DEF 14A: Toast, Inc. Seeks Stockholder Approval for Officer Liability Limitation Amendment

Toast, Inc. is holding its 2024 Annual Meeting of Stockholders on June 6, 2024, to vote on key proposals, including an amendment to limit officer liability.

Summary

• Toast, Inc. is convening its Annual Meeting of Stockholders on June 6, 2024, to address several key proposals.
• Stockholders will vote on the election of three Class III directors (Stephen Fredette, Aman Narang, and Deval L. Patrick) to serve until the 2027 annual meeting.
• Another proposal involves ratifying the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024.
• An advisory (non-binding) vote will be held to approve the compensation of the company's named executive officers.
• A significant proposal seeks to amend the company's Amended and Restated Certification of Incorporation to limit the liability of certain officers, as permitted by Delaware law.
• The board of directors recommends voting 'FOR' all listed proposals.
• The meeting will be held virtually, and stockholders of record as of April 10, 2024, are entitled to vote.
• The company's annualized recurring run rate (ARR) grew 35% year-over-year to $1,218 million as of December 31, 2023.
• The net loss was $246 million in full year 2023 compared to net loss of $275 million for the full year 2022.
• The company achieved positive Adjusted EBITDA of $61 million in full year 2023 compared to Adjusted EBITDA of $(115) million in full year 2022.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting growth in ARR and improvements in profitability. However, the presence of a net loss and the need for an amendment to limit officer liability introduce some caution.

Positives

• The company's annualized recurring run rate (ARR) grew 35% year-over-year to $1,218 million as of December 31, 2023.
• The net loss was $246 million in full year 2023 compared to net loss of $275 million for the full year 2022.
• The company achieved positive Adjusted EBITDA of $61 million in full year 2023 compared to Adjusted EBITDA of $(115) million in full year 2022.

Negatives

• The company experienced a net loss of $246 million in full year 2023.

Risks

• The document mentions potential risks associated with climate change and cybersecurity, which are being integrated into the company's risk management processes.
• There are risks associated with attracting and retaining qualified directors and officers, which the proposed amendment to limit officer liability aims to mitigate.

Future Outlook

The company intends to continue its commitment to achieve net-zero Scope 2 emissions and will continue to issue its annual ESG report.

Management Comments

• Aman Narang, Chief Executive Officer, expressed gratitude for stockholders' ongoing support and interest in Toast.

Industry Context

The proposed amendment to limit officer liability aligns with a broader trend among Delaware companies to adopt similar provisions, potentially impacting the competitive landscape for attracting and retaining executive talent.

Comparison to Industry Standards

• The document mentions benchmarking non-employee director compensation against companies similar in size and industry, suggesting an awareness of industry standards.
• The peer group of companies used for executive compensation benchmarking includes Akamai Technologies, Etsy, HubSpot, Paycom Software, Twilio, and Zendesk, among others, indicating a focus on technology and SaaS companies.

Management Changes

Corporate Governance

Related Party Transactions

• Timothy Fredette, brother of Stephen Fredette, received cash compensation of $301,663 and an equity award with a grant date fair value of $157,963 as a non-executive employee.

Stakeholder Impact

• Shareholders: The proposed amendment to limit officer liability could impact shareholder rights, but the board believes it is in the best interest of the company and its stockholders.
• Employees: The company is committed to sound environmental, social and governance (ESG) practices and to making its business a force for good in the world.
• Customers: The company launched a Food Waste Reduction product to help restaurants save money and prevent waste and emissions.

Next Steps

• Stockholders will vote on the proposals at the Annual Meeting on June 6, 2024.
• The company will file the Certificate of Amendment with the Secretary of State of Delaware if the Exculpation Amendment is approved.
• The company intends to hold an annual Say-on-Pay vote at the 2024 Annual Meeting.

Key Dates

Keywords

Annual Meeting, Proxy Statement, Officer Liability, Director Election, Executive Compensation, Ernst & Young, Corporate Governance, Stockholders, Toast