Airbnb CEO's 10-Year Pay Package Could Turn Into $1 Billion or More

17.04.2024 - 14:53 / skift.com / Brian Chesky / Dennis Schaal

Airbnb turned heads in 2021 when it announced chairman and CEO Brian Chesky had been awarded a $120 million pay package the previous year that potentially included earning 12 million restricted stock units over the following decade.

The $120 million figure was for accounting purposes. However, the fair value of those stock units was estimated to be $430 million on the grant date of November 10, 2020, when then-privately held Airbnb’s share price was $35.81.

But that was a month before the Airbnb IPO. By year’s end 2020, the stock traded above $145.

It may turn out that the 10-year package for Chesky could soar to $1 billion or more if Airbnb’s share price hits certain price targets during each of the 10 years, and he remains CEO.

In a proxy statement issued late last month that included its executive pay figures, Airbnb noted that the potential value of Chesky’s eight remaining tranches of at the end of 2023 was $1.3 billion.

That’s the value at the end of 2023 of the remaining 9.6 million shares in the 12 million share package that haven’t already vested. These would be for years 2023-2030.

But Chesky’s actually receiving them is far from a sure thing. Let’s look at what Chesky has received so far, and the hurdles he needs to clear to hit that potential payout.

Payouts come two years after the vesting eligibility date.

So the two tranches already earned could potentially inflate the $1.3 billion figure because they weren’t included in the estimate, but the unmet third tranche for 2023 may lower it.

That highlights the difficult nature of estimating the potential payout because it is based on whether Airbnb’s share price hits the designated thresholds, and the actual share price on the date an earned award settles.

Future stock awards will be even tougher to achieve than the ones already earned. For example, the stock price hurdle is $245 per share in 2024, meaning the stock would need to average $245 over a 60-day trailing period. That stock price hurdle is $365 in 2027, and $485 in 2030.

If Airbnb hits those share price marks, Chesky and fellow shareholders would be making a lot of money.

When the board initially awarded the pay package to Chesky, it made the following statement: “In designing the compensation program for Mr. Chesky, our board of directors was cognizant of Mr. Chesky’s intention to contribute shares of our common stock worth over $100 million to support the Host Endowment Fund and to donate the net proceeds from the Multi-Year Award to community, philanthropic and charitable causes.”

So the payout after Chesky’s taxes get paid could ultimately go to programs to benefit Airbnb hosts — such as educational grants or emergency funds during pandemic-like crises — and various