Should Shareholders Reconsider ADTRAN Holdings, Inc.'s (NASDAQ:ADTN) CEO Compensation Package?

Key Insights

• ADTRAN Holdings' Annual General Meeting to take place on 14th of May
• Salary of US$709.6k is part of CEO Tom Stanton's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, ADTRAN Holdings' EPS fell by 98% and over the past three years, the total loss to shareholders 53%

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The results at ADTRAN Holdings, Inc. (NASDAQ:ADTN) have been quite disappointing recently and CEO Tom Stanton bears some responsibility for this. At the upcoming AGM on 14th of May, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for ADTRAN Holdings

Comparing ADTRAN Holdings, Inc.'s CEO Compensation With The Industry

According to our data, ADTRAN Holdings, Inc. has a market capitalization of US$620m, and paid its CEO total annual compensation worth US$4.0m over the year to December 2024. We note that's a decrease of 32% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$710k.

On examining similar-sized companies in the American Communications industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$3.8m. This suggests that ADTRAN Holdings remunerates its CEO largely in line with the industry average. What's more, Tom Stanton holds US$7.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	US$710k	US$914k	18%
Other	US$3.3m	US$4.9m	82%
Total Compensation	US$4.0m	US$5.8m	100%

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. There isn't a significant difference between ADTRAN Holdings and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ADTRAN Holdings, Inc.'s Growth

ADTRAN Holdings, Inc. has reduced its earnings per share by 98% a year over the last three years. It saw its revenue drop 20% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has ADTRAN Holdings, Inc. Been A Good Investment?

Few ADTRAN Holdings, Inc. shareholders would feel satisfied with the return of -53% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for ADTRAN Holdings that investors should be aware of in a dynamic business environment.

Switching gears from ADTRAN Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.