Form 4: Cloudflare President Zatlyn Reports PSU Vesting, Tax Sale

Cloudflare's President and Board Co-Chair, Michelle Zatlyn, reported the vesting of performance stock units and a related tax withholding sale of Class A common stock.

Summary

• Michelle Zatlyn, President and Board Co-Chair of Cloudflare, Inc. (NET), reported transactions involving Class A Common Stock on November 15, 2025.
• 21,889 shares of Class A Common Stock were acquired upon the vesting of performance-based restricted stock units (PSUs), for which a performance metric was met.
• These PSUs vest in six equal quarterly installments beginning on November 15, 2025.
• 20,058 shares of Class A Common Stock were disposed of at a price of $210.6 per share to satisfy tax liabilities related to the vesting of PSUs or restricted stock units (RSUs).
• Following these transactions, Michelle Zatlyn directly beneficially owns 349,644 shares of Class A Common Stock.
• Additionally, 34,013 shares are indirectly held by The Sutherland/Zatlyn Revocable Trust, and 19,615 shares are indirectly held by The SZ 2021 Irrevocable Trust.
• The PSUs became eligible to vest after the $203.00 Stock Price Goal was satisfied, with remaining tranches tied to stock price targets ranging from $263.00 to $579.00.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The achievement of a stock price goal for PSU vesting is a positive indicator of past company performance and executive compensation. The subsequent sale for tax purposes is a routine event and not indicative of negative sentiment towards the company.

Positives

• Achievement of the $203.00 Stock Price Goal for performance stock units (PSUs), indicating positive stock performance for Cloudflare.
• The vesting of 21,889 PSUs reflects successful attainment of performance metrics by the executive.

Negatives

• A portion of shares (20,058) was sold to cover tax liabilities, which is a common occurrence for equity compensation but reduces direct beneficial ownership.

Risks

• The remaining tranches of PSUs are subject to the achievement of higher stock price targets ranging from $263.00 to $579.00, which may not be met.
• PSUs are subject to the reporting person's continued status as a Service Provider through each vesting date, posing a risk to future vesting if employment status changes.

Future Outlook

Future vesting of remaining performance stock units is contingent upon Cloudflare's stock price reaching targets ranging from $263.00 to $579.00 within seven years of February 5, 2025, and the reporting person's continued service.

Industry Context

This Form 4 filing is a routine disclosure of an insider transaction, common for executives of publicly traded companies. It reflects a standard practice of performance-based equity compensation, where stock units vest upon the achievement of specific company stock price targets, followed by a sale of shares to cover tax obligations.

Related Party Transactions

• Shares are indirectly held of record by The Sutherland/Zatlyn Revocable Trust dated November 17, 2016, for which the reporting person serves as co-trustee.
• Shares are indirectly held of record by The SZ 2021 Irrevocable Trust dated November 6, 2021, for which the reporting person serves as the appointer.

Stakeholder Impact

• Shareholders gain transparency into executive compensation and insider trading activities.
• The vesting of PSUs indicates that a performance milestone (stock price target) has been met, which could be viewed positively by investors.

Next Steps

• Continued vesting of the 21,889 PSUs in five additional equal quarterly installments after November 15, 2025.
• Potential eligibility and vesting of remaining PSU tranches upon achievement of higher stock price targets ($263.00 to $579.00).

Key Dates

Recommendation

This Form 4 filing details a routine executive compensation event involving the vesting of performance stock units and a subsequent sale to cover tax liabilities. It does not provide new information regarding the company's operational performance, financial health, or strategic direction that would warrant a change in investment recommendation. The achievement of a stock price goal for PSU vesting is a positive indicator of past stock performance but is already reflected in the market price. Therefore, a 'hold' recommendation is appropriate as this filing does not present a catalyst for significant price movement.

Keywords

Cloudflare, NET, Michelle Zatlyn, Form 4, Insider Transaction, Performance Stock Units, PSU Vesting, Executive Compensation, Stock Sale, Tax Withholding