PayPal Cuts 32% of Pay for Outgoing CEO Dan Schulman to Meet Financial Targets

PayPal announced to cut compensation for Chief Executive Officer Dan Schulman by 32% to recover from failing to meet the company's financial targets, including revenue, adjusted operating margin, and net new active users.

Cutting CEO's Compensation

After failing to meet its financial targets last year, PayPal Holdings Inc. and its board compensation committee decided to cut outgoing CEO Dan Schulman's pay by 32%. According to Bloomberg's report, he was awarded $22 million in compensation for 2022, with $20.2 million in stock awards.

Prior to this, Schulman already experienced pay cuts in 2021 as he was awarded a higher compensation of $32 million. PayPal has set key metrics to meet financial targets such as revenue, adjusted operating margin, and net new active users.

As per the committee, slashing the CEO's compensation is the best way to recover from this, especially "through a challenging period of macroeconomic uncertainty, geopolitical instability, slowing e-commerce growth, and a return to pre-pandemic consumer behaviors."

Strait Times reported that shareholders will be deciding to vote on the board's proposed compensations for Schulman and other top executives at its annual meeting that will happen later next month. Aside from this, several proposals will be presented.

Leaving PayPal

In February, PayPal announced that Schulman has decided to leave the company by the end of this year to spend more time on things he is passionate about outside of work, which could be related to politics, nonprofit organizations, or traveling more to academia.

However, the outgoing CEO will continue to work with the company's board of directors as the company still decides who will be his successor. Schulman will work with the leadership transition with the board. His departure follows the slowing growth of the company across its platforms and the low stock prices for months.

Business Insider reported that they have spoken with several analysts, VCs, and industry experts who they think would be a good replacement to take place of Shulman's previous position.

This includes General Atlantic Vice Chairman Ajay Banga, Meta Head of Commerce and Financial Technologies Stephane Kasriel, Nextdoor CEO Sarah Friar, PayPal Chief Product Officer and Exec. Vice President John Kim, Pinterest CEO Bill Ready, and, Walmart Chief Financial Officer and Exec. Vice President John Rainey.

As Schulman retires from his position after a 9-year run, Market Watch reported that Schulman will exit as earnings return to growth. Company executives expect about $4.87 in full-year adjusted FPS, which is about an 18% increase from a year before.

Analysts also expect the company to a $4.79 per share on average. He stated that "This reflects a very conservative planning assumption, while the company's actual revenue expectations are well higher than that planning assumption."