Tom Leighton
AKAMAI TECHNOLOGIESAbout Tom Leighton
Tom Leighton (age 68) is Akamai’s co-founder and Chief Executive Officer (CEO) since January 2013; he previously served as Chief Scientist (1998–2012) and has been a Professor of Applied Mathematics at MIT since 1982 (currently on leave) . He has served on Akamai’s Board since 1998 and is the primary technologist behind the company’s platform . Under his leadership in 2024, Akamai reported $3.99B revenue (+5% y/y), with Security surpassing $2B (+16% y/y), Compute ~$630M (+25% y/y), operating cash flow of $1.52B (38% of revenue), and $557M of buybacks (5.6M shares) . Pay-versus-performance disclosures show 2024 total shareholder return (TSR) value of $111 (from a $100 base) and revenue (FX-adjusted) of $4.033B; 2023 TSR was $137 and 2022 was $98 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Akamai Technologies | Chief Executive Officer | 2013–present | Led multi-year pivot from CDN toward Security and Cloud; drove revenue growth and cash generation with expanding Security/Compute mix . |
| Akamai Technologies | Chief Scientist, Co-founder | 1998–2012 | Key developer of Akamai’s platform; deep technical leadership that underpins product strategy . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Massachusetts Institute of Technology | Professor of Applied Mathematics (on leave) | 1982–present | Academic credentials and network bolster technical credibility with customers and investors . |
| Presidential IT Advisory Committee (Cybersecurity) | Chair | 2003–2005 | National-level cybersecurity leadership, informing Akamai’s security strategy positioning . |
Fixed Compensation
| Component | 2024 Value | Notes |
|---|---|---|
| Base Salary | $1 | CEO salary set at $1 since 2013 to emphasize at-risk equity . |
| Director Fees | $0 | Leighton receives no additional pay for Board service; director comp excludes CEO . |
| Ownership Guidelines | 6x salary | CEO must hold ≥6x salary in stock; all directors in compliance as of latest report . |
Performance Compensation
2024 Annual Bonus (paid in stock)
| Metric | Weight | 2024 Threshold (0% payout) | 2024 Target (100%) | 2024 Max (200%) | 2024 Actual | Payout vs Target |
|---|---|---|---|---|---|---|
| Revenue (FX-adjusted) | 50% | $3,706.6M | $4,118.4M | $4,530.2M | $4,032.7M | 79.2% |
| Non-GAAP Operating Income | 50% | $1,094.7M | $1,216.3M | $1,337.9M | $1,187.5M | 76.3% |
| Overall payout (pre-ESG) | 77.75% | |||||
| ESG modifier | -6.66 pp → Final 72.57% |
| CEO Bonus Detail | Amount |
|---|---|
| 2024 Target Bonus (fixed-dollar plan) | $1,500,000 |
| 2024 Actual Bonus Earned (paid in shares) | $1,088,508 |
Notes: NEO bonuses are paid entirely in Akamai stock to align with shareholders; ESG objectives can modify payout ±10% .
Long-Term Incentive (LTI) Design and 2024 Grants
| Award Type | Why Used | Vesting | 2024 CEO Target Value |
|---|---|---|---|
| Time-vesting RSUs | Retention, alignment | 1/3 annually over 3 years | $6,750,000 |
| PRSUs (Revenue FX-adj, Non-GAAP EPS) | Financial performance | 3-year cliff; earned 1/3 each year vs annual goals; vest after 2026 certification | $2,700,000 |
| Relative TSR-based RSUs (vs S&P 500) | Market-relative performance | 3-year cliff (2024–2026) | $4,050,000 |
| Total 2024 LTI Target | $13,500,000 |
Share counts (2024 grants):
- Time-vesting RSUs: 60,942
- PRSUs: 29,370 target (0–200% earned)
- Relative TSR RSUs: 36,565 target (0–200% earned)
Performance outcomes:
- 2024 PRSU tranche: Overall earned 80.5% vs target based on Revenue (97.9% of target; 79.2% payout) and Non-GAAP EPS (98.2% of target; 81.8% payout) .
- 2022–2024 Relative TSR cycle: 26th percentile; 28% of target earned (underperformance vs S&P 500) .
Policies and risk controls:
- Double-trigger for CoC vesting on assumed awards; 1-year minimum vesting; no option repricing; few perqs; no excise tax gross-ups; robust clawbacks (2014 and 2023 policies per SEC/Nasdaq) .
Equity Ownership & Alignment
| Ownership Detail | Amount / Status |
|---|---|
| Total Beneficial Ownership | 2,606,220 shares (≈1.7% of outstanding 150,387,475 on 2/25/25) |
| Breakdown | Trust: 2,342,621; TBL Foundation: 108,358 (Leighton trustee); RSUs vesting within 60 days: 55,569 |
| Anti-Hedging/Pledging | Hedging prohibited; pledging prohibited for officers/directors |
| Stock Ownership Guidelines | CEO 6x salary; all directors compliant; executives required holdings increased in 2024 (NEOs 3x salary) |
Potential selling pressure mechanics:
- Annual time-vest RSU tranches (1/3 over 3 years) and annual share-settled bonuses (typically granted late Feb) can create periodic supply; PRSUs/TSR RSUs vest on 3-year cliff after 2026 results certification .
Employment Terms
Severance and Change-in-Control (CoC)
| Scenario | Cash Severance | Equity Acceleration | Health Benefits |
|---|---|---|---|
| Involuntary (without cause) / Good Reason (non-CoC) | $1,500,001 | PRSUs: $6,470,149; Time-RSUs: $0 | 12× monthly premiums |
| Voluntary Separation (retirement-eligible treatment) | — | PRSUs: $6,470,149 | — |
| CoC (no termination) | — | — | — |
| Involuntary/Good Reason within 12 months post-CoC | $3,000,001 | Time-RSUs: $11,435,053; Performance RSUs: $16,436,496 | 12× monthly premiums |
Notes:
- Dr. Leighton’s letter agreement (amended 2015) eliminated single-trigger PRSU vesting for awards after that date; cash severance structure includes base salary + target bonus (and pro-rata bonus in certain cases) .
- Company equity plan uses double-trigger for assumed awards in a CoC; unassumed awards vest at CoC as specified by plan .
Other terms:
- Private air travel for business is permitted to maximize efficiency/security, but Dr. Leighton personally pays airfare costs .
Board Governance and Service
- Board service: Director since 1998; not independent; no committee memberships listed for Leighton .
- Leadership structure: Independent Chair (Dan Hesse) since 2021; roles of Chair and CEO are separated to enhance oversight .
- Independence: All directors except Leighton are independent under Nasdaq rules .
- Meeting attendance: Each director attended >75% of Board/committee meetings in 2024 .
- Director compensation: Leighton receives no director fees; non-employee director pay disclosed separately .
Dual-role implications:
- Separation of Chair/CEO mitigates typical CEO/Chair concentration risk; regular independent director sessions and strong committee oversight further address independence concerns .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay (on 2023 program): ~92% approval, indicating strong investor support for pay design .
- 2025 proposal includes an 8M share increase to the 2013 Stock Incentive Plan; company highlights repurchases offsetting dilution and projects share capacity through the 2026 AGM .
Compensation Peer Group (Benchmarking)
- 2024 benchmarking peer group aligned to size/industry; for 2025, changes include removing Splunk, VMware (M&A), Arista, Equinix, Sabre; adding Cloudflare, OpenText, Twilio, Zscaler to reflect operating focus and financial range .
Related-Party Transactions and Red Flags
- 2024: No related-party transactions requiring disclosure (Item 404) .
- Anti-hedging/pledging prohibitions; no option repricing without shareholder approval; no excise tax gross-ups; 1-year minimum vesting; strong clawbacks adopted (2014 and 2023) .
- Relative TSR 2022–2024 cycle paid 28% of target (26th percentile), signaling underperformance vs S&P 500 over that window .
Performance & Track Record Indicators
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue (FX-adjusted, $B) | 3.611 | 3.819 | 4.033 |
| TSR ($100 initial value) | 98 | 137 | 111 |
| Security Revenue Milestone | — | — | >$2B; +16% y/y |
| Compute Revenue | — | — | >$630M; +25% y/y |
| Operating Cash Flow ($B) | — | — | 1.52 (38% of revenue) |
| Share Repurchases | — | — | $557M; 5.6M shares |
Compensation Structure Analysis (Signals)
- Near-100% at-risk pay with $1 salary plus stock-settled bonus tightens alignment to shareholders; half of LTI is performance-based (PRSUs + Relative TSR) with rigorous financial targets and market-relative modifier .
- Annual bonus tied 50/50 to Revenue (FX-adjusted) and Non-GAAP Operating Income, with ESG modifier; 2024 payout at 72.57% indicates goals were moderately challenging amid transformation investments .
- Relative TSR underperformance in the 2022–2024 cycle (28% payout) will reduce realized equity value, evidencing outcome sensitivity to share performance .
- Strong governance features (double-trigger CoC, clawbacks, anti-pledging/hedging, no repricing/gross-ups) reduce shareholder risk typically associated with equity-heavy pay .
Investment Implications
- Alignment: $1 salary and stock-settled annual bonus concentrate compensation outcomes in equity, closely aligning Leighton’s incentives with shareholders; robust ownership (≈1.7% beneficial stake) provides meaningful “skin in the game” .
- Execution vs pay: 2024 PRSU and bonus outcomes (≈80% and 73% of target, respectively) reflect disciplined targets amid a pivot toward higher-growth Security/Compute; however, relative TSR underperformance in 2022–2024 curtailed realized value and underscores ongoing execution/market-perception risk .
- Supply dynamics: Time-vest RSUs, annual stock bonuses, and 3-year PRSU/TSR cliffs create predictable vesting calendars that can add share supply; anti-hedging/pledging and ownership requirements mitigate misalignment or leverage risks .
- Retention and CoC economics: Double-trigger CoC terms and sizable potential equity acceleration support retention through strategic cycles/transactions; cash severance is modest in dollar terms given $1 salary, but equity acceleration could be substantial depending on price/performance at event time .
Citations:
About/Background: **[1086222_0001193125-25-070445_d882861ddef14a.htm:22]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:19]**
2024 results & mix: **[1086222_0001193125-25-070445_d882861ddef14a.htm:1]**
Pay vs performance (TSR, revenue): **[1086222_0001193125-25-070445_d882861ddef14a.htm:70]**
Annual bonus framework/results: **[1086222_0001193125-25-070445_d882861ddef14a.htm:43]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:44]**
LTI design/mix/vesting: **[1086222_0001193125-25-070445_d882861ddef14a.htm:45]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:47]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:48]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:57]**
2024 grants (counts/values): **[1086222_0001193125-25-070445_d882861ddef14a.htm:61]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:45]**
Clawbacks/anti-hedging/pledging/min vest/no repricing/no gross-ups: **[1086222_0001193125-25-070445_d882861ddef14a.htm:54]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:55]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:89]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:78]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:56]**
Ownership details: **[1086222_0001193125-25-070445_d882861ddef14a.htm:25]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:26]**
Severance/CoC & potential payouts: **[1086222_0001193125-25-070445_d882861ddef14a.htm:66]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:67]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:69]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:89]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:90]**
Board governance structure/independence/attendance: **[1086222_0001193125-25-070445_d882861ddef14a.htm:27]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:31]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:29]**
Director pay exclusion for CEO: **[1086222_0001193125-25-070445_d882861ddef14a.htm:32]**
Say-on-pay result: **[1086222_0001193125-25-070445_d882861ddef14a.htm:53]**
Peer group changes: **[1086222_0001193125-25-070445_d882861ddef14a.htm:51]**
Equity plan increase/offset dilution: **[1086222_0001193125-25-070445_d882861ddef14a.htm:77]** **[1086222_0001193125-25-070445_d882861ddef14a.htm:81]**