DEF 14A: Fastly's 2024 Annual Meeting: Stockholders to Vote on Director Elections, Auditor Ratification, and Executive Pay

Fastly, Inc. invites stockholders to its virtual annual meeting on June 12, 2024, to vote on key proposals including the election of directors, ratification of the independent auditor, and an advisory vote on executive compensation.

Summary

• Fastly, Inc. is holding its 2024 annual meeting of stockholders virtually on June 12, 2024, at 9:00 a.m. Pacific Time.
• Stockholders will vote on the election of three Class II directors (David Hornik, Charles Meyers, and Vanessa Smith), the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for the year ending December 31, 2024, and an advisory vote to approve the compensation of named executive officers.
• The record date for the annual meeting is April 15, 2024.
• The company intends to mail the Notice of Internet Availability of Proxy Materials on or about April 24, 2024.
• In 2023, Fastly's total revenue was $506.0 million, representing 17% year-over-year growth.
• The U.S. GAAP gross margin was 52.6%, and the non-GAAP gross margin was 56.9% in 2023.
• The U.S. GAAP operating loss was $198.0 million, while the non-GAAP operating loss was $36.7 million in 2023.
• The U.S. GAAP net loss was $133.1 million, and the non-GAAP net loss was $21.7 million in 2023.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there's positive revenue growth and improved gross margins, the company still faces operating and net losses. The negative say-on-pay vote also contributes to a neutral-to-slightly negative outlook.

Positives

• Revenue increased by 17% year-over-year, reaching $506.0 million in 2023.
• Gross margin improved to 52.6% (U.S. GAAP) and 56.9% (non-GAAP) in 2023.
• Operating loss decreased to $198.0 million (U.S. GAAP) and $36.7 million (non-GAAP) in 2023.
• Net loss decreased to $133.1 million (U.S. GAAP) and $21.7 million (non-GAAP) in 2023.
• The company has implemented more robust stock ownership guidelines for Named Executive Officers.
• The company is committed to sound environmental practices across its operations while maintaining service performance.

Negatives

• The company experienced a U.S. GAAP operating loss of $198.0 million in 2023.
• The company experienced a U.S. GAAP net loss of $133.1 million in 2023.
• Stockholders did not approve the say-on-pay proposal, with only 47.1% of votes cast voting in favor of our executive compensation program.

Risks

• The document contains forward-looking statements that are subject to risks and uncertainties.
• These risks include the ability to address defects, interruptions, and outages, attract new customers, develop new products, and respond to changing technology.
• General market, political, economic, and business conditions can also impact results.
• Component delays, shortages and price increases could impact results.

Future Outlook

The proxy statement contains forward-looking statements regarding future results of operations, financial condition, business strategy, and management's plans and objectives, which are subject to risks and uncertainties.

Management Comments

• Todd Nightingale, Chief Executive Officer, states that 2023 was highlighted by customers increasing reliance upon Fastly's platform to deliver fast, safe and engaging digital experiences.
• Management believes that companies are turning to Fastly for higher performance, best in class security, and low latency to build the most engaging applications.

Industry Context

Fastly operates in the competitive edge cloud platform market, where companies are increasingly focused on digital transformation and require high-performance, secure, and low-latency solutions.

Comparison to Industry Standards

• The Compensation Committee reviews a peer group of companies including 8x8, Inc., Momentive Global, A10 Networks, Rapid7, Inc., Alteryx, Semrush Holdings, Inc., AppFolio, Inc., Smartsheet, Inc., BigCommerce Holdings, Inc., Sumo Logic, Inc., BlackLine, Inc., Tenable Holdings, Inc., DOMO, Inc., Varonis Systems, Inc., Everbridge, Inc., Yext, Inc., JFrog Ltd., and Zuroa, Inc.
• These companies are generally U.S. headquartered, competitors and cloud-based enterprise and security software companies with between about 50% to 200% of Fastly's revenue and 33% to 300% of Fastly's market capitalization.
• At the time of the analysis, the resulting compensation peer group had median trailing four-quarter revenues of approximately $409 million and a 30-day average market capitalization as of September 1, 2022 of approximately $1.6 billion compared to Fastly's trailing four-quarter revenues of $389 million (positioned at the 39th percentile) and a 30-day average market capitalization of $1.3 billion (positioned at the 44th percentile).

Related Party Transactions

• The company employs Per Alexander Bergman, the brother of Chief Technology Officer Artur Bergman, and Angela Noell, the sister-in-law of Artur Bergman, with compensation exceeding $120,000 each in 2023.

Stakeholder Impact

• The outcome of the votes at the annual meeting will impact the composition of the Board of Directors and the company's executive compensation practices.
• The company's financial performance and strategic decisions will affect shareholders, employees, customers, and other stakeholders.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Board of Directors and Compensation Committee will consider the outcome of the say-on-pay vote when making future executive compensation decisions.
• The company will continue to engage with stockholders on compensation and governance matters.
• The Compensation Committee will continue to evaluate the metrics and performance periods for PSUs to ensure that they align with business priorities and needs.

Key Dates

Keywords

proxy statement, annual meeting, executive compensation, board of directors, Deloitte & Touche LLP, stockholders, corporate governance, Fastly