Shantanu Narayen
ADOBEAbout Shantanu Narayen
Chair and CEO of Adobe since December 2007 (Chair since January 2017), Shantanu Narayen, 61, has led Adobe’s transformation to a subscription and platform model spanning Creative Cloud, Document Cloud, and Experience Cloud. He holds a B.S. in Electronics Engineering (Osmania University), an M.S. in Computer Science (Bowling Green State University), and an MBA (UC Berkeley Haas) . Under his leadership, Adobe delivered record FY2024 revenue of $21.51B (+11% y/y) and non-GAAP diluted EPS of $18.42, with operating cash flow of $8.06B . Pay outcomes reflect performance: the 2022 three-year Performance Share Program paid 79% of target (TSR portion 41% at 26th percentile vs Nasdaq 100) while FY2024 Net New Sales achieved 107.8% (132% payout for that tranche) .
| Snapshot | Detail |
|---|---|
| Current roles | Chair & CEO, Adobe (since 2017 as Chair; since 2007 as CEO) |
| Age | 61 |
| Education | B.S. Electronics Eng. (Osmania); M.S. CS (BGSU); MBA (UC Berkeley Haas) |
| FY2024 highlights | Revenue $21.51B; GAAP EPS $12.36; non-GAAP EPS $18.42; OCF $8.06B |
| Multi-year pay-for-performance | 2022 PSP overall 79%; TSR portion 41% (26th percentile); FY24 Net New Sales 132% |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Adobe | Chair of the Board | 2017–present | Board leadership and CEO oversight in a combined role, continuity of strategy |
| Adobe | Chief Executive Officer | 2007–present | Led cloud transition; built Digital Media and Experience categories; scaled ARR model |
| Adobe | President & COO | 2005–2007 | Enterprise-wide operations and product leadership |
| Adobe | EVP, Worldwide Product Marketing & Development | 2001–2005 | Unified product roadmap across business lines |
| Adobe | SVP, Worldwide Products | 1999–2001 | Drove global product strategy |
| Adobe | VP & GM, Engineering Technology Group | 1998–1999 | Engineering leadership |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Pfizer Inc. | Lead Independent Director | Current | Public company board leadership outside Adobe |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (% of Salary) | Actual Cash Incentive Paid ($) |
|---|---|---|---|
| 2022 | 1,413,461 | 200% | 2,680,357 |
| 2023 | 1,500,000 | 200% | 3,000,000 |
| 2024 | 1,500,000 | 200% | 2,940,000 (98% of target) |
Notes:
- FY2024 corporate result was adjusted to 98% (100% financial minus 2 pts strategic adjustment), with individual at 100%; payout math capped total at 98% .
- For FY2025, Adobe raised threshold gates to 95% for both revenue and non-GAAP EPS and removed individual component, cutting max cash payout to 155% (tightened pay-performance) .
Performance Compensation
Annual and Long-Term Incentive Design (CEO)
- Equity mix: 70% performance shares (PSP), 30% time-based RSUs; 90% of target total direct compensation in equity; CEO TDC unchanged y/y for FY2024 .
- PSP metrics: 50% three-year Relative TSR vs Nasdaq 100 (target at 55th percentile; 0% below 25th; capped at 100% if absolute TSR negative; max 200% if positive) and 50% Net New Sales (annual goals; no vesting until end of 3-year period) .
- RSUs vest 6.25% quarterly over four years .
FY2024 CEO Equity Grants (Targeted)
| Grant Date | Instrument | Target Shares (#) | Max Shares (#) | Notes |
|---|---|---|---|---|
| 1/24/2024 | Performance Shares (2024 PSP) | 47,210 | 94,420 | 50% TSR, 50% Net New Sales; cliff vest after 3 years |
| 1/24/2024 | RSUs | 20,233 | — | 6.25% quarterly over 4 years |
| Total Target Equity Value | — | — | — | $40,500,000 target value |
PSP Results and Payouts
| Program | Metric | Period | Target | Actual/Payout |
|---|---|---|---|---|
| 2022 PSP | Relative TSR | CY2022–CY2024 | 55th percentile | 26th percentile; 41% payout |
| 2022 PSP | Net New Sales | FY2022, FY2023, FY2024 (each 1/3) | Above initial guidance (yearly) | FY22 86%; FY23 133%; FY24 132% (component) |
| 2022 PSP | Overall | 3-year | 100% | 79% weighted payout |
| 2024 PSP | Net New Sales (FY2024 tranche) | FY2024 | Above initial guidance | 107.8% attainment → 132% payout of that 1/3 tranche |
FY2024 Cash Incentive Mechanics and Gates
| Metric | Threshold | Target | Max | Result |
|---|---|---|---|---|
| Revenue (FY2024) | 90% of $21.40B | $21.40B | ≥$22.68B | $21.51B → at target component |
| Non-GAAP Diluted EPS | 90% of $17.80 | $17.80 | ≥$19.05 | $18.42 → at target component |
| Strategic Adjustment | — | — | ±25 pts | -2 pts applied |
Vesting Schedules and Near-Term Supply
| As of 11/29/2024 | Unvested RSUs (#) | Unearned Performance Shares (#) | Notable Dates |
|---|---|---|---|
| CEO outstanding (selected lines) | 16,440 (2024 RSU) ; 19,798 (2023 RSU) ; 6,271 (2022 RSU) | 23,411 (2022 PSP TSR tranche reference) ; 109,498 (2023 PSP) ; 40,442 (2024 PSP) | RSUs vest quarterly; 2021 RSUs fully vested 1/24/2025; 2022 RSUs fully vest 1/24/2026; PSPs vest after 3 years upon certification |
FY2024 vesting/realization: CEO acquired 65,088 shares on vesting with $37.66M value in FY2024 (stock awards), indicating material realized equity that could create periodic liquidity but not necessarily sales (no options outstanding) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 388,126 shares; <1% of shares outstanding as of 2/21/2025 |
| Pledging/Hedging | None of officers’/directors’ shares are pledged; Adobe policy prohibits pledging, hedging, and short sales |
| Ownership guidelines (executives) | CEO: 20x base salary; all NEOs compliant as of 11/29/2024 |
| Insider plan/vesting flow | FY2024 stock awards vested: 65,088 shares ($37.66M realized) |
Employment Terms
| Provision | Key Economics / Terms |
|---|---|
| Employment status | At-will; no fixed-term employment agreement |
| Change-of-Control (COC) Plan (NEOs) | Double-trigger: severance and full equity acceleration upon involuntary termination or resignation for good reason post-COC; expires 12/13/2026 unless extended |
| CEO Retention Agreement | Single-trigger equity acceleration upon COC without termination; also covered by plan for economics |
| CEO COC economics (as of 11/29/2024) | If terminated w/ COC: $3,000,000 target bonus + $13,500,000 cash severance + $90,884,164 accelerated performance awards + $22,605,987 accelerated RSUs + $41,187 health → total $130,031,338 |
| Death/Disability (CEO) | $60,522,716 performance + $10,411,467 RSUs accelerated (illustrative as of 11/29/2024) |
| Tax gross-ups | No excise tax gross-up; benefits cut if needed for best after-tax outcome |
| Clawbacks | SEC 10D-1 restatement clawback; supplemental misconduct clawback (financial/operational harm) for 3-year lookback; applies to cash, performance equity, and time-based equity |
| Hedging/Pledging | Prohibited for all directors/employees |
| Perquisites | Corporate aircraft personal use allowance up to $400,000; 2024 personal jet incremental cost $145,822; security services $1,409,118; no tax gross-up except sales club trip; executive health concierge eligible |
| Deferred compensation | CEO participates in Deferred Compensation Plan (others did not in FY2024) |
Board Governance and Director Service
| Topic | Detail |
|---|---|
| Board role | Chair & CEO (non-independent); no committee memberships |
| Lead Independent Director | Frank Calderoni; presides independent sessions; agenda setting; investor outreach; annual CEO evaluation duties |
| Committees (independent-only) | Audit (Chair: Oberg), Executive Compensation (Chair: Banse), Governance & Sustainability (Chair: Calderoni) |
| Board meetings | 5 board meetings; 19 committee meetings in FY2024; 75%+ attendance for all directors |
| Independence status | 10 of 11 nominees independent; Narayen not independent |
| Director compensation | Employee directors (CEO) receive no additional director pay |
| Anti-pledging/hedging | Governance policy prohibits pledging, hedging, short sales |
Dual-role implications: Adobe maintains an empowered Lead Director and fully independent committees to mitigate combined Chair/CEO concentration of power, with regular executive sessions (4 in FY2024) and robust ownership/anti-hedging policies .
Compensation Committee Analysis
| Item | Detail |
|---|---|
| Committee composition | Amy Banse (Chair), Cristiano Amon, Melanie Boulden, Laura Desmond (stepping down if elected), David Ricks; all independent |
| Independent consultant | Compensia advises; no conflicts; provides peer/market analyses and design input |
| Interlocks | No compensation committee interlocks or insider participation |
| Peer group (FY2024) | Alphabet, Amazon, Apple, Autodesk, Broadcom, Cisco, DocuSign, Intuit, Meta, Microsoft, Netflix, NVIDIA, Oracle, PayPal, Salesforce, SAP, ServiceNow, Twilio, Workday |
| Say-on-Pay | 85% approval at 2024 annual meeting for FY2023 NEO pay |
| Program changes | FY2025: raised financial gates (to 95%), eliminated individual component, reduced max cash payout to 155%; emphasis on formulaic performance |
Director and Executive Ownership (Selected)
| Holder | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| Shantanu Narayen | 388,126 | <1% | None of executive/director shares are pledged |
| The Vanguard Group | 40,262,670 | 9.26% | 13G/A as referenced |
| BlackRock, Inc. | 37,969,080 | 8.73% | 13G/A as referenced |
Performance & Track Record
| Metric | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Revenues ($B) | 17.61* | 19.41* | 21.51 |
| EBITDA ($B) | 6.72* | 7.27* | 8.40* |
| Cash from Operations ($B) | 7.84* | 7.30* | 8.06 |
Values marked with an asterisk were retrieved from S&P Global.
Additional indicators:
- Ten-year stockholder return comparison (vs S&P 500) disclosed in proxy; 2022 PSP TSR percentile at 26th produced 41% payout, evidencing below-median 3-year relative TSR for that tranche despite strong Net New Sales execution .
Equity Ownership & Vesting Detail (CEO)
| Grant | Type | Unvested/Unearned (#) | Market/Payout Value Basis | Notes |
|---|---|---|---|---|
| 1/24/2023 | RSU | 36,271 | $18.71M @ $515.93 | 6.25% quarterly; through 2027 |
| 1/24/2024 | RSU | 16,440 | $8.48M @ $515.93 | 6.25% quarterly; through 2028 |
| PSP 2023 | Unearned PS | 109,498 | $56.49M @ $515.93 | Vests after 3-year period |
| PSP 2024 | Unearned PS | 40,442 | $20.87M @ $515.93 | Vests after 3-year period |
| PSP 2022 (TSR tranche ref.) | Unearned PS | 23,411 | $12.08M @ $515.93 | Earned at 41% for TSR; vesting at program end |
Related Party Transactions and Risk Indicators
- Related party transactions: None requiring disclosure since FY2024 .
- Insider trading policy: prohibits pledging, hedging, short sales .
- Clawbacks: robust restatement and misconduct-based recovery policies .
- Options: No stock options outstanding for NEOs as of FY2024 end (reduces repricing risk) .
Board Governance (Committees and Attendance)
| Committee | FY2024 Meetings | Chair | Notes |
|---|---|---|---|
| Audit | 8 | Kathleen Oberg | Oversees ERM, cybersecurity, controls; all members are financial experts |
| Executive Compensation | 7 | Amy Banse | Oversees pay/HCM, clawbacks, ownership guidelines |
| Governance & Sustainability | 4 | Frank Calderoni | Oversees ESG, board composition and evaluations |
Say-on-Pay & Shareholder Feedback
- Say-on-Pay: 85% approval at 2024 annual meeting (FY2023 pay) .
- Engagement: sought meetings with holders of >40% of shares; topics included strategy, financial performance, board composition, compensation, ESG .
Compensation Structure Analysis
- Mix: High proportion of performance-based, at-risk pay (approx. 70% performance-based, 97% at-risk for CEO target TDC) .
- Design rigor: PSP uses relative TSR vs Nasdaq 100 and Net New Sales above initial guidance; FY2025 cash plan increases gates and removes individual factor, cutting max payout to 155%—reduces discretion/upside from cash and elevates equity alignment .
- No evergreen equity plan; no dividend equivalents on unvested awards; no pension/SERP; no excise tax gross-ups .
Investment Implications
- Alignment: Strong structural pay-for-performance with rigorous metrics, robust anti-hedging/pledging, high stock ownership requirements, and modern clawbacks supports alignment and reduces governance risk .
- Execution vs market: Operationally strong (FY2024 revenue +11% y/y; Net New Sales 132% tranche payout) but below-median 3-year relative TSR for the 2022 PSP (41% TSR component payout) signals mixed stock-relative performance—important for assessing incentive realizability and momentum .
- Retention/supply: Material unvested RSUs vesting quarterly through 2026–2028 and performance shares cliff-vesting on program completions will periodically add potential supply; FY2024 realized vesting of 65k shares underscores ongoing liquidity windows (actual sales depend on 10b5-1 plans/Form 4 activity) .
- COC economics: CEO has sizable single-trigger equity acceleration upon COC and large double-trigger severance totals; no gross-ups but magnitude is high—watch for M&A optics .
- Dual role: Combined Chair/CEO mitigated by strong Lead Director role, fully independent committees, frequent executive sessions—acceptable structure but still a governance focus area for some investors .