Thomas R. Stanton
ADTRAN HoldingsAbout Thomas R. Stanton
Thomas R. Stanton is Chairman and Chief Executive Officer of ADTRAN Holdings (ADTN). He has served as CEO since September 2005 and Chairman since 2007; he joined Adtran in 1995 and has been a director since 2005. He holds a B.S. in Computer Engineering from Auburn University and is age 60. In 2024, Company “Compensation Actually Paid” to the PEO (Stanton) was $3.88M; Company TSR (indexed to a $100 investment starting 12/31/2019) stood at $92.62 vs $123.93 for the NASDAQ Telecommunications Index, with 2024 Adjusted EBIT of $3.2M and net loss of $441.0M. The Company’s 2024 annual bonus plan for executives was tied to Adjusted EBIT ($77.8M target) and revenue ($1.0B target).
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| ADTRAN Holdings, Inc. | Chief Executive Officer; Director | CEO since Sep-2005; Director since 2005 | Oversaw strategy, operations, and industry leadership; later became Chairman, centralizing leadership and board interface. |
| ADTRAN Holdings, Inc. | Chairman of the Board | Since 2007 | Unified CEO/Chair roles; Board cites enhanced strategy development and information flow; Lead Director structure in place. |
| Adtran International, Inc. (subsidiary) | CEO and Chairman | Since Sep-2005 | Oversight of international subsidiary operations. |
| Adtran Networks | CEO; Management Board Member | Current | Leadership of optical/network subsidiary and governance on management board. |
| ADTRAN (Carrier Networks Division) | VP Marketing; SVP & GM, CN Division | 1995–pre-2005 | Led product/marketing, then division GM for carrier solutions. |
| Transcrypt International | VP Marketing & Engineering | — | Senior leadership in telecom equipment; prior operating experience. |
| E. F. Johnson Company | Senior Management Roles | — | Senior roles in communications equipment. |
External Roles
| Organization | Role | Years | Committees/Notes |
|---|---|---|---|
| Cadence Bank (NYSE: CADE) | Director | Since Oct-2015 | Compensation Committee member; Chair of Risk Committee. |
| Federal Reserve Bank of Atlanta, Birmingham Branch | Past Chairman of the Board | Past | Regional economic oversight (past chairman). |
| Telecommunications Industry Association (TIA) | Past Chairman; Former Director | Past | Industry standards/advocacy leadership. |
| Economic Development Partnership of Alabama | Director | Current | State economic development. |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 865,676 | 913,699 | 709,589 (reflects temporary 50% salary reduction Oct-30-2023 to Jul-31-2024) |
| Target Bonus (% of Salary) | — | — | 140% (target $1,400,000) |
| Actual Annual Bonus Paid ($) | 963,768 | — | 1,100,440 (31.5% of target) |
Notes:
- The Compensation Committee approved temporary salary reductions through July 31, 2024; Stanton’s base was reduced by 50% (Oct-30-2023 to Jul-31-2024).
Performance Compensation
2024 Annual Bonus (VICC)
| Metric | Weighting | Threshold → Target → Max | Company Target | 2024 Payout vs Target |
|---|---|---|---|---|
| Adjusted EBIT | 50% | Earn 0.004% → 50% → 100% of target component | $77.8M | Contributed to total payout of 31.5% of target for Stanton ($440,440) |
| Revenue | 50% | Earn 0.001% → 50% → 100% of target component | $1.0B | Contributed to total payout of 31.5% of target |
Design highlights:
- Two equally weighted corporate metrics (Adjusted EBIT, revenue); linear interpolation between threshold/target/max; total capped at 200% of target.
2024 Long-Term Incentives (LTI) – Grants and Vesting
| Grant Date | Instrument | Target Shares | Key Terms | Grant Date Fair Value ($) |
|---|---|---|---|---|
| 1/26/2024 | Market-based PSUs | 97,469 | 3-year performance; payout 25%–150% based on relative TSR vs NASDAQ Telecommunications Index; 100% cap if absolute TSR negative | 808,019 |
| 1/26/2024 | Time-based RSUs | 129,958 | Vests 25% on each of 4 anniversaries of grant date | 903,208 |
| 3/01/2024 | Performance-based PSUs (Long-Term Financial Plan) | 72,246 | 2-year performance (2024 tranche for Stanton) tied to Adjusted EBIT CAGR through 12/31/2025; 50%–150% payout | 419,749 |
Additional LTI program design:
- Annual equity normally split 50% time-based RSUs (4-year ratable vest) and 50% market PSUs (3-year cliff). In 2024, Stanton also received 2-year Adjusted EBIT PSUs aligned to the 2023 Long-Term Financial Plan.
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (3/17/2025) | 703,046 shares; <1% of outstanding (79,962,032) |
| Options exercisable within 60 days | 94,207 (grant 11/14/2015; $15.33 strike) |
| Deferred Compensation (stock units) | 225,775 shares deferred; payable after separation, earliest first day of month following six-month anniversary |
| Unvested RSUs (12/31/2024) | 7,564 (11/17/2021); 38,304 (7/13/2022; special schedule below); 65,360 (1/20/2023); 129,958 (1/26/2024) |
| Unearned PSUs (12/31/2024) | 65,359 (1/20/2023); 72,246 (3/1/2023 integration/plan); 97,469 (1/26/2024 market PSUs); 72,246 (3/1/2024 EBIT PSUs) |
| RSU Special Schedule (7/13/2022 grant) | 75% vests on 24-month anniversary; 6.25% at 27-, 30-, 33-, 36-month anniversaries |
| 2024 Stock/PSU Vesting Realized | 277,886 shares vested; value realized $1,914,320; no option exercises |
| Pledging/Hedging | Company policy prohibits hedging, short-term/speculative trading, holding in margin accounts, and pledging of Company stock by insiders |
| Director Ownership Guidelines | Non-employee directors: 3× annual cash retainer within five years; sales restricted until compliance |
At 12/31/2024 close ($8.33), Stanton’s 2015 options ($15.33 strike) were out-of-the-money, reducing near-term option-exercise selling pressure.
Employment Terms
| Feature | Terms (Mr. Stanton Employment Agreement dated Jul-13-2022) |
|---|---|
| Role/Term | Serves as President, CEO and Chairman; initial 2-year term with automatic 1-year renewals unless notice given |
| Base Salary | $1,000,000 (effective upon Business Combination closing) |
| Annual Bonus Target | At least 140% of base salary; metrics set by Compensation Committee |
| Equity Eligibility | Annual PSUs (relative TSR or other agreed criteria) and time-based RSUs; plus PSUs aligned to Long-Term Financial Plan (Adjusted EBIT), delivered in three yearly tranches (2023–2025 grants with 3/2/1-year performance periods) |
| Covenants | Confidentiality, non-compete, non-solicit, non-disparagement (as a condition to severance) |
| Severance (no change in control) | If terminated without Cause/for Good Reason: 2× (base + target bonus) in installments over two years; pro-rata annual bonus based on actual results; RSU acceleration; specified COBRA reimbursements (up to 36 months combination) |
| Severance (within 24 months post-CoC) | Double-trigger: 3× (base + target bonus) lump sum; pro-rata cash bonus; RSU full acceleration; PSUs at target (plus any earned Integration PSUs) |
| Retirement/Death/Disability | Retirement defined as age 65 or age 55 with at least 10 years of service; benefits include pro-rata PSUs, RSU acceleration, COBRA (death/disability has similar structures) |
Illustrative potential payouts as of 12/31/2024:
- Termination without Cause/Good Reason (no CoC): $9,345,873 total (cash $5,946,350; PSUs $1,390,443; RSUs $2,009,079).
- Termination without Cause/Good Reason in connection with CoC: $13,080,902 total (cash $8,346,350; PSUs $2,725,472; RSUs $2,009,079).
- Change in control alone: No benefits unless a qualifying termination within 24 months (double-trigger).
Board Governance
- Board service: Director since 2005; currently one of seven directors; Stanton serves on no committees.
- Combined CEO/Chairman: Board endorses combined role; elected an independent Lead Director (H. Fenwick Huss, since 2015) to mitigate independence concerns and lead executive sessions.
- Independence: Six of seven directors determined independent; Stanton is not independent.
- Committees: Audit (Huss, Chair), Compensation (Theodosopoulos, Chair), Nominating & Corporate Governance (Rice, Chair), ESG (Walker, Chair).
- Attendance: Board met 17 times in 2024; all directors met or exceeded 75% attendance; directors attend annual meeting absent extenuating circumstances.
Compensation Governance, Peer Group, and Shareholder Feedback
- Peer group/consultant: Compensation Committee engages Pay Governance LLC; 2024 peer group included Calix, Ciena, Extreme Networks, Fabrinet, Infinera, Lumentum, MACOM, NETGEAR, NetScout, OSI Systems, Ribbon, Viavi, Casa Systems, Methode Electronics. No conflicts of interest identified.
- Plan design updates from investor feedback: Increased performance-based LTI for CEO; raised TSR percentile for target payout to 55th; added cap when absolute TSR is negative; adopted double-trigger vesting for officers and employees upon change of control (CEO already had double-trigger).
- Say-on-Pay: 2024 support ~87% (improved from 53% in 2023).
- Clawbacks: Dodd-Frank-compliant clawback adopted Oct-2023; March 2024 restatement and November 2024 revisions did not trigger recoupment (no impact on Adjusted EBIT/revenue metrics).
Risk Indicators and Red Flags
- Restatement/revisions: Financial restatements/revisions disclosed in 2024; compensation clawback not triggered; continued oversight by Audit Committee.
- Pledging/hedging: Prohibited for insiders (reduces misalignment/forced-sale risk).
- Equity vesting supply: 277,886 shares vested for Stanton in 2024; ongoing RSU/PSU schedules may create periodic supply at vest; stock options outstanding are currently out-of-the-money at 12/31/2024.
- Double-trigger only: No single-trigger benefits on change-of-control (mitigates windfall risk).
Performance & Track Record (select metrics)
| Year | Company TSR (Value of $100 since 12/31/2019) | NASDAQ Telecom Index TSR | Adjusted EBIT ($M) | Net Income ($M) |
|---|---|---|---|---|
| 2024 | 92.62 | 123.93 | 3.2 | (441.0) |
| 2023 | 81.62 | 114.43 | (9.9) | (259.3) |
| 2022 | 203.51 | 100.08 | 52.2 | (8.9) |
Notes:
- TSR is used for market-based PSUs; 2024 annual bonus metrics were Adjusted EBIT and revenue; 2024 payout at 31.5% of target reflects underperformance vs targets.
Director Service and Compensation Notes (as a Director)
- Committee roles: Stanton serves on no Board committees (common for an executive director).
- Director pay program: Non-employee director ownership guidelines (3× cash retainer) and independent compensation governance; not applicable to Stanton’s executive role.
Employment, Severance, and Change-of-Control Economics (Detail)
| Scenario (as of 12/31/2024) | Cash Severance | PSUs | Time-based RSUs | Stock Options | Total |
|---|---|---|---|---|---|
| CoC only (no termination) | — | — | — | — | — |
| Termination w/o Cause or Good Reason (no CoC) | 5,946,350 | 1,390,443 | 2,009,079 | — | 9,345,873 |
| Termination in connection with CoC (double-trigger) | 8,346,350 | 2,725,472 | 2,009,079 | — | 13,080,902 |
| Death/Retirement (illustrative) | 1,146,350 | 1,390,443 | 2,009,079 | — | 4,545,873 |
COBRA reimbursements are included in cash figures where applicable; PSUs in CoC scenarios assume target achievement, consistent with award terms.
Key Policies and Plan Mechanics
- 2024 Employee Plan/2024 Directors Plan: Change-of-control treatment includes immediate vesting for time-based awards and pro-rated or target settlement for performance awards unless superseded by award agreements; double-trigger introduced for officers/employees (Oct 2024 award agreements).
- Bonus eligibility: Under VICC, employment through payment date generally required, with specific change-of-control acceleration mechanics.
- Risk assessment: Compensation Committee concluded programs are not reasonably likely to create material adverse risk; mechanisms include caps and discretion to reduce payouts.
Investment Implications
- Pay-for-performance alignment improved after 2023 feedback: Higher weight on performance equity; tougher TSR hurdle (55th percentile for target) and negative-TSR cap reduce windfall risk; double-trigger vesting limits single-trigger change-of-control payouts. This strengthens governance alignment.
- Retention vs overhang: Stanton’s unvested RSUs/PSUs and installment/lump-sum severance provisions provide meaningful retention incentives; however, scheduled RSU/PSU vesting represents periodic supply that could create selling pressure at vesting windows. Options remain out-of-the-money at year-end 2024, limiting option-related supply.
- Alignment safeguards: Anti-pledging/hedging policy, clawback adoption (even after restatements no recoupment triggered), and independent Lead Director mitigate governance risk stemming from combined CEO/Chair role.
- Performance risk: 2024 payout at 31.5% of target underscores sensitivity to Adjusted EBIT and revenue underperformance; multi-year PSUs tied to TSR and Adjusted EBIT should continue to drive longer-term execution focus.