Anil K. Singhal

About Anil K. Singhal

Co‑founder of NetScout Systems, Inc., Anil K. Singhal is President, Chief Executive Officer, Chairman, and a Director (age 71). He has served on the Board since June 1984 and as Chairman since January 2007; he holds a BSEE from BITS Pilani and an MS in Computer Science from the University of Illinois at Urbana‑Champaign . Under his leadership, NetScout completed its IPO in 1999 and acquired Danaher’s Communications Business in 2015 for $2.3B, expanding scale and product breadth . For FY2025, NetScout reported total revenue of $822.7M (≈1% YoY decline) and non‑GAAP diluted EPS of $2.22; GAAP results included a $427.0M non‑cash goodwill impairment leading to a GAAP net loss of $366.9M (−$5.12 per diluted share) . On long‑term incentives, PSUs granted in FY2022 (measured to June 3, 2024) paid out at 56% of target based on relative TSR performance versus the Russell 2000 Index .

Past Roles

External Roles

• Other public company directorships: None disclosed .

Fixed Compensation

• Base salary and target bonus policy: CEO base salary and target bonus were unchanged in FY2025 vs. FY2024; CEO base salary has not increased since FY2023 .
• Say‑on‑pay: 87.4% support at the 2024 Annual Meeting .
• Perquisites: Company‑paid automobile and insurance allowances, financial/charitable planning, tax preparation, and event tickets for CEO; no tax gross‑ups .

FY2025 CEO pay components (disclosed amounts):

Notes: FY2025 bonuses were set at 80.9% of target via negative discretion despite over‑achievement on two metrics (see Performance Compensation) .

Performance Compensation

Annual incentive (FY2025)

• Plan metrics/weights: Non‑GAAP EPS (40%), total non‑GAAP revenue (40%), YoY non‑GAAP cybersecurity revenue growth (20%). Threshold profitability (non‑GAAP EPS) gate applies .
• Targets vs. actual and payout outcome:

• CEO FY2025 bonus paid: $523,580 (80.9% of $647,194 target) .

Long‑term incentives (FY2025 grants)

• Instrument mix and objectives: ~40% PSUs (3‑yr relative TSR vs. Russell 2000, cliff vest at end of period, capped at 100% of target), and time‑based RSUs vesting in four equal annual installments .
• FY2025 CEO grant (June 6, 2024): 28,800 PSUs and 43,200 RSUs; total grant‑date fair value $1,193,760 .
• PSU measurement period: June 6, 2024–June 5, 2027; target requires TSR ≥ 5 percentage points above Russell 2000; payout schedule ranges from 2% at deep underperformance to 100% at target/maximum; capped at 100% .
• Prior PSU outcome: FY2022 PSUs (June 4, 2021–June 3, 2024) paid 56% of target based on relative TSR .

Equity Ownership & Alignment

• Beneficial ownership: 1,991,615 shares (2.75% of outstanding); includes 118,455 shares held by a charitable foundation where Mr. Singhal and his spouse are trustees; excludes 776,887 shares in a trust for his children and 400,000 shares in a trust for his benefit where he and spouse are not trustees .
• Stock ownership guidelines: CEO required to hold 5x base salary; as of March 31, 2025, all officers and non‑employee directors had met guidelines or were within the compliance period .
• Hedging/pledging: Company policy prohibits short sales, hedging, pledging, and derivative transactions in NetScout securities by directors and officers .
• Clawback: Executive Compensation Recovery Policy adopted October 2023 compliant with Nasdaq standards; applies to erroneously awarded incentive‑based compensation in restatement scenarios .

Outstanding equity awards (as of March 31, 2025)

Vesting cadence

• RSUs generally vest in four equal annual installments beginning on the first anniversary of grant; PSUs are measured and vest (if earned) on a three‑year cliff, subject to certified performance .
• Upon death or disability, RSUs fully vest; PSUs are forfeited per award agreements .

Insider supply/pressure signals

• New RSU tranches vest annually per schedule; PSUs may settle at end of performance periods, potentially adding episodic supply; hedging/pledging prohibitions reduce forced‑sale risks .

Employment Terms

• Agreement: Employment agreement (in effect since 2007, as amended) with automatic one‑year renewals; terminable at will by either party .
• Severance/change‑of‑control economics (CEO): If terminated by NetScout without due cause, if he terminates at any time following a sale of NetScout, upon death or disability, or if he terminates employment for any reason prior to consummation of a sale, he (or estate) receives a lump sum equal to the net present value of $16,208 per month for seven years plus continued health/dental benefits; benefits fully vested; projected future payments for unfunded severance obligation ≈ $1,214,689 (company projection) .
• Potential payments table (as of 3/31/2025):
  • Termination without cause by NetScout at any time or termination by Mr. Singhal for any reason: Salary/other cash payments $1,057,694 and health/dental $156,995 (illustrative at $21.01 share price and contemporaneous assumptions) .
  • Death or disability: RSU acceleration value $2,745,288 (PSUs forfeited per award agreements) .
• Clawback/forfeiture: Agreements include clawback provisions for prohibited conduct; company‑wide executive clawback policy also applies .

Board Service & Governance

• Board roles: Chairman, President, CEO, and Director (since 1984); non‑independent; no committee memberships .
• Governance structure: Combined CEO/Chair role balanced by a Lead Independent Director with defined responsibilities; all Board committees (Audit, Compensation, Nominating & Corporate Governance, Finance) are fully independent .
• Independence profile: 8 of 10 current Directors are independent; committee chairs are independent .
• Attendance: FY2025 average Board/committee meeting attendance was 96%; each Director attended ≥75% of the meetings on which they served .
• Director pay: Employee Directors (including Mr. Singhal) receive no compensation for Board service .

Compensation Structure Details

Annual incentive design (FY2025)

• Targets (set July 2024): Non‑GAAP EPS range $2.10–$2.30; total non‑GAAP revenue $800–$830M; non‑GAAP cybersecurity revenue growth 10%–15%; weightings 40%/40%/20% .
• Achievement: EPS $2.22 and revenue $822.7M achieved; cybersecurity growth 7% fell below threshold; potential payout 134.4% of target; actual 80.9% after negative discretion .

LTI design

• PSUs: 3‑year rTSR vs. Russell 2000; target/maximum = 100% at ≥5pp outperformance; payout capped at 100%; threshold outcome as low as 2% of target for deep underperformance .
• RSUs: time‑based retention, four equal annual installments starting on first anniversary .

Peer group and positioning

• FY2025 peer group included 19 tech/communications software and hardware names (e.g., ATEN, EXTR, TENB, HLIT, CALX, BOX, IDCC, VIAV), calibrated to revenue and market cap comparability; CEO target total cash was between 25th and 50th percentiles vs. peers; other NEOs’ target total cash below 25th percentile .

Risk and policy safeguards

• No options outstanding for NEOs as of 3/31/2025; no option repricing without stockholder approval; clawback policy; ownership guidelines; prohibition on hedging/pledging; bonus cap at 200% of target; independent consultant (Pay Governance) .

Investment Implications

• Alignment: High insider ownership (2.75%) and robust ownership/holding requirements align CEO incentives with long‑term value creation; hedging/pledging prohibitions further align incentives and reduce tail risks .
• Performance sensitivity: Annual bonus tied to non‑GAAP EPS and revenue (80% weighting combined), with added emphasis on cybersecurity revenue growth (20%); negative discretion applied (actual 80.9% vs. 134.4% formulaic) signals Compensation Committee discipline in the face of mixed growth performance .
• LTI design signal: rTSR‑based PSUs over 3 years (capped at 100%) and multi‑year RSU vesting support retention but limit windfalls; the FY2022 PSU payout at 56% indicates historical TSR underperformance vs. Russell 2000 during that period, highlighting execution risk versus peers .
• Contract risk: CEO severance is unusual—fixed seven‑year stream (present‑valued) triggered in broad circumstances (including CEO resignation pre‑sale), which may be viewed as shareholder‑unfriendly and could create payout overhang in adverse scenarios .
• Execution context: FY2025 GAAP loss driven by goodwill impairment (non‑cash) amid portfolio repositioning; non‑GAAP EPS grew YoY and cybersecurity revenue rose 7% while service assurance faced carrier headwinds; leadership transitions (COO/CFO) elevate near‑term execution risk and succession focus .
• Governance mitigants: Lead Independent Director framework, fully independent committees, 96% meeting attendance, strong say‑on‑pay support (87.4%) and clawback policy reduce governance risk concerns tied to combined CEO/Chair roles .