Table of Contents
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Pursuant to § 240.14a-12 | |
| ☒ | No fee required. |
| ☐ | Fee paid previously with preliminary materials: |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
Table of Contents
Table of Contents
March 25, 2024
Dear CommScope Stockholders,
Like all companies in our industry, CommScope faced significant global economic headwinds in 2023 and a very different economy from the one that delivered such big wins for us in 2022. Even so, we pivoted proactively to manage those factors that we can control, leaning on the strengths of our R&D pipeline, our innovation-driven culture, and of course, the dedicated people who build the solutions that connect the world.
In 2023, we aggressively used our cash generated to repurchase $217 million of the debt that has negatively impacted our share value and market capitalization, and we will continue to work toward improving our leverage in 2024. We believe this, combined with our outstanding R&D pipeline, exceptional talent and a leaner, more efficient company structure, will put CommScope in a commanding position to capitalize on the expected recovery.
Following the principles of our CommScope NEXT strategic transformation, it’s clear that getting to the next level will mean being excellent in our go-to-market strategy. It will mean committed sales teams helping our customers deliver world class connectivity and communication systems. It will mean continuing to control costs—and also investing in those innovations that will deliver long-term growth for the company, our customers and you, our shareholders. In 2023, this was reflected by our loss from continuing operations improving to $851.3 million and achieving Core Adjusted EBITDA of $1.02 billion.
Our core markets and industries demonstrate an ongoing unprecedented build in fiber to the home (FTTH) networks, and we remain well positioned to benefit from mid- and long-term technological changes that prioritize products made in America and will be supported by United States Federal funding programs expected to commence in late 2024. We continue to fund innovation and advancement and invest in our future. Much of this innovation is focused on enabling faster, smarter and more sustainable solutions that meet our customers’ current and future sustainability requirements, which aligns with our sustainability goals.
CommScope continued to demonstrate strong environmental stewardship in 2023, earning recognition from Newsweek, EcoVadis and Cabling Installation and Maintenance as well as being upgraded to ESG Prime status by ISS for our social and environmental performance. Finally, we demonstrated our commitment to our people through the Diversity & Inclusion Business Network, which empowers every employee to deliver their best—for the company, for the customer and for themselves.
On behalf of the entire Board, I thank you for your investment in CommScope. The values and priorities laid down in CommScope NEXT reflect those of the people who make this company work, whose commitment to building the networks of the future remains as strong as ever. As I have mentioned, we continue to manage what we can control and are confident we are well positioned to drive significant value for our stakeholders.
| Sincerely, |
|
| Charles L. Treadway |
| President and Chief Executive Officer |
Table of Contents
COMMSCOPE HOLDING COMPANY, INC.
3642 E. US Highway 70
Claremont, North Carolina 28610
NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement and accompanying proxy (Proxy Statement) are being furnished to the stockholders of CommScope Holding Company, Inc., a Delaware corporation (Company or CommScope), in connection with the solicitation of proxies by the Board of Directors of the Company (Board or Board of Directors) for use at the Annual Meeting of Stockholders, and at any adjournment or postponement thereof (Annual Meeting), for the purposes set forth in this Notice of 2024 Annual Meeting of Stockholders.
Time and Date: 1:00 p.m., Eastern Time, on Thursday, May 9, 2024.
Access to the Virtual Meeting: The meeting will be hosted at https://web.lumiagm.com/285972254. The meeting will begin promptly at 1:00 p.m., Eastern Time, and online access will open 15 minutes prior to allow time to login. The log-in password is: commscope2024. You will also need your voter control number, which, if you are a stockholder of record, you can find on your original proxy card or Notice of Internet Availability of Proxy Materials.
If you hold your shares in “street name” through an intermediary, such as a bank or broker, you must register in advance in order to ask questions or vote your shares at the Annual Meeting. In order to register, you must first obtain proof of your proxy power (legal proxy) reflecting the number of shares of CommScope Holding Company, Inc. common stock you held as of the Record Date (as defined herein). You then must submit a request for registration to Equiniti Trust Company, LLC (Equiniti): (1) by email to helpAST@equiniti.com; (2) by facsimile to 718-765-8730; or (3) by mail to Equiniti Trust Company, LLC, Attn: Proxy Tabulation Department, 48 Wall Street, Floor 23, New York, NY 10005. Requests for registration must be labeled as “Legal Proxy,” must include your legal proxy along with your name and email address, and must be received by Equiniti no later than 5:00 p.m., Eastern Time, on May 3, 2024. You will receive a confirmation email from Equiniti of your registration, which will include your voter control number.
Who Can Vote: Only holders of our common stock, par value $0.01 per share (common stock), and shares of Series A Convertible Preferred Stock, liquidation preference $1,000 per share (Series A Convertible Preferred Stock) at the close of business on March 13, 2024 will be entitled to receive notice of, and to vote at, the Annual Meeting.
Proxy Voting: Your Vote is Important. Please vote your shares at your earliest convenience. This will ensure the presence of a quorum at the Annual Meeting. Promptly voting your shares via the Internet, by telephone, or, if you request printed copies of the proxy materials by mail, by signing, dating and returning the enclosed proxy card or voting instruction form will save the expenses and extra work of solicitation. If you request printed copies of the proxy materials by mail and you wish to vote by mail, we have enclosed an envelope, postage prepaid if mailed in the United States. Submitting your proxy now will not prevent you from voting your shares at the meeting, as your proxy is revocable at your option. You may revoke your proxy at any time before it is voted by delivering to the Company a subsequently executed proxy or a written notice of revocation or by voting at the Annual Meeting by following the instructions above under “Access to the Virtual Meeting” and voting your shares virtually via the virtual meeting platform (attendance without casting a ballot will not, by itself, constitute revocation of a proxy).
Items of Business:
The holders of shares of Series A Convertible Preferred Stock will be asked:
| • | To elect two directors designated by The Carlyle Group (Carlyle), each for a term ending at the 2025 Annual Meeting of Stockholders or until his or her successor is elected and qualified to serve. |
The holders of shares of common stock and shares of Series A Convertible Preferred Stock, voting together as a single class, will be asked:
| • | To elect eight directors to the Board of Directors, each for a term ending at the 2025 Annual Meeting of Stockholders or until his or her successor is elected and qualified to serve; |
| • | To approve, on a non-binding advisory basis, the compensation of our named executive officers (NEOs), as described in this Proxy Statement; |
| • | To approve additional shares under our 2019 Long-Term Incentive Plan; |
| • | To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2024; and |
| • | To transact any other business that may properly come before the Annual Meeting. |
Proxy Statement and Annual Report: A Notice of Internet Availability of Proxy Materials (Notice) or this Proxy Statement are first being mailed on or about March 26, 2024. Our 2023 Annual Report to Stockholders (the 2023 Annual Report) accompanies but is not part of these proxy materials.
BY ORDER OF THE BOARD OF DIRECTORS,
Sincerely,
Justin C. Choi
Secretary
March 25, 2024
Table of Contents
TABLE OF CONTENTS
| 1 | ||||
|
|
||||
| 10 | ||||
|
|
||||
| 10 | ||||
| CORPORATE GOVERNANCE MATTERS | 18 | |||
|
|
||||
| PROPOSALS No. 1 & 2: ELECTION OF DIRECTORS | 18 | |||
| 24 | ||||
| 24 | ||||
| 24 | ||||
| 25 | ||||
| 25 | ||||
| 26 | ||||
| 26 | ||||
| 26 | ||||
| 27 | ||||
| 27 | ||||
| 28 | ||||
| 28 | ||||
| 28 | ||||
| 30 | ||||
| 30 | ||||
| 32 | ||||
| 33 | ||||
| CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS | 34 | |||
|
|
||||
| 35 | ||||
| 36 | ||||
| EXECUTIVE OFFICERS | 37 | |||
|
|
||||
| BENEFICIAL OWNERSHIP OF OUR COMMON STOCK | 39 | |||
|
|
||||
| DELINQUENT SECTION 16(a) REPORTS | 42 | |||
|
|
||||
| EXECUTIVE COMPENSATION | 43 | |||
|
|
||||
| PROPOSAL No. 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION | 43 | |||
| 44 | ||||
| 44 | ||||
| 44 | ||||
| 44 | ||||
| 46 | ||||
| 46 | ||||
| 47 | ||||
| 47 | ||||
| 49 | ||||
| 49 | ||||
| 50 | ||||
| 50 | ||||
| 50 | ||||
| 51 | ||||
| 52 | ||||
| 59 | ||||
| 59 | ||||
| 59 | ||||
| 59 | ||||
| 60 | ||||
| 60 | ||||
| 62 | ||||
| Narrative Supplement to SCT for 2023 and Grants of Plan- Based Awards in 2023 Table |
63 | |||
| 63 | ||||
| 64 | ||||
| 64 | ||||
| 65 | ||||
| 70 | ||||
| 72 | ||||
| 76 | ||||
| 77 | ||||
|
|
||||
| PROPOSAL No. 4: APPROVAL OF ADDITIONAL SHARES UNDER OUR 2019 LONG-TERM INCENTIVE PLAN | 78 | |||
| AUDIT MATTERS | 87 | |||
|
|
||||
| PROPOSAL No. 5: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 87 | |||
| 89 | ||||
| 91 | ||||
| 92 | ||||
| 93 | ||||
| A-1 | ||||
| B-1 | ||||
Table of Contents
PROXY SUMMARY
We provide the below highlights of certain information in this Proxy Statement. As it is only a summary, please refer to the complete Proxy Statement and the 2023 Annual Report before you vote.
The Annual Meeting
| Date and Time: |
Thursday, May 9, 2024 1:00 p.m., Eastern Time | |
|
Virtual Meeting Site: |
https://web.lumiagm.com/285972254 | |
|
Log-In Password: |
commscope2024 | |
|
Record Date: |
March 13, 2024 | |
| Attendance Information for Stockholders of Record: |
If you were a holder of record of common stock of CommScope at the close of business on the Record Date (i.e., your shares are held in your own name in the records of CommScope’s transfer agent, Equiniti Trust Company, LLC (Equiniti)), you can attend the meeting by visiting the Virtual Meeting Site and entering the Log-In Password provided above and the 11-digit control number previously provided to you in your proxy materials. If you are a stockholder of record and you have misplaced your 11-digit control number, please call Equiniti at (800) 937-5449 or (718) 921-8124. | |
| Attendance Information for “Beneficial” and “Street Name” Holders: |
If you were a beneficial owner of common stock of CommScope at the close of business on the Record Date (i.e., you hold your shares in “street name” through an intermediary, such as a bank, broker or other nominee), you must register in advance in order to ask questions or vote your shares at the Annual Meeting. To register, please obtain a legal proxy from the bank, broker or other nominee that is the record holder of your shares and then submit the legal proxy, along with your name and email address, to Equiniti to receive an 11-digit control number that may be used to access the Virtual Meeting Site provided above. Any control number that was previously provided with your proxy materials (likely a 16-digit number) will not provide access to the Virtual Meeting Site. Requests for registration and submission of legal proxies should be labeled as “Legal Proxy” and must be received by Equiniti no later than 5:00 p.m., Eastern Time, on May 3, 2024. All such requests should be submitted (1) by email to helpAST@equiniti.com, (2) by facsimile to (718) 765-8730 or (3) by mail to Equiniti Trust Company, LLC, Attn: Proxy Tabulation Department, 48 Wall Street, Floor 23, New York, NY 10005. Once you have obtained your 11-digit control number from Equiniti, please follow the steps set forth above for stockholders of record to attend the Annual Meeting. | |
|
2024 Proxy Statement | 1 |
Table of Contents
PROXY SUMMARY
Proposals Up for Vote
The following proposals will be voted on at the Annual Meeting.
|
|
Board’s Recommendation
|
Page Reference (for more detail)
| ||||||||
| Item 1. | To elect two directors designated by Carlyle, each for a term ending at the 2025 Annual Meeting of Stockholders or until his or her successor is elected and qualified to serve
|
✓
|
|
|
FOR each nominee
|
18
| ||||
| Item 2. | To elect eight directors to the Board of Directors, each for a term ending at the 2025 Annual Meeting of Stockholders or until his or her successor is elected and qualified to serve
|
✓
|
|
|
FOR each nominee
|
18
| ||||
| Item 3. | To approve, on a non-binding advisory basis, the compensation of our NEOs, as described in this Proxy Statement
|
✓
|
|
|
FOR
|
43
| ||||
| Item 4. | To approve additional shares under our 2019 Long-Term Incentive Plan
|
✓
|
|
|
FOR
|
78
| ||||
| Item 5. | To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2024
|
✓
|
|
|
FOR
|
87
| ||||
How to Cast Your Vote
Your vote is important! Please cast your vote and play a part in the future of CommScope.
Stockholders of record, who hold shares registered in their names, can vote by:
|
|
| ||
| Internet at | calling 1-800-PROXIES | |||
| www.voteproxy.com | toll-free from the | return the signed | ||
| United States or Canada | proxy card | |||
The deadline for voting online or by telephone is 11:59 p.m., Eastern Time, on May 8, 2024. If you vote by mail, your proxy card must be received before the Annual Meeting.
Beneficial owners, who own shares through a bank, brokerage firm or other financial institution, can vote by returning the voting instruction form or by following the instructions for voting via telephone or the Internet provided by their bank, broker or other organization. If you own shares in different accounts or in more than one name, you may receive different voting instructions for each type of ownership. Please vote all your shares.
If you are a stockholder of record or a beneficial owner who has a legal proxy to vote the shares and has registered in advance with Equiniti and received a control number to attend the virtual Annual Meeting, you may choose to vote at the virtual Annual Meeting. Even if you plan to attend our virtual Annual Meeting, please cast your vote as soon as possible.
| 2 | 2024 Proxy Statement |
|
Table of Contents
PROXY SUMMARY
See the “Questions and Answers About the Annual Meeting and Voting” section for more details.
Board Nominees (page 19)
CommScope’s Board of Directors currently has ten members, two of whom are designees of Carlyle under the terms of the Investment Agreement with Carlyle, dated November 8, 2018 (Investment Agreement), and serve a one-year term. In addition, eight of our current directors are standing for re-election at the Annual Meeting, each for a one-year term. The following table provides summary information about each director standing for election to the Board of Directors.
|
|
Committees | |||||||||||||
| Age
|
Tenure
|
Independent
|
Audit
|
Compensation
|
Nominating and Corporate Governance
|
Other Public Company Boards
| ||||||||
| Carlyle Nominee |
||||||||||||||
| Scott H. Hughes |
38 | 2024 | ✓ | ✓ | 0 | |||||||||
| Patrick R. McCarter |
49 | 2020 | ✓ | ✓ | 1 | |||||||||
| Nominees |
||||||||||||||
| Stephen C. Gray |
65 | 2011 | ✓ | C | 0 | |||||||||
| L. William Krause |
81 | 2011 | ✓ | ✓ | ✓ | 0 | ||||||||
| Joanne M. Maguire |
70 | 2016 | ✓ | C | 2 | |||||||||
| Thomas J. Manning |
68 | 2014 | ✓ | ✓ | 2 | |||||||||
| Derrick A. Roman |
60 | 2021 | ✓ | C | 1 | |||||||||
| Charles L. Treadway |
58 | 2020 | 0 | |||||||||||
| Claudius E. Watts IV, Chairman |
62 | 2011 | 0 | |||||||||||
| Timothy T. Yates
|
76
|
2013
|
L
|
✓
|
0
| |||||||||
L Lead Independent Director
C Chair
Stockholder Outreach Highlights
In each of 2022 and 2023, the Company received 98% support for its say-on-pay proposal. We believe this reflects our responsiveness to the feedback we heard through our stockholder outreach initiatives and the changes the Compensation Committee made to our executive compensation programs for 2022 and 2023.
We regularly meet with investors to discuss a variety of business, industry and competitive dynamics. During the course of these discussions, the Company seeks to gather feedback on its executive compensation and governance programs to ensure that interests are aligned with stockholders.
|
|
2024 Proxy Statement | 3 |
Table of Contents
PROXY SUMMARY
Financial Performance Highlights(1) (page 45)
|
2023 Selected Financial Performance Highlights(1) |
||||||||||||||||||||
| Net Sales | Loss from Continuing Operations |
Non-GAAP Adjusted EBITDA (2) |
Core Adjusted EBITDA (2)(3) |
December 31 Stock Price |
||||||||||||||||
| 2023 |
$ | 5,789.2 | $ | (851.3 | ) | $ | 999.0 | $ | 1,022.2 | $ | 2.82 | |||||||||
| Change |
$ | (1,735.5 | ) | $ | 333.4 | $ | (224.4 | ) | $ | (228.2 | ) | $ | (4.53 | ) | ||||||
| 2022 |
$ | 7,524.7 | $ | (1,184.7 | ) | $ | 1,223.4 | $ | 1,250.4 | $ | 7.35 | |||||||||
(1) Financial performance highlights are from continuing operations and do not include the net sales, net loss or adjusted EBITDA classified as discontinued operations related to the divestiture of our Home Networks (Home) segment.
(2) See reconciliation of non-GAAP financial measures included in Appendix A hereto.
(3) Core adjusted EBITDA reflects the results of our Connectivity and Cable Solutions (CCS), Outdoor Wireless Networks (OWN), Networking, Intelligent Cellular and Security Solutions (NICS) and Access Network Solutions (ANS) segments, in the aggregate, and excludes general corporate costs that were previously allocated to the Home segment and are now classified as continuing operations.
Executive Compensation Program Highlights (page 46)
Our executive compensation approach is straightforward and supports our pay-for-performance philosophy:
| • | Significant portion of executive pay is at risk |
| • | Equity awards with multi-year vesting, allocated between performance and time-based awards |
| • | Regular stockholder outreach in connection with the annual say-on-pay vote |
| • | A compensation approach that does not create incentives for excessive risk taking |
| • | Policy prohibiting hedging and pledging of Company shares |
| • | New Compensation Recovery “Clawback” Policy to recover incentive compensation from executives in the event of a restatement of our financial statements |
The principal objectives of our NEO pay include:
| • | Competitive pay – allows us to attract top talent and to retain those executives by providing substantial pay for performance opportunity |
| • | Pay for performance – by rewarding outstanding results that will enhance near-term performance and drive long-term sustainable returns |
| • | Alignment with stockholders – through performance goals and by setting meaningful equity ownership guidelines |
| 4 | 2024 Proxy Statement |
|
Table of Contents
PROXY SUMMARY
Elements of our Executive Compensation Program (page 48)
The following table summarizes the primary elements of our executive compensation program for 2023. Please see our Compensation Discussion and Analysis beginning on page 44.
| Compensation Element
|
Purpose
|
2023 Pay Outcome
| ||
| Base Salary |
Recognize performance of job responsibilities as well as attract and retain individuals with superior talent. | Base salary for Mr. Treadway was increased by 14.3% to bring it more in line with the median salary of our peer group, and Mr. Giordano’s salary was increased by 16.2% in connection with his appointment as head of the NICS segment. The base salary increase was 3% for Mr. Choi and less than 1% for Mr. Lorentzen. Mr. Chow did not receive a base salary increase.
| ||
| AIP Bonus Awards |
Provide short-term incentives linked directly to achievement of financial objectives. Our NEOs’ 2023 AIP, with the exception of Messrs. Giordano and Chow, was based on the following metrics:
• 70% on Core Adjusted EBITDA;
• 20% on Core Revenue; and
• 10% on strategic objectives tied to CommScope NEXT.
Core Adjusted EBITDA and Core Revenue are the aggregate Adjusted EBITDA and revenue results, respectively, of our CCS, OWN, NICS and ANS segments.
As a result of the divesture of the Home Networks (Home) segment, our results are now reported based on continuing operations. Core Revenue aligns with net sales from continuing operations, but Core Adjusted EBITDA does not align with Adjusted EBITDA from continuing operations because Core Adjusted EBITDA excludes general corporate costs that were previously allocated to the Home segment that are now included within continuing operations. |
We did not achieve threshold performance for our Core Adjusted EBITDA and Core Revenue metrics. Target performance was met for the strategic objectives metric, resulting in a 10.0% payout for each of Messrs. Treadway, Lorentzen and Choi.
The NICS segment achieved maximum performance for the NICS segment Adjusted EBITDA and above target performance for the NICS segment revenue metric. Additionally, target performance was met for the strategic objectives metric resulting in a total payout of 179.1% for Mr. Giordano.
The Home segment did not achieve threshold performance for the Home segment Adjusted EBITDA metric and achieved below target performance on the strategic objectives metric, resulting in a payout of 25.0% for Mr. Chow. | ||
|
|
2024 Proxy Statement | 5 |
Table of Contents
PROXY SUMMARY
| Compensation Element
|
Purpose
|
2023 Pay Outcome
| ||
| The 2023 AIP for Mr. Giordano, who is the NICS segment leader, was based 70% on the Adjusted EBITDA for the NICS segment, 20% on revenue for the NICS segment, and 10% on corporate strategic objectives.
The 2023 AIP for Mr. Chow, who was the Home segment leader, was based 50% on the Adjusted EBITDA for the Home segment, and 50% on Home segment strategic objectives
|
||||
| Equity Incentive Awards |
Directly link senior management’s and stockholders’ interests by tying long-term incentive to stock price appreciation.
All NEOs received two different types of performance share units (PSUs) in 2023:
• Total Stockholder Return (TSR) PSUs, which are eligible to vest based upon the achievement of goals relating to our TSR ranking relative to the TSR of the companies, other than the Company, comprising the Standard & Poor’s 500 Index (S&P 500) over a three-year period from March 1, 2023 through February 28, 2026.
• Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs), which are eligible to vest based upon on achievement of cumulative Core Adjusted EBITDA goals (or for Mr. Chow, Home segment Adjusted EBITDA goals) for the three-year period covering fiscal years 2023, 2024 and 2025.
All NEOs also received restricted stock units (RSUs) that vest over three years, conditioned on continued service.
|
The TSR PSUs and Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs) granted in 2022 and 2023 are not eligible to vest until the end of their respective performance periods.
The Executive Performance Retention Grant (EPRG) PSUs granted in prior years are eligible to vest based upon the achievement of various stock price hurdles (ranging from a low of $15 for Messrs. Treadway and Lorentzen and $17.50 for Messrs. Choi and Chow, to a high of $40) and continued service over a four-year period. The EPRG PSUs will require continued service from these NEOs and significant growth in our stock price in order to vest fully. Mr. Giordano did not receive EPRG PSUs. | ||
| 6 | 2024 Proxy Statement |
|
Table of Contents
PROXY SUMMARY
Corporate Governance Highlights (page 18)
We are committed to strong corporate governance, which we believe is important to the success of our business. Our corporate governance practices are described in greater detail in the “Corporate Governance Matters and Committees of the Board of Directors” section. Highlights include:
| • | Strong, independent Board with a Lead Independent Director |
| • | Independent directors meet regularly in executive sessions |
| • | Risk oversight provided by both the appropriate committees and the full Board |
| • | Regular Board and committee self-evaluations |
| • | Majority voting in uncontested director elections |
| • | Annual director election |
| • | No stockholder rights plan (or “poison pill”) |
Corporate Responsibility and Sustainability Highlights
At CommScope, we believe that corporate responsibility and sustainability means making decisions that have a positive long-term impact on our people, planet, and bottom line. Our company-wide sustainability mission is to enable faster, smarter, and more sustainable solutions while demonstrating the utmost respect for our human and natural resources. Innovative technology, intelligent engineering, and energy efficient design help us accomplish our mission and achieve our goals. CommScope builds sustainable networks that make our customers more agile, while simultaneously helping preserve the natural ecosystems from which we source our raw materials.
We believe that acting with integrity includes creating a culture that invites and values the unique perspectives and contributions of all employees. Diversity, equity and inclusion have become essential and mainstream parts of the Company’s business model and success. Through commitments like the CEO Action for Diversity & InclusionTM and our own Diversity & Inclusion Business Network (DIBN), we seek to embrace and leverage our diverse employee base to create a more engaged workforce and enable business success along with professional and personal success.
We are proud of the Company’s significant standing in one of the world’s most vital and dynamic industries. We make great strides in delivering on our sustainability actions while advancing the industry and creating a better and sustainable tomorrow. For the sake of our current and future generations, we will continue to grow as a sustainable, environmentally conscious business that benefits the whole planet.
Environmental, Social and Governance (ESG) and Sustainability Oversight
As a global company, CommScope is exposed to risks at many levels. The Board of Directors has ultimate responsibility for ESG policies and practices. The Board’s three standing committees provide oversight and guidance over different aspects of ESG:
| • | Audit Committee oversees our ethics and compliance program and matters relating to ESG disclosures. |
| • | Nominating and Corporate Governance Committee is responsible for environmental matters and the integration of ESG into all governance matters. |
|
|
2024 Proxy Statement | 7 |
Table of Contents
PROXY SUMMARY
| • | Compensation Committee oversees our ESG-related compensation incentives and targets and strategies related to diversity, equity, inclusion, belonging and well-being. |
In addition, management-led teams devise, steer and execute our sustainability strategy and goals. They do this through an exhaustive system of checks and balances that assist in minimizing social, environmental, physical and ethical risks. The Company’s employees play an essential role in the sustainability program by implementing our sustainability actions and initiatives.
For additional information, which is not incorporated by reference into this Proxy Statement, see our Corporate Responsibility & Sustainability pages on the CommScope website:
https://www.commscope.com/corporate-responsibility-and-sustainability/.
Information on our website is not, and should not be deemed to be, a part of this Proxy Statement, or incorporated by reference into any other filings we made with the Securities and Exchange Commission (Commission).
| 8 | 2024 Proxy Statement |
|
Table of Contents
PROXY SUMMARY
ESG and Sustainability Key Achievements
|
|
ENVIRONMENTAL
|
|
SOCIAL
|
|
GOVERNANCE
|
|||||||||
|
Priorities
• Reduce the environmental impact of our operations and facilities. • Develop solutions that meet our customers current and future sustainability requirements. |
Priorities
• Leverage a collaborative, diverse, enabled and agile workforce to deliver business innovation. • Provide a safe work culture and environment for all employees. |
Priorities
• Improve our ESG transparency and reporting. • Strengthen our ethics and compliance program. • Source responsibly and minimize supply chain risks.
|
||||||||||||
| Achievements • Achieved 32.6%* reduction in Scope 1 and 2 Greenhouse Gas (GHG) emissions compared to 2019 baseline. • 12.0%* of purchased electricity originated from renewable sources in 2023. • Achieved 6.9% reduction in water withdrawal compared to 2019 baseline. • Diverted 76.4% of non-hazardous waste and e-waste from landfill. • Continued to support the Society of Cable Telecommunication Engineers (SCTE) energy goals in order to help our Access Network and Edge Facility products achieve greater energy reductions. • Continued to utilize life cycle thinking approach in our product development processes. • Developed in-house capability to conduct Life-Cycle Assessments (LCAs) for our products. • Continued to ensure our products meet global regulations, including RoHS, WEEE and REACH regulations. • Continued focus on eliminating single-use plastics (SUP) across all business segments.
|
Achievements
• Achieved a global injury rate of 0.32, 46.7% below the United States Occupational Safety & Health Administration (OSHA) industry rate of 0.60. • Continued sponsorship of our DIBN and RISE for early-in-career talent. The DIBN now includes more than 1,500 employees worldwide and the RISE network has over 230 members. • Continued our commitment as a member of the CEO Action for Diversity & Inclusion™ • Conducted the Global Employee Pulse Survey with our 20,000 employees to better understand employee sentiment about the Company, our progress, their work, and overall employee engagement. Follow-up communications and action plan deployment are ongoing. • Expanded the General Manager (GM) Accelerate program to strengthen our GM culture and capabilities. • Continued our well-being program with GuidanceResources, the Company’s global wellness resource program available to all employees and their families worldwide. • Continued the Frank M. Drendel Community Service Excellence Awards to recognize and support the most significant community service efforts made by our employees. • Supported charitable organizations worldwide and partnered with United Way to support local charitable causes by using an employer match program in the United States.
|
Achievements
• Reported climate-related risks and opportunities using the CDP platform which is committed to aligning with the Task Force on Climate-Related Disclosures (TCFD) recommendations. • Maintained ESG goals in our short-term incentive plan for CEO & Section 16B Officers. • 100% of non-production employees completed the annual Ethics and Compliance training (10,000+ employees). • Achieved zero “major nonconformances” in third-party certification audits. • Maintained the ISO14001:2015 (environmental management system) and ISO45001:2018 (health and safety management system) standards certification program to cover 90% of our manufacturing facilities. • Continued to ensure our operations and supply chain aligns with global modern anti-slavery and human rights standards. • Completed 19 CSR assessments in our manufacturing facilities, utilizing the Responsible Business Association tool (RBA ONLINE), and achieved low risk rating. • Conducted 189 sustainability assessments and audits in our supply chain. These included review compliance and evaluation of established labor, ethics, environmental, health and safety practices and business continuity.
|
||||||||||||
| Recognition
• Recognized in USA Today’s 2023 list of America’s Climate Leaders. • Honored with an Innovators Award from Cabling Installation & Maintenance for our commitment to sustainability. |
Recognition
• Named in Forbes’ America’s Best Employers by State List 2023. • Received a five-star ranking on Newsweek’s America’s Greatest Workplaces for Diversity 2024 list. |
Recognition
• Recognized in Newsweek’s 2023 and 2024 list of America’s Most Responsible Companies. • Achieved a Gold Level Corporate Social Responsibility Rating from EcoVadis, with overall score of 77/100. |
||||||||||||
*Reported performance may vary from actual as we finalize the Q4 2023 data. This is due to global energy billing processes—final data will be published in the 2024 Sustainability Report.
|
|
2024 Proxy Statement | 9 |
Table of Contents
PROXY STATEMENT
Annual Meeting of Stockholders
May 9, 2024
This Proxy Statement is being furnished to the stockholders of the Company in connection with the solicitation of proxies by the Board of Directors for use at the Annual Meeting, and at any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of 2024 Annual Meeting of Stockholders. The Annual Meeting will be held on May 9, 2024 at 1:00 p.m., Eastern Time. To provide expanded access to our Annual Meeting to stockholders who would not otherwise be able to attend, the 2024 Annual Meeting will be held solely on the Internet by virtual means. Information regarding how to access and vote at or participate in the virtual Annual Meeting is provided herein and in the accompanying Notice of 2024 Annual Meeting of Stockholders.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why did I receive a Notice of Internet Availability of Proxy Materials?
You are receiving this Proxy Statement because you owned shares of CommScope common stock or Series A Convertible Preferred Stock at the close of business on March 13, 2024 (Record Date), and that entitles you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting.
We are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies of those materials to each stockholder. On or about March 26, 2024, we mailed a Notice to our stockholders. The Notice contains instructions about how to access our proxy materials and vote via the Internet or telephone. If you would like to receive a paper copy of our proxy materials, please follow the instructions included in the Notice. If you previously chose to receive our proxy materials electronically, you will continue to receive access to these materials via e-mail unless you elect otherwise.
Who is entitled to vote at the Annual Meeting?
Holders of our common stock and/or our Series A Convertible Preferred Stock outstanding at the close of business on the Record Date are entitled to vote their shares at the Annual Meeting. As of the Record Date, 212,244,891 shares of our common stock were issued and outstanding. Each share of our common stock is entitled to one vote on each matter properly brought before the Annual Meeting and on which holders of common stock are entitled to vote.
Each record holder of Series A Convertible Preferred Stock will have a number of votes equal to the largest number of whole shares of common stock into which such shares are convertible on the Record Date on each matter that is properly brought before the Annual Meeting and on which
| 10 | 2024 Proxy Statement |
|
Table of Contents
PROXY STATEMENT
holders of Series A Convertible Preferred Stock are entitled to vote together with common stock as a single class. In addition, each holder of record of Series A Convertible Preferred Stock will have one vote for each share of Series A Convertible Preferred Stock on each matter that is properly brought before the Annual Meeting and on which holders of Series A Convertible Preferred Stock are entitled to vote separately, as a class. As of the Record Date, there were 1,162,085 shares of Series A Convertible Preferred Stock outstanding, which were convertible into 42,257,594 shares of common stock.
The presence at the Annual Meeting in person or by proxy of the holders of record of a majority in voting power of the shares entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting.
What will I be voting on at the Annual Meeting and how does the Board recommend that I vote?
The holders of shares of Series A Convertible Preferred Stock are being asked to vote, separately as a class, on the following item:
| • | Proposal No. 1—Election of two directors designated by Carlyle, each for a term ending at the 2025 Annual Meeting of Stockholders or until his or her successor is elected and qualified to serve; |
The holders of shares of common stock and shares of Series A Convertible Preferred Stock, voting together as a single class, are being asked to consider and vote on the following items:
| • | Proposal No. 2—Election of eight directors to the Company’s Board of Directors, each for a term ending at the 2025 Annual Meeting of Stockholders or until his or her successor is elected and qualified to serve; |
| • | Proposal No. 3—Advisory vote to approve the compensation of our NEOs as set forth in this Proxy Statement; |
| • | Proposal No. 4—Approval of additional shares under our 2019 Long-Term Incentive Plan; and |
| • | Proposal No. 5—Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2024. |
The Board recommends that you vote:
| • | Proposal No. 1—FOR the election of each of the two nominees designated by Carlyle to the Board; |
| • | Proposal No. 2—FOR the election of each of the eight director nominees to the Board; |
| • | Proposal No. 3—FOR the advisory vote to approve the compensation of our NEOs as set forth in this Proxy Statement; |
| • | Proposal No. 4—FOR the approval of additional shares under our 2019 Long-Term Incentive Plan; and |
| • | Proposal No. 5—FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2024. |
Each of Kyle D. Lorentzen and Justin C. Choi has been selected by our Board to serve as a proxy holder for the Annual Meeting. All shares of our common stock and Series A Convertible Preferred
|
|
2024 Proxy Statement | 11 |
Table of Contents
PROXY STATEMENT
Stock represented by properly delivered proxies received in time for the Annual Meeting will be voted at the Annual Meeting by the proxy holders in the manner specified in the proxy by the stockholder. If you sign and return a proxy card without indicating how you want your shares to be voted, the persons named as proxies will vote your shares in accordance with the recommendations of the Board.
Are there any requirements on how the holders of the Series A Convertible Preferred Stock must vote?
Under the Investment Agreement, at the Annual Meeting, Carlyle is required to vote its shares of Series A Convertible Preferred Stock in favor of each of the director nominees who are nominated and recommended by the Board for election, in favor of the advisory vote on the compensation of our NEOs and any proposal by the Company relating to equity compensation that has been approved by the Compensation Committee of the Board (including the proposal to approve additional shares under our 2019 Long-Term Incentive Plan), and in favor of the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024, as described in these proxy materials. Carlyle is entitled to vote at its discretion on any other proposals described in this Proxy Statement or any other matters properly raised at the Annual Meeting.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
If your shares are registered directly in your name with our transfer agent, Equiniti, you are considered, with respect to those shares, the “stockholder of record.” The Proxy Statement has been or will be sent directly to you. If you are a “stockholder of record,” you can find your voter control number on your original proxy card or Notice of Internet Availability of Proxy Materials. This voter control number will allow you to access, participate in, and vote at our virtual Annual Meeting.
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of those shares held in street name. The Proxy Statement has been or will be sent to you by your broker, bank or other holder of record who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote the shares in your account. If you are a “beneficial owner” and you wish to participate in or vote at our virtual Annual Meeting, you will need to obtain a legal proxy from your broker, bank or other holder of record and register for the virtual Annual Meeting in advance with Equiniti. For more information about the registration process, see “How do I vote?” below.
How do I vote?
Stockholder of Record. If you are a stockholder of record, you may vote by using any of the following methods:
| • | Through the Internet. You may vote by proxy through the Internet by following the instructions in this Proxy Statement or the instructions on the proxy card. |
| • | By Telephone. You may vote by proxy by calling the toll-free telephone number shown on the proxy card and following the recorded instructions. |
| • | By Mail. You may vote by proxy by completing, signing and dating the proxy card and sending it back to the Company in the envelope provided. |
| 12 | 2024 Proxy Statement |
|
Table of Contents
PROXY STATEMENT
| • | Virtually at the Annual Meeting. The meeting will be hosted virtually at https://web.lumiagm.com/285972254. The meeting will begin promptly at 1:00 p.m., Eastern Time, and online access will open 15 minutes prior to allow time to log in. The log-in password is: commscope2024. You will also need your voter control number (an 11-digit number), which, if you are a stockholder of record, you can find on your original proxy card or Notice of Internet Availability of Proxy Materials. If you attend the virtual Annual Meeting, you may vote your shares virtually on the virtual meeting platform. However, we encourage you to vote in advance through the Internet, by telephone or by mailing us your proxy card even if you plan to attend the virtual Annual Meeting, so that your shares will be voted in the event you later decide not to attend. The Annual Meeting will be held solely on the Internet by virtual means, so you will not be able to attend or vote your shares at the Annual Meeting in person. |
Beneficial Owners. If you are a beneficial owner of shares, you may vote by using any of the following methods:
| • | Through the Internet. You may vote by proxy through the Internet by following the instructions provided in this Proxy Statement and the voting instruction form provided by your broker, bank or other holder of record. |
| • | By Telephone. You may vote by proxy by calling the toll-free telephone number found on the voting instruction form and following the recorded instructions. |
| • | By Mail. You may vote by proxy by completing, signing and dating the voting instruction form and sending it back to the record holder in the envelope provided. |
| • | Virtually at the Annual Meeting. If you are a beneficial owner of shares held in street name and you wish to vote at the virtual Annual Meeting, you must (i) obtain a legal proxy from your broker, bank or other holder of record and (ii) register in advance with Equiniti and receive an 11-digit control number. Please contact your broker, bank or other holder of record for instructions regarding obtaining a legal proxy. Once obtained, you must submit your legal proxy, along with your name and e-mail address to Equiniti and request registration. Requests for registration and submission of legal proxies should be labeled as “Legal Proxy” and must be received by Equiniti no later than 5 p.m., Eastern Time, on May 3, 2024. All such requests should be submitted (1) by email to helpAST@equiniti.com, (2) by facsimile to (718) 765-8730 or (3) by mail to Equiniti Trust Company, LLC, Attn: Proxy Tabulation Department, 48 Wall Street, Floor 23, New York, NY 10005. Once you have obtained your 11-digit control number from Equiniti, please follow the steps set forth above for stockholders of record to vote virtually at the Annual Meeting. The Annual Meeting will be held solely on the Internet by virtual means, so you will not be able to attend or vote your shares at the Annual Meeting in person. |
If you hold both common stock and Series A Convertible Preferred Stock, you will need to vote, or authorize a proxy to vote, each class of stock separately so that all your votes can be counted. For more information, see “What if I hold both common stock and Series A Convertible Preferred Stock?” below.
What if I hold both common stock and Series A Convertible Preferred Stock?
Some of our stockholders may hold both common stock and Series A Convertible Preferred Stock. If you are a holder of both common stock and Series A Convertible Preferred Stock, you can expect to receive separate sets of printed proxy materials.
|
|
2024 Proxy Statement | 13 |
Table of Contents
PROXY STATEMENT
You will need to vote, or authorize a proxy to vote, each class of stock separately in accordance with the instructions set forth herein and on the applicable proxy cards or voting instruction forms. Voting, or authorizing a proxy to vote, only your common stock will not also cause your shares of Series A Convertible Preferred Stock to be voted, and vice versa.
If you hold both common stock and Series A Convertible Preferred Stock, please be sure to vote or authorize a proxy to vote for each class of stock separately so that all your votes can be counted.
What does it mean if I receive more than one Notice, proxy card or voting instruction form?
If you received more than one Notice, proxy card or voting instruction form, your shares are registered in more than one name or are registered in different accounts. Please follow the voting instructions included in each Notice, proxy card and voting instruction form to ensure that all your shares are voted.
May I change my vote after I have submitted a proxy?
If you are a stockholder of record, you have the power to revoke your proxy at any time by:
| • | delivering to our Corporate Secretary written revocation of your proxy; |
| • | delivering a new proxy, through the Internet, by telephone or by mail, dated after the date of the proxy being revoked; or |
| • | attending the Annual Meeting and voting virtually at the Annual Meeting using the virtual meeting platform (attendance without casting a ballot will not, by itself, constitute revocation of a proxy). |
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record.
Who will serve as the proxy tabulator and inspector of election?
A representative from Equiniti will serve as the independent inspector of election and will tabulate votes cast by proxy or in person at the Annual Meeting. We will report the results in a Form 8-K filed with the Commission within four business days of the Annual Meeting.
How will abstentions and “broker non-votes” be counted?
The shares of a stockholder whose ballot on any or all proposals is marked as “abstain” will be included in the number of shares present at the Annual Meeting to determine whether a quorum is present, but they will not be considered votes cast on any proposal. The director nominees will be elected if they receive the majority of the votes cast, so abstentions will have no effect on the outcome of Proposals No. 1 and No. 2. However, since these shares are considered present and entitled to vote, abstentions will have the same effect as a vote against Proposals No. 3, No. 4 and No. 5. If you are a beneficial owner of shares and do not provide the record holder of your shares with specific voting instructions, your record holder may vote your shares on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024 (Proposal No. 5). However, your record holder cannot vote your shares without specific instructions on the election of directors (Proposals No. 1 and No. 2), the advisory vote on the compensation of our NEOs (Proposal No. 3), or the vote to approve additional shares under our 2019 Long-Term
| 14 | 2024 Proxy Statement |
|
Table of Contents
PROXY STATEMENT
Incentive Plan (Proposal No. 4). If your record holder does not receive instructions from you on how to vote your shares on Proposals 1, 2, 3 or 4, your record holder will inform the inspector of election that it does not have the authority to vote on that proposal with respect to your shares. This is generally referred to as a “broker non-vote.” Broker non-votes will be counted as present for purposes of determining whether a quorum is present, but they will not be counted in determining the outcome of the vote on Proposals 1, 2, 3 or 4.
What vote is required to approve each proposal?
The following table summarizes the votes required for passage of each proposal and the effect of abstentions and broker non-votes.
| Proposal | Vote Required | Impact of Abstentions and Broker Non-votes, if any | ||
| No. 1—Election of the directors designated by Carlyle |
Each director designated by Carlyle will be elected by a majority of the votes cast by holders of our Series A Convertible Preferred Stock voting with respect to that director, meaning the number of votes cast “for” a director must exceed the number of votes cast “against” that director.
|
Abstentions and broker non-votes will not affect the outcome of the vote. | ||
| No. 2—Election of the directors nominated by the Board |
Each director will be elected by a majority of the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class with respect to that director, meaning the number of votes cast “for” a director must exceed the number of votes cast “against” that director.
|
Abstentions and broker non-votes will not affect the outcome of the vote. | ||
| No. 3—Advisory vote to approve compensation of our NEOs, as described in this Proxy Statement |
Approval by a majority of the voting power of the shares entitled to vote and represented in person or by proxy.
|
Abstentions will have the same effect as votes against the proposal; broker non-votes will not affect the outcome of the vote. | ||
| No. 4—Vote to approve additional shares under our 2019 Long Term Incentive Plan |
Approval by a majority of the voting power of the shares entitled to vote and represented in person or by proxy.
|
Abstentions will have the same effect as votes against the proposal; broker non-votes will not affect the outcome of the vote. |
|
|
2024 Proxy Statement | 15 |
Table of Contents
PROXY STATEMENT
| Proposal | Vote Required | Impact of Abstentions and Broker Non-votes, if any | ||
| No. 5—Ratification of appointment of independent registered public accounting firm |
Approval by a majority of the voting power of the shares entitled to vote and represented in person or by proxy.
|
Abstentions will have the same effect as votes against the proposal. |
Who is paying for the cost of this proxy solicitation?
Our Board is soliciting the proxy accompanying this Proxy Statement. We will pay all proxy solicitation costs. Proxies may be solicited by our officers, directors and employees, none of whom will receive any additional compensation for their services. These solicitations may be made personally or by mail, facsimile, telephone, messenger, email or the Internet. We will pay brokers, banks and certain other holders of record holding shares of common stock in their names or in the names of nominees, but not owning such shares beneficially, for the expense of forwarding solicitation materials to the beneficial owners. The Company has retained Morrow Sodali LLC, located at 333 Ludlow Street, 5th Floor, Stamford, Connecticut 06902 (or by email at COMM.info@investor.morrowsodali.com), to assist in the solicitation of proxies from stockholders. Morrow Sodali LLC will receive a solicitation fee of approximately $11,000, plus reimbursement of certain out-of-pocket expenses.
What do I need to do to attend the meeting?
To provide expanded access to the Annual Meeting for stockholders who would not otherwise be able to attend, the Annual Meeting will be held solely on the internet by virtual means. Stockholders will not be able to attend the Annual Meeting in person.
In order to participate in and vote at the virtual Annual Meeting, stockholders of record as of the Record Date can visit the Virtual Meeting Site (https://web.lumiagm.com/285972254) and enter the Log-In Password (commscope2024) and the 11-digit control number previously provided to stockholders of record on the original proxy card or Notice of Internet Availability of Proxy Materials. Stockholders of record that have misplaced their 11-digit control number should call Equiniti at (800) 937-5449 or (718) 921-8124 in advance of the Annual Meeting to obtain their control number.
Beneficial owners, who own shares beneficially through a broker, bank or other nominee, must provide a legal proxy from such broker, bank or other nominee during registration and will be assigned a control number in order to vote their shares virtually and ask questions at the Annual Meeting. Beneficial owners who are unable to obtain a legal proxy to vote their shares will still be able to attend and listen to the virtual Annual Meeting live via the Virtual Meeting Site (https://web.lumiagm.com/285972254) as a guest but will not be able to vote their shares or ask any questions.
Instructions on how to connect and attend as a guest, as well as how to demonstrate proof of share ownership and participate live via the Internet, may be requested by e-mailing helpAST@equiniti.com.
Will I be able to ask questions at the Annual Meeting?
Yes. We expect that our directors and executive officers, as well as representatives of our independent registered public accounting firm, will attend the virtual Annual Meeting and be
| 16 | 2024 Proxy Statement |
|
Table of Contents
PROXY STATEMENT
available to answer questions. We will provide our stockholders of record and beneficial owners who register in advance in accordance with the instructions provided herein (see “What do I need to do to attend the meeting?” above), the opportunity to ask questions and make statements about a proposal during the formal business of the meeting. Questions and comments of a general nature will be held until after the conclusion of the formal business of the Annual Meeting. Instructions for submitting questions and making statements will be posted on the Virtual Meeting Site. This question and answer session will be conducted in accordance with certain Rules of Conduct. These Rules of Conduct will be posted on the Virtual Meeting Site, and may include certain procedural requirements, such as limiting repetitive or follow-up questions, so that more stockholders will have an opportunity to ask questions.
Is there a list of stockholders entitled to vote at the Annual Meeting?
A list of stockholders entitled to vote at the Annual Meeting will be available to any stockholder, for any purpose germane to the meeting, for a period of ten days ending on the day prior to the meeting, between the hours of 8:00 a.m. and 4:00 p.m., Eastern Time, at our offices at 3642 E. US Highway 70, Claremont, North Carolina 28610. If you would like to view the stockholder list, please contact our Corporate Secretary to schedule an appointment.
I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
To reduce costs and reduce the environmental impact of our Annual Meeting, we have adopted a procedure approved by the Commission called “householding.” Under this procedure, stockholders of record who have the same address and last name will receive only a single copy of our Proxy Statement and 2023 Annual Report, unless we have received contrary instructions from such stockholder. Stockholders who participate in householding will continue to receive separate proxy cards and Notices.
We will promptly deliver, upon written or oral request, individual copies of the proxy materials to any stockholder that received a household mailing. If you are a stockholder of record and would like an additional copy of the Proxy Statement or 2023 Annual Report, please contact our Corporate Secretary by mail at 3642 E. US Highway 70, Claremont, North Carolina 28610 or by phone at (828) 459-5000. If you are a beneficial owner, you may contact the broker or bank where you hold the account.
If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of our Proxy Statement and Annual Report, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, please contact our Corporate Secretary by mail at 3642 E. US Highway 70, Claremont, North Carolina 28610 or by phone at (828) 459-5000.
|
|
2024 Proxy Statement | 17 |
Table of Contents
CORPORATE GOVERNANCE MATTERS
PROPOSALS No. 1 & No. 2:
ELECTION OF DIRECTORS
Our Company is governed by a Board of Directors. Pursuant to our certificate of incorporation, the precise number of directors shall be fixed and may be altered from time to time, exclusively by a Board resolution adopted by the affirmative vote of a majority of the total number of directors then in office. The number of directors constituting our whole Board is currently fixed at ten. Carlyle has the right to designate two directors pursuant to the Investment Agreement. All director nominees are elected to one-year terms. The director nominees designated by Carlyle will be proposed for election by the holders of Series A Convertible Preferred Stock, voting as a separate class, and eight director nominees will be proposed for election by the holders of common stock and Series A Convertible Preferred Stock, voting together as a single class, at the Annual Meeting on May 9, 2024.
It is intended that the persons named in the accompanying proxy will vote to elect the nominees listed below unless otherwise instructed. All directors elected will serve until the next annual meeting of stockholders in 2025 or until their successors are elected and qualified to serve or until an earlier death, resignation or retirement.
All the nominees are presently serving as directors of the Company. The nominees have agreed to be named in this Proxy Statement, to stand for re-election and to serve if elected. If for any reason any nominee designated by Carlyle shall not be available for election as a director at the Annual Meeting, it is intended that shares represented by the accompanying proxy will be voted for the election of a substitute nominee designated by Carlyle. If for any reason any other nominee shall not be available for election as a director at the Annual Meeting, it is intended that shares represented by the accompanying proxy will be voted for the election of a substitute nominee designated by our Board, or the Board may determine to leave the vacancy temporarily unfilled or may, by resolution, reduce the size of the Board.
The professional experience and skills and qualifications highlighted in the nominee and continuing directors’ biographies and skills and qualifications matrix below summarize the experience, qualifications, areas of expertise or skills that the Board of Directors used to determine that the person should serve as a director.
| 18 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
PROPOSAL No. 1: Two Nominees for Election as Directors to Be Elected by Holders of Series A Convertible Preferred Stock
|
Scott H. Hughes
Age: 38
Director Since: 2024
Committees: - Compensation
|
Professional Experience • Chief Operating Officer, Corporate Private Equity Americas at The Carlyle Group LP (2023-present) • Investment Professional in the Industrial & Transportation Sector at The Carlyle Group LP (2010-2023) • Analyst in the Mergers and Acquisitions Group at Merrill Lynch, Pierce, Fenner & Smith (2008-2010)
Other Current Public Company Directorships • None
Other Directorships • Novolex (2022-present) • Sciens Building Solutions (2021-2023) | |
|
Patrick R. McCarter
Age: 49
Director Since: 2020
Committees: - Nominating and Corporate Governance
|
Professional Experience • Partner and Head of Global Technology, Media and Telecommunications Sector at The Carlyle Group LP (2017-present) • Various other positions, including Partner, Managing Director, Principal and VP, at The Carlyle Group LP (2001-2016) • Member of Northwestern’s McCormick School of Engineering Advisory Council (2018-present) • Past director for HireVue Inc., OpenLink, Open Solutions, CPU Technology, Dealogic, Hexaware Technologies, and Yipitdata
Other Current Public Company Directorships • ZoomInfo Technologies Inc. (NASDAQ: ZI) (2018-present)
Other Directorships • Saama (2022-present). • Jagex Limited (2022-present) • HireVue, Inc. (2019-present) • Ampere Computing LLC (2017-present) • Veritas Technologies LLC (2016-present) |
The Board of Directors of the Company recommends that holders of Series A Convertible Preferred Stock vote “FOR” each of the foregoing nominees for election as directors. Proxies will be voted “FOR” each nominee, unless otherwise specified in the proxy.
|
|
2024 Proxy Statement | 19 |
Table of Contents
CORPORATE GOVERNANCE
PROPOSAL No. 2: Eight Nominees for Election as Directors, Each to Be Elected by Holders of Common Stock and Series A Convertible Preferred Stock, Voting Together as a Single Class
|
Stephen (Steve) C. Gray
Age: 65
Director Since: 2011
Committees: - Compensation (Chair)
|
Professional Experience • Founder and Chair of Gray Venture Partners, LLC, a private investment company (2009-present) • Senior Advisor to The Carlyle Group LP (2018-2023 and 2007-2015) • President and CEO of Syniverse Holdings, Inc. (2014-2018) • President of McLeodUSA Incorporated (1992-2004) • VP of Business Services at MCI Inc. (1990-1992) • SVP of National Accounts and Carrier Services for TelecomUSA (1988-1990) • Various sales management positions with WilTel Network Services and the Clayton W. Williams Companies, including ClayDesta Communications Inc. (1986-1988)
Other Current Public Company Directorships • None
Other Directorships • INAP Holdings, LLC (2020-present) (Chair – Compensation Committee) • Involta, (2010-present) • Wyyerd Group, LLC (2021-2023) (Chair) • ImOn Communications, LLC (Vice-Chair) (2007-2022) • HH Ventures, LLC (d/b/a ReadyMobile LLC) (Chair) (2009-2020) • SecurityCoverage, Inc. (Chair) (2005-2019) • Syniverse Holdings, Inc. (2011-2018) |
|
L. William (Bill) Krause
Age: 81
Director Since: 2011
Committees: - Compensation - Nominating and Corporate Governance
|
Professional Experience • President of LWK Ventures, a private advisory and investment firm (1991-present) • Senior Advisor to The Carlyle Group LP (2010-present) • Board Partner at Andreesen Horowitz (2014-present) • CEO (1981-1990) and Chair (1987-1993) of 3Com Corporation, a global data networking company
Other Current Public Company Directorships • None
Other Directorships • Veritas Holding, Ltd (2016-present) • Coherent, Inc., (NASDAQ: COHR) (2009-2019) • Brocade Communication Systems, Inc. (NASDAQ: BRCD) (now Broadcom Inc.) (2004-2017) • Core-Mark Holding Company, Inc. (NASDAQ: CORE) (2005-2014) |
| 20 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
|
Joanne M. Maguire
Age: 70
Director Since: 2016
Committees: - Nominating and Corporate Governance (Chair)
|
Professional Experience • EVP of Lockheed Martin Corporation and President of Lockheed Martin Space, providers of communication, remote sensing and exploration spacecraft for national security and civil customers (2006-2013) • VP and Deputy to President of Lockheed Martin Space (2003-2006) • Diverse leadership roles at TRW’s Space & Electronics sector (now part of Northrop Grumman) in division general management, programs, engineering, manufacturing and business development (1975-2003) • Member of UCLA’s Samueli School of Engineering Dean’s Executive Board (2014-present) • Member of National Academy of Engineering
Other Current Public Company Directorships • Visteon Corporation (NASDAQ: VC) (2015-present) • Tetra Tech, Inc. (NASDAQ: TTEK) (2016-present)
Other Directorships • Charles Stark Draper Laboratory (2013-2022) • Freescale Semiconductor, Ltd. (2013-2015) |
|
Thomas J. Manning
Age: 68
Director Since: 2014
Committees: - Audit
|
Professional Experience • Executive-in-Residence at the Booth School of Business (2018-present) • Executive Chairman of Aegis Ventures (January 2023-September 2023) • Executive Chair of Cresco Labs, Inc. (2020-2023) • Senior Fellow in the Advanced Leadership Initiative at Harvard University (2019-2021) • CEO of Dun & Bradstreet (Aug 2018-Feb 2019) • Lecturer in Law at the University of Chicago Law School teaching courses on corporate governance, private equity, United States-China relations, and innovative solutions (2012-2018) • Chair & Interim CEO of Dun & Bradstreet (Feb 2018-Aug 2018) • CEO of Cerberus Asia Operations & Advisory Limited (2010-2012) • CEO of Indachin Limited (2005-2009)
Other Current Public Company Directorships • Cresco Labs, Inc. (Chairman of the Board - 2016-present)
Other Directorships • Chindata Group Holdings Limited (NASDAQ: CD) (2020-2023) • Clear Media Limited (Chair of the Remuneration Committee) (2016-2020) • Dun & Bradstreet (NYSE: DNB) (2013-2019) (Lead Director and Chair of the Nominating and Corporate Governance Committee) • iSoftStone Holdings Limited (2010-2014) • AsiaInfo-Linkage, Inc. (2006-2014) • GOME Electrical Appliances Company (2007-2012) • Bank of Communications Co., Ltd. (2004-2010) |
|
|
2024 Proxy Statement | 21 |
Table of Contents
CORPORATE GOVERNANCE
|
Derrick A. Roman
Age: 60
Director Since: 2021
Committees: - Audit (Chair)
|
Professional Experience • Audit, consulting and senior client relationship partner at PwC with leadership experience in risk management, DEI, corporate responsibility, cybersecurity and IT solutions (1997-2020) • Certified Public Accountant (1987-Present) • Diligent™ Climate Leadership Certified (2022) • National Association of Corporate Directors (NACD) Member (2021 -Present) and NACD CERT Certificate in Cyber-Risk Management (2023) • Central Audit Committee Network Member (2022-Present) • NABA Inc. Lifetime Member and Board Advisor (2011-Present) • Named one of Savoy Magazine’s “2021 Most Influential Black Corporate Directors” (2021)
Other Current Public Company Directorships • WEX, Inc. (NYSE: WEX) (Audit and Finance Committees) (2021-Present)
Other Directorships • Financial Industry Regulatory Authority (2023-Present) • The Skillman Foundation Board of Trustees (2022-Present) • Pangeo Holdings LLC (dba G-P or Globalization Partners) Board Observer (2022-Present) • Philanthropos LLC (dba Philanthropi) Board Member (2020-Present) • National Constitution Center Board of Trustees (2000-Present) |
|
Charles L. Treadway
Age: 58
Director Since: 2020
Committees: - None
|
Professional Experience • President and CEO of CommScope (2020-present) • Operating Executive with The Carlyle Group LP (July 2020-September 2020) • CEO of Accudyne Industries (2016-2020) • CEO of Thomas & Betts Corporation, a global business unit of ABB Group (2012-2016) • President and COO, Thomas & Betts Corporation (2011-2012) • President of Electrical Division, Thomas & Betts Corporation (2009-2011)
Other Current Public Company Directorships • None
Other Directorships • None |
| 22 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
|
Claudius (Bud) E. Watts IV
Age: 62
Director Since: 2011
Chairman of the Board Since: 2020
Committees: - None
|
Professional Experience • Private investor and Founding Partner of Meeting Street Capital, LLC (2018-present) • Senior Advisor to The Carlyle Group LP (2018-present) • Partner with The Carlyle Group LP (2000-2017) • Founded and led The Carlyle Group LP’s Technology Buyout business (2004-2014) • Managing Director in the M&A group of First Union Securities, Inc. (1998-2000) • Principal at Bowles Hollowell Conner & Co. (1994-1998) • Fighter Pilot, United States Air Force (1984-1992)
Other Current Public Company Directorships • None
Other Directorships • Carolina Financial Corporation (NASDAQ: CARO) (Chair) (2015-2020) • Former director on boards of numerous other public and private companies, including service as Chair and Lead Independent Director | |||
|
Timothy T. Yates
Age: 76
Director Since: 2013
Lead Independent Director Since: 2020
Committees: - Audit
|
Professional Experience • Various leadership roles including CEO, CFO and EVP at Monster Worldwide, Inc. (2007–2016) • Led integration of Symbol Technologies, Inc. (Symbol) into Motorola, Inc.’s Enterprise Mobility business (2007) • Various positions including independent consultant and SVP, CFO at Symbol (2005–2007) • Partner and CFO of Saguenay Capital, a boutique investment firm (2002–2005) • Co-Founder and Partner at Cove Harbor Partners, a private investment firm (1996–2002) • Various senior leadership roles at Bankers Trust New York Corporation, including serving as Chief Financial and Administrative Officer (1971–1995)
Other Current Public Company Directorships • None
Other Directorships • Monster Worldwide, Inc. (NASDAQ: MWW) (2007-2016) • Symbol Technologies, Inc. (2006-2007) • Blue Goji (2014-present) • Jay Heritage Center (2019-present) • Soapply, Inc. (2021-present) • Seaboard Associates (1975-present) • Cyndx, Inc. (2017-present) | |||
The Board of Directors of the Company recommends a vote “FOR” each of the foregoing nominees for election as directors. Proxies will be voted “FOR” each nominee, unless otherwise specified in the proxy.
|
|
2024 Proxy Statement | 23 |
Table of Contents
CORPORATE GOVERNANCE
DIRECTOR SKILLS AND QUALIFICATIONS
|
|
|
|
|
|
|
|
|
| |||||||||||
| Directorship |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| Finance / Accounting |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Governance |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| Industry Experience |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Leadership / Management |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
| Mergers & Acquisitions / Integration Experience |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Information Technology |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| Cybersecurity |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Strategic Planning |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| Audit Committee Financial Expert |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Risk Management / Internal Controls |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Climate Risk Oversight |
✓ | |||||||||||||||||||
| Extensive Experience with Our Business |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Regulatory Matters |
✓ | ✓ | ✓ |
POLICIES ON CORPORATE GOVERNANCE
Our Board believes that good corporate governance is important to ensure our business is managed for the long-term benefit of our stockholders. We have adopted a Code of Conduct that applies to all our directors, executive officers and senior financial and accounting officers, as well as a Code of Ethics and Business Conduct that applies to all our employees. We have also adopted Corporate Governance Guidelines. Current versions of the Code of Conduct, the Code of Ethics and Business Conduct and the Corporate Governance Guidelines are available on our website at www.commscope.com and will also be provided upon request to any person without charge. Requests should be made in writing to our Corporate Secretary at CommScope Holding Company, Inc., 3642 E. US Highway 70, Claremont, North Carolina 28610, or by phone at (828) 459-5000. In the event of any amendment or waiver of our Code of Conduct or Code of Ethics and Business Conduct applicable to our directors or executive officers, such amendment or waiver will be posted on our website.
BOARD LEADERSHIP STRUCTURE
The Company currently has separate individuals serving in the positions of Chairman of the Board and Chief Executive Officer. The Board of Directors does not have a set policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer, as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board regularly evaluates whether the roles of Chairman of the Board and Chief Executive Officer should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or be an employee of the Company. The Board believes these issues should be considered as part of the Board’s broader oversight and succession planning process. The Board believes that Mr. Watts is appropriate to serve as employee Chairman as he has a long history of service to the Company, most recently as the Board’s Lead Independent Director.
In accordance with our Corporate Governance Guidelines, at any time when the Chairman of the Board is not an independent director, the independent members of the Board will select an
| 24 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
independent director to serve in a lead capacity. Mr. Yates was appointed as Lead Independent Director in 2020 upon Mr. Watts’ appointment as Chairman of the Board. Among other things, our Lead Independent Director presides at all meetings of the independent directors and any Board meeting when the Chairman is not present, advises the Chairman as to the Board’s agenda and information to be provided to the Board, and serves as the principal liaison and facilitator between the independent directors and the Chairman and Chief Executive Officer. In addition, our Lead Independent Director has the authority to convene special meetings of the independent directors, responds to stockholder questions directed to the independent directors and is available to major stockholders for consultation and direct communication.
THE BOARD’S ROLE IN MANAGEMENT’S SUCCESSION PLANNING
As reflected in our Corporate Governance Guidelines, the Board’s primary responsibilities include planning for Chief Executive Officer succession and monitoring and advising on management’s succession planning for other executive officers. The Board’s goal is to have a long-term and continuing program for effective senior leadership development and succession. The Board is actively engaged in these endeavors and has a contingency plan in place for emergencies such as the departure, death or disability of the Chief Executive Officer or other executive officers.
The Chief Executive Officer and Chief Human Resources Officer report regularly to the Compensation Committee and the Board on succession planning and management development.
THE BOARD’S ROLE IN RISK OVERSIGHT
While risk management is primarily the responsibility of our management, the Board provides overall risk oversight focusing on the most significant risks facing the Company. The Board oversees the risk management processes that have been designed and are implemented by our executives to determine whether those processes are functioning as intended and are consistent with our business and strategy. The Board executes its oversight responsibility for risk management directly and through its committees. The Board’s role in risk oversight has not affected its leadership structure.
We are exposed to a number of risks, including financial risks, operational risks and risks related to regulatory and legal compliance. The Audit Committee is specifically tasked with reviewing with management, our internal audit function, our independent auditors and our Chief Compliance Officer, as appropriate, our compliance with legal and regulatory requirements and any related compliance policies and programs as well as reviewing our financial and risk management policies. The Audit Committee also has oversight of our enterprise risk management program (ERM), which is our annual comprehensive assessment of key risks related to finance, operations and management information systems, including those related to cybersecurity. On a quarterly basis, our ERM team reviews with senior management and the Audit Committee our risk profile and our progress on the related risk mitigation action plans. Annually, our internal audit function also develops a risk-based internal audit plan utilizing the ERM consolidated risk profile. The Company consults with external advisors, as necessary, to identify and understand emerging risks for the Company. The ERM process is the responsibility of the Company’s Chief Financial Officer.
As part of the Audit Committee’s oversight of cybersecurity matters, they receive quarterly updates from our Chief Information Officer and Chief Information Security Officer on matters impacting the Company, emerging issues and the results of external assessments. Members of our management who have responsibility for designing and implementing our risk management processes around other areas of the business also regularly meet with the Audit Committee. Additionally, the Nominating and Corporate Governance Committee is tasked with overseeing our environmental and corporate responsibility efforts and any related risks. The Board’s other committees oversee risks associated with their respective areas of responsibility.
|
|
2024 Proxy Statement | 25 |
Table of Contents
CORPORATE GOVERNANCE
The full Board considers specific risk topics, including risk-related issues pertaining to laws and regulations enforced by the United States and foreign government regulators and risks associated with our business plan and capital structure. In addition, the Board receives reports from members of our management that include discussions of the risks and exposures involved with their respective areas of responsibility, and the Board is routinely informed of developments that could affect our risk profile or other aspects of our business.
DIRECTOR INDEPENDENCE
Nasdaq listing standards and our Corporate Governance Guidelines, the latter of which are available on our website as described above, require that the Board be comprised of a majority of directors who qualify as independent directors under applicable Nasdaq rules. The Board has determined that each of Stephen C. Gray, Scott H. Hughes, L. William Krause, Joanne M. Maguire, Thomas J. Manning, Patrick R. McCarter, Derrick A. Roman, and Timothy T. Yates, is independent under applicable Nasdaq rules. The Board has determined that Charles L. Treadway and Claudius E. Watts IV are not independent.
NOMINATIONS FOR DIRECTORS
The Nominating and Corporate Governance Committee will consider director nominees recommended by stockholders. A stockholder who wishes to recommend a director candidate for consideration by the Nominating and Corporate Governance Committee should send such recommendation to our Corporate Secretary at CommScope Holding Company, Inc., 3642 E. US Highway 70, Claremont, North Carolina 28610, who will then forward it to the committee. Any such recommendation should include a description of the candidate’s qualifications for board service, the candidate’s written consent to be considered for nomination and to serve if nominated and elected, and addresses and telephone numbers for contacting the stockholder and the candidate for more information. A stockholder who wishes to nominate an individual as a candidate for election, rather than recommend the individual to the Nominating and Corporate Governance Committee as a nominee, must comply with the advance notice requirements set forth in our Bylaws. See “Stockholder Proposals for the Company’s 2025 Annual Meeting” in this Proxy Statement for more information on these procedures.
The Nominating and Corporate Governance Committee will consider and evaluate persons recommended by stockholders in the same manner as it considers and evaluates other potential directors. With respect to the directors to be elected by the holders of shares of Series A Convertible Preferred Stock, such nominees are required to have been designated by Carlyle pursuant to the Investment Agreement.
DIRECTORS’ QUALIFICATIONS
The Nominating and Corporate Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board of Directors those candidates to be nominated for election. Our Corporate Governance Guidelines, which are available on our website as described above, set forth criteria that the Nominating and Corporate Governance Committee must consider when evaluating a director candidate for membership on the Board of Directors. These criteria are as follows:
| • | Integrity: reputation for integrity, honesty and adherence to high ethical standards; |
| • | Sound business judgment: demonstrated business acumen, experience and ability to exercise sound judgment in matters that relate to our current and long-term objectives and a willingness to contribute positively to the decision-making process; |
| 26 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
| • | Ability and willingness to commit sufficient time to the Board: commitment to understand us and our industry and to regularly attend and participate in meetings of the Board of Directors and its committees; and |
| • | Ethics and independence: ability to understand the sometimes-conflicting interests of our various constituencies, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the overall best interests of all stakeholders. |
The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria, and no particular criterion is a prerequisite for any prospective nominee.
Our Corporate Governance Guidelines also require the Nominating and Corporate Governance Committee (i) to consider the mix of backgrounds and qualifications of the directors in order to assure that the Board of Directors has the necessary experience, knowledge and abilities to perform its responsibilities effectively and (ii) to consider the value of diversity on the Board of Directors, including diversity of experience, thoughts, gender, race, ethnicity, age and background. We believe that diversity and, specifically, representation in the Board room are important, and we continue to work towards our goal of an overall diverse Board. Our Board is currently composed of directors who self-identify as female (one), black (one), and LGBTQ+ (one). In addition, our diverse directors have taken on leadership roles on the Board: one Board committee is chaired by a female director, and another is chaired by a black director. We will continue to consider the overall diversity of the Board in connection with any new appointments to our Board.
| Board Diversity Matrix (As of March 13, 2024) | ||||||||||||||||||||
| Total Number of Directors |
10 | |||||||||||||||||||
| Female | Male | Non-Binary | Did Not Disclose Gender |
|||||||||||||||||
| Part I: Gender Identity |
| |||||||||||||||||||
| Directors |
1 | 9 | — | — | ||||||||||||||||
| Part II: Demographic Background |
| |||||||||||||||||||
| African American or Black |
— | 1 | — | — | ||||||||||||||||
| Alaskan Native or Native American |
— | — | — | — | ||||||||||||||||
| Asian |
— | — | — | — | ||||||||||||||||
| Hispanic or Latinx |
— | — | — | — | ||||||||||||||||
| Native Hawaiian or Pacific Islander |
— | — | — | — | ||||||||||||||||
| White |
1 | 8 | — | — | ||||||||||||||||
| Two or More Races or Ethnicities |
— | — | — | — | ||||||||||||||||
| LGBTQ+ |
1 | |||||||||||||||||||
| Did Not Disclose Demographic Background |
— | |||||||||||||||||||
BOARD COMPOSITION
The number of members on our Board of Directors may be modified from time to time exclusively by resolution of our Board of Directors. Our Board of Directors currently consists of ten members. Claudius E. Watts IV was appointed Chairman of the Board of Directors in October 2020, and Timothy T. Yates has served as the Lead Independent Director since 2020.
As of April 4, 2019, per the Investment Agreement between Carlyle and CommScope, Carlyle has the right to designate two directors to our Board, each to serve a one-year term. Messrs. Hughes and McCarter are nominees designated by Carlyle and recommended by the Board for election in 2024
|
|
2024 Proxy Statement | 27 |
Table of Contents
CORPORATE GOVERNANCE
with terms expiring at the 2025 Annual Meeting of Stockholders. The directors designated by Carlyle will be voted on by the holders of Series A Convertible Preferred Stock as a single class at each annual meeting until certain beneficial ownership conditions are no longer met as detailed in the Investment Agreement.
When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable the Board of Directors to satisfy their oversight responsibilities effectively in light of our business and structure, the Board of Directors focused primarily on each person’s background and experience as reflected in the information discussed in each of the director’s individual biographies set forth above. See Proposals No. 1 and No. 2: Election of Directors. We believe that our directors provide an appropriate diversity of experience and skills relevant to the size and nature of our business.
BOARD AND COMMITTEE EVALUATIONS
Each year, our Nominating and Corporate Governance Committee oversees self-evaluations of the Board and each of the committees to assess the qualifications, attributes, skills and experience represented on the Board; to assess their effectiveness and adherence to our Corporate Governance Guidelines and committee charters; and to identify opportunities to improve Board and committee performance. Periodically, the Board also engages outside counsel to assist with the director self-assessment process, including performing candid one-on-one confidential interviews with directors and presenting their findings to the Board.
BOARD MEETINGS, ATTENDANCE AND EXECUTIVE SESSIONS
The Board meets on a regularly scheduled basis during the year to review significant developments affecting us and to act on matters requiring Board approval. It also holds special meetings when an important matter requires Board action between scheduled meetings. Members of senior management regularly attend meetings of the Board and its committees to report on and discuss their areas of responsibility. Directors are expected to attend Board meetings and meetings of committees on which they serve. In addition, all directors are encouraged, but not required, to attend our annual stockholder meeting. In 2023, all the directors attended our virtual annual stockholder meeting. Directors are expected to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. In 2023, the Board held nine meetings and committees of the Board held a total of 18 meetings. All directors attended 80% or more of the meetings of the Board and committees on which they served.
In general, the Board reserves time following each regularly scheduled meeting to allow the independent directors to meet in executive session.
BOARD COMMITTEES
Our Board of Directors oversees the management of our business and affairs as provided by Delaware law, and conducts its business through meetings of the Board of Directors and three standing committees: Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. In addition, from time to time, other committees may be established under the direction of the Board of Directors when necessary or advisable to address specific issues.
| 28 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
Each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee operates under a charter that was approved by our Board of Directors. Each of these charters is available on our investor relations website at http://ir.commscope.com.
| Committee | Primary Responsibilities | |
|
Audit(1)
Members: Messrs. Roman (Chair), Manning and Yates
Number of Meetings in 2023: 9 |
• Assists the Board of Directors in its oversight of (i) our accounting and financial reporting processes and other internal control processes, (ii) the audits and integrity of our financial statements, and (iii) our compliance with legal and regulatory requirements. • Approves the independent registered public accounting firm’s appointment, compensation and retention and provides oversight of such firm’s work, as well as annually assesses such firm’s qualifications and independence. • Considers and reviews the adequacy and effectiveness of our internal controls over financial reporting and any related significant findings of our independent auditor and internal audit. • Reviews our Code of Ethics, recommends changes and reviews and assesses any violations. • Reviews and approves any proposed related person transactions. • Oversees overall risk management profile and policies with respect to risk assessment and risk management, including oversight of the ERM program. • Reviews treasury financial risk management policies, including approval of decisions to enter swaps or other derivatives. • Reviews cybersecurity risk assessments from management including assessments of the overall threat landscape, steps management has taken to monitor or mitigate its risk exposure and related strategies and investments. • Oversees sustainability disclosures in the Company’s financial reports.
| |
| Compensation(2)
Members: Messrs. Gray (Chair), Hughes and Krause
Number of Meetings in 2023: 5 |
• Reviews and approves the compensation philosophy and all forms of compensation and benefits provided to our Chief Executive Officer. • Reviews and approves all forms of compensation and benefits provided to our other executive officers. • Reviews and oversees the administration of our equity incentive plans. • Engages independent compensation advisors to provide advice regarding our executive compensation program and director compensation. • Reviews and approves talent management development and succession plans for the Chief Executive Officer. • Oversees the human capital management strategy and related policies. • Reviews and oversees our diversity, equity and inclusion plans.
| |
| Nominating and Corporate Governance(3)
Members: Ms. Maguire (Chair)
Number of Meetings in 2023: 4 |
• Identifies, screens and recommends candidates to the Board of Directors for election to our Board of Directors. • Reviews the composition of the Board of Directors and its committees. • Reviews and determines appropriate Board leadership structure. • Develops and recommends appropriate Corporate Governance Guidelines and oversees compliance with the Guidelines. • Oversees environmental and governance policies and practices. • Oversees annual Board evaluation process.
| |
| (1) | The Board of Directors has determined that each member of the Audit Committee is an “audit committee financial expert,” as such term is defined under the applicable regulations of the Commission and has the requisite accounting or related financial management expertise and financial sophistication under the applicable rules and regulations of Nasdaq. The Board of Directors has also determined that each member of the Audit Committee is independent under Rule 10A-3 under |
|
|
2024 Proxy Statement | 29 |
Table of Contents
CORPORATE GOVERNANCE
| the Securities Exchange Act of 1934 (Exchange Act) and the enhanced independence standards for audit committee members as defined in the rules of Nasdaq and the Commission. All members of the Audit Committee can read and understand fundamental financial statements, are familiar with finance and accounting practices and principles, and are financially literate. |
| (2) | The Compensation Committee’s processes for fulfilling its responsibilities and duties with respect to executive compensation and the role of executive officers and management in the compensation process are each described under the heading “Determination of Compensation Awards” in this Proxy Statement. The Board of Directors has determined that each member of the Compensation Committee satisfies the enhanced independence standards for compensation committee members, as defined in the rules of Nasdaq and the Commission. |
| (3) | The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent, as defined in the Nasdaq rules. |
STOCKHOLDER COMMUNICATION WITH BOARD OF DIRECTORS
Stockholders may send written communications to the Board of Directors, or any of the individual directors, c/o our Corporate Secretary at CommScope Holding Company, Inc., 3642 E. US Highway 70, Claremont, North Carolina 28610. All communications will be compiled by the Corporate Secretary of the Company and submitted to the Board of Directors or the individual directors, as applicable, on a periodic basis.
DIRECTOR COMPENSATION
Our Compensation Committee has the primary authority to determine and approve the compensation of our non-employee directors. When considering and approving changes to the level and composition of the directors’ compensation, the Compensation Committee considers input from its independent compensation consultant and market data from peer companies.
Directors who are employees of the Company or its affiliates (including Carlyle) receive no additional compensation for their service on our Board of Directors or its committees. Non-employee directors are each paid a basic cash retainer per year for service on our Board of Directors, payable quarterly, plus an additional amount for serving as a chair or member of a committee. The Lead Independent Director receives an additional cash retainer annually. We also reimburse non-employee directors for reasonable out-of-pocket expenses in the performance of their duties as directors. Non-employee directors receive equity-based awards in the form of RSUs at the time of their election to our Board of Directors. In addition, our non-employee directors receive an annual grant of RSUs on the date of the annual stockholders’ meeting. The RSUs vest on the date of the next annual meeting or, if earlier, the first anniversary of the grant date. If a director joins the Board or changes roles between stockholders’ meetings, the director fees and stock retainer are prorated.
Each of the cash retainer and the stock retainer amounts for 2023 remained unchanged from the prior year.
| 30 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
The following tables summarize our non-employee director compensation for 2023:
| Annual Non-Employee Director Compensation
|
||||
| Basic Cash Retainer |
$ |
90,000 |
| |
| Supplemental Cash Retainers: |
||||
| Lead Independent Director |
$ |
30,000 |
| |
| Audit Committee Chair(1) |
$ |
30,000 |
| |
| Audit Committee Member |
$ |
15,000 |
| |
| Compensation Committee Chair(1) |
$ |
20,000 |
| |
| Compensation Committee Member |
$ |
10,000 |
| |
| Nominating and Corporate Governance Committee Chair(1) |
$ |
15,000 |
| |
| Nominating and Corporate Governance Committee Member |
$ |
10,000 |
| |
| Annual Stock Retainer(2) |
$ |
200,000 |
| |
| (1) | Amount includes both the supplemental cash retainer for serving as the committee chair and the supplemental cash retainer for serving as a member of such committee. |
| (2) | The number of RSUs granted as the annual stock retainer is determined based upon the closing price of our common stock on the grant date. |
Employment Agreement with Mr. Watts
Mr. Watts is the Chairman of the Board and an employee of the Company, and we are party to an employment agreement with him. His agreement had an initial one-year term, and automatically renews for an additional one-year period each year, unless either party gives 60 days written notice of non-renewal. Mr. Watts receives a salary equal to $620,400 and is eligible to participate in the Company’s employee benefit programs, but he does not receive annual incentive awards under the AIP.
In connection with his employment, in 2023, Mr. Watts received 117,000 RSUs that vest annually over three years beginning on the first anniversary of the grant date, subject to Mr. Watts’ continued service. In addition, in 2023, Mr. Watts received 55,000 Core Adjusted EBITDA PSUs and 36,700 TSR PSUs. The Core Adjusted EBITDA PSUs are eligible to vest based upon an achievement of cumulative Core Adjusted EBITDA goals for the three-year period covering fiscal years 2023, 2024 and 2025, and the TSR PSUs are eligible to vest on June 1, 2026 based upon the achievement of goals related to our TSR ranking relative to the TSR of the companies, other than the Company, comprising the S&P 500 over a three-year period from March 1, 2023 through February 28, 2026.
Pursuant to Mr. Watts’ employment agreement, in the event Mr. Watts’ employment is terminated by the Company for any reason other than for cause or disability or by Mr. Watts for good reason, in each case regardless of whether a change in control has occurred, Mr. Watts will be entitled to receive his accrued compensation and each of the following:
| • | severance pay equal to twelve months’ base salary, payable in equal monthly installments over twelve months, or two years’ base salary if such termination occurs within twenty-four months following a change in control, payable in a lump sum; and |
| • | a cash payment equal to the cost we would have incurred had he continued group medical, dental, vision and/or prescription drug benefit coverage for himself and his eligible dependents for twelve months, payable in periodic installments in accordance with our payroll practice. |
|
|
2024 Proxy Statement | 31 |
Table of Contents
CORPORATE GOVERNANCE
For purposes of Mr. Watts’ agreement, “good reason” includes a material reduction in base salary, a change in his title or position as Chairman, any requirement to permanently relocate to the Company’s headquarters, or a material breach of the agreement.
If Mr. Watts’ employment is terminated by the Company for cause or disability, by reason of his death or by Mr. Watts other than for good reason, we will pay to Mr. Watts his accrued compensation.
DIRECTOR COMPENSATION TABLE FOR 2023
| Name | Fees Earned or Paid in Cash ($) |
Stock Awards ($)(1) |
All Other Compensation ($)(2) |
Total ($) | ||||
| Claudius E. Watts IV (Chair) |
— |
— |
2,035,895 |
2,035,895 | ||||
| Mary S. Chan(3) |
110,000 |
200,000 |
— |
310,000 | ||||
| Frank M. Drendel |
32,625 |
— |
— |
32,625 | ||||
| Stephen C. Gray |
100,000 |
200,000 |
— |
300,000 | ||||
| L. William Krause |
110,000 |
200,000 |
— |
310,000 | ||||
| Mindy Mackenzie(4) |
— |
— |
— |
— | ||||
| Joanne M. Maguire |
105,000 |
200,000 |
— |
305,000 | ||||
| Thomas J. Manning |
105,000 |
200,000 |
— |
305,000 | ||||
| Patrick R. McCarter(4) |
— |
— |
— |
— | ||||
| Derrick A. Roman |
114,563 |
200,000 |
— |
314,563 | ||||
| Timothy T. Yates |
140,438 |
200,000 |
— |
340,438 | ||||
| (1) | We granted each non-employee director 47,170 RSUs in 2023 which will vest May 1, 2024. Amounts represent the grant date fair value of these RSUs, which was computed in accordance with FASB ASC Topic 718. No directors held stock options. |
| (2) | Mr. Watts is employed by the Company and did not receive compensation for his service as a director in 2023. Amounts paid in 2023 are related to Mr. Watts’ 2023 employment, including $620,400 in salary, a $18,612 company contribution to the 401(k) plan, and a $594 life insurance premium. Also included is the $650,900 grant date fair value of Mr. Watts’ 117,000 RSUs, the $390,500 grant date fair value of Mr. Watts’ 55,000 Core Adjusted EBITDA PSUs and the $354,889 grant date fair value of Mr. Watts’ 36,700 TSR PSUs, which were granted to him in 2023 in connection with his service as an employee of the Company. The fair value of these awards was computed in accordance with FASB ASC Topic 718. Mr. Watts’ RSUs were granted on March 1, 2023 and vest subject to his continued service annually over three years beginning on the first anniversary of the grant date. Mr. Watts’ Core Adjusted EBITDA PSUs and TSR PSUs were also granted on March 1, 2023 and the Core Adjusted EBITDA PSUs vest based on achievement of cumulative Core Adjusted EBITDA goals for the three-year period covering fiscal years 2023, 2024 and 2025. The TSR PSUs vest on June 1, 2026 based upon the achievement of goals relating to our TSR ranking relative to the TSR of the companies, other than the Company, comprising the S&P 500, over a three-year period from March 1, 2023 through February 28, 2026. As of December 31, 2023, in addition to these 2023 RSUs, Core Adjusted EBITDA PSUs and TSR PSUs, Mr. Watts held 154,000 EPRG PSUs granted to him in 2020 that remained unvested and are eligible to vest upon achievement of certain hurdles relating to our stock price (ranging from a low of $15 and a high of $40, with the $15 and $20 average price hurdles being previously met in 2021) and his continued service over a four-year period. |
| (3) | On November 17, 2023, Ms. Chan resigned as a director due to her appointment as chief operating officer for Nikola Corporation. |
| (4) | Ms. Mackenzie and Mr. McCarter, as directors selected by Carlyle, did not receive director compensation from the Company. On February 14, 2024, Ms. Mackenzie resigned as a director. |
| 32 | 2024 Proxy Statement |
|
Table of Contents
CORPORATE GOVERNANCE
DIRECTOR STOCK OWNERSHIP GUIDELINES
We maintain stock ownership guidelines for the non-employee members of our Board of Directors and our executive officers. These guidelines were established to align with industry practice and to affirm to stockholders that our directors and executives have a meaningful long-term equity position in the Company and a longer-term view of its performance. Pursuant to our stock ownership guidelines, which were based on market and peer group data and were adopted following consultation with the Compensation Committee’s independent compensation consultant, each of our non-employee directors are expected to own either (i) shares having a value equal to five times their base cash retainer (excluding committee fees) or (ii) an aggregate of 100,000 shares.
The value of a non-employee director’s stock ownership is measured as of December 31 of each year by reference to the thirty day average closing price of our stock on the Nasdaq Stock Market and using each individual’s base retainer then in effect.
Current and new non-employee directors who are subject to these guidelines are expected to satisfy them by the end of the calendar year following the fifth anniversary of the date that a Participant becomes subject to the guidelines and to hold at least such minimum value in shares of our common stock or RSUs for so long as applicable. All of our non-employee directors have met or are on track to meet their ownership requirements within the applicable five-year period. See the “Stock Ownership Guidelines” section below for information on the guidelines for our executives.
|
|
2024 Proxy Statement | 33 |
Table of Contents
CERTAIN RELATIONSHIPS AND RELATED PERSON
TRANSACTIONS
Our Board has adopted a written statement of policy for the evaluation of and the approval, disapproval and monitoring of transactions involving us and “related persons.” For the purposes of the policy, “related persons” will include our executive officers, directors and director nominees and their immediate family members, or stockholders owning five percent or more of our outstanding common stock and their immediate family members.
The policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, the amount involved exceeds $120,000, and a related person had or will have a direct or indirect material interest. Pursuant to this policy, our management will present to our Audit Committee each proposed related person transaction, including all relevant facts and circumstances relating thereto. Our Audit Committee will then:
| • | review the relevant facts and circumstances of each related person transaction, including the financial terms of such transaction, the benefits to us, the availability of other sources for comparable products or services, if the transaction is on terms no less favorable to us than those that could be obtained in arm’s-length dealings with an unrelated third party or employees generally and the extent of the related person’s interest in the transaction; and |
| • | consider the impact on the independence of any independent director and the actual or apparent conflicts of interest. |
Any related person transaction may only be consummated if our Audit Committee has approved or ratified such transaction in accordance with the guidelines set forth in the policy. Certain types of transactions have been pre-approved by our Audit Committee under the policy. These pre-approved transactions include:
| • | certain employment and compensation arrangements; |
| • | transactions where the related person’s interest is only as an employee (other than an executive officer), director or owner of less than ten percent (10%) of the equity in another entity; |
| • | transactions where the related person is an executive officer of another company and the aggregate amount involved does not exceed the greater of $200,000 or five percent (5%) of the total annual revenues of the other company; |
| • | charitable contributions to an organization, foundation or university at which the related person’s only relationship is as an employee, trustee or director, if the contribution is made pursuant to the Company’s policies and approved by someone other than the related person; |
| • | transactions where the interest of the related person arises solely from the ownership of a class of equity securities in the Company where all holders of such class of equity securities will receive the same benefit on a pro rata basis; |
| • | transactions determined by competitive bids; |
| • | certain regulated transactions involving the rendering of services at rates or charges fixed by law or governmental authority; and |
| • | certain transactions involving banking-related services such as services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services. |
| 34 | 2024 Proxy Statement |
|
Table of Contents
CERTAIN RELATIONSHIPS
No director may participate in the approval of a related person transaction for which he or she, or any of his or her immediate family members, is a related person.
INVESTMENT AGREEMENT
On April 4, 2019, the Company issued 1,000,000 shares of Series A Convertible Preferred Stock to Carlyle for an aggregate purchase price of $1.0 billion, or $1,000 per share, pursuant to the Investment Agreement between the Company and Carlyle, dated November 8, 2018.
The Series A Convertible Preferred Stock ranks senior to the shares of the Company’s common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. Holders of Series A Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per annum, payable quarterly in arrears. Dividends can be paid in cash, in kind with Series A Convertible Preferred Stock or any combination of the two options at the Company’s sole discretion. During 2023, we paid Carlyle dividends in-kind of $61.8 million (in the form of 61,775 additional shares of Series A Convertible Preferred Stock) for the Series A Convertible Preferred Stock.
The Series A Convertible Preferred Stock is convertible at the option of the holders at any time into shares of CommScope common stock at a conversion rate of 36.36 shares of common stock per share of Series A Convertible Preferred Stock (equivalent to $27.50 per common share). The conversion rate is subject to customary anti-dilution and other adjustments. At any time after the third anniversary of the issuance of the Series A Convertible Preferred Stock, if the volume weighted average price of CommScope’s common stock exceeds the mandatory conversion price of $49.50 for at least thirty trading days in any period of forty-five consecutive trading days (including the final five consecutive trading days of such forty-five day trading period), the Company has the option to convert all of the outstanding shares of Series A Convertible Preferred Stock into CommScope common stock. During the three months following the eight and one-half year anniversary of the Investment Agreement closing date and the three months following each anniversary thereafter, holders of the Series A Convertible Preferred Stock will have the right to require CommScope to redeem all or any portion of the Series A Convertible Preferred Stock at 100% liquidation preference plus all accrued and unpaid dividends. The redemption price is payable, at the Company’s option, in cash or a combination of cash and common stock subject to certain restrictions. Upon the occurrence of a change of control, the Company will have the right, subject to the rights of the holders of outstanding shares of Series A Convertible Preferred Stock to convert prior to such redemption, to redeem all of the Series A Convertible Preferred Stock for the greater of (i) an amount in cash equal to the sum of the liquidation preference of the Series A Convertible Preferred Stock, all accrued but unpaid dividends and, if the applicable redemption date is prior to the fifth anniversary of the first dividend payment date, the present value, discounted at a rate of 10%, of any remaining scheduled dividends through the five-year anniversary of the first dividend payment date, assuming CommScope chose to pay such dividends in cash and (ii) the consideration the holders would have received if they had converted their shares of Series A Convertible Preferred Stock into common stock immediately prior to the change of control event.
Holders of Series A Convertible Preferred Stock are entitled to vote with the holders of common stock on an as-converted basis, voting together as a single class. Holders of Series A Convertible Preferred Stock are entitled to a separate class vote with respect to amendments to the Company’s organizational documents that have an adverse effect on the Series A Convertible Preferred Stock and the creation or classification of, or issuances by, the Company of securities that are senior to, or equal in priority with, the Series A Convertible Preferred Stock. So long as Carlyle or its affiliates beneficially
|
|
2024 Proxy Statement | 35 |
Table of Contents
CERTAIN RELATIONSHIPS
own shares of Series A Convertible Preferred Stock and/or shares of common stock issued upon conversion of Series A Convertible Preferred Stock (Conversion Common Stock) that represent, in the aggregate and on an as-converted basis, at least 50% of Carlyle’s initial shares of Series A Convertible Preferred Stock on an as-converted basis, Carlyle has the right to designate two directors to be nominated by the Board for election to the Board. Until Carlyle no longer has the right to designate directors for election to the Board, it and its affiliates have committed to vote all of their shares of Series A Convertible Preferred Stock and/or common stock (i) in favor of director nominees recommended by the Board, (ii) against stockholder director nominees not approved and recommended by the Board, (iii) in favor of the Company’s say-on-pay proposal and other equity compensation proposals that have been approved by the Compensation Committee and (iv) in favor of the Company’s proposal for ratification of the appointment of the Company’s independent registered public accounting firm. Regarding all other matters submitted to the vote of stockholders, Carlyle and its affiliates are under no obligation to vote in the same manner as recommended by the Board or otherwise.
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with each of our directors and certain of our officers. These indemnification agreements provide the directors and officers with contractual rights to indemnification and expense advancement which are, in some cases, broader than the specific indemnification provisions under Delaware law. We believe that these indemnification agreements are, in form and substance, substantially similar to those commonly entered into by similarly situated companies. A form of an indemnification agreement is filed as an exhibit to our Annual Report on Form 10-K.
| 36 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE OFFICERS
The following table provides information regarding our executive officers:
| Name
|
Age
|
Position
| ||
| Charles L. Treadway |
58 | President, Chief Executive Officer and Director | ||
| Kyle D. Lorentzen |
58 | Executive Vice President and Chief Financial Officer | ||
| Justin C. Choi |
58 | Senior Vice President, Chief Legal Officer and Secretary | ||
| Farid Firouzbakht |
60 | Senior Vice President & President, OWN | ||
| Bartolomeo A. Giordano |
47 | Senior Vice President & President, NICS | ||
| Robyn T. Mingle |
58 | Senior Vice President and Chief Human Resources Officer | ||
| Laurie S. Oracion |
47 | Senior Vice President and Chief Accounting Officer | ||
| Guy Sucharczuk |
58 | Senior Vice President & President, ANS | ||
| Koen ter Linde
|
50
|
Senior Vice President & President, CCS
| ||
Charles (Chuck) L. Treadway
Mr. Treadway was appointed as our President and Chief Executive Officer in October 2020. He also serves as a member of our Board of Directors. Mr. Treadway most recently served as an operating executive with The Carlyle Group in 2020 and Chief Executive Officer of Accudyne Industries, a global provider of precision-engineered, process-critical and technologically advanced pumps and flow control equipment, systems and high efficiency industrial compressors, from 2016 to 2020. Prior to joining Accudyne Industries, Mr. Treadway held various leadership positions at Thomas & Betts Corporation, a global leader in the design, manufacture and marketing of essential components used to manage the connection, distribution, transmission and reliability of electrical power in industrial, construction and utility applications, including President and Chief Executive Officer from 2012 to 2016, President and Chief Operating Officer from 2011 to 2012 and Group President of Electrical from 2009 to 2011. He previously served in several management and executive positions at Schneider Electric S.A., Prettl International, Inc. and Yale Security, Inc.
Kyle D. Lorentzen
Mr. Lorentzen became our Executive Vice President and Chief Financial Officer in November 2021. Prior to this role, Mr. Lorentzen served as our Senior Vice President and Chief Transformation Officer since joining CommScope in January 2021. Before joining CommScope, he served as Chief Financial Officer of Accudyne Industries from 2017 to 2020. From 2014 to 2017, Mr. Lorentzen was Chief Financial Officer and Executive Vice President of Express Energy Service. Earlier, Mr. Lorentzen held multiple roles with Constellium, including Chief Executive Officer of Constellium Ravenswood from 2011 to 2014. Throughout his career, Mr. Lorentzen has held numerous financial and managerial roles with companies such as Noranda Aluminum, Berry Plastics/Covalence Specialty Materials, Hexion Specialty Chemical, Inc., Borden Chemical, Inc., Dow Chemical, Sanachem, Hampshire Chemical Corp. and W.R. Grace.
Justin C. Choi
Mr. Choi became our Senior Vice President, Chief Legal Officer and Secretary in May 2021. Mr. Choi was Executive Vice President, General Counsel, Secretary and Chief Compliance Officer of Anixter International, Inc., a global distributor of communication, security, and cable products, from 2012 to
|
|
2024 Proxy Statement | 37 |
Table of Contents
EXECUTIVE OFFICERS
2020. Prior to that, Mr. Choi served as Senior Vice President, General Counsel and Secretary of Andrew Corporation, a global leader in the wireless infrastructure industry that was acquired by CommScope in 2007.
Farid Firouzbakht
Mr. Firouzbakht has been our Senior Vice President & President, Outdoor Wireless Networks, since 2020. Mr. Firouzbakht previously served as our Senior Vice President and General Manager, RF Products from 2016 to 2020.
Bartolomeo A. Giordano
Mr. Giordano became our Senior Vice President & President of the Networking, Intelligent Cellular and Security Solutions segment in 2023. Prior to that he was general manager of the RUCKUS business unit from 2021 to 2023 and led the RUCKUS worldwide sales organization and product management from 2018 to 2021. Prior to RUCKUS, Mr. Giordano served in roles of increasing responsibility at Egnyte, an enterprise SaaS company and Marvell Semiconductor.
Robyn T. Mingle
Ms. Mingle became our Senior Vice President and Chief Human Resources Officer in 2016. Prior to joining CommScope, she was the Chief Human Resource Officer at Xylem Inc. from 2011 to 2015, where she was a founding executive team member for the global water company spin-off from ITT Corp. From 2003 to 2011, Ms. Mingle was the Senior Vice President, Human Resources at Hovnanian Enterprises, Inc., one of the nation’s largest homebuilders. She spent the first 14 years of her career with The Black & Decker Corporation in various human resources roles.
Laurie S. Oracion
Ms. Oracion became our Senior Vice President and Chief Accounting Officer in May 2022. Ms. Oracion previously served as our Vice President, Corporate Accounting from 2019 to 2022. She also served as our Director of Financial Reporting since joining CommScope in 2015. Prior to joining CommScope, Ms. Oracion worked in roles of increasing responsibility at General Dynamics, GoldToeMoretz LLC and Deloitte. Ms. Oracion is a Certified Public Accountant in North Carolina.
Guy Sucharczuk
Mr. Sucharczuk has been our Senior Vice President & President, Access Network Solutions, since 2022. Previously, he served as our Senior Vice President and General Manager, Access Technologies, from 2014 to 2021, which included predecessor companies ARRIS from 2016 to 2021 and Pace from 2014 to 2015. Prior to that, Mr. Sucharczuk founded and served as President and Chief Executive Officer of Aurora Networks from 1999 to 2013.
Koen ter Linde
Mr. ter Linde became our Senior Vice President & President, Connectivity & Cable Solutions in 2023. Previously, he served as our head of the Network Cable and Connectivity business, from 2021 to 2023 and as Chief Marketing Officer of the Company from 2020 to 2021. Koen ter Linde joined CommScope in 1996 and has held a variety of senior roles ranging in responsibility from product management, to sales, to business unit leadership – in both the enterprise and service provider organizations globally.
| 38 | 2024 Proxy Statement |
|
Table of Contents
BENEFICIAL OWNERSHIP OF OUR COMMON STOCK
The following tables set forth information with respect to the beneficial ownership of our common stock and Series A Convertible Preferred Stock as of March 13, 2024 by:
| • | each of our NEOs; |
| • | each of our directors; |
| • | all our directors and executive officers as a group; and |
| • | each individual or entity known to own beneficially more than 5% of the capital stock. |
We had 212,244,891 shares of common stock and 1,162,085 shares of Series A Convertible Preferred Stock outstanding as of March 13, 2024. None of the executive officers or directors named in the table below owned, beneficially or of record, any shares of the Company’s Series A Convertible Preferred Stock. The amounts and percentages of shares beneficially owned are reported based on Commission regulations governing the determination of beneficial ownership of securities. Under the Commission rules, an individual or entity is deemed to be a “beneficial” owner of a security if that individual or entity has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. An individual or entity is also deemed to be a beneficial owner of any securities of which that individual or entity has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are not deemed to be outstanding for purposes of computing the ownership percentage of any other individual or entity. Under these rules, more than one individual or entity may be deemed to be a beneficial owner of securities as to which such individual or entity has no economic interest. Except as otherwise indicated in the footnotes to the table below, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the shares of capital stock, and the business address of each such beneficial owner, unless otherwise noted, is c/o CommScope Holding Company, Inc., 3642 E. US Highway 70, Claremont, North Carolina 28610.
| Name of Beneficial Owner
|
Common
|
Options to
|
RSUs(2)
|
PSUs(3)
|
Total
|
Percentage
| ||||||||
| Executive Officers and Directors: |
||||||||||||||
| Charles L. Treadway |
1,053,272 | — | — | — | 1,053,272 | * | ||||||||
| Kyle D. Lorentzen |
195,041 | — | — | — | 195,041 | * | ||||||||
| Justin C. Choi |
137,745 | — | 17,634 | — | 155,379 | * | ||||||||
| Bartolomeo A. Giordano |
17,221 | 32,050 | — | — | 49,271 | * | ||||||||
| Gonzaga J. Chow
|
77,011 | 61,520 | — | — | 138,531 | * |
|
|
2024 Proxy Statement | 39 |
Table of Contents
BENEFICIAL OWNERSHIP
| Name of Beneficial Owner
|
Common
|
Options to
|
RSUs(2)
|
PSUs(3)
|
Total
|
Percentage
| ||||||||
| Claudius E. Watts IV
|
696,763 | (4) | — | — | — | 696,763 | * | |||||||
| Stephen C. Gray
|
73,578 | — | 47,170 | — | 120,748 | * | ||||||||
| Scott H. Hughes
|
— | — | — | — | — | * | ||||||||
| L. William Krause
|
272,830 | — | 47,170 | — | 320,000 | * | ||||||||
| Joanne M. Maguire
|
71,323 | — | 47,170 | — | 118,493 | * | ||||||||
| Thomas J. Manning
|
73,820 | — | 47,170 | — | 120,990 | * | ||||||||
| Patrick R. McCarter
|
— | — | — | — | — | * | ||||||||
| Derick A. Roman
|
35,932 | — | 47,170 | — | 83,102 | * | ||||||||
| Timothy T. Yates
|
178,581 | — | 47,170 | — | 225,751 | * | ||||||||
| Directors and executive officers as a group (19 persons)
|
3,182,744 | 344,230 | 300,654 | — | 3,827,628 | 1.8% |
| * | Denotes less than 1% |
| (1) | Includes options to purchase shares of common stock that are currently exercisable or will become exercisable within 60 days of March 13, 2024. |
| (2) | Includes RSUs that will vest and become exercisable within 60 days of March 13, 2024. |
| (3) | Includes PSUs that will vest and become exercisable within 60 days of March 13, 2024. |
| (4) | Includes 10,000 shares held in the Watts Family Foundation. |
Note: Fractional shares have been rounded to the nearest whole share.
| 40 | 2024 Proxy Statement |
|
Table of Contents
BENEFICIAL OWNERSHIP
| Common Stock | Series A Convertible Preferred Stock |
|||||||||||||||
| Name and Address of Beneficial Owner |
|
Total Number of Shares |
|
Percentage of Class |
|
Total Number of Shares |
|
Percentage of Class |
||||||||
| Large Stockholders: | ||||||||||||||||
| The Carlyle Group Inc.(1) |
1,162,085 | 100.00% | ||||||||||||||
| The Vanguard Group(2) |
34,107,786 | 16.1% | ||||||||||||||
| FPR Partners, LLC(3) |
18,625,657 | 8.8% | ||||||||||||||
| BlackRock, Inc.(4) |
16,706,878 | 7.9% | ||||||||||||||
| The Charger Corporation(5)
|
13,071,560 | 6.2% | ||||||||||||||
| (1) | According to a Schedule 13D/A filed jointly by The Carlyle Group Inc., Carlyle Holdings I GP Inc., Carlyle Holdings I GP Sub L.L.C., Carlyle Holdings I L.P., CG Subsidiary Holdings L.L.C., TC Group, L.L.C., TC Group Sub L.P., TC Group VII S1, L.L.C., TC Group VII S1, L.P., and Carlyle Partners VII S1 Holdings, L.P. (Carlyle Partners VII) on January 3, 2024, and including dividends paid in kind. As of March 13, 2024, the shares of Series A Convertible Preferred Stock held by Carlyle Partners VII were convertible into 42,257,594 shares of common stock. |
| (2) | According to a Schedule 13G/A filed by The Vanguard Group on February 13, 2024, reporting beneficial ownership of our common stock as of December 29, 2023. The Vanguard Group has shared voting power with respect to 789,534 of the shares, sole dispositive power with respect to 33,098,638 of the shares, and shared dispositive power over 1,009,148 of the shares. |
| (3) | According to a Schedule 13G/A filed jointly by FPR Partners, LLC, Andrew Raab, Bob Peck and FPR Partners, LP on February 14. 2024, reporting beneficial ownership of our common stock as of December 31, 2023. According to the Schedule 13G/A, the reported shares are held directly by certain limited partnerships, including FPR Partners, LP. FPR Partners, LLC is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940 and, as such, may be deemed to have beneficial ownership of 18,625,657 shares of our common stock through the investment discretion it exercises over its clients’ accounts. Andrew Raab and Bob Peck are the Senior Managing Members of FPR Partners, LLC. FPR Partners, LLC has the sole voting and dispositive power, and Andrew Raab and Bob Peck each have shared voting and dispositive power, over 18,625,657 shares reported on the Schedule 13G/A. FPR Partners, LP has shared voting and dispositive power over 9,656,553 shares reported on the Schedule 13G/A. |
| (4) | According to a Schedule 13G/A filed on February 7, 2024 by BlackRock, Inc., reporting beneficial ownership of our common stock as of January 31, 2024. According to the Schedule 13G/A, BlackRock, Inc. is a parent holding company or control person with the sole power to vote or to direct the vote of 16,327,150 of the shares listed in the table and sole power to dispose or direct the disposition of 16,706,878 of the shares. The shares listed in the table are beneficially owned by the following subsidiaries of BlackRock, Inc.: BlackRock Life Limited; Aperio Group, LLC; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock (Luxembourg) S.A.; BlackRock Investment Management (Australia) Limited; BlackRock Fund Advisors; and BlackRock Fund Managers Ltd. |
| (5) | According to a Schedule 13G filed jointly by The Charger Corporation, First Trust Portfolios L.P. and First Trust Advisors L.P. on January 10, 2024, reporting beneficial ownership of our common stock as of December 31, 2023. The Charger Corporation is the General Partner of both First Trust Portfolios L.P. and First Trust Advisors L.P. First Trust Portfolios L.P. acts as sponsor of certain unit investment trusts which hold the shares listed in the table. First Trust Advisors L.P., an affiliate of First Trust Portfolios L.P., acts as portfolio supervisor of the unit investment trusts sponsored by First Trust Portfolios L.P., certain of which hold the shares listed in the table. The Charger Corporation and First Trust Advisors L.P. reported shared voting and dispositive power over 13,071,560 shares reported on the Schedule 13G. Each of The Charger Corporation, First Trust Portfolios L.P. and First Trust Advisors L.P. disclaims beneficial ownership of the shares listed in the table. |
|
|
2024 Proxy Statement | 41 |
Table of Contents
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires CommScope’s executive officers and directors, and persons who own more than ten percent of a registered class of CommScope’s equity securities, to file initial reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the Commission. Such executive officers, directors and ten percent stockholders are also required by Commission rules to furnish CommScope with copies of all such forms that they file. Based solely on our review of the reports filed with the Commission and written representations that no other reports were required under Section 16(a) of the Exchange Act, we believe that all Section 16(a) filing requirements were met during fiscal 2023, with the exception of (a) a Form 4 filed late by John R. Carlson on May 16, 2023, reporting the purchase of shares on May 11, 2023; and (b) a Form 4 filed late by Kyle D. Lorentzen on November 27, 2023, reporting the purchase of shares on November 17, 2023.
| 42 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
PROPOSAL No. 3:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Exchange Act and related rules promulgated by the Commission, our stockholders have an opportunity to vote to approve, on an advisory (nonbinding) basis, the compensation of our NEOs as described in this Proxy Statement. This proposal is commonly referred to as a “say-on-pay” proposal. This proposal is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. As required by these rules, the Board invites you to review carefully the Compensation Discussion and Analysis and the tabular and other disclosures on compensation under Executive Compensation and cast a vote on the Company’s executive compensation programs through the following resolution:
“Resolved, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables, and any narrative executive compensation disclosure contained in this Proxy Statement.”
As discussed in the Compensation Discussion and Analysis, the Board of Directors believes that the Company’s long-term success depends in large measure on the talents of our employees. The Company’s compensation system plays a significant role in our ability to attract, retain and motivate the highest quality workforce. The Board of Directors believes that its current compensation program directly links executive compensation to performance, aligning the interests of the Company’s executive officers with those of the stockholders.
Pursuant to Section 14A of the Exchange Act, this vote is advisory and will not be binding on the Company or the Compensation Committee. While the vote does not bind the Compensation Committee to any particular action, the Compensation Committee and the Board of Directors value the input of the stockholders and will take into account the outcome of this vote in considering future compensation arrangements.
The Company strongly encourages all stockholders to vote on this matter. Currently, say-on-pay votes are held by the Company annually. The next stockholder advisory vote on say-on-pay is expected to occur at the 2025 Annual Meeting of Stockholders.
The Board of Directors recommends a vote “FOR” Proposal No. 3, to approve an advisory (non-binding) resolution regarding the compensation of the Company’s NEOs.
|
|
2024 Proxy Statement | 43 |
Table of Contents
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) describes our compensation philosophy, process, plans and practices for our NEOs. Our executive compensation program is intended to incent and reward our leadership to produce financial results that our Compensation Committee believes align with the interests of our stockholders.
OUR NAMED EXECUTIVE OFFICERS
Our NEOs for 2023, whose compensation is discussed in this CD&A, are as follows:
|
Name
|
Title
| |
| Charles L. Treadway |
President and Chief Executive Officer (principal executive officer) | |
| Kyle D. Lorentzen |
Executive Vice President and Chief Financial Officer (principal financial officer) | |
| Justin C. Choi |
Senior Vice President, Chief Legal Officer and Secretary | |
| Bartolomeo A. Giordano |
Senior Vice President and President, NICS | |
| Gonzaga J. Chow(1) |
Former Senior Vice President and President, Home Networks | |
| (1) | Mr. Chow’s employment ended on January 9, 2024 following the sale of our Home business. |
2023 EXECUTIVE SUMMARY
OUR COMPANY
CommScope is a global provider of infrastructure solutions for communication, data center and entertainment networks. Our solutions for wired and wireless networks enable service providers including cable, telephone and digital broadcast satellite operators and media programmers, to deliver media, voice, IP data services and Wi-Fi to their subscribers and allow enterprises to experience constant wireless and wired connectivity across complex and varied networking environments. Our solutions are complemented by a broad array of services, including technical support, systems design and integration. We are a leader in digital video and Internet Protocol Television distribution systems, broadband access infrastructure platforms and equipment that delivers data and voice networks to homes. We are a strong part of communities from coast to coast and around the world, with over 20,000 employees spread across 45 states and 51 countries. Our global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.
2023 BUSINESS RESULTS
Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization. We believe these efforts are critical to making us more competitive and allowing us to invest in growth, de-leverage our indebtedness and maximize stockholder and other stakeholder value in the future. In 2022, CommScope NEXT generated positive impacts on net sales, profitability and cash flow from our execution on pricing initiatives, capacity expansion and operational efficiencies. In 2023, we experienced headwinds related to a slow-down in spending by our customers, but we continued to execute under CommScope NEXT to improve our profitability and cash flows by driving operational efficiencies and focusing on portfolio optimization that should enable us take advantage of the recovery in demand in the future. While we are disappointed with our 2023 results,
| 44 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
we still believe our position in the overall market is strong, and we are confident that CommScope NEXT will allow us to be more competitive and allow us to invest in growth and maximize stakeholder value in the future.
In 2021, as a step in our CommScope NEXT transformation plan, we announced a plan to separate the Home segment and began analyzing the financial results of our “Core” business separately from Home. On October 2, 2023, we entered into a Call Option Agreement with Vantiva SA (Vantiva), pursuant to which we granted Vantiva a binding call option to acquire our Home segment and substantially all of the associated segment assets and liabilities (Home business), which was subsequently exercised and a Purchase Agreement signed on December 7, 2023. The transaction closed on January 9, 2024.
We determined the anticipated sale of our Home business met the “held for sale” and “discontinued operations” criteria in accordance with accounting guidance in the fourth quarter of 2023. Therefore, for all periods presented, our financial results have been recast to reflect the discontinuation of our Home segment. Unless otherwise noted, our discussions of our financial performance relate solely to our continuing operations.
The results of our recast continuing operations do not align with our historical “Core” profitability measures, which excluded the Home segment, because our continuing operations results include general corporate costs that were previously allocated to the Home segment. These indirect costs are classified as continuing operations, since they were not directly attributable to the discontinued operations of the Home segment. In future years, these costs will be reallocated to our remaining segments and are expected to be at least partially offset by income from our transition services agreement with Vantiva or eliminated with future restructuring actions.
| Key Features of our 2023 Financial Performance(1)
|
| • Net sales decreased year over year to $5,789.2 million in 2023 compared to $7,524.7 million in 2022, driven by decreased sales volumes as certain customers reduced purchases as they right-sized their inventories and others paused capital spending. Net sales decreased across all segments except our NICS segment.
• Loss from continuing operations of $851.3 million in 2023 decreased compared to a net loss from continuing operations of $1,184.7 million in 2022, driven primarily by lower impairment of goodwill.
• Non-GAAP Adjusted EBITDA(2) of $999.0 million was down $224.4 million year-over-year.
• Core Adjusted EBITDA(2)(3) of $1,022.2 million was down $228.2 million year-over-year primarily due to lower demand.
• Stock price on December 31 decreased to $2.82 in 2023 compared to $7.35 in 2022.
|
| (1) | Financial performance highlights are from continuing operations and do not include the net sales, net loss or adjusted EBITDA classified as discontinued operations related to the divestiture of our Home segment. |
| (2) | See reconciliation of Non-GAAP financial measures included in Appendix A hereto. |
| (3) | Core adjusted EBITDA reflects the results of our CCS, OWN, NICS and ANS segments, in the aggregate, and excludes general corporate costs that were previously allocated to the Home segment and are now classified as continuing operations. |
Our compensation program is designed to attract and retain key executives by offering competitive levels of compensation and to motivate our executives by creating a strong link between pay and the Company’s performance. A significant portion of our executives’ compensation for 2023 was tied to the achievement of performance goals that align management’s objectives with key drivers of long-term stockholder value, including Core Adjusted EBITDA, Core Revenue and stock price appreciation. The decline in net sales and Core Adjusted EBITDA did not meet our expectations for 2023 which caused us to miss our AIP targets, and our lower stock price limited achievement under equity compensation awards.
|
|
2024 Proxy Statement | 45 |
Table of Contents
EXECUTIVE COMPENSATION
2023 EXECUTIVE COMPENSATION HIGHLIGHTS
Key compensation considerations for 2023 include:
| • | Base salary for Mr. Treadway was increased by 14.3% to align with the median salary of our peer group, and Mr. Giordano’s salary was increased by 16.2% in connection with his appointment as head of NICS. The base salary increase was 3% for Mr. Choi and less than 1% for Mr. Lorentzen. Mr. Chow did not receive a base salary increase. |
| • | Short-term incentives under our 2023 AIP were earned at 10.0% of target for Messrs. Treadway, Lorentzen and Choi, whose payouts are tied to our Core performance. This payout reflects only the achievement of the NEOs’ strategic objectives and no achievement of the financial performance components, which aligns with our disappointing financial performance in 2023. The strategic objectives that were achieved were established by the Compensation Committee and were tied to ESG initiatives in our CommScope NEXT transformation plan. Mr. Giordano earned 179.1% in 2023 AIP due to the NICS segment’s strong financial performance in 2023 and Mr. Chow earned 25.0% of his target, based on his achievement for his Home segment strategic goals. |
| • | Our NEOs were granted long-term incentives in an equally weighted mix of time-vesting RSUs and performance-based equity with multi-year goals. |
| • | 50% of the target long-term incentive value granted to our NEOs was in the form of RSUs that vest over three years, conditioned on continued service. |
| • | 50% of the target long-term incentive value granted to our NEOs was in the form of PSUs with multi-year performance goals. |
| • | 20% of the target long-term incentive value was in the form of TSR PSUs, which are eligible to vest based upon our TSR ranking relative to the TSR of the companies, other than the Company, comprising the S&P 500 over a three-year period from March 1, 2023 through February 28, 2026. |
| • | 30% of the target long-term incentive value was in the form of Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs), which are eligible to vest based upon achievement of cumulative Core Adjusted EBITDA goals (or for Mr. Chow, Home segment Adjusted EBITDA goals) for the three-year period covering fiscal years 2023, 2024 and 2025. |
SAY-ON-PAY RESULTS AND CONSIDERATION OF STOCKHOLDER SUPPORT
The Company’s management team is available and meets regularly with investors to discuss a variety of business, industry and competitive dynamics. During the course of these discussions, the Company seeks to gather feedback on its executive compensation and governance programs to ensure that our interests are aligned with those of the stockholders.
In 2023, the Company received 98% support for its say-on-pay proposal, consistent with the 98% support in 2022. We believe this reflects our responsiveness to the feedback we heard through our stockholder outreach initiatives and the changes the Compensation Committee made to our executive compensation programs for 2022, which were repeated in 2023. Our NEO compensation program for fiscal 2023 included a competitive mix of RSUs and PSUs with absolute and relative goals, both measured over three-year performance periods. In addition, the AIP opportunity for our NEOs continued to include a strategic weighting in 2023, which can be earned based on our level of achievement of environmental and social goals tied to our CommScope NEXT transformation plan. Our Compensation Committee’s objectives in finalizing our 2023 compensation program for NEOs included providing a market competitive compensation program that aligns with investor expectations and supports a strong pay-for-performance culture.
| 46 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
The Compensation Committee will continue to consider input from our stockholders as reflected in the outcome of our annual say-on-pay vote when making executive compensation program decisions. We value the input of our stockholders, and our Compensation Committee will consider the results of our future say-on-pay votes, as well as feedback received throughout the year from our stockholders, when determining the compensation of our NEOs.
The Compensation Committee invites our stockholders to communicate any concerns or views on executive pay directly to the Board of Directors. Please refer to “Corporate Governance—Stockholder Communications with Board of Directors” for information about communicating with the Board.
2023 COMPENSATION ELEMENTS AND OUTCOMES
The table below summarizes the primary elements of our executive compensation program for 2023. The 2023 outcomes of the incentive opportunities provided to our NEOs reflect our current year results as well as our focus on delivering long-term results. Specifically, the incentives earned under our 2023 AIP were significantly below target due to our Core Adjusted EBITDA and Core Revenue results. The TSR PSUs and Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs) are not eligible to vest until completion of the three-year performance period (the period from March 1, 2023 until February 28, 2026 for the TSR PSUs and fiscal years 2023-2025 for the Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs)).
In 2023, we granted time-based RSUs, TSR PSUs and Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs) that were similar to the awards granted in 2022, although the Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs) had different performance goals. Other equity awards granted in prior years that remained outstanding in 2023 included PSUs, which we refer to as EPRG PSUs, that are eligible to vest based upon the achievement of various stock price hurdles (ranging from a low of $15 for Messrs. Treadway and Lorentzen and $17.50 for Messrs. Choi and Chow, to a high of $40) and continued service over a four-year period. The EPRG PSUs will require continued service from these NEOs and significant growth in our stock price in order to vest fully. Mr. Giordano did not receive EPRG PSUs. The time-based RSUs provide ongoing alignment of the executives’ compensation with stockholder returns.
OUR PAY-FOR-PERFORMANCE APPROACH
The compensation programs approved by our Compensation Committee emphasize pay-for-performance over a longer-term time horizon and based on the realized value under incentive programs through the prominence of variable, at-risk compensation. AIP bonus awards and long-term equity awards are intended to ensure that total compensation reflects the overall level of success of the Company and are intended to motivate the NEOs to meet and exceed pre-established target levels of performance for each measure.
We seek to select performance metrics in our AIP and our long-term incentive program that support the Company’s strategy.
|
|
2024 Proxy Statement | 47 |
Table of Contents
EXECUTIVE COMPENSATION
|
Compensation Element
|
Purpose
| |
| Base Salary
|
Recognize performance of job responsibilities as well as attract and retain individuals with superior talent.
| |
| AIP Bonus Awards |
Provide short-term incentives linked directly to achievement of financial objectives. Our NEOs’ 2023 AIP, with the exception of Mr. Giordano and Mr. Chow, was based on the following metrics: • 70% on Core Adjusted EBITDA; • 20% on Core Revenue; and • 10% on strategic objectives tied to CommScope NEXT.
Core Adjusted EBITDA and Core Revenue are the aggregate Adjusted EBITDA and revenue results, respectively, of our CCS, OWN, NICS and ANS segments.
As a result of the divesture of the Home segment, our results are now reported based on continuing operations. Core Revenue aligns with Revenue from continuing operations, but Core Adjusted EBITDA does not align with Adjusted EBITDA because Core Adjusted EBITDA excludes general corporate costs that were previously allocated to the Home segment that are now included within continuing operations.
The 2023 AIP for Mr. Giordano, who is the NICS segment leader, was based 70% on the Adjusted EBITDA for the NICS segment, 20% on revenue for the NICS segment, and 10% on corporate strategic objectives.
The 2023 AIP for Mr. Chow, who was the Home segment leader, was based 50% on the Adjusted EBITDA for the Home segment and 50% on Home segment strategic objectives.
| |
| Equity Incentive Awards |
Directly link senior management’s and stockholders’ interests by tying long-term incentive to stock price appreciation.
All NEOs received two different types of PSUs in 2023: • TSR PSUs, which are eligible to vest based upon the achievement of goals relating to our TSR ranking relative to the TSR of the companies, other than the Company, comprising the S&P 500 over a three-year period from March 1, 2023 through February 28, 2026, and • Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs), which are eligible to vest based upon on achievement of cumulative Core Adjusted EBITDA goals (or for Mr. Chow, Home segment Adjusted EBITDA goals) for the three-year period covering fiscal years 2023, 2024 and 2025.
All NEOs also received RSUs that vest over three years, conditioned on continued service.
|
Annual Planning Cycle
The Compensation Committee generally approves annual compensation decisions for our executive officers in the first quarter of each year, but retains the flexibility to extend decisions to the second quarter, if necessary. The Committee’s approvals in the first quarter address target annual incentives effective as of January 1, base salary effective as of January 1, as well as equity awards that are approved in the first quarter and typically granted in the first or second quarter. In the timeline leading up to the annual approval of compensation decisions, the Compensation Committee undertakes a
| 48 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
review process that spans several meetings and is intended to evaluate our approach to setting executive pay from multiple perspectives. This review begins in the third quarter of the prior year and takes into consideration our strategic business plan, market data, trends in executive compensation, the input of the Committee’s independent compensation consultant and input from stockholders, where applicable.
EXECUTIVE COMPENSATION-RELATED POLICIES AND PRACTICES
We endeavor to maintain sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our executive compensation philosophy. The following summarizes our executive compensation and related governance policies and practices during 2023:
| What We Do | What We Don’t Do | |||
|
✓ |
Use a Pay-for-Performance philosophy |
×No backdating or spring-loading of equity awards | ||
|
✓ |
Grant a significant portion of executive pay as at-risk |
×No hedging of shares | ||
| ✓ | Apply “clawback” policy to awards to recover cash and equity payments from executives in certain circumstances | ×No pledging of shares | ||
|
✓ |
Require multi-year vesting for equity awards |
×No guaranteed bonuses | ||
|
✓ |
Engage regularly with stockholders on executive compensation |
×No incentives that encourage excessive risk taking | ||
|
✓ |
Use an independent compensation consultant |
×No excessive severance or change in control agreements or 280G gross-ups | ||
|
✓ |
Require meaningful equity ownership by our executives |
×No repricing of stock options or stock appreciation rights without stockholder approval | ||
|
✓ |
Allocate equity awards between time- and performance-based awards
|
|||
II. EXECUTIVE COMPENSATION PHILOSOPHY
We intend for our NEOs’ total compensation to reflect our pay-for-performance compensation philosophy. This philosophy includes both compensating our NEOs competitively when we meet or out-perform our goals as well as placing large portions of their compensation at risk based on both the Company’s financial performance and our stock price performance. This assures that the financial incentives of our executives are in alignment with the interests of our stockholders. Furthermore, by delivering a significant portion of compensation in the form of at-risk incentives (including equity compensation), the compensation realized by our NEOs will be reduced if the Company does not achieve performance goals.
The principal objectives of our NEO compensation include the following:
| • | Competitive pay – providing compensation opportunities that enable us to attract superior talent in a highly competitive industry and retain key employees by rewarding outstanding achievement. |
|
|
2024 Proxy Statement | 49 |
Table of Contents
EXECUTIVE COMPENSATION
| • | Pay-for-performance – creating incentives that reward management for outstanding financial results that our Compensation Committee believes will enhance near-term performance and drive sustainable performance over the longer term. |
| • | Alignment with stockholders – aligning our executives’ interests with those of our stockholders through our pay-for-performance philosophy and by encouraging our executives to have a meaningful equity stake in the Company. |
III. 2023 COMPENSATION DECISION-MAKING PROCESS
DETERMINATION OF COMPENSATION AWARDS
Our Compensation Committee has the primary authority to determine and approve the compensation of our NEOs. The Committee is charged with reviewing our executive compensation policies and practices annually to ensure that the total compensation of our NEOs is fair, reasonable, competitive to our peers, and commensurate with the level of expertise and experience of our NEOs. To aid our Compensation Committee in making its determinations, our Chief Executive Officer provides recommendations to our Compensation Committee regarding the compensation of all officers who report directly to him.
Our Compensation Committee reviews and approves the total amount of compensation for our NEOs and the allocation of total compensation among each of the components of compensation, based principally on the following factors:
| • | Input about competitive market practices from the Compensation Committee’s independent compensation consultant |
| • | Individual and Company performance |
| • | Each executive’s scope of responsibility and experience |
| • | The Compensation Committee’s general industry knowledge obtained through years of service with comparably-sized companies in our industry and other similar industries |
| • | Changes in the Company’s size or strategic position |
| • | Stockholder perspectives |
We believe that direct ownership in CommScope provides our NEOs with a strong incentive to increase the value of the Company. We encourage equity ownership by our NEOs and other employees through direct stock holdings and the award of various equity-based awards. We believe that equity awards granted to our NEOs substantially align their interests with those of our stockholders. In addition, we maintain formal stock ownership guidelines. See the “Stock Ownership Guidelines” section below for more information.
ROLE OF THE COMPENSATION CONSULTANT
The Compensation Committee relies on its independent compensation consultant to provide advice on matters relating to the compensation of our executives and non-employee directors. Compensia, a national compensation consulting firm, has served in this capacity since 2016.
A representative of Compensia generally attends all of the Compensation Committee meetings. During 2023, Compensia provided the following assistance to the Compensation Committee:
| • | Analyzed the compensation levels and practices of the companies in our compensation peer group |
| 50 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
| • | Reviewed the competitiveness of compensation of our NEOs including base salary, annual cash awards and long-term incentive awards |
| • | Reviewed and provided input on the design of the annual and long-term incentives provided to our NEOs and other executives |
| • | Reviewed the competitiveness of compensation of our non-employee directors |
| • | Reviewed and provided input on the CD&A section of our Proxy Statement |
| • | Provided support in connection with the amendment of our 2019 Long-Term Incentive Plan |
| • | Provided ad hoc advice and support |
Compensia reports directly to the Compensation Committee and provided no services to us other than the consulting services to the Committee. The Compensation Committee reviews the objectivity and independence of the advice provided by Compensia. In 2023, the Committee considered the specific independence factors adopted by the Commission and the NASDAQ Global Select Market and determined that Compensia is independent and that its work did not raise any conflicts of interest.
COMPENSATION PEER GROUP
In 2022, with the assistance of Compensia, the Compensation Committee approved a compensation peer group as a source of competitive market data for evaluating the compensation of our executive officers and to support pay decisions for 2023, which included base salary, AIP targets, and the equity awards granted in 2023. The compensation peer group consisted of the following 14 companies.
| Compensation Peer Group
| ||
| Corning Incorporated |
NetApp, Inc. | |
| Fortive Corporation |
Rockwell Automation, Inc. | |
| Hubbell Incorporated |
Sanmina Corporation | |
| Jabil Inc. |
Seagate Technology Holdings PLC | |
| Juniper Networks, Inc. |
TE Connectivity Ltd | |
| Keysight Technologies, Inc. |
Western Digital Corporation | |
| NCR VOYIX Corporation |
Zebra Technologies Corporation | |
Companies included in this peer group were identified based primarily on the following target selection criteria:
| • | Companies with a status as an independent, publicly traded company |
| • | Companies with revenue between approximately 0.33 times to 3.0 times our revenue on a trailing twelve-month basis |
| • | Companies with enterprise value between approximately 0.33 times to 3.0 times our enterprise value |
| • | Companies with a similar industry profile, prioritizing direct competitors and companies that operate in the Communications Equipment sector |
Companies are not required to meet all of the selection criteria above. Our Compensation Committee evaluated each company against all selection criteria in order to identify a peer group that, as a whole, was considered to be a strong representation of our competitive market for talent.
|
|
2024 Proxy Statement | 51 |
Table of Contents
EXECUTIVE COMPENSATION
When evaluating executive compensation relative to practices among our peers, the Compensation Committee generally seeks to align with the market median.
We supplement information from the peer group public filings with data from the Radford Global Technology Survey, which is provided annually by Compensia. While peer group and other market research data provides the framework for our compensation decisions, adjustments are also made by the Compensation Committee on an individual basis to account for individual performance and each executive’s scope of responsibility and experience.
IV. 2023 COMPENSATION ACTIONS
BASE SALARY ADJUSTMENTS
Base salaries for our NEOs are generally set at a level deemed necessary to attract and retain individuals with superior talent. In addition to considering industry and market practices, our Compensation Committee and Board of Directors annually review our NEOs’ performance. Adjustments in base salary are generally based on the factors noted above, including each NEO’s individual performance, role, scope of responsibility, experience and competitive pay practices.
After considering Mr. Treadway’s recommendations (other than with respect to his own compensation), our Compensation Committee decided that Mr. Treadway’s salary should be increased by 14.30% to align with the median base salary of our peer group, and Mr. Giordano’s salary was increased by 16.2% in connection with his appointment as head of the NICS segment . The base salary increase was 3% for Mr. Choi and less than 1% for Mr. Lorentzen. Mr. Chow did not receive a base salary increase.
The base salaries for our NEOs as of July 1, 2022 and January 1, 2023, except for Mr. Giordano whose salary was increased upon his appointment to the head of NICS in February 2023, are set forth in the following table.
| Name
|
2022 Base
|
2023 Base
|
Percent Increase
|
|||||||||
| Charles L. Treadway |
$ | 1,137,401 | $ | 1,300,000 | 14.30% | |||||||
| Kyle D. Lorentzen |
$ | 682,500 | $ | 683,000 | 0.07% | |||||||
| Justin C. Choi |
$ | 558,360 | $ | 575,000 | 2.98% | |||||||
| Bartolomeo A. Giordano |
$ | 414,000 | $ | 481,000 | 16.18% | |||||||
| Gonzaga J. Chow
|
$
|
513,372
|
|
$
|
513,372
|
|
|
0.00%
|
| |||
ANNUAL INCENTIVE PLAN
In February 2023, the Compensation Committee approved Company performance objectives under the AIP that were based on Core Adjusted EBITDA, Core Revenue and strategic objectives tied to CommScope NEXT, for all NEOs except Mr. Giordano, whose performance objectives were based on Adjusted EBITDA, revenue and strategic objectives specific for our NICS segment and Mr. Chow whose performance objectives were based on Adjusted EBITDA and strategic objectives specific for our Home segment. At that time, the Company’s Core financial performance metrics were the aggregate results of our CCS, OWN, NICS and ANS segments and excluded the results of our Home segment. The Compensation Committee approved the AIP performance measures and the target award, which is expressed as a percentage of base salary for the year, for each NEO.
| 52 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
Our Compensation Committee determined that Core Adjusted EBITDA, Core Revenue and strategic objectives tied to CommScope NEXT were meaningful measures of the Company’s financial performance and align with the interests of our stockholders for long-term value creation.
As discussed herein, as a result of the agreement to divest our Home segment in the fourth quarter of 2023, our results are now reported based on continuing operations. Core revenue aligns with net sales from continuing operations but Core Adjusted EBITDA does not align with Adjusted EBITDA from continuing operations because Core Adjusted EBITDA excludes general corporate costs that were previously allocated to the Home segment that are now included within continuing operations.
| Performance Metric*
|
Weighting
|
Rationale
| ||
| Core Adjusted EBITDA |
70% | Measures the profitability of our business, incorporating our ability to generate revenue and manage our expenses, and its growth has historically been a key driver of long-term stockholder returns. Core Adjusted EBITDA excludes the results of the Home segment.
| ||
| Core Revenue |
20% | Measures the growth of our business. Core Revenue excludes the revenue of our Home segment.
| ||
| Strategic Objectives | 10% | Measures two continuous improvements tied to CommScope NEXT, including specific ESG performance metrics: 1) reduce GHG emissions across our operations, and 2) improve our culture of inclusion and the attraction, promotion and retention of women in leadership roles.
|
*For all NEOs except Mr. Giordano, whose 2023 AIP opportunity was based 70% on NICS segment Adjusted EBITDA, 20% on NICS segment revenue, and 10% on corporate strategic objectives, and Mr. Chow whose 2023 AIP opportunity was based 50% on Home segment Adjusted EBITDA, and 50% on Home segment strategic objectives.
For purposes of the AIP, Core Adjusted EBITDA consists of Adjusted EBITDA from continuing operations excluding general corporate costs that were previously allocated to the Home segment and are now included within continuing operations. Adjusted EBITDA from continuing operations consists of net income (loss) from continuing operations as reported on the Consolidated Statements of Operations, adjusted to exclude: income tax expense (benefit); interest income; interest expense; other income, net; depreciation; amortization of intangible assets; restructuring costs; asset impairments; equity-based compensation; transaction, transformation and integration costs; and other special items that the Company believes are useful to exclude in the evaluation of operating performance from period to period because these items are not representative of the Company’s Core performance. Core Revenue now aligns with net sales as reported on the Consolidated Statements of Operations because it represents net sales from continuing operations. The term “Strategic Objectives” means key performance indicators that are tied to CommScope NEXT and the Company’s stated goal of continual improvement.
Our Compensation Committee retains the authority to change target award percentages or performance measures, as appropriate, to account for extraordinary business circumstances that are out of the Company’s control. In addition, the Compensation Committee may, at its sole discretion, decrease the amount of an award that would otherwise be payable to a NEO.
The levels of performance required to achieve target payout were tied to our annual operating plan and represent goals that were considered achievable but difficult to accomplish.
|
|
2024 Proxy Statement | 53 |
Table of Contents
EXECUTIVE COMPENSATION
The following tables show the weighting of each financial performance metric, the levels of performance required to earn threshold, target and maximum payouts, and the actual performance achieved under our AIP for the year ended December 31, 2023 for all NEOs.
| Performance Metric
|
Weighting
|
Level
|
Threshold ($M)
|
Target ($M)
|
Maximum ($M)
|
|||||||||||
| Core Adjusted EBITDA | 70% | Goal
|
|
$1,088.0
|
|
|
$1,360.0
|
|
|
$1,632.0
|
| |||||
| % of Target Performance
|
|
80%
|
|
|
100%
|
|
|
120%
|
| |||||||
| % of Target Payout
|
|
50%
|
|
|
100%
|
|
|
210%
|
| |||||||
| Core Revenue | 20% | Goal
|
|
$7,234.3
|
|
|
$7,615.0
|
|
|
$7,995.8
|
| |||||
| % of Target Performance
|
|
95%
|
|
|
100%
|
|
|
105%
|
| |||||||
| % of Target Payout
|
|
50%
|
|
|
100%
|
|
|
210%
|
| |||||||
| Strategic Objectives | 10% | Goal |
|
Tied to CommScope NEXT |
|
|||||||||||
| Performance |
|
Partially Meets Expectations
|
|
|
Meets Expectations
|
|
|
Exceeds Expectations
|
| |||||||
| % of Target Payout
|
|
0%
|
|
|
100%
|
|
|
210%
|
| |||||||
Mr. Giordano’s Adjusted EBITDA goals related to the NICS segment were $128.0 million threshold, $160.0 million target and $215.0 million maximum, and revenue goals related to the NICS segment were $1.0 billion threshold, $1.1 billion target and $1.3 billion maximum. Percentage of target payout percentages for Adjusted EBITDA and revenue goals for Mr. Giordano were 50% for threshold, 100% for target and 210% for maximum.
Mr. Chow’s Adjusted EBITDA goals related to the Home segment were $37.3 million threshold, $47.0 million target and $56.4 million maximum. Percentage of target payout percentages for Adjusted EBITDA and revenue goals for Mr. Chow were 50% for threshold, 100% for target and 210% for maximum.
In addition to the above financial goals, achievement of strategic objectives represented 10% of the target AIP opportunity for our NEOs with the exception of Mr. Chow, whose strategic objectives represented 50% of the target AIP. Performance in this category reflected the Compensation Committee’s assessment of our performance in two categories related to our CommScope NEXT transformation plan:
| • | Environmental - Reduce GHG emissions across our operations by using energy efficiently and driving renewable energy use |
| • | Social - Improve our culture of inclusion and the attraction, promotion and retention of women in leadership roles |
Performance against these strategic objectives was evaluated in the discretion of the Compensation Committee, with the opportunity to earn between 0% and 210% of target for this portion of the bonus.
| 54 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
| Performance Metric
|
Weighting
|
Actual
|
% of Target Actual
|
% of Target
|
Adjusted Payout
| |||||||||||||||||||||||||
| Core Adjusted EBITDA |
70% | $1,022.2 | 75.2% | 0.00% | 0.00% | |||||||||||||||||||||||||
| Core Revenue |
20% | $5,790.5 | 76.0% | 0.00% | 0.00% | |||||||||||||||||||||||||
| Strategic Objectives |
10% | Meets Expectations | Meets Expectations | 100.0% | 100.0% | |||||||||||||||||||||||||
| Total |
100% | 10.0% | 10.0% | |||||||||||||||||||||||||||
Based on the actual level of achievement set forth above, Mr. Treadway, Mr. Lorentzen, and Mr. Choi were entitled to bonus payments in amounts equal to 10.0% of their target bonus amounts.
Unlike the other NEOs, Mr. Giordano’s bonus was based on the performance of the NICS segment and Mr. Chow’s bonus was based on the performance of the Home segment. Actual achievement for the NICS segment was Adjusted EBITDA of $225.2 million, which was $65.2 million above target; revenue of $1,118.9 million, which was 101.7% of target; and the segment met expectations for their strategic objective, which was 100% of target. Percentage of target actual payout was 210.0%, 110.4% and 100.0% for NICS segment Adjusted EBITDA, revenue and the strategic performance objective, respectively, for a combined actual achievement of 179.1%. Actual achievement for the Home segment was Adjusted EBITDA of $(48.7) million, which was $95.7 million below target, and the segment was below expectations for its strategic objective, which was 50% of target. Percentage of target actual payout was 0.0% and 50.0% for the Home segment Adjusted EBITDA and the strategic performance objective, respectively, for a combined actual achievement of 25.0%.
| Target Award |
Actual 2023 Award | ||||||||||||||
| Name
|
(% of 2023
|
% of 2023
|
Payout
| ||||||||||||
|
Charles L. Treadway |
150.0 | % | 15.00 | % | $195,000 | ||||||||||
|
Kyle D. Lorentzen |
100.0 | % | 10.00 | % | $68,300 | ||||||||||
|
Justin C. Choi |
80.0 | % | 8.00 | % | $46,000 | ||||||||||
|
Bartolomeo A. Giordano |
77.0 | % | 138.65 | % | $657,742 | ||||||||||
|
Gonzaga J. Chow
|
|
80.0
|
%
|
|
20.00
|
%
|
|
$102,674
|
| ||||||
| (1) | The NEOs received a performance payout of 10.0% of target, except for Mr. Giordano who received 179.1% of target for the NICS operating segment and Mr. Chow who received 25.0% of target for the Home operating segment. |
EQUITY INCENTIVE AWARDS
The Compensation Committee believes that key employees who are in a position to make a substantial contribution to the long-term success of the Company and to build stockholder value should have a significant and on-going stake in the Company’s success. In determining equity incentive award grants, the Committee considered market practices among comparable peer group companies as well as our compensation objectives and the desired role of equity compensation in the total compensation of our NEOs. In 2023, the long-term incentive awards for our executives were allocated into three equity vehicles.
|
|
2024 Proxy Statement | 55 |
Table of Contents
EXECUTIVE COMPENSATION
| Vehicle
|
Weighting
|
Description
| ||
|
Time Vesting RSUs
|
50%
|
RSUs vesting in three equal annual installments
| ||
|
TSR PSUs
|
20%
|
PSUs eligible to be earned based on our TSR relative to the TSR of the companies, other than the Company, comprising the S&P 500 for a three-year performance period
| ||
|
Core Adjusted EBITDA PSUs(1)
|
30% | PSUs eligible to be earned based on our three-year cumulative Core Adjusted EBITDA performance over fiscal years 2023-2025
| ||
| (1) | For all NEOs except Mr. Chow, who received PSUs based on Home segment Adjusted EBITDA performance over fiscal years 2023-2025. |
The key features of our 2023 NEO equity awards are described in greater detail below.
RSUs
Each of the NEOs received an award of RSUs that vest in annual installments over a three-year period, conditioned upon his continuous service.
TSR PSUs
Each of the NEOs received a grant of PSUs with performance conditions relating to the Company’s TSR ranking relative to the TSR for each of the 500 companies, other than the Company, comprising the S&P 500. For purposes of the TSR PSUs, our TSR will be calculated by comparing the average closing price per share of our common stock over the 45 consecutive trading days ending on and including March 1, 2023, to the average closing price per share of our common stock over the 45 consecutive trading days ending on and including February 28, 2026, and factoring in per-share dividends paid with respect to an ex-dividend date that occurs beginning from the date when the starting average share price is calculated for the performance period through the end of the performance period, which dividends will be deemed to have been reinvested in the underlying common shares. The NEOs can earn between 0% and 200% of the granted TSR PSUs based on the following schedule, with the number of units earned being rounded up to the nearest whole share:
| Degree of Performance Attainment
|
Company TSR Percentile Ranking
|
Achievement of Performance Goal (% of Units)
| ||
|
Maximum |
≥80th |
200% | ||
|
Target |
50th |
100% | ||
|
Threshold |
25th |
25% | ||
|
Less than Threshold
|
<25th
|
0%
| ||
Payouts for performance levels falling between the above thresholds will be determined to the nearest one-tenth of a percentage point using linear interpolation. If the Company’s TSR for the performance period is negative on an absolute basis, then the number of earned TSR PSUs will be capped at the target level, regardless of our actual TSR ranking relative to the S&P 500 TSR.
| 56 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
Adjusted EBITDA PSUs
Each of the NEOs received a grant of PSUs with performance conditions relating to the Company’s cumulative Core Adjusted EBITDA (or for Mr. Chow, Home segment Adjusted EBITDA) over the 2023-2025 fiscal years. The NEOs can earn between 0% and 200% of the granted Core Adjusted EBITDA PSUs (or for Mr. Chow, Home segment Adjusted EBITDA PSUs) based on the Company’s performance. Targets were established and approved by the Compensation Committee prior to the grant date, and actual performance will be evaluated and disclosed following the end of 2025 due to the proprietary and competitive nature of this information. The levels of performance required to achieve target payout represent goals that are considered achievable but difficult to accomplish.
SUMMARY oF EQUITY AWARDS GRANTED IN 2023
The aggregate target level for long-term incentive awards granted in 2023 was $10 million for Mr. Treadway, $2.85 million for Mr. Lorentzen, $1.9 million for Mr. Choi, and $1.20 million for each of Mr. Giordano and Mr. Chow. The Committee determined the number of awards using the market price per share on the grant date equal to $7.10 on March 1, and $4.20 on June 1, which resulted in the grant of the following number of awards:
| Name
|
Number of TSR
|
Target Number of Core
|
Number of
| ||||||||||||
| Charles L. Treadway |
281,700 | 422,600 | 898,800 | ||||||||||||
| Kyle D. Lorentzen |
80,300 | 120,500 | 256,300 | ||||||||||||
| Justin C. Choi |
53,600 | 80,300 | 170,800 | ||||||||||||
| Bartolomeo A. Giordano |
33,900 | 50,800 | 108,000 | ||||||||||||
| Gonzaga J. Chow
|
|
33,900
|
|
|
50,800
|
(1)
|
|
108,000
|
| ||||||
| (1) | Mr. Chow’s Adjusted EBITDA PSUs related to Home segment Adjusted EBITDA. |
MODIFICATION OF CERTAIN EQUITY AWARDS FOR HOME EMPLOYEES
In anticipation of the sale of our Home segment to Vantiva, the Committee took action in 2023 to amend certain equity awards held by certain Home employees, including Mr. Chow, so that they would receive pro rata vesting through the end of the month in which the closing date of the transaction occurred and achievement for certain PSUs would be deemed to be at target performance. In addition, certain options held by Mr. Chow were amended so that the vested options would remain exercisable for a period of one year following his termination upon completion of the Vantiva transaction, which occurred on January 9, 2024. The incremental fair values resulting from the modification of certain of Mr. Chow’s equity awards are included in the Summary Compensation Table, and more information regarding such awards is provided in footnote 6 thereto.
EMPLOYEE BENEFITS AND PERQUISITES
Our NEOs are eligible to participate in the same plans as substantially all of our other United States employees, and such plans include medical, dental, vision, short-term and long-term disability insurance, and a Health Savings Plan. We also maintain the CommScope, Inc. Retirement Savings Plan (the 401(k) plan), in which substantially all our United States employees, including our NEOs, are eligible to participate. We currently contribute 2% of the participant’s base salary and bonus to the 401(k) plan and provide matching contributions of up to 4% of the participant’s base salary and bonus, which provides for up to a maximum of 6% of the participant’s base salary and bonus, subject to
|
|
2024 Proxy Statement | 57 |
Table of Contents
EXECUTIVE COMPENSATION
certain statutory limitations ($330,000 for 2023). In addition, we provide our NEOs with a supplemental term life insurance policy. We provide these benefits due to their relatively low cost and the high value they provide in attracting and retaining talented executives.
We operate and maintain corporate aircraft that are used primarily for business travel by our directors and executive officers. We have a written policy that sets forth guidelines and procedures regarding limited permissible personal use of this aircraft by our executive officers. CommScope, Inc. of North Carolina, a wholly-owned subsidiary of the Company, maintains an Aircraft Time Sharing Agreement with Mr. Treadway, pursuant to which Mr. Treadway has limited use of the Company’s aircraft for non-business travel. In February 2023, the Compensation Committee approved Mr. Treadway’s unreimbursed personal use of the Company’s aircraft for up to 30 hours a year. Pursuant to his Aircraft Time Sharing Agreement, Mr. Treadway must reimburse our subsidiary for the incremental expenses for each personal use flight in excess of the 30-hour annual allowance, based on the variable costs of the flight, as permitted under Federal Aviation Administration rules.
We determine the incremental cost of any personal use of our corporate aircraft based on the direct cost of use per flight, which may include aircraft fuel, oil and other additives; crew travel and lodging expense; hangar costs away from the aircraft’s base of operation; insurance obtained for the specified flight; landing fees, airport taxes and similar assessments; customs, foreign permits and similar fees directly related to the flight; in-flight catering expenses; passenger ground transportation; and flight planning and weather contract services. Because our aircraft are used primarily for business travel, this methodology excludes fixed costs that do not change based on usage, such as the salaries of pilots and crew, purchase or lease costs of aircraft, hangar rent and insurance, and costs of maintenance and upkeep. We impute taxable income to the NEOs for any personal aircraft use in accordance with Internal Revenue Service regulations. We do not provide tax reimbursements, or “gross-ups”, on these amounts to executive officers.
For 2023, no NEO other than Mr. Treadway met or exceeded $10,000 in unreimbursed aggregate incremental costs associated with personal use of the aircraft.
DEFERRED COMPENSATION PLAN
We offer a voluntary non-qualified deferred compensation plan (DCP) that permits a group of our management, including the NEOs, to defer up to 90% of their annual compensation (including base salary, AIP and/or Sales Incentive Plan (SIP) awards). For additional information regarding the DCP, see below under “Nonqualified Deferred Compensation.”
EMPLOYMENT, SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
Each of the Company’s senior officers, including the NEOs, has a severance protection agreement that entitles him or her to receive certain payments and benefits upon a qualifying termination of employment, with enhanced payments if such termination occurs within 24 months following a change in control of the Company, and includes restrictive covenants. In addition, Mr. Treadway has an employment agreement that entitles him to receive certain compensation and benefits, and previously included severance provisions relating to a qualifying termination of employment, including a qualifying termination of employment in connection with a change in control of the Company. In 2022, Mr. Treadway’s employment agreement was amended so that the severance rights and restrictive covenants in his employment agreement were replaced with the severance provisions and restrictive covenants contained in his severance protection agreement. Mr. Treadway’s employment agreement and the severance protection agreements for each of the NEOs are described below under “Potential Payments upon Termination or Change in Control.”
| 58 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
V. OTHER COMPENSATION POLICIES
COMPENSATION RECOVERY (“CLAWBACK”) POLICY
We have a compensation recovery (i.e. “clawback”) policy that requires recovery of erroneously awarded incentive-based compensation from executive officers (and former executive officers) in the event of an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws. The policy was adopted in 2023 in compliance with Commission rules and Nasdaq listing standards and replaced our prior clawback policy. The policy requires the Company to recover reasonably promptly all erroneously awarded incentive-based compensation received on or after the October 2, 2023 effective date by a person after beginning service as an executive officer, while the Company has a class of securities listed on Nasdaq, and during the three completed fiscal years immediately preceding the date the Company is required to prepare the accounting restatement, with certain limited exceptions as permitted under Commission rules and Nasdaq listing standards. The Company may not indemnify any executive officer against the recovery of incentive compensation under the policy. The policy also provides that the Compensation Committee may designate non-executive persons to be subject to the clawback requirements. In addition, if a mandatory clawback relating to incentive-based compensation is triggered, the Compensation Committee may recover from the executive officers, former executive officers, and other designated persons, to the extent it deems appropriate, service-based compensation received under awards with purely time-based vesting requirements if such awards were granted, vested, exercised or paid during the applicable recovery periods.
ANTI-HEDGING AND ANTI-PLEDGING POLICIES
We have an insider trading policy to guide our employees and directors in complying with securities laws and avoid the appearance of improper conduct. Our policy specifically prohibits directors and employees, including our NEOs, from entering into hedging or monetization transactions involving CommScope securities, such as covered calls, collars and forward sale contracts, and from purchasing CommScope securities on margin, holding CommScope securities in a margin account or pledging CommScope securities. In addition, all our Section 16 officers and directors, and certain other designated employees, are prohibited from trading in exchange-traded options of CommScope securities.
STOCK OWNERSHIP GUIDELINES
We maintain stock ownership guidelines for our executive officers and the non-employee members of our Board of Directors. These guidelines were established to align with industry practice and to affirm to stockholders that our executives and directors have a meaningful long-term equity position in the Company and a longer-term view of its performance. The following table summarizes our stock ownership guidelines, which were based on market and peer group data and were adopted following consultation with the Compensation Committee’s independent compensation consultant.
|
Multiple of Salary Target
| ||
| Chief Executive Officer |
5x annual base salary or 1,000,000 shares | |
| Chairman and Chief Financial Officer |
3x annual base salary or 250,000 shares | |
| Designated Officers |
2x annual base salary or 125,000 shares | |
| Other Designated Officers |
1x annual base salary or 100,000 shares | |
| Non-Employee Directors |
5x base cash retainer (excluding committee fees) or 100,000 shares |
|
|
2024 Proxy Statement | 59 |
Table of Contents
EXECUTIVE COMPENSATION
The value of an executive’s or non-employee director’s stock ownership is measured as of December 31 of each year by reference to the 30-day average closing price of our stock on the Nasdaq Stock Market and using each individual’s base salary or base retainer then in effect.
Current and new executive officers and non-employee directors who are subject to these guidelines are expected to satisfy them by the end of the calendar year following the fifth anniversary that a Participant becomes subject to the Guidelines and to hold at least such minimum value in shares of our common stock or RSUs for so long as applicable.
VI. COMPENSATION TABLES
SUMMARY COMPENSATION TABLE (SCT) FOR 2023
The following table provides information regarding the compensation that we paid our NEOs for services rendered during the fiscal years ended December 31, 2023, 2022 and 2021.
| Name and Principal Position
|
Year
|
Salary ($)(1)
|
Bonus ($)
|
Stock Awards ($)(2)
|
Option Awards ($)(2)
|
Non-Equity Incentive Plan Compensation ($)(3)
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)
|
All Other Compensation
|
Total ($)
| ||||||||||||||||||||||||||||||||||||
| Charles L. Treadway(5) President, Chief |
|
2023 2022 |
|
1,300,000 1,118,700 |
|
— — |
|
10,724,999 7,237,105 |
|
— — |
|
195,000 2,225,263 |
|
— — |
|
80,464 18,894 |
|
12,300,463 10,599,962 |
|||||||||||||||||||||||||||
| Executive Officer and |
2021 | 1,100,000 | — | — | — | 1,748,010 | — | 17,850 | 2,865,860 | ||||||||||||||||||||||||||||||||||||
| Kyle D. Lorentzen Executive VP and |
2023 | 683,000 | — | 3,057,961 | — | 68,300 | — | 20,394 | 3,829,655 | ||||||||||||||||||||||||||||||||||||
| 2022 | 666,250 | — | 2,094,411 | — | 839,339 | — | 18,894 | 3,618,894 | |||||||||||||||||||||||||||||||||||||
| Chief Financial Officer |
2021 | 587,500 | — | 1,915,782 | — | 540,515 | — | 17,850 | 3,061,647 | ||||||||||||||||||||||||||||||||||||
| Justin C. Choi |
2023 | 575,000 | — | 2,038,672 | — | 46,000 | — | 20,394 | 2,680,066 | ||||||||||||||||||||||||||||||||||||
| Senior VP, Chief Legal |
2022 | 549,180 | — | 1,249,877 | — | 546,201 | — | 18,894 | 2,364,152 | ||||||||||||||||||||||||||||||||||||
| Officer and Secretary |
2021 | 370,227 | — | 1,745,726 | — | 294,164 | — | 15,491 | 2,425,608 | ||||||||||||||||||||||||||||||||||||
| Bartolomeo A. Giordano |
2023 | 474,402 | — | 1,289,413 | — | 657,742 | — | 14,876 | 2,436,433 | ||||||||||||||||||||||||||||||||||||
| Senior VP & President, NICS |
|||||||||||||||||||||||||||||||||||||||||||||
| Gonzaga J. Chow(6) |
2023 | 513,372 | 500,000 | 1,638,205 | 3,076 | 102,674 | — | 20,394 | 2,777,721 | ||||||||||||||||||||||||||||||||||||
| Former Senior VP & President, Home Networks
|
|||||||||||||||||||||||||||||||||||||||||||||
| (1) | Salary reported may differ from the annual base salary rate set for the year due to the fact that changes in base salary may have become effective during the year. For 2023, all salary changes were effective on January 1, except for Mr. Giordano, whose change was effective on February 7. |
| (2) | Amounts represent the grant date fair value of equity awards, which was computed in accordance with FASB ASC Topic 718 without regard to estimated forfeitures related to service-based vesting conditions. Amounts for Mr. Chow for 2023 also include the incremental fair value related to the modification of certain of his stock and option awards in 2023 pursuant to the sale of our Home segment to Vantiva, as discussed further in footnote 6 below. Refer to Note 15 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding the assumptions used to value these awards. Assuming the highest level of performance conditions are achieved for the performance-based awards, the grant date stock award values are outlined below: |
| Year | Mr. Treadway ($) |
Mr. Lorentzen ($) |
Mr. Choi ($) |
Mr. Giordano ($) |
Mr. Chow ($) |
|||||||||||||||||
| 2023 |
16,449,498 | 4,690,012 | 3,127,114 | 1,977,906 | 1,977,906 | |||||||||||||||||
| 2022 |
11,074,254 | 3,464,910 | 2,047,526 | — | — | |||||||||||||||||
| 2021 |
— | 1,915,782 | 1,745,726 | — | — | |||||||||||||||||
| (3) | Amounts represent AIP bonus payments by performance year. The AIP bonus payments for our NEOs in 2023, 2022, and 2021 were 10.0% (179.1% for Giordano and 25.0% for Chow), 132.6%, and 105.9% of target, respectively. |
| 60 | 2024 Proxy Statement |
|
Table of Contents
EXECUTIVE COMPENSATION
| (4) | The following table shows all amounts included in the “All Other Compensation” column for 2023 for each NEO: |
| All Other Compensation | |||||||||||||||||||||||||
| Name | Company Contribution to 401(k) Plan ($) |
Life Insurance Premiums ($) |
Personal Use of Aircraft ($) |
Other Perquisites ($) |
Total ($) | ||||||||||||||||||||
| Charles L. Treadway |
19,800 | 594 | 59,022 | 1,048 | 80,464 | ||||||||||||||||||||
| Kyle D. Lorentzen |
19,800 | 594 | — | — | 20,394 | ||||||||||||||||||||
| Justin C. Choi |
19,800 | 594 | — | — | 20,394 | ||||||||||||||||||||
| Bartolomeo A. Giordano |
14,282 | 594 | — | — | 14,876 | ||||||||||||||||||||
| Gonzaga J. Chow |
19,800 | 594 | — | — | 20,394 | ||||||||||||||||||||
| (5) | Mr. Treadway did not receive an equity award grant in 2021, since he received equity awards upon joining the company in 2020 that covered the 2021 grant cycle. |
| (6) |