Badrinarayanan Kothandaraman
Enphase EnergyAbout Badrinarayanan Kothandaraman
Badrinarayanan (“Badri”) Kothandaraman, 53, has served as Enphase Energy’s President and CEO since September 2017 and as a director since April 2017. He holds a B.Tech. from IIT Madras, an M.S. in Materials Science from UC Berkeley, attended the Stanford Executive Program in 2008, and holds eight U.S. patents . Under his leadership, Enphase navigated a solar demand slowdown while maintaining strong free cash flow ($480.1M in 2024) and completing $391.4M of buybacks; 2024 net revenues were $1,330.4M, GAAP net income $102.7M, and non-GAAP gross margin 48.9% . Pay-versus-performance disclosures show CAP to CEO tracking alongside TSR and revenues/net income; Enphase’s $100 TSR tracker from 2019 stood at $263 at year-end 2024 (peer Invesco Solar ETF $108), reflecting multi-year volatility in industry conditions .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cypress Semiconductor | EVP, Data Communications Division | 2011–2016 | Built USB 3.0, USB‑C and IoT businesses; executive director of Cypress India (2012–2016) . |
| Cypress Semiconductor | VP, Asynchronous SRAM Business | 2008–2011 | Led business unit; prior work in process technology and chip design . |
| Enphase Energy | COO → CEO, Director | Apr 2017–Sep 2017 (COO), CEO since Sep 2017 | Operational turnaround, scale-up of microinverters and storage; board service . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No current public company boards disclosed . |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 450,000 | 450,000 | 450,000 |
| Target Bonus (% of Salary) | 100% | 100% | 100% |
| Actual Cash Bonus ($) | 564,665 | 270,750 | 22,843 |
| Total Reported Compensation ($) | 16,627,977 | 19,527,534 | 12,630,005 |
Notes:
- Target bonus is determined quarterly with Company, Funding, and Individual factors; 2024 payout equaled ~5% of target due to below-threshold quarters and funding factor constraints .
Performance Compensation
Enphase emphasizes at-risk equity: 67% of NEO equity as PSUs (34% three-year Relative TSR; 33% one-year SMART Goals) and 33% time-based RSUs; CEO total target compensation decreased ~35% YoY in 2024; 69% of CEO compensation was at risk .
2024 Grants and Vesting Mechanics (CEO)
| Instrument | Grant Date | Target Shares | Vesting Schedule | Performance Conditions |
|---|---|---|---|---|
| Time-based RSUs | 1/15/2024 | 33,000 | 1/3 on Mar 1 of 2025, 2026, 2027 | Service-based only . |
| PSUs – Annual CEO SMART Goals | 1/15/2024 | 33,000 target; 49,500 max | Eligible 3/1/2025 | Score-based: <65=0%; 65–80=50%; 80–100=100%; ≥100=150% . 2024 achievement scored 70.5 → 50% payout (16,500 shares) . |
| PSUs – 3-year Relative TSR | 1/15/2024 | 34,000 target; 68,000 max | Eligible 3/1/2027 | Vest at 0–200% based on percentile vs S&P 500; target at 55th percentile; cap at 100% if TSR negative . |
Key SMART Goal Metrics and Outcomes (2024)
| Metric | Weighting / Points | Target | Actual | Payout |
|---|---|---|---|---|
| Net Revenues | 20 pts (incl. stretch) | ~$1,650.3M | $1,330.4M | 0.3 pts |
| Non-GAAP GM with IRA | 10 pts | 47.6% | 48.9% | 10.0 pts |
| Non-GAAP GM without IRA | 5 pts | 40.4% | 40.0% | 4.0 pts |
| Adjusted FCF | 1 pt | $348.5M | $480.0M | 1.0 pt |
| New Products (aggregate) | 27 pts | Multiple launches | See disclosures | 16.4 pts |
| Total SMART Goals Score | 120 max | — | 70.5 | 50% PSU payout |
Quarterly Bonus Mechanics (2024)
| Quarter | Company Perf. Factor | Funding Factor | CEO Individual Factor | Result |
|---|---|---|---|---|
| Q1 | 1.0 | 0 due to EPS guardrail | 0.8990 | No payout |
| Q2 | 0.5 | 0 due to EPS guardrail | 0.7080 | No payout |
| Q3 | — (below 65%) | 0.66 | 0.6220 | No payout |
| Q4 | 0.5 | 0.62 | 0.6550 | $22,843 |
Equity Ownership & Alignment
| Ownership Detail | Value |
|---|---|
| Beneficial ownership | 1,611,632 shares; ~1.2% of outstanding (131,185,907 shares at 3/20/2025) . |
| 2024 Option/Stock activity | Exercised 557,660 options ($68,296,620 value realized); multiple RSU/PSU vestings disclosed . |
| Outstanding awards (12/31/2024) | RSUs: 33,000 (2024 grant); prior RSUs 17,600; PSUs: 27,200 (TSR 2023 cohort), 33,000 (2024 SMART), 34,000 (TSR 2024 cohort) . |
| Ownership guidelines | CEO 6x base salary; status achieved as of 12/31/2024 . |
| Hedging/pledging policy | Hedging/short-selling prohibited; pledging prohibited except pre-approved; Kothandaraman has permission to use company securities as collateral to secure a credit line (RED FLAG for alignment) . |
| 10b5‑1 plans | Separate policy governing pre-arranged trading plans exists; filed with 2024 Form 10‑K . |
Employment Terms
| Term | CEO Details |
|---|---|
| Employment | At-will; initial offer letter; eligible for PSP . |
| Severance Plan Tier | Tier I . |
| Involuntary Termination (no CIC) | Cash: 12 months base + pro‑rata target bonus; COBRA 12 months; 25% acceleration of equity; extended option exercise window (to earlier of 1 year or original expiry) . |
| Change-in-Control Termination (double-trigger) | Cash: 12 months base + pro‑rata target bonus; COBRA 12 months; 100% acceleration of equity; extended option exercise window . |
| Potential payments (as of 12/31/2024) | CIC with termination: Cash $900,000; RSU acceleration $3,475,208; PSU acceleration $6,469,656; Benefits $25,419 . Involuntary (no CIC): Cash $900,000; RSU $868,802; PSU $1,617,414; Benefits $25,419 . |
| Clawbacks | SEC Rule 10D-compliant clawback (effective 10/2/2023) plus PSP-specific misconduct/erroneous results recoupment . |
| Other | No tax gross-ups; no executive perquisites; no pensions/SERP; double-trigger equity acceleration on CIC . |
Board Governance
- Board service: Class III Director since April 2017; not “independent” under Nasdaq due to CEO role .
- Board leadership: Independent Chair (Steven Gomo) serves as Board Chair/Lead Independent Director; separate Chair/CEO structure enhances oversight .
- Committees: CEO is not a member of Board committees; Audit, Compensation, and Nominating committees fully independent .
- Attendance: Board met 4 times in 2024; all directors attended ≥75% of meetings; CEO and all directors attended the 2024 annual meeting .
- Director compensation: CEO receives no additional pay for board service (non-employee director retainers apply only to independents) .
Director/Say-on-Pay Voting and Shareholder Feedback
| Item | Result |
|---|---|
| 2024 Director election (Badri) | For: 87,940,904; Withheld: 6,244,233; Broker non-votes: 17,677,272 . |
| 2024 Say-on-Pay approval | ~74.7% of votes cast supported NEO compensation . |
| Shareholder outreach (2024/25) | Contacted top 30 holders (~51% of shares); spoke with holders representing ~14%; some (~24%) declined due to no concerns . |
Compensation Peer Group and Benchmarking
- 2024 peer group includes First Solar, SolarEdge, Sunrun, Sunnova, Generac, Monolithic Power, Qorvo, Teradyne, ADT, Alarm.com, Resideo, SunPower (new) among others; market-cap $8–75B, revenues $0.5–$4.2B .
- No fixed percentile benchmarking for pay levels; TSR PSUs target 55th percentile of S&P 500 for target vesting .
Compensation Structure Analysis
- Mix shift: Emphasis on PSUs (67% of equity) and longer vesting for RSUs (3 years), reflecting increased performance orientation and retention .
- 2024 outcomes: SMART Goals PSU paid at 50% due to challenging revenue and profit targets; quarterly cash bonus paid only in Q4 (5% of annual target) .
- Governance enhancements: Adoption of SEC-compliant clawback; explicit anti-hedging; no perqs/pensions; continued use of 10b5‑1 plans .
- Option usage: Company has not granted options “in many years”; 2024 awards were RSUs/PSUs only .
Risk Indicators & Red Flags
- Pledging: CEO permitted to pledge company securities as collateral for a credit line, increasing forced-sale risk during market stress (alignment concern) .
- Industry demand slowdown: 2023–2024 headwinds impacted revenues, TSR PSUs remain at risk until 2027 determination .
- Say-on-pay support: 74.7% approval indicates room for further shareholder engagement on pay design .
- Positive mitigants: Independent Chair; strong clawback; double-trigger CIC; no tax gross-ups or perqs .
Equity Detail and Vesting Schedules
| Category | Detail |
|---|---|
| 2024 RSUs | 33,000 shares; vest 1/3 on Mar 1 of 2025, 2026, 2027 . |
| 2024 SMART PSUs | 33,000 target; payout 50% (16,500) based on 70.5 score; vested on Mar 1, 2025 . |
| 2024 TSR PSUs | 34,000 target; eligible Mar 1, 2027; 0–200% payout vs S&P 500 percentile; cap at 100% if negative TSR . |
| 2023 TSR PSUs | 27,200 target unearned at 12/31/2024; eligible Mar 1, 2026 . |
Investment Implications
- Alignment and incentives: Large, multi-year PSU components (Relative TSR and SMART Goals) create strong performance alignment; ownership guideline met, but approved pledging introduces alignment risk under stress .
- Trading signals: 2024 saw significant option exercises and realized value ($68.3M), suggesting potential liquidity needs or diversification; continued use of 10b5‑1 plans and policy constraints reduce informational risk of sales .
- Retention and M&A dynamics: Tier I severance with 100% equity acceleration on double-trigger CIC could lower personal risk in strategic transactions; vesting cliff dates (2026/2027) may support retention through critical product cycles .
- Governance quality: Independent Chair, fully independent committees, robust clawbacks and outreach support investor confidence; say-on-pay at 74.7% indicates engagement opportunities as the company balances retention and performance amid cyclical demand .