ADTRAN Holdings Announces Key Changes to Executive Compensation Structure and Long-Term Incentive Plan

HUNTSVILLE, AL – April 1, 2026 – ADTRAN Holdings, Inc. (NASDAQ: ADTN), a leading provider of networking and communications equipment, has filed a Form 8-K with the U.S. Securities and Exchange Commission, disclosing significant amendments to its executive compensation arrangements and the grant of new performance-based equity awards to top executives. These changes are poised to impact investor sentiment and could affect the company’s share price.

Key Highlights from the Report

• Amendment to CEO Employment Agreement: The Compensation Committee and CEO have agreed to amend the employment agreement, specifically adjusting the performance objectives and award values for long-term incentive grants.
• Performance Objectives Now Include Relative TSR: The performance goals for the CEO’s long-term PSU (Performance Share Unit) awards, previously based solely on Adjusted EBIT, will now also be subject to adjustment based on ADTRAN’s relative Total Shareholder Return (TSR) compared to peers over the performance period.
• Changes in Anticipated Equity Grant Values: The anticipated value of Restricted Stock Units (RSUs) and target number of long-term financial plan PSUs the CEO is eligible to receive during the agreement term has been adjusted.
• New Long-Term Performance Share Grants: On April 1, 2026, the Compensation Committee granted new PSU awards to the CEO, Chief Revenue Officer (James D. Wilson), and Senior Vice President of Finance and CFO (Timothy Santo) under the 2024 Employee Stock Incentive Plan.
• Three-Year Performance Period: The new PSU awards are based on a performance period from January 1, 2026 through December 31, 2028.
• Performance Metrics: The awards are earned based on achieving specific Adjusted EBIT targets, with the possibility of upward or downward adjustment (by 20%) depending on ADTRAN’s TSR percentile ranking versus the Nasdaq Telecommunications Index.
• No More Market-Based PSUs for Executives: The company confirmed it will not grant any additional market-based PSUs (those based solely on TSR) to named executive officers going forward.
• Details Incorporated by Reference: Full terms of the amendments and award agreements are included as exhibits to the filing. Some information has been redacted as confidential.

Details of the New Executive Performance Share Awards

• Target Calculation: For the CEO, the target number of PSU shares is calculated by dividing 633% of base salary by the closing stock price on the grant date. This award is divided into three equal tranches, each vesting contingent on meeting annual and cumulative performance goals.
• Performance Hurdles: To achieve 100% of the award, the company must meet a specified Adjusted EBIT target by the end of 2028. Minimum (threshold) and maximum payout levels are set, with linear interpolation for results between goals.
• TSR Adjustment: At the end of the performance period, the number of shares earned under the Adjusted EBIT metric is adjusted:
  • If ADTRAN’s TSR is at the 30th percentile or below relative to the Nasdaq Telecommunications Index, the earned shares are decreased by 20%.
  • If TSR is at the 55th percentile or higher, the earned shares are increased by 20%.
  • Percentile performance between these markers results in no TSR-based adjustment.
• Dividend Credits: Executives will receive dividend credits on unvested performance shares, which will vest in accordance with the original performance share schedule.
• Settlement and Vesting: Shares are delivered after the performance period, following the release of the company’s annual report, and subject to compliance with applicable regulations.

Potential Shareholder and Price-Sensitive Implications

• Alignment with Shareholder Interests: The introduction of relative TSR as a modifier to long-term incentives better aligns executive compensation with shareholder returns and market performance.
• Increased Performance-Based Pay: A greater portion of executive compensation is now at risk and contingent on both internal financial performance and ADTRAN’s stock performance relative to industry peers.
• Transparency and Disclosure: While some details are redacted for confidentiality, the company has provided substantial information regarding the structure and metrics of these awards, allowing investors to assess the rigor and potential payout of executive compensation.
• Potential Impact on Management Behavior: The revised plan may incentivize management to pursue strategies that drive both absolute financial performance and relative stock outperformance, which could be positive for shareholders if executed successfully.
• Future Grant Policy: The company’s commitment not to issue further market-based PSUs for executives may signal a shift in compensation philosophy and could be relevant for institutional investors focused on incentive plan design.

Other Noteworthy Information

• Exchange and Trading Symbol: ADTRAN Holdings’ common stock continues to be listed on the Nasdaq Global Select Market under the symbol “ADTN.”
• Emerging Growth Company Status: ADTRAN confirms it is not an emerging growth company under current SEC definitions.
• Former Company Name: The company was formerly known as ADTRAN Inc.

Conclusion

These changes to ADTRAN Holdings’ executive compensation and long-term incentive structure represent a material development for investors. The incorporation of relative TSR into executive awards, the adjustment of grant values, and the explicit performance targets could influence management decisions and align their interests more closely with shareholders. Investors should closely monitor the company’s future performance in relation to these targets, as well as any further disclosures regarding executive compensation.

Disclaimer: This article is a summary and interpretation of ADTRAN Holdings, Inc.’s recent SEC filings and is intended for informational purposes only. It does not constitute investment advice. Investors should review the full filings and consult with their financial advisors before making investment decisions.

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