Kate Johnson
Lumen TechnologiesAbout Kate Johnson
Kate Johnson is President and Chief Executive Officer of Lumen Technologies and a director since November 7, 2022; she is 57 years old and does not serve on Board committees at Lumen . Her prior roles include President of Microsoft U.S. (2017–2021), senior leadership positions at GE, Oracle, and Red Hat, and she has served on the UPS board since 2020 with committee roles in Nominating & Corporate Governance and Risk . Under Johnson, Lumen reported 2024 revenue of $13.1B and Adjusted EBITDA of $3.9B, with one-year TSR of 190% as of Dec 31, 2024; however, 2024 STI paid below target at 88.5% and 2022 PBRS paid 0% for the 2022–2024 performance period, indicating pay aligned to mixed performance outcomes .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Microsoft Corporation | President, Microsoft U.S. | 2017–2021 | Led domestic solutions/services growth; large-scale commercial execution |
| GE (Digital, Intelligent Platforms) | EVP & Chief Commercial Officer; CEO, Intelligent Platforms Software; VP & CCO | 2013–2017 | Commercial transformation and digital/industrial software strategy |
| Oracle Corporation | SVP, North America Tech & Government Consulting | 2007–2013 | Enterprise technology sales and public sector consulting leadership |
| Red Hat | VP, Global Services & Strategic Accounts | 2004–2007 | Enterprise open-source services growth and strategic accounts |
External Roles
| Organization | Role | Years | Committees / Notable Governance |
|---|---|---|---|
| United Parcel Service (UPS) | Director | 2020–present | Nominating & Corporate Governance; Risk |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $180,840 | $1,200,000 | $1,283,607 |
| STI Target % | 200% (prorated from start date 11/7/22) | 200% | Increased to 220% effective 3/1/24 |
| STI Target $ Opportunity | Pro-rated per offer letter | $2,400,000 | $2,784,606 (based on earned 2024 salary and blended % after increase) |
| Actual STI Bonus Paid ($) | $329,129 | $1,996,800 | $2,957,252 |
| Stock Awards Grant-Date Fair Value ($) | $3,013,700 | $6,215,329 | $6,135,630 |
| All Other Compensation ($) | $254,461 | $180,834 | $123,502 |
Performance Compensation
Annual STI (Design, Metrics, Payouts – FY 2024)
| Metric | Weighting | Target Definition | Actual vs Target | Payout % | Notes |
|---|---|---|---|---|---|
| Adjusted EBITDA | 50% | Threshold/Target/Max set in Feb 2024 (recalibrated mid-year) | 96.7% of target | 66.7% | Primary performance measure; aligns cost/margins |
| Revenue | 35% | Threshold/Target/Max set in Feb 2024 (recalibrated mid-year) | 98.7% of target | 93.4% | Transition-to-growth emphasis |
| Customer Experience | 15% | Qualitative CX goals | Exceeded expectations | 150% | Qualitative component |
| Company Performance Funding | — | Weighted aggregate | — | 88.5% | Approved by HRCC in Feb 2025 |
| Individual Performance Modifier (CEO cap 20%) | — | 0–120% | Johnson modifier 120% | Applied to STI amount | Program rule cap 120% |
STI payout formula: (Base Salary × STI Target %) × Company Performance Funding × Individual Modifier; capped at 2× target .
Long-Term Incentive Program (FY 2024 grants; performance period 2024–2026)
| Component | Weighting | Grant Date | Target / Curve | Vesting | Design Notes |
|---|---|---|---|---|---|
| TBRS (time-based restricted stock) | 40% | March 1, 2024 | NA (service-based) | Graded over 3 years | Retention and alignment; unvested shares granted: 3,609,194; GDFV $6,135,630 |
| PLTC – Relative TSR | 50% of PLTC (PLTC total 60% of LTI) | March 1, 2024 | 25th pct=50%; 50th=100%; 75th=200%; capped at 100% if absolute TSR is negative | Cliff vest 3/1/2027 | Peer group defined (15 companies incl. AT&T, Verizon, Comcast, etc.) |
| PLTC – Cumulative Free Cash Flow | 50% of PLTC | March 1, 2024 | Threshold/Target/Max set Nov 2024; numeric targets not disclosed due to sensitivity | Cliff vest 3/1/2027 | Shifted primary LTI metric from Cumulative Adj. EBITDA to Cumulative FCF in 2024 |
Outstanding LTI tranches as of Dec 31, 2024:
- 2022 PBRS (Adj. EBITDA + rTSR) performance period 2022–2024; payout 0% (below threshold on both metrics) .
- 2023 PBRS (Adj. EBITDA + rTSR) performance period 2023–2025; targets adjusted for EMEA sale timing .
- 2024 PLTC (rTSR + Cumulative FCF) performance period 2024–2026 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 11,759,439 shares (3,228,807 unrestricted; 8,530,632 unvested restricted stock); includes 2,278,362 shares held indirectly in a trust |
| Ownership as % of outstanding | 1.1% |
| Vested vs. unvested | See above; unvested TBRS subject to service vesting; performance-based awards retained/accelerated only per plan/offer letter conditions |
| Options | Company has not granted stock options in several years |
| Pledging / Hedging | Prohibited for directors and Section 16 officers by insider trading policy |
| Ownership guidelines | CEO required to hold 6× base salary ($7.8M at Dec 31, 2024); compliance required within 3 years; Johnson was in compliance as of Mar 19, 2025 |
| 10b5-1 plans | Not disclosed in proxy; insider policy text filed with 2024 10-K |
Employment Terms
| Provision | Key Terms |
|---|---|
| Start date / Board service | CEO effective Nov 7, 2022; appointed to Board; to resign Board seat upon ceasing to serve as CEO (offer letter) |
| Base pay / STI target | Base salary $1.2M at hire; STI target 200% (prorated in 2022) |
| LTI target | Annual LTI target $14,250,000 beginning FY 2023 (60% performance-based; 40% time-based) |
| Sign-on awards | $1,000,000 cash sign-on (two-year clawback); $1,000,000 time-based restricted stock vesting at first anniversary; prorated 2022 TBRS $2,375,000 vesting over 3 years |
| Severance (no CoC) | CEO entitled to 2× total targeted cash compensation (base + STI target), 12 months COBRA subsidy, prorated annual bonus based on actual performance (90% individual modifier) upon qualifying termination without cause/for good reason |
| Change-of-control (double trigger) | Protected period 2 years; cash severance at 2.5× annual cash compensation (base + STI target), 2 years welfare benefits; STI for year of termination based on actual and pro-rata; immediate vesting of time-based awards; performance-based awards retained to continue vesting (death pays out at target); no single-trigger equity acceleration |
| Equity acceleration (offer letter) | For terminations without cause/for good reason within 3 years after start date (before Nov 7, 2025): prorated portion of time-based awards vest; prorated performance-based awards retained to continue vesting |
| Restrictive covenants / clawbacks | Non-compete/solicit provisions embedded; forfeiture/clawback broader than Dodd-Frank (fraud, reputational harm) plus NYSE-compliant Dodd-Frank policy adopted Oct 2, 2023 |
| Perquisites | Personal and business use of corporate aircraft; personal use capped at $200,000 per calendar year and treated as taxable income (offer letter) |
| Tax gross-ups | Company states no excise tax gross-ups; relocation benefits include tax gross-up per offer letter |
Board Governance (Lumen)
- Johnson is an employee director; Board affirmed independence for all directors except Johnson; she does not serve on Board committees .
- Board has a non-executive Chairman (T. Michael Glenn) who receives a supplemental fee; independent directors met in executive session quarterly led by the Chairman .
- 2024 Board/committee meeting attendance was strong; each director attended >90% of meetings; all directors attended the 2024 annual meeting; 28 total meetings in 2024 .
- Employee directors receive no additional compensation for Board service; outside director compensation mix and fees are disclosed separately .
Director Compensation (as director)
- Johnson receives no additional compensation for serving as a director; her compensation is disclosed in NEO tables .
Say-on-Pay & Shareholder Feedback
- 2024 annual meeting say-on-pay received 92% support; 2024 Equity Incentive Plan received 93% support .
- HRCC engaged top 30 shareholders in 2024, disclosed rationale for mid-year recalibration (STI target adjustments in August; LTI metric change to Cumulative FCF in November) and received general support with emphasis on clear rationales .
Performance & Track Record
- 2024 performance: Revenue $13.1B; Adjusted EBITDA $3.9B; Free Cash Flow $1.4B; Capex $3.2B .
- STI payout below target at 88.5%; LTI 2022 PBRS paid 0% for 2022–2024, reinforcing pay-for-performance .
- CEO messaging focuses on AI backbone build-out and “cloudifying telecom,” with PCF agreements, network capacity expansion goals, and improved enterprise wave sales in 2024 .
Compensation Peer Group / Benchmarking
- Lumen targets the 50th percentile of peer compensation; compensation and TSR peer groups disclosed (TSR peers include AT&T, Verizon, Comcast; benchmarking peers include HPE, Oracle, Qualcomm, etc.) .
Risk Indicators & Red Flags
- Prohibitions on hedging/pledging reduce misalignment risk; no related party transactions reported for 2024 .
- Mid-year changes to incentive metrics and targets (2024) were extraordinary but accompanied by shareholder engagement and documented rationales .
- Long-term performance shortfalls (0% payouts on 2022 PBRS) underline execution risk; options not used in recent years, reducing repricing risk .
Compensation Committee / Governance
- HRCC composed entirely of independent directors; active oversight of LTI share usage, burn rate, dilution/overhang; 2024 equity pool replenished by 43M shares; 2025 LTI returned to equity for SLT .
- Use of independent consultant (Semler Brossy) and robust goal-setting and timing practices for grants; no timing around MNPI .
Investment Implications
- Alignment: Johnson’s ownership (≈1.1% of shares) and compliance with 6× salary ownership guidelines support alignment; hedging/pledging prohibitions further reduce misalignment risk .
- Incentive levers: 2024 STI relied on EBITDA/Revenue/CX with below-target payout; 2024 LTI emphasizes rTSR and Cumulative FCF through 2026, directly linking value creation to deleveraging and cash generation amid transformation—watch PLTC payout sensitivity to FCF and TSR caps .
- Retention/overhang: Large unvested TBRS and cliff-vesting PLTC (3/1/2027) provide retention but also potential share supply on vesting; equity acceleration protections through Nov 2025 reduce near-term departure risk; severance and double-trigger CoC terms standard but material in change scenarios .
- Execution risk: Documented 0% LTI payouts for 2022 tranche and below-target STI highlight performance risk; CEO strategy on AI backbone and network utilization is a positive narrative, but realized payouts will hinge on delivering FCF/TSR versus peers .
Board service note: Johnson is not independent at Lumen and holds no committee memberships; the Board maintains a non-executive Chair and independent committee structures, mitigating dual-role concerns. Johnson must resign her Board seat if she ceases to be CEO, preserving governance clarity **[18926_0000018926-25-000031_lumn-20250331.htm:23]** **[18926_0000018926-25-000031_lumn-20250331.htm:40]** **[68622_0001193125-22-243230_d396237dex101.htm:0]**.