Eden G. Egziabher
Founder, Makina Cafe
2024 Notice of Annual
Meeting of Stockholders
and Proxy Statement
2023 Annual Report
Eden G.
Egziabher
Makina Cafe
Long Island City, NY
Makina Cafe founder Eden Egziabher was raised amidst
a vibrant mix of Ethiopian, Eritrean, and Italian cultures,
creating a mosaic of flavors found on her menu. Eden relies
on PayPal Zettle to allow New Yorkers to quickly and easily
pay for their meals, and she loves the seamless experience
of using PayPal to pay her vendors.
Message from Our President and CEO
Dear Stockholders, Colleagues, Customers and Partners:
Over the last two and a half decades, PayPal has been at the forefront of e-commerce innovation. In that time, our belief in
the importance of embracing change has allowed us to evolve into who we are today – a global leader in commerce with
a two-sided network at scale and steadfast commitment to serving our customers.
When I stepped into the role of PayPal’s President and CEO last September, I knew that to unlock our full potential and drive
durable, profitable growth we needed to be more focused and deliberate in every aspect of our business. Since then, I’ve
spent time with PayPal’s employees, customers, partners, and stockholders to learn about our greatest strengths, where we
need to move faster, what we need to change, and how to instill a culture of innovation that returns PayPal to a position of
strength.
I’m pleased with what we’ve been able to accomplish in such a short period of time to reposition PayPal for profitable
growth. We’ve put in place a world-class leadership team and organized the business around the customers we serve –
consumers, small businesses, and enterprises. We’ve narrowed our focus to the products and services that will have the
greatest impact for our customers. And we’ve updated our mission to reflect the evolution of our purpose: revolutionizing
commerce globally.
We’re embracing our roots to reshape commerce for the consumers and merchants around the world who rely on PayPal
each day – making it faster and simpler for people to connect with each other and make their money go further. Our entire
organization is focused on durable growth priorities that will help solve our customers’ most pressing needs and delight
them in new ways. We aim to deliver a best-in-class personalized commerce experience, and drive engagement by
creating a richer value proposition that makes PayPal the obvious choice for both consumers and businesses.
All the investments and improvements we will make this year are guided by a set of new operating principles that we
believe will help us drive value creation over time. The principles we will follow are: start with the customer; focus on
profitable growth; drive operating leverage over time; set measurable goals and communicate consistently; and maintain a
strong balance sheet.
We’re committed to increasing transparency and accountability, and investing in areas of our business that will drive
profitable growth and margin expansion in the years ahead. However, it will take time for these new initiatives and operating
model to produce results. 2024 is a transition year focused on execution and moving with velocity to put the organization
on a path for long-term success. I know that we’re on the right strategic path that will allow this company to fully embrace
the future that awaits us.
I am grateful to our employees who have shown incredible resolve in solving our customers’ greatest challenges and who
are working tirelessly to transform PayPal. To our stockholders, customers, and partners, thank you for your continued
support and belief in what we can achieve together.
Thank you.
Alex Chriss
President and CEO
April 9, 2024
[THIS PAGE INTENTIONALLY LEFT BLANK]
Message from Our Independent Board Chair
Dear PayPal Stockholders:
2023 was a pivotal year for PayPal as we welcomed Alex Chriss to our Company and to our Board. While steering the
successful CEO search and transition, the Board worked closely with management to navigate a complex macroeconomic
environment and deliver solid financial and operational results. Looking ahead, we are inspired by the energy and vision
that the new leadership team brings to their roles, and we believe PayPal is well-positioned for future profitable growth.
Executive Leadership Transitions
One of the Board’s key priorities in 2023 was to identify a next-generation leader capable of driving growth across the
PayPal platform for years to come. After a rigorous search process, we were thrilled to find in Alex a seasoned executive
steeped in technology and product leadership experience with an impressive and proven track record of growing
businesses.
We are also pleased to have appointed new executives to lead our Finance and People functions, as well as our Global
Markets, Small Business & Financial Services and Consumer business units. Their collective expertise, honed through
leadership roles at preeminent companies, will be crucial to our path forward. In overseeing these executive transitions, the
Board has redoubled our commitment to building relationships with new leaders and ensuring that each of our leaders is
cultivating robust talent development processes and succession plans. With this strong leadership team now in place,
PayPal is ready to embark on our next chapter of growth and expansion.
Board Composition & Oversight
Collectively, our Board’s balanced and diverse mix of skill sets, experiences and perspectives enables proper oversight of
our business as we continue to evolve and grow in a rapidly shifting competitive environment. In particular, the Board’s
thoughtful approach to risk oversight supports our enterprise-wide global risk and compliance program to safeguard our
customers and our platform, which is of the utmost importance. Our Board is committed to continuous improvement, and
the annual Board and committee self-evaluations play a critical role in ensuring the continued effectiveness of our Board
and each committee.
Stakeholder Engagement
Robust, ongoing engagement with our stockholders, customers, employees, regulators and other stakeholders is crucial to
informing the Board’s decision-making process. Since our 2023 Annual Meeting, we’ve contacted investors representing
approximately 50% of our common stock and have engaged with investors holding approximately 19% of our common
stock. As part of these efforts, independent directors met with investors representing approximately 12% of our common
stock. These discussions covered a variety of subjects, including board composition and oversight, executive
compensation and corporate sustainability and impact topics. Stockholders’ feedback provides the Board and
management with invaluable perspectives, and we look forward to continuing this important dialogue with our
stakeholders.
On behalf of our Board, thank you for your investment in PayPal. I look forward to discussing these developments further
with you at the 2024 Annual Meeting on May 22, which will be held via live webcast at
www.virtualshareholdermeeting.com/PYPL2024.
Sincerely yours,
John J. Donahoe
Independent Board Chair
April 9, 2024
[THIS PAGE INTENTIONALLY LEFT BLANK]
Table of Contents
Notice of 2024 Annual Meeting of Stockholders
Important Information About PayPal’s Virtual Annual Meeting
Proxy Statement Summary
PROPOSAL 1: Election of Directors
Director Nominees
Director Biographies
Corporate Governance
Board Leadership
Director Independence
Board Committees
Board Oversight
Executive Succession Planning
New Director to be Appointed After Annual Meeting
Board and Committee Evaluations
Stockholder Engagement
Related Person Transactions
Director Compensation
2023 Director Compensation
Deferred Compensation
Director Stock Ownership Guidelines
2023 Director Compensation Table
Corporate Sustainability and Impact Oversight and Management
Corporate Sustainability and Impact Governance Structure
Corporate Sustainability and Impact Strategy
Human Capital Management
Stock Ownership Information
Information About Our Executive Officers
PROPOSAL 2: Advisory Vote to Approve Named Executive Officer Compensation (“say-on-pay” vote)
Message from Our Compensation Committee
Compensation Discussion and Analysis
Named Executive Officers
Executive Summary
2023 Compensation Framework and Decisions
Executive Compensation Program Design
Other Compensation Elements
Our Structure for Setting Compensation
Other Compensation Practices and Policies
Compensation Tables
Pay versus Performance
CEO Pay Ratio Disclosure
Equity Compensation Plan Information
PROPOSAL 3: Vote to Approve PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as Amended and
Restated
1
2
3
13
13
17
23
23
24
24
28
31
31
32
32
35
37
37
38
38
39
40
40
40
42
45
46
48
48
51
51
52
60
60
69
69
71
74
88
92
93
94
PROPOSAL 4: Ratification of the Appointment of PricewaterhouseCoopers LLP as Our Independent Auditor for 2024 107
PROPOSAL 5: Stockholder Proposal — Report on Respecting Workforce Civil Liberties
PROPOSAL 6: Stockholder Proposal — Bylaw Amendment: Stockholder Approval of Director Compensation
Frequently Asked Questions
APPENDIX A: Reconciliation of Non-GAAP Financial Measures
APPENDIX B: PayPal Holdings, Inc. 2015 Equity Incentive Award Plan (marked)
110
112
114
123
125
Forward-Looking Statements
This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans or intentions
(such as those relating to future business, future results of operations or financial condition, new or planned features or
services, acquisitions or divestitures, or management strategies). These forward-looking statements can be identified by
words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “continue,”
“strategy,” “future,” “opportunity,” “plan,” “project,” “forecast” and other similar expressions. These forward-looking
statements involve risks and uncertainties that could cause our actual results and financial condition to differ materially from
those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those
discussed in the “Risk Factors,” “Quantitative and Qualitative Disclosures about Market Risk” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” sections of our Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. We do not intend, and undertake no obligation except as required by law, to update any of
our forward-looking statements after the date of this proxy statement to reflect actual results, new information or future
events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements.
Incorporation by Reference
All website addresses contained in this proxy statement are intended to provide inactive, textual references only. The
content on, or accessible through, any website identified in this proxy statement is not a part of, and is not incorporated by
reference into, this proxy statement or in any other report or document that we file with the Securities and Exchange
Commission.
P
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Notice of 2024 Annual Meeting
of Stockholders
Wednesday, May 22, 2024
8:00 a.m. Pacific Time
Online at: www.virtualshareholdermeeting.com/PYPL2024
There is no physical location for the 2024 Annual Meeting.
ITEMS OF BUSINESS
1. Election of the 11 director nominees named in this proxy statement.
2. Advisory vote to approve named executive officer compensation.
3. Approval of the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as Amended and Restated.
4. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditor for 2024.
5. Consideration of two stockholder proposals, if properly presented at the Annual Meeting.
6. Such other business as may properly come before the Annual Meeting.
RECORD DATE
Wednesday, March 27, 2024 (the “Record Date”)
Only stockholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the
Annual Meeting.
PARTICIPATION IN VIRTUAL ANNUAL MEETING
We are pleased to invite you to participate in our Annual Meeting, which will be conducted exclusively online at
www.virtualshareholdermeeting.com/PYPL2024. See “Important Information About PayPal’s Virtual Annual Meeting” on the
following page for additional information.
The Annual Meeting will begin promptly at 8:00 a.m. Pacific Time. The virtual meeting room will open at 7:45 a.m. Pacific
Time for registration.
VOTING
Your vote is very important to us. Please act as soon as possible to vote your shares, even if you plan to participate in the
Annual Meeting. For specific instructions on how to vote your shares, see “Frequently Asked Questions – Voting
Information” beginning on page 116 of this proxy statement.
REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF THREE WAYS:
INTERNET
Visit the website on your proxy card or
voting instruction form
BY TELEPHONE
Call the telephone number on your
proxy card or voting instruction form
BY MAIL
Sign, date and return your proxy card or
voting instruction form in the enclosed
envelope
Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see which
voting methods are available to you.
By Order of the Board of Directors
Brian Y. Yamasaki
Secretary
April 9, 2024
This notice of Annual Meeting and proxy statement and form of proxy are being distributed and made available on or about
April 9, 2024.
Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on May 22, 2024
This proxy statement and PayPal Holdings, Inc.’s 2023 Annual Report are available electronically at
https://investor.pypl.com/financials/annual-reports/default.aspx and (with your 16-digit control number) at www.proxyvote.com.
• 2024 Proxy Statement
1
IMPORTANT INFORMATION ABOUT PAYPAL’S VIRTUAL ANNUAL MEETING
Important Information About PayPal’s
Virtual Annual Meeting
PayPal’s 2024 Annual Meeting will be conducted online only, via live webcast. Stockholders will be able to access the
meeting live by visiting www.virtualshareholdermeeting.com/PYPL2024.
We have conducted efficient and effective virtual meetings since PayPal became an independent company in 2015. We
intend to continue to ensure that our stockholders are afforded the same rights and opportunities to participate virtually as
they would at an in-person meeting. We believe the virtual format makes it easier for stockholders to attend and participate
fully and equally in the Annual Meeting because they can join with any Internet-connected device from any location around
the world at no cost. Our virtual meeting format encourages participation and communication with our management, helps
us engage with all stockholders regardless of size, resources or physical location, saves time and money, reduces our
environmental impact and protects the health and safety of attendees.
Participating in the Virtual Annual Meeting
• Instructions on how to attend the virtual Annual Meeting are posted at www.virtualshareholdermeeting.com/PYPL2024.
• You may log in to the meeting platform beginning at 7:45 a.m. Pacific Time on May 22, 2024. The meeting will begin
promptly at 8:00 a.m. Pacific Time.
• You will need the 16-digit control number provided in your proxy materials to attend the virtual Annual Meeting and
listen live at www.virtualshareholdermeeting.com/PYPL2024.
• Stockholders of record and beneficial owners as of the March 27, 2024 Record Date may vote their shares electronically
during the virtual Annual Meeting.
• On the date of the Annual Meeting, if you have questions about how to attend and participate or encounter any
difficulties accessing the virtual meeting during the check-in or meeting time, please call 1-844-986-0822 (U.S.) or 1-
303-562-9302 (International).
Additional Information About the Virtual Annual Meeting
• Stockholders may submit questions in advance of the meeting at www.proxyvote.com before 8:59 p.m. Pacific Time on
May 21, 2024, or during the live meeting at www.virtualshareholdermeeting.com/PYPL2024.
• During the meeting’s question and answer session, members of our executive management team and our Board Chair
will answer questions (including those submitted in advance) as time permits.
• Our rules of conduct and procedure for the meeting generally provide that:
• Management will answer stockholder questions after the formal meeting has concluded.
• We limit each stockholder to one question so that we can answer questions from as many stockholders as
possible. Questions should be succinct and cover only one topic per question. Questions from multiple
stockholders on the same topic or that are otherwise related may be grouped, summarized and answered
together. In addition, questions may be edited for brevity and grammatical corrections.
• We do not intend to address any questions that are, among other things: irrelevant to the business of the Company
or to the business of the Annual Meeting; related to material non-public information of the Company; related to
personal matters or grievances; derogatory or otherwise in bad taste; repetitious statements already made by
another stockholder; in furtherance of the stockholder’s personal or business interests; or out of order or not
otherwise suitable for the conduct of the Annual Meeting, in each case as determined by the Board Chair or
Corporate Secretary in their reasonable discretion.
• If there are matters of individual concern to a stockholder and not of general concern to all stockholders, or if we are not
able to answer all the questions submitted due to time constraints, stockholders may contact us separately after the
meeting through our Investor Relations department by email at investorrelations@paypal.com.
• We will post questions and answers if applicable to the Company’s business on our Investor Relations website as soon
as practicable after the Annual Meeting. In addition, a replay of the meeting will be publicly available on our Investor
Relations website after the meeting concludes.
2
• 2024 Proxy Statement
PROXY STATEMENT SUMMARY
Proxy Statement Summary
This summary highlights certain information contained elsewhere in this proxy statement for the 2024 Annual Meeting of
Stockholders (the “Annual Meeting”). This summary does not contain all the information that you should consider, and you
should read the entire proxy statement carefully before voting.
2024 Annual Meeting Information
P
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TIME AND DATE
8:00 a.m. Pacific Time
on May 22, 2024
PLACE
Online at www.virtualshareholdermeeting.com/PYPL2024.
There is no physical location for the Annual Meeting.
RECORD DATE
March 27, 2024
Proposals to be Voted on and Board Voting Recommendations
Management Proposals
Recommendation of the Board
Page
1 Election of the 11 Director Nominees Named in this Proxy Statement
FOR
each of the nominees
2 Advisory Vote to Approve Named Executive Officer Compensation
(“say-on-pay” vote)
3 Approval of the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as
Amended and Restated
4 Ratification of the Appointment of PricewaterhouseCoopers LLP as Our
Independent Auditor for 2024
Stockholder Proposals
FOR
FOR
FOR
5 Stockholder Proposal – Report on Respecting Workforce Civil Liberties
6 Stockholder Proposal – Bylaw Amendment: Stockholder Approval of Director
AGAINST
AGAINST
Compensation
13
48
94
107
110
112
Our 2023 Key Highlights
Key Executive Leadership Transitions
In February 2023, Dan Schulman announced his intention to retire from the role of President and CEO at year-end. The
announcement was a catalyst for our leadership team transformation in 2023 and into 2024. Mr. Schulman’s longstanding
leadership at PayPal made a positive and lasting impact, and the Board was committed to identifying a successor with
extensive product, technology, and global payments experience who would build on Mr. Schulman’s contributions and be
a next-generation leader, capable of driving growth across the PayPal platform for years to come. Largely in connection
with the appointment of Mr. Schulman’s successor, we reconstituted our leadership team in late 2023 and early 2024,
positioning PayPal for its next phase of growth.
After a rigorous search process, Alex Chriss joined PayPal as President and CEO in September, followed by our new CFO,
Jamie Miller, who joined in November. Mr. Chriss joined PayPal from Intuit and has extensive product, technology and
global payments experience, which will enable him to drive growth across the PayPal platform for years to come. Ms. Miller
was most recently Global CFO of EY and brings a proven track record of driving strong financial results and guiding both
public and private companies through dynamic and meaningful transformation.
Additionally, PayPal further strengthened its next-generation leadership team by hiring seasoned leaders across several key
roles, including Michelle Gill, who joined to serve as PayPal’s Executive Vice President, General Manager of the newly
formed Small Business & Financial Services Group; Diego Scotti, who joined as Executive Vice President, General Manager
of our Consumer Group and Global Marketing & Communications; Isabel Cruz, who joined as Executive Vice President,
Chief People Officer; and Suzan Kereere, who joined as President, Global Markets. These leadership appointments
underscore PayPal’s commitment to building a high-performing organization, with the goal of advancing innovation and
solutions to better serve our customers and in turn drive more profitable growth.
• 2024 Proxy Statement
3
PROXY STATEMENT SUMMARY
Our 2023 Key Highlights
Sound Financial and Operational Performance
In 2023, we delivered solid financial and operating results across our key performance metrics. This was accomplished
during a period which saw the successful transition of multiple key leadership roles, accompanied by macroeconomic
uncertainty, slowing e-commerce growth and continued geopolitical instability. We ended the year with 426 million active
consumer and merchant accounts and $29.8 billion in revenue, an 8% increase compared to 2022. In 2023, we processed
25.0 billion payment transactions and $1.53 trillion in total payment volume across our platform, representing year-over-year
increases of 12% and 13%, respectively.
We continued to execute a disciplined capital allocation strategy, returning $5 billion to stockholders through share
repurchases in 2023, representing 119% of our free cash flow. In June 2023, we entered into a multi-year agreement with a
global investment firm to sell up to €40 billion of our eligible consumer installment receivables portfolio, including a
forward-flow arrangement for the sale of future originations, and sold $5.5 billion of loans receivable during the year in
connection with this agreement. Additionally, we completed the divestiture of Happy Returns for $466 million in cash
proceeds, enabling greater focus on our core business and strategic priorities. Our cost discipline efforts contributed to
solid non-GAAP earnings per share and non-GAAP operating margin expansion in 2023.
This progress is a direct result of our sharpened focus, responsible innovation and enhanced cost discipline, which will
enable us to execute against our core strategic priorities.
Performance Highlights
The following graphic summarizes key performance highlights for 2023. As described in the Compensation Discussion and
Analysis below, in line with our pay-for-performance philosophy, a significant portion of executive compensation is tied to
company performance. Notably, the 2023 PayPal Annual Incentive Plan featured both Revenue and Non-GAAP Operating
Margin as performance criteria and performance-based restricted stock units granted in 2023 vest in part based on a metric
related to Free Cash Flow.
Revenue
Non-GAAP Operating Margin1
Free Cash Flow1
24.8%
21.3%
22.4%
$29.8B
$27.5B
$25.4B
$30
$25
$20
$15
$10
$5
$0
25%
20%
15%
10%
5%
0%
$4.9B
$5.1B
$4.6B2
$4.2B
$6
$5
$4
$3
$2
$1
$0
2021
2022
2023
2021
2022
2023
2021
2022
2023
Delivering solid
revenue growth:
Focusing on engaged
accounts:
Growing payment
volume:
Efficiency and capital
return contributing to
earnings growth:
+8%
426M
$1.53T
$5.10
revenue increase from
2022 (spot basis)
active accounts
(down 2% from 2022)
Total Payment Volume
(up 13% from 2022)
non-GAAP EPS1 growth
(up 24% from 2022)
1
2
Non-GAAP Operating Margin, non-GAAP earnings per diluted share and Free Cash Flow are not financial measures prepared in accordance with generally accepted accounting
principles (“GAAP”). For information on how we compute these non-GAAP financial measures and a reconciliation to the most directly comparable financial measures prepared in
accordance with GAAP, please refer to “Appendix A: Reconciliation of Non-GAAP Financial Measures” in this proxy statement.
Adjusted free cash flow excludes the net impact of originating European buy now, pay later receivables as held for sale and the subsequent sale of these receivables.
4
• 2024 Proxy Statement
PROXY STATEMENT SUMMARY
2024 Director Nominees
2024 Director Nominees
The following tables provide summary information about our director nominees. All our 2024 director nominees are
independent except Mr. Chriss, our President and CEO. Directors are elected annually by a majority of votes cast. The
Board of Directors recommends that you vote “FOR” the election of each of the 11 nominees. See page 13 of this proxy
statement for the proposal.
Directors
Name
Occupation
Diversity Age
Director
Since
Independent
Other Public
Company
Boards
Committee
Memberships
ARC COMP GOV
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
Rodney C.
Adkins
President,3RAM
Group LLC
D
65
2017
Š
3
Š
Š
Alex
Chriss
President and CEO,
PayPal Holdings,
Inc.
46
2023
Jonathan
Christodoro
Partner,
Patriot Global
Management, LP
47
2015
Š
John J.
Donahoe
President and CEO,
Nike, Inc.
63
2015
David W.
Dorman
Former
Non-Executive
Board Chair of CVS
Health Corporation
70
2015
Enrique
Lores
President and
CEO, HP Inc.
D
58
2021
Gail J.
McGovern
President and CEO,
American Red
Cross
W
72
2015
Š
Š
Š
-
-
1
1
Š
Š
Š
1
Š
1
Š
Independent Board Chair
Committee Chair
ARC = Audit, Risk and Compliance Committee (“ARC Committee”)
COMP = Compensation Committee
GOV = Corporate Governance and Nominating Committee
W = Woman
D = Diverse Ethnicity
• 2024 Proxy Statement
5
PROXY STATEMENT SUMMARY
2024 Director Nominees
Directors
Name
Occupation
Diversity Age
Director
Since
Independent
Other Public
Company
Boards
Committee
Memberships
ARC COMP GOV
Deborah M.
Messemer
Former Major
Market Managing
Partner, KPMG
W
66
2019
David M.
Moffett
Former CEO,
Federal Home Loan
Mortgage Corp.
72
2015
Ann M.
Sarnoff
Former Chair
and CEO,
WarnerMedia
Studios & Networks
Group
W
62
2017
Frank D.
Yeary
Managing Member,
Darwin Capital
Advisors, LLC
60
2015
Š
Š
Š
Š
2
Š
3
-
Š
2
Š
Independent Board Chair
Committee Chair
ARC = Audit, Risk and Compliance Committee (“ARC Committee”)
COMP = Compensation Committee
GOV = Corporate Governance and Nominating Committee
W = Woman
D = Diverse Ethnicity
As previously disclosed, Belinda Johnson has informed the Company that she will not stand for re-election as a director at
the Annual Meeting. The Board anticipates that it will reduce the size of the Board to 11 directors effective immediately
before the Annual Meeting.
In addition, the Company has announced that the Board intends to appoint Carmine Di Sibio as an independent director of
the Company effective July 1, 2024. Mr. Di Sibio is currently Global Chair and CEO of EY (“EY”) and has previously
announced that he will retire from EY in June 2024. In accordance with EY policy and practice, he is only able to join a
public company board upon his retirement. Accordingly, Mr. Di Sibio is not a director nominee in this Proxy Statement. We
are providing this disclosure to be transparent with our stockholders and to highlight our continued focus on board
refreshment. See “Corporate Governance—New Director to be Appointed After Annual Meeting” for Mr. Di Sibio’s
biography and additional information.
The Board and the Corporate Governance and Nominating Committee (the “Governance Committee”) are committed to
ensuring that the Board is composed of individuals who have highly relevant skills, professional experience and
backgrounds, bring diverse viewpoints and perspectives and effectively represent the long-term interests of stockholders.
Below is a snapshot of the diversity, skills and experience of our director nominees. For more information about our Board
members, see “Director Experience, Expertise and Attributes” beginning on page 15 of this proxy statement.
6
• 2024 Proxy Statement
Tenure1
Age
Gender
Ethnic Diversity
PROXY STATEMENT SUMMARY
2024 Director Nominees
6 YRS
average tenure
of director
nominees
1-4 years
5-8 years
62 YRS
average age
of director
nominees
< 60 years
61-65 years
66+ years
1
PayPal became an independent public company in July 2015.
Nominee Skills & Experience
27%
of director
nominees are
women
18%
of director
nominees are
ethnically
diverse
Women
Men
Did Not Disclose
Ethnically Diverse
White
Did Not Disclose
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
6
Payments /
Financial Services /
FinTech
9
Technology /
Innovation
11
Global
Business
9
Go to Market
11
Senior
Leadership
11
Business
Development
and Strategy
7
Regulatory /
Governmental Risk
Management and
Compliance
3
Cybersecurity /
Information Security
Risk Management
11
Finance /
Accounting
10
Environmental
and Social Risk
Management
11
Human Capital
Management
10
Other Public
Company Board
Service
• 2024 Proxy Statement
7
PROXY STATEMENT SUMMARY
Corporate Governance Highlights
Corporate Governance Highlights
Corporate governance at PayPal is designed to promote the long-term interests of our stockholders, strengthen Board and
management accountability, foster responsible decision-making, engender public trust and demonstrate PayPal’s
commitment to transparency, accountability, independence and diversity.
• 10 of 11 director nominees are independent
• Independent Board Chair with significant responsibilities
• All directors stand for annual election
• Simple majority vote standard for charter/bylaw
amendments and mergers/business combinations
• Diverse Board in which 5 of 11 director nominees are
women and/or from a diverse ethnic group
• Diverse characteristics considered in assessing Board
composition include sexual orientation, ethnicity,
nationality and cultural background
• Committed to actively seeking highly qualified women
and individuals from underrepresented communities to
include in the initial pool from which director nominees
are chosen
• Annual performance self-evaluations by the full Board and
each committee
• Majority vote standard for uncontested director elections
• Stockholder right to call a special meeting
• Regular review of Board and executive succession
planning
• Strong stockholder engagement practices
• Director service limited to no more than four public
company boards, including the PayPal Board
• Proxy access for qualifying stockholders
• Robust stock ownership requirements for our executives
and directors
• Prohibition on hedging and pledging transactions by
executive officers and directors
• Annual Global Impact Report disclosing our performance,
progress and strategy on key non-financial risks and
opportunities
To learn more about our corporate governance practices and policies, see page 23 of this proxy statement.
Stockholder Engagement
Outreach
and
Engagement
Contacted holders of
50%
of our common stock
Engaged with holders of
19%
of our common stock
Areas for
Stockholder
Focus
Board Composition
and Succession
Planning
Risk Management and
Oversight
Executive
Compensation
Corporate Sustainability
and Impact (“CSI”)
Matters
Highlights
of our
Practices
• Governance Committee
oversight and regular
discussion of director
succession and Board
refreshment plans
• Five directors added to
the Board since 2017
• Board review of
executive succession
planning at least
annually
• Robust Board oversight
of ERCM program
• Committees have
clearly defined
oversight responsibility
of specific risks as
outlined in committee
charters
• ARC Committee
oversees and reviews
overall risk management
framework and reports
to the full Board on
risk matters, including
cybersecurity and data
privacy
• Compensation
Committee evaluates
the appropriateness of
the Company’s
compensation-related
performance metrics
at least annually, taking
into consideration
the Company’s
overall strategy and
stockholder feedback
• Alignment of
CSI disclosures
to established
frameworks, including
IFRS Foundation’s
Sustainability
Accounting Standards
Board (“SASB”)
standards and Task
Force on Climate-
Related Financial
Disclosures (“TCFD”)
recommendations
• Focus on promoting a
culture of community,
and ensuring alignment
of our global talent and
Belonging strategy
Stockholder conversations following our 2023 Annual Meeting provided significant input to the Compensation Committee’s
enhancements made to our executive compensation program as detailed on page 58 of the Compensation Discussion and Analysis
(“CD&A”).
8
• 2024 Proxy Statement
PROXY STATEMENT SUMMARY
Executive Compensation Highlights
Executive Compensation Highlights
Our key guiding principle for executive compensation is to closely align the compensation of our executives with the
creation of long-term value for our stockholders. We also recognize that the creation of long-term stockholder value begins
with attracting exceptionally talented leaders to our Company. 2023 was a transformative year for PayPal as we welcomed
several new executives to our leadership team and provided attractive compensation opportunities to induce them to join.
We also made several enhancements to our incentive compensation plans to increase focus on profitable growth. Finally,
our 2023 incentive programs were designed to strike an appropriate balance between incentivizing top-line growth,
profitability, non-financial business initiatives and stockholder value creation over both the short-term and long-term
horizons.
To learn more about our executive compensation program, see the CD&A beginning on page 51 of this proxy statement.
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Executive Transition-Related Compensation
The Compensation Committee took a thoughtful approach in establishing new hire awards to attract Mr. Chriss and Mses.
Miller and Gill to join PayPal and ensure appropriate long-term alignment with stockholders. The offer letters provided to
Mr. Chriss and Mses. Miller and Gill included two categories of compensation entitlements: (1) go-forward, ordinary course
compensation arrangements and (2) special, non-recurring new hire awards. The non-recurring new hire awards were
intended to incentivize Ms. Miller and Ms. Gill to join PayPal’s next-generation leadership team. For Mr. Chriss, the non-
recurring new hire awards were also intended to compensate him for a portion of the awards he forfeited in departing from
his prior employer to join PayPal. The amounts and types of compensation for each of Mr. Chriss and Mses. Miller and Gill
were determined carefully by the Compensation Committee, taking into consideration the NEO’s experience,
responsibilities, expertise, compensation at their prior employer, potential contributions to PayPal, the compensation
received by the new NEO’s predecessor at PayPal (if applicable), their competitive opportunities, and market compensation
for their role with PayPal’s compensation peer group.
The following table summarizes the go-forward compensation arrangements and special, non-recurring new hire awards
for Mr. Chriss and Mses. Miller and Gill, which were intended to compensate them for awards they forfeited when joining
PayPal or to induce them to accept our offers, as applicable:
Go-Forward Compensation Arrangements
Special, Non-Recurring
New Hire Awards
Target Annual
Incentive
Plan Bonus as
a Percentage
of Annual
Base Salary
Annual Base
Salary Rate
Initial
PBRSU
Grant (at
target)
Cash Sign-
On Bonus
Initial RSU
Grant
Make-
Whole or
Sign-On
Incentive
RSUs
$1,250,000
200%
$16,750,000 $17,000,000
N/A
$10,000,000
$ 750,000
125%
$ 6,250,000 $ 6,250,000 $6,000,000(1) $ 2,000,000
$ 750,000
125%
$ 6,250,000 $ 6,250,000 $2,000,000(1) $ 2,000,000
NEO
Alex Chriss
President & Chief Executive Officer
Jamie Miller
EVP, Chief Financial Officer
Michelle Gill
EVP, General Manager – Small Business &
Financial Services Group
1
50% of the Cash Sign-On Bonus was payable in cash within the first two pay periods following the NEO’s start date, with the remaining 50% payable within two pay periods following
the 6-month anniversary (each, an “installment”). If the NEO resigns or PayPal terminates the NEO’s employment for cause: (a) on or before the first anniversary of the payment date
of the first installment, the NEO must repay 100% of the first installment; (b) after the first anniversary of the payment date of the first installment and on or before the second
anniversary of the payment date of the first installment, the NEO must repay the first installment, less 1/24th of the first installment for every full month of the NEO’s active employment
with PayPal following the NEO’s start date; and (c) on or before the first anniversary of the payment date of the second installment, the NEO must pay back 100% of the second
installment.
Mr. Chriss and Mses. Miller and Gill will not receive any equity grants during PayPal’s 2024 rewards cycle, apart from their
Initial RSU Grants, Initial PBRSU Grants and Sign-On Incentive RSUs.
To find additional details on new hire-related compensation, please see the CD&A section titled “Offer Letter
Compensation for New NEOs” on page 53 of this proxy statement.
• 2024 Proxy Statement
9
PROXY STATEMENT SUMMARY
Executive Compensation Highlights
2024 Compensation Program Changes Informed by Investor Feedback
Informed by investor feedback, in January 2024, our Compensation Committee made the following enhancements to our
incentive programs to strengthen pay for performance alignment, increase the focus on profitable growth, reduce burn rate
(defined as the number of shares subject to equity awards granted during a given year divided by the basic weighted
average number of common shares outstanding for that fiscal year) and address historical challenges experienced in
connection with setting long-term performance goals.
Enhancements to 2024 PayPal Annual Incentive Plan
Enhancement
Rationale
Redesign the plan to fund the bonus pool
based on company performance and
determine employee payouts based on
individual performance
Update metrics to Non-GAAP Operating
Income and Transaction Margin Dollars
(from Revenue and Non-GAAP Operating
Margin)
Move to 100% cash compensation for short-
term incentive program
Company-wide bonus pool and resulting employee bonus starting point to be
based on company performance, strengthening pay and performance alignment;
individual performance modifier will provide for better upwards or downwards
differentiation when specifically warranted
Will more closely align performance goals to current Company strategy, including
additional focus on driving profitable growth
Additionally, stock-based compensation expense will be included in non-GAAP
financial metric reporting, including Non-GAAP Operating Income, beginning in
2024
Will align actual payout with intended value to be delivered and reduce burn rate
Enhancements to 2024-2026 PBRSUS under Long-Term Incentive Program
Enhancement
Rationale
Move to relative total shareholder return
(rTSR) metric, measured as compared to
the S&P 500 (from FX-Neutral Revenue
CAGR and Free Cash Flow CAGR), with the
target for rTSR vs. the S&P 500 set at the
55th percentile
Three-year performance period using three
discrete measurement periods of 12, 24,
and 36 months in calculating payout; no
vesting prior to end of the full three-year
vesting period. If absolute TSR achievement
is negative for the 36-month period, the
maximum shares an executive could earn
would be capped at 100% of the target
number of shares
More closely aligns PBRSU payouts with long-term shareholder value while
effectively motivating leaders to holistically execute during this transitional period
while our strategy continues to evolve
Will minimize the potential impact of short-term share price volatility, while
maximizing retention value over the entire vesting period; designed to enhance the
program’s durability and provide a holistic measure of long-term value creation
during PayPal’s strategic pivot
2023 Incentive Compensation Plan Outcomes
For 2023, the Compensation Committee approved incentive programs designed to strike an appropriate balance between
incentivizing top-line growth, profitability, non-financial business initiatives, and stockholder value creation over both the
short-term and long-term horizons.
10
• 2024 Proxy Statement
PROXY STATEMENT SUMMARY
Executive Compensation Highlights
Based on our 2023 results, our incentive plans paid out as follows:
2023 PayPal Annual Incentive Plan (“AIP” or “2023 AIP”)
Under the AIP, 75% of the NEOs’ target incentive was based on company performance. The following table shows the
performance goals and actual performance achieved, as determined by the Compensation Committee.
Company Measure
Threshold
(50% Payout)*
Target
(100% Payout)*
Maximum
(200% Payout)*
Actual
Achieved
Actual Achieved
(Percentage of
Target Achieved)
Revenue
(in $ billions)
Non-GAAP
Operating Margin
$27.52
$28.42
$29.32
$29.77
200%
20.40%
22.40%
24.40%
22.43%
102%
Company Performance Score of the AIP
151%
*
Linear interpolation applies to revenue and Non-GAAP Operating Margin for results between specific goals.
The remaining 25% of the NEOs’ target incentive under the AIP was based on individual performance. Payouts under the
individual performance component of the AIP were 100% of target for each of our eligible NEOs.
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2021-2023 PBRSUs
The following table shows the performance goals and actual performance achieved for the PBRSUs granted in 2021, which
vested based on performance during a three-year performance period (the “2021-2023 PBRSUs”).
Measure
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(200% Payout)
FX-Neutral Revenue CAGR
Free Cash Flow CAGR
15.5%
13.0%
17.5%
15.0%
18.5%
16.0%
Actual Achieved
(Percentage of
Target Achieved)
0.0%
0.0%
Aggregate Percent of Target Achieved
0.0%
Share Authorization Approval
At this year’s Annual Meeting, the Company is asking stockholders to approve the amendment and restatement of the
PayPal Holdings, Inc. 2015 Equity Incentive Award Plan (the “Equity Plan”) in order to (i) increase the number of shares
authorized for issuance under the Equity Plan by 20 million and (ii) remove the “inverse fungible share ratio” for future
awards.
In determining to seek stockholder approval to increase the number of shares reserved for future issuance, the PayPal
Compensation Committee and Board of Directors carefully considered a number of important factors, including:
• The Equity Plan supports a broad-based program that is critical to our ability to effectively compete for talented
employees;
• Equity awards support our pay-for-performance philosophy;
• We have taken a responsible approach to the use of equity, including a number of recent steps that balance
stockholder considerations regarding dilution and the vital role of equity in attracting and retaining the talent we need to
implement our strategy;
• Our equity request reflects our market for talent; and
• Our strong governance practices protect stockholder interests.
• 2024 Proxy Statement
11
PROXY STATEMENT SUMMARY
Share Authorization Approval
Equity is a key element of compensation that is critical in the labor markets in which we compete, particularly within our
technology function. Accordingly, the Board believes that approval of the equity plan amendment and restatement to
authorize additional shares is in the best interests of the Company and its stockholders.
Corporate Sustainability and Impact
Our governance framework is designed to provide sound company oversight, drive Board and management accountability
and demonstrate PayPal’s commitment to transparency. We seek to apply the same approach to the oversight,
management and implementation of the Company’s corporate sustainability and impact (“CSI”) strategy. Our cross-
functional program is managed by executive leaders and implemented through guidance and direction provided by the
CSI steering committee. Representatives from the CSI steering committee brief Board committees and executive
management on CSI matters periodically and meet with a subcommittee of the Enterprise Risk Management Committee at
least annually to review current and emerging CSI-related risk topics.
Oversight
Management
Our Board of Directors is actively engaged on CSI matters
that impact business strategy.
• Governance Committee: Oversight of PayPal’s
management of CSI topics, including overall CSI
strategy, risks and opportunities, stakeholder
engagement and programs and initiatives in social
innovation and environmental sustainability
• ARC Committee: Oversight of the Company’s risk
framework and enterprise-wide compliance program,
including cybersecurity and privacy matters
• Compensation Committee: Oversight of the
Company’s strategies and responsibilities related to
human capital (global talent) management, including
diversity and inclusion, pay equity efforts and corporate
culture
Our executive management directs and manages the
execution of our enterprise-wide CSI strategy to help
ensure non-financial risks and opportunities are
appropriately integrated across the enterprise, including
through the Enterprise Risk and Compliance Management
Program (ERCM Program)
Implementation
A CSI steering committee and cross-functional working
groups with representatives from more than 20 functions
are responsible for overall program implementation
PayPal recognizes the importance of operating our business in a responsible and sustainable manner. We believe the
effective management of key non-financial risks and opportunities plays a role in furthering our strategy and helps to create
value for our stockholders, customers, employees and other stakeholders. For more information on our CSI strategy and
program, see “Corporate Sustainability and Impact Oversight and Management” beginning on page 40 of this proxy
statement, and our most recent Global Impact Report, which is available at https://investor.pypl.com/csi-strategy.
12
• 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS
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PROPOSAL 1:
Election of Directors
Based upon a review of their skills, qualifications, expertise and characteristics, the Board has nominated 11 of our current
directors for election at the Annual Meeting, to serve until our 2025 Annual Meeting of Stockholders and until their
successors are elected and qualified. Each director nominee is independent except Mr. Chriss, our President and CEO.
Each of our current directors other than Mr. Chriss has been previously elected by our stockholders. As previously
disclosed, Ms. Johnson has informed the Company that she will not stand for re-election as a director at the Annual
Meeting. The Board anticipates that it will reduce the size of the Board to 11 directors effective immediately before the
Annual Meeting.
We expect that each director nominee will be able to serve if elected. If any director nominee is unable or unwilling to serve
at the time of the Annual Meeting, the current Board may identify a substitute nominee to fill the vacancy, reduce the size of
the Board or leave a vacancy to fill at a later date.
Directors must be elected by a majority of the votes cast in uncontested elections, which has been our voting standard
since we became an independent public company in 2015. This means that the number of votes cast “FOR” a director
nominee must exceed the number of votes cast “AGAINST” that nominee. (For more information, see “Frequently Asked
Questions – Voting Information” on page 116 of this proxy statement.) Each director has submitted an advance, contingent,
irrevocable resignation that the Board may accept if stockholders do not re-elect that director. After the certification of any
such stockholder vote, the Governance Committee or a committee composed solely of independent directors that does
not include the director who was not re-elected will determine whether to accept the director’s resignation. We will publicly
disclose any such decision and the rationale behind it.
Director Nominees
The Governance Committee is responsible for recommending to the Board the qualifications for Board membership and
for identifying, assessing and recommending qualified director candidates for the Board’s consideration. The Board’s
membership qualifications and nomination procedures are set forth in the Governance Guidelines for the Board of Directors
(“Governance Guidelines”). Nominees may be suggested by directors, management, stockholders or by a third-party firm.
The Governance Committee and the Board have evaluated each of the director nominees and concluded that it is in the
best interests of the Company and its stockholders for each of these individuals to continue to serve as a director. The
Board believes that each director nominee has a strong track record of being a responsible steward of stockholders’
interests and brings extraordinarily valuable insight, perspective and expertise to the Board.
To ensure that the Board continues to evolve and be refreshed in a manner that serves the changing business and strategic
needs of the Company, the Governance Committee annually reviews with the Board the applicable skills, qualifications,
expertise and characteristics of Board nominees in the context of the current Board composition and Company
circumstances. The Governance Committee evaluates whether each director demonstrates several key attributes and
provides significant and meaningful contributions to the Board. These factors include:
• Highly relevant professional experience in payments, financial services, financial technology (“FinTech”), technology,
innovation, global business, business development, strategy, legal, regulatory, government, cybersecurity, information
security, finance, accounting, consumer, sales, marketing, brand management, talent (human capital) management
and/or environmental and social risk management matters;
• Relevant senior leadership/CEO experience;
• Experience and expertise that complement the skill sets of the other director nominees;
• High degree of character and integrity and ability to contribute to strong Board dynamics;
• Highly engaged and able to commit the time and resources needed to provide active oversight of PayPal and its
management;
• Sound business judgment; and
• Commitment to enhancing stockholder value.
In addressing the overall composition of the Board, the Governance Committee considers how each director contributes to
the Board’s diversity in terms of gender, sexual orientation, race, ethnicity, nationality, cultural background and age, in
addition to the skills, qualifications and expertise that they bring to the Board.
• 2024 Proxy Statement
13
PROPOSAL 1: ELECTION OF DIRECTORS
Director Nominees
Descriptions of Skills and Attributes
We apply the following standards to determine whether a nominee possesses each of the skills and attributes chart below.
Experience, Expertise and Attributes
Definition
Payments / Financial Services / FinTech
Experience developing business strategies that strengthen and enable financial
services, including payment services and infrastructure, banking, and technology
platforms.
Technology / Innovation
Global Business
Go to Market
Senior Leadership
Business Development and Strategy
Possesses knowledge and insights into developing or operating technology
businesses, product development and new business models, and anticipating
technological trends and driving innovation.
Demonstrated ability to drive growth in markets around the world, including an
understanding of diverse competitive and operating environments, economic
conditions, regulatory frameworks and cultures.
Experience in developing strategies to grow sales and market share, executing
marketing campaigns, building brand awareness and overall preference among
customers, and enhancing the reputation of a business at significant scale.
CEO or other significant senior leadership experience, with a practical
understanding of organizations, processes, strategic planning and risk management
to assess, develop and implement business strategy, planning, and operations.
Experience driving growth through strategic partnerships or business combinations,
including assessment of potential partners and targets for strategic and cultural fit,
structuring and negotiating agreements, and integrating and streamlining
operations.
Regulatory / Governmental Risk Management
and Compliance
Knowledge of and experience with navigating complex legal and regulatory issues,
compliance obligations and governmental policies in multiple jurisdictions,
including engagement with legislators and regulatory bodies.
Cybersecurity / Information Security Risk
Management
Operational management or oversight of cybersecurity, information security data
privacy, or expertise and understanding of how those issues affect business
operations, risk management or compliance.
Finance / Accounting
Oversight or management of the capital structure, financing and investing activities,
and financial reporting and internal controls of a sophisticated and complex global
business.
Environmental and Social Risk Management
Human Capital Management
An understanding of effective management and disclosure of risks and
opportunities around environmental sustainability, social aspects of business
models and activities, and key governance practices that align with stockholder
value creation and stakeholder expectations.
Experience managing or overseeing the business function that attracts, motivates,
develops and retains qualified personnel in a competitive talent environment and
fostering a corporate culture that encourages and promotes accountability,
performance and belonging.
Other Public Company Board Service
Insight into ensuring strong board and management accountability, protecting
stockholder interests, overseeing enterprise risk and adhering to leading
governance practices.
14
• 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS
Director Nominees
Director Experience, Expertise and Attributes
Our Board skills matrix identifies the core skills, expertise and attributes of each director that we consider most relevant in
light of our current business strategy and structure. For more information on the qualifications that each director nominee
brings to our Board, see the nominee biographies beginning on page 17 of this proxy statement.
Experience, Expertise and Attributes
Payments / Financial Services / FinTech
o
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• • •
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• •
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Technology / Innovation
Global Business
Go to Market
Senior Leadership
• • • • • • • •
•
• • • • • • • • • • •
• • • • • • • •
•
• • • • • • • • • • •
Business Development and Strategy
• • • • • • • • • • •
Regulatory / Governmental Risk Management and
Compliance
•
•
• • • • •
Cybersecurity / Information Security Risk
Management
•
• •
Finance / Accounting
• • • • • • • • • • •
Environmental and Social Risk Management
• • • • • • • • •
•
Human Capital Management
Other Public Company Board Service
• • • • • • • • • • •
•
• • • • • • • • •
6
9
11
9
11
11
7
3
11
10
11
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• 2024 Proxy Statement
15
PROPOSAL 1: ELECTION OF DIRECTORS
Director Nominees
Focus on Board Refreshment and Diversity
The Governance Committee regularly oversees and plans for director succession and Board refreshment. The Board values
succession and refreshment over time as critical components to maintaining an appropriate balance of tenure, diversity,
skills and experience needed to promote and support the Company’s long-term strategy. The Board believes that having a
mix of experienced directors with a deep understanding of the Company and newer directors who bring fresh perspectives
and innovative ideas provides significant benefits to the Company in driving and overseeing its strategy and operations and
managing key risks. The Board does not believe in a specific limit for the overall length of time a director may serve.
Directors who have served on the Board for an extended period can provide valuable insight into the operations and future
of the Company based on their experience with, and understanding of, the Company’s history, policies and objectives.
The Governance Committee values diversity as a factor in selecting nominees. When searching for new directors, the
Governance Committee actively seeks out highly qualified women and individuals from underrepresented communities to
include in the initial pool from which Board nominees are chosen. In keeping with this commitment to diversity and
inclusion, our 11 director nominees include three people who identify as women, one person who identifies as African
American or Black and one person who identifies as Hispanic or Latinx and White.
Our active Board refreshment process has resulted in a strong mix of diversity and independence, which contributes to
effective oversight of management and the Company.
Board Diversity Matrix (as of April 9, 2024)
Total Number of Directors
Part I: Gender Identity
12
Directors
Part II: Demographic Background
African American or Black
White
Two or More Races or Ethnicities
Did Not Disclose Demographic Background
Female
Male
Did Not Disclose
4
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4
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7
1
4
1
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1
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2
Stockholder Recommendations and Nominations
Stockholders who would like the Governance Committee to consider their recommendations for director nominees should
submit their recommendations in writing by mail to the Governance Committee in care of our Corporate Secretary at
PayPal Holdings, Inc., 2211 North First Street, San Jose, California 95131, stating the candidate’s name and qualifications for
Board membership. Any such recommendation by a stockholder will receive the same consideration by the Governance
Committee as other suggested nominees.
Subject to the nominating stockholder’s compliance with the Company’s certificate of incorporation and bylaws and, if
applicable, Exchange Act Rule 14a-19, candidates nominated by a stockholder will be included on a universal proxy
card. Such inclusion is not an endorsement of the stockholder nominee.
In addition, our Restated Certificate of Incorporation and Bylaws provide proxy access rights that permit eligible
stockholders to nominate candidates for election to the Board in the Company’s proxy statement. These proxy access
rights permit a stockholder, or group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common
stock continuously for at least three years to nominate and include in the Company’s proxy materials director nominees
constituting up to 20% of the Board, provided that the stockholder(s) and nominee(s) satisfy the requirements and
procedures described in our Restated Certificate of Incorporation and Bylaws.
16
• 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
Director Biographies
RODNEY C. ADKINS
President of 3RAM Group LLC
INDEPENDENT
Board Committees:
• ARC
• Governance
Director since:
September 2017
Age:
65
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• Extensive experience in the technology industry including
leadership positions in multiple business units within IBM,
including emerging technologies, strategy, global business
operations, innovation, product development and brand
management
• Significant experience in corporate finance, financial
statements and accounting
• In-depth expertise in corporate governance matters as a board
member of other public companies
• Expertise in supply chain, procurement and global trade
Other Public Company Boards:
• United Parcel Service, Inc. since 2013
• W.W. Grainger, Inc. since July 2014
• Avnet, Inc. (Chair) since 2015
Former Public Company Boards within Last Five Years:
• PPL Corporation from August 2014 to May 2019
Career Highlights:
• President of 3RAM Group LLC, a privately held company
specializing in capital investments, business consulting
services and property management since January 2015
• Spent over 30 years at International Business Machines
Corporation (“IBM”) in various development and management
roles, including Senior Vice President of Corporate Strategy
from April 2013 to April 2014, Senior Vice President of Systems
and Technology Group from October 2009 to April 2013, Senior
Vice President of Development & Manufacturing from May 2007
to October 2009 and Vice President of Development of IBM
Systems and Technology Group from December 2003 to May
2007
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ALEX CHRISS
President and Chief Executive
Officer of PayPal
Board Committees:
• None
Director since:
September 2023
Age:
46
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• Extensive product, technology and global payments
Career Highlights:
• President and Chief Executive Officer of PayPal since
September 2023
experience
• Deep expertise in leading high-growth businesses focused on
customer-driven innovation
Other Public Company Boards:
• None
Former Public Company Boards within Last Five Years:
• None
• Executive Vice President and General Manager, Small Business
and Self-Employed, of Intuit Inc. from January 2019 to
September 2023
• Led a global organization responsible for delivering
QuickBooks and Mailchimp to millions of customers and for
more than half of Intuit’s revenue
• Led Intuit’s successful acquisition of Mailchimp, significantly
expanding the capacity of Intuit’s platform and its customer
base
• Senior Vice President and Chief Product Officer, Small Business
organization of Intuit from January 2017 to December 2018
• Managed the full suite of QuickBooks products, including
payroll and payments platform segments
• Vice President and General Manager, Self-Employed segment
of Small Business division of Intuit, Inc. from August 2013 to
December 2016
• Various positions of increasing responsibility at Intuit, Inc. from
July 2004 to July 2013 including Business Leader and Director,
Intuit Partner Platform
• 2024 Proxy Statement
17
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
JONATHAN CHRISTODORO
Partner at Patriot Global Management, LP
INDEPENDENT
Board Committees:
• Compensation
• Governance
Director since:
July 2015
Age:
47
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• Extensive financial, strategic planning and investment banking
experience advising public companies, including at the board
level
• Significant experience as both a director and an investor in
identifying and evaluating mergers and acquisitions and
investment opportunities and portfolio companies across a
range of industries, including technology
Other Public Company Boards:
• None
Former Public Company Boards within Last Five Years:
• Frontier Acquisition Corp. from February 2021 to March 2023
• Pioneer Merger Corp. from November 2020 to January 2023
• Sandridge Energy, Inc. from June 2018 to May 2021
• Xerox Corporation from June 2016 to May 2021
• Herbalife Ltd. from April 2013 to January 2021
• Lyft, Inc. from May 2015 to March 2019
Career Highlights:
• Partner at Patriot Global Management, LP, an investment
management firm since March 2019
• Managing Director of Icahn Capital LP, the entity through which
Carl C. Icahn manages investment funds from July 2012 to
February 2017.
• Served in various investment and research roles from March
2007 to July 2012
• Began his career as an investment banking analyst at Morgan
Stanley, where he focused on merger and acquisition
transactions across a variety of industries
• Served in the United States Marine Corps
JOHN J. DONAHOE
President and Chief Executive
Officer of Nike, Inc.
INDEPENDENT BOARD CHAIR
Board Committees:
• None
Director since:
July 2015
Age:
63
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• As eBay Inc. President and CEO, oversaw successful separation
of PayPal from eBay Inc. and its establishment as an
independent public company
• Expertise in commerce, technology, global strategy, operations
and executive leadership
• Extensive track record of creating value, driving innovation and
scaling large technology and consumer-facing companies
Other Public Company Boards:
• Nike, Inc. since June 2014
Former Public Company Boards within Last Five Years:
• ServiceNow, Inc. from April 2017 to June 2020
Career Highlights:
• President and Chief Executive Officer of Nike, Inc. since January
2020
• President and Chief Executive Officer of ServiceNow, Inc., a
cloud computing company from April 2017 to December 2019
• President and Chief Executive Officer of eBay Inc. from March
2008 to July 2015, and director of eBay Inc. from January 2008
to July 2015
• President, eBay Marketplaces from March 2005 to January 2008
• Worldwide Managing Director of Bain & Company from January
2000 to February 2005
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• 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
DAVID W. DORMAN
Former Non-Executive Board Chair
of CVS Health Corporation
INDEPENDENT
Board Committees:
• Compensation (Chair)
• Governance
Director since:
June 2015
Age:
70
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• In-depth board chair and executive-level experience leading
global companies in regulated industries including technology,
telecommunications and health care
• Expertise in finance, mergers and acquisitions and investments,
strategic planning
• Public company executive compensation, talent management
and executive leadership expertise
Other Public Company Boards:
• Dell Technologies, Inc., since September 2016
Former Public Company Boards within Last Five Years:
• CVS Health Corporation from March 2006 to May 2022
Career Highlights:
• Founding Partner of Centerview Capital Technology Fund, a
private investment firm since July 2013
• Board Chair of InfoWorks, a portfolio company of Centerview
since January 2019
• Board of Directors of CVS Health Corporation from March 2006
until May 2022 including Non-Executive Board Chair from
March 2011 until May 2022
• Lead Independent Director of the Board of Motorola Solutions,
Inc. (formerly Motorola, Inc.), a leading provider of business and
communication products and services from May 2011 until May
2015
• Non-Executive Board Chair of Motorola, Inc. from May 2008 to
January 2011
• Senior Advisor and Managing Director to Warburg Pincus LLC, a
global private equity firm from October 2006 to May 2008
• President and a director of AT&T Corporation from November
2005 to January 2006
• Board Chair and Chief Executive Officer of AT&T Corporation
from November 2002 to November 2005
• President of AT&T Corporation, from 2000 to 2002, and the
Chief Executive Officer of Concert Communications Services, a
former global venture created by AT&T Corporation and British
Telecommunications plc from 1999 to 2000
• Served as a Trustee for Georgia Tech Foundation, Inc.
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ENRIQUE LORES
President and CEO, HP Inc.
INDEPENDENT
Board Committees:
• ARC
Director since:
June 2021
Age:
58
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• Deep product and operational experience at the highest levels
of the information technology industry
Career Highlights:
• President and Chief Executive Officer of HP Inc., an information
technology company since November 2019
• President, Imaging and Printing Solutions, HP Inc. from
• Proven leader in consumer-facing business with extensive
international business and leadership experience and global
perspective
Other Public Company Boards:
• HP Inc. since November 2019
Former Public Company Boards within Last Five Years:
• None
November 2015 to October 2019
• Spent over 30 years at The Hewlett-Packard Company in
several positions of increasing responsibility ranging from Vice
President, Imaging & Printing Group, EMEA to Senior Vice
President & General Manager, Business Personal Systems and
then Separation Leader from 1989 to 2015
• 2024 Proxy Statement
19
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
GAIL J. MCGOVERN
President and Chief Executive Officer
of the American Red Cross
INDEPENDENT
Board Committees:
• Compensation
• Governance (Chair)
Director since:
June 2015
Age:
72
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• Extensive executive experience in strategic planning across a
global organization operating in challenging environments,
sales and marketing, customer relations and corporate finance
• Strong expertise in regulatory matters and government relations
garnered through leadership positions in regulated industries
• Brings a strong perspective from the academic and nonprofit
worlds aligned with PayPal’s mission and vision
Other Public Company Boards:
• DTE Energy Company since June 2003
Former Public Company Boards within Last Five Years:
• None
Career Highlights:
• President and Chief Executive Officer of the American Red
Cross, a humanitarian organization since June 2008
• Faculty member at the Harvard Business School from 2002 to
2008
• President of Fidelity Personal Investments from 1998 to 2002
• Executive Vice President, Consumer Markets Division at AT&T
Corporation from 1997 to 1998
• Serves as a trustee of The Johns Hopkins University School of
Medicine
DEBORAH M. MESSEMER
Former Major Market Managing Partner
at KPMG
Board Committees:
• ARC (Audit Committee
Financial Expert)
Director since:
January 2019
Age:
66
INDEPENDENT
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• More than 30 years of experience in finance, strategy, market
development, regulation, governance and operations
• Strong leadership and people management experience as the
Managing Partner of KPMG’s Bay Area and Northwest region,
having led a team of over 3,000 employees
• Extensive expertise in financial reporting, due diligence,
mergers and acquisitions and internal controls over financial
reporting as Audit Engagement Partner or Senior Relationship
Partner for companies in a variety of industries, including
financial services and technology
Other Public Company Boards:
• Allogene Therapeutics, Inc. since October 2018
• TPG, Inc. since January 2022
Former Public Company Boards within Last Five Years:
• None
Career Highlights:
• Served for over 35 years at KPMG, one of the world’s leading
professional services firms, first in the audit practice, then as
Audit Engagement Partner or Global Senior Relationship Partner
for clients in a variety of industries, including financial services
and technology. She was Managing Partner of KPMG’s Bay Area
and Northwest region, responsible for leading teams in 10
offices across all functions from 2008 through her retirement in
September 2018
• Served on the Board of Directors of Carbon, Inc., a privately
held company
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• 2024 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
DAVID M. MOFFETT
Former Chief Executive Officer of Federal
Home Loan Mortgage Corp.
INDEPENDENT
Board Committees:
• ARC (Chair)
(Audit Committee
Financial Expert)
Director since:
June 2015
Age:
72
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• Strong leadership experience and extensive global financial
management and regulatory expertise as a former Chief
Executive Officer and Chief Financial Officer of financial
services companies
• More than 30 years of strategic finance, mergers and
acquisitions, risk management and operational experience in
banking and payment processing
Other Public Company Boards:
• Columbia Seligman Premium Technology Growth Fund, Inc.
since January 2024
• Tri-Continental Corp. since January 2024
• CSX Corporation since May 2015
Former Public Company Boards within Last Five Years:
• Genworth Financial, Inc. from December 2012 to May 2021
Career Highlights:
• Lead Independent Director of PayPal from July 2015 to
December 2018
• Chief Executive Officer of Federal Home Loan Mortgage Corp.
(“Freddie Mac”) from September 2008 until his retirement in
March 2009, and director of Freddie Mac from December 2008
to March 2009
• Chief Financial Officer of Star Banc Corporation, a bank holding
company, starting in 1993. During his tenure, he played an
integral role in the acquisition of Firstar Corporation in 1998 and
later U.S. Bancorp in 2001. Mr. Moffett remained Chief Financial
Officer of U.S. Bancorp until 2007
• Serves as a Trustee for Columbia Threadneedle Mutual Funds
and University of Oklahoma Foundation and as a consultant to
various financial services companies
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ANN M. SARNOFF
Former Chair and Chief Executive Officer
of WarnerMedia Studios & Networks Group
INDEPENDENT
Board Committees:
• ARC
Director since:
June 2017
Age:
62
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• More than 30 years of diversified business experience through
a variety of executive leadership roles at preeminent global
media companies
Career Highlights:
• Career Highlights Chair and Chief Executive Officer of
WarnerMedia Studios & Networks Group, a global leader in
entertainment and consumer products from August 2020 to
April 2022
• Expertise in driving consumer engagement with a large and
• Chair and Chief Executive Officer of Warner Bros. Entertainment
diverse spectrum of globally-recognized brands
from August 2019 to August 2020
• Proven ability to develop innovative partnerships and
• President of BBC Studios Americas from August 2015 to August
technology-focused solutions across platforms
2019
• Extensive technology experience across media and platforms
• Chief Operating Officer of BBC Worldwide North America from
Other Public Company Boards:
• None
Former Public Company Boards within Last Five Years:
• None
2010 to July 2015
• Served on the board of directors of HSN from December 2012
to December 2017.
• Board Chair of BritBox, a joint venture subscription streaming
service launched in partnership with ITV in March 2017
• Serves as vice chair of the boards of McDonough School of
Business at Georgetown and The Shed, and serves as a member
of the boards of directors of WTA Ventures and Cineworld Group
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PROPOSAL 1: ELECTION OF DIRECTORS
Director Biographies
FRANK D. YEARY
Managing Member at Darwin Capital
Advisors, LLC
INDEPENDENT
Board Committees:
• ARC
Director since:
July 2015
Age:
60
Experience, Skills and Qualifications Relevant to Nomination
Includes:
• Notable career in investment banking and finance with financial
Career Highlights:
• Managing Member at Darwin Capital Advisors, LLC, a private
investment firm since October 2018 and a Member since 2012
• Executive Chair of CamberView Partners, LLC, a corporate
advisory firm from 2012 to 2018
• Vice Chancellor of the University of California, Berkeley, a
public university, from 2008 to 2012, where he led and
implemented changes to the university’s financial and
operating strategy
• Spent 25 years in the finance industry, most recently as
Managing Director, Global Head of Mergers and Acquisitions
and as a member of the Management Committee at Citigroup
Investment Banking
strategy and global mergers and acquisitions expertise,
including expertise in financial reporting and experience
attracting and retaining strong senior leaders
• Tenure as Independent Chair at Intel enhances acumen in
corporate governance and technology industry strategic
oversight
• Extensive experience in corporate governance and stockholder
engagement, including as a co-founder of CamberView
Partners, a financial advisory firm providing independent,
investor-led advice to public companies and their boards
• Role as a Vice Chancellor and as Chief Administration Officer of
a large public research university provides strategic and
financial expertise
Other Public Company Boards:
• Intel Corporation (Chair) since March 2009
• Mobileye Global, Inc. since October 2022
Former Public Company Boards within Last Five Years:
• None
The Board and the Governance Committee believe that the combination of our director nominees’ qualifications, skills and
experience will contribute to an effective Board and that, individually and collectively, the director nominees have the
necessary qualifications to provide effective oversight of the business and quality advice and counsel to management.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES.
* * *
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• 2024 Proxy Statement
CORPORATE GOVERNANCE
Corporate Governance
Corporate governance at PayPal is designed to promote the long-term interests of our stockholders, strengthen Board and
management accountability, oversee risk assessment and management strategies, foster responsible decision-making and
build public trust. We believe that strong corporate governance practices that provide meaningful rights to our stockholders
and ensure Board and management accountability are essential to our long-term success.
Board Leadership
The Board’s leadership structure is designed to promote Board effectiveness and to appropriately allocate authority and
responsibility between the Board and management. The Board believes that separating the Chair and CEO positions
continues to be the appropriate leadership structure for the Company at this time, as it provides the Company and the
Board with strong leadership and independent oversight of management and allows the CEO to focus primarily on the
management and operation of our business. Factors that the Board considers in reviewing its leadership structure and
making this determination include, but are not limited to, the current composition of the Board, the policies and practices in
place to provide independent Board oversight of management, the Company’s circumstances and the views of our
stockholders and other stakeholders. Changes in the Board’s leadership structure will be reflected on our website shortly
after becoming effective and disclosed in compliance with applicable regulatory requirements.
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Independent Chair
JOHN J. DONAHOE
Independent Chair
Mr. Donahoe has served as the Board Chair since PayPal became an independent public company in July 2015.
The Board has concluded that Mr. Donahoe is an independent director under the listing standards of the Nasdaq
Global Select Market (“Nasdaq”) and the Governance Guidelines.
Mr. Donahoe possesses extensive industry experience and deep knowledge of PayPal’s operations, serves as a trusted
advisor to management and effectively leads a dynamic and collaborative Board.
Robust Independent Chair Responsibilities
• Calls meetings of the Board and independent directors
• Sets the agenda for Board meetings in consultation with other directors and the CEO
• Provides management with input as to the quality, quantity and timeliness of the flow of information that is
necessary for the independent directors to effectively and responsibly perform their duties
• Chairs executive sessions of the independent directors
• Acts as a liaison between the independent directors and the CEO on sensitive issues
• Leads the Board’s annual CEO performance evaluation
• Leads the Board’s review of the results of the annual self-evaluation process, including acting on director feedback
as needed
• Engages and consults with major stockholders and other constituencies, where appropriate
• 2024 Proxy Statement
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CORPORATE GOVERNANCE
Director Independence
Director Independence
Under the Nasdaq listing standards and our Governance Guidelines, the Board must consist of a majority of independent
directors. Annually, each director completes a questionnaire designed to assist the Board in determining whether the
director is independent, and whether members of the ARC Committee and the Compensation Committee satisfy additional
Securities and Exchange Commission (“SEC”) and Nasdaq independence requirements. The Board has adopted guidelines
setting forth certain categories of transactions, relationships and arrangements that it has deemed immaterial for purposes
of determining independence.
Based on the review and recommendation by the Governance Committee, the Board analyzed the independence of each
director and has determined that Mses. Johnson, McGovern, Messemer and Sarnoff and Messrs. Adkins, Christodoro,
Donahoe, Dorman, Lores, Moffett and Yeary meet the standards of independence under the Nasdaq listing standards and
the Governance Guidelines, including that each director is free of any relationship that would interfere with their individual
exercise of independent judgment.
Our Governance Guidelines prohibit Company directors from serving as a director or as an officer of another company that
may cause a significant conflict of interest. Our Governance Guidelines also provide that any director who has previously
been determined to be independent must inform the Board Chair and our Corporate Secretary of any significant change in
personal circumstances that may cause their status as an independent director to change, including a change in principal
occupation, change in professional roles and responsibilities, status as a member of the board of another public company
or retirement, in each case including changes that may affect the continued appropriateness of Board or committee
membership. In such situations, the Governance Committee makes a recommendation to the Board on the continued
appropriateness of such director’s Board or committee membership(s).
Board Committees
The Board has three principal standing committees: the ARC Committee, the Compensation Committee and the
Governance Committee. Each committee has a written charter that addresses, among other matters, the committee’s
purposes and policy, composition and organization, duties and responsibilities and meetings. The committee charters are
available in the governance section of our Investor Relations website at https://investor.pypl.com/governance. Each
charter permits the applicable committee, in its discretion, to delegate all or a portion of its duties and responsibilities to a
subcommittee or any member of the committee. Subject to applicable law, listing standards and the terms of its charter,
the Compensation Committee also may delegate duties and responsibilities to any officer(s) of the Company.
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• 2024 Proxy Statement
Below is a description of each principal committee of the Board.
ARC Committee
DAVID M. MOFFETT
Chair
CORPORATE GOVERNANCE
Board Committees
Committee Meetings in 2023: 9
Other Members:
Primary Responsibilities
Provide assistance and guidance to the Board in fulfilling its oversight responsibilities with respect to:
• PayPal’s corporate accounting and financial reporting practices and the audit of PayPal’s financial statements;
Rodney C. Adkins
• The independent auditor, including their qualifications and independence;
• The performance of PayPal’s internal audit function and independent auditor;
• The quality and integrity of PayPal’s financial statements and reports;
• PayPal’s overall risk framework and risk appetite framework, including risks associated with cybersecurity,
information security and privacy; and
• PayPal’s compliance with legal and regulatory obligations.
Belinda J. Johnson
The ARC Committee is also responsible for reviewing and approving all audit engagement fees and terms, as
well as all non-audit engagements, with the independent auditor and producing the Audit Committee Report for
inclusion in our proxy statement.
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Independence
The Board has determined that each member of the ARC Committee meets the independence requirements of
Nasdaq and the SEC and otherwise satisfies the requirements for audit committee service imposed by the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board has also determined that each member of the ARC Committee is financially literate, and that
Mr. Moffett and Ms. Messemer satisfy the requirements for an “audit committee financial expert” set forth in the
SEC rules.
Enrique Lores
Deborah M.
Messemer
Ann M. Sarnoff
Frank D. Yeary
• 2024 Proxy Statement
25
CORPORATE GOVERNANCE
Board Committees
Compensation Committee
DAVID W. DORMAN
Chair
Committee Meetings in 2023: 5
Other Members:
Primary Responsibilities
• Review and approve the overall strategy for employee compensation and all compensation programs
applicable to executive officers and non-employee directors;
Jonathan
Christodoro
• Annually review and approve corporate goals and objectives relevant to the compensation of the CEO and
evaluate the CEO’s performance;
• Review, determine and approve the compensation for the CEO and our other executive officers;
• Review and discuss the Compensation Discussion and Analysis contained in our proxy statement and prepare
the Compensation Committee Report for inclusion in our proxy statement and our Annual Report on Form 10-K;
• Oversee and monitor the Company’s strategies and responsibilities related to human capital management,
including belonging, pay equity efforts and corporate culture;
• Review and approve, and oversee and monitor compliance with, policies with respect to the recovery or
Gail J. McGovern
“clawback” of compensation;
• Review and consider the results of any advisory stockholder votes on named executive officer compensation;
and
• Oversee and monitor compliance with the Company’s stock ownership guidelines applicable to
non-employee directors and executive officers.
Independence
The Board has determined that each member of the Compensation Committee meets the independence
requirements of Nasdaq and the SEC. Additionally, the Compensation Committee assesses on an annual basis
the independence of its compensation consultant and other compensation advisers. Additional information
regarding the role of the Compensation Committee in compensation matters, including the role of consultants, is
provided in the Compensation Discussion and Analysis section of this proxy statement.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or has been an employee of PayPal. None of our
executive officers served on the board of directors or compensation committee of another entity that has an
executive officer serving on the Board or the Compensation Committee.
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• 2024 Proxy Statement
Governance Committee
GAIL J. MCGOVERN
Chair
CORPORATE GOVERNANCE
Board Committees
Committee Meetings in 2023: 4
Other Members:
Primary Responsibilities
• Make recommendations to the Board as to the appropriate size of the Board or any Board committee;
Rodney C. Adkins
Jonathan
Christodoro
• Identify individuals believed to be qualified to become Board members;
• Make recommendations to the Board on potential Board and Board committee members, whether as a result
of any vacancy or as part of the annual election cycle, taking into consideration the criteria set forth in the
“Board Member Criteria” and “Guiding Principles for Board Development and Succession” sections of the
Governance Guidelines;
• Review and, if necessary, update, our Governance Guidelines at least annually;
• Establish procedures to exercise oversight of the evaluation of the Board;
• Exercise general oversight of the Company’s management of topics related to corporate sustainability and
impact (“CSI”) matters, including overall CSI strategy, risk and opportunities, stakeholder engagement and
reporting programs, initiatives in social innovation and environmental sustainability and the Company’s Global
Impact Report; and
• Review and discuss with management, at least annually, PayPal’s overall approach to, and guidelines and
policies for, political activities and expenditures to ensure consistency with PayPal’s business objectives and
public policy priorities.
David W. Dorman
Independence
The Board has determined that each member of the Governance Committee meets the independence
requirements of Nasdaq.
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CORPORATE GOVERNANCE
Board Oversight
Board Oversight
The Board is responsible for providing advice and oversight of PayPal’s strategic and operational direction and overseeing
its executive management to support the long-term interests of the Company and its stockholders.
Board of Directors
ARC Committee
Compensation Committee
Governance Committee
• Oversees the Company’s risk
and compliance management
program, including risks
associated with privacy and
cybersecurity matters
• Oversees financial reporting
• Maintains an appropriate
relationship with the external
auditor
• Monitors internal controls
• Oversees the Company’s
• Oversees and reviews the risks
compensation policies, plans
and programs and regulatory
compliance
• Oversees strategies and
responsibilities related to
human capital (global talent)
management, including
belonging, pay equity efforts and
corporate culture
• Oversees executive succession
planning
associated with our overall corporate
governance framework
• Exercises focused oversight of
PayPal’s management of corporate
sustainability and impact (”CSI”)
matters, including overall CSI strategy,
risks and opportunities, stakeholder
engagement and programs and
initiatives in social innovation and
environmental sustainability
• Oversees political activities
and expenditures
Management
Management regularly reviews and discusses with the ARC Committee the overall effectiveness of, and ongoing enhancements to,
the Enterprise Risk and Compliance Management (“ERCM”) Program.
Enterprise Risk Management Committee
Oversees the implementation and execution of the ERCM Program, which sets the Company’s programmatic approach
to identifying, measuring, managing, monitoring and reporting key risks facing the Company.
Strategic Oversight
One of the Board’s primary responsibilities is overseeing management’s establishment and execution of the Company’s
strategy. The Board works with management to respond to the dynamic, competitive environment in which PayPal
operates. At least quarterly, the CEO and executive management provide detailed business and strategy updates to the
Board, and at least annually, the Board conducts an in-depth review of the Company’s overall strategy. In these meetings,
the Board engages with executive management and other business leaders regarding:
• business objectives;
• the competitive landscape;
• the Company’s budget, capital allocation plan and financial and operating performance;
• product and technology updates;
• potential acquisitions, dispositions, strategic investments and partnerships;
• information security and data privacy;
• risk management and compliance reviews; and
• other special topics.
The Board looks to the expertise of its committees to inform strategic oversight in their areas of responsibility.
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• 2024 Proxy Statement
CORPORATE GOVERNANCE
Board Oversight
Risk Oversight
PayPal operates in approximately 200 markets globally in a rapidly evolving environment characterized by a heightened
regulatory focus on all aspects of the payments industry. Accordingly, our business is subject to the risks inherent in the
payments industry generally. A sound risk management and oversight program is critical to the successful operation of our
business and the protection of our Company, customers, employees and other stakeholders. Management is responsible
for assessing and managing risk and views it as a top priority. The Board is responsible for overall risk assessment and
management oversight and executes its responsibility as a group and through its committees, which report at least
quarterly to the full Board. The Board and its Committees consult with external advisors, including outside counsel,
consultants, auditors and industry experts, to help ensure that they are well informed about the risks and opportunities
pertinent to the Company.
In addition to their ongoing oversight responsibilities, throughout 2023, the Board and its committees regularly reviewed
and discussed with management the implications of geopolitical instability, supply chain shortages, higher inflation and
rising interest rates and macroeconomic uncertainty. As part of these reviews, the Board considered management’s
ongoing strategies and initiatives to respond to and mitigate the adverse effects of geopolitical instability and
macroeconomic conditions.
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ARC Committee
The ARC Committee is primarily responsible for the oversight of the Company’s risk framework and reports to the full Board
on the following matters on a regular basis:
Financial and Audit Risk: Meets with the independent auditor, Chief Financial Officer, Chief Accounting Officer and other
members of the management team quarterly and as needed, including in executive sessions, to review the following:
• quality and integrity of the Company’s financial statements and reports;
• accounting and financial reporting practices;
• disclosure controls and procedures;
• audit of the Company’s financial statements;
• selection, qualifications, independence and performance of the independent auditor; and
• effect of regulatory and accounting initiatives and application of new accounting standards.
Enterprise-Wide Risk and Compliance: Periodically reviews and approves the framework for the ERCM Program and other
key risk management policies. Meets with the Chief Risk and Compliance Officer, quarterly and as needed, including in
executive sessions, to review and discuss the following:
• the Company’s overall risk framework and risk appetite framework, including policies and practices established by
management to identify, assess, measure and manage key current and emerging risks facing the Company, including
regulatory and financial crimes compliance, technology (including cybersecurity, information security and privacy),
operational, portfolio, capital, strategic, extended enterprise, third-party and reputational risks;
• compliance risks, the level of compliance risk, management actions on significant compliance matters and reports
concerning the Company’s compliance with applicable laws and regulations; and
• periodic reports from the Chief Risk and Compliance Officer and other members of management regarding ongoing
enhancements to, and overall effectiveness of, the Company’s risk management program, including actions taken by
management to address risks, the progress of key risk initiatives and the implementation of risk management
enhancements.
Internal Audit: Meets with the Vice President, Internal Audit, quarterly and as needed, including in executive sessions, to
discuss the performance of the Company’s internal audit function and the independent auditor. Reviews and approves the
annual risk-based audit plan and any significant changes to such plan.
Legal and Regulatory: Meets with the General Counsel and the Chief Risk and Compliance Officer, quarterly and as
needed, including in executive sessions, to review significant legal, regulatory or compliance matters that could have a
material impact on our financial statements, business or compliance policies.
Compensation Committee
The Compensation Committee is primarily responsible for the following areas and reports to the full Board on these matters
on a regular basis:
• oversees and reviews the risks associated with our compensation policies, plans and programs;
• oversees regulatory compliance with respect to compensation matters;
• 2024 Proxy Statement
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CORPORATE GOVERNANCE
Board Oversight
• oversees and monitors the Company’s strategies related to talent management, including the recruitment and retention of
key talent, pay equity, corporate culture, diversity, inclusion, equity and belonging and other key human capital management
programs and initiatives; and
• oversees executive succession planning.
Governance Committee
The Governance Committee is primarily responsible for the following areas and reports to the full Board on these matters
on a regular basis:
• oversees and reviews the risks associated with our overall corporate governance framework, principles, policies and
practices;
• oversees CSI matters generally, including overall CSI strategy, risks and opportunities, stakeholder engagement and
reporting, programs and initiatives in social innovation and environmental sustainability and the Company’s annual
Global Impact Report; and
• oversees political activities and expenditures.
Management’s Risk and Compliance Framework
Management regularly reviews and discusses with the ARC Committee the overall effectiveness of, and ongoing
enhancements to, the ERCM Program.
Management’s Risk and Compliance Framework
Management’s risk and compliance framework is designed to enable the ARC Committee to effectively oversee the Company’s
risk management practices and capabilities.
• The Company’s risk management committees, including the Enterprise Risk Management Committee (“ERM Committee”),
oversee the implementation and execution of the ERCM Program.
• The ERM Committee is the highest-level risk management committee, is chaired by PayPal’s Chief Risk and Compliance
Officer and reviews periodic reports from management regarding the effectiveness of the ERCM Program.
• The ERCM Program’s objectives are to identify, measure, manage, monitor and report key risk factors facing our Company
including:
— Financial crime and regulatory compliance risk
— Operational, portfolio and capital risk
— Technology, cybersecurity and privacy risk
— Strategic, reputational and third-party risk
• Key corporate sustainability and impact (”CSI”) considerations are integrated into our ERCM Program and emerging CSI trends
are regularly reported to a subcommittee of the ERM Committee.
Effectively managing privacy and cybersecurity risks is paramount
and an integral component of the ERCM Program
Our Global Privacy Program is based on eight data
management principles, including choice and
consent, notice and transparency, security and data lifecycle
management, that serve as the basis for enterprise-wide
standards, programs and trainings.
Our Information Security Program is designed to
enable robust cybersecurity management across our
global enterprise and support the Company in identifying,
protecting, detecting, responding to and recovering from
cybersecurity threats.
— Our Global Privacy and Data Management Team, led by our Chief
Privacy Officer and Global Head of Data Management, collaborates
with dedicated teams integrated throughout our business to
foster a “Data Hygiene by Default” and “Privacy by Design” culture
throughout the Company.
— This includes mandatory employee and contractor training and
education, issue management and privacy risk assessments.
— The risk-driven program, led by our Chief Information Security
Officer, is ISO 27001 certified and aligned with other industry
frameworks and best practices.
— We institute 24/7 monitoring and measurement through our PayPal
Command Center and PayPal Cyber Defense Center, require
employee and contractor training and promote regular cybersecurity
awareness and educational programs for our employees, customers
and broader ecosystem.
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• 2024 Proxy Statement
CORPORATE GOVERNANCE
Executive Succession Planning
Executive Succession Planning
The Board recognizes the importance of effective executive leadership to PayPal’s success and reviews executive
succession planning at least annually. As part of this process, the Board reviews and discusses the capabilities of our
executive management, as well as succession planning and potential successors for the CEO and our other executive
officers. The process includes consideration of organizational and operational needs, competitive challenges, leadership/
management potential and development and emergency situations.
In February 2023, Dan Schulman announced his intention to retire from the role of President and CEO at year-end. The
Board conducted a rigorous search process to identify the best successor for Mr. Schulman. To that end, the Board formed
an ad hoc CEO search committee, composed of Ms. Sarnoff and Messrs. Donahoe, Dorman and Lores, to help spearhead
the Board’s search for a new CEO and President, and retained a search firm to assist in identifying and evaluating internal
and external candidates. As part of this process, the Board took into consideration direct feedback from investors regarding
the desired background, skills and expertise of PayPal’s next CEO. Following a thorough and robust search process, the
Board selected Alex Chriss as PayPal’s new President and CEO, who joined the Company in September 2023. We
subsequently reconstituted the senior leadership team by bringing in new leadership talent including a new Chief Financial
Officer and Chief People Officer, new heads of our Small Business & Financial Services and Consumer Groups, and a new
President, Global Markets, in late 2023 and early 2024.
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New Director to be Appointed After Annual Meeting
The Company has announced that the Board intends to appoint Carmine Di Sibio as an independent director of the
Company effective July 1, 2024. Mr. Di Sibio is currently Global Chair and CEO of EY (“EY”), and has previously announced
that he will retire from EY in June 2024. In accordance with EY policy and practice, he is only able to join a public company
board upon to his retirement. Accordingly, Mr. Di Sibio is not a director nominee in this Proxy Statement. We are providing
this disclosure to be transparent with our stockholders and to highlight our continued focus on board refreshment.
Mr. Di Sibio has been with EY, one of the largest professional services organizations in the world with more than 380,000
people in 150 countries, since 1985. He was named Global Chairman and CEO in 2019. Prior to being elected to his current
post, Mr. Di Sibio served as EY Global Managing Partner – Client Service. Mr. Di Sibio has spearheaded EY’s innovation
efforts, including helping to create the Global Innovation team to redefine how EY uses technology to both transform
existing services and create new solutions. Since joining EY in 1985, he has served as an Advisory and Assurance partner
for many of the firm’s largest financial services accounts. He held several leadership positions, including Chair of the Global
Financial Services Markets Executive and Regional Managing Partner for the Americas Financial Services Organization
(FSO), where he started EY Risk Management and Regulatory Services.
Director Orientation and Continuing Education
Upon joining the Board, directors participate in a robust orientation program to help ensure that they have the tools,
resources and knowledge to provide effective oversight of the Company and management. Our director orientation
program familiarizes new directors with the Company’s business, strategy, operations and culture, among other areas, and
assists them in developing the skills and knowledge required to serve on the Board and any assigned Board committees.
New directors meet with members of our executive leadership team and other key leaders to gain a deeper understanding
of the Company’s business and operations. Directors regularly engage, formally and informally, with other directors and
senior leaders to share ideas, build stronger working relationships, gain broader perspectives and strengthen their working
knowledge of the Company’s business and strategies. From time to time, management provides, or invites outside experts
to provide, educational briefings to the Board on business, corporate governance, regulatory and compliance matters and
other topics to help enhance skills and knowledge relevant to their service as a PayPal director. In addition, directors are
encouraged to attend accredited director education programs at the Company’s expense.
• 2024 Proxy Statement
31
CORPORATE GOVERNANCE
Board and Committee Evaluations
Board and Committee Evaluations
Our Board is committed to continuous corporate governance improvement, and the Board and committee self-evaluations
play a critical role in ensuring the overall effectiveness of our Board and each committee. The Board and its principal
committees perform an annual self-evaluation to assess their performance and effectiveness and to identify opportunities
to improve. As appropriate, the self-evaluations result in updates or changes to our practices as well as commitments to
continue existing practices that our directors believe contribute positively to the effective functioning of our Board and its
committees. The Governance Committee annually reviews the self-evaluation process to ensure it is operating effectively.
Complete
Questionnaire
Participate in One-
on-One Interview
Review
Responses
Each director completes
a written questionnaire
that addresses strategic
oversight, Board/
committee structure
and composition
and interactions with,
and evaluation of,
management and Board
processes.
A one-on-one interview
is conducted with
each director to
review the Board’s
and its committees’
performance over the
prior year and identify
opportunities to improve
Board effectiveness
going forward.
The questionnaires
and anonymized
interview responses are
reviewed with the full
Board, and committee
self-evaluations are
reviewed by each
committee, in each
case in executive
session.
Incorporate
Feedback
Feedback from the
evaluations informs
Board and committee
enhancements.
Board and Committee Meetings and Attendance
Our Board typically holds at least four regularly scheduled meetings each year, in addition to special meetings scheduled
as appropriate. At each regularly scheduled Board meeting, a member of each principal Board committee reports on any
significant matters addressed by the committee since the last regular meeting, and the independent directors have the
opportunity to meet in executive session without management or the other directors present. The Board expects that its
members will rigorously prepare for, attend and participate in all Board and applicable Board committee meetings.
Our Board met 10 times during 2023. Each director nominee who served in 2023 attended at least 90% of all our Board
meetings and meetings of the Board committees on which they served.
All directors are encouraged to attend the Annual Meeting. Last year, 83% of the directors serving at the time of our 2023
Annual Meeting of Stockholders attended that meeting.
Outside Advisors
The Board may retain outside legal, financial or other advisors as it deems necessary or appropriate at the Company’s
expense and without obtaining management’s consent. Each principal Board committee may also retain outside legal,
financial or other advisors as it deems necessary, at the Company’s expense and without obtaining the Board’s or
management’s consent.
Stockholder Engagement
We recognize the value of a robust stockholder outreach program. We engage in regular, constructive dialogue with our
stockholders on matters relevant to our business, including corporate governance, corporate sustainability and impact
issues and executive compensation, so we can better understand their views and interests and share our perspectives on
these important subjects.
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• 2024 Proxy Statement
In addition to the outreach conducted in the weeks leading up to our 2023 Annual Meeting of Stockholders, we also
reached out to our investors to solicit feedback following that meeting. In 2023, following our Annual Meeting of
Stockholders, we contacted investors representing approximately 50% of our common stock, and holders of approximately
19% of our common stock engaged with us.
CORPORATE GOVERNANCE
Stockholder Engagement
Host Annual Meeting
• Engage in pre-Annual Meeting
stockholder outreach to
understand stockholder views
on proxy matters, respond to
questions and solicit support for
Board recommendations
• Hold virtual Annual Meeting
• Post Annual Meeting Q&A on
our Investor Relations website
following the Annual Meeting
Consider Meeting Results
• Discuss Annual Meeting voting
results with the Governance
Committee and the Board, as
appropriate
• Plan stockholder outreach
campaign for targeted and
responsive engagement and
prioritize focus areas
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Assess Stockholder
Feedback
• Review stockholder feedback
with relevant Committees and
the Board, as appropriate
• Consider enhancements to
the Company’s corporate
governance, CSI and executive
compensation practices and
disclosures, when warranted
• Discuss stockholder proposals
with proponents
Conduct Stockholder
Outreach
• Engage in comprehensive
stockholder outreach to gather
feedback following the Annual
Meeting
• Discuss developments in the
Company’s business and
strategy, Board composition,
corporate governance, corporate
sustainability and impact
(”CSI”) matters, and executive
compensation
•
Explore new topics of interest
for the upcoming year
• 2024 Proxy Statement
33
CORPORATE GOVERNANCE
Stockholder Engagement
The table below provides an overview of the key areas of stockholder focus covered during our stockholder outreach
meetings following our 2023 Annual Meeting. In these engagements, investors noted that they are exploring these focus
areas with companies across their portfolio and are generally supportive of our current practices. As such, through these
conversations stockholders sought to better understand our approach to these topics, rather than to suggest substantial
changes to our existing practices.
Key Topic
Board Composition
and Succession
Planning
Risk Management
and Oversight
Executive
Compensation
CSI Matters
Area of Stockholder Focus Highlights of our Practices
• Board refreshment and skillsets in
alignment with our innovation and
product-focused strategy;
• The Governance Committee regularly oversees and plans for director succession
and Board refreshment, and the full Board oversees executive succession
planning. The Board reviews executive succession planning at least annually.
• Since 2017, we have added five directors to the Board, each of whom enhances
the Board’s gender and ethnic diversity and possess a strong mix of skills,
qualifications, backgrounds and experience that has contributed to and enhanced
the overall effectiveness of the Board.
• Board and executive succession
planning;
• Orderly executive leadership
transitions
• Board and ARC Committee risk
• The Board is committed to robust and effective oversight of our ERCM Program.
oversight;
• Governance structure and
program management of
cybersecurity, data privacy and
data management;
• Responsible AI practices;
• Administration of user policies;
• Selection of appropriate
performance metrics for
evolving executive compensation
program;
• Strategic new hire
compensation tied to long-term
performance criteria;
• Equity compensation as a tool for
talent acquisition and retention;
• Effective incorporation of key
corporate sustainability and
impact (“CSI”) considerations,
including Belonging
considerations, into executive
compensation
• Board oversight of CSI strategy;
• Global talent and Belonging
strategies including talent
recruitment and retention;
• Climate strategy and reporting
under established frameworks;
• Financial inclusion initiatives;
• Employee wellness
Each of the Board committees has oversight responsibility for clearly defined risks
outlined in each of their respective committee charters. The ARC Committee
oversees and reviews our overall risk management framework and reports to the
full Board on risk matters, including cybersecurity and data privacy, on a regular
basis.
• We are committed to preserving the integrity of our platform and to ensuring the
safety, security and privacy of our customers and others.
• Managing key risks, including cybersecurity and data privacy, is a vital component
of our enterprise-wide ERCM Program and includes oversight and management
by our Chief Information Security Officer and Chief Privacy Officer.
• We focus on integrating appropriate data management and security controls
across our business, conduct privacy impact assessments, certify our information
security management system to ISO 27001 and require mandatory employee and
contractor training.
• The Compensation Committee evaluates the appropriateness of the Company’s
compensation-related performance metrics at least annually, taking into
consideration the Company’s overall strategy and stockholder feedback. The
Committee made enhancements to our incentive programs, beginning in 2024, to
strengthen pay for performance alignment, increase the focus on profitable
growth, reduce burn rate and address historical challenges experienced in
connection with setting long-term performance goals (see CD&A for details).
• In structuring the compensation for our new executives, the Compensation
Committee focused on creating attractive compensation opportunities that would
induce talented leaders to join PayPal, while also providing the appropriate
incentives to drive long-term value creation and align our new executive’s
interests with those of our stockholders.
• We continued our multi-year process to incorporate Belonging considerations
into our executive compensation program, and assessed the actions taken by our
leaders intended to drive measurable outcomes over time, including increasing
the representation of women and minorities within our leadership and general
employee population.
• We continued to enhance our non-financial reporting efforts and aligned our CSI
disclosures with established frameworks, including IFRS Foundation’s
Sustainability Accounting Standards Board (“SASB”) standards and Task Force on
Climate-Related Financial Disclosures (“TCFD”) recommendations.
• We made progress on our 2025 science-based targets to reduce our greenhouse
gas emissions and encourage climate actions across our supply chain, important
steps toward our long-term goal to reach net-zero GHG emissions by 2040.
• We take a holistic approach to global talent management in an evolving
workplace, including focusing on promoting a culture of flexibility and community,
enhancing our employee total wellness initiatives and ensuring alignment of our
global talent and Belonging strategies.
Code of Business Conduct and Ethics
Our credibility and reputation depend upon the good judgment, ethical standards and personal integrity of each director,
executive officer and employee. PayPal’s Code of Business Conduct and Ethics (“Code of Conduct”) requires that our
directors, executive officers and all other employees disclose actual or potential conflicts of interest and recuse
34
• 2024 Proxy Statement
CORPORATE GOVERNANCE
Stockholder Engagement
themselves from related decisions. Directors, executive officers and other employees are expected to avoid any activity
that is or has the appearance of being a conflict of interest with the Company. This includes refraining from engaging in
activities that compete with, or are adverse to, the Company, or that interfere with the proper performance of an individual’s
duties or responsibilities to the Company. In addition, our Code of Conduct prohibits the use of confidential company
information, company assets or position at the Company for personal gain.
We regularly review our Code of Conduct and related policies to ensure that they provide clear guidance. Additionally, to
foster a strong culture of compliance and ethics, we conduct local outreach and awareness sessions, as well as annual risk
and compliance training for all employees and contractors, which covers areas such as our Code of Conduct, anti-money
laundering, information protection awareness, data privacy, safety and security and sexual harassment prevention. In
addition, upon joining PayPal and annually thereafter, our employees must certify that they understand and will comply with
our Code of Conduct. In 2023, PayPal achieved 100% completion for its annual risk and compliance training for the eighth
consecutive year.
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Concerns about accounting or auditing matters or possible violations of our Code of Conduct should be reported under
the procedures outlined in our Code of Conduct. We also provide a global Integrity Helpline, which is available 24 hours a
day, seven days a week in multiple languages. Reports to the Integrity Helpline are confidential and can be made
anonymously.
Governance Guidelines of the Board of Directors
The Board has adopted Governance Guidelines to serve as a framework to aid the Board in effectively conducting its
business. The Governance Guidelines cover many of the policies and practices discussed in this proxy statement,
including Board member criteria, Board composition, leadership, development and succession, expectations for meeting
attendance and the roles of the Board’s standing committees. The Governance Committee reviews the Governance
Guidelines each year and recommends changes to the Board for consideration and approval as necessary or appropriate
in response to changing regulatory requirements, evolving best practices and other considerations.
Where to Find Our Governance Documents
Our Governance Guidelines, charters of our principal Board committees, our Code of Conduct and other key corporate
governance documents and materials are available on the governance section of our Investor Relations website at
https://investor.pypl.com/governance/governance-overview/.
Related Person Transactions
The Board has adopted a written policy governing the review and approval of related person transactions. The policy,
which is administered by the ARC Committee, applies to any transaction or series of transactions in which (1) the Company
or its consolidated subsidiary is a participant, (2) the amount involved is or is reasonably expected to be more than
$120,000 and (3) a related person under the policy has a direct or indirect material interest. The policy defines a “related
person” to include directors, director nominees, executive officers, beneficial owners of more than 5% of PayPal’s
outstanding common stock or an immediate family member of any of these persons.
Under the policy, transactions requiring review are referred to the ARC Committee for pre-approval, ratification or other
action. Management will provide the ARC Committee with a description of any related-person transaction proposed to be
approved or ratified, including the terms of the transaction, the business purpose of the transaction and the benefits to
PayPal and to the relevant related person. In determining whether to approve or ratify a related-person transaction, the ARC
Committee will consider the following factors:
• whether the terms of the transaction are fair to the Company, and at least as favorable to the Company as they would be
if the transaction did not involve a related person;
• whether there are demonstrable business reasons for the Company to enter into the transaction;
• whether the transaction would impair the independence of an outside director under the Company’s director
independence standards; and
• whether the transaction would present an improper conflict of interest for any director or executive officer, taking into
account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of the
related person’s interest in the transaction, the ongoing nature of any proposed relationship and any other factors the
ARC Committee deems relevant.
• 2024 Proxy Statement
35
CORPORATE GOVERNANCE
Related Person Transactions
The Company also has practices that address potential conflicts in circumstances where a non-employee director is a
control person of an investment fund that desires to make an investment in or acquire a company that may compete with
one of the Company’s businesses. Under those circumstances, the director is required to notify the Company’s CEO,
General Counsel and Corporate Secretary of the proposed transaction, who then assess the nature and degree to which
the investee company is competitive with one of the Company’s businesses, as well as the potential overlaps between the
Company and the investee company. If it is determined that the competitive situation and potential overlaps between
PayPal and the investee company are acceptable, the Company may approve the transaction, conditioned upon the
director agreeing to certain limitations. Such limitations may include refraining from joining the board of directors of, serving
as an advisor to or being directly involved in the business of the investee company; not conveying any confidential or
proprietary information regarding the investee company to the Company or regarding the Company’s line of business with
which the investee competes to the investee company; abstaining from being the primary decision-maker for the
investment fund with respect to the investee company; recusing themselves from portions of investee company meetings
that cover confidential competitive information reasonably pertinent to the Company’s lines of business with which the
investee company competes; and agreeing to any additional limitations the CEO or General Counsel deems reasonably
necessary or appropriate as circumstances change. All transactions by investment funds in which a non-employee director
is a control person also remain subject in all respects to the Board’s written policy for the review of related person
transactions, discussed above.
The ARC Committee charter requires it to review and approve all related person transactions that are required to be
disclosed under Item 404(a) of Regulation S-K. There were no transactions required to be reported in this proxy statement
since the beginning of fiscal year 2023, where our written related-person transaction policy did not require review, approval
or ratification or where this policy was not followed.
36
• 2024 Proxy Statement
DIRECTOR COMPENSATION
Director Compensation
The Compensation Committee is responsible for reviewing and making recommendations to the Board regarding
compensation paid to non-employee directors for their Board and Board committee service. On an annual basis, the
Compensation Committee reviews the non-employee director compensation program, receiving input from the
Compensation Committee’s independent compensation consultant regarding market practices and the competitiveness of
the non-employee director compensation program in relation to the general market and the Company’s peer group.
2023 Director Compensation
In late 2022, the Compensation Committee, after consultation with its independent compensation consultant, determined
that the Company’s director compensation program continued to be aligned with market practices. Accordingly, no
changes were made to the director compensation program for 2023.
Each non-employee director of the Company was provided the following annual retainers following the first trading day
after January 1, 2023:
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2023 Annual Retainers:
All Non-Employee Directors
Non-Executive Board Chair
Lead Independent Director
ARC Committee Chair
Compensation Committee Chair
Governance Committee Chair
ARC Committee Member
Compensation Committee Member
Governance Committee Member
$80,000/year
$87,500/year
$75,000/year
$40,000/year
$25,000/year
$20,000/year
$20,000/year
$18,000/year
$10,000/year
A non-employee director who served as the Non-Executive Board Chair and/or as the chair of a committee is entitled to
receive the Non-Executive Board Chair annual retainer and/or committee chair annual retainer, as applicable, in addition to
the non-employee director annual retainer. Board committee chairs, however, are not entitled to receive the committee
member annual retainer in addition to the committee chair annual retainer.
A non-employee director could elect to receive 100% of their annual retainer(s) in fully vested stock awards of PayPal
common stock having a grant date fair value equal to the annual retainer(s), in lieu of cash.
If, following the annual retainer payment date, a non-employee director is appointed or elected to serve as a member of
the Board (or appointed to serve as a member of a committee or as a chair of a committee for which they were not a
member or chair prior to such appointment), the non-employee director receives a prorated annual retainer, based on the
number of days from the appointment or election date to December 31 of that year.
2023 Equity Awards
In addition to the annual retainers, all non-employee directors received the following fully vested awards of PayPal
common stock following the 2023 Annual Meeting of Stockholders.
2023 Equity Awards:
All Non-Employee Directors
Non-Executive Board Chair
$275,000 in PayPal common stock
Additional $87,500 in PayPal common stock
The number of shares of PayPal common stock subject to the equity award is determined by dividing the value of the
annual equity award by the closing price of our common stock on the date of the annual stockholders meeting, rounded up
to the nearest whole share.
• 2024 Proxy Statement
37
DIRECTOR COMPENSATION
2023 Director Compensation
Deferred Compensation
Our non-employee directors are eligible to defer 5% to 100% of their annual retainers and equity awards pursuant to the
PayPal Holdings, Inc. Deferred Compensation Plan (“DCP”), our non-qualified deferred compensation plan. The DCP allows
participants to set aside tax-deferred amounts. The investment return on any deferred cash amounts is linked to the
performance of a range of market-based investment choices made available pursuant to the DCP, and the investment
return on any deferred equity awards is linked to the performance of PayPal common stock. Our non-employee directors
can elect to begin distributions from the DCP following the termination of their services to PayPal or in a specified year
(provided that a director’s DCP account will be distributed if the director’s service on the Board terminates prior to the
specified year). Our non-employee directors can elect to receive their distributions as either a lump sum or annual
installments over a period ranging from two to 15 years.
Director Stock Ownership Guidelines
Our non-employee directors are subject to rigorous stock ownership guidelines. Each non-employee director is required to
hold an amount of PayPal common stock valued at five times the annual retainer for all non-employee directors within five
years of joining the Board and is expected to continuously own sufficient shares to meet the stock ownership guidelines. As
of the Record Date, each non-employee director met the stock ownership guidelines.
Shares that count toward satisfaction of the stock ownership guidelines include the following:
• shares owned outright by the director or their immediate family members residing in the same household;
• shares held in trusts, limited liability companies, or similar entities for the benefit of the director or their immediate family
members; and
• deferred shares, vested deferred stock units, deferred restricted stock units, or deferred performance stock units that
may only be settled in shares of our common stock.
Our stock ownership guidelines are available on the governance section of our Investor Relations website at
https://investor.pypl.com/governance/governance-overview/.
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• 2024 Proxy Statement
2023 Director Compensation Table
The following table summarizes the total compensation earned by or paid to our non-employee directors for the fiscal year
ended December 31, 2023.
DIRECTOR COMPENSATION
2023 Director Compensation Table
Name
Rodney C. Adkins
Jonathan Christodoro
John J. Donahoe
David W. Dorman
Belinda J. Johnson
Enrique Lores
Gail J. McGovern
Debbie M. Messemer
David M. Moffett
Ann M. Sarnoff
Frank D. Yeary
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Fees Earned or
Paid in Cash1 ($)
Stock
Awards2 ($)
All Other
Compensation ($)
Total3 ($)
110,000
108,000
167,507
115,002
100,012
100,012
118,000
100,000
120,000
100,012
100,012
275,010
275,010
362,519
275,010
275,010
275,010
275,010
275,010
275,010
275,010
275,010
—
—
—
—
—
—
—
—
—
—
—
385,010
383,010
530,025
390,012
375,022
375,022
393,010
375,010
395,010
375,022
375,022
1
The amounts reported in the Fees Earned or Paid in Cash column reflect the annual cash retainer amounts earned by each non-employee director in 2023, which includes annual
retainer amounts for which the following directors elected to receive fully vested shares of PayPal common stock in lieu of cash:
Name
John J. Donahoe
David W. Dorman
Belinda J. Johnson
Enrique Lores
Ann M. Sarnoff
Frank D. Yeary
Fees Forgone ($) Shares Received (#)
167,500
115,000
100,000
100,000
100,000
100,000
2,246
1,542
1,341
1,341
1,341
1,341
2
3
Amounts shown represent the grant date fair value of the equity awards granted on May 24, 2023 to our non-employee directors following our 2023 Annual Meeting of Stockholders,
as computed in accordance with FASB ASC Topic 718.
The amounts reported in the Fees Earned or Paid in Cash, Stock Awards and Total columns include amounts deferred under the DCP.
Name
Jonathan Christodoro
John J. Donahoe
David W. Dorman
Gail J. McGovern
David M. Moffett
Frank D. Yeary
Total DSUs Held (#) Total Options Held (#)
5,353
2,464
9,488
3,711
49,001
5,460
—
—
—
—
—
—
• 2024 Proxy Statement
39
CORPORATE SUSTAINABILITY AND IMPACT OVERSIGHT AND MANAGEMENT
Corporate Sustainability and Impact Oversight and
Management
PayPal recognizes the importance of operating our business in a responsible and sustainable manner. We believe that
effective prioritization and management of non-financial risks and opportunities are important to furthering the long-term
interests of our business and play an important role in creating value for our stockholders, customers, employees and other
stakeholders. Accordingly, we strive to maintain the highest standards of governance in these areas and provide regular,
non-financial reporting on our progress and activities.
As we continue to evolve our corporate sustainability and impact (“CSI”) efforts, we are committed to sharing progress
through subsequent reports and updates. This Corporate Sustainability and Impact Oversight and Management section is a
high-level overview of our programs and initiatives. For more in-depth information, see our latest annual Global Impact
Report available at https://investor.pypl.com/csi-strategy.
Corporate Sustainability and Impact Governance Structure
PayPal recognizes the importance of upholding our values across the organization, including by promoting diverse
viewpoints through our Board, our leadership and our workforce. Executive management is regularly engaged on PayPal’s
priority non-financial related risks and opportunities.
r i n
e
S t e
g C o m m i t t ee & Working
i v e Managem
i v e Managem
c u t
c u t
ent
ent
e
e
x
x
E
E
G
r
o
u
p
Governance
PayPal Board
of Directors
C
o
m
p
e
n
s
a
t
i
o
n
ARC
Overs i g h t
Manage m e n t
Impleme n t a t i o n
Oversight
Our Board of Directors is actively engaged on corporate
sustainability and impact (”CSI”) matters that impact business
strategy.
• Governance Committee: Oversight of PayPal’s management
of CSI topics, including overall CSI strategy, risks and
opportunities, stakeholder engagement and programs and
initiatives in social innovation and environmental sustainability
• ARC Committee: Oversight of the Company’s risk framework
and enterprise-wide compliance program, including
cybersecurity and privacy matters
• Compensation Committee: Oversight of the Company’s
strategies and responsibilities related to human capital
(global talent) management, including belonging, pay equity
efforts and corporate culture
Management
Our executive management directs and manages the execution
of our enterprise-wide CSI strategy to help ensure non-financial
risks and opportunities are appropriately integrated across the
enterprise, including through the Enterprise Risk
and Compliance Management Program (ERCM Program)
Implementation
A steering committee and cross-functional working groups with
representatives from diverse functions across the business are
responsible for overall program implementation
Our overall governance framework is designed to provide sound company oversight of CSI matters, drive Board and
management accountability and demonstrate PayPal’s commitment to transparency. The entire Board engages on CSI
matters that affect business strategy, and Board committees are responsible for oversight of specific matters. Our cross-
functional program is managed by executive leaders and implemented through guidance and direction provided by the
CSI steering committee. Representatives from the CSI steering committee brief Board committees and executive
management on CSI matters periodically and meet with a subcommittee of the ERM Committee at least annually to review
current and emerging CSI-related risk topics.
Corporate Sustainability and Impact Strategy
Our CSI strategy is an aspect of our focus on driving long-term business value and growth. We approach and manage our
key non-financial risks and opportunities across four focus areas – Responsible Business Practices, Social Innovation,
Employees & Culture and Environmental Sustainability. Reflective of our business, mission and values, this integrated
40
• 2024 Proxy Statement
CORPORATE SUSTAINABILITY AND IMPACT OVERSIGHT AND MANAGEMENT
Corporate Sustainability and Impact Strategy
approach is designed to support enterprise priorities to drive and protect brand value, manage risk effectively, demonstrate
competitive differentiation, position PayPal as an employer of choice and support future opportunities for innovation and
growth.
Non-financial Responsibilities Pillars
Responsible Business
Practices
Social
Innovation
Employees
& Culture
Environmental
Sustainability
Our commitment and
approach to operating
ethically and responsibly
Our work to realize our
mission and build a more
inclusive global economy
Our embodiment of our
core values from the
inside out
Our efforts to manage our
footprint and advance
sustainability
P
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Corporate Sustainability and Impact Significance Assessment
To help ensure our CSI strategy reflects non-financial topics most relevant to our business success and long-term growth,
PayPal periodically reviews and refreshes our CSI significance* assessment. In 2023, our annual review of our CSI topic
prioritization reaffirmed our 18 key CSI topics, including eight priority risks and opportunities that have been noted as
significant for PayPal to drive long-term business performance and impact based on stockholder and other stakeholder
feedback. The findings from our CSI significance assessment are an important input that helps inform how we strategically
deploy resources across the enterprise and refine our programs.
* As used in this proxy statement in reference to CSI matters, the term “significance” and variations thereof refer to significance within the context of our CSI strategies, activities,
progress, metrics and performance. Such term is distinct from, and does not refer to, concepts of materiality used in securities or other applicable law, and use of such term is not an
indication that PayPal deems related information to be material or important to an understanding of the business or an investment decision with respect to PayPal securities.
I
G
N
S
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N
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E
C
N
A
T
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O
P
M
I
Cybersecurity &
secure transactions
Belonging
Climate change
mitigation
Data privacy
Empowering entrepreneurs,
small businesses & nonprofits
Corporate
governance
Social product
innovation
Financial health
& inclusion
Employee wellness,
health & safety
Employee recruitment & development
Human rights
Sustainable supply
chain management
Natural resources
management
Environmental
product innovation
Community engagement
Compliant, ethical &
humane use of products
Climate change
adaptation
Business ethics
INCREASING
IMPORTANCE
)
n
r
e
c
n
o
c
r
e
d
o
h
e
k
a
t
s
l
f
o
e
e
r
g
e
D
(
e
v
i
t
c
e
p
s
r
e
P
r
e
d
o
h
e
k
a
t
S
l
l
a
n
r
e
t
x
E
PayPal Perspective (Impact on business)
CATEGORIES:
Responsible Business Practices
Social Innovation
Employees & Culture
Environmental Sustainability
• 2024 Proxy Statement
41
CORPORATE SUSTAINABILITY AND IMPACT OVERSIGHT AND MANAGEMENT
Corporate Sustainability and Impact Strategy
Corporate Sustainability and Impact Reporting Frameworks
As part of our commitment to transparency, we strive for alignment with those non-financial reporting frameworks most
applicable to our business and most important to our stakeholders. Our Global Impact Report provides specific reporting of
our CSI programs, policies and metrics mapped to Global Reporting Initiative standards and Sustainability Accounting
Standards Board standards, as applicable. We also provide climate-related disclosures in accordance with the
recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”), and seek to provide clear reporting
on associated governance, strategy, risk management and targets through our TCFD Index.
Human Capital Management
PayPal’s mission to revolutionize commerce globally guides our efforts to make the movement and management of money
as simple, secure and affordable as possible. Our business strategy is supported by our core values of Inclusion,
Innovation, Collaboration and Wellness, and advanced through our Leadership Principles, which outline a common set of
expectations for all employees.
Our Leadership Principles
Put people
first
Work
customer
back
Win
together
• Build the next generation,
unlocking their superpowers
• Provide and seek
• Focus on our customers’
greatest needs, sweating
every detail
constructive feedback – clear
is kind
• Solve with tech and
innovation
• Choose inclusion and foster
• Create simple and valuable
belonging
customer experiences
• Do the right thing
• Operate with velocity and an
ownership mindset
• Deliver great end-to-end
results
• Work as One PayPal
Integrated with Our Values: Inclusion l Innovation l Collaboration l Wellness
42
• 2024 Proxy Statement
CORPORATE SUSTAINABILITY AND IMPACT OVERSIGHT AND MANAGEMENT
Human Capital Management
Global Talent Strategy
PayPal recognizes the fundamental importance to our business of attracting, recruiting, developing and retaining diverse
talent through a comprehensive approach to managing our global talent (human capital). This approach enables us to
create innovative products and services for our customers and to serve our stockholders and other stakeholders. The
Compensation Committee oversees our approach to global talent, which is managed by our EVP, Chief People Officer, and
receives regular reports from management with respect to our global talent strategy.
We remain focused on supporting our employees across the full employee lifecycle from recruitment, onboarding, and
development to offboarding. We are focused on actively listening to our workforce, broadening our talent pipeline,
promoting the physical, mental and financial wellness of our employees and enabling flexibility and collaboration in an
evolving work environment.
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ENGAGEMENT
ATTRACT
Right people
DEVELOP
Right capabilities
MOBILE
Right workforce
REWARDS &
WELLNESS
Recruitment and selection
of talent fulfilling the
talent needs necessary
to execute on business
strategy.
Developing talent to ensure
they have the critical skills
and capabilities to excel in
current and future roles.
Aligning talent for
business growth
through internal mobility,
redeployment,
outplacement and
retirement.
Supporting talent through
an integrated approach
to financial, physical and
mental wellness and a
pay-for-performance
compensation strategy.
BELONGING
Talent Acquisition, Development & Retention
As a leading technology platform that enables digital payments and simplifies commerce experiences, we compete for
talent around the world. We are focused on creating an employee experience that actively engages our people at every
phase of their career and supports the acquisition, development and retention of top talent.
In 2023, we continued to enhance our Global Talent Acquisition strategy to create a more candidate-centric and inclusive
experience for prospective talent, while enabling efficiencies for our managers through new tools and resources. We also
implemented programs focused on inclusive hiring practices and extending our talent pipeline. In addition, we also
enhanced the learning and development opportunities available to employees, providing new resources to support
employees’ individual career paths and strengthen specialized skills development.
Employee Total Wellness
PayPal remained focused on promoting the holistic wellbeing of our employees through resources, programs and services
in support of their physical, mental and financial wellness. We aim to foster a flexible, balanced work culture, and to take a
comprehensive approach to leave and benefits.
In 2023, we continued to provide employees with benefits and resources designed to allow them to make informed
decisions about their health, including launching a healthcare concierge to help employees navigate the U.S. healthcare
system. To support employee mental health, we piloted dedicated part-time Employee Assistance Program (EAP)
counselors to support employees’ emotional wellbeing in select markets and provided resources from external partners,
such as webinars and moderated sessions, focused on targeted mental wellbeing topics.
We also continued our efforts to strengthen employee financial wellness through access to benefits, tools and trainings to
support financial planning.
Through our global community impact program, we support our employees’ individual passions and communities by
providing opportunities for volunteerism, charitable giving and other engagement programs. In 2023, employees supported
nonprofits by donating more than $4 million, including matching eligible employee donations to nonprofit organizations.
• 2024 Proxy Statement
43
CORPORATE SUSTAINABILITY AND IMPACT OVERSIGHT AND MANAGEMENT
Human Capital Management
Belonging Strategy
We are committed to fostering a culture of belonging and inclusion where employees can be their authentic selves,
enabling greater collaboration and innovation as we develop products and services to meet the needs of our diverse
customer base. We are committed to equal pay for equal work, promoting enterprise-wide inclusive learning opportunities
and further integrating Belonging considerations into our talent strategy.
Belonging
The feeling of security and support when there is
a sense of acceptance, inclusion and identity.
Diversity
Inclusion
Equity
The value we each bring
based on our individual
characteristics and traits.
It’s who we are.
Our commitment to
respect, appreciate and
value the diversity
amongst us. Inclusion
requires action.
Our established strategies,
policies and practices that
minimize barriers in the
workplace.
Our global Talent & Belonging team, in partnership with functional leadership through our Belonging Business Council, took
tangible actions toward growing our diverse workforce reflective of the merchants, consumers and communities that we
serve. In 2023, we continued to promote effective sponsorship and inclusive performance management and expanded our
enterprise sponsorship program. We also continued to incorporate Belonging considerations into the individual
performance portion of our 2023 Annual Incentive Program for our senior executives. PayPal also empowers eight
employee resource groups, which are open to all employees, to drive engagement and support our business and talent
strategies.
Our commitment is evident through diverse representation across our organization – from our Board of Directors to our
executive leadership team to our global workforce. As of March 27, 2024, 50% of our Board and 71% of our current
executive officers identified as women and/or from a diverse ethnic group. Across our workforce, we reached 55% overall
diverse workforce representation, including 43% global gender diversity and 54% U.S. ethnic diversity, as of December 31,
2023.
Additional workforce diversity metrics can be found in our public U.S. EEO-1 reports and annual Global Impact Report
available at https://about.pypl.com/values-in-action/reporting/default.aspx.
44
• 2024 Proxy Statement
STOCK OWNERSHIP INFORMATION
Stock Ownership Information
The following tables set forth certain information with respect to (1) each stockholder known to us to be the beneficial
owner of 5% or more of our common stock as of December 31, 2023, and (2) the beneficial ownership of our common
stock by each director and director nominee, by each executive officer named in the 2023 Summary Compensation Table
and by all executive officers and directors (including nominees) as a group as of the Record Date. Beneficial ownership is
determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to
securities. Unless otherwise indicated in the footnotes to these tables, the entities and individuals named in the tables have
sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws
where applicable.
P
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Y
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Five Percent Owners of Common Stock
Name and Mailing Address
The Vanguard Group1
100 Vanguard Blvd.
Malvern, PA 19355
BlackRock, Inc.2
50 Hudson Yards
New York, NY 10001
Shares Beneficially Owned
Number
Percent
90,024,391
8.35%
72,523,555
6.70%
1
2
Based solely on information on Schedule 13G/A (Amendment No. 8) filed with the SEC on February 13, 2024. The Vanguard Group and certain related entities have sole voting power
of 0 shares of the Company’s common stock, shared voting power of 1,444,322 shares of the Company’s common stock, sole dispositive power of 85,361,825 shares of the
Company’s common stock and shared dispositive power of 4,662,566 shares of the Company’s common stock.
Based solely on information on Schedule 13G/A (Amendment No. 6) filed with the SEC on January 26, 2024. BlackRock, Inc. has sole voting power of 64,471,044 shares of the
Company’s common stock and sole dispositive power of 72,523,555 shares of the Company’s common stock.
Security Ownership of Executive Officers and Directors
Shares Beneficially Owned2
Name1
Alex Chriss
Daniel H. Schulman
Jamie Miller
Blake Jorgensen
Gabrielle Rabinovitch
Peggy Alford
Michelle Gill
Aaron Karczmer
John Kim
Rodney C. Adkins
Jonathan Christodoro
John J. Donahoe
David W. Dorman
Belinda J. Johnson
Enrique J. Lores
Gail J. McGovern
Deborah M. Messemer
David M. Moffett
Ann M. Sarnoff
Frank D. Yeary
Number
8,107
646,776
—
—
85,347
45,608
—
142,422
43,624
26,460
33,259
83,553
66,405
29,298
15,768
27,758
13,976
62,805
23,650
45,760
All Directors and Executive Officers as a Group (24 Persons)
1,424,026
Percent of
Class
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
1
2
Less than one percent
c/o PayPal Holdings, Inc., 2211 North First Street, San Jose, California 95131.
Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of March 27, 2024, and RSUs that are scheduled to vest within 60 days of
March 27, 2024 are deemed to be outstanding for the purpose of computing the percentage ownership of the person holding those options or RSUs, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other person. The percentage of beneficial ownership is based on 1,052,643,337 shares of common
stock outstanding as of March 27, 2024.
• 2024 Proxy Statement
45
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information About Our Executive Officers
Diversity of Our Current Executive Officers
Did Not
Disclose
Women
71%
of our executive
officers are women
and/or from
diverse ethnic
groups*
Ethnically
Diverse
Men
Ethnically
Diverse
Women
Our executive officers are
elected annually by, and
serve at the discretion of, the
Board. The Board recognizes
that diversity of our executive
leadership is critical to strong
and effective management
of the Company.
* As of March 30, 2023
Executive Officer Biographies
ALEX CHRISS
President and Chief Executive Officer
In current position
since September 2023
Age:
46
Career Highlights
Mr. Chriss’ biography is set forth on page 17 of this proxy statement under the heading “Proposal 1: Election of Directors
– Director Biographies.”
MICHELLE GILL Š
Executive Vice President, General Manager –
Small Business & Financial Services Group
Career Highlights
In current position
since November 2023
Age:
51
Senior Vice President, QuickBooks Money Platform at Intuit from March 2023 to September 2023.
General Manager and Executive Vice President of Consumer Lending and Capital Markets at SoFi from April 2020 to
September 2022.
Chief Financial Officer of SoFi from May 2018 to April 2020.
Investment Professional at TPG Sixth Street Partners from July 2017 to April 2018.
Managing Director and Partner at Goldman Sachs from February 2003 to April 2017.
FRANK KELLER
Executive Vice President, General Manager –
Large Enterprise & Merchant Platform Group
Career Highlights
In current position
since April 2024
Age:
50
Senior Vice President, General Manager – Large Enterprise & Merchant Platform Group from November 2023 to March 2024.
Senior Vice President, General Manager Merchant and Payments at PayPal from May 2022 to October 2023.
Senior Vice President, Enterprise Solutions and Digital Commerce at PayPal from January 2021 to April 2022.
Vice President, Europe & Global Inside Sales, Global Sales Transformation Lead at PayPal from June 2019 to January
2021.
Vice President, Global Head of Consumer Segment at PayPal from July 2018 to June 2019.
Served in additional positions of increasing responsibility at PayPal from May 2011 to July 2018.
Diverse Ethnicity
Š Woman
46
• 2024 Proxy Statement
P
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A
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E
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SUZAN KEREERE Š
President, Global Markets
Career Highlights
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Executive Officer Biographies
In current position
since January 2024
Age:
58
Executive Vice President, Global Business Solutions at Fiserv from June 2021 to December 2023 and Chief Growth
Officer at Fiserv from July 2021 to November 2021.
Global Head, Merchant Sales & Acquiring at Visa from August 2018 to May 2021.
Head, Europe Merchant Sales & Acquiring at Visa from September 2017 to July 2018.
Head, Global Merchant Client Group at Visa from May 2016 to August 2017.
Served in positions of increasing responsibility at American Express from June 1996 to April 2016, including Senior
Vice President & General Manager, National Client Group, Global Merchant Services from March 2013 to April 2016;
and Senior Vice President & General Manager, Global Network Business from March 2010 to February 2013.
Member of the Board of Directors of 3M since February 2022.
JAMIE MILLER Š
Executive Vice President, Chief Financial Officer
In current position
since November 2023
Age:
55
Career Highlights
Global Chief Financial Officer of Ernst and Young from February 2023 to June 2023.
Senior Vice President, Chief Financial Officer and Head of Strategy of Cargill from June 2021 to January 2023.
Held a variety of senior positions at General Electric from April 2008 to February 2020, including Senior Vice President
and Chief Financial Officer from November 2017 to February 2020; Senior Vice President and President and CEP of GE
Transportation from October 2015 to November 2017; Senior Vice President and Chief Information Officer from April
2013 to October 2015.
Senior Vice President, Controller and Investor Relations at Anthem (formerly Wellpoint) from August 2007 to April 2008
and Lead Partner, Midwest financial services advisory practice at PricewaterhouseCoopers from 2005 to 2007
Member of the Board of Directors of Qualcomm since May 2020.
DIEGO SCOTTI
Executive Vice President, General Manager – Consumer
Group & Global Marketing and Communications
In current position
since December 2023
Age:
51
Career Highlights
Executive Vice President, Chief Marketing Officer at Verizon from October 2014 to November 2023.
Senior Vice President, Chief Marketing Officer at J.Crew from November 2011 to October 2014.
Executive Director, Marketing at Vogue Magazine from August 2008 to October 2011.
Served in a variety of senior positions at American Express from August 1992 to August 2008, including Vice President,
Global Advertising & Brand Management from July 2003 to August 2008.
AARON WEBSTER
Executive Vice President, Chief Enterprise Services Officer
In current position
since March 2024
Age:
44
Career Highlights
Chief Risk Officer, Global Head of Operations and Latin America at SoFi from June 2022 to March 2024.
Chief Risk Officer at SoFi from July 2019 to August 2022.
Chief Risk Officer at Citi from January 2018 to July 2019.
Held a variety of senior positions at Toyota North America from October 2008 to February 2018, including Managing
Director, USA/Americas Risk Management and Data Science from August 2017 to February 2018; Managing Director,
Risk Management and Data Science – Americas Region and US Residual Value from May 2016 to August 2017; and
Director, Risk Management and Data Science – Americas Region from October 2008 to May 2016.
Regional Risk Leader at GE Capital from June 2004 to October 2008.
Diverse Ethnicity
Š Woman
• 2024 Proxy Statement
47
PROPOSAL 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION (“SAY-ON-PAY” VOTE)
PROPOSAL 2:
Advisory Vote to Approve Named Executive
Officer Compensation (“say-on-pay” vote)
Each year, pursuant to Section 14A of the Exchange Act, we ask our stockholders to vote on an advisory basis to approve
the compensation granted or paid to our named executive officers (“NEOs”), as described in the Compensation Discussion
and Analysis and the compensation table sections of this proxy statement.
The Compensation Committee is committed to an executive compensation program that is transparent, appropriately
incentivizes our executive officers and aligns with stockholder interests and external expectations and enables us to
effectively compete for, attract and retain top talent so we can build the strongest possible leadership team for PayPal. The
Compensation Committee believes the goals of our executive compensation program are appropriate and that the
program is properly structured to achieve those goals. In deciding how to vote on this proposal, the Board encourages you
to read the Compensation Discussion and Analysis and the compensation table sections of this proxy statement.
The Board recommends that stockholders vote “FOR” the following resolution:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named
executive officers, as disclosed in the Company’s Proxy Statement for the 2024 Annual Meeting of Stockholders
pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the
Compensation Discussion and Analysis, the 2023 Summary Compensation Table and the other related tables and
disclosures.”
This say-on-pay vote is advisory, and therefore not binding on the Company, the Board or the Compensation Committee.
However, the Board and the Compensation Committee value the opinions of our stockholders and will take into account
the outcome of this vote in considering future compensation arrangements. The next say-on-pay vote will occur at PayPal’s
2025 annual meeting of stockholders.
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 2.
Message from Our Compensation Committee
Dear PayPal Stockholders,
As the Compensation Committee of PayPal, we are driven by the goal of maximizing value for our stockholders over the
long term. We recognize that the creation of long-term stockholder value begins with attracting exceptionally talented
leaders and aligning the incentives of those leaders with those of our stockholders. 2023 was a transformative year for
PayPal as we focused on refreshing our culture of innovation and welcomed a new CEO, a new CFO, and several additional
new executives to our leadership team. Throughout our leadership team transformation, our efforts have been, and
continue to be, guided by (1) input from our stockholders, (2) our rigorous pay-for-performance philosophy, and (3) our
commitment to an executive compensation program that is transparent, creates appropriate incentives, and aligns with
stockholder interests.
Executive Leadership Transitions and Related Compensation Decision-Making
In February 2023, Dan Schulman announced his intention to retire from the role of President and CEO at year-end. After a
rigorous search process, Alex Chriss joined PayPal as President and CEO in September, followed by our new CFO, Jamie
Miller, who joined in November. Mr. Chriss joined PayPal from Intuit, and has extensive product, technology and global
payments experience, which will enable him to drive growth across the PayPal platform for years to come. Ms. Miller was
most recently Global CFO of EY, and brings a proven track record of driving strong financial results.
In structuring the compensation for our new executives, the Compensation Committee focused on creating attractive
compensation opportunities that would induce these talented, sought-after leaders to join PayPal while also providing the
appropriate incentives to drive long-term value creation and retention and align Mr. Chriss and Ms. Miller’s interests with
those of our stockholders. Both Mr. Chriss and Ms. Miller received an initial grant of restricted stock unit (“RSU”) and
performance-based restricted stock unit (“PBRSU”) awards, consistent with the grants we make for our executive officers
on an annual basis. In addition, Mr. Chriss was granted make-whole RSUs, which were important to successfully recruit him
48
• 2024 Proxy Statement
PROPOSAL 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION (“SAY-ON-PAY” VOTE)
Message from Our Compensation Committee
from his prior employer, where he forfeited significant equity greater in value than the target grant date value of his make-
whole grant upon joining PayPal. Ms. Miller was also granted sign-on incentive RSUs to establish an ownership stake,
aligning her interests with those of our stockholders. Neither will receive any equity awards in the 2024 rewards cycle
beyond those described above. We believe these new leaders position PayPal for continued growth, and the incentives
each were granted upon joining PayPal provide strong alignment with our long-term performance and the interests of our
stockholders.
In order to ensure the Board had sufficient time to conduct a rigorous search process, identify the best successor for
Mr. Schulman, and facilitate an orderly CEO transition following the announcement of Mr. Schulman’s retirement, in
February 2023, the Compensation Committee (1) guaranteed that Mr. Schulman would receive his base salary and 2023
Annual Incentive Plan bonus for 2023 and (2) approved Mr. Schulman’s annual long-term incentive award, which was
designed to support a successful transition of Mr. Schulman’s CEO duties to his successor and to maintain Mr. Schulman’s
alignment to the long term performance of PayPal. In determining the target value of Mr. Schulman’s long term incentive
award, the Committee considered past performance against financial, strategic and operational objectives and our
stockholders’ experience, and determined to reduce the target value from $24 million in 2022 to $18.7 million for 2023,
reflecting our pay-for-performance philosophy. Mr. Schulman’s long term incentive award included performance-based
restricted stock units (“PBRSUs”), restricted stock units (“RSUs”), and transition-related performance-based RSU awards, the
latter of which were designed to vest contingent on Mr. Schulman’s successful completion of two performance conditions:
50% upon the new CEO’s start date and the other 50% in June 2024, in anticipation of Mr. Schulman completing the
transition of his duties and stepping down from the Board of Directors in May 2024 at the end of his current term. Ultimately,
Mr. Schulman facilitated a smooth and effective transition, enabling Mr. Chriss to onboard more quickly than anticipated
and allowing Mr. Schulman to complete the transition and retire from the Board in December 2023. The Compensation
Committee determined that it would be appropriate to accelerate the vesting of the performance-based RSUs granted with
respect to the second performance condition to match the timing of Mr. Schulman’s retirement from the Board, as
Mr. Schulman’s performance of his transition responsibilities had been completed.
P
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Stockholder Feedback and 2023 Say-on-Pay Vote
The perspectives of our stockholders on our business and governance practices, including our executive compensation
program, have always been a key input in our decision-making process. PayPal’s historically strong say-on-pay vote results
demonstrate overall investor support for our program. Our 2023 say-on-pay vote, although supported by a substantial
majority of our stockholders at 78% support, reflected a decrease in support compared to the prior year; this led the
Compensation Committee to seek input from stockholders specifically regarding our compensation practices.
In response to the 2023 Say-on-Pay vote, as well as our CEO search, we conducted robust outreach to stockholders in
2023 to solicit input on these key topics. Since our 2023 Annual Meeting, we sought meetings with investors representing
approximately 50% of our common stock and successfully engaged with investors holding approximately 19% of our
common stock.
In these conversations, some of which included members of our Board, we were pleased to learn that stockholders broadly
continue to support the fundamentals of our program and its alignment of pay and performance. Stockholders also
provided input on the key criteria for our CEO search, and later expressed support for the hiring of Mr. Chriss, who brings
extensive product and technology leadership experience, and conveyed that they understand the competitive market for
talented executives in our industry. We discussed new-hire related compensation and the importance of tying those
incentives closely to our strategy and long-term performance criteria. We also discussed enhancements that the
Compensation Committee could make going forward. Stockholders shared diverse perspectives, but we noted themes
including the opportunity to adopt different performance metrics to ensure continued alignment with our evolving strategy,
such as placing more emphasis on profitability-linked metrics and exploring the potential inclusion of a relative TSR or
return on capital metric.
2024 Compensation Program Enhancements Informed by Investor Feedback
With investor feedback front of mind, the Compensation Committee determined to make several enhancements to both
our annual and long-term incentive plans to strengthen pay for performance alignment, increase the focus on profitable
growth, reduce burn rate and address historical challenges experienced in connection with setting long-term performance
goals.
In the annual incentive plan, starting with 2024 compensation, we have updated the underlying metrics from revenue and
non-GAAP operating margin to non-GAAP operating income and transaction margin dollars. This will more closely align
performance goals to our current strategy, including additional focus on driving profitable growth. We will also move to
100% cash compensation for the annual incentive plan, aligning payouts with intended rewards and reducing our burn rate.
Additionally, beginning with first quarter 2024 results, non-GAAP operating income will include the impact of stock-based
• 2024 Proxy Statement
49
PROPOSAL 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION (“SAY-ON-PAY” VOTE)
Message from Our Compensation Committee
compensation expense, which will no longer be excluded from non-GAAP results. We believe this change to our financial
reporting will introduce greater transparency, accountability, and discipline, while better aligning our own performance
measures to the way that many investors already evaluate our business.
In the long-term incentive plan, starting with the 2024 grant, our PBRSUs will be earned based on a relative total
shareholder return metric, measured as compared to the S&P 500, instead of the FX-neutral revenue compound annual
growth rate and free cash flow compound annual growth rate metrics. This will more closely align pay with long-term
shareholder value, while effectively motivating leaders to successfully and holistically drive PayPal’s evolving strategy.
Additionally, we will use a three-year performance period with three discrete measurement periods of 12, 24, and 36
months in calculating payouts to minimize the potential impact of short-term share price volatility; the PBRSU awards
granted in 2024 will vest only at the end of the full three-year vesting period to maintain maximal retentive value and a
focus on long-term value creation.
The Path Forward
The enhancements to our 2024 compensation program outlined above reflect the feedback we received from
stockholders and will ensure continued strong pay-for-performance alignment. This past year has been pivotal for PayPal,
and we have appreciated the opportunity to incorporate stockholder views as the Compensation Committee made critical
compensation decisions. We look forward to continuing our dialogue with investors.
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Compensation Discussion and Analysis
COMPENSATION DISCUSSION AND ANALYSIS
Table of Contents
Named Executive Officers
Executive Summary
2023 Compensation Framework and Decisions
Other Compensation Elements
Our Structure for Setting Compensation
Other Compensation Practices and Policies
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Named Executive Officers
This Compensation Discussion and Analysis (“CD&A”) describes the material compensation elements for each of PayPal’s
NEOs and provides an overview of the compensation policies and practices applicable to our NEOs.
2023 NEOs1
Alex Chriss
President and Chief
Executive Officer
Michelle Gill
Executive Vice President,
General Manager – Small
Business & Financial
Services Group
John Kim
Executive Vice President,
Chief Product Officer
Jamie Miller
Executive Vice President,
Chief Financial Officer
1
The following were also NEOs for 2023. Such NEOs either departed prior to the Record Date or will depart prior to the 2024 Annual Meeting of Stockholders:
• Daniel H. Schulman resigned from his role as President and Chief Executive Officer, effective September 27, 2023.
• Gabrielle Rabinovitch ceased serving in her role as acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer, effective December 31, 2023.
Pursuant to the planned transition with respect to the role of Chief Financial Officer, Ms. Rabinovitch’s employment with PayPal terminated on January 31, 2024.
• Blake Jorgensen ceased serving as Chief Financial Officer effective March 7, 2023, and his employment with PayPal terminated on September 15, 2023.
• Pursuant to the planned transition in connection with an internal restructuring, Peggy Alford’s employment with PayPal terminated on January 31, 2024.
• Aaron Karczmer, who served as PayPal’s Executive Vice President, Chief Enterprise Services Officer, will depart from PayPal on April 30, 2024.
• 2024 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Executive Summary
Leadership Changes and Related Compensation
Mr. Schulman’s announcement in February 2023 that he planned to retire on December 31, 2023 was a catalyst for our
leadership team transformation in 2023. Mr. Schulman’s longstanding leadership at PayPal made a positive and lasting
impact, and the Board was committed to identifying a successor with extensive product, technology, and global payments
experience who would build on Mr. Schulman’s contributions and be a next generation leader, capable of driving growth
across the PayPal platform for years to come. Largely in connection with the appointment of Mr. Schulman’s successor, we
reconstituted our leadership team in late 2023 and early 2024.
For a summary of each incoming NEO’s new hire compensation, see the section below titled “Offer Letter Compensation
for New NEOs.” Additional details regarding Alex Chriss’ offer letter, Jamie Miller’s offer letter and Gabrielle Rabinovitch’s
transition agreement are also available on PayPal’s Current Reports on Form 8-K filed on August 14, 2023, November 1,
2023, and December 22, 2023, respectively. For detailed information on each departing NEO’s severance, transition, or
retirement benefits, as applicable, see the section below titled “Potential Payments Upon Termination or Change in Control
Table – Executive Departure-Related Compensation.”
Chief Executive Officer Transition
Following a rigorous and thorough CEO search process conducted by the Board, PayPal identified Mr. Chriss as
Mr. Schulman’s successor and entered into an offer letter with Mr. Chriss setting out the terms of his employment and
compensation. In August 2023, PayPal announced that Mr. Chriss would become PayPal’s President and Chief Executive
Officer and a member of the Board, effective September 27, 2023.
Mr. Schulman’s last day of employment with PayPal was September 26, 2023, and he retired from the Board effective as of
December 31, 2023. The PayPal Holdings, Inc. Executive Change in Control and Severance Plan, as amended and restated
(the “Executive Severance Plan”) previously filed with the SEC on February 8, 2024 as Exhibit 10.05 to PayPal’s Annual
Report on Form 10-K provides for certain retirement severance benefits in connection with a Qualifying Retirement (as
defined in the Executive Severance Plan). Mr. Schulman’s retirement constituted a Qualifying Retirement under the
Executive Severance Plan. On December 12, 2023, Mr. Schulman entered into a retirement agreement with PayPal (the
“Schulman Retirement Agreement”), which documented his retirement benefits and the conditions to receive them.
Chief Financial Officer Transition
Following Mr. Jorgensen’s appointment as PayPal’s Chief Financial Officer effective August 3, 2022, on September 14, 2022,
PayPal announced that Mr. Jorgensen was taking a leave of absence for health reasons. Mr. Jorgensen ceased serving as
Chief Financial Officer effective March 7, 2023, and thereafter served as a senior advisor to PayPal through September 15,
2023. Mr. Jorgensen’s employment with PayPal terminated on September 15, 2023 and his separation constituted an
involuntary termination by PayPal without Cause (as defined in the Executive Severance Plan), which qualified him for
severance in accordance with the terms and conditions of the Executive Severance Plan. PayPal and Mr. Jorgensen entered
into a separation agreement on March 3, 2023 (the “Jorgensen Separation Agreement”), which provided for the payment of
severance benefits to Mr. Jorgensen under Appendix A of the Executive Severance Plan in exchange for a release of claims
and other valuable consideration.
Upon commencement of Mr. Jorgensen’s leave of absence, from September 14, 2022 until November 6, 2023,
Ms. Rabinovitch served as PayPal’s acting Chief Financial Officer, in addition to her continuing duties as Senior Vice
President, Investor Relations and Treasurer. Upon Ms. Miller’s appointment as PayPal’s Chief Financial Officer effective
November 6, 2023, Ms. Rabinovitch ceased to serve as PayPal’s acting Chief Financial Officer, but otherwise continued to
serve in her prior role through year-end.
Following a transition period that began on January 1, 2024, during which Ms. Rabinovitch provided transition services to
PayPal as an officer on a part-time basis, Ms. Rabinovitch’s employment with PayPal terminated on January 31, 2024, and
her separation constituted an involuntary termination by PayPal without Cause (as defined in the Executive Severance Plan).
The unique nature of Ms. Rabinovitch’s roles at PayPal, her leadership of our financial operations at two key transitional
points – first as interim Chief Financial Officer for approximately 2 months and later as acting Chief Financial Officer for an
additional period of approximately 14 months – in addition to her significant experience as head of Investor Relations and
Treasurer, made it critical to obtain transition services from Ms. Rabinovitch through January 31, 2024. In lieu of paying
Ms. Rabinovitch severance in accordance with the Executive Severance Plan, on December 21, 2023 PayPal entered into an
individually negotiated transition agreement with Ms. Rabinovitch (the “Rabinovitch Transition Agreement”).
On October 29, 2023, in connection with Ms. Miller’s appointment as PayPal’s Chief Financial Officer, PayPal entered into an
offer letter with Ms. Miller setting forth the terms and conditions of her employment and compensation.
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Other NEO Transitions
Following Mr. Chriss’ appointment to the CEO role, PayPal further strengthened its next generation leadership team by
hiring seasoned leaders across several key roles, including Ms. Gill, whom PayPal brought on in November 2023 to serve as
PayPal’s Executive Vice President, General Manager of the newly formed Small Business and Financial Services Group.
Ms. Gill will be accountable for bringing together the ecosystem of products and services that help small business owners
run and grow their businesses into a unified offering. On October 23, 2023, PayPal entered into an offer letter with Ms. Gill
setting out the terms of her employment and compensation.
In January 2024, Suzan Kereere joined PayPal as President, Global Markets. Following Ms. Kereere’s appointment, Ms. Alford,
PayPal’s former Executive Vice President, Global Sales and Merchant Services, departed from PayPal on January 31, 2024.
Her separation constituted an involuntary termination by PayPal without Cause (as defined in the Executive Severance Plan)
and a Job Elimination (as defined in the Executive Long Term Incentive Program (“ELTIP”) contained in Appendix B of the
Executive Severance Plan), which qualified Ms. Alford for severance in accordance with the terms and conditions of the
Executive Severance Plan. PayPal and Ms. Alford entered into a separation agreement on January 8, 2024 (the “Alford
Separation Agreement”), which provided for the payment of severance benefits to Ms. Alford under Appendix A of the
Executive Severance Plan and the ELTIP, in exchange for a release of claims and other valuable consideration.
In connection with a restructuring related to the leadership changes described above, Aaron Karczmer, PayPal’s Executive
Vice President, Chief Enterprise Services Officer, will depart from PayPal on April 30, 2024. His separation constitutes a
resignation by Mr. Karczmer due to Good Reason (as defined in the Executive Severance Plan), which qualifies
Mr. Karczmer for severance in accordance with the terms and conditions of the Executive Severance Plan. PayPal and
Mr. Karczmer entered into a separation agreement on February 7, 2024 (the “Karczmer Separation Agreement”), which
provides for the payment of severance benefits to Mr. Karczmer under Appendix A of the Executive Severance Plan, in
exchange for a release of claims and other valuable consideration.
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Offer Letter Compensation for New NEOs
The offer letters for Mr. Chriss and Mses. Miller and Gill included two categories of compensation entitlements: (1) go-
forward, ordinary course compensation arrangements and (2) special, non-recurring new hire awards. The non-recurring
new hire awards were intended to incentivize Ms. Miller and Ms. Gill to join PayPal’s next generation leadership team. For
Mr. Chriss, the non-recurring new hire awards were also intended to compensate him for a portion of the awards he
forfeited in departing from his prior employer to join PayPal.
The amounts and types of compensation for each of Mr. Chriss and Mses. Miller and Gill were determined carefully by the
Compensation Committee in consultation with the Compensation Committee’s independent compensation consultant.
Factors including, but not limited to, the NEO’s experience, responsibilities, expertise, compensation at their prior employer
(if publicly available or voluntarily disclosed), potential contributions to PayPal, the compensation received by the new
NEO’s predecessor at PayPal (if applicable), their competitive opportunities, including if applicable specific alternative
opportunities at the time of hire, and market compensation for their role within PayPal’s compensation peer group (as listed
below under the heading “Our Compensation Peer Group”) were considered when determining each new NEO’s
compensation package. In each case, the annual pay elements were consistent with the compensation practices of our
peer group and the non-recurring elements of compensation were driven by the specific circumstances of the individual
hires (as noted above). Consistent with market practice, as PayPal’s Chief Executive Officer, Mr. Chriss is compensated at a
higher level than the other new NEOs due to his higher level of responsibility, accountability, and experience.
Mr. Chriss and Mses. Miller and Gill will not receive any equity grants during PayPal’s 2024 rewards cycle, apart from their
Initial RSU Grants, Initial PBRSU Grants and Sign-On Incentive RSUs, as set forth in the two tables below.
• 2024 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
The following table summarizes the go-forward compensation arrangements with each of Mr. Chriss and Mses. Miller and
Gill that are documented in their offer letters:
NEO
Alex Chriss
President & Chief
Executive Officer
Jamie Miller
EVP, Chief Financial
Officer
Michelle Gill
EVP, General
Manager – Small Business &
Financial Services Group
Annual Base Salary
Rate ($)
Target Annual Incentive
Plan Bonus as a
Percentage of
Annual Base Salary
Initial RSU Grant ($)1
Initial PBRSU Grant
(at target) ($)2
1,250,000
200%
16,750,000
17,000,000
750,000
125%
6,250,000
6,250,000
750,000
125%
6,250,000
6,250,000
1
2
Initial RSU Grants follow PayPal’s standard 3-year vesting schedule. Amounts reflects grant date value.
Initial PBRSU Grants follow PayPal’s standard PBRSU vesting schedule, with their payout contingent on PayPal’s performance over the three-year performance period. The three-year
period applicable to Mr. Chriss’ Initial PBRSU Grant began on January 1, 2023 (based on Mr. Chriss’ start date, which was earlier than that of Mses. Miller and Gill) and the three-year
period applicable to Ms. Miller’s and Ms. Gill’s Initial PBRSU Grants began on January 1, 2024. Amounts reflect target grant date value and may differ from those reported in the
Summary Compensation Table below.
The following table summarizes the special, non-recurring new hire awards for Mr. Chriss and Mses. Miller and Gill, which
were intended to compensate them for awards they forfeited when joining PayPal or to induce them to accept our offers, as
applicable:
NEO
Alex Chriss
President & Chief
Executive Officer
Jamie Miller
EVP, Chief Financial
Officer
Michelle Gill
EVP, General
Manager – Small Business &
Financial Services Group
Cash Sign-On Bonus ($)
Make-Whole or Sign-On
Incentive RSUs ($)
Total Non-Recurring, New
Hire Awards ($)
N/A
10,000,0001
10,000,000
6,000,0002
2,000,0003
8,000,000
2,000,0002
2,000,0003
4,000,000
1
2
3
Represents Make-Whole RSUs at grant date value, which vest as to 50% on the first anniversary of grant date and 50% on the second anniversary of the grant date, with acceleration
upon a Qualifying Termination (as defined in the Executive Severance Plan) of employment. Mr. Chriss forfeited significant equity awards at his prior employer that were greater in
value than the target grant date value of Mr. Chriss’ Make-Whole RSUs, which were intended to compensate Mr. Chriss for a portion of such forfeited awards.
50% of the Cash Sign-On Bonus was payable in cash within the first two pay periods following the NEO’s start date, with the remaining 50% payable within two pay periods following
the 6-month anniversary (each, an “installment”). If the NEO resigns or PayPal terminates the NEO’s employment for cause: (a) on or before the first anniversary of the payment date
of the first installment, the NEO must repay 100% of the first installment; (b) after the first anniversary of the payment date of the first installment and on or before the second
anniversary of the payment date of the first installment, the NEO must repay the first installment, less 1/24th of the first installment for every full month of the NEO’s active employment
with PayPal following the NEO’s start date; and (c) on or before the first anniversary of the payment date of the second installment, the NEO must pay back 100% of the second
installment.
Represents Sign-On Incentive RSUs at grant date value, which follow PayPal’s standard 3-year vesting schedule.
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
2023 Financial and Operational Performance Highlights
Revenue
Non-GAAP Operating Margin1
Free Cash Flow1
24.8%
21.3%
22.4%
$29.8B
$27.5B
$25.4B
$30
$25
$20
$15
$10
$5
$0
25%
20%
15%
10%
5%
0%
$4.9B
$5.1B
$4.6B2
$4.2B
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$6
$5
$4
$3
$2
$1
$0
2021
2022
2023
2021
2022
2023
2021
2022
2023
Delivering solid
revenue growth:
Focusing on engaged
accounts:
Growing payment
volume:
Efficiency and capital
return contributing to
earnings growth:
+8%
426M
$1.53T
$5.10
revenue increase from
2022 (spot basis)
active accounts
(down 2% from 2022)
Total Payment Volume
(up 13% from 2022)
non-GAAP EPS1 growth
(up 24% from 2022)
1
Non-GAAP Operating Margin, non-GAAP earnings per diluted share and Free Cash Flow are not financial measures prepared in accordance with generally accepted accounting
principles (“GAAP”). In 2023, the most significant adjustment to our GAAP measures was the exclusion of stock-based compensation expense. Starting with fiscal year 2024, our
non-GAAP measures will include the impact of stock-based compensation expense. For more information on how we compute these non-GAAP financial measures and a
reconciliation to the most directly comparable financial measures prepared in accordance with GAAP, please refer to “Appendix A: Reconciliation of Non-GAAP Financial Measures”
in this proxy statement.
2
Adjusted free cash flow excludes the net impact of originating European buy now, pay later receivables as held for sale and the subsequent sale of these receivables.
In 2023, we delivered solid financial and operating results across our key performance metrics. We demonstrated strong
expense discipline and the ability to operate the business with greater efficiency. In addition, we continued to reprioritize
while making progress on long-term strategic initiatives aimed at driving more profitable growth.
We announced changes to our executive leadership team, intended to position PayPal for its next phase of growth. These
changes underscore PayPal’s commitment to building a high-performing organization, with the goal of advancing
innovation and solutions to better serve our customers, and in turn drive more profitable growth.
We also reorganized our operations to be more closely aligned to the customers we serve – consumers, small businesses
and large enterprises – and to help enable our teams to deliver more seamless and differentiated end-to-end experiences.
In the fourth quarter, we began externalizing our European buy now, pay later portfolio and divested Happy Returns as we
pursue a disciplined approach to capital allocation and increase focus on core priorities.
In 2023, we processed $1.53 trillion in total payment volume across our platform, representing a year-over-year increase of
13%. We ended the year with 426 million active consumer and merchant accounts as we continued to focus on the quality
of our account base and driving more usage and engagement among active accounts.
Our revenue increased 8% to $29.8 billion, non-GAAP operating margin expanded 110 basis points to 22.4% driven by
expense leverage, and free cash flow was $4.2 billion, or $4.6 billion excluding the impact of externalizing our European
buy now, pay later portfolio. We continued to return excess capital to stockholders with share repurchases of $5.0 billion,
reducing our weighted average share count by approximately 4%. As a result of these factors, and benefit from the higher
interest rate environment, non-GAAP diluted earnings per share increased 24% year-over-year to $5.10.
• 2024 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
2023 NEO Compensation Program Elements
For 2023, the Compensation Committee approved an executive compensation program based on our “pay for
performance” philosophy that is designed to align our executive officers’ compensation with the key drivers of profitable
growth. The ultimate goals of our executive compensation program are to properly incentivize and reward our executives
for performance that exceeds expectations, provide transparency for our executives and our stockholders and position
PayPal competitively to enable us to attract and retain highly capable leaders in an intensely competitive talent market.
The following is an overview of the 2023 compensation program elements for our NEOs.
Form of
Payment
Performance
Period
Performance Criteria Objectives
Salary
100%
Cash
Ongoing
Alignment of salary
with performance is
evaluated on an
annual basis
• Compensates for expected day-to-day
performance
• Rewards individuals’ current contributions
• Reflect scope of roles and responsibilities
For More
Information
Page 60
Annual
Incentive
Plan (“AIP”)
75%
PBRSUs One year
Revenue and
Non-GAAP Operating
Margin
25%
Cash
One year
Individual
Performance
• Rewards successful annual performance
• Motivates achievement of short-term
performance goals designed to enhance
value of PayPal
• Significant equity portion to further align
with stockholder interests
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Long-Term
Incentive
Plan (“LTI”)
50%
PBRSUs Three years
50%
RSUs
Vests over
three years
FX-Neutral Revenue
Compound Annual
Growth Rate (“CAGR”)
and Free Cash Flow
CAGR
Service-based
vesting; ultimate
value based on stock
price performance
• Rewards successful achievement of three-
year performance goals designed to
enhance long-term value of PayPal
• Intended to satisfy long-term retention
objectives
• Rewards the creation of long-term value
• Recognizes potential future contributions
• Intended to satisfy long-term retention
objectives
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2023 Incentive Compensation Plan Outcomes
For 2023, the Compensation Committee approved incentive programs designed to strike an appropriate balance between
incentivizing top-line growth, profitability, non-financial business initiatives and stockholder value creation over both the
short-term and long-term horizons. By design, our AIP and PBRSUs utilize different metrics and timeframes, and for 2023,
both programs utilized operational metrics. As a result, the two programs may have significantly different outcomes in the
same year, as they did in 2023; this is consistent with the intended incentive structures of the programs.
Based on our 2023 results, our incentive plans paid out as follows:
2023 PayPal Annual Incentive Plan (“AIP” or “2023 AIP”)
Under the AIP, 75% of the NEOs’ target incentive was based on company performance. The following table shows the
performance goals and actual performance achieved, as determined by the Compensation Committee.
Company Measure
Threshold
(50% Payout)*
Target
(100% Payout)*
Maximum
(200% Payout)*
Actual
Achieved
Actual Achieved
(Percentage of
Target Achieved)
Revenue
(in $ billions)
Non-GAAP
Operating Margin
$27.52
$28.42
$29.32
$29.77
200%
20.40%
22.40%
24.40%
22.43%
102%
Company Performance Score of the AIP
151%
*
Linear interpolation applies to revenue and Non-GAAP Operating Margin for results between specific goals.
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
The remaining 25% of the NEOs’ target incentive under the AIP was based on individual performance. Payouts under the
individual performance component of the AIP were 100% of target for each of our current NEOs.
2021-2023 PBRSUs
The following table shows the performance goals and actual performance achieved for the PBRSUs granted in 2021, which
vested based on performance during a three-year performance period (the “2021-2023 PBRSUs”).
Measure
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(200% Payout)
FX-Neutral Revenue CAGR
Free Cash Flow CAGR
15.5%
13.0%
17.5%
15.0%
18.5%
16.0%
Actual Achieved
(Percentage of
Target Achieved)
0.0%
0.0%
Aggregate Percent of Target Achieved
0.0%
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2023 Say-on-Pay Outcome and Stockholder Engagement
At our 2023 Annual Meeting of Stockholders, 78% of the votes cast supported our say-on-pay proposal. While this
represents significant support from our stockholders, it was below the level we have generally received in prior years.
Following the 2023 Annual Meeting of Stockholders, we engaged in proactive outreach efforts with stockholders (including
extensively during the Board’s CEO search process), reaching out to stockholders representing approximately 50% of our
common stock, and having conversations with stockholders representing 19% of our common stock. Independent
directors participated in meetings with stockholders representing 12% of our common stock. We also met with proxy
advisory firms Institutional Shareholder Services (ISS) and Glass Lewis in early 2024.
Compensation was a prominent topic during our discussions with investors. Compensation topics discussed and feedback
from investors included the following:
New Hire
Compensation for
Joining Executives
• Supported hiring of Alex Chriss as PayPal’s CEO, recognizing his extensive product and technology leadership
experience and understanding the competitive environment for talented executives
• Understood the rationale for and structure of recent new-hire related awards, and encouraged that future new-
hire related awards also include rigorous performance criteria clearly tied to PayPal’s go-forward strategy and
have a reasonably long-term structure
Incentive Program
Metrics
Disclosure
Use of Equity for
Compensation
• Interested in more emphasis on profitability-linked metrics
• Encouraged including a relative TSR metric and/or return on capital metric in the long-term incentive program
• Emphasized the importance of including stock-based compensation expense in non-GAAP metrics underlying
the compensation program
• Encouraged PayPal to continue providing thorough and transparent disclosure, especially with regard to
individual performance evaluations that impact compensation
• Understood the reasoning for PayPal’s broad-based equity incentive program and its position in PayPal’s culture
and talent retention and acquisition strategies
• Acknowledged the impact of a decline in share price on the number of shares needed to deliver market-
competitive dollar values; nevertheless, encouraged thoughtful go-forward management of the burn rate
For more information on our engagement efforts and additional feedback received through these conversations, see
“Corporate Governance – Stockholder Engagement” on page 32 of this proxy statement.
• 2024 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
2024 Compensation Program Changes Informed by Investor Feedback
Informed by investor feedback, in January 2024, our Compensation Committee made the following enhancements to our
incentive programs to strengthen pay for performance alignment, increase the focus on profitable growth, reduce burn rate
and address historical challenges experienced in connection with setting long-term performance goals.
Enhancements to 2024 PayPal Annual Incentive Plan
Enhancement
Rationale
Redesign the plan to fund the bonus pool
based on company performance and
determine employee payouts based on
individual performance
Update metrics to Non-GAAP Operating
Income and Transaction Margin Dollars
(from Revenue and Non-GAAP Operating
Margin)
Move to 100% cash compensation for short-
term incentive program
Company-wide bonus pool and resulting employee bonus starting point to be
based on company performance, strengthening pay and performance alignment;
individual performance modifier will provide for better upwards or downwards
differentiation when specifically warranted
Will more closely align performance goals to current Company strategy, including
additional focus on driving profitable growth
Additionally, stock-based compensation expense will be included in non-GAAP
financial metric reporting, including non-GAAP Operating Income, beginning in
2024
Will align actual payout with intended value to be delivered and reduce burn rate
Enhancements to 2024-2026 PBRSUS under Long-Term Incentive Program
Enhancement
Rationale
Move to relative total shareholder return
(rTSR) metric, measured as compared to
The S&P 500 (from FX-Neutral Revenue
CAGR and Free Cash Flow CAGR), with the
target for rTSR vs. the S&P 500 set at the
55th percentile
Three-year performance period using three
discrete measurement periods of 12, 24,
and 36 months in calculating payout; no
vesting prior to end of the full three-year
vesting period. If absolute TSR achievement
is negative for the 36-month period, the
maximum shares an executive could earn
would be capped at 100% of the target
number of shares
More closely aligns PBRSU payouts with long-term shareholder value while
effectively motivating leaders to holistically execute during this transitional period
while our strategy continues to evolve
Will minimize the potential impact of short-term share price volatility, while
maximizing retention value over the entire vesting period; designed to enhance the
program’s durability and provide a holistic measure of long-term value creation
during PayPal’s strategic pivot
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
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Key Compensation Policies and Practices
We maintain the following policies and practices that we believe demonstrate our commitment to strong corporate
governance and executive compensation best practices.
What We Do
Our AIP is entirely performance-based, and our NEOs are not guaranteed any minimum levels of payment under that plan.
Pay for Performance
More than 50% of our NEOs’ Target Total Direct Compensation is performance-based and tied to
pre-established performance goals aligned with our short-term and long-term objectives.
Rigorous performance goals
We use objective performance-based Company goals that are designed to be rigorous in our
incentive plans.
Corporate sustainability
and impact (“CSI”)
considerations
We incorporate CSI considerations, such as risk and compliance and Belonging, into our
executive compensation program.
Independent compensation
consultant
The Compensation Committee engages its own independent compensation consultant to advise
on executive and director compensation matters.
Annual compensation
peer group review
The Compensation Committee annually reviews the composition of our compensation peer
group to evaluate whether the peer group remains appropriate in light of our size and industry.
Annual say-on-pay vote
We conduct an annual advisory say-on-pay vote on our NEO compensation.
Stockholder engagement
Annual compensation
risk assessment
Clawback policies
We are committed to ongoing engagement with our stockholders – including on executive
compensation, corporate governance and CSI matters – through teleconferences, in-person
meetings and correspondence.
We conduct an annual compensation risk assessment to evaluate whether our executive
compensation program presents any risks that are reasonably likely to have a material adverse
effect on PayPal.
In 2023, we adopted a mandatory recovery policy to comply with Exchange Act Rule 10D-1 and
the Nasdaq listing standards regarding recovery of erroneously awarded compensation in the
event of an accounting restatement. In addition, the Compensation Committee can require
forfeiture or reimbursement of incentive compensation paid or awarded to our NEOs in certain
other circumstances under our other clawback policy.
Robust stock ownership
guidelines
Our stock ownership guidelines require significant sustained ownership of PayPal common stock
to align the long-term interests of our NEOs and non-employee directors with those of our
stockholders and promote our commitment to sound corporate governance.
Prohibition of hedging and
pledging transactions
Our insider trading policy, which applies to all Board members, executive officers and
employees, prohibits the use of hedging and monetization transaction relating to our securities
and the use of PayPal derivative securities as collateral in a margin account or for any loan or
extension of credit. Board members and executive officers are prohibited, and all other
employees are strongly discouraged, from pledging any PayPal securities as collateral for loans.
Performance-based bonuses
Our AIP is entirely performance-based, and our NEOs are not guaranteed any minimum levels of
payment under that plan.
What We Don’t Do
No excise tax gross-ups
on “change in control”
payments
No “single-trigger” CIC
payments or acceleration
of equity awards
No tax gross-ups on
perquisites
No discounting of stock
options or repricing of
underwater options
We do not provide our NEOs with any excise tax gross-ups or other payment or reimbursement of
excise taxes on severance in connection with a change in control of PayPal.
We do not make “single-trigger” change-in-control payments or maintain any plans that require
single-trigger change-in-control acceleration of equity awards to our NEOs upon a change in
control of PayPal.
We do not provide our NEOs with tax gross-ups on perquisites, other than in limited
circumstances related to relocation and international business travel that are at our direction and
deemed to benefit our business operations.
Our equity compensation plan expressly prohibits the discounting of the exercise price of stock
options and the repricing of underwater stock options without stockholder approval.
• 2024 Proxy Statement
59
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
2023 Compensation Framework and Decisions
Executive Compensation Program Design
Our key guiding principle for executive compensation is to closely align the compensation of our executives with the
creation of long-term value for our stockholders. We do so by tying a significant portion of our executives’ Target Total
Direct Compensation opportunity (composed of each NEO’s base salary, AIP target and LTI target) to PayPal’s performance.
In designing our executive compensation program, the Compensation Committee prioritizes four goals:
Transparency, Simplicity and Clarity
One Team
Enable executives to directly link between
Company and individual performance and their
pay, and enable stockholders to directly link
between returns on their investment and
pay outcomes to Company performance.
Maintain unified goals and objectives of the annual
short- and long-term incentive programs for
the entire executive leadership team to
drive aligned operational decisions and
Company performance.
Winning the War For Talent
Individual Performance
Recognize the unique space in which we
compete and prioritize nimble and aggressive
compensation strategies to attract and retain key
talent.
Deliver compensation commensurate with
results, both on the upside and downside, and
hold leaders accountable for their performance,
including with respect to risk and compliance and
Belonging within their respective organizations.
When designing our executive compensation program, the Compensation Committee assessed competitive market data
obtained from the public filings of our compensation peer group companies and general industry data for comparable
technology and financial companies that are included in proprietary third-party compensation surveys. For more
information, see “Our Structure for Setting Compensation.”
Base Salary
At the beginning of each year, the Compensation Committee reviews and approves each then-serving executive officer’s
base salary for the year. In making its determinations, the Compensation Committee considered competitive market data
and certain individual factors, including the executive’s individual performance, level of responsibility, breadth of
knowledge and prior experience, while also considering internal pay equity. At the time of hire or promotion, the
Compensation Committee approves the compensation of the newly appointed or promoted executive officer based on the
competitive market data, prior experience, the compensation received at the executive officer’s prior employer (if publicly
available or voluntarily disclosed) and the compensation received by the executive officer’s predecessor at PayPal. The
following table shows the 2023 annualized base salary for each NEO.
NEO
Alex Chriss
Jamie Miller
Michelle Gill
John Kim
Daniel H. Schulman
Blake Jorgensen
Gabrielle Rabinovitch
Peggy Alford
Aaron Karczmer
1
The annual base salaries provided in this table reflect each NEO’s annualized rate of base salary during 2023.
60
• 2024 Proxy Statement
Annual Base Salary in 2023 ($)1
1,250,000
750,000
750,000
750,000
1,250,000
750,000
750,000
750,000
750,000
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
How We Determine Incentive Compensation
When deciding the target amount and forms of incentive compensation for our NEOs, the Compensation Committee
considers the size and complexity of the NEO’s position and business unit or function, as well as the following factors
(which we refer to as the “Incentive Compensation Factors”):
• leadership;
• performance against financial, strategic and operational objectives and performance measures;
• for newly hired NEOs, successfully onboarding and effectively integrating into PayPal;
• defining and executing against strategy, roadmaps and budgets;
• driving innovation for the business unit or function;
• championing and advancing PayPal’s set of core values of inclusion, innovation, collaboration and wellness through its
Leadership Principles;
• compliance with corporate governance policies and practices, and appropriate management of risks; and
• organizational development and human capital management, including hiring, development and retention for the
business unit or function by supporting and enhancing our diversity, inclusion and equity initiatives (which we refer to
collectively as “Belonging”).
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
PayPal Annual Incentive Plan
The AIP provided each of our NEOs with the opportunity to earn annual incentive compensation based on Company
performance and individual performance. For the 2023 AIP, the Compensation Committee determined that our executives’
annual incentives should be primarily tied to our overall Company performance, with individual performance accounting for
25% of each executive’s annual incentive.
The majority of our NEOs’ AIP awards was in the form of PBRSUs, to be settled in shares of PayPal common stock based on
Company achievement of the applicable performance criteria.
The following table sets forth the 2023 target annual incentive opportunity (the “Target Incentive Amount”) for each
participating NEO, which is expressed as a percentage of the NEO’s base salary.
NEO1
Alex Chriss2
John Kim
Daniel H. Schulman3
Blake Jorgensen3
Gabrielle Rabinovitch3
Peggy Alford3
Aaron Karczmer
AIP Target as Percentage of Base Salary
200%
125%
200%
125%
125%
125%
125%
1 Mses. Miller and Gill were not eligible to participate in the 2023 AIP based on their respective start dates with PayPal. Under the AIP, an individual must be employed by PayPal before
October 1, 2023, to be eligible to participate in the AIP for fiscal year 2023.
2 Mr. Chriss’ AIP Target was established at the time he joined PayPal, and he was eligible for a prorated 2023 AIP bonus based on his start date relative to the performance period.
3 Messrs. Schulman and Jorgenson and Mses. Rabinovitch and Alford ceased to be eligible for the 2023 AIP in accordance with its terms upon their termination of employment with
PayPal. For information on the compensation these NEOs received in connection with their termination of employment, see the section below titled “Potential Payments Upon
Termination or Change in Control Table – Executive Departure-Related Compensation.”
• 2024 Proxy Statement
61
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
75% of the Target Incentive Amount for each NEO was delivered in the form of PBRSUs with a one-year performance
period, with the final payout determined based on Company performance for 2023.
NEO
Alex Chriss
John Kim
Daniel H. Schulman3
Blake Jorgensen3
Gabrielle Rabinovitch3
Peggy Alford3
Aaron Karczmer
Base Salary Used to
Calculate PBRSU Target1 ($)
PBRSU Target
Incentive Amount ($)
PBRSU Target2 (Shares)
328,767
750,000
1,250,000
750,000
750,000
750,000
750,000
493,151
703,125
1,875,000
703,125
703,125
703,125
703,125
8,225
8,827
23,539
8,827
8,827
8,827
8,827
1
2
In accordance with the terms of the 2023 AIP, each then-serving NEO’s base salary and AIP Target as of April 1, 2023 was used to calculate the Target Incentive Amount applicable
to the PBRSUs granted pursuant to the AIP. For Mr. Chriss, his starting base salary was used to calculate his Target Incentive Amount applicable to the PBRSUs, which was prorated
based on his start date relative to the performance period.
The target number of PBRSUs was determined by dividing (i) the Target Incentive Amount allocated to the Company performance portion by (ii) the average closing price of PayPal
common stock for a period of 30 consecutive trading days prior to the grant date (the “Average Closing Price”). The PBRSUs under the 2023 AIP were granted on February 15, 2023
to each of the then-serving NEOs and on October 15, 2023 to Mr. Chriss.
3 Messrs. Schulman and Jorgensen and Mses. Rabinovitch and Alford ceased to be eligible for the 2023 AIP in accordance with its terms upon their termination of employment with
PayPal. For information on the compensation these NEOs received in connection with their termination of employment, see the section below titled “Potential Payments Upon
Termination or Change in Control Table – Executive Departure-Related Compensation.”
The remaining 25% of the Target Incentive Amount for each NEO was determined based on individual performance, to be
delivered in cash, in each case as described below.
NEO
Alex Chriss2
John Kim
Daniel H. Schulman3
Blake Jorgensen3
Gabrielle Rabinovitch3
Peggy Alford3
Aaron Karczmer
Base Salary Used to Calculate Cash Incentive Amount1 ($) Target Cash ($)
328,767
750,000
1,250,000
750,000
750,000
750,000
750,000
164,384
234,375
625,000
234,375
234,375
234,375
234,375
1
In accordance with the terms of the AIP, each NEO’s base salary and AIP Target as of December 1, 2023 was used to calculate the Target Incentive Amount applicable to the cash
portion of the AIP.
2 Mr. Chriss’ Target Cash was prorated based on his start date relative to the performance period.
3 Messrs. Schulman and Jorgensen and Mses. Rabinovitch and Alford ceased to be eligible for the 2023 AIP in accordance with its terms upon their termination of employment with
PayPal. For information on the compensation these NEOs received in connection with their termination of employment, see the section below titled “Potential Payments Upon
Termination or Change in Control Table – Executive Departure-Related Compensation.”
The actual amount of each participating NEO’s 2023 AIP award was determined by the following formula (and for
Mr. Chriss, prorated based on his start date relative to the performance period, in accordance with the terms of the 2023
AIP applicable to employees hired during the performance period):
Base
Salary
Target
Incentive %
Company Performance
75% Weight
Revenue
0-200% Payout
Non-GAAP Operating
Margin
0-200% Payout
Individual
Performance
25% Weight
0-200% Payout
AIP
PAYOUT
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• 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
Company Performance Measures
When designing PayPal’s 2023 executive compensation program, the Compensation Committee evaluated a range of
performance metrics for the purposes of PayPal’s incentive programs and considered input from management and its
independent compensation consultant. The Compensation Committee determined that revenue and non-GAAP operating
margin were the metrics best aligned to PayPal’s strategy entering 2023, and that achievement of goals associated with
those measures would drive strong operational performance results and shareholder returns.
Measure
Weighting Definition
Purpose
Revenue
50%
Revenue, as reported in our Annual
Report on Form 10-K.
Non-GAAP
Operating
Margin
50%
“Non-GAAP Operating Margin,”
as described in “Appendix A:
Reconciliations of Non-GAAP Financial
Measures” to this proxy statement.
The Compensation Committee believes that revenue is a key
financial metric for the Company’s performance and driver of
stockholder value creation.
The Compensation Committee believes that Non-GAAP
Operating Margin is an important measure of our performance
because it measures profitability, reflects the Company’s revenue
growth and expense management discipline and is a key
financial metric of core financial performance and business
activities within our peer group. Non-GAAP Operating Margin is
also a key financial metric that the Company uses internally to
measure ongoing financial performance.
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
The minimum threshold for either revenue or Non-GAAP Operating Margin needed to be met to trigger any payments
under the Company performance component of the AIP. Revenue and Non-GAAP Operating Margin were weighted equally
to determine the payout of the Company performance component of the AIP. The maximum possible payout for the
Company performance portion of the AIP was 200%.
In January 2023, the Compensation Committee established threshold, target, and maximum performance goals for the
revenue and Non-GAAP Operating Margin measures, based primarily on our approved budget and operating plan for the
year and full year guidance provided to the investment community. The table below shows the performance goals for the
AIP applicable to the NEOs and the actual performance achieved. The Compensation Committee believes that the goals
established were rigorous and represented a high degree of operational performance. In addition, the 2023 targets for both
revenue and Non-GAAP Operating Margin were set higher than the actual performance achieved in 2022.
Company Measure
Threshold
(50% Payout)*
Target
(100% Payout)*
Maximum
(200% Payout)*
Actual
Achieved
Actual Achieved
(Percentage of
Target Achieved)
Revenue
(in $ billions)
Non-GAAP
Operating Margin
$27.52
$28.42
$29.32
$29.77
200%
20.40%
22.40%
24.40%
22.43%
102%
Company Performance Score of the AIP
151%
*
Linear interpolation applies to revenue and Non-GAAP Operating Margin for results between specific goals.
Individual Performance Measures
25% of the target incentive amount for our NEOs was based on an individual performance score ranging from 0% to 200%
(the “Individual Performance Score”). At the beginning of 2023, the Compensation Committee discussed with
Mr. Schulman the key factors for determining awards under the AIP, as well as our then-serving NEOs’ expected
contributions to that performance and their respective individual business objectives. Mr. Schulman briefed Mr. Chriss on
the key individual performance factors applicable to the NEOs for the 2023 AIP as part of the transition of his responsibilities
to Mr. Chriss. In early 2024, the Compensation Committee assessed the then-serving NEOs’ individual performance during
2023 against their respective objectives for the year.
• 2024 Proxy Statement
63
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
The key accomplishments of the NEOs that were eligible for an AIP bonus are discussed below.
NEO1
Key Performance Against Objectives
Alex Chriss
• Successfully onboarded into CEO role
• Recruited top talent to fill several key leadership positions
Aaron Karczmer
• Developed and led the end-to-end Servicing Transformation as a company-wide priority to enable the
structural shift from being primarily transaction-focused to primarily customer-focused
John Kim
• Oversaw product, design, and technology organizations, including planning, resource management, and
operations
• Oversaw end-to-end merchant and consumer product strategy, and continued development and
optimization of supporting product capabilities across the consumer and merchant customer segments
• Led the incubation of several new products including the launch of AI checkout, PayPal Complete Payments,
Venmo Commerce and Cash Back rewards
1 Mses. Miller and Gill were not eligible for the 2023 AIP based on their start date with PayPal. Messrs. Schulman and Jorgensen and Mses. Rabinovitch and Alford ceased to be eligible
for the 2023 AIP in accordance with its terms upon their termination of employment with PayPal. For information on the compensation these NEOs received in connection with their
termination of employment, see the section below titled “Potential Payments Upon Termination or Change in Control Table – Executive Departure-Related Compensation.”
In determining the Individual Performance Score for each NEO, the Compensation Committee, with Mr. Chriss’ input,
conducted a thorough review of each applicable NEO’s performance against their various business objectives, taking into
account the relative importance of each objective to PayPal. Mr. Chriss then recommended to the Compensation
Committee each NEO’s Individual Performance Score other than his own. The Compensation Committee made a final
determination, in its sole discretion, as to the Individual Performance Score for each applicable NEO based on this review
and Mr. Chriss’ recommendations. The Compensation Committee also reviewed Mr. Chriss’ performance and determined,
in its sole discretion, the Individual Performance Score for Mr. Chriss.
The Compensation Committee also included in its consideration each applicable NEO’s individual performance ratings
based on (1) each NEO’s demonstrated commitment to PayPal’s Belonging strategy and goals, pursuant to the independent
observation and judgment of PayPal’s people function leadership team; and (2) the risk and compliance reviews by, and
independent observation and judgment of, PayPal’s risk and compliance officers, as well as its own observations and
assessments of the performance of each NEO. In 2023, we continued our multi-year process to incorporate Belonging into
our executive compensation program, and assessed the actions taken by our leaders with the intent to drive measurable
outcomes over time. For 2023, PayPal’s focus was driving purposeful actions to yield more inclusive and diverse outcomes
and engagement with respect to our employee population. The Compensation Committee assessed each NEO’s
participation in our Belonging program based on demonstrable and objective actions taken by the NEO. In addition, the
Compensation Committee assessed whether our Belonging program was producing the intended outcomes. The
Compensation Committee believes that PayPal’s executive compensation program should appropriately support PayPal’s
multi-year, long-term Belonging strategy. The Compensation Committee intends to continue incorporating Belonging
considerations in the executive compensation program, with an increased focus on measurable outcomes resulting from
our NEOs’ active engagement.
Embedding Belonging in our Executive Compensation Program
Our performance evaluation is based on each executive officer’s commitment to building the foundation of a
more inclusive and diverse culture as demonstrated through measurable actions across the employee lifecycle:
Participation in training
and learning journey
for all employees
Diverse pipeline hiring
programs to broaden
our candidate pool
Sponsorship programs
to coach, support, and
enable advancements
among employees
broadly
Focus on building
broad and inclusive
slates for critical role
succession planning
Business-specific
actions to support
retention and
advancement
Based upon evaluation of each individual’s performance achievements as well as assessment of demonstrated
commitment to PayPal’s Belonging strategy and risk and compliance reviews, the Compensation Committee determined
that each individual achieved target performance for the year.
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• 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
AIP Payments
The following table shows the AIP Payout for each participating NEO.1
NEO
Alex Chriss
John Kim
Aaron Karczmer
Target
PBRSUs
(Shares) x
8,225
8,827
8,827
Company
Performance
2023
AIP PBRSU
Payout
Individual
Performance
Score =
(Shares) + Target Cash ($) x
Score =
151%
151%
151%
12,420
13,329
13,329
164,384
234,375
234,375
100%
100%
100%
2023
AIP Cash
Payment ($)
164,384
234,375
234,375
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
1 Mses. Miller and Gill were not eligible for the 2023 AIP based on their start date with PayPal. Messrs. Schulman and Jorgensen and Mses. Rabinovitch and Alford ceased to be eligible
for the 2023 AIP in accordance with its terms upon their termination of employment with PayPal. For information on the compensation these NEOs received in connection with their
termination of employment, see the section below titled “Potential Payments Upon Termination or Change in Control Table – Executive Departure-Related Compensation.”
Long-Term Incentive Compensation
Long-Term Incentive Award Target Values
In making its determination on the LTI target values for our NEOs for 2023, the Compensation Committee set equity award
guidelines and target levels for individual awards by position based on the following:
• equity compensation practices of technology companies in our compensation peer group, as disclosed in their public
filings (see “Our Compensation Peer Group” below for our 2023 peer group) and in proprietary third-party
compensation surveys;
• individual performance and potential;
• the Incentive Compensation Factors (see “How We Determine Incentive Compensation” above);
• any changes to or expansion of scope of role and responsibilities; and
• the need to retain qualified individuals in a highly competitive market for proven executive talent taking into account
their prospective contributions to PayPal.
• 2024 Proxy Statement
65
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
The Compensation Committee determines each of our NEO’s target values based on information available at the beginning
of the year (or, if later, at the time of appointment), including company and individual performance and potential and
competitive market data. The 2023 LTI awards for our NEOs, other than for Mr. Schulman, as described below, (and
excluding the awards described below in the section “Leadership Transition Awards”) were divided equally into (i) PBRSUs
(assuming target performance) with a three-year performance period and (ii) service-based RSUs that vest over three years
(with one-third of the RSUs vesting on the first anniversary of the grant date, and the remainder vesting ratably each
subsequent quarter over the remaining vesting period). Based on the above guidelines, in January 2023, the Compensation
Committee approved the target 2023 LTI awards for our then-serving NEOs, which are set forth in the following table.
Mr. Chriss and Mses. Miller and Gill are not included in the below table as they joined PayPal during 2023; their new hire
equity awards are described above in the section titled “Leadership Changes and Related Compensation.”
NEO
John Kim
Daniel H. Schulman
Blake Jorgensen
Gabrielle Rabinovitch
Peggy Alford
Aaron Karczmer
Target LTI
Grant
Value ($)1
$8,000,000
Target
PBRSUs
Value ($)
(Shares)2
Service-
Based RSUs
($) (Shares)2
$4,000,000
(50,676 shares)
$4,000,000
(50,676 shares)
CEO
Transition
Performance-
Based RSU
Awards ($)
(Shares)2
$18,700,000
$6,000,000
(76,014 shares)
$6,000,000
(76,014 shares)
$6,700,000
(84,882 shares)
—
—
—
$7,500,000
$3,750,000
(47,509 shares)
$3,750,000
(47,509 shares)
$7,500,000
$3,750,000
(47,509 shares)
$3,750,000
(47,509 shares)
$7,500,000
$3,750,000
(47,509 shares)
$3,750,000
(47,509 shares)
1
2
Reflects the Target LTI Grant Value for awards granted to NEOs listed in the table in 2023. This table excludes the awards described below in the section “Leadership Transition
Awards.”
The target number of PBRSUs and number of service-based RSUs granted was determined by dividing the total grant value of the award by the Average Closing Price. The PBRSUs,
service-based RSUs and CEO Transition Performance-Based RSU Awards listed in this table were granted on March 1, 2023 to the then-serving NEOs.
In determining Mr. Schulman’s long term incentive compensation target value and design, the Board considered the
following:
Our performance
against financial, strategic and operational
objectives, and our stockholders’ experience
As a result of an assessment of our performance, our CEO’s LTI target value was
reduced year-over-year, from $24M in 2022 to $18.7M in 2023, reflecting our pay-for-
performance philosophy
The need to ensure
an orderly CEO transition
We granted Mr. Schulman two CEO Transition Performance-Based RSU Awards of equal
value that were designed to vest contingent on Mr. Schulman’s successful completion
of two performance conditions related to the recruitment and onboarding of a new
CEO. One award vested upon the new CEO’s start date and the other was scheduled to
vest in June 2024, in anticipation of and conditioned upon Mr. Schulman completing the
transitioning of his duties and stepping down from the Board of Directors in May 2024 at
the end of his current term.
Ultimately, Mr. Schulman facilitated a smooth and effective transition, enabling
Mr. Chriss to onboard more quickly than anticipated and allowing Mr. Schulman to
complete the transition and depart from the Board in December 2023. The
Compensation Committee determined that it would be appropriate to accelerate the
vesting of the performance-based RSUs granted with respect to the second
performance condition to match the timing of Mr. Schulman’s retirement from the Board,
as Mr. Schulman’s performance of his transition responsibilities had been completed
The need to maintain Mr. Schulman’s
alignment to long-term performance and
ensure his focus on execution during the
remainder of his tenure
Mr. Schulman’s 2023 LTI included PBRSUs with a three-year performance period from
January 1, 2023 through December 31, 2025, with metrics described below, and RSUs
that would vest one-third each on the first, second and third anniversary of the grant
date, assuming his employment ultimately terminated due to a Qualifying Retirement
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• 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
Performance-Based Restricted Stock Units (PBRSUs)
In January 2023, the Compensation Committee approved the following structure for the multi-year PBRSUs granted in 2023
(the “2023-2025 PBRSUs”).
• Three-year performance period from January 1, 2023 through December 31, 2025, to emphasize the importance of long-
term, sustained strategic growth.
• Awards to be settled in shares of PayPal common stock, subject to the Compensation Committee’s approval of the
level of achievement against the pre-established goals for two performance measures: “FX-Neutral” Revenue
compound annual growth rate (“CAGR”) and Free Cash Flow CAGR.
Performance Measures and Rationales
The Compensation Committee believes that measuring CAGR over the three-year performance period is an appropriate
performance measure as it is aligned with our long-term goal of growing revenue and free cash flow.
The following table describes the two performance measures for the 2023-2025 PBRSUs and the Compensation
Committee’s rationale for their selection.
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
Measure
Weighting Definition
Purpose
FX-Neutral
Revenue
CAGR
50%
Revenue calculated on a fixed foreign
exchange basis (referred to as “FX-
Neutral”).
The Compensation Committee believes that the FX-Neutral
Revenue measure makes our executive officers accountable for
driving profitable growth while making appropriate tradeoffs
between investments that increase future revenue growth and
operating expense.
Free Cash
Flow CAGR
50%
“Free Cash Flow” as described in
“Appendix A: Reconciliation of Non-
GAAP Financial Measures” to this
proxy statement.
The Compensation Committee believes that the Free Cash Flow
measure reinforces the importance of PayPal’s cash generation
capability so we can finance continued growth and investment
requirements and remain well-positioned to take advantage of
inorganic growth opportunities.
PBRSU Mechanics and Targets
Each year, in establishing performance goals for the new three-year performance period, the Compensation Committee
considers a number of key factors, including PayPal’s:
• medium-term business plan;
• strategic direction and initiatives;
• historical performance and goals set for prior performance periods; and
• potential extraordinary events that could have a disproportionate impact on the alignment of performance and
compensation.
The targets set by the Compensation Committee are intended to be rigorous and consistent with the medium-term outlook
provided to the investment community and our medium-term business plan. The specific goals for the 2023-2025 PBRSUs
are intended to be challenging but attainable to provide appropriate incentives for our executive officers to continue to
grow our business. The Compensation Committee believes that achievement of maximum performance against the target
levels would require sustained exceptional performance over the performance period.
The two LTI performance measures are independent. If either threshold goal is met, awards will be earned with respect to
that performance measure consistent with the weighting shown in the table above. If the performance threshold for a
measure is not met, there will be no payment attributable to that performance measure. If neither performance threshold is
met, no shares of PayPal common stock subject to the 2023-2025 PBRSUs will be awarded.
We do not disclose the specific performance goals for the 2023-2025 PBRSUs in this proxy statement for competitive
reasons. For each measure, performance at the threshold level will result in a payout of 50% of target, performance at the
target level will result in a payout of 100% of target and performance at the maximum level will result in a payout of 200% of
target. Linear interpolation is applied to performance between threshold, target and maximum levels. The performance
targets and achievement levels for the 2021-2023 PBRSUs are shown below to provide insight into the rigor of the targets
the Compensation Committee sets.
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67
COMPENSATION DISCUSSION AND ANALYSIS
2023 Compensation Framework and Decisions
Settlement of Previously Awarded 2021-2023 PBRSUs
The Compensation Committee set the targets for the 2021-2023 PBRSUs at the beginning of the performance period. The
percentage of target achieved for the 2021-2023 PBRSUs was 0%.
The following chart shows the minimum, target and maximum vesting levels for FX-Neutral Revenue CAGR and Free Cash
Flow CAGR for the 2021-2023 PBRSUs, the actual results for each measure, and the corresponding percentage of target
achieved.
PayPal Performance
Measure
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(200% Payout)
FX-Neutral Revenue CAGR
Free Cash Flow CAGR
15.5%
13.0%
17.5%
15.0%
18.5%
16.0%
Actual Achieved
(Percentage of
Target Achieved)
0.0%
0.0%
Aggregate Percent of Target Achieved
0.0%
Accordingly, each of the NEOs did not earn any shares with respect to the 2021-2023 PBRSUs.
Restricted Stock Units (RSUs)
Our 2023 LTI awards also included service-based RSUs with a three-year vesting schedule. These RSU awards vest one-
third on the first anniversary of the grant date, with the remainder vesting ratably each following quarter over the remaining
vesting period, subject to the continued employment of the NEO. Service-based RSUs have value regardless of whether
our stock price increases or decreases, and are designed to help secure and retain our executive officers and provide an
appropriate incentive for them to remain with us during the vesting period.
Leadership Transition Awards
On April 15, 2023, Ms. Alford, Ms. Rabinovitch, Mr. Karczmer and Mr. Kim were granted service-based RSUs with a two-year
vesting schedule, which vest in full on the second anniversary of their grant date, subject to the continued employment of
the NEO with PayPal (the “Leadership Transition RSUs”).
The number of shares subject to the Leadership Transition RSUs was determined by dividing (x) the Leadership Transition
RSU Value set forth in the following table by (y) the average closing PayPal share price as reported on the NASDAQ Global
Select Market for the period of 30 consecutive trading days ending on (and including) the last trading day prior to April 15,
2023 (the grant date), and rounding up to the nearest whole share.
The Leadership Transition RSU Value of each NEO’s award was determined by the Compensation Committee to provide
retention incentives to the recipients to remain employed with PayPal in the face of significant perceived continuing
employment uncertainty driven by our planned CEO transition. In light of that transition, the Compensation Committee
believed near-term stability within these NEOs’ roles until a new CEO was identified was particularly critical to minimizing
disruption to our business and, ultimately, facilitating a more effective and efficient transition.
NEO
John Kim
Gabrielle Rabinovitch
Peggy Alford
Aaron Karczmer
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• 2024 Proxy Statement
Leadership Transition RSU Value ($)
1,000,000
2,000,000
2,500,000
3,000,000
COMPENSATION DISCUSSION AND ANALYSIS
Other Compensation Elements
Other Compensation Elements
Deferred Compensation
P
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The DCP, our non-qualified deferred compensation plan, provides our U.S.-based executive officers the opportunity to
defer compensation in excess of the amounts that are legally permitted to be deferred under our tax-qualified 401(k)
savings plan (the “401(k) Plan”). Each of the 401(k) Plan and the DCP allows participants to set aside tax-deferred amounts.
The Compensation Committee believes the opportunity to defer compensation is a competitive benefit that enhances our
ability to attract and retain talented executives while building plan participants’ long-term commitment to PayPal. The
investment return on the deferred amounts is linked to the performance of a range of market-based investment choices.
Other Benefits
We provide certain executive officers with perquisites and other personal benefits that the Compensation Committee
believes are reasonable and consistent with our overall executive compensation program and philosophy and that will help
us attract and retain these executive officers, as set forth below. The Compensation Committee periodically reviews the
levels of these benefits provided to our executive officers.
CEO Security Program
We maintain a comprehensive security policy, and we may determine that in certain circumstances, certain executive
officers should be required to have personal security protection. We require these executives to accept such personal
security protection because we believe it is in the best interests of PayPal and our stockholders that our executives and
their family members not be vulnerable to security threats.
Because PayPal is a highly visible company, the Compensation Committee authorized a CEO security program to address
safety concerns, which include specific threats to our CEO’s safety arising directly as a result of his position as our
President and CEO. In connection with this program, we paid to procure, install and maintain personal residential security
measures and for the costs of security personnel during personal travel for Mr. Chriss (and previously, Mr. Schulman). In
addition, the Compensation Committee has approved Mr. Chriss’ (and previously, Mr. Schulman’s) use of our corporate
aircraft for personal travel in connection with his overall security program.
We believe the costs of this overall security program are reasonable, appropriate and benefit PayPal. Although we do not
consider the CEO overall security program to be a perquisite for the benefit of either Mr. Chriss or Mr. Schulman for the
reasons described above, the costs related to personal security measures for them at their residence and during personal
travel, as well as the costs of our corporate aircraft for personal travel, are reported in the “All Other Compensation” column
in the 2023 Summary Compensation Table below.
Our Structure for Setting Compensation
Roles and Responsibilities
Compensation Committee
Our executive compensation program is designed and administered under the direction and control of the Compensation
Committee, which is made up solely of independent directors. The Compensation Committee reviews and approves our
overall executive compensation program, policies and practices and sets the compensation of our executive officers,
including our NEOs.
Compensation Consultant
The Compensation Committee’s independent compensation consultant provides advice and resources to help the
Compensation Committee assess the effectiveness of our executive compensation strategy and program. The
compensation consultant reports directly to the Compensation Committee, and the Compensation Committee has the
sole power to terminate or replace the consultant at any time. Compensia has served as the Compensation Committee’s
compensation consultant since 2016.
The Compensation Committee directed Compensia to help members of management obtain the information necessary for
management to formulate recommendations to the Compensation Committee, which are evaluated by Compensia. A
representative of Compensia also attends Compensation Committee meetings, in executive session with no members of
management present, and meets with the Chair and members of the Compensation Committee outside of regular
meetings.
• 2024 Proxy Statement
69
COMPENSATION DISCUSSION AND ANALYSIS
Our Structure for Setting Compensation
As part of its engagement in 2023, Compensia provided an environmental scan of executive compensation, evaluated our
compensation peer group composition, evaluated executive cash and equity compensation levels at our compensation
peer group companies, reviewed proposed compensation adjustments and changes to existing arrangements, advised on
the framework for our annual and long-term incentive awards, assessed executive perquisites relative to peer and broader
market practices and reviewed proposed compensation arrangements for new executives, as well as the compensation of
our non-employee directors. Compensia did not provide any other services to us in 2023.
Recognizing the importance of objective advice, the Compensation Committee closely examines the procedures and
safeguards of its compensation consultant to ensure that its services are objective. The Compensation Committee has
assessed the independence of Compensia pursuant to the applicable Nasdaq listing standards and SEC rules and
concluded that Compensia’s work for the Compensation Committee does not raise any conflict of interest.
CEO and the People Function
The Compensation Committee works with members of our management team, including Mr. Chriss and Ms. Cruz, our EVP,
Chief People Officer, to formulate the specific plan and award designs, including performance measures and performance
target levels, necessary to align our executive compensation program with our business objectives and strategies.
Mr. Chriss reviews with the Compensation Committee his performance evaluations of each of our other NEOs together with
his recommendations regarding base salary adjustments, annual incentive awards and long-term incentives to allow the
Compensation Committee to consider our financial and operational results as well as individual performance in its
compensation decisions. The Compensation Committee makes all final decisions regarding the compensation of all our
NEOs.
While certain members of management attended the meetings of the Compensation Committee in 2023 by invitation, they
did not attend executive sessions of the meetings or portions of Compensation Committee meetings during which their
individual compensation was discussed or approved.
Our Compensation Peer Group
Our compensation peer group is made up of technology companies and financial companies. This mix is intended to
provide the Compensation Committee with insight into the differences across these two business sectors in which we
generally compete for executive talent.
In deciding whether a company should be included in our compensation peer group, the Compensation Committee
generally considers the following screening criteria:
• revenue;
• market capitalization;
• historical growth rates;
• primary line of business;
• whether the company has a recognizable and well-regarded brand; and
• whether we compete with the company for executive talent.
Each member of the compensation peer group was chosen based on one or more of the factors listed above, but not all
factors were relevant for every peer company. While some of the compensation peer group members may be significantly
larger than PayPal in terms of revenue or market capitalization, the Compensation Committee has determined that such
companies should be included in the peer group primarily because we compete with them for talent.
Our compensation peer group for 2023 was composed of 10 technology companies and nine financial companies with
which we generally compete for talent. Applying the criteria described above and in order to improve the comparability of
our compensation peer group, in consultation with Compensia, the Compensation Committee removed Alphabet Inc.,
Amazon.com, Inc. and Meta Platforms, Inc. from our compensation peer group and added Capital One Financial
Corporation, Shopify Inc. and Uber Technologies, Inc.
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• 2024 Proxy Statement
Peer Group Companies
COMPENSATION DISCUSSION AND ANALYSIS
Our Structure for Setting Compensation
P
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Technology Companies
Financial Companies
• Adobe Inc.
• Apple Inc.
• Block, Inc.
• Intuit Inc.
• Netflix, Inc.
• Oracle Corporation
• Salesforce, Inc.
• ServiceNow, Inc.
• Shopify Inc.
• Uber Technologies, Inc.
•
American Express
Company
•
Capital One Financial
Corporation
• Discover Financial Services
• Fidelity National
Information Services, Inc.
• Fiserv Inc.
• Global Payments Inc.
• JP Morgan Chase & Co.
• Mastercard Incorporated
• Visa Inc.
In assessing our executive compensation program for 2023 and going forward, the Compensation Committee considered
the compensation programs of our compensation peer group as well as our goals of rewarding performance and retaining
core top talent. We also compare our performance against the performance of companies in our compensation peer group
that we believe have relatively comparable business models. Our executive compensation program is generally designed
to roughly parallel the programs of members of our compensation peer group because our employees have historically
been recruited by these competitors.
Other Compensation Practices and Policies
Stock Ownership Guidelines
Our Board has adopted stock ownership guidelines designed to closely align the interests of our senior leadership team
(including our executive officers) with the long-term interests of our stockholders. Under these guidelines, our executive
officers are required to achieve ownership of our common stock valued at the following multiple of their annual base salary,
as applicable:
• CEO: six times base salary
• Executive Vice Presidents: three times base salary
• Senior Vice Presidents who are members of the senior leadership team: two times base salary
Each executive officer is expected to meet the applicable guideline level within five years of becoming subject to these
requirements and to continuously own sufficient shares to meet the guideline level for as long as they remain an executive
officer.
Executive officers who have not yet satisfied their applicable guideline level are required to retain 25% of the net shares of
our common stock that they receive as the result of the exercise, vesting or payment of any equity awards granted to them.
Shares that count towards satisfaction of the stock ownership guidelines include the following:
• shares owned outright by the executive officer or their immediate family members residing in the same household;
• shares held in trusts, limited liability companies or similar entities for the benefit of the executive officer or, in each case,
their immediate family members; and
• deferred shares, vested deferred stock units (“DSUs”), deferred RSUs or deferred PBRSUs that may only be settled in
shares of our common stock.
• 2024 Proxy Statement
71
COMPENSATION DISCUSSION AND ANALYSIS
Other Compensation Practices and Policies
Unearned RSU and PBRSU awards do not count toward ownership under the stock ownership guidelines.
Our stock ownership guidelines are available on the Governance section of our Investor Relations website at
https://investor.pypl.com/governance/governance-overview/default.aspx.
Hedging and Pledging Policy
Our insider trading policy prohibits all directors, executive officers and employees from entering (directly or indirectly) into
any hedging or monetization transactions relating to our securities, including prepaid variable forward contracts, equity
swaps, collars and exchange funds, or any other transaction that hedges or offsets, or is designed to hedge or offset, any
decrease in the market value of PayPal securities owned directly or indirectly by such person. Additionally, directors,
executive officers and employees are prohibited from using PayPal derivative securities as collateral in a margin account or
for any loan or extension of credit, or otherwise trading in any instrument relating to the future price of our securities, such
as a put or call option, futures contract, short sale (including a short sale “against the box”), collar, or other derivative
security. Our insider trading policy also prohibits all directors and executive officers from pledging our common stock as
collateral for loans. Other employees are strongly discouraged from pledging PayPal securities as collateral for loans.
Clawback Policy and Mandatory Recovery Policy
We have a clawback policy that applies to incentive compensation (including cash and time-based and performance-
based equity awards) paid or awarded to any NEO or other officer in a vice president or more senior position (“covered
employees”). The occurrence of any of the following events will trigger the clawback policy:
• a covered employee materially violates our Code of Conduct;
• a covered employee causes material financial or reputational harm to PayPal; or
• a material restatement of all or a portion of our financial statements due to a supervisory or other failure by a covered
employee in a senior vice president (or more senior) position or any covered employee who is a vice president in
PayPal’s finance function.
The clawback policy provides that the Compensation Committee will determine in its discretion whether any of the above
triggering events has occurred, and if so, whether to require the full or partial forfeiture and/or repayment of any incentive
compensation covered by the policy based on the facts and circumstances. The forfeiture and/or repayment may include
the following:
• any incentive compensation that is greater than the amount that would have been paid to the covered employee had
the triggering event been known;
• any outstanding or unpaid incentive compensation, whether vested or unvested, that was awarded to the covered
employee; and/or
• any incentive compensation that was paid to or received by the covered employee (including gains realized through
the exercise of stock options) during the 12-month period preceding the date on which we had actual knowledge of the
triggering event or the full impact of the triggering event was known (or such longer period of time as may be required
by any applicable statute or government regulation).
In addition, in 2023, we adopted a mandatory recovery policy applicable to our current and former Section 16 officers to
comply with Exchange Act Rule 10D-1 and the Nasdaq listing standards regarding recovery of erroneously awarded
compensation in the event of an accounting restatement.
PayPal continues to monitor its clawback policy and mandatory recovery policy to ensure that they are consistent with
applicable laws and best corporate governance practices.
72
• 2024 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Other Compensation Practices and Policies
Severance and Change in Control Provisions
Executive Severance Plan
PayPal maintains the Executive Severance Plan, which replaced and superseded all prior plans and agreements providing
for severance payments and benefits, including those in prior individual agreements and severance plans. Under the
Executive Severance Plan, each actively employed NEO is eligible to receive payments and benefits in the event of certain
terminations of employment, including an involuntary termination of employment by PayPal without cause or by the
executive for good reason. The Executive Severance Plan includes the ELTIP adopted by the Compensation Committee
effective July 1, 2021, which provides additional severance benefits to NEOs, including equity vesting provisions and
continued health benefits upon a qualifying retirement, job elimination, death or disability.
No payments or benefits are provided under the Executive Severance Plan if there is a change in control of PayPal without
an accompanying qualifying termination of employment (i.e., we do not provide any “single-trigger” change in control
payments). We also do not provide any of our NEOs with any excise tax “gross-ups” or other payment or reimbursement of
excise taxes on severance or other payments in connection with a change in control of PayPal.
P
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X
Y
S
T
A
T
E
M
E
N
T
The Compensation Committee believes that the Executive Severance Plan is essential to fulfill PayPal’s objective of
recruiting, developing and retaining key, high-quality management talent in a competitive market because these
arrangements provide reasonable protection to executives in the event they are not retained under specific circumstances.
The Executive Severance Plan is also intended to facilitate changes to the leadership team by setting terms for the
termination of the employment of an NEO in advance, which allows for a smoother transition of responsibilities when it is
deemed to be in PayPal’s best interest. The change in control provisions in the Executive Severance Plan are intended to
allow our executives to focus their attention on our business operations despite the potentially disruptive impact of a
proposed change-in-control transaction, to assess takeover bids objectively without regard to the potential impact on their
individual job security and to allow for a seamless transition in the event of a change in control of PayPal. These
considerations are especially important in light of the executives’ key leadership roles.
See “Potential Payments Upon Termination or Change in Control” below for a description of these arrangements and the
estimated payments and benefits payable under the Executive Severance Plan as of December 31, 2023.
As noted above under the heading “Leadership Changes and Related Compensation” and below under the heading
“Potential Payments Upon Termination or Change in Control Table—Executive Departure-Related Compensation”, each of
Messrs. Schulman and Jorgensen and Mses. Rabinovitch and Alford terminated employment with PayPal before the Record
Date and Mr. Karczmer’s employment with PayPal will terminate prior to the date of the 2024 Annual Meeting. Their
severance entitlements are generally aligned with the Executive Severance Plan, with the exception of Ms. Rabinovitch’s
and Mr. Schulman’s transition arrangements. Please refer to such sections for details on the severance that each of the
NEOs who departed prior to the Record Date received and that Mr. Karczmer will receive and the circumstances of their
separations.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code (as amended, “Section 162(m)”) generally limits tax deductibility of
compensation paid by a public company to its chief executive officer, chief financial officer and certain other current and
former executive officers in any year to $1 million in the year compensation becomes taxable to the executive officer. The
Compensation Committee will award non-deductible compensation where it believes doing so is in our and our
stockholders’ best interests, regardless of its deductibility.
We account for stock-based compensation in accordance with FASB ASC Topic 718, which requires us to recognize
compensation expense for share-based payments, including stock options, RSUs, PBRSUs, shares of common stock and
other forms of equity compensation.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by
Item 402(b) of Regulation S-K with management. Based on its review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and
incorporated by reference into PayPal’s 2023 Annual Report on Form 10-K.
The Compensation Committee of the Board
David W. Dorman (Chair)
Jonathan Christodoro
Gail J. McGovern
• 2024 Proxy Statement
73
COMPENSATION TABLES
2023 Summary Compensation Table
Compensation Tables
2023 Summary Compensation Table
The following table summarizes the total compensation paid to and received and earned by each of our NEOs for the fiscal
year ended December 31, 2023 and, to the extent required under SEC rules, the fiscal years ended December 31, 2022 and
December 31, 2021.
Name and
Principal Position (a)
Year
(b)
Salary
($)(c)
Bonus
($)(d)
Stock
Awards
($)(e)
Option
Awards
($)(f)
Non-Equity
Incentive Plan
Compensation
($)(g)
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
($)(h)
2023 302,885
— 41,137,646
—
164,384
Alex Chriss
President &
Chief Executive Officer
Jamie Miller
EVP, Chief Financial
Officer
2023
100,962 3,000,0001 8,825,116
—
—
—
Michelle Gill
2023
80,769 1,000,0001 8,825,116
—
EVP, General Manager -
Small Business &
Financial Services Group
John Kim
EVP, Chief
Product Officer
Daniel H. Schulman
Former President &
Chief Executive Officer
Blake Jorgensen
Former Chief
Financial Officer
Gabrielle Rabinovitch
Former Acting
Chief Financial Officer
Peggy Alford
Former EVP,
Global Sales
Aaron Karczmer
Former EVP,
Chief Enterprise
Services Officer
2023 750,000 1,000,0002 12,034,764
—
234,375
2023
947,115
— 20,020,6983
2022 1,250,000
— 20,182,730
2021
1,122,115
— 29,920,381
2023 548,077 2,000,0002
702,1074
2022 302,885 4,000,000 10,336,008
2023 750,000
— 10,949,045
2022 534,231 1,035,000 6,233,422
2023 750,000
— 10,288,003
2022
736,731
— 8,353,168
2021 674,423 250,000 9,377,300
2023 750,000
— 10,801,825
2022
736,731
— 8,353,168
2021 674,423
— 9,377,300
—
—
—
—
—
—
—
—
—
—
—
—
—
—
312,500
625,000
—
73,684
—
210,938
—
199,219
325,000
234,375
187,500
325,000
All Other
Compensation
($)(i)
Total
($)
311,840 41,916,755
3,462 11,929,539
923 9,906,808
13,200 14,032,339
1,171,141 22,138,954
212,692 21,957,922
402,857 32,070,353
2,700,700 5,950,884
— 14,712,576
234,375 11,933,420
— 8,013,590
247,575 11,285,578
12,200 9,301,318
11,600 10,638,323
13,200 11,799,400
12,200 9,289,599
11,600 10,388,323
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
2
3
4
This amount represents the portion of the Cash Sign-On Bonus offered to Mses. Miller and Gill (as applicable) that was paid in 2023. See the section titled “Offer Letter Compensation
for New NEOs” in the CD&A for more information.
This amount represents the final portion of a Cash Sign-On Bonus offered to Messrs. Kim and Jorgensen (as applicable) in connection with the commencement of their employment
with PayPal.
This amount represents the grant date value of equity awards granted to Mr. Schulman in 2023, as well as the incremental fair value, calculated in accordance with SEC disclosure
rules, associated with modification to his 2023 AIP PBRSU award equal to $670,713, which was modified to be eligible for continued vesting in accordance with the Schulman
Retirement Agreement. The modification value does not represent any newly granted awards. See the section titled “Executive Departure-Related Compensation” for more
information.
This amount represents the grant date value of equity awards granted to Mr. Jorgensen in 2023, as well as the incremental fair value, calculated in accordance with SEC disclosure
rules, associated with the modification to his 2023 AIP PBRSU award equal to $14,395, which was modified in accordance with the Jorgensen Separation Agreement. The
modification value does not represent any newly granted awards. See “Executive Departure-Related Compensation” for additional details.
74
• 2024 Proxy Statement
COMPENSATION TABLES
2023 Summary Compensation Table
Stock Awards – Column (e)
Amounts shown represent the grant date fair value of RSUs and PBRSUs (including PBRSUs under the AIP) granted to each
of our NEOs as computed in accordance with FASB ASC Topic 718. The grant date fair value of RSUs is determined using
the fair value of the underlying common stock on the grant date.
The assumptions used by PayPal in calculating the grant date fair value of the stock awards are incorporated herein by
reference to Note 15 to the consolidated financial statements contained in PayPal’s 2023 Annual Report on Form 10-K. The
estimated fair value of PBRSUs is calculated based on the probable outcome of the performance measures for the
applicable performance period as of the grant date of the award for accounting purposes.
Assuming the highest level of performance is achieved under the applicable performance measures for the 2023 AIP
PBRSUs and the 2023-2025 PBRSUs, the maximum possible value of the awards using the fair value of the underlying
common stock on the date that the awards were granted for accounting purposes is presented below:
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
Name
Alex Chriss
Jamie Miller
Michelle Gill
John Kim
Daniel H. Schulman
Blake Jorgensen
Gabrielle Rabinovitch
Peggy Alford
Aaron Karczmer
Maximum Value of 2023 AIP PBRSUs
(as of Grant Date for Accounting Purposes) ($)
Maximum Value of 2023-2025 PBRSUs
(as of Grant Date for Accounting Purposes) ($)
917,088
—
—
1,375,423
3,667,847
1,375,423
1,375,423
1,375,423
1,375,423
31,613,484
—
—
13,157,010
11,277,437
—
9,398,013
7,048,435
7,048,435
Non-Equity Incentive Plan Compensation – Column (g)
Amounts represent cash (non-equity) performance-based compensation earned under the individual performance portion
of the AIP. The Company performance portion of the annual incentive payout was delivered in PBRSUs and is reflected in
the “Stock Awards” column. See the section titled “PayPal Annual Incentive Plan” in the CD&A for a more detailed
discussion.
• 2024 Proxy Statement
75
COMPENSATION TABLES
2023 Summary Compensation Table
All Other Compensation – Column (i)
The dollar amounts for each perquisite and each other item of compensation shown in the “All Other Compensation”
column and in this footnote represent PayPal’s incremental cost of providing the perquisite or other benefit to our NEOs, net
of any amounts reimbursed by our NEOs and are valued based on the amounts accrued for payment or paid to the service
provider or NEO, or, in the case of perquisites or other benefits, the aggregate incremental cost to PayPal, as applicable.
See the section titled “Other Benefits” in the CD&A for additional details on these benefits. Amounts include the following
perquisites and other compensation provided to our NEOs in 2023.
Name
Alex Chriss
Jamie Miller
Michelle Gill
John Kim
Daniel H. Schulman
Blake Jorgensen
Gabrielle Rabinovitch
Peggy Alford
Aaron Karczmer
401(k) Match1 ($)
Other Benefits ($) Total ($)
Perquisites and
9,615
3,462
923
13,200
13,200
13,200
—
13,200
13,200
302,2252
311,840
—
—
—
3,462
923
13,200
1,157,9413
1,171,141
2,687,5004 2,700,700
234,3754
234,375
234,3754
247,575
—
13,200
1
2
3
4
Represents matching contributions under the PayPal 401(k) Savings Plan.
Represents costs related to Mr. Chriss’ overall security program, which consisted of $302,225 related to the procurement, installation and maintenance of personal security
measures for Mr. Chriss.
This amount represents $215,056 in costs related to Mr. Schulman’s overall security program, which consisted of the following:
• $107,083 related to the maintenance of personal security measures for Mr. Schulman.
• $107,973 related to personal use of our corporate aircraft, calculated based on the aggregate incremental cost to PayPal.
This amount also represents $942,885 paid to Mr. Schulman in connection with his retirement from PayPal, which consisted of:
• $302,885 of continued base salary for remainder of fiscal year 2023 following Mr. Schulman’s retirement as President and CEO effective September 26, 2023 (i.e., from
September 27, 2023 through December 31, 2023).
• $625,000, which was equivalent to Mr. Schulman’s individual performance component of the 2023 AIP at target.
• $15,000 in reimbursed legal fees under the Schulman Retirement Agreement.
See the section titled “Chief Executive Officer Transition” in the CD&A for more information.
This amount represents the cash severance payments made to the NEO under their separation or transition agreement, as applicable, with PayPal. See the section titled “Chief
Financial Officer Transition” in the CD&A and “Executive Departure-Related Compensation” below for more information.
76
• 2024 Proxy Statement
2023 Grants of Plan-Based Awards Table
The following table sets forth information regarding grants of plan-based awards to each of our NEOs for the fiscal year
ended December 31, 2023.
COMPENSATION TABLES
2023 Grants of Plan-Based Awards Table
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards2
Estimated Future Payouts
Under Equity Incentive Plan
Awards3
Approval
Date (b)
Grant
Date (c)
Threshold
($)(d)
Target
($)(e)
Maximum
($)(f)
Threshold
(#)(g)
Target
(#)(h)
Maximum
(#)(i)
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or
Units4
(#)(j)
Grant
Date
Fair
Value of
Stock
and
Option
Awards5
($)(m)
Name
Alex Chriss
2023 AIP – Cash
2023 AIP – PBRSUs
2023-2025 PBRSUs
RSUs
8/10/23
10/15/23
8/10/23
10/15/23
8/10/23
10/15/23
Supplemental New Hire Make Whole RSUs
8/10/23
10/15/23
Dan Schulman
2023 AIP – Cash6
2023 AIP – PBRSUs6
2023-2025 PBRSUs
RSUs
1/25/23
2/15/23
2/28/23
3/1/23
2/28/23
3/1/23
CEO Transition PBRSUs7
2/28/23
3/1/23
CEO Transition PBRSUs8
2/28/23
3/1/23
Jamie Miller
RSUs
10/23/23
12/15/23
RSUs – Supplemental New Hire
10/23/23
12/15/23
Gabrielle Rabinovitch
2023 AIP – Cash
2023 AIP – PBRSUs
2023-2025 PBRSUs
1/25/23
2/15/23
2/28/23
3/1/23
2023-2025 PBRSUs – Supplemental9
9/27/22
3/1/23
RSUs
2/28/23
3/1/23
RSUs – Leadership Transition Award
3/23/23
4/15/23
Blake Jorgensen10
2023 AIP – Cash
— 164,384
328,768
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,056
8,225
16,450
—
458,544
70,882 283,529
567,058
— 15,806,742
—
—
—
—
— 279,359 15,574,264
—
166,782 9,298,097
— 625,000 1,250,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,885 23,539
47,078
— 1,833,92312
19,004
76,014
152,028
— 5,638,719
—
—
—
—
—
—
—
—
—
—
—
76,014 5,611,353
—
42,441 3,132,995
—
42,441 3,132,995
—
109,136 6,685,671
— 34,924 2,139,444
— 234,375
468,750
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,207
8,827
17,654
11,877 47,509
95,018
— 3,524,218
3,959
15,837
31,674
—
1,174,789
—
—
—
—
—
47,509 3,507,114
—
26,855 2,055,213
—
—
—
687,712
2023 AIP – PBRSUs
1/25/23
2/15/23
—
—
—
2,207
8,827
17,654
— 234,375
468,750
—
—
—
Peggy Alford
2023 AIP – Cash
2023 AIP – PBRSUs
2023-2025 PBRSUs
RSUs
1/25/23
2/15/23
2/28/23
3/1/23
2/28/23
3/1/23
RSUs – Leadership Transition Award
3/23/23
4/15/23
—
—
—
—
—
—
—
—
—
—
—
—
— 234,375
468,750
—
—
—
—
—
—
—
—
687,71212
—
687,712
2,207
8,827
17,654
11,877 47,509
95,018
— 3,524,218
—
—
—
—
—
47,509 3,507,114
— 33,568 2,568,959
• 2024 Proxy Statement
77
COMPENSATION TABLES
2023 Grants of Plan-Based Awards Table
Name
Michelle Gill
RSUs
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards2
Estimated Future Payouts
Under Equity Incentive Plan
Awards3
Approval
Date (b)
Grant
Date (c)
Threshold
($)(d)
Target
($)(e)
Maximum
($)(f)
Threshold
(#)(g)
Target
(#)(h)
Maximum
(#)(i)
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or
Units4
(#)(j)
Grant
Date
Fair
Value of
Stock
and
Option
Awards5
($)(m)
10/23/23
12/15/23
—
—
—
—
—
—
—
—
—
—
—
109,136 6,685,671
— 34,924 2,139,444
RSUs – Supplemental New Hire
10/23/23
12/15/23
Aaron Karczmer
2023 AIP – Cash
2023 AIP – PBRSUs
2023-2025 PBRSUs
RSUs
1/25/23
2/15/23
2/28/23
3/1/23
2/28/23
3/1/23
RSUs – Leadership Transition Award
3/23/23
4/15/23
John Kim
2023 AIP – Cash
2023 AIP – PBRSUs
2023-2025 PBRSUs
1/25/23
2/15/23
2/28/23
3/1/23
2023-2025 -PBRSUs – New Hire11
8/29/22
3/1/23
RSUs
2/28/23
3/1/23
RSUs – Leadership Transition Award
3/23/23
4/15/23
— 234,375
468,750
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,207 8,827
17,654
11,877 47,509
95,018
— 3,524,218
—
—
—
—
—
47,509 3,507,114
— 40,282 3,082,781
—
—
—
687,712
— 234,375
468,750
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,207 8,827
17,654
12,669 50,676
101,352
— 3,740,902
9,502 38,007
76,014
— 2,819,359
—
—
—
—
—
50,676 3,759,146
—
13,428 1,027,645
—
—
—
687,712
1
2
3
4
5
6
7
8
The Compensation Committee approved the AIP design and performance measures with respect to the 2023 AIP PBRSUs granted to the NEOs on January 25, 2023. The 2023 Target
Incentive Amounts for executives did not change as compared to the 2022 PayPal Annual Incentive Plan. The Compensation Committee ratified the Target Incentive Amounts for the
NEOs on February 28, 2023.
The amounts shown represent potential non-equity incentive plan awards under the individual performance portion of the AIP. Maximum amounts represent 200% of the NEO’s
target incentive amount under the AIP. Mr. Chriss’ target incentive amount was prorated based on the number of days during 2023 that he was employed by PayPal, in accordance
with the terms of the AIP. For more information on the AIP, including actual payouts for the AIP, see the section titled “PayPal Annual Incentive Plan” in the CD&A.
The amounts shown in the “2023 AIP – PBRSUs” rows represent the AIP PBRSUs granted in 2023 under our 2015 Equity Incentive Award Plan (the “Equity Plan”) for the Company
performance portion of the AIP. Amounts shown in the “Threshold” column represent 25% of the target number of shares, which represents the threshold performance of one of the
two primary performance metrics. Awards are capped at the maximum of 200% of the target number of shares. For more information on the AIP, including actual payouts for the AIP,
see the section titled “PayPal Annual Incentive Plan” in the CD&A.
The amounts shown in the “2023-2025 PBRSUs” rows represent the 2023-2025 PBRSUs granted in 2023 under the Equity Plan. Amounts shown in the “Threshold” column represent
25% of the target number of shares, which represents the threshold performance of one of the two performance metrics. Awards are capped at the maximum of 200% of the target
number of shares. The 2023-2025 PBRSUs will be earned and vest based on performance over the 2023-2025 performance period. See the section titled “Long-Term Incentive
Compensation” in the CD&A for more information.
The amounts shown in the “RSUs” and “RSUs – Supplemental New Hire” rows represent service-based RSUs granted in 2023 under the Equity Plan that vest over three years, with
one-third vesting on the first anniversary of the grant date, and the remainder vesting ratably each following quarter over the remaining vesting period, subject to continued
employment. See the section titled “Long-Term Incentive Compensation” in the CD&A for more information.
The amounts shown in the “Supplemental New Hire Make Whole RSUs” row for Mr. Chriss represent service-based RSUs granted in 2023 under the Equity Plan that vest over two
years, with one-half vesting on each anniversary of the grant date.
The amounts shown in the “RSUs—Leadership Transition Award” rows represent service-based RSUs granted in 2023 under the Equity Plan that cliff vest after two years, with the full
award vesting on the second anniversary of the grant date.
Represents the grant date fair value determined in accordance with FASB ASC Topic 718. The grant date fair value was calculated by multiplying the closing price of the underlying
common stock on the date of grant (or, if there is no closing price on such date, the closing price on the immediately preceding day with a reported closing price) by the number of
stock awards granted. For the 2023 AIP PBRSUs and the 2023-2025 PBRSUs, the grant date fair value assumes the probable outcome of the performance conditions applicable to
the awards. See “Stock Awards – Column (e)” under the “2023 Summary Compensation Table” for more information. The assumptions used by PayPal in calculating the grant date
fair value of the stock awards are incorporated herein by reference to Note 15 to the consolidated financial statements contained in the 2023 Annual Report on Form 10-K.
In accordance with the Schulman Retirement Agreement, Mr. Schulman was eligible to receive severance benefits based on his target AIP bonus opportunity for the individual
performance portion of the AIP and actual performance for the Company performance portion.
The amounts shown in this “CEO Transition PBRSUs” row represent the CEO Transition Performance-Based RSU Award that vested on September 27, 2023, upon Mr. Chriss’ start
date with PayPal.
The amounts shown in this “CEO Transition PBRSUs” row represent the CEO Transition Performance-Based RSU Award that vested on December 11, 2023, based on the
Compensation Committee’s determination that Mr. Schulman had effectively completed his CEO-related transition responsibilities.
The amounts shown in this “2023-2025 PBRSUs – Supplemental” row represent the PBRSUs granted to Ms. Rabinovitch in connection with her appointment as acting CFO.
9
Ms. Rabinovitch forfeited all her 2023-2025 PBSRU awards (including the “2023-2025 PBRSUs” and “2023-2025 PBRSUs – Supplemental” awards) upon her separation with PayPal.
In accordance with the Jorgensen Separation Agreement, Mr. Jorgensen was eligible to receive severance benefits equal to a prorated portion of his AIP bonus (for both the
10
individual and Company performance components), based on his full months of service during the AIP performance period.
The amounts shown in this “2023-2025—PBRSUs—New Hire” row represent a PBRSU award granted to Mr. Kim in connection with the commencement of his employment with
PayPal.
These AIP PBRSUs were modified pursuant to the Schulman Separation Agreement and Jorgensen Separation Agreement (as applicable). The incremental fair value of the
modifications, calculated in accordance with SEC disclosure rules, was equal to $670,713 for Mr. Schulman’s AIP PBRSUs and $14,395 for Mr. Jorgensen’s AIP PBRSUs.
12
11
78
• 2024 Proxy Statement
P
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COMPENSATION TABLES
2023 Outstanding Equity Awards at Fiscal Year-End Table
2023 Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information regarding outstanding equity awards held by each of our NEOs as of
December 31, 2023.
Stock Awards
Name
Alex Chriss
Jamie Miller
Michelle Gill
John Kim
Dan Schulman
Gabrielle Rabinovitch
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other
Rights That
Have Not
Vested (#)
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units
or Other Rights That
Have Not Vested1 ($)
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
Market Value of
Shares or Units
of Stock That
Have Not
Vested1 ($)
Stock Award
Grant Date
279,3592
17,155,436
10/15/23
166,7823
10,242,083
10/15/23
12,4204
762,712
10/15/23
10/15/23
283,5295
17,411,516
109,1362
6,702,042
12/15/23
34,9242
2,144,683
12/15/23
109,1362
6,702,042
12/15/23
34,9242
2,144,683
12/15/23
22,1112
22,1112
1,357,837
10/15/22
1,357,837
10/15/22
50,6762
3,112,013
3/1/23
13,42812
824,613
4/15/23
13,3294
818,534
2/15/23
17,1346
1,052,199
44,1962
2,714,076
76,0142
4,668,020
3/1/23
3/1/23
3/1/21
3/1/22
3/1/23
35,5444
2,182,757
2/15/23
3/1/21
3/1/22
3/1/23
3/1/21
3/1/21
67,183
20,450
36,600
9/15/21
235,507
23,459
3/1/22
3/1/22
563,007
6/15/22
565,770
10/15/22
1,0949
3339
5969
3,8359
3829
9,1689
9,2139
47,5099
2,917,528
3/1/23
26,8559
1,649,166
4/15/23
50,6765
38,0075
3,112,013
2,334,010
51,4047
88,3968
76,0145
3,156,720
5,428,398
4,668,020
• 2024 Proxy Statement
79
COMPENSATION TABLES
2023 Outstanding Equity Awards at Fiscal Year-End Table
Name
Blake Jorgensen
Peggy Alford
Aaron Karczmer
Stock Awards
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
Market Value of
Shares or Units
of Stock That
Have Not
Vested1 ($)
Stock Award
Grant Date
13,3294
818,534
2/15/23
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other
Rights That
Have Not
Vested (#)
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units
or Other Rights That
Have Not Vested1 ($)
3/1/21
3/1/21
9/15/21
3/1/22
3/1/22
6/15/22
3/1/23
3/1/23
1,0957
3347
1,7897
9,2088
9218
18,3378
47,50910
15,83710
67,244
20,511
109,862
565,463
56,559
1,126,075
2,917,528
972,550
3,4722
8,8864
213,216
9/15/22
545,689
2/15/23
9/15/22
27,7748
1,705,601
5,71111
350,713
15,3452
942,336
47,5092
2,917,528
3/1/21
3/1/22
3/1/23
33,56812
2,061,411
4/15/23
13,3294
818,534
2/15/23
3/1/21
3/1/22
3/1/23
3/1/21
3/1/22
3/1/23
5,7116
350,713
15,3452
942,336
47,5092
2,917,528
13,3294
818,534
2/15/23
40,28212
2,473,718
4/15/23
17,1357
36,8328
47,5095
1,052,260
2,261,853
2,917,528
3/1/21
3/1/22
3/1/23
17,1357
36,8328
47,5095
1,052,260
2,261,853
2,917,528
1 Market value is calculated based on $61.41 per share, the closing price of PayPal’s common stock on December 29, 2023.
2
Becomes fully vested over three years, with one-third vesting on the first anniversary of the grant date, and the remainder vesting ratably each following quarter over the remaining
vesting period, subject to the NEO’s continued employment.
3 One-half of the shares subject to these service-based RSUs will vest on the first anniversary of the grant date, with the remainder vesting on the second anniversary of the grant date,
4
subject to the NEO’s continued employment.
Represents unvested PBRSUs granted under the 2023 AIP based on actual Company performance. These AIP PBRSUs were subject to the achievement of the performance goals
over the one-year performance period from January 1, 2023 through December 31, 2023. Following the performance period, these RSUs became fully vested on February 15, 2024
based on Company performance.
Mr. Chriss’ AIP PBRSUs were prorated based on his start date relative to the performance period, and Mr. Jorgensen’s AIP PBRSUs were prorated based on his full months of service
during the AIP performance period, in accordance with the Jorgensen Separation Agreement.
The amounts reported in this row assume achievement of target performance goals for the 2023-2025 PBRSU awards granted in 2023, as performance for the 2023-2025
performance period is measured on a cumulative basis and is not determinable until the end of the three-year performance period. The PBRSU awards vest based on PayPal’s
performance over the three-year performance period with respect to the FX-Neutral Revenue CAGR and Free Cash Flow CAGR goals. PBRSUs earned based on Company
performance will become fully vested on March 1, 2026, subject to the NEO’s continued employment through the vesting date.
Becomes fully vested over three years, with one-third vesting on the first, second and third anniversaries of the date of grant, subject to the NEO’s continued employment.
5
6
80
• 2024 Proxy Statement
COMPENSATION TABLES
2023 Outstanding Equity Awards at Fiscal Year-End Table
7
8
9
The share amounts reported in this row assume achievement of target performance goals for the 2021-2023 PBRSUs granted in 2021, as performance for the 2021-2023 performance
period is measured on a cumulative basis and is not determinable until the end of the three-year performance period. The PBRSU awards vest based on the Company’s performance
over the three-year performance period with respect to the FX-Neutral Revenue CAGR and Free Cash Flow CAGR goals. The percentage of target achieved for the 2021-2023
PBRSUs was 0%, and no shares were earned or issued on the March 1, 2024 vesting date.
The amounts reported in this row assume achievement of target performance goals for the 2022-2024 PBRSU awards granted in 2022, as performance for the 2022-2024
performance period is measured on a cumulative basis and is not determinable until the end of the three-year performance period. The PBRSU awards vest based on the Company’s
performance over the three-year performance period with respect to the FX-Neutral Revenue CAGR and Free Cash Flow CAGR goals. PBRSUs earned based on Company
performance will become fully vested on March 1, 2025, subject to the NEO’s continued employment through the vesting date.
Represents unvested service-based RSUs that accelerated vesting upon Ms. Rabinovitch’s separation from PayPal on January 31, 2024, in accordance with the Rabinovitch Transition
Agreement.
10 Represents PBRSUs that were forfeited upon Ms. Rabinovitch’s separation from PayPal on January 31, 2024, in accordance with the Rabinovitch Transition Agreement.
11
Represents unvested service-based RSUs that accelerated vesting upon Ms. Alford’s separation from PayPal on January 31, 2024, in accordance with the Alford Separation
Agreement.
12 Represents the Leadership Transition RSUs that will become fully vested on the second anniversary of the grant date, subject to the NEO’s continued employment.
P
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2023 Option Exercises and Stock Vested Table
The following table sets forth the number of shares acquired, and the value realized, upon exercise of stock options and the
vesting of stock awards by each of our NEOs for the fiscal year ended December 31, 2023. None of our NEOs exercised
stock options during the fiscal year ended December 31, 2023.
Name
Alex Chriss
Jamie Miller
Michelle Gill
John Kim
Dan Schulman
Gabrielle Rabinovitch
Blake Jorgensen
Peggy Alford
Aaron Karczmer
Stock Awards
Number of Shares
Acquired on
Vesting (#)
Value Realized
on Vesting1 ($)
—
—
—
—
—
—
22,114
1,232,856
432,512
30,714,380
45,681
31,246
72,893
84,315
3,171,566
2,006,306
5,272,942
6,116,114
1
Value realized for stock awards is calculated based on the closing price per share on each applicable vesting date.
2023 Non-Qualified Deferred Compensation Table
All NEOs are eligible to participate in the DCP. In 2023, Mr. Karczmer elected to participate in the DCP. For more
information, see the section titled “Deferred Compensation” in the CD&A.
Name
Aaron Karczmer
Executive
Contributions in
2023 ($)
PayPal
Contributions in
2023 ($)
Aggregate
Earnings in 2023 ($)
Aggregate
Withdrawals/
Distributions ($)1
Aggregate Balance
as of December 31,
2023 ($)
150,000
—
12,853
—
162,853
1 Mr. Karczmer first participated in the DCP in 2023. None of the earnings or balance as of December 31, 2023 were reported as compensation in a previous year.
Potential Payments Upon Termination or Change in Control Table
The following table, footnotes, and narrative set forth our payment obligations pursuant to the compensation arrangements
for each of our NEOs serving as of the Record Date, as well as Ms. Rabinovitch, under the circumstances described below,
assuming that their employment was terminated or a change in control of PayPal occurred on December 31, 2023. Because
our executive compensation program is heavily weighted towards equity-based compensation, a significant percentage of
the compensation that would be received by our NEOs upon a termination of employment under the circumstances
described below relates to the settlement of outstanding equity awards. See the 2023 Outstanding Equity Awards at
Fiscal Year-End Table above for further information regarding outstanding equity awards granted to the NEOs in 2023 and in
prior years.
• 2024 Proxy Statement
81
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
Please see the section below titled “Executive Departure-Related Compensation” for a description and quantitative
summary of the amounts Messrs. Schulman and Jorgensen and Ms. Alford received in connection with their separations
from PayPal prior to the Record Date, along with the “Leadership Changes and Related Compensation” section for further
details regarding their separations. The section below titled “Executive Departure-Related Compensation” also includes a
description and quantitative summary of the amounts Mr. Karczmer will receive in connection with his planned separation
from PayPal on April 30, 2024.
Name
Alex Chriss
Jamie Miller
Michelle Gill
John Kim
Gabrielle Rabinovitch2
Aaron Karczmer
Voluntary
Termination or
Retirement ($)(a)1
Involuntary
Termination Outside
of Change in
Control Period ($)(b)1
Involuntary
Termination Within
Change in
Control Period ($)(c)1
Death or
Disability ($)(d)1
—
—
—
—
—
—
46,280,841
46,257,902
44,809,035
9,154,061
9,169,874
10,590,255
11,951,284
6,468,320
9,131,130
9,141,973
8,846,725
8,846,725
10,554,573
10,259,027
11,951,279
11,716,844
6,432,810
6,137,561
1
Amounts do not take into account (i) potential reductions due to “best net pay” provision in the Executive Severance Plan, (ii) the value of the 2021-2023 PBRSUs, which were earned
at 0% of target following the completion of the performance period on December 31, 2023, or (iii) the value of the AIP PBRSUs, which were earned at 151% of target following the
completion of the AIP performance period on December 31, 2023.
2 Ms. Rabinovitch is included in this table even though she departed after fiscal year end and prior to the Record Date, because her actual severance entitlements were newly
negotiated rather than the terms that would have applied under the Executive Severance Plan. Please see the section titled “Executive Transition Related Compensation” for a
description and quantitative summary of the severance payments and transition benefits Ms. Rabinovitch received in connection with her termination of employment from PayPal.
Retirement – Column (a)
None of our NEOs who were employed by PayPal as of December 31, 2023 were eligible to receive amounts under the
Executive Severance Plan in connection with their retirement under the ELTIP.
The ELTIP provides for the following benefits if an NEO has attained at least 60 years of age and completed at least seven
years of service, subject to the NEO providing sufficient advance notice to PayPal and the retirement having restrictive
covenant conditions mutually agreed to by PayPal and the NEO:
• Eligibility for continued vesting of all outstanding equity awards. Any outstanding time-based restricted stock unit
awards would be eligible to continue vesting in accordance with their original schedule; however, if any such awards
were scheduled to vest more frequently than annually, each scheduled vesting date not falling on an anniversary of the
grant date would be treated as though that vesting date were on the next following anniversary of the grant date. Any
outstanding PBRSUs (other than PBRSUs awarded pursuant to an Annual Incentive Plan) would remain outstanding and
eligible to vest, based solely on the achievement of the applicable Company performance targets for the applicable
performance period.
• COBRA premium payments (or payments in lieu thereof) for the period during which any equity award continues to vest
under the ELTIP.
We refer to the ELTIP benefits described above as the “ELTIP Benefits.” All continued vesting under the ELTIP is subject to
the NEO’s execution of a release of claims in favor of PayPal and required attestations and compliance with the restrictive
covenants set forth in the Executive Severance Plan.
As noted above under the heading “Leadership Changes and Related Compensation”, Mr. Schulman’s departure in 2023
constituted a Qualifying Retirement under the Executive Severance Plan. Please see the section below titled “Executive
Transition Related Compensation” for a description and quantitative summary of the amounts Mr. Schulman received under
the Schulman Retirement Agreement.
82
• 2024 Proxy Statement
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
Involuntary Termination Other than for Cause – Column (b)
Severance Arrangements for Involuntary Termination Other Than for Cause Outside a Change in
Control Period
Under the terms of the Executive Severance Plan, each NEO is eligible for severance payments and benefits in the event
that the NEO’s employment with us is terminated outside of a “change in control period,” which is defined as more than 90
days prior to or more than 24 months following a “change in control” (as defined in the Equity Plan and the Inducement
Plan, as applicable) of PayPal, either (a) by us other than for “cause” or due to “disability” or (b) by the NEO for “good
reason” (each as defined in the Executive Severance Plan), subject to the NEO’s execution of a release of claims in favor of
PayPal, as follows:
• A lump sum cash payment equal to the product of (i) the sum of annual base salary and target bonus amount and (ii) a
multiple (2x for Mr. Chriss and 1.5x for our other NEOs).
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
• A prorated annual bonus for the year of termination based on actual company performance and target individual
performance (“Prorated Incentive Award”).
• For awards granted prior to July 1, 2021: accelerated vesting of service-based equity awards that would have otherwise
become vested pursuant to their ordinary vesting schedule within the 12 months following the employment termination
date; performance-based equity awards subject to a performance period that ends within the 12 months following the
employment termination date would remain outstanding and eligible to vest, based solely on the achievement of the
Company performance targets. For awards granted on or after July 1, 2021: eligibility to continue to vest in service-
based and performance-based equity awards scheduled to vest within the 12 months following the employment
termination date, subject to the NEO’s execution of a release of claims in favor of PayPal and required attestations and
compliance with the restrictive covenants set forth in the Executive Severance Plan.
• If the NEO is employed by PayPal in the U.S., participates in PayPal’s health insurance program and is eligible to
continue to participate in the program under COBRA, PayPal will provide COBRA premium payments or reimbursement
thereof for 18 months for Mr. Chriss and 12 months for our other NEOs.
In addition, each NEO would be eligible for the ELTIP Benefits in the event the NEO’s employment was involuntarily
terminated by PayPal due to a job elimination or role restructuring. All continued vesting would be subject to the NEO’s
execution of a release of claims in favor of PayPal and required attestations and compliance with the restrictive covenants
set forth in the Executive Severance Plan.
Involuntary Termination with a Change in Control – Column (c)
Severance Arrangements for an Involuntary Termination in Connection with a Change in Control
Under the terms of the Executive Severance Plan, each NEO is eligible for severance payments and benefits in the event
that a “change in control” of PayPal occurred as of December 31, 2023 and the NEO’s employment with us terminates
within the “change in control period,” either (a) by us other than for “cause” or due to “disability,” or (b) by the NEO for
“good reason,” subject to the NEO’s execution of a release of claims in favor of PayPal, as follows:
• A lump sum cash payment equal to 2x the sum of annual base salary and target bonus amount.
• Prorated Incentive Award.
• Accelerated vesting of outstanding equity awards. If the termination occurs during a performance period with respect to
an award of PBRSUs, such award will be deemed earned assuming achievement of target performance for purposes of
determining the number of awards that will be treated as becoming immediately vested.
• If the NEO is employed by PayPal in the U.S., participates in PayPal’s health insurance program, and is eligible to
continue to participate in the program under COBRA, PayPal will provide COBRA premium payments or a cash-
out payment in lieu of such payments, for 24 months.
Under the Executive Severance Plan, in the event any payments or benefits constitute “parachute payments” within the
meaning of Section 280G of the Internal Revenue Code and would be subject to the excise tax imposed by Internal
Revenue Code Section 4999, such payments or benefits would be reduced to the maximum amount that does not result in
the imposition of such excise tax, but only if such reduction results in the NEO receiving a higher net-after tax amount than
the NEO would have received absent such reduction (the “best net pay” provision).
• 2024 Proxy Statement
83
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
Change in Control – Equity Awards
We have not entered into any arrangements with any of our NEOs to provide “single trigger” change in control payments.
The Equity Plan and the Inducement Plan generally provide for the acceleration of vesting of awards granted under each
respective plan upon a change in control (as defined in the Equity Plan and the Inducement Plan, as applicable) of PayPal
only if the acquiring entity does not agree to assume or continue the awards. Under the terms of the Equity Plan and the
Inducement Plan, for purposes of determining payouts in connection with or following a change in control, PBRSU
performance will be based on applicable performance metrics through the date of the change in control. These provisions
generally apply to all holders of awards under the Equity Plan and the Inducement Plan.
Death or Disability – Column (d)
Severance Arrangements in the Event of Death or Disability
Under the terms of the Executive Severance Plan, in the event that an NEO’s employment terminates due to “disability,”
they would be eligible for accelerated vesting of equity awards were granted prior to July 1, 2021 and that would have
otherwise become vested pursuant to their ordinary vesting schedule within the 24 months following the employment
termination date. If a termination due to “disability” occurs during a performance period with respect to an award of PBRSUs
granted prior to July 1, 2021 and scheduled to vest within this 24-month period, such award will be deemed earned
assuming achievement of target performance for purposes of determining the number of awards that will become
immediately vested. In addition, the NEO would be eligible for the ELTIP Benefits in the event the NEO’s employment
terminates due to “disability.” All continued vesting would be subject to the NEO’s execution of a release of claims in favor
of PayPal and required attestations and compliance with the restrictive covenants set forth in the Executive Severance Plan.
Under the terms of the Executive Severance Plan, in the event that an NEO’s employment terminates due to death, all
outstanding equity awards eligible to continue vesting under the ELTIP would vest on the date of the NEO’s death. Any such
accelerated vesting with respect to PBRSUs would be based on target achievement of the applicable performance targets.
Executive Departure-Related Compensation
As noted above under the heading “Leadership Changes and Related Compensation”, in connection with their terminations
of employment, each of Messrs. Schulman, Jorgensen and Karczmer and Mses. Rabinovitch and Alford entered into an
agreement with PayPal documenting their respective severance benefits and the conditions to receiving such severance
benefits, including timely execution and non-revocation of a release of claims in favor of PayPal and compliance with non-
solicitation, non-disparagement, confidentiality, and other obligations (the “NEO Separation Agreements”).
Severance payable under the NEO Separation Agreements is described in this section. Any estimated amounts are
estimated using the following assumptions, unless otherwise noted below: (1) RSUs and PBRSUs are valued at $59.70 per
share, which was our closing stock price on February 15, 2024, unless such RSUs and PBRSUs vested earlier than
February 15, 2024, in which case they are valued at the closing share price on the vesting date (or if the vesting date is not a
trading day, the trading day prior to the vesting date); (2) PBRSUs granted in 2021 and 2022 assumed at 0% achievement
(based on actual and probable outcome, respectively), and PBRSUs granted in 2023 assumed at target achievement;
(3) severance based on a pro-rata amount under the 2024 PayPal Annual Incentive Plan is estimated assuming that PayPal’s
actual performance is equal to target performance, and (4) health-premium related benefits are calculated based on
estimated COBRA rates for the applicable NEO (collectively, the “Assumptions”).
84
• 2024 Proxy Statement
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
Mr. Schulman
Mr. Schulman was entitled to receive the following retirement benefits under the Schulman Retirement Agreement, subject
to his compliance with its terms:
Retirement Benefits Type
Continued vesting of outstanding RSUs and PBRSUs in accordance with the terms of the ELTIP, excluding the CEO
Transition Performance-Based RSU Awards
Vesting of the CEO Transition Performance-Based RSU Awards in accordance with their terms2
Payments for health benefits on each of March 1, 2024, March 1, 2025 and March 1, 2026 calculated to approximate
prorated COBRA premium payments in accordance with the ELTIP for continued health, vision, and dental benefits
Continued payments of Mr. Schulman’s base salary through December 31, 20233
Lump sum equal to the cash portion of Mr. Schulman’s 2023 bonus incentive under the 2023 AIP, with individual
performance deemed achieved at the target level, with payment at or around when other participants of the 2023 AIP
receive their 2023 AIP payout3
Vesting of the AIP PBRSUs granted pursuant to the Company performance portion of the 2023 AIP in February 2024,
based on actual performance through the full performance period3
PayPal’s reimbursement of Mr. Schulman for up to $15,000 in legal fees with respect to the negotiation of the Schulman
Retirement Agreement3
TOTAL
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
Amount ($)1
12,737,473*
4,939,284
25,739
328,767
625,000
2,121,970
15,000
20,793,233*
1
Amounts denoted with an asterisk (*) are estimates calculated based on the applicable Assumptions. Amounts that are not denoted by an asterisk are actual amounts.
2 On March 1, 2023, PayPal granted Mr. Schulman a set of RSU awards designed to vest based on certain leadership transition milestones being met (each, a “CEO Transition
Performance-Based RSU Award”) as described further in the Compensation Discussion and Analysis and the 2023 Grants of Plan-Based Awards Table. The first of the CEO Transition
Performance-Based RSU Awards vested in full on September 27, 2023, when Mr. Chriss’ appointment took effect, and the second of the CEO Transition RSU Awards vested in full on
December 11, 2023.
3 Mr. Schulman’s guaranteed base salary payments for the remainder of 2023 (for the period after he ceased to be the CEO, starting September 27, 2023 through December 31, 2023),
entitlement to a 2023 AIP bonus, and reimbursement of certain legal fees were not severance that Mr. Schulman was entitled to in connection with a Qualifying Retirement under the
Executive Severance Plan. The Board determined in March 2023 that it was necessary to provide such guaranteed continued base salary payments and entitlement to a 2023 AIP
bonus to ensure the Board had sufficient time to conduct a rigorous search process to identify the best successor for Mr. Schulman, to ensure that Mr. Schulman remained focused
on execution of our financial, strategic and operating goals and to execute an orderly and effective CEO transition.
Under the Schulman Retirement Agreement, Mr. Schulman was also required to reimburse PayPal an amount equal to
$388,000 to offset a portion of his personal use of Company corporate aircraft in 2023.
Mr. Jorgensen
Mr. Jorgensen was entitled to receive the following severance under the Jorgensen Separation Agreement, subject to his
compliance with its terms:
Severance Type
Lump sum equal to 1.5 times the sum of Mr. Jorgensen’s (i) base salary and (ii) target AIP bonus, generally payable
within 60 days after September 15, 2023
Lump sum equal to the cash portion of Mr. Jorgensen’s 2023 bonus incentive under the 2023 AIP, with individual
performance deemed achieved at the target level, pro-rated to reflect that he was employed by PayPal for 8 full months
out of the 12 month performance period, with payment at or around when other participants of the 2023 AIP receive
their 2023 AIP payout
Vesting of the AIP PBRSUs granted pursuant to the Company performance portion of the 2023 AIP in February 2024,
based on actual performance through the full performance period, pro-rated to reflect that he was employed by PayPal
for 8 full months out of the 12 month performance period
12 months of continued vesting of all RSUs that were outstanding as of September 15, 2023 in accordance with their
regular vesting schedule (but no longer subject to a continued employment requirement), except the RSU vesting
schedule converted to annual vesting, i.e., any quarterly vests will be deemed to vest on the next anniversary of the
grant date
Up to 12 months of reimbursement of COBRA health premiums or payment of health premiums, at COBRA rates
TOTAL
Amount ($)1, 2
2,531,250
156,250
530,485
1,865,386*
20,427*
5,103,798*
Amounts denoted with an asterisk are estimates calculated based on the applicable Assumptions. Amounts that are not denoted by an asterisk are actual amounts.
1
2 Under the Jorgensen Separation Agreement, Mr. Jorgensen remained employed with PayPal on garden leave from March 7, 2023 through September 15, 2023, during which time he
agreed to provide any requested transition services to PayPal. Mr. Jorgensen’s equity continued to vest during this period and he received the last installment of his sign-on bonus as
provided by his offer letter during this period.
• 2024 Proxy Statement
85
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
Ms. Rabinovitch
Ms. Rabinovitch was entitled to receive the following transition payments and severance under the Rabinovitch Transition
Agreement, subject to her compliance with its terms:
Transition Payment or Severance Type
Lump sum cash payment from PayPal equal to $150,000 within 60 days following January 31, 2024, contingent on Ms.
Rabinovitch providing satisfactory transition services during January 2024, as determined by PayPal
Lump sum equal to the cash portion of Ms. Rabinovitch’s 2023 bonus incentive under the 2023 AIP, with individual
performance deemed achieved at the target level, with payment at or around when other participants of the 2023 AIP
receive their 2023 AIP payout
Vesting of the AIP PBRSUs granted pursuant to the Company performance portion of the 2023 AIP in February 2024,
based on actual performance through the full performance period
Accelerated vesting on January 31, 2024 of Ms. Rabinovitch’s outstanding time-based RSUs and eligibility to continue
vesting in Ms. Rabinovitch’s outstanding PBRSUs that were granted before March 1, 2023, on the same basis and to the
same extent as determined for PayPal’s executive officers(2)
TOTAL
Amount ($)1
150,000
234,375
795,728
6,072,327*
7,252,429*
Amounts denoted with an asterisk are estimates calculated based on the applicable Assumptions. Amounts that are not denoted by an asterisk are actual amounts.
1
2 Ms. Rabinovitch’s PBRSUs granted in March 2023 were forfeited on December 31, 2023.
Ms. Alford
Ms. Alford was entitled to receive the following severance under the Alford Separation Agreement, subject to her
compliance with its terms:
Severance Type
Amount ($)1
Lump sum equal to 1.5 times the sum of Ms. Alford’s (i) base salary and (ii) target AIP bonus, generally payable within 60
days after January 31, 2024
2,531,250
Lump sum equal to the cash portion of Ms. Alford’s 2023 bonus incentive under the 2023 AIP, with individual
performance deemed achieved at the target level, with payment at or around when other participants of the 2023 AIP
receive their 2023 AIP payout
Vesting of the AIP PBRSUs granted pursuant to the Company performance portion of the 2023 AIP in February 2024,
based on actual performance through the full performance period
An amount equal to Ms. Alford’s bonus under the 2024 PayPal Annual Incentive Plan on a prorated basis based on full
months of service during the performance period, with individual performance based on 100% of the target bonus
incentive and Company performance based on actual performance through the full performance period, with payment at
or around when other participants of the 2024 PayPal Annual Incentive Plan receive their payout
Accelerated vesting on January 31, 2024 of Ms. Alford’s outstanding service-based RSUs that were granted prior to July 1,
2021
Eligibility to continued vesting in all of Ms. Alford’s RSUs and PBRSUs that were outstanding as of January 31, 2024, in
accordance with their regular vesting schedule and based on actual performance for PBRSUs through the full
performance period (but no longer subject to a continued employment requirement), except that the vesting schedule
for RSUs converted to ratable annual vesting (i.e., any RSUs scheduled to vest on a quarterly vest date are deemed to
vest on the next anniversary of the grant date)
Up to 12 months of subsidized COBRA health premiums (estimated to be $31,166) and an annual cash payment based on
Ms. Alford’s COBRA premium rate on her separation date and the period during which Ms. Alford is eligible to continue
vesting in any equity awards under the ELTIP (estimated to be $33,763, representing 13 months of potential continued
vesting)
TOTAL
234,375
795,728
78,125*
350,370
8,592,681*
64,929*
12,647,457*
1
Amounts denoted with an asterisk are estimates calculated based on the applicable Assumptions. Amounts that are not denoted by an asterisk are actual amounts.
86
• 2024 Proxy Statement
COMPENSATION TABLES
Potential Payments Upon Termination or Change in Control Table
Mr. Karczmer
Mr. Karczmer is entitled to receive the following severance under the Karczmer Separation Agreement, subject to his
compliance with its terms:
Severance Type
Amount ($)1
Lump sum equal to 1.5 times the sum of Mr. Karczmer’s (i) base salary and (ii) target AIP bonus, generally payable within
30 days after April 30, 2024
2,531,250
An amount equal to Mr. Karczmer’s bonus under the 2024 PayPal Annual Incentive Plan on a prorated basis based on full
months of service during the performance period, with individual performance based on 100% of the target bonus
incentive and Company performance based on actual performance through the full performance period, with payment at
or around when other participants of the 2024 PayPal Annual Incentive Plan receive their payout
312,500*
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
Eligibility to continued vesting for 12 months in Mr. Karczmer’s RSUs that were outstanding as of April 30, 2024 and
eligibility to continued vesting for Mr. Karczmer’s PBRSUs granted March 1, 2022, in accordance with their regular vesting
schedule and based on actual performance for PBRSUs through the full performance period (but no longer subject to a
continued employment requirement), except that the vesting schedule for RSUs converted to ratable annual vesting (i.e.,
any RSUs scheduled to vest on a quarterly vest date are deemed to vest on the next anniversary of the grant date)
Up to 12 months of reimbursement of COBRA health premiums or payment of health premiums, at COBRA rates
TOTAL
4,083,182*
31,006*
6,957,938*
1
Amounts denoted with an asterisk are estimates calculated based on the applicable Assumptions. Amounts that are not denoted by an asterisk are actual amounts.
• 2024 Proxy Statement
87
PAY VERSUS PERFORMANCE
Pay versus Performance
The following Pay versus Performance table sets forth information regarding PayPal’s performance and the “compensation
actually paid” to our NEOs, as calculated in accordance with SEC disclosure rules.
Amounts included as “compensation actually paid” do not represent the value of cash compensation and equity awards
actually received by the NEOs, but rather is an amount calculated under SEC rules that includes, among other things, the
year-over-year changes in the “fair value” of unvested equity-based awards. For discussion of how the Compensation
Committee seeks to align pay with performance when making compensation decisions, please review the CD&A.
Summary
Compensation
Table Total for
PEO2
(Chriss) ($)
Summary
Compensation
Table Total for
PEO2
(Schulman) ($)
Year1
Compensation
Actually Paid
to PEO3
(Chriss)($)
Compensation
Actually Paid
to PEO3
(Schulman) ($)
Average
Summary
Compensation
Table Total for
Non-PEO
NEOs2 ($)
Average
Compensation
Actually Paid
to Non-PEO
NEOs3 ($)
Value of Initial Fixed $100
Investment Based On:4
Total
Shareholder
Return ($)
Peer Group
Total
Shareholder
Return5 ($)
Net Income
($ millions)
Revenue6
($ millions)
2023
41,916,754
22,138,954 46,350,840
18,991,635
10,976,852
9,423,987
2022
2021
2020
0
0
0
21,957,922
32,070,353
23,362,072
0 -87,002,457
10,367,818
-13,358,744
0
0
13,504,312
14,799,891
10,020,976
191,128,954
9,184,457
50,894,687
57
66
174
217
151
109
165
153
4,246
29,771
2,419
4,169
27,518
25,371
4,202
21,454
1 Mr. Chriss served as the Principal Executive Officer (“PEO”) from and after September 27, 2023. Mr. Schulman served as the Principal Executive Officer (“PEO”) in 2023 from January 1
through September 26 and for the entirety of 2022, 2021 and 2022. PayPal’s other NEOs for the applicable years were as follows:
• 2023: Messrs. Karczmer, Kim and Jorgensen, and Mses. Miller, Alford, Gill and Rabinovitch
• 2022: Messrs. Jorgensen, Rainey, Britto, Auerbach and Karczmer, and Mses. Rabinovitch and Alford.
• 2021: Messrs. Rainey, Britto and Auerbach and Ms. Louise Pentland.
• 2020: Messrs. Rainey and Karczmer and Mses. Alford and Pentland.
2
3
4
Amounts reported in these columns represent (i) the total compensation reported in the Summary Compensation Table for the applicable year for Mr. Chriss or Mr. Schulman, as
applicable and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year for PayPal’s non-PEO NEOs reported for that
applicable year, respectively.
To calculate compensation actually paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the
adjustments for Mr. Chriss, Mr. Schulman and for the average of the other NEOs is set forth following the footnotes to this table.
Pursuant to SEC rules, the comparison assumes $100 was invested on December 31, 2019 and that dividends were reinvested during the measurement period. Historical stock price
performance is not necessarily indicative of future stock price performance.
The Total Shareholder Return Peer Group consists of the companies included in the S&P Software and Services Select Industry Index.
5
6 As noted in the CD&A, the Compensation Committee determined that revenue was a key financial metric for PayPal’s performance and success and driver of stockholder value
creation for 2023. By using revenue, together with the other performance goals used in our incentive programs, the Compensation Committee believes that the program reflected an
appropriate balance with respect to incentivizing top-line growth, profitability and cash flow generation. Revenue is as reported in PayPal’s 2023 Annual Report on Form 10-K. PayPal
has designated revenue as the Company-Selected Measure for 2023.
88
• 2024 Proxy Statement
Reconciliation of Compensation Actually Paid Adjustments
PAY VERSUS PERFORMANCE
Reconciliation of Compensation Actually Paid Adjustments
Plus
Fair Value at
Fiscal Year-
End of
Outstanding
and Unvested
Stock Awards
Granted in
Fiscal Year3 ($)
(Minus)
Grant Date
Fair
Value of
Stock Awards
Granted in
Fiscal Year2 ($)
Plus/(Minus)
Change in Fair
Value of
Outstanding
and Unvested
Stock Awards
Granted in Prior
Fiscal Years4 ($)
Mr. Chriss
Summary
Compensation
Table
Total1 ($)
Year
Plus/(Minus)
Change in Fair
Value as of
Vesting Date
of Stock
Awards
Granted in
Prior Years for
which
Applicable
Vesting
Conditions
Were
Satisfied
During Fiscal
Year6 ($)
Plus
Fair Value at
Vesting of
Stock Awards
Granted in
Fiscal Year
that Vested
During Fiscal
Year5 ($)
(Minus)
Fair Value as
of Prior Fiscal
Year-End of
Stock Awards
Granted in
Prior Fiscal
Years that
Failed to Meet
Applicable
Vesting
Conditions
During Fiscal
Year7 ($)
Equals
Compensation
Actually Paid($)
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
2023
41,916,754
(41,137,646)
45,571,732
0
0
0
22,138,954
(20,020,698)
11,518,790
(601,647)
4,939,284
1,016,952
Mr. Schulman
2023
2022
2021
2020
2023
2022
2021
2020
21,957,922
(20,182,730)
6,295,563
(61,560,303)
32,070,353
(29,920,381)
25,010,046
(30,072,494)
23,362,072
(20,957,193)
61,706,781
126,774,395
Other NEOs (Average)8
10,976,852
(8,917,996)
7,946,593
(199,285)
10,367,818
(8,894,035)
3,444,983
(8,905,483)
14,799,891
(13,803,096)
10,435,216
(6,428,838)
9,184,457
(7,819,391)
22,989,423
26,461,003
-
-
-
0
-
-
-
(33,512,909)
16,416,789
242,899
(64,301)
(317,875)
9,423,987
(5,839,653)
(3,532,373)
(13,358,744)
5,017,803
79,195
-
-
10,020,976
50,894,687
0
0
-
-
46,350,840
18,991,635
(87,002,457)
13,504,312
191,128,954
1
2
3
4
5
6
7
8
Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the other NEOs, amounts shown represent averages.
Represents the grant date fair value of the stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting
purposes.
Represents the fair value as of the indicated fiscal year-end of the outstanding and unvested stock awards granted during such fiscal year, computed in accordance with the
methodology used for financial reporting purposes.
Represents the change in fair value during the indicated fiscal year of each stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the
last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting
conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year.
Represents the fair value at vesting of the stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for
financial reporting purposes.
Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award that was granted in a prior fiscal year and that vested during the
indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes.
Represents the fair value as of the last day of the prior fiscal year of the stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting
conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes.
See footnote 1 in the Pay versus Performance table above for the NEOs included in the average for each year.
• 2024 Proxy Statement
89
PAY VERSUS PERFORMANCE
Relationship Between Pay and Performance
Relationship Between Pay and Performance
We believe the compensation actually paid in each of the years reported above and over the four-year cumulative period
are reflective of the Compensation Committee’s emphasis on “pay-for-performance” as the compensation actually paid
fluctuated year over year, primarily due to our stock performance and our varying levels of achievement against
pre-established performance goals under the AIP and PBRSU awards. The CD&A describes in detail the Compensation
Committee’s emphasis on “pay-for-performance” and how our executive compensation program is designed to link
executive compensation with the achievement of our financial objectives as well as stockholder value creation. Because
our executive compensation program incentivizes and rewards executives primarily through long-term incentives in the
form of PBRSU and RSU equity awards, the compensation actually paid is most significantly impacted by changes in our
stock price over the vesting period of the awards.
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the NEOs
The following is a list of financial performance measures which, in our assessment, represent the most important financial
performance measures used by PayPal to link compensation actually paid to the NEOs for 2023:
• revenue
• non-GAAP operating margin
• free cash flow
See the CD&A for a further description of the metrics used in PayPal’s executive compensation program.
)
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$100
$50
$0
$(50)
$(100)
$217
$191
$153
$51
$174
$165
$14
$10
$151
$57
$19
$46
$9
$109
$66
($13)
2020
2021
($87)
2022
2023
$250
$200
$150
$100
$50
$0
$(50)
$(100)
Compensation Actually Paid to PEO (Chriss)
PayPal Total Shareholder Return
Compensation Actually Paid to PEO (Schulman)
S&P Software & Services Select Industry Index Total Shareholder Return
Average Compensation Actually Paid to Non-PEO NEOs
$4.2
$191
$4.2
$4.2
$51
$14
$10
2020
2021
$2.4
($13)
($87)
2022
$46
$19
$9
2023
$5.0
$4.0
$3.0
$2.0
$1.0
$0
($1.0)
($2.0)
)
$
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Compensation Actually Paid to PEO (Chriss)
Average Compensation Actually Paid to Non-PEO NEOs
Compensation Actually Paid to PEO (Schulman)
Net Income ($ in Billions)
90
• 2024 Proxy Statement
PAY VERSUS PERFORMANCE
Relationship Between Pay and Performance
)
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$200
$150
$100
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$191
$25.4
$27.5
$29.8
$21.5
$51
$14
$10
$46
$19
$9
2020
2021
($13)
($87)
2022
2023
$35.0
$30.0
$25.0
$20.0
$15.0
$10.0
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Compensation Actually Paid to PEO (Chriss)
Average Compensation Actually Paid to Non-PEO NEOs
Compensation Actually Paid to PEO (Schulman)
Revenue ($ in Billions)
• 2024 Proxy Statement
91
CEO PAY RATIO DISCLOSURE
CEO Pay Ratio Disclosure
We are providing the following information about the relationship of the annualized total compensation of Mr. Chriss, our
CEO, to the median of the annual total compensation of all our employees (other than Mr. Chriss), which we refer to as the
“pay ratio.” We believe that the pay ratio disclosed below is a reasonable estimate calculated in a manner consistent with
Item 402(u) of Regulation S-K.
For 2023, our last completed fiscal year, the median of the annual total compensation of all our employees (other than our
CEO) was $94,167 and the annualized total compensation of our CEO was $35,311,260 (based on the assumptions used to
annualize the compensation reported in the “2023 Summary Compensation Table” in this proxy statement). For 2023, we
estimate that the pay ratio of the annualized total compensation of our CEO to the median of the annual total compensation
of all our employees is 375 to 1.
Methodology
PayPal is a global company and operates in approximately 200 markets around the world. As of December 31, 2023, we
employed approximately 27,200 people globally: approximately 38% of them were based in the U.S. and 62% were based
outside of the U.S. We strive to create a competitive global compensation program in terms of both each employee’s
position and the geographic location in which the employee is located. Accordingly, our compensation programs and
reward offerings are designed to reflect local market practices across our global operations.
In 2023 we adjusted the date for identifying our median employee from December 31 to December 1 to better align with the
processes involved with the planning and administration of our annual rewards cycle. As of that date, we compiled
compensation information for all of our full-time and part-time employees worldwide (including interns).
For purposes of identifying the median employee from our global employee population, we compared the total target
compensation of our employees for 2023, which was composed of annual base salary, target short-term incentives and
other bonuses and the intended grant value related to any long-term incentive equity awards, as reflected in our global
human resources and equity management systems. For employees outside of the U.S., we converted their compensation
to U.S. dollars using the applicable exchange rate as of December 1, 2023. We did not include any contractors or workers
employed through a third-party provider in our employee population.
The elements in this compensation measure are representative of the principal forms of compensation delivered to our
employees. We identified our median employee using this compensation measure, which was consistently applied to all
employees included in the calculation.
Once we identified our median employee, we identified and calculated the elements of that employee’s compensation for
2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of
$94,167.
For our CEO, we determined Mr. Chriss’ annualized total compensation as follows:
Grant Date Fair
Value of
2023 RSUs1,2
Grant Date
Fair Value of
2023-2024
PBRSUs1
Annual Base Salary
Grant Date Fair
Value of AIP
PBRSUs3
AIP Individual
Performance
Component4
All Other
Compensation5
CEO Total
Annualized
Compensation
$1,250,000
$15,574,264
$15,806,742
$1,743,414
$625,000
$311,840
$35,311,260
1
2
3
4
5
This amount represents the grant date value of the initial RSU and PBRSU awards (as applicable) that Mr. Chriss was granted on October 15, 2023 in connection with his
commencement of employment with PayPal. See the section titled “Offer Letter Compensation for New NEOs” in the CD&A and the “2023 Grant of Plan-Based Awards Table” in this
proxy statement for more information.
This value excludes Mr. Chriss’ award of non-recurring, new hire, make-whole RSUs, which were granted to Mr. Chriss on October 15, 2023.
This value is based on Mr. Chriss’ 2023 annual base salary and his AIP Target Incentive Amount of 200% of base salary, 75% of which was allocated to the Company performance
component of the AIP and issued as AIP PBRSUs. This value assumes a grant date of October 15, 2023, which is the same grant date as Mr. Chriss’ other PayPal equity awards based
on his start date with PayPal.
This amount is based on Mr. Chriss’ 2023 annual base salary and his AIP Target Incentive Amount of 200% of base salary, 25% of which was allocated to the individual performance
component of the AIP. This amount reflects the 100% Individual Performance Score that Mr. Chriss achieved in 2023 for purposes of the AIP.
See “2023 Summary Compensation Table” in this proxy statement for more information.
The SEC rules for identifying the median employee allow companies to adopt many different methodologies, such as
applying estimates, assumptions, adjustments and exclusions and adopting unique definitions of compensation to identify
the median employee and calculate the pay ratio. In light of the differences in how pay ratios may be calculated, neither the
median employee’s compensation nor the estimated pay ratio reported by other companies may be comparable to the
pay ratio reported above, as other companies have different employee populations and compensation practices and may
use different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
92
• 2024 Proxy Statement
EQUITY COMPENSATION PLAN INFORMATION
Equity Compensation Plan Information
The following table gives information regarding our equity compensation plans as of December 31, 2023, which we
collectively refer to as our Equity Compensation Plans.
Plan Category
Equity Compensation Plans approved by
security holders
Equity Compensation Plans not approved by
security holders
TOTAL
(a)
Number of Securities
to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
(b)
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights ($)
(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
31,548,3801
1,768,2373
33,316,617
—
15.184
15.18
85,547,8272
—
85,547,827
1
2
3
Includes (a) 23,355,445 shares of our common stock issuable pursuant to RSUs under the Equity Plan, (b) 79,595 shares of our common stock issuable pursuant to DSUs under the
Equity Plan, (c) 1,076,030 shares of common stock issuable from outstanding 2023 AIP shares awarded under the 2023 AIP (representing the actual number of shares that were
earned based on actual Company performance for the one-year performance period ending December 31, 2023), (d) 3,309,892 shares of our common stock issuable from
outstanding PBRSUs awarded under the 2023-2025 PBRSUs (representing the maximum number of shares assuming achievement of maximum performance against target level),
(e) 1,599,492 shares of our common stock issuable from outstanding PBRSUs awarded under the 2022-2024 PBRSUs (representing the maximum number of shares assuming
achievement of maximum performance against target level) and (f) 0 shares of our common stock issuable from outstanding PBRSUs awarded under the 2021-2023 PBRSUs
(representing the actual number of shares that were based on actual Company performance for the three-year performance period ending December 31, 2023). RSUs and DSUs
each represent an unfunded, unsecured right to receive shares of Company common stock. The value of RSUs and DSUs varies directly with the price of our common stock.
Includes 43,972,527 shares of our common stock reserved for future issuance under our Amended and Restated Employee Stock Purchase Plan as of December 31, 2023.
Represents (a) 71,746 shares of our common stock to be issued upon exercise of outstanding options assumed in connection with acquisitions and (b) 1,696,491 shares of our
common stock issuable pursuant to RSUs granted under our 2022 Inducement Equity Incentive Plan. We do not intend to make further grants of any awards under any equity plan of
any acquired company or our 2022 Inducement Equity Incentive Plan.
4 Does not include outstanding RSUs.
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• 2024 Proxy Statement
93
PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
PROPOSAL 3:
Vote to Approve PayPal Holdings, Inc. 2015 Equity
Incentive Award Plan, as Amended and Restated
Summary
The Company is asking stockholders to approve the Amended and Restated 2015 Equity Incentive Plan (the “Equity Plan”)
in order to (i) increase the number of shares authorized for issuance under the Equity Plan and (ii) remove the “inverse
fungible share ratio” for future awards.
The Board has determined that it is in the best interests of the Company and its stockholders to approve this proposal. The
Board, upon the recommendation of the Compensation Committee, has approved the amended and restated Equity Plan,
subject to stockholder approval, and recommends that our stockholders vote in favor of this proposal at the Annual Meeting.
Background
• The Equity Plan was initially adopted by the Board in June 2015 and approved by eBay Inc. as the Company’s sole
stockholder at that time.
• At our 2018 annual meeting of stockholders held in May 2018, our stockholders approved an amendment and
restatement of the Equity Plan which, among other items, increased the number of shares reserved for issuance under
the Equity Plan to 145 million shares.
• At our 2023 annual meeting of stockholders held in May 2023, our stockholders approved an amendment and
restatement of the Equity Plan which increased the number of shares reserved for issuance under the Equity Plan to
179.6 million shares.
• As of March 15, 2024, 26,637,589 shares remained available for future grants under the Equity Plan. March 15, 2024 was
the last ordinary course PayPal equity grant date prior to the proxy statement’s filing date. No equity awards were
granted to our named executive officers between March 16, 2024 and the March 27, 2024 Record Date.
Reasons to Vote for the Proposal – Share Increase
Stockholder approval to amend and restate the Equity Plan will increase the number of shares reserved for issuance under
the Equity Plan by an additional 20 million shares of PayPal stock. In determining whether to recommend that stockholders
approve the increase in the number of shares reserved for future issuance, the Compensation Committee and Board of
Directors carefully considered a number of important factors, including:
• The Equity Plan supports a broad-based program that is critical to our ability to effectively compete for talented
employees. We operate in a highly competitive market for talent, and in this regard we compete with companies in
both the technology and financial sectors. With 43% of our full-time employees classified within our technology
function, it is important to consider how our technology sector competitors utilize equity compensation for similar roles.
Therefore, our ability to continue offering equity incentive awards under the Equity Plan is particularly critical to our
ability to attract, retain and reward skilled and motivated employees.
We make our annual, broad-based equity grant in early March of each year. As of March 15, 26,637,589 shares remained
available for future grants under the Equity Plan (equal to approximately 2.49% of our common shares outstanding). If
stockholders do not approve this proposal, the current share reserve may not be sufficient to support our equity
compensation plans through the next opportunity to increase the equity plan reserve at the 2025 Annual Meeting, which
is expected to be held in May 2025. As a result, we would lose access to a key element of compensation that is critical
in the labor markets in which we compete, particularly within our technology function.
Key statistics on our program (as of fiscal year-end 2023) include:
100%
of Full-Time Employees
Who Hold Equity Awards
77%
of Full-Time Employees
Who Received Equity in
2023
43%
of Full-Time Employees in
Our Technology Function
92%
of 2023 Grants Awarded
to Non-Named Executive
Officers1
1.
It is important to note that our grants to Named Executive Officers during 2023 included a total of nine individuals (vs. the standard five individuals) as a result of executive transitions
during 2023.
94
• 2024 Proxy Statement
PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
• Equity awards support our pay-for-performance philosophy. We currently award restricted stock units (RSUs) to a
broad-based group of our employee population and our non-employee directors. In addition to RSUs, we also grant
performance-based RSUs (PBRSUs) to senior-level employees that vest based on both time and performance
conditions. The Board believes that equity awards, whose value depends on the performance of our stock and which
require achievement of performance criteria and/or continued service over time, link realized pay to company
performance, support an ownership mentality and create strong alignment between participants and stockholders.
• Steps taken to balance our need to attract and retain talent with stockholder interests regarding dilution. We are
mindful of the dilutive impact of our equity compensation programs on our stockholders. The proposed increase to the
share reserve is intended to balance this reality with our need to compete for skilled talent, maintain competitive
compensation practices, and attract and retain the talent required to support our strategic objectives. Specifically:
• Size of share request. This proposal would increase the number of shares available for future issuance by 20 million
shares. This represents approximately 1.9% of our fiscal year-end common shares outstanding. This is well below the
25th percentile of the size of share pool increases requested among our executive compensation peers during the
last five years of approximately 2.6% of common shares outstanding. We expect that the proposed increase will be
sufficient to support our compensation programs during the remainder of 2024 and the first half of 2025 (including our
annual focal grant in fiscal year 2025), with a reasonable buffer to support potential unexpected events such as
acquisitions, unplanned senior executive hires, significant changes in the trading price of our stock or significant
changes to our headcount.
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• Significant share repurchase program to offset dilution from equity awards. Our share repurchase program has
helped mitigate dilution to our stockholders by reducing the total number of shares outstanding. In fiscal year 2023,
our share repurchases resulted in a reduction of 74 million shares outstanding which was equivalent to 6.9% of our
shares outstanding as of December 31, 2023. These share repurchases more than offset the impact of ownership
dilution from equity-based awards that vested during the year.
• Ongoing, frequent stockholder input. As noted above, we expect that the proposed increase should be sufficient
to support our compensation plans during 2024 and the first half of 2025. In the near term, we intend to make annual
requests to stockholders for additional shares under our Equity Plan to allow stockholders to continue to monitor our
share usage and provide ongoing input on our equity program. In addition, we continue to conduct significant and
ongoing outreach to gather input from our stockholders. As outlined in the Compensation Discussion & Analysis
section of this proxy statement, since our 2023 Annual Meeting we contacted investors representing 50% of our
common stock, and successfully engaged with holders of approximately 19% of our common stock.
• Responsible equity usage. We manage our long-term stockholder dilution by closely managing the number of equity
awards granted annually while regularly undertaking an evaluation of the equity compensation practices of those
companies with which we compete for talent. We grant what we believe is an appropriate amount of equity necessary
to effectively attract, reward and retain employees in the context of the talent markets in which we compete. Our three-
year average burn rate, which we define as the number of shares subject to equity awards granted divided by the
weighted average number of shares outstanding for that fiscal year, was 1.5% for fiscal years 2021 through 2023.
• 2024 Proxy Statement
95
PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Given the reduction in our stock price during 2023, we have also implemented and continue to evaluate actions to
reduce our ongoing equity usage while still maintaining a competitive total rewards program. For example, in 2024, we
revised the participation requirements under our ongoing program and no longer provide an initial grant to all newly
hired full-time employees. Going forward, we will continue to manage our dilution by thoughtfully assessing the scope
of equity grants. In addition, we have discontinued our historical practice of using stock for compensation under our
annual incentive plan, and will use only cash for the annual incentive plan beginning with fiscal year 2024. In response to
stockholder feedback and to promote increased accountability and transparency, starting with Q1 of 2024 we will
include stock-based compensation expense in our non-GAAP financial metric reporting. Key statistics on our equity
plan status and annual share usage are shown in the tables that follow:
Equity Plan Status as of March 15, 2024
Item
Outstanding awards
Outstanding Options/SARs
Weighted Average Exercise Price
Weighted Average Remaining Term (years)
Outstanding Full-Value Awards (PBRSUs1, RSUs and DSUs)
Shares available for new grants
Total number of shares issuable
(outstanding awards plus potential new grants)
Additional shares requested under this Proposal
Total shares authorized for issuance
(if this Proposal is approved)
1. Assumes target performance for PBRSUs.
As of
March 15, 2024
38,473,000
51,000
$
14.38
3.80
38,422,000
26,638,000
65,111,000
20,000,000
85,111,000
Three-Year Average Equity Award “Burn Rate”
Weighted
Average Shares
Outstanding
(Undiluted)
Options
Granted1
Options
Canceled/
Forfeited
Full-
Value
Awards1
Granted
Full-Value
Awards
Canceled/
Forfeited
Gross Equity
Burn/Usage
Net Equity
Burn/Usage
(a)
(b)
(c)
(d)
(e)
(b+d)/(a)
(b+d-c-e)/(a)
1,103,000,000
1,154,000,000
1,174,000,000
0
0
0
9,000 24,970,000
3,595,000
11,000
17,238,000
5,254,000
9,000
8,666,000
2,038,000
3-Year Average:
2.3%
1.5%
0.7%
1.5%
1.9%
1.0%
0.6%
1.2%
Year
2023
2022
2021
1.
Includes RSUs, PBRSUs (reflects target performance for PBRSUs in the year of grant and incorporates performance adjustments for PBRSUs granted in prior periods), and DSUs
granted; excludes RSUs and options assumed in connection with acquisitions.
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• 2024 Proxy Statement
PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Equity Request Reflects our Market for Talent. PayPal operates a technology platform to enable digital payments across
millions of consumers and merchants across the world. Our proprietary technology solutions simplify commerce
experiences on behalf of consumers and merchants, and are the key driver of our growth and the center of our value
proposition. Given that we operate at the intersection of technology and finance, some market participants have classified
us as a financial firm, most notably Standard & Poor’s, which recently changed our industry classification from the
Technology Sector to the Financial Services Sector. This may lead some market participants to compare our use of equity
to that of financial services firms. With 43% of our full-time employees classified within our technology function, we believe
that comparisons relative to traditional financial services organizations do not fully capture our competitive market for
talent. Traditional financial services organizations typically have significantly different workforce demographics with a
smaller percentage of employees focused on engineering, and often pay significantly higher cash compensation and rely
less on equity compensation than is common within the technology sector. As a FinTech organization with headquarters in
the Bay Area, we compete for key talent with other technology companies in certain critical areas, such as our technology
function and many of our leadership roles; accordingly, we believe it is appropriate to compare our equity compensation
practices to those of our technology peers. As shown in the table below, our equity usage, as measured by our three-year
average gross and net burn rate, is below the median of the 10 technology companies included in our compensation peer
group:
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3-Year Average
Gross Burn Rate
Net Burn Rate
PayPal
1.5%
25th
1.0%
50th
1.9%
75th
2.5%
PayPal
1.2%
25th
0.7%
50th
1.6%
75th
1.9%
• 2024 Proxy Statement
97
PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Strong Governance Practices Designed to Protect Stockholder Interests. The Equity Plan and our equity compensation
programs are designed to reflect leading corporate governance and compensation practices:
What We Do
Administered by 100%
independent
Compensation Committee
Minimum vesting for equity
awards
The Equity Plan is administered by the Compensation Committee of the Board, which is
comprised entirely of independent non-employee directors.
The Equity Plan provides that no portion of any award granted under the Equity Plan may vest
before the one-year anniversary of the date of grant. The foregoing is subject to a 5% carve-out,
as discussed in further detail below, and does not restrict the Compensation Committee’s ability
to provide for accelerated vesting upon a termination of employment.
Required stockholder
approval for additional
shares
The Equity Plan does not contain an annual “evergreen” provision but instead reserves a fixed
maximum number of shares for issuance, which can only be increased with stockholder
approval.
Share counting provisions
Annual limits on
nonemployee director
awards
Stock ownership guidelines
and mandatory retention
requirement
In general, when awards granted under the Equity Plan expire or are canceled without having
been fully exercised, or are settled in cash, the shares reserved for those awards are returned to
the share reserve and become available for future awards. If shares are tendered to us or
withheld by us to satisfy an award’s tax withholding obligations or pay a stock option’s or stock
appreciation right’s exercise price, those shares do not become available for future awards.
The Equity Plan limits the value of equity that may be granted under non-employee director
awards each fiscal year.
We maintain robust stock ownership requirements for our executives and directors. In addition,
executive officers who have not yet satisfied their applicable guideline level are required to retain
25% of the net shares of our common stock that they receive as the result of the exercise, vesting
or payment of any equity awards granted to them.
Grant performance-based
equity awards to our
executives
Since our spin-off from eBay, we have awarded a meaningful portion of equity awards to our
executives in the form of PBRSUs that are subject to forfeiture based on both time- and
performance-based vesting conditions.
Frequent re-approval
We intend to continue to provide our stockholders with frequent opportunities to provide input on
the amount of equity available for grant under the Equity Plan.
What We Don’t Do
Explicit prohibition on
repricing without
stockholder approval
No discounted stock
options or stock
appreciation rights
No dividends paid on
awards prior to vest and no
dividend equivalents on
options or stock
appreciation rights
Limited transferability and
no share pledging
The Equity Plan prohibits the repricing, cash-out or other exchange of underwater stock options
and stock appreciation rights without prior stockholder approval.
The Equity Plan requires that stock options and stock appreciation rights issued under it must
have an exercise price equal to at least the fair market value of a share on the date the award is
granted, except in certain situations in which we are assuming or replacing options granted by
another company that we are acquiring.
The Equity Plan provides that dividends credited or payable or dividend equivalents in
connection with any award granted under the Equity Plan are subject to the same restrictions as
the underlying award and will not be paid until the underlying award vests. Further, no dividend
equivalents are payable with respect to options or stock appreciation rights.
In general, awards may not be sold, assigned, transferred, pledged or otherwise encumbered,
either voluntarily or by operation of law, unless otherwise approved by the Board or a committee
of the Board administering the Equity Plan.
No tax gross-ups
The Equity Plan does not provide for any tax gross-ups.
98
• 2024 Proxy Statement
PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Reasons to Vote for the Proposal – Eliminate Inverse Fungible Share Ratio
Approval of the Equity Plan will also eliminate the “inverse fungible share ratio” for future awards. The Equity Plan currently
utilizes an “inverse fungible share ratio” under which options and stock appreciation rights reduce the share reserve by 0.5
shares, but full value awards, such as RSUs and PBRSUs, reduce the share reserve on a one-for-one basis. Based on input
from our stockholders and given that we intend to issue only RSUs and PBRSUs (i.e., full value awards) under the Equity Plan
for the foreseeable future, we do not believe that continuing to include an “inverse fungible share ratio” is necessary.
Conclusion
The Board has determined that it is in the best interests of the Company and its stockholders to approve this proposal. The
Board, upon the recommendation of the Compensation Committee, has approved the amended and restated Equity Plan
to increase the shares reserved for issuance and to remove the inverse fungible share ratio contained within the Equity
Plan, subject to stockholder approval, and recommends that our stockholders vote in favor of this proposal at the Annual
Meeting. This proposal is also being submitted to our stockholders in compliance with Nasdaq listing standards concerning
stockholder approval of equity compensation plans and/or material revisions to these plans.
If our stockholders approve this proposal, the amended and restated Equity Plan will become effective as of the date of
stockholder approval, and the 20 million additional shares will be available for grant under the Equity Plan. If our
stockholders do not approve this proposal, the amended and restated Equity Plan and the additional shares reserved for
issuance will not take effect, and our Equity Plan will continue to be administered in its current form.
Our executive officers and directors have an interest in this proposal by virtue of their being eligible to receive equity
awards under the Equity Plan. References to the Equity Plan in the remainder of this discussion refer to the amended and
restated Equity Plan as if this proposal has been approved by our stockholders, unless otherwise specified or the context
otherwise references the Equity Plan prior to it being amended and restated.
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Summary of the Equity Plan
The following is a summary of the operation and principal features of the Equity Plan. The summary is qualified in its entirety
by reference to the Equity Plan as set forth in Appendix B.
Purpose
The Compensation Committee and the Board believe that it is in the best interests of the Company and its stockholders to
provide, through the Equity Plan, a comprehensive equity incentive program designed to enable the Company to attract,
retain and reward employees, non-employee directors and other persons providing services to the Company. The Board
also believes that equity compensation is essential to link executive compensation with long-term stockholder value
creation. Equity compensation represents a significant portion of the compensation package for our key employees. We
strongly believe that granting equity awards motivates employees to think and act like owners, rewarding them when value
is created for stockholders.
Authorized Shares
Under the Equity Plan, 179.6 million shares are authorized for issuance. We are asking our stockholders to approve an
additional 20 million shares to be available for issuance under the Equity Plan, which will increase the aggregate number of
shares authorized under the Equity Plan to 199.6 million. As of March 15, 2024, we had approximately 26,637,589 shares
available for issuance under the Equity Plan. Based solely on the closing price of the Company’s common stock, as
reported on the Nasdaq on March 15, 2024, which was $62.85 per share, the maximum aggregate market value of the
26,637,589 shares that could be issued under the Equity Plan is $1,674,172,469. Moreover, the market value per share of the
Company’s common stock on March 27, 2024 (i.e., the Record Date) was $66.57 per share, based solely on the closing
price of the Company’s common stock on such date.
Share Reserve Reduction and Share Recycling
Currently, any shares subject to stock options or stock appreciation rights are counted against the Equity Plan share reserve
as 0.5 share for every one share subject to the award. Any shares subject to awards granted under the Equity Plan other
than options or stock appreciation rights (i.e., full value awards, including restricted stock, restricted stock units,
performance units and performance shares) are counted against the Equity Plan share reserve as one share for every one
share subject thereto.
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We are asking our stockholders to approve an amendment to the Equity Plan to remove the “inverse fungible share ratio”
and, effective with respect to awards granted on or after May 22, 2024, each award will reduce the number of shares
available for awards under the Equity Plan by one share for each share covered by the award.
If any award granted under the Equity Plan expires or becomes unexercisable without having been exercised in full, is
surrendered or is forfeited to or repurchased by the Company due to failure to vest, the unpurchased, forfeited or
repurchased shares subject to such award become available for future grant or sale under the Equity Plan.
Shares used to satisfy tax withholding obligations relating to an award or pay the exercise price or purchase price of an
option or stock appreciation right do not become available for future issuance under the Equity Plan.
Adjustments to Shares Subject to the Equity Plan
Certain transactions with our stockholders not involving our receipt of consideration, such as a stock split, spin-off, stock
dividend, or certain recapitalizations, may affect the price of our shares (these transactions are collectively referred to as
“equity restructurings”). In the event that an equity restructuring occurs, the Compensation Committee or the Board will
equitably adjust the class of shares issuable and the maximum number of shares of our stock subject to the Equity Plan, as
well as the maximum number of shares that may be issued to an employee during any calendar year, and will also
equitably adjust outstanding awards as to the class, number of shares and price per share of our stock. Other types of
transactions may also affect our shares, such as a dividend or other distribution, reorganization, merger, or other changes in
corporate structure. In the event that there is a transaction which is not an equity restructuring, and the Compensation
Committee or the Board determines that an adjustment to the plan and any outstanding awards would be appropriate to
prevent any dilution or enlargement of benefits under the Equity Plan, the Compensation Committee or the Board will
equitably adjust the Equity Plan as to the class of shares issuable and the maximum number of shares of our stock subject
to the Equity Plan, as well as the maximum number of shares that may be issued to an employee during any calendar year,
and will also adjust any outstanding awards as to the class, number of shares and price per share of our stock in such
manner as it may deem equitable.
Administration
The Compensation Committee has the exclusive authority to administer the Equity Plan, including the power to determine
eligibility, the types and sizes of awards, the price and timing of awards, the acceleration or waiver of any vesting restriction
and the authority to delegate such administrative responsibilities.
To the extent permitted by applicable law, the Compensation Committee may delegate to a committee of one or more of
our directors or one or more of our officers the authority to grant or amend awards to participants other than our executives
who are subject to Section 16 of the Exchange Act. Pursuant to this provision, our Compensation Committee’s current
practice is to delegate to our Chief Executive Officer, in his capacity as a Board member, the authority to determine and
make individual grants to our employees who are not subject to Section 16 of the Exchange Act.
Unless otherwise determined by the Board, the Compensation Committee will consist solely of two or more members of
the Board, each of whom is a non-employee director under the Exchange Act, and an “independent director” under the
rules of Nasdaq (or other principal securities market on which shares of our common stock are traded).
Eligibility
Awards may be granted to employees, directors and consultants of the Company and employees and consultants of any
subsidiary of the Company. Incentive stock options may be granted only to employees who, as of the time of grant, are
employees of the Company or any subsidiary corporation of the Company. As of December 31, 2023, there were
approximately 27,200 employees, including 7 executive officers, 11 non-employee directors and 14,200 consultants eligible
to be granted awards under the Equity Plan. While consultants to the Company are eligible to participate in the Equity Plan,
as of March 15, 2024, the Company has not granted any equity awards to any consultants and the Company’s current
practice is to not grant equity awards to consultants.
Stock Options
Stock options, including incentive stock options as defined under Section 422 of the Code and non-qualified stock options,
may be granted pursuant to the Equity Plan. The option exercise price of all stock options granted pursuant to the Equity
Plan will not be less than 100% of the fair market value of a share on the date of grant. Stock options may be exercised as
determined by the Compensation Committee, but in no event may a stock option have a term extending beyond ten years
from the date of grant.
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PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Notwithstanding the foregoing, incentive stock options granted to any person who owns, as of the date of grant, stock
possessing more than ten percent of the total combined voting power of all classes of our stock will have an exercise price
that is not less than 110% of the fair market value of a share on the date of grant and may not have a term extending beyond
the fifth anniversary of the date of grant. The aggregate fair market value of a share with respect to which options intended
to be incentive stock options are exercisable for the first time by an employee in any calendar year may not exceed
$100,000 or such other amount as the Code provides.
The Compensation Committee has the authority to determine the methods by which an option holder may pay the
exercise price of an option or the related taxes, including, without limitation: (1) cash, (2) shares (including, in the case of
payment of the exercise price of an award, shares issuable pursuant to the exercise of the award) having a fair market value
on the date of delivery equal to the aggregate payments required or (3) other property acceptable to the Compensation
Committee (including through the delivery of a notice that the award holder has placed a market sell order with a broker
with respect to shares then issuable upon exercise or vesting of an award, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to us in satisfaction of the aggregate payments required; provided that
payment of such proceeds is then made to us upon settlement of that sale). No participant who is a member of the Board
or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act will be permitted to pay
the exercise price of an option in any method which would violate the prohibitions on loans made or arranged by us as set
forth in Section 13(k) of the Exchange Act.
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Restricted Stock Awards
Restricted stock may be granted pursuant to the Equity Plan. A restricted stock award is the grant of shares at a price, if any,
determined by the Compensation Committee, that is nontransferable and may be subject to substantial risk of forfeiture
until specific conditions are met. Conditions may be based on continuing employment and/or achieving performance
goals. During the period of restriction, participants holding shares of restricted stock may have full voting and dividend
rights with respect to such shares; provided, however, that any dividends will be subject to the same vesting conditions as
the underlying shares of restricted stock. The restrictions will lapse in accordance with a schedule or other conditions
determined by the Compensation Committee.
Restricted Stock Units
RSUs may be granted pursuant to the Equity Plan. An RSU award provides for the issuance of common stock at a future date
upon the satisfaction of specific performance conditions as set forth in the applicable award agreement and/or subject to
continuing employment as set forth in the applicable award agreement. The vesting and maturity dates will be established
at the time of grant and may provide for the deferral of receipt of the common stock beyond the vesting date. On or
following the maturity date, we will transfer to the participant one unrestricted, fully transferable share of common stock for
each RSU scheduled to be paid out and not previously forfeited (subject to applicable tax withholding requirements).
Stock Appreciation Rights
Stock appreciation rights (“SARs”) may be granted pursuant to the Equity Plan. The exercise price of all SARs granted
pursuant to the Equity Plan will not be less than 100% of the fair market value of a share on the date of grant. SARs may be
exercised as determined by the Compensation Committee, but in no event may an SAR have a term extending beyond ten
years from the date of grant.
Additional Awards
The other types of equity awards that may be granted under the Equity Plan include performance share units, performance
shares, deferred stock units, dividend equivalents and other stock-based awards. Notwithstanding anything in the Equity
Plan to the contrary, dividend equivalents will be subject to the same vesting conditions as the underlying awards to which
the dividend equivalents relate. No dividend equivalents may be payable with respect to stock options or SARs.
Performance Bonus Awards
Performance bonus awards may be granted pursuant to the Equity Plan. Performance bonus awards are cash bonuses
payable upon the attainment of pre-established performance goals based on established performance criteria. The goals
are established and evaluated by the Compensation Committee and may relate to performance over any periods as
determined by the Compensation Committee.
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PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Performance-Based Awards
The Compensation Committee may grant performance-based awards under the Equity Plan. Under the Equity Plan, these
performance-based awards may be either equity awards or performance bonus awards. Participants are entitled to receive
payment for a performance-based award for any given performance period only to the extent that pre-established
performance goals set by the Compensation Committee for the period are satisfied.
Pre-established performance goals may include, without limitation, any one or more of the following types of performance
criteria:
• trading volume;
• users;
• customers;
• total payment volume;
• revenue;
• operating income;
• EBITDA and/or net earnings (either before or after
interest, taxes, depreciation and amortization);
• net income (either before or after taxes);
• earnings per share;
• earnings as determined other than pursuant to GAAP;
• multiples of price to earnings;
• multiples of price/earnings to growth;
• return on net assets;
• return on gross assets;
• return on equity;
• return on invested capital;
• stock price;
• cash flow (including operating cash flow and free cash
flow);
• net or operating margins;
• economic profit;
• stock price appreciation;
• total stockholder returns;
• employee productivity;
• market share;
• volume;
• customer satisfaction metrics;
• net sales;
• expense levels;
• regulatory achievements (including submitting or filing
applications or other documents with regulatory
authorities or receiving approval of any such
applications or other documents, passing pre-approval
inspections (whether of the Company or third parties));
• gross or cash margins;
• sales or licenses of the Company’s assets, including its
intellectual property, whether in a particular jurisdiction
or territory or globally, or through partnering
transactions;
• implementation, completion or attainment of
objectives with respect to research, development,
commercialization, products or projects, production
volume levels, acquisitions and divestitures and
recruiting and maintaining personnel;
• financing and other capital raising transactions
(including sales of the Company’s equity or debt
securities, factoring transactions);
• product revenue growth;
• gross profit;
• financial ratios, including those measuring liquidity,
activity, profitability or leverage, cost of capital or
assets under management;
• strategic partnerships or transactions (including in-
licensing and out-licensing of intellectual property,
establishing relationships with commercial entities with
respect to the marketing, distribution and sale of the
Company’s products (including with group purchasing
organizations, distributors and other vendors);
• co-development, co-marketing, profit sharing, joint
venture or other similar arrangements;
• economic value-added models or equivalent metrics;
• debt reduction;
• reductions in costs;
• year-end cash;
• working capital levels, including cash, inventory and
accounts receivable;
• research and development achievements;
• operating efficiencies; and
• employee engagement/satisfaction metrics.
Any of the above criteria may be measured with respect to us, or any subsidiary, affiliate, or other business unit of ours,
either in absolute terms, terms of growth, or as compared to any incremental increase and as compared to results of a peer
group, and may be calculated on a pro forma basis or in accordance with GAAP. The Compensation Committee defines
the manner of calculating the performance criteria it selects to use for such awards. With regard to a particular performance
period, the Compensation Committee will have the discretion to select the length of the performance period, the type of
performance-based awards to be granted, and the goals that will be used to measure the performance for the period.
Unless otherwise provided in an award agreement, to be eligible for a performance-based award for any period, a
participant will have to be employed by or providing services to the Company on the date the performance-based award is
paid.
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PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Limitations on Awards to Individual Participants
The maximum number of shares that may be subject to one or more awards granted to any one participant pursuant to the
Equity Plan during any calendar year is 2,000,000 shares, and the maximum amount that may be paid in cash to any
employee during any calendar year with respect to any performance-based award is $3 million. The maximum value of
awards granted to non-employee directors pursuant to the Equity Plan during any fiscal year is $600,000; provided,
however, that the limit set forth in this sentence: (a) is increased to $1,200,000 in the fiscal year in which a non-employee
director commences service on the Board and (b) does not apply to awards made pursuant to a non-employee director’s
election to receive an award in lieu of all or a portion of a cash retainer for service on the Board or any committee
thereunder.
Prohibition on Repricing
Except for adjustments described in “Adjustments to Shares Subject to the Equity Plan” above, the Compensation
Committee will not, without stockholder approval, authorize the amendment of any outstanding award to reduce its
purchase price per share, the replacement or substitution of any award for an award having a lesser purchase price per
share, or an offer to purchase any previously granted option or stock appreciation right for a payment in cash when the per
share exercise price exceeds the Fair Market Value of the underlying share.
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Minimum Vesting
Subject to the acceleration of vesting as permitted under the terms of the Equity Plan, no portion of any award granted
under the Equity Plan will vest before the one-year anniversary of the date of grant, except that awards that result in the
issuance to one or more participants of up to 5% of the shares of common stock which may be issued or transferred under
the Equity Plan may be granted without regard to such minimum vesting provisions.
Awards Subject to Clawback
Any incentive awards granted under the Equity Plan, and any cash or property delivered pursuant to incentive awards, are
subject to forfeiture, recovery, or other action by PayPal as necessary for compliance with any Company policy or as
required by law.
Transferability of Awards
Awards granted under the Equity Plan generally are not transferable, and all rights with respect to an award granted to a
participant generally will be available during a participant’s lifetime only to the participant (or the participant’s guardian or
legal representative).
Change in Control
A “change in control” generally means a transaction in which any person or group acquires more than 50% of our voting
securities, a change in a majority of the Board over a two-year period that is not approved by at least two-thirds of the
incumbent Board members, a sale or other disposition of all or substantially all of our assets, a merger or consolidation in
which we are not the surviving corporation or a reverse merger in which we are the surviving corporation but the shares of
our stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, or the
Company’s stockholders approval of a liquidation or dissolution of the Company.
Outstanding awards do not automatically terminate in the event of a change in control. In the event of a change in control,
any surviving corporation or acquiring corporation must either assume or continue outstanding awards or substitute similar
awards. Otherwise, the vesting of such awards (and, if applicable, the time during which such awards may be exercised)
will be accelerated in full and all forfeiture restrictions on such awards will lapse. The unexercised portion of all outstanding
awards may terminate upon the change in control.
If a change in control occurs during a performance period with respect to an outstanding award that vests based on
performance goals or other performance-based objectives, the performance period of the award will end as of the date of
the change in control and the performance goals will be deemed to have been satisfied at the actual level of performance
as of the date of the change in control, as determined by the Compensation Committee as constituted immediately prior to
the change in control, without proration, and such award, to the extent deemed earned by the Compensation Committee,
will continue to be subject to time-based vesting following the change in control in accordance with the original vesting
• 2024 Proxy Statement
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PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
schedule; provided, however, that if the awards are not converted, assumed or replaced by a successor entity, then
immediately prior to the change in control, such award will become fully vested, as described in the paragraph above.
Termination or Amendment
The Equity Plan will automatically terminate ten years from the most recent approval of the Equity Plan by the Company’s
stockholders, unless terminated at an earlier time by the Administrator. The Administrator may terminate or amend the
Equity Plan at any time, subject to stockholder approval for any amendment (i) to the extent necessary and desirable to
comply with any applicable law, regulation, or stock exchange rule, (ii) to increase the number of shares available under the
Equity Plan, (iii) to permit the Compensation Committee or the Board to grant options with a price below fair market value
on the date of grant, or (iv) to extend the exercise period for an option or stock appreciation right beyond ten years from the
date of grant. No termination or amendment of the Equity Plan may adversely affect in any material respect any Award
previously granted pursuant to the Equity Plan without the prior written consent of the participant.
Summary of U.S. Federal Income Tax Consequences
The following is a general summary under current law of the material federal income tax consequences to participants in
the Equity Plan under U.S. law. This summary deals with the general tax principles that apply and is provided only for
general information. Certain types of taxes, such as state and local income taxes and taxes imposed by jurisdictions
outside the U.S., are not discussed. Tax laws are complex and subject to change and may vary depending on individual
circumstances and from locality to locality. The summary does not discuss all aspects of income taxation that may be
relevant to a participant in light of their personal investment circumstances. This summarized tax information is not tax
advice.
Section 162(m) of the Code
Section 162(m) of the Code generally limits to $1 million the amount that a publicly held corporation is allowed each year to
deduct for the compensation paid to the corporation’s chief executive officer, chief financial officer, and certain of the
corporation’s current and former executive officers.
Stock Options
A participant will not recognize taxable income at the time an option is granted and the Company (or, if applicable, the
employer subsidiary) will not be entitled to a tax deduction at that time. A participant will recognize compensation taxable
as ordinary income (and subject to income tax withholding in respect of an employee) upon exercise of a nonqualified
stock option equal to the excess of the fair market value of the shares purchased over their purchase price, and the
Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the
Code apply. A participant will not recognize income (except for purposes of the alternative minimum tax) upon exercise of
an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for at least two years from
the date the option was granted and one year from the date it was exercised, any gain or loss arising from a subsequent
disposition of those shares will be taxed as long-term capital gain or loss, and the Company (or, if applicable, the employer
subsidiary) will not be entitled to any deduction. If, however, such shares are disposed of within the above-described
period, then in the year of that disposition the participant will recognize compensation taxable as ordinary income equal to
the excess of the lesser of (i) the amount realized upon that disposition and (ii) the excess of the fair market value of those
shares on the date of exercise over the purchase price, and the Company (or, if applicable, the employer subsidiary) will be
entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.
Stock Appreciation Rights
A participant will not recognize taxable income at the time SARs are granted and the Company (or, if applicable, the
employer subsidiary) will not be entitled to a tax deduction at that time. Upon exercise, the participant will recognize
compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount
equal to the fair market value of any shares delivered and the amount of cash paid by the Company. This amount is
deductible by the Company (or, if applicable, the employer subsidiary) as compensation expense, except to the extent the
deduction limits of Section 162(m) of the Code apply.
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PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Other Stock-Based Awards
A participant will not recognize taxable income at the time restricted stock (including performance-based restricted stock)
is granted and the Company (or, if applicable, the employer subsidiary) will not be entitled to a tax deduction at that time,
unless the participant makes an election to be taxed at that time. If such election is made, the participant will recognize
compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of
the grant in an amount equal to the excess of the fair market value for the shares at such time over the amount, if any, paid
for those shares. If such election is not made, the participant will recognize compensation taxable as ordinary income (and
subject to income tax withholding in respect of an employee) at the time the restrictions constituting a substantial risk of
forfeiture lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any,
paid for those shares. The amount of ordinary income recognized by making the above-described election or upon the
lapse of restrictions is deductible by the Company (or, if applicable, the employer subsidiary) as compensation expense,
except to the extent the deduction limits of Section 162(m) of the Code apply.
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A participant will not recognize taxable income at the time a RSU (including a performance-based RSU) is granted and the
Company (or, if applicable, the employer subsidiary) will not be entitled to a tax deduction at that time. Upon settlement of
RSUs, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in
respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of any cash
paid by the Company. The amount of ordinary income recognized is deductible by the Company (or, if applicable, the
employer subsidiary) as compensation expense, except to the extent the deduction limits of Section 162(m) of the Code
apply.
Dividend Equivalents
In general, dividend equivalents are generally taxable as ordinary income when the participant receives a payout of the
dividend equivalent, and the Company generally will be entitled to a tax deduction at the same time and in the same
amount.
Other Cash-Based Awards
A participant who receives an other cash-based award will realize compensation taxable as ordinary income in an amount
equal to the cash paid at the time of such payment. Income tax withholding requirements generally apply to amounts that
are recognized as ordinary income and the Company generally will be entitled to a deduction in the same amount and at
the same time that the participant recognizes ordinary income.
The tax consequences for equity awards outside of the U.S. may differ significantly from the U.S. federal income tax
consequences described above.
New Plan Benefits
No awards made under the Equity Plan prior to the date of the Annual Meeting were granted subject to stockholder
approval of this Proposal 3. The future awards to be made under the Equity Plan are subject to the discretion of the
Compensation Committee and therefore are not determinable at this time. Moreover, the number of shares that would be
earned with respect to any grant may vary based on the achievement of any applicable performance goals, which is not
determinable at this time.
The Equity Plan authorizes the grant of discretionary awards to non-employee directors, the terms and conditions of which
are determined by the Compensation Committee. Historically, our non-employee directors have received annual equity
grants under our equity incentive plans. Under our 2023 Independent Director Compensation Policy, our non-employee
directors receive annual equity grants promptly following the date of each annual stockholders meeting in the form of fully
vested stock payment awards with a dollar value equal to $275,000, and our Non-Executive Board Chair receives an
additional fully vested stock payment award with a dollar value equal to $87,500. In addition, our non-employee directors
may elect to receive their annual retainers in the form of fully vested stock awards.
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PROPOSAL 3: VOTE TO APPROVE PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN, AS AMENDED AND RESTATED
Awards Granted Under the Equity Plan
The Company’s NEOs and members of the Board will be eligible to receive grants under the Equity Plan and therefore have
an interest in this Proposal.
Because grants under the Equity Plan to participants are within the discretion of the Compensation Committee (or its
delegate), it is not possible to determine the grants that will be made to participants under the Equity Plan.
The following table sets forth information with respect to the number of shares subject to equity awards previously granted
under the Equity Plan since its inception through March 15, 2024 for certain individuals. No equity awards were granted to
our named executive officers between March 16, 2024 and the March 27, 2024 Record Date.
Name of Individual or Group
2023 NEOs:
Alex Chriss
President & Chief Executive Officer
Jamie Miller
EVP, Chief Financial Officer
Michelle Gill
EVP, General Manager – Small Business & Financial Services Group
John Kim
EVP, Chief Product Officer
Daniel H. Schulman
Former President and Chief Executive Officer
Blake Jorgensen
Former Chief Financial Officer
Gabrielle Rabinovitch
Former Acting Chief Financial Officer, Senior Vice President, Investor Relations and Treasurer
Peggy Alford
Former EVP, Global Sales and Merchant Services
Aaron Karczmer
EVP, former Chief Enterprise Services Officer
All current executive officers as a group
All current non-employee directors as a group
Each nominee for election as a director
Associate of any such directors, executive officers or nominees
Other persons who received or is to receive 5% of such options or rights
Number of
Options
Granted (#)
Number of
Shares Subject to
Stock Awards (#)1
—
—
—
—
737,895
246,606
246,606
292,872
30,485
2,482,269
—
—
—
—
—
—
—
—
—
8,827
320,956
448,544
636,864
2,933,879
551,086
1,259,886
—
—
All employees as a group (excluding executive officers)
428,653
133,110,863
1
The target number of shares was applied with respect to any PBRSUs granted to the individuals in this table.
Registration with the SEC
Subject to stockholder approval to amend and restate the Equity Plan, we intend to file with the U.S. Securities and
Exchange Commission a registration statement on Form S-8 covering the 20 million additional shares reserved for
issuance under the Equity Plan.
Summary
We strongly believe that the approval of this proposal is important to our continued success and is in the best interests of
PayPal and its stockholders. Awards such as those provided under the Equity Plan constitute an important incentive and
help us attract and retain high-performing individuals.
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 3.
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PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT AUDITOR FOR 2024
PROPOSAL 4:
Ratification of the Appointment of
PricewaterhouseCoopers LLP as Our Independent
Auditor for 2024
The ARC Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s
independent auditor.
The ARC Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent auditor for fiscal year 2024.
PwC has served as the independent auditor for PayPal, Inc., a direct wholly-owned subsidiary of the Company, since 2000,
and as the Company’s independent auditor since it became an independent public company in July 2015. The Board and
the ARC Committee believe that the continued retention of PwC to serve as our independent auditor is in the best interests
of the Company and our stockholders. Accordingly, we are asking our stockholders to ratify the selection of PwC as our
independent auditor for 2024. Although ratification is not legally required, we are submitting the appointment of PwC for
ratification by our stockholders because we value our stockholders’ views on the Company’s independent auditor and as a
matter of good corporate practice. We expect that a representative of PwC will attend the Annual Meeting, have an
opportunity to make a statement if they choose and be available to respond to appropriate questions.
If stockholders do not ratify the appointment, the ARC Committee will reconsider the appointment of our independent
auditor. Even if the appointment is ratified, the ARC Committee may in its discretion select a different independent
registered public accounting firm at any time during the year if it determines that such a change would be appropriate.
THE BOARD AND THE ARC COMMITTEE RECOMMEND A VOTE FOR PROPOSAL 4.
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ARC Committee Report
The ARC Committee operates under a written charter adopted by the Board and reviewed annually. The ARC Committee
consists of the seven directors named below. Each member of the ARC Committee meets the independence requirements
of Nasdaq and the SEC, and otherwise satisfies the requirements for audit committee service imposed by the Exchange
Act. In addition, the Board has determined that each of Mr. Moffett and Ms. Messemer is an “audit committee financial
expert” as defined by applicable SEC rules.
The ARC Committee provides assistance and guidance to the Board in fulfilling its oversight responsibilities with respect to:
• PayPal’s corporate accounting and financial reporting practices and the audit of its financial statements;
• The independent auditor’s qualifications and independence;
• The performance of PayPal’s internal audit function and independent auditor;
• The quality and integrity of PayPal’s financial statements and reports;
• Reviewing and approving all audit engagement fees and terms, as well as all non-audit engagements with the
independent auditor;
• Producing this ARC Committee Report;
• PayPal’s overall risk framework and risk appetite framework; and
• PayPal’s compliance with legal and regulatory requirements.
The ARC Committee relies on the expertise and knowledge of management, the internal audit department and the
independent auditor in carrying out its oversight responsibilities. Management is responsible for the preparation, presentation
and integrity of PayPal’s financial statements and for maintaining appropriate accounting and financial reporting principles
and policies and internal controls and procedures that provide for compliance with accounting standards and applicable
laws and regulations. PayPal’s independent auditor, PwC, is responsible for performing an audit of PayPal’s financial
statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing
an opinion on the conformity of those financial statements with generally accepted accounting principles in the U.S. The
independent auditor is also responsible for expressing an opinion on the effectiveness of PayPal’s internal control over
financial reporting.
• 2024 Proxy Statement
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PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT AUDITOR FOR 2024
ARC Committee Report
During 2023 and early 2024, among other things, the ARC Committee:
• Reviewed and discussed with management and the independent auditor the Company’s quarterly earnings press
releases, financial statements and related periodic reports prior to filing with the SEC;
• Reviewed and discussed with executive management, the internal audit team and the independent auditor the scope,
adequacy and effectiveness of the Company’s internal accounting and financial reporting controls and the independent
auditor’s opinion on the effectiveness of the Company’s internal control over financial reporting;
• Monitored and evaluated the independent auditor’s qualifications, performance, internal quality control procedures and
independence on an ongoing basis;
• Reviewed and discussed with management, the independent auditor and, as appropriate, the Chief Accounting Officer,
the audit scope, any significant matters arising from any audit and the audit plans of both the internal audit department
and the independent auditor;
• Reviewed and discussed the Company’s enterprise-wide risk management program and overall risk management
framework, including policies and practices established by management to identify, assess, measure and manage key
current and emerging risks facing the Company;
• Reviewed and discussed the Company’s enterprise-wide compliance program and global financial crimes program,
including compliance risks, management actions on significant compliance matters, progress of major compliance
initiatives and reports concerning the Company’s compliance with applicable laws and regulations;
• Reviewed with the General Counsel and Chief Risk and Compliance Officer, as applicable, any significant legal,
compliance or regulatory matters that could have a material impact on the Company’s financial statements, business or
compliance policies, including material notices to or inquiries received from governmental agencies;
• Reviewed and discussed with the independent auditor and management the audited financial statements in the
Company’s 2023 Annual Report on Form 10-K, including a discussion of any critical audit matters identified by the
independent auditor, the quality (not merely the acceptability) of the Company’s accounting principles, the
reasonableness of significant judgments and estimates and the clarity of the disclosures in the financial statements; and
• Held separate executive sessions with the independent auditor, the internal audit department (including the internal
Sarbanes-Oxley Act of 2002 (“SOX”) team) and executive management to enable them to discuss legal, accounting,
auditing and internal controls matters privately with the ARC Committee.
The ARC Committee has discussed with PwC the matters required to be discussed by the requirements of the PCAOB and
the SEC. In addition, the ARC Committee has discussed with PwC its independence from PayPal and its management,
received the written disclosures and the letter required by applicable PCAOB requirements regarding the independent
auditor’s communications with the ARC Committee concerning independence and considered whether PwC’s provision of
non-audit services was compatible with maintaining the independent auditor’s independence.
As provided in its charter, in addition to evaluating PwC’s independence, the ARC Committee assessed PwC’s
performance as independent auditor during 2023. As part of its annual, comprehensive review of PwC to determine
whether to reappoint the firm for the following fiscal year, the ARC Committee reviews a variety of indicators of audit quality
including: the quality and candor of PwC’s communications with the ARC Committee and management; the quality and
efficiency of the services provided, including input from management on PwC’s performance and how effectively PwC
demonstrates its independent judgment, objectivity and professional skepticism; external data on audit quality and
performance, including recent PCAOB reports on PwC and its peer firms; PwC’s global capabilities, technical expertise and
knowledge of the Company’s global operations, accounting policies and practices and internal control over financial
reporting; the appropriateness of PwC’s fees; PwC’s tenure as the Company’s independent auditor; and the controls and
procedures in place to maintain PwC’s independence. As a result of its evaluation, the ARC Committee concluded that the
appointment of PwC as the Company’s independent auditor for the fiscal year ending December 31, 2024 is in the best
interests of the Company and its stockholders.
Based on the ARC Committee’s reviews and discussions described above, the ARC Committee recommended to the
Board that the consolidated audited financial statements be included in PayPal’s Annual Report on Form 10-K for the year
ended December 31, 2023 for filing with the SEC.
The ARC Committee of the Board
David M. Moffett (Chair)
Rodney C. Adkins
Belinda J. Johnson
Enrique Lores
Deborah M. Messemer
Ann M. Sarnoff
Frank D. Yeary
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PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT AUDITOR FOR 2024
Audit and Other Professional Fees
Audit and Other Professional Fees
The following table provides information about fees for services provided by PwC (in thousands):
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
TOTAL
Year Ended December 31,
2023 ($)
2022 ($)
16,111
677
25
8
15,227
887
3
17
16,821
16,134
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“Audit Fees” include fees for services provided in connection with the audit of our annual financial statements, the review
of our quarterly financial statements included in our quarterly reports on Form 10-Q, the audit of internal control over
financial reporting, comfort letters, consents, statutory audits, discussions surrounding the proper application of financial
accounting and/ or reportable standards and audit services provided in connection with other regulatory or statutory filings
for which we have engaged PwC.
“Audit-Related Fees” are fees for assurance and related services that are reasonably associated with the performance of
the audit or review of our consolidated financial statements or internal control over financial reporting and are not included
in “Audit Fees.” These services primarily include fees for procedures in connection with our Systems and Organization
Control (“SOC”) reports.
“Tax Fees” are fees for tax services, including tax planning and advice and tax compliance.
“All Other Fees” are fees for permitted services performed by PwC that do not meet the “Audit Fees,” “Audit-Related Fees”
or “Tax Fees” category description. These services primarily include fees for software licenses.
The ARC Committee has determined that the provision of the non-audit services listed above is compatible with PwC’s
independence.
ARC Committee Pre-Approval Policy
The ARC Committee has adopted a policy regarding pre-approval of any audit and permissible non-audit services. Under
this policy, the ARC Committee pre-approves all audit and permissible non-audit services to be provided by PwC. These
services may include audit services, audit-related services, tax services and other services. Pre-approval of services is
generally provided for a period of up to one year, detailed as to the particular service or category of services and subject to
a specified budget. PwC is required to report periodically to the ARC Committee regarding the extent of services provided
in accordance with each pre-approval and the fees for such services provided to date. The ARC Committee may also pre-
approve particular services on a case-by-case basis.
• 2024 Proxy Statement
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PROPOSAL 5: STOCKHOLDER PROPOSAL – REPORT ON RESPECTING WORKFORCE CIVIL LIBERTIES
PROPOSAL 5:
Stockholder Proposal – Report on Respecting
Workforce Civil Liberties
National Center for Public Policy Research (“NCPPR”) on behalf of the Free Enterprise Project of the NCPPR has advised the
Company that it intends to present the following stockholder proposal at the Annual Meeting. NCPPR has indicated that the
Free Enterprise Project holds sufficient shares of PayPal common stock to meet the requirements of Rule 14a-8. The
stockholder proposal will be voted on at the Annual Meeting only if properly presented by or on behalf of the proponent.
The text of the stockholder proposal and supporting statement (including footnotes) appear exactly as received by the
Company unless otherwise noted. All statements contained in the stockholder proposal and supporting statement are the
sole responsibility of the proponent. The stockholder proposal may contain assertions about the Company or other matters
that we believe are incorrect, but we have not attempted to refute all those assertions.
THE BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL 5 BASED ON THE REASONS
SET FORTH IN PAYPAL’S STATEMENT IN OPPOSITION FOLLOWING THE STOCKHOLDER PROPOSAL.
Supporting Statement:
Report on Respecting Workforce Civil Liberties
PayPal employs more than 29,000 people and should respect its employees’ speech rights and religious freedom. The
Company must comply with laws prohibiting discrimination against employees on grounds including religion and
sometimes political affiliation and participation.
Respecting diverse views allows companies to attract the most qualified talent, promote a healthy and innovative business
culture, and contribute to the market and marketplace of ideas. Despite this, the 2023 Viewpoint Diversity Score Business
Index1 found that 91% of scored companies promote divisive training concepts like Critical Race Theory, replacing rich
cultural and ideological diversity with a monolithic focus on immutable surface-characteristic group identity.
PayPal, which received an abysmal score of 5% on the Index,2 goes further from training to practice, injecting illegal
considerations of race and sex into every supplier-recruitment decision,3 thus discriminating against suppliers arbitrarily
deemed “non-diverse.” And as PayPal actively discriminates against disfavored “non-diverse” people such as whites, men,
straight people and religious believers, no such groups are represented by any “employee resource group,” while favored
“diverse” groups — benefiting from Company discrimination — have a series of surface-characteristic-based lobbying
groups.4 This further indicates systemic discrimination at PayPal against the “non-diverse.”
Many companies, including PayPal, also alienate employees by taking divisive stances on political and social issues. The
Index found that 78% of scored companies discriminated against religious nonprofits in company programs, and 63%
supported legislation undermining fundamental First Amendment freedoms.5 PayPal fully engages in these misdeeds,
reliably misusing shareholder assets to further executives’ personal policy preferences.6
Companies’ potential liability for discrimination was sharpened by recent Supreme Court decisions in Students for Fair
Admission v. Harvard and Groff v DeJoy. PayPal must act now to assess and correct potential shortcomings.
Corporations have recently lost such actions, paying $10 to $25 million in damages, plus litigation costs. The risk of these
suits is rising. With more than 29,000 employees and a score of 5% on the Index, PayPal likely has 20,000+ employees that
were potentially discriminated against for being white, Asian, male, straight or religious. If only 10% of them sue, and only
10% of those win, Company losses would run to the billions. And while racial equity audits can cost up to $4 million, this
report should cost much less, as it need review only the discriminatory programs — unless PayPal so embraces suspect
discrimination that its whole operation need be reviewed.
Resolved: Shareholders request the Board of Directors to conduct an evaluation and issue a civil rights and non-
discrimination report within the next year, at reasonable cost and excluding proprietary information and disclosure of
anything that would constitute an admission of pending litigation, evaluating how the Company’s policies and practices
impact employees and prospective employees based on their race, color; religion (including religious views), sex, national
origin or political views, and the risks those impacts present to the Company’s business.
1
2
3
4
5
6
https://www.viewpointdiversityscore.org/business-index
https://www.viewpointdiversityscore.org/company/paypal-holdings
https://about.pypl.com/how-we-work/diversity-and-inclusion/supplier-diversity/default.aspx
https://about.pypl.com/how-we-work/diversity-and-inclusion/default.aspx
https://www.viewpointdiversityscore.org/business-index
https://investor.pypl.com/esg-strategy/default.aspx; https://s202.q4cdn.com/805890769/files/doc_downloads/2023/05/2022-Global-Impact-Report_FINAL-73.pdf; https://
www.weforum.org/partners/#P; https://www.civicalliance.com/members; https://www.hrc.org/about/corporate-partners
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PROPOSAL 5: STOCKHOLDER PROPOSAL – REPORT ON RESPECTING WORKFORCE CIVIL LIBERTIES
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PayPal’s Statement in Opposition
PAYPAL’S BOARD RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
THIS PROPOSAL FOR THE FOLLOWING REASONS:
The report requested by the Proposal is unnecessary for the following reasons:
• A diverse, inclusive workplace free of discrimination is in the best interest of PayPal and its stockholders.
• PayPal already publicly provides robust reporting of its inclusion and anti-discrimination initiatives.
• The Proposal presents a misleading view of PayPal’s diversity, inclusion, equity and belonging (“Belonging”) performance.
A diverse, inclusive workplace free of discrimination is in the best interest of PayPal and its stockholders
PayPal believes in the strong business case for a diverse and inclusive work environment founded on mutual respect and
free of discrimination. PayPal is an equal opportunity employer, and we hire, promote and compensate employees based
on their ability to perform the job, without regard to race, religious creed or belief, color, ethnicity or national origin, age,
disability, gender, gender identity and expression, sexual orientation, military or veteran status, marital status, or any other
legally protected characteristic. We recognize and respect each person as a unique individual, and we do not tolerate
employment discrimination in the workplace.
We believe there is ample evidence establishing that diverse teams make better business decisions and build better
products. As a global company, we believe that the diversity of our workforce enables greater collaboration and innovation
as we develop products and services to meet the needs of our diverse customer base globally.
PayPal already publicly provides robust reporting of its inclusion and anti-discrimination initiatives
The Proposal calls for a reporting obligation beyond PayPal’s already robust reporting of our diversity and anti-
discrimination programs. Our anti-discrimination efforts are reflected in our Code of Business Conduct and Ethics and other
public disclosures including our Global Impact Report. We report publicly on the importance we place on diversity and
inclusion across multiple dimensions, which is part of our overall anti-discrimination efforts. Accordingly, our Board
believes that devoting additional time and resources to produce the report sought by the Proposal would only distract from
and duplicate the ongoing anti-discrimination and inclusion programs and initiatives underway at PayPal.
The Proposal presents a misleading view of PayPal’s Belonging performance
The Proposal’s supporting statement cites PayPal’s score of 5% on the “2023 Viewpoint Diversity Score Business Index.” Of
the 75 companies rated on this index, the average score is 11% and only one company was rated above 25%. The
proponent further claims, inaccurately and without evidence, that “PayPal actively discriminates against disfavored “non-
diverse” people such as whites, men, straight people, and religious believers.” PayPal’s Belonging programs are designed
and operated in accordance with applicable laws prohibiting discrimination based on any legally protected characteristic.
The proponent further erroneously asserts that “no such groups are represented by any ‘employee resource group.’” In fact,
our eight employee resource groups are open to all employees and include the Believe group, which promotes the value
of faith at work.
Our Board has carefully considered the Proposal, and for the reasons set forth above, the Board believes that devoting
additional time and resources to the proposed report would be unnecessary, costly and would only distract from the
ongoing diversity and anti-discrimination programs already in place at PayPal. Accordingly, our Board believes that the
Proposal is not in the best interests of PayPal and its stockholders.
* * *
THE BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL 5.
• 2024 Proxy Statement
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PROPOSAL 6: STOCKHOLDER PROPOSAL – BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION
PROPOSAL 6:
Stockholder Proposal – Bylaw Amendment:
Stockholder Approval of Director Compensation
John Chevedden, whose address is 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, has advised the
Company that he intends to present the following stockholder proposal at the Annual Meeting. Mr. Chevedden has
indicated that he holds sufficient shares of PayPal common stock to meet the requirements of Rule 14a-8. The stockholder
proposal will be voted on at the Annual Meeting only if properly presented by or on behalf of the proponent.
The text of the stockholder proposal and supporting statement appear exactly as received by the Company unless
otherwise noted. All statements contained in the stockholder proposal and supporting statement are the sole responsibility
of the proponent. The stockholder proposal may contain assertions about the Company or other matters that we believe
are incorrect, but we have not attempted to refute all those assertions.
THE BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL 6 BASED ON THE REASONS
SET FORTH IN PAYPAL’S STATEMENT IN OPPOSITION FOLLOWING THE STOCKHOLDER PROPOSAL.
Proposal 6 – Bylaw Amendment: Stockholder Approval of Director Compensation
FOR
Shareholder
Rights
The Bylaws of PayPal Holdings, Inc. are amended as follows:
Article II, Section 1.12 is deleted and replaced in its entirety as follows:
Compensation of Directors. The Board of Directors shall not have any authority to fix the compensation of directors. The
compensation of directors the Corporation pays shall be fixed at $1 in a fiscal year; provided, however, the Corporation may
pay, grant, or award compensation greater than $1 in a fiscal year if such compensation has been (1) disclosed to
stockholders in advance of the fiscal year in which the Corporation will pay, grant, or award such compensation;
(2) submitted to an approval vote of stockholders at an annual or special meeting of stockholders in advance of the fiscal
year in which the Corporation will pay, grant, or award such disclosed compensation; and (3) approved by a majority of
stockholder votes present in person or represented by proxies and entitled to vote cast in favor of the disclosed annual
compensation at an annual or special meeting of stockholders in advance of the fiscal year in which the Corporation will
pay, grant, or award such compensation, which majority shall include only stockholder votes of stockholders that are not
directors of the Company.
Supporting statement
PayPal stockholders seek an independent Board of Directors, one that has as its sole objective representing stockholders
without conflict of interest. One interest pertains to compensation and how PayPal compensates directors for board
service. Stockholders seek the authority to approve compensation that directors receive from PayPal.
Stockholders want and need authority over how and how much PayPal compensates directors. If stockholders approve
compensation, then directors have the greatest incentive to work in the sole interest of stockholders. Currently, directors
design and approve compensation with no approval from stockholders. Directors receive whatever compensation they
desire. This bylaw amendment corrects this problem.
The bylaw amendment provides for a stockholder vote on director compensation. Directors can continue to design and
propose compensation structure and amount, including the mix and amount of cash and equity. Stockholders will have
final approval over whether Directors receive what directors propose. Stockholders will vote on Director compensation as
disclosed in the proxy statement for a stockholder meeting before the fiscal year in which Directors receive that
compensation. Stock owned by Directors will not count in the vote, so the vote result represents the independent views of
stockholders.
I urge stockholders to approve this bylaw amendment and assume proper authority over the compensation of directors
who represent us.
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PROPOSAL 6: STOCKHOLDER PROPOSAL – BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION
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PayPal’s Statement in Opposition
PAYPAL’S BOARD RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
THIS PROPOSAL FOR THE FOLLOWING REASONS:
The proposed bylaw amendment is not in the best interest of PayPal because:
• PayPal’s director compensation program is reasonable and reflects market practice.
• PayPal already provides opportunities for stockholders to express their views on director compensation.
• The proponent’s requested director compensation scheme would place PayPal at an extreme disadvantage relative to
other US public companies and hinder PayPal’s ability to maintain a qualified, high-performing Board of Directors.
PayPal’s director compensation program is reasonable and reflects market practice
As discussed under the section titled “Director Compensation,” the Compensation Committee of the Board of Directors,
comprising solely independent directors, reviews and makes recommendations to the Board regarding compensation paid
to non-employee directors for their Board and committee service. The Committee reviews the non-employee director
compensation program on an annual basis, receiving input from the Committee’s independent compensation consultant
regarding market practices and the competitiveness of the non-employee director compensation program in relation to the
general market and the Company’s peer group. This process has resulted in an effective compensation program that
enables the Company to attract and retain highly-qualified directors with the background, experience and skills needed to
oversee the management of the Company, while remaining aligned with market practices for director compensation.
Structurally, our program is broadly consistent with the practices of both our peers and other S&P 500 constituents. Further,
the annual compensation paid to our directors, as set forth in the Director Compensation Table, is well within the range of
amounts paid by our peers, as well as companies in the S&P 500 Technology and S&P 500 Financial Services indices.
PayPal already provides opportunities for stockholders to express their views on director compensation
PayPal’s established good governance processes provide ample opportunities for investors to express their views on
director compensation. PayPal maintains an active stockholder engagement process with participation by members of our
Board and facilitates regular communication of stockholder feedback to the full Board; investors to date have not raised the
amount, structure, or form of our director compensation as a concern. Additionally, all of PayPal’s directors are subject to
election on an annual basis, and investors who are concerned about director pay practices could emphasize any views
shared in direct dialogue with the Company through a vote on the members of the Compensation Committee, without
requiring a separate vote to signal the investor’s perspective. These two key communication pathways provide an effective
venue for investors to share their views on director compensation.
The proponent’s requested director compensation scheme would place PayPal at an extreme disadvantage relative
to other US public companies and hinder PayPal’s ability to maintain a qualified, high-performing Board of Directors
The proponent’s proposed bylaw amendment would completely upend the widely-accepted framework for director
compensation at public companies and place PayPal at a significant disadvantage in attracting and retaining highly-
qualified directors. First, the proposed regime would require advance approval of director compensation, creating
enormous uncertainty each year for nominees and incumbent directors as to what, if any, compensation they might receive
for their significant commitment of time and effort to serve on our Board, a commitment they would need to make before
knowing how they will be compensated. Second, the vote would be binary and binding, leaving no room for any iterative
and deliberative dialogue with investors regarding director compensation. Finally, directors – particularly those with the
caliber and diversity of qualifications, experience and expertise we seek for our Board – typically have great flexibility as to
which of the available board positions they might accept. For these reasons, highly-qualified directors who are sought by
multiple public companies would be less willing to serve on PayPal’s Board because the proposal would result in (i)
recurring uncertainty about the expected compensation for board service and (ii) the potential for a full year’s
compensation for board service to be capped at $1, which is in stark contrast to a predictable, competitive director
compensation program. Accordingly, if PayPal were shackled to the proponent’s mandatory advance director
compensation framework, it would be materially disadvantaged in attracting the most qualified candidates, facing a
significant and perennial obstacle to realizing long-term shareholder value.
Our Board has carefully considered the Proposal, and for the reasons set forth above, the Board believes that adoption of
the proposed Bylaw amendment and resulting director compensation stockholder approval requirements would introduce
significant uncertainty and compromise PayPal’s ability to attract and retain highly-qualified directors. Therefore, our Board
believes that the Proposal is not in the best interests of PayPal and its stockholders.
* * *
THE BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL 6.
• 2024 Proxy Statement
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FREQUENTLY ASKED QUESTIONS
Proxy Materials
Frequently Asked Questions
Proxy Materials
1. Why did I receive these proxy materials?
We have made these materials available to you or delivered paper copies by mail in connection with our Annual Meeting,
which will take place exclusively online on Wednesday, May 22, 2024. As a stockholder, you are invited to participate in the
Annual Meeting via live webcast and vote on the business items described in this proxy statement. This proxy statement
includes information that we are required to provide to you under SEC rules and is intended to assist you in voting your
shares.
2. What is included in the proxy materials?
The proxy materials include:
• The Notice of the Annual Meeting;
• Our proxy statement for the Annual Meeting; and
• Our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
If you received a paper copy of these materials by mail, the proxy materials also include a proxy card or a voting instruction
form for the Annual Meeting. If you received a “Notice of Internet Availability of Proxy Materials” (described in Question 4
below) instead of a paper copy of the proxy materials, see the section entitled “Voting Information” below for information
regarding how you can vote your shares.
3. What does it mean if I receive more than one Notice, proxy card or voting instruction
form?
It generally means that some of your shares are registered differently or are in more than one account. Please provide
voting instructions separately for each Notice, proxy card and voting instruction form you receive.
4. Why did I receive a Notice in the mail regarding the Internet availability of proxy
materials instead of a full set of proxy materials?
We are distributing our proxy materials to certain stockholders over the Internet under the “notice and access” approach in
accordance with SEC rules. As a result, we are mailing to many of our stockholders a “Notice of Internet Availability of Proxy
Materials” (“Notice”) instead of a paper copy of the proxy materials. All stockholders receiving the Notice will have the
ability to access the proxy materials over the Internet and may request to receive a paper copy of the proxy materials by
mail. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the
Notice. In addition, the Notice contains instructions on how you may request access to proxy materials electronically on an
ongoing basis or in printed form by mail.
5. How can I access the proxy materials over the Internet?
Your Notice, proxy card or voting instruction form will contain instructions on how to:
• view our proxy materials for the Annual Meeting on the Internet; and
• instruct us to send our future proxy materials to you electronically by email.
Our proxy materials are also available on our website at https://investor.pypl.com/financials/annual-reports/default.aspx.
Your Notice, proxy card or voting instruction form will contain instructions on how you may request access to proxy
materials electronically on an ongoing basis. Instead of receiving future copies of our proxy statements and annual reports
by mail, stockholders of record and most beneficial owners may elect to receive an email that will provide an electronic link
to these documents. Choosing to receive your proxy materials electronically helps us conserve natural resources and
reduce printing costs, mailing fees and the environmental impact of our Annual Meeting. If you choose to access future
proxy materials electronically, you will receive an email with instructions containing a link to the website where those
materials are available and a link to the proxy voting website. Your election to receive future proxy materials by email will
remain in effect until you revoke it.
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FREQUENTLY ASKED QUESTIONS
Proxy Materials
6. How may I obtain a paper copy of the proxy materials?
If you receive a paper Notice instead of a paper copy of the proxy materials, the Notice will provide instructions about how
to obtain a paper copy of the proxy materials. If you receive the Notice by email, the email will also include instructions
about how to obtain a paper copy of the proxy materials. All stockholders of record who do not receive a paper Notice or
Notice by email will receive a paper copy of the proxy materials by mail.
7. I share an address with another stockholder, and we received only one paper copy of
the proxy materials or Notice. How may I obtain an additional copy?
To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account
holding PayPal common stock but who share the same address, we have adopted an SEC-approved procedure called
“householding.” Under this procedure, we deliver a single copy of the Notice and, if applicable, the proxy materials to
certain stockholders having the same last name and address and to individuals with more than one account registered at
our transfer agent with the same address, unless contrary instructions have been received from an affected stockholder.
This practice helps us conserve natural resources and reduces printing costs, mailing fees and the environmental impact of
our Annual Meeting. Stockholders participating in householding will continue to receive separate proxy cards.
If you are a beneficial owner and wish to receive a separate Notice or set of proxy materials, please request those
additional materials by contacting your individual bank, broker or other nominee. All stockholders may also request a
separate Notice or set of proxy materials for the Annual Meeting by contacting Broadridge Financial Solutions, Inc.
(“Broadridge”) at:
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• By Internet: www.proxyvote.com
• By telephone: 1-800-579-1639
• By email: sendmaterial@proxyvote.com
If you request a separate Notice or set of proxy materials by email, please be sure to include your control number in the
subject line. A separate Notice or set of proxy materials, as applicable, will be sent promptly following receipt of your
request.
If you are a stockholder of record and wish to receive a separate Notice or set of proxy materials, as applicable, in the
future, please contact Computershare Shareowner Services LLC, our transfer agent, at:
• 1-800-522-6645
If you are the beneficial owner of shares held through a bank, broker or other nominee, and you wish to receive a separate
Notice or set of proxy materials, as applicable, in the future, please call Broadridge at:
• 1-866-540-7095
8. I share an address with another stockholder, and we received more than one paper
copy of the proxy materials or the Notice. How do we obtain a single copy in the
future?
Stockholders of record sharing an address who are receiving multiple copies of the proxy materials or the Notice, as
applicable, and who wish to receive a single copy of such materials in the future may contact Computershare Shareowner
Services LLC, our transfer agent, at:
• 1-800-522-6645
Beneficial owners of shares held through a bank, broker, or other nominee sharing an address who are receiving multiple
copies of the proxy materials or the Notice, as applicable, and who wish to receive a single copy of such materials in the
future may contact Broadridge at:
• 1-866-540-7095
• 2024 Proxy Statement
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FREQUENTLY ASKED QUESTIONS
Voting Information
Voting Information
9. Which proposals will be voted on at the Annual Meeting? How does the Board
recommend that I vote? What is the vote required to approve each of the proposals?
What effect will abstentions and broker non-votes have?
Voting Options
Board
Recommendation
Vote Required to
Adopt the
Proposal
Effect of
Abstentions
Broker
Discretionary
Voting Allowed*
FOR each
nominee
Majority of votes cast for
such nominee
No effect
No
Proposal 1: Election of the 11
Director Nominees Named in this
Proxy Statement
For, Against or
Abstain for each
nominee
Proposal 2: Advisory Vote to
Approve Named Executive Officer
Compensation (“say-on-pay”
vote)
For, Against or
Abstain
Proposal 3: Approval of PayPal
Holdings, Inc. 2015 Equity
Incentive Award Plan, as
Amended and Restated
For, Against or
Abstain
Proposal 4: Ratification of the
Appointment of
PricewaterhouseCoopers LLP as
Our Independent Auditor for 2024
For, Against or
Abstain
FOR
FOR
FOR
Majority of shares
represented in person or
by proxy at the meeting
Treated as
votes Against
Majority of shares
represented in person or
by proxy at the meeting
Treated as
votes Against
Majority of shares
represented in person or
by proxy at the meeting
Treated as
votes Against
Proposal 5: Stockholder Proposal
– Report on Respecting Workforce
Civil Liberties
For, Against or
Abstain
AGAINST
Majority of shares
represented in person or
by proxy at the meeting
Treated as
votes Against
Proposal 6: Stockholder Proposal
– Bylaw Amendment: Stockholder
Approval of Director
Compensation
For, Against or
Abstain
AGAINST
Majority of shares
represented in person or
by proxy at the meeting
Treated as
votes Against
*
See Question 16 below for additional information on broker non-votes.
No
No
Yes
No
No
10. Who is entitled to vote? How many shares can I vote?
Each share of PayPal common stock issued and outstanding as of the close of business on March 27, 2024, the Record
Date for the Annual Meeting, is entitled to cast one vote per share on all items being voted on at the Annual Meeting. You
may vote all shares of PayPal common stock that you owned as of the Record Date, including (1) shares held directly in your
name as the stockholder of record, including shares purchased or acquired through PayPal’s equity incentive plans and
(2) shares held for you as the beneficial owner through a broker, bank or other nominee.
On the Record Date, 1,052,643,337 shares of PayPal common stock were issued and outstanding and entitled to vote.
11. What is the difference between holding shares as a stockholder of record and as a
beneficial owner?
Most of our stockholders hold their shares as a beneficial owner through a bank, broker or other nominee rather than
directly in their own name as the stockholder of record. As summarized below, there are some important distinctions
between shares held of record and those owned beneficially.
Stockholder of Record
If your shares are registered directly in your name with our transfer agent, Computershare Shareowner Services LLC, you
are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to
grant your voting proxy directly to PayPal or to a third party, or to vote your shares during the Annual Meeting.
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FREQUENTLY ASKED QUESTIONS
Voting Information
Beneficial Owner
If your shares are held in a brokerage account or by a bank or other holder of record (commonly referred to as holding
shares in “street name”), you are considered the “beneficial owner” of those shares. As the beneficial owner, you have the
right to direct your broker, bank or other holder of record how to vote your shares during our Annual Meeting.
12. How can I vote my shares without participating in the Annual Meeting?
Whether you are a stockholder of record or a beneficial stockholder, you may direct how your shares are voted without
participating in the Annual Meeting. We encourage stockholders to vote well before the Annual Meeting, even if they plan
to attend the virtual Annual Meeting. Please make sure that you have your Notice, proxy card or voting instruction form
available and carefully follow the instructions. There are three ways to vote by proxy:
• By Internet: vote your shares online at www.proxyvote.com.
• By telephone: call 1-800-690-6903 or the telephone number on your proxy card or voting instruction form.
• By mail: complete, sign and date your proxy card or voting instruction form and return in the postage-paid envelope.
Internet and telephone voting are available 24 hours a day until 8:59 p.m. Pacific time on Tuesday, May 21, 2024.
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13. How can I vote my shares during the Annual Meeting?
The Annual Meeting will be held entirely online to enable greater stockholder attendance and participation globally.
Stockholders may participate in the Annual Meeting by visiting the following website:
• www.virtualshareholdermeeting.com/PYPL2024
To participate in the Annual Meeting, you will need the 16-digit control number included on the Notice, proxy card or voting
instruction form, as applicable.
You may vote your shares electronically during the Annual Meeting, whether you are a stockholder of record or a beneficial
stockholder. Even if you plan to participate in the Annual Meeting online, we recommend that you also vote by proxy as
described above so that your vote will be counted if you later decide not to participate in the Annual Meeting.
14. May I change my vote or revoke my proxy?
If you are the stockholder of record, you may revoke your proxy at any time before it is voted at the Annual Meeting by:
• submitting a new proxy by Internet, telephone or paper ballot with a later date (which will automatically revoke the
earlier proxy);
• sending written notice of revocation to our Corporate Secretary; or
• voting in person by attending the virtual Annual Meeting by webcast.
Participation in the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make
that request in a manner described in the immediately preceding sentence. For shares you hold beneficially in the name of
a broker, bank or other nominee, you may change your vote by submitting new voting instructions to your broker, bank or
nominee, or by participating in the meeting and electronically voting your shares during the meeting.
15. What if I return my proxy card but do not provide voting instructions?
If you are a stockholder of record and you return your signed proxy card without giving specific voting instructions, your
shares will be voted as recommended by the Board (see Question 9 above).
16. What if I am a beneficial owner and do not give voting instructions to my broker?
If you are a beneficial owner of shares, your broker, bank or other nominee is not permitted to vote on your behalf on the
election of directors and other matters to be considered at the Annual Meeting, except for Proposal 4 (the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent auditor for 2024), unless you provide specific instructions
by completing and returning the voting instruction form or following the instructions provided to you to vote your shares on
the Internet or by telephone. If you do not provide voting instructions, your shares will not be voted on any proposal except
for Proposal 4. This is called a “broker non-vote.” For your vote to be counted, you will need to communicate your
voting decision to your broker, bank or other nominee before the date of the Annual Meeting, or vote in person at the
virtual Annual Meeting.
• 2024 Proxy Statement
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FREQUENTLY ASKED QUESTIONS
Voting Information
17. Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner designed to
protect your voting privacy. Your vote will not be disclosed, either within PayPal or to third parties, except: (1) as necessary
to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote and (3) to facilitate
proxy solicitation. To the extent that stockholders provide written comments on their proxy cards, those comments will be
forwarded to management.
18. What constitutes a quorum?
The quorum requirement for holding the Annual Meeting and the transaction of business is that holders of a majority of the
shares of PayPal common stock entitled to vote at the Annual Meeting must be present in person or represented by proxy.
All abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum.
19. Who will bear the cost of soliciting votes for the Annual Meeting?
We will bear the expense of soliciting proxies and have engaged D.F. King & Co., Inc. to solicit proxies for a fee of $19,000,
plus a reasonable amount to cover expenses. We will reimburse brokerage houses and other custodians, fiduciaries and
nominees for their reasonable out-of-pocket expenses for forwarding proxy materials to beneficial owners of shares. Our
directors, officers and employees may solicit proxies in person, by mail, by telephone, or by electronic communication. No
additional compensation will be paid to our directors, officers or employees for such services.
20. What happens if additional matters are presented at the Annual Meeting?
Other than the six items of business described in this proxy statement, we are not aware of any other business to be acted
upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders (Alex Chriss, Jamie Miller, Bimal Patel
and Brian Y. Yamasaki) will have the discretion to vote your shares on any additional matters properly presented for a vote
at the Annual Meeting. If, for any reason, any of the nominees is not available as a candidate for director, the persons
named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.
21. Where can I find the voting results of the Annual Meeting?
We intend to announce preliminary voting results at the Annual Meeting and will report the final voting results in a Current
Report on Form 8-K within four business days of the Annual Meeting and available at www.sec.gov and on our Investor
Relations website.
Attending the Annual Meeting
22. How can I attend the Annual Meeting?
The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively online via
live webcast. You are entitled to attend and participate in the Annual Meeting only if you were a PayPal stockholder as of
the close of business on March 27, 2024, the Record Date, or if you hold a valid proxy for the Annual Meeting.
You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting
www.virtualshareholdermeeting.com/PYPL2024. You also will be able to vote your shares by attending the virtual Annual
Meeting online. Interested persons who were not stockholders as of the close of business on March 27, 2024, the Record
Date, may view, but not participate, in the Annual Meeting by visiting www.virtualshareholdermeeting.com/PYPL2024. To
participate in the Annual Meeting, you will need the 16-digit control number included on your Notice, on your proxy card (if
you requested printed materials) or on the instructions that accompanied your proxy materials. Stockholders who wish to
submit a question to PayPal prior to the Annual Meeting may do so at www.proxyvote.com before 8:59 p.m. Pacific Time on
Tuesday, May 21, 2024. Stockholders will need the 16-digit control number to submit a question. The online meeting will
begin promptly at 8:00 a.m. Pacific Time. We encourage you to access the meeting prior to the start time. Online check-in
will begin at 7:45 a.m. Pacific Time, and you should allow sufficient time for the check-in procedures.
23. What if I have technical difficulties or trouble accessing the virtual meeting website
during the check-in time or the meeting?
We will have technicians to assist you if you experience technical difficulties accessing the virtual meeting. If you encounter
any difficulties accessing the virtual meeting during the check-in or meeting time, please call 844-986-0822 (U.S.) or 303-
562-9302 (international).
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FREQUENTLY ASKED QUESTIONS
Attending the Annual Meeting
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24. Why are you holding a virtual meeting instead of a physical meeting?
We have conducted an exclusively virtual Annual Meeting each year since becoming a public company in 2015 and have
adopted a series of safeguards which we believe provide all stockholders the same rights and opportunities to participate
as they would at an in-person meeting. We have found that the virtual meeting format enables greater stockholder
attendance and participation globally, while reducing our environmental impact and saving time and money. Please visit
www.virtualshareholdermeeting.com/PYPL2024, where you can attend this year’s Annual Meeting and submit questions
before and during the meeting. For additional information regarding our virtual Annual Meeting, see the section entitled
“Important Information About PayPal’s Virtual Annual Meeting” on page 2 of this proxy statement.
25. Can stockholders ask questions during the Annual Meeting?
Yes. We will answer stockholder questions submitted in advance of, and questions submitted live during, the Annual
Meeting, time permitting. Stockholders may submit a question in advance of the meeting before 8:59 p.m. Pacific Time on
Tuesday, May 21, 2024 at www.proxyvote.com after logging in with the 16-digit control number included on the Notice, on
their proxy card (if they requested printed materials), or on the instructions that accompanied their proxy materials.
Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/PYPL2024. We will
endeavor to answer as many questions submitted by stockholders that comply with the meeting rules of conduct as time
permits. We will limit each stockholder to one question so we can answer questions from as many stockholders as
possible. Questions should be succinct and cover only one topic. Questions from multiple stockholders on the same topic
or that are otherwise related may be grouped, summarized and answered together. In addition, questions may be edited for
brevity and grammatical corrections. We do not intend to address any questions that are, among other things: irrelevant to
the business of the Company or to the business of the Annual Meeting; related to material non-public information of the
Company; related to personal matters or grievances; derogatory or otherwise in bad taste; repetitious statements already
made by another stockholder; in furtherance of the stockholder’s personal or business interests; or out of order or not
otherwise suitable for the conduct of the Annual Meeting, in each case as determined by the Board Chair or Corporate
Secretary in their reasonable discretion. For additional information regarding our virtual Annual Meeting, see the section
entitled “Important Information About PayPal’s Virtual Annual Meeting” on page 2 of this proxy statement.
26. What is the deadline to propose actions for consideration at the 2025 Annual
Meeting of Stockholders or to nominate individuals to serve as directors?
Stockholders may present proper proposals for consideration at future stockholder meetings. For a stockholder proposal
(other than a director nomination) to be considered for inclusion in our proxy statement and for consideration at our 2025
Annual Meeting of Stockholders (“2025 Annual Meeting”), our Corporate Secretary must receive the written proposal at our
principal executive offices no later than December 10, 2024. If we hold our 2025 Annual Meeting more than 25 days before
or after the one-year anniversary date of the Annual Meeting, we will disclose the new deadline by which stockholder
proposals must be received by any means reasonably determined to inform stockholders. In addition, stockholder
proposals must otherwise comply with the requirements of Rule 14a-8 under the Exchange Act. Proposals should be
addressed to Corporate Secretary, PayPal Holdings, Inc., 2211 North First Street, San Jose, California 95131. Failure to deliver
a proposal in accordance with this procedure may result in the proposal not being deemed timely received.
Our Bylaws also establish an advance notice procedure for stockholders who wish to present a proposal, including the
nomination of directors, before an annual meeting of stockholders but do not intend for the proposal to be included in our
proxy materials. Our Bylaws provide that the only business that may be conducted at an annual meeting is business that is
(1) brought before the meeting by the Company and specified in the notice of a meeting given by or at the direction of our
Board, (2) brought before the meeting by or at the direction of our Board or (3) otherwise properly brought before the
meeting by a stockholder of record entitled to vote at the annual meeting who has delivered timely written notice to our
Corporate Secretary, which notice must contain the information specified in our Bylaws. To be timely for our 2025 Annual
Meeting, our Corporate Secretary must receive the written notice by overnight express courier or registered mail, return
receipt requested, at our principal executive offices:
• not earlier than the close of business on December 10, 2024; and
• not later than the close of business on January 9, 2025.
If we hold our 2025 Annual Meeting more than 25 days before or after the one-year anniversary of the 2024 Annual Meeting,
our Corporate Secretary must receive the written notice at our principal executive offices no later than the close of business
on the 10th day following the day on which public disclosure of the date of such annual meeting was first made.
• 2024 Proxy Statement
119
FREQUENTLY ASKED QUESTIONS
Attending the Annual Meeting
If a stockholder proponent (or its representative) does not appear virtually (for a virtual annual meeting) or in person (for a
physical annual meeting) to present their proposal or nomination at such meeting, we are not required to present the
proposal for a vote at such meeting.
In addition, our Bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To
nominate a director, the stockholder must provide the information required by our Bylaws. In addition, the stockholder must
give timely notice to our Corporate Secretary in accordance with our Bylaws, which, in general, require that our Corporate
Secretary receive the notice within the time period described above for stockholder proposals that are not intended to be
included in our proxy statement.
We advise you to review our Bylaws, which contain these and other requirements with respect to advance notice of
stockholder proposals and director nominations, including certain information that must be included concerning the
stockholder and each proposal and nominee. Our Bylaws were filed with the SEC on October 2, 2023 as an exhibit to our
Current Report on Form 8-K and are available at https://investor.pypl.com/financials/sec-filings/default.aspx. You may also
contact our Corporate Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the
requirements for submitting stockholder proposals and nominating director candidates. We will not consider any proposal
or nomination that is not timely or otherwise does not meet our Bylaws’ and SEC requirements for submitting a proposal or
nomination. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal
that does not comply with these and other applicable requirements.
In addition to satisfying the requirements of our Bylaws, including the deadline for notice of director nominations,
stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must
provide notice that sets forth any additional information required by Rule 14a-19 under the Exchange Act no later than
January 9, 2025.
27. Where can I find more information about the Company’s SEC filings, governance
documents and communicating with the Company and the Board?
SEC Filings and Reports
Our SEC filings, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and any amendments to those reports, are available free of charge on our Investor Relations website at
https://investor.pypl.com/financials/sec-filings/default.aspx.
Corporate Governance Documents
The Governance Guidelines, charters of our principal Board committees, our Code of Business Conduct and Ethics and
other key corporate governance documents and materials are available on our Investor Relations website at
https://investor.pypl.com/governance/governance-overview/default.aspx.
Communicating with Management and Investor Relations
Stockholders may contact management or Investor Relations through our Investor Relations department by writing to
Investor Relations at our principal executive offices at PayPal Holdings, Inc., 2211 North First Street, San Jose, California
95131 or by email at investorrelations@paypal.com.
Communicating with the Board
Our Board has adopted a process by which stockholders or other interested persons may communicate with the Board or
any of its members. Stockholders and other interested parties may send communications in writing to any or all directors
(including the Board Chair, Board committees or the independent directors as a group) in care of our Corporate Secretary,
PayPal Holdings, Inc., 2211 North First Street, San Jose, California 95131. All mail received may be opened and screened for
security purposes. Certain items that are unrelated to the duties and responsibilities of the Board will not be forwarded.
Such items include, but are not limited to: spam; junk mail and mass mailings; new product suggestions; resumes and
other forms of job inquiries; surveys; and business solicitations or advertisements. In addition, material that is trivial,
obscene, unduly hostile, threatening, illegal or similarly unsuitable items will not be forwarded.
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• 2024 Proxy Statement
Summary Contact Information
Area of Interest
Board of Directors
PayPal Management
Contact Information
PayPal Holdings, Inc.
Attn: Corporate Secretary
2211 North First Street
San Jose, California 95131
PayPal Investor Relations
InvestorRelations@paypal.com
Annual Meeting
www.virtualshareholdermeeting.com/PYPL2024
Information for stockholders of record
Information for beneficial holders
Computershare Shareowner Services LLC
www.computershare.com/contactus
1.800.522.6645
Broadridge Financial Solutions, Inc.:
www.proxyvote.com
1.800.579.1639 or 1.866.540.7095
sendmaterial@proxyvote.com
FREQUENTLY ASKED QUESTIONS
Attending the Annual Meeting
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121
OTHER MATTERS
Other Matters
The Board is not aware of any other matters that will be presented for consideration at the Annual Meeting. However, if any
other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy intend to
vote on those matters in accordance with their best judgment.
By Order of the Board of Directors
Brian Y. Yamasaki
Secretary
Dated: April 9, 2024
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• 2024 Proxy Statement
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
APPENDIX A:
Reconciliation of Non-GAAP Financial Measures
This proxy statement contains certain non-GAAP measures of financial performance. These non-GAAP measures include
Non-GAAP Operating Margin, Non-GAAP earnings per diluted share and Free Cash Flow.
These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP
and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not
based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do
not reflect all of the amounts associated with the company’s results of operations as determined in accordance with GAAP.
These measures should be used to evaluate the company’s results of operations only in conjunction with the
corresponding GAAP measures.
Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in the proxy statement
can be found in the tables below.
In addition to the non-GAAP measures discussed above, the company also analyzes certain measures, including revenues,
on an FX-neutral basis to better measure the comparability of operating results between periods. The company believes
that changes in foreign currency exchange rates are not indicative of the company’s operations, and that evaluating growth
in revenues on an FX-neutral basis provides an additional meaningful and comparable assessment of this measure to both
management and investors. FX-neutral results are calculated by translating the current period’s local currency results with
the prior period’s exchange rate. FX-neutral growth rates are calculated by comparing the current period’s FX-neutral
results by the prior period’s results, excluding the impact from hedging activities.
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Reconciliation of GAAP Operating Income to Non-GAAP Operating Income
and GAAP Operating Margin to Non-GAAP Operating Margin
GAAP net revenues
GAAP operating income
Stock-based compensation expense and related employer payroll taxes
Amortization of acquired intangible assets
Restructuring
Other1
Total non-GAAP operating income adjustments
Non-GAAP operating income
GAAP operating margin
Non-GAAP operating margin
Year Ended December 31,
2021
2022
2023
(In millions, except percentages)
(unaudited)
$29,771
$27,518
$25,371
5,028
1,558
227
122
(256)
1,651
3,837
1,355
471
122
85
4,262
1,539
441
27
35
2,033
2,042
$ 6,679
$ 5,870
$ 6,304
16.9%
22.4%
13.9%
21.3%
16.8%
24.8%
1
The year ended for the periods presented, as applicable, include the following:
• December 31, 2023 includes $339 million in pre-tax gain, net of transaction costs, related to the sale of Happy Returns, $61 million of asset impairment charges for right-of-use
lease assets and related leasehold improvements in conjunction with exiting certain leased properties, and $21 million in fees related to credit externalization
• December 31, 2022 includes $81 million of asset impairment charges for right-of-use lease assets and related leasehold improvements in conjunction with exiting certain leased
properties and a $4 million charge associated with an early lease termination
• December 31, 2021 includes a $9 million charge associated with early lease terminations and $26 million of asset impairment charges for right-of-use lease assets and related
leasehold improvements in conjunction with exiting certain leased properties.
• 2024 Proxy Statement
123
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Reconciliation of GAAP Net Income to Non-GAAP Net Income and GAAP
Diluted EPS to Non-GAAP Diluted EPS
GAAP income before income taxes
GAAP income tax expense (benefit)
GAAP net income
Non-GAAP adjustments to net income:
Non-GAAP operating income adjustments (see table above)
Net (gains) losses on strategic investments
Other1
Tax effect of non-GAAP adjustments
Non-GAAP net income
Diluted net income per share:
GAAP
Non-GAAP
Shares used in GAAP diluted share calculation
Shares used in non-GAAP diluted share calculation
Year Ended December 31,
2021
2022
2023
(In millions, except per share data)
(unaudited)
$ 5,411
$3,366
$4,099
1,165
4,246
947
2,419
(70)
4,169
1,651
(201)
39
(89)
2,033
2,042
304
410
(384)
(46)
36
(746)
$5,646
$4,782
$5,455
$ 3.84
$ 5.10
1,107
1,107
$ 2.09
$ 3.52
$ 4.13
$ 4.60
1,158
1,158
1,186
1,186
1
The year ended for the periods presented, as applicable, include the following:
• December 31, 2023 and 2022 consist primarily of tax expense (benefit) related to intra-group transfer of assets.
• December 31, 2021 consists primarily of $43 million in tax expense related to intra-group transfer of intellectual property and $11 million in tax benefit related to the write-off of
deferred tax liabilities on strategic investments as a result of acquiring the remaining interest in the investments during the period.
Reconciliation of Operating Cash Flow to Free Cash Flow
Net cash provided by operating activities
Less: Purchases of property and equipment
Free cash flow
Net impact of European BNPL receivables originated as held for sale and the subsequent
sale of receivables
Adjusted free cash flow
Year Ended December 31,
2022
2023
(In millions/unaudited)
2021
$ 4,843
$ 5,813
$ 5,797
(623)
4,220
(706)
5,107
(908)
4,889
334
—
—
$4,554
$5,107
$4,889
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PAYPAL HOLDINGS, INC. 2015 EQUITY INCENTIVE AWARD PLAN (MARKED)
APPENDIX B:
PayPal Holdings, Inc. 2015 Equity Incentive Award Plan
(marked)
This Appendix B presents a marked version of the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan (the “Plan”), as
amended and restated, subject to the approval of our stockholders. The marked version shows all of the differences
between the version of the Plan approved by stockholders in May 20182023 and the version proposed to be voted on at
the 2024 Annual Meeting.
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PAYPAL HOLDINGS, INC.
2015 EQUITY INCENTIVE AWARD PLAN
ARTICLE 1
Purpose
The purpose of the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as it may be further amended and restated from
time to time (the “Plan”) is to promote the success and enhance the value of PayPal Holdings, Inc. (the “Company”) by
linking the personal interests of the members of the Board, Employees, and Consultants (each as defined below) to those
of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate
superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment,
interest, and special effort the successful conduct of the Company’s operation is largely dependent.
ARTICLE 2
Definitions and Construction
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly
indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
2.1 “Assumed Spin-Off Award” means an award granted to certain employees, consultants and directors of the Company,
eBay Inc. and their respective subsidiaries under an equity compensation plan maintained by eBay Inc. or a corporation
acquired by eBay Inc., which award is assumed by the Company and converted into an Award in connection with the Spin-
Off, pursuant to the terms of the Employee Matters Agreement between the Company and eBay Inc., entered into in
connection with the Spin-Off, which Assumed Spin-Off Award shall be issued upon the effective time of the Spin-Off.
2.2 “Award” means an Option, a Restricted Stock award, a Stock Appreciation Right award, a Performance Stock Unit award,
a Dividend Equivalents award, a Stock Payment award, a Deferred Stock Unit award, a Restricted Stock Unit award or a
Performance Bonus Award granted to a Participant pursuant to the Plan, including an Assumed Spin-Off Award.
2.3 “Award Agreement” means any written agreement, contract, or other instrument or document evidencing an Award,
including through electronic medium.
2.4 “Board” means the Board of Directors of the Company.
2.5 “Change in Control” means and includes each of the following:
(a) A transaction or series of transactions (other than an offering of Stock to the general public through a registration
statement filed with the U.S. Securities and Exchange Commission) whereby any “person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of
its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company)
directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities
outstanding immediately after such acquisition; or
(b) During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board
together with any new director(s) (other than a director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described in Section 2.5(a) or Section 2.5(c)) whose election by
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the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
(c) The consummation by the Company (whether directly involving the Company or indirectly involving the Company
through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a
sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related
transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(i) Which results in the Company’s voting securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting securities of the Company or the
person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or
indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company
(the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined
voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and
(ii) After which no person or group beneficially owns voting securities representing 50% or more of the combined
voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of
this Section 2.5(c)(ii) as beneficially owning 50% or more of combined voting power of the Successor Entity solely
as a result of the voting power held in the Company prior to the consummation of the transaction; or
(d) The Company’s stockholders approve a liquidation or dissolution of the Company.
In addition, if the Change in Control constitutes a payment event with respect to any Award which provides for the
deferral of compensation and is subject to Section 409A of the Code, to the extent required, the transaction or event
described in subsection (a), (b), (c) or (d) with respect to such Award must also constitute a “change in control event”
as defined in Treasury Regulation § 1.409A-3(i)(5). The Committee shall have full and final authority, which shall be
exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred
pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters
relating thereto.
2.6 “Code” means the U.S. Internal Revenue Code of 1986, as amended.
2.7 “Committee” means the committee of the Board described in Article 12.
2.8 “Consultant” means any consultant or adviser if: (a) the consultant or adviser renders bona fide services to the Company
or any Subsidiary; (b) the services rendered by the consultant or adviser are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s
securities; and (c) the consultant or adviser is a natural person.
2.9 “Deferred Stock Unit” means a right to receive a specified number of shares of Stock during specified time periods
pursuant to Section 8.5.
2.10 “Director” means a member of the Board.
2.11 “Disability” means that the Participant qualifies to receive long-term disability payments under the Company’s long-
term disability insurance program, as it may be amended from time to time, or if Participant is otherwise ineligible to
participate in the Company’s long-term disability insurance program or resides outside the United States and no such
program exists, means that the Participant is unable to perform his or her duties with the Company or its Subsidiary by
reason of a medically determinable physical or mental impairment, as determined by a physician acceptable to the
Company, which is permanent in character or which is expected to last for a continuous period of more than six (6) months.
2.12 “Dividend Equivalent” means a right granted to a Participant pursuant to Section 8.3 to receive the equivalent value (in
cash or Stock) of dividends paid on Stock.
2.13 “DRO” shall mean a domestic relations order as defined by the Code or Title I of the U.S. Employee Retirement Income
Security Act of 1974, as amended from time to time, or the rules thereunder.
2.14 “Effective Date” shall have the meaning set forth in Section 13.1.
2.15 “Eligible Individual” means any person who is an Employee, a Consultant or an Independent Director, as determined
by the Committee.
2.16 “Employee” means any person on the payroll records of the Company or a Subsidiary and actively providing services
as an employee. Service as a Director or compensation by the Company or a Subsidiary solely for services as a Director
shall not be sufficient to constitute “employment” by the Company or a Subsidiary.
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2.17 “Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a
stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that
affects the shares of Stock (or other securities of the Company) or the share price of Stock (or other securities) and causes a
change in the per share value of the Stock underlying outstanding Awards.
2.18 “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
2.19 “Fair Market Value” means, as of any given date, (a) if Stock is traded on any established stock exchange, the closing
price of a share of Stock as reported in the Wall Street Journal (or such other source as the Company may deem reliable for
such purposes) for such date, or if no sale occurred on such date, the first trading date immediately prior to such date
during which a sale occurred; or (b) if Stock is not traded on an exchange but is quoted on a national market or other
quotation system, the last sales price on such date, as reported in the Wall Street Journal (or such other source as the
Company may deem reliable for such purposes), or if no sales occurred on such date, then on the date immediately prior
to such date on which sales prices are reported; or (c) if Stock is not publicly traded, the fair market value of a share of
Stock as established by the Committee acting in good faith.
2.20 “Full Value Award” means any Award other than an Option, Stock Appreciation Right or other Award for which the
Participant pays the intrinsic value existing at the date of grant (whether directly or by forgoing a right to receive a payment
from the Company or any Subsidiary). [Reserved]
2.21 “Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
2.22 “Independent Director” means a Director of the Company who is not an Employee.
2.23 “Non-Employee Director” means a Director of the Company who qualifies as a “Non-Employee Director” as defined in
Rule 16b-3(b)(3) under the Exchange Act, or any successor rule.
2.24 “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.
2.25 “Option” means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of
shares of Stock at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
2.26 “Participant” means any Eligible Individual who, as a member of the Board, Consultant or Employee, has been granted
an Award pursuant to the Plan.
2.27 “Performance Bonus Award” has the meaning set forth in Section 8.7.
2.28 “Performance Criteria” means the criteria that the Committee selects for purposes of establishing the Performance
Goal or Performance Goals for a Participant for a Performance Period, determined as follows:
(a) The Performance Criteria that will be used to establish Performance Goals may include, without limitation, any of the
following: trading volume; users; customers; total payment volume; revenue; operating income; EBITDA and/or net
earnings (either before or after interest, taxes, depreciation and amortization); net income (either before or after taxes);
earnings per share; earnings as determined other than pursuant to United States generally accepted accounting
principles (“GAAP”); multiples of price to earnings; multiples of price/earnings to growth; return on net assets; return on
gross assets; return on equity; return on invested capital; Stock price; cash flow (including, but not limited to, operating
cash flow and free cash flow); net or operating margins; economic profit; Stock price appreciation; total stockholder
returns; employee productivity; market share; volume; customer satisfaction metrics; net sales; expense levels; sales
or licenses of the Company’s assets, including its intellectual property, whether in a particular jurisdiction or territory or
globally, or through partnering transactions; implementation, completion or attainment of objectives with respect to
research, development, commercialization, products or projects, production volume levels, acquisitions and
divestitures and recruiting and maintaining personnel; financing and other capital raising transactions (including sales
of the Company’s equity or debt securities, factoring transactions); product revenue growth; gross profit; financial
ratios, including those measuring liquidity, activity, profitability or leverage; cost of capital or assets under
management; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property,
establishing relationships with commercial entities with respect to the marketing, distribution and sale of the
Company’s products (including with group purchasing organizations, distributors and other vendors)); co-
development, co-marketing, profit sharing, joint venture or other similar arrangements; economic value-added models
or equivalent metrics; regulatory achievements (including submitting or filing applications or other documents with
regulatory authorities or receiving approval of any such applications or other documents, passing pre-approval
inspections (whether of the Company or third parties)); gross or cash margins; debt reduction; reductions in costs;
year-end cash; working capital levels, including cash, inventory and accounts receivable; research and development
achievements; operating efficiencies and employee engagement/satisfaction metrics, any of which may be measured
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with respect to the Company, or any Subsidiary, affiliate or other business unit of the Company, either in absolute
terms, terms of growth or as compared to any incremental increase, as compared to results of a peer group, and may
be calculated on a pro forma basis or in accordance with GAAP.
(b) The Committee may, in its discretion, provide that one or more adjustments shall be made to one or more of the
Performance Goals. Such adjustments may include, without limitation, one or more of the following: (i) items related to
a change in accounting principle; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity
initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business
operations of any entity acquired by the Company during the Performance Period; (vii) items related to the disposal of a
business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a
business under GAAP; (ix) items attributable to any stock dividend, stock split, combination or exchange of shares
occurring during the Performance Period; (x) any other items of significant income or expense which are determined to
be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or
developments; (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of
the Company’s core, on-going business activities; or (xiv) items relating to any other unusual or nonrecurring events or
changes in applicable laws, tax rates, accounting principles or business conditions.
2.29 “Performance Goals” means, for a Performance Period, the goals established in writing by the Committee for the
Performance Period based upon the Performance Criteria. Depending on the Performance Criteria used to establish such
Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the
performance of a division, business unit, or an individual. The Committee, in its discretion, may adjust or modify the
calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights
of Participants (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or
development, or (b) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company,
or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions.
2.30 “Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as
the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose
of determining a Participant’s right to, and the payment of, a performance-based Award.
2.31 “Performance Share” means a right granted to a Participant pursuant to Section 8.1, to receive Stock, the payment of
which is contingent upon achieving certain Performance Goals or other performance-based targets established by the
Committee.
2.32 “Performance Stock Unit” means a right granted to a Participant pursuant to Section 8.2, to receive Stock, the payment
of which is contingent upon achieving certain Performance Goals or other performance-based targets established by the
Committee.
2.33 “Plan” means this PayPal Holdings, Inc. Amended and Restated 2015 Equity Incentive Award Plan, as it may be
amended from time to time.
2.34 “Restricted Stock” means Stock awarded to a Participant pursuant to Article 6 that is subject to certain restrictions and
may be subject to risk of forfeiture.
2.35 “Restricted Stock Unit” means an Award granted pursuant to Section 8.6.
2.36 “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.
2.37 “Spin-Off” means the distribution of shares of Stock to the stockholders of eBay Inc. on July 17, 2015, pursuant to the
Separation and Distribution Agreement between the Company and eBay Inc., dated as of June 26, 2015, entered into in
connection with such distribution.
2.38 “Stock” means the common stock of the Company, par value $0.0001 per share, and such other securities of the
Company that may be substituted for Stock pursuant to Article 12.
2.39 “Stock Appreciation Right” or “SAR” means a right granted pursuant to Article 7 to receive a payment equal to the
excess of the Fair Market Value of a specified number of shares of Stock on the date the SAR is exercised over the Fair
Market Value on the date the SAR was granted as set forth in the applicable Award Agreement.
2.40 “Stock Payment” means (a) a payment in the form of shares of Stock, or (b) an option or other right to purchase shares
of Stock, as part of any bonus, deferred compensation or other arrangement, made in lieu of all or any portion of a benefit or
compensation, granted pursuant to Section 8.4.
2.41 “Subsidiary” means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities
beginning with the Company if, at the time of the determination, each of the entities other than the last entity in the
unbroken chain beneficially owns securities or interests representing more than fifty percent (50%) of the total combined
voting power of all classes of securities or interests in one of the other entities in such chain.
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2.42 “Substitute Award” shall mean an Option or SAR granted under the Plan upon the assumption of, or in substitution for,
outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction,
such as a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall
the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an
Option.
2.43 “Termination of Service” shall mean,
(a) As to a Consultant, the time when the engagement of a Participant as a Consultant to the Company or a Subsidiary
is terminated for any reason, with or without cause, including, without limitation, by resignation, discharge, death or
retirement, but excluding a termination where there is a simultaneous commencement of employment with the
Company or any Subsidiary.
(b) As to a Non-Employee Director or Independent Director, the time when a Participant who is a Non-Employee
Director or Independent Director ceases to be a Director for any reason, including, without limitation, a termination by
resignation, failure to be elected, death or retirement, but excluding: (i) a termination where there is simultaneous
employment by the Company or a Subsidiary of such person and (ii) a termination which is followed by the
simultaneous establishment of a consulting relationship by the Company or a Subsidiary with such person.
(c) As to an Employee, the time when the Participant has ceased to actively be employed by or to provide services to
the Company or any Subsidiary for any reason, without limitation, including resignation, discharge, death, disability or
retirement; but excluding: (i) a termination where there is a simultaneous reemployment or continuing employment of a
Participant by the Company or any Subsidiary, (ii) a termination which is followed by the simultaneous establishment of
a consulting relationship by the Company or a Subsidiary with the former employee, and (iii) a termination where a
Participant simultaneously becomes an Independent Director.
(d) The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to
Termination of Service, including, without limitation, questions relating to the nature and type of Termination of Service,
and all questions of whether particular leaves of absence constitute Termination of Service; provided, however, that,
with respect to Incentive Stock Options, unless the Committee otherwise provides in the terms of the Award
Agreement, a leave of absence, change in status from an employee to an independent contractor or other change in
the employee-employer relationship shall constitute a Termination of Service if, and to the extent that, such leave of
absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code
and the then applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Participant shall
be deemed to have a Termination of Service in the event that the Subsidiary employing or contracting with such
Participant ceases to remain a Subsidiary following any merger, sale of stock or other corporate transaction or event
(including, without limitation, a spin-off).
3.1 Number of Shares.
ARTICLE 3
Shares Subject to the Plan
(a) Subject to Article 11 and Section 3.1(b), the aggregate number of shares of Stock which may be issued or transferred
pursuant to Awards granted under the Plan is 179199,600,000 which includes the aggregate number of shares of Stock
subject to all Assumed Spin-Off Awards. Any shares of Stock that are subject to Awards granted under the Plan on or
after the 20162024 annual meeting of the Company’s stockholders (the “20162024 Annual Meeting”) other than Full
Value Awards shall be counted against this limit as 0.50 shares for every share of Stock subject to the Award granted.
Any shares of Stock that are subject to Full Value Awards granted under the Plan shall be counted against this limit as
one (1) share for every share of Stock subject to the Award granted.
(b) To the extent that an Award terminates, expires, or lapses for any reason, or such an Award is settled in cash without
delivery of shares to the Participant, then any shares of Stock subject to the Award shall again be available for the grant
of an Award pursuant to the Plan. Any such shares of Stock that cease to be subject to such an Award other than a Full
Value Award shall be added to the number of shares available under the Plan as the number of shares of Stock (or
portion thereof) deemed subject to such Award under Section 3.1(a) as of the date of grant for every share of Stock that
ceases to be subject to such Award. Any such shares of Stock that cease to be subject to an Full Value Award shall be
added to the number of shares available under the Plan as one (1) share for every share of Stock that ceases to be
subject to such Award. Notwithstanding anything in this Section 3.1(b) to the contrary, shares of Stock subject to an
Award may not again be made available for issuance under this Plan if such shares are: (x) shares delivered to or
withheld by the Company to pay the exercise price of an Option or SAR, (y) shares delivered to or withheld by the
Company to satisfy withholding taxes related to such an Award or (z) shares that were subject to an Award and were
not issued upon the net settlement of such Award. To the extent permitted by applicable law or any exchange rule,
shares of Stock issued in assumption of, or in substitution for, any outstanding Awards of any entity acquired in any
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form of combination by the Company or any Subsidiary shall not be counted against shares of Stock available for grant
pursuant to this Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall
not be counted against the shares available for issuance under the Plan. Notwithstanding the provisions of this
Section 3.1(b), no shares of Stock may again be optioned, granted or awarded if such action would cause an Incentive
Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code.
3.2 Stock Distributed. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and
unissued Stock, treasury Stock or Stock purchased on the open market.
3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any provision in the Plan to the contrary, and
subject to Article 11, the maximum number of shares of Stock with respect to one or more Awards that may be granted to
any one Participant during any calendar year shall be 2,000,000 and the maximum amount that may be paid in cash during
any calendar year with respect to any performance-based Award (including, without limitation, any Performance Bonus
Award) shall be $3,000,000; provided, however, that such limits shall apply without regard to the Assumed Spin-Off
Awards. Any shares of Stock that are subject to Awards granted under the Plan on or after the 20162024 Annual Meeting
other than Full Value Awards shall be counted against this limit as 0.50 shares for every share of Stock subject to the Award
granted. Any shares of Stock that are subject to Full Value Awards granted under the Planshall be counted against this limit
as one (1) share for every share of Stock subject to the Award granted. Awards to Non-Employee Directors and
Independent Directors are subject to the limits set forth in Article 10.
ARTICLE 4
Eligibility and Participation
4.1 Participation. Subject to the provisions of the Plan, the Committee may, from time to time, and in its sole discretion,
select from among all Eligible Individuals, those to whom Awards shall be granted and shall determine the nature and
amount of each Award. No Eligible Individual shall have any right to be granted an Award pursuant to this Plan. In
connection with the Spin-Off and pursuant to the terms of the Employee Matters Agreement between the Company and
eBay Inc., entered into in connection with the Spin-Off, certain employees, consultants and directors of the Company, eBay
Inc. and their respective subsidiaries will receive Assumed Spin-Off Awards.
4.2 Foreign Participants. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company and its Subsidiaries operate or have Eligible Individuals, the Committee, in its sole
discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan;
(ii) determine which Eligible Individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms
and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable foreign
laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions
may be necessary or advisable, including adoption of rules, procedures or sub-plans applicable to particular Subsidiaries
or Participants residing in particular locations; provided, however, that no such subplans and/or modifications shall
increase the share limitations contained in Sections 3.1 and 3.3 of the Plan; and (v) take any action, before or after an Award
is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory
exemptions or approvals. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt
rules, procedures and sub-plans with provisions that limit or modify rights on eligibility to receive an Award under the Plan
or on death, disability, retirement or other Termination of Service, available methods of exercise or settlement of an Award,
payment of income, social insurance contributions and payroll taxes, the shifting of employer tax liability to the Participant,
the withholding procedures and handling of any Stock certificates or other indicia of ownership. Notwithstanding the
foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the
Exchange Act, the Code, any securities law or governing statute or any other law applicable to the Stock or the issuance of
Stock under the Plan.
ARTICLE 5
Stock Options
5.1 General. The Committee is authorized to grant Options to Eligible Individuals on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock subject to an Option shall be determined by the Committee
and set forth in the Award Agreement; provided, that, subject to Section 5.4, the exercise price for any Option shall not
be less than 100% of the Fair Market Value of a share of Stock on the date of grant.
(b) Time and Conditions of Exercise. The Committee shall determine the time or times at which an Option may be
exercised in whole or in part; provided, that the term of any Option granted under the Plan shall not exceed ten years.
The Committee shall determine the time period, including the time period following a Termination of Service, during
which the Participant has the right to exercise the vested Options, which time period may not extend beyond the term
of the Option. Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and
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rulings thereunder, the Committee may extend the term of any outstanding Option, and may extend the time period
during which vested Options may be exercised, in connection with any Termination of Service of the Participant, and
may amend any other term or condition of such Option relating to such a Termination of Service. The Committee shall
also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be
exercised.
(c) Evidence of Grant. All Options shall be evidenced by an Award Agreement between the Company and the
Participant. The Award Agreement shall include such additional provisions as may be specified by the Committee.
5.2 Incentive Stock Options. Incentive Stock Options shall be granted only to Employees and the terms of any Incentive
Stock Options granted pursuant to the Plan, in addition to the requirements of Section 5.1, must comply with the provisions
of this Section 5.2.
(a) Expiration. Subject to Section 5.2(c), an Incentive Stock Option shall expire and may not be exercised to any extent
by anyone after the first to occur of the following events:
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(i) Ten years from the date it is granted, unless an earlier time is set in the Award Agreement;
(ii) Three months after the Participant’s termination of employment as an Employee; and
(iii) One year after the date of the Participant’s termination of employment or service on account of Disability or
death. Upon the Participant’s Disability or death, any Incentive Stock Options exercisable at the Participant’s
Disability or death may be exercised by the Participant’s legal representative or representatives, by the person or
persons entitled to do so pursuant to the Participant’s last will and testament, or, if the Participant fails to make
testamentary disposition of such Incentive Stock Option or dies intestate, by the person or persons entitled to
receive the Incentive Stock Option pursuant to the applicable laws of descent and distribution.
(b) Dollar Limitation. The aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of
Stock with respect to which Incentive Stock Options are first exercisable by a Participant in any calendar year may not
exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision. To the
extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be
considered Non-Qualified Stock Options.
(c) Ten Percent Owners. An Incentive Stock Option shall be granted to any individual who, at the date of grant, owns
stock possessing more than ten percent of the total combined voting power of all classes of Stock of the Company
only if such Option is granted at a price that is not less than 110% of Fair Market Value on the date of grant (or the date
the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) and the Option is exercisable
for no more than five years from the date of grant.
(d) Notice of Disposition. The Participant shall give the Company prompt notice of any disposition of shares of Stock
acquired by exercise of an Incentive Stock Option within (i) two years from the date of grant of such Incentive Stock
Option or (ii) one year after the transfer of such shares of Stock to the Participant.
(e) Right to Exercise. During a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant.
(f) Failure to Meet Requirements. Any Option (or portion thereof) purported to be an Incentive Stock Option, which, for
any reason, fails to meet the requirements of Section 422 of the Code shall be considered a Non-Qualified Stock
Option.
5.3 Substitution of Stock Appreciation Rights. Subject to Section 9.8, the Committee may provide in the Award Agreement
evidencing the grant of an Option that the Committee, in its sole discretion, shall have to right to substitute a Stock
Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided, that such Stock
Appreciation Right shall be exercisable with respect to the same number of shares of Stock for which such substituted
Option would have been exercisable.
5.4 Substitute Awards. Notwithstanding the foregoing provisions of this Article 5 to the contrary, in the case of an Option
that is a Substitute Award, the exercise price per share of the shares subject to such Option may be less than the Fair
Market Value per share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date
such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price
thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the
transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of
the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate
exercise price of such shares.
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ARTICLE 6
Restricted Stock Awards
6.1 Grant of Restricted Stock.
(a) The Committee is authorized to make Awards of Restricted Stock to any Eligible Individual selected by the
Committee in such amounts and subject to such terms and conditions as determined by the Committee. All Awards of
Restricted Stock shall be evidenced by an Award Agreement.
(b) The Committee shall establish the purchase price, if any, and form of payment for Restricted Stock; provided,
however, that such purchase price shall be no less than the par value of the Stock to be purchased, unless otherwise
permitted by applicable state law. In all cases, legal consideration shall be required for each issuance of Restricted
Stock.
6.2 Issuance and Restrictions. All shares of Restricted Stock (including any shares received by Participants thereof with
respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in
the terms of each individual Award Agreement, be subject to such restrictions on transferability and other restrictions and
vesting requirements as the Committee shall provide. Such restrictions may include, without limitation, restrictions
concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and
pursuant to such circumstances or based on such criteria as selected by the Committee, including, without limitation,
criteria based on the Participant’s duration of employment, directorship or consultancy with the Company, Performance
Criteria, Company performance, individual performance or other criteria selected by the Committee. By action taken after
the Restricted Stock is issued, the Committee may, on such terms and conditions as it may determine to be appropriate,
accelerate the vesting of such Restricted Stock by removing any or all of the restrictions imposed by the terms of the Award
Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire.
6.3 Repurchase or Forfeiture of Restricted Stock. If no price was paid by the Participant for the Restricted Stock, upon a
Termination of Service the Participant’s rights in unvested Restricted Stock then subject to restrictions shall lapse, and such
Restricted Stock shall be surrendered to the Company without consideration. If a price was paid by the Participant for the
Restricted Stock, upon a Termination of Service the Company shall have the right to repurchase from the Participant the
unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Participant for
such Restricted Stock or such other amount as may be specified in the Award Agreement. The Committee in its discretion
may provide that in the event of certain events, including a Change in Control, the Participant’s death, retirement or
disability or any other specified Termination of Service or any other event, the Participant’s rights in unvested Restricted
Stock shall not lapse, such Restricted Stock shall vest and, if applicable, the Company shall not have a right of repurchase.
6.4 Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing shares of Restricted Stock are registered in the name of the
Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to
such Restricted Stock, and the Company may, at its discretion, retain physical possession of the certificate until such time
as all applicable restrictions lapse.
6.5 Section 83(b) Election. If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to
the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the
Participant would otherwise be taxable under Section 83(a) of the Code, the Participant shall be required to deliver a copy
of such election to the Company promptly after filing such election with the Internal Revenue Service.
7.1 Grant of Stock Appreciation Rights.
ARTICLE 7
Stock Appreciation Rights
(a) A Stock Appreciation Right may be granted to any Eligible Individual selected by the Committee. A Stock
Appreciation Right shall be subject to such terms and conditions not inconsistent with the Plan as the Committee shall
impose and shall be evidenced by an Award Agreement.
(b) A Stock Appreciation Right shall entitle the Participant (or other person entitled to exercise the Stock Appreciation
Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then
exercisable pursuant to its terms) and to receive from the Company an amount equal to the product of (i) the excess of
(A) the Fair Market Value of the Stock on the date the Stock Appreciation Right is exercised over (B) the Fair Market
Value of the Stock on the date the Stock Appreciation Right was granted and (ii) the number of shares of Stock with
respect to which the Stock Appreciation Right is exercised, subject to any limitations the Committee may impose.
Except as described in (c) below, the exercise price per share of Stock subject to each Stock Appreciation Right shall
be set by the Committee, but shall not be less than 100% of the Fair Market Value on the date the Stock Appreciation
Right is granted.
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(c) Notwithstanding the foregoing provisions of Section 7.1(b) to the contrary, in the case of a Stock Appreciation Right
that is a Substitute Award, the price per share of the shares subject to such Stock Appreciation Right may be less than
the Fair Market Value per share on the date of grant; provided, that the excess of: (a) the aggregate Fair Market Value
(as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate
exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately
preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the
Committee) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the
Company, over (y) the aggregate exercise price of such shares.
7.2 Payment and Limitations on Exercise.
(a) Subject to Sections 7.2(b) payment of the amounts determined under Section 7.1(b) above shall be in cash, in Stock
(based on its Fair Market Value as of the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee in the Award Agreement and subject to any tax withholding requirements.
(b) To the extent any payment under Section 7.1(b) is effected in Stock, it shall be made subject to satisfaction of all
provisions of Article 5 above pertaining to Options.
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ARTICLE 8
Other Types of Awards
8.1 Performance Share Awards. Any Eligible Individual selected by the Committee may be granted one or more
Performance Share awards which shall be denominated in a number of shares of Stock and which may be linked to any
one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it deems relevant in light of the specific type of
award) the contributions, responsibilities and other compensation of the particular Participant.
8.2 Performance Stock Units. Any Eligible Individual selected by the Committee may be granted one or more Performance
Stock Unit awards which shall be denominated in unit equivalent of shares of Stock and/or units of value including dollar
value of shares of Stock and which may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a specified date or dates or over any
period or periods determined by the Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.
8.3 Dividend Equivalents.
(a) Any Eligible Individual selected by the Committee may be granted Dividend Equivalents based on the dividends
declared on the shares of Stock that are subject to any Award, to be credited as of dividend payment dates, during the
period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by
the Committee. Such Dividend Equivalents shall be converted to cash or additional shares of Stock by such formula
and at such time and subject to such limitations as may be determined by the Committee; provided, that to the extent
shares of Stock subject to an Award are subject to vesting conditions, any Dividend Equivalents relating to such shares
shall be subject to the same vesting conditions.
(b) Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or SARs.
8.4 Stock Payments. Any Eligible Individual selected by the Committee may receive Stock Payments in the manner
determined from time to time by the Committee. The number of shares shall be determined by the Committee and may be
based upon the Performance Criteria or other specific performance criteria determined appropriate by the Committee,
determined on the date such Stock Payment is made or on any date thereafter.
8.5 Deferred Stock Units. Any Eligible Individual selected by the Committee may be granted an award of Deferred Stock
Units in the manner determined from time to time by the Committee. The number of shares of Deferred Stock Units shall be
determined by the Committee and may be linked to the Performance Criteria or other specific performance criteria
determined to be appropriate by the Committee, including service to the Company or any Subsidiary, in each case on a
specified date or dates or over any period or periods determined by the Committee. Stock underlying a Deferred Stock Unit
award will not be issued until the Deferred Stock Unit award has vested, pursuant to a vesting schedule or performance
criteria set by the Committee. Unless otherwise provided by the Committee, a Participant awarded Deferred Stock Units
shall have no rights as a Company stockholder with respect to such Deferred Stock Units until such time as the Deferred
Stock Unit Award has vested and the Stock underlying the Deferred Stock Unit Award has been issued.
8.6 Restricted Stock Units. The Committee is authorized to make Awards of Restricted Stock Units to any Eligible Individual
selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee.
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At the time of grant, the Committee shall specify the date or dates on which the Restricted Stock Units shall become fully
vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate. The Committee shall
specify, or permit the Participant to elect, the conditions and dates upon which the shares of Stock underlying the
Restricted Stock Units shall be issued, which dates shall not be earlier than the date as of which the Restricted Stock Units
vest and become nonforfeitable and which conditions and dates shall be subject to compliance with Section 409A of the
Code. On the distribution dates, the Company shall, subject to Section 9.6(b), transfer to the Participant one unrestricted,
fully transferable share of Stock for each Restricted Stock Unit scheduled to be paid out on such date and not previously
forfeited.
8.7 Performance Bonus Awards. Any Eligible Individual selected by the Committee may be granted one or more
performance-based Awards in the form of a cash bonus (a “Performance Bonus Award”) payable upon the attainment of
Performance Goals that are established by the Committee and relate to one or more of the Performance Criteria, in each
case on a specified date or dates or over any period or periods determined by the Committee.
8.8 Term. Except as otherwise provided herein, the term of any Award of Performance Shares, Performance Stock Units,
Dividend Equivalents, Stock Payments, Deferred Stock Units or Restricted Stock Units shall be set by the Committee in its
discretion.
8.9 Exercise or Purchase Price. The Committee may establish the exercise or purchase price, if any, of any Award of
Performance Shares, Performance Stock Units, Deferred Stock Units, Stock Payments or Restricted Stock Units; provided,
however, that such price shall not be less than the par value of a share of Stock on the date of grant, unless otherwise
permitted by applicable state law.
8.10 Exercise or Payment upon Termination of Service. An Award of Performance Shares, Performance Stock Units,
Dividend Equivalents, Deferred Stock Units, Stock Payments and Restricted Stock Units shall only be exercisable or payable
while the Participant is an Employee, Consultant or Director, as applicable; provided, however, that the Committee in its
sole and absolute discretion may provide that an Award of Performance Shares, Performance Stock Units, Dividend
Equivalents, Stock Payments, Deferred Stock Units or Restricted Stock Units may be exercised or paid subsequent to a
Termination of Service, as applicable, or following a Change in Control of the Company, or because of the Participant’s
retirement, death or disability, or otherwise.
8.11 Form of Payment. Payments with respect to any Awards granted under this Article 8 shall be made in cash, in Stock or a
combination of both, as determined by the Committee and set forth in the applicable Award Agreement.
8.12 Award Agreement. All Awards under this Article 8 shall be subject to such additional terms and conditions as
determined by the Committee and shall be evidenced by an Award Agreement
ARTICLE 9
Provisions Applicable to Awards
9.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the discretion of the Committee, be
granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in
addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of
such other Awards.
9.2 Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions
and limitations for each Award which may include the term of an Award, the provisions applicable in the event the
Participant’s employment or service terminates, and the Company’s authority to unilaterally or bilaterally amend, modify,
suspend, cancel or rescind an Award.
9.3 Payment. The Committee shall determine the methods by which payments by any Participant with respect to any
Awards granted under the Plan may be paid, the form of payment including, without limitation: (i) cash, (ii) shares of Stock
(including, in the case of payment of the exercise price of an Award, shares of Stock issuable pursuant to the exercise of
the Award) held for such period of time as may be required by the Committee in order to avoid adverse accounting
consequences and having a Fair Market Value on the date of delivery equal to the aggregate payments required, or
(iii) other property acceptable to the Committee (including through the delivery of a notice that the Participant has placed a
market sell order with a broker with respect to shares of Stock then issuable upon exercise or vesting of an Award, and that
the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the
aggregate payments required; provided, that payment of such proceeds is then made to the Company upon settlement of
such sale). The Committee shall also determine the methods by which shares of Stock shall be delivered or deemed to be
delivered to Participants. Notwithstanding any other provision of the Plan to the contrary, no Participant who is a Director or
an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay
the exercise price of an Option with a loan from the Company or a loan arranged by the Company in violation of
Section 13(k) of the Exchange Act.
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9.4 Limits on Transfer.
(a) Except as otherwise provided in Section 9.4(b):
(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the
laws of descent and distribution or, subject to the consent of the Committee, pursuant to a DRO, unless and until
such Award has been exercised, or the shares underlying such Award have been issued, and all restrictions
applicable to such shares have lapsed;
(ii) No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Participant or
his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge,
hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding sentence; and
(iii) During the lifetime of the Participant, only the Participant may exercise an Award (or any portion thereof)
granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Participant,
any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the
Plan or the applicable Award Agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and
distribution.
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(b) Notwithstanding Section 9.4(a), the Committee, in its sole discretion, may determine to permit a Participant to
transfer an Award other than an Incentive Stock Option to any one or more Permitted Transferees (as defined below),
subject to the following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be assignable
or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) an Award
transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as
applicable to the original Participant (other than the ability to further transfer the Award); and (iii) the Participant and the
Permitted Transferee shall execute any and all documents requested by the Committee, including, without limitation
documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an
exemption for the transfer under applicable federal, state and foreign securities laws and (C) evidence the transfer. For
purposes of this Section 9.4(b), “Permitted Transferee” shall mean, with respect to a Participant, any “family member” of
the Participant, as defined under the instructions to the Form S-8 Registration Statement under the Securities Act, or
any other transferee specifically approved by the Committee after taking into account any state, federal, local or
foreign tax and securities laws applicable to transferable Awards.
9.5 Beneficiaries. Notwithstanding Section 9.4, if provided in the applicable Award Agreement, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any
distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or
other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award
Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a
community property state, a designation of a person other than the Participant’s spouse as his or her beneficiary with
respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of
the Participant’s spouse. If no beneficiary designation is provided in the applicable Award Agreement or if no beneficiary
has been designated or survives the Participant (or if a beneficiary designation is not enforceable and/or valid under the
inheritance and other laws in the Participant’s country, as determined by the Committee in its sole discretion), payment
shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution. Subject
to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or
revocation is filed with the Committee.
9.6 Stock Certificates; Book Entry Procedures.
(a) Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any
certificates or make any book entries evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Board has determined, with advice of counsel, that the issuance and delivery of such shares is in compliance
with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange
on which the shares of Stock are listed or traded. All Stock certificates delivered pursuant to the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal,
state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Committee may place
legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and
conditions provided herein, the Board may require that a Participant make such reasonable covenants, agreements,
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and representations as the Board, in its discretion, deems advisable in order to comply with any such laws, regulations,
or requirements. The Committee shall have the right to require any Participant to comply with any timing or other
restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be
imposed in the discretion of the Committee.
(b) Notwithstanding any other provision of the Plan, unless otherwise determined by the Committee or required by any
applicable law, rule or regulation, the Company shall not deliver to any Participant certificates evidencing shares of
Stock issued in connection with any Award and instead such shares of Stock shall be recorded in the books of the
Company (or, as applicable, its transfer agent or stock plan administrator).
9.7 Paperless Administration. In the event that the Company establishes, for itself or using the services of a third party, an
automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or
interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be
permitted through the use of such an automated system.
9.8 Prohibition on Repricing. Subject to Section 11.1, the Committee shall not, without the approval of the stockholders of the
Company, authorize the amendment of any outstanding Award to reduce its price per share. Furthermore, subject to
Section 12.1, no Award shall be canceled and replaced or substituted for with the grant of an Award having a lesser price
per share without the further approval of stockholders of the Company. Subject to Section 11.1, the Committee shall have
the authority, without the approval of the stockholders of the Company, to amend any outstanding award to increase the
price per share or to cancel and replace or substitute for an Award with the grant of an Award having a price per share that
is greater than or equal to the price per share of the original Award. Subject to Section 11.1, absent the approval of the
stockholders of the Company, the Committee shall not offer to buyout for a payment in cash, an Option or Stock
Appreciation Right previously granted when the per share exercise price exceeds the Fair Market Value of the underlying
share of stock.
9.9 Award Vesting Limitations. Notwithstanding any other provision of the Plan to the contrary, but subject to Sections 6.2,
11.1, 11.2 and 12.3(d) of the Plan, effective as of the 2018 annual meeting of the Company’s stockholders (the “2018 Annual
Meeting”), no portion of Awards granted under the Plan shall vest before the one-year anniversary of the date of grant;
provided, however, that, notwithstanding the foregoing, Awards that result in the issuance to one or more Participants of an
aggregate of up to 5% of the shares of Stock which may be issued or transferred under the Plan may be granted without
regard to such minimum vesting provisions. Nothing in this Section 9.9 shall preclude the Board or the Committee from
taking action, in its sole discretion, to accelerate the vesting of any Award in connection with or following a Change in
Control.
9.10 Dividends on Unvested Awards. To the extent shares of Stock subject to an Award are subject to vesting conditions,
any dividends related to such unvested shares of Stock shall be subject to the same vesting conditions.
ARTICLE 10
Independent Director Awards
10.1 The Board may grant Awards to Independent Directors, subject to the limitations of the Plan, pursuant to a written non-
discretionary formula established by the Committee, or any successor committee thereto carrying out its responsibilities on
the date of grant of any such Award (the “Independent Director Equity Compensation Policy”). The Independent Director
Equity Compensation Policy shall set forth the type of Award(s) to be granted to Independent Directors, the number of
shares of Stock to be subject to Independent Director Awards, the conditions on which such Awards shall be granted,
become exercisable and/or payable and expire, and such other terms and conditions as the Committee (or such other
successor committee as described above) shall determine in its discretion, except that any Assumed Spin-Off Awards shall
be subject to the terms as in existence as of the completion of the Spin-Off.
10.2 Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value of shares of Stock
that may be granted during any fiscal year of the Company to any Non-Employee Director or Independent Director shall not
exceed $600,000; provided, however, that (i) the limit set forth in this sentence shall be multiplied by two in the fiscal year
in which a Non-Employee Director or Independent Director commences service on the Board, and (ii) the limit set forth in
this sentence shall not apply to awards made pursuant to a Non-Employee Director’s or Independent Director’s election to
receive an Award in lieu of all or a portion of a cash retainer for service on the Board or any committee thereunder or
pursuant to conversion of an eBay Inc. award to a Company award.
ARTICLE 11
Changes in Capital Structure
11.1 Adjustments.
(a) In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other
distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the
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shares of Stock or the share price of the Stock other than an Equity Restructuring, the Committee shall make such
equitable adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change with
respect to (i) the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3); (ii) the number and kind of shares (or other securities or property)
subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation,
any applicable performance targets or criteria with respect thereto); and (iv) the grant or exercise price per share for
any outstanding Awards under the Plan.
(b) In the event of any transaction or event described in Section 11.1 or any unusual or nonrecurring transactions or
events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any of its
affiliates, or of changes in applicable laws, regulations or accounting principles, the Committee, in its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action
taken prior to the occurrence of such transaction or event and either automatically or upon the Participant’s request, is
hereby authorized to take any one or more of the following actions whenever the Committee determines that such
action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or
to give effect to such changes in laws, regulations or principles:
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(i) To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the
amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights
(and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this
Section 11.1 the Committee determines in good faith that no amount would have been attained upon the exercise
of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company
without payment) or (B) the replacement of such Award with other rights or property selected by the Committee in
its sole discretion;
(ii) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices;
(iii) To make adjustments in the number and type of shares of Stock (or other securities or property) subject to
outstanding Awards, and in the number and kind of outstanding Restricted Stock or Deferred Stock Units and/or in
the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding options,
rights and awards and options, rights and awards which may be granted in the future;
(iv) To provide that such Award shall be exercisable or payable or fully vested with respect to all shares covered
thereby, notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and
(v) To provide that the Award cannot vest, be exercised or become payable after such event.
(c) In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in
Sections 11.1(a) and 11.1(b):
(i) The number and type of securities subject to each outstanding Award and the exercise price or grant price
thereof, if applicable, will be equitably adjusted. The adjustments provided under this Section 11.1(c)(i) shall be
nondiscretionary and shall be final and binding on the affected Participant and the Company.
(ii) The Committee shall make such equitable adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may
be issued under the Plan (including, but not limited to, adjustments of the limitations in Sections 3.1 and 3.3).
(iii) To the extent that such equitable adjustments result in tax consequences to the Participant, the Participant shall
be responsible for payment of such taxes and shall not be compensated for such payments by the Company or its
Subsidiaries.
(d) The existence of the Plan, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any
way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or affect the Stock or the rights thereof or
which are convertible into or exchangeable for Stock, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar
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11.2 Acceleration Upon a Change in Control.
(a) Notwithstanding Section 11.1, subject to Section 11.2(b) below, and except as may otherwise be provided in any
applicable Award Agreement or other written agreement entered into between the Company and a Participant, if a
Change in Control occurs and a Participant’s Awards are not converted, assumed, or replaced by a successor entity,
then immediately prior to the Change in Control such Awards shall become fully exercisable and all forfeiture
restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change in Control, the Committee may cause any
and all Awards outstanding hereunder to terminate at a specific time in the future, including but not limited to the date
of such Change in Control, and shall give each Participant the right to exercise such Awards during a period of time as
the Committee, in its sole and absolute discretion, shall determine. In the event that the terms of any agreement
between the Company or any Company subsidiary or affiliate and a Participant contains provisions that conflict with
and are more restrictive than the provisions of this Section 11.2, this Section 11.2 shall prevail and control and the more
restrictive terms of such agreement (and only such terms) shall be of no force or effect. Further, to the extent that there
are tax consequences to the Participant as a result of the acceleration or lapsing of forfeiture restriction upon a Change
in Control, the Participant shall be responsible for payment of such taxes and shall not be compensated for such
payment by the Company or its Subsidiaries.
(b) Except as may otherwise be provided in any applicable Award Agreement or other written agreement entered into
between the Company and a Participant, if a Change in Control occurs during the Performance Period with respect to
an outstanding Award that vests based on Performance Goal(s) or other performance-based objectives, the
Performance Period of such Award shall end as of the date of the Change in Control and the Performance Goal(s) or
other performance-based objectives shall be deemed to have been satisfied at the actual level of performance as of
the date of the Change in Control, as determined by the Committee, as constituted immediately prior to the Change in
Control, without proration, and such Award, to the extent deemed earned by the Committee, shall continue to be
subject to time-based vesting following the Change in Control in accordance with the original vesting schedule;
provided, however, that if the Awards are not converted, assumed, or replaced by a successor entity, then immediately
prior to the Change in Control such Awards shall become fully vested pursuant to Section 12.2(a) above.
11.3 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any
subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other
corporation. Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no issuance
by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to an Award or the
grant or exercise price of any Award.
ARTICLE 12
Administration
12.1 Committee. Except as otherwise provided herein, the Plan shall be administered by a committee consisting of two or
more members of the Board (the “Committee”). Unless otherwise determined by the Board, the Committee shall consist
solely of two or more members of the Board each of whom is a Non-Employee Director and an “independent director”
under the rules of the Nasdaq Stock Market (or other principal securities market on which shares of Stock are traded);
provided, that any action taken by the Committee shall be valid and effective, whether or not members of the Committee at
the time of such action are later determined not to have satisfied the requirements for membership set forth in this
Section 12.1 or otherwise provided in any charter of the Committee. Notwithstanding the foregoing: (a) the full Board, acting
by a majority of its members in office, shall conduct the general administration of the Plan with respect to all Awards
granted to Independent Directors and for purposes of such Awards the term “Committee” as used in this Plan shall be
deemed to refer to the Board and (b) the Committee may delegate its authority hereunder to the extent permitted by
Section 12.5. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of
the Committee under the Plan except with respect to matters which under Rule 16b-3 under the Exchange Act, or any
regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee. Except as
may otherwise be provided in any charter of the Committee, appointment of Committee members shall be effective upon
acceptance of appointment; Committee members may resign at any time by delivering written notice to the Board; and
vacancies in the Committee may only be filled by the Board.
12.2 Action by the Committee. Unless otherwise established by the Board or in any charter of the Committee, a majority of
the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a
quorum is present, and acts approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the
acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other
information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company’s
independent certified public accountants, or any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.
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12.3 Authority of Committee. Subject to any specific designation in the Plan, the Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each Participant;
(c) Determine the number of Awards to be granted and the number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the
exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for vesting,
lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations
as the Committee in its sole discretion determines; provided, however, that, except as provided in Article 11 of the Plan,
the Committee shall not have the authority to accelerate the vesting or waive the forfeiture of any performance-based
Awards;
(e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise
price of an Award may be paid in, cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be identical for each Participant;
(g) Decide all other matters that must be determined in connection with an Award;
(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan,
including adopting sub-plans to the Plan or special terms for Award Agreements, for the purposes of complying with
non-U.S. laws and/or taking advantage of tax favorable treatment for Awards granted to Participants outside the United
States (as further set forth in Section 4.2 of the Plan) as it may deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems
necessary or advisable to administer the Plan.
12.4 Decisions Binding. The Committee’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Award
Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
12.5 Delegation of Authority. To the extent permitted by applicable law, the Board or the Committee may from time to time
delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to
grant or amend Awards to Participants or to exercise any of the power, authority and discretion granted to the Committee
pursuant to Section 12.3; provided, that (i) the Committee shall have the sole authority with respect to Awards granted to or
held by Employees who are subject to Section 16 of the Exchange Act and (ii) officers of the Company (or Directors) to
whom authority has been delegated hereunder shall not be delegated such authority with respect to Awards granted to or
held by such officers (or Directors). Any delegation hereunder shall be subject to the restrictions and limits that the Board or
the Committee specifies at the time of such delegation, and the Board or the Committee may at any time rescind the
authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 12.5 shall serve
in such capacity at the pleasure of the Board or the Committee.
ARTICLE 13
Effective and Expiration Date
13.1 Effective Date. The effective date of this Plan is the date the Plan (as it may be amended and/or restated from time to
time) is last approved by the Company’s stockholders (the “Effective Date”). Each award granted under the Plan or subject
to a written binding contract on or before November 2, 2017 shall be subject to the Plan as in effect as of the date on which
such award was granted, and it is intended that each such award continue to be subject to Section 162(m) of the Code as
in effect prior to the enactment of the Tax Cuts and Jobs Act.
13.2 Expiration Date. The Plan will expire on, and no Award may be granted pursuant to the Plan after the tenth anniversary
of the Effective Date, except that no Incentive Stock Options may be granted under the Plan after the earlier of the tenth
anniversary of (a) the date the Plan is approved by the Board or (b) the Effective Date. Any Awards that are outstanding on
the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award
Agreement.
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ARTICLE 14
Amendment, Modification, and Termination
14.1 Amendment, Modification, and Termination. Subject to Section 15.16, with the approval of the Board, at any time and
from time to time, the Committee may terminate, amend or modify the Plan; provided, however, that (a) to the extent
necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree as required, and (b) stockholder
approval shall be required for any amendment to the Plan that (i) increases the number of shares available under the Plan
(other than any adjustment as provided by Article 12), (ii) permits the Committee to grant Options with an exercise price that
is below Fair Market Value on the date of grant, (iii) permits the Committee to extend the exercise period for an Option
beyond ten years from the date of grant or (iv) amends Section 9.8 of the Plan.
14.2 Awards Previously Granted. Except with respect to amendments made pursuant to Section 15.16, no termination,
amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to
the Plan without the prior written consent of the Participant.
ARTICLE 15
General Provisions
15.1 No Rights to Awards. No Eligible Individual or other person shall have any claim to be granted any Award pursuant to
the Plan, and neither the Company nor the Committee is obligated to treat Eligible Individuals, Participants or any other
persons uniformly.
15.2 No Stockholders Rights. Except as otherwise provided herein, a Participant shall have none of the rights of a
stockholder with respect to shares of Stock covered by any Award until the Participant becomes the record owner of such
shares of Stock.
15.3 Withholding. The Company or any Subsidiary shall have the authority and the right to deduct or withhold (by any means
set forth herein or in an Award Agreement), or require a Participant to remit to the Company or a Subsidiary, an amount
sufficient to satisfy federal, state, local and foreign income tax, social insurance, payroll tax, fringe benefits tax, payment on
account or other tax-related items related to participation in the Plan and legally applicable to Participant and required by
law to be withheld (including any amount deemed by the Company or the Participant’s employer, in its discretion, to be an
appropriate charge to the Participant even if legally applicable to the Company or the Participant’s employer). The
Committee may, in its discretion and in satisfaction of the foregoing requirement, allow a Participant to elect to have the
Company withhold shares of Stock otherwise issuable under an Award (or allow the return of shares of Stock) having a Fair
Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of
shares of Stock which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which
may be repurchased from the Participant of such Award within six months (or such other period as may be determined by
the Committee) after such shares of Stock were acquired by the Participant from the Company) in order to satisfy the
Participant’s federal, state, local and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise
or payment of the Award (as described above) shall be limited to the number of shares which have a Fair Market Value on
the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory
withholding amounts or other applicable withholding rates to the extent that the withholding or repurchase of shares in
excess of such minimum statutory amount would result in adverse accounting consequences to the Company.
15.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way
the right of the Company or any Subsidiary to terminate any Participant’s employment or services at any time, nor confer
upon any Participant any right to continue in the employ or service of the Company or any Subsidiary.
15.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to
any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement
shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.
15.6 Assumed Spin-Off Awards. Notwithstanding anything in this Plan to the contrary, each Assumed Spin-Off Award shall
be subject to the terms and conditions of the equity compensation plan and award agreement to which such Award was
subject immediately prior to the Spin-Off, subject to the adjustment of such Award by the Compensation Committee of
eBay Inc. and the terms of the Employee Matters Agreement, dated as of July 17, 2015, between the Company and eBay
Inc. entered into in connection with the Spin-Off; provided, that following July 17, 2015, each such Award shall relate solely
to shares of Stock and be administered by the Committee in accordance with the administrative procedures in effect under
this Plan.
15.7 Indemnification. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board
and each person to whom the Committee delegates its authority under Section 12.5 shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such
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member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and
all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he
or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes
to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
15.8 Relationship to Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits
pursuant to any severance, resignation, termination, redundancy, end of service payments, long-term service awards,
pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company or any Subsidiary
except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
15.9 Effect of Plan upon Compensation Plans. The adoption of the Plan shall not affect any compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in the Plan shall be construed to limit the right of the Company or any
Subsidiary: (a) to establish any forms of incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in
connection with any proper corporate purpose including, without limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, partnership, limited liability company, firm or association.
15.10 Awards Subject to Clawback. The Awards and any cash payment or shares of Stock delivered pursuant to an Award
are subject to forfeiture, recovery by the Company or other action pursuant to the applicable Award Agreement or any
clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such
policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection
Act and implementing rules and regulations thereunder, or as otherwise required by law.
15.11 Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.
15.12 Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only and, in
the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.
15.13 Fractional Shares. No fractional shares of Stock shall be issued and the Committee shall determine, in its discretion,
whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up
or down as appropriate.
15.14 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award
granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any
additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 under the Exchange Act) that are requirements for the application of such exemptive rule. To the
extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.
15.15 Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of
shares of Stock and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to
compliance with all applicable federal, state, local and foreign laws, rules and regulations (including but not limited to state,
federal and foreign securities law and margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection
therewith. The Company shall have no obligation to issue or deliver shares of Stock prior to obtaining any approvals from
listing, regulatory or governmental authority that the Company determines are necessary or advisable. Any securities
delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the Company may deem necessary or
desirable to assure compliance with all applicable legal requirements. The Company shall be under no obligation to
register pursuant to the Securities Act, any of the shares of Stock paid pursuant to the Plan. To the extent permitted by
applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
15.16 Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws
of the State of Delaware, without regard to the principles of conflict of laws of that State.
15.17 Section 409A. To the extent that the Committee determines that any Award granted under the Plan is subject to
Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions
required by Section 409A of the Code. To the extent applicable, the Plan and Award Agreements shall be interpreted in
accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued
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thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.
Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any Award may
be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of
Treasury guidance as may be issued after the Effective Date), the Committee may adopt such amendments to the Plan and
the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures
with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to
(a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided
with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of
Treasury guidance and thereby avoid the application of any penalty taxes under such Section.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,D.C.20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
.
Commission file number 001-36859
PAYPAL HOLDINGS, INC.
(ExactNameofRegistrantasSpecifiedinItsCharter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
2211 North First Street
San Jose, California
(Address of Principal Executive Offices)
47-2989869
(I.R.S. Employer
Identification No.)
95131
(ZipCode)
(408) 967-1000
(Registrant’s telephone number, including area code)
Title of each class
Common stock, $0.0001 par value per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Trading Symbol(s)
PYPL
Name of each exchange on which registered
NASDAQ Global Select Market
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark
YES
NO
• if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
• if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
• whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit such files).
• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Accelerated Filer
Non-accelerated Filer
Smaller reporting company
Large Accelerated Filer
• If an emerging growth company, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
• whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act
(15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
• If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued
financial statements.
• whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery
period pursuant to §240.10D-1(b).
Emerging growth company
• whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of June 30, 2023, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately
$73.4 billion based on the closing sale price as reported on the NASDAQ Global Select Market.
As of February 1, 2024, there were 1,071,741,864 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for its 2024 Annual Meeting of Stockholders are incorporated herein by reference in Part III
of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission
within 120 days of the registrant’s fiscal year ended December 31, 2023.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Table of Contents
Page Part I
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Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
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Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
Trademarks, Trade Names and Service Marks
PayPal owns or has rights to use the trademarks, service marks, and trade names that it uses in conjunction with the
operation of its business. Some of the more important trademarks that PayPal owns or has rights to use that appear in this
Annual Report on Form 10-K include: PayPal®, PayPal Credit®, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and
Paidy, which may be registered or trademarked in the United States and other jurisdictions. PayPal’s rights to some of these
trademarks may be limited to select markets. This report may contain additional trade names and trademarks of other
companies. The use or display of other companies’ trade names or trademarks does not imply our endorsement or
sponsorship of, or a relationship with these companies.
PART I
Forward-Looking Statements
Part I
Forward-looking Statements
This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve
expectations, plans or intentions (such as those relating to future business, future results of operations or financial
condition, new or planned features or services, mergers or acquisitions, or management strategies). These forward-looking
statements can be identified by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,”
“estimate,” “intend,” “continue,” “strategy,” “future,” “opportunity,” “plan,” “project,” “forecast,” and other similar
expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results and
financial condition to differ materially from those expressed or implied in our forward-looking statements. Such risks and
uncertainties include, among others, those discussed in “Item 1A. Risk Factors” of this Form 10-K, as well as in our
consolidated financial statements, related notes, and the other information appearing in this report and our other filings with
the Securities and Exchange Commission (“SEC”). We do not intend, and undertake no obligation except as required by
law, to update any of our forward-looking statements after the date of this report to reflect actual results, new information,
or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements. You should read the information in this report in conjunction with the audited
consolidated financial statements and the related notes that appear in this report.
Item 1. Business
Overview
PayPal Holdings, Inc. was incorporated in Delaware in January 2015 and is a leading technology platform that enables
digital payments and simplifies commerce experiences on behalf of merchants and consumers worldwide. PayPal is
committed to democratizing financial services to help improve the financial health of individuals and to increase economic
opportunity for entrepreneurs and businesses of all sizes around the world. Our goal is to enable our merchants and
consumers to manage and move their money anywhere in the world in the markets we serve, anytime, on any platform,
and using any device when sending payments or getting paid, including person-to-person (“P2P”) payments. We believe
that effective management of non-financial risks and opportunities,
including environmental, social, and governance
(“ESG”) topics, helps to create value for our stakeholders and deliver on our mission and strategy. We also believe that our
core values help stimulate the creativity and engagement of our global workforce to deliver products and services
designed to meet the diverse needs of our customers. Unless otherwise expressly stated or the context otherwise requires,
references to “we,” “our,” “us,” “the Company,” or “PayPal” refer to PayPal Holdings, Inc. and its consolidated subsidiaries.
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PART 1
Item 1. Business
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PayPal’s payment solutions enable our customers to connect, transact, and send and receive payments, whether they are
online or in person. We provide proprietary payment solutions accepted by merchants that enable the completion of
payments on our platform on behalf of our customers. We operate a global, two-sided network at scale that connects
merchants and consumers with 426 million active accounts (consisting of 391 million consumer active accounts and
35 million merchant active accounts) across approximately 200 markets as of December 31, 2023.
We offer our customers the flexibility to use their PayPal or Venmo accounts to send and receive payments for goods and
services, as well as the ability to transfer and withdraw funds. We enable consumers to exchange funds more safely with
merchants using a variety of funding sources, which may include a bank account, a PayPal or Venmo account balance,
PayPal and Venmo branded credit products including our installment products, a credit card, a debit card, certain
cryptocurrencies, or other stored value products such as gift cards, and eligible rewards. Our PayPal and Venmo products
also make it safer and simpler for friends and family to transfer funds to each other. We offer merchants an end-to-end
payments solution that provides authorization and settlement capabilities, as well as instant access to funds and payouts.
We help merchants connect with their customers, and offer tools and insights to help increase sales, power omnichannel
experiences, and manage risk. We also help reduce the friction typically involved in cross-border commerce by offering
consumers a simple payment experience and by enabling merchants to extend their reach to consumers in the global
markets in which our services are available.
We earn revenues primarily by charging fees for completing payment transactions for our customers and other payment-
related services, which are typically based on the volume of activity processed on our payments platform. We also
generate revenue from customers for currency conversion, for instant transfers from their PayPal or Venmo account to their
bank account or debit card, and to facilitate the purchase and sale of cryptocurrencies; however, we generally do not
charge customers to fund or draw from their accounts. We also earn revenue by providing other value-added services,
which primarily comprise revenue earned through partnerships, interest and fees from our merchant and consumer credit
products, interest earned on certain assets underlying customer balances, referral fees, subscription fees, and gateway
services.
• 2024 Annual Report
3
PART 1
Item 1. Business
Key Performance Metrics
We measure the scale of our platform and the relevance of our products and services to our customers through certain
metrics, including total payment volume, payment transactions, and active accounts:
Total payment volume (“TPV”) is the value of payments, net of payment reversals, successfully completed on our payments
platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions.
Number of payment transactions are the total number of payments, net of payment reversals, successfully completed on
our payments platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions.
An active account is an account registered directly with PayPal or a platform access partner that has completed a
transaction on our platform, not including gateway-exclusive transactions, within the past 12 months. A platform access
partner is a third party whose customers are provided access to PayPal’s platform or services through such third-party’s
login credentials, including individuals and entities that utilize Hyperwallet’s payout capabilities. A user may register on our
platform to access different products and may register more than one account to access a product. Accordingly, a user
may have more than one active account. The number of active accounts provides management with additional perspective
on the overall scale of our platform, but may not have a direct relationship to our operating results.
Our Strengths
Our business is built on a strong foundation designed to drive growth and differentiate us from our competitors. A critical
element of our overall growth strategy involves increasing the engagement of our active accounts, which we expect will
contribute to growth in payment transactions, total payment volume, and net revenues. We believe that our competitive
strengths include the following:
• Two-sided network—our payments platform connecting merchants and consumers enables PayPal to offer unique
end-to-end product experiences designed to remove friction for consumers and drive sales conversion for merchants
while gaining valuable insights into how our customers use our platform. Our payments platform provides for digital and
in-store (at the point of sale) transactions while being both technology and platform agnostic.
• Merchant and consumer choice—our branded and unbranded card processing payment solutions support an open
ecosystem that provides choice to both merchants and consumers, enabling flexibility to make and receive payments
using a wide variety of different funding options and digital wallet solutions.
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Item 1. Business
• Scale—our global scale helps us to drive organic growth. As of December 31, 2023, we had 426 million active accounts,
consisting of 391 million consumer active accounts and 35 million merchant active accounts in approximately 200
markets around the world. A market is a geographic area or political
jurisdiction, such as a country, territory, or
protectorate, in which we offer some or all of our products and services. A country, territory, or protectorate is identified
by a distinct set of laws and regulations. In 2023, we processed $1.53 trillion of TPV.
• Trusted brands—we have built and strengthened well-recognized and trusted brands, including PayPal, Braintree, and
Venmo. Our communications and marketing efforts across multiple geographies and demographic groups play an
important role in building brand visibility, usage, and overall preference among customers.
• Risk and compliance management—our enterprise risk and compliance management program is designed to help
keep customer information secure and ensure we process legitimate transactions around the world, while identifying
and minimizing illegal, high-risk, or fraudulent transactions.
• Regulatory licenses—we believe that our regulatory licenses, which enable us to operate in markets around the world,
are a distinct advantage and help support business growth.
Merchant and Consumer Payment Solutions
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In late 2023, we reorganized our operations to be more closely aligned to the customers we serve—consumers, small
businesses, and large enterprises—and to help enable our teams to deliver more seamless and differentiated end-to-end
experiences.
Merchant Value Proposition
We partner with our merchants to help grow and expand their businesses by providing global reach and powering all
aspects of digital checkout. We offer alternative payment methods including access to credit solutions, provide fraud
prevention and risk management solutions, reduce merchant losses through proprietary protection programs, and offer
tools and insights for utilizing data analytics to help merchants attract and engage customers and improve sales
conversion. We employ a technology and platform agnostic approach intended to enable merchants of all sizes to quickly
and easily provide digital checkout online, including through PayPal-branded checkout and unbranded card processing
(primarily consisting of Braintree), as well as in person at the point of sale, across all platforms and devices, and to securely
and simply receive payments from their customers.
• 2024 Annual Report
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PART I
Item 1. Business
PayPal’s payments platform enables merchants to accept all types of online and in person payments, including those made
with the PayPal and Venmo digital wallets, our consumer credit products, credit cards and debit cards, and competing
digital wallets, as well as other popular local payment methods. Our diversified suite of products and services is tailored to
meet the needs of merchants regardless of their size or business complexity. We offer a seamless, omnichannel solution
that helps merchants manage and grow their business. By offering simplified and personalized shopping experiences for
consumers, we help merchants drive increased engagement and sales conversion.
We offer access to merchant financing products for eligible small and medium-sized businesses through the PayPal
Working Capital and PayPal Business Loan products, which we collectively refer to as our merchant financing solutions. The
PayPal Working Capital product allows businesses to access a loan or cash advance for a fixed fee, based on their annual
payment volume processed by PayPal. The PayPal Business Loan product provides businesses with access to short-term
financing for a fixed fee or interest based on an evaluation of both the applying business as well as the business owner. In
the United States (“U.S.”), these products are provided under a program agreement with an independent chartered financial
institution. We believe that our merchant financing solutions enable us to deepen our engagement with our existing small
and medium-sized merchants and expand services to new merchants by providing access to capital that may not be
available from traditional banks or other lenders.
We generate revenues from merchants primarily by charging fees for completing their payment transactions and other
payment-related services. We also earn revenues from interest and fees earned on our merchant loans receivables.
Consumer Value Proposition
We focus on providing affordable, convenient, and secure consumer financial products and services intended to facilitate
the management and movement of money. We provide consumers with a digital wallet that enables them to send
payments to merchants more safely using a variety of funding sources, which may include a bank account, a PayPal or
Venmo account balance, our consumer credit products, a credit card, a debit card, certain cryptocurrencies, or other
stored value products such as gift cards, and eligible rewards. Our goal is to create the simplest checkout experience
possible for consumers both online and on mobile devices.
We also offer consumers P2P payment solutions for domestic and international transfers through our PayPal, Venmo, and
Xoom products and services. Our Venmo digital wallet in the U.S. is a leading mobile application used to move money
between our customers and to make purchases at select merchants. Our Xoom international money transfer service
enables our customers to send money to people around the world in a secure, fast, and cost-effective way. P2P is an
important source of customer engagement and also serves as a customer acquisition channel that facilitates organic
growth by enabling potential users to establish active accounts with PayPal or Venmo at the time they make or receive a
P2P payment.
We also focus on simplifying and personalizing shopping experiences for our consumers by offering tools for product
discovery, price tracking, saving through deals and offers, convenient package tracking, and redemption of shopping
rewards, which help our merchants to increase consumer engagement and sales conversion.
We offer credit products to eligible consumers in certain markets as a funding source at checkout. Our consumer credit
offerings include our buy now, pay later products in the U.S., United Kingdom (“U.K.”), France, and Germany, among other
markets, and in Japan through our Paidy brand. A key attribute of our buy now, pay later products is the absence of interest
or consumer late fees for missed payments in most of the geographies where we offer them. Further, we offer interest-
bearing installment products for consumers in the U.S. (issued by an independent chartered financial institution) and in
Germany. In the U.S., consumers may apply for our PayPal- and Venmo-branded consumer credit cards and our PayPal
Credit revolving consumer credit product, which are offered through a partnership with an independent chartered financial
institution. We offer a PayPal-issued PayPal Credit product in the U.K. We believe that our consumer credit products help us
to increase engagement with consumers and merchants on our two-sided network.
We have expanded our consumer value proposition through enhancements to the PayPal and Venmo digital wallets, which
provide functionality to enable consumers to more easily check out, explore deals and offers, track and redeem rewards,
and to transact with certain cryptocurrencies, including buying, holding, selling, sending, and receiving them in certain
markets. Our goal is to drive increased consumer engagement by providing consumers with a wide range of services to
manage their finances and enhance their ability to shop online and in person.
We generate revenue from consumers from: foreign currency conversions, instant transfers from their PayPal or Venmo
account to their bank account or debit card, and facilitating the purchase and sale of cryptocurrencies; interest, fees, or
other revenue from our credit products; and other miscellaneous fees.
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• 2024 Annual Report
PART I
Item 1. Business
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Protecting Merchants and Consumers
Protecting merchants and consumers on our payments platform from financial and fraud loss is important to successfully
compete and sustainably grow our business. Fraudulent activities, such as account takeover, identity theft (including stolen
financial information), and malicious activities by counterparties, represent a significant risk to merchants and consumers,
as well as their payment partners. In addition to the protections afforded by applicable law, we provide merchants and
consumers with protection programs for certain purchase transactions completed on our payments platform. Our
protection programs help protect both merchants and consumers from financial loss resulting from, among other things,
counterparty non-performance. These programs are designed to promote confidence on the part of both consumers, who
will not be required to pay in certain circumstances, such as not receiving their purchased item in the condition significantly
as described, and merchants, who will receive payment for delivering an item to the customer. We believe that these
programs are generally consistent with or broader than protections provided by other participants in the payments industry.
Our ability to help protect both merchants and consumers is based largely on our proprietary, end-to-end payments
platform and our ability to utilize the data from both sides of transactions on our two-sided network, specifically from buyers
and sellers and from senders and receivers of payments. Our ongoing investment in systems and processes is designed to
enhance the safety and security of our products and reflects our goal of having PayPal recognized as one of the world’s
most trusted payments brands.
Competition
The global payments industry is highly competitive, dynamic, highly innovative, and increasingly subject to regulatory
scrutiny and oversight. Many of the areas in which we compete evolve rapidly with innovative and disruptive technologies,
shifting user preferences and needs, price sensitivity of merchants and consumers, and frequent introductions of new
products and services. Competition also may intensify as new competitors emerge, businesses combine or enter into new
partnerships, and established companies in other segments expand to become competitive with various aspects of our
business.
Our business faces competition from a wide range of businesses and from all forms of physical and electronic payments.
We face competition from banks and financial institutions, which provide traditional payment methods (particularly credit
cards and debit cards (collectively, “payment cards”), electronic bank transfers, credit, and installment methods), payment
networks that facilitate payments for payment cards or proprietary retail networks, payment card processors, and “card on
file” services. We also face competition from providers offering a variety of payment products and services, including
tokenized and contactless payment cards, digital wallets and mobile payments solutions, credit, installment or other buy
now pay later methods, real-time payment systems, P2P payments and money remittance services, card readers and other
devices or
tokenized cards, Near Field
Communication (NFC) based solutions, and Quick Response (QR) code based solutions), virtual currencies (such as
cryptocurrencies and stablecoins) and distributed ledger technologies, and tools that simplify and personalize shopping
experiences for consumers and merchants. Our products and services also face competition from paper-based payments
(primarily cash and checks).
technologies for payment at point of sale (such as contactless cards,
We differentiate ourselves to merchants through our ability to innovate and develop products and services that offer new
payment experiences for our merchants, demonstrate that they may achieve incremental sales by using and offering our
services to consumers, and support transactions on our payments platform across varied technologies and payment
methods; through the simplicity and transparency of our fee structure; and through our seller protection programs,
analytics, and risk management, as well as other merchant services. In addition, we differentiate ourselves to consumers
through our broad acceptance and the ability to use our products and services across multiple commerce channels,
including e-commerce, mobile, and in person payments, and without sharing their financial information with the merchant
or any other party they are paying; our customer service, dispute resolution, and purchase protection programs; and our
ability to simplify and personalize shopping experiences. We invest resources towards improving our products and services
and expanding their acceptance, offering choice in payment options, providing excellent customer service, and building
brands that merchants and consumers trust.
In addition to the discussion in this section, see “Item 1A. Risk Factors” under the caption “We face substantial and
increasingly intense competition worldwide in the global payments industry” for further discussion of the potential impact
of competition on our business.
• 2024 Annual Report
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PART I
Item 1. Business
Strategy
Our ability to grow revenue is affected by, among other things, the macroeconomic environment and its impact on
consumer spending patterns, adoption of digital payment methods, the expansion of multiple commerce channels, the
growth of mobile devices and merchant and consumer applications on those devices, the growth of merchants and
consumers globally with internet and mobile access, the pace of transition from cash and checks to digital forms of
payment, our share of digital payments, and our ability to innovate and introduce new products, services, and features that
merchants and consumers value. Our strategy to drive growth in our business includes the following:
• Growing our core business: through expanding our global capabilities, customer base and scale,
increasing our
customers’ engagement with our products and services by better addressing their everyday needs to access, manage,
and move money, creating seamless checkout experiences, and expanding the adoption of our solutions by merchants
and consumers;
• Expanding our value proposition for merchants and consumers: by being technology- and platform- agnostic,
partnering with our merchants to grow and expand their business online and in person, including offering merchants risk
management and seller protection programs, and providing consumers with simple, secure, and flexible ways to
manage and move money across different markets, merchants, and platforms, including offering buyer protection
programs and simplifying their shopping experiences;
• Forming and expanding strategic partnerships: by building new strategic partnerships and deepening existing ones to
provide better experiences for our customers, offer greater choice and flexibility, acquire new customers, and reinforce
our role in the payments ecosystem; and
• Seeking new areas of growth: by focusing on innovation in both the digital and physical worlds and finding
opportunities to expand and improve upon our existing products and capabilities.
Technology
Our payments platform utilizes a combination of proprietary and third-party technologies and services intended to facilitate
transactions efficiently and securely between millions of merchants and consumers worldwide across different channels,
markets, and networks. Our payments platform connects with financial services providers around the world and allows
consumers to make purchases using a wide range of payment methods, regardless of where a merchant is located.
Consumers who use our payments platform can send payments in approximately 200 markets around the world and in
approximately 150 currencies, withdraw funds to their bank accounts in 56 currencies, and hold balances in their PayPal
accounts in 24 currencies.
We have developed intuitive user interfaces, customer tools, transaction management databases, and payment network
integrations on our platform designed to enable our customers to utilize our suite of products and services. Our payments
platform, open application programming interfaces, and developer tools are designed to enable developers to innovate
with ease and offer robust solutions to our global ecosystem of merchants and consumers, while at the same time helping
to maintain the security of our customers’ information.
The technology infrastructure supporting our payments platform is designed to simplify the storage and processing of large
amounts of data and facilitate the deployment and operation of large-scale global products and services in both our own
data centers and when hosted by third-party cloud service providers. Our technology infrastructure is designed around
industry best practices intended to reduce downtime and help ensure the resiliency of our payments platform in the event
of outages or catastrophic occurrences. Our payments platform incorporates multiple layers of protection for business
continuity and system redundancy purposes and to help mitigate cybersecurity risks. We have a comprehensive
cybersecurity program designed to protect our technology infrastructure and payments platform against cybersecurity
threats, which includes regularly testing our systems to identify and address potential vulnerabilities. We strive to
continually improve our technology infrastructure and payments platform to enhance the customer experience and to
increase efficiency, scalability, and security.
For additional information regarding risks relating to our technology infrastructure and cybersecurity, see the information in
“Item 1A. Risk Factors” under the captions “Cyberattacks and security vulnerabilities could result in serious harm to our
reputation, business, and financial condition” and “Business interruptions or systems failures may impair the availability of
our websites, applications, products or services, or otherwise harm our business.”
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• 2024 Annual Report
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Item 1. Business
Research and Development
Our total research and development expense was $1.6 billion, $1.7 billion, and $1.6 billion in 2023, 2022, and 2021,
respectively.
Intellectual Property
The protection of our intellectual property, including our trademarks, copyrights, domain names, trade dress, patents, and
trade secrets, is important to the success of our business. We seek to protect our intellectual property rights by relying on
applicable laws, regulations, and administrative procedures in the U.S. and internationally. We have registered our core
brands as domain names and as trademarks in the U.S. and many international jurisdictions. We also have an active
program to secure and enforce trademarks and domain names that correspond to our brands in markets of interest. We
have filed and continue to file patent applications in the U.S. and in international jurisdictions covering certain aspects of our
proprietary technology and new innovations. We also rely on contractual restrictions to protect our proprietary rights when
offering or procuring products and services. We routinely enter into confidentiality and invention assignment agreements
with our employees and contractors, and non-disclosure agreements with parties with whom we conduct business to
control access to, and use and disclosure of, our proprietary information.
For additional information regarding risks relating to our intellectual property, see the information in “Item 1A. Risk Factors”
under the captions “Third parties may allege that we are infringing their patents and other intellectual property rights” and
“We may be unable to protect or enforce our intellectual property.”
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Government Regulation
We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators
globally on all aspects of the payments industry, including anti-money laundering, countering terrorist financing, privacy,
cybersecurity, and consumer protection. The laws and regulations applicable to us, including those enacted prior to the
advent of digital payments, continue to evolve through legislative and regulatory action and judicial interpretation. New or
changing laws and regulations, including changes to their interpretation and implementation, as well as increased penalties
and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of
operations, and financial condition. We monitor these areas closely and are focused on designing compliant solutions for
our customers.
Government regulation impacts key aspects of our business. We are subject to the laws and regulations applicable to the
payments industry in the markets we operate, which are subject to interpretation and change.
Payments Regulation.
Various laws and regulations govern the payments industry in the U.S. and internationally. In the U.S., PayPal, Inc. (a wholly-
owned subsidiary) holds licenses to operate as a money transmitter (or its equivalent) in the states where such licenses are
required, as well as in the District of Columbia and certain territories. These licenses include not only our PayPal-branded
products and services, but also our Venmo, Hyperwallet, and Xoom products and services, to the extent offered in these
locations. As a licensed money transmitter, PayPal is subject to, among other requirements, restrictions on the investment
of customer funds, reporting requirements, bonding requirements, and inspection by state regulatory agencies. In certain
transfer, and sell
cases,
cryptocurrency directly from their PayPal or Venmo account. In the State of New York, PayPal holds a full Bitlicense issued
by the New York Department of Financial Services to offer cryptocurrency services in the state.
these licenses also generally cover PayPal’s service enabling customers to buy, hold,
Outside the U.S., we provide similar services customized for various countries and foreign jurisdictions through our foreign
subsidiaries. The activities of those non-U.S. entities are, or may be, supervised by a financial regulatory authority in the
jurisdictions in which they operate. Among other regulatory authorities, the Luxembourg Commission de Surveillance du
Secteur Financier (the “CSSF”), the U.K. Financial Conduct Authority (“FCA”), the Australian Prudential Regulation Authority,
the People’s Bank of China, the Monetary Authority of Singapore, the Reserve Bank of India, the Central Bank of Russia, and
the Central Bank of Brazil have asserted jurisdiction over some or all of our activities in their respective jurisdictions. This list
is not exhaustive, and there are numerous other regulatory agencies which have asserted or may assert jurisdiction over our
activities.
In addition, financial services regulators in various jurisdictions, including the U.S. and the European Union (“EU”), have
implemented authentication requirements for banks and payment processors intended to reduce online fraud, which could
impose significant costs, make it more difficult for new customers to open PayPal accounts, and reduce the ease of use of
our products.
• 2024 Annual Report
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Item 1. Business
Financial Services Supervision.
We serve our customers in the U.K. through PayPal U.K. Limited (“PayPal U.K.”), a wholly-owned subsidiary that is subject to
regulation as an electronic money institution in the U.K. by the FCA. PayPal U.K. is authorized and regulated by the FCA from
November 1, 2023. We serve our customers in the EU (and the U.K. through October 31, 2023) through PayPal (Europe) S.à.r.l.
et Cie, S.C.A. (“PayPal (Europe)”), a wholly-owned subsidiary that is licensed and subject to regulation as a credit institution
in Luxembourg by the CSSF. Accordingly, we must comply with rules and regulations of the U.K. and European banking
industry,
including those related to capitalization, funds management, corporate governance, anti-money laundering,
disclosure, reporting, and inspection. We are, or may be, subject to banking-related regulations in other countries now or in
the future related to our role in the financial industry. In addition, based on our relationships with our partner financial
institutions, we are, or may be, subject to indirect regulation and examination by the regulators of these partner financial
institutions.
Lending Regulation.
Our U.S. consumer short-term, interest-free, installment product is subject to federal and state laws governing consumer
credit and debt collection, and PayPal holds multiple state licenses as the lender for this product. Paidy, Inc. holds multiple
licenses for the issuance of its consumer installment products in Japan and is registered with the Ministry of Economy,
Trade and Industry as a Comprehensive Credit Purchase Intermediary. In Australia, PayPal Credit Pty Limited offers a
consumer short-term, interest-free, installment product that is exempt from regulation by the primary consumer credit
legislation, but is subject to other laws which cover the provision of financial services, credit reporting, debt collection, and
privacy. PayPal’s consumer short-term, interest-free, installment products in the U.K., France, Germany, Spain, and Italy are
generally exempt from primary consumer credit legislation; however, certain consumer lending laws, consumer protection,
and banking transparency regulations apply to this activity.
Our U.S. consumer interest-bearing installment product is subject to federal and state laws and is offered by an
independent chartered financial institution. PayPal’s interest-bearing installment product for consumers in Germany is
subject to applicable local
laws such as consumer (lending) laws, consumer protection, or banking transparency
regulations. These loans are originated by PayPal (Europe).
PayPal and Venmo co-branded consumer credit cards and the PayPal Credit revolving consumer credit product are issued
by an independent chartered financial institution in the U.S., and are subject to laws and regulations governing these
programs. PayPal Credit in the U.K. is a regulated, revolving consumer credit product subject to applicable local laws and
regulations.
Our U.S. merchant lending products are subject to federal and state regulations and are offered by an independent
chartered financial institution. Our merchant lending products offered in Germany and France are subject to the laws of
Luxembourg and certain local laws, and our merchant lending product offered in the U.K. is subject to U.K. regulation. The
loans offered to European and U.K. merchants are originated by PayPal (Europe) and PayPal U.K., respectively. Our merchant
lending product in Australia is subject to the laws of Australia and originated by PayPal Credit Pty Limited.
Consumer Financial Protection Bureau (“CFPB”).
The CFPB has significant authority to regulate consumer financial products in the U.S., including consumer credit, deposits,
payments, and similar products. As a larger market participant of remittance transfers, we are subject to the direct
supervisory authority of the CFPB. The CFPB and similar regulatory agencies in other jurisdictions may have broad
consumer protection mandates that could result in the promulgation and interpretation of rules and regulations that may
affect our business.
Anti-Money Laundering, Counter-Terrorist Financing, and Sanctions.
PayPal is subject to anti-money laundering (“AML”) laws and regulations in the U.S. and other jurisdictions, as well as laws
designed to prevent the use of the financial systems to facilitate terrorist activities. Our AML program is designed to prevent
our payments platform from being used to facilitate money laundering, terrorist financing, and other illicit activities, or to do
business in countries or with persons and entities included on designated country or person lists promulgated by the U.S.
Department of the Treasury’s Office of Foreign Assets Controls and equivalent authorities in other countries. Our AML and
sanctions compliance programs, overseen by our AML/Bank Secrecy Act Officer, are composed of policies, procedures,
and internal controls, and are designed to address these legal and regulatory requirements and assist in managing money
laundering and terrorist financing risks.
Interchange Fees.
Interchange fees (the transaction fees for processing credit and debit card transactions) are subject to regulation in certain
jurisdictions. For example, in the EU, the Multilateral Interchange Fee Regulation caps interchange fees and provides for
business rules to be complied with by any company dealing with payment card transactions. Interchange fees are being
reviewed or challenged in various jurisdictions. As a result, the fees that we collect in certain jurisdictions may become the
subject of regulatory challenge.
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PART I
Item 1. Business
Data Protection and Privacy.
We are subject to a number of laws, rules, directives, and regulations (“privacy and data protection laws”) relating to the
collection, use, retention, security, processing, and transfer (collectively, “processing”) of personally identifiable information
about our customers, our merchants’ customers, and employees (“personal data”) in the countries where we operate. Our
business relies on the processing of personal data in many jurisdictions and the movement of data across national borders.
As a result, much of the personal data that we process, which may include certain financial information associated with
individuals, is subject to one or more privacy and data protection laws in one or more jurisdictions. In many cases, these
laws apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries,
and other parties with which we have commercial relationships.
Regulatory scrutiny of privacy, data protection, cybersecurity practices, and the processing of personal data is increasing
around the world. Regulatory authorities are continuously considering numerous legislative and regulatory proposals and
interpretive guidelines that may contain additional privacy and data protection obligations. Many jurisdictions in which we
operate have adopted, or are in the process of adopting or amending data privacy legislation or regulation aimed at
creating and enhancing individual privacy rights. In addition, the interpretation and application of these privacy and data
protection laws in the U.S., Europe, and elsewhere are subject to change and may subject us to increased regulatory
scrutiny and business costs.
Anti-corruption.
PayPal is subject to applicable anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and
similar laws in the jurisdictions in which we operate. Anti-corruption laws generally prohibit offering, promising, giving,
accepting, or authorizing others to provide anything of value, either directly or indirectly, to or from a government official or
private party in order to influence official action or otherwise gain an unfair business advantage, such as to obtain or retain
business. We have implemented policies, procedures, and internal controls that are designed to comply with these laws
and regulations.
Additional Regulatory Developments.
Various regulatory agencies continue to examine and implement laws governing a wide variety of issues, including virtual
currencies, identity theft, account management guidelines, disclosure rules, cybersecurity, competition, and marketing,
which may impact PayPal’s business. Certain governments around the world are adopting laws and regulations pertaining
to ESG performance, transparency, and reporting, including those related to general corporate ESG disclosures (e.g., the
EU Corporate Sustainability Reporting Directive) as well as topical reporting and risk management disclosure requirements,
such as obligations related to disclosure of the management of climate-related risks.
For an additional discussion on governmental regulation affecting our business, please see “Item 1A. Risk Factors” and
“Item 3. Legal Proceedings” included in this Form 10-K.
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ESG Management
PayPal is committed to creating a more inclusive global economy and advancing our core values of Inclusion, Innovation,
Collaboration, and Wellness across our communities, workforce, and strategies. We manage priority ESG risks and
innovation, and
opportunities organized across responsible business practices, employees and culture, social
environmental sustainability. We believe this integrated, enterprise-wide approach to managing our global business
responsibly helps to enable us to create value for our stakeholders, including our stockholders, employees, partners, and
communities. We continue to advance and prioritize efforts to manage key non-financial factors critical to our long-term
including further enhancements to support the safety and security of our products and platform, ongoing
business,
programmatic development intended to foster an inclusive culture across the employee experience, and progress on our
science-based approach to reducing our climate change impacts. We take this commitment seriously and endeavor to
provide transparent disclosures on our progress through our annual Global Impact Report and other communications.
Human Capital
At PayPal, we consider the management of our global talent (human capital) to be essential to the ongoing success of our
business. As of December 31, 2023, we employed approximately 27,200 people globally, with 45% in the Americas, 42% in
Asia-Pacific, and 13% in Europe and the Middle East. Our global employees work predominantly full-time and represent 144
nationalities, across 27 countries, including approximately 10,200 located in the U.S.
• 2024 Annual Report
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Item 1. Business
Attracting, recruiting, developing, and retaining diverse talent enables us to provide our customers with products and
services that help them to thrive in the global economy. In 2023, we continued to build employee awareness and
engagement in our leadership principles, which were launched in 2022, to establish a common set of expectations for all
employees. We continued to integrate these principles across our global talent strategy to help shape our programs
throughout the employee lifecycle and achieve key business priorities. A year after launch, 78% of employees responding
to a global survey reported that the leadership principles are now part of their day-to-day work. We also remain focused on
promoting the physical, mental, and financial wellness of our employees, particularly as our workforce continues to
navigate changes in where and how we work and operate in a dynamic and competitive environment.
Employee Engagement
We use employee feedback to directly inform the ongoing development of our employee programs. In addition to
administering an annual survey to gather input from our global workforce, we also conducted specific surveys to gather
direct employee feedback on our specific topics. This year, our 2023 annual employee survey was conducted in
September, between the announcement of the appointment of Alex Chriss as PayPal’s new CEO and his assumption of the
role. We heard from 82% of our global employees. Our engagement score, which reflects whether employees would
recommend PayPal to their peers and/or are happy at PayPal, was 77%. Our score measuring intent to stay was 77%, which
reflects an employee’s expectation to remain employed with the company in two years.
Talent Acquisition, Development, and Retention
As a leading technology platform that enables digital payments and simplifies commerce experiences, we compete for top
global talent around the world. We believe that a strong culture focused on employee experiences that enables
advancement, learning, and individual career insights is essential to the successful acquisition, development, and retention
of diverse talent. Accordingly, we have implemented programs focused on inclusive hiring practices and extending our
talent pipeline through targeted partnerships, revise our career development program for individuals and managers,
extended individual coaching and mentorship programs (particularly for technical and underrepresented talent), and
advanced efforts for employees to grow through self-paced and community learning experiences.
Employee Wellness
We remain focused on promoting the holistic well-being of our employees, including resources, programs, and services to
support our employees’ physical, mental, and financial wellness. Benefits include Global Wellness Days for all employees,
resources to foster emotional well-being, and providing workplace flexibility through Crisis Leave and other programs. We
promote employee financial wellness, including by offering individual employee financial coaching. Through our global
individual passions and communities by matching eligible
Community Impact program, we support our employees’
employee donations and volunteer time with non-profit organizations up to $2,500 annually per employee.
Diversity, Inclusion, Equity, and Belonging
We believe that fostering diversity, inclusion, equity, and belonging (“DIE&B”) is critical to our global talent strategy and
pivotal to building a culture that embraces individual characteristics, values diversity, minimizes barriers, and enhances
feelings of security and support across the workplace. We are committed to equal pay for equal work and promoting
enterprise-wide inclusive learning opportunities. We believe that our strong commitment to DIE&B is evident at all levels of
the organization from our Board of Directors to our executive leadership team to our global workforce. As of December 31,
2023, 46% of our Board and 75% of our senior leadership team identified as women and/or from a diverse ethnic group.
Across our workforce, we reached 55% overall diverse workforce representation, including 43% global gender diversity
(inclusive of self-identified women and non-binary employees) and 54% U.S. ethnic diversity, as of December 31, 2023.
Additional U.S. workforce diversity metrics can be found in our public EEO-1 reports and annual Global Impact Report
available at https://about.pypl.com/values-in-action/reporting/default.aspx.
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Workforce representation is only one aspect of our broader DIE&B strategy. In 2023, we continued our support for
underrepresented communities and employees, including through activities such as inclusion-focused employee learning
modules and our enterprise-wide sponsorship program. We continue to evaluate DIE&B progress across the company and
as part of the individual performance assessment under our 2023 annual incentive plan for our senior executives. In
addition, we empower eight employee resource groups, which are open to all employees, to promote community and
belonging for employees that identify as Black, Latinx/Hispanic, women, interfaith, veterans, LGBTQ+, Asian, and disabled
persons and their allies.
Our Evolving Workplace
We remain focused on creating a culture of flexibility and community by designing ways to collaborate across diverse
workplace models, whether working virtually, on-site, or using a hybrid approach. We empower functional leadership to
determine the most appropriate workplace strategy for their teams to optimize employee productivity and engagement
and deliver on business priorities. Across PayPal, we are focused on providing tools and resources to support our diverse
and distributed teams. We believe this flexible approach has broadened our potential global talent pools.
Available Information
The address of our principal executive offices is PayPal Holdings, Inc., 2211 North First Street, San Jose, California 95131. Our
website is located at www.paypal.com, and our investor relations website is located at https://investor.pypl.com. From time
to time, we may use our investor relations site and other online and social media channels, including the PayPal Corporate
website (https://about.pypl.com), the PayPal Newsroom (https://newsroom.paypal-corp.com/), PayPal’s LinkedIn page
(https://www.linkedin.com/company/paypal), Alex Chriss’ LinkedIn profile (https://www.linkedin.com/in/alexchriss/), Alex
Chriss’ X profile (https://twitter.com/acce), and Jamie Miller’s LinkedIn profile (https://www.linkedin.com/in/jamiesmiller/),
as a means of disclosing information about the Company, including information which could be deemed to be material to
investors. Our Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports
are available free of charge on our investor relations website as soon as reasonably practicable after they are electronically
filed with, or furnished to, the SEC. The SEC maintains an internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. The content
of our websites and information we may post on, provide to, or accessible through online and social media channels,
including those mentioned above, are not incorporated by reference into this Form 10-K or in any other report or document
we file with the SEC, and any references to our websites or online and social media channels are intended to be inactive
textual references only.
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Item 1A. Risk Factors
Item 1A. Risk Factors
You should carefully consider the risks and uncertainties described below, in addition to other information appearing in this
Form 10-K, including our consolidated financial statements and related notes, for important information regarding risks and
uncertainties that could affect us. These risk factors do not identify all risks we face, and additional risks and uncertainties
that we are unaware of, or that we currently believe are not material, may also become important factors that adversely
affect our business. If any of the following risks actually occur, our business, financial condition, results of operations, future
prospects, and the trading price of our common stock could be materially and adversely affected.
Cybersecurity and Technology Risks
Cyberattacks and security vulnerabilities could result in serious harm to our reputation, business,
and financial condition.
The techniques used to attempt to obtain unauthorized or illegal access to systems and information (including customers’
personal data), disable or degrade service, exploit vulnerabilities, or sabotage systems are constantly evolving. In some
circumstances, these attempts may not be recognized or detected until after they have been launched against a target.
Unauthorized parties will continue to attempt to gain access to our systems or facilities through various means, including
through hacking into our systems or facilities or those of our customers, partners, or vendors, and attempting to fraudulently
induce users of our systems (including employees, vendor and partner personnel and customers) into disclosing user
names, passwords, payment card information, multi-factor authentication application access or other sensitive information
used to gain access to such systems or facilities. This information may,
in turn, be used to access our customers’
confidential personal or proprietary information and financial instrument data that are stored on or accessible through our
information technology systems and those of third parties with whom we partner. This information may also be used to
execute fraudulent transactions or otherwise engage in fraudulent actions. Numerous and evolving cybersecurity threats,
including advanced and persisting cyberattacks, cyberextortion, distributed denial-of-service attacks, ransomware, spear
phishing and social engineering schemes, the introduction of computer viruses or other malware, and the physical
destruction of all or portions of our information technology and infrastructure and those of third parties with whom we
partner or that are part of our information technology supply chain, are becoming increasingly sophisticated and complex,
may be difficult to detect, and could compromise the confidentiality, availability, and integrity of the data in our systems, as
well as the systems themselves.
We believe that hostile actors, who may comprise individuals, coordinated groups, sophisticated organizations, or nation
state supported entities may target PayPal due to our name, brand recognition, types of data (including sensitive payments-
and identity-related data) that customers provide to us, and the widespread adoption and use of our products and services.
We have experienced from time to time, and may experience in the future, cybersecurity incidents, including breaches of
our security measures, network breaches, and compromise of personally identifiable customer information due to human
error, deception, malfeasance, insider threats, system errors, defects, vulnerabilities, or other issues.
Any cybersecurity incidents, including cyberattacks or data security breaches affecting the information technology or
infrastructure of companies we acquire or of our customers, partners, or vendors (including data center and cloud
computing providers) could have similar negative effects.
Under payment card network rules and our contracts with our payment processors, if there is a breach of payment card
information stored by us or our direct payment card processing vendors, we could be liable to the payment card issuing
banks, including for their cost of issuing new cards and related expenses. Cybersecurity breaches and other exploited
security vulnerabilities could subject us to significant costs and third-party liabilities, result in improper disclosure of data
and violations of applicable privacy and other laws, require us to change our business practices, cause us to incur
significant remediation costs, lead to loss of customer confidence in, or decreased use of, our products and services,
damage our reputation and brands, divert the attention of management from the operation of our business, result in
significant compensation or contractual penalties from us to our customers and their business partners as a result of losses
to or claims by them, or expose us to litigation, regulatory investigations, and significant fines and penalties. While we
maintain insurance policies intended to help offset the financial impact we may experience from these risks, our coverage
may be insufficient to compensate us for all losses caused by security breaches and other damage to or unavailability of
our systems.
Business interruptions or systems failures may impair the availability of our websites, applications,
products or services, or otherwise harm our business.
Our systems and operations and those of our service providers and partners have experienced from time to time, and may
experience in the future, business interruptions or degradation of service because of distributed denial-of-service and other
cyberattacks, insider threats, hardware and software defects or malfunctions, human error, earthquakes, hurricanes, floods,
losses, disruptions in
fires, and other natural disasters, public health crises (including pandemics), power
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telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or
other events. The frequency and intensity of weather events related to climate change are increasing, which could increase
the likelihood and severity of such disasters as well as related damage and business interruption. Our corporate
headquarters are located in the San Francisco Bay Area, a seismically active region in California. A catastrophic event that
could lead to a disruption or failure of our systems or operations could result in significant losses and require substantial
recovery time and significant expenditures to resume or maintain operations. Further, some of our systems, including those
of companies that we have acquired, are not fully redundant and any failure of these acquired systems, including due to a
catastrophic event, may lead to operational outages or delays. While we engage in disaster recovery planning and testing
intended to mitigate risks from outages or delays, our planning and testing may not be sufficient for all possible outcomes
or events. As a provider of payments solutions, we are also subject to heightened scrutiny by regulators that may require
specific business continuity, resiliency and disaster recovery plans, and rigorous testing of such plans, which may be costly
and time-consuming to implement, and may divert our resources from other business priorities. Any of the foregoing risks
could have a material adverse impact on our business, financial condition, and results of operations.
We have experienced, and expect to continue to experience, system failures, cyberattacks, unplanned outages, and other
events or conditions from time to time that have and may interrupt the availability, or reduce or adversely affect the speed
or functionality, of our products and services. A prolonged interruption of, or reduction in, the availability, speed, or
functionality of our products and services could materially harm our business. Frequent or persistent interruptions in our
services could permanently harm our relationship with our customers and partners and our reputation. If any system failure
or similar event results in damage to our customers or their business partners, they could seek significant compensation or
contractual penalties from us for their losses. These claims, even if unsuccessful, would likely be time-consuming and
costly for us to address.
We continue to undertake system upgrades and re-platforming efforts designed to improve the availability, reliability,
resiliency, and speed of our payments platform. These efforts are costly and time-consuming, involve significant technical
complexity and risk, may divert our resources from new features and products, and may ultimately not be effective.
Frequent or persistent site interruptions could lead to regulatory scrutiny, significant fines and penalties, and mandatory and
costly changes to our business practices, and ultimately could cause us to lose existing licenses that we need to operate
or prevent or delay us from obtaining additional licenses that may be required for our business.
We also rely on facilities, components, applications, software, and services supplied by third parties, including data center
facilities and cloud data storage and processing services. From time to time, we have experienced interruptions in the
provision of such facilities and services provided by these third parties. If these third parties experience operational
interference or disruptions (including a cybersecurity incident), fail to perform their obligations, or breach their agreements
with us, our operations could be disrupted or otherwise negatively affected, which could result in customer dissatisfaction,
regulatory scrutiny, and damage to our reputation and brands, and materially and adversely affect our business. While we
maintain insurance policies intended to help offset the financial impact we may experience from these risks, our coverage
may be insufficient to compensate us for all losses caused by interruptions in our service due to systems failures and
similar events.
In addition, any failure to successfully implement new information systems and technologies, or improvements or upgrades
to existing information systems and technologies in a timely manner could adversely impact our business, internal controls,
results of operations, and financial condition.
If we cannot keep pace with rapid technological developments to provide new and innovative
products and services, the use of our products and services and, consequently, our revenues, could
decline.
Rapid, significant, and disruptive technological changes impact the industries in which we operate, including payment
technologies (including real-time payments, payment card tokenization, virtual currencies, distributed ledger and
blockchain technologies, and proximity payment technology such as Near Field Communication and other contactless
payments); internet browser technologies, that enable users to easily store their payment card information for use on any
retail or e-commerce website; artificial intelligence and machine learning; developments in technologies supporting our
regulatory and compliance obligations; and in-store, digital, and social commerce.
We expect that new technologies applicable to the industries in which we operate will continue to emerge and may be
superior to, or render obsolete, the technologies we currently use in our products and services. We cannot predict the
effects of technological changes on our business, which technological developments or innovations will become widely
adopted, and how those technologies may be regulated. Developing and incorporating new technologies into new and
existing products and services may require significant investment, take considerable time, and may not ultimately be
successful. We rely in part on third parties, including some of our competitors, for the development of and access to new or
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Item 1A. Risk Factors
evolving technologies. These third parties may restrict or prevent our access to, or utilization of, those technologies, as well
as their platforms or products. Our ability to develop, provide or incorporate new technologies and adapt our existing
products and services or develop future and new products and services using new technologies may be limited or
restricted by industry-wide standards, platform providers, payments networks, changes to laws and regulations, changing
customer expectations, third-party intellectual property rights, and other factors.
If we are unable to develop and
incorporate new technologies and adapt to technological changes and evolving industry standards in a timely or cost-
effective manner, our business could be harmed.
Legal, Regulatory and Compliance Risks
Our business is subject to extensive government regulation and oversight. Our failure to comply
with extensive, complex, overlapping, and frequently changing rules, regulations, and legal
interpretations could materially harm our business.
Our business is subject to complex and changing laws, rules, regulations, policies, and legal interpretations in the markets
in which we offer services directly or through partners, including, but not limited to, those governing: banking, credit,
deposit taking, cross-border and domestic money transmission, prepaid access, foreign currency exchange, privacy, data
protection, data governance, cybersecurity, banking secrecy, digital payments, cryptocurrency, payment services
(including payment processing and settlement services), lending, fraud detection, consumer protection, antitrust and
competition, economic and trade sanctions, anti-money laundering, and counter-terrorist financing.
Regulators and legislators globally have been establishing, evolving, and increasing their regulatory authority, oversight,
and enforcement in a manner that impacts our business. As we introduce new products and services and expand into new
markets, including through acquisitions, we expect to become subject to additional regulations, restrictions, and licensing
requirements. As we expand and localize our international activities, we expect that our obligations in the markets in which
we operate will continue to increase. In addition, because we facilitate sales of goods and provide services to customers
worldwide, one or more jurisdictions may claim that we or our customers are required to comply with their laws, which may
impose different, more specific, or conflicting obligations on us, as well as broader liability.
Any failure or perceived failure to comply with existing or new laws, regulations, or orders of any government authority
(including changes to or expansion of their interpretation) may subject us to significant fines, penalties, criminal and civil
forfeiture of significant assets, and enforcement actions in one or more jurisdictions; result in additional
lawsuits,
compliance and licensure requirements; cause us to lose existing licenses or prevent or delay us from obtaining additional
licenses that may be required for our business; increase regulatory scrutiny of our business; divert management’s time and
attention from our business; restrict our operations; lead to increased friction for customers; force us to make changes to
our business practices, products, or operations; require us to engage in remediation activities; or delay planned
transactions, product launches, or improvements. Any of the foregoing could, individually or in the aggregate, harm our
reputation, damage our brands and business, and adversely affect our results of operations and financial condition. The
complexity of U.S. federal and state and international regulatory and enforcement regimes, coupled with the global scope
of our operations and the evolving global regulatory environment, could result in a single event prompting a large number
of overlapping investigations and legal and regulatory proceedings by multiple government authorities in different
jurisdictions. While we have implemented policies and procedures designed to help ensure compliance with applicable
laws and regulations, there can be no assurance that our employees, contractors, and agents will not violate such laws and
regulations.
Payments Regulation
In the U.S., PayPal, Inc. (a wholly-owned subsidiary) holds licenses to operate as a money transmitter (or its equivalent) in
the states where such licenses are required, as well as in the District of Columbia and certain territories. If we fail to comply
with applicable laws or regulations required to maintain our licenses, we could be subject to liability and/or additional
restrictions, forced to cease doing business with residents of certain states or territories, forced to change our business
practices, or required to obtain additional licenses or regulatory approvals, which could impose substantial costs and harm
our business.
While we currently allow our customers to send payments from approximately 200 markets, we allow customers in only
approximately half of those markets (including the U.S.) to also receive payments, in some cases with significant restrictions
on the manner in which customers can hold balances or withdraw funds. These restrictions may limit our ability to grow our
business.
Outside of the U.S., we principally provide our services to customers in the European Economic Area (“EEA”) through
PayPal (Europe) S.à.r.l. et Cie, S.C.A. (“PayPal (Europe)”), our wholly-owned subsidiary that is licensed and subject to
regulation as a credit institution in Luxembourg and PayPal U.K. Limited (“PayPal U.K.”), a wholly-owned subsidiary that is
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Item 1A. Risk Factors
subject to regulation as an electronic money institution in the United Kingdom (“U.K.”) by the Financial Conduct Authority
(“FCA”). PayPal (Europe) or PayPal U.K. may be subject to enforcement actions and significant fines if either violates
applicable requirements. If the business activities of PayPal (Europe) exceed certain thresholds, or if the European Central
Bank (“ECB”) so determines, PayPal (Europe) may be deemed a significant supervised entity and certain activities of PayPal
(Europe) would become directly supervised by the ECB, rather than by the Luxembourg Commission de Surveillance du
Secteur Financier. PayPal (Europe) is also subject to regulation by the ECB under the oversight framework for electronic
payment instruments, schemes and arrangements (PISA). Compliance with applicable laws and regulations could become
more costly and operationally difficult to manage due to additional supervision, potentially inconsistent interpretations, and
domestic regulations by various countries in the region. Applicable regulation relating to payments, anti-money laundering,
and digital services, which are key focus areas of regulators and subject to extensive new regulation, could subject us to
additional and complex obligations, risks, and associated costs, and impact our ability to expand our business in Europe.
In many of the other markets outside the U.S. in which we do business, we serve our customers through PayPal Pte. Ltd., our
wholly-owned subsidiary based in Singapore. PayPal Pte. Ltd. is supervised by the Monetary Authority of Singapore (“MAS”).
As of July 1, 2023, PayPal Pte. Ltd. has been issued a Major Payment Institution license by the MAS under the Payment
Services Act 2019 to continue providing payments services. In order to maintain this license and certain other licenses or
registrations we hold in certain markets, we are required to comply with applicable regulatory requirements, which will
result in increased operational complexity and costs for our Singapore and international operations.
In many of the markets outside the U.S. (other than Singapore) served by PayPal Pte. Ltd. or by local branches or
subsidiaries subject to local regulatory supervision or oversight, as the case may be, there may be uncertainty whether our
Singapore-based service is subject only to Singapore law or also to other local laws, and whether such local laws might
require a payment processor like us to be licensed as a payments service, bank, financial institution, or otherwise.
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There are substantial costs and potential product and operational changes involved in maintaining and renewing licenses,
certifications, and approvals, and we could be subject to enforcement actions, fines, and litigation if we are found to violate
any of these requirements. There can be no assurance that we will be able to (or decide to) continue to apply for or obtain
any licenses, renewals, certifications, and approvals in any jurisdiction. In certain markets, we may need to rely on local
banks or other partners to process payments and conduct foreign currency exchange transactions in local currency, and
local regulators may use their authority over such local partners to prohibit, restrict, or limit us from doing business. Any of
the foregoing could, individually or in the aggregate, result in substantial additional costs, delay or preclude planned
transactions, product launches or improvements, require significant and costly operational changes, impose restrictions,
limitations, or additional requirements on our business, products and services, or prevent or limit us from providing our
products or services in a given market.
Cryptocurrency Regulation and Related Risks
licensing requirements, or other
Our customer cryptocurrency offerings could subject us to additional regulations,
obligations or liabilities. Within the U.S., we are regulated by the New York Department of Financial Services as a virtual
currency business, which does not qualify us to engage in securities brokerage or dealing activities. The regulatory status of
particular cryptocurrencies is unclear under existing law. For example, if the Securities and Exchange Commission (“SEC”)
were to assert that any of the cryptocurrencies we support are securities, the SEC could assert that our activities involving
that cryptocurrency require securities broker-dealer registration or other obligations under the federal securities laws. The
rapidly evolving regulatory landscape with respect to cryptocurrency may subject us to additional licensing and regulatory
obligations or to additional inquiries or investigations from the SEC or other regulators and governmental authorities, and
require us to make product changes, restrict or discontinue product offerings in certain markets, implement additional and
potentially costly controls, or take other actions.
In August 2023, a third-party issuer with which we have partnered commercially (the “PYUSD Issuer”) launched a U.S.
dollar-denominated stablecoin named PayPal USD (“PYUSD”), which was initially available to PayPal U.S. customers and
subsequently made available to Venmo customers in September 2023. These PayPal and Venmo customers may,
if
provisioned for external transfers and subject to our sanctions and anti-money laundering controls, send PYUSD to external
wallets not controlled by PayPal. The PYUSD Issuer may also allow institutional users to directly purchase PYUSD from the
PYUSD Issuer (as per the PYUSD Issuer’s stablecoin terms and conditions). The regulatory treatment of stablecoins is
evolving and has drawn significant attention from legislative and regulatory bodies around the world, including the SEC.
There are uncertainties on how ongoing changes to federal, state, and international laws and regulations would apply to
stablecoins in practice, and we and the PYUSD Issuer may face substantial costs to operationalize and comply with any
additional or changed requirement. If we or the PYUSD Issuer fail to comply with regulations, requirements, prohibitions or
other obligations applicable to us, we could face regulatory or other enforcement actions, potential fines, and other
consequences. In addition, we could face reputational harm through our relationship with the PYUSD Issuer if the PYUSD
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Issuer were to face regulatory scrutiny, PYUSD is deemed to be a security, or PYUSD is alleged to be used for transactions
in connection with illicit or illegal activities.
We hold our customers’ cryptocurrency assets through one or more third-party custodians. Financial and third-party risks
related to our customer cryptocurrency offerings, such as inappropriate access to, theft, or destruction of cryptocurrency
assets held by our custodians, insufficient insurance coverage by a custodian to reimburse us for all such losses, a
custodian’s failure to maintain effective controls over the custody and settlement services provided to us, a custodian’s
inability to purchase or liquidate cryptocurrency holdings, the failure of the PYUSD Issuer to maintain sufficient reserve
assets backing PYUSD and defaults on financial or performance obligations by a custodian, banks with which the PYUSD
Issuer maintains reserve assets or counterparty financial institutions, could expose our customers and us to loss, and
therefore significantly harm our business, financial performance, and reputation.
We have selected custodian partners and the PYUSD Issuer, and may in the future select additional custodian partners and
stablecoin issuing entities, that are subject to regulatory oversight, capital requirements, maintenance of audit and
compliance industry certifications, and cybersecurity procedures and policies. Nevertheless, operational disruptions at any
such custodian or issuer, or such custodians’ or issuer’s failure to safeguard cryptocurrency holdings (or reserve assets)
could result in losses of customer assets, expose us to customer claims, reduce consumer confidence and materially
impact our operating results and our cryptocurrency product offerings.
Custodial arrangements to safeguard cryptocurrency assets involve unique risks and uncertainties in the event of a
custodian’s bankruptcy. While other types of assets and some custodied cryptocurrencies have been deemed not to be
part of the custodian’s bankruptcy estate under various regulatory regimes, bankruptcy courts have not yet definitively
determined the appropriate treatment of custodial holdings of digital assets in a bankruptcy proceeding. In the event of a
custodian’s bankruptcy, the lack of precedent and the highly fact-dependent nature of the determination could delay or
preclude the return of custodied cryptocurrency assets to us or to our customers. Although we contractually require our
custodians to segregate our customer assets and not commingle them with proprietary or other assets, we cannot be
certain that these contractual obligations, even if duly observed by a custodian, will be effective in preventing such assets
from being treated as part of the custodian’s estate under bankruptcy or other insolvency law. In that event, our claim on
behalf of such customers against a custodian’s estate for our customers’ cryptocurrency assets could be treated as a
general unsecured claim against the custodian, in which case our customers could seek to hold us liable for any resulting
losses.
In addition, our cryptocurrency product offerings could have the effect of heightening or exacerbating many of the risk
factors described in this “Risk Factors” section.
Lending Regulation
We hold a number of U.S. state lending licenses for our U.S. consumer short-term installment loan product, which is subject
to federal and state laws governing consumer credit and debt collection. While the consumer short-term installment loan
products that we offer outside the U.S. are generally exempt from primary consumer credit legislation, certain consumer
lending laws, consumer protection or banking transparency regulations continue to apply to these products. Increased
global regulatory focus on short-term installment products and consumer credit more broadly could result in laws or
regulations requiring changes to our policies, procedures, operations, and product offerings, and restrict or limit our ability
to offer credit products.
Consumer Protection
Violations of federal and state consumer protection laws and regulations, including the Electronic Fund Transfer Act
(“EFTA”) and Regulation E as implemented by the Consumer Financial Protection Bureau (“CFPB”), could result in the
assessment of significant actual damages or statutory damages or penalties (including treble damages in some instances)
and plaintiffs’ attorneys’ fees. We are subject to, and have paid amounts in settlement of, lawsuits containing allegations
that our business violated the EFTA and Regulation E or otherwise advance claims for relief relating to our business
practices (e.g., that we improperly held consumer funds or otherwise improperly limited consumer accounts).
In addition, the CFPB, pursuant to its market-monitoring authority, may require us to provide extensive information on our
products and offerings. From time to time, we have received orders from the CFPB pursuant to such market-monitoring
authority requiring us to provide, among other items, extensive information on our payment products, including with
respect to the collection, use of, and access to data and consumer protections, as well as our Buy Now, Pay Later offerings.
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Item 1A. Risk Factors
Following the departure of the U.K. from the European Union (“EU”) and the EEA on January 31, 2020 (commonly referred to
as “Brexit”), effective November 1, 2023, PayPal’s wholly-owned U.K. subsidiary received authorizations from the FCA as an
electronic money institution and consumer credit firm, and registration as a cryptoasset business, subject to certain
conditions that will require further implementation action by us. If we are unable to meet these requirements, our U.K.
business and operations may be impacted and we may be subject to enforcement actions.
Anti-Money Laundering and Counter-Terrorist Financing; Economic and Trade Sanctions
Regulators globally continue to increase standards and expectations regarding anti-money laundering and counter-terrorist
financing, and to expand the scope of existing laws and regulations to emerging products and markets, which may require
us to further revise or expand our compliance program globally and/or in specific jurisdictions, including the procedures
we use to verify the identity of our customers and to monitor international and domestic transactions. Such changes could
have the effect of making compliance more costly and operationally difficult to manage, lead to increased friction for
customers, and result in a decrease in business. Regulators regularly re-examine the transaction volume thresholds at
which we must obtain and keep applicable records or the circumstances in which we must verify identities of customers,
and any change to such obligations could result in greater compliance costs and impact our business. We are also required
to comply with economic and trade sanctions administered by the U.S., the EU and its member states, the U.K., and other
jurisdictions in which we operate. Non-compliance with anti-money laundering laws and regulations or economic and
trade sanctions may subject us to significant fines, penalties,
lawsuits, and enforcement actions, result in regulatory
sanctions and additional compliance requirements, increase regulatory scrutiny of our business, restrict our operations, and
damage our reputation and brands. Our compliance history may be considered by OFAC and other regulators as part of
any potential future investigation of our sanctions regulation.
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Privacy and Protection of Customer Data
The legal and regulatory environment relating to privacy and data protection laws continues to develop and evolve in ways
intelligence, machine
including with respect to technologies such as cloud computing, artificial
we cannot predict,
learning, cryptocurrency, and blockchain technology. Any failure or alleged failure by us to comply with our privacy policies
as communicated to customers or with privacy and data protection laws relating to our collection, use, storage, transfer, or
sharing of customer data with third parties could result in proceedings or actions against us by data protection authorities,
other government agencies, or others, which could subject us to significant fines, penalties, judgments, and negative
increase the costs and complexity of compliance, result in
publicity, require us to change our business practices,
reputational harm, and materially harm our business. Compliance with inconsistent privacy and data protection laws may
also restrict or limit our ability to provide products and services to our customers.
PayPal relies on a variety of compliance methods to transfer personal data of EEA individuals to the U.S., including Binding
Corporate Rules for internal transfers of certain types of personal data and Standard Contractual Clauses (“SCCs”) as
approved by the European Commission for transfers to and from third parties. Additionally, in July 2023, the EU-U.S. Data
Privacy Framework, the U.K. Extension to the EU-U.S. Data Privacy Framework, and the Swiss-U.S. Data Privacy Framework
became effective as additional mechanisms to enable transfers of personal data to the U.S. from the EU/EEA, the U.K., and
Switzerland, respectively. The new Data Protection Framework (DPF) replaces prior transatlantic personal data transfer
regimes that were invalidated by the Court of Justice of the European Union. As such, there are risks in solely relying on the
DPF for internal transfers of personal data to the U.S. While PayPal intends to continue to rely on Binding Corporate Rule and
SCCs and will evaluate the circumstances under which the DPF may be leveraged for transfers of personal data to the U.S.,
we may be subject to regulatory enforcement actions if our approach is deemed to be noncompliant.
Many jurisdictions in which we operate globally have enacted, or are in the process of enacting, data privacy legislation or
regulations aimed at creating and enhancing individual privacy rights. For example, numerous U.S. states have enacted or
are in the process of enacting state level data privacy laws and regulations governing the collection, use, and retention of
their residents’ personal information. The continued proliferation of privacy laws in the jurisdictions in which we operate is
likely to result in a disparate array of privacy rules with unaligned or conflicting provisions, accountability requirements,
individual rights, and national or local enforcement powers, which may subject us to increased regulatory scrutiny and
business costs and could lead to unintended consumer confusion.
We are subject to regulatory scrutiny and may be subject to legal proceedings under antitrust and
competition laws.
We are subject to scrutiny by various government agencies regarding antitrust and competition laws and regulations in the
U.S. and internationally,
including in connection with proposed or implemented business combinations, acquisitions,
investments, partnerships, commercial agreements and business practices. Some jurisdictions also provide private rights
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of action for competitors or consumers to assert claims of anticompetitive conduct. Companies and government agencies
have in the past alleged, and may in the future allege, that our actions violate the antitrust or competition laws in the U.S. or
other jurisdictions in which we operate or otherwise constitute unfair competition, or that our products and services are
used so broadly that otherwise uncontroversial business practices could be deemed anticompetitive. Any claims or
investigations, even if without merit, may be costly to defend or respond to,
involve negative publicity, and cause
substantial diversion of management’s time and effort, and could result in reputational harm, significant judgments, fines
and other remedial actions against us, require us to change our business practices, make product or operational changes,
or delay or preclude planned transactions, product launches or improvements.
We are regularly subject to general litigation, regulatory scrutiny, and government inquiries.
fraud, accessibility, securities,
the terms of our customer agreements,
We are regularly subject to claims, individual and class action lawsuits, arbitration proceedings, government and regulatory
investigations, inquiries, actions or requests, and other proceedings alleging violations of laws, rules, and regulations with
respect to competition, antitrust, intellectual property, privacy, data protection, information security, anti-money laundering,
counter-terrorist financing, sanctions, anti-bribery, anti-corruption, consumer protection (including unfair, deceptive, or
abusive acts or practices),
labor and
employment, commercial disputes, services, charitable fundraising, contract disputes, escheatment of unclaimed or
abandoned property, product liability, use of our services for illegal purposes, the matters described in “Note 13—
Commitments and Contingencies—Litigation and Regulatory Matters—General Matters” to our consolidated financial
statements, and other matters. The number and significance of these disputes and inquiries is expected to continue to
increase as our products, services, and business expand in complexity, scale, scope, and geographic reach, including
Investigations and legal proceedings are inherently uncertain,
through acquisitions of businesses and technology.
expensive and disruptive to our operations, and could result in substantial judgments, fines, penalties or settlements,
negative publicity, substantial diversion of management’s time and effort, reputational harm, criminal sanctions, or orders
that prevent or limit us from offering certain products or services; require us to change our business practices or customer
agreement terms in ways that may increase costs or reduce revenues, develop non-infringing or otherwise altered
products or technologies, or pay substantial royalty or licensing fees; or delay or preclude planned transactions or product
launches or improvements. Determining legal reserves or possible losses from such matters involves significant estimates
and judgments and may not reflect the full range of uncertainties and unpredictable outcomes. We may be exposed to
losses in excess of the amount recorded, and such amounts could be material. If our estimates and assumptions change or
prove to have been incorrect, this could have a material adverse effect on our business, financial position, results of
operations, or cash flows.
tax,
Third parties may allege that we are infringing their patents and other intellectual property rights.
We are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights.
Intellectual property infringement claims against us may result from, among other things, our expansion into new business
areas, including through acquisitions of businesses and technology, or new or expanded products and services and their
convergence with technologies not previously associated with areas related to our business, products, and services. The
ultimate outcome of any allegation or claim is often uncertain and any such claim, with or without merit, may be time-
consuming to defend, result in costly litigation, divert management’s time and attention from our business, result in
reputational harm, and require us to, among other things, redesign or stop providing our products or services, pay
substantial amounts to settle claims or lawsuits, satisfy judgments, or pay substantial royalty or licensing fees.
We may be unable to protect or enforce our intellectual property.
The protection of our proprietary rights, including our trademarks, copyrights, domain names, trade dress, patents and trade
secrets, is important to the success of our business. Effective protection of our proprietary rights may not be available in
every jurisdiction in which we offer our products and services. Although we have generally taken measures to protect our
intellectual property, there can be no assurance that we will be successful in protecting or enforcing our rights in every
jurisdiction, that our contractual arrangements will prevent or deter third parties from infringing or misappropriating our
intellectual property, or that third parties will not independently develop equivalent or superior intellectual property rights.
We may be required to expend significant time and resources to prevent infringement and enforce our rights, and we may
be unable to discover or determine the extent of any unauthorized use of our proprietary rights. If we are unable to prevent
third parties from infringing or otherwise violating our proprietary rights, the uniqueness and value of our products and
services could be adversely affected, the value of our brands could be diminished, and our business could be adversely
affected. We expect to continue to license in the future certain of our proprietary rights, such as trademarks or copyrighted
material, to others. These licensees may take actions that diminish the value of our proprietary rights or harm our reputation.
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Any failure to adequately protect or enforce our proprietary rights, or significant costs incurred in doing so, could diminish
the value of our intangible assets and materially harm our business.
Business and Operations Risks
We face substantial and increasingly intense competition worldwide in the global payments
industry.
The global payments industry is highly competitive, dynamic, highly innovative, and increasingly subject to regulatory
scrutiny and oversight. Many of the areas in which we compete evolve rapidly with innovative and disruptive technologies,
shifting user preferences and needs, price sensitivity of merchants and consumers, and frequent introductions of new
products and services. Competition also may intensify as new competitors emerge, businesses enter into business
combinations and partnerships, and established companies in other segments expand to become competitive with various
aspects of our business.
We compete with a wide range of businesses in every aspect of our business. Some of our current and potential
competitors are or may be larger than we are, have larger customer bases, greater brand recognition, longer operating
histories, a dominant or more secure position, broader geographic scope, volume, scale, resources, and market share than
we do, or offer products and services that we do not offer. Other competitors are or may be smaller or younger companies
that may be more agile in responding to regulatory and technological changes and customer preferences. Our competitors
may devote greater resources to the development, promotion, and sale of products and services, and/or offer lower prices
or more effectively offer their own innovative programs, products, and services. We often partner with other businesses,
and the ability to continue establishing these partnerships is important to our business. Competition for relationships with
these partners is intense, and there can be no assurance that we will be able to continue to establish, grow, or maintain
these partner relationships. If we are unable to differentiate our products and services from those of our competitors, drive
value for our customers, or effectively and efficiently align our resources with our goals and objectives, we may not be able
to compete effectively. See “Item 1. Business—Competition” of this Form 10-K for further discussion of the competitive
environment in the markets where we operate.
Changes to payment card networks or bank fees, rules, or practices could harm our business.
To process certain transactions, we must comply with applicable payment card, bank or other network (collectively,
“network”) rules. The rules govern all aspects of a transaction on the networks, including fees and other practices. From
time to time, the networks have increased the fees and assessments that they charge for transactions that access their
networks. Certain networks have also imposed special fees or assessments for transactions that are executed through a
digital wallet such as the one that PayPal offers. Our payment processors may have the right to pass any increases in fees
and assessments on to us and to increase their own fees for processing. Any increase in interchange fees, special fees, or
assessments for transactions that we pay to the networks or our payment processors could make our pricing less
competitive, increase our operating costs, and reduce our operating income, which could materially harm our business,
financial condition, and results of operations.
In some jurisdictions, government regulations have required payment card networks to reduce or cap interchange fees.
Any changes in interchange fee rates or limitations, or their applicability to PayPal, could adversely affect our competitive
position against payment card service providers and the revenue we earn from our branded card programs, require us to
change our business practices, and harm our business.
We may also be subject to fines and other penalties assessed by networks resulting from any rule violations by us or our
merchants. The networks set and interpret their rules, and have alleged from time to time that various aspects of our
business model violate these rules, or our agreements with the networks. Such allegations may result in significant fines,
penalties, damages, or other liabilities, adversely impact benefits to us under the agreements, or require changes in our
business practices that may be costly and adversely affect our business, results of operations and financial condition. The
network rules may also increase the cost of, impose restrictions on, or otherwise impact the development of, our products
which may negatively affect product deployment and adoption. The networks could adopt new operating rules or interpret
or re-interpret existing rules that we or our payment processors might find difficult or impractical to follow, or costly to
implement, which could require us to make significant changes to our products, increase our operational costs, and
negatively impact our business. If we become unable or limited in our ability to accept certain payment types such as debit
or credit cards, our business would be materially and adversely affected.
Changes in how consumers fund their PayPal transactions could harm our business.
We pay transaction fees when consumers fund payment transactions using credit cards, lower fees when consumers fund
payments with debit cards, and nominal fees when consumers fund payment transactions by electronic transfer of funds
from bank accounts, from an existing PayPal account balance or Venmo account balance, or through our PayPal branded
• 2024 Annual Report
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consumer credit products. Our financial performance is sensitive to changes in the rate at which our consumers fund
payments using payment cards, which can significantly increase our costs. Although we provide consumers in certain
markets with the opportunity to use their existing PayPal account balance or Venmo account balance to fund payment
transactions, some of our consumers may prefer to use payment cards, which may offer features and benefits not provided
as part of their PayPal accounts. Any increase in the portion of our payment volume funded using payment cards or in fees
associated with our funding mix, or other events or developments that make it more difficult or costly for us to fund
transactions with lower-cost funding options, could materially and adversely affect our financial performance and
significantly harm our business.
Our credit products expose us to additional risks.
We offer credit products to a wide range of consumers and merchants in the U.S. and various international markets. The
financial success of these products depends largely on the effective management of related risk. The credit decision-
making process for our consumer credit products uses proprietary methodologies and credit algorithms and other
analytical techniques designed to analyze the credit risk of specific consumers based on, among other factors, their past
purchase and transaction history with PayPal or Venmo and their credit scores. Similarly, proprietary risk models and other
indicators are applied to assess merchants who desire to use our merchant financing offerings to help predict their ability to
repay. These risk models may not accurately predict the creditworthiness of a consumer or merchant due to inaccurate
assumptions, including those related to the particular consumer or merchant, market conditions, economic environment, or
limited transaction history or other data. The accuracy of these risk models and the ability to manage credit risk related to
our credit products may also be affected by legal or regulatory requirements, changes in consumer behavior, changes in
the economic environment, issuing bank policies, and other factors.
We generally rely on the activities and charters of unaffiliated financial institutions to provide PayPal and Venmo branded
consumer credit and merchant financing offerings to our U.S. customers. As a service provider to these unaffiliated financial
institutions, which are federally supervised U.S. financial institutions, we are subject from time to time to examination by
their federal banking regulators. In the event of any termination or interruption in a partner bank’s ability or willingness to
lend, our ability to offer consumer credit and merchant financing products could be interrupted or limited, which could
materially and adversely affect our business. We may be unable to reach a similar arrangement with another unaffiliated
financial institution on favorable terms or at all. Obtaining and maintaining the lending licenses required for us to originate
such loans ourselves would be a costly, time-consuming and uncertain process, and would subject us to additional laws
and regulatory requirements, which could significantly increase our costs and compliance obligations and require us to
change our business practices.
Merchant loans under our U.S. PayPal Working Capital (“PPWC”) and PayPal Business Loan (“PPBL”) products and certain
U.S. installment loan products are provided by a state-chartered industrial bank under a program agreement with us, and
we acquire the receivables generated by those loans from the state-chartered bank after origination. In June 2020, the
Federal Deposit Insurance Corporation (“FDIC”) approved a final rule clarifying that loans validly originated by state-
chartered banks or insured branches of foreign banks remain valid throughout the lifetime of the loan, reflecting a similar
rule finalized by the Office of the Comptroller of Currency (“OCC”) in May 2020 for nationally chartered banks. The final rule
reaffirms and codifies the so-called “valid-when-made doctrine,” which provides that the permissibility of an interest rate
for a loan is determined when the loan is made and will not be affected by subsequent events such as sale, assignment, or
other transfer. While a number of state attorneys general have unsuccessfully challenged these FDIC and OCC rules, there
remains some uncertainty whether non-bank entities purchasing loan receivables originated by FDIC-insured, state-
chartered banks may rely on federal preemption of state usury laws and other state laws. An adverse outcome of these or
similar challenges, or changes to applicable laws and regulations or regulatory policy, could materially impact our U.S.
PPWC, PPBL, certain installment products, and our business.
We are subject to the risk that account holders who use our credit products will default on their payment obligations. The
non-payment rate among account holders may increase due to, among other factors, changes to underwriting standards,
risk models not accurately predicting the creditworthiness of a user, worsening economic conditions, such as a recession
or government austerity programs, increases in prevailing interest rates, and high unemployment rates. Account holders
who miss payments often fail to repay their loans, and account holders who file for protection under the bankruptcy laws
generally do not repay their loans. Any deterioration in the performance of loans facilitated through our platform or
unexpected losses on such loans may increase the risk of potential charge-offs, increase our allowance for loans and
interest receivable, negatively impact our revenue share arrangement with an independent chartered financial institution
with respect to our U.S. consumer credit products, and materially and adversely affect our financial condition and results of
operations.
We currently purchase receivables related to our U.S. PayPal-branded merchant financing offerings and certain U.S.
consumer installment loan products and extend credit for our consumer and merchant products outside the U.S. through
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our international subsidiaries. In June 2023, we entered into a multi-year agreement to sell up to €40 billion of U.K. and
European buy now, pay later (“BNPL”) loan receivables originated by PayPal (Europe) and PayPal U.K., consisting of the sale
of a substantial majority of the U.K. and European BNPL loan portfolio held on PayPal (Europe)’s balance sheet at the closing
of the transaction and a forward-flow arrangement for the sale of future originations of eligible loans, and in October 2023,
we began selling those receivables. The sale of future eligible receivables is subject to certain conditions. If these
conditions are not satisfied or waived or if the parties are unable to fulfill their obligations under these arrangements, the
sale of these receivables could be delayed and we may not realize the expected benefits of this arrangement.
From time to time, we may consider other third-party sources of funding (including asset sales, warehouse facilities,
forward-flow arrangements, securitizations, partnerships or other funding structures) for our credit portfolio or other
receivables. The availability of such third-party funding is subject to a number of factors, including economic conditions
and interest rates, and there can be no assurance that any such funding arrangements can be obtained on favorable terms
or at all. If we are unable to fund our credit products or the purchase of the receivables related to our credit products and
offerings adequately or in a cost-effective manner, the growth of our credit products and our results of operations and
financial condition could be materially and adversely impacted.
We rely on third parties in many aspects of our business, which creates additional risk.
We rely on third parties in many aspects of our business, including networks, banks, payment processors, and payment
gateways that link us to the payment card and bank clearing networks to process transactions; unaffiliated third-party
lenders to originate our U.S. credit products to consumers, U.S. merchant financing, and branded credit card products;
branded debit card and savings products issued by unaffiliated banks; cryptocurrency custodial service providers; and
external business partners and contractors who provide key functions (e.g., outsourced customer support and product
development functions; facilities; information technology, data center facilities and cloud computing). We are subject to
additional risks inherent in engaging and relying upon third-party providers, including legal, regulatory, information security,
reputational and operational risks. We are undertaking efforts to diversify our reliance on a small number of third-party
payment processors in various markets. We are working with our primary payment processor in the U.S. to facilitate the
migration of our arrangements to other payment processors over a transition period in connection with the wind-down of
our agreement; however, if we are unable to timely and efficiently migrate our business to other payment processors or
experience disruptions in connection with this transition, our business could be harmed. If we are unable to effectively
manage our third-party relationships, these third parties are unable to meet their obligations to us, or we experience
substantial disruptions in these relationships, our operations, results of operations, and financial results could be adversely
impacted. Additionally, our relationships with third parties inherently involve a lesser degree of control over business
operations, governance, and compliance, which potentially increases our financial, legal, reputational, and operational risk.
Any factors that reduce cross-border trade or make such trade more difficult could harm our
business.
Cross-border trade (i.e., transactions where the merchant and consumer are in different countries) is an important source of
our revenues and profits. Cross-border transactions generally provide higher revenues and operating income than similar
transactions that take place within a single country or market. In certain markets, cross-border trade represents our primary
(and in some instances our only) presence.
Cross-border trade may be negatively impacted by various factors including foreign currency exchange rate fluctuations,
tariffs, trade barriers or restrictions, sanctions, import or export controls, and the interpretation and application of laws of
multiple jurisdictions in the context of cross-border trade and foreign exchange. Any factors that increase the costs of
cross-border trade for us or our customers or that restrict, delay, or make cross-border trade more difficult or impractical
could reduce our cross-border transactions and volume, negatively impact our revenues and profits, and harm our
business.
Failure to deal effectively with fraud, abusive behaviors, bad transactions, and negative customer
experiences may increase our loss rate and could negatively impact our business and severely
diminish merchant and consumer confidence in and use of our services.
We expect that third parties will continue to attempt to abuse access to and misuse our payments services to commit fraud
by, among other things, creating fictitious PayPal accounts using stolen or synthetic identities or personal information,
making transactions with stolen financial instruments, abusing or misusing our services for financial gain, or fraudulently
inducing users of our systems into engaging in fraudulent transactions. Due to the nature of PayPal’s digital payments
services, third parties may seek to engage in abusive schemes or fraud attacks that are often difficult to detect and may be
deployed at a scale that would otherwise not be possible in physical transactions. Measures to detect and reduce the risk
of fraud and abusive behavior are complex, require continuous improvement, and may not be effective in detecting and
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preventing fraud, particularly new and continually evolving forms of fraud or in connection with new or expanded product
offerings. If these measures are not effective, our business could be negatively impacted. We also incur substantial losses
from erroneous transactions and situations where funding instruments used for legitimate transactions are closed or have
insufficient funds to satisfy payments, or the payment is initiated to an unintended recipient in error. Numerous and evolving
fraud schemes and misuse of our payments services could subject us to significant costs and liabilities, require us to
change our business practices, cause us to incur significant remediation costs, lead to loss of customer confidence in, or
decreased use of, our products and services, damage our reputation and brands, divert the attention of management from
the operation of our business, and result in significant compensation or contractual penalties from us to our customers and
their business partners as a result of losses or claims. While we actively seek to recover transaction losses where possible,
such recoveries may be insufficient to compensate us for such losses.
Our Purchase and Seller Protection Programs (“protection programs”) are intended to reduce the likelihood of losses for
consumers and merchants from unauthorized and fraudulent transactions. Our Purchase Protection Program also protects
consumers who do not receive the item ordered or who receive an item that is significantly different from its description.
We incur substantial losses from our protection programs as a result of disputes filed by our customers. We seek to recover
losses from our protection programs from the merchant, but may not be able to fully recover our losses (for example, if the
merchant is unwilling or unable to pay, the transaction involves a fraudulent merchant, or the merchant provides sufficient
evidence that the item was delivered).
In addition, consumers who pay through PayPal or Venmo may have reimbursement rights from their payment card issuer,
which in turn will seek recovery from us. If losses incurred by us related to payment card transactions become excessive,
we could lose the ability to accept payment cards for payment, which would negatively impact our business. Regulators
and card networks may also adapt error resolution and chargeback requirements to account for evolving forms of fraud,
which could increase PayPal’s exposure to fraud losses and impact the scope of coverage of our protection programs.
Increases in our loss rate,
including as a result of changes to the scope of transactions covered by our protection
programs, could negatively impact our business. See “Note 13—Commitments and Contingencies—Protection Programs”
to our consolidated financial statements.
Failure to effectively monitor and evaluate the financial condition of our merchants may expose PayPal to losses. In the
event of the bankruptcy, insolvency, business failure, or other business interruption of a merchant that sells goods or
services in advance of the date of their delivery or use (e.g., airline, cruise, or concert tickets, custom-made goods, and
subscriptions), we could be liable to the buyers of such goods or services, including through our Purchase Protection
Program or through chargebacks on payment cards used by customers to fund their purchase. Allowances for transaction
losses that we have established may be insufficient to cover incurred losses.
Use of our payments services for illegal activities or improper purposes could harm our business.
We expect that users will continue to attempt to use our payments platform for illegal activities or improper uses, including
money laundering, terrorist financing, sanctions evasion, illegal online gambling, fraudulent sales of goods or services,
illegal telemarketing activities,
illegal sales of prescription medications or controlled substances, piracy of software,
movies, music, and other copyrighted, trademarked or digital goods, bank fraud, child pornography, human trafficking,
prohibited sales of alcoholic beverages or tobacco products, securities fraud, pyramid or Ponzi schemes, or the facilitation
of other illegal or improper activity. Moreover, certain activity that may be legal in one jurisdiction may be illegal in another
jurisdiction, and a merchant may be found responsible for intentionally or inadvertently importing or exporting illegal goods,
resulting in liability for us. Owners of intellectual property rights or government authorities may seek to bring legal action
against providers of payments solutions, including PayPal, that are peripherally involved in the sale of infringing or allegedly
infringing items by a user. While we invest in measures intended to prevent and detect illegal activities that may occur on
our payments platform, these measures require continuous improvement and may not be effective in detecting and
preventing illegal activity or improper uses.
Any illegal or improper uses of our payments platform or failure by us to detect or prevent illegal or improper activity by our
users may subject us to claims, individual and class action lawsuits, and government and regulatory requests, inquiries, or
investigations that could result in liability, restrict our operations,
impose additional restrictions or limitations on our
business or require us to change our business practices, harm our reputation, increase our costs, and negatively impact our
business.
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Acquisitions, dispositions, strategic investments, and other strategic transactions could result in
operating difficulties and could harm our business.
We expect to continue to consider and evaluate a wide array of potential strategic transactions as part of our overall
business strategy, including business combinations, acquisitions, and dispositions of certain businesses, technologies,
services, products, and other assets; strategic investments; and commercial and strategic partnerships (collectively,
“strategic transactions”). At any given time, we may be engaged in discussions or negotiations with respect to one or more
strategic transactions, any of which could, individually or in the aggregate, be material to our financial condition and results
in identifying, negotiating, consummating and
of operations. There can be no assurance that we will be successful
integrating transaction opportunities. Strategic transactions may involve additional significant challenges, uncertainties, and
risks, including challenges of obtaining regulatory or other approvals, integrating new employees, products, systems,
technologies, operations, and business cultures; challenges associated with operating acquired businesses in markets or
business areas in which we may have limited or no experience; disruption of our ongoing operations and diversion of our
management’s attention; inadequate data security, cybersecurity, or operational and information technology resilience;
failure to identify, or our underestimation of, commitments, liabilities, deficiencies and other risks associated with acquired
businesses or assets; potential exposure to new or incremental risks associated with acquired businesses and entities,
strategic investments or other strategic transactions,
including potential new or increased regulatory oversight and
uncertain or evolving legal, regulatory, and compliance requirements, particularly with respect to companies in new or
developing businesses or
including
disruption to other parts of our business, potential loss of employees or customers, the transfer of technology and/or
certain intellectual property rights to third-party purchasers, or exposure to unanticipated liabilities or ongoing obligations
to us following any such dispositions; failure of the transaction to advance our business strategy or for its anticipated
benefits to materialize; potential impairment of goodwill or other acquisition-related intangible assets; and the potential for
our acquisitions to result in dilutive issuances of our equity securities or the incurrence of significant additional debt.
Strategic transactions are inherently risky, may not be successful, and may harm our business, results of operations, and
financial condition.
industries; challenges associated with dispositions of business or operations,
Strategic investments in which we have a minority ownership stake inherently involve a lesser degree of influence over
business operations. The success of our strategic investments may be dependent on controlling shareholders,
management, or other persons or entities that may have business interests, strategies, or goals that are inconsistent with
ours. Business decisions or other actions or omissions of the controlling shareholders, management, or other persons or
entities who control companies in which we invest may adversely affect the value of our investment, result in litigation or
regulatory action against us, and damage our reputation.
Our international operations subject us to increased risks, which could harm our business.
Our international operations generate a significant portion of our net revenues. Our international operations subject us to
significant challenges, uncertainties, and risks, including local regulatory, licensing, reporting, and legal obligations; costs
and challenges associated with operating in markets in which we may have limited or no experience, including effectively
localizing our products and services and adapting them to local preferences; difficulties in developing, staffing, and
simultaneously managing a large number of varying foreign operations as a result of distance, language, and cultural
differences and in light of varying laws, regulations, and customs; differing employment practices and the existence of
works councils; difficulties in recruiting and retaining qualified employees and maintaining our company culture;
fluctuations in foreign currency exchange rates; exchange control regulations; profit repatriation restrictions; potential
tariffs, sanctions, fines, or other trade barriers or restrictions; import or export regulations; compliance with U.S. and foreign
anti-bribery, anti-corruption, sanctions, anti-money laundering and counter-terrorist financing laws and regulations; the
interpretation and application of laws of multiple jurisdictions; and national or regional political, economic, or social
instability.
Our international operations also may heighten many of the other risks described in this “Risk Factors” section. Any
violations of the complex foreign and U.S. laws, rules and regulations that may apply to our international operations may
result in lawsuits, enforcement actions, criminal actions, or sanctions against us and, our directors, officers, and employees;
prohibit or require us to change our business practices; and damage our reputation. Although we have implemented
policies and procedures designed to promote compliance with these laws, there can be no assurance that our employees,
contractors, or agents will not violate our policies. These risks are inherent in our international operations, may increase our
costs of doing business internationally, and could materially and adversely affect our business.
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Global and regional economic conditions could harm our business.
inflationary pressures, supply chain issues,
Adverse global and regional economic conditions such as turmoil affecting the banking system or financial markets,
including, but not limited to, tightening in the credit markets, extreme volatility or distress in the financial markets (including
the fixed income, credit, currency, equity, and commodity markets), higher unemployment, high consumer debt levels,
recessionary or
reduced consumer confidence or economic activity,
government fiscal, monetary and tax policies, U.S. and international trade relationships, agreements, treaties, tariffs and
restrictive actions, the inability of a government to enact a budget in a fiscal year, government shutdowns, government
austerity programs, and other negative financial news or macroeconomic developments could have a material adverse
impact on the demand for our products and services, including a reduction in the volume and size of transactions on our
payments platform. Additionally, any inability to access the capital markets when needed due to volatility or illiquidity in the
markets or increased regulatory liquidity and capital requirements may strain our liquidity position. Such conditions may
also expose us to fluctuations in foreign currency exchange rates or interest rates that could materially and adversely affect
our financial results.
If our reputation or our brands are damaged, our business and operating results may be harmed.
Our reputation and brands are globally recognized, important to our business, and affect our ability to attract and retain our
customers. There are numerous ways our reputation or brands could be damaged. We may experience scrutiny or criticism
from customers, partners, employees, government entities, media, advocacy groups, and other influencers or stakeholders
that disagree with, among other things, our product offering decisions or public policy positions. Damage to our reputation
or our brands may result from, among other things, new features, products, services, operational efforts, or terms of service
(or changes to the same), or our decisions regarding user privacy, data practices, or information security. The proliferation
of social media may increase and compound the likelihood, speed, magnitude, and unpredictability of negative brand
events. If our brands or reputation are damaged, our business and operating results may be adversely impacted.
Real or perceived inaccuracies in our key metrics may harm our reputation and negatively affect our
business.
Our key metrics are calculated using internal company data based on the activity we measure on our payments platform
and compiled from multiple systems,
including systems that are internally developed or acquired through business
combinations. While the measurement of our key metrics is based on what we believe to be reasonable methodologies
and estimates, there are inherent challenges and limitations in measuring our key metrics globally at scale. The
methodologies used to calculate our key metrics require significant judgment.
We regularly review our processes for calculating these key metrics, and from time to time we may make adjustments to
improve the accuracy or relevance of our metrics. For example, we continuously apply models, processes and practices
designed to detect and prevent fraudulent account creation on our platforms, and work to improve and enhance those
capabilities. When we detect a significant volume of illegitimate activity, we generally remove the activity identified from
our key metrics. Although such adjustments may impact key metrics reported in prior periods, we generally do not update
previously reported key metrics to reflect these subsequent adjustments unless the retrospective impact of process
improvements or enhancements is determined by management to be material. Further, as our business develops, we may
revise or cease reporting metrics if we determine that such metrics are no longer appropriate measures of our
performance. If investors, analysts, or customers do not consider our reported measures to be sufficient or to accurately
reflect our business, we may receive negative publicity, our reputation may be harmed, and our business may be adversely
impacted.
Environmental, social and governance (“ESG”) issues may have an adverse effect on our business,
financial condition and results of operations and damage our reputation.
Investors, customers, employees, regulators, legislators and other stakeholders are increasingly focused on ESG matters
and related disclosures, including with respect to cybersecurity, data privacy and protection, global talent and climate. If
we are unable to comply with new laws and regulations or changes to legal or regulatory requirements concerning ESG
matters, or fail to meet investor, industry or stakeholder expectations and standards, our reputation may be harmed,
customers may choose to refrain from using our products and services, we may be subject to fines, penalties, regulatory or
other enforcement actions, and our business or financial condition may be adversely affected. We may also experience
additional scrutiny or criticism from investors, customers, partners, media, government entities, and other stakeholders if
they perceive PayPal to not have acted appropriately with respect to ESG matters. If our ESG-related data, processes and
reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to ESG-related goals on a timely basis,
or at all, our reputation, business, financial performance and growth could be adversely affected.
We specifically recognize the inherent physical climate-related risks where we conduct business. Our primary locations
may be vulnerable to the adverse effects of climate change. For example, California, where our headquarters are located,
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• 2024 Annual Report
PART I
Item 1A. Risk Factors
has historically experienced, and is projected to continue to experience, extreme weather and natural disaster events more
frequently, including drought, water scarcity, flooding, heat waves, wildfires and resultant air quality impacts, and power
shutoffs associated with wildfire prevention. Such events may disrupt our business and may cause us to experience
additional costs to maintain or resume operations and higher attrition.
If one or more of our counterparty financial institutions default on their financial or performance
obligations to us or fail, we may incur significant losses.
We have significant amounts of cash, cash equivalents, receivables outstanding, and other investments on deposit or in
accounts with banks or other financial institutions in the U.S. and international jurisdictions. As part of our foreign currency
hedging activities, we regularly enter into transactions involving derivative financial
instruments with various financial
institutions. Certain banks and other financial institutions are also lenders under our credit facilities. We regularly monitor our
concentration of, and exposure to counterparty risk, and actively manage this exposure to mitigate the associated risk.
Despite these efforts, we may be exposed to the risk of default on obligations by, or deteriorating operating results or
financial condition or failure of, these counterparty financial institutions. If one of our counterparty financial institutions were
to become insolvent, placed into receivership, or file for bankruptcy, our ability to recover losses incurred as a result of
default or to access or recover our assets that are deposited, held in accounts with, or otherwise due from, such
counterparty may be limited due to the insufficiency of the failed institutions’ estate to satisfy all claims in full or the
applicable laws or regulations governing the insolvency, bankruptcy, or resolution proceedings. In the event of default on
obligations by, or the failure of, one or more of these counterparties, we could incur significant losses, which could
negatively impact our results of operations and financial condition.
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If we are unable, or perceived as unable, to effectively manage customer funds, our business could
be harmed.
We hold a substantial amount of funds belonging to our customers, including balances in customer accounts and funds
being remitted to sellers of goods and services or recipients of person-to-person transactions. In certain jurisdictions where
we operate, we are required to comply with applicable regulatory requirements with respect to customer balances. Our
success is reliant on public confidence in our ability to effectively manage our customers’ balances and handle substantial
transaction volumes and amounts of customer funds. Any failure to manage customer funds in compliance with applicable
regulatory requirements, or any public loss of confidence in us or our ability to effectively manage customer balances,
could lead customers to discontinue or reduce their use of our products or reduce customer balances held with us, which
could significantly harm our business.
There are risks associated with our indebtedness.
We have incurred indebtedness, and we may incur additional indebtedness in the future. Our ability to pay interest and
repay the principal for our indebtedness is dependent upon our ability to manage our business operations and generate
sufficient cash flows to service such debt. Our outstanding indebtedness and any additional indebtedness we incur may
have significant consequences, including the need to use a significant portion of our cash flow from operations and other
available cash to service our indebtedness, thereby reducing the funds available for other purposes, including capital
expenditures, acquisitions, strategic investments, and share repurchases; the reduction of our flexibility in planning for or
reacting to changes in our business, competitive pressures and market conditions; and limits on our ability to obtain
additional financing for working capital, capital expenditures, acquisitions, strategic investments, share repurchases, or
other general corporate purposes.
Our revolving credit facilities and the indentures for our senior unsecured notes pursuant to which certain of our
outstanding debt securities were issued contain financial and other covenants that restrict or could restrict, among other
things, our business and operations. If we fail to pay amounts due under a debt instrument or breach any of its covenants,
the lenders or noteholders would typically have the right to demand immediate repayment of all borrowings thereunder
(subject in certain cases to a grace or cure period). Moreover, any such acceleration and required repayment of, or default
in respect of, our indebtedness could, in turn, constitute an event of default under other debt instruments, thereby resulting
in the acceleration and required repayment of our indebtedness. Any of these events could materially adversely affect our
liquidity and financial condition.
Changes by any rating agency to our outlook or credit rating could negatively affect the value of both our debt and equity
securities and increase our borrowing costs. If our credit ratings are downgraded or other negative action is taken, the
interest rates payable by us under our indebtedness may increase, and our ability to obtain additional financing in the future
on favorable terms or at all could be adversely affected.
• 2024 Annual Report
27
PART I
Item 1A. Risk Factors
Changes in tax laws, exposure to unanticipated additional tax liabilities, or implementation of
reporting or record-keeping obligations could have a material adverse effect on our business.
An increasing number of U.S. states, the U.S. federal government, and governments of foreign jurisdictions, such as the EU
Commission, as well as international organizations, such as the Organization for Economic Co-operation and Development
(“OECD”), are focused on tax reform and other legislative or regulatory action to increase tax revenue. For example, various
countries have proposed or enacted digital services taxes and global minimum tax provisions under the Pillar Two OECD
model rules. These actions may materially and adversely affect our effective tax rate, net income, and cash flows.
The determination of our worldwide provision for income taxes and other tax liabilities requires estimation and significant
judgment, and there are many transactions and calculations for which the ultimate tax determination is uncertain. We are
currently undergoing a number of investigations, audits, and reviews by tax authorities in multiple U.S. and foreign tax
jurisdictions. Any adverse outcome of any such audit or review could result in unforeseen tax-related liabilities that differ
from the amounts recorded in our financial statements, which may, individually or in the aggregate, materially affect our
financial results in the periods for which such determination is made. While we have established reserves based on
assumptions and estimates that we believe are reasonable to cover such eventualities, these reserves may prove to be
insufficient.
In addition, our future income taxes could be adversely affected by the incurrence of losses or earnings being lower than
anticipated in jurisdictions that have lower statutory tax rates, and earnings being higher than anticipated in jurisdictions that
have higher statutory tax rates; by changes in the valuation of our deferred tax assets and liabilities, including as a result of
gains on our foreign currency exchange risk management program; by changes in tax laws, regulations, or accounting
principles; or by certain discrete items.
A number of U.S. states, the U.S. federal government, and foreign jurisdictions have implemented and may impose
reporting or record-keeping obligations on companies that engage in or facilitate e-commerce to improve tax compliance.
A number of jurisdictions are also reviewing whether payment service providers and other intermediaries could be deemed
to be the legal agent of merchants for certain tax purposes. We have modified our systems to meet applicable
requirements and expect that further modifications will be required to comply with future requirements, which may
negatively impact our customer experience and increase operational costs. Any failure by us to comply with these and
similar reporting and record-keeping obligations could result in substantial monetary penalties and other sanctions,
adversely impact our ability to do business in certain jurisdictions, and harm our business.
We may be unable to attract, retain, and develop the highly skilled employees we need to support
our business.
Competition for key and other highly skilled personnel is intense, especially for executive talent, software engineers, and
other technology talent. We may be limited in our ability to recruit or hire internationally, including due to restrictive laws or
policies on immigration, travel, or availability of visas for skilled workers. The loss of the services of any of our key
personnel, or our inability to attract, hire, develop, motivate and retain key and other highly qualified and diverse talent,
whether in a remote or in-office environment, or protect the safety, health and productivity of our workforce could harm our
overall business and results of operations.
We are subject to risks associated with information disseminated through our products and
services.
We may be subject to claims relating to information disseminated through our online services, including claims alleging
defamation, libel, harassment, hate speech, breach of contract, invasion of privacy, negligence, copyright or trademark
infringement, or other theories based on the nature and content of the materials disseminated through the services, among
other things. We invest in measures intended to detect and block activities that may occur on our payments platform in
violation of our policies and applicable laws. These measures require continuous improvement and may not be sufficiently
effective in detecting and preventing the exchange of information in violation of our policies and applicable laws. If these
measures are not sufficiently effective, our business could be negatively impacted. If the laws or regulations that provide
protections for online dissemination of information are invalidated or are modified to reduce protections available to us and
we become liable for information provided by our customers and carried on our products and services, we could be
including expending
directly harmed and we may be forced to implement new measures to reduce our exposure,
substantial resources or discontinuing certain product or service offerings, which could harm our business.
Item 1B. Unresolved Staff Comments
None.
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• 2024 Annual Report
PART I
Item 1C. Cybersecurity
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Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
Our Information Security Program is designed to support the Company in identifying, protecting, detecting, responding to,
and recovering from cybersecurity threats and incidents (collectively, “cybersecurity risks”) with the intention to protect the
confidentiality, integrity, and availability of our critical systems and information.
We design and regularly assess our Information Security Program guided by National Institute of Standards and Technology
Cybersecurity Framework (NIST CSF) and ISO standards (including ISO 27001), proprietary controls and industry best
practices.
Our Information Security Program is built on a three lines of defense model integrated into our overall Enterprise Risk and
It shares common methodologies, reporting channels, and
Compliance Management Program (“ERCM Program”).
governance processes that apply across the ERCM Program to other legal, compliance, strategic, operational, and financial
risk areas. The Program is governed by the Technology, Information Security, and Privacy Risk Management Committee and
overseen by our Board of Directors (“Board”) and its Audit, Risk and Compliance Committee (“ARC Committee”).
The three lines of defense model is designed to provide a structure for risk accountability in the first line of defense
(“FLOD”), effective challenge by the second line of defense (“SLOD”), and independent risk assurance by the third line of
defense (“TLOD”). Our Office of the Chief Information Security Officer serves as FLOD and provides operational and
technical controls and capabilities to protect against cybersecurity risks. The Technology and Information Security team
serves as SLOD and provides independent oversight of our technology and cybersecurity risk mitigation practices and
capabilities. As TLOD, Internal Audit independently assesses the effectiveness of our first and second line of defense
organizations in managing cybersecurity risk and independently reports the results of audits to our ARC Committee to
assist it in its oversight duties.
Our Information Security Program includes:
• Risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products,
services, and our broader enterprise Information Technology (“IT”) environment;
• Regular testing of our systems to identify and address potential vulnerabilities;
• Integrated planning and preparedness activities supporting business continuity and operational resiliency;
• Security teams principally responsible for managing (1) our annual cybersecurity risk assessment processes, (2) our
security controls, and (3) our response to cybersecurity incidents;
• A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents;
• 24/7 monitoring and measurement of cybersecurity threats through our PayPal Cyber Defense Center (“CDC”);
• The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security
controls;
• An information training and awareness program for our employees, contractors, incident response personnel, and
senior management; and
• A third-party risk management framework designed to monitor and address risks from cybersecurity incidents of service
providers, suppliers, and vendors that includes due diligence over third-party’s information security and technology
control environment at onboarding and periodically throughout the lifecycle of the relationship. In addition, our standard
contractual terms require notification and communication from third parties in the event of a cybersecurity incident. We
maintain procedures to respond to, manage and mitigate third-party cybersecurity events and vulnerabilities when
identified.
For a description of risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that
have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results
of operations, or
the captions “Cyberattacks and security
vulnerabilities could result in serious harm to our reputation, business, and financial condition” and “Business interruptions
or systems failures may impair the availability of our websites, applications, products or services, or otherwise harm our
business.”
financial condition, see “Item 1A. Risk Factors” under
• 2024 Annual Report
29
PART I
Item 1C. Cybersecurity
Cybersecurity Governance
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to our ARC Committee
oversight of cybersecurity and other information technology risks. The ARC Committee oversees PayPal’s overall risk
framework, including management’s implementation of our cybersecurity risk management program, and reports to the full
Board of Directors on a regular basis on cybersecurity and information technology risk management.
The ARC Committee receives periodic reports from the Chief Information Security Officer (“CISO”) on our cybersecurity
risks. Our CISO has numerous years of experience at PayPal and other organizations building security products, managing
security infrastructure, providing a variety of security services, and overseeing incident response and management,
escalation of security events, vulnerability scanning, and security defect management. Management also updates the ARC
Committee, as necessary, regarding cybersecurity incidents.
The ARC Committee reports to the Board regarding its activities, including those related to cybersecurity risk oversight. The
Board also receives briefings at least annually from management on our Information Security Program. Board members
receive presentations on cybersecurity topics from our CISO and external experts from time to time as part of our
continuing education to Board on topics relevant to their service as a member of our Board.
Our cybersecurity teams, overseen by our CISO, are responsible for assessing and managing our risks from cybersecurity
threats, including defining security policy and board reporting of security risk. The CISO approves all security policies and
oversees the identification, assessment, and management of cybersecurity risks, which provides a proactive and
comprehensive approach to safeguarding our information assets. The teams have primary responsibility for our overall
Information Security Program and supervise both our internal cybersecurity personnel and our external cybersecurity
consultants. Our cybersecurity teams’ experience includes cybersecurity incident response, in-depth security assessments
and security emulation exercises to evaluate security profile, security research, education and outreach, and security tool
development.
Our cybersecurity teams, in coordination with the CDC, supervise efforts to prevent, detect, mitigate, and remediate
cybersecurity threats and incidents through the operation of our incident response plan and various other means, which
may include briefings from internal security personnel,
information obtained from
governmental, public or private sources, including external consultants engaged by us, as well as alerts and reports
produced by security tools deployed in the IT environment. The CDC team oversees, identifies, and addresses security
threats aimed at safeguarding PayPal employees, consumers, and merchants.
intelligence and other
threat
Our CISO organization is responsible for independently identifying, measuring, monitoring, controlling and reporting
aggregate risks and for setting policies for the management and oversight of risk. The organization monitors cyber
regulation requirements, reviews impacts of new products and initiatives, conduct reviews of cyber assessments and
testing activities and provides effective challenge to the FLOD risk management activities.
Item 2. Properties
We own and lease various properties in the United States (“U.S.”) and other countries around the world. We use these
properties for executive and administrative offices, customer services and operations centers, product development
offices, and data centers. As of December 31, 2023, our owned and leased properties provided us with aggregate square
footage as follows:
Owned facilities
Leased facilities
TOTAL FACILITIES
United States Other Countries
Total
(In millions)
0.7
1.3
2.0
0.2
1.6
1.8
0.9
2.9
3.8
We own a total of approximately 70 acres of land, with approximately 49 acres in the U.S. Our corporate headquarters are
located in San Jose, California and occupy approximately 0.7 million of owned square feet.
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• 2024 Annual Report
Item 3. Legal Proceedings
The information set forth under “Note 13—Commitments and Contingencies—Litigation and Regulatory Matters” to the
consolidated financial statements included in Part IV, Item 15 of this Form 10-K is incorporated herein by reference.
PART I
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Not applicable.
Part II
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters,
and Issuer Purchases of Equity Securities
Common Stock
PayPal common stock is quoted on the NASDAQ Global Select Market under the ticker symbol “PYPL.”
As of February 1, 2024, there were 3,942 holders of record of our common stock. The actual number of stockholders is
significantly greater than this number of record holders, and includes stockholders who are beneficial owners but whose
shares are held in street name by brokers and other nominees.
Dividend Policy
We have never paid any cash dividends and we currently do not anticipate paying any cash dividends in the foreseeable
future.
Stock Repurchase Activity
In June 2022, our Board of Directors authorized a stock repurchase program that provides for the repurchase of up to
$15 billion of our common stock, with no expiration from the date of authorization. Our stock repurchase program is
intended to offset the impact of dilution from our equity compensation programs and, subject to market conditions and
other factors, may also be used to make opportunistic repurchases of our common stock to reduce outstanding share
count. Any share repurchases under our stock repurchase program may be made through open market transactions, block
trades, privately negotiated transactions, including accelerated share repurchase agreements or other means at times and
in such amounts as management deems appropriate, and will be funded from our working capital or other financing
alternatives. Moreover, any stock repurchases are subject to market conditions and other uncertainties and we cannot
predict if or when any stock repurchases will be made. We may terminate our stock repurchase program at any time
without prior notice.
The stock repurchase activity under our stock repurchase program during the three months ended December 31, 2023 is
summarized as follows:
Total number
of shares
purchased
Average price
paid per share(1)
Total number of
shares purchased
as part of publicly
announced plans or
programs
Approximate dollar
value of shares
that may yet be
purchased under the
plans or programs
(In millions, except per share amounts)
Balance as of September 30, 2023
October 1, 2023 through October 31, 2023
November 1, 2023 through November 30, 2023
December 1, 2023 through December 31, 2023
BALANCE AS OF DECEMBER 31, 2023
1.8
1.9
6.4
10.1
$ 58.13
$ 57.45
$ 60.37
(1) Average price paid per share for open market purchases includes broker commissions, but excludes excise tax.
1.8
1.9
6.4
10.1
$ 11,466
11,359
11,247
10,859
$ 10,859
• 2024 Annual Report
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PART II
item 6. [Reserved]
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
You should read the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
conjunction with the audited consolidated financial statements and the related notes that appear in this report. Unless
otherwise expressly stated or the context otherwise requires, references to “we,” “our,” “us,” “the Company,” and “PayPal”
refer to PayPal Holdings, Inc. and its consolidated subsidiaries.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on a discussion of
2023 results as compared to 2022 results. For a discussion of 2022 results as compared to 2021 results, see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Form 10-K for the year
ended December 31, 2022 filed with the SEC on February 10, 2023.
Business Environment
The Company
We are a leading technology platform that enables digital payments and simplifies commerce experiences on behalf of
merchants and consumers worldwide. PayPal
is committed to democratizing financial services to help improve the
financial health of individuals and to increase economic opportunity for entrepreneurs and businesses of all sizes around
the world. Our goal is to enable our merchants and consumers to manage and move their money anywhere in the world in
the markets we serve, anytime, on any platform, and using any device when sending payments or getting paid, including
person-to-person payments.
Regulatory Environment
We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators
globally on all aspects of the payments industry, including countering terrorist financing, anti-money laundering, privacy,
cybersecurity, and consumer protection. The laws and regulations applicable to us, including those enacted prior to the
advent of digital payments, continue to evolve through legislative and regulatory action and judicial interpretation. New or
changing laws and regulations, including changes to their interpretation and implementation, as well as increased penalties
and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of
operations, and financial condition. We monitor these areas closely and are focused on designing compliant solutions for
our customers.
Cybersecurity and Information Security
Cybersecurity and information security risks for global payments and technology companies like us have increased
significantly in recent years. Although we have developed systems and processes designed to protect the data we
manage, prevent data loss and other security incidents, and enable us to effectively respond to known and potential risks,
and expect to continue to expend significant resources to bolster these protections, we remain subject to these risks and
there can be no assurance that our security measures will provide sufficient security or prevent breaches or attacks. For
additional information regarding our cybersecurity and information security risks, see “Item 1A. Risk Factors—Cyberattacks
and security vulnerabilities could result in serious harm to our reputation, business, and financial condition” and “Item 1C.
Cybersecurity.”
Macroeconomic Environment
The broader implications of the macroeconomic environment, including uncertainty around recent international conflicts
including the Russia and Ukraine conflict, supply chain shortages, a recession globally or in markets in which we operate,
higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown. A deterioration
in macroeconomic conditions could continue to increase the risk of lower consumer spending, merchant and consumer
bankruptcy, insolvency, business failure, higher credit losses, foreign currency exchange fluctuations, or other business
interruption, which may adversely impact our business. If these conditions continue or worsen, they could adversely impact
our future financial and operating results.
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PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview of Results of Operations
The following table provides a summary of our consolidated financial results for the years ended December 31, 2023, 2022,
and 2021:
Year Ended December 31,
Percent Increase/(Decrease)
2023
2022
2021
2023
2022
(In millions, except percentages and per share amounts)
Net revenues
Operating expenses
Operating income
Operating margin
Other income (expense), net
Income tax expense (benefit)
Effective tax rate
NET INCOME (LOSS)
Net income (loss) per diluted share
$ 29,771
$ 27,518
$25,371
24,743
5,028
23,681
3,837
21,109
4,262
17%
14%
17%
383
1,165
(471)
947
(163)
(70)
22%
28%
(2)%
$ 4,246
$ 2,419
$ 4,169
$ 3.84
$ 2.09
$ 3.52
Net cash provided by operating activities
$ 4,843
$ 5,813
$ 5,797
8%
4%
31%
**
181%
23%
**
76%
84%
(17)%
8%
12%
(10)%
**
189%
**
**
(42)%
(41)%
—%
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All amounts in tables are rounded to the nearest million, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided.
** Not meaningful.
Net revenues increased $2.3 billion, or 8%, in 2023 compared to 2022 driven primarily by growth in total payment volume
(“TPV”, as defined below under “Key Metrics”) of 13%.
Total operating expenses increased $1.1 billion, or 4%, in 2023 compared to 2022 due primarily to an increase in transaction
expense, partially offset by reductions in sales and marketing expense, restructuring and other, and technology and
development expense.
Operating income increased $1.2 billion, or 31%, in 2023 compared to 2022 due to net revenues growing more than
operating expenses. Our operating margin was 17% and 14% in 2023 and 2022, respectively, reflecting the positive impact
of operating efficiencies in our business and gain on sale of a divested business, partially offset by the negative impact of
an increase in transaction expense.
Net income increased by $1.8 billion, or 76%, in 2023 compared to 2022 due to the previously discussed increase in
operating income of $1.2 billion and an increase of $854 million in other income (expense), net, driven primarily by net gains
on strategic investments in the current period as compared to net losses and impairments on strategic investments in the
prior period as well as higher interest income from an increase in interest rates, partially offset by an increase in income tax
expense of $218 million primarily related to higher pre-tax income, inclusive of tax expense associated with net gains on
strategic investments and the sale of a divested business.
Impact of Foreign Currency Exchange Rates
We have significant international operations that are denominated in foreign currencies, primarily the British pound, Euro,
Australian dollar, and Canadian dollar, subjecting us to foreign currency exchange risk which may adversely impact our
financial results. The strengthening or weakening of the United States (“U.S.”) dollar versus foreign currencies in which we
conduct our international operations impacts the translation of our net revenues and expenses generated in these foreign
currencies into the U.S. dollar. In 2023, 2022, and 2021, we generated approximately 42%, 43%, and 46% of our net
revenues from customers domiciled outside of the U.S., respectively. Because we generate substantial net revenues
internationally, we are subject to the risks of doing business outside of the U.S., including those discussed under “Item 1A.
Risk Factors.”
We calculate the year-over-year impact of foreign currency exchange movements on our business using prior period
foreign currency exchange rates applied to current period transactional currency amounts. While changes in foreign
currency exchange rates affect our reported results, we have a foreign currency exchange exposure management program
in which we use foreign currency exchange contracts, designated as cash flow hedges, intended to reduce the impact on
earnings from foreign currency exchange rate movements. Gains and losses from these foreign currency exchange
contracts are recognized as a component of transaction revenues or operating expenses (as applicable) in the same
period the forecasted transactions impact earnings.
• 2024 Annual Report
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PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In the years ended December 31, 2023 and 2022, the year-over-year foreign currency exchange rate movements relative to
the U.S. dollar had the following impact on our reported results:
Favorable (unfavorable) impact to net revenues (exclusive of hedging impact)
Hedging impact
Favorable (unfavorable) impact to net revenues
(Unfavorable) favorable impact to operating expense
NET FAVORABLE IMPACT TO OPERATING INCOME
Year Ended December 31,
2023
2022
(In millions)
$ 128
$ (949)
111
239
(29)
462
(487)
492
$ 210
$
5
While we enter into foreign currency exchange contracts to help reduce the impact on earnings from foreign currency
exchange rate movements, it is impossible to predict or eliminate the total effects of this exposure.
We also use foreign currency exchange contracts, designated as net investment hedges, to reduce the foreign currency
exchange risk related to our investment in certain foreign subsidiaries. Gains and losses associated with these instruments
will remain in accumulated other comprehensive income (loss) until the underlying foreign subsidiaries are sold or
substantially liquidated.
Given that we also have foreign currency exchange risk on our assets and liabilities denominated in currencies other than
the functional currency of our subsidiaries, we have an additional foreign currency exchange exposure management
program in which we use foreign currency exchange contracts to help offset the impact of foreign currency exchange rate
movements on our assets and liabilities. The foreign currency exchange gains and losses on our assets and liabilities are
recorded in other income (expense), net, and are offset by the gains and losses on the foreign currency exchange
contracts. These foreign currency exchange contracts reduce, but do not entirely eliminate, the impact of foreign currency
exchange rate movements on our assets and liabilities.
Additionally, in connection with transactions occurring in multiple currencies on our payments platform, we generally set
our foreign currency exchange rates daily and may face financial exposure if we incorrectly set our foreign currency
exchange rates or as a result of fluctuations in foreign currency exchange rates between the times that we set our foreign
currency exchange rates and when transactions occur.
Key Metrics and Financial Results
Key Metrics
TPV, number of payment transactions, active accounts, and number of payment transactions per active account are key
non-financial performance metrics (“key metrics”) that management uses to measure the scale of our platform and the
relevance of our products and services to our customers, and are defined as follows:
• TPV is the value of payments, net of payment reversals, successfully completed on our payments platform or enabled
by PayPal via a partner payment solution, not including gateway-exclusive transactions.
• Number of payment transactions are the total number of payments, net of payment reversals, successfully completed
on our payments platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive
transactions.
• An active account is an account registered directly with PayPal or a platform access partner that has completed a
transaction on our platform, not including gateway-exclusive transactions, within the past 12 months. A platform access
partner is a third party whose customers are provided access to PayPal’s platform or services through such third party’s
login credentials, including individuals and entities that utilize Hyperwallet’s payout capabilities. A user may register on
our platform to access different products and may register more than one account to access a product. Accordingly, a
user may have more than one active account. The number of active accounts provides management with additional
perspective on the overall scale of our platform, but may not have a direct relationship to our operating results.
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PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
• Number of payment transactions per active account reflects the total number of payment transactions within the
previous 12-month period, divided by active accounts at the end of the period. The number of payment transactions per
active account provides management with insight into the average number of times an account engages in payments
activity on our payments platform in a given period. The number of times a consumer account or a merchant account
transacts on our platform may vary significantly from the average number of payment transactions per active account.
As our transaction revenue is typically correlated with TPV growth and the number of payment transactions completed on
our payments platform, management uses these metrics to gain insights into the scale and strength of our payments
platform, the engagement level of our customers, and underlying activity and trends which may be indicators of current
and future performance. We present these key metrics to enhance investors’ evaluation of the performance of our business
and operating results.
Our key metrics are calculated using internal company data based on the activity we measure on our payments platform
including systems that are internally developed or acquired through business
and compiled from multiple systems,
combinations. While the measurement of our key metrics is based on what we believe to be reasonable methodologies
and estimates, there are inherent challenges and limitations in measuring our key metrics globally at our scale. The
methodologies used to calculate our key metrics require significant judgment.
We regularly review our processes for calculating these key metrics, and from time to time we may make adjustments to
improve the accuracy or relevance of our metrics. For example, we continuously apply models, processes, and practices
designed to detect and prevent fraudulent account creation on our platforms, and work to improve and enhance those
capabilities. When we detect a significant volume of illegitimate activity, we generally remove the activity identified from
our key metrics. Although such adjustments may impact key metrics reported in prior periods, we generally do not update
previously reported key metrics to reflect these subsequent adjustments unless the retrospective impact of process
improvements or enhancements is determined by management to be material.
A
N
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L
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O
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Net Revenues
Our revenues are classified into the following two categories:
• Transaction revenues: Net transaction fees charged to merchants and consumers on a transaction basis based on the
TPV completed on our payments platform. Growth in TPV is directly impacted by the number of payment transactions
that we enable on our payments platform. We generate additional revenue from merchants and consumers: on
transactions where we perform currency conversion, when we enable cross-border transactions (i.e., transactions
where the merchant and consumer are in different countries), to facilitate the instant transfer of funds for our customers
from their PayPal or Venmo account to their bank account or debit card, to facilitate the purchase and sale of
cryptocurrencies, as contractual compensation from sellers that violate our contractual terms (for example, through
fraud or counterfeiting), and other miscellaneous fees.
• Revenues from other value added services: Net revenues derived primarily from revenue earned through partnerships,
referral fees, subscription fees, gateway fees, and other services we provide to our merchants and consumers. We also
earn revenues from interest and fees earned on our portfolio of loans receivable, and interest earned on certain assets
underlying customer balances.
Our revenues can be significantly impacted by a number of factors, including the following:
• The mix of merchants, products, and services;
• The mix between domestic and cross-border transactions;
• The geographic region or country in which a transaction occurs; and
• The amount of our loans receivable outstanding with merchants and consumers.
Refer to “Part I, Item 1A, Risk Factors” in this Form 10-K for further discussion on factors that may impact our revenue.
• 2024 Annual Report
35
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Net Revenue Analysis
The components of our net revenues for the years ended December 31, 2023, 2022, and 2021 were as follows (in millions):
$29,771
$2,914
$27,518
$2,312
$26,857
$25,206
$25,371
$1,969
$23,402
2023
2022
2021
Transaction revenues
Revenues from other value added services
Transaction Revenues
Transaction revenues grew by $1.7 billion, or 7%, in 2023 compared to 2022 driven primarily by growth in TPV and the
number of payment transactions from our Braintree products and services, partially offset by a decline in revenues from our
core PayPal products and services, including declines in contractual compensation of $190 million from sellers that violated
our contractual terms predominantly in international markets. Transaction revenues for the year ended December 31, 2023
were also impacted unfavorably by lower net gains due to hedging activities as compared to the same period of the prior
year.
The graphs below present the respective key metrics (in millions) for the years ended December 31, 2023, 2022, and 2021:
Active accounts*
Number of payment
transactions
TPV
$1,528,579
24,981
22,349
19,348
$1,357,122
$1,245,879
426
435
426
2023
2022
2021
2023
2022
2021
2023
2022
2021
*
Reflects active accounts at the end of the applicable period.
The following table provides a summary of related metrics:
Number of payment transactions per active account
Percent of cross-border TPV(1)
Year Ended December 31,
2023
58.7
2022
51.4
2021
45.4
12%
13%
16%
Percent Increase/
(Decrease)
2023
2022
14%
**
13%
**
(1) Cross-border TPV occurs primarily between two PayPal accounts in different countries and includes transactions initiated through our Xoom product.
** Not meaningful
We had active accounts of 426 million and 435 million as of December 31, 2023 and 2022, respectively, a decrease of 2%.
Number of payment transactions was 25.0 billion and 22.3 billion for the years ended December 31, 2023 and 2022,
respectively, an increase of 12%. TPV was $1.53 trillion and $1.36 trillion or the years ended December 31, 2023 and 2022,
respectively, an increase of 13%.
36
• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Transaction revenues growth was lower than the growth in TPV and the number of payment transactions in 2023 due
primarily to a decline in revenues from core PayPal products and services, an unfavorable impact from hedging, and
declines in foreign currency exchange fees.
Revenues From Other Value Added Services
Revenues from other value added services increased by $602 million, or 26%, in 2023 compared to 2022 due primarily to
increases in interest earned on certain assets underlying customer account balances resulting from higher interest rates,
and to a lesser extent, interest and fee revenue on our loans receivable portfolio driven by consumer interest-bearing
installment loans and consumer revolving loans. These drivers positively impacting revenues from other value added
services were partially offset by a decline in revenue earned from our PayPal Honey product and a lower revenue share
earned from an independent chartered financial institution (“partner institution”).
Consumers that have outstanding loans and interest receivable due to our partner institution may experience hardships that
result in losses recognized by the partner institution, which may result in a decrease in our revenue share earned in future
periods. In the event the overall return on the PayPal branded credit programs funded by the partner institution does not
meet a minimum rate of return (“minimum return threshold”) in a particular quarter, our revenue share for that period would
be zero. Further, in the event the overall return on the PayPal branded credit programs managed by the partner institution
does not meet the minimum return threshold as measured over four consecutive quarters and in the following quarter, we
would be required to make a payment to the partner institution, subject to certain limitations. Through December 31, 2023,
the overall return on the PayPal branded credit programs funded by the partner institution exceeded the minimum return
threshold.
A
N
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Seasonality
The Company does not experience meaningful seasonality with respect to net revenues. No individual quarter in 2023,
2022, or 2021 accounted for more than 30% of annual net revenue.
Operating Expenses
The following table summarizes our operating expenses and related metrics we use to assess the trends in each:
Year Ended December 31,
Percent Increase/
(Decrease)
2023
2022
2021
2023
2022
(In millions, except percentages)
Transaction expense
Transaction and credit losses
Customer support and operations
Sales and marketing
Technology and development
General and administrative
Restructuring and other
TOTAL OPERATING EXPENSES
Transaction expense rate(1)
Transaction and credit loss rate(2)
(1)
(2)
Transaction expense rate is calculated by dividing transaction expense by TPV.
Transaction and credit loss rate is calculated by dividing transaction and credit losses by TPV.
** Not meaningful.
$ 14,385
$
12,173
$ 10,315
1,682
1,919
1,809
2,973
2,059
(84)
1,572
2,120
2,257
3,253
2,099
207
1,060
2,075
2,445
3,038
2,114
18%
7%
(9)%
(20)%
(9)%
(2)%
18%
48%
2%
(8)%
7%
(1)%
62
(141)%
234%
$ 24,743
$ 23,681
$ 21,109
0.94%
0.11%
0.90%
0.12%
0.83%
0.09%
4%
**
**
12%
**
**
• 2024 Annual Report
37
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Transaction Expense
Transaction expense is primarily composed of the costs we incur to accept a customer’s funding source of payment. These
costs include fees paid to payment processors and other financial institutions when we draw funds from a customer’s
credit or debit card, bank account, or other funding source they have stored in their digital wallet. We refer to the allocation
of funding sources used by our consumers as our “funding mix.” The cost of funding a transaction with a credit or debit
card is generally higher than the cost of funding a transaction from a bank or through internal sources such as a PayPal or
Venmo account balance or our consumer credit products. As we expand the availability and presentation of alternative
funding sources to our customers, our funding mix may change, which could increase or decrease our transaction expense
rate. The cost of funding a transaction is also impacted by the geographic region or country in which a transaction occurs,
as we generally pay lower rates for transactions funded with credit or debit cards outside the U.S. Our transaction expense
rate is impacted by changes in product mix, merchant mix, regional mix, funding mix, and fees paid to payment processors
and other financial institutions. Macroeconomic environment changes may also result in behavioral shifts in consumer
spending patterns affecting the type of funding source they use, which could also impact the funding mix.
Transaction expense (in millions)
$14,385
$12,173
$10,315
2023
2022
2021
Transaction expense increased by $2.2 billion, or 18%, in 2023 compared to 2022 due primarily to an increase in TPV of 13%
and unfavorable changes in product mix. The increase in transaction expense rate in 2023 compared to 2022 was also
attributable to unfavorable changes in product mix with a higher proportion of TPV from unbranded card processing
volume, which generally has higher expense rates than other products and services, partially offset by favorable changes in
regional mix with respect to our core PayPal products and services. For the years ended December 31, 2023, 2022, and
2021, approximately 36%, 35%, and 39% of TPV, respectively, was generated outside of the U.S.
Transaction and Credit Losses
Transaction losses include the expense associated with our customer protection programs, fraud, and chargebacks. Credit
losses include the current expected credit losses associated with our merchant and consumer loans receivable portfolio.
Our transaction and credit losses fluctuate depending on many factors, including TPV, product mix, current and projected
macroeconomic conditions such as unemployment rates, retail e-commerce sales and household disposable income,
merchant insolvency events, changes to and usage of our customer protection programs, the impact of regulatory
changes, and the credit quality of loans receivable arising from transactions funded with our credit products for consumers
and loans and advances to merchants. Estimating our current expected credit loss allowances for our loans receivable
portfolios is an inherently uncertain process and the ultimate losses we incur may vary from the current estimates. We
regularly update our allowance estimates as new facts become known and events occur that may impact the ultimate
losses incurred. A deterioration in macroeconomic conditions or other factors beyond those considered in our estimates
could result in credit losses that exceed our current estimated credit losses and adversely impact our future operating
results.
38
• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The components of our transaction and credit losses for the years ended December 31, 2023, 2022, and 2021 were as
follows (in millions):
$1,682
$490
$1,192
$1,572
$402
$1,170
2023
2022
Transaction losses
Credit losses
$1,060
$1,153
$(93)
2021
Transaction and credit losses increased by $110 million, or 7%, in 2023 compared to 2022.
Transaction losses were approximately $1.2 billion for both 2023 and 2022, reflecting a slight increase of $22 million, or 2%.
Transaction loss rate (transaction losses divided by TPV) was 0.08%, 0.09%, and 0.09% for the years ended December 31,
2023, 2022, and 2021, respectively. The increase in transaction losses in 2023 was primarily attributable to lower recoveries
compared to 2022 and higher losses related to fraud schemes, partially offset by a $39 million loss related to an ongoing
merchant insolvency proceeding in 2022 with no activity of comparable individual magnitude in the current period.
Credit losses increased by $88 million in 2023 compared to 2022. The components of credit losses for the years ended
December 31, 2023, 2022, and 2021 were as follows (in millions):
Net charge-offs(1)
Reserve build (release)(2)
CREDIT LOSSES
Year Ended December 31,
2023(3)
$ 549
2022
$ 267
2021
$ 219
(59)
135
(312)
$ 490
$ 402
$ (93)
A
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(1) Net charge-offs includes principal charge-offs partially offset by recoveries for consumer and merchant receivables.
(2)
Reserve build (release) represents change in allowance for principal receivables excluding foreign currency remeasurement.
Includes changes in the allowance due to the reclassification of loans and interest receivable to or from held for sale.
(3)
The provision in the years ended December 31, 2023 and 2022 was primarily attributable to loan originations during the
respective periods and a deterioration in the credit quality of loans outstanding. During 2023 and 2022, allowances for our
merchant and consumer portfolios included qualitative adjustments that took into account uncertainty with respect to
macroeconomic conditions, and around the financial health of our borrowers,
loan
modification programs made available to merchants.
including the effectiveness of
Consumer Loan Portfolio
As of December 31, 2023, loans and interest receivable, held for sale was $563 million. Loans and interest receivable, held
for sale, represents the portion of our installment consumer receivables that we intend to sell. This portfolio includes the
substantial majority of our United Kingdom (“U.K.”) and other European buy now, pay later loan receivables. In June 2023,
we entered into a multi-year agreement with a global investment firm to sell up to €40 billion of U.K. and other European
buy now, pay later loan receivables, consisting of eligible loans and interest receivables,
including a forward-flow
arrangement for the sale of future originations of eligible loans over a 24-month commitment period (collectively, “eligible
information, see “Note 1—Overview and Summary of Significant
consumer installment receivables”). For additional
Accounting Policies” in the notes to the consolidated financial statements included in this Form 10-K.
• 2024 Annual Report
39
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The consumer loans and interest receivable balance as of December 31, 2023 and 2022 was $4.8 billion and $5.9 billion,
respectively, net of participation interest sold, representing a year-over-year decrease of 19% driven by the sale of eligible
consumer installment receivables in the U.K. and other European countries, as discussed above, partially offset by the
expansion of our revolving credit product in the U.K. and our installment credit products in Japan.
The following table provides information regarding the credit quality of our consumer loans and interest receivable balance:
Percent of consumer loans and interest receivable current(1)
Percent of consumer loans and interest receivable > 90 days outstanding(1), (2)
Net charge-off rate(1), (3)
December 31,
2023
95.4%
2.2%
7.2%
2022
97.1%
1.4%
4.5%
(1) Amounts as of December 31, 2023 exclude loans and interest receivable, held for sale.
(2)
Represents percentage of balances which are 90 days past the billing date or contractual repayment date, as applicable.
(3) Net charge-off rate is the annualized ratio of net credit losses during the three months ended December 31, 2023, excluding fraud losses, on consumer loans as a percentage of the
average daily amount of consumer loans and interest receivable balance during the same period.
The increase in net charge-off rate for consumer loans and interest receivable at December 31, 2023 as compared to
December 31, 2022 was primarily due to the sale of eligible consumer installment receivables, as discussed above, and
deterioration in the credit quality of the U.S. interest-bearing installment product.
We continue to evaluate and modify our acceptable risk parameters related to our consumer loan portfolio in response to
the changing macroeconomic environment. In response to declining performance, a number of risk mitigation strategies
were implemented in the third quarter of 2023, which resulted in reduced originations for our U.S.
interest-bearing
installment product.
Merchant Loan Portfolio
We offer access to merchant finance products for certain small and medium-sized businesses, which we refer to as our
merchant
finance offerings. Total merchant loans, advances, and interest and fees receivable outstanding, net of
participation interest sold, as of December 31, 2023 and December 31, 2022 was $1.2 billion and $2.1 billion, respectively,
reflecting a decline of 44% due primarily to a decrease in originations related to our PayPal Business Loan (“PPBL”)
products in the U.S.
The following table provides information regarding the credit quality of our merchant loans, advances, and interest and fees
receivable balance:
Percent of merchant loans, advances, and interest and fees receivable current
Percent of merchant loans, advances, and interest and fees receivable > 90 days outstanding(1)
Net charge-off rate (2)
December 31,
2023
87.0%
5.6%
18.8%
2022
90.7%
3.7%
4.5%
(1)
Represents percentage of balances which are 90 days past the original expected or contractual repayment period, as applicable.
(2) Net charge-off rate is the annualized ratio of net credit losses during the three months ended December 31, 2023, excluding fraud losses, on merchant loans and advances as a
percentage of the average daily amount of merchant loans, advances, and interest and fees receivable balance during the same period.
The decrease in the percent of current merchant receivables, increase in percent of merchant receivables greater than 90
days outstanding, and increase in the net charge-off rate for merchant receivables at December 31, 2023 as compared to
December 31, 2022 were primarily due to the expansion of acceptable risk parameters in 2022, which resulted in a decline
in the overall credit quality of loans outstanding related to our PPBL product. The significant decline in the merchant
receivable portfolio year-over-year due to repayments and reduced originations also resulted in higher delinquency and
charge-off rates as a percentage of outstanding loan balance as of December 31, 2023.
We continue to evaluate and modify our acceptable risk parameters related to our merchant loan portfolio in response to
the changing macroeconomic environment. In response to declining performance, a number of risk mitigation strategies
were implemented throughout 2023, which resulted in reduced originations for our PPBL product.
For additional
statements, and “Item 1A. Risk Factors—Our credit products expose us to additional risks” included in this Form 10-K.
information, see “Note 11—Loans and Interest Receivable” in the notes to the consolidated financial
40
• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Customer Support and Operations
Customer support and operations includes costs incurred in our global customer operations centers, including costs to
provide call support to our customers, costs to support our trust and security programs protecting our merchants and
consumers, and other costs incurred related to the delivery of our products, including payment devices, card production,
and customer onboarding and compliance costs.
Customer support and operations (in millions)
$1,919
$2,120
$2,075
A
N
N
U
A
L
R
E
P
O
R
T
2023
2022
2021
Customer support and operations costs decreased $201 million, or 9%, in 2023 compared to 2022 due primarily to a
decline in employee-related costs, contractors and consulting costs, and customer onboarding and compliance costs.
Sales and Marketing
Sales and marketing includes costs incurred for customer acquisition, business development, advertising, and marketing
programs.
Sales and marketing (in millions)
$1,809
$2,257
$2,445
2023
2022
2021
Sales and marketing expenses decreased $448 million, or 20%, in 2023 compared to 2022 due primarily to lower spending
on targeted user incentives and marketing campaigns, and to a lesser extent, a decline in amortization of acquired
intangibles.
• 2024 Annual Report
41
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Technology and Development
Technology and development includes costs incurred in connection with the development of our payments platform, new
products, and the improvement of our existing products, including the amortization of software and website development
costs incurred in developing our payments platform, which are capitalized. It also includes acquired developed technology
and our site operations and other infrastructure costs incurred to support our payments platform.
Technology and development (in millions)
$2,973
$3,253
$3,038
2023
2022
2021
Technology and development expenses decreased $280 million, or 9%, in 2023 compared to 2022 due primarily to lower
intangible amortization and a decline in costs related to contractors and consultants.
General and Administrative
General and administrative includes costs incurred to provide support to our business, including legal, human resources,
finance, risk and compliance, executive, and other support operations.
General and administrative (in millions)
$2,059
$2,099
$2,114
2023
2022
2021
General and administrative expenses decreased $40 million, or 2%, in 2023 compared to 2022 due primarily to a decline in
depreciation expense and facilities costs.
Restructuring and Other
Restructuring and other primarily consist of restructuring expenses, asset impairment charges, gain on sale of divested
business, and losses on loans and interest receivable, held for sale.
Restructuring and other (in millions)
$207
2022
$62
2021
$(84)
2023
Restructuring and other decreased by $291 million in 2023 compared to 2022 primarily resulting from gain on sale of a
divested business, partially offset by restructuring charges, asset impairment charges, and fair value adjustments on loans
and interest receivable, held for sale.
42
• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
A
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T
In the fourth quarter of 2023, we completed the sale of Happy Returns and recorded a pre-tax gain of $339 million, net of
transaction costs. For additional information on the divestiture, see “Note 4—Business Combinations and Divestitures” in
the notes to the consolidated financial statements included in this Form 10-K.
During the first quarter of 2023, management initiated a global workforce reduction intended to focus resources on core
strategic priorities, and improve our cost structure and operating efficiency. The associated restructuring charges during the
year ended December 31, 2023 were $122 million. We primarily incurred employee severance and benefits costs, which
were substantially completed in the fourth quarter of 2023. The estimated reduction in annualized employee-related costs
associated with the impacted workforce was approximately $280 million, including approximately $85 million in stock-
based compensation. We expect to reinvest a portion of the reduction in annual costs associated with the impacted
workforce to drive business priorities.
During the first quarter of 2022, management initiated a strategic reduction of the existing global workforce intended to
streamline and optimize our global operations to enhance operating efficiency. This effort focused on reducing redundant
operations and simplifying our organizational structure. The associated restructuring charges during the year ended
December 31, 2022 were $121 million. We primarily incurred employee severance and benefits costs, as well as associated
consulting costs. The strategic actions associated with this plan were substantially completed by the fourth quarter of 2022.
For information on the associated restructuring liabilities, see “Note 17—Restructuring and Other” in the notes to the
consolidated financial statements included in this Form 10-K.
Additionally, we are continuing to review our real estate and facility capacity requirements due to our new and evolving
work models. We incurred asset impairment charges of $61 million and $81 million in the years ended December 31, 2023
and 2022, respectively, due to exiting certain leased properties, which resulted in a reduction of right-of-use lease assets
and related leasehold improvements.
In the year ended December 31, 2023, we recognized a gain of $17 million due to the sale of an owned property. We also
incurred a loss of $14 million related to another owned property, which was previously held for sale, in the year ended
December 31, 2023.
During the year ended December 31, 2023, approximately $74 million of losses were recorded in restructuring and other,
which included net loss on sale of loans and interest receivable previously held for sale (inclusive of transaction costs) and
fair value adjustments in order to measure loans and interest receivable, held for sale, at the lower of cost or fair value.
Other Income (Expense), Net
Other income (expense), net of $383 million in 2023 increased $854 million compared to $(471) million in 2022 due
primarily to net gains on strategic investments in the current period compared to net losses and impairments in the prior
period and higher interest income from an increase in interest rates.
Income Tax Expense (Benefit)
Our effective income tax rate was 22% in 2023 and 28% in 2022. The decrease in our effective income tax rate in 2023
compared to 2022 was primarily attributable to higher tax expense in the prior year related to the intra-group transfer of
intellectual property. See “Note 16—Income Taxes” to the consolidated financial statements included in this Form 10-K for
more information on our effective tax rate.
Liquidity and Capital Resources
We require liquidity and access to capital to fund our global operations, including our customer protection programs, credit
products, capital expenditures, investments in our business, potential acquisitions and strategic investments, working
capital, and other cash needs. We believe that our existing cash, cash equivalents, and investments, cash expected to be
generated from operations, and our expected access to capital markets, together with potential external funding through
third party sources, will be sufficient to meet our cash requirements within the next 12 months and beyond.
• 2024 Annual Report
43
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Sources of Liquidity
Cash, Cash Equivalents, and Investments
The following table summarizes our cash, cash equivalents, and investments as of December 31, 2023 and 2022:
Cash, cash equivalents, and investments(1)(2)
Year Ended December 31,
2023
2022
(In millions)
$ 15,493
$ 13,723
(1)
(2)
Excludes assets related to funds receivable and customer accounts of $38.9 billion and $36.3 billion as of December 31, 2023 and 2022, respectively.
Excludes total restricted cash of $3 million and $17 million at December 31, 2023 and 2022, respectively, and strategic investments of $1.8 billion and $2.1 billion at December 31,
2023 and 2022, respectively.
Cash, cash equivalents, and investments held by our foreign subsidiaries were $10.0 billion at December 31, 2023 and
$8.6 billion at December 31, 2022, or 64% and 62%, of our total cash, cash equivalents, and investments as of those
respective dates. At December 31, 2023, all of our cash, cash equivalents, and investments held by foreign subsidiaries
were subject to U.S. taxation under Subpart F, Global Intangible Low Taxed Income (“GILTI”) or the one-time transition tax
under the Tax Cuts and Jobs Act of 2017 (“Tax Act”). Subsequent repatriations to the U.S. will not be taxable from a U.S.
federal tax perspective, but may be subject to state income or foreign withholding tax.
A significant aspect of our global cash management activities involves meeting our customers’ requirements to access
their cash while simultaneously meeting our regulatory financial ratio commitments in various jurisdictions. Our global cash
balances are required not only to provide operational liquidity to our businesses, but also to support our global regulatory
requirements across our regulated subsidiaries. Accordingly, not all of our cash is available for general corporate purposes.
Cash Flows
The following table summarizes our consolidated statements of cash flows:
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rates on cash, cash equivalents, and restricted cash
Year Ended December 31,
2023
2022
2021
(In millions)
$ 4,843
$ 5,813
$ 5,797
752
(3,328)
(5,149)
(2,993)
(1,203)
76
(155)
(557)
(102)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
$ 2,678
$ 1,127
$
(11)
Operating Activities
Cash flows from operating activities includes net income adjusted for certain non-cash expenses, timing differences
between expenses recognized for provision for transaction and credit losses and actual cash transaction losses incurred,
and changes in other assets and liabilities. Significant non-cash expenses for the period include depreciation and
amortization and stock-based compensation. The cash impact from actual transaction losses incurred during a period is
reflected as changes in other assets and liabilities. The expenses recognized during the period for provision for credit
losses are estimates of current expected credit losses on our merchant and consumer credit products. Actual charge-offs
of receivables related to our merchants and consumer credit products have no impact on cash from operating activities.
The net cash provided by operating activities of $4.8 billion in 2023 was due primarily to operating income of $5.0 billion, as
well as adjustments for non-cash expenses including provision for transaction and credit losses of $1.7 billion, stock-based
compensation of $1.5 billion, and depreciation and amortization of $1.1 billion. Cash flows from operating activities was also
impacted by proceeds from repayments and sales of loans receivable, originally classified as held for sale, of $10.8 billion
and changes in other assets of $203 million. These changes, which favorably impacted cash generated from operations,
were offset by originations of loans receivable, held for sale of $11.5 billion, actual cash transaction losses incurred during
the period of $1.2 billion, changes in deferred income taxes of $668 million, gain on divestiture of business, excluding
transaction costs, of $356 million, net accretion of investments purchased at a discount of $367 million, and changes in
liabilities of $222 million.
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• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The net cash provided by operating activities of $5.8 billion in 2022 was due primarily to operating income of $3.8 billion, as
well as adjustments for non-cash expenses including provision for transaction and credit losses of $1.6 billion, depreciation
and amortization of $1.3 billion, and stock-based compensation of $1.3 billion. Cash flows from operating activities was also
impacted by net losses on our strategic investments of $304 million, and an increase in other liabilities of $856 million.
These changes, which favorably impacted cash generated from operations, were partially offset by actual cash transaction
losses incurred during the period of $1.2 billion and changes in deferred income taxes of $811 million.
Cash paid for income taxes, net in 2023, 2022, and 2021 was $2.1 billion, $878 million, and $474 million, respectively.
Included within cash paid for income taxes for 2023 is $106 million related to the purchase of transferable tax credits as
authorized by the Inflation Reduction Act of 2022.
Investing Activities
Cash flows from investing activities includes purchases, maturities and sales of investments; cash paid for acquisitions and
strategic investments; purchases and sales of property and equipment; purchases, originations, sales, and principal
repayment of loans receivable, originally classified as held for investment; changes in funds receivable; and changes in
collateral posted related to derivative instruments, net.
The net cash provided by investing activities of $752 million in 2023 was due primarily to proceeds from repayments and
sales of loans receivable, originally classified as held for investment, of $26.7 billion, maturities and sales of investments of
$24.3 billion, and proceeds from divestiture of business, net of cash divested, of $466 million. These cash inflows were
partially offset by purchases and originations of loans receivable of $25.2 billion, purchases of investments of $22.0 billion,
changes in funds receivable from customers of $2.9 billion, and purchases of property and equipment of $623 million.
The net cash used in investing activities of $3.3 billion in 2022 was due primarily to purchases and originations of loans
receivable of $28.2 billion, purchases of investments of $20.2 billion, changes in funds receivable from customers of
$2.7 billion, and purchases of property and equipment of $706 million. These cash outflows were partially offset by principal
repayment of loans receivable of $24.9 billion and maturities and sales of investments of $23.4 billion.
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Financing Activities
Cash flows from financing activities includes proceeds from issuance of common stock, purchases of treasury stock, tax
withholdings related to net share settlements of equity awards, borrowings and repayments under financing arrangements,
changes in funds payable and amounts due to customers, and changes in collateral received related to derivative
instruments, net.
The net cash used in financing activities of $3.0 billion in 2023 was due primarily to the repurchase of $5.0 billion of our
common stock under our stock repurchase programs, repayments of borrowings under financing arrangements of
$1.1 billion (including principal repayment of fixed rate debt that matured in June 2023 and repayment of borrowings under
our Paidy credit agreement), tax withholdings of $257 million related to net share settlement of equity awards, and a decline
in collateral received related to derivative instruments of $197 million. These cash outflows were partially offset by changes
in funds payable and amounts due to customers of $1.9 billion and borrowings under financing arrangements of $1.5 billion
(including proceeds from the issuance of fixed rate debt in June 2023, borrowings under our Paidy credit agreement, and
short-term overdraft borrowings).
The net cash used in financing activities of $1.2 billion in 2022 was due primarily to the repurchase of $4.2 billion of our
common stock under our stock repurchase programs, repayments of borrowings under financing arrangements of
$1.7 billion (including the repurchase and redemption of certain fixed rate notes and repayment of borrowings under a prior
credit agreement), and tax withholdings of $336 million related to net share settlement of equity awards. These cash
outflows were partially offset by borrowings under financing arrangements of $3.5 billion (including proceeds from the
issuance of fixed rate debt in May 2022 and borrowings under our Paidy credit agreements) and changes in funds payable
and amounts due to customers of $1.4 billion.
• 2024 Annual Report
45
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Effect of Exchange Rates on Cash, Cash Equivalents, and Restricted Cash
Foreign currency exchange rates had a positive impact of $76 million and negative impact of $155 million on cash, cash
equivalents, and restricted cash during 2023 and 2022, respectively. The positive impact of foreign currency exchange on
cash, cash equivalents, and restricted cash in 2023 was primarily due to favorable fluctuations in the exchange rate of the
U.S. dollar to the British pound. The negative impact of foreign currency exchange on cash, cash equivalents, and restricted
cash in 2022 was primarily attributable to the unfavorable impact of fluctuations in the exchange rate of the U.S. dollar to the
Australian dollar and, to a lesser extent, to the fluctuations in the exchange rate of the U.S. dollar to the Swedish krona,
Japanese yen, Indian rupee, and the Euro.
Available credit and debt
In June 2023, we entered into a credit agreement (the “Credit Agreement”) that provides for an unsecured $5.0 billion, five-
year revolving credit facility and terminated the facility entered into in September 2019. The Credit Agreement includes a
$150 million letter of credit sub-facility and a $600 million swingline sub-facility, with available borrowings under the
revolving credit facility reduced by the amount of any letters of credit and swingline borrowings outstanding from time to
time. As of December 31, 2023, no borrowings were outstanding under the Credit Agreement and as such, $5.0 billion of
borrowing capacity was available for the purposes permitted by the Credit Agreement, subject to customary conditions to
borrowing.
In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which
provided for an unsecured revolving credit facility of ¥60.0 billion, which was modified in September 2022 to increase the
borrowing capacity by ¥30.0 billion for a total borrowing capacity of ¥90.0 billion (approximately $638 million as of
December 31, 2023). In the year ended December 31, 2023, ¥50.0 billion (approximately $355 million) was drawn down
under the Paidy Credit Agreement. Accordingly, at December 31, 2023, ¥40.0 billion (approximately $283 million) of
borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary
conditions to borrowing.
We maintain uncommitted credit
the world with a borrowing capacity of
approximately $80 million in the aggregate, where we can withdraw and utilize the funds at our discretion for general
corporate purposes. As of December 31, 2023, the majority of the borrowing capacity under these credit facilities was
available, subject to customary conditions to borrowing.
facilities in various regions throughout
In June 2023, May 2022, May 2020 and September 2019, we issued fixed rate notes with varying maturity dates for an
aggregate principal amount of $12.6 billion (collectively referred to as the “Notes”). Proceeds from the issuance of these
Notes may be used for general corporate purposes, which may include funding the repayment or redemption of
outstanding debt, share repurchases, ongoing operations, capital expenditures, and possible acquisitions of businesses,
assets, or strategic investments. As of December 31, 2023, we had $10.6 billion in fixed rate debt outstanding with varying
maturity dates.
For additional information, see “Note 12—Debt” to our consolidated financial statements included in this Form 10-K.
Depending on market conditions, we may from time to time issue debt, including in private or public offerings, to fund our
operating activities, finance acquisitions, make strategic investments, repurchase shares under our stock repurchase
programs, or reduce our cost of capital.
We have a cash pooling arrangement with a financial institution for cash management purposes. The arrangement allows
for cash withdrawals from the financial institution based upon our aggregate operating cash balances held within the
financial institution (“Aggregate Cash Deposits”). The arrangement also allows us to withdraw amounts exceeding the
Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash
Deposits are used by the financial institution as a basis for calculating our net interest expense or income under the
arrangement. As of December 31, 2023, we had a total of $3.9 billion in cash withdrawals offsetting our $3.9 billion in
Aggregate Cash Deposits held within the financial institution under the cash pooling arrangement.
46
• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Credit ratings
As of December 31, 2023, we continue to be rated investment grade by Standard and Poor’s Financial Services, LLC, Fitch
Ratings, Inc., and Moody’s Investors Services, Inc. We expect that these credit rating agencies will continue to monitor our
performance, including our capital structure and results of operations. Our goal is to be rated investment grade, but as
circumstances change, there are factors that could result in our credit ratings being downgraded or put on a watch list for
possible downgrading. If that were to occur, it could increase our borrowing rates, including the interest rate on borrowings
under our credit agreements.
Current and Future Cash Requirements
Our material cash requirements include funds to support current and potential: operating activities, credit products,
customer protection programs, stock repurchases, strategic investments, acquisitions, other commitments, and capital
expenditures and other future obligations.
Credit Products
Growth in our portfolio of loan receivables increases our liquidity needs, and any inability to meet those liquidity needs
could adversely affect our business. We continue to evaluate partnerships and third-party sources of funding for our credit
products.
The Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) agreed that PayPal’s management may
designate up to 50% of European customer balances held in our Luxembourg banking subsidiary to fund European, U.K.,
and U.S. credit activities. As of December 31, 2023 and 2022, the total amount approved by management to be designated
to fund credit activities was $3.0 billion and $3.8 billion, respectively, and represented approximately 39% and 37% of
European customer balances made available for our corporate use as of those respective dates, as determined by applying
financial regulations maintained by the CSSF. We may periodically seek to designate additional amounts of European
customer balances for our credit activities, as we deem necessary, based on utilization of the approved funds and
anticipated credit funding requirements. Under certain exceptional circumstances, corporate liquidity could be called upon
to meet our obligations related to our European customer balances.
In June 2023, we entered into a multi-year agreement with a global investment firm to sell up to €40 billion of our eligible
consumer installment receivables portfolio. During the year ended December 31, 2023, we sold $5.5 billion of loans and
interest receivable, in connection with this agreement. For additional information, see “Note 1—Overview and Summary of
Significant Accounting Policies” to our consolidated financial statements included in this Form 10-K.
While our objective is to expand the availability of our credit products with capital from external sources, there can be no
assurance that we will be successful in achieving that goal.
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Customer Protection Programs
losses from our customer protection programs are specific to individual consumers, merchants, and
The risk of
transactions, and may also be impacted by regional variations in, and changes or modifications to, the programs, including
as a result of changes in regulatory requirements. For the periods presented in these consolidated financial statements
included in this report, our transaction loss rate ranged between 0.08% and 0.09% of TPV. Historical loss rates may not be
indicative of future results.
Stock Repurchases
During the year ended December 31, 2023, we repurchased approximately $5.0 billion of our common stock in the open
market under our stock repurchase programs authorized in July 2018 and June 2022. The June 2022 stock repurchase
program became effective during the first quarter of 2023 upon completion of the July 2018 stock repurchase program. As
of December 31, 2023, a total of approximately $10.9 billion remained available for future repurchases of our common stock
under our June 2022 stock repurchase program. For additional information, see “Note 14—Stock Repurchase Programs” to
our consolidated financial statements included in this Form 10-K.
• 2024 Annual Report
47
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Future Obligations
As of December 31, 2023 and 2022, approximately $6.2 billion and $4.9 billion, respectively, of unused credit was available
to PayPal Credit account holders in the U.K. While this amount represents the total unused credit available, we have not
experienced, and do not anticipate, that all of our PayPal Credit account holders will access their entire available credit at
any given point in time. In addition, the individual lines of credit that make up this unused credit are subject to periodic
review and termination based on, among other things, account usage and customer creditworthiness.
We have certain fixed contractual obligations and commitments that include future estimated payments for general
operating purposes. Changes in our business needs, contractual cancellation provisions, fluctuating interest rates, and
other factors may result in actual payments differing from our estimates. We cannot provide certainty regarding the timing
and amounts of these payments. The following table summarizes our obligations as of December 31, 2023 that are
expected to impact liquidity and cash flow in future periods. We believe we will be able to fund these obligations through
our existing cash and investment portfolio and cash expected to be generated from operations.
Payments Due During the Year Ending December 31,
(In millions)
Purchase
Obligations
Operating
Leases
Transition
Tax
Long-term
Debt
Total
2024
2025
2026
2027
2028
Thereafter
$
936
$ 186
$ 284
$
1,575
$
2,981
477
348
—
—
—
153
139
118
87
174
354
—
—
—
—
1,498
1,689
732
483
8,996
2,482
2,176
850
570
9,170
$ 1,761
$ 857
$ 638
$ 14,973
$ 18,229
The significant assumptions used in our determination of amounts presented in the above table are as follows:
• Purchase obligation amounts include minimum purchase commitments for cloud computing services, capital
expenditures, advertising, and other goods and services entered into in the ordinary course of business.
• Operating lease amounts include minimum rental payments under our non-cancelable operating leases (including
leases not yet commenced) primarily for office and data center facilities. The amounts presented are consistent with
contractual terms and are not expected to differ significantly from actual results under our existing leases, unless a
substantial change in our headcount needs requires us to expand our occupied space or exit an office facility early.
• Transition tax represents the one-time mandatory tax on previously deferred foreign earnings under the Tax Act.
• Long-term debt amounts represent the future principal and interest payments (based on contractual interest rates) on
our fixed-rate debt. For more information, see “Note 12—Debt” to our consolidated financial statements included in this
Form 10-K.
As we are unable to reasonably predict the timing of settlement of liabilities related to unrecognized tax benefits, net, the
table above does not include $2.4 billion recorded in other long-term liabilities on our consolidated balance sheets as of
December 31, 2023.
Other Considerations
Our liquidity, access to capital, and borrowing costs could be adversely impacted by declines in our credit rating, our
financial performance, and global credit market conditions, as well as a broad range of other factors. In addition, our
liquidity, access to capital, and borrowing costs could also be negatively impacted by the outcome of any of the legal or
regulatory proceedings to which we are a party. See “Item 1A. Risk Factors” and “Note 13—Commitments and
Contingencies” to our consolidated financial statements included in this Form 10-K for additional discussion of these and
other risks that our business faces.
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• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Policies and Estimates
The application of U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions
about certain items and future events that directly affect our reported financial condition. We have established detailed
policies and control procedures to provide reasonable assurance that the methods used to make estimates and
assumptions are well controlled and are applied consistently from period to period. The accounting estimates and
assumptions discussed in this section are those that we consider to be the most critical to our financial statements. An
accounting estimate or assumption is considered critical if both (a) the nature of the estimate or assumption is material due
to the levels of subjectivity and judgment involved, and (b) the impact within a reasonable range of outcomes of the
estimate and assumption is material to our financial condition. Management has discussed the development, selection,
and disclosure of these estimates with the Audit, Risk, and Compliance Committee of our Board of Directors. Our significant
accounting policies, including recent accounting pronouncements, are described in “Note 1—Overview and Summary of
Significant Accounting Policies” to the consolidated financial statements included in this Form 10-K.
A quantitative sensitivity analysis is provided where information is reasonably available, can be reliably estimated, and
provides material information to investors. The amounts used to assess sensitivity are included to allow users of this report
to understand a general directional cause and effect of changes in the estimates and do not represent management’s
it should be noted that future events rarely develop exactly as
predictions of variability. For all of these estimates,
forecasted, and such estimates require regular review and adjustment.
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Allowance for Transaction and Credit Losses
Transaction and credit losses include the expense associated with our customer protection programs, fraud, chargebacks,
and credit losses associated with our loans receivable balances. Our transaction and credit losses fluctuate depending on
many factors, including: total TPV, product mix, current and projected macroeconomic conditions, merchant insolvency
events, changes to and usage of our customer protection programs, the impact of regulatory changes, and the credit
quality of
loans receivable arising from transactions funded with our credit products, which include revolving and
installment credit products offered to consumers at checkout, as well as merchant loans and advances arising from the
PayPal Working Capital and PPBL products.
We establish allowances for negative customer balances and estimated transaction losses arising from processing
customer transactions, such as chargebacks for unauthorized credit card use and merchant-related chargebacks due to
non-delivery or unsatisfactory delivery of purchased items, purchase protection program claims, account takeovers, and
bank returns and reversals. Additions to the allowance, in the form of provisions, are reflected in transaction and credit
losses on our consolidated statements of income (loss). The allowances are based on known facts and circumstances,
internal factors including experience with similar cases, historical trends involving collection and write-off patterns, and the
mix of transaction and loss types, as well as current and projected macroeconomic factors, as appropriate.
losses at
the balance sheet date after
We also establish an allowance for loans and interest receivable, which represents our estimate of current expected credit
losses inherent in our portfolio of loans and interest receivable and includes expected credit losses from modifications of
receivables to borrowers experiencing financial difficulty. Determining appropriate current expected credit loss allowances
for loans and interest receivable is an inherently uncertain process and ultimate losses may vary from the current estimates.
We regularly update our allowance estimates as new facts become known and events occur that may impact the
settlement or recovery of losses. The allowances are maintained at a level we deem appropriate to adequately provide for
current expected credit
incorporating the impact of externally sourced
macroeconomic forecasts. As of December 31, 2023, we utilized externally published projections of U.S. forecasted
unemployment rates, forecasted U.S. and U.K. retail e-commerce sales, and forecasted U.K. household disposable income,
among others, over the reasonable and supportable forecast period. As of December 31, 2022, we utilized externally
published projections of the U.S. and U.K. forecasted unemployment rates, forecasted U.S. retail e-commerce sales, and
forecasted U.K. household disposable income, among others, over the reasonable and supportable forecast period. The
overall principal and interest coverage ratio as of December 31, 2023 and 2022 was approximately 9% and 7%,
respectively. A significant change in the forecasted macroeconomic factors could result in a material change in our
to
allowances. Our allowance as of December 31, 2023 and 2022 took into account uncertainty with respect
macroeconomic conditions, uncertainty around the financial health of our borrowers, and effectiveness of
loan
modification programs made available to merchants. An increase of 1% in the principal and interest coverage ratio would
increase our allowances by approximately $60 million based on the loans and interest receivable balance outstanding as of
December 31, 2023.
• 2024 Annual Report
49
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Accounting For Income Taxes
Our annual tax rate is based on our income, statutory tax rates, and tax planning opportunities available to us in the various
jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and
respective government taxing authorities. Significant judgment is required in determining our tax expense and in evaluating
our tax positions, including evaluating uncertainties. We review our tax positions quarterly and adjust the balances as new
information becomes available. Our income tax rate is significantly affected by the tax rates that apply to our foreign
earnings. In addition to local country tax laws and regulations, our income tax rate depends on the extent that our foreign
earnings are taxed by the U.S. through provisions such as the GILTI tax and base erosion anti-abuse tax.
Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such
assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well
as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and
including reversal of taxable
credits by assessing the adequacy of future expected taxable income from all sources,
temporary differences, forecasted operating earnings, and available tax planning strategies. These sources of income rely
heavily on estimates that are based on a number of factors, including our historical experience and short-range and long-
range business forecasts. To the extent deferred tax assets are not expected to be realized, we record a valuation allowance.
We recognize and measure uncertain tax positions in accordance with U.S. GAAP, pursuant to which we only recognize the
tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by
the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements
from such positions are then measured based on the largest benefit that has a greater than 50 percent likelihood of being
realized upon ultimate settlement. We report a liability for unrecognized tax benefits resulting from uncertain tax positions
taken or expected to be taken in a tax return. U.S. GAAP further requires that a change in judgment related to the expected
ultimate resolution of uncertain tax positions be recognized in earnings in the quarter in which such change occurs. We
recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
We file annual income tax returns in multiple taxing jurisdictions around the world. A number of years may elapse before an
uncertain tax position is audited by the relevant tax authorities and finally resolved. While it is often difficult to predict the
final outcome or the timing of resolution of any particular uncertain tax position, we believe that our reserves for income
taxes are adequate. We adjust these reserves, as well as the related interest and penalties, where appropriate in light of
changing facts and circumstances. Settlement of any particular position could require the use of cash.
Based on our results for the year ended December 31, 2023, a one-percentage point increase in our effective tax rate would
have resulted in an increase in our income tax expense of approximately $54 million.
Loss Contingencies
We are regularly involved in various claims, regulatory and legal proceedings, and investigations of potential violations by
regulatory oversight authorities. On a regular basis, we review the status of each significant matter and assess our potential
financial exposure. If the potential loss from any claim, legal proceeding, or potential regulatory violation is considered
probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgment is
required in both the determination of probability and whether an exposure is reasonably estimable. Our judgments are
subjective and are based on the status of the legal or regulatory proceedings, the merits of our defenses, and consultation
with in-house and outside legal counsel. Because of uncertainties related to these matters, accruals are based on the best
information available at the time. As additional information becomes available, we reassess the potential liability related to
pending claims, litigation, or other violations and may revise our estimates. Due to the inherent uncertainties of legal and
regulatory processes in the multiple jurisdictions in which we operate, our judgments may differ materially from the actual
outcomes.
Revenue Recognition
Application of the accounting principles in U.S. GAAP related to the measurement and recognition of revenue requires us to
make judgments and estimates. Complex arrangements with nonstandard terms and conditions may require significant
contract interpretation to determine the appropriate accounting. Specifically, the determination of whether we are a principal to
a transaction (gross revenue) or an agent (net revenue) can require considerable judgment. Further, we provide incentive
payments to consumers and merchants. Evaluating whether these incentives are a payment to a customer, or consideration
payable on behalf of a customer, requires judgment. Incentives determined to be made to a customer, or payable on behalf of a
customer, are recorded as a reduction to gross revenue. Incentives that are earned by the customer based on performance
targets are recorded when earned, based on management’s estimate of each customer’s future performance. These accruals
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• 2024 Annual Report
PART II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
are regularly reviewed and estimates of performance are adjusted, as appropriate, based on changes in performance
expectations, actual customer performance, amendments to existing contracts, or the execution of new contracts. Changes in
judgments with respect to these assumptions and estimates could impact the amount of revenue recognized.
Evaluation of Strategic Investments for Impairment
We have strategic investments in non-marketable equity securities, which include investments that do not have a readily
determinable fair value and are measured at cost minus impairment, if any, and are adjusted for changes resulting from
observable price changes in orderly transactions for an identical or similar investment in the same issuer (the Measurement
Alternative). We review these investments regularly to determine if impairment has occurred. We assess whether an
impairment loss on these non-marketable equity securities, which are primarily investments in privately held companies,
has occurred based on qualitative factors such as the companies’ financial condition and business outlook, industry
performance, regulatory, economic or technological environment, and other relevant events and factors affecting the
company. When indicators of impairment exist, we estimate the fair value of these non-marketable equity securities using
the market approach and/or the income approach. If any impairment is identified, we write down the investment to its fair
value and record the corresponding charge through other income (expense), net on our consolidated statements of
income (loss). Estimating fair value requires judgment and use of estimates such as discount rates, forecasted cash flows,
and market data of comparable companies, among others. For sensitivity analysis performed on our strategic investments,
see “Item 7A. Quantitative and Qualitative Disclosures about Market Risk—Equity Investment Risk.”
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse
changes in market factors such as interest rates, foreign currency exchange rates, and equity investment risk. Management
establishes and oversees the implementation of policies governing our investing, funding, and foreign currency derivative
activities intended to mitigate market risks. We monitor risk exposures on an ongoing basis.
Interest Rate Risk
We are exposed to interest rate risk relating to our investment portfolio and from interest-rate sensitive assets underlying
the customer balances we hold on our consolidated balance sheets as customer accounts.
As of December 31, 2023 and 2022, approximately 59% and 57%, respectively, of our total cash, cash equivalents, and
investment portfolio (excluding restricted cash and strategic investments) was held in cash and cash equivalents. The
remaining portfolio and assets underlying the customer balances that we hold on our consolidated balance sheets as
customer accounts are maintained in interest and non-interest bearing bank deposits, time deposits, and available-for-sale
debt securities. We seek to preserve principal while holding eligible liquid assets, as defined by applicable regulatory
requirements and commercial law in certain jurisdictions where we operate, equal to at least 100% of the aggregate
amount of all customer balances. We do not pay interest on amounts due to customers.
the interest
rate movements affect
Interest
time deposits, and
available-for-sale debt securities and the fair value of those securities. A hypothetical 100 basis points increase in interest
rates would have resulted in a decrease in the fair value of our cash equivalents and available-for-sale debt securities
investment by approximately $122 million and $161 million at December 31, 2023 and 2022, respectively. Changes in the fair
value of our available-for-sale debt securities resulting from such interest rate changes are reported as a component of
accumulated other comprehensive income (“AOCI”) and are realized only if we sell the securities prior to their scheduled
maturities or the declines in fair values are due to expected credit losses.
income we earn on cash and cash equivalents,
As of December 31, 2023 and 2022, we had $10.6 billion and $10.4 billion, respectively, in fixed rate debt with varying
maturity dates. Since these notes bear interest at fixed rates, they do not result in any financial statement risk associated
with changes in interest rates. However, the fair value of these notes fluctuates when interest rates change, increasing in
periods of declining interest rates and declining in periods of increasing interest rates.
• 2024 Annual Report
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PART II
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
As of December 31, 2023 and 2022, we also had revolving credit facilities of approximately $5.6 billion and $5.7 billion,
respectively, available to us. We are obligated to pay interest on borrowings under these facilities as well as other
customary fees, including an upfront fee and an unused commitment fee based on our debt rating. Borrowings under these
facilities, if any, bear interest at floating rates. As a result, we are exposed to the risk related to fluctuations in interest rates to
the extent of our borrowings. As of December 31, 2023 and 2022, ¥50.0 billion (approximately $355 million) and
¥64.3 billion (approximately $491 million), respectively, was outstanding under these facilities. A 100 basis points
hypothetical adverse change in applicable market interest rates would not have resulted in a material impact to interest
expense recorded in the period. For additional information, see “Note 12—Debt” in the notes to the consolidated financial
statements included in this Form 10-K.
Interest rates may also adversely impact our customers’ spending levels and ability and willingness to pay outstanding
amounts owed to us. Higher interest rates often lead to larger payment obligations by customers of our credit products to
us, or to lenders under mortgage, credit card, and other consumer and merchant loans, which may reduce our customers’
ability to remain current on their obligations to us and therefore lead to increased delinquencies, charge-offs, and
allowances for loans and interest receivable, which could have an adverse effect on our net income (loss).
Foreign Currency Exchange Rate Risk
We have significant operations internationally that are denominated in foreign currencies, primarily the British pound, Euro,
Australian dollar, and Canadian dollar, which subject us to foreign currency exchange rate risk and may adversely impact
our financial results. We transact in various foreign currencies and have significant international revenues and expenses. In
addition, we charge our international subsidiaries for their use of intellectual property and technology and for certain
corporate services. Our cash flows, results of operations, and certain of our intercompany balances that are exposed to
foreign currency exchange rate fluctuations may differ materially from expectations, and we may record significant gains or
losses due to foreign currency fluctuations and related hedging activities. We are generally a net receiver of foreign
currencies and therefore benefit from a weakening of the United States (“U.S.”) dollar, and are adversely affected by a
strengthening of the U.S. dollar, relative to foreign currencies. We considered the historical trends in foreign currency
exchange rates and determined that it was reasonably possible that changes in exchange rates of 10% for all currencies
could be experienced in the near term.
We have a foreign currency exchange exposure management program designed to identify material foreign currency
exposures, manage these exposures, and reduce the potential effects of currency fluctuations on our consolidated cash
flows and results of operations through the execution of foreign currency exchange contracts. These foreign currency
exchange contracts are accounted for as derivative instruments; for additional details related to our foreign currency
exchange contracts, please see “Note 10—Derivative Instruments” to the consolidated financial statements included in this
Form 10-K.
We use foreign currency exchange forward contracts to protect our forecasted U.S. dollar-equivalent earnings and our
investment in foreign subsidiaries from adverse changes in foreign currency exchange rates. These hedging contracts
reduce, but do not entirely eliminate, the impact of adverse foreign currency exchange rate movements. We designate
these contracts as cash flow hedges of forecasted revenues and expenses denominated in certain foreign currencies and
net investment hedges for accounting purposes. The derivative’s gain or loss is initially reported as a component of AOCI.
Cash flow hedges are subsequently reclassified into revenue or expense in the same period the forecasted transaction
affects earnings. The accumulated gains and losses associated with net investment hedges will remain in AOCI until the
foreign subsidiaries are sold or substantially liquidated, at which point they will be reclassified into earnings.
If the U.S. dollar weakened by a hypothetical 10% at December 31, 2023 and 2022, the amount recorded in AOCI related to
our foreign currency exchange forward contracts, before taxes, would have been approximately $622 million and
$710 million lower, respectively, before considering the offsetting impact of the underlying hedged item.
We have an additional foreign currency exchange management program in which we use foreign currency exchange
contracts to help offset the foreign currency exchange risk on our assets and liabilities denominated in currencies other
than the functional currency of our subsidiaries. These contracts are not designated as hedging instruments and reduce,
but do not entirely eliminate, the impact of currency exchange rate movements on our assets and liabilities. The foreign
currency exchange gains and losses on our assets and liabilities are recorded in other income (expense), net, and are
offset by the gains and losses on the foreign currency exchange contracts.
52
• 2024 Annual Report
PART II
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Adverse changes in exchange rates of a hypothetical 10% for all foreign currencies would have resulted in a negative
impact on income before income taxes of approximately $417 million and $173 million at December 31, 2023 and 2022,
respectively, without considering the offsetting effect of foreign currency exchange contracts. Foreign currency exchange
contracts in place as of December 31, 2023 would have positively impacted income before income taxes by approximately
$400 million, resulting in a net negative impact of approximately $17 million. Foreign currency exchange contracts in place
as of December 31, 2022 would have positively impacted income before income taxes by approximately $144 million,
resulting in a net negative impact of approximately $29 million. These reasonably possible adverse changes in exchange
rates of 10% were applied to monetary assets, monetary liabilities, and available-for-sale debt securities denominated in
currencies other than the functional currencies of our subsidiaries at the balance sheet dates to compute the adverse
impact these changes would have had on our income before income taxes in the near term.
Equity Investment Risk
Our strategic investments are subject to a variety of market-related risks that could substantially reduce or increase the
carrying value of the portfolio. As of December 31, 2023 and 2022, our strategic investments totaled $1.8 billion and
$2.1 billion which represented approximately 11% and 14% of our total cash, cash equivalents, and short-term and long-term
investment portfolio at each of those respective dates. Our strategic investments include marketable equity securities,
which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held
companies. We are required to record all adjustments to the value of these strategic investments through our consolidated
statements of income (loss). As such, we expect volatility to our net income (loss) in future periods due to changes in
observable prices and impairment related to our non-marketable equity securities accounted for under the Measurement
Alternative. These changes could be material based on market conditions. Additionally, the financial success of our
investments in privately held companies is typically dependent on a liquidity event, such as a public offering, acquisition,
private sale, or other favorable market event providing the ability to realize appreciation in the value of the investment. A
hypothetical adverse change of 10% in the carrying value of our strategic investments as of December 31, 2023, which
could be experienced in the near term, would have resulted in a decrease of approximately $184 million to the carrying
value of the portfolio. We review our non-marketable equity securities accounted for under the Measurement Alternative for
impairment when events and circumstances indicate a decline in fair value of such assets below carrying value. Our
analysis includes a review of recent operating results and trends, recent purchases and sales of securities, and other
publicly available data, for which we assess factors such as the investees’ financial condition and business outlook,
industry performance, regulatory, economic, or technological environment, and other relevant events and factors affecting
the investees.
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Item 8. Financial Statements and Supplementary Data
The audited consolidated financial statements covering the years ended December 31, 2023, 2022, and 2021 and
accompanying notes listed in Part IV, Item 15(a)(1) of this Form 10-K are included in this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures. Based on the evaluation of our disclosure controls and procedures (as
defined in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act),
our principal executive officer and our principal financial officer have concluded that as of December 31, 2023, the end of
the period covered by this report, our disclosure controls and procedures were effective.
Management’s report on internal control over financial reporting. Our management is responsible for establishing and
maintaining adequate internal control over financial reporting. Our management, including our principal executive officer
and principal financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting
based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on its evaluation under the framework in Internal Control—Integrated
Framework, our management concluded that our internal control over financial reporting was effective as of December 31,
2023.
• 2024 Annual Report
53
PART II
Item 9A. Controls and Procedures
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in
Item 15(a) of this Form 10-K.
Changes in internal controls over financial reporting. There were no changes in our internal controls over financial reporting
as defined in Exchange Act Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Rule 10b5-1 Trading Plans
An equity trading plan is a written document that preestablishes the amounts, prices and dates (or formula for determining
the amounts, prices and dates) of future purchases or sales of the Company’s stock, including sales of shares acquired
under the Company’s employee and director equity plans.
On December 7, 2023, Jonathan Auerbach entered into an equity trading plan that is intended to satisfy the affirmative
defense conditions of Rule 10b5-1(c) under the Exchange Act. Mr. Auerbach was serving as an executive officer of the
Company at the time the trading plan was adopted. The trading plan has a duration of March 7, 2024 to September 10, 2024
with approximately 85,839 shares (vested and net shares expected to vest over the duration of the trading plan) subject to
sale under the plan.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Incorporated by reference from our Proxy Statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after December 31, 2023.
Item 11. Executive Compensation
Incorporated by reference from our Proxy Statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after December 31, 2023 (excluding the information under the subheading “Pay Versus Performance”).
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Incorporated by reference from our Proxy Statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after December 31, 2023.
Item 13. Certain Relationships and Related Transactions, and Director
Independence
Incorporated by reference from our Proxy Statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after December 31, 2023.
Item 14. Principal Accountant Fees and Services
Incorporated by reference from our Proxy Statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after December 31, 2023.
54
• 2024 Annual Report
PART IV
Item 15. Exhibits, Financial Statement Schedules
Part IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets
Consolidated Statements of Income (Loss)
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Financial Statement Schedule
Schedule II—Valuation and Qualifying Accounts
All other schedules have been omitted because the information required to be set forth therein is not applicable or is shown
in the financial statements or notes thereto.
3. Exhibits Required by Item 601 of Regulation S-K
The information required by this Item is set forth in the Index of Exhibits that precedes the signature page of this Annual
Report.
Page
Number
56
58
59
60
61
62
64
120
121
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• 2024 Annual Report
55
PART IV
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of PayPal Holdings, Inc.
Opinions on the Financial Statements and Internal Control over Financial
Reporting
We have audited the accompanying consolidated balance sheets of PayPal Holdings, Inc. and its subsidiaries (the
“Company”) as of December 31, 2023 and 2022, and the related consolidated statements of
income (loss), of
comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended
December 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item
15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal
control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework
(2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility
is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over
financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained
in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.
56
• 2024 Annual Report
PART IV
Report of Independent Registered Public Accounting Firm
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts
or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Loans Receivable
As described in Notes 1 and 11 to the consolidated financial statements, as of December 31, 2023, the Company recorded
total loans and interest receivable of $5,433 million, net of an allowance of $540 million. The allowance for loans receivable
is primarily based on expectations of credit losses based on historical lifetime loss data as well as macroeconomic
forecasts applied to the portfolio. The loss models incorporate various portfolio attributes, as well as macroeconomic
factors such as forecasted trends in unemployment, retail e-commerce sales, and household disposable income. The
forecasted macroeconomic factors are sourced externally, using a single scenario to reflect the economic conditions
applicable to a particular period. Management also includes qualitative adjustments that
incorporate incremental
information not captured in the expected credit loss models.
The principal considerations for our determination that performing procedures relating to the allowance for loans
receivable is a critical audit matter are (i) the high degree of auditor subjectivity and effort in performing procedures and
evaluating audit evidence relating to certain models which apply macroeconomic forecasts to estimate expected credit
losses; and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to the allowance for loans receivable,
including controls over certain models which apply macroeconomic
forecasts to estimate expected credit losses. These procedures also included, among others, the involvement of
professionals with specialized skill and knowledge to assist in testing management’s process for estimating the allowance
for loans receivable. Testing management’s process included (i) evaluating the appropriateness of the methodology and
certain models; (ii) testing the completeness and accuracy of certain data used in the estimate; and (iii) evaluating the
reasonableness of management’s application of macroeconomic forecasts to estimate expected credit losses.
/s/ PricewaterhouseCoopers LLP
San Jose, California
February 7, 2024
We have served as the Company’s auditor since 2000.
• 2024 Annual Report
57
PART IV
Consolidated Balance Sheets
PayPal Holdings, Inc.
Consolidated Balance Sheets
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Loans and interest receivable, held for sale
Loans and interest receivable, net of allowances of $540 and $598 as of December 31, 2023 and
2022, respectively
Funds receivable and customer accounts
Prepaid expenses and other current assets
TOTAL CURRENT ASSETS
Long-term investments
Property and equipment, net
Goodwill
Intangible assets, net
Other assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Funds payable and amounts due to customers
Accrued expenses and other current liabilities
TOTAL CURRENT LIABILITIES
Other long-term liabilities
Long-term debt
TOTAL LIABILITIES
Commitments and contingencies (Note 13)
Equity:
As of December 31,
2023
2022
(In millions, except par value)
$
9,081
$
7,776
4,979
1,069
563
5,433
38,935
2,509
62,569
3,273
1,488
11,026
537
3,273
3,092
963
—
7,431
36,264
1,898
57,424
5,018
1,730
11,209
788
2,455
$ 82,166
$ 78,624
$
139
$
126
41,935
6,392
48,466
2,973
9,676
61,115
40,014
4,868
45,008
2,925
10,417
58,350
Common stock, $0.0001 par value; 4,000 shares authorized; 1,072 and 1,136 shares outstanding
as of December 31, 2023 and 2022, respectively
Preferred stock, $0.0001 par value; 100 shares authorized, unissued
—
—
—
—
Treasury stock at cost, 245 and 173 shares as of December 31, 2023 and 2022, respectively
(21,045)
(16,079)
Additional paid-in-capital
Retained earnings
Accumulated other comprehensive income (loss)
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
19,642
23,200
(746)
21,051
18,327
18,954
(928)
20,274
$ 82,166
$ 78,624
The accompanying notes are an integral part of these consolidated financial statements.
58
• 2024 Annual Report
PayPal Holdings, Inc.
Consolidated Statements of Income (Loss)
Net revenues
Operating expenses:
Transaction expense
Transaction and credit losses
Customer support and operations
Sales and marketing
Technology and development
General and administrative
Restructuring and other
TOTAL OPERATING EXPENSES
Operating income
Other income (expense), net
Income before income taxes
Income tax expense (benefit)
NET INCOME (LOSS)
Net income (loss) per share:
Basic
Diluted
Weighted average shares:
Basic
Diluted
PART IV
Consolidated Statements of Income (Loss)
Year Ended December 31,
2023
2022
2021
(In millions, except for per share amounts)
$ 29,771
$ 27,518
$ 25,371
14,385
1,682
1,919
1,809
2,973
2,059
(84)
24,743
5,028
383
5,411
1,165
12,173
1,572
2,120
2,257
3,253
2,099
207
23,681
3,837
(471)
3,366
947
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10,315
1,060
2,075
2,445
3,038
2,114
62
21,109
4,262
(163)
4,099
(70)
$ 4,246
$ 2,419
$ 4,169
$
$
3.85
3.84
$
$
2.10
2.09
$
$
3.55
3.52
1,103
1,107
1,154
1,158
1,174
1,186
The accompanying notes are an integral part of these consolidated financial statements.
• 2024 Annual Report
59
PART IV
Consolidated Statements of Comprehensive Income (Loss)
PayPal Holdings, Inc.
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation adjustments (“CTA”)
Net investment hedges CTA gains (losses), net
Tax (expense) benefit on net investment hedges CTA gains (losses), net
Unrealized (losses) gains on cash flow hedges, net
Tax benefit (expense) on unrealized (losses) gains on cash flow hedges, net
Unrealized gains (losses) on available-for-sale debt securities, net
Tax (expense) benefit on unrealized gains (losses) on available-for-sale debt securities, net
Other comprehensive income (loss), net of tax
COMPREHENSIVE INCOME (LOSS)
The accompanying notes are an integral part of these consolidated financial statements.
Year Ended December 31,
2023
2022
2021
$ 4,246
(In millions)
$ 2,419
$ 4,169
(156)
192
(44)
(167)
8
457
(108)
182
(305)
(25)
6
(88)
4
(504)
120
(792)
(72)
—
—
522
(26)
(98)
22
348
$ 4,428
$ 1,627
$ 4,517
60
• 2024 Annual Report
PART IV
Consolidated Statements of Stockholders’ Equity
PayPal Holdings, Inc.
Consolidated Statements of Stockholders’ Equity
Common
Stock
Shares
Treasury
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
(Loss)
(In millions)
Retained
Earnings
Noncontrolling
Interest
Total
Equity
Balances at December 31, 2020
Net income
Foreign CTA
Unrealized gains on cash flow hedges, net
Tax expense on unrealized gains on cash flow
hedges, net
Unrealized losses on available-for-sale debt
securities, net
Tax benefit on unrealized losses on
available-for-sale debt securities, net
Common stock and stock-based awards issued
and assumed, net of shares withheld for
employee taxes
Common stock repurchased
Stock-based compensation
Change in noncontrolling interest
Balances at December 31, 2021
Net income
Foreign CTA
Net investment hedge CTA losses, net
Tax benefit on net investment hedges CTA
losses, net
Unrealized losses on cash flow hedges, net
Tax benefit on unrealized losses on cash flow
hedges, net
Unrealized losses on available-for-sale debt
securities, net
Tax benefit on unrealized losses on
available-for-sale debt securities, net
Common stock and stock-based awards
issued, net of shares withheld for employee
taxes
Common stock repurchased
Stock-based compensation
Other
Balances at December 31, 2022
Net income
Foreign CTA
Net investment hedge CTA gains, net
Tax expense on net investment hedges CTA
gains, net
Unrealized losses on cash flow hedges, net
Tax benefit on unrealized losses on cash flow
hedges, net
Unrealized gains on available-for-sale debt
securities, net
Tax expense on unrealized gains on
available-for-sale debt securities, net
Common stock and stock-based awards
issued, net of shares withheld for employee
taxes
Common stock repurchased
Treasury stock reissuance
Stock-based compensation
1,172 $ (8,507) $ 16,644
—
—
—
—
—
—
—
—
—
—
—
—
11
(15)
—
—
—
—
—
—
(3,373)
—
—
—
—
—
(881)
—
1,445
1,168 $ (11,880) $ 17,208
—
—
—
—
—
—
—
—
—
—
—
—
—
—
9
(41)
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,199)
—
—
(195)
—
1,313
1
1,136 $ (16,079) $ 18,327
—
—
—
—
—
—
—
—
—
$ (484) $ 12,366
4,169
—
—
—
(72)
522
(26)
(98)
22
—
—
—
—
—
—
—
—
—
—
—
$ (136) $ 16,535
2,419
—
—
—
(305)
(25)
6
(88)
4
(504)
120
—
—
—
—
—
—
—
—
—
—
—
—
—
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N
N
U
A
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E
P
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$ 44 $ 20,063
4,169
(72)
522
—
—
—
—
—
—
(26)
(98)
22
—
(881)
— (3,373)
1,445
—
(44)
(44)
$ — $ 21,727
2,419
(305)
(25)
—
—
—
—
—
—
—
—
—
—
—
—
6
(88)
4
(504)
120
(195)
(4,199)
1,313
1
$ (928) $ 18,954
4,246
—
—
—
(156)
192
$ — $ 20,274
4,246
(156)
192
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
9
(74)
1
—
—
(5,046)
80
—
(130)
—
—
1,445
(44)
(167)
8
457
(108)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(44)
(167)
8
457
(108)
(130)
—
— (5,046)
80
—
1,445
—
Balances at December 31, 2023
1,072 $ (21,045) $ 19,642
$ (746) $ 23,200
$ — $ 21,051
The accompanying notes are an integral part of these consolidated financial statements.
• 2024 Annual Report
61
PART IV
Consolidated Statements of Cash Flows
PayPal Holdings, Inc.
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Transaction and credit losses
Depreciation and amortization
Stock-based compensation
Deferred income taxes
Net (gains) losses on strategic investments
Gain on divestiture of business, excluding transaction costs
Accretion of discounts on investments, net of amortization of premiums
Adjustments to loans and interest receivable, held for sale
Other
Originations of loans receivable, held for sale
Proceeds from repayments and sales of loans receivable, originally classified as held
for sale
Changes in assets and liabilities:
Accounts receivable
Transaction loss allowance for cash losses, net
Other current assets and non-current assets
Accounts payable
Other current liabilities and non-current liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Proceeds from sales of property and equipment
Purchases and originations of loans receivable
Proceeds from repayments and sales of loans receivable, originally classified as held
for investment
Purchases of investments
Maturities and sales of investments
Acquisitions, net of cash and restricted cash acquired
Proceeds from divestiture of business, net of cash divested
Funds receivable
Collateral posted related to derivative instruments, net
Other investing activities
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from issuance of common stock
Purchases of treasury stock
Tax withholdings related to net share settlements of equity awards
Borrowings under financing arrangements
Repayments under financing arrangements
Funds payable and amounts due to customers
Collateral received related to derivative instruments, net
Other financing activities
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Year Ended December 31,
2023
2022
2021
(In millions)
$
4,246
$
2,419
$
4,169
1,682
1,072
1,475
(668)
(201)
(356)
(367)
53
(104)
(11,470)
10,795
(114)
(1,188)
203
7
(222)
4,843
(623)
45
(25,198)
26,660
(21,980)
24,295
—
466
(2,943)
(56)
86
752
127
(5,002)
(257)
1,528
(1,053)
1,861
(197)
—
1,572
1,317
1,261
(811)
304
—
(70)
—
275
—
1,060
1,265
1,376
(482)
(46)
—
73
—
27
—
—
—
(163)
(1,230)
118
(35)
856
5,813
(706)
5
(28,170)
24,903
(20,219)
23,411
—
—
(2,720)
(19)
187
(3,328)
143
(4,199)
(336)
3,475
(1,686)
1,405
(6)
1
(222)
(1,178)
(486)
(31)
272
5,797
(908)
5
(13,420)
11,826
(40,116)
39,698
(2,763)
—
193
336
—
(5,149)
162
(3,373)
(1,036)
272
(361)
3,572
207
—
PayPal Holdings, Inc.
Consolidated Statements of Cash Flows—(Continued)
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Net change in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
PART IV
Consolidated Statements of Cash Flows
Year Ended December 31,
2023
2022
2021
(2,993)
76
2,678
19,156
(In millions)
(1,203)
(155)
1,127
(557)
(102)
(11)
18,029
18,040
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD
$ 21,834
$ 19,156
$ 18,029
Supplemental cash flow disclosures:
Cash paid for interest
Cash paid for income taxes, net
The table below reconciles cash, cash equivalents, and restricted cash as reported in the
consolidated balance sheets to the total of the same amounts shown in the
consolidated statements of cash flows:
Cash and cash equivalents
Short-term and long-term investments
Funds receivable and customer accounts
$
$
331
2,118
$
$
280
878
$
$
231
474
$
9,081
$
7,776
$
5,197
3
17
12,750
11,363
109
12,723
TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH SHOWN IN THE
CONSOLIDATED STATEMENTS OF CASH FLOWS
$ 21,834
$ 19,156
$ 18,029
The accompanying notes are an integral part of these consolidated financial statements.
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PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements
Note 1—Overview and Summary of Significant Accounting Policies
Overview and Organization
PayPal Holdings, Inc. (“PayPal,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in January 2015 and is a
leading technology platform that enables digital payments and simplifies commerce experiences on behalf of merchants
and consumers worldwide. PayPal is committed to democratizing financial services to help improve the financial health of
individuals and to increase economic opportunity for entrepreneurs and businesses of all sizes around the world. Our goal
is to enable our merchants and consumers to manage and move their money anywhere in the world in the markets we
serve, anytime, on any platform, and using any device when sending payments or getting paid, including person-to-person
payments.
We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators
globally on all aspects of the payments industry, including countering terrorist financing, anti-money laundering, privacy,
cybersecurity, and consumer protection. The laws and regulations applicable to us, including those enacted prior to the
advent of digital payments, continue to evolve through legislative and regulatory action and judicial interpretation. New or
changing laws and regulations, including changes to their interpretation and implementation, as well as increased penalties
and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of
operations, and financial condition. We monitor these areas closely and are focused on designing compliant solutions for
our customers.
Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the financial statements of PayPal and our wholly- and
majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are
accounted for using the equity method of accounting. For such investments, our share of the investee’s results of
operations is included in other income (expense), net on our consolidated statements of income (loss). Investments in
entities where we do not have the ability to exercise significant influence over the investee are accounted for at fair value or
cost minus impairment, if any, adjusted for changes resulting from observable price changes, which are included in other
income (expense), net on our consolidated statements of income (loss). Our investment balance is included in long-term
investments on our consolidated balance sheets.
We determine at the inception of each investment, and re-evaluate if certain events occur, whether an entity in which we
have made an investment is considered a variable interest entity (“VIE”). If we determine an investment is in a VIE, we then
assess if we are the primary beneficiary, which would require consolidation. As of December 31, 2023 and December 31,
2022, no VIEs qualified for consolidation as the structures of these entities do not provide us with the ability to direct
activities that would significantly impact their economic performance. As of December 31, 2023 and December 31, 2022,
the carrying value of our investments in nonconsolidated VIEs was $175 million and $128 million, respectively, and is
included as non-marketable equity securities applying the equity method of accounting in long-term investments on our
consolidated balance sheets. Our maximum exposure to loss related to our nonconsolidated VIEs, which represents
funded commitments and any future funding commitments, was $246 million and $232 million as of December 31, 2023
and 2022, respectively.
Certain amounts for prior years have been reclassified to conform to the financial statement presentation as of and for the
year ended December 31, 2023.
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PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Use of Estimates
The preparation of consolidated financial statements in conformity with United States (“U.S.”) generally accepted
accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we
evaluate our estimates,
loss
contingencies, revenue recognition, and the evaluation of strategic investments for impairment. We base our estimates on
historical experience and various other assumptions which we believe to be reasonable under the circumstances. Actual
results could materially differ from these estimates.
including those related to provisions for transaction and credit losses,
income taxes,
Cash and Cash Equivalents
Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less when
purchased and are comprised of primarily bank deposits, government and agency securities, and commercial paper.
Investments
Short-term investments include time deposits and available-for-sale debt securities with original maturities of greater than
three months but less than one year when purchased or maturities of one year or less on the reporting date. Long-term
investments include time deposits and available-for-sale debt securities with maturities exceeding one year on the
reporting date, as well as our strategic investments. Our available-for-sale debt securities are reported at fair value using the
specific identification method. Unrealized gains and losses are reported as a component of other comprehensive income
(loss), net of related estimated tax provisions or benefits.
We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of
our subsidiaries, underlying funds receivable and customer accounts, short-term investments, and long-term investments,
under the fair value option as further discussed in “Note 9—Fair Value Measurement of Assets and Liabilities.” The changes
in fair value related to initial measurement and subsequent changes in fair value are included as a component of other
income (expense), net on our consolidated statements of income (loss).
Our strategic investments consist of marketable equity securities, which are publicly traded, and non-marketable equity
securities, which are primarily investments in privately held companies. Marketable equity securities have readily
determinable fair values with changes in fair value recorded in other income (expense), net. Non-marketable equity
securities include investments that do not have a readily determinable fair value, as well as equity method investments. The
investments that do not have readily determinable fair value are measured at cost minus impairment, if any, and are
adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment
in the same issuer (the “Measurement Alternative”). Non-marketable equity securities also include our investments where
we have the ability to exercise significant influence, but not control, over the investee and account for these securities
using the equity method of accounting. All gains and losses on these investments, realized and unrealized, and our share of
earnings or losses from investments accounted for using the equity method are recognized in other income (expense), net
on our consolidated statements of income (loss).
We assess whether an impairment loss on our non-marketable, Measurement Alternative investments has occurred based
on qualitative factors such as the companies’ financial condition and business outlook, industry performance, regulatory,
economic or technological environment, and other relevant events and factors affecting the company. We assess whether
an other-than-temporary impairment loss on our equity method investments has occurred due to declines in fair value or
other market conditions. If any impairment is identified for non-marketable equity securities or impairment is considered
other-than-temporary for our equity method investments, we write down the investment to its fair value and record the
corresponding charge through other income (expense), net on our consolidated statements of income (loss).
• 2024 Annual Report
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PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Our available-for-sale debt securities in an unrealized loss position are written down to fair value through a charge to other
income (expense), net on our consolidated statements of income (loss) if we intend to sell the security or it is more likely
than not we will be required to sell
its amortized cost basis. For the remaining
available-for-sale debt securities in an unrealized loss position, if we identify that the decline in fair value has resulted from
credit losses, taking into consideration changes to the rating of the security by rating agencies, implied yields versus
benchmark yields, and the extent to which fair value is less than amortized cost, among other factors, we estimate the
present value of cash flows expected to be collected. If the present value of cash flows expected to be collected is less
than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that
the fair value is less than the amortized cost basis. Any portion of impairment not related to credit losses is recognized in
other comprehensive income (loss).
the security before recovery of
Accounts Receivable, Net
Accounts receivable is primarily related to revenue earned from customers and is reduced by an allowance for credit
losses. For the years ended December 31, 2023 and 2022, the allowance for credit losses was not significant. Accounts
receivable deemed uncollectible are charged against the allowance for credit losses when identified.
Loans and Interest Receivable, Held for Sale
In June 2023, we entered into a multi-year agreement with a global investment firm to sell up to €40 billion of United
Kingdom (“U.K.”) and other European buy now, pay later loan receivables, consisting of eligible loans and interest
receivable and a forward-flow arrangement for the sale of future originations of eligible loans over a 24-month commitment
period (together, “eligible consumer installment receivables”). Following the sale, the global investment firm becomes the
owner of the eligible consumer installment receivables sold and we no longer hold an ownership interest in these
receivables.
These sales of eligible consumer installment receivables to the global investment firm are accounted for as a true sale
based on our determination that these receivables met all the necessary criteria for such accounting including legal
isolation for transferred assets, ability of the transferee to pledge or exchange the transferred assets without constraint, and
the transfer of control, and thus, we no longer record these receivables on our consolidated financial statements. We also
concluded that our continuing involvement in the arrangement does not invalidate this determination. We maintain the
servicing rights for the entire pool of the consumer installment receivables sold and receive a market-based service fee for
servicing the assets sold.
Prior to the decision to sell, this portfolio was reported at outstanding principal balances, including unamortized deferred
origination costs and estimated collectible interest and fees, net of allowances for credit
the time of
reclassification of eligible consumer installment receivables to loans and interest receivable, held for sale in May 2023, any
previously recorded allowance for credit losses for loans and interest receivable outstanding was reversed, resulting in a
decrease in transaction and credit losses on our consolidated statements of income (loss) for the year ended December 31,
2023.
losses. At
Loans and interest receivable, held for sale as of December 31, 2023 represents installment consumer receivables that we
originated and intend to sell to the global investment firm. Loans and interest receivable, held for sale are recorded at the
lower of cost or fair value, determined on an aggregate basis, with valuation changes and any associated charge-offs
recorded in restructuring and other on our consolidated statements of income (loss). Interest income on interest bearing
held-for-sale loans is accrued and recognized based on the contractual rate of interest.
If PayPal no longer has intent to sell loans and interest receivable, held for sale, such loans would be reclassified to loans
and interest receivable, held for investment. When a loan is reclassified to held for investment, any amounts previously
recorded in order to measure the loan at the lower of cost or fair value are reversed on our consolidated statements of
income (loss) (recognized within restructuring and other) and the loan is recorded consistent with loans originated as held
for investment.
Loans and Interest Receivable, Net
Loans and interest receivable, net represents merchant receivables originated under our PayPal Working Capital (“PPWC”)
product and PayPal Business Loan (“PPBL”) product and consumer loans originated under our PayPal Credit and installment
credit products. PayPal Credit consists of revolving credit products.
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PART IV
Note 1—Overview and Summary of Significant Accounting Policies
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PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
In the U.S., PPWC, PPBL, and consumer interest-bearing installment products are provided under a program agreement we
have with an independent chartered financial institution (“partner institution”). The partner institution extends credit to
merchants for the PPWC and PPBL products and to consumers for interest-bearing installment products and we purchase
the related receivables originated by the partner institution. For our merchant finance products outside the U.S., we extend
working capital advances and loans in the U.K. and rest of Europe through our U.K. subsidiary and Luxembourg banking
subsidiary, respectively, and working capital loans in Australia through an Australian subsidiary. In the U.S., we extend
certain short-term, interest-free, installment loans to consumers through a U.S. subsidiary. For our international consumer
credit products, we extend credit in the U.K and the rest of Europe through our U.K. subsidiary and Luxembourg banking
subsidiary, respectively, and in Australia and Japan, through local subsidiaries.
As part of our arrangement with the partner institution in the U.S., we sell back a participation interest in the pool of
receivables for the PPWC, PPBL, and consumer interest-bearing installment products. The partner institution has no
recourse against us related to their participation interests for failure of debtors to pay when due. The participation interests
held by the partner institution have the same priority to the interests held by us and are subject to the same credit,
prepayment, and interest rate risk associated with this pool of receivables. All risks of loss are shared pro rata based on
participation interests held among all participating stakeholders. We account for the asset transfer as a sale and
derecognize the portion of the participation interests for which control has been surrendered. For this arrangement, gains or
losses on the sale of the participation interests are not material as the carrying amount of the participation interest sold
approximates the fair value at time of transfer.
Loans, advances, and interest and fees receivable are reported at their outstanding balances, net of any participation
interests sold and unamortized deferred origination costs. We maintain the servicing rights for the entire pool of consumer
and merchant receivables outstanding and receive a market-based service fee for servicing the assets underlying the
participation interest sold.
We offer both revolving and installment credit products to our consumers. The terms of our consumer relationships require
us to submit monthly bills to the consumer detailing loan repayment requirements. The terms also allow us to charge the
consumer interest and fees in certain circumstances. Due to the relatively small dollar amount of individual loans and
interest receivable, we do not require collateral on these balances.
In certain instances where a merchant is able to demonstrate that it is experiencing financial difficulty, there may be a
modification of the loan or advance and the related interest or fee receivable for which it is probable that, without
modification, we would be unable to collect all amounts due. Refer to “Note 11—Loans and Interest Receivable” for further
information related to loan modifications.
Another partner institution is the exclusive issuer of the PayPal Credit consumer financing program in the U.S. We do not
hold an ownership interest in the receivables generated through the program and therefore, do not record these
receivables on our consolidated financial statements. PayPal earns a revenue share on the portfolio of consumer
receivables owned by the partner institution, which is recorded in revenues from other value added services on our
consolidated statements of income (loss).
Allowance for Loans and Interest Receivable
The allowance for loans and interest receivable represents our estimate of current expected credit losses inherent in our
portfolio of loans and interest receivables. Increases to the allowance for loans receivable are reflected as a component of
transaction and credit losses on our consolidated statements of income (loss). Increases to the allowance for interest and
fees receivable are reflected as a reduction of net revenues on our consolidated statements of income (loss), or as a
reduction of deferred revenue when interest and fees are billed at the inception of a loan or advance. The evaluation
process to assess the adequacy of allowances is subject to numerous estimates and judgments.
• 2024 Annual Report
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PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The allowance for merchant loans, advances, and interest and fees receivable is primarily based on expectations of credit
losses based on historical lifetime loss data as well as macroeconomic forecasts applied to the portfolio. The merchant
loss models incorporate various portfolio attributes including geographic region, first borrowing versus repeat borrowing,
delinquency, internally developed risk ratings, and vintage, as well as macroeconomic factors such as forecasted trends in
unemployment rates and retail e-commerce sales. The forecasted macroeconomic factors are sourced externally, using a
single scenario that we believe is most appropriate to the economic conditions applicable to a particular period. The
reasonable and supportable forecast period for merchant products that we have included in our projected loss rates for
2023 and 2022, which approximates the estimated life of the loans, is approximately 2.5 to 3.5 years. Projected loss rates,
inclusive of historical loss data and macroeconomic factors, are derived based on and applied to the principal amount of
our merchant receivables. We also include qualitative adjustments that incorporate incremental information not captured in
the quantitative estimates of our current expected credit losses. The allowance for current expected credit losses on
interest and fees receivable is determined primarily by applying loss curves to each portfolio by geography, delinquency,
and period of origination, among other factors.
The allowance for consumer loans and interest receivable not classified as held for sale is primarily based on expectations
of credit losses based on historical lifetime loss data. The allowance for loans and interest receivable for our revolving
credit product also incorporates macroeconomic forecasts applied to the portfolio. In the second quarter of 2023, our
expected credit loss models for our revolving consumer receivables were updated. These changes did not have a material
impact on our provision recorded in the year ended December 31, 2023. The consumer loss models incorporate various
portfolio attributes including geographic region, loan term, delinquency, credit rating, vintage, and for the revolving credit
portfolio macroeconomic factors such as forecasted trends in household disposable income and retail e-commerce sales
(and through the first quarter of 2023, unemployment rates). The forecasted macroeconomic factors are sourced externally,
using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period.
The reasonable and supportable forecast period for revolving products and installment products (not classified as held for
sale) that we have included in our projected loss rates for 2023, which approximates the estimated life of the loans, is
approximately 5 years and 7 months to 3.5 years, respectively. In 2022, the reasonable and supportable forecast periods
were consistent with 2023 except for revolving products, which had a reasonable and supportable forecast period of 2
years. Projected loss rates, inclusive of historical loss data and, for the revolving credit portfolio macroeconomic factors,
are derived based on and applied to the principal amount of our consumer receivables. We also include qualitative
adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected
credit losses, such as expectations of macroeconomic conditions not captured in the loss models for our installment
products (not classified as held for sale). The allowance for current expected credit losses on interest and fees receivable is
determined primarily by applying loss curves to each portfolio by geography, delinquency, and period of origination,
among other factors.
In connection with the sale of our eligible consumer installment receivables, and the reclassification of that portfolio as held
for sale, we reversed the previously recorded allowances for credit losses associated with those loans and interest
receivable balances. Charge-offs and any adjustments to the fair value of loans and interest receivable, held for sale, are
recorded in restructuring and other on our consolidated statement of income (loss).
Customer Accounts
We hold all customer balances, both in the U.S. and internationally, as direct claims against us which are reflected on our
consolidated balance sheets as a liability classified as amounts due to customers. Certain jurisdictions where PayPal
operates require us to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in
these jurisdictions, equal to at least 100% of the aggregate amount of all customer balances. Therefore, we restrict the use
of the assets underlying the customer balances to meet these regulatory requirements and separately classify the assets as
customer accounts on our consolidated balance sheets. We classify the assets underlying the customer balances as
current based on their purpose and availability to fulfill our direct obligation under amounts due to customers. Customer
funds for which PayPal is an agent and custodian on behalf of our customers are not reflected on our consolidated balance
sheets. These funds include U.S. dollar funds which are deposited at one or more third-party financial institutions insured by
the Federal Deposit Insurance Corporation (“FDIC”) and are eligible for FDIC pass-through insurance (subject to applicable
limits).
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PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) agreed that PayPal’s management may
designate up to 50% of European customer balances held in our Luxembourg banking subsidiary to fund European, U.K.,
and U.S. credit activities. As of December 31, 2023 and 2022, the total amount approved by management to be designated
to fund credit activities was $3.0 billion and $3.8 billion, respectively, and represented approximately 39% and 37% of
European customer balances made available for our corporate use as of those respective dates, as determined by applying
financial regulations maintained by the CSSF. At the time PayPal’s management designates the European customer
balances held in our Luxembourg banking subsidiary to be used to extend credit, the balances are classified as cash and
cash equivalents and no longer classified as customer accounts on our consolidated balance sheets. The remaining assets
underlying the customer balances remain separately classified as customer accounts on our consolidated balance sheets.
We identify these customer accounts separately from corporate funds and maintain them in interest and non-interest
bearing bank deposits, time deposits, and available-for-sale debt securities. Customer balances deposited with our
partners on a short-term basis in advance of customer transactions and used to fulfill our direct obligation under amounts
due to customers are classified as cash and cash equivalents within our customer accounts classification on our
consolidated balance sheets. See “Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and
Investments” for additional information related to customer accounts.
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We present changes in funds receivable and customer accounts as cash flows from investing activities on our consolidated
statements of cash flows based on the nature of the activity underlying our customer accounts.
Under applicable accounting standards, we are an agent when facilitating cryptocurrency transactions on behalf of our
customers. Cryptocurrencies held on behalf of our customers are not PayPal’s assets and therefore, are not reflected as
cryptocurrency assets on our consolidated balance sheets; however, we recognize a crypto asset safeguarding liability
with a corresponding safeguarding asset to reflect our obligation to safeguard the cryptocurrencies held on behalf of our
customers.
Funds Receivable and Funds Payable
Funds receivable and funds payable arise due to the time required to initiate collection from and clear transactions through
external payment networks. When customers fund their PayPal account using their bank account, credit card, debit card, or
withdraw funds from their PayPal account to their bank account or through a debit card transaction, there is a clearing
period before the cash is received or settled, usually one to three business days for U.S. transactions and generally up to
five business days for international transactions. In addition, a portion of our customers’ funds are settled directly to their
bank account. These funds are also classified as funds receivable and funds payable and arise due to the time required to
initiate collection from and clear transactions through external payment networks.
Property and Equipment
Property and equipment consists primarily of computer equipment, software and website development costs, land and
buildings, leasehold improvements, and furniture and fixtures. Property and equipment are stated at historical cost less
accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method
over the estimated useful lives of the assets; generally, one to four years for computer equipment and software, including
capitalized software and website development costs, three years for furniture and fixtures, up to 30 years for buildings and
building improvements, and the shorter of five years or the non-cancelable term of the lease for leasehold improvements.
Direct costs incurred to develop software for internal use and website development costs, including those costs incurred in
expanding and enhancing our payments platform, are capitalized and amortized generally over an estimated useful life of
three years and are recorded as amortization within the financial statement captions aligned with the internal organizations
that are the primary beneficiaries of such assets. We capitalized $445 million and $511 million of internally developed
software and website development costs for the years ended December 31, 2023 and 2022, respectively. Amortization
expense for these capitalized costs was $482 million, $426 million, and $366 million for the years ended December 31,
2023, 2022, and 2021, respectively. Costs related to the maintenance of internal use software and website development
costs are expensed as incurred.
• 2024 Annual Report
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PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Leases
We determine whether an arrangement is a lease for accounting purposes at contract inception. Operating leases are
recorded as right-of-use (“ROU”) assets, which are included in other assets, and lease liabilities, which are included in
accrued expenses and other current liabilities and other long-term liabilities on our consolidated balance sheets. For sale-
leaseback transactions, we evaluate the sale and the lease arrangement based on our conclusion as to whether control of
the underlying asset has been transferred, and recognize the sale-leaseback as either a sale transaction or under the
financing method. The financing method requires the asset to remain on our consolidated balance sheets throughout the
term of the lease and the proceeds to be recognized as a financing obligation.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to
make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement
date based on the present value of lease payments over the lease term. Our leases do not provide an implicit rate and
therefore we use an incremental borrowing rate for specific terms on a collateralized basis using information available on
the commencement date in determining the present value of lease payments. The ROU asset calculation includes lease
payments to be made and excludes lease incentives. The ROU asset and lease liability may include amounts attributed to
options to extend or terminate the lease when it is reasonably certain we will exercise that option. When we reach a
decision to exercise a lease renewal or termination option, we recognize the associated impact to the ROU asset and lease
liability. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
We have lease agreements with lease and non-lease components. We have elected to apply the practical expedient and
account for the lease and non-lease components as a single lease component for all leases, where applicable. In addition,
we have elected to apply the practical expedients related to lease classification, hindsight, and land easement. We apply a
single portfolio approach to account for the ROU assets and lease liabilities.
We evaluate ROU assets related to leases for indicators of impairment whenever events or changes in circumstances
indicate that the carrying amount of an ROU asset may not be recoverable. When a decision has been made to exit a lease
prior to the contractual term or to sublease that space, we evaluate the asset for impairment and recognize the associated
impact to the ROU asset and related expense, if applicable. The evaluation is performed at the asset group level initially and
when appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level. Undiscounted cash
flows expected to be generated by the related ROU assets are estimated over the ROU assets’ useful lives. If the evaluation
indicates that the carrying amount of the ROU assets may not be recoverable, any potential impairment is measured based
upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques.
Goodwill and Intangible Assets
Goodwill is tested for impairment, at a minimum, on an annual basis at the reporting unit level by first performing a
qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its
carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is
compared to its fair value. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value.
The fair value of the reporting unit may be estimated using income and market approaches. The discounted cash flow
method, a form of the income approach, uses expected future operating results and a market participant discount rate. The
market approach uses comparable company prices and other relevant information generated by market transactions
(either publicly traded entities or mergers and acquisitions) to develop pricing metrics to be applied to historical and
expected future operating results of the reporting unit. Failure to achieve these expected results, changes in the discount
rate, or market pricing metrics may cause a future impairment of goodwill at the reporting unit level. We conducted our
annual impairment test of goodwill as of August 31, 2023 and 2022. We determined that no adjustment to the carrying value
of goodwill of our reporting unit was required. As of December 31, 2023, we determined that no events occurred, or
circumstances changed from August 31, 2023 through December 31, 2023 that would more likely than not reduce the fair
value of the reporting unit below its carrying amount.
Intangible assets consist of acquired customer list and user base intangible assets, marketing related intangibles,
developed technology, and other intangible assets. Intangible assets are amortized over the period of estimated benefit
using the straight-line method and estimated useful lives ranging from three to seven years. No significant residual value is
estimated for intangible assets.
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• 2024 Annual Report
PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances
indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its
carrying amount exceeds the future undiscounted cash flow the asset is expected to generate.
Allowance for Transaction Losses
We are exposed to transaction losses due to credit card and other payment misuse as well as nonperformance from sellers
who accept payments through PayPal. We establish an allowance for estimated losses arising from completing customer
transactions, such as chargebacks for unauthorized credit card use and merchant-related chargebacks due to non-delivery
or unsatisfactory delivery of purchased items, purchase protection program claims, and account takeovers. This allowance
represents an accumulation of the estimated amounts of probable transaction losses as of the reporting date. The
allowance is monitored regularly and is updated based on actual loss data. The allowance is based on known facts and
circumstances, internal factors including experience with similar cases, historical trends involving loss payment patterns,
and the mix of transaction and loss types, as applicable. Additions to the allowance are reflected as a component of
transaction and credit losses on our consolidated statements of income (loss). The allowance for transaction losses is
included in accrued expenses and other current liabilities on our consolidated balance sheets.
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Allowance for Negative Customer Balances
Negative customer balances occur primarily when there are insufficient funds in a customer’s PayPal account to cover
charges applied for bank returns and reversals, debit card transactions, and merchant-related chargebacks due to
non-delivery or unsatisfactory delivery of purchased items, which are generally within the scope of our protection
programs. Negative customer balances can be cured by the customer by adding funds to their account, receiving
payments, or through back-up funding sources. We also utilize third-party collection agencies. For negative customer
balances that are not expected to be cured or otherwise collected, we provide an allowance for expected losses. The
allowance represents expected losses based on historical trends involving collection and write-off patterns, internal factors
including our experience with similar cases, other known facts and circumstances, and reasonable and supportable
macroeconomic forecasts, as applicable. Loss rates are derived using historical loss data for each delinquency bucket
using a roll rate model that captures the losses and the likelihood that a negative customer balance will be written off as the
delinquency age of such balance increases. The loss rates are then applied to the outstanding negative customer
balances. Once the quantitative calculation is performed, we review the adequacy of the allowance and determine if
qualitative adjustments need to be considered. We write-off negative customer balances in the month in which the balance
becomes outstanding for 120 days. Write-offs that are recovered are recorded as a reduction to our allowance for negative
customer balances. Negative customer balances are included in other current assets, net of the allowance on our
consolidated balance sheets. Adjustments to the allowance for negative customer balances are recorded as a component
of transaction and credit losses on our consolidated statements of income (loss).
Derivative Instruments
See “Note 10—Derivative Instruments” for information related to the derivative instruments.
Fair Value Measurements
We measure certain financial assets and liabilities at fair value on a recurring basis and certain financial and non-financial
assets and liabilities at fair value on a non-recurring basis when a change in fair value or impairment is evidenced. Fair value
is defined as the price received to sell an asset or paid to transfer a liability in the principal market for the asset or liability in
an orderly transaction between market participants on the measurement date. Fair value is estimated by maximizing the
use of observable inputs and minimizing the use of unobservable inputs. The categorization within the following three-level
fair value hierarchy for our recurring and non-recurring fair value measurements is based upon the lowest level of input that
is available and significant to the fair value measurement:
• Level 1—Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2—Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities,
quoted prices in markets that are not active or other inputs that are observable or can be market-corroborated.
• Level 3—Unobservable inputs that cannot be directly corroborated by observable market data and that typically reflect
management’s estimate of assumptions that market participants would use in pricing the asset or liability.
• 2024 Annual Report
71
PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
See “Note 9—Fair Value Measurement of Assets and Liabilities” for additional information related to our fair value
measurements.
Crypto Asset Safeguarding Liability and Corresponding Safeguarding Asset
See “Note 7—Other Financial Statement Details” for information related to our crypto asset safeguarding liability and
corresponding safeguarding asset.
Concentrations of Risk
loans and interest receivable, net,
Our cash, cash equivalents, short-term investments, accounts receivable,
funds
receivable and customer accounts, long-term investments, and long-term notes receivable, are potentially subject to
concentration of credit risk. Cash, cash equivalents, and customer accounts are placed with financial institutions that
management believes are of high credit quality. In addition, funds receivable are generated primarily with financial
institutions which management believes are of high credit quality. We invest our cash, cash equivalents, and customer
accounts primarily in highly liquid, highly rated instruments which are uninsured. We have corporate deposit balances with
financial services institutions which exceed the FDIC insurance limit of $250,000. As part of our cash management process,
we perform periodic evaluations of the relative credit standing of these financial institutions. Our accounts receivable are
derived from revenue earned from customers located in the U.S. and internationally. Our loans and interest receivable are
derived from merchant and consumer financing activities for customers located in the U.S. and internationally. Our long-
term notes receivable is derived from deferred proceeds associated with the sale of our U.S. consumer credit receivables
portfolio to a partner institution in 2018. Transaction expense is derived from fees paid to payment processors and other
financial institutions, located in the U.S. and internationally, when we draw funds from a customer’s credit or debit card,
bank account, or other funding source they have stored in their digital wallet.
As of December 31, 2023 and 2022, one customer accounted for 15% and 20% of net accounts receivables, respectively.
No customer accounted for more than 10% of net loans receivable as of December 31, 2023 and 2022. At December 31,
2023 and 2022, one partner institution accounted for our long-term notes receivable balance, which represented 16% and
18% of other assets, respectively. During the years ended December 31, 2023, 2022, and 2021, no customer accounted for
more than 10% of net revenues. During the years ended December 31, 2023 and 2022, one payment processor accounted
for 60% and 63% of transaction expense, respectively. During the year ended December 31, 2021, two payment processors
accounted for 70% of transaction expense.
Revenue Recognition
See “Note 2—Revenue” for information related to our revenue recognition.
Advertising Expense
We expense the cost of producing advertisements at the time production occurs and expense the cost of communicating
advertisements in the period during which the advertising space or airtime is used as sales and marketing expense. Online
advertising expenses are recognized based on the terms of the individual agreements, which are generally based on the
number of impressions delivered over the total number of contracted impressions, on a pay-per-click basis, or on a
straight-line basis over the term of the contract. Advertising expense totaled $364 million, $518 million, and $740 million for
the years ended December 31, 2023, 2022, and 2021, respectively.
Defined Contribution Savings Plans
We have a defined contribution savings plan in the U.S. which qualifies under Section 401(k) of the Internal Revenue Code
(“Code”). Our non-U.S. employees are covered by other savings plans. Expenses related to our defined contribution
savings plans are recorded when services are rendered by our employees.
72
• 2024 Annual Report
PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Stock-Based Compensation
We determine compensation expense associated with restricted stock units, performance based restricted stock units, and
restricted stock awards based on the estimated fair value of our common stock on the date of grant. We determine
compensation expense associated with stock options based on the estimated grant date fair value method using the
Black-Scholes valuation model. We generally recognize compensation expense using a straight-line amortization method
over the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based compensation
expense for the years ended December 31, 2023, 2022, and 2021 has been reduced for estimated forfeitures. When
estimating forfeitures, we consider voluntary termination behavior of our employees as well as trends of actual forfeitures.
Foreign Currency
Many of our foreign subsidiaries have designated the local currency of their respective countries as their functional
currency. Assets and liabilities of our non-U.S. dollar functional currency subsidiaries are translated into U.S. dollars at
exchange rates prevailing at the balance sheet dates. Revenues and expenses of our non-U.S. dollar functional currency
subsidiaries are translated into U.S. dollars using daily exchange rates. Gains and losses resulting from these translations are
recorded as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains and losses from the
remeasurement of foreign currency transactions into the functional currency are recognized as other income (expense), net
on our consolidated statements of income (loss).
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Income Taxes
We account for income taxes using an asset and liability approach which requires the recognition of taxes payable or
refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have
been recognized in the financial statements or tax returns. The measurement of current and deferred tax assets and
liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. If
necessary, the measurement of deferred tax assets is reduced by the amount of any tax benefits that are not expected to
be realized based on available evidence. We report a liability for unrecognized tax benefits resulting from uncertain tax
positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized
tax benefits in income tax expense. We account for Global Intangible Low-Taxed Income as a current-period expense
when incurred.
Other Income (expense), Net
Other income (expense), net includes:
• interest income, which consists of interest earned on corporate cash and cash equivalents and short-term and long-
term investments,
• interest expense, which consists of interest expense, fees, and amortization of debt discount on our long-term debt
(including current portion) and credit facilities,
• realized and unrealized gains (losses) on strategic investments, and
• other, which primarily includes foreign currency exchange gains and losses due to remeasurement of certain foreign
currency denominated monetary assets and liabilities, forward points on derivative contracts designated as net
investment hedges, and fair value changes on the derivative contracts not designated as hedging instruments.
Recent Accounting Guidance
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amended guidance
requires incremental reportable segment disclosures, primarily about significant segment expenses. The amendments also
require entities with a single reportable segment to provide all disclosures required by these amendments, and all existing
segment disclosures. The amendments will be applied retrospectively to all prior periods presented in the financial
statements and is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning
after December 15, 2024, with early adoption permitted. We are evaluating the impact this amended guidance may have on
the footnotes to our consolidated financial statements.
• 2024 Annual Report
73
PART IV
Note 1—Overview and Summary of Significant Accounting Policies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60):
Accounting for and Disclosure of Crypto Assets. This amended guidance requires fair value measurement of certain crypto
assets each reporting period with the changes in fair value reflected in net income. The amendments also require
disclosures of the name,
fair value, units held, and cost bases for each significant crypto asset held and annual
reconciliations of crypto asset holdings. The new guidance is effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2024, with early adoption permitted. We are required to apply these
amendments as a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the
guidance is adopted. The adoption of this guidance is not expected to have a material impact on our consolidated financial
statements based on our current crypto asset holdings and fair value.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
The amended guidance enhances income tax disclosures primarily related to the effective tax rate reconciliation and
income taxes paid information. This guidance requires disclosure of specific categories in the effective tax rate
reconciliation and further information on reconciling items meeting a quantitative threshold. In addition, the amended
guidance requires disaggregating income taxes paid (net of refunds received) by federal, state, and foreign taxes. It also
requires disaggregating individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater
than 5 percent of total income taxes paid (net of refunds received). The amended guidance is effective for fiscal years
beginning after December 15, 2024. The guidance can be applied either prospectively or retrospectively. We are evaluating
the impact this amended guidance may have on the footnotes to our consolidated financial statements.
Recently Adopted Accounting Guidance
In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326):
Instruments – Credit Losses. This amended guidance eliminated the accounting designation of a loan
Financial
modification as a TDR and the measurement guidance for TDRs. The amendments also enhanced existing disclosure
requirements and introduced new requirements related to modifications of receivables due from borrowers experiencing
financial difficulty. Additionally, this guidance required entities to disclose gross charge-offs by year of origination for
financing receivables, such as loans and interest receivable. The amended guidance was effective for fiscal years
beginning after December 15, 2022 and was required to be applied prospectively, except for the recognition and
measurement of TDRs, which could be applied on a modified retrospective basis. We adopted this guidance effective
January 1, 2023 on a prospective basis. Our financial statements were not materially impacted upon adoption. For
additional information, see “Note 11—Loans and Interest Receivable.”
There are other new accounting pronouncements issued by the FASB that we have adopted or will adopt, as applicable.
We do not believe any of these new accounting pronouncements have had, or will have, a material impact on our
consolidated financial statements or disclosures.
Note 2—Revenue
We enable our customers to send and receive payments. We earn revenue primarily by completing payment transactions
for our customers on our payments platform and from other value added services. Our revenues are classified into two
categories: transaction revenues and revenues from other value added services.
Transaction Revenues
We earn transaction revenues primarily from fees paid by our customers to receive payments on our platform. These fees
may have a fixed and variable component. The variable component is generally a percentage of the value of the payment
amount and is known at the time the transaction is processed. For a portion of our transactions, the variable component of
the fee is eligible for reimbursement when the underlying transaction is approved for a refund. We estimate the amount of
fee refunds that will be processed each quarter and record a provision against our transaction revenues. The volume of
activity processed on our payments platform, which results in transaction revenue, is referred to as Total Payment Volume
(“TPV”). We generate additional revenues from merchants and consumers: on transactions where we perform currency
conversion, when we enable cross-border transactions (i.e., transactions where the merchant and consumer are in different
countries), to facilitate the instant transfer of funds for our customers from their PayPal or Venmo account to their bank
account or debit card, to facilitate the purchase and sale of cryptocurrencies, as contractual compensation from sellers that
violate our contractual terms (for example, through fraud or counterfeiting), and other miscellaneous fees. Our transaction
revenues are also reduced by certain incentives provided to our customers.
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• 2024 Annual Report
PART IV
Note 2—Revenue
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Our contracts with our customers are usually open-ended and can be terminated by either party without a termination
penalty after the notice period has lapsed. Therefore, our contracts are defined at the transaction level and do not extend
beyond the service already provided. Our contracts generally renew automatically without any significant material rights.
Some of our contracts include tiered pricing, which are based primarily on volume. The fee charged per transaction is
adjusted up or down if the volume processed for a specified period is different from prior period defined volumes. We have
concluded that this volume-based pricing approach does not constitute a future material right since the discount is within a
range typically offered to a class of customers with similar volume. We do not have any capitalized contract costs and we
do not carry any material contract balances.
Our primary service comprises a single performance obligation to complete payments on our payments platform for our
customers. Using our risk assessment tools, we perform a transaction risk assessment on individual transactions to
determine whether a transaction should be authorized for completion on our payments platform. When we authorize a
transaction, we become obligated to our customer to complete the payment transaction.
We recognize fees charged to our customers primarily on a gross basis as transaction revenue when we are the principal in
respect of completing a payment transaction. As a principal to the transaction, we control the service of completing
payments on our payments platform. We bear primary responsibility for the fulfillment of the payment service, contract
directly with our customers, control the product specifications, and define the value proposal from our services. Further, we
have full discretion in determining the fee charged to our customers, which is independent of the costs we incur in
instances where we may utilize payment processors or other financial institutions to perform services on our behalf. We
therefore bear full margin risk when completing a payment transaction. These fees paid to payment processors and other
financial institutions are recognized as transaction expense. We are also responsible for providing customer support.
To promote engagement and acquire new users on our platform, we may provide incentives to merchants and consumers
in various forms including discounts on fees, rebates, rewards, and coupons. Evaluating whether an incentive is a payment
to a customer requires judgment. Incentives that are determined to be consideration payable to a customer or paid on
behalf of a customer are recognized as a reduction of revenue. Incentives based on performance targets are recorded as a
reduction to revenue when earned, based on management’s estimate of each customer’s future performance and
incentives not based on performance targets are amortized as a reduction of revenue ratably over the contractual term.
Certain incentives paid to users that are not our customers are classified as sales and marketing expense.
We provide merchants and consumers with protection programs for certain transactions completed on our payments
platform. These programs are intended to protect both merchants and consumers from loss primarily due to fraud and
counterparty performance. These protection programs do not provide a separate service to our customers and we estimate
and record associated costs in transaction and credit losses during the period the payment transaction is completed.
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Revenues from Other Value Added Services
We earn revenues from other value added services, which are comprised primarily of revenue earned through partnerships,
referral fees, subscription fees, gateway fees, and other services that we provide to our merchants and consumers. These
contracts typically have one performance obligation which is provided and recognized over the term of the contract. The
transaction price is generally fixed and known at the end of each reporting period; however, for some agreements, it may
be necessary to estimate the transaction price using the expected value method. Revenue earned from other value added
services is recorded on a net basis when we are considered the agent with respect to processing transactions.
We also earn revenues from interest and fees earned on our portfolio of loans receivable, and interest earned on certain
assets underlying customer balances. Interest and fees earned on the portfolio of loans receivable are computed and
recognized based on the effective interest method and are presented net of any required reserves and amortization of
deferred origination costs.
• 2024 Annual Report
75
PART IV
Note 2—Revenue
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Disaggregation of Revenue
We determine operating segments based on how our chief operating decision maker (“CODM”) manages the business,
makes operating decisions around the allocation of resources, and evaluates operating performance. Our CODM is our
Chief Executive Officer, who regularly reviews our operating results on a consolidated basis. We operate as one segment
and have one reportable segment. Based on the information provided to and reviewed by our CODM, we believe that the
nature, amount, timing, and uncertainty of our revenue and cash flows and how they are affected by economic factors are
most appropriately depicted through our primary geographical markets and types of revenue categories (transaction
revenues and revenues from other value added services). Revenues recorded within these categories are earned from
similar products and services for which the nature of associated fees and the related revenue recognition models are
substantially similar.
The following table presents our revenue disaggregated by primary geographical market and category:
Primary geographical markets
U.S.
Other countries(1)
TOTAL NET REVENUES(2)
Revenue category
Transaction revenues
Revenues from other value added services
TOTAL NET REVENUES(2)
Year Ended December 31,
2023
2022
2021
(In millions)
$ 17,253
$ 15,807
$ 13,712
12,518
11,711
11,659
$ 29,771
$ 27,518
$ 25,371
$ 26,857
$ 25,206
$ 23,402
2,914
2,312
1,969
$ 29,771
$ 27,518
$ 25,371
(1) No single country included in the other countries category generated more than 10% of total net revenues.
(2)
Total net revenues include $1.8 billion, $1.3 billion, and $425 million for the years ended December 31, 2023, 2022, and 2021, respectively, which do not represent revenues
recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers. Such revenues relate to interest and fees earned on loans and
interest receivable, including loans and interest receivable held for sale, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.
Net revenues are attributed to the country in which the party paying our fee is located.
Note 3—Net Income (loss) Per Share
Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average
number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net
income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common
stock outstanding for the period. The dilutive effect of outstanding equity incentive awards is reflected in diluted net income
(loss) per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes
all anti-dilutive common shares. During periods when we report net loss, diluted net loss per share is the same as basic net
loss per share because the effects of potentially dilutive items would decrease the net loss per share.
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• 2024 Annual Report
PART IV
Note 3—Net Income (loss) Per Share
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated:
Numerator:
Net income (loss)
Denominator:
Weighted average shares of common stock—basic
Dilutive effect of equity incentive awards
WEIGHTED AVERAGE SHARES OF COMMON STOCK—DILUTED
Net income (loss) per share:
Basic
Diluted
Year Ended December 31,
2023
2022
2021
(In millions, except per share amounts)
$ 4,246
$ 2,419
$ 4,169
1,103
4
1,107
1,154
4
1,158
1,174
12
1,186
$
$
3.85
3.84
$
2.10
$ 3.55
$ 2.09
$ 3.52
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Common stock equivalents excluded from net income (loss) per diluted share because
their effect would have been anti-dilutive or potentially dilutive
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Note 4—Business Combinations and Divestitures
There were no acquisitions accounted for as business combinations completed in 2023 or 2022. There were no divestitures
completed in 2022 or 2021.
Divestitures Completed in 2023
On November 1, 2023, we completed the sale of Happy Returns to United Parcel Services, Inc. for approximately
$466 million in cash, net of cash divested, and derecognized the assets held for sale, consisting primarily of $81 million of
goodwill and $13 million of net intangible assets. The sale of Happy Returns will help enable us to focus on our core
business and priorities. A pre-tax gain of $339 million, net of transaction costs, was included in restructuring and other in
the consolidated statements of income (loss) for the year ended December 31, 2023.
Acquisitions Completed in 2021
During the year ended December 31, 2021, we completed five acquisitions reflecting 100% of the equity interests of the
acquired companies, for an aggregate purchase price of $3.1 billion.
Paidy
We completed the acquisition of Paidy in October 2021 by acquiring all outstanding shares for total consideration of
approximately $2.7 billion, consisting of approximately $2.6 billion in cash and approximately $161 million in assumed
restricted stock and restricted stock units, subject to vesting conditions. Paidy is a two-sided payments platform that
primarily provides buy now, pay later solutions (installment credit offerings) in Japan. With the acquisition of Paidy, we
expanded our capabilities and relevance in Japan.
• 2024 Annual Report
77
PART IV
Note 4—Business Combinations and Divestitures
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The following table summarizes the final allocation of the purchase consideration to the fair value of the assets acquired
and liabilities assumed:
Goodwill
Customer lists and user base
Marketing related
Developed technology
TOTAL INTANGIBLES
Loans and interest receivable, net
Cash and cash equivalents
Other net assets
Short-term and long-term debt
Deferred tax liabilities, net
TOTAL PURCHASE PRICE
(In millions)
$ 1,897
512
83
47
$ 642
197
102
87
(188)
(166)
$ 2,571
The intangible assets acquired consist primarily of merchant contracts,
trade names/trademarks, and developed
technology with estimated useful lives of three to seven years. Contractual gross loans and interest receivable acquired
were $216 million. The excess of the purchase consideration, including the fair value of our equity investment, over the fair
value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is attributable to the
workforce of Paidy and the synergies expected to arise from the acquisition, including continued customer acquisition.
Goodwill was not deductible for income tax purposes.
In connection with the acquisition, we issued restricted stock and restricted stock units with an approximate grant date fair
value of $161 million, which represents post-business combination expense. The equity granted is a combination of shares
issued to certain former Paidy employees subject to a holdback arrangement and assumed Paidy employee equity grants,
which vest over a period of up to approximately four years subject to continued employment.
Other Acquisitions
In 2021, we completed four other acquisitions accounted for as business combinations. The total purchase price for these
acquisitions was $542 million, consisting primarily of cash consideration. The allocation of purchase consideration resulted
in approximately $90 million of technology, customer, and marketing-related intangible assets with estimated useful lives
ranging from approximately one to seven years, net assets of $17 million, and goodwill of approximately $435 million
attributable to the workforce of the acquired companies and the synergies expected to arise from these acquisitions,
including the integration of the acquired technology with our existing product offerings. Goodwill was not considered
deductible for income tax purposes.
Other Information
Prior to acquisition, we held minority interests in certain of the companies we acquired in 2021. We remeasured these
investments immediately before the completion of the respective acquisitions at a total acquisition-date fair value of
$64 million, which resulted in an aggregate gain of $36 million recognized as other income (expense), net on our
consolidated statements of income (loss). The acquisition-date fair value was derived using the value paid less a control
premium based on market analysis performed by a third party.
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• 2024 Annual Report
PART IV
Note 5—Goodwill and Intangible Assets
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Note 5—Goodwill and Intangible Assets
Goodwill
The following table presents goodwill balances and adjustments to those balances during the years ended December 31,
2023 and 2022:
December 31,
2021
Goodwill
Acquired
Adjustments
December 31,
2022
Goodwill
Acquired
Adjustments
December 31,
2023
(In millions)
Total goodwill
$ 11,454
—
(245)
$ 11,209
—
(183)
$ 11,026
The adjustments to goodwill during 2023 pertained to foreign currency translation adjustments and a reduction in goodwill
associated with the divestiture of Happy Returns. For additional information, see “Note 4—Business Combinations and
Divestitures.” The adjustments to goodwill during 2022 pertained primarily to foreign currency translation adjustments.
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Intangible Assets
The components of identifiable intangible assets were as follows:
December 31, 2023
December 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Weighted
Average
Useful
Life
(Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Weighted
Average
Useful
Life
(Years)
(In millions, except years)
Intangible assets:
Customer lists and user base
$ 1,546
$
(1,140)
$ 406
Marketing related
Developed technology
All other
387
1,013
433
(350)
(999)
(353)
37
14
80
7
5
3
7
$ 1,664
$ (1,092)
$ 572
395
1,099
438
(339)
(1,048)
(329)
56
51
109
7
5
3
7
INTANGIBLE ASSETS, NET
$ 3,379
$ (2,842)
$ 537
$ 3,596
$ (2,808)
$ 788
In the year ended December 31, 2023, we recorded a reduction of approximately $36 million of gross intangible assets,
with a net carrying amount of $13 million, associated with the divestiture of Happy Returns as described in “Note 4—
Business Combinations and Divestitures.” In the year ended December 31, 2023, we retired approximately $141 million of
fully amortized intangible assets, consisting primarily of $79 million in customer lists and user base and $62 million in
developed technology. Amortization expense for intangible assets was $226 million, $471 million, and $443 million for the
years ended December 31, 2023, 2022, and 2021, respectively.
Expected future intangible asset amortization as of December 31, 2023 was as follows:
Fiscal years:
2024
2025
2026
2027
2028
(In millions)
$ 184
153
95
59
46
$ 537
• 2024 Annual Report
79
PART IV
Note 6—Leases
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Note 6—Leases
PayPal enters into various leases, which are primarily real estate operating leases. We use these properties for executive
and administrative offices, data centers, product development offices, and customer services and operations centers.
While a majority of our lease agreements do not contain an explicit interest rate, certain of our lease agreements are subject
to changes based on the Consumer Price Index or another referenced index. In the event of changes to the relevant index,
lease liabilities are not remeasured and instead are treated as variable lease payments and recognized in the period in
which the obligation for those payments is incurred.
The short-term lease exemption has been adopted for all leases with a duration of less than 12 months.
PayPal’s lease portfolio includes a small number of subleases. A sublease situation can arise when currently leased real
estate space is available and is surplus to operational requirements.
As of December 31, 2023, we had no finance leases.
The components of lease expense were as follows:
Lease expense
Operating lease expense
Sublease income
LEASE EXPENSE, NET
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
ROU lease assets obtained in exchange for new operating lease liabilities
Other non-cash ROU lease asset activity(1)
(1)
ROU lease asset impairment. Refer to “Note 17—Restructuring and Other” for further details.
Supplemental balance sheet information related to leases was as follows:
Operating ROU lease assets
Current operating lease liabilities
Operating lease liabilities
TOTAL OPERATING LEASE LIABILITIES
Weighted-average remaining lease term—operating leases
Weighted-average discount rate—operating leases
80
• 2024 Annual Report
Year Ended December 31,
2023
2022
2021
(In millions)
$ 156
$ 171
$ 170
(9)
(8)
(8)
$ 147
$ 163
$ 162
Year Ended December 31,
2023
2022
2021
(In millions)
$ 174
$ 172
$
(1)
$ 131
$ 167
$ 124
$ (40)
$ (52)
$ (21)
As of December 31,
2023
2022
(In millions, except
weighted-average figures)
$ 390
$ 574
144
416
151
569
$ 560
$ 720
5.0 years
5.7 years
4%
3%
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Future minimum lease payments for our operating leases as of December 31, 2023 were as follows:
Fiscal years:
2024
2025
2026
2027
2028
Thereafter
TOTAL
Less: present value discount
LEASE LIABILITY
PART IV
Note 6—Leases
Operating Leases
(In millions)
$
161
122
108
87
57
80
$ 615
(55)
$ 560
A
N
N
U
A
L
R
E
P
O
R
T
Operating lease amounts include minimum lease payments under our non-cancelable operating leases primarily for office
and data center facilities. The amounts presented are consistent with contractual terms and are not expected to differ
significantly from actual results under our existing leases. We recognize rent expense under such agreements on a straight-
line basis. Rent expense for the years ended December 31, 2023, 2022, and 2021 totaled $183 million, $202 million, and
$192 million, respectively.
As of December 31, 2023, we have additional operating leases, primarily for data centers, which will commence in the first
quarter of 2024 or later with minimum lease payments aggregating to $242 million and lease terms ranging from five to
eight years.
Note 7—Other Financial Statement Details
Crypto Asset Safeguarding Liability and Corresponding Safeguarding Asset
We allow our customers in certain markets to buy, hold, sell, convert, receive, and send certain cryptocurrencies as well as
use the proceeds from sales of cryptocurrencies to pay for purchases at checkout. These cryptocurrencies consist of
Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and PayPal USD stablecoin (collectively, “our customers’ crypto assets”). We
engage third parties, which are licensed trust companies, to provide certain custodial services, including holding our
customers’ cryptographic key information, securing our customers’ crypto assets, and protecting them from loss or theft,
including indemnification against certain types of losses such as theft. Our third-party custodians hold the crypto assets in a
custodial account in PayPal’s name for the benefit of PayPal’s customers. We maintain the internal recordkeeping of our
customers’ crypto assets, including the amount and type of crypto asset owned by each of our customers in that custodial
account. As of December 31, 2023, we utilize two third-party custodians; as such, there is concentration risk in the event
these custodians are not able to perform in accordance with our agreement.
Due to the unique risks associated with cryptocurrencies, including technological, legal, and regulatory risks, we recognize
a crypto asset safeguarding liability to reflect our obligation to safeguard the crypto assets held for the benefit of our
customers, which is recorded in accrued expenses and other current liabilities on our consolidated balance sheets. We
also recognize a corresponding safeguarding asset which is recorded in prepaid expenses and other current assets on our
consolidated balance sheets. The crypto asset safeguarding liability and corresponding safeguarding asset are measured
and recorded at fair value on a recurring basis using quoted prices for the underlying crypto assets on the active exchange
that we have identified as the principal market at the balance sheet date. The corresponding safeguarding asset may be
adjusted for loss events, as applicable. As of December 31, 2023 and 2022, the Company had not incurred any
safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were
recorded at the same value.
• 2024 Annual Report
81
PART IV
Note 7—Other Financial Statement Details
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The following table summarizes the significant crypto assets we hold for the benefit of our customers and the crypto asset
safeguarding liability and corresponding safeguarding asset as of December 31, 2023 and 2022:
Bitcoin
Ethereum
Other
CRYPTO ASSET SAFEGUARDING LIABILITY
CRYPTO ASSET SAFEGUARDING ASSET
Property and Equipment, Net
Property and equipment, net:
Computer equipment and software
Internal use software and website development costs
Land and buildings
Leasehold improvements
Furniture and fixtures
Development in progress and other
TOTAL PROPERTY AND EQUIPMENT, GROSS
Accumulated depreciation and amortization
TOTAL PROPERTY AND EQUIPMENT, NET
As of December 31,
2023
2022
(In millions)
741
412
88
1,241
1,241
$
$
$
291
250
63
604
604
$
$
$
As of December 31,
2023
2022
(In millions)
$
3,377
$
3,380
4,257
3,814
333
317
118
34
388
364
141
25
8,436
(6,948)
8,112
(6,382)
$ 1,488
$
1,730
Depreciation and amortization expense was $846 million, $846 million, and $822 million for the years ended December 31,
2023, 2022, and 2021, respectively.
Net changes in accounts payable on our consolidated statements of cash flows includes non-cash investing activities
associated with property and equipment; the impact of which was an increase of $7 million in 2023 and a decrease of
$36 million and $27 million in 2022 and 2021, respectively.
Geographical information
The following table summarizes long-lived assets based on geography, which consist of property and equipment, net and
operating lease ROU assets:
Long-lived assets:
U.S.
Other countries
TOTAL LONG-LIVED ASSETS
As of December 31,
2023
2022
(In millions)
$ 1,629
$
1,910
249
394
$ 1,878
$ 2,304
Long-lived assets attributed to the U.S. and other countries are based upon the country in which the asset is located or
owned.
82
• 2024 Annual Report
PART IV
Note 7—Other Financial Statement Details
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Accumulated Other Comprehensive Income (loss)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year
ended December 31, 2023:
Unrealized
Gains
(Losses) on
Cash Flow
Hedges
Unrealized
Gains
(Losses) on
Available-for-sale
Debt Securities
Foreign
Currency
Translation
Adjustment
(“CTA”)
(In millions)
Net
Investment
Hedges
CTA Gains
(Losses)
Estimated
Tax
(Expense)
Benefit
Total
Beginning balance
$ 111
$ (591)
$ (575)
$
(1)
$ 128
$ (928)
Other comprehensive income (loss)
before reclassifications
Less: Amount of gain (loss) reclassified
from AOCI
Net current period other comprehensive
income (loss)
ENDING BALANCE
(56)
111
(167)
$ (56)
434
(23)
457
(156)
—
(156)
$ (134)
$ (731)
192
—
(144)
270
—
88
192
$ 191
(144)
182
$ (16)
$ (746)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year
ended December 31, 2022:
A
N
N
U
A
L
R
E
P
O
R
T
Unrealized
Gains
(Losses) on
Cash Flow
Hedges
Unrealized
Gains
(Losses) on
Available-for-sale
Debt Securities
Net
Investment
Hedges
CTA Gains
(Losses)
Estimated
Tax
(Expense)
Benefit
Total
Foreign
CTA
(In millions)
Beginning balance
$ 199
$
(87)
$ (270)
$ 24
$
(2)
$ (136)
Other comprehensive income (loss) before
reclassifications
Less: Amount of gain reclassified from
AOCI
Net current period other comprehensive
income (loss)
ENDING BALANCE
374
462
(88)
$ 111
(499)
(305)
5
—
(25)
—
130
(325)
—
467
(504)
(305)
$ (591)
$ (575)
(25)
$ (1)
130
(792)
$ 128
$ (928)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year
ended December 31, 2021:
Unrealized
Gains
(Losses) on
Cash Flow
Hedges
Unrealized Gains
(Losses) on
Available-for-sale
Debt Securities
Net
Investment
Hedges
CTA Gains
(Losses)
Estimated
Tax
(Expense)
Benefit
Total
Foreign
CTA
(In millions)
Beginning balance
$ (323)
$ 11
$ (198)
$ 24
$ 2
$ (484)
Other comprehensive income (loss) before
reclassifications
Less: Amount of loss reclassified from AOCI
Net current period other comprehensive
income (loss)
ENDING BALANCE
332
(190)
522
$ 199
(98)
—
(98)
(72)
—
(72)
—
—
—
(4)
—
(4)
158
(190)
348
$ (87)
$ (270)
$ 24
$ (2)
$ (136)
• 2024 Annual Report
83
PART IV
Note 7—Other Financial Statement Details
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The following table provides details about reclassifications out of AOCI for the periods presented below:
Details about AOCI Components
Amount of Gains (Losses) Reclassified from AOCI
Affected Line Item in the
Statements of Income (Loss)
Gains (losses) on cash flow hedges—foreign
currency exchange contracts
Losses on available-for-sale debt securities
Losses (gains) on available-for-sale debt
securities
Year Ended December 31,
2023
2022
2021
(In millions)
$ 111
$ 462
$ (190) Net revenues
(21)
(2)
88
—
—
5
467
—
— Net revenues
— Other income (expense), net
(190)
Income before income taxes
— Income tax expense (benefit)
TOTAL RECLASSIFICATIONS FOR THE PERIOD
$ 88
$ 467
$ (190) Net income (loss)
Other Income (Expense), Net
The following table reconciles the components of other income (expense), net for the periods presented below:
Interest income
Interest expense
Net gains (losses) on strategic investments
Other
OTHER INCOME (EXPENSE), NET
Year Ended December 31,
2023
2022
2021
(In millions)
$ 480
$ 174
$
57
(347)
201
49
(304)
(304)
(37)
(232)
46
(34)
$ 383
$ (471)
$ (163)
Refer to “Note 1—Overview and Summary of Significant Accounting Policies” for details on the composition of these
balances.
84
• 2024 Annual Report
PART IV
Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and Investments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Note 8—Cash and Cash Equivalents, Funds Receivable and Customer
Accounts, and Investments
The following table summarizes the assets underlying our cash and cash equivalents, funds receivable and customer
accounts, short-term investments, and long-term investments as of December 31, 2023 and 2022:
Cash and cash equivalents(1)
Funds receivable and customer accounts:
Cash and cash equivalents(2)
Time deposits
Available-for-sale debt securities
Funds receivable
December 31,
2023
December 31,
2022
(In millions)
$
9,081
$
7,776
$
12,750
$
11,363
82
15,708
10,395
95
17,349
7,457
A
N
N
U
A
L
R
E
P
O
R
T
TOTAL FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS
$ 38,935
$ 36,264
Short-term investments:
Time deposits
Available-for-sale debt securities
Restricted cash
TOTAL SHORT-TERM INVESTMENTS
Long-term investments:
Time deposits
Available-for-sale debt securities
Strategic investments
TOTAL LONG-TERM INVESTMENTS
$
128
$
482
4,848
3
2,593
17
$ 4,979
$
3,092
$
45
1,391
1,837
$
55
2,817
2,146
$
3,273
$
5,018
(1)
(2)
Includes $777 million and $780 million of available-for-sale debt securities with original maturities of three months or less as of December 31, 2023 and 2022, respectively.
Includes $399 million and $192 million of available-for-sale debt securities with original maturities of three months or less as of December 31, 2023 and 2022, respectively.
• 2024 Annual Report
85
PART IV
Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and Investments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
As of December 31, 2023 and 2022, the estimated fair value of our available-for-sale debt securities included within cash
and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments was as
follows:
Cash and cash equivalents:
U.S. government and agency securities
Commercial paper
Funds receivable and customer accounts:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Municipal securities
Commercial paper
Short-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Commercial paper
Long-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
December 31, 2023(1)
Gross
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
(In millions)
$ —
$ — $
—
8
—
—
4
1
4
—
—
1
3
1
—
—
—
2
—
(79)
(8)
(18)
(2)
(2)
(1)
(9)
(6)
(13)
(4)
(1)
(8)
(1)
(6)
—
428
349
8,478
612
1,489
1,423
638
2,849
623
347
1,482
718
1,678
180
32
418
761
$
428
349
8,549
620
1,507
1,421
639
2,846
632
353
1,494
719
1,678
188
33
424
759
TOTAL AVAILABLE-FOR-SALE DEBT SECURITIES(2)
$ 22,639
$ 24
$ (158)
$ 22,505
(1)
(2)
“—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position.
Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and
Liabilities.”
86
• 2024 Annual Report
PART IV
Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and Investments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
December 31, 2022(1)
Gross
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Cash and cash equivalents:
U.S. government and agency securities
$
Corporate debt securities
Commercial paper
Funds receivable and customer accounts:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Municipal securities
Commercial paper
Short-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Commercial paper
Long-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
(In millions)
$ —
$ — $
—
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
(252)
(44)
(82)
(26)
(3)
(14)
(3)
(11)
(14)
(9)
—
(36)
(22)
(58)
(18)
A
N
N
U
A
L
R
E
P
O
R
T
140
100
540
8,585
1,464
1,555
1,298
408
3,689
812
424
627
406
324
457
364
929
1,067
140
100
540
8,837
1,508
1,637
1,324
411
3,702
815
435
641
415
324
493
386
987
1,085
TOTAL AVAILABLE-FOR-SALE DEBT SECURITIES(2)
$ 23,780
$
1
$ (592) $ 23,189
(1)
(2)
“—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position.
Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and
Liabilities.”
Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt
securities, which totaled $101 million and $65 million at December 31, 2023 and 2022, respectively, and were included in
other current assets on our consolidated balance sheets.
• 2024 Annual Report
87
PART IV
Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and Investments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
As of December 31, 2023 and 2022, the gross unrealized losses and estimated fair value of our available-for-sale debt
securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments,
and long-term investments for which an allowance for credit losses was not deemed necessary in the current period,
aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:
December 31, 2023(1)
Less than 12 months
12 months or longer
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
(In millions)
$
349
$ — $
—
$
— $
349
$
—
Cash and cash equivalents:
Commercial paper
Funds receivable and customer accounts:
U.S. government and agency securities
2,626
(8)
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Municipal securities
Commercial paper
Short-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Commercial paper
Long-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
36
100
253
196
1,088
—
—
194
131
737
—
—
120
109
—
—
—
(1)
(1)
—
—
—
—
(1)
—
—
—
—
3,917
451
1,364
473
156
—
296
347
797
144
—
180
32
120
195
(71)
(8)
(18)
(2)
(1)
—
(9)
(6)
(13)
(4)
—
(8)
(1)
(6)
—
6,543
487
1,464
726
352
1,088
296
347
991
275
737
180
32
240
304
(79)
(8)
(18)
(2)
(2)
(1)
(9)
(6)
(13)
(4)
(1)
(8)
(1)
(6)
—
TOTAL AVAILABLE-FOR-SALE DEBT SECURITIES
$ 5,939
$ (11)
$ 8,472
$ (147)
$ 14,411
$ (158)
(1)
“—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.
88
• 2024 Annual Report
PART IV
Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and Investments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
December 31, 2022(1)
Less than 12 months
12 months or longer
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
(In millions)
$
519
$ — $
—
$ — $
519
$ —
3,730
439
9
773
264
3,079
345
61
97
175
224
—
31
85
872
(89)
(10)
(1)
(12)
(3)
(14)
—
—
(2)
(2)
—
—
(2)
(6)
(9)
4,246
997
1,545
508
50
—
73
362
465
217
—
457
333
834
195
(163)
(34)
(81)
(14)
—
—
(3)
(11)
(12)
(7)
—
(36)
(20)
(52)
(9)
7,976
1,436
1,554
1,281
314
3,079
418
423
562
392
224
457
364
919
1,067
A
N
N
U
A
L
R
E
P
O
R
T
(252)
(44)
(82)
(26)
(3)
(14)
(3)
(11)
(14)
(9)
—
(36)
(22)
(58)
(18)
Cash and cash equivalents:
Commercial paper
Funds receivable and customer accounts:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Municipal securities
Commercial paper
Short-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Commercial paper
Long-term investments:
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
TOTAL AVAILABLE-FOR-SALE DEBT SECURITIES
$ 10,703
$ (150) $ 10,282
$ (442) $ 20,985
$ (592)
(1)
“—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.
Unrealized losses have not been recognized into income as we neither intend to sell, nor anticipate that it is more likely
than not that we will be required to sell, the securities before recovery of their amortized cost basis. The decline in fair value
is due primarily to changes in market interest rates, rather than credit losses. We will continue to monitor the performance of
the investment portfolio and assess whether impairment due to expected credit losses has occurred. During the year
ended December 31, 2023, we received $4.5 billion in proceeds from the sale of available-for-sale debt securities and
incurred gross realized losses of $26 million and de minimis gross realized gains, which were determined using the
specific identification method. Amounts reclassified to earnings from unrealized gains and losses were not material for the
year ended December 31, 2022 and 2021.
Our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts,
short-term investments, and long-term investments classified by date of contractual maturity were as follows:
One year or less
After one year through five years
After five years through ten years
After ten years
TOTAL
Actual maturities may differ from contractual maturities as certain securities may be prepaid.
December 31, 2023
Amortized Cost
Fair Value
(In millions)
14,971
$ 14,862
$
5,454
2,178
36
5,426
2,181
36
$ 22,639
$ 22,505
• 2024 Annual Report
89
PART IV
Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and Investments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Strategic Investments
Our strategic investments include marketable equity securities, which are publicly traded, and non-marketable equity
securities, which are primarily investments in privately held companies. Our marketable equity securities have readily
determinable fair values and are recorded as long-term investments on our consolidated balance sheets at fair value with
changes in fair value recorded in other income (expense), net on our consolidated statements of income (loss). Marketable
equity securities totaled $24 million and $323 million as of December 31, 2023 and 2022, respectively, including the impact
of the sale of marketable equity securities during the year ended December 31, 2023.
Our non-marketable equity securities are recorded in long-term investments on our consolidated balance sheets. The
carrying value of our non-marketable equity securities totaled $1.8 billion as of December 31, 2023 and 2022. As of
December 31, 2023 and 2022, we had non-marketable equity securities of $182 million and $136 million, respectively, for
which we have the ability to exercise significant influence, but not control, over the investee. We account for these equity
securities using the equity method of accounting. The remaining non-marketable equity securities do not have a readily
determinable fair value and we measure these equity investments at cost minus impairment, if any, and adjust for changes
resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. All
gains and losses on these investments, realized and unrealized, and our share of earnings or losses from investments
accounted for using the equity method are recognized in other income (expense), net on our consolidated statements of
income (loss).
Measurement Alternative adjustments
The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement
Alternative in the years ended December 31, 2023 and 2022 were as follows:
Carrying amount, beginning of period
Adjustments related to non-marketable equity securities:
Net additions(1)
Gross unrealized gains
Gross unrealized losses and impairments
CARRYING AMOUNT, END OF PERIOD
Year Ended December 31,
2023
2022
(In millions)
$ 1,687
$ 1,268
67
32
(155)
100
423
(104)
$ 1,631
$ 1,687
(1) Net additions include purchases, reductions due to sales of securities, and reclassifications when the Measurement Alternative is subsequently elected or no longer applies.
The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses and
impairment related to non-marketable equity securities accounted for under the Measurement Alternative, held at
December 31, 2023 and 2022, respectively:
Cumulative gross unrealized gains
Cumulative gross unrealized losses and impairments
December 31,
2023
December 31,
2022
(In millions)
$ 1,168
$ (283)
$ 1,137
$ (131)
Unrealized gains (losses) on strategic investments, excluding those accounted for using the equity
method
The following table summarizes the net unrealized gains (losses) on marketable and non-marketable equity securities,
excluding those accounted for using the equity method, held at December 31, 2023 and 2022, respectively:
Net unrealized gains (losses)
90
• 2024 Annual Report
Year Ended December 31,
2023
2022
(In millions)
$ (128)
$ 79
PART IV
Note 9—Fair Value Measurement of Assets and Liabilities
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Note 9—Fair Value Measurement of Assets and Liabilities
Financial Assets and Liabilities Measured and Recorded at Fair Value on a Recurring
Basis
The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of
December 31, 2023 and 2022:
December 31, 2023
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
(In millions)
Significant Other
Observable Inputs
(Level 2)
Assets:
Cash and cash equivalents(1):
U.S. government and agency securities
$
$ —
$
A
N
N
U
A
L
R
E
P
O
R
T
Commercial paper
Money market fund
TOTAL CASH AND CASH EQUIVALENTS
Short-term investments(2):
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Commercial paper
TOTAL SHORT-TERM INVESTMENTS
Funds receivable and customer accounts(3):
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Municipal securities
Commercial paper
TOTAL FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS
Derivatives(4)
Crypto asset safeguarding asset(4)
Long-term investments(2),(5):
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Marketable equity securities
TOTAL LONG-TERM INVESTMENTS
TOTAL FINANCIAL ASSETS
Liabilities:
Derivatives(4)
Crypto asset safeguarding liability(4)
TOTAL FINANCIAL LIABILITIES
428
349
160
937
623
347
1,482
718
1,678
4,848
8,478
1,118
1,601
1,423
638
2,849
16,107
141
1,241
180
32
418
761
24
1,415
$ 24,689
$
$
131
1,241
1,372
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
24
24
$ 24
$ —
—
$ —
428
349
160
937
623
347
1,482
718
1,678
4,848
8,478
1,118
1,601
1,423
638
2,849
16,107
141
1,241
180
32
418
761
—
1,391
$ 24,665
$
$
131
1,241
1,372
(1)
(2)
(3)
Excludes cash of $8.1 billion not measured and recorded at fair value.
Excludes restricted cash of $3 million and time deposits of $173 million not measured and recorded at fair value.
Excludes cash, time deposits, and funds receivable of $22.8 billion underlying funds receivable and customer accounts not measured and recorded at fair value.
• 2024 Annual Report
91
PART IV
Note 9—Fair Value Measurement of Assets and Liabilities
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
(4) Derivative assets and liabilities are included within “prepaid expenses and other current assets” and “other assets” and “accrued expenses and other current liabilities” and “other
long-term liabilities,” respectively, on our consolidated balance sheets. Crypto safeguarding asset and associated liability are recorded within “prepaid expenses and other current
assets” and “accrued expenses and other current liabilities,” respectively, on our consolidated balance sheets.
Excludes non-marketable equity securities of $1.8 billion measured using the Measurement Alternative or equity method accounting.
(5)
December 31, 2022
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
(In millions)
Significant Other
Observable Inputs
(Level 2)
Assets:
Cash and cash equivalents(1):
U.S. government and agency securities
$
$ —
$
Corporate debt securities
Commercial paper
Money market fund
TOTAL CASH AND CASH EQUIVALENTS
Short-term investments(2):
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Commercial paper
TOTAL SHORT-TERM INVESTMENTS
Funds receivable and customer accounts(3):
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Municipal securities
Commercial paper
TOTAL FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS
Derivatives(4)
Crypto asset safeguarding asset(4)
Long-term investments(2), (5):
U.S. government and agency securities
Foreign government and agency securities
Corporate debt securities
Asset-backed securities
Marketable equity securities
TOTAL LONG-TERM INVESTMENTS
TOTAL FINANCIAL ASSETS
Liabilities:
Derivatives(4)
Crypto asset safeguarding liability(4)
TOTAL FINANCIAL LIABILITIES
(1)
Excludes cash of $6.8 billion not measured and recorded at fair value.
92
• 2024 Annual Report
140
100
540
152
932
812
424
627
406
324
2,593
8,585
1,867
1,694
1,298
408
3,689
17,541
244
604
457
364
929
1,067
323
3,140
$ 25,054
$
$
298
604
902
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
323
323
$ 323
$ —
—
$ —
140
100
540
152
932
812
424
627
406
324
2,593
8,585
1,867
1,694
1,298
408
3,689
17,541
244
604
457
364
929
1,067
—
2,817
$ 24,731
$
$
298
604
902
PART IV
Note 9—Fair Value Measurement of Assets and Liabilities
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
(2)
(3)
Excludes restricted cash of $17 million and time deposits of $537 million not measured and recorded at fair value.
Excludes cash, time deposits, and funds receivable of $18.7 billion underlying funds receivable and customer accounts not measured and recorded at fair value.
(4) Derivative assets and liabilities are included within “prepaid expenses and other current assets” and “other assets” and “accrued expenses and other current liabilities” and “other
long-term liabilities,” respectively, on our consolidated balance sheets. Crypto safeguarding asset and associated liability are recorded within “prepaid expenses and other current
assets” and “accrued expenses and other current liabilities,” respectively, on our consolidated balance sheets.
Excludes non-marketable equity securities of $1.8 billion measured using the Measurement Alternative or equity method accounting.
(5)
Our marketable equity securities are valued using quoted prices for identical assets in active markets (Level 1). There are no
active markets for our crypto asset safeguarding liability or the corresponding safeguarding asset. Accordingly, we have
valued the asset and liability using quoted prices on the active exchange that we have identified as the principal market for
the underlying crypto assets (Level 2). All other financial assets and liabilities are valued using quoted prices for identical
instruments in less active markets, readily available pricing sources for comparable instruments, or models using market
observable inputs (Level 2).
A majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as
multiple inputs where applicable, such as currency rates, interest rate yield curves, option volatility, and equity prices.
As of December 31, 2023 and 2022, we did not have any assets or liabilities requiring measurement at fair value on a
recurring basis with significant unobservable inputs that would require a high level of judgment to determine fair value
(Level 3).
A
N
N
U
A
L
R
E
P
O
R
T
We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of
our subsidiaries under the fair value option. Election of the fair value option allows us to recognize any gains and losses
from fair value changes on such investments in other income (expense), net on the consolidated statements of income
(loss) to significantly reduce the accounting asymmetry that would otherwise arise when recognizing the corresponding
foreign exchange gains and losses relating to customer liabilities. The following table summarizes the estimated fair value
and amortized cost of our available-for-sale debt securities under the fair value option as of December 31, 2023 and 2022:
December 31, 2023
December 31, 2022
Amortized Cost
Fair Value
Amortized Cost
Fair Value
(In millions)
Funds receivable and customer accounts
$ 625
$ 618
$ 553
$ 540
The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net
related to the available-for-sale debt securities under the fair value option for the years ended December 31, 2023 and
2022:
Funds receivable and customer accounts
Year Ended December 31,
2023
2022
(In millions)
$ 13
$ (149)
• 2024 Annual Report
93
PART IV
Note 9—Fair Value Measurement of Assets and Liabilities
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Assets Measured and Recorded at Fair Value on a Non-recurring Basis
The following tables summarize our assets held as of December 31, 2023 and 2022 for which a non-recurring fair value
measurement was recorded during the years ended December 31, 2023 and 2022, respectively:
Loans and interest receivable, held for sale
Non-marketable equity securities measured using the
Measurement Alternative(1)
Other assets(2)
TOTAL
December 31, 2023
Significant Other
Observable Inputs
(Level 2)
Significant Other
Unobservable Inputs
(Level 3)
$ 563
440
112
$ 1,115
(In millions)
$ —
131
112
$ 243
$ 563
309
—
$ 872
(1)
Excludes non-marketable equity securities of $1.2 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended
December 31, 2023.
(2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2023. See “Note 6—Leases” for additional
information.
Non-marketable equity securities measured using the
Measurement Alternative(1)
Other assets(2)
TOTAL
December 31, 2022
Significant Other
Observable Inputs
(Level 2)
Significant Other
Unobservable Inputs
(Level 3)
(In millions)
$ 724
165
$889
$ 1,122
165
$1,287
$398
—
$398
(1)
Excludes non-marketable equity securities of $565 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended
December 31, 2022.
(2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2022. See “Note 6—Leases” for additional
information.
The fair value of loans and interest receivables held for sale is classified within Level 3 as we estimate fair value using
significant unobservable inputs. The significant unobservable input is the price at which the Company expects to sell the
loans based upon our agreement with the global investment firm to purchase these loans. The price is determined based
upon certain loan and risk classifications of the portfolio. The following table presents the valuation techniques covering the
majority of Level 3 non-recurring fair value measurements and the most significant unobservable inputs used in those
measurements as of December 31, 2023:
Loans and interest receivable, held for sale
$ 563
Price-based
(1)
Prices are measured in relation to $1.00 par.
(2) Weighted average is calculated based on the fair value of the loans.
Fair Value
(In millions)
Methodology
Input
Price
Low(1)
High(1)
Weighted
Average(1)(2)
$ 0.99
$ 0.99
$ 0.99
We measure the non-marketable equity securities accounted for under the Measurement Alternative at cost minus
impairment, if any, adjusted for observable price changes in orderly transactions for an identical or similar investment in the
same issuer. Non-marketable equity securities that have been remeasured during the period based on observable price
changes are classified within Level 2 in the fair value hierarchy because we estimate the fair value based on valuation
methods which only include significant inputs that are observable, such as the observable transaction price at the
transaction date. The fair value of non-marketable equity securities are classified within Level 3 when we estimate fair value
using significant unobservable inputs such as when we remeasure due to impairment and use discount rates, forecasted
cash flows, and market data of comparable companies, among others.
94
• 2024 Annual Report
PART IV
Note 9—Fair Value Measurement of Assets and Liabilities
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
We evaluate ROU assets related to leases for indicators of impairment whenever events or changes in circumstances
indicate that the carrying amount of an ROU asset may not be recoverable. Impairment losses on ROU lease assets related
to office operating leases are calculated using estimated rental income per square foot derived from observable market
data, and the impaired asset is classified within Level 2 in the fair value hierarchy.
Financial Assets and Liabilities not Measured and Recorded at Fair Value
Our financial instruments, including cash, restricted cash, time deposits, loans and interest receivable, net, certain customer
accounts, and long-term debt related to borrowings on our credit
facilities are carried at amortized cost, which
approximates their fair value. Our notes receivable had a carrying value of approximately $513 million and fair value of
approximately $474 million as of December 31, 2023. Our notes receivable had a carrying value of approximately
$441 million and fair value of approximately $396 million as of December 31, 2022. Our term debt (including current portion)
in the form of fixed rate notes had a carrying value of approximately $10.6 billion and fair value of approximately $10.0 billion
as of December 31, 2023. Our term debt (including current portion) in the form of fixed rate notes had a carrying value of
approximately $10.3 billion and fair value of approximately $9.5 billion as of December 31, 2022.
If these financial
instruments were measured at fair value in the financial statements, cash would be classified as Level 1; restricted cash,
time deposits, certain customer accounts, and term debt (including current portion) would be classified as Level 2; and the
remaining financial instruments would be classified as Level 3 in the fair value hierarchy.
A
N
N
U
A
L
R
E
P
O
R
T
Note 10—Derivative Instruments
Summary of Derivative Instruments
Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes
in foreign currency exchange rates. Our derivatives expose us to credit risk to the extent that our counterparties may be
unable to meet the terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by
spreading the risk across, major financial institutions and by entering into collateral security arrangements. In addition, the
potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We
do not use any derivative instruments for trading or speculative purposes.
Cash Flow Hedges
We have significant international revenues and expenses denominated in foreign currencies, which subjects us to foreign
currency exchange risk. We have a foreign currency exposure management program in which we designate certain foreign
currency exchange contracts, generally with maturities of 12 months or less, to reduce the volatility of cash flows primarily
related to forecasted revenues and expenses denominated in certain foreign currencies. The objective of these foreign
currency exchange contracts is to help mitigate the risk that the U.S. dollar-equivalent cash flows are adversely affected by
changes in the applicable U.S. dollar/foreign currency exchange rate. These derivative instruments are designated as cash
flow hedges and accordingly, the derivative’s gain or loss is initially reported as a component of AOCI and subsequently
reclassified into revenue or applicable expense line item in the consolidated statements of income (loss) in the same
period the forecasted transaction affects earnings. We evaluate the effectiveness of our foreign currency exchange
contracts on a quarterly basis by comparing the critical terms of the derivative instruments with the critical terms of the
forecasted cash flows of the hedged item; if the critical terms are the same, we conclude the hedge will be perfectly
effective. We do not exclude any component of the changes in fair value of the derivative instruments from the assessment
of hedge effectiveness. We report cash flows arising from derivative instruments consistent with the classification of cash
flows from the underlying hedged items that these derivatives are hedging. Accordingly, the cash flows associated with
derivatives designated as cash flow hedges are classified in cash flows from operating activities on our consolidated
statements of cash flows.
As of December 31, 2023, we estimated that $57 million of net derivative losses related to our cash flow hedges included in
AOCI are expected to be reclassified into earnings within the next 12 months. During the years ended December 31, 2023,
2022, and 2021, we did not discontinue any cash flow hedges because it was probable that the original forecasted
transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the
hedged transaction. If we elect to discontinue our cash flow hedges and it is probable that the original forecasted
transaction will occur, we continue to report the derivative’s gain or loss in AOCI until the forecasted transaction affects
earnings, at which point we also reclassify it into earnings. Gains and losses on derivatives held after we discontinue our
cash flow hedges and on derivative instruments that are not designated as cash flow hedges are recorded in the same
financial statement line item to which the derivative relates.
• 2024 Annual Report
95
PART IV
Note 10—Derivative Instruments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Net Investment Hedges
We use forward foreign currency exchange contracts to reduce the foreign currency exchange risk related to our
investment in certain foreign subsidiaries. These derivatives are designated as net investment hedges and accordingly, the
gains and losses on the portion of the derivatives included in the assessment of hedge effectiveness is recorded in AOCI
as part of foreign currency translation. We exclude forward points from the assessment of hedge effectiveness and
recognize them in other income (expense), net on a straight-line basis over the life of the hedge. The accumulated gains
and losses associated with these instruments will remain in AOCI until the foreign subsidiaries are sold or substantially
liquidated, at which point they will be reclassified into earnings. The cash flows associated with derivatives designated as a
net investment hedge are classified in cash flows from investing activities on our consolidated statements of cash flows.
We have not reclassified any gains or losses related to net investment hedges from AOCI into earnings for any of the
periods presented.
Foreign Currency Exchange Contracts not Designated as Hedging Instruments
We have a foreign currency exposure management program in which we use foreign currency exchange contracts to offset
the foreign currency exchange risk of our assets and liabilities denominated in currencies other than the functional currency
of our subsidiaries. These contracts are not designated as hedging instruments and reduce, but do not entirely eliminate,
the impact of foreign currency exchange rate movements on our assets and liabilities. The gains and losses due to
remeasurement of certain foreign currency denominated monetary assets and liabilities are recorded in other income
(expense), net, which are offset by the gains and losses on these foreign currency exchange contracts. The cash flows
associated with our non-designated derivatives used to hedge foreign currency denominated monetary assets and
liabilities are classified in cash flows from operating activities on our consolidated statements of cash flows.
Fair Value of Derivative Contracts
The fair value of our outstanding derivative instruments as of December 31, 2023 and 2022 was as follows:
Derivative Assets:
Balance Sheet Location
As of December 31,
2023
2022
(In millions)
Foreign currency exchange contracts designated as hedging instruments Other current assets
$
Foreign currency exchange contracts designated as hedging instruments Other assets (non-current)
Foreign currency exchange contracts not designated as hedging
instruments
Other current assets
7
77
57
$ 167
15
62
TOTAL DERIVATIVE ASSETS
Derivative Liabilities:
$ 141
$ 244
Foreign currency exchange contracts designated as hedging instruments Other current liabilities
$ 64
$
68
Foreign currency exchange contracts designated as hedging instruments Other long-term liabilities
Foreign currency exchange contracts not designated as hedging
instruments
Other current liabilities
TOTAL DERIVATIVE LIABILITIES
—
67
133
97
$ 131
$ 298
96
• 2024 Annual Report
PART IV
Note 10—Derivative Instruments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Master Netting Agreements—Rights of Set-off
Under master netting agreements with certain counterparties to our foreign currency exchange contracts, subject to
applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by
one party to the other. However, we have elected to present the derivative assets and derivative liabilities on a gross basis
on our consolidated balance sheets. Rights of set-off associated with our foreign currency exchange contracts represented
a potential offset to both assets and liabilities of $38 million as of December 31, 2023 and $70 million as of December 31,
2022.
We have entered into collateral security arrangements that provide for collateral to be received or posted when the net fair
value of certain financial instruments fluctuates from contractually established thresholds. The following table provides the
collateral posted and received:
Cash collateral posted(1)
Cash collateral received(2)
December 31,
2023
December 31,
2022
(In millions)
$
$
80
6
$
24
$ 203
(1)
Right to reclaim cash collateral related to our derivative liabilities recognized in other current assets on our consolidated balance sheets.
(2) Obligation to return counterparty cash collateral related to our derivative assets recognized in other current liabilities on our consolidated balance sheets.
Effect of Derivative Contracts on Consolidated Financial Statements
The following table provides the location in the consolidated statements of income (loss) and amount of recognized gains
or losses related to our derivative instruments:
A
N
N
U
A
L
R
E
P
O
R
T
Total amounts presented in the consolidated
statements of income (loss) in which the effects of
cash flow hedges and net investment hedges are
recorded
Gains (losses) on derivatives in cash flow
hedging relationship:
Amount of gains (losses) on foreign exchange
contracts reclassified from AOCI
Gains on derivatives in net investment hedging
relationship:
Amount of gains on foreign exchange contracts
excluded from the assessment of effectiveness
Gains (losses) on derivatives not designated as
hedging instruments:
Amount of (losses) gains on foreign exchange
contracts
Amount of gains (losses) on equity derivative
contracts (1)
2023
Year Ended December 31,
2022
(In millions)
2021
Other
income
(expense),
net
Other
income
(expense),
net
Net
revenues
Net
revenues
Other
income
(expense),
net
Net
revenues
$ 29,771
$
383
$ 27,518
$ (471)
$ 25,371
$ (163)
111
—
462
—
(190)
—
100
—
—
111
(263)
44
—
—
—
84
118
(174)
—
—
—
—
—
144
—
TOTAL GAINS (LOSSES)
$
$ (119)
$
462
$
28
$
(190)
$ 144
(1) During the years ended December 31, 2023 and 2022, equity derivative contracts were entered into and matured in association with the sale of marketable equity securities related
to strategic investments. The cash flows associated with the equity derivative contracts were classified in cash flows from investing activities on our consolidated statements of cash
flows.
• 2024 Annual Report
97
PART IV
Note 10—Derivative Instruments
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The following table provides the amount of pre-tax unrealized gains or losses included in the assessment of hedge
effectiveness related to our derivative instruments designated as hedging instruments that are recognized in other
comprehensive income (loss):
Year Ended December 31,
2023
2022
2021
(In millions)
Unrealized (losses) gains on foreign exchange contracts designated as cash flow hedges
$ (56)
$ 374
$ 332
Unrealized gains (losses) on foreign exchange contracts designated as net investment
hedges
192
(25)
—
TOTAL NET UNREALIZED GAINS RECOGNIZED FROM DERIVATIVE CONTRACTS
DESIGNATED AS HEDGING INSTRUMENTS IN THE CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
$ 136
$ 349
$ 332
Notional Amounts of Derivative Contracts
Derivative transactions are measured in terms of the notional amount; however, this amount is not recorded on the balance
sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the derivative instruments. The
notional amount is generally not exchanged, but is used only as the underlying basis on which the value of foreign currency
exchange payments under these contracts is determined. The following table provides the notional amounts of our
outstanding derivatives:
Foreign exchange contracts designated as hedging instruments
Foreign exchange contracts not designated as hedging instruments
TOTAL
Note 11—Loans and Interest Receivable
Year Ended December 31,
2023
2022
(In millions)
$
6,767
$
7,149
14,025
11,840
$ 20,792
$ 18,989
Loans and Interest Receivable, Held for Sale
In June 2023, we entered into a multi-year agreement with a global investment firm to sell up to €40 billion of our eligible
consumer installment receivables portfolio, including a forward-flow arrangement for the sale of future originations. Loans
and interest receivable, held for sale are recorded at the lower of cost or fair value, determined on an aggregate basis, with
valuation changes and any associated charge-offs recorded in restructuring and other on our consolidated statements of
income (loss). See “Note 1—Overview and Summary of Significant Accounting Policies” for additional information.
During the year ended December 31, 2023, we reclassified approximately $1.2 billion of eligible consumer installment
receivables from loans and interest receivable, net to loans and interest receivable, held for sale. As of December 31, 2023,
the total outstanding balance in our held for sale portfolio was $563 million. During the year ended December 31, 2023, we
sold $5.5 billion of loans and interest receivable in connection with this agreement.
98
• 2024 Annual Report
PART IV
Note 11—Loans and Interest Receivable
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Loans and Interest Receivable, Net
Consumer Receivables
We offer revolving and installment credit products as a funding option for consumers in certain checkout transactions on
our payments platform. Our revolving credit product consists of PayPal Credit in the U.K., which is made available to
consumers as a funding source in their PayPal wallet once they are approved for credit. Additionally, we offer installment
credit products at the time of checkout in various markets, including the U.S., several markets across Europe, Australia, and
Japan. We offer non interest-bearing installment credit products in these markets as well as interest-bearing installment
credit products in the U.S. and Germany. We purchase receivables related to interest-bearing installment loans extended to
U.S. consumers by a partner institution and are responsible for the servicing functions related to that portfolio. During the
years ended December 31, 2023 and 2022, we purchased approximately $670 million and $381 million, respectively, in
consumer receivables. As of December 31, 2023 and 2022, the outstanding balance of consumer receivables, which
consisted of revolving and installment loans and interest receivable, was $4.8 billion and $5.9 billion, respectively, net of the
participation interest sold to the partner institution of $14 million and $17 million, respectively. See “Note 1—Overview and
Summary of Significant Accounting Policies” for additional information on this participation arrangement.
A
N
N
U
A
L
R
E
P
O
R
T
We closely monitor the credit quality of our consumer receivables to evaluate and manage our related exposure to credit
risk. Credit risk management begins with initial underwriting and continues through the full repayment of a loan. To assess a
consumer who requests a loan, we use, among other indicators,
internally developed risk models using detailed
information from external sources, such as credit bureaus where available, and internal data, including the consumer’s prior
repayment history with our credit products where available. We use delinquency status and trends to assist in making (or,
for interest-bearing installment loans in the U.S., to assist the partner institution in making) new and ongoing credit
decisions, to adjust our models, to plan our collection practices and strategies, and in determining our allowance for
consumer loans and interest receivable.
Consumer Receivables Delinquency and Allowance
The following tables present the delinquency status and gross charge-offs of consumer loans and interest receivable by
year of origination. The amounts are based on the number of days past the billing date for revolving loans or contractual
repayment date for installment loans. The “current” category represents balances that are within 29 days of the billing date
or contractual repayment date, as applicable.
December 31, 2023
(In millions, except percentages)
Revolving Loans
Amortized
Cost Basis
Installment Loans Amortized Cost Basis
2023
2022
2021
2020
2019
Total
Percent
Consumer loans and interest receivable:
Current
30—59 Days
60—89 Days
90—179 Days
TOTAL
$ 2,225
$ 2,045
$ 289 $ — $ — $ —
$ 4,559
95.4%
27
20
41
34
26
55
4
4
8
1
—
1
—
—
—
—
—
—
66
50
105
1.4%
1.0%
2.2%
$ 2,313
$ 2,160 $ 305 $ 2
$ — $ —
$ 4,780
100%
Gross charge-offs for the year ended
December 31, 2023
$
125
$
101
$ 140 $ 5
$ — $ —
$
371
• 2024 Annual Report
99
PART IV
Note 11—Loans and Interest Receivable
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
December 31, 2022
(In millions, except percentages)
Revolving Loans
Amortized
Cost Basis
Installment Loans Amortized Cost Basis
2022
2021
2020
2019
2018
Total
Percent
Consumer loans and interest receivable:
Current
30—59 Days
60—89 Days
90—179 Days
TOTAL(1)
$ 1,850
$ 3,726 $ 123
$ — $ — $ —
$ 5,699
97.1%
23
15
34
26
20
47
2
2
4
—
—
—
—
—
—
—
—
—
51
37
85
0.9%
0.6%
1.4%
$ 1,922
$ 3,819 $ 131
$ — $ — $ —
$ 5,872
100%
(1)
Excludes receivables from other consumer credit products of $11 million at December 31, 2022.
The following table summarizes the activity in the allowance for consumer loans and interest receivable for the years ended
December 31, 2023 and 2022:
December 31, 2023
December 31, 2022
Consumer
Loans
Receivable
Interest
Receivable
Total
Allowance(1)
Consumer
Loans
Receivable
Interest
Receivable
Total
Allowance(2)
(In millions)
Beginning balance
$ 322
$ 25
$ 347
$ 243
$ 43
$ 286
Changes in allowance due to
reclassification of loans and interest
receivable to or from held for sale
Provisions
Charge-offs
Recoveries
Other(3)
(12)
342
(342)
41
6
—
26
(29)
—
1
(12)
368
(371)
41
7
—
292
(216)
21
(18)
—
15
(29)
—
(4)
—
307
(245)
21
(22)
ENDING BALANCE
$ 357
$ 23
$ 380
$ 322
$ 25
$ 347
(1)
(2)
(3)
Beginning balances, provisions and charge-offs include amounts related to loans and interest receivable prior to their reclassification to loan and interest receivable, held for sale.
Excludes allowances from other consumer credit products of $3 million at December 31, 2022.
Includes amounts related to foreign currency remeasurement.
The provision for the year ended December 31, 2023 for our consumer receivable portfolio was primarily attributable to
growth in installment loans in the U.S. and Japan and U.K. revolving loans as well as a deterioration in credit quality of
installment loans in the U.S. Qualitative adjustments were made to account for limitations in our current expected credit
loss models due to uncertainty with respect to macroeconomic conditions and the financial health of our borrowers.
The increase in charge-offs for the year ended December 31, 2023 compared to the same period in the prior year was due
to the expansion of our installment products, growth of revolving credit products, and credit deterioration of our U.S.
interest-bearing installment credit products.
The provision for current expected credit losses relating to our consumer receivable portfolio is recognized in transaction
and credit losses on our consolidated statements of income (loss). The provision for interest receivable for interest earned
on our consumer receivable portfolio is recognized in revenues from other value added services as a reduction to revenue.
Loans receivable continue to accrue interest until they are charged off.
We charge off consumer receivable balances in the month in which a customer’s balance becomes 180 days past the
billing date or contractual repayment date, except for the U.S. consumer interest-bearing installment receivables, which are
charged off 120 days past the contractual repayment date. Bankrupt accounts are charged off within 60 days after receipt of
notification of bankruptcy. Charge-offs are recorded as a reduction to our allowance for loans and interest receivable and
subsequent recoveries, if any, are recorded as an increase to the allowance for loans and interest receivable.
100
• 2024 Annual Report
PART IV
Note 11—Loans and Interest Receivable
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Merchant Receivables
We offer access to merchant finance products for certain small and medium-sized businesses through our PPWC and PPBL
products, which we collectively refer to as our merchant finance offerings. We purchase receivables related to credit
extended to U.S. merchants by a partner institution and are responsible for the servicing functions related to that portfolio.
During the years ended December 31, 2023 and 2022, we purchased approximately $1.7 billion and $3.2 billion in merchant
receivables, respectively. As of December 31, 2023 and 2022, the total outstanding balance in our pool of merchant loans,
advances, and interest and fees receivable was $1.2 billion and $2.1 billion, respectively, net of the participation interest sold
to the partner institution of $44 million and $97 million, respectively. See “Note 1—Overview and Summary of Significant
Accounting Policies” for additional information on this participation arrangement.
Through our PPWC product, merchants can borrow a certain percentage of their annual payment volume processed by
PayPal and are charged a fixed fee for the loan or advance based on the overall credit assessment of the merchant. Loans
and advances are repaid through a fixed percentage of the merchant’s future payment volume that PayPal processes.
Through our PPBL product, we provide merchants access to short-term business financing for a fixed fee based on an
evaluation of the applying business as well as the business owner. PPBL repayments are collected through periodic
payments until the balance has been satisfied.
A
N
N
U
A
L
R
E
P
O
R
T
The interest or fee is fixed at the time the loan or advance is extended and is recognized as deferred revenue in accrued
expenses and other current liabilities on our consolidated balance sheets. The fixed interest or fee is amortized into
revenues from other value added services based on the amount repaid over the repayment period. We estimate the
repayment period for PPWC based on the merchant’s payment processing history with PayPal. For PPWC, there is a general
requirement that at least 10% of the original amount of the loan or advance plus the fixed fee must be repaid every 90 days.
We calculate the repayment rate of the merchant’s future payment volume so that repayment of the loan or advance and
fixed fee is expected to generally occur within 9 to 12 months from the date of the loan or advance. On a monthly basis, we
recalculate the repayment period based on the repayment activity on the receivable. As such, actual repayment periods
are dependent on actual merchant payment processing volumes. For PPBL, we receive fixed periodic payments over the
contractual term of the loan, which generally ranges from 3 to 12 months.
We actively monitor receivables with repayment periods greater than the original expected or contractual repayment
period, as well as the credit quality of our merchant loans and advances that we extend or purchase, so that we can
evaluate, quantify, and manage our credit risk exposure. To assess a merchant seeking a loan or advance, we use, among
other indicators, risk models developed internally which utilize information obtained from multiple internal and external data
sources to predict the likelihood of timely and satisfactory repayment by the merchant of the loan or advance amount and
the related interest or fee. Primary drivers of the models include the merchant’s annual payment volume, payment
processing history with PayPal, prior repayment history with PayPal’s credit products where available, information sourced
from consumer and business credit bureau reports, and other information obtained during the application process. We use
delinquency status and trends to assist in making (or, in the U.S., to assist the partner institution in making) ongoing credit
decisions, to adjust our internal models, to plan our collection strategies, and in determining our allowance for these loans,
advances, and interest and fees receivable.
• 2024 Annual Report
101
PART IV
Note 11—Loans and Interest Receivable
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Merchant Receivables Delinquency and Allowance
The following tables present the delinquency status and gross charge-offs of merchant loans, advances, and interest and
fees receivable by year of origination. The amounts are based on the number of days past the expected or contractual
repayment date for amounts outstanding. The “current” category represents balances that are within 29 days of the
expected repayment date or contractual repayment date, as applicable.
Merchant loans, advances, and interest and fees receivable:
Current
30—59 Days
60—89 Days
90—179 Days
180+ Days
TOTAL
December 31, 2023
(In millions, except percentages)
2023
2022
2021
2020
2019
Total
Percent
$
925
$
37
16
27
2
74
16
12
28
4
$ 3
$ 22
$ 14
$ 1,038
87.0%
2
1
1
1
2
1
1
—
1
1
1
1
58
31
58
8
4.9%
2.5%
4.9%
0.7%
$ 1,007
$ 134 $ 8 $ 26 $ 18
$ 1,193
100%
Gross charge-offs for the year ended December 31, 2023
$
38
$ 228 $ 14
$ 16 $ 4
$
300
Merchant loans, advances, and interest and fees receivable:
Current
30—59 Days
60—89 Days
90—179 Days
180+ Days
TOTAL
December 31, 2022
(In millions, except percentages)
2022
2021
2020
2019
2018
Total
Percent
$ 1,826
$ 20 $ 57
$ 42
$ 2
$ 1,947
90.7%
63
34
55
1
7
4
9
2
3
4
3
2
4
2
3
3
—
—
—
—
77
44
70
8
3.6%
2.0%
3.3%
0.4%
$ 1,979
$ 42 $ 69 $ 54 $ 2
$ 2,146
100%
The following table summarizes the activity in the allowance for merchant loans, advances, and interest and fees
receivable, for the years ended December 31, 2023 and 2022:
December 31, 2023
December 31, 2022
Merchant
Loans
and
Advances
Interest
and Fees
Receivable
Total
Allowance
Merchant
Loans
and
Advances
Interest
and Fees
Receivable
Total
Allowance
(In millions)
Beginning balance
$ 230
$ 18
$ 248
$
Provisions
Charge-offs
Recoveries
162
(271)
27
23
(29)
—
185
(300)
27
192
109
(105)
34
$
9
18
(9)
—
$
201
127
(114)
34
ENDING BALANCE
$ 148
$ 12
$ 160
$ 230
$ 18
$ 248
102
• 2024 Annual Report
PART IV
Note 11—Loans and Interest Receivable
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The provision for the year ended December 31, 2023 was primarily attributable to a deterioration in credit quality of loans
outstanding. Qualitative adjustments were made to account for limitations in our current expected credit loss models due
to uncertainty around the financial health of our borrowers, including the effectiveness of loan modification programs made
available to merchants, as described further below.
The increase in the charge-offs for the year ended December 31, 2023 compared to the prior year was due to the expansion
of acceptable risk parameters in 2022, which resulted in deterioration of the overall credit quality of loans outstanding.
For merchant loans and advances, the determination of delinquency is based on the current expected or contractual
repayment period of the loan or advance and fixed interest or fee payment as compared to the original expected or
contractual repayment period. We charge off the receivables outstanding under our PPBL product when the repayments
are 180 days past the contractual repayment date. We charge off the receivables outstanding under our PPWC product
when the repayments are 180 days past our expectation of repayments and the merchant has not made a payment in the
last 60 days, or when the repayments are 360 days past due regardless of whether the merchant has made a payment in
the last 60 days. Bankrupt accounts are charged off within 60 days after receipt of notification of bankruptcy. The provision
for credit losses on merchant loans and advances is recognized in transaction and credit losses on our consolidated
statements of income (loss), and the provision for interest and fees receivable is recognized as a reduction of deferred
revenue in accrued expenses and other current liabilities on our consolidated balance sheets. Charge-offs are recorded as
a reduction to our allowance for loans and interest receivable and subsequent recoveries, if any, are recorded as an
increase to the allowance for loans and interest receivable.
A
N
N
U
A
L
R
E
P
O
R
T
Loan Modifications for Merchants Experiencing Financial difficulty
In certain instances, we may modify the merchant loans, advances, and interest and fees receivable for which we
determine it is probable that, without modification, we would be unable to collect all amounts due. These modifications are
intended to provide merchants with financial relief and enable us to potentially mitigate losses.
Modifications during the year ended December 31, 2023 were term extensions. These modifications increased the term,
while moving the delinquency status to current. The following table details merchant loans, advances, and interest and fees
receivable as of December 31, 2023 that were modified through a term extension to a merchant experiencing financial
difficulty during the year ended December 31, 2023, and the financial effect of those modifications:
Merchant loans, advances, and interest and fees receivables:
Amortized cost basis (in millions)
Modifications as % of merchant loans, advances, and interest and fees receivables
Weighted average term extension (months)
Year Ended
December 31, 2023
$103
9%
24
We closely monitor the performance of the merchant loans, advances, and interest and fees receivable that were modified
to extend the term to understand the effectiveness of
these modification efforts. The following table depicts the
performance of merchant loans, advances, and interest and fees receivable as of December 31, 2023 that have been
modified during the year ended December 31, 2023:
Merchant loans, advances, and interest and fees receivables:
Current
30—59 days past due
60—89 days past due
90—179 days past due
TOTAL
December 31, 2023
(In millions)
$
75
9
7
12
$ 103
A merchant is considered in payment default after a modification when the merchant’s payment is 60 days past their
expected or contractual repayment date. Merchant loans, advances, and interest and fees receivable modified to extend
the term since January 1, 2023 that subsequently defaulted were not material during the year ended December 31, 2023.
• 2024 Annual Report
103
PART IV
Note 11—Loans and Interest Receivable
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Allowances for merchant loans, advances, and interest and fees receivable modified due to merchants experiencing
financial difficulties are assessed separately from other loans and advances within our portfolio and are determined by
estimating current expected credit losses utilizing the modified term. Historical loss estimates are utilized in addition to
macroeconomic assumptions to determine current expected credit losses. Further, we may include qualitative adjustments
that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses.
Note 12—Debt
Fixed Rate Notes
In June 2023, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of ¥90 billion
(approximately $638 million as of December 31, 2023). Interest on these notes is payable on June 9 and December 9 of
each year, beginning on December 9, 2023.
In May 2022, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $3.0 billion.
Interest on these notes is payable on June 1 and December 1 of each year, beginning on December 1, 2022.
In May 2020, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $4.0 billion.
Interest on these notes is payable on June 1 and December 1 of each year, beginning on December 1, 2020.
In September 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $5.0 billion.
Interest on these notes is payable in arrears semiannually (payable on April 1 and October 1).
The notes issued from the June 2023, May 2022, May 2020, and September 2019 debt issuances are senior unsecured
obligations and are collectively referred to as the “Notes.” We may redeem the Notes in whole, at any time, or in part
(except for the June 2023 notes), from time to time, prior to maturity, at their redemption prices. Upon the occurrence of
both a change of control of the Company and a downgrade of the Notes below an investment grade rating, we will be
required to offer to repurchase each series of Notes at a price equal to 101% of the then outstanding principal amounts, plus
accrued and unpaid interest. The Notes are subject to covenants, including limitations on our ability to create liens on our
assets, enter into sale and leaseback transactions, and merge or consolidate with another entity, in each case subject to
certain exceptions, limitations, and qualifications. Proceeds from the issuance of these Notes may be used for general
corporate purposes, which may include funding the repayment or redemption of outstanding debt, share repurchases,
ongoing operations, capital expenditures, acquisitions of businesses, assets, or strategic investments.
In May 2022, we repurchased certain notes under the September 2019 and May 2020 debt issuances prior to maturity
through tender offers. In addition, in June 2022, we redeemed the outstanding balance of the notes maturing in September
2022 through a make-whole redemption. We repurchased and redeemed $1.6 billion of outstanding notes, as described
above, which resulted in de minimis debt extinguishment net gains that were recorded as interest expense within other
income (expense), net on our consolidated statements of income (loss) for the year ended December 31, 2022.
104
• 2024 Annual Report
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
As of December 31, 2023 and 2022, we had an outstanding aggregate principal amount of $10.6 billion and $10.4 billion,
respectively, related to the Notes. The following table summarizes the Notes:
PART IV
Note 12—Debt
September 2019 debt issuance:
Fixed-rate 2.400% notes
Fixed-rate 2.650% notes
Fixed-rate 2.850% notes
May 2020 debt issuance:
Fixed-rate 1.350% notes
Fixed-rate 1.650% notes
Fixed-rate 2.300% notes
Fixed-rate 3.250% notes
May 2022 debt issuance:
Fixed-rate 3.900% notes
Fixed-rate 4.400% notes
Fixed-rate 5.050% notes
Fixed-rate 5.250% notes
June 2023 debt issuance(1):
¥30 billion fixed-rate 0.813% notes
¥23 billion fixed-rate 0.972% notes
¥37 billion fixed-rate 1.240% notes
TOTAL TERM DEBT
Unamortized premium (discount) and issuance costs, net
Less: current portion of term debt(2)
TOTAL CARRYING AMOUNT OF TERM DEBT
Maturities
Effective
Interest Rate
As of December 31,
2023
2022
(in millions)
10/1/2024
10/1/2026
10/1/2029
6/1/2023
6/1/2025
6/1/2030
6/1/2050
6/1/2027
6/1/2032
6/1/2052
6/1/2062
6/9/2025
6/9/2026
6/9/2028
A
N
N
U
A
L
R
E
P
O
R
T
2.52% $
1,250
$ 1,250
2.78%
2.96%
1.55%
1.78%
2.39%
3.33%
4.06%
4.53%
5.14%
5.34%
0.89%
1.06%
1.31%
1,250
1,500
—
1,000
1,000
1,000
500
1,000
1,000
500
213
163
262
1,250
1,500
418
1,000
1,000
1,000
500
1,000
1,000
500
—
—
—
$ 10,638
$ 10,418
(68)
(1,249)
(74)
(418)
$ 9,321
$ 9,926
(1)
(2)
Principal amounts represent the U.S. dollar equivalent as of December 31, 2023 and 2022, respectively.
The current portion of term debt is included within accrued expenses and other current liabilities on our consolidated balance sheets.
The effective interest rates for the Notes include interest on the Notes, amortization of debt issuance costs, and
amortization of the debt discount. The interest expense recorded for the Notes, including amortization of the debt discount,
debt issuance costs, and debt extinguishment net gains, was $334 million, $290 million, and $224 million for the years
ended December 31, 2023, 2022, and 2021, respectively.
• 2024 Annual Report
105
PART IV
Note 12—Debt
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Credit Facilities
Five-year Revolving Credit Facility
In June 2023, we entered into a credit agreement (the “Credit Agreement”) that provides for an unsecured $5.0 billion, five-
year revolving credit facility and terminated the facility entered into in September 2019. The Credit Agreement includes a
$150 million letter of credit sub-facility and a $600 million swingline sub-facility, with available borrowings under the
revolving credit facility reduced by the amount of any letters of credit and swingline borrowings outstanding from time to
time. Loans borrowed under the Credit Agreement are available in U.S. dollar, Euro, British pound, and Australian dollar, and
in each case subject to the sub-limits and other limitations provided in the Credit Agreement. We may also, subject to the
agreement of the applicable lenders and satisfaction of specified conditions,
increase the commitments under the
revolving credit facility by up to $2.0 billion. Subject to specific conditions, we may designate one or more of our
subsidiaries as additional borrowers under the Credit Agreement, provided PayPal Holdings, Inc. guarantees the portion of
borrowings made available and other obligations of any such subsidiaries under the Credit Agreement. As of December 31,
2023, certain subsidiaries were designated as additional borrowers. Funds borrowed under the Credit Agreement may be
used for working capital, capital expenditures, acquisitions, and other purposes not in contravention of the Credit
Agreement.
We are obligated to pay interest on loans under the Credit Agreement and other customary fees for a credit facility of this
size and type, including an upfront fee and an unused commitment fee based on our debt rating. Loans under the Credit
Agreement will bear interest at either (i) the applicable term benchmark rate plus a margin (based on the Company’s public
debt ratings) ranging from 0.750% to 1.250%, (ii) the applicable Risk-Free Rate (Sterling Overnight Index Average for loans
denominated in pounds sterling and Euro Short-Term Rate for loans denominated in euros) rate plus a margin (based on the
Company’s public debt ratings) ranging from 0.750% to 1.250%, (iii) the applicable overnight rate plus a margin (based on
the Company’s public debt ratings) ranging from 0.750% to 1.250% or (iv) a formula based on the prime rate, the federal
funds effective rate or the adjusted term Secured Overnight Financing Rate plus a margin (based on the Company’s public
debt ratings) ranging from zero to 0.250%. Subject to certain conditions stated in the Credit Agreement, the Company and
any subsidiaries designated as additional borrowers may borrow, prepay and reborrow amounts under the revolving credit
facility at any time during the term of the Credit Agreement. The Credit Agreement will terminate and all amounts owing
thereunder will be due and payable on June 7, 2028, unless (a) the commitments are terminated earlier, either at the
request of the Company or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-
related events), or (b) the maturity date is extended upon the request of the Company, subject to the agreement of the
lenders. The Credit Agreement contains customary representations, warranties, affirmative and negative covenants,
including a financial covenant, events of default, and indemnification provisions in favor of the lenders. The negative
covenants include restrictions regarding the incurrence of liens and the incurrence of subsidiary indebtedness, in each
case subject to certain exceptions. The financial covenant requires the Company to meet a quarterly financial test with
respect to a maximum consolidated leverage ratio.
As of December 31, 2023, no borrowings or letters of credit were outstanding under the Credit Agreement. Accordingly, at
December 31, 2023, $5.0 billion of borrowing capacity was available for the purposes permitted by the Credit Agreement,
subject to customary conditions to borrowing.
Paidy Credit Agreement
In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which
provided for an unsecured revolving credit facility of ¥60.0 billion, which was modified in September 2022, to increase the
borrowing capacity by ¥30.0 billion for a total borrowing capacity of ¥90.0 billion (approximately $638 million as of
December 31, 2023). As of December 31, 2023 and 2022, ¥50.0 billion (approximately $355 million) and ¥64.3 billion
(approximately $491 million) was drawn down under the Paidy Credit Agreement, respectively, which was recorded in
long-term debt on our consolidated balance sheets. At December 31, 2023, ¥40.0 billion (approximately $283 million) of
borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary
conditions to borrowing. During the years ended December 31, 2023 and 2022, the total interest expense and fees we
recorded related to the Paidy Credit Agreement were de minimis.
Other Available Facilities
As of December 31, 2023, we had a short-term borrowing of $359 million due to a bank overdraft, which was recorded in
accrued expenses and other liabilities on our consolidated balance sheet. The weighted average interest rate on the
borrowing was 7.92%.
106
• 2024 Annual Report
PART IV
Note 12—Debt
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
We also maintain uncommitted credit facilities in various regions throughout the world, which had a borrowing capacity of
approximately $80 million in the aggregate, as of December 31, 2023 and 2022. This available credit includes facilities where
we can withdraw and utilize the funds at our discretion for general corporate purposes. Interest rate terms for these facilities
vary by region and reflect prevailing market rates for companies with strong credit ratings. As of December 31, 2023, the
majority of the borrowing capacity under these credit facilities was available, subject to customary conditions to borrowing.
Future Principal Payments
As of December 31, 2023, the future principal payments associated with our term debt were as follows (in millions):
2024
2025
2026
2027
2028
Thereafter
TOTAL
$
1,250
1,213
1,413
500
262
6,000
$ 10,638
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Note 13—Commitments and Contingencies
Commitments
As of December 31, 2023 and 2022, approximately $6.2 billion and $4.9 billion, respectively, of unused credit was available
to PayPal Credit account holders in the U.K. While this amount represents the total unused credit available, we have not
experienced, and do not anticipate, that all our PayPal Credit account holders will access their entire available credit at any
given point in time. In addition, the individual lines of credit that make up this unused credit are subject to periodic review
and termination based on, among other things, account usage and customer creditworthiness.
Litigation and Regulatory Matters
Overview
We are involved in legal and regulatory proceedings on an ongoing basis. Certain of these proceedings are in early stages
and may seek an indeterminate amount of damages or penalties or may require us to change or adopt certain business
practices. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the
estimated liability in our financial statements at that time. If only a range of estimated losses can be determined, we accrue
an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range
is a better estimate than any other amount, we accrue the low end of the range. For those proceedings in which an
unfavorable outcome is reasonably possible but not probable, we have disclosed an estimate of the reasonably possible
loss or range of losses or we have concluded that an estimate of the reasonably possible loss or range of losses arising
directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) are not material. If we
cannot estimate the probable or reasonably possible loss or range of losses arising from a legal proceeding, we have
disclosed that fact. In assessing the materiality of a legal proceeding, we evaluate, among other factors, the amount of
monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive
relief) that may require us to change our business practices in a manner that could have a material adverse impact on our
business. With respect to the matters disclosed in this Note 13, we are unable to estimate the possible loss or range of
losses that could potentially result from the application of such non-monetary remedies.
Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable
were not material for the year ended December 31, 2023. Except as otherwise noted for the proceedings described in this
Note 13, we have concluded, based on currently available information, that reasonably possible losses arising directly from
the proceedings (i.e., monetary damages or amounts paid in judgment or settlement) in excess of our recorded accruals
are also not material. Determining legal reserves or possible losses from such matters involves judgment and may not
reflect the full range of uncertainties and unpredictable outcomes. We may be exposed to losses in excess of the amount
recorded, and such amounts could be material. If any of our estimates and assumptions change or prove to have been
incorrect, it could have a material adverse effect on our business, financial position, results of operations, or cash flows.
• 2024 Annual Report
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PART IV
Note 13—Commitments and Contingencies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Regulatory Proceedings
PayPal Australia Pty Limited (“PPAU”) self-reported a potential violation to the Australian Transaction Reports and Analysis
Centre (“AUSTRAC”) on May 22, 2019. This self-reported matter relates to PPAU incorrectly filing required international funds
transfer instructions over a period of time under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
(“AML/CTF Act”). On September 23, 2019, PPAU received a notice from AUSTRAC requiring that PPAU appoint an external
auditor (a partner of a firm which is not our independent auditor) to review certain aspects of PPAU’s compliance with its
obligations under the AML/CTF Act. The external auditor was appointed on November 1, 2019.
AUSTRAC had notified PPAU that its enforcement team was investigating the matters reported upon by the external auditor
in its August 31, 2020 final report. As a resolution of this investigation, on March 17, 2023, AUSTRAC’s Chief Executive Officer
accepted an enforceable undertaking from PPAU in relation to the self-reported issues.
The enforceable undertaking does not include a monetary penalty. The entry into and compliance with the enforceable
undertaking will not require a change to our business practices in a manner that could result in a material loss, require
significant management time, result in the diversion of significant operational resources, or otherwise adversely affect our
business.
PPAU is required to deliver an Assurance Action Plan (“AAP”) under the enforceable undertaking to demonstrate that the
governance and oversight arrangements following the remedial work completed by PPAU are sustainable and appropriate.
The enforceable undertaking requires PPAU to appoint an external auditor. The external auditor was appointed on June 22,
2023 and will assess and report on the appropriateness, sustainability and efficacy of the actions to be taken under the AAP.
The external auditor’s final report to PPAU and AUSTRAC is due on or before April 16, 2024. The successful completion of
the enforceable undertaking is subject to AUSTRAC’s ultimate review and decision based on the external auditor’s final
report. We cannot predict the outcome of the external auditor’s final report or AUSTRAC’s decision.
Any failure to comply with the enforceable undertaking could result in penalties or require us to change our business
practices.
We have received Civil Investigative Demands (“CIDs”) from the Consumer Financial Protection Bureau (“CFPB”) related to
Venmo’s unauthorized funds transfers and collections processes, and related matters, including treatment of consumers
who request payments but accidentally designate an unintended recipient. The CIDs request the production of documents
and answers to written questions. We are cooperating with the CFPB in connection with these CIDs.
In February 2022, we received a CID from the Federal Trade Commission (“FTC”) related to PayPal’s practices relating to
commercial customers that submit charges on behalf of other merchants or sellers, and related activities. The CID requests
the production of documents and answers to written questions. We are cooperating with the FTC in connection with this
CID.
In January 2023, we received notice of an administrative proceeding and a related request for information from the German
Federal Cartel Office (“FCO”) related to terms in PayPal (Europe) S.à.r.l. et Cie, S.C.A.’s contractual terms with merchants in
Germany prohibiting surcharging and requiring parity presentation of PayPal relative to other payment methods. We are
cooperating with the FCO in connection with this proceeding.
In October 2023, we received a CID from the CFPB related to investigation and error-resolution obligations under
Regulation E, the presentment of transactions to linked bank accounts, and related matters. The CID requests the
production of documents and answers to written questions. We are cooperating with the CFPB in connection with this CID.
On November 1, 2023, we received a subpoena from the U.S. SEC Division of Enforcement relating to PayPal USD
stablecoin. The subpoena requests the production of documents. We are cooperating with the SEC in connection with this
request.
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• 2024 Annual Report
PART IV
Note 13—Commitments and Contingencies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Legal Proceedings
On December 16, 2021 and January 19, 2022, two related putative shareholder derivative actions captioned Pang v. Daniel
Schulman, et al., Case No. 21-cv-09720, and Lalor v. Daniel Schulman, et al., Case No. 22-cv-00370, respectively, were filed
in the U.S. District Court for the Northern District of California (the “California Derivative Actions”), purportedly on behalf of
the Company. On August 2, 2022, a related putative shareholder derivative action captioned Jefferson v. Daniel Schulman,
et al., No. 2022-0684, was filed in the Court of Chancery for the State of Delaware (the “Delaware Derivative Action,” and
collectively with the California Derivative Actions, the “Derivative Actions”), purportedly on behalf of the Company. The
Derivative Actions are based on the same alleged facts and circumstances as the putative securities class action captioned
Kang v. PayPal Holdings, Inc., et al., Case No. 21-cv-06468, that was filed in the U.S. District Court for the Northern District of
California (the “Kang Securities Action”), and name certain of our officers, including our former Chief Executive Officer and
former Chief Financial Officer, and members of our Board of Directors, as defendants. The Derivative Actions allege claims
for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and
violations of the Securities Exchange Act of 1934 (“Exchange Act”), and seek to recover damages on behalf of the
Company. On February 1, 2022, the court entered an order consolidating the two California Derivative Actions and staying
them until all motions to dismiss in the Kang Securities Action are resolved. On June 29, 2023, following the final dismissal
of the Kang Securities Action, the Court ordered a stipulation dismissing the California Derivative Actions, without prejudice,
and on July 7, 2023, the Court ordered a stipulation dismissing the Delaware Derivative Action, without prejudice.
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On October 4, 2022, a putative securities class action captioned Defined Benefit Plan of the Mid-Jersey Trucking Industry
and Teamsters Local 701 Pension and Annuity Fund v. PayPal Holdings, Inc., et al., Case No. 22-cv-5864, was filed in the
U.S. District Court for the District of New Jersey. On January 11, 2023, the Court appointed Caisse de dépôt et placement du
Québec as lead plaintiff and renamed the action In re PayPal Holdings, Inc. Securities Litigation (“PPH Securities Action”).
On March 13, 2023, the lead plaintiff filed an amended and consolidated complaint. The PPH Securities Action asserts
claims relating to our public statements with respect to net new active accounts (“NNA”) results and guidance, and the
detection of illegitimately created accounts. The PPH Securities Action purports to be brought on behalf of purchasers of
the Company’s stock between February 3, 2021 and February 1, 2022 (the “Class Period”), and asserts claims for alleged
violations of Sections 10(b) of the Exchange Act against the Company, as well as its former Chief Executive Officer, former
Chief Strategy, Growth and Data Officer, and former Chief Financial Officer (collectively, the “Individual Defendants,” and
together with the Company, “Defendants”), and for alleged violations of Sections 20(a) and 20A of the Exchange Act
against the Individual Defendants. The complaint alleges that certain public statements made by the Defendants during the
Class Period were rendered materially false and misleading (which, allegedly, caused the Company’s stock to trade at
artificially inflated prices) by the Defendants’ failure to disclose that, among other things, the Company’s incentive
campaigns were susceptible to fraud and led to the creation of illegitimate accounts, which allegedly affected the
Company’s NNA results and guidance. The PPH Securities Action seeks unspecified compensatory damages on behalf of
the putative class members. Defendants have filed a motion to dismiss the PPH Securities Action, which is fully briefed and
pending before the court.
On November 2, 2022, a putative shareholder derivative action captioned Shah v. Daniel Schulman, et al., Case No.
22-cv-1445, was filed in the U.S. District Court for the District of Delaware (the “Shah Action”), purportedly on behalf of the
Company. On April 4, 2023, a putative shareholder derivative action captioned Nelson v. Daniel Schulman, et. al., Case No.
23-cv-01913, was filed in the U.S. District Court for the District of New Jersey (the “Nelson Action”) purportedly on behalf of
the Company. The Shah and Nelson Actions are based on the same alleged facts and circumstances as the PPH Securities
Action, and name certain of our officers, including our former Chief Executive Officer and former Chief Financial Officer, and
members of our Board of Directors, as defendants. The Shah and Nelson Actions allege claims for breach of fiduciary duty,
aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement and
violations of the Exchange Act, and seek to recover damages on behalf of the Company. The Shah and Nelson Actions
have been stayed pending further developments in the PPH Securities Action.
On December 20, 2022, a civil lawsuit captioned State of Hawai‘i, by its Office of Consumer Protection, v. PayPal, Inc., and
PayPal Holdings, Inc., Case No. 1CCV-22-0001610, was filed in the Circuit Court of the First Circuit of the State of Hawai‘i
(the “Hawai‘i Action”). The Hawai‘i Action asserts claims for unfair and deceptive acts and practices under Hawai‘i Revised
Statutes Sections 480-2(a) and 481A-3(a). Plaintiff seeks injunctive relief as well as unspecified penalties and other
monetary relief. On July 14, 2023, the court denied Defendants’ motion to dismiss the complaint. Trial is scheduled to begin
in April 2025.
• 2024 Annual Report
109
PART IV
Note 13—Commitments and Contingencies
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
General Matters
Other third parties have from time to time claimed, and others may claim in the future, that we have infringed their
intellectual property rights. We are subject to patent disputes and expect that we will increasingly be subject to additional
patent infringement claims involving various aspects of our business as our products and services continue to expand in
scope and complexity. Such claims may be brought directly or indirectly against our companies and/or against our
customers (who may be entitled to contractual indemnification under their contracts with us), and we are subject to
increased exposure to such claims as a result of our acquisitions, particularly in cases where we are introducing new
products or services in connection with such acquisitions. We have in the past been forced to litigate such claims, and we
believe that additional
Intellectual property claims, whether
meritorious or not, are time-consuming and costly to defend and resolve, could require expensive changes in our methods
of doing business, or could require us to enter into costly royalty or licensing agreements on unfavorable terms or make
substantial payments to settle claims or to satisfy damages awarded by courts.
lawsuits alleging such claims will be filed against us.
From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of business,
including suits by our customers (individually or as class actions) or regulators alleging, among other things, improper
disclosure of our prices, rules, or policies, that our practices, prices, rules, policies, or customer/user agreements violate
applicable law, or that we have acted unfairly or not acted in conformity with such prices, rules, policies, or agreements. In
addition to these types of disputes and regulatory inquiries, our operations are also subject to regulatory and legal review
and challenges that may reflect the increasing global regulatory focus to which the payments industry is subject and, when
taken as a whole with other regulatory and legislative action, such actions could result in the imposition of costly new
compliance burdens on our business and customers and may lead to increased costs and decreased transaction volume
and revenue. Further, the number and significance of these disputes and inquiries are increasing as our business has grown
and expanded in scale and scope, including the number of active accounts and payments transactions on our platform, the
range and increasing complexity of the products and services that we offer, and our geographical operations. Any claims or
regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, settlement
payments, damage awards (including statutory damages for certain causes of action in certain jurisdictions), fines,
penalties, injunctive relief, or increased costs of doing business through adverse judgment or settlement, require us to
change our business practices in expensive ways, require significant amounts of management time, result in the diversion
of significant operational resources, or otherwise harm our business.
Indemnification Provisions
Our agreements with eBay governing our separation from eBay provide for specific indemnity and liability obligations for
both eBay and us. Disputes between eBay and us have arisen and others may arise in the future, and an adverse outcome
in such matters could materially and adversely impact our business, results of operations, and financial condition. In
addition, the indemnity rights we have against eBay under the agreements may not be sufficient to protect us, and our
indemnity obligations to eBay may be significant.
In the ordinary course of business, we include indemnification provisions in certain of our agreements with parties with
whom we have commercial relationships. Under these contracts, we generally indemnify, hold harmless, and agree to
reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with claims by any
third party with respect to our domain names, trademarks, logos, and other branding elements to the extent that such marks
are related to the subject agreement. We have provided an indemnity for other types of third-party claims, which may
include indemnities related to intellectual property rights, confidentiality, willful misconduct, data privacy obligations, and
certain breach of contract claims, among others. We have also provided an indemnity to our payments processors in the
event of card association fines against the processor arising out of conduct by us or our customers. It is not possible to
determine the maximum potential
loss under these indemnification provisions due to our limited history of prior
indemnification claims and the unique facts and circumstances involved in each particular situation.
PayPal has participated in the U.S. Government’s Paycheck Protection Program administered by the U.S. Small Business
Administration. Loans made under this program are funded by an independent chartered financial institution that we partner
with. We receive a fee for providing services in connection with these loans and retain operational and audit risk related to
those activities. We have agreed, under certain circumstances, to indemnify the chartered financial institution and its
assignee of a portion of these loans in connection with the services provided for loans made under this program.
110
• 2024 Annual Report
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
PART IV
Note 13—Commitments and Contingencies
As part of the agreement to sell a portion of our consumer installment receivables portfolio, in certain circumstances such
as breaches in loan warranties, we may be required to indemnify the global investment firm that purchased the loans or
repurchase the loans. The estimate of the maximum potential amount of future payments we may be required to make is
equal
the
indemnification is not, in our view, representative of the expected future exposure. As of December 31, 2023, the current
outstanding balances of the loans sold was $2.2 billion. The terms of the indemnification align to the maturities of the loans
sold.
to the current outstanding balances of
the maximum potential amount of
the loans sold; however,
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To date, no significant costs have been incurred, either individually or collectively, in connection with our indemnification
provisions.
Off-Balance Sheet Arrangements
As of December 31, 2023 and 2022, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures,
or capital resources.
Protection Programs
We provide merchants and consumers with protection programs for certain transactions completed on our payments
platform. These programs are intended to protect both merchants and consumers from loss primarily due to fraud and
counterparty performance. Our Purchase Protection Program provides protection to consumers for qualifying purchases by
reimbursing the consumer for the full amount of the purchase if a purchased item does not arrive or does not match the
seller’s description. Our Seller Protection Programs provide protection to merchants against claims that a transaction was
not authorized by the buyer or claims that an item was not received by covering the seller for the full amount of the
payment on eligible sales. These protection programs are considered assurance-type warranties under applicable
accounting standards for which we estimate and record associated costs in transaction and credit losses during the period
the payment transaction is completed.
At December 31, 2023 and 2022, the allowance for transaction losses was $64 million and $66 million, respectively. The
allowance for negative customer balances was $218 million and $212 million at December 31, 2023 and 2022, respectively.
The following table shows changes in the allowance for transaction losses and negative customer balances related to our
protection programs for the years ended December 31, 2023 and 2022:
Beginning balance
Provision
Realized losses
Recoveries
ENDING BALANCE
As of December 31,
2023
2022
(In millions)
$ 278
$ 355
1,192
1,170
(1,313)
(1,417)
125
170
$ 282
$ 278
• 2024 Annual Report
111
PART IV
Note 14—Stock Repurchase Programs
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Note 14—Stock Repurchase Programs
In July 2018, our Board of Directors authorized a stock repurchase program that provided for the repurchase of up to $10
billion of our common stock, with no expiration from the date of authorization. In June 2022, our Board of Directors
authorized an additional stock repurchase program that provides for the repurchase of up to $15 billion of our common
stock, with no expiration from the date of authorization. This program became effective in the first quarter of 2023 upon
completion of the July 2018 stock repurchase program. Our stock repurchase programs are intended to offset the impact of
dilution from our equity compensation programs and, subject to market conditions and other factors, may also be used to
make opportunistic repurchases of our common stock to reduce outstanding share count. Any share repurchases under
our stock repurchase programs may be made through open market transactions, block trades, privately negotiated
transactions,
including accelerated share repurchase agreements, or other means at times and in such amounts as
management deems appropriate and will be funded from our working capital or other financing alternatives. Moreover, any
stock repurchases are subject to market conditions and other uncertainties, and we cannot predict if or when any stock
repurchases will be made. We may terminate our stock repurchase programs at any time without prior notice.
During the year ended December 31, 2023, we repurchased approximately 74 million shares of our common stock for
approximately $5.0 billion at an average cost of $67.72. These shares were purchased in the open market under our stock
repurchase programs authorized in July 2018 and June 2022. As of December 31, 2023, a total of approximately $10.9 billion
remained available for future repurchases of our common stock under our June 2022 stock repurchase program.
The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases
made after December 31, 2022. Beginning in the first quarter of 2023, we have reflected the applicable excise tax in treasury
stock on our consolidated balance sheets. During the year ended December 31, 2023, we recorded $44 million in excise
tax within treasury stock on our consolidated balance sheets.
During the year ended December 31, 2022, we repurchased approximately 41 million shares of our common stock for
approximately $4.2 billion at an average cost of $103.47. These shares were purchased in the open market under our stock
repurchase program authorized in July 2018. As of December 31, 2022, a total of approximately $861 million and
$15.0 billion remained available for future repurchases of our common stock under our July 2018 and June 2022 stock
repurchase programs, respectively.
During the year ended December 31, 2021, we repurchased approximately 15 million shares of our common stock for
approximately $3.4 billion at an average cost of $219.75. These shares were purchased in the open market under our stock
repurchase program authorized in July 2018. As of December 31, 2021, a total of approximately $5.1 billion remained
available for future repurchases of our common stock under our July 2018 stock repurchase program.
Shares of common stock repurchased for the periods presented were recorded as treasury stock for the purposes of
calculating net income (loss) per share and were accounted for under the cost method. No repurchased shares of
common stock have been retired.
Note 15—Stock-Based and Employee Savings Plans
Equity Incentive Plans
Under the terms of the Amended and Restated PayPal Holdings, Inc. 2015 Equity Incentive Award Plan (the “Plan”), equity
awards,
including restricted stock units (“RSUs”), restricted stock awards, performance based restricted stock units
(“PBRSUs”), stock options, deferred stock units, and stock payments, may be granted to our directors, officers, and
employees. In May 2023, our stockholders approved an additional authorization of 34.6 million shares to the Plan, and in
June 2023, the Company filed a post-effective amendment to the registration statement for the PayPal Holdings, Inc. 2022
Inducement Plan (“Inducement Plan”), which enabled 2.6 million shares previously issuable under the Inducement Plan to
be included in the 34.6 million additional shares issuable under the Plan. At December 31, 2023, approximately 72 million
shares were authorized under the Plan and approximately 45 million shares were available for future grant, and no shares
were available for future grant under the Inducement Plan. Shares issued as a result of stock option exercises and the
release of stock awards were funded primarily with the issuance of new shares of common stock.
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• 2024 Annual Report
PART IV
Note 15—Stock-Based and Employee Savings Plans
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
RSUs are granted to eligible employees under the Plan. RSUs issued prior to January 1, 2022 generally vest in equal annual
installments over a period of three years. RSUs issued on or after January 1, 2022 generally vest over three years at a rate of
33% after one year, then in equal quarterly installments thereafter. RSUs are subject to an employee’s continuing service to
us, and do not have an expiration date. The cost of RSUs granted is determined using the fair market value of PayPal’s
common stock on the date of grant.
Certain of our executives and non-executives are eligible to receive PBRSUs, which are equity awards that may be earned
based on an initial target number. The final number of PBRSUs may vest and settle depending on the Company’s
performance against pre-established performance metrics over a predefined performance period. PBRSUs granted under
the Plan generally have one to three-year performance periods with cliff vesting following the completion of the
performance period, subject to the Compensation Committee’s approval of
the level of achievement against the
pre-established performance targets. Over the performance period, the number of PBRSUs that may be issued and related
stock-based compensation expense that is recognized is adjusted upward or downward based upon the probability of
achieving the approved performance targets against the performance metrics. Depending on the probability of achieving
the pre-established performance targets, the number of PBRSUs issued could range from 0% to 200% of the target amount.
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All stock options under the Plan were assumed in connection with acquisitions on the same terms and conditions
(including vesting) applicable to such acquired companies’ equity awards. The cost of stock options was determined using
the Black-Scholes option pricing model.
Employee Stock Purchase Plan
Under the terms of the Employee Stock Purchase Plan (“ESPP”), shares of our common stock may be purchased over an
offering period with a maximum duration of two years at 85% of the lower of the fair market value on the first day of the
applicable offering period or on the last business day of each six-month purchase period within the offering period.
Employees may contribute between 2% and 10% of their gross compensation during an offering period to purchase shares,
but not more than the statutory limitation of $25,000 per year. All company stock purchased through the ESPP is considered
outstanding and is included in the weighted-average outstanding shares for purposes of computing basic and diluted net
income (loss) per share. For the years ended December 31, 2023, 2022, and 2021, our employees purchased 2.3 million,
1.9 million, and 1.4 million shares under the ESPP at an average per share price of $55.34, $73.20, and $114.36, respectively.
As of December 31, 2023, approximately 44 million shares were reserved for future issuance under the ESPP.
RSU, PBRSU, and Restricted Stock Activity
The following table summarizes RSU, PBRSU, and restricted stock activity under the Plan and the Inducement Plan as of
December 31, 2023 and changes during the year ended December 31, 2023:
Outstanding at January 1, 2023
Awarded and assumed(1)
Vested(1)
Forfeited/cancelled
OUTSTANDING AT DECEMBER 31, 2023
Expected to vest
Weighted Average
Grant-Date
Fair Value
(per share)
Units
(In thousands, except per share amounts)
19,588
24,970
(10,799)
(3,595)
30,164
26,180
$ 133.27
$
72.51
$ 127.98
$ 105.81
$ 88.10
(1)
Includes approximately 0.3 million of additional PBRSUs issued during 2023 due to the achievement of company performance metrics on awards granted in previous years.
During the years ended December 31, 2023, 2022, and 2021, the aggregate intrinsic value of RSUs and PBRSUs vested
under the Plan was $752 million, $935 million, and $3.4 billion, respectively.
• 2024 Annual Report
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PART IV
Note 15—Stock-Based and Employee Savings Plans
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
In the year ended December 31, 2023, the Company granted 2.3 million PBRSUs with a one-year performance period (fiscal
2023), which which will become fully vested following the completion of the performance period in February 2024 (one
year from the annual incentive award cycle grant date), and 1.8 million PBRSUs with a three-year performance period.
In the year ended December 31, 2022, the Company granted 1.5 million PBRSUs with a one-year performance period (fiscal
2022), of which 1.0 million were subsequently cancelled due to the change in method of payout of the Company portion of
our Annual Incentive Plan from equity to cash for certain employees. As such, 0.5 million PBRSUs became fully vested
following the completion of the performance period in February 2023 (one year from the annual incentive award cycle
grant date). In the year ended December 31, 2022, the Company also granted 1.1 million PBRSUs with a three-year
performance period.
Stock Option Activity
The following table summarizes stock option activity of our employees under the Plan for the year ended December 31,
2023:
Outstanding at January 1, 2023
Assumed
Exercised
Forfeited/expired/cancelled
OUTSTANDING AT DECEMBER 31, 2023
Expected to vest
Options exercisable
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (Years)
Shares
Aggregate
Intrinsic Value
(In thousands, except per share amounts and years)
141
—
(60)
(9)
72
3
69
$ 14.56
$
—
$ 13.65
$ 15.76
$ 15.18
$ 37.45
$ 14.28
4.39
6.92
4.29
$ 3,402
$
95
$ 3,305
No options were granted or assumed during the year ended December 31, 2023. The weighted average grant date fair
value of options assumed from acquisitions during the years ended December 31, 2022 and 2021 was $147.92 and $237.26,
respectively. The aggregate intrinsic value was calculated as the difference between the exercise price of the underlying
options and the quoted price of our common stock at December 31, 2023. During the years ended December 31, 2023,
2022, and 2021, the aggregate intrinsic value of options exercised under the Plan was $4 million, $16 million, and
$81 million, respectively, determined as of the date of option exercise. At December 31, 2023, substantially all outstanding
options were in-the-money.
Stock-Based Compensation Expense
Stock-based compensation expense for the Plan and the Inducement Plan is measured based on estimated fair value at
the time of grant, and recognized over the award’s vesting period.
The impact on our results of operations of recording stock-based compensation expense under the equity incentive plans
for the years ended December 31, 2023, 2022, and 2021 was as follows:
Customer support and operations
Sales and marketing
Technology and development
General and administrative
TOTAL STOCK-BASED COMPENSATION EXPENSE
Capitalized as part of internal use software and website development costs
Income tax benefit on total stock-based compensation expense
Income tax benefit realized related to awards vested or exercised
114
• 2024 Annual Report
Year Ended December 31,
2023
2022
2021
$
305
179
612
434
(In millions)
$
269 $
263
151
512
383
175
515
468
$ 1,530
$ 1,315 $ 1,421
$
$
$
52
260
136
$
$
$
52 $
209 $
182 $
68
221
621
PART IV
Note 15—Stock-Based and Employee Savings Plans
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
As of December 31, 2023, there was approximately $1.5 billion of unearned stock-based compensation that is expected to
be recognized over a weighted average period of 1.80 years. If there are any modifications or cancellations of the
underlying unvested awards, we may be required to accelerate, increase, or cancel all or a portion of the remaining
unearned stock-based compensation expense. Future unearned stock-based compensation will increase to the extent we
grant additional equity awards, change the mix of equity awards we grant, or assume unvested equity awards in connection
with acquisitions.
Employee Savings Plans
Under the terms of the PayPal Holdings, Inc. Deferred Compensation Plan, which also qualifies under Section 401(k) of the
Code, participating U.S. employees may contribute up to 50% of their eligible compensation, but not more than statutory
limits. Under the PayPal plan, eligible employees received one dollar for each dollar contributed, up to 4% of each
employee’s eligible salary, subject to a maximum employer contribution per employee of $13,200 in 2023, $12,200 in 2022,
and $11,600 in 2021. Our non-U.S. employees are covered by other savings plans. For the years ended December 31, 2023,
2022, and 2021, the matching contribution expense for our U.S. and international savings plans was approximately
$80 million, $83 million, and $81 million, respectively.
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Note 16—Income Taxes
The components of income before income taxes were as follows:
United States
International
INCOME BEFORE INCOME TAXES
The income tax expense (benefit) was composed of the following:
Current:
Federal
State and local
Foreign
Year Ended December 31,
2023
2022
2021
(In millions)
$
993
$
(155)
$
290
4,418
3,521
3,809
$ 5,411
$ 3,366
$ 4,099
Year Ended December 31,
2023
2022
2021
(In millions)
$ 1,031
$ 688
$
145
657
104
966
6
80
326
TOTAL CURRENT PORTION OF INCOME TAX EXPENSE
$ 1,833
$ 1,758
$ 412
Deferred:
Federal
State and local
Foreign
TOTAL DEFERRED PORTION OF INCOME TAX EXPENSE (BENEFIT)
INCOME TAX EXPENSE (BENEFIT)
$ (490) $ (563)
$ (401)
(79)
(99)
(668)
(101)
(147)
(811)
(45)
(36)
(482)
$ 1,165
$ 947
$ (70)
• 2024 Annual Report
115
PART IV
Note 16—Income Taxes
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
The following is a reconciliation of the difference between the effective income tax rate and the federal statutory rate:
Federal statutory rate
Domestic income taxed at different rates
State taxes, net of federal benefit
Foreign income taxed at different rates
Stock-based compensation expense
Tax credits
Change in valuation allowances
Intra-group transfer of intellectual property
Other
EFFECTIVE INCOME TAX RATE
Year Ended December 31,
2023
21.0%
(1.5)%
1.1%
(5.1)%
3.5%
(0.7)%
—%
—%
3.2%
21.5%
2022
21.0%
(0.6)%
—%
(12.2)%
4.1%
(0.4)%
2.2%
10.0%
4.0%
28.1%
2021
21.0%
(1.7)%
0.9%
(13.4)%
(7.3)%
(2.4)%
0.5%
0.7%
—%
(1.7)%
Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying
amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the year in which the
differences are expected to reverse. Significant deferred tax assets and liabilities consist of the following:
Deferred tax assets:
Net operating loss and credit carryforwards
Accruals and allowances
Lease liabilities
Stock-based compensation
Net unrealized losses
Safeguarded crypto liabilities
Capitalized research and development
Other items
TOTAL DEFERRED TAX ASSETS
Valuation allowance
NET DEFERRED TAX ASSETS
Deferred tax liabilities:
ROU lease assets
Capitalized software development costs
Net unrealized gains
Safeguarded crypto assets
Other items
TOTAL DEFERRED TAX LIABILITIES
NET DEFERRED TAX ASSETS
As of December 31,
2023
2022
(In millions)
$
305
$
761
138
168
36
319
1,207
114
3,048
(276)
355
448
173
154
151
152
874
113
2,420
(341)
$ 2,772
$ 2,079
$
(96)
(187)
(170)
(319)
(161)
(933)
$
(138)
(190)
(135)
(152)
(179)
(794)
$ 1,839
$ 1,285
As of December 31, 2023, our foreign net operating loss carryforwards for income tax purposes were approximately
$707 million and certain of these amounts are subject to an annual limitation. If not utilized, a portion of these losses will
begin to expire in 2024. As of December 31, 2023, our California research and development tax credit carryforwards for
income tax purposes were approximately $264 million, which may be carried forward indefinitely. It is more likely than not
that most of these net operating loss and tax credit carryforwards will not be realized; therefore we have recorded a
valuation allowance against them.
Repatriation of our foreign earnings for use in the United States is generally not expected to result in a significant amount of
income taxes; as a result, the corresponding deferred tax liability we have accrued is not material.
116
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PART IV
Note 16—Income Taxes
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PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
We benefit from agreements concluded in certain jurisdictions, most significantly Singapore. The Singapore agreement is
effective through 2030, results in significantly lower rates of taxation on certain classes of income and requires various
thresholds of investment and employment in that jurisdiction. We review our compliance on an annual basis to ensure we
continue to meet our obligations under this agreement. Before taking into consideration the effects of the U.S. Tax Cuts and
Jobs Act and other indirect tax impacts, this agreement resulted in tax savings of approximately $441 million, $510 million,
and $327 million in 2023, 2022, and 2021, respectively. The benefit of this agreement on our net income (loss) per share
(diluted) was approximately $0.40, $0.44, and $0.28 in 2023, 2022, and 2021, respectively.
The following table reflects changes in unrecognized tax benefits for the periods presented below:
Year Ended December 31,
2023
2022
2021
(In millions)
Gross amounts of unrecognized tax benefits as of the beginning of the period
$
1,877
$ 1,678
$ 1,479
Increases related to prior period tax positions
Decreases related to prior period tax positions
Increases related to current period tax positions
Settlements
Statute of limitation expirations
178
(30)
235
—
(24)
52
(185)
337
(2)
(3)
172
(187)
232
(15)
(3)
GROSS AMOUNTS OF UNRECOGNIZED TAX BENEFITS AS OF THE END OF THE PERIOD
$ 2,236
$ 1,877
$ 1,678
If the remaining balance of unrecognized tax benefits were realized in a future period, it would result in a tax benefit of
$1.4 billion.
For the years ended December 31, 2023, 2022, and 2021, we recognized net interest and penalties of $151 million,
$119 million, and $6 million, respectively, related to uncertain tax positions in income tax expense. This expense is reflected
in the “Other” line of our effective income tax rate schedule. The amount of interest and penalties accrued as of
December 31, 2023 and 2022 was approximately $520 million and $342 million, respectively.
We are subject to taxation in the U.S. and various state and foreign jurisdictions. We are currently under examination by
certain tax authorities for the 2010 to 2022 tax years. The material jurisdictions in which we are subject to examination by tax
authorities for tax years after 2009 primarily include the U.S. (Federal and California), Germany, India, Israel, and Singapore.
We believe that adequate amounts have been reserved for any adjustments that may ultimately result from our open
examinations.
including uncertainties of
the judicial, administrative, and regulatory processes in certain
Due to various factors,
jurisdictions, the timing of the resolution of these audits is highly uncertain. It is reasonably possible that within the next
twelve months, we will receive additional tax adjustments by various tax authorities or possibly reach resolution of these
audits in one or more jurisdictions. These adjustments or settlements could result in changes to our contingencies related
to positions on prior year tax filings. Given the number of years remaining subject to examination and the number of matters
being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax
benefits.
In connection with our separation from eBay in 2015, we entered into various agreements that govern the relationship
between the parties going forward, including a tax matters agreement. Under the tax matters agreement, eBay is generally
responsible for all additional taxes (and will be entitled to all related refunds of taxes) imposed on eBay and its subsidiaries
(including subsidiaries that were transferred to PayPal pursuant to the separation) arising after the separation date with
respect to the taxable periods (or portions thereof) ended on or prior to July 17, 2015, except for those taxes for which
PayPal has reflected an unrecognized tax benefit in its financial statements on the separation date.
• 2024 Annual Report
117
PART IV
Note 17—Restructuring and Other
PayPal Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
Note 17—Restructuring and Other
Restructuring
During the first quarter of 2023, management initiated a global workforce reduction intended to focus resources on core
strategic priorities and improve our cost structure and operating efficiency. The associated restructuring charges in 2023
were $122 million. We primarily incurred employee severance and benefits costs, which were substantially completed by
the fourth quarter of 2023.
The following table summarizes the restructuring reserve activity during the year ended December 31, 2023:
Accrued liability as of January 1, 2023
Charges
Payments
ACCRUED LIABILITY AS OF DECEMBER 31, 2023
Employee Severance and
Benefits and Other
Associated Costs
(In millions)
$
24
122
(142)
$
4
During the first quarter of 2022, management initiated a strategic reduction of the existing global workforce intended to
streamline and optimize our global operations to enhance operating efficiency. This effort focused on reducing redundant
operations and simplifying our organizational structure. The associated restructuring charges in 2022 were $121 million. We
primarily incurred employee severance and benefits costs, as well as associated consulting costs under this strategic
reduction. The strategic actions associated with this plan were substantially completed by the fourth quarter of 2022.
During the first quarter of 2020, management approved a strategic reduction of the existing global workforce as part of a
multiphase process to reorganize our workforce concurrently with the redesign of our operating structure, which spanned
multiple quarters. The associated restructuring charges in 2021 were $27 million. We primarily incurred employee severance
and benefits costs, as well as associated consulting costs under the 2020 strategic reduction, which was substantially
completed in 2021.
Other
We continue to review our real estate and facility capacity requirements due to our new and evolving work models. We
incurred asset impairment charges of $61 million, $81 million, and $26 million in 2023, 2022, and 2021, respectively, due to
exiting of certain leased properties which resulted in a reduction of ROU lease assets and related leasehold improvements.
See “Note 6—Leases” for additional information. In the year ended December 31, 2023, we recognized a gain of $17 million
due to the sale of an owned property. We also incurred a loss of $14 million related to another owned property, which was
previously held for sale in the year ended December 31, 2023.
During the year ended December 31, 2023, approximately $74 million of losses were recorded in restructuring and other,
which included net loss on sale of loans and interest receivable previously held for sale (inclusive of transaction costs) and
fair value adjustments in order to measure loans and interest receivable, held for sale, at the lower of cost or fair value.
In the fourth quarter of 2023, we completed the sale of Happy Returns and recorded a pre-tax gain of $339 million, net of
transaction costs,
information on the divestiture, see “Note 4—Business
Combinations and Divestitures”.
in restructuring and other. For additional
118
• 2024 Annual Report
PART IV
Note 18—Subsequent Events
Note 18—Subsequent Events
In January 2024, management initiated a global workforce reduction intended to streamline operations, focus resources on
core strategic priorities, and improve our cost structure. We estimate this reduction will impact approximately 8% of our
employees and result in approximately $120 million of restructuring charges, primarily related to employee severance and
benefits costs. The actions associated with this plan are expected to be substantially completed by the first quarter of 2024.
In addition to this workforce reduction, as a part of this overall strategy, we have also committed to reassess our previous
hiring plans with a focus on identifying additional efficiency opportunities, such as the deployment of more automation.
This additional commitment to rationalize growth in employee headcount may not directly result in restructuring charges.
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PART IV
Financial Statement Schedule
Financial Statement Schedule
The Financial Statement Schedule II—VALUATION AND QUALIFYING ACCOUNTS is filed as part of this Annual Report on
Form 10-K.
Balance at
Beginning of
Period
Charged/
(Credited) to
Net Income
Charged to
Other
Accounts
(In millions)
Charges
Utilized/
(Write-offs)
Balance at
End of Period
Allowance for Transaction Losses and Negative
Customer Balances
Year Ended December 31, 2021
Year Ended December 31, 2022
Year Ended December 31, 2023
Allowance for Loans and Interest Receivable
Year Ended December 31, 2021
Year Ended December 31, 2022
Year Ended December 31, 2023
$ 414
$ 355
$ 278
$ 838
$ 491
$ 598
$ 1,153
$ 1,170
$ 1,192
$ (104)
$ 437
$ 539
$ —
$ —
$ —
$ —
$ —
$ —
$ (1,212)
$ (1,247)
$ (1,188)
$ (243)
$ (330)
$
(597)
$ 355
$ 278
$ 282
$ 491
$ 598
$ 540
120
• 2024 Annual Report
Item 16. Form 10-K Summary
None.
Index of Exhibits
Exhibit
Number
Exhibit Description
2.01
3.01
3.02
4.01
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
10.01
Separation and Distribution Agreement by and between eBay Inc.
and PayPal Holdings, Inc.
PayPal Holdings, Inc. Restated Certificate of Incorporation
PayPal Holdings, Inc. Amended and Restated Bylaws effective
September 27, 2023
Description of Securities
Indenture, dated as of September 26, 2019, by and between PayPal
Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee
Officer’s Certificate, dated as of September 26, 2019, pursuant to the
Indenture, dated as of September 26, 2019, by and between PayPal
Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee
Form of 2022 Note (included in Exhibit 4.03)
Form of 2024 Note (included in Exhibit 4.03)
Form of 2026 Note (included in Exhibit 4.03)
Form of 2029 Note (included in Exhibit 4.03)
Officer’s Certificate, dated as of May 18, 2020, pursuant to the
Indenture, dated as of September 26, 2019, by and between PayPal
Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee
Form of 2025 Note (included in Exhibit 4.08)
Form of 2030 Note (included in Exhibit 4.08)
Form of 2050 Note (included in Exhibit 4.08)
Officer’s Certificate, dated as of May 23, 2022, pursuant to the
Indenture, dated as of September 26, 2019, by and between PayPal
Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee
Form of 2027 Note (included in Exhibit 4.2)
Form of 2032 Note (included in Exhibit 4.2)
Form of 2052 Note (included in Exhibit 4.2)
Form of 2062 Note (included in Exhibit 4.2)
Officer’s Certificate pursuant to the Indenture, dated as of June 9,
2023
Form of Note for 0.813% Notes due 2025 (included in Exhibit 4.17)
Form of Note for 0.972% Notes due 2026 (included in Exhibit 4.18)
Form of Note for 1.240% Notes due 2026 (included in Exhibit 4.18)
Tax Matters Agreement by and between eBay Inc. and PayPal
Holdings, Inc. dated July 17, 2015
PART IV
Item 16. Form 10-K Summary
Incorporated by Reference
Filed with this
Form 10-K
Form
Date Filed
10-12B/A
6/26/2015
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10-Q
8-K
10-K
8-K
7/27/2017
10/2/2023
2/6/2020
9/26/2019
8-K
9/26/2019
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
9/26/2019
9/26/2019
9/26/2019
9/26/2019
5/18/2020
5/18/2020
5/18/2020
5/18/2020
5/23/2022
5/23/2022
5/23/2022
5/23/2022
5/23/2022
6/9/2023
6/9/2023
6/9/2023
6/9/2023
7/20/2015
• 2024 Annual Report
121
PART IV
Index of Exhibits
Exhibit
Number
10.02+
10.03+
10.04+
10.05+
10.06+
10.07+
10.08+
10.09+
10.10+
10.11+
10.12+
10.13+
10.14+
10.15+
10.16+
10.17+
10.18+
10.19+
10.20+
10.21+
10.22+
10.23+
Exhibit Description
PayPal Employee Incentive Plan, as amended and restated
PayPal Holdings, Inc. Amended and Restated 2015 Equity Incentive
Award Plan
PayPal Holdings, Inc. Amended and Restated Deferred
Compensation Plan effective November 6, 2018
PayPal Holdings, Inc. Executive Change in Control and Severance
Plan, as amended and restated, effective as of September 27, 2021
Form of Indemnity Agreement between PayPal Holdings, Inc. and
individual directors and officers
Form of Global Restricted Stock Unit Award Grant Notice and
Restricted Stock Unit Award Agreement under the PayPal Holdings,
Inc. 2015 Equity Incentive Award Plan
Form of Global Performance Based Restricted Stock Unit Award
Grant Notice and Performance Based Restricted Stock Unit Award
Agreement under the PayPal Holdings, Inc. 2015 Equity Incentive
Award Plan, as amended and restated
Form of Global Notice of Grant of Stock Option and Stock Option
Agreement under the PayPal Holdings, Inc. 2015 Equity Incentive
Award Plan
Form of Director Annual Award Agreement under the PayPal
Holdings, Inc. 2015 Equity Incentive Award Plan
Form of Electing Director Quarterly Award Agreement under the
PayPal Holdings, Inc. 2015 Equity Incentive Award Plan
PayPal Holdings, Inc. Amended and Restated Employee Stock
Purchase Plan
Amendment to PayPal Holdings, Inc. Amended and Restated
Employee Stock Purchase Plan
PayPal Holdings, Inc. 2022 Inducement Plan
Offer Letter dated September 29, 2014 between eBay Inc. and Daniel
Schulman
Amendment dated December 31, 2014 to Offer Letter between eBay
Inc. and Daniel Schulman
Letter dated April 13, 2015 from eBay Inc. to Jonathan Auerbach
Letter Agreement, dated April 17, 2016, between Aaron Karczmer and
PayPal Holdings, Inc.
Letter Agreement effective July 13, 2022, between Blake Jorgensen
and PayPal Holdings, Inc.
Letter Agreement dated June 15, 2022 between Gabrielle Rabinovitch
and PayPal Holdings, Inc.
Letter Agreement dated September 27, 2022 between Gabrielle
Rabinovitch and PayPal Holdings, Inc.
Letter Agreement dated September 1, 2022 between John Kim and
PayPal Holdings, Inc.
Letter Agreement by and between PayPal Holdings, Inc. and Alex
Chriss, dated August 10, 2023
122
• 2024 Annual Report
Filed with this
Form 10-K
Incorporated by Reference
Form
Date Filed
DEF 14A
4/14/2016
8-K
10-K
5/31/2023
2/7/2019
10-Q
11/9/2021
10-12B/A
5/14/2015
10-12B/A
5/14/2015
10-Q
4/27/2017
10-12B/A
5/14/2015
10-12B/A
5/14/2015
10-12B/A
5/14/2015
8-K
10-Q
5/25/2018
11/9/2021
10-Q
8/2/2022
10-12B/A
5/14/2015
10-12B/A
5/14/2015
10-K
10-Q
2/11/2016
4/27/2017
10-Q
8/2/2022
8-K
6/17/2022
8-K
10/3/2022
10-Q
11/3/2022
8-K
8/14/2023
Exhibit Description
Filed with this
Form 10-K
Exhibit
Number
10.24+
10.25+^
10.27
10.28†
10.29†
10.30+
10.31+
10.32+
Offer Letter, dated October 29, 2023, by and between PayPal
Holdings, Inc. and Jamie Miller
Transition Agreement by and between PayPal, Inc. and Gabrielle
Rabinovitch, dated December 21, 2023
Credit Agreement, dated as of June 7, 2023, among PayPal Holdings,
Inc. the Designated Borrowers party thereto, the Lenders party
thereto and JPMorgan Chase Bank, N.A. and J.P. Morgan Securities
Australia Limited, as the Administrative Agents
Receivables Purchase Agreement, dated as of June 16, 2023 in the
form as amended and restated as of October 13, 2023 by and
between PayPal (Europe) S.à r.l. et Cie, SCA (as Seller and
Receivables Manager), Alps Partners S.à r.l. (as Purchaser), BNY
Mellon Corporate Trustee Services limited (as Security Agent), Avega
S.à r.l. (as Back-Up Receivables Manager Facilitator) and Alps
Partners (Holding) S.à r.l. (as Class C Lender)
Receivables Management Agreement, dated as of June 16, 2023 in
the form as amended and restated as of October 13, 2023 by and
between PayPal (Europe) S.à r.l. et Cie, SCA (as Seller and
Receivables Manager), Alps Partners S.à r.l. (as Purchaser), Avega S.à
r.l. (as Back-Up Receivables Manager Facilitator) and Alps Partners
(Holding) S.à r.l. (as Class C Lender)
Offer Letter, dated October 23, 2023, by and between PayPal
Holdings, Inc. and Michelle Gill
Offer Letter, dated October 23, 2023, by and between PayPal
Holdings, Inc. and Diego Scotti
Offer Letter, dated December 4, 2023, by and between PayPal
Holdings, Inc. and Suzan Kereere
10.33+
Independent Director Compensation Policy
21.01
22.01
23.01
31.01
31.02
32.01
32.02
97.1
101
List of Subsidiaries
PricewaterhouseCoopers LLP consent
Power of Attorney (see signature page)
Certification of PayPal Holdings, Inc.’s Chief Executive Officer, as
required by Section 302 of the Sarbanes-Oxley Act of 2002
Certification of PayPal Holdings, Inc.’s Chief Financial Officer, as
required by Section 302 of the Sarbanes-Oxley Act of 2002
Certification of PayPal Holdings, Inc.’s Chief Executive Officer, as
required by Section 906 of the Sarbanes-Oxley Act of 2002
Certification of PayPal Holdings, Inc.’s Chief Financial Officer, as
required by Section 906 of the Sarbanes-Oxley Act of 2002
PayPal Holdings, Inc. Mandatory Recovery Policy for Executive
Officers
The following financial information related to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2023,
formatted in iXBRL (Inline Extensible Business Reporting Language):
(i) the Consolidated Balance Sheets, (ii) the Consolidated Statements
of Income (Loss), (iii) the Consolidated Statements of
Comprehensive Income (Loss), (iv) the Consolidated Statements of
Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows;
and (vi) the related Notes to Consolidated Financial Statements
PART IV
Index of Exhibits
Incorporated by Reference
Form
8-K
Date Filed
11/1/2023
8-K
12/22/2023
8-K
6/13/2023
10-Q
11/2/2023
10-Q
11/2/2023
A
N
N
U
A
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E
P
O
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T
X
X
X
X
X
X
X
X
X
X
X
X
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• 2024 Annual Report
123
PART IV
Index of Exhibits
Exhibit
Number
104
Exhibit Description
Cover Page Interactive Data File, formatted in iXBRL and contained in
Exhibit 101
Incorporated by Reference
Form
Date Filed
Filed with this
Form 10-K
X
Indicates a management contract or compensatory plan or arrangement.
+
† Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
^
Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to
the SEC upon request.
124
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 7, 2024.
PART IV
Signatures
PayPal Holdings, Inc.
By:
/s/ Alex Chriss
Name:
Title:
Alex Chriss
President, Chief Executive Officer and
Director
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PART IV
Signatures
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Alex Chriss, Jamie Miller, Bimal Patel, Brian Y. Yamasaki and Hasitha Verma, and each or any one of them, each with the
power of substitution, his or her attorney-in-fact, to sign any amendments to this report, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities indicated on February 7, 2024.
Principal Executive Officer:
Principal Financial Officer and Principal Accounting
Officer:
By: /s/ Alex Chriss
By: /s/ Jamie Miller
Alex Chriss
President, Chief Executive Officer and Director
Jamie Miller
Executive Vice President, Chief Financial Officer
Additional Directors
By:
/s/ Rodney C. Adkins
By:
/s/ Jonathan Christodoro
Rodney C. Adkins
Director
Jonathan Christodoro
Director
By:
/s/ John J. Donahoe
By:
/s/ David W. Dorman
John J. Donahoe
Director
By:
/s/ Belinda Johnson
By:
/s/ Enrique Lores
Belinda Johnson
Director
David W. Dorman
Director
Enrique Lores
Director
By:
/s/ Gail J. McGovern
By:
/s/ Deborah M. Messemer
Gail J. McGovern
Director
Deborah M. Messemer
Director
By:
/s/ David M. Moffett
By:
/s/ Ann M. Sarnoff
By:
/s/ Frank D. Yeary
David M. Moffett
Director
Frank D. Yeary
Director
Ann M. Sarnoff
Director
126
• 2024 Annual Report
STOCK PERFORMANCE GRAPH
Stock Performance Graph
This performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange
Commission (the “SEC”) for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the
liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the
Securities Act of 1933.
The graph below shows the cumulative total stockholder return of an investment of $100 in our common stock during the
period beginning December 31, 2018 through December 31, 2023, compared to the S&P 500 Index and the S&P 500
Software & Services Select Industry Index. These indices are included only for comparative purposes as required by SEC
rules and do not necessarily reflect management’s opinion that such indices are an appropriate measure of the relative
performance of our common stock. Stockholder returns over the indicated periods should not be considered indicative of
future stock price or stockholder returns.
P
R
O
X
Y
S
T
A
T
E
M
E
N
T
$400
$300
$200
$100
$202
$190
$73
$0
2018
2019
2020
2021
2022
2023
PayPal Holdings, Inc.
S&P 500 Index
S&P Software & Services Select Industry Index
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Our Mission
Revolutionize commerce globally.
Our Leadership Principles
Our Leadership Principles are integrated with our core values and outline a common set of
expectations for all employees for how they drive positive impact through their work.
Put people
first
Work
customer
back
Win
together
• Build the next generation,
unlocking their superpowers
• Provide and seek
constructive feedback –
clear is kind
• Choose inclusion and
foster belonging
• Focus on our customers’
greatest needs, sweating
every detail
• Solve with tech and
innovation
• Create simple and valuable
customer experiences
• Do the right thing
• Operate with velocity and
an ownership mindset
• Deliver great end-to-end
results
• Work as One PayPal
Integrated with Our Values: Inclusion l Innovation l Collaboration l Wellness
PayPal funded certified carbon credit
projects to compensate for the
climate impact of this publication.