DEF 14A of Toast, Inc., Apr 23, 2024

DEF 14A of Toast, Inc.

Filed Apr 23, 2024 · FY20230001650164-24-000144

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  2. Directors

    Directors The following table sets forth information regarding our directors, including their ages, as of March 31, 2024:

  3. Directors

    | | Class | Age | Position(s) | Current Term Expires | Expiration of Term for which Nominated | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | | Directors with Terms Expiring at the Annual Meeting/Nominees | | | | | | | | | | Stephen Fredette | III | 40 | President, Co-Founder, and Director | 2024 | 2027 | | | | | Aman Narang | III | 41 | CEO, Co-Founder, and Director | 2024 | 2027 | | | | | Deval L. Patrick | III | 67 | Director | 2024 | 2027 | | | C | | Continuing Directors | | | | | | | | | | Paul Bell | I | 63 | Director | 2025 | N/A | M | | | | Christopher P. Comparato | I | 57 | Director | 2025 | N/A | | | | | Hilarie Koplow-McAdams | I | 60 | Director | 2025 | N/A | | M | | | David Yuan | I | 49 | Director | 2025 | N/A | M | | | | Kent Bennett | II | 46 | Director | 2026 | N/A | | M | M | | Susan Chapman-Hughes | II | 55 | Director | 2026 | N/A | | C | M | | Mark Hawkins | II | 64 | Board Chairperson | 2026 | N/A | C | M | |

  4. Directors

    Legend:

  5. M= Member

    M= Member

  6. C= Chairperson

    C= Chairperson

  7. Information Concerning Director Nominees

    Information Concerning Director Nominees Stephen Fredette. Mr. Fredette is a Co-Founder and has been our President since January 2024 and a member of our Board since August 2021. Prior to that, Mr. Fredette was our Co-President since December 2015 and our Chief Executive Officer from December 2011 to February 2015. Mr. Fredette also previously served as a member of our Board from December 2011 to June 2017 and February 2020 to January 2021. Previously, Mr. Fredette served in various roles at Oracle. Mr. Fredette holds a B.S. in Chemistry from the Massachusetts Institute of Technology. Mr. Fredette is qualified to serve on our Board because of his management experience and business expertise, including his perspective and experience he brings as our President and as a Co-Founder. Aman Narang. Mr. Narang is a Co-Founder and has been our Chief Executive Officer since January 2024 and a member of our Board since January 2021. Prior to that, Mr. Narang was our Co-President between December 2012 and December 2023, and Chief Operating Officer between June 2021 and December 2023. Mr. Narang also served as a member of our Board from December 2011 to December 2015 and from June 2017 to June 2018. Previously, Mr. Narang worked in Product Management at Oracle. Mr. Narang holds a B.S. and M.S. in Computer Science from the Massachusetts Institute of Technology. Mr. Narang is qualified to serve on our Board because of his management experience and business expertise, including his perspective and experience he brings as our Chief Executive Officer and as a Co-Founder. Deval L. Patrick. Mr. Patrick has been a member of our Board since February 2021. Mr. Patrick has served as a Senior Advisor to The Vistria Group, a private impact investment firm, since January 2024. He has been a professor of the practice of public leadership and a co-director of the Center for Public Leadership at Harvard Kennedy School since February 2022. From March 2021 to December 2023, Mr. Patrick was a Senior Advisor at Bain Capital LLC, where he previously founded and, from April 2015 to December 2019, served as Managing Partner of the Double Impact Fund, an investment fund focused on delivering competitive financial returns and positive social impact. Previously, from January 2007 to January 2015, Mr. Patrick served as Governor of the Commonwealth of Massachusetts. Mr. Patrick has served on the boards of directors of American Well Corp., a telemedicine technology company, from June 2015 to December 2019, and from April 2020 to the present; Cerevel Therapeutics Holdings, Inc., a biopharmaceutical company focused on neuroscience, since January 2021; and Twilio Inc., a cloud communications developer platform, since January 2021. He previously served on the board of Environmental Impact Acquisition Corp., a special purpose acquisition company focused on sustainability companies, from January 2021 to February 2022 and the board of Global Blood Therapeutics, Inc., a biotech company focused on therapies to address sickle cell disease, from April 2015 to November 2019, and from May 2020 until its acquisition by Pfizer Inc. in October 2022. In addition, Mr. Patrick serves as a member of several charitable boards. Mr. Patrick holds a B.A. in English and American Literature from Harvard College and a J.D. from Harvard Law School. Mr. Patrick’s qualifications to sit on our Board include his extensive leadership, executive and business experience with companies, investment firms and government, combined with his dedication and commitment to public interest through corporate social impact and civil rights.

  8. Information Concerning Continuing Directors

    Information Concerning Continuing Directors Paul Bell. Mr. Bell has been a member of our Board since June 2017. Mr. Bell has been an Operating Partner at Lead Edge Capital since July 2013. Previously, Mr. Bell worked for Dell Inc. (“Dell”), serving as President of various business units. Mr. Bell currently serves on the boards of directors of several private companies. Mr. Bell holds an M.B.A. from Yale University and a B.S. and B.A. from Pennsylvania State University. Mr. Bell’s qualifications to serve on our Board include his extensive leadership, executive, managerial, and business experience with technology companies and knowledge of the venture capital industry. Christopher P. Comparato. Mr. Comparato has been a member of our Board since December 2015, and served as the Chairperson of our Board between November 2021 and December 2023. Mr. Comparato was our Chief Executive Officer between February 2015 and December 2023. Previously, Mr. Comparato led Customer Success functions at Acquia, Inc. and Endeca Technologies, Inc. (“Endeca”) (acquired by Oracle Corporation (“Oracle”)), and held management roles at Keane, Inc. and Cambridge Technology Partners, both consulting firms. Mr. Comparato holds a B.S. in Mechanical Engineering from Union College. Mr. Comparato’s qualifications to serve on our Board include his management experience and business expertise, including his prior executive-level leadership and experience scaling companies. Hilarie Koplow-McAdams. Ms. Koplow-McAdams has been a member of our Board since November 2021. Ms. Koplow-McAdams has been a Venture Partner at New Enterprise Associates since December 2017. Previously, Ms. Koplow-McAdams worked at New Relic, Inc., where she served as President from October 2015 to April 2017, and prior to that as Chief Revenue Officer from December 2013 to September 2015. Ms. Koplow-McAdams has served on the board of directors of Zendesk, Inc. since September 2017 and continues to serve as a director following its acquisition in November 2022. Previously, she served on the board of directors of Tableau Software, Inc. from December 2016 until it was acquired by Salesforce.com, Inc. (“Salesforce”) in August 2019. Ms. Koplow-McAdams has been a Trustee of the University of Chicago since May 2020. Ms. Koplow-McAdams also serves on the boards of directors of various privately held companies. Ms. Koplow-McAdams holds a B.A. in sociology from Mills College and an M.A. in public policy from the University of Chicago. Ms. Koplow-McAdams’ qualifications to sit on our Board include her extensive leadership, executive, and business experience with technology companies and knowledge of the venture capital industry. David Yuan. Mr. Yuan has been a member of our Board since March 2019. Mr. Yuan is a general partner at Tidemark Capital (“Tidemark”), a growth equity firm which Mr. Yuan founded in January 2021. Prior to Tidemark, Mr. Yuan was a General Partner at Technology Crossover Ventures (“TCV”), a private investment firm, from September 2005 to January 2021. Mr. Yuan has served as a director of Cypress Holdings, Inc. since its founding in 2017 until its acquisition by CCC Intelligent Solutions Holdings Inc., where he has continued to serve as a director since the closing of the acquisition in 2021 until April 2022. He has also served on the board of directors of LegalZoom.com, Inc. from August 2018 to March 2022. In addition, he serves as a director or as a board observer of multiple companies within the technology and financial technology space, including Karbon, Inc., and Kajabi LLC. Mr. Yuan holds an M.B.A. from Stanford Graduate School of Business and an A.B. in Economics from Harvard University. Mr. Yuan’s qualifications to sit on our Board include his extensive experience as a director of technology companies and his knowledge of the venture capital and technology industries. Kent Bennett. Mr. Bennett has been a member of our Board since December 2015. Mr. Bennett has served as an investment professional at Bessemer Venture Partners, a global venture capital and private equity firm, since 2008 and has been a Partner since 2013. Mr. Bennett currently serves on the boards of directors of various privately held companies. Mr. Bennett holds an M.B.A. from Harvard Business School and a B.S. in Systems Engineering from the University of Virginia. Mr. Bennett’s qualifications to sit on our Board include his extensive experience in the venture capital industry and serving as a director of various privately held companies, and his knowledge of technology companies. Susan E. Chapman-Hughes. Ms. Chapman-Hughes has been a member of our Board since February 2021. Ms. Chapman-Hughes was the Executive Vice President, Global Head of Digital Capabilities, Transformation and Operations of The American Express Company (“American Express”) from February 2018 to February 2021. Previously at American Express, Ms. Chapman-Hughes served as Senior Vice President, U.S. Large Market, Global Corporate Payments from December 2014 to February 2018 and in various other roles since 2010. Ms. Chapman-Hughes has served on the board of directors of The J.M. Smucker Company since August 2020 and previously served on the board of directors of Potbelly Corporation from May 2014 to June 2020. Ms. Chapman-Hughes holds an M.B.A. in Real Estate Finance and Urban Land Economics from the University of Wisconsin Madison, a Master’s Degree in Regional Planning from the University of Massachusetts, Amherst and a B.S. in Engineering from Vanderbilt University. Ms. Chapman-Hughes’s qualifications to sit on our Board include her extensive experience as a director of public companies and her leadership, executive, managerial and business experience with technology companies. Mark Hawkins. Mr. Hawkins has been a member of our Board since April 2020, Chairperson of the Board since January 2024, and the Lead Independent Director of our Board between November 2021 and December 2023. Mr. Hawkins served as the President and Chief Financial Officer Emeritus Advisor at Salesforce between February 2021 and November 2021, the President and Chief Financial Officer from August 2017 to February 2021, and the Executive Vice President and Chief Financial Officer at Salesforce between August 2014 and 2017. Prior to that, he served as Chief Financial Officer and Executive Vice President of Autodesk, Inc., Chief Financial Officer and Senior Vice President of Finance & IT at Logitech International S.A. and held various positions at Dell and Hewlett-Packard. Mr. Hawkins has served on the board of directors of SecureWorks Inc. since April 2016, Cloudflare, Inc. since June 2022, and Workday, Inc. since February 2023. He also serves as a senior advisor and board member to a number of private companies. Mr. Hawkins holds an M.B.A. in Finance from the University of Colorado, a B.A. from Michigan State University and has completed the Advanced Management Program at Harvard Business School. Mr. Hawkins’s qualifications to sit on our Board include his extensive experience as a director of public companies and his leadership, executive, managerial, financial and business experience with technology companies.

  9. Identifying and Evaluating Director Nominees

    Identifying and Evaluating Director Nominees The Board has delegated to the nominating and corporate governance committee the responsibility of identifying suitable candidates for nomination to the Board (including candidates to fill any vacancies that may occur) and assessing their qualifications in light of the policies and principles in these corporate governance guidelines and our compensation committee’s charter. The nominating and corporate governance committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating and corporate governance committee deems to be appropriate in the evaluation process. The nominating and corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board. Based on the results of the evaluation process, the nominating and corporate governance committee recommends candidates for the Board’s approval as director nominees for election to the Board.

  10. NON-EMPLOYEE DIRECTOR COMPENSATION

    NON-EMPLOYEE DIRECTOR COMPENSATION

  11. Non-Employee Director Compensation Program

    Non-Employee Director Compensation Program We maintain a Non-Employee Director Compensation Program, which is designed to provide a total compensation package that enables us to attract and retain, on a long-term basis, high caliber members of our Board. Under our Non-Employee Director Compensation Program, all directors who are not employees of the company or any of its subsidiaries, collectively referred to as our non-employee directors, are eligible to receive compensation under the program.

  12. Non-Employee Director Compensation Policy

    Non-Employee Director Compensation Policy In November 2022, our Board approved the Toast, Inc. Non-Employee Director Compensation Policy (the “Director Compensation Policy”), which became effective on January 1, 2023. The Director Compensation Policy governs the administration of our non-employee director compensation program. Under our Director Compensation Policy, our non-employee directors were compensated according to the director cash retainer table below. All cash retainers are paid quarterly in arrears and prorated for partial years of service.

  13. Non-Employee Director Compensation Policy

    | | Cash Retainer | | Annual Retainer for Board Membership | | | Annual service on the Board | $50,000 | | Additional Annual Retainer for Committee Membership | | | Annual service as audit committee chairperson | $25,000 | | Annual service as member of the audit committee (other than chair) | $10,000 | | Annual service as compensation committee chairperson | $20,000 | | Annual service as member of the compensation committee (other than chair) | $10,000 | | Annual service as nominating and governance committee chairperson | $10,000 | | Annual service as member of the nominating and governance committee (other than chair) | $5,000 | | Additional Annual Cash Retainer for Lead Independent Director | | | Annual service as lead independent director | $40,000 |

  14. Non-Employee Director Compensation Policy

    In addition, our Director Compensation Policy provides that, upon initial election or appointment to our Board, each new non-employee director will be granted a one-time grant of restricted stock units with a total value of $400,000 on the date of such director’s election (the “Director Initial Grant”). The Director Initial Grant vests in substantially equal annual installments over three years, subject to continued service relationship with us through each applicable vesting date. Each year thereafter, each non-employee director who would continue as a non-employee director would be granted an annual award of restricted stock units with a total value of $225,000 (the “Director Annual Grant”). The Director Annual Grant vests on the earlier of the one-year anniversary of the grant date or the next annual meeting of stockholders, subject to continued service relationship with us through the applicable vesting date. The number of restricted stock units (“RSUs”) to be granted is determined by dividing the total value by the average closing market price of one share of our Class A common stock over the trailing 90 trading days ending on the last trading day immediately prior to the grant date. In 2023, each continuing non-employee director received the Director Annual Grant on the date of our annual shareholder meeting in 2023. All outstanding Director Initial Grants and Director Annual Grants awarded to our non-employee directors under the Director Compensation Policy will become fully vested and nonforfeitable upon a Sale Event (as defined in our 2021 Stock Option and Incentive Plan, as amended from time to time (the “2021 Stock Plan”)), subject to such director’s continued service until the date of such Sale Event. Employee directors receive no additional compensation for their service as a director beyond the compensation they receive for serving as our officers. We also reimburse all reasonable out-of-pocket expenses incurred by our non-employee directors for their attendance at meetings of our Board or any committee thereof. The aggregate amount of compensation, including both equity compensation and cash compensation, paid to any non-employee director for service as a non-employee director in a calendar year period cannot exceed $1,200,000. Non-Employee Director Compensation Policy Effective January 1, 2024: In November 2023, following a benchmarking review of non-employee director compensation values and programs at companies similar to us in size and industry, and in order to provide market-competitive compensation to our non-employee directors, our Board approved an additional annual cash retainer for the non-executive board chair position that is equivalent to the additional annual cash retainer for the lead direction position (i.e., $40,000). All other cash and equity retainer amounts remained unchanged.

  15. Non-Employee Director Compensation Table

    Non-Employee Director Compensation Table The following table provides information regarding the total compensation that was earned by or paid to each of our non-employee directors in the fiscal year ended December 31, 2023. Mr. Comparato, Mr. Narang and Mr. Fredette are members of our Board, but as employees of our company during 2023, they did not receive any compensation from us for their service on our Board. See the section titled “Executive Compensation” for more information on the compensation paid to or earned by Mr. Comparato, Mr. Narang and Mr. Fredette as named executive officers for the fiscal year ended December 31, 2023.

  16. Non-Employee Director Compensation Table

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | Paul Bell (2) | 60,000 | 254,234 | 314,234 | | Kent Bennett (3) | 65,000 | 254,234 | 319,234 | | Mark Hawkins (4) | 125,000 | 254,234 | 379,234 | | Susan Chapman-Hughes (5) | 75,000 | 254,234 | 329,234 | | David Yuan (6) | 60,000 | 254,234 | 314,234 | | Deval L. Patrick (7) | 60,000 | 254,234 | 314,234 | | Hilarie Koplow-McAdams (8) | 59,167 | 254,234 | 313,401 |

  17. Non-Employee Director Compensation Table

    (1)The amounts reported represent the aggregate grant date fair value of the awards granted to the non-employee directors calculated in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 718. Such grant date fair value does not take into account any estimated forfeitures. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in the notes of our consolidated financial statements of our 2023 Form 10-K. The amounts reported in this column reflect the accounting cost for the stock awards, and does not correspond to the actual economic value that may be received upon issuance of shares of Class A common stock, or any sale of any of the underlying shares of Class A common stock. (2)Mr. Bell held 11,593 restricted stock units as of December 31, 2023. (3)Mr. Bennett held 11,593 restricted stock units as of December 31, 2023. (4)Mr. Hawkins held 11,593 restricted stock units as of December 31, 2023. (5)Ms. Chapman-Hughes held 19,238 restricted stock units as of December 31, 2023. (6)Mr. Yuan held 11,593 restricted stock units as of December 31, 2023. (7)Mr. Patrick held 19,238 restricted stock units as of December 31, 2023. (8)Ms. Koplow-McAdams held 15,025 restricted stock units as of December 31, 2023. PROPOSAL TWO:

  18. Pay Practices and Governance

    | WHAT WE DO | WHAT WE DON’T DO | | Committee Independence: Our compensation committee is composed entirely of independent directors as defined under the rules of the NYSE. | No Hedging or Pledging our Equity Securities: Our Stock Trading Policy prohibits our directors and employees, including our executive officers, from hedging or pledging our securities. | | Independent Compensation Consultant: Our compensation committee retains the services of an independent, third-party compensation consultant to provide advice on executive compensation pay and practices. | No Single-trigger Equity Vesting: Under our equity plan and severance and change in control policies, in a change in control where equity awards are assumed, continued or substituted by a successor entity, such awards will vest only if the individual has a qualifying termination of employment within a specified period of time following the change in control. | | Compensation At-Risk: A significant portion of our executive officers’ compensation is “at-risk” based on our corporate performance, as well as equity-based, to align the interests of our executives and stockholders. | No 280G Excise Tax or Gross-up Payments: Our severance and change in control policy does not include payment for 280G excise tax or tax gross-up. | | Pay-for-Performance Philosophy: The majority of our executive officers’ compensation is directly linked to corporate performance and includes a significant long-term equity component. | No Special Health and Welfare Benefits. Our executive officers participate in our health and welfare benefits programs on the same basis as our other employees. | | 10b5-1 Plans: We require our executive officers to plan any stock sales in advance through the use of 10b5-1 plans. | | | Stock Ownership Guidelines: Our directors and executive officers are subject to ownership guidelines. | | | Annual Say-On-Pay Vote: We put our executive compensation to an advisory vote of stockholders annually. | | | Clawback Policy: We have adopted a compensation recovery policy applicable to all of our executive officers. | |

  19. Oversight for Our Executive Compensation Programs

    Oversight for Our Executive Compensation Programs Our compensation committee directs the design and oversees the operation of our executive compensation program. A description of our compensation committee’s structure, roles and responsibilities can be found above under the heading “Board of Directors Meetings and Committees.” Independent Compensation Consultant: Our compensation committee has the authority under its charter to directly retain, review fees for, and terminate advisors and consultants as it deems necessary to assist in the fulfillment of its responsibilities. Our compensation committee has retained an independent compensation consultant (“the compensation consultant”) who provides information and analyses that serve as the basis for setting executive and director compensation levels and advises our compensation committee on compensation decisions. The compensation consultant also advises our compensation committee on the structure of executive and director compensation programs, including the design of incentive plans, the forms and mix of compensation, allocation of equity compensation, regulatory requirements and other topics relevant to executive and Board compensation. During the fiscal year ended December 31, 2023, our compensation committee retained Pay Governance as its compensation consultant through June 2023 and retained Compensia as its compensation consultant beginning in July 2023. Our compensation committee reviews the independence of its compensation consultant annually and found no conflict of interest with Pay Governance or Compensia during its 2023 independence review. Neither PayGovernance nor Compensia provided any additional services beyond providing advice and recommendations on the amount or form of compensation for our directors and management during the fiscal year ended December 31, 2023. Our compensation committee has adopted protocols governing if and when its compensation consultant’s advice and recommendations to our compensation committee can be shared with management, recognizing that, in advising our compensation committee, it is necessary for the compensation consultant to interact with management to gather information. Our compensation committee also determines the appropriate forum for receiving recommendations from its compensation consultant. Where appropriate, our compensation committee invites management to provide context for the recommendations. In other cases, our compensation committee receives the compensation consultant’s recommendations in executive sessions where management is not present. Our compensation committee also engages directly with its compensation consultant between meetings, as deemed necessary by our compensation committee. This approach further protects our compensation committee’s ability to receive objective advice from the compensation consultant and establishes a forum for independent decisions about executive pay. Committee Meetings: The agenda for meetings of our compensation committee is managed by the Chairperson of the compensation committee with assistance from our Chief Executive Officer and other members of management. At the invitation of the Chairperson of the compensation committee, committee meetings held in the fiscal year ended December 31, 2023 were regularly attended by our Chief Executive Officer, our Chief Financial Officer, our Chief People Officer, our General Counsel, other supporting members of management, as well as the compensation consultant. For part of each meeting, our compensation committee meets in executive session without the Chief Executive Officer and other members of management present. The compensation consultant attends committee meetings and executive sessions as requested by our compensation committee. The committee’s Chairperson regularly reports the compensation committee’s recommendations and decisions on executive compensation to our Board. Our Chief Executive Officer and other executive officers may be authorized by our compensation committee to fulfill certain administrative duties regarding compensation and benefit programs. Role of the CEO: The Chief Executive Officer regularly attends a portion of each committee meeting. He provides our compensation committee with his assessment of the performance of the other named executive officers and provides recommendations for their compensation, which the committee considers and may approve or modify. The Chief Executive Officer does not make recommendations to the committee or participate in committee decision-making regarding his own compensation. Our compensation committee has delegated authority to our Chief Executive Officer to grant options and restricted stock units to certain non-executive officers under specified guidelines. Following the end of each fiscal year, our Chief Executive Officer’s annual performance is evaluated by our full Board against the Company’s corporate goals. Working with its compensation consultant, our compensation committee recommends to the Board the Chief Executive Officer’s short-term incentive plan award associated with performance, if applicable, for the prior fiscal year and his base salary, short-term incentive plan opportunity and equity grant for the current fiscal year. The Board evaluates our Chief Executive Officer’s performance and discusses and approves his compensation in executive session without the Chief Executive Officer present.

  20. Use of Market Data

    Use of Market Data Market Data and Reference Points: Our compensation committee reviews competitive market compensation for our executive roles provided by the compensation consultant and uses the information as a reference point in making decisions on compensation levels, the mix of base, short-term and long-term incentives, and other executive pay practices. Our compensation committee uses the 25th, 50th and 75th percentiles of market as reference points and the selection of a specific market reference point may vary for each pay element. Market data is only one factor considered in the compensation-setting process, and an individual named executive officer’s total compensation (or an element of compensation) in any given year may be set above or below market reference points, depending on holistic consideration of relevant factors as outlined above. Our compensation committee has not adopted a practice of setting executive compensation solely aligned with a particular market reference point. External Market Analysis and Peer Companies: Our compensation committee reviews market compensation levels at least annually to determine the placement of our executive compensation relative to the competitive market for executive talent. This assessment includes evaluation of base salary, and short- and long-term incentive opportunities against executive compensation reported by a peer group of companies selected by our compensation committee as comparable to Toast in size and related industry. The compensation committee also considers market compensation information collected from survey sources. The compensation consultant supports our compensation committee in the selection of the peer company group and also provides the compensation committee with analyses of the peer company and survey executive compensation information. Our compensation committee selected a group of peer companies in August 2022 which it used as a reference group in making executive compensation decisions in 2023. Criteria considered to determine the peer company group included industry, revenue, market cap, employee count, price to sales ratio, gross margin, annualized total shareholder return and duration of time in operation as a public company. Our compensation committee reevaluated the peer company group in August 2023 in order to ensure all companies in the group continued to be appropriate comparators based on the same criteria used in the August 2022 evaluation. Based on the reevaluation, the compensation committee removed the companies indicated below with an asterisk from the peer group and added Affirm Holdings, Inc, BILL Holdings, Inc., MongoDB Inc., Paylocity Holding Corporation, Procore Technologies, Inc., Shift4 Payments, Inc. and Smartsheet Inc. The peer company group approved by our compensation committee in August 2023 was not used as a reference in the evaluation of executive compensation decisions for 2023 and was used for evaluating executive compensation decisions for 2024. The group of peer companies our compensation committee selected in August 2022 as a reference group for making executive compensation decisions in 2023 is shown below:

  21. Use of Market Data

    | Akamai Technologies, Inc.* | Etsy, Inc. | The Trade Desk, Inc. | | AppLovin Corporation | HubSpot, Inc. | Twilio Inc. | | Datadog, Inc. | Paycom Software, Inc. | Unity Software Inc. | | DocuSign, Inc.* | Pegasystems Inc.* | Zendesk, Inc.* | | DoorDash, Inc. | PTC Inc. | ZoomInfo Technologies Inc. | | Dropbox, Inc.* | RingCentral, Inc.* | | | Dynatrace, Inc. | Splunk Inc.* | |

  22. Use of Market Data

    *Indicates a company that was removed from the peer company list in August 2023.

  23. Our Executive Compensation Programs

    Our Executive Compensation Programs The compensation of our named executive officers comprises a combination of base salary, short-term incentive payments, and long-term incentive compensation in the form of stock options and restricted stock units. Our named executive officers, like all full-time employees, are eligible to participate in our 401(k), health, and welfare benefit plans. The following describes our executive compensation programs and payments for the fiscal year ended December 31, 2023.

  24. Cash Compensation

    Cash Compensation Our compensation committee reviewed compensation for our executives, including our named executive officers, during 2023 and approved changes to cash compensation based on its review of market compensation information presented by the compensation consultant and informed by our compensation philosophy. Individual job responsibilities, including the scope and impact of each role, were also considered. Based on their evaluation, our compensation committee approved changes to the base salary and/or target short-term bonus for Ms. Gomez and Mr. Elworthy. Ms. Gomez’s annual base salary was changed from $420,000 to $438,000. Mr. Elworthy’s annual base salary was changed from $365,000 to $380,500 and his target annual bonus was changed from 40% of annual base salary to 50% of annual base salary. The base salary changes were effective on April 1, 2023 and the target bonus change for Mr. Elworthy was effective for the entire year, starting on January 1, 2023. These changes were approved to align cash compensation within a reasonable range of the market median for similar jobs performed at our peer companies and with consideration of internal pay parity. Cash compensation for Messrs. Comparato, Narang and Fredette did not change during 2023. Annual base salaries for Messrs. Comparato, Narang and Fredette remained at $20,000 which was intended to cover employee payroll benefit plan contributions and payroll taxes with minimal resulting net pay after applicable withholding. This cash compensation arrangement was implemented in 2021 at the request of Messrs. Comparato, Narang and Fredette and was consistent with our compensation committee’s view that the majority of the compensation received by our CEO and Co-Founders should be at-risk. While Messrs. Comparato, Narang and Fredette did not have an annual bonus target as a percentage of their base salary, during 2023 they had an opportunity to earn a special dining award equivalent to $10,000 in value under the bonus plan, which is described in more details below in the section titled “Short-Term Incentive Bonus Plan”. Our compensation committee retained the ability to approve cash or other awards to Messrs. Comparato, Fredette, Narang, in the event actual company performance exceeded performance goals, but did not do so during 2023.

  25. Cash Compensation

    | Name | As of December 31, 2022 | | As of December 31, 2023 | | | | Annual Base Salary | Annual Bonus Target | Annual Base Salary | Annual Bonus Target | | Christopher P. Comparato | $20,000 | — | $20,000 | — | | Elena Gomez | $420,000 | 75% of base | $438,000 | 75% of base | | Aman Narang | $20,000 | — | $20,000 | — | | Brian Elworthy | $365,000 | 40% of base | $380,500 | 50% of base | | Stephen Fredette | $20,000 | — | $20,000 | — |

  26. Cash Compensation

    In February 2024, following the annual review of our executive compensation, including a review of competitive compensation conducted by the compensation consultant, upon recommendation by our compensation committee, our Board approved changes to cash compensation for Mr. Narang, increasing his annual base salary to $400,000 and setting his target annual bonus as 100% of annual base salary, both effective as of January 1, 2024, the date Mr. Narang started the Chief Executive Officer role. In February 2024, our compensation committee approved changes to cash compensation for Ms. Gomez and Mr. Elworthy following their annual review of our executive compensation program. Ms. Gomez’s annual base salary was increased to $454,425 and her target annual bonus remained at 75% of annual base salary. Mr. Elworthy’s annual base salary and target annual bonus were increased to $394,769 and 60% of annual base salary, respectively. Changes to base salary for Ms. Gomez and Mr. Elworthy went into effect on April 1, 2024 and approved target annual bonus percentages were effective as of January 1, 2024. Mr. Fredette’s cash compensation arrangement did not change for 2024. Cash compensation for our named executive officers for 2024 and the basis for changes will be described in full in our proxy statement for the 2025 annual meeting of stockholders. Short-Term Incentive Bonus Plan Our short-term incentive bonus plan is designed to incentivize and reward the attainment of company financial goals and individual performance against business objectives. During 2023, our named executive officers were eligible for and received an annual bonus award based upon company performance and the achievement of business objectives, as approved by our compensation committee and further described below. Our bonus period is on an annual basis, which aligns the bonus performance period with our annual financial and operating plans. Our short-term incentive bonus plan is administered under the Toast, Inc. Senior Executive Cash Incentive Bonus Plan (the “Incentive Plan”), which is our executive short-term incentive plan governing bonus payments to eligible executives, including our named executive officers. Our compensation committee has the sole discretion and authority to determine, approve and administer bonus payments to eligible executives under the Incentive Plan. Our compensation committee will establish a target annual bonus opportunity for each eligible executive for each performance period. Each executive’s target annual bonus for the period is also adjusted based on changes to annual base salary within the period as well as employment changes, such as hire date, that impact program eligibility within the period. Eligible executives may receive a bonus payment based upon the attainment of one or more performance objectives established by our compensation committee which may include goals which are financial or strategic. Incentive goals will have a target and our compensation committee may also set minimum and maximum goals. Individual executive bonus payments may also vary based upon individual performance. The Incentive Plan is funded based on Company performance against its bonus funding goals. This positions the achievement of the company financial goals as the dominant driver of bonus attainment, and ensures we meet certain financial goals before paying any bonus. Performance against individual business objectives is included in the Incentive Plan as a modifier, creating an incentive and reward for the achievement of strategic, financial and operational goals important to the growth, development and operation of our business. 2023 Bonus Funding Goals and MBOs (as defined below): For 2023, our compensation committee approved bonus funding metrics and goals for the annual bonus period at its February 2023 meeting. Company achievement against the bonus funding goals determined the bonus funding for the bonus period, expressed as a percentage of the target annual bonus for the period. Our compensation committee selected ARR and Adjusted EBITDA, each subject to customary acquisition adjustment, as bonus funding goals for the 2023 bonus performance period which began on January 1, 2023 and ended on December 31, 2023. Our compensation committee selected these metrics because they were key measures of our top line growth and the profitability and efficiency of our business. The ARR goal was weighted 70% due to our focus on recurring revenue growth. Adjusted EBITDA was weighted 30%, and selected because it measures total revenue growth and profitability. Performance against each goal was measured independently. Achievement against the goals for each applicable metric govern the funding for the portion of the bonus associated with that metric. When approving the goals, our compensation committee determined that financial results from acquisitions during the bonus period would be removed from results for the determination of performance against bonus funding goals for such period because those results were not included in the approved bonus funding goals. Our compensation committee set the Incentive Plan target ARR and Adjusted EBITDA goals to align with our 2023 financial plan. In order for the portion of bonus associated with each applicable metric to be funded at 100%, the target financial goal for that metric must be met. For each metric, our compensation committee also approved threshold goals below target which, if met, would result in 50% bonus funding for the ARR metric and 80% funding for the Adjusted EBITDA metric. Performance below the threshold goal would result in no funding for the portion of bonus associated with that metric. Our compensation committee also approved above-target stretch goals, which if met or exceeded would result in maximum funding of 150% for the portion of bonus associated with that metric. Funding for performance falling between the threshold and target or target and maximum goals would be interpolated in a straight line fashion to determine funding for the portion of bonus associated with that metric.

  27. Cash Compensation

    | Bonus Metric | Threshold | Target | Maximum | | ARR | 50% | 100% | 150% | | Adjusted EBITDA | 80% | 100% | 150% |

  28. Annual Funded Bonus * Blended MBO % for 2023 = Individual Bonus Payment

    Annual Funded Bonus * Blended MBO % for 2023 = Individual Bonus Payment 2023 Bonus Achievement: Actual 2023 ARR results fell between the threshold and target goals. Actual 2023 Adjusted EBITDA results exceeded the maximum goal. Based upon the combination of performance between the two metrics, our compensation committee approved 85% funding for executive bonuses for the 2023 bonus period. 2023 Bonus Funding Goal Achievement:

  29. Annual Funded Bonus * Blended MBO % for 2023 = Individual Bonus Payment

    | Metric* | Goal Achievement | Bonus Achievement | Metric Weighting | Bonus Funding | | ARR1 | Between Threshold and Target | 56% | 70% | 40% | | Adjusted EBITDA | Target Goal Exceeded | 150% | 30% | 45% | | Total | | | 100% | 85% |

  30. Annual Funded Bonus * Blended MBO % for 2023 = Individual Bonus Payment

    * We are not disclosing the specific numbers for the bonus funding metrics or the actual goal achievement because we believe disclosure would cause substantial competitive harm (for example, by providing competitors insight into our sales strategy and business operations) without adding to a meaningful understanding of our business. However, like performance targets for all metrics, our compensation committee has set performance goals at definitive, rigorous, and objective levels so as to require significant effort and achievement by our executive team to be attained. 1 In Q4 of 2023, we made improvements to our ARR reporting methodology, which resulted in a de minimis change in ARR compared to the methodology used in Q1-Q3. For purposes of determining 2023 ARR achievement for executive bonuses, we applied the methodology used in Q1-Q3 for Q4, to remain consistent with how the targets were set at the beginning of 2023. Our compensation committee also evaluated the performance of each executive against their individual MBOs for H1 and H2 and approved the blended 2023 MBO % for each executive. The MBOs for our named executive officers included challenging goals related to customer satisfaction, the growth and expansion of our business, continued evolution of our public company operating processes, product development and diversity, equity and inclusion. Most of the individual MBOs were met, resulting in a blended MBO % of 87% for both Ms. Gomez and Mr. Elworthy. For each eligible executive, the annual funded bonus was multiplied by the executive’s blended 2023 MBO % to determine the executive’s 2023 bonus payment as shown below. 2023 Bonus Payments:

  31. Annual Funded Bonus * Blended MBO % for 2023 = Individual Bonus Payment

    | Name | 2023 Target Bonus* | 2023 Funded Bonus Based on 85% Financial Goal Achievement | Individual Blended 2023 MBO % | 2023 Approved Bonus Payment** | 2023 Approved Bonus as % of Target Bonus | | Elena Gomez | $325,171 | $276,396 | 87% | $239,082 | 74% | | Brian Elworthy | $188,339 | $160,088 | 87% | $139,277 | 74% |

  32. Annual Funded Bonus * Blended MBO % for 2023 = Individual Bonus Payment

    *As adjusted for changes in compensation during 2023. **Numbers may not tie due to rounding Company performance against the 2023 bonus financial goals did not exceed target and as a result, our compensation committee did not approve a 2023 special dining award for Messrs. Comparato, Narang and Fredette. In February 2024, our compensation committee approved Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit2 (with 70% weighting) and Adjusted EBITDA (with 30% weighting) bonus funding goals for the 2024 bonus program. The Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit goal was selected because it is an indicator of the Company’s growth and success, and guides how we operate the business. Adjusted EBITDA was selected because it measures total revenue growth and profitability. The 2024 bonus program for our named executive officers will be described in full in our proxy statement for the 2025 annual meeting of stockholders.

  33. Equity-Based Compensation

    Equity-Based Compensation Although we do not have a formal policy with respect to the grant of equity incentive awards specifically to our executive officers, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture, and help to align the interests of our executives and our stockholders. In addition, we believe that equity grants promote executive retention because they incentivize our executive officers to remain in our employment during the vesting period. Accordingly, our Board or the compensation committee periodically review the equity incentive compensation of our named executive officers and may grant equity incentive awards to them from time to time. For 2023, our compensation committee approved equity awards to each of our executive officers which were granted on March 10, 2023. Our compensation committee approved a grant value for each executive officer which was determined based on a review of market-competitive equity grant values for similar roles at peer companies, the relative scope and impact of the executive officer’s role at Toast, and the executive officer’s contribution, performance and future growth potential. The approved equity grant value was granted as a mix of stock options and RSUs. Our compensation committee chose to issue 60% of the grant value in the form of stock options because options deliver value to the executive only if the price of our stock rises higher than the option exercise price, which aligns the interests of our executives with that of our shareholders. Our compensation committee chose to issue 40% of the grant value in the form of RSUs because RSUs also provide an incentive to increase enterprise value over the long-term while also supporting retention in volatile stock market conditions and reduces dilution. Stock options granted to our executive officers provide an option to purchase shares of our common stock subject to vesting and have a ten-year term. The exercise price per share is equal to the fair market value of our common stock on the date of grant. Each RSU provides the holder with the right to receive one share of Toast common stock when the RSU vests. The stock options and RSUs granted to our executive officers in 2023 vest in equal quarterly increments over a four-year period, subject to continuous service with us through each applicable vesting date. The numbers of stock options and RSUs granted to our executive offers in 2023 was determined on the grant date as governed by our Equity Award Grant Policy. The number of stock options granted was determined by dividing the portion of the approved grant value allocated to stock options by the fair value of the award on the date of grant calculated under ASC Topic 718. The number of RSUs granted was determined by dividing the portion of the approved grant value allocated to RSUs by the average closing market price of one share of our common stock over the trailing 90 trading days ending on the last trading day immediately prior to the grant date. 2 Non-GAAP Subscription Services and Financial Technology Solutions Gross Profit is a non-GAAP financial measure. Please refer to page 78 of Toast’s Annual Report on Form 10-K for the year ended December 31, 2023 for a description and reconciliation of this non-GAAP financial measure. Our compensation committee approved grants to our named executive officers during 2023 as summarized below. These grants were issued from our 2021 Plan.

  34. Equity-Based Compensation

    | | | | Stock Options | | | RSUs | | | Name | Grant Date | Approved Grant Value | Grant Value for Stock Options (60%) | Number of Stock Options Granted | Exercise Price | Grant Value for RSUs (40%) | Number of RSUs Granted | | Christopher P. Comparato | March 10, 2023 | $9,000,000 | $5,400,000 | 547,778 | $17.33 | $3,600,000 | 182,319 | | Elena Gomez | March 10, 2023 | $5,000,000 | $3,000,000 | 304,321 | $17.33 | $2,000,000 | 101,288 | | Aman Narang | March 10, 2023 | $5,000,000 | $3,000,000 | 304,321 | $17.33 | $2,000,000 | 101,288 | | Brian Elworthy | March 10, 2023 | $2,750,000 | $1,650,000 | 167,376 | $17.33 | $1,100,000 | 55,708 | | Stephen Fredette | March 10, 2023 | $4,500,000 | $2,700,000 | 273,889 | $17.33 | $1,800,000 | 91,159 |

  35. Severance and Change in Control Policy and Severance Letter

    Severance and Change in Control Policy and Severance Letter Severance Policy In June 2021, we adopted the Toast, Inc. Severance and Change in Control Policy (the “Severance Policy”), which provides certain severance benefits and accelerated vesting of equity awards to certain executives, including the named executive officers, each a “covered employee,” in the event of a qualified termination, including a qualified termination in connection with a change in control. We believe the Severance Policy supports the attraction and retention of senior leaders in a competitive market. We also believe that appropriately structured change in control benefits serve to minimize potential distraction caused by a transaction and reduce the risk that leaders will leave the organization before the transaction closes. The severance payments and benefits under the Severance Policy (and Severance Letter, as applicable and as defined below) superseded any severance payments and benefits for which the covered employees were eligible under existing employment agreements or other agreements, plans, policies, or arrangements. Pursuant to the Severance Policy, in the event of a termination by us for any reason other than due to “cause” (as defined in the Severance Policy), death, or disability that occurs outside of the period beginning three months prior to and ending 12 months following a “change in control,” as defined in the Severance Policy, (the “change in control period”), subject to the covered employee’s execution and non-revocation of a release of claims in favor of Toast and our affiliates and continued compliance with all applicable restrictive covenants, we shall pay the covered employee (i) 12 months of continued base salary, (ii) a lump sum cash payment equal to the covered employee’s target bonus for the year in which the termination date occurs to the extent not already paid and pro-rated to reflect the number of days of service provided in the year of termination, or a prorated target bonus, and (iii) if the covered employee was participating in our group health plan immediately prior to termination and elects COBRA health continuation, monthly cash payments for 12 months in an amount equal to the monthly employer contribution that we would have made to provide health insurance to the covered employee (and his or her eligible dependents) if the covered employee had remained employed by us. Additionally, notwithstanding anything in any applicable option agreement or stock-based award agreement, the covered employee’s unvested and outstanding time-based stock options and other time-based stock-based awards held by the covered employee immediately prior to termination that would have vested during the 12-month period following the termination date will accelerate and become fully vested. Awards that are solely performance-based and/or performance- and time-based will be governed by the terms of the applicable award agreement. In the event of a (i) termination by us for any reason other than due to cause, death, or disability that occurs within a change in control period or (ii) resignation by the covered employee for “good reason” (as defined in the Severance Policy) that occurs within 12 months following a change in control, in lieu of the foregoing benefits, and subject to the covered employee’s execution and non-revocation of a release of claims in favor of us and our affiliates and continued compliance with applicable restrictive covenants, we shall pay the covered employee: (i) an amount equal to 1.5 times the sum of (A) 12 months of base salary and (B) the covered employee’s target bonus, (ii) a prorated target bonus, and (iii) if the covered employee was participating in our group health plan immediately prior to termination and elects COBRA health continuation, monthly cash payments in an amount equal to the monthly employer contribution that we would have made to provide health insurance to the covered employee (and his or her eligible dependents) if the covered employee had remained employed by us until the earlier of 18 months following the date of termination or the date the covered employee becomes eligible for health benefits through another employer or otherwise becomes ineligible for COBRA. Additionally, notwithstanding anything in any applicable option agreement or stock-based award agreement, the covered employee will receive full accelerated vesting of any unvested and outstanding time-based stock options and other time-based stock-based awards held by the covered employee immediately prior to termination, and awards that are solely performance-based and/or performance- and time-based will be governed by the terms of the applicable award agreement. For Messrs. Narang and Fredette in light of the significant reduction to their base salaries and elimination of their bonus opportunity following our IPO, for the purposes of calculating the cash compensation payable under the Severance Policy upon any termination event, the base salary input shall be an amount equal to the greater of their base salary immediately prior to the termination event and $250,000, and the target bonus input shall be an amount equal to the greater of their then current target bonus and $150,000. The payments and benefits provided under the Severance Policy in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”). These payments and benefits may also subject a covered employee, including the named executive officers, to an excise tax under Section 4999 of the Code. If the payments or benefits payable to an eligible participant in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a greater net after-tax benefit to the applicable participant. CEO Severance Letter We entered into a letter agreement with Mr. Comparato in June 2021 (the “CEO Severance Letter”), pursuant to which certain provisions of the Severance Policy were superseded solely with respect to Mr. Comparato. These variations were determined following a review of competitive practice for severance and change in control benefits for the Chief Executive Officer role and based on evaluation of separation circumstances unique to our Chief Executive Officer position. The CEO Severance Letter provides for an amended definition of “good reason” for purposes of severance payments and benefits under the Severance Policy and provides that (i) upon a resignation by Mr. Comparato for good reason outside of a change in control period, he will be entitled to the same severance benefits as if he were terminated by us without cause outside of a change in control period and (ii) upon a resignation by Mr. Comparato for good reason within a change in control period, he will be entitled to the same severance benefits as if he were terminated by us without cause during a change in control period. In addition, the CEO Severance Letter provides that as long as Mr. Comparato serves as our Chief Executive Officer, we will nominate him for re-election as a member of our Board and any payments or benefits due to Mr. Comparato pursuant to the Severance Policy are subject to his resignation from our Board as of the effective date of the applicable termination event. Furthermore, the CEO Severance Letter provides that for purposes of calculating the cash compensation payable under the Severance Policy upon any termination event, the base salary input shall be an amount equal to the greater of Mr. Comparato’s base salary immediately prior to the termination event and $250,000, and the target bonus input shall be an amount equal to the greater of his then current target bonus and $185,000.

  36. Severance and Change in Control Policy and Severance Letter

    In conjunction with his promotion to Chief Executive Officer, we entered into a letter agreement with Mr. Narang on September 1, 2023 (the “Narang CEO Severance Letter”), effective as of January 1, 2024 pursuant to which certain provisions of the Severance Policy were superseded solely with respect to Mr. Narang. The Narang CEO Severance Letter provides for the same arrangements as set forth in the CEO Severance Letter, as described above.

  37. Employee Benefits and Other Policies

    Employee Benefits and Other Policies 401(k) Plan We maintain a tax-qualified retirement plan that provides all regular U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Under our 401(k) plan, participants may elect to defer a portion of their compensation on a pre-tax basis and have it contributed to the plan subject to applicable annual limits under the Code. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employee elective deferrals are 100% vested at all times. As a U.S. tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan and all contributions are deductible by us when made. Under our 401(k) plan we will match 50% of the participant’s voluntary contribution up to a maximum of 6% of eligible compensation. Employee Stock Purchase Plan Pursuant to our employee stock purchase plan, employees have an opportunity to purchase our Class A common stock at a discount on a tax-qualified basis through payroll deductions. The employee stock purchase plan is designed to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. The purpose of the employee stock purchase plan is to encourage our employees to become our stockholders and better align their interests with those of our other stockholders. Health and Welfare Benefits Our named executive officers are eligible to participate in our employee benefit plans on the same basis as our other employees, including our health and welfare plans. Perquisites Perquisites or other personal benefits are not a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our executive officers, including our named executive officers. Nonqualified Deferred Compensation Our named executive officers did not participate in, or earn any benefits under, a nonqualified deferred compensation plan sponsored by us during the fiscal year ended December 31, 2023. In November 2023, our Board approved the Deferred Compensation Program. Under this nonqualified deferral program which went into effect on January 1, 2024, non-employee directors may elect to defer receipt of their annual cash retainers, their Director Annual Grant, or both. More information about the Deferred Compensation Program is provided in the “Non-Employee Director Compensation” section of this proxy statement. Equity Award Grant Policy We adopted our Equity Award Grant Policy in December 2021. The Equity Award Grant Policy establishes the process we follow when granting equity-based awards to an officer, employee, or other service provider (other than a non-employee director) of the Company. All equity grants must be approved in advance by our Board or our compensation committee. Our Board or the compensation committee may delegate to a committee comprised of one or more officer(s) of the Company all or part of the authority with respect to the granting of equity awards to employees or eligible service providers who are not subject to the reporting and other provisions of Section 16 of the Exchange Act. Our compensation committee has delegated authority to our Chief Executive Officer to grant options and restricted stock units to certain non-executive officers under specified guidelines. Non-Employee Director and Executive Stock Ownership Policy We believe our non-employee directors and executive officers should have a meaningful and direct ownership stake in the Company that will align their interests with those of the Company’s stockholders and promote a long-term perspective in managing the Company. In support of this objective, in November 2022, our Board approved the Toast, Inc. Non-Employee Director and Executive Stock Ownership Policy (“the Policy”) which established stock ownership requirements for Toast non-employee directors and executive officers. The Policy provides a five-year ramp period to enable covered executive officers to build their ownership of Toast shares to meet policy requirements. Starting on December 31, 2027, executive officers other than our CEO and founders, will be required to hold the lesser of 15,000 shares, or an amount of shares equivalent to two (2) times their annual base salary then in effect. For Messrs. Fredette and Narang, the ownership requirement will be the lesser of 50,000 shares, or an amount of shares equivalent in value to $2,500,000. Only shares directly owned by, or beneficially owned in a grantor trust or similar instrument for the benefit of the executive officer and/or direct family members and for which the executive officer has voting and disposal rights, will count towards share ownership under this policy. See “Non-Employee Director Compensation”, above, for information about stock ownership requirements under this policy for our non-employee directors.

  38. Material Tax Implications of the Program

    Material Tax Implications of the Program Deductibility of Executive Compensation Generally, Section 162(m) of the Code, or Section 162(m), disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid in any fiscal year to certain specified former or current executive officers. Other than for remuneration provided pursuant to written binding contracts which were in effect on November 2, 2017 (and which are not subsequently modified in any material respect), for taxable years beginning after December 31, 2017, all remuneration in excess of $1 million paid to a specified executive will not be deductible. To maintain flexibility to compensate our executive officers in a manner designed to promote our short- and long-term corporate goals, our compensation committee has not adopted a policy that all compensation must be deductible. Our compensation committee believes that our stockholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted in order to allow such compensation to be consistent with the goals of our executive compensation program, even though some compensation awards may result in non-deductible compensation expense. Consequently, our compensation committee will not necessarily limit executive compensation to that which is or may be deductible under Section 162(m). Accounting for Stock-Based Compensation We follow FASB ASC Topic 718 for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and non-employee members of our Board, including stock options to purchase shares of our common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards. Taxation of “Parachute” Payments Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the company that exceeds certain prescribed limits, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer, including any named executive officer, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Code. Section 409A of the Internal Revenue Code Section 409A of the Code imposes additional significant taxes in the event that an executive officer, director or service provider receives “deferred compensation” that does not satisfy the requirements of Section 409A of the Code. We structure all our compensation arrangements, including our severance, bonus and equity programs in a manner to either avoid the application of Section 409A or, to the extent doing so is not possible, to comply with the applicable requirements of Section 409A of the Code.

  39. 2023 Summary Compensation Table

    2023 Summary Compensation Table The following table sets forth information regarding total compensation awarded to, earned by and paid to each of our named executive officers during the fiscal year ended December 31, 2023, 2022 and 2021 and their positions as of December 31, 2023. On September 1, 2023, Mr. Comparato informed the Board that he would step down as Chief Executive Officer of the Company and Chairperson of the Board, effective January 1, 2024. Mr. Comparato will continue serving as a member of the Board. The Board appointed Mr. Narang to succeed Mr. Comparato as Chief Executive Officer of the Company, effective January 1, 2024.

  40. 2023 Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) | Total ($) | | Christopher P. Comparato (3) CEO | 2023 | 20,000 | — | 3,159,588 | 5,397,287 | — | 11,237 (4) | 8,588,112 | | | 2022 | 20,000 | — | 2,175,837 | 5,999,967 | 10,000 | — | 8,205,804 | | | 2021 | 196,923 | — | 763,000 | 1,372,088 | 144,622 | 8,219 | 2,484,852 | | Elena Gomez (5) CFO | 2023 | 432,808 | — | 1,755,321 | 2,999,235 | 239,082 | 19,000 (6) | 5,445,446 | | | 2022 | 414,308 | — | 1,087,918 | 2,999,981 | 335,240 | 4,512 | 4,841,960 | | | 2021 | 246,154 | 150,000 | 5,722,500 | 17,175,000 | 99,638 | 3,146 | 23,396,438 | | Aman Narang (3) Founder, COO, Co-President | 2023 | 20,000 | — | 1,755,321 | 2,999,235 | — | — | 4,774,556 | | | 2022 | 20,000 | — | 979,120 | 2,699,979 | 10,000 | — | 3,709,099 | | | 2021 | 196,923 | — | 381,500 | 685,838 | 117,261 | — | 1,381,522 | | Brian Elworthy (7) General Counsel | 2023 | 376,029 | — | 965,420 | 1,650,327 | 139,277 | 11,281 (8) | 3,142,334 | | | 2022 | 359,649 | — | 598,341 | 1,649,988 | 160,463 | 9,124 | 2,777,565 | | | 2021 | 319,190 | — | 418,800 | 749,553 | 106,964 | 8,327 | 1,602,834 | | Stephen Fredette (3) Founder, Co-President | 2023 | 20,000 | — | 1,579,785 | 2,699,480 | — | — | 4,299,266 | | | 2022 | 20,000 | — | 979,120 | 2,699,979 | 10,000 | — | 3,709,099 | | | 2021 | 196,923 | — | 381,500 | 685,838 | 108,351 | 3,837 | 1,376,449 |

  41. 2023 Summary Compensation Table

    * Numbers may not tie due to rounding. (1)The amounts reported represent the aggregate grant date fair value of the awards granted to the named executive officers calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures. The assumptions used in calculating the grant date fair values of the awards reported in this column are set forth in Note 12 of our consolidated financial statements of our 2023 Form 10-K. The amounts reported in this column reflect the accounting cost for the stock options and stock awards, as applicable, and does not correspond to the actual economic value that may be received upon exercise of the stock option, issuance of shares of Class A common stock, or any sale of any of the underlying shares of Class A common stock. (2)The amounts reported reflect actual cash bonus payments awarded based on the achievement of company and individual performance and approved by our compensation committee. (3)Effective as of September 24, 2021, the completion of our IPO, Messrs. Comparato, Fredette, and Narang (i) voluntarily elected to receive a base salary of $20,000, and (ii) agreed to forego any cash bonus tied to their annual base salary made under the Incentive Plan. (4)This amount for Mr. Comparato includes (i) a corrective 401(k) match in the amount of $481, and (ii) a corrective 401(k) qualified non-elective contribution of $10,756. (5)Ms. Gomez’s 2023 base salary was $420,000 until April 1, 2023, when it was increased to $438,000. (6)This amount for Ms. Gomez includes (i) Toast’s contributions to a 401(k) in the amount of $9,900, (ii) a corrective 401(k) match in the amount of $4,582, and (iii) a corrective 401(k) qualified non-elective contribution of $4,518. (7)Mr. Elworthy’s 2023 base salary was $365,000 until April 1, 2023, when it was increased to $380,500. (8)This amount for Mr. Elworthy includes (i) Toast’s contributions to a 401(k) in the amount of $8,467, (ii) a corrective 401(k) match in the amount of $400, and (iii) a corrective 401(k) qualified non-elective contribution of $2,415.

  42. Grants of Plan-Based Awards in 2023

    Grants of Plan-Based Awards in 2023 The following table sets forth the individual awards made to each of our named executive officers during 2023. For a description of the types of awards indicated below, please see our “Compensation Discussion and Analysis” section above.

  43. Grants of Plan-Based Awards in 2023

    | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | | | Threshold ($) | Target ($) | Maximum ($) | | | | | | Christopher P. Comparato | | | | | | | | | | 2023 Bonus Opportunity | | | 10,000 (5) | | | | | | | Time-based Options | 3/10/2023 | | | | | 547,778 | 17.33 | 5,397,287 | | Time-based RSUs | 3/10/2023 | | | | 182,319 | | | 3,159,588 | | Elena Gomez | | | | | | | | | | 2023 Bonus Opportunity | | 191,851 | 325,171 | 487,757 | | | | | | Time-based Options | 3/10/2023 | | | | | 304,321 | 17.33 | 2,999,235 | | Time-based RSUs | 3/10/2023 | | | | 101,288 | | | 1,755,321 | | Aman Narang | | | | | | | | | | 2023 Bonus Opportunity | | | 10,000 (5) | | | | | | | Time-based Options | 3/10/2023 | | ` | | | 304,321 | 17.33 | 2,999,235 | | Time-based RSUs | 3/10/2023 | | | | 101,288 | | | 1,755,321 | | Brian Elworthy | | | | | | | | | | 2023 Bonus Opportunity | | 111,120 | 188,339 | 282,509 | | | | | | Time-based Options | 3/10/2023 | | | | | 167,376 | 17.33 | 1,650,327 | | Time-based RSUs | 3/10/2023 | | | | 55,708 | | | 965,420 | | Stephen Fredette | | | | | | | | | | 2023 Bonus Opportunity | | | 10,000 (5) | | | | | | | Time-based Options | 3/10/2023 | | | | | 273,889 | 17.33 | 2,699,480 | | Time-based RSUs | 3/10/2023 | | | | 91,159 | | | 1,579,785 |

  44. Grants of Plan-Based Awards in 2023

    (1)The amounts listed under the Threshold, Target, and Maximum columns of this table reflect any pro-ration of bonus targets due to compensation changes during the measurement periods. More details can be found in the “Short-Term Incentive Bonus Plan” section of the “Compensation Discussion & Analysis.” Total amounts of non-equity incentive plan awards paid to each employee earned for 2023 are reported in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” (2)Consists of RSUs granted under the 2021 Plan. Unless otherwise indicated, each RSU award vests in 16 equal quarterly installments over four years, subject to the employee’s continued service relationship through each vesting date. All shares referenced are Class A common stock, unless otherwise noted. (3)Consists of options to purchase shares of our common stock granted under the 2021 Plan. Unless otherwise indicated, each stock option vests over four years in 16 equal quarterly installments, subject to the employee’s continued service relationship through each vesting date. All shares referenced are Class A common stock, unless otherwise noted. (4)The amounts reported represent the aggregate grant date fair value of the awards granted to the named executive officers calculated in accordance with FASB ASC Topic 718. Such grant date fair value does not take into account any estimated forfeitures. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in Note 12 of our consolidated financial statements of our 2023 Form 10-K. The amounts reported in this column reflect the accounting cost for the stock options and stock awards, as applicable, and does not correspond to the actual economic value that may be received upon exercise of the stock option issuance of shares of Class A common stock, or any sale of any of the underlying shares of Class A common stock. (5)Our compensation committee approved a $10,000 dining award opportunity for Messrs. Comparato, Fredette, and Narang which, subject to committee approval, could be awarded if Company performance exceeded the 2023 bonus plan target goals. More details can be found in the “Short-Term Incentive Bonus Plan” section of the “Compensation Discussion & Analysis.”

  45. Outstanding Equity Awards at 2023 Year-End Table

    Outstanding Equity Awards at 2023 Year-End Table The following table sets forth certain information with respect to outstanding equity awards held by each of our named executive officers as of December 31, 2023.

  46. Outstanding Equity Awards at 2023 Year-End Table

    | Name | Grant Date | Vesting Commencement Date (2) | Option Awards (1) | | | | Stock Awards (1) | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Christopher P. Comparato | 2/8/2019 | 7/1/2018 | 665,160 (4)(5) | — | 1.51 | 2/8/2029 | | | | | 2/8/2019 | 2/8/2019 | 1,425,000 (4)(5) | — | 1.51 | 2/8/2029 | | | | | 3/22/2021 | 3/22/2021 | 143,450 (5)(6) | — | 15.26 | 3/22/2031 | | | | | 3/22/2021 | 4/1/2021 | | | | | 18,750 (7)(8) | 342,375 | | | 3/15/2022 | 2/1/2022 | 286,342 (9) | 382,948 (9) | 17.38 | 3/15/2032 | 70,421 (9) | 1,285,887 | | | 3/10/2023 | 4/1/2023 | 68,472 (9) | 479,306 (9) | 17.33 | 3/10/2033 | 159,530 (9) | 2,913,018 | | Elena Gomez | 3/22/2021 | 3/8/2021 | 1,875,000 (10) | — | 15.26 | 3/22/2031 | | | | | 3/22/2021 | 4/1/2021 | | | | | 140,625 (7) | 2,567,813 | | | 3/15/2022 | 2/1/2022 | 148,924 (9) | 191,474 (9) | 17.38 | 3/15/2032 | 35,211 (9) | 642,953 | | | 3/10/2023 | 4/1/2023 | 38,040 (9) | 266,281 (9) | 17.33 | 3/10/2033 | 88,627 (9) | 1,618,329 | | Aman Narang | 2/8/2019 | 7/1/2018 | 1,662,500 (4)(5) | | 1.51 | 2/8/2029 | | | | | 2/8/2019 | 2/8/2019 | 1,425,000 (4)(5) | — | 1.51 | 2/8/2029 | | | | | 3/22/2021 | 3/22/2021 | 75,000 (5)(6) | — | 15.26 | 3/22/2031 | | | | | 3/22/2021 | 4/1/2021 | | | | | 9,375 (7)(8) | 171,188 | | | 3/15/2022 | 2/1/2022 | 134,031 (9) | 172,327 (9) | 17.38 | 3/15/2032 | 31,689 (9) | 578,641 | | | 3/10/2023 | 4/1/2023 | 38,040 (9) | 266,281 (9) | 17.33 | 3/10/2033 | 88,627 (9) | 1,618,329 | | Brian Elworthy | 2/8/2019 | 7/1/2018 | 375,000 (6) | — | 1.51 | 2/8/2029 | | | | | 4/21/2020 | 4/21/2020 | 427,500 (6) | — | 2.21 | 4/21/2030 | | | | | 6/2/2021 | 6/2/2021 | 60,000 (6) | — | 20.94 | 6/2/2031 | | | | | 6/2/2021 | 7/1/2021 | | | | | 8,750 (7) | 159,775 | | | 3/15/2022 | 2/1/2022 | 81,908 (9) | 105,311 (9) | 17.38 | 3/15/2032 | 19,366 (9) | 353,623 | | | 3/10/2023 | 4/1/2023 | 20,922 (9) | 146,454 (9) | 17.33 | 3/10/2033 | 48,745 (9) | 890,084 | | Stephen Fredette | 3/22/2021 | 3/22/2021 | 75,000 (5)(6) | — | 15.26 | 3/22/2031 | | | | | 3/22/2021 | 4/1/2021 | | | | | 9,375 (7)(8) | 171,188 | | | 3/15/2022 | 2/1/2022 | 134,031 (9) | 172,327 (9) | 17.38 | 3/15/2032 | 31,689 (9) | 578,641 | | | 3/10/2023 | 4/1/2023 | 34,236 (9) | 239,653 (9) | 17.33 | 3/10/2033 | 79,765 (9) | 1,456,509 |

  47. Outstanding Equity Awards at 2023 Year-End Table

    (1)Each of the option grants issued prior to our IPO date, September 24, 2021, were granted under our Amended and Restated 2014 Stock Incentive Plan, as amended (the “2014 Plan”) and are subject to early exercise, which permits the holder to exercise the option at any time following the grant date. If the holder early-exercises the option grants, such individual will hold restricted shares that will vest in accordance with the original stock option vesting schedule. Each of the option grants made following the IPO were granted under our 2021 Plan and are not subject to early exercise. Each of the grants vests based on the holder’s continuous service relationship with us. Each of the grants will also be subject to certain acceleration of vesting provisions as set forth in our Severance Policy and/or CEO Severance Letter or Narang CEO Severance Letter, as applicable. All shares referenced are Class A common stock, unless otherwise noted. (2)The vesting commencement date for each award is fixed by our compensation committee upon grant. (3)Market value is calculated by multiplying the number of RSUs or shares of restricted stock that have not vested by the closing price of our Class A common stock on the NYSE on December 29, 2023, the last trading day of 2023, which was $18.26. All shares referenced are Class A common stock, unless otherwise noted. (4)This award is fully vested as of December 31, 2023. (5)The shares referenced are Class B common stock. (6)The shares subject to this option vest in 20 equal quarterly installments over five years. (7)The shares subject to this award vest 25% upon the first anniversary, then in 12 equal quarterly installments over the remaining 3 years. (8)The shares referenced were issued as Class B common stock but subsequently converted to Class A common stock prior to December 31, 2023. (9)The shares subject to this award vest in 16 equal quarterly installments over four years. (10)The shares subject to this option vest 20% upon the first anniversary, then in 16 equal quarterly installments over the remaining 4 years.

  48. Option Exercises and Stock Vested in 2023

    Option Exercises and Stock Vested in 2023 The following table sets forth the number of shares acquired and the value realized upon exercises of stock options and vesting of restricted stock and RSUs during the fiscal year ended December 31, 2023, by each of our named executive officers.

  49. Option Exercises and Stock Vested in 2023

    | Name | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Christopher P. Comparato | 5,753 | 6,041 | 66,587 | 1,326,242 | | Elena Gomez | — | — | 122,060 | 2,375,388 | | Aman Narang | — | — | 32,995 | 658,520 | | Brian Elworthy | — | — | 20,569 | 409,178 | | Stephen Fredette | — | — | 655,168 (3) | 12,758,275 |

  50. Option Exercises and Stock Vested in 2023

    (1)Computed by determining the difference between the market price of our Class A common stock on the date of exercise and the exercise price of the exercised stock option, multiplied by the number of shares acquired upon exercise of the option. All shares referenced are Class A common stock, unless otherwise noted. (2)Computed by multiplying the number of shares of Class A common stock underlying the vested restricted stock or RSUs, as applicable, by the market price of our Class A common stock on the vesting date. All shares referenced are Class A common stock, unless otherwise noted. (3)Of the shares referenced, 623,440 shares were for early exercised shares of Class B common stock that have become vested in the fiscal year ended December 31, 2023.

  51. Pension Benefits

    Pension Benefits We do not maintain any defined benefit pension plans.

  52. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation We did not maintain any nonqualified deferred compensation plans for our NEOs during 2023.

  53. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control Our Severance and Change in Control Policy (or CEO Severance Letter or Narang CEO Severance Letter, as applicable) provides for certain payments and benefits to each of our named executive officers if the named executive officer’s employment is terminated by us or our acquirer or successor without Cause (as defined in such policy), both during and outside of the Change in Control Period (as defined in such policy) (assuming that all outstanding equity awards were assumed, continued or substituted by an acquirer or successor in such change in control), or terminated by the named executive officer for Good Reason (as defined in such policy or CEO Severance Letter or Narang CEO Severance Letter, as applicable) in the 12 month period following a Change in Control (as defined in such policy) (or during or outside of the Change of Control Period, for our CEO), subject to the named executive officer’s execution and non-revocation of a severance agreement, including a general release of claims. The table below quantifies the potential payments and benefits that would have become due to our named executive officers assuming that one of the triggering events above occurred as of December 31, 2023. The market price of a share of our common stock on December 29, 2023, the last trading day of 2023, was $18.26 per share.

  54. Potential Payments Upon Termination or Change in Control

    | | Termination Without Cause or for Good Reason Not in Connection with a Change in Control (1) | | | Termination Without Cause or for Good Reason in Connection with a Change in Control (2) | | | | Name | Cash Severance ($) (3) | Health Care Benefits ($) (4) | Acceleration of Vesting Equity Awards ($) (5) | Cash Severance ($) (6) | Health Care Benefits ($) (7) | Acceleration of Vesting Equity Awards ($) (8) | | Christopher P. Comparato (9) | 435,000 | 23,794 | 1,999,055 | 837,500 | 35,691 | 5,526,259 | | Elena Gomez | 763,171 | 20,578 | 3,729,147 | 1,474,921 | 30,868 | 7,773,108 | | Aman Narang (10) | 400,000 | 22,343 | 1,016,772 | 750,000 | 33,515 | 2,868,562 | | Brian Elworthy | 568,839 | — | 2,027,374 | 1,044,464 | — | 3,799,108 | | Stephen Fredette | 400,000 | 23,668 | 963,462 | 750,000 | 35,501 | 2,681,978 |

  55. Potential Payments Upon Termination or Change in Control

    (1)Pursuant to the Severance Policy and the CEO Severance Letter, only Mr. Comparato was eligible to receive severance benefits in the event that his employment was terminated for Good Reason outside of a Change in Control Period. All named executive officers were eligible to receive severance benefits if their employment was terminated without Cause outside of a Change in Control Period. The Change in Control Period is the period commencing 3 months prior to and ending 12 months following a Change in Control. (2)Pursuant to the Severance Policy and the CEO Severance Letter, Mr. Comparato was eligible to receive severance benefits in the event that his employment was terminated without Cause or for Good Reason during a Change in Control Period. Pursuant to the Severance Policy, all other named executive officers were only eligible to receive severance benefits in the event that his or her employment was terminated without Cause during a Change in Control Period or in the event that his or her employment is terminated for Good Reason during the 12-month period following a Change in Control. (3)Represents 12 months of salary continuation payments, plus a lump sum in cash equal to the executive’s prorated target annual bonus opportunity. Pursuant to the CEO Severance Letter, Mr. Comparato’s base salary for purposes of such severance payment was calculated based on the greater of his base salary immediately prior to termination or $250,000 and his bonus was calculated based on the greater of his bonus immediately prior to termination or $185,000. For Messrs. Narang and Fredette, during 2023, the base salary for purposes of such payment was based on the greater of the named executive officer’s salary immediately prior to termination or $250,000 and his bonus was calculated based on the greater of his bonus immediately prior to termination or $150,000. (4)The amounts in this column represent 12 months of the employer portion of health benefit continuation. (5)The amounts in this column represent 12 months of acceleration of equity awards, calculated based on $18.26 per share, which was the closing price of our common stock on December 29, 2023, the last trading day of 2023. (6)Represents (i) a lump sum cash payment equal to 1.5 times the sum of 12 months of base salary plus the named executive officer’s target annual bonus opportunity, plus (ii) a lump sum in cash equal to the executive’s prorated target annual bonus opportunity. Pursuant to the CEO Severance Letter, Mr. Comparato’s base salary for purposes of such severance payment was calculated based on the greater of his base salary immediately prior to termination or $250,000 and his bonus was calculated based on the greater of his bonus immediately prior to termination or $185,000. For Messrs. Narang and Fredette, the base salary for purposes of such payment was based on the greater of the named executive officer’s salary immediately prior to termination or $250,000 and his bonus was calculated based on the greater of his bonus immediately prior to termination or $150,000. (7)The amounts in this column represent 18 months of the employer portion of health benefit continuation. (8)The amounts in this column represent full acceleration of equity awards, calculated based on $18.26 per share, which was the closing price of our common stock on December 29, 2023, the last trading day of 2023. (9)Mr. Comparato resigned from the CEO position, effective as of December 31, 2023. Mr. Comparato did not receive any severance associated with his resignation per the terms of the CEO Severance Letter. (10) The amount listed for Mr. Narang is calculated pursuant to the Executive Severance Policy in effect for Mr. Narang on December 31, 2023 and not the Narang CEO Severance Letter.

  56. CEO PAY RATIO

    CEO PAY RATIO As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the total annual compensation of our employees and the total annual compensation of Christopher Comparato, our chief executive officer during 2023. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. The pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

  57. Pay Ratio Disclosure

    Pay Ratio Disclosure For 2023, our last completed fiscal year: •the total annual compensation of our median employee was $146,734, as determined in accordance with Item 402 of Regulation S-K; and •the total annual compensation of our chief executive officer, as determined in accordance with Item 402 of Regulation S-K and reported in the “2023 Summary Compensation Table” included elsewhere in this proxy statement was $8,588,112. Based on this information, for 2023, the ratio of the total annual compensation of Mr. Comparato, who served as our chief executive officer during 2023, to the total annual compensation of our median employee was approximately 59 to 1.

  58. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance compensation programs and how the Company aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.”

  59. Pay Versus Performance Table

    Pay Versus Performance Table

  60. Pay Versus Performance Table

    | Year | Summary Compensation Table Total for PEO (1) ($) | Compensation Actually Paid to PEO (2) ($) | Average Summary Compensation Table Total for Non-PEO NEOs (3) ($) | Average Compensation Actually Paid to Non-PEO NEOs (4) ($) | Value of Initial Fixed $100 Investment Based on (5) | | Net Loss (7) ($MM) | Adjusted EBITDA (8) ($MM) | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return (6) ($) | | | | 2023 | 8,588,112 | 10,904,502 | 4,413,737 | 5,676,969 | 29 | 125 | (246) | 61 | | 2022 | 8,205,804 | (14,145,157) | 3,749,364 | (17,140,438) | 29 | 80 | (275) | (115) | | 2021 | 2,484,852 | 97,433,267 | 5,640,626 | 58,679,019 | 56 | 113 | (487) | (42) |

  61. Pay Versus Performance Table

    (1)The amounts listed are the amounts of total compensation listed for Mr. Comparato (our CEO) for each corresponding year in the “Total” column of the Summary Compensation Table. (2)The amounts listed in this column represent the amount of “compensation actually paid” to Mr. Comparato, in accordance with Item 402(v) of Regulation S-K. These amounts do not reflect the amount of actual compensation earned by or paid to Mr. Comparato in the applicable year. We did not report a change in pension value for any of the years reflected in this table; therefore, a deduction from the Summary Compensation Table total related to pension value is not applicable. The following adjustments were made to Mr. Comparato’s total compensation for each year to determine the compensation actually paid:

  62. Pay Versus Performance Table

    | Year | Summary Compensation Table Total for PEO ($) | Summary Compensation Table Equity Total (a) ($) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | Year End Fair Value of Equity Awards Granted During Fiscal Year that are Outstanding and Unvested ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Equity Award Adjustment ($) | Compensation Actually Paid to PEO ($) | | 2023 | 8,588,112 | 8,556,875 | 214,778 | 8,068,243 | 1,357,397 | 1,232,847 | 10,873,265 | 10,904,502 | | 2022 | 8,205,804 | 8,175,804 | (12,120,356) | 7,425,937 | 1,790,943 | (11,271,681) | (14,175,157) | (14,145,157) | | 2021 | 2,484,852 | 2,135,088 | 36,218,236 | 4,758,989 | 691,861 | 55,414,417 | 97,083,503 | 97,433,267 |

  63. Pay Versus Performance Table

    a.The grant date fair value of equity awards as reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. The value in this column is subtracted from the “Summary Compensation Table Total for PEO” column of this table. (3)The amounts listed represent the average amounts of total compensation listed for our NEOs (excluding Mr. Comparato) for each corresponding year in the “Total” column of the Summary Compensation Table. For 2023, our non-PEO NEOs were Ms. Gomez, Mr. Elworthy, Mr. Fredette, and Mr. Narang. For 2022 our non-PEO NEOs were Ms. Gomez, Mr. Elworthy, Mr. Fredette, Mr. Narang and Jonathan Grimm. For 2021 our non-PEO NEOs were Ms. Gomez, Jennifer DiRico, Mr. Elworthy, Mr. Fredette and Mr. Narang. (4)The amounts listed in this column represent the average amount of “compensation actually paid” to our NEOs (excluding Mr. Comparato), in accordance with Item 402(v) of Regulation S-K. These amounts do not reflect the actual average amount of compensation earned by or paid to our NEOs in the applicable year. We did not report a change in pension value for any of the years reflected in this table; therefore, a deduction from the Summary Compensation Table total related to pension value is not applicable. The following adjustments were made to our NEOs total compensation for each year to determine the compensation actually paid:

  64. Pay Versus Performance Table

    | Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Summary Compensation Table Equity Total (a) ($) | Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | Average Year End Fair Value of Equity Awards Granted During Fiscal Year that are Outstanding and Unvested ($) | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Average Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Average Equity Award Adjustment ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 4,413,737 | 4,101,031 | 94,619 | 3,826,319 | 650,419 | 792,907 | 5,364,264 | 5,676,969 | | 2022 | 3,749,364 | 3,474,705 | (11,900,420) | 3,156,030 | 761,151 | (9,431,858) | (17,415,098) | (17,140,438) | | 2021 | 5,640,626 | 5,240,106 | 19,793,865 | 12,813,080 | 159,190 | 25,512,365 | 58,278,499 | 58,679,019 |

  65. Pay Versus Performance Table

    a.The average grant date fair value of equity awards as reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. The value in this column is subtracted from the “Average Summary Compensation Table Total for Non-PEO NEOs” column of this table. (5)The disclosed values in these columns represent the measurement period value of an investment of $100 as of September 22, 2021, the date our Class A common stock began trading on the New York Stock Exchange, and then valued on each of December 31, 2021, December 31, 2022, and December 31, 2023. (6)The peer group used was the S&P 500 IT Industry Index, consistent with the peer group used for the stock performance graph in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. (7)The dollar amounts listed represent the total net income reported in the Company’s audited financial statements for the applicable year. (8)Adjusted EBITDA is a non-GAAP financial measure. Please refer to pages 78 of Toast’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for a description and reconciliation of this non-GAAP financial measure.

  66. Analysis of the Information Presented in the Pay versus Performance Table

    Analysis of the Information Presented in the Pay versus Performance Table In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid to Mr. Comparato and the average amount of compensation actually paid to our named executive officers as a group (excluding Mr. Comparato) is generally aligned with our cumulative TSR over the three years presented in the table. The general alignment of compensation actually paid with our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to Mr. Comparato and to the other named executive officers is comprised of equity awards, the value of which is tied directly to our stock price. Please refer to “Executive Compensation - Compensation Discussion and Analysis,” for information about our executive compensation programs. Compensation Actually Paid and Net Income As demonstrated by the following graph, the amount of compensation actually paid to Mr. Comparato and the average amount of compensation actually paid to our named executive officers as a group (excluding Mr. Comparato) is not aligned with our net income results over the three years presented in the table. Our net income performance improved over the three year period reported in the table while the compensation actually paid to Mr. Comparato and the other named executive officers declined over the first two years of the same period. The lack of alignment of compensation actually paid with our net income over the period presented is because a significant portion of the compensation actually paid to Mr. Comparato and to the other named executive officers is comprised of equity awards, the value of which is tied directly to our stock price, and net income is not used as a metric in the Company’s compensation arrangements. Please refer to “Executive Compensation - Compensation Discussion and Analysis,” for information about our executive compensation programs. Compensation Actually Paid and Adjusted EBITDA As demonstrated by the following graph, the amount of compensation actually paid to Mr. Comparato and the average amount of compensation actually paid to our named executive officers as a group (excluding Mr. Comparato) is aligned with our Adjusted EBITDA results over the three years presented in the table. Our 2022 short-term incentive bonus plan included Adjusted EBITDA %, which is derived from Adjusted EBITDA, as a bonus financial funding metric. Our 2023 short-term incentive bonus plan also includes Adjusted EBITDA as a bonus financial funding metric. Although the graph below shows alignment between compensation actually paid and our Adjusted EBITDA results over the period presented, the primary reason for the decline in compensation actually paid to Mr. Comparato and to the other named executive officers between the first and second years of the three year period is because a significant portion of the compensation actually paid to Mr. Comparato and to the other named executive officers is comprised of equity awards, the value of which is tied directly to our stock price. Please refer to “Executive Compensation - Compensation Discussion and Analysis,” for information about our executive compensation programs. Cumulative TSR of the Company and Cumulative TSR of the Peer Group As demonstrated by the following graph, the Company’s cumulative TSR over the period presented in the table was (29%), while the cumulative TSR of the peer group presented for this purpose, the S&P 500 IT Index, was 25% over the same period. Our stock price performance was below that of the S&P 500 IT Index. Following our initial public offering in September 2021, we believe our stock price was subject to greater market volatility than the stock prices for technology companies in the S&P 500 IT Index since companies in the index had been in operation and trading publicly for longer periods of time.