Proxy Statement (Form DEF 14A)
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
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Payment of Filing Fee (Check all boxes that apply):
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No fee required |
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Fee paid previously with preliminary materials |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
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Notice of 2025
Annual Meeting and
Proxy Statement
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Corporate Office |
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Toll-Free: 1 800 9Adtran |
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P.O. Box 140000 |
Telephone: 256 963 8000 |
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Dear Stockholder:
You are cordially invited to attend the 2025 Annual Meeting of Stockholders of
The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe the formal business to be transacted at the meeting. During the meeting, we also will report on Adtran's operations during the past year and our plans for the future.
We have elected to take advantage of
Your vote, whether during the virtual meeting on
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Sincerely, |
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Chairman of the Board |
Notice of Annual Meeting of Stockholders
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Date & Time |
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www.virtualshareholdermeeting.com/ ADTN2025 |
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NOTICE HEREBY IS GIVEN that the 2025 Annual Meeting of Stockholders (the "Annual Meeting") of
The Annual Meeting is being held for the purposes of considering and voting upon:
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Items of Business |
Board Recommendation |
Page Reference |
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1. |
A proposal to elect seven directors to serve until the 2026 Annual Meeting of Stockholders; |
FOR |
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An advisory proposal with respect to the compensation of the Company's named executive officers ("NEOs"), as described in the Compensation Discussion and Analysis, executive compensation tables and accompanying narrative in the attached Proxy Statement; and |
FOR |
85 |
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3. |
A proposal to ratify the appointment of |
FOR |
86 |
Stockholders will also consider and act upon such other business as may properly come before the Annual Meeting or any adjournments thereof. The Board of Directors is not aware of any other business to be presented for a vote of the stockholders at the Annual Meeting. See page90for additional details.
How to Vote
The Board of Directors recommends that you vote FOR each of the seven director nominees; FOR the approval on an advisory basis of the compensation of the Company's NEOs; and FOR the ratification of the appointment of
Information relating to the above matters is set forth in the attached Proxy Statement. Stockholders of record at the close of business on
Whether or not you plan to participate in the Annual Meeting, we urge you to review these materials carefully, which are available at https://materials.proxyvote.com/00486H. We also encourage you to vote by (i) following the instructions on the notice that you received from your broker, bank or other nominee if your shares are held beneficially in "street name" or (ii) one of the following means if your shares are registered directly in your name with the Company's transfer agent:
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By Internet:Go to the website www.proxyvote.com and follow the instructions. You will need the control number included on your Notice to obtain your records and vote by Internet. |
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By Telephone:From a touch-tone telephone, dial toll-free 1-800-690-6903 and follow the recorded instructions. You will need the control number included on your Notice in order to vote by telephone. |
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By Mail:You may request a hard copy of the proxy materials, including a proxy card, by following the instructions on your Notice. If you request and receive a proxy card, please mark your selections on the proxy card, date and sign your name exactly as it appears on the proxy card and mail the proxy card in the pre-paid envelope that will be provided to you. Mailed proxy cards must be received no later than |
You can submit questions in advance of the Annual Meeting by visiting www.proxyvote.com, entering your 16-digit control number, and using the "Questions for Management" feature. You can submit questions during the Annual Meeting by following the instructions on the meeting website. Management will answer pertinent questions in the "Investor Resources" section of our website at https://investors.adtran.com. The questions and answers will be available as soon as practicable after the Annual Meeting and will remain available for thirty (30) days after posting.
By order of the Board of Directors,
Senior Vice President, Administration and Corporate Secretary
Table of Contents
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Security Ownership of Certain Beneficial Owners and Management |
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Information About an Executive Officer Who is Not Also a Director |
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Policies and Procedures for Review and Approval of Related Person Transactions |
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Proposal 2: Advisory Vote Regarding Compensation of Our Named Executive Officers |
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Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm |
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Policy on Pre-Approval of Audit and Permissible Non-Audit Services |
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Stockholders' Proposals for 2026 Annual Meeting of Stockholders |
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2025 Proxy Statement |
Proxy Statement for the Annual
Meeting of Stockholders
To Be Held on
This Proxy Statement, along with the accompanying Notice of Annual Meeting of Stockholders, contains information about the 2025 Annual Meeting of Stockholders (the "Annual Meeting") of
You can submit questions in advance of the Annual Meeting by visiting www.proxyvote.com, entering your 16-digit control number, and using the "Questions for Management" feature. You can submit questions during the Annual Meeting by following the instructions on the meeting website. Management will answer pertinent questions in the "Investor Resources" section of our website athttps://investors.adtran.com. The questions and answers will be available as soon as practicable after the Annual Meeting and will remain available for thirty (30) days after posting.
We are providing this Proxy Statement to the stockholders of the Company in connection with the solicitation of proxies by our Board of Directors to be voted during the Annual Meeting and at any adjournments of that meeting.
On or about
In
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on
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2025 Proxy Statement |
This Notice, the Proxy Statement and the 2024 Annual Report to Stockholders of
Additionally, you can find a copy of our Annual Report on Form 10-K for the fiscal year ended
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2025 Proxy Statement |
General Information about the Annual Meeting
Why is the Company soliciting my proxy?
The Board of Directors of the Company (the "Board") is soliciting your proxy to vote at the 2025 Annual Meeting of Stockholders to be held on
How can I participate in the virtual Annual Meeting?
You will be able to attend and participate in the Annual Meeting by visitingwww.virtualshareholdermeeting.com/ADTN2025 and entering the 16-digit control number included on your Notice or proxy card. If you hold your shares through an intermediary, such as a bank or broker, and do not have a control number, please contact the bank or broker. Please log in to the website by
You can submit questions in advance of the Annual Meeting by visiting www.proxyvote.com, entering your 16-digit control number, and using the "Questions for Management" feature. You can submit questions during the Annual Meeting by following the instructions on the meeting website. Management will answer pertinent questions in the "Investor Resources" section of our website athttps://investors.adtran.com. The questions and answers will be available as soon as practicable after the Annual Meeting and will remain available for thirty (30) days after posting.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
In accordance with rules and regulations adopted by the
Why am I receiving these materials?
Our Board is providing these proxy materials to you on the Internet or, upon your request, will deliver printed versions of these materials to you by mail, in connection with the Annual Meeting, which will take place on
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2025 Proxy Statement |
What is included in these materials?
These proxy materials include:
If you request printed versions of these materials by mail, these materials will also include the proxy card for the Annual Meeting.
What proposals will be voted on during the Annual Meeting?
You will be voting on the matters listed below (with the Board's recommendation on each matter):
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Items of Business |
Board Recommendation |
Page Reference |
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1.
Elect seven directors to serve until the 2026 Annual Meeting of Stockholders
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FOR |
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2.
Approve on an advisory basis the compensation of our NEOs
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FOR |
85 |
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Ratify the appointment of
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86 |
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What shares owned by me can be voted?
All shares owned by you as of the close of business on
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Most of the Company's stockholders hold their shares through a stock broker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially through a nominee.
Stockholder of Record
If your shares are registered directly in your name with the Company's transfer agent,
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2025 Proxy Statement |
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in "street name," and a notice is being sent to you by your broker or nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you are invited to participate in the virtual Annual Meeting. You also have the right to direct your broker on how to vote these shares. The notice that you receive from your broker or nominee should include instructions for you to direct your broker or nominee how to vote your shares. You may also vote prior to the Annual Meeting by Internet or by telephone, as described below under "How can I vote my shares without participating in the Annual Meeting in real time?" However, shares held in "street name" may be voted during the Annual Meeting by you only if you obtain a signed proxy from the record holder (broker, bank or other nominee) giving you the right to vote the shares.
How can I vote my shares during the virtual Annual Meeting?
Shares held directly in your name as the stockholder of record or shares held beneficially in "street name" may be voted during the virtual Annual Meeting. If you choose to vote your shares during the virtual Annual Meeting and you are the stockholder of record, you will need the control number included on your Notice or proxy card. If you hold your shares in "street name" and do not have a control number, please contact the bank or broker.
How can I vote my shares without participating in the Annual Meeting in real time?
Whether you hold your shares directly as the stockholder of record or beneficially in "street name," you may direct your vote by proxy without participating in the virtual Annual Meeting in real time. If you are the stockholder of record, you can vote by proxy by one of the following means:
If you hold your shares beneficially in "street name," please follow the instructions provided in the notice from your broker, or, if you request printed copies of proxy materials, on the proxy card or voting instruction form. We urge you to review the proxy materials carefully before you vote. These materials are available at https://materials.proxyvote.com/00486H.
Can I revoke my proxy or change my vote?
You may revoke your proxy or change your voting instructions prior to the vote during the virtual Annual Meeting. You may enter a new vote by using the Internet or the telephone or by mailing a new proxy card or new voting instruction form bearing a later date (which will automatically revoke your earlier voting instructions), which new vote must be received by
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2025 Proxy Statement |
and voting during the virtual Annual Meeting. Your participation in the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
What is the voting requirement to approve each of the proposals?
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Proposals |
Vote Required for Approval |
Effect of Abstentions |
Broker Discretionary Voting |
Unmarked Signed Proxy Cards |
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1.
Election of directors
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The number of votes exceeds the number |
No effect |
No |
Voted "For" All Director Nominees |
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Non-binding advisory vote to approve the compensation of our NEOs
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Majority of shares represented and entitled to vote |
Counted as "Against" |
No |
Voted "For" |
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Ratification of appointment of independent registered public accounting firm
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Majority of shares represented and entitled to vote |
Counted as "Against" |
Yes |
Voted "For" |
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What does it mean if I receive more than one Notice, proxy card or voting instruction form?
It means your shares are registered differently or are held in more than one account. For each Notice you receive, please submit your vote for each control number you have been assigned. If you request and receive paper copies of proxy materials, please provide voting instructions for all proxy cards and voting instruction forms you receive.
Where can I find the voting results of the Annual Meeting?
We will announce preliminary voting results during the Annual Meeting and publish preliminary results, or final results if available, in a Current Report on Form 8-K within four business days of the Annual Meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended report on Form 8-K to disclose the final voting results within four business days after the final voting results are known.
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2025 Proxy Statement |
What happens if additional proposals are presented during the Annual Meeting?
Other than the three proposals described in this Proxy Statement, we do not expect any matters to be presented for a vote during the Annual Meeting. If you grant a proxy, the persons named as proxy holders,
What is the quorum requirement for the Annual Meeting?
The quorum requirement for holding the Annual Meeting and transacting business is a majority of the outstanding shares entitled to vote or act at the meeting. The shares may be present by participating in the Annual Meeting or represented by proxy at the Annual Meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. If a quorum is not present or if we decide that more time is necessary for the solicitation of proxies, we may adjouthe Annual Meeting. We may do this with or without a stockholder vote. Alternatively, if the stockholders vote to adjouthe Annual Meeting in accordance with the Company's Second Amended and Restated Bylaws (the "Bylaws"), the named proxies will vote all shares of common stock for which they have voting authority in favor of adjournment.
Who will bear the cost of soliciting proxies for the Annual Meeting?
The Company will pay the entire cost of soliciting proxies for the Annual Meeting, including the distribution of proxy materials. We have hired
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2025 Proxy Statement |
Security Ownershipof Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of our common stock as of
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Number of |
Percent |
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703,046 |
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Chairman of the Board, Chief Executive Officer and Director |
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Former Senior Vice President of Finance, Chief Financial Officer, |
15,121 |
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94,773 |
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Chief Revenue Officer |
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59,243 |
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Chief Technology Officer |
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79,385 |
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Lead Director |
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44,678 |
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Director |
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97,158 |
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Director |
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62,281 |
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Director |
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24,889 |
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Director |
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70,448 |
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Director |
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All current directors and executive officers as a group (10 persons) |
1,235,900 |
1.5% |
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* Represents beneficial ownership of less than 1% of the shares of common stock.
Additionally, pursuant to the terms of the
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2025 Proxy Statement |
upon vesting of RSUs within 60 days are deemed to be outstanding for the purpose of computing "Percent of Class" held by the holder thereof but are not deemed to be outstanding for the purpose of computing the "Percent of Class" held by any other stockholder.
The shares shown include: as to
The following table sets forth information regarding the beneficial ownership of our common stock as of the date indicated for each person, other than the officers or directors of Adtran, known to us to be the beneficial owner of more than 5% of our outstanding common stock.
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Number of |
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6,603,046 |
8.3% |
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50 Hudson Yards |
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6,550,941 |
8.2% |
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5,357,343 |
6.7% |
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4,873,121 |
6.1% |
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4,837,765 |
6.1% |
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Dronning Eufemias Gate 30 |
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4,806,383 |
6.0% |
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2025 Proxy Statement |
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2025 Proxy Statement |
Proposal 1
Election of Directors
Our Boardof Directors
Our Bylaws provide that the exact number of directors will be fixed from time to time by our Board pursuant to a resolution adopted by a majority of the whole Board. Our Board of Directors currently consists of seven members. The Board has nominated
If elected as a director at the Annual Meeting, each of the nominees would serve a one-year term expiring at the 2026 Annual Meeting of Stockholders and until his or her successor has been duly elected and qualified. There are no family relationships among the directors, director nominees or the executive officers. Pursuant to the Company's Director Resignation Policy, each of the director nominees is deemed to have agreed to promptly tender to the Chairman of the Board of Directors an irrevocable contingent resignation in the event that such director fails to receive a sufficient number of votes for re-election (a "majority against vote"). If any director nominee receives a majority against vote at the Annual Meeting, the
Our Board of Directors seeks to ensure that the Board is composed of members whose experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively in light of the Company's business and the laws and stock exchange rules that goveits affairs. We have no minimum qualifications for director candidates. In general, however, our Board will review and evaluate both incumbent and potential new directors in an effort to achieve diversity of skills and experience among our directors so that our Board has an effective mix of technical, financial, operating and management experience. Our Board has adopted corporate governance principles to guide the Company and the Board on various governance matters, and these principles task the
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Leadership 4 |
Business experiences 3 |
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Financial acumen 1 |
Industry knowledge 5 |
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Interpersonal skills 3 |
Diversity of viewpoints 2 |
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Independence 6 |
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We believe that our Board should be comprised predominantly of independent directors from diverse backgrounds external to the Company, but should nevertheless include the insight and judgment of our senior management. Our Board has no specific requirements regarding diversity.
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2025 Proxy Statement |
In assessing the experience, qualifications, attributes and skills that led our
Information Regarding the Nominees for Director
Set forth below is certain information regarding the seven nominees for director, including their ages, principal occupations or employment for at least the past five years, the length of their tenure as directors, and the names of other public companies in which such persons hold or have held directorships during the past five years. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board's conclusion at the time of filing of this Proxy Statement that each person listed below should serve as a director is set forth below. The stock ownership with respect to each director nominee is set forth in the Security Ownership of Certain Beneficial Owners and Management table on page8.
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Age:60 Director Since:2005 Board Committees: •
None
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Background Information |
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Qualifications |
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2025 Proxy Statement |
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Age:74 Director Since:2002 Board Committees: •
Audit (Chair)
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Compensation
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Environmental, Social and Governance
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Nominating and Corporate Governance
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Background Information |
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Qualifications |
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2025 Proxy Statement |
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Age:61 Director Since:2017 Board Committees: •
Audit
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Compensation
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Nominating and Corporate Governance
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Background Information |
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Qualifications |
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2025 Proxy Statement |
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Age:58 Director Since:2007 Board Committees: •
Compensation
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Background Information |
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Qualifications |
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2025 Proxy Statement |
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Age:53 Director Since:2016 Board Committees: •
Audit
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Nominating and Corporate Governance (Chair)
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Background Information |
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Qualifications |
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2025 Proxy Statement |
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Age:62 Director Since:2022 Board Committees: •
Audit
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Compensation (Chair)
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Environmental, Social and Governance
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Background Information |
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Qualifications |
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2025 Proxy Statement |
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Age:65 Director Since:2014 Board Committees: •
Nominating and Corporate Governance
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Environmental, Social and Governance (Chair)
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Background Information |
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Qualifications |
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Information About an Executive Officer Who is Not Also a Director
Set forth below is information regarding an executive officer who is not also a director, including his age, positions and offices held with the Company, and his principal occupations and employment, focused primarily on the past five years. See Part I, Item 1 of the Annual Report on Form 10-K for the fiscal year ended
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Age 48 |
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Senior Vice President of Finance and Chief Financial Officer, |
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Chief Financial Officer, |
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Interim Chief Financial Officer, |
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Vice President and Chief Accounting Officer, |
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2018 - 2023 |
Senior Vice President & Global Controller, |
*On
Votingof Proxies
Unless otherwise instructed, the proxy holders will vote proxies held by them"For"the election of
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2025 Proxy Statement |
represented by all valid proxies for the election of the substitute nominee or nominees), allow the vacancies to remain open until a suitable candidate or candidates are located, or by resolution provide for a lesser number of directors.
The Board of Directors unanimously recommends that the stockholders vote "For"
the election of the seven nominees named above.
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2025 Proxy Statement |
Corporate Governance
Governance Highlights
Our Board of Directors is committed to having sound corporate governance principles. Such principles are essential to running our business efficiently and to maintaining our integrity in the marketplace. The "Governance" section of this Proxy Statement describes our governance framework, which includes the following features:
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Majority voting in uncontested director elections
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No classified Board
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6 of 7 independent directors
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Independent Lead Director of the Board
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Directors required to submit resignations if they do not receive sufficient votes for re-election
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Annual Board and committee evaluations, as well as director self-evaluations, with focus on tangible improvements
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No poison pill
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All directors attended 75% or more of Board and applicable committee meetings in 2024
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Mature environmental management system that is ISO 14001 certified, as part of comprehensive sustainability program
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Stock ownership guidelines and equity retention requirements for non-employee directors
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Regular executive sessions of independent directors
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No supermajority standards - stockholders may amend our Bylaws and charter and approve mergers and business combinations by simple majority vote
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Risk oversight by full Board and designated committees
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Limitation on directorships of other publicly-traded companies
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Compositionof the Board
Our Board seeks to ensure that the Board, as a whole, is strong in its collective knowledge of, and has a diversity of skills and experience with respect to, accounting and finance, management and leadership, vision and strategy, business operations, business judgment, crisis management, risk assessment, industry knowledge, corporate governance and global markets. As part of our annual Board self-evaluation process, the Board evaluates whether or not the Board as a whole has the appropriate mix of skills, experience, backgrounds and diversity in relation to the needs of the Company for the current issues facing the Company.
Directors to be nominated by the Company for election at the annual stockholders' meeting are approved by the Board upon recommendation by the
Process for Stockholders to Recommend Director Nominees
As provided in its charter, the
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2025 Proxy Statement |
The Corporate Secretary will promptly forward these materials to the Chair of the
In addition to submitting nominations in advance to the
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2025 Proxy Statement |
Board, Committee and Individual Director Evaluation Program
Pursuant to the Corporate Governance Principles, the Board and each of its committees conduct an annual evaluation of its performance, led by the
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Board and Committee members complete self-evaluations:These questionnaires are completed individually in order to encourage honest feedback from the directors. |
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Group discussions:The Board or committee, as applicable, engages in a discussion of the completed questionnaires in order to assess performance in areas such as meeting efficiency, membership and structure, culture and operational effectiveness, and execution of roles and responsibilities. |
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Focus on outcomes: |
Corporate Governance Principles
The Board of Directors has adopted Corporate Governance Principles that set forth the Company's fundamental corporate governance principles and provide a flexible framework for the governance of the Company. The Corporate Governance Principles address, among other things, Board duties and responsibilities, management development and succession planning, Board membership and independence, Board meetings and Board committees, access to senior management and experts, director orientation and continuing education, and annual performance evaluations.
Director Independence
Nasdaq listing standards require that the Company have a majority of independent directors. Accordingly, because our Board currently has seven members, Nasdaq requires that four or more of the directors be independent. Nasdaq's listing standards provide that no director will qualify as "independent" for these purposes unless the Board affirmatively determines that the director has no relationship with the Company that would interfere with the exercise of the director's independent judgment in carrying out the responsibilities of a director. Additionally, the listing standards set forth a list of relationships that would preclude a finding of independence.
The Board affirmatively determines the independence of each director and nominee for election as a director. The Board makes this determination annually. In accordance with Nasdaq's listing standards, we do not consider a director to be independent unless the Board determines that (i) no relationship exists that would preclude a finding of independence under Nasdaq's listing standards and (ii) the director has no relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) that would interfere with the exercise of the director's independent judgment in carrying out his or her responsibilities as a
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2025 Proxy Statement |
director. Members of the Audit, Compensation and Nominating and Corporate Governance Committees must also meet applicable independence tests of Nasdaq and the
The Board has reviewed a summary of directors' responses to a questionnaire asking about their relationships with the Company, as well as material provided by management related to transactions, relationships or arrangements between the Company and the directors and parties related to the directors. Following this review, the Board determined that six of the seven directors (
Company Leadership Structure
The Board of Directors oversees the business and affairs of the Company and monitors the performance of its management. The basic responsibility of the Board is to lead the Company by exercising its business judgment to act in what each director reasonably believes to be the best interests of the Company and its stockholders. Although the Board is not involved in the Company's day-to-day operations, the directors keep themselves informed about the Company through meetings of the Board, reports from management and discussions with the Company's NEOs. Directors also communicate with the Company's outside advisors, as necessary.
The Board does not have a policy as to whether the role of Chair of the Board and Chief Executive Officer should be separate or whether the Chair should be a management or a non-management director. The Corporate Governance Principles provide that whether to have the same person occupy the offices of Chair and Chief Executive Officer should be decided by the Board, from time to time, in its business judgment after considering relevant circumstances. If the Chair is also the Chief Executive Officer, or if the Board otherwise determines that it is appropriate, the Board will also elect an independent lead director (as described below).
The Board has determined that it is in the best interests of the Company and its stockholders to elect an independent director to serve in a lead capacity (the "Lead Director") to perform the duties and responsibilities set forth in the Corporate Governance Principles and as determined by the Board. The Board elected
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Board Structure and Committees
The Board of Directors conducts its business through meetings of the full Board and through committees of the Board, consisting of an Audit Committee, a Compensation Committee, a
Each committee operates under a written charter adopted by the Board, which charters are available in the "Governance" section of our website at https://investors.adtran.com.
The Board met 17 times in 2024. None of the incumbent directors attended less than 75% of the aggregate of (a) the total number of meetings held in 2024 of the Board while he or she was a director and (b) the total number of meetings held in 2024 of all committees of the Board on which he or she served. Absent extenuating circumstances, directors are expected to participate in annual meetings of the Company's stockholders, and all our directors serving at that time attended the 2024 Annual Meeting of Stockholders.
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The following tables set forth the current membership and the roles and responsibilities of each committee of the Board, as well as the number of meetings that each committee held during 2024:
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Audit Committee |
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Current Members |
Roles and Responsibilities: |
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Number of Meetings in 2024:11 |
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Review financial reports and other financial information provided by us to the public or any governmental body
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Review the qualifications, performance, and independence of our independent registered public accounting firm
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Discuss the financial statements and other financial information with management and the independent auditors and review the integrity of the Company's internal and external financial reporting process
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Review with management various reports regarding the Company's system of internal controls and consult with the independent auditors regarding internal controls and the accuracy of the Company's financial statements
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Assist the Board in fulfilling its oversight responsibilities with respect to the Company's compliance with legal and regulatory requirements and review the Company's risk assessment and risk management policies
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Annually review and monitor compliance with the Company's Code of Conduct and review and approve all requests for waivers of the Code of Conduct
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Establish and oversee procedures for the submission and treatment of complaints received by the Company regarding accounting, internal accounting controls or audit matters
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Review the activities, organizational structure, and qualifications of the internal audit department
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Review, oversee and approve all related party transactions (as required to be disclosed pursuant to Item 404 of SEC Regulation S-K)
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Independence and Financial Expertise: |
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All members of the Audit Committee qualify as independent under applicable Nasdaq listing standards and satisfy the heightened independence standards under |
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Compensation Committee |
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Current Members |
Roles and Responsibilities: |
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Number of Meetings in 2024:4 |
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Administer, review and make recommendations to the Board regarding the Company's incentive compensation, equity-based and deferred compensation plans
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Review the Company's incentive compensation arrangements to consider whether they encourage excessive risk-taking and evaluate compensation policies and practices that could mitigate any such risk
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Review and approve the compensation of the Chief Executive Officer and all executive officers, including the annual performance goals and objectives relevant to their compensation, and oversee succession planning for executive positions
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Review and make recommendations to the Board regarding any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change of control, for the Chief Executive Officer and other executive officers
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Review, evaluate, and make recommendations to the Board with respect to adopting, amending, or terminating any clawback policy allowing the Company to recoup compensation paid to employees and oversee the administration of any such policies
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Review all director compensation and benefits for service on the Board and Board committees and recommend any changes to the Board as necessary
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Exercise general oversight of the Company's benefit plans
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Independence: |
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All members of the Compensation Committee qualify as independent under applicable Nasdaq listing standards and satisfy the heightened independence standards under |
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Nominating And Corporate Governance Committee |
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Current Members |
Roles and Responsibilities: |
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Number of Meetings in 2024:4 |
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Establish criteria for selecting new Board members and for the basic structure and membership of the Board
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Consider director nominees submitted by stockholders in accordance with procedures adopted by the Committee and as described in the Company's proxy statement
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Make recommendations to the Board regarding director nominees for the next annual meeting of stockholders, directors to serve on various committees of the Board and a chairperson of each committee
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Review the Corporate Governance Principles and Code of Business Conduct and Ethics at least once a year and recommend any changes to the Board and review the Company's organizational documents at least once every two years
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Monitor and evaluate the independence of directors and make recommendations to the Board regarding the same
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Oversee the annual performance evaluations of the Board and Board committees
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Coordinate with the ESG Committee on matters such as ethics, diversity, equity and inclusion, and stockholder rights
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Oversee the Company's corporate governance practices and procedures and consult with management and the Board on matters of corporate culture and values
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Independence: |
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All members of the |
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Current Members |
Roles and Responsibilities: |
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Number of Meetings in 2024:5 |
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Work with management and the Board to develop the Company's overall ESG strategy
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Review the Company's ESG policies, performance and reporting standards
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Report to the Board on current and emerging ESG topics that might affect the Company's business, operations, performance or public image, or are otherwise pertinent to the Company and its stakeholders, and advise the Board on stockholder proposals
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Coordinate with other Board committees on ESG matters
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Independence: |
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All members of the ESG Committee qualify as independent under applicable Nasdaq listing standards. |
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Risk Management and Cybersecurity Oversight
Enterprise Risk Management
Our management continually monitors the material risks facing the Company, including financial risk, strategic risk, operational risk, and legal and compliance risk. The Board of Directors is responsible for overseeing management's identification and management of, and planning for, those risks. The Board has delegated to certain committees
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oversight responsibility for those risks that are directly related to their areas of focus. The Audit Committee is responsible for coordinating the Board's oversight of the Company's risk management program, including the process by which management assesses, prioritizes, and manages the Company's material risks. The Audit Committee also oversees the major financial, data security and enterprise risks facing the Company. The Compensation Committee considers risk issues when establishing and administering our compensation program for executive officers and other key personnel.
Cybersecurity Oversight
Cybersecurity is a critical part of the Company's risk management. To more effectively address cybersecurity threats, the Company leverages a multi-layered approach, led by a Chief Information Officer / Chief Information Security Officer ("CIO/CISO") whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture, and processes. Both the Board and the Audit Committee each receive regular updates from senior management, including the CIO/CISO and cybersecurity experts, in areas such as threat intelligence, major cyber risk areas, emerging global policies and regulations, cybersecurity technologies and best practices, and cybersecurity incidents. Highlights of the Company's recent cybersecurity efforts and achievements are as follows:
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For additional information regarding our cybersecurity program, please see Item 1C. Cybersecurity in Part I of our Annual Report on Form 10-K for the fiscal year ended
Corporate Social Responsibility and Sustainability
As we follow our vision to "enable a fully connected world," corporate social responsibility (CSR) and ESG matters are important to us. As more people are connected, work and life can be accomplished using fewer resources. On the journey to our vision, we must continue to be a responsible corporate citizen of the world. We have established ESG and sustainability programs and policies that encompass the elements of Environmental, Health & Safety, Ethics, Labor, and
The ESG Committee of the Board has been formally tasked with overseeing management's efforts related to the long-term sustainable growth of the Company, including considering the social and environmental goals of the Company. We use the European Sustainability Reporting Standards (ESRS) for our ESG reporting, and these standards support our ESG risk, materiality and context assessments. Highlights of our current practices in these areas are described below.
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Corporate Social Responsibility and Sustainability Highlights |
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Products and Services |
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Design products to meet applicable energy efficiency requirements, such as the Code of Conduct for Broadband Communication Equipment published by the
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The Adtran Management System (AMS) manages the Company's facilities, products, and services, and focuses on continuous improvement. The AMS is designed to meet and exceed all of the requirements of ISO 9001:2015, ISO 14001:2015, ISO 27001:2013, TL 9000:2016 HS, ISO 22301:2019 and ISO 50001:2019. Some certifications are site-specific.
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Pursue conformance to the Responsible Business Alliance Code of Conduct, which the Company recognizes as a total supply chain initiative
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Provide products that are compliant with the Restriction of Hazardous Substances (RoHS) initiative, which the Company has done since the inception of RoHS in 2006
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Strive to adhere to regulatory requirements for sustainability initiatives in the various markets we serve, including the
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Design and test our products for compliance with applicable product safety and other national regulatory requirements
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Identify and control the chemicals used in the Company's products and/or packaging that are banned, restricted or targeted for reduction by legislation such as REACH
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Develop and utilize Eco-Design guidelines in the CTO organization, focusing on product energy efficiency and Circular Economy processes
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Perform process-based Life Cycle Assessments (LCA) on our products
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Optimize packaging and logistics of products to reduce packaging waste and transportation costs
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Supply Chain Responsibility |
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Promote fundamental human rights as a key ethical principle by implementing Company-wide policies that apply to partners and suppliers and support the
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Require suppliers to comply with the Company's Supplier Code of Conduct, which establishes minimum standards that must be met by all manufacturers, distributors, vendors, and other suppliers regarding their treatment of workers, workplace safety and ethical business practices
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Require suppliers to act consistently with the Company's Human Rights Policy and adhere to the Company's Global Anti-Corruption and Anti-Bribery Policy
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Apply various workmanship standards and quality program requirements to the Company's product and service suppliers and other partners
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Require suppliers to submit documents to show compliance with environmental and product standards, such as REACH, RoHS and conflict mineral rules
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Launched supplier surveys to better understand our carbon footprint, monitor initiatives of our key supply chain partners and establish comprehensive supplier standards
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Promote responsibility within our supply chain by educating and informing our suppliers regarding our specific requirements while providing relevant information on compliance. Sample topics are human rights, labor diversity, equity and inclusion, living wages and environmental protection. Our internal platform actively monitors critical supplier news to provide risk alerts.
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German operations are BAFA (Federal export control) compliant
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Environment and Energy Conservation |
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Measure and manage our environmental impact using the
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CDP Climate Change rating in 2024 of "B" for Adtran, which is in the "Management" band and signifies we are taking coordinated action on climate issues. This is an improvement from Adtran's "C" rating in 2022 (equal to the global average) and "B-" rating in 2023.
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CDP Water Security rating in 2024 of "B-" for Adtran, consistent with the global average
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Our Sustainability Committee, established in 2021, focuses on strategies to improve the Company's energy conservation and emissions footprint
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Our
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Decreased annual electricity consumption by 7.0% from 2023 to 2024. This is the equivalent of removing 203 homes from the energy grid for one year.
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Decreased our Energy Utilization Index (EUI), which is the standard benchmark for buildings, by 7.0% from 2023 to 2024. Our EUI for 2024 was 62.8, and we have consequently achieved our goal of reducing our EUI to 65 by 2030. We intend to establish a new baseline for 2025 in connection with our new consolidated
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Pursue the core goals of our Energy Management Strategy: (i) reduce operating expenses and promote sustainability by reducing energy consumption and improving energy efficiency and (ii) leverage end-of-useful-life cycle and technology obsolescence by utilizing a 5-year capital expenditure plan to prioritize projects. Our
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Participated with
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For our German locations which used 100% Green energy, we launched an Energy Management Initiative in
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SBTi approved our goal to develop net zero targets for 1.5c degree
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Purchased Renewable Energy Credits equaling approximately 20% of Adtran's energy consumption
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Actively participate in industry initiatives such as the
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Utilize water-based, non-hazardous flux on all manufacturing lines in order to effectively eliminate air emission concerns and utilize Impel filtering system hoods to exhaust all manufacturing equipment
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Maintained our comprehensive recycling program in
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Adtran Huntsville Energy Manager was elected to serve as the President of the
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Employees and Our Communities |
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Maintained a safe workplace in 2024. Our OSHA Summary of Work-Related Injuries and Illnesses identified three cases with zero total days away from work, including 11 days with job transfer or restriction access from our workforce of 967 average employees from our
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Strive to comply with
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Voluntarily strive to meet the human rights principles outlined in the
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Invest in our communities by hiring local people, creating innovative products that cater to community needs, using natural resources responsibly and supporting community initiatives
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Monitor employee engagement through employee satisfaction surveys and ongoing analysis and tracking
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Girls Day participation by Adtran Networks for Meiningen site to promote and encourage women in STEM studies
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Team Adtran hosted various fundraisers and donation drives to support non-profit organizations and schools in our communities, and anyone can submit requests at www.adtran.com/AskTeamAdtran
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Adtran Green Team is a group of employees who volunteer their time to forward environmental initiatives, supporting
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Twenty volunteer hours per year are available to full-time employees so they may volunteer at any local 501(c)(3) non-profit organization. Adtran-Huntsville employees donated approximately 1,140 hours in 2024
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Encourage employees to increase their knowledge by providing 17,880 training hours in 2024 through our Adtran Learning Network, on-campus events and required training
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Encourage employees to help fellow employees and the community through a payroll deduction gift to the
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Equity Ownership Requirement for Non-Employee Directors
In
Directors must refrain from selling or transferring shares of the Company's common stock until they have first satisfied the stock ownership requirement. Once a director has met the stock ownership requirement, if there is a subsequent decline in the Company's stock price that causes the director's ownership level to fall below the guideline, the director is not required to purchase additional shares but is generally required to refrain from selling or transferring shares until the guideline is again satisfied. The Outside Director Stock Ownership Guidelines are available in the "Governance" section of our website athttps://investors.adtran.com.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee, which establishes the compensation of the executive officers of the Company, was comprised during 2024 of
During 2024, no executive officer of the Company served as (i) a member of a compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board) of another entity, one of whose executive officers served on the
Communications with the Board of Directors
Stockholders and other interested parties may communicate with the Board, the non-management directors or specific directors by mail addressed to:
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The Board has also established a process for stockholders to communicate concerns to members of the Board on a confidential basis. If you have any concern, question or complaint regarding any accounting, auditing or internal controls matter, as well as any issues arising under our Code of Conduct and Ethics or other matters that you wish to communicate to our Audit Committee or Board of Directors, you can reach the Board through our Corporate Governance Hotline online at https://www.report.whistleb.com/Adtran (Client Code: 453581) or via phone to WhistleB at 1.800.218.8954 (Client Code: 453581). Information about the Corporate Governance Hotline can be found in the "Governance" section of our website athttps://investors.adtran.com.
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ExecutiveCompensation
Compensation Discussion and Analysis
Executive Summary
This Compensation Discussion and Analysis is designed to provide our stockholders with an explanation of our executive compensation philosophy and objectives, our 2024 executive compensation program and the compensation paid by us to the following named executive officers (or "NEOs"):
Compensation Philosophy
The guiding principles of our executive compensation program are to:
We design our executive compensation packages in a manner that incorporates these principles. We also evaluate the compensation packages to ensure they will help us encourage executive management to deliver strong performance results in the compensation year under consideration and motivate management to realize our strategic initiatives within the immediate, near- and long-term time frames our directors and management have developed. Additionally, we consider various market performance metrics in order to put the executive compensation program in context, including the performance of the Company in prior periods, the performance of the industry and our competitors in those periods, and total shareholder retu("TSR"), particularly as relative to our peer companies over those periods.
We also maintain a positive working environment that provides intangible benefits to our executives and encourages longevity. Combining compensation with a desirable working environment allows us to maintain a compensation program that generally provides overall compensation to our executive officers that is approximately at the median when compared to companies with which we compete for talent.
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Compensation in Context: Discussion of 2024 Financial Results and Operating Activities
Aligning executive compensation with stockholder interests is a primary consideration in determining our executive compensation program. Accordingly, we believe that Company performance and stockholder returns are important factors to consider when making executive compensation decisions. We use TSR, measured over rolling three-year periods relative to a broad-based industry peer group, as the measure for our market-based PSUs. Additionally, we believe that motivating executives to achieve certain performance targets used in our annual incentive compensation programs leads to positive stockholder returns. Below are some of the Company's key financial and operating performance accomplishments during 2024:
Business Results:
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Financial Results:
All of this was accomplished despite customer spending being negatively impacted by excess inventory and the weakened macroeconomic environment, as well as high interest rates and currency fluctuations. Despite these challenges, we continue to see increasing investment from both public and private sectors in fiber-based broadband connectivity and capacity upgrades in the network infrastructure in our primary growth markets in the
Overview of Executive Compensation Program
Our executive compensation packages are comprised of base salary and incentive opportunities, which can be annual or long-term and paid in cash or equity. We use a mix of these incentives to align management's interests with those of our stockholders. In designing incentive compensation packages, we use performance measures related to the Company's financial goals, as well as the Company's TSR, all with the goal of increasing stockholder return. We also individualize certain performance measures for individual executives.
Specific considerations in the Compensation Committee's process in setting 2024 executive compensation included the following:
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The compensation of our NEOs is comprised of the following elements:
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Compensation Element |
Type |
Description |
Linkage to Stockholder Value |
Specifications |
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Fixed |
Base Salary |
Cash |
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Short-term fixed compensation
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Reviewed annually and adjusted as appropriate
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Required to attract and retain talented personnel
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Predicated on responsibility, skills, and experience
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The Compensation Committee did not increase the base salaries of the NEOs for 2024, except for an increase in
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The Committee approved temporary base salary reductions through
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Performance-Based (Cash and Equity) |
Short-Term Cash Incentives |
Cash |
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Short-term variable compensation
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Based on performance against short-term financial and strategic objectives
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Incentive targets tied to key Company performance measures
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Drives management to achieve corporate and individual goals
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2024 cash awards were based on annual corporate goals.
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Additionally,
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Market-Based Performance Stock Units |
Equity |
Long-term three-year cliff vesting award with payout based on relative performance compared to peer group |
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Performance based on TSR ranking compared to peers
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Drives management to out-perform our market segment
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2024 awards were eligible to be earned based on TSR performance compared to industry index. |
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Compensation Element |
Type |
Description |
Linkage to Stockholder Value |
Specifications |
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Performance-Based Performance Stock Units |
Equity |
Long-term equity award with payout based on achievement of the Company's multi-year strategic plan objectives |
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Incentive targets tied to profitability objectives in the 3-year strategic plan
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Drives management to achieve the longer-term plan
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The Company granted a Long-Term Financial Plan Award to Participants remain eligible to eathe previously granted 2023 Long-Term Financial Plan awards, which are based on the Company's performance measured against the Company's 3-year strategic plan for Adjusted EBIT growth. |
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One-Time Integration Awards |
Cash and Equity |
Combination of cash bonus award and performance-based PSUs based on achievement of cost savings targets |
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Incentivizes achievement of cost savings and expected synergies following the Business Combination
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Cash award only eligible to be earned once threshold synergy level is achieved
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Participants were eligible to eathe integration awards based on performance from the grant date through |
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Retention Equity |
Time-Based Restricted Stock Units |
Equity |
Annual award of time-based equity |
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Value realized directly aligned with share price performance
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Drives ownership mentality and encourages retention
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2024 time-based awards vest over a 4-year period, subject to continued service to the Company. |
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Stock Options |
Equity |
Equity award granted in special circumstances |
Incentivizes management to achieve share price growth |
The Company did not grant any stock options to its NEOs in 2024. |
Role of the Compensation Committee and Management
Under our Compensation Committee's Charter, the Compensation Committee has the power and duty to discharge our Board's responsibilities related to the compensation of our executive officers, within guidelines established by the Board. The Compensation Committee reviews and approves compensation, including base salary, annual incentive awards and equity awards, for the CEO and our other executive officers. The Compensation Committee also makes recommendations to the Board regarding our incentive compensation plans, equity plans and the outside director compensation program.
The Committee establishes annual performance goals and objectives for the CEO and other executive officers based on annual performance evaluations. Our CEO also provides the Committee, and in particular, the Committee Chair,
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with recommendations regarding compensation for our executive officers other than himself. The Committee considers the recommendations from the CEO when approving pay changes for executives other than the CEO. The Committee has delegated to the CEO the authority to approve the base salaries and incentive compensation of non-executive employees, as well as equity grants to such individuals, subject to pre-approved limits and terms and conditions.
At the beginning of each calendar year, our Compensation Committee establishes the structure of the Company's incentive compensation programs for the current year, including setting the performance goals for the Variable Incentive Cash Compensation (the "VICC") program and the standards for measuring achievement of those goals; approves any increases in executive salaries or other compensation; approves the executives' annual equity grants; and recommends plan changes, if any, for submission to our stockholders at the annual meeting. The Committee approves any equity awards and/or compensation for newly hired or promoted executives as necessary throughout the year.
In fulfilling its fiduciary duties pertaining to the Company's employee retirement benefit plans, our Compensation Committee considers the information and advice it receives from a committee
Role of the Compensation Consultant
Our Compensation Committee has the authority to retain and terminate any outside advisors, such as compensation consultants. Starting in 2022 and continuing into 2024, the Committee engaged
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The Compensation Committee believes comparison to these companies is appropriate, given the limited number of comparable companies and direct competition with these peers for executive talent. The Compensation Committee also references various peer, industry and market compensation data when evaluating the appropriateness of the Company's compensation program, including the compensation arrangements of our NEOs.
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The Compensation Committee reviews the types of services provided by Pay Governance and all fees paid for those services on a regular basis. Neither Pay Governance nor any of its affiliates provided additional services to the Company or any of its affiliates in 2024, other than the advice provided by Pay Governance to the Compensation Committee on director compensation and the advice provided to the Company on pension plan management, company insurance and employee health insurance. As required by rules adopted by the
Benchmarking and Individual Considerations
The Company reviews compensation data for similar positions from Proxy peers, as well as from the telecom and networking industry and the broader general industry. We generally seek to provide our executives with base salaries and target bonus and long-term incentive opportunities that are positioned around the median of competitive practice in order to assist in attracting and retaining talented executives and to further motivate and reward our NEOs for sustained, long-term improvements in the Company's financial results and the achievement of long-term business objectives. We recognize, however, that benchmarking may be subject to variation from one year to the next. As a result, we also use Company and individual performance in determining the appropriate compensation opportunities for our NEOs.
Our Compensation Committee focuses on establishing and maintaining a compensation structure that is internally consistent and provides appropriate compensation for our executives in relation to one another. Consequently, the Compensation Committee does not focus on any particular benchmark to set executive compensation. Instead, we believe that a successful compensation program requires the application of judgment and subjective determinations based on the consideration of a number of factors. These factors include the following:
The Compensation Committee does not assign relative weights or rankings to these factors. Our allocation of compensation between cash and equity awards, our two principal forms of compensation, is based upon our historical practice and our evaluation of the cost of equity awards, as discussed in more detail below. An important part of this evaluation is the Committee's consideration of the goals of the several initiatives undertaken in the execution of the Company's business plan and each executive's past and expected future contributions toward those goals at the time of setting executive compensation packages.
Risk Assessment
The Compensation Committee has evaluated the Company's compensation program, plans and practices for all of its employees as they relate to risk management and risk-taking initiatives to ascertain if they serve to incent risks which are "reasonably likely to have a material adverse effect" on the Company. As a result of this process, the
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Compensation Committee concluded and informed the Board of Directors that any risks arising from these programs, plans and practices are not reasonably likely to have a material adverse effect on the Company.
The Compensation Committee has attempted to establish compensation programs that value current goals along with long-term growth. While the use of short-term cash incentive opportunities creates the potential for short-term risk-taking, the Committee believes that this risk is more than offset by the fact that a short-term cash incentive is only one of three primary elements of the overall compensation program and has governance features that are aligned with market best practice (e.g., maximum payout opportunity of 200% of target). Additionally, the Committee has the ability to utilize discretion to reduce the amount of a cash incentive award if an executive officer takes unnecessary risks. The Committee has concluded that the two other primary elements of our total compensation program - base salaries and long-term equity awards - are either risk neutral or help lower risk. Annual salaries are based on a number of factors, including the individual's position and responsibility within our Company and performance in that position. The longer-term equity awards incentivize executives to focus on improving the Company and its operations rather than taking risks for short-term gain.
Our "Say-on-Pay" Results from Last Year and Ongoing Stockholder Engagement
At our 2024 Annual Meeting of Stockholders, our "Say-on-Pay" advisory proposal passed with approximately 87% of our stockholders voting in favor of the Company's executive compensation plan. This was a significant improvement compared to our 2023 results, which had indicated that a majority of our stockholders (53%) did not support our executive compensation plan at the time. Our stockholders will recall that the 2023 Say-on-Pay result prompted us to implement a concerted stockholder engagement program. Our engagement efforts were broad-based, focusing on institutional investors and supplemented with feedback from shareholder advisory services. We contacted 30 investors holding 73.6% of our outstanding shares and received feedback from 20 investors holding 64.0% of our outstanding shares. Our stockholder engagement program provided valuable feedback in relation to how we structure our executive compensation program to ensure our approach aligns with creating long-term value for our stockholders.
During our engagements, stockholders provided feedback on the following key items, in order of most cited to least cited, and here is what we have done in response:
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What we heard |
What we have done in response |
When effective |
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Need more performance-based grants than time-based grants |
Increased performance-based component of CEO's annual LTI award |
2023 |
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TSR should be above median to receive target payout for market-based PSUs |
Increased relative TSR percentile rank from 50thto 55thpercentile to receive target payout |
2024 |
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There should be a cap on payout when TSR is negative but ahead of peers |
Implemented a cap to limit payouts when absolute TSR is negative |
2024 |
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Modify equity incentive plan to provide for double-trigger vesting upon a change of control |
Award agreements require double-trigger vesting for all officers and employees |
2024(1) |
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Consider multiple metrics for future long-term awards |
The Committee decided not to add an additional metric to the long-term incentive plan at this time as the current design already includes multiple metrics (Adjusted EBIT and relative TSR). |
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Furthermore, we extended the measurement period for the short-term cash incentive program from quarterly performance periods to a half-year performance period in the second half of 2023, and we began using a one-year measurement period in 2024.
We also engaged with and received feedback from two of the largest and most reputable shareholder advisory services. Their feedback was closely aligned with what we heard from our shareholders during the outreach process.
During 2024, we continued to engage with our most significant stockholders on an array of topics, including executive compensation, and we remain committed to pursuing a robust program of stockholder engagement going forward. We will continue to review feedback and best practices in the future to ensure alignment.
Elements of 2024 Executive Compensation
Our executive compensation program consists of base salary; short-term cash incentives, including those under our VICC program, a sales incentive arrangement for our Chief Revenue Officer, and occasional one-time performance bonuses for certain executives; and long-term equity incentives in the form of time-based and performance-based equity. Historically, the Compensation Committee has granted time-based RSUs that vest ratably over four years and market-based PSUs that the NEOs are eligible to eabased on Company performance over a three-year performance period (collectively, the "Annual Equity Awards"). Additionally, in 2024, the Compensation Committee granted performance-based PSUs to
Our
|
43 |
2025 Proxy Statement |
Base Salary
Base salaries are integral to any competitive employment arrangement. At the beginning of each fiscal year, the Compensation Committee establishes an annual base salary for our executive officers based on recommendations made by our CEO with respect to the salaries of our other executives. Consistent with our compensation objectives and philosophy described above, the Compensation Committee sets base salary compensation, and adjusts it when warranted, based on the Company's financial performance, the individual's position and responsibility within our Company and performance in that position, the importance of the executive's position to our business, and the compensation of other executive officers of the Company with comparable qualifications, experience and responsibilities. The Committee also generally takes into account the range of salaries of executive officers with comparable qualifications, experience and responsibilities at other companies with which we compete for executive talent.
At a meeting of the Compensation Committee held on
However, while most of the affected employees, including
This reversal resulted in
As a result, the NEOs' 2024 base salaries were as follows:
|
Named Executive Officer |
2023 Base |
Percentage |
2024 Base Salary |
2024 Base Salary |
||||||||||||||||||||
|
|
1,000,000 |
- |
1,000,000 |
709,589 |
||||||||||||||||||||
|
|
410,000 |
- |
410,000 |
427,083 |
||||||||||||||||||||
|
|
405,072 |
- |
405,072 |
346,253 |
||||||||||||||||||||
|
|
350,000 |
5.9(1) |
370,700 |
380,390 |
||||||||||||||||||||
|
44 |
2025 Proxy Statement |
Short-Term Cash Incentives
2024 Bonus Program
We provide our executive officers, including our NEOs, with the opportunity to eashort-term cash incentive compensation under our bonus programs, including our VICC. The VICC program is designed to motivate and reward executives for their contribution to the Company's performance during the fiscal year. A significant portion of the total cash compensation that our executive officers are eligible to receive each year is paid through this program and thus is dependent upon corporate performance.
On
Each NEO was granted a target bonus amount (in dollars and as a percentage of base salary), with the actual incentive earned to be based on the two Company Performance Measures. In determining the target bonus amount for each NEO, the Compensation Committee considered, among other things, the executive's responsibilities and opportunity to influence the achievement of the Company Performance Measures, as well as the executive's prior contributions to the Company's performance. Each NEO's target bonus amount (in dollars and as a percentage of base salary) was as follows:
The bonus awards for 2024 were based on the two Company Performance Measures described above:
Payouts for performance between the threshold and maximum levels were subject to linear interpolation between threshold, target and maximum performance levels. Failure to meet the minimum performance threshold corresponding to a specific performance measure would have resulted in the participant not receiving any portion of the payout award related to such performance measure. In no event could a participant receive more than 100% of the target bonus related to each Company Performance Measure and, therefore, not more than 200% of the target bonus award. The Compensation Committee believes that it is appropriate to establish a maximum payout that any participant could receive under the bonus programs in order to avoid an excessive payout should Company results or individual performance significantly exceed expectations.
|
45 |
2025 Proxy Statement |
2024 Actual Bonus Program Results
The individual target bonus awards, including as a percentage of salary, for the NEOs and the amounts earned and paid in 2024 based on the level of achievement of the Company Performance Measure were as follows:
|
Named Executive Officer |
Target Cash Award as a % of Salary |
Target Cash Award Amount |
Total Annual Cash Award Earned and Paid in 2024 |
Total Cash Award Paid as a % of Target |
||||||||||||||||||||
|
|
140 |
1,400,000 |
440,440 |
31.5 |
||||||||||||||||||||
|
|
60 |
246,000 |
77,392 |
31.5 |
||||||||||||||||||||
|
|
40 |
162,029 |
50,974 |
31.5 |
||||||||||||||||||||
|
|
60 |
219,365 |
69,012 |
31.5 |
||||||||||||||||||||
2024 Sales Incentive Arrangement for Chief Revenue Officer
The Company has in place a sales incentive program for certain of its employees whose focus is on sales.
Long-Term Incentive Awards
Historically, we have compensated our executive officers, including our NEOs, with annual equity awards granted under the
|
46 |
2025 Proxy Statement |
The Compensation Committee typically grants 50% of the Annual Equity Awards in the form of time-based RSUs that vest ratably over four years and 50% in the form of market-based PSUs that the NEOs are eligible to eabased on Company performance over a three-year performance period. Additionally, in 2024, the Compensation Committee granted
|
Named Executive Officer |
Dollar Value of |
Dollar Value of |
Total Dollar Value |
Dollar Value of |
Total Dollar |
|||||||||||||||||||
|
|
903,208 |
677,410 |
1,580,618 (158%) |
419,749 |
(3) |
2,000,367 |
||||||||||||||||||
|
|
92,581 |
92,581 |
185,162 (45%) |
- |
185,162 |
|||||||||||||||||||
|
|
80,036 |
80,036 |
160,072 (40%) |
- |
160,072 |
|||||||||||||||||||
|
|
83,706 |
83,706 |
167,412 (45%) |
- |
167,412 |
|||||||||||||||||||
The Compensation Committee's process for determining the amounts of the incentive equity awards begins with a consideration of the overall dollar level of value that the Committee determines is appropriate, taking into account the estimated expense to the Company of the awards and the earnings per share impact of that expense. The Committee typically establishes an internal target for the aggregate expense from Company-wide equity awards, which, based on our review of industry data as discussed above, we believe is at the low end of the expense levels incurred by our competitors. This dollar value is then translated into a number of shares of the Company's common stock based on the current range of the stock's market price. Based on this process, the Committee established a pool of up to 937,894 RSUs and PSUs to be granted to all participants in the 2024 Employee Plan for the 2024 Annual Equity Awards. The 373,435 RSUs and PSUs granted to the NEOs in 2024 are included in this total. The Compensation Committee's delegate allocated the pool of RSUs and PSUs among the different functions throughout the Company based on the importance and performance of the function and considerations such as retention and competitive compensation levels. The Committee also considered the recommendations of our CEO with respect to the awards to other executives and employees.
|
47 |
2025 Proxy Statement |
|
Adtran's TSR Performance Relative to its |
Market-Based |
|||||
|
Less than 30th percentile |
- |
% |
||||
|
30th percentile |
25 |
% |
||||
|
35th percentile |
40 |
% |
||||
|
40th percentile |
55 |
% |
||||
|
45th percentile |
70 |
% |
||||
|
50th percentile |
85 |
% |
||||
|
55th percentile |
100 |
% |
||||
|
60th percentile |
110 |
% |
||||
|
65th percentile |
120 |
% |
||||
|
70th percentile |
130 |
% |
||||
|
75th percentile |
140 |
% |
||||
|
80th or more percentile |
150 |
% |
||||
Pursuant to earned market-based PSUs, a corresponding number of shares is issued at the end of the three-year performance period, and after that time there is no additional holding period for the shares that are issued. Prior to the suspension of the Company's dividend, the recipients of the market-based PSUs under the award agreements received dividend credits based on the shares of common stock underlying the market-based PSUs. The dividend credits are vested, earned and distributed in cash upon issuance of the shares pursuant to the earned market-based PSUs.
Integration Awards
On
|
48 |
2025 Proxy Statement |
Combination. The Compensation Committee set the synergies performance target at a level that it believes was reasonably difficult to achieve given the business environment at the time the target was established.
The participants in the Integration Bonus Plan were eligible to receive shares under the performance-based PSUs equal to a certain percentage of the participant's base salary (as of the grant date) based on the Company Synergy Achievement over the performance period. If the threshold level of Company Synergy Achievement was reached, the participants would also be eligible to receive a cash award up to 66% of their base salary (as of the grant date) based on the percentage of individual objectives related to cost savings achieved by each participant, as determined by the Compensation Committee. If the target level of Company Synergy Achievement was achieved and all of the individual objectives were achieved, the participants would eaa maximum amount under the Integration Bonus Plan equal to 132% of their base salary.
On
|
Named Executive Officer |
Dollar Value of |
Dollar Value |
Target Cash |
Actual Cash |
Cash Award Paid as a % of Target |
|||||||||||||||||||||||||
|
|
660,000 |
660,000 |
660,000 |
660,000 |
100 |
|||||||||||||||||||||||||
|
|
270,600 |
270,600 |
270,600 |
154,513 |
57.1 |
|||||||||||||||||||||||||
|
|
267,348 |
267,348 |
267,348 |
- |
- |
|||||||||||||||||||||||||
|
|
231,000 |
231,000 |
231,000 |
156,875 |
67.9 |
(2) |
||||||||||||||||||||||||
Benefits and Perquisites
We maintain general broad-based employee benefit plans in which our
|
49 |
2025 Proxy Statement |
We also maintain a Deferred Compensation Plan for our
As described in more detail under "Potential Payments Upon Termination or Change of Control" below, we provide certain benefits to participants in our equity incentive plans and our VICC program, including the NEOs, upon a change of control or upon termination of employment for specified reasons (provided, in some cases, that termination must be a "separation from service" as defined in Section 409A of the Internal Revenue Code). Each of
Employment Arrangements
Employment Agreement with
On
In addition, under the terms of the Employment Agreement,
|
50 |
2025 Proxy Statement |
agreed upon by
Under the terms of the Employment Agreement,
Service Agreements with
On
Under the terms of the Adtran Networks Service Agreements, the executives are eligible for specified termination payments and benefits in the event of a termination of their service due to death or inability to work as more specifically provided for in the Adtran Networks Service Agreements and described below under "Potential Payments Upon Termination or Change of Control." The Adtran Networks Service Agreements contain noncompetition and nondisclosure covenants applicable to the executives.
Clawback Policies
The Board previously adopted a policy providing that, in the event the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, the Company will recover incentive-based compensation paid to current or former executive officers of the Company during the three years prior to the date as of which the accounting restatement is required, to the extent that any of that compensation was based upon the erroneous data that made the restatement necessary (the "Original Clawback
|
51 |
2025 Proxy Statement |
Policy"). Under the Original Clawback Policy, incentive-based compensation includes RSUs, PSUs, and other cash or equity-based compensation awards. To implement this policy, the Board had entered into a clawback agreement with each of the NEOs providing for their agreement to such repayment.
In addition, in
On
During the third quarter of 2024, the Company identified errors primarily impacting the carrying values of the redeemable non-controlling interest, retained deficit, net income attributable to the non-controlling interest and net loss attributable to the Company and, consequently, loss per common share attributable to the Company for the periods ended
Policy Against Hedging Instruments, Pledging and Other Transactions
Under the Company'sInsider Trading Policy, Company insiders, including directors, executive officers, any employee of the Company employed at the level of Senior Vice President (or the equivalent) or higher, or any other employee who is involved in the preparation of or is reasonably expected to be exposed to the quarterly or annual financial statements of the Company prior to their public release ("Company Insiders"), as well as their family members who reside with them or who are subject to their influence or control, other members of their households, any entities controlled or managed by Company Insiders or their family and household members, and their closely associated persons, are prohibited from entering into hedging transactions involving Company securities. Additionally, they are prohibited from engaging in speculative transactions involving Company securities, short-term trading, holding Company securities in a margin account or pledging Company securities as collateral for a loan.
Policy for the Granting of Equity-Based Awards
The Board and the Compensation Committee view equity-based compensation to be a key factor in incentivizing the future performance of our executives. Consequently, the Company adopted a Policy for the Granting of Equity-Based Awards ("Equity
|
52 |
2025 Proxy Statement |
period beginning four business days before the filing of a periodic report on Form 10-Q or Form 10-K and ending one business day after the filing or furnishing of such report. Additionally, the Equity
Furthermore,the Equity
Tax Considerations
Section 162(m) of the Internal Revenue Code limits the tax deductibility of compensation over
With the enactment of the Tax Act, the Compensation Committee reviewed and assessed the impact of the law on our compensation programs and design. While the Committee may consider the deductibility of awards as one factor in determining executive compensation, the Committee also looks at other factors in making its decisions, as noted above, and believes it is important to preserve flexibility in administering its compensation program in a manner designed to promote varying corporate goals. Accordingly, where it is deemed necessary and in the best interests of the Company to attract and retain executive talent, the Committee may approve compensation that is not deductible by the Company for tax purposes.
|
53 |
2025 Proxy Statement |
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
|
COMPENSATION COMMITTEE |
|
|
|
|
|
|
|
|
|
54 |
2025 Proxy Statement |
Summary Compensation Table
The following table sets forth, for the fiscal years ended
|
|
Year |
Salary |
Bonus |
Stock |
Option |
Non-Equity |
Change in |
All Other |
Total ($) |
|||||||||||||||||||||||||||||||||
|
|
2024 |
709,589 |
- |
2,130,975 |
- |
1,100,440 |
- |
32,481 |
3,973,485 |
|||||||||||||||||||||||||||||||||
|
Chief Executive Officer |
2023 |
913,699 |
- |
4,918,164 |
- |
- |
- |
15,798 |
5,847,661 |
|||||||||||||||||||||||||||||||||
|
2022 |
865,676 |
- |
8,632,599 |
- |
963,768 |
- |
14,669 |
10,467,712 |
||||||||||||||||||||||||||||||||||
|
|
2024 |
427,083 |
- |
203,012 |
- |
231,904 |
- |
8,334 |
870,334 |
|||||||||||||||||||||||||||||||||
|
Former Senior Vice President, Chief Financial Officer, Corporate Secretary and Treasurer |
2023 |
356,705 |
- |
835,743 |
- |
- |
- |
12,833 |
1,205,281 |
|||||||||||||||||||||||||||||||||
|
|
2024 |
346,253 |
- |
175,504 |
- |
123,004 |
- |
- |
644,761 |
|||||||||||||||||||||||||||||||||
|
Chief Revenue Officer |
2023 |
387,593 |
- |
1,626,272 |
50,465 |
59,228 |
- |
13,200 |
2,136,758 |
|||||||||||||||||||||||||||||||||
|
2022 |
375,067 |
- |
567,728 |
- |
189,582 |
- |
12,200 |
1,144,577 |
||||||||||||||||||||||||||||||||||
|
|
2024 |
380,390 |
- |
183,551 |
- |
225,887 |
- |
18,204 |
808,031 |
|||||||||||||||||||||||||||||||||
|
Chief Technology Officer |
2023 |
335,377 |
- |
790,543 |
- |
- |
- |
16,713 |
1,142,633 |
|||||||||||||||||||||||||||||||||
|
2022 |
122,113 |
- |
- |
- |
- |
- |
7,288 |
129,401 |
||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||
Annual Stock Awards: Amounts for 2024 and 2023 include the aggregate grant date fair value of annual stock awards, including grants of time-based RSUs and market-based PSUs. The grant date fair values of the time-based RSUs are based on the closing price of our common stock on the grant date. The grant date fair values of the market-based PSUs are based on the probable outcome of the performance conditions as of the grant dates (taking into account a Monte Carlo simulation applicable to the market-based performance metric, or
|
55 |
2025 Proxy Statement |
Long-Term Financial Plan Stock Awards (3-year awards): Amounts for 2024, 2023 and 2022 include the aggregate grant date fair value of the performance-based PSUs granted pursuant to the 2023 Long-Term Financial Plan (the 2024 and 2023 awards) or the 2020 Long-Term Financial Plan (the 2022 awards). The grant date fair values of the performance-based PSUs are based on the closing stock price on the grant date. The maximum values of the performance-based PSUs (calculated by multiplying the maximum potential number of performance-based PSUs that could have been earned by the grant date fair value) are: for
Equity Portion of Integration Awards: Amounts for 2023 also include the aggregate grant date fair value of the performance-based PSUs granted pursuant to the Integration Bonus Plan. The grant date fair values of the performance-based PSUs are based on the closing stock price on the grant date. The maximum values of the performance-based PSUs (calculated by multiplying the maximum potential number of performance-based PSUs that could have been earned by the grant date fair value) are: for
2022 One-Time CEO Grants: With respect to
|
|
Company Contributions |
Perquisites |
Total |
|||||||||||||||
|
|
13,800 |
18,681 |
32,481 |
|||||||||||||||
|
|
7,167 |
1,167 |
8,334 |
|||||||||||||||
|
|
- |
- |
- |
|||||||||||||||
|
|
- |
18,204 |
18,204 |
|||||||||||||||
|
56 |
2025 Proxy Statement |
Grants of Plan-BasedAwards in 2024
The following table provides certain information regarding the annual cash incentive compensation and equity incentive awards granted to our NEOs during the fiscal year ended
|
Estimated Possible Payouts |
Estimated Future Payouts |
||||||||||||||||||||||||||||||||||||||||||
|
|
Grant Date |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
All Other Stock Awards Number of Shares of Stock or Units |
All Other Option Awards: Number of Securities Underlying Options |
Exercise or Base Price of Option Awards |
Grant Date Fair Value of Stock and Option Awards |
||||||||||||||||||||||||||||||||
|
|
|
1 |
1,400,000 |
2,800,000 |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||
|
|
- |
- |
- |
24,367 |
97,469 |
146,204 |
- |
- |
- |
808,019 |
|||||||||||||||||||||||||||||||||
|
|
- |
- |
- |
- |
- |
- |
129,958 |
- |
- |
903,208 |
|||||||||||||||||||||||||||||||||
|
|
- |
- |
- |
36,123 |
72,246 |
108,369 |
- |
- |
- |
419,749 |
|||||||||||||||||||||||||||||||||
|
|
|
1 |
246,000 |
492,000 |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||
|
|
- |
- |
- |
3,330 |
13,321 |
19,982 |
- |
- |
- |
110,431 |
|||||||||||||||||||||||||||||||||
|
|
- |
- |
- |
- |
- |
- |
13,321 |
- |
- |
92,581 |
|||||||||||||||||||||||||||||||||
|
|
|
1 |
162,029 |
324,058 |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||
|
|
- |
81,014 |
- |
- |
- |
- |
- |
- |
- |
- |
|||||||||||||||||||||||||||||||||
|
|
- |
- |
- |
2,879 |
11,516 |
17,274 |
- |
- |
- |
95,468 |
|||||||||||||||||||||||||||||||||
|
1/26/2024(4) |
- |
- |
- |
- |
- |
- |
11,516 |
- |
- |
80,036 |
|||||||||||||||||||||||||||||||||
|
|
1/26/2024(2) |
1 |
219,365 |
438,730 |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||
|
1/26/2024(3) |
- |
- |
- |
3,011 |
12,044 |
18,066 |
- |
- |
- |
99,845 |
|||||||||||||||||||||||||||||||||
|
1/26/2024(4) |
- |
- |
- |
- |
- |
- |
12,044 |
- |
- |
83,706 |
|||||||||||||||||||||||||||||||||
|
57 |
2025 Proxy Statement |
Outstanding Equity Awards at 2024 Fiscal Year-End
The following table sets forth information regarding all outstanding equity awards held by our NEOs as of December 31, 2024.
|
Option Awards |
Stock Awards |
|||||||||||||||||||||||||||||||||
|
|
Grant Date |
Number of |
Number of |
Equity Incentive |
Option |
Number of |
Market |
Equity |
Equity Incentive |
|||||||||||||||||||||||||
|
Thomas R. |
11/14/2015 |
94,207 |
- |
- |
15.33 |
- |
- |
- |
- |
|||||||||||||||||||||||||
|
Stanton |
11/17/2021 |
- |
- |
- |
- |
7,564 |
(4) |
63,008 |
- |
- |
||||||||||||||||||||||||
|
7/13/2022 |
- |
- |
- |
- |
38,304 |
(5) |
319,072 |
- |
- |
|||||||||||||||||||||||||
|
1/20/2023 |
- |
- |
- |
- |
- |
- |
65,359 |
(6) |
544,440 |
|||||||||||||||||||||||||
|
1/20/2023 |
- |
- |
- |
- |
65,360 |
(4) |
544,449 |
- |
- |
|||||||||||||||||||||||||
|
3/1/2023 |
- |
- |
- |
- |
- |
- |
72,246 |
(7) |
601,809 |
|||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
129,958 |
(4) |
1,082,550 |
- |
- |
|||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
- |
- |
97,469 |
(6) |
811,917 |
|||||||||||||||||||||||||
|
3/1/2024 |
- |
- |
- |
- |
- |
- |
72,246 (8) |
601,809 |
||||||||||||||||||||||||||
|
Ulrich |
5/15/2021 |
- |
61,830 |
- |
12.17 |
- |
- |
- |
- |
|||||||||||||||||||||||||
|
Dopfer |
5/15/2022 |
- |
124,641 |
- |
19.08 |
- |
- |
- |
- |
|||||||||||||||||||||||||
|
5/24/2023 |
- |
- |
- |
- |
- |
- |
8,932 |
(6) |
74,404 |
|||||||||||||||||||||||||
|
5/24/2023 |
- |
- |
- |
- |
6,699 |
(4) |
55,803 |
- |
- |
|||||||||||||||||||||||||
|
5/24/2023 |
- |
- |
- |
- |
- |
- |
60,205 |
(7) |
501,508 |
|||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
13,321 |
(4) |
110,964 |
- |
- |
|||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
- |
- |
13,321 |
(6) |
110,964 |
|||||||||||||||||||||||||
|
James D. |
11/17/2021 |
- |
- |
- |
- |
1,594 |
(4) |
13,278 |
- |
- |
||||||||||||||||||||||||
|
Wilson, Jr. |
1/20/2023 |
- |
- |
- |
- |
- |
- |
8,825 |
(6) |
73,512 |
||||||||||||||||||||||||
|
1/20/2023 |
- |
- |
- |
- |
6,619 |
(4) |
55,136 |
- |
- |
|||||||||||||||||||||||||
|
3/1/2023 |
- |
- |
- |
- |
- |
- |
60,205 |
(7) |
501,508 |
|||||||||||||||||||||||||
|
12/1/2023 |
8,439 |
(9) |
8,439 |
(9) |
- |
5.23 |
- |
- |
- |
- |
||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
11,516 |
(4) |
95,928 |
- |
- |
|||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
- |
- |
11,516 |
(6) |
95,928 |
|||||||||||||||||||||||||
|
Christoph |
5/15/2020 |
41,220 |
- |
- |
7.01 |
- |
- |
- |
- |
|||||||||||||||||||||||||
|
Glingener |
5/15/2021 |
- |
107,172 |
- |
12.17 |
- |
- |
- |
- |
|||||||||||||||||||||||||
|
5/15/2022 |
- |
85,383 |
- |
19.08 |
- |
- |
- |
- |
||||||||||||||||||||||||||
|
5/24/2023 |
- |
- |
- |
- |
- |
- |
7,625 |
(6) |
63,516 |
|||||||||||||||||||||||||
|
5/24/2023 |
- |
- |
- |
- |
5,719 |
(4) |
47,639 |
- |
- |
|||||||||||||||||||||||||
|
5/24/2023 |
- |
- |
- |
- |
- |
- |
60,205 |
(7) |
501,508 |
|||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
12,044 |
(4) |
100,327 |
- |
- |
|||||||||||||||||||||||||
|
1/26/2024 |
- |
- |
- |
- |
- |
- |
12,044 |
(6) |
100,327 |
|||||||||||||||||||||||||
|
58 |
2025 Proxy Statement |
|
59 |
2025 Proxy Statement |
Option Exercises and Stock Vested in 2024
The following table sets forth information with respect to stock options that were exercised by the NEOs, PSUs that were earned, and time-based RSUs that vested during the fiscal year ended December 31, 2024.
|
Option Awards |
Stock Awards |
||||||||||||||||||||
|
|
Number |
Value |
Number |
Value |
|||||||||||||||||
|
|
- |
- |
277,886 |
1,914,320 |
|||||||||||||||||
|
|
- |
- |
18,524 |
179,728 |
|||||||||||||||||
|
|
- |
- |
28,976 |
264,181 |
|||||||||||||||||
|
|
- |
- |
15,813 |
153,426 |
|||||||||||||||||
Equity Compensation Plans
2015 Employee Stock Incentive Plan
In 2015, we adopted the
Change of Control and Other Transactions.Upon a corporate transaction, including a change of control (as defined in the 2015 Employee Plan), the Compensation Committee may make appropriate adjustments to the shares available for, and the exercise price and/or base value of, awards and other actions it deems appropriate including, without limitation, providing that awards will be: (i) substituted for equivalent awards; (ii) upon reasonable prior written notice, terminated without payment if not exercised within a certain period (for stock options) or terminated if not accepted within a certain period (for time-based RSUs); (iii) terminated in exchange for payment; (iv) fully vested and exercisable; and/or (v) with respect to PSUs, issued based on the higher of the actual attainment of the performance targets or the participant's target award. See "Potential Payments Upon Termination or Change of Control."
Amendment and Termination.The Board may amend or terminate any award agreement entered into pursuant to the 2015 Employee Plan at any time. However, no amendment may adversely affect the rights of holders of outstanding awards without their consent, and no award agreement may be amended to reprice any award.
2020 Employee Stock Incentive Plan
In 2020, we adopted the
|
60 |
2025 Proxy Statement |
Change of Control and Other Transactions.Upon a corporate transaction, including a change of control, the Committee may make appropriate adjustments to the shares available for, and the exercise price and/or base value of, awards and other actions it deems appropriate including, without limitation, providing that awards will be: (i) substituted for equivalent awards; (ii) upon reasonable prior written notice, terminated without payment if not exercised within a certain period (for stock options and SARs) or terminated if not accepted within a certain period (for restricted stock and RSUs); (iii) terminated in exchange for payment; (iv) fully vested and exercisable; and/or (v) with respect to performance-based awards, settled based on the higher of the actual attainment of the performance targets or the participant's target award.
Amendment and Termination.The Board may amend or terminate any award agreement entered into pursuant to the 2020 Employee Plan at any time. However, no amendment may adversely affect a participant's rights or benefits under an award without such participant's consent, and no award agreement may be amended to reprice any award.
2020 Directors Stock Plan
In 2020, we adopted the
Change of Control and Other Transactions.Upon a corporate transaction, including a change of control, the Committee may make appropriate adjustments to the shares available for, and the exercise price of, awards and other actions it deems appropriate including, without limitation, providing that awards will be: (i) substituted for equivalent awards; (ii) upon reasonable prior written notice, terminated without payment if not exercised within a certain period (for stock options) or terminated if not accepted within a certain period (for restricted stock and RSUs); (iii) terminated in exchange for payment; (iv) fully vested and exercisable; and/or (v) with respect to performance-based awards, settled based on the higher of the actual attainment of the performance targets or the participant's target award.
Amendment and Termination.The Board may amend or terminate any award agreement entered into pursuant to the 2020 Directors Plan at any time. However, no amendment may adversely affect a participant's rights or benefits under an award without such participant's consent, and no award agreement may be amended to reprice any award.
2024 Employee Stock Incentive Plan
The Board of Directors adopted the
Administration.Under the 2024 Employee Plan, the Board appoints a committee to administer the 2024 Employee Plan, which committee must consist solely of non-employee directors. The Board has appointed the Compensation Committee, all of whose members qualify as non-employee directors, to administer the 2024 Employee Plan. Among other powers and duties, the Committee has the authority to interpret the 2024 Employee Plan, to prescribe, amend, and rescind rules and regulations relating to the 2024 Employee Plan, to determine the terms and provisions of award agreements, and to make all other determinations necessary or advisable for the administration of the 2024 Employee Plan. With respect to awards to non-officer employees and service providers, the Plan authorizes the Company's CEO to grant awards using the form of award agreement approved by the Committee.
|
61 |
2025 Proxy Statement |
Common Stock Subject to Awards; Maximum Limit.The stock underlying awards under the 2024 Employee Plan is our common stock. The total aggregate shares of common stock authorized for issuance during the term of the 2024 Employee Plan is limited to 3,970,058 shares, subject to adjustment in connection with awards previously granted under the Company's prior equity incentive plans as described below, with no more than 1,000,000 shares awarded to any participant during any calendar year, subject to adjustment as provided in the 2024 Employee Plan. All such shares that are available for issuance under the 2024 Employee Plan can be used to grant incentive stock options ("ISOs"). Common stock subject to awards and other provisions of the 2024 Employee Plan shall consist of the following: (i) authorized but unissued shares of common stock; (ii) authorized and issued shares of common stock held by the Company in its treasury which have been reacquired by the Company; and (iii) shares of common stock purchased by the Company in the open market.
If an award under the 2024 Employee Plan or the Company's prior equity incentive plans is cancelled, terminates, expires without exercise, is forfeited or lapses, the shares retained or returned to the Company will again be available for issuance under the 2024 Employee Plan. The 2024 Employee Plan prohibits "liberal share recycling," in that the following shares shall not again become available for issuance: (i) the total number of stock options or stock appreciation rights ("SARs") that have been exercised, regardless of whether any of the shares of common stock underlying such awards are not actually issued as the result of a net settlement, (ii) the total number of shares underlying any stock-settled SAR that has been exercised regardless of whether a lesser number of shares have been delivered, (iii) any shares used to pay any exercise price on any award that is subject to exercise, (iv) any shares used to satisfy tax withholding obligations and (v) any shares repurchased by the Company on the open market using proceeds from the exercise of any award.
Adjustments.The Committee will make appropriate and proportional adjustments to the number and kind of shares available for, and the exercise price and/or base value of, awards to reflect any change in our capital structure by reason of a stock split, stock dividend, reclassification or other recapitalization affecting the common stock. The Committee (or, for participants other than officers, the Company's CEO) also has the power, in connection with a participant's separation from service, to accelerate vesting of outstanding awards or allow continued vesting and exercise of outstanding awards over their original vesting and exercise period.
Types of Awards.The 2024 Employee Plan permits grants of ISOs, nonqualified stock options ("NQSOs"), SARs, restricted stock and RSUs. Each award is subject to an award agreement approved by the Committee reflecting the terms and conditions of the award.
Performance-Based Awards.Awards under the 2024 Employee Plan may be subject to certain performance measures and the Committee must certify attainment of the performance measures before any payment of the award is made. Unless the Committee specifies otherwise in the award agreement or approved by separate action of the Committee (or CEO) as described under Adjustments above, if restricted stock or RSUs are subject to performance-based vesting, then upon the participant's death or disability, or upon a change of control, a portion of the award becomes immediately vested on a pro-rata basis (based on the portion of the performance period that has elapsed), as if the performance measures had been achieved at target.
Corporate Transaction; Change of Control.Unless otherwise provided in an award agreement, upon a corporate transaction, including a change of control, (i) all outstanding stock options and SARs shall become immediately exercisable with respect to 100% of the shares subject to such stock options or SARs, and any restrictions applicable to outstanding Restricted Stock or RSUs shall expire immediately with respect to 100% of the outstanding shares of Restricted Stock or RSUs and (ii) with respect to performance-based awards, any incomplete performance periods shall end on the date of such transaction and the awards shall be settled based on the higher of the actual attainment of the performance targets or the participant's target award, except that any award will be pro-rated based on the number of days that the participant was employed between the beginning of the performance period and the date of such transaction. The Committee also may (i) make provision for outstanding awards to be substituted for equivalent awards or (ii) cancel outstanding awards in exchange for payment. In the case of an award having an exercise price
|
62 |
2025 Proxy Statement |
equal to or greater than the fair market value of the consideration to be paid per share of common stock in the change of control, the Committee may cancel the stock option or SAR without payment of consideration to the applicable participant.
Clawbacks.Awards are subject to a general clawback right as provided by Company policies, as required by law, as set forth in an award agreement or other agreement, or where the Committee determines that the participant has violated certain financial or ethical requirements or been terminated for "Cause."
Amendment and Termination.The Board shall have the power at any time to amend, modify, or repeal any provisions of the 2024 Employee Plan, to suspend the operation of the 2024 Employee Plan or any of its provisions for any period or periods, or to terminate the 2024 Employee Plan in whole or in part. Notwithstanding the foregoing, the addition, amendment, modification, repeal, suspension or termination shall not adversely affect the rights of a participant who has an outstanding award without the consent of the participant. No modification or amendment of the 2024 Employee Plan may be made without the prior approval of the Company's stockholders if such approval is necessary with respect to tax, securities or other applicable laws or rules or regulations of any stock exchange.
Term.The 2024 Employee Plan became effective upon stockholder approval at the 2024 Annual Meeting of Stockholders. Unless earlier terminated by the Board, the 2024 Employee Plan will remain in effect until the tenth (10th) anniversary of the effective date, or May 8, 2034.
2024 Directors Stock Plan
The Board of Directors adopted the
Administration.Under the 2024 Directors Plan, the Board appoints a committee to administer the 2024 Directors Plan, which committee must consist solely of non-employee directors. The Board has appointed the Compensation Committee, all of whose members qualify as non-employee directors, to administer the 2024 Directors Plan. Among other powers and duties, the Committee has the authority to interpret the 2024 Directors Plan, to prescribe, amend, and rescind rules and regulations relating to the 2024 Directors Plan, to determine the terms and provisions of award agreements, and to make all other determinations necessary or advisable for the administration of the 2024 Directors Plan.
Common Stock Subject to Awards; Maximum Limit.The stock underlying awards under the 2024 Directors Plan is our common stock. The total aggregate shares of common stock authorized for issuance during the term of the 2024 Directors Plan is limited to 655,000 shares, subject to adjustment in connection with awards previously granted under the Company's prior equity incentive plans as described below. Common stock subject to awards and other provisions of the 2024 Directors Plan shall consist of the following: (i) authorized but unissued shares of common stock; (ii) authorized and issued shares of common stock held by the Company in its treasury which have been reacquired by the Company; and (iii) shares of common stock purchased by the Company in the open market.
|
63 |
2025 Proxy Statement |
If an award under the Company's prior equity incentive plans is cancelled, terminates, expires without exercise, is forfeited or lapses, the shares retained or returned to the Company will again be available for issuance under the 2024 Directors Plan. The 2024 Directors Plan prohibits "liberal share recycling," in that the following shares shall not again become available for issuance: (i) the total number of stock options that have been exercised, regardless of whether any of the shares of common stock underlying such awards are not actually issued as the result of a net settlement, (ii) any shares used to pay any exercise price on any award that is subject to exercise, (iii) any shares used to satisfy tax withholding obligations and (iv) any shares repurchased by the Company on the open market using proceeds from the exercise of any award.
Adjustments.The Committee will make appropriate and proportional adjustments to the number and kind of shares available for, and the exercise price of, awards to reflect any change in our capital structure by reason of a stock split, stock dividend, reclassification or other recapitalization affecting the common stock. The Committee also has the power, in connection with a director's termination of service, to accelerate vesting of outstanding awards or allow continued vesting of outstanding awards over their original vesting period.
Types of Awards.The Committee, in its discretion, may award stock options, restricted stock and restricted RSUs under the 2024 Directors Plan. Each award is subject to an award agreement approved by the Committee reflecting the terms and conditions of the award.
Corporate Transaction; Change of Control.Unless otherwise provided in an award agreement, upon a corporate transaction, including a change of control, (i) all outstanding stock options shall become immediately exercisable with respect to 100% of the shares subject to such stock options, and any restrictions applicable to outstanding Restricted Stock or RSUs shall expire immediately with respect to 100% of the outstanding shares of Restricted Stock or RSUs and (ii) with respect to performance-based awards, any incomplete performance periods shall end on the date of such transaction and the awards shall be settled based on the higher of the actual attainment of the performance targets or the participant's target award, except that any award will be pro-rated based on the number of days that the participant was employed between the beginning of the performance period and the date of such transaction. The Committee also may (i) make provision for outstanding awards to be substituted for equivalent awards or (ii) cancel outstanding awards in exchange for payment. In the case of an award having an exercise price equal to or greater than the fair market value of the consideration to be paid per share of common stock in the change of control, the Committee may cancel the stock option without payment of consideration to the applicable participant.
Clawbacks.Awards are subject to a general clawback right as provided by Company policies, as required by law, as set forth in an award agreement or other agreement, or where the Committee determines that the participant has violated certain financial or ethical requirements or been terminated for "Cause."
Amendment and Termination. The Board shall have the power at any time to amend, modify, or repeal any provisions of the 2024 Directors Plan, to suspend the operation of the 2024 Directors Plan or any of its provisions for any period or periods, or to terminate the 2024 Directors Plan in whole or in part. Notwithstanding the foregoing, the addition, amendment, modification, repeal, suspension or termination shall not adversely affect the rights of a participant who has an outstanding award without the consent of the participant. No modification or amendment of the 2024 Directors Plan may be made without the prior approval of the Company's stockholders if such approval is necessary with respect to tax, securities or other applicable laws or rules or regulations of any stock exchange.
Term.The 2024 Directors Plan became effective upon stockholder approval at the 2024 Annual Meeting of Stockholders. Unless earlier terminated by the Board, the 2024 Directors Plan will remain in effect until the tenth (10th) anniversary of the effective date, or May 8, 2034.
|
64 |
2025 Proxy Statement |
Nonqualified Deferred Compensation in 2024
The following table sets forth information regarding the deferred compensation plans in which our NEOs participated in 2024.
|
|
Executive |
Registrant |
Aggregate |
Aggregate |
Aggregate |
||||||||||||||||||||
|
|
- |
- |
4,748,533 |
- |
27,713,642 |
||||||||||||||||||||
|
|
- |
- |
- |
- |
- |
||||||||||||||||||||
|
|
- |
- |
20,850 |
- |
164,292 |
||||||||||||||||||||
|
|
- |
- |
- |
- |
- |
||||||||||||||||||||
We maintain the
The Deferred Compensation Plan is offered as a supplement to our tax-qualified 401(k) plan and allows participants to defer a portion of their salaries and all or a portion of their annual VICC and equity awards and permits us to make matching contributions on a discretionary basis, without the limitations that apply to the 401(k) plan. To date, we have not made any matching contributions under this plan. All contributions are unfunded and are credited to bookkeeping accounts for the participants, although we have set aside assets in a rabbi trust to pay for the benefits under the Deferred Compensation Plan. Each participant's account is credited with earnings as if the account were invested as elected by the participant among pre-approved mutual funds and, subject to the Insider Trading Policy, participants may adjust such elections at their discretion. Benefits are usually distributed or begin to be distributed on the first day of the month following the six-month anniversary of the participant's separation from service. Benefits will be paid in a single lump sum cash payment, and any deferred stock awards will be paid in whole shares of Adtran common stock with fractional shares paid in cash; however, a participant may, in some cases, elect to receive a portion of his or her benefit in installments paid over three or ten years.
Under the Deferred Compensation Plan, participants are entitled to receive their benefits upon termination of employment (provided the termination is a "separation from service" as defined in Section 409A of the Internal Revenue Code). The amount they receive is based on their account balance, which would consist of their contributions to the plan and any earnings as described above. Benefits are not payable from the plan until the first day of the month following the six-month anniversary of the participant's separation from service.
|
65 |
2025 Proxy Statement |
Potential
This section describes the limited benefits that would be provided to our NEOs under our executive compensation arrangements upon a change of control of the Company or following termination of employment (provided, in some cases further described below, the termination must be a "separation from service" as defined in Section 409A of the Internal Revenue Code). We also provide tables below showing the potential benefits payable to each of our NEOs upon a change of control of the Company or following termination of employment as of December 31, 2024.
Discussion of Potential Benefits Under Various Arrangements
Cash Incentive Compensation
Under the Company's annual variable incentive compensation ("VICC") programs, which are established pursuant to the Company's Variable Incentive Compensation Plan, a plan participant must be employed by the Company through the date that payment of an award is scheduled to be made for a plan year to be eligible to receive any award for such year. If a termination of employment for any reason occurred on December 31, 2024, the executive would be disqualified from the VICC program for 2024 and any VICC would be forfeited unless otherwise provided in an employment or service agreement. In the event of a change of control of the Company, each executive will receive an immediate lump sum cash payment of the VICC award in an amount consistent with the expected level of achievement and for a proportionate share of the annualized amount for the part-year period ending on the change of control event. See "Elements of 2024 Executive Compensation-Short-Term Cash Incentives-2024 Bonus Program" above for a description of how the appropriate payment and benefit levels were determined under the VICC program for 2024.
Under
Incentive Plans
Under our 2015 Employee Plan and 2020 Employee Plan, all awards (or portions thereof) that remain unexercisable or unvested upon a participant's termination of employment for any reason (provided the termination is a "separation from service" as defined in Section 409A of the Internal Revenue Code) shall be forfeited by the participant immediately upon the date of such termination, unless the Compensation Committee decides otherwise. With respect to outstanding PSU awards, unless otherwise provided in an award agreement, upon a termination of employment for any reason, a pro rata portion of the shares subject to such award shall be deemed earned equal to the target number of shares multiplied by a fraction, the numerator of which equals the number of days elapsed from the grant date to the date of the applicable acceleration event and the denominator of which equals the days in the performance period. Under our 2015 Employee Plan and 2020 Employee Plan, if there is a change in control, then any outstanding awards shall immediately become fully exercisable or vested unless otherwise provided in an award, employment or service agreement.
Under our 2024 Employee Plan, all awards (or portions thereof) that remain unexercisable or unvested upon a participant's termination of employment for any reason (provided the termination is a "separation from service" as defined in Section 409A of the Internal Revenue Code) shall be forfeited by the participant immediately upon the date of such termination, unless the Compensation Committee decides otherwise. With respect to outstanding PSU awards, unless otherwise provided in an award, employment or service agreement, upon a termination of employment for any reason, a pro rata portion of the shares subject to such award shall be deemed earned equal to the target number of
|
66 |
2025 Proxy Statement |
shares multiplied by a fraction, the numerator of which equals the number of days elapsed from the grant date to the date of the applicable acceleration event and the denominator of which equals the days in the performance period. Unless otherwise provided in an award agreement, upon a corporate transaction, including a change of control, (i) all outstanding stock options and SARs shall become immediately exercisable with respect to 100% of the shares subject to such stock options or SARs, and any restrictions applicable to outstanding restricted stock or RSUs shall expire immediately with respect to 100% of the outstanding shares of restricted stock or RSUs. and (ii) with respect to performance-based awards, any incomplete performance periods shall end on the date of such transaction and the awards shall be settled based on the higher of the actual attainment of the performance target or the participant's target award, except that any award will be pro-rated based on the number of days that the participant was employed between the beginning of the performance period and the date of such transaction.
Pursuant to the award agreements approved in October 2024, the NEOs shall no longer be entitled to any accelerated vesting of their market-based PSUs or time-based RSUs upon a change of control unless, within 24 months following the change of control, they experience an involuntary separation from service without cause.
Employment Agreements and Service Agreements
Under the terms of his Employment Agreement,
Under the terms of their Service Agreements with Adtran Networks, each of
|
67 |
2025 Proxy Statement |
Tables Quantifying Potential Benefits for the NEOs
The following tables set forth the potential benefits payable to the NEOs pursuant to the arrangements described above, assuming a termination of employment or a change of control had occurred on December 31, 2024. The tables do not include: (i) compensation or benefits previously earned by the NEOs and paid or equity incentive awards that were already fully vested prior to December 31, 2024; (ii) the amounts payable under the Deferred Compensation Plan that are disclosed in the table entitled "Nonqualified Deferred Compensation in 2024" above; or (iii) the value of any benefits (such as retiree health coverage, life insurance and disability coverage) provided on the same basis to substantially all other employees.
Additional information applicable to all of the tables quantifying potential benefits for the NEOs includes:
Potential Benefits Upon a Termination by the Company Without Cause or by the NEO for Good Reason
In the event of a termination of
In the event of a termination of
|
68 |
2025 Proxy Statement |
March 1, 2023. Additionally,
Upon a termination of employment by the Company without "Cause" or by the NEO for "Good Reason" on December 31, 2024, the NEOs (other than
|
|
Cash |
PSUs |
Time-based |
Stock |
Total |
||||||||||||||||||||
|
|
5,946,350 |
1,390,443 |
2,009,079 |
- |
9,345,873 |
||||||||||||||||||||
|
|
641,904 |
67,852 |
- |
- |
709,756 |
||||||||||||||||||||
|
|
11,138 |
67,040 |
- |
- |
78,178 |
||||||||||||||||||||
|
|
591,495 |
57,923 |
- |
- |
649,418 |
||||||||||||||||||||
Potential Benefits Upon a Termination Due to Death
In the event of a termination of
In the event of a termination of
|
69 |
2025 Proxy Statement |
In the event of a termination of
Upon a termination of employment due to death on December 31, 2024, the NEOs (other than
|
|
Cash |
PSUs |
Time-based |
Stock |
Total |
||||||||||||||||||||
|
|
1,100,440 |
1,390,443 |
2,009,079 |
- |
4,499,963 |
||||||||||||||||||||
|
|
334,404 |
86,420 |
- |
- |
420,825 |
||||||||||||||||||||
|
|
11,138 |
86,402 |
- |
26,161 |
123,701 |
||||||||||||||||||||
|
|
317,289 |
74,208 |
- |
- |
391,497 |
||||||||||||||||||||
Potential Benefits Upon a Termination Due to Disability or Inability to Work
In the event of a termination of
In the event of a termination of
In the event of a termination of
Upon a termination of employment due to disability on December 31, 2024, the NEOs (other than
|
70 |
2025 Proxy Statement |
unvested stock options is based on the difference between the closing price of our common stock on Nasdaq on December 31, 2024 ($8.33) and the exercise price of the applicable stock options. No value is included for unvested stock options that were underwater as of December 31, 2024.
|
|
Cash |
PSUs |
Time-based |
Stock |
Total |
||||||||||||||||||||
|
|
1,146,350 |
1,390,443 |
2,009,079 |
- |
4,545,873 |
||||||||||||||||||||
|
|
359,513 |
86,420 |
- |
- |
445,933 |
||||||||||||||||||||
|
|
11,138 |
86,402 |
- |
26,161 |
123,701 |
||||||||||||||||||||
|
|
339,679 |
74,208 |
- |
- |
413,887 |
||||||||||||||||||||
Potential Benefits Upon a Termination Due to Retirement
In the event of a termination of
In the event of a termination of
|
71 |
2025 Proxy Statement |
Upon a termination of employment due to retirement on December 31, 2024, the NEOs (other than
|
|
Cash |
PSUs |
Time-based |
Stock |
Total |
||||||||||||||||||||
|
|
1,146,350 |
1,390,443 |
2,009,079 |
- |
4,545,873 |
||||||||||||||||||||
|
|
231,904 |
67,852 |
- |
- |
299,756 |
||||||||||||||||||||
|
|
11,138 |
67,040 |
- |
- |
78,178 |
||||||||||||||||||||
|
|
225,887 |
57,923 |
- |
- |
283,809 |
||||||||||||||||||||
Potential Benefits Upon a Change of Control
Pursuant to
In the event of a change of control of the Company on December 31, 2024, each of the NEOs (other than
Upon a change of control of the Company on December 31, 2024, the NEOs (other than
|
72 |
2025 Proxy Statement |
|
|
Cash |
PSUs |
Time-based |
Stock |
Total |
||||||||||||||||||||
|
|
- |
- |
- |
- |
- |
||||||||||||||||||||
|
|
231,904 |
355,020 |
166,767 |
- |
753,690 |
||||||||||||||||||||
|
|
62,112 |
393,438 |
164,343 |
26,161 |
646,054 |
||||||||||||||||||||
|
|
225,887 |
342,807 |
147,966 |
- |
716,660 |
||||||||||||||||||||
Potential Benefits Upon a Termination by the Company Without Cause or by the NEO for Good Reason in connection with a Change of Control
The amounts presented in the following table assume that a termination by the Company without cause or by the NEO for good reason occurred on December 31, 2024, in connection with a change of control occurring no more than 24 months before such date. The NEOs other than
In the event of such a termination,
|
73 |
2025 Proxy Statement |
In the event of a termination of
|
|
Cash |
PSUs |
Time-based |
Stock |
Total |
||||||||||||||||||||
|
|
8,346,350 |
2,725,472 |
2,009,079 |
- |
13,080,902 |
||||||||||||||||||||
|
|
410,000 |
- |
- |
- |
410,000 |
||||||||||||||||||||
|
|
- |
- |
- |
- |
- |
||||||||||||||||||||
|
|
365,608 |
- |
- |
- |
365,608 |
||||||||||||||||||||
|
74 |
2025 Proxy Statement |
Pay Versus Performance
In accordance with rules adopted by the
|
Value of Initial Fixed $100 Investment based on:(4) |
||||||||||||||||||||||||||||||||||||||||
|
Year |
Summary Compensation Table Total for |
Compensation Actually Paid to PEO(1)(2)(3) |
Average Summary Compensation Table Total for Non-PEO NEOs(1) |
Average |
TSR |
|
Net Income |
Adjusted |
||||||||||||||||||||||||||||||||
|
2024 |
3,973,485 |
3,876,710 |
774,375 |
861,970 |
92.62 |
123.93 |
(441.0 |
) |
3.2 |
|||||||||||||||||||||||||||||||
|
2023 |
5,847,661 |
(3,434,422 |
) |
1,291,473 |
(349,239 |
) |
81.62 |
114.43 |
(259.3 |
) |
(9.9 |
) |
||||||||||||||||||||||||||||
|
2022 |
10,467,712 |
9,153,853 |
1,110,338 |
1,053,973 |
203.51 |
100.08 |
(8.9 |
) |
52.2 |
|||||||||||||||||||||||||||||||
|
2021 |
4,515,356 |
6,565,639 |
1,155,022 |
1,381,134 |
243.02 |
131.83 |
(8.6 |
) |
11.3 |
|||||||||||||||||||||||||||||||
|
2020 |
2,898,033 |
4,106,999 |
900,561 |
1,059,643 |
154.37 |
124.19 |
2.4 |
10.8 |
||||||||||||||||||||||||||||||||
|
2024 |
2023 |
2022 |
2021 |
2020 |
||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
|
|
|
|
|||||
|
|
|
Year |
Summary Compensation |
Exclusion of |
Inclusion of |
Compensation |
||||||||||||||||
|
2024 |
3,973,485 |
(2,130,975 |
) |
2,034,200 |
3,876,710 |
|||||||||||||||
|
Year |
Average Summary |
Average Exclusion of |
Average Inclusion of |
Average Compensation |
||||||||||||||||
|
2024 |
774,375 |
(187,356 |
) |
274,951 |
861,970 |
|||||||||||||||
|
75 |
2025 Proxy Statement |
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
|
Year |
Year-End |
Change in Fair Value |
Vesting-Date Fair |
Change in Fair Value |
Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for |
Total - Inclusion of |
||||||||||||||||||
|
2024 |
2,128,124 |
110,113 |
- |
(204,037 |
) |
- |
2,034,200 |
|||||||||||||||||
|
Year |
Average Year-End |
Average Change in |
Average Vesting- |
Average Change in |
Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs |
Total - Average |
||||||||||
|
($) |
||||||||||||||||
|
2024 |
234,284 |
40,823 |
- |
(156) |
- |
274,951 |
||||||||||
|
76 |
2025 Proxy Statement |
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Total Shareholder Retu("TSR")
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, the cumulative TSR of the Company over the five most recently completed fiscal years, and the NASDAQ Telecommunications Index TSR over the same period.
|
77 |
2025 Proxy Statement |
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our net income during the five most recently completed fiscal years.
|
78 |
2025 Proxy Statement |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Adjusted EBIT
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and Adjusted EBIT during the five most recently completed fiscal years.
Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our PEO and other NEOs for 2024 to Company performance. The measures in this table are not ranked.
|
Adjusted EBIT |
|
Gross Margin |
|
Relative TSR |
|
79 |
2025 Proxy Statement |
Pay Ratio
As required by
Based on this information, for 2024, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was approximately 50 to 1. Below is a description of the methodology and the material assumptions, adjustments and estimates that we used to identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the median employee. We believe that this information is useful to put into context the ratio comparing the annual total compensation of the median employee in our Company with the annual total compensation of our CEO.
We determined that, as of December 31, 2024, our employee and service provider population, full and part time, consisted of approximately 3,234 individuals working at the Company and our consolidated subsidiaries. Given our global business, our workforce is distributed among a number of countries and regions. Of those, approximately 35% of these employees are located in
We measured compensation using the 12-month period ended December 31, 2024. Our compensation programs vary from region to region and, among our various consolidated subsidiaries in each region, from country to country. Our employees are compensated on either a salaried basis or an hourly basis. In addition, some employees receive equity incentive awards, sales incentives and/or bonuses. We included salary or hourly wages, as applicable, as well as any equity incentive awards granted, and bonuses and sales incentives earned for 2024 in our measurement to determine the median of the annual total compensation of all our employees.
Our workforce includes a number of part-time employees and service provider/contractor employees. In making our determination of the median employee, we did not annualize the compensation of part-time employees, temporary employees or employees who were hired in 2024 but did not work for us or our consolidated subsidiaries for the entire fiscal year. We also did not make any cost-of-living adjustments in identifying the median employee. For purposes of this disclosure, we applied foreign currency to
Using this methodology, we determined that the median employee was a full-time, salaried employee located in
|
80 |
2025 Proxy Statement |
2024 Director Compensation
The table below sets forth information regarding compensation paid to our directors for 2024.
|
|
Fees Earned |
Stock |
All Other |
Total |
|||||||||||||||||||
|
|
126,875 |
120,002 |
- |
246,877 |
|||||||||||||||||||
|
|
73,125 |
120,002 |
- |
193,127 |
|||||||||||||||||||
|
|
73,125 |
120,002 |
- |
193,127 |
|||||||||||||||||||
|
|
50,625 |
- |
- |
50,625 |
|||||||||||||||||||
|
|
88,125 |
120,002 |
- |
208,127 |
|||||||||||||||||||
|
|
93,125 |
120,002 |
- |
213,127 |
|||||||||||||||||||
|
|
88,125 |
120,002 |
- |
208,127 |
|||||||||||||||||||
In 2024, each of our non-employee directors received an annual cash retainer of $90,000 for service as a director, payable quarterly in advance. The Lead Director received an additional $30,000, the chairperson of the Audit Committee received an additional $25,000, the chairperson of the Compensation Committee received an additional $20,000, and the chairperson of each of the Nominating and Corporate Governance Committee and the ESG Committee received an additional $15,000. Such amounts are pro-rated based on the actual length of service in these positions during 2024. Directors who are employees of the Company receive no directors' fees. All directors are reimbursed for their reasonable expenses in connection with the performance of their duties.
Our non-employee directors were entitled to participate in the 2024 Directors Plan, which our stockholders approved at the 2024 Annual Meeting of Stockholders. Upon initially joining the Board, a new director will receive an initial award equal to 50% of the value of the annual equity grant made in the calendar year prior to the calendar year in which the new director joins the Board, or a lesser amount as determined in the discretion of our Board. The initial grant will be in addition to any annual grant. Grants under the 2024 Directors Plan are in the form of restricted stock unless our Board (upon recommendation from the Compensation Committee) determines to grant awards in the form of RSUs or nonqualified stock options.
Awards granted under the 2024 Directors Plan (whether in the form of restricted stock, RSUs or nonqualified stock options) vest in full on the first anniversary of the grant date, unless the vesting schedule is varied by the Compensation Committee in the director's award agreement. Any cash dividends paid on the Company's common stock during the restricted period are credited to the director's account and paid in additional shares at the time of vesting. Unvested shares of restricted stock vest immediately upon a change of control of the Company or if the director's service is terminated due to death or disability. In the event of a director's "separation from service," such director's rights with regard to all unvested shares of restricted stock cease immediately. The Compensation Committee may in its discretion accelerate the vesting of the unvested restricted stock or permit continued vesting on the vesting schedule set forth in the award agreement.
|
81 |
2025 Proxy Statement |
Certain Relationships and
Related Person Transactions
Policies and Procedures for Review and Approval of Related Person Transactions
We believe that business decisions and actions taken by our officers, directors and employees should be based on the best interests of the Company and must not be motivated by personal considerations or relationships. We attempt to analyze all transactions in which the Company participates and in which a related person may have a direct or indirect material interest, both due to the potential for a conflict of interest and to determine whether disclosure of the transaction is required under applicable
Related persons include any of our directors or executive officers, certain of our stockholders and their immediate family members. A conflict of interest occurs when an individual's private interest interferes with or appears to interfere in any way with the interests of the Company. Our Code of Business Conduct and Ethics requires all directors, officers and employees to report certain conflicts of interest to the Director of Internal Audit and to consult the Director of Internal Audit or the Vice President of Human Resources if they are unsure of a potential conflict of interest. Such an individual will then generally consult with the Audit Committee, and a determination will be made as to whether the activity is permissible. A copy of our Code of Business Conduct and Ethics is available in the "Governance" section of our website athttps://investors.adtran.com.
In addition to the reporting requirements under the Code of Business Conduct and Ethics, each year our directors and officers complete Directors' and Officers' Questionnaires identifying any transactions with us in which the officer or director or their family members have an interest. A list is then maintained by us of all companies known to us that are affiliated with a related person. Any potential transactions with such companies or other related party transactions are reviewed by the Chief Financial Officer and brought to the attention of the Audit Committee as appropriate. Our Audit Committee is responsible for reviewing and approving all material transactions with any related person.
Related Person Transactions Entered into by the Company
Since January 1, 2024, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 and in which any related person had or will have a direct or indirect material interest.
|
82 |
2025 Proxy Statement |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act, and regulations of the
|
83 |
2025 Proxy Statement |
Audit Committee Report
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the accuracy and integrity of Adtran's financial reporting. Our Board of Directors has adopted an Audit Committee Charter, which sets forth the responsibilities of the Audit Committee. A copy of the Audit Committee Charter is available in the "Governance" section of our website at https://investors.adtran.com.
The Audit Committee reviewed and discussed with management and
The Audit Committee has actively reviewed management's assessment of the effectiveness of the Company's internal control over financial reporting (including management's evaluation of identified control deficiencies and management's program for remediation of those deficiencies) and
The Audit Committee also received the written disclosures and the letter from
Based upon the Audit Committee's review of the audited financial statements and the discussions noted above, the Audit Committee recommended that the Board of Directors include the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024, for filing with the
|
AUDIT COMMITTEE |
|
|
|
|
|
|
|
|
|
84 |
2025 Proxy Statement |
Proposal 2
Advisory Vote Regarding Compensation of
Our Named Executive Officers
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we provide our stockholders with the opportunity to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers ("NEOs") as disclosed in this Proxy Statement in accordance with the rules of the
As described in detail in the Compensation Discussion and Analysis, we seek to align the interests of our NEOs with the interests of our stockholders and to reward performance that enhances stockholder returns. As discussed in the Compensation Discussion and Analysis, the Compensation Committee intends to continue to place an emphasis on performance-based compensation. We believe that our compensation program has been, and will continue to be, successful in retaining and motivating our executive officers necessary for the current and long-term success of the Company.
We are asking our stockholders to indicate their support for the compensation of our NEOs as described in this Proxy Statement. This proposal gives our stockholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, in accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we are asking our stockholders to vote"For"the following resolution at the Annual Meeting:
"RESOLVED, that the Company's stockholders approve, on an advisory basis, the compensation of the NEOs, as disclosed in the Company's Proxy Statement for the 2025 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2024 Summary Compensation Table and the other related tables and narrative disclosures."
While this "say-on-pay" vote is non-binding and advisory, the Board of Directors and the Compensation Committee value the opinions of our stockholders and intend to consider the vote of the Company's stockholders when considering future compensation arrangements. To the extent there is any significant vote against the compensation of our NEOs as disclosed in this Proxy Statement, the Compensation Committee and Board will evaluate whether any actions are necessary to address the concerns of stockholders.
The Board of Directors unanimously recommends a vote "For" approval
of the "Say-on-Pay" proposal.
|
85 |
2025 Proxy Statement |
Proposal 3
Ratification of Appointment of Independent
Registered Public Accounting Firm
The Audit Committee of the Board of Directors, in accordance with its charter and authority delegated to it by the Board, has appointed the firm of
Representatives of
The Board of Directors unanimously recommends a vote "For" the ratification of the appointment of
|
86 |
2025 Proxy Statement |
Principal Accountant Fees and Services
Audit and Non-Audit Fees
The aggregate fees and expenses paid or accrued by the Company for professional services rendered by
|
2024 |
2023 |
|||||
|
Audit Fees |
$ |
3,561,741 |
$ |
4,211,956 |
||
|
Audit-Related Fees |
482,500 |
323,575 |
||||
|
Tax Fees |
233,261 |
21,090 |
||||
|
All Other Fees |
2,000 |
2,080 |
||||
|
Total |
$ |
4,279,502 |
$ |
4,558,701 |
||
Audit Fees. Audit Fees include fees for professional services rendered for the integrated audits of
Audit-Related Fees. Audit-Related Fees for 2024 were for due diligence services. Audit-Related Fees for 2023 were for professional services in connection with Adtran Networks' preparation for compliance with Section 404(b) of the Sarbanes-Oxley Act of 2002, which was applicable to such company beginning in the third quarter of 2023, and limited assurance audits.
Tax Fees. Tax Fees in 2024 and 2023 related to tax compliance services. These items were evaluated by the Audit Committee to be permissible services and determined not to impact the independence and objectivity of the independent registered public accounting firm.
All Other Fees. All Other Fees for 2024 and 2023 were fees for other permissible work performed by
Policy on Pre-Approval of Auditand Permissible Non-Audit Services
The Audit Committee has adopted a pre-approval policy that provides guidelines for the audit, audit-related, tax and other non-audit services that may be provided to us by
Under the policy, a schedule is presented annually to the Audit Committee outlining the types of audit-related, tax and other services (other than audit services) that are likely to be performed during the year. The Audit Committee, based upon the guidelines in the policy, selects the services from that schedule that will be generally pre-approved and attaches the list as an appendix to the policy. The Audit Committee then sets an annual aggregate fee limitation for all of these generally pre-approved services. For fiscal year 2024, that limit was set at $100,000. Any fees for the generally pre-approved services that exceed this aggregate fee limit must be specifically pre-approved by the Audit Committee. In addition, any services not on the list of general pre-approved services must be specifically
|
87 |
2025 Proxy Statement |
pre-approved. Consequently, one hundred percent of the services described in the table above for fiscal year 2024 were pre-approved by the Board.
Each member of the Audit Committee has been delegated the authority to provide any necessary specific pre-approval, in the event that the full Audit Committee is not available. Any member of the Audit Committee who provides specific pre-approval must report such approval to the Committee at its next meeting. To ensure compliance with the policy, a detailed report outlining all fees incurred year-to-date for services provided by
|
88 |
2025 Proxy Statement |
Stockholders' Proposals for 2026
Annual Meeting of Stockholders
Pursuant to Rule 14a-8 under the Exchange Act, stockholder proposals may be eligible for inclusion in the proxy statement for the 2026 Annual Meeting of Stockholders (the "2026 Annual Meeting"). Any stockholder intending to present a proposal for inclusion in the proxy statement for the 2026 Annual Meeting must provide timely written notice of the proposal to us at
In addition, under our Bylaws, any stockholder of record intending to nominate a candidate for election to the Board or to propose any business at the 2026 Annual Meeting must give timely written notice to us at our executive offices in
In addition to satisfying the requirements under our Bylaws, to comply with the
|
89 |
2025 Proxy Statement |
Other Matters That
Before the Annual Meeting
As of the date of this Proxy Statement, the Board of Directors of the Company does not know of any matters which will be presented for consideration at the 2025 Annual Meeting other than those specified herein and referred to in the accompanying Notice of Annual Meeting of Stockholders. However, if any other matter should be properly presented for consideration and voting during the 2025 Annual Meeting or any adjournment thereof, the persons named as proxies herein intend to vote the shares represented by all valid proxies in accordance with their judgment of what is in the best interest of the Company.
Householding of Proxy Materials
|
90 |
2025 Proxy Statement |
|
91 |
2025 Proxy Statement |
|
92 |
2025 Proxy Statement |
Attachments
Disclaimer
Proxy Statement (Form DEF 14A)
Proxy Statement (Form DEF 14A)
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