Gary B. Smith
CIENAAbout Gary B. Smith
Gary B. Smith is President and CEO of Ciena, serving as CEO since May 2001 after joining the company in 1997; he has over 30 years in telecommunications and has lived and worked on four continents . Age 64, he brings deep global sales/marketing experience from prior roles at Intelsat S.A. and Cray Communications and previously served on the boards of Avaya and CommVault; he also serves on the Wake Forest University Entrepreneurship Advisory Council . Under his leadership in fiscal 2024, Ciena delivered $4.01B in revenue, generated record $1.2B revenue from cloud providers, and launched WaveLogic 6 Extreme (1.6T coherent), though adjusted operating income undershot plan and cash incentives paid at 65% of target, consistent with pay-for-performance . Ciena’s CEO “compensation actually paid” in 2024 tracked higher with equity value changes, and 2022–2024 MSUs paid at 110% on TSR outperformance versus the index (8.43% vs 3.63%) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Ciena | President & CEO | Since May 2001 | Led multi-decade strategy and execution; expanded optical leadership and addressable markets . |
| Ciena | COO; SVP, Worldwide Sales | Not disclosed | Built go-to-market and operational foundations pre-CEO . |
| Intelsat S.A. | VP, Sales & Marketing | Not disclosed | Brought global carrier perspective and sales leadership . |
| Cray Communications | VP, Sales & Marketing | Not disclosed | Telecom systems sales/marketing leadership . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Avaya, Inc. | Director (previous) | Not disclosed | Enterprise tech governance and go-to-market oversight . |
| CommVault Systems, Inc. | Director (previous) | Not disclosed | Data management/software governance insights . |
| Wake Forest University | Entrepreneurship Advisory Council | Not disclosed | University-industry innovation engagement . |
Fixed Compensation
| Component | FY2024 Detail | Evidence |
|---|---|---|
| Base salary rate | $1,000,000 (no increase vs FY2023) | |
| Salary paid (fiscal year) | $1,019,231 | |
| Target annual cash incentive | 150% of base salary (unchanged) | |
| Actual FY2024 cash bonus paid | $975,000 (65% of target outcome driver) |
Performance Compensation
| Plan/Grant | Metric(s) | Weighting | FY2024 Target | FY2024 Actual | Payout/Result | Vesting |
|---|---|---|---|---|---|---|
| Annual cash incentive | Revenue | 40% | $4.6B | $4.015B | 69.5% on this component | Cash paid after FY end . |
| Annual cash incentive | Adjusted Operating Income | 30% | $734M | $465.8M | 0% on this component | As above . |
| Annual cash incentive | Corporate objectives | 30% | 4 of 6 = 100%; 6 of 6 = 150% | 5 of 6 | 125% on this component | As above . |
| Annual cash incentive (total) | Blended | — | — | — | 65% of target earned | Paid in cash . |
| PSUs (granted Dec 12, 2023) | Aggregate sales orders | 50% | $4,017M | $3,595M | 80% of this half | Earned shares vest 50% Dec 2024, 50% Dec 2025 . |
| PSUs (granted Dec 12, 2023) | Adjusted EPS | 50% | $2.95 | $1.82 | 0% of this half | As above . |
| PSUs (overall) | Combined | 100% | — | — | 40% of target earned | As above . |
| MSUs (FY2024–2026) | Relative TSR vs S&P Networking Index median company | 100% | Equal = 100%; +50 pts = 200% | In-flight | In-flight | 100% vests after 3 years; linear scale; negative absolute TSR caps below 100% . |
| MSUs (FY2022–2024 result) | Relative Return vs Index | 100% | — | CIEN 8.43% vs Index 3.63% | 110% earned | Vested Dec 20, 2024 . |
Equity Awards (FY2024 grants)
| Grant (12/12/2023) | Shares/Units | Grant-date fair value ($) | Notes |
|---|---|---|---|
| RSUs | 100,964 | 4,400,011 | 1/16th quarterly over 4 years . |
| PSUs (target) | 90,867 | 3,959,984 | FY2024 goals; earned 40%; vests 50% Dec’24/50% Dec’25 . |
| MSUs (target) | 60,578 | 3,709,797 | Relative TSR over FY2024–FY2026; vest after 3 years if earned . |
| Total | — | 12,069,792 | Equity mix approx 40% RSUs / 36% PSUs / 24% MSUs . |
Equity Ownership & Alignment
| Item | Detail | Evidence |
|---|---|---|
| Beneficial ownership (as of 1/27/2025) | 225,560 shares total (206,262 owned; 19,298 right to acquire within 60 days); <1% of outstanding | . |
| Outstanding options | None (no stock options held by executives or directors) | . |
| Unvested awards at FYE2024 (select) | RSUs 82,034; PSUs earned 36,346 (vesting into 2025); MSUs target 60,578; plus older tranches | . |
| Ownership guidelines | CEO required to hold stock equal to 5x base salary; 50% holding requirement until met | . |
| Pledging/hedging | Prohibited for employees and directors; 10b5‑1 plan policy maintained | . |
| Tax withholding on vest | Company repurchases/retire shares to satisfy tax withholding on vestings, limiting open-market sales | . |
Employment Terms
| Provision | Key terms | Quantification/Status |
|---|---|---|
| Employment agreement | At-will; no individualized employment contract disclosed | — |
| Severance (U.S. Executive Severance Benefit Plan) | If involuntary separation without cause: 2x (base + target bonus) for CEO; 18 months benefits; 12 months outplacement; 12-month non-compete/non-solicit | Estimated CEO payout $5,032,791 at FYE2024 (cash + benefits) . |
| Change-in-control (CIC) | Double trigger: 2.5x (base + target bonus) for CEO; 18 months benefits; equity converts to time-based on CIC, then fully accelerates upon covered termination; 18-month non-compete for CEO | Estimated CEO “covered termination” total $32,768,290 (salary/bonus $6.25M; benefits ~$32.8k; equity acceleration $26.49M) . |
| CIC equity conversion (assumed awards) | Performance awards convert to time-based at target on CIC; portion accelerates | CEO value realized upon acceleration from conversion (if assumed) $7,221,637 . |
| CIC equity acceleration (not assumed) | Full acceleration if awards not assumed or substituted | CEO value $26,485,499 . |
| Clawback | NYSE-compliant policy; recovery of erroneously paid performance comp after restatement; broader recoupment in plans | . |
| Gross-ups | No excise tax gross-ups; “best net” cutback applies | . |
| Perquisites | Limited (exec health, financial/tax planning); CEO 401(k) match $12,750 in FY2024 | . |
Board Governance
- Current roles: CEO and Class II Director (term expiring 2026). Does not serve on standing board committees .
- Chair/CEO split: Independent Chair appointed Dec 2024; Ciena has kept roles separate since 2001, strengthening independent oversight .
- Independence: Smith is an employee director; standing committees are composed solely of independent directors .
- Attendance: Board held 10 meetings in FY2024; directors attended 100% of Board/committee meetings, except one director missed one meeting .
- Director compensation: CEO receives no additional compensation for director service .
- Say‑on‑pay: ~90% approval at 2024 annual meeting; Board recommends FOR 2025 say‑on‑pay .
Compensation Structure Analysis
- Equity-heavy, performance-tilted: 82% of CEO target TDC in equity; ~60% at‑risk performance-based (PSUs/MSUs) in FY2024 .
- Rigor and outcomes: FY2024 cash bonus funded at 65% (revenue below target; AOI below threshold; 5/6 corporate objectives achieved); PSUs earned at 40%; 2022–2024 MSUs earned at 110% on TSR outperformance, evidencing balanced calibration .
- Metrics evolution: PSUs use one-year sales orders and adjusted EPS with 50/50 split and symmetric slopes; MSUs use 3-year relative TSR vs median company in S&P Networking Index, reducing index reconstitution noise .
- Governance practices: Double-trigger CIC; clawbacks; prohibition on hedging/pledging; no excise tax gross-ups; stock ownership guideline 5x salary for CEO .
Equity Award Vesting Schedules and Potential Selling Pressure
- RSUs vest quarterly on Mar 20, Jun 20, Sep 20, Dec 20 (1/16th over four years), creating regular taxable events; the company repurchases/retire shares to satisfy tax withholdings, which can reduce open-market selling .
- PSUs earned for FY2024 vest 50% in Dec 2024 and 50% in Dec 2025; MSUs vest at end of the 3-year period if earned .
Equity Ownership & Beneficial Holdings (Detail)
| Item | Amount |
|---|---|
| Shares owned directly/indirectly | 206,262 |
| Right to acquire within 60 days (incl. deferred RSUs) | 19,298 |
| Total beneficial ownership | 225,560 (<1% of outstanding) |
| Unvested RSUs (12/12/2023 grant, remaining) | 82,034 |
| PSUs earned (FY2024) pending delivery | 36,346 |
| MSUs at target (FY2024–2026) | 60,578 |
| Options outstanding | None |
Employment & Contracts (Retention Risk)
- Severance and CIC agreements in place through November 2025 (renewed Nov 2022) provide clarity on protections; CEO non‑compete is 18 months in CIC covered terminations, 12 months otherwise, supporting retention but limiting abrupt departure flexibility .
- Insider trading compliance: One late Form 4 noted for Mr. Smith in FY2024; otherwise Section 16 compliance affirmed, indicating generally strong reporting discipline .
- Leadership bench: CFO transition underway (CFO retirement effective Aug 28, 2025; Marc D. Graff appointed effective Aug 1, 2025), relevant to succession and execution continuity under Smith’s oversight .
Performance & Track Record
- Operational achievements in FY2024: Introduced WaveLogic 6 Extreme (first 1.6T single wavelength), expanded coherent pluggables (ZR/ZR+) and WaveRouter portfolio; record revenue from cloud providers ($1.2B) .
- Pay-versus-performance context: CEO “compensation actually paid” is equity-sensitive; revenue in FY2024 was $4.015B and net income $83.956M per PVP table; cumulative TSR tracked above peer index in 2022–2024 MSU period .
Director Compensation (as relevant to dual roles)
- CEO receives no additional compensation for director service; non-employee director program includes $75,000 cash retainer and $225,000 annual RSU, with committee retainers; independent Chair retainer approved for FY2025 .
Compensation Peer Group and Benchmarking
- Peer group updated for FY2024 includes Akamai, Arista, Cadence, Calix, CommScope, Coherent, Extreme Networks, F5, Juniper, Keysight, Logitech, Lumentum, Motorola, NetApp, Nutanix, Sanmina, Synopsys, ViaSat, Zebra; market data used primarily for revenue comparability .
- Equity targeting: Committee set equity values around third quartile to address competitive talent markets versus larger tech peers .
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑pay support ~90% in 2024; board cites ongoing shareholder engagement (almost 60 engagements with top holders in last 12 months) .
Related Party Transactions and Red Flags
- No related person transactions in FY2024 under SEC rules; anti-hedging/pledging and clawbacks in force; no option repricing or excise gross-ups; one late Form 4 for Smith noted .
Multi-Year Financial Context
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 |
|---|---|---|---|---|---|
| Revenues ($) | 3,532,157,000* | 3,620,684,000* | 3,632,661,000* | 4,386,549,000* | 4,014,955,000* |
| EBITDA ($) | 646,174,000* | 618,479,000* | 397,433,000* | 527,033,000* | 324,679,000* |
Values retrieved from S&P Global.*
Investment Implications
- Alignment: High equity and performance-based mix (PSUs/MSUs) ties pay to topline growth, profitability, and relative TSR; FY2024 underperformance flowed through to 65% bonus and 40% PSU payouts, reinforcing discipline .
- Overhang/vesting cadence: Quarterly RSU vesting and two-step PSU delivery create predictable supply, but Ciena’s practice of share withholding/retirement for taxes mitigates open-market selling pressure; MSUs provide long-term alignment .
- Retention/CIC: Robust double-trigger CIC with equity conversion and acceleration plus significant equity holdings implies meaningful retention incentive; lack of gross-ups and existence of clawbacks are governance positives .
- Board structure: Independent Chair and no CEO committee roles reduce dual-role governance risk; say-on-pay support is strong, but small personal ownership (<1%) could temper perceived “skin in the game” despite 5x salary guideline .
- Execution risk: 2024 demand normalization (customer inventory digestion) drove below-plan results; ongoing AI/cloud-driven bandwidth demand and optical innovation roadmap (WL6E) are positives under Smith’s tenure; monitor CFO transition and FY2025–2026 MSU trajectory .