executive officers with the long-term interests of our stockholders. For information concerning these guidelines, see the section titled “Board of Directors and Corporate Governance—Stock Ownership Guidelines.”
Compensation “Clawback” Policy
The board of directors has adopted a policy that gives the board of directors (or any duly authorized committee of the board of directors) discretion to require that any of our executive officers, including our interim co-CFOs while they served in that capacity and our other named executive officers, repay incentive-based compensation to our company if a majority of the independent members of the board of directors (or the committee to which it has delegated authority) determines that the executive officer’s gross negligence, intentional misconduct or fraud caused or partially caused us to materially restate all or a portion of our financial statements on which such compensation was calculated. Such determination must be made within three years of the date of filing of the applicable financial statements. The compensation committee believes that the clawback policy reflects good standards of corporate governance and reduces the potential for excessive risk taking by executive officers. The SEC is expected to adopt regulations requiring national listing exchanges to enact listing standards governing policies providing for the recovery of incentive-based compensation, and the clawback policy will be timely revised and updated to comply with such listing standards.
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Compensation Committee Report
The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis provided above. Based on its review and discussions, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and Square’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Compensation Committee
Mary Meeker (Chair)
Roelof Botha
Paul Deighton
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Compensation Risk Assessment
Our management team and our compensation committee each play a role in evaluating and mitigating any risk that may exist relating to our compensation programs, policies and practices for all employees, including our named executive officers. We have undertaken a risk review of our employee compensation plans and arrangements in which our employees (including our named executive officers) participate to determine whether these plans and arrangements have any features that might create undue risks or encourage unnecessary and excessive risk-taking that could threaten our value. In this review, we considered numerous factors and design elements that enable us to monitor, manage and mitigate risk, without diminishing the effect of the incentive nature of compensation, including:
a commission-based incentive program for sales employees that only results in payout based on measurable financial or business critical performance measures with payments made quarterly in arrears;
our practice of awarding long-term incentive compensation in equity awards upon hire to our named executive officers to directly tie his or her expectation of compensation to his or her contributions to the long-term value of our company; and
our Insider Trading Policy.
Based on our review, we have concluded that any potential risks arising from our employee compensation programs, policies and practices, including our executive compensation program, are not reasonably likely to have a material adverse effect on Square.
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Summary Compensation Table for 2019
Name and Principal Position
Year
Salary ($)
Bonus ($)
Stock
Awards
($)(1)
Option
Awards
($)(1)
All Other
Compensation
($)(2)
Total
Compensation
($)
Mr. Dorsey
2019
2.75
2.75
Chief Executive Officer
2018
2.75
2.75
2017
2.75
2.75
Ms. Ahuja
2019
425,000
315,000(3)
9,000,051
3,000,026
341,449
13,081,526
Chief Financial Officer
Ms. Henry
2019
437,500
2,857,283
3,032,672
5,188
6,332,644
Seller Lead
2018
387,500
1,707,615
1,771,683
3,682
3,870,481
2017
325,000
4,563,693
1,227,352
2,170
6,118,215
Ms. Reses
2019
433,333
2,381,069
2,527,237
71,502
5,413,142
Square Capital Lead
2018
387,500
1,707,615
1,771,683
106,169
3,972,968
2017
325,000
3,042,456
818,234
89,588
4,275,278
Ms. Whiteley
2019
437,500
1,904,855
2,021,771
96,017
4,460,143
General Counsel and Corporate Secretary
2018
381,250
1,564,439
775,114
75,792
2,796,591
Mr. Daswani
2019
303,594
694,940
6,734
1,005,268
Former Interim Co-Chief Financial Officer and Former Finance and Strategy Lead
2018
295,000
187,861
4,080
486,940
Mr. Murphy
2019
306,100
742,902
4,880
1,053,882
Former Interim Co-Chief Financial Officer and Current Treasury Lead
2018
288,750
222,050
3,660
514,460
(1)
The amounts included in the “Stock Awards” and “Option Awards” columns represent the aggregate grant date fair value of RSUs, RSAs and option awards calculated in accordance with ASC 718. Such grant date fair value does not take into account any estimated forfeitures related to service-vesting conditions. The valuation assumptions used in determining the grant date fair value of the RSUs, RSAs and option awards reported in this column are described in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
(2)
Amounts disclosed in this column include the aggregate incremental costs of perquisites and other personal benefits, including, among other things, (i) relocation costs for Ms. Ahuja of $105,166 in 2019 in connection with Ms. Ahuja moving near our principal executive offices in San Francisco, which includes a tax gross-up amount of $47,582 and $182,631 for home sale assistance, (ii) transportation costs for Ms. Reses of $37,213 in 2019 in connection with Ms. Reses commuting to our principal executive offices in San Francisco, which includes a tax gross-up amount of $29,109, (iii) transportation costs for Ms. Whiteley of $53,819 in 2019 in connection with Ms. Whiteley commuting to our principal executive offices in San Francisco, which includes a tax gross-up amount of $36,612 and (iv) expense reimbursements for meals, wellness allowance and 401(k) plan matching contributions.
(3)
The amount disclosed represents a discretionary one-time bonus paid in connection with Ms. Ahuja joining us in January 2019.
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Grants of Plan-Based Awards in 2019
The following table sets forth information regarding grants of awards made to our named executive officers during 2019. We did not grant any plan-based cash awards during 2019.
Name
Grant Date
Number of
Securities
Underlying
Restricted
Stock Awards and
Restricted Stock
Units (#)
Number of
Securities
Underlying
Options (#)
Exercise or
Base Price of
Option Awards
($/Sh)
Grant Date
Fair Value of
Stock and
Option Awards
($)(1)
Mr. Dorsey
Ms. Ahuja
1/24/2019
121,721
97,701
73.94
12,000,077
Ms. Henry
4/24/2019
39,690
99,224
71.99
5,889,956
Ms. Reses
4/24/2019
33,075
82,687
71.99
4,908,306
Ms. Whiteley
4/24/2019
26,460
66,149
71.99
3,926,627
Mr. Daswani
4/23/2019
9,592
694,940
Mr. Murphy
4/23/2019
10,254
742,902
(1)
The amounts included in this column represent the aggregate grant date fair value of RSUs, RSAs and option awards calculated in accordance with ASC 718. The valuation assumptions used in determining the grant date fair value of the RSUs, RSAs and options reported in this column are described in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
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Outstanding Equity Awards at 2019 Year-End
The following table lists all outstanding equity awards held by our named executive officers as of December 31, 2019. See “—Potential Payments on Termination or Change of Control” below for information regarding the impact of certain employment termination scenarios on outstanding equity awards.
 
Option Awards
Stock Awards
Name
Grant Date(1)
Number of
Securities
Underlying
Unexercised
Options
Exercisable (#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Option
Exercise
Price ($)(2)
Option
Expiration
Date
Number of
Shares of
Stock That
Have Not
Vested (#)
Market
Value of
Shares of
Stock That
Have Not
Vested ($)(3)
Mr. Dorsey
Ms. Ahuja
1/24/2019   (4)
97,701
73.94
1/23/2029
1/24/2019   (5)
121,721
$7,614,866
Ms. Henry
5/14/2014   (6)
1,640,000
7.254
5/14/2024
4/25/2016   (7)
28,610
$1,789,842
4/19/2017   (8)
137,122
68,561
17.20
4/18/2027
4/19/2017   (9)
99,500
$6,224,720
4/25/2018 (10)
32,707
76,319
44.75
4/24/2028
4/25/2018(11)
28,620
$1,790,467
4/24/2019   (8)
16,537
82,687
71.99
4/23/2029
4/24/2019 (12)
34,729
$2,172,646
Ms. Reses
11/18/2015   (6)
1,445,000
9.00
11/17/2025
4/25/2016   (8)
916,666
83,334
13.59
4/24/2026
4/25/2016   (7)
13,205
$826,105
4/25/2016   (7)
9,000
$563,040
4/19/2017   (8)
91,414
45,708
17.20
4/18/2027
4/19/2017   (9)
66,333
$4,149,792
4/25/2018 (10)
32,707
76,319
44.75
4/24/2028
4/25/2018(11)
28,620
$1,790,467
4/24/2019   (8)
13,781
68,906
71.99
4/23/2029
4/24/2019 (12)
28,941
$1,810,549
Ms. Whiteley
2/27/2014   (6)
4,167
7.254
2/27/2024
6/17/2015   (6)
13,125
13.94
6/16/2025
4/25/2016 (13)
1,409
$88,147
1/30/2017 (14)
12,500
$782,000
4/19/2017   (9)