COMPENSATIONDISCUSSIONANDANALYSIS AnnualIncentivePlan PBRSUMechanicsandTargets Eachyear,inestablishingperformancegoalsforthenewthree-yearperformanceperiod,theCompensationCommittee considersanumberofkeyfactors,includingPayPals: • medium-termbusinessplan; PRO • medium-termoutlookprovidedtoinvestors; XY S • strategic direction and initiatives; T A • historical performanceand goals set for prior performanceperiods;and TEMENT • potential extraordinaryevents that could have a disproportionateimpact on the alignmentof performanceand compensation. ThetargetssetbytheCompensationCommitteeareintendedtoberigorousandconsistentwiththemedium-termoutlook providedtotheinvestmentcommunityandourmedium-termbusinessplan.Thespecificgoalsforthe2022-2024PBRSUs are intendedto bechallengingbutattainabletoprovideappropriateincentivesforourexecutiveofficerstocontinueto growourbusiness.TheCompensationCommitteebelievesthatachievementofmaximumperformanceagainstthetarget levels would require sustainedexceptionalperformanceovertheperformanceperiod. ThetwoLTIperformancemeasuresareindependent.Ifeitherthresholdgoalismet,awardswillbeearnedwithrespectto that performancemeasurebasedonthepercentagesshowninthetableabove.Iftheperformancethresholdforameasure is not met, there will be no payment attributableto that performancemeasure.If neither performancethresholdis met, no sharesofPayPalcommonstocksubjecttothe2022-2024PBRSUswillbeawarded. Wedonotdisclosethespecificperformancegoalsforthe2022-2024PBRSUsinthisproxystatementforcompetitive reasons. For each measure, performance at the threshold level will result in a payout of 50% of target, performance at the target level will result in a payout of 100% of target and performance at the maximum level will result in a payout of 200% of target. Linear interpolation is applied to performance between threshold, target and maximum levels. The performance targets and achievement levels for the 2020-2022 PBRSUs are shown below to provide insight into the rigor of the targets the CompensationCommitteesets. SettlementofPreviouslyAwarded2020-2022PBRSUs TheCompensationCommitteesetthetargetsforthe2020-2022PBRSUsatthebeginningoftheperformanceperiod.Itwas unclear at that time the impact that the COVID-19 pandemic would have on our financial profile. We were able to maintain strong operating income and Free Cash Flow generation duringthis period, despite facing macroeconomic headwinds. Beginningwiththefourthquarterof2022,wereclassifiedcertaincashflowsrelatedtoderivativecollateral forforeign currencyhedging.Thesecashflowshadpreviouslybeenclassifiedascashflowsfromoperatingactivities,andwere reclassified as cash flows from investing and financing activities, which we believe provides a more meaningful representation of cash flows from operating activities for a given period to our investors. At the time the targets for the 2020- 2022PBRSUsweredetermined,ourFreeCashFlowforecastwasbasedonthepriormethodology.Becausethe2020-2022 PBRSUtargetsweresetunderthepriormethodology,theCompensationCommitteebasedtheperformanceachievement for the Free Cash Flow CAGR for the 2020-2022 PBRSUs on our historical presentation of Free Cash Flow, as indicated below.Thepercentageoftargetachievedforthe2020-2022PBRSUswas145%(undertherevisedmethodology,thetarget achievedwouldhavebeen97%). Thefollowingchartshowstheminimum,targetandmaximumvestinglevelsforFX-NeutralRevenueCAGRandFreeCashFlow CAGRforthe2020-2022PBRSUs,theactualresultsforeachmeasureandthecorrespondingpercentageoftargetachieved. •2023ProxyStatement 63