Claudius E. Watts IV

About Claudius E. Watts IV

Claudius (Bud) E. Watts IV, age 63, has served on CommScope’s Board since 2011 and as Chairman since 2020. He is a private investor and founding partner of Meeting Street Capital, and a Senior Advisor and former Partner at The Carlyle Group; earlier he founded Carlyle’s Technology Buyout business, and began his career as a fighter pilot in the U.S. Air Force . The Board has determined he is not independent under Nasdaq rules .

Past Roles

External Roles

Board Governance

• Chairman of the Board; no standing committee memberships .
• Not independent; Lead Independent Director is Timothy T. Yates (since 2020) .
• Board/committee activity: 2024 had 15 Board meetings and 16 committee meetings; all directors attended ≥80% of meetings; annual director elections and regular executive sessions of independent directors .
• Board size fixed at 10; Carlyle has rights to designate two directors under the Investment Agreement while ownership thresholds are met .

Fixed Compensation

Employment Agreement (severance summary):

Performance Compensation

| Award Type | Metric/Design | Grant/Target | Outcome/Vesting | Notes | |---|---|---|---| | Cash Incentive (2024) | 0.0667% of financial benefits from strategic initiatives | Target $2.40M | Earned $2.01M; paid in 3 equal installments Mar 2025/Sep 2025/Mar 2026 (service condition) | Mirrors CEO/CFO Cash LTIP design; retention-focused | | RSUs (2024) | Time-based | 260,000 units; grant-date fair value $348,231 | Vest annually over 3 years beginning Jun 1, 2025 (service) | 2024 grants on Mar 1 and Jun 1 | | PSUs (2022) | Core Adjusted EBITDA (cumulative FY22–FY24) | Eligible vest at 69.7% of target | Vests Jun 1, 2025; targets modified in Feb 2024 | TSR PSUs (2022) forfeited (below threshold) | | PSUs (2023) | Core Adjusted EBITDA (FY23–FY25); TSR relative to S&P 500 (Mar 1, 2023–Feb 28, 2026) | 55,000 Core EBITDA PSUs; 36,700 TSR PSUs outstanding | Not eligible until period end (FY25/Feb 2026) | Targets for 2023 Core EBITDA PSUs modified (Feb 2024) |

Performance Metric Detail (2022 Core Adjusted EBITDA PSUs – target modifications):

Company-wide short-term plan and context (for alignment):

• 2024 AIP metrics for executives: 90% Adjusted EBITDA (incl. OWN & DAS), 10% strategic objectives; company achieved 157.6% payout on AIP for corporate NEOs; segments CCS and OWN achieved 199% payout segment-specific; Watts did not participate in AIP but had Cash LTIP .

Other Directorships & Interlocks

Expertise & Qualifications

• Finance/M&A leadership; private equity technology buyouts; capital structure strategy .
• Operating and governance depth across multiple boards; Chair/Lead Independent roles historically .
• Defense/operations background (USAF fighter pilot), adding discipline and risk oversight perspective .

Equity Ownership

Additional outstanding awards:

• As of Dec 31, 2024: 32,759 RSUs (eligibility from 2022 Core EBITDA PSUs), 55,000 Core Adjusted EBITDA PSUs (2023 grant), 36,700 TSR PSUs (2023 grant), plus 260,000 RSUs granted in 2024; RSUs vest annually from Jun 1, 2025 .

Ownership policy:

• Non-employee director stock ownership guidelines: ≥5x base cash retainer or ≥100,000 shares, to be met within 5 years; all non-employee directors on track; Watts is an employee director and not in the non-employee director guideline cohort .

Insider filings:

• No Section 16(a) delinquency noted for Watts in 2023; company disclosed late filings for other individuals (not Watts) .

Governance Assessment

Key findings and implications for investor confidence:

• Independence: Watts is not independent and simultaneously serves as Chairman and a Senior Advisor to Carlyle. Given Carlyle’s preferred equity position and board designation rights, this is a structural governance risk that requires strong Lead Independent Director processes and robust committee independence—CommScope has a Lead Independent Director (Yates) and fully independent Audit/Compensation/NCG committees .
• Attendance/Engagement: Board met frequently in 2024 and all directors achieved ≥80% attendance, indicating high engagement during a transformational year .
• Pay design: 2024 compensation for Watts was heavily performance-linked through the Cash LTIP tied to strategic initiatives and time-vesting RSUs; however, the Compensation Committee modified performance targets for 2022 and 2023 Core Adjusted EBITDA PSUs in Feb 2024, increasing earned outcomes (69.7% on 2022 PSUs). Target modifications for in-progress awards can be viewed as a red flag without clear disclosure of rationale—CommScope disclosed drivers (supply chain tumult, customer ordering unpredictability, retention needs) and did not grant new awards in lieu of PSUs, but investors should monitor repeatability of such actions .
• Alignment safeguards: Company policies prohibit hedging/pledging and include an incentive compensation clawback policy; say‑on‑pay support remained strong (≈97% in 2024), which suggests shareholder tolerance for transitional pay structures in a turnaround context .
• Related‑party oversight: Audit Committee pre-approves and reviews related‑party transactions; Carlyle’s Investment Agreement terms (dividends in kind, conversion rights and voting commitments) are clearly disclosed; oversight processes and independent committee leadership mitigate, but do not eliminate, perceived influence risks .

RED FLAGS

• Non‑independent Chairman with ongoing advisory relationship to a major preferred shareholder (Carlyle) that designates two directors—monitor for potential conflicts and ensure continued robust executive sessions and Lead Independent Director empowerment .
• Modification of performance goals for in‑progress PSUs (Feb 2024) increasing the probability of payout; while disclosed and justified, repeated use would undermine pay‑for‑performance integrity .
• Significant Cash LTIP awards for senior leadership (including Watts) linked to divestiture/capital structure outcomes—ensure disclosure clarity on metrics and pay outcomes; 2024 earned amount $2.01M for Watts .

Positives

• Strong independent committee structure; all committee members independent; Audit Committee members designated “financial experts” .
• High meeting cadence and attendance during strategic transformation .
• Clear anti‑hedging/anti‑pledging and clawback policies; majority voting; annual elections; no poison pill .

Director Compensation (Watts-specific)

Note: Non‑employee directors in 2024 received a $200,000 cash award in lieu of annual RSUs to manage equity burn rate; Watts did not receive director comp as an employee director .

Equity Grants and Vesting (Watts)

Related Party & Investment Agreement (Carlyle)

• Terms: 5.5% cumulative dividend on Series A Convertible Preferred (cash or in kind), conversion into common at 36.36x (equiv. $27.50/share), mandatory conversion option at VWAP $49.50 conditions, redemption rights post 8.5 years, change‑of‑control redemption formula; 2024 dividends paid in kind of $65.2M .
• Board influence: Two Carlyle designees; committed voting on specified proposals while rights remain .

Say‑on‑Pay & Shareholder Feedback

• Say‑on‑pay approval ≈97% in 2024; the company cites investor outreach and program changes (clawback, risk moderation, equity mix) .

Governance Committee Composition (for context)

Governance Assessment Summary

• Overall: Board structure and independent committees offset some risks from a non‑independent Chair with PE ties. Attendance and process rigor are strengths. Pay program adjustments during a turnaround (PSU modifications, Cash LTIP) should be monitored for recurrence and rigor in target-setting. Anti‑hedging/pledging and clawback policies, majority voting, and annual elections support investor confidence .