DEF 14A of Ribbon Communications Inc.
Filed Apr 14, 2025 · FY20240001104659-25-034540
NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS
| 57 | 2024 Stock Vested | | 58 | Severance and Change of Control Benefits | | 61 | Potential Payments Upon Termination or Upon Change in Control | | 61 | CEO Pay Ratio | | 63 | Pay Versus Performance Disclosures | | 67 | Proposal 4 — Approval of an Amendment to Our Restated Certificate of Incorporation to Increase the Number of Authorized Shares of our Common Stock from 240 Million to 390 Million | | 68 | Purpose of the Proposed Amendment | | 68 | Effects of the Proposed Amendment | | 69 | Dissenters’ Right of Appraisal | | 70 | Proposal 5 — Adoption of the Ribbon Communications Inc. 2025 Incentive Award Plan | | 71 | Highlights of the New Plan | | 71 | Analysis of Share Reserve | | 73 | Equity Compensation Plan Information | | 73 | Summary of the New Plan | | 80 | New Plan Benefits / Interest of Certain Persons | | 81 | Federal Income Tax Consequences | | 83 | STOCK INFORMATION | | 83 | Beneficial Ownership of Our Common Stock | | 86 | ADDITIONAL INFORMATION | | 86 | Information about the Annual Meeting | | 91 | Stockholder Proposals for Inclusion in 2025 Proxy Statement | | 91 | Stockholder Nominations and Proposals for Presentation at 2025 Annual Meeting | | 92 | Stockholders Sharing the Same Address | | 93 | Form 10-K | | 93 | Other Matters | | A-1 | APPENDICES | | A-1 | APPENDIX A — Reconciliation of Non- GAAP Financial Measures | | B-1 | APPENDIX B — Certificate of Amendment | | C-1 | Appendix C — Ribbon Communications Inc. 2025 Incentive Award Plan |
Director Nominees
Director Nominees The biographies below describe the skills, qualities, attributes and experience of the director nominees that led the Board and its Nominating, Sustainability and Corporate Governance Committee to determine that it is appropriate to nominate these individuals as directors.
Director Nominees
| AGE 73 COMMITTEES ■ Audit (Chair and Audit Committee Financial Expert) ■ Nominating, Sustainability and Corporate Governance |
Director Nominees
| R. STEWART EWING, JR. | Independent Director Director since March 2020 |
Director Nominees
| BACKGROUND InterMountain Management, a privately- owned hotel management company ■ Chief Financial Officer (April 2020 to present) CenturyLink, Inc. (“CenturyLink,” now Lumen Technologies), a global technology company offering communications, network services, security, cloud solutions and voice and managed services ■ Executive Vice President and Chief Financial Officer (1989 to November 2017) ■ Vice President and Controller (1984 to 1989) ■ Vice President of Finance (1983 to 1984) KPMG ■ Accountant (1973 to 1982) | BOARD SERVICE ■ Louisiana Endowment for the Humanities (2019 to present) ■ Progressive Bank, Chairman of the Audit Committee (2002 to present) EDUCATION ■ B.S., Northwestern State University SKILLS AND EXPERTISE We believe Mr. Ewing brings to the Board executive leadership experience gained at CenturyLink, along with extensive financial expertise. We believe Mr. Ewing is qualified to serve on the Board because of his experience as chief financial officer at CenturyLink and his experience leading the integration of acquired companies into CenturyLink’s corporate structure and philosophy. |
Director Nominees
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Nominees
| AGE 77 COMMITTEES ■ Compensation ■ Nominating, Sustainability and Corporate Governance (Chair) |
Director Nominees
| BRUNS H. GRAYSON | Lead Independent Director Director since March 2020 |
Director Nominees
| BACKGROUND ABS Ventures, a venture capital firm ■ Managing Partner (1983 to present) Adler & Co. ■ Venture Capitalist (1980 to 1983) McKinsey & Co., a management consulting firm ■ Associate (1978 to 1980) U.S. Army ■ Captain (1970) BOARD SERVICE ■ Served as a director for many private and public companies over the last 30 years | EDUCATION ■ Elected a Rhodes Scholar from California (1974) ■ J.D., University of Virginia School of Law ■ Master’s degree, Oxford University ■ B.A., Harvard College SKILLS AND EXPERTISE We believe Mr. Grayson is qualified to serve on the Board based on his knowledge of the data communication and software industries, his investment experience as a Managing Partner at ABS Ventures, and his experience as a director of various public companies. |
Director Nominees
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Nominees
| AGE 71 COMMITTEES ■ Audit (Audit Committee Financial Expert) ■ Compensation (Chair) ■ Technology and Innovation |
Director Nominees
| BEATRIZ V. INFANTE | Independent Director Director since October 2017 |
Director Nominees
| BACKGROUND BusinessExcelleration LLC, a business consultancy specializing in corporate transformation and renewal ■ Chief Executive Officer (2009 to present) ENXSUITE Corporation, a leading supplier of energy management solutions ■ Chief Executive Officer (2010 until its acquisition by Infor in 2011) VoiceObjects Inc., a market leader in voice applications servers ■ Chief Executive Officer (2006 until its acquisition by Voxeo Corporation in 2008) Sychron Inc., a data center automation company ■ Interim Chief Executive Officer (2004 to 2005) Aspect Communications Corporation, a market leader in communications solutions ■ Chief Executive Officer (April 2000 to October 2003) ■ President and additional executive roles (October 1998 to April 2000) BOARD SERVICE ■ Current National Association of Corporate Directors Board Leadership Fellow ■ PriceSmart, Inc., Chair of its Digital Transformation Committee, and Audit Committee member | BOARD SERVICE (cont’d) ■ Liquidity Services Inc., Lead Independent Director, Chair of the Compensation Committee and Audit Committee member ■ Previously served as a director at a number of other public and privately held companies EDUCATION ■ Master of Science degree, California Institute of Technology ■ B.S. and Engineering degree, Princeton University SKILLS AND EXPERTISE We believe Ms. Infante is qualified to serve on the Board due to her executive leadership experience, including as a chief executive officer of various companies, along with extensive operational expertise and experience in engineering, sales, and marketing. |
Director Nominees
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Nominees
| AGE 64 COMMITTEES ■ Audit ■ Technology & Innovation (Chair) |
Director Nominees
| SCOTT MAIR | Independent Director Director since September 2022 |
Director Nominees
| BACKGROUND: AT&T, a leading provider of telecommunications, media and technology services. ■ President, Network Engineering & Operations (2019 to 2022) ■ President of Operations (2017 to 2019) ■ Various other rolls (1985 to 2017) BOARD SERVICE: ■ American Transmission Company, a private transmission-only utility (2021 to present) ■ Gigapower, LLC, a joint venture between BlackRock and AT&T to build fiber-based broadband outside of AT&T’s traditional geographic footprint. (2022 to present) | ■ Fortress Solutions, a private telecom services company serving both large telecom operators and enterprise businesses for logistics as well as repair and maintenance capabilities (2022 to present) ■ Airspan Network Holdings LLC, a private provider of hardware and software for 5G networks and Open RAN solutions (2024 to present) EDUCATION: ■ B.A., University of Wisconsin- Platteville ■ Master of Industrial Technology, University of Wisconsin-Platteville SKILLS AND EXPERTISE: ■ We believe Mr. Mair is qualified to serve on the Board due to his executive leadership experience and extensive operational expertise and experience primarily in the telecommunications industry in which the Company operates. |
Director Nominees
| AGE 58 COMMITTEES ■ None |
Director Nominees
| BRUCE W. MCCLELLAND | Non-Independent Director Director since March 2020 |
Director Nominees
| BACKGROUND Ribbon Communications Inc. ■ President and Chief Executive Officer, responsible for the strategic direction and management of Ribbon (March 2020 to present) CommScope Inc., a global network infrastructure provider ■ Chief Operating Officer, responsible for the combined portfolio of products and services (April 2019 to August 2019) ARRIS International plc (“ARRIS”), a telecommunications equipment manufacturing company ■ Chief Executive Officer (September 2016 until its sale to CommScope in April 2019) ■ served in numerous leadership roles during 20 years at ARRIS and managed the successful acquisition and integration of the Ruckus Wireless and Brocade ICX Campus switching business from Broadcom Inc., a major step in diversifying the ARRIS business beyond the service provider market into the broader enterprise market, while strengthening the company’s wireless technology capabilities | ARRIS (cont’d) ■ held several other roles at ARRIS, including President of Network & Cloud and Global Services (April 2013 to August 2016) ■ authored several communications- related patents Nortel Networks Corporation and Bell Northern Research (“BNR”) ■ served in leadership roles for eleven years ■ began his career with BNR in Ottawa, Canada, responsible for the development of Nortel’s SS7 switching products immediately prior to joining ARRIS EDUCATION ■ B.E., the University of Saskatchewan SKILLS AND EXPERTISE We believe Mr. McClelland is qualified to serve on the Board due to his executive leadership experience, including as a chief executive officer of ARRIS, along with extensive operational expertise and experience in engineering. |
Director Nominees
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Nominees
| AGE 70 COMMITTEES ■ None |
Director Nominees
| SHAUL SHANI | Non-Independent Director Director and Chairman of the Board since June 2020 |
Director Nominees
| BACKGROUND Entrepreneur Swarth Group, a private global investment company investing in public and private companies primarily in the communication services, technology, IT, cyber, renewable energy and real estate sectors as well as financial markets ■ Founder and Chairman (2006 to present) Magnum Group, an investment group investing in telecom and tech ventures, including DSP Group (a major shareholder of AudioCodes which was taken public in 1999) ■ Founder (1994 to 2006) Sapiens International Corporation, a software development company which was listed on the Nasdaq Stock Market in 1992 ■ Founder and Chief Executive Officer (1989 to 1993) Eurosoft, an IT company ■ Founder and Chief Executive Officer Tecnomatix Technologies ■ Founder (1983) Oshap Technologies Ltd., a developer of flexible automation software for robotics ■ Founder and Chief Executive Officer (1982 to 1985) | BOARD SERVICE ■ ECI (where Swarth Group was the controlling shareholder) (2007 to 2012), holding the position of Chairman (2009 to 2012) ■ Global Village Telecom, a telecommunications service provider in Brazil (where Swarth Group was the lead investor), Executive Chairman (1997 until its acquisition by the Vivendi Group in 2009) ■ DSP Group (serving as director on behalf of the Magnum Group) (1999 to 2000) ■ Sapiens International Corporation, Chairman (1989 to 1993) ■ held board positions at many private and public companies in the field of telecommunications and technology over the last 30 years SKILLS AND EXPERTISE We believe Mr. Shani is qualified to serve on the Board due to his extensive background in finance and private equity, his extensive knowledge of the telecommunication business and his experience serving as a director of companies in the telecommunications industry. |
Director Nominees
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Nominees
| AGE 72 COMMITTEES ■ None |
Director Nominees
| RICHARD W. SMITH | Non-Independent Director Director since October 2017 |
Director Nominees
| BACKGROUND JPMorgan Chase & Co., a multinational banking and financial services holding company ■ Chairman, Private Capital, creating and guiding a series of investment entities focused initially on technology and healthcare, funded by the bank and clients (February 2021 to present) ■ Head of Private Investments, responsible for private and public company investments solely funded by the bank (November 2014 to January 2021) ■ One Equity Partners, Partner (July 2002 to present) Allegra Partners and predecessor entities ■ Managing Partner (1981 to 2013) Citicorp Venture Capital Ltd., a former venture and private equity investment division of Citigroup Inc. ■ Senior Investment Manager (1979 to 1981) Morgan Guaranty Trust Company of New York ■ International Money Management Group (1974 to 1979) | BOARD SERVICE ■ GENBAND (2014 to 2017) ■ has over 45 years of experience as a board member of both public and private companies PUBLICATION ■ Co-author of the book Treasury Management: A Practitioner’s Handbook, John Wiley & Sons, 1980 EDUCATION ■ B.A., Harvard College SKILLS AND EXPERTISE We believe Mr. Smith is qualified to serve on the Board due to his extensive background in finance and private equity and his experience serving as a director of companies in the telecommunications industry. |
Director Nominees
| AGE 63 COMMITTEES ■ Compensation ■ Nominating, Sustainability and Corporate Governance |
Director Nominees
| TANYA TAMONE | Independent Director Director since June 2020 |
Director Nominees
| BACKGROUND Sogerco S.A., a private trust company ■ Chief Executive Officer (2007 to present) Bank Leu, Fuji Bank and Cedef S.A., in Switzerland ■ Trader, specializing in currency and interest trading (1985 to 1996) | BOARD SERVICE ■ currently serves as a director for several privately held companies SKILLS AND EXPERTISE We believe Ms. Tamone is qualified to serve on the Board due to her experience as a Chief Executive Officer and her financial expertise. |
Director Nominees
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Compensation
Director Compensation The Compensation Committee reviews the Non-Employee Director Compensation Policy (the “Director Compensation Policy”) periodically and, in consultation with its independent compensation consultant regarding compensation on levels for peer companies and the broader market, recommends changes to the Board when it deems appropriate. The Director Compensation Policy permits a director to elect to receive all or 50% of the cash fees payable to her or him in shares of the Company’s common stock and further permits a director to defer receipt of all or 50% of any shares payable to her or him upon vesting of equity awards until the 15th day of the month following the date on which the electing director ceases to serve on the Board (or earlier in connection with a change in control as defined under the Director Compensation Policy). Pursuant to the Director Compensation Policy, Mr. Grayson elected to receive 100% of the 2024 cash fees payable to him in shares of the Company’s common stock.
Director Compensation
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Compensation
The following table describes the components of the non-employee directors’ compensation for 2024:
Director Compensation
| Compensation Element | Compensation Payment | | Annual Retainer | $60,000(1)(2) | | Annual Equity Retainer | $145,000(1) in restricted stock units that vest after one year (or, if earlier, on the date of the next annual meeting if the non- employee director does not stand for re-election or is not re-elected by stockholders of the Company) | | Non-Executive Chairman Fee(3) | $50,000(2) | | Lead Independent Director Fee(3) | $50,000 | | Committee Fees(3) | | | Audit Committee | $15,000 | | Compensation Committee | $10,000 | | Nominating, Sustainability and Corporate Governance Committee | $5,000 | | Technology and Innovation Committee | $5,000 | | Chair Fees(3) | | | Audit Committee | $25,000 | | Compensation Committee | $17,000 | | Nominating, Sustainability and Corporate Governance Committee | $10,000 | | Technology and Innovation Committee | $10,000 | | New Director Retainer | New non-employee directors will receive a pro rata annual equity award of restricted stock units, with the proration based on the number of months of service until the month of the Company’s next annual stockholders meeting | | Stock Ownership Guidelines | Directors are expected to hold shares of the Company’s common stock in an amount equal to five times the annual cash retainer amount. |
Director Compensation
(1) Mr. Smith is not entitled to any annual director equity grants. In lieu of such grants, Mr. Smith is entitled to an annual cash retainer of $160,000. As described below, Mr. Smith waived receipt of this cash retainer effective April 1, 2020. Any compensation paid to Mr. Smith will be paid directly to Heritage PE (OEP) III L.P. (“Heritage III”). (2) Mr. Shani waived receipt of any cash compensation for his service as Chairman of the Board in 2024. (3) Compensation for service as the chairman of the Board, lead independent director or a committee chair is in addition to the compensation paid for Board and committee service. Total Director Compensation for 2024 The following table contains information on compensation earned by each non-employee member of our Board during 2024:
Director Compensation
| Director | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total(2) ($) | | R. Stewart Ewing, Jr. | 105,000 | 145,000 | 250,000 | | Bruns H. Grayson | 135,000(3) | 145,000 | 280,000 | | Beatriz V. Infante | 107,000 | 145,000 | 252,000 | | Scott Mair | 90,000 | 145,000 | 235,000 | | Shaul Shani(4) | 0 | 145,000 | 145,000 | | Richard W. Smith(5) | 0 | 0 | 0 | | Tanya Tamone | 75,000 | 145,000 | 220,000 |
Director Compensation
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Director Compensation
The amounts in this column do not reflect compensation actually received by the applicable director. Instead, the amounts reflect the grant date fair value of restricted stock awards, as calculated in accordance with Accounting Standards Codification 718, Compensation — Stock-Based Compensation (“ASC 718”). The amounts reported for each member of the Board represents the grant date fair value of his or her grants during 2024. The grants made to each director during 2024 were as follows:
Director Compensation
| Director | Restricted Stock Units (“RSUs”) (#) | Grant Date Fair Value ($) | | R. Stewart Ewing, Jr. | 48,365(a) | 145,000 | | Bruns H. Grayson | 48,365(a) | 145,000 | | Beatriz V. Infante | 48,365(a) | 145,000 | | Scott Mair | 48,365(a) | 145,000 | | Shaul Shani | 48,365(a) | 145,000 | | Tanya Tamone | 48,365(a) | 145,000 |
Director Compensation
(a) Annual director RSU award granted on June 17, 2024 and will vest on June 17, 2025. As of December 31, 2024, our non-employee directors held an aggregate of 290,190 unvested restricted stock units as follows:
Director Compensation
| Director | No. of Unvested RSUs Held as of December 31, 2024 (#) | | R. Stewart Ewing, Jr. | 48,365 | | Bruns H. Grayson | 48,365 | | Beatriz V. Infante | 48,365 | | Scott Mair | 48,365 | | Shaul Shani | 48,365 | | Richard W. Smith | — | | Tanya Tamone | 48,365 |
Director Compensation
(2) Non-employee directors are also eligible to be reimbursed for reasonable out-of-pocket expenses incurred in connection with attendance at our Board or committee meetings. (3) Pursuant to the Director Compensation Policy, Mr. Grayson elected to receive 100% of the cash fees otherwise payable to him in unrestricted shares of our common stock. (4) Mr. Shani waived receipt of any cash compensation for his service as a director in 2024. Mr. Smith is not entitled to any equity compensation in connection with his service as a director. Mr. Smith waived receipt of any cash compensation for his service as a director in 2024.
Director Compensation
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Compensation Discussion and Analysis
| 45 | Equity-Based Incentives | | 46 | Performance Goals | | 48 | BENEFITS AND OTHER COMPENSATION | | 48 | SEVERANCE AND SEPARATION ARRANGEMENTS | | 48 | COMPENSATION POLICIES AND PRACTICES | | 48 | Stock Ownership Requirements | | 49 | Clawback Policy | | 49 | Insider Trading Policy and Policy Regarding Transactions Involving Hedging, Monetization, Margin Accounts and Pledges | | 49 | Timing of Stock Options and Other Equity Awards | | 49 | TAX AND ACCOUNTING CONSIDERATIONS | | 49 | Accounting for Stock-Based Compensation | | 50 | Policy on Deductibility of Executive Compensation | | 50 | RISK MANAGEMENT AND OUR EXECUTIVE COMPENSATION PROGRAM |
Our Guiding Compensation Philosophy
| Compensation Practices that We Do Not Follow | | NO GUARANTEED BONUSES for our executive officers NO INDIVIDUAL PERFORMANCE OR NON-FINANCIAL METRICS for determining annual bonus for the NEOs NO DISCOUNTED STOCK AWARDS, RELOADS OR REPRICING without stockholder approval NO HEDGING OR PLEDGING of shares permitted for our executive officers and directors NO TAX GROSS-UP PAYMENTS with respect to any payments made in connection with severance including any change of control NO BROAD SHARE RECYCLING under our stock incentive plans |
Who Oversees the Company’s Compensation Program?
Who Oversees the Company’s Compensation Program? THE COMPENSATION COMMITTEE The Compensation Committee is primarily responsible for overseeing the Company’s executive compensation program. Our Board sets the overall corporate performance objectives for each year, while the Compensation Committee determines and approves the compensation level for the CEO; reviews the recommendations of the CEO and approves compensation levels of other executive officers; evaluates the performance of these executives; and evaluates and approves all grants of equity-based compensation to the CEO and the other executive officers. All decisions regarding the CEO’s compensation are made by the Compensation Committee in executive session without the CEO present. After the end of the fiscal year, the Compensation Committee reviews the actual corporate performance to determine the appropriate cash incentive amount, if any, to be paid to each eligible executive officer. ROLE OF THE COMPENSATION CONSULTANT The duties of the compensation consultant we engage are generally to evaluate board and executive compensation, perform an analysis on realized pay alignment with financial and stock performance, keep the committee apprised of general compensation trends, provide competitive market practice data and benchmarking (including peer group determination), participate in the design and implementation of certain elements of the executive compensation program, assist in the review of compensation related disclosures, assist in share usage analysis and determinations with respect to our equity incentive plans (including with respect to our share reserve), assist our CEO in developing compensation recommendations to present to the Compensation Committee for the other executive officers and assist in reviewing our proxy statement and other relevant public filings.
Competitive Benchmarking
Competitive Benchmarking As part of the ongoing assessment of our executive compensation program, the Compensation Committee, with the assistance of its compensation consultant, reviews market compensation data, including the compensation practices of selected similar peer companies. Accordingly, the Compensation Committee updates the peer group from time to time to ensure that the Company’s executive compensation program remains competitive and in line with market compensation data.
Competitive Benchmarking
| The peer group generally consists of publicly-traded information technology companies that are in the communications equipment and related sub-industries with market capitalization and revenue in a similar range to that of the Company. |
Competitive Benchmarking
The compensation consultant reviews the business descriptions of potential peer companies to identify businesses generally in the telecommunications and/or networking industries. Then, the Compensation Committee considers factors, such as executive talent and business-line competitors, global scope and complexity, research and development expenses, and market capitalization and revenue multiples, when selecting peers. The Compensation Committee reviews and approves the peer group annually. In September 2024, the Committee determined, in consultation with FW Cook, that no changes to the peer group were needed given that the Company’s business and competition were similar to the prior year. The current peer group is outlined below. CURRENT RIBBON EXECUTIVE COMPENSATION PEER GROUP COMPANIES
Competitive Benchmarking
| A10 Networks Inc. ADTRAN Holdings, Inc. AudioCodes Ltd. Aviat Networks, Inc. CalAmp Corp. | Calix, Inc. Cambium Networks Corporation CSG Systems International, Inc. Extreme Networks, Inc. Harmonic Inc. | NETGEAR, Inc. NetScout Systems, Inc. Viavi Solutions Inc. |
Competitive Benchmarking
FW Cook compiled and provided the Compensation Committee with compensation information from the peer group based on the publicly-filed documents of each member of the peer group. While the Compensation Committee considers the compensation of our peer group companies’ senior executives, it does not benchmark a particular percentile for the total compensation of our NEOs or for any component thereof.
Competitive Benchmarking
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Competitive Benchmarking
Compensation Components The Compensation Committee annually reviews fixed and variable compensation received by our NEOs, including: ■ base salary, ■ annual bonus incentives, ■ equity awards, and ■ other benefits (e.g. health and retirement). Our executive compensation program has four major components that support the Company’s compensation objectives, each of which is discussed in detail below. Such major components reflect the compensation provided to our NEOs in 2024.
Compensation Mix
Compensation Mix A significant portion of our executive officers’ total direct compensation (which includes base salary, cash bonus and equity-based incentives) opportunity is attributable to variable compensation — that is, the amount our executives earn is dependent upon Company performance. The 2024 equity-based component of our NEOs’ total compensation consisted primarily of (i) restricted stock units, the vesting of which is subject to established performance metrics (“PSUs”), and (ii) restricted stock units that are subject to time-based vesting (“RSUs”), and in both cases the value of which is tied to the value of the Company’s common stock. These variable elements were intended to align the executives’ performance and interests with Company performance and long-term stockholder value. The table below generally summarizes the elements of our compensation program for our NEOs in 2024:
Compensation Mix
| | Element | Form of Compensation | Purpose | Link to Company Performance | | ◀ FIXED ▶ | BASE SALARIES | ■ Cash | ■ Provide competitive, fixed compensation to attract and retain exceptional executive talent | ■ Low | | ◀ VARIABLE ▶ | ANNUAL BONUS INCENTIVES | ■ Cash | ■ Provide a direct incentive to achieve strong annual operating results | ■ High | | | LONG-TERM EQUITY INCENTIVES | ■ PSUs ■ RSUs | ■ Encourage executive officers to build and maintain a long-term equity ownership position in Ribbon so that their interests are aligned with those of our stockholders | ■ High | | ◀ OTHER ▶ | HEALTH, RETIREMENT AND OTHER BENEFITS | ■ Eligibility to participate in benefit plans generally available to our employees, including 401(k) plan, premiums paid on long-term disability and life insurance | ■ Benefit plans are part of a broad-based employee benefits program ■ Except in limited circumstances as discussed in the footnotes of our Summary Compensation Table, our executives do not generally receive any material nonqualified deferred compensation plans or perquisites | ■ Low |
Base Salary
Base Salary Base salaries are designed to reflect the scope of responsibilities, performance and competencies of the individual executives, and the relation of that position to other positions in the Company and the external benchmark data for similar positions at peer companies. Each NEO’s salary and performance are reviewed annually as well as at the time of a promotion or other change in responsibilities.
Annual Bonuses
Annual Bonuses Annual incentives provide NEOs with the opportunity to earn additional compensation beyond base salary. The eligibility for an annual bonus creates an incentive to achieve desired near-term
Annual Bonuses
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Annual Bonuses
corporate goals that are in furtherance of the Company’s long-term objectives. The compensation program establishes target bonuses for each NEO. Bonuses are expected to represent a substantial part of total compensation for our NEOs, if earned. The 2024 target bonus for each NEO is set forth below.
Annual Bonuses
| Named Executive Officer | 2024 Target Bonus (as % of Base Salary) | | Bruce McClelland | 100% | | John Townsend | 75% | | Sam Bucci | 75% | | Patrick Macken | 75% | | Dan Redington | 75% | | Miguel Lopez | 75% |
Annual Bonuses
For 2024, the Company had one cash incentive plan for the NEOs — the Senior Management Cash Incentive Plan (the “SMCIP”). In early 2024, the Compensation Committee determined that the annual incentive under the SMCIP for each NEO would be calculated based on both the Company’s consolidated revenues (50% weighting) and Adjusted EBITDA (50% weighting) included in the 2024 operating plan adopted by the Board.
Annual Bonuses
| | Target SMCIP Bonus Metrics for NEOs (in millions) | | | Actual 2023 Results ($ in millions) | Payout Result | Weighting | | Performance Metric | Minimum 0% ($) | Target 100% ($) | Maximum 200% ($) | | | | | Revenue | 800.0 | 880.0 | 925.0 | 833.9 | 42.4% | 50% | | Adjusted EBITDA (pre-bonus)(1) | 90.0 | 137.0 | 165.0 | 131.5 | 87.7% | 50% |
Annual Bonuses
(1) Adjusted EBITDA (bonus) is calculated by excluding from (Loss) income from operations: depreciation; amortization of acquired intangible assets; stock-based compensation; acquisition-related inventory adjustments; certain litigation costs; impairment of goodwill; acquisition-, disposal- and integration related expense; and restructuring and related expense. As noted in the table above, the 2024 revenue of approximately $834 million and Adjusted EBITDA of approximately $132 million would result in a payout of approximately 65% under the SMCIP. In reviewing the Company’s 2024 results, however, the Compensation Committed noted, among other items, a 30% increase in the Company’s adjusted EBITDA (please see Appendix A to this Proxy Statement for a discussion of non-GAAP measures) over 2023, total revenue growth despite the Company suspending sales to customers in Eastern Europe in June 2024 and completion of the refinancing of the Company’s credit facility in May 2024. Given these achievements, the Compensation Committee elected to use its discretion under the SMCIP to increase the payouts to participants to levels equivalent to the Company achieving approximately 70% of target. As a result, the bonuses paid to the NEOs in 2024 under the SMCIP were as follows:
Annual Bonuses
| Named Executive Officer | Target Annual Bonus Under SMCIP | Cash Bonus Paid Under SMCIP | | Bruce McClelland | $750,000 | $525,000 | | John Townsend | $375,000 | $81,164(1) | | Sam Bucci | $344,138 | $240,896 | | Patrick Macken | $358,875 | $251,213 | | Dan Redington | $322,500 | $225,750 | | Miguel Lopez | $393,750 | —(2) |
Annual Bonuses
(1) Reflects pro-rated bonus for period November 1, 2024 through December 31, 2024 based on 100% of target pursuant to terms of Mr. Townsend’s employment agreement. Mr. Lopez retired effective November 1, 2024 and as a result was not eligible to receive a cash bonus under the SMCIP.
Annual Bonuses
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Annual Bonuses
In addition to the bonus paid under the SMCIP, Messrs. Lopez and Macken were also each paid an additional cash bonus of $100,000 in 2024 in recognition of their work done in connection with the completion of the refinancing of our credit facility.
Annual Equity-Based Incentives
Annual Equity-Based Incentives Equity-based incentives are provided to executives whose decisions and actions have a direct impact upon our long-term performance and success. PSUs and RSUs were granted to our executive officers in 2024 to link a significant portion of their compensation directly to our long-term success, which aligns with the Compensation Committee’s philosophy. In determining the size of the PSU and RSU awards granted to each executive officer in 2024, the Compensation Committee considered a multitude of factors including: ■ the executive officer’s role, ■ past performance, ■ anticipated contribution to our long-term goals, ■ areas of focus for the year, ■ market data, ■ equity granted in prior years, and ■ existing levels of stock ownership. 2024 EQUITY AWARDS We made annual equity grants to our NEOs in 2024 as shown in the table below. Generally 50% of the annual equity based incentives granted to our executives officers are in the form of RSUs and 50% are in the form of PSUs, with the PSUs then split between financial performance (60%) and relative total stockholder return (40%) as described in more detail below. In 2024, approximately 67% of the annual equity awards were in the form of PSUs. In addition to the awards listed below, in connection with appointment as Executive Vice President, Chief Financial Officer of the Company, Mr. Townsend was awarded an additional equity inducement grant as described below under “— Townsend Inducement Grant.” No equity awards were made to Mr. Lopez in 2024.
Annual Equity-Based Incentives
| Named Executive Officer | Performance-Based Stock Units (# at Target Vesting) | RSUs (#) | | Bruce McClelland | 545,886 | 237,341 | | John Townsend | 230,769(1) | 230,769 | | Sam Bucci | 121,308 | 52,742 | | Patrick Macken | 103,111 | 44,831 | | Dan Redington | 97,046 | 42,194 |
Annual Equity-Based Incentives
(1) Granted in 2024 in connection with appointment as CFO. The portion subject to performance conditions is based on performance metrics for 2025, 2026 and 2027 and the portion subject to relative total stockholder return will be based on the period from the date of the award through December 31, 2027. PSUS The annual PSU awards typically vest after three years and have both performance and service conditions. However, for the PSU awards made in 2024 (the “2024 Annual PSUs”), other than to Mr. Townsend, the portion of the awards subject to vesting based on financial performance metrics, the vesting will occur over two years and the size of the awards were reduced, compared to prior years, to reflect the shorter vesting period. The decision to shorten the vesting period for 2024 was made because the Company did not have sufficient shares available under the Ribbon Communications Inc. Amended and Restated 2019 Incentive Award Plan (the “2019 Plan”) to make grants consistent with prior years. In addition to reducing the grant size compared to prior years, the maximum number of shares issuable based on the achievement of the identified financial metrics was also reduced from 200% of target to 150% of target. No changes were made to the portion of
Annual Equity-Based Incentives
the 2024 Annual PSUs subject to relative total stockholder return from prior years and those awards will vest at the end of the three year performance period described below and can vest at up to 200% of target as discussed below. Subject to stockholder approval of the 2025 Incentive Award Plan at the 2025 Annual Meeting, the portion of the annual PSUs granted in 2025 that are subject to vesting based on achievement of financial metrics will again vest over three years, however the maximum number of shares that may be issued will continue to be capped at 150% of target. The performance conditions for the 2024 Annual PSUs were again based on key financial performance metrics (60% of the total target award amount) and relative total stockholder return over a three-year period (40% of the total target award amount).
Performance Goals for Annual PSUs
Performance Goals for Annual PSUs Due to the challenge of setting multi-year goals in our industry, the Compensation Committee establishes annual corporate performance goals at the start of each year of the two- or three-year period covered by the annual awards (60% total weighting of the target award value for the 2024 Annual PSUs). While shares are earned at the end of each one-year performance period, they do not vest and become payable until the end of the full two-year period under the terms of the 2024 Annual PSU awards. For the performance period beginning January 1, 2024 through December 31, 2024, the corporate performance goal established by the Compensation Committee for the 2024 Annual PSUs was consolidated revenue (50% weighting) and Adjusted EBITDA (50% weighting). The revenue and Adjusted EBITDA goals and potential payouts are set forth in the table below. These performance goals also applied to the 2024 performance period under PSUs granted to the NEOs in 2022 and 2023 (the “Previously Outstanding Annual PSUs”).
Performance Goals for Annual PSUs
| | PSU 2024 Performance Metrics (in millions) | | | Weighting | | Performance Metric | Minimum 0% ($) | Target 100% ($) | Maximum 150% ($) | | | Revenue | 800.0 | 880.0 | 925.0 | 50% | | Adjusted EBITDA (pre-bonus) | 90.0 | 137.0 | 165.0 | 50% |
Performance Goals for Annual PSUs
For 2024, based on the results discussed above for the SMCIP, the Company’s 2024 revenue and Adjusted EBITDA would have resulted in shares equivalent to approximately 65% of the revenue target being earned for the 2024 performance period. However, as with the SMCIP discussed above, based on the Company’s 2024 achievements, the Compensation Committee used its discretion to increase the shares earned for the 2024 performance period to the number that would have been earned at 70% of the revenue target. RELATIVE TSR Relative total stockholder return (“Relative TSR”), which comprises 40% of the total target award, is the return on the Company’s stock taking into account the change in the stock price over the three- year measurement period and assuming any dividends are reinvested. Ribbon’s stock performance over the three-year period is compared on a relative basis to a peer index and measured “point-to-point,” with the starting and ending points based on the average 20-trading day closing stock prices at the end of our fiscal years to smooth out any single day volatility. As noted above, for
Performance Goals for Annual PSUs
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Performance Goals for Annual PSUs
Mr. Townsend’s award made in connection with his appointment as CFO, the measurement period will run from the date of the award in 2024 through December 31, 2027. The Nasdaq Telecommunications Index is the peer index used to measure Relative TSR, which is the same peer index used for the “— Pay Versus Performance Disclosures.” The table below provides the payout range for the Relative TSR portion of the 2024 Annual PSUs. This portion of the PSU awards cliff vest at the end of the three-year performance period with linear interpolation between each performance hurdle (e.g., 40th percentile Relative TSR performance yields 80% of target payout on this metric).
Performance Goals for Annual PSUs
| Payout for Relative TSR Achievement Metric | Relative TSR Achievement | | 200% | 75th percentile | | 100% | 50th percentile | | 50% | 25th percentile |
Performance Goals for Annual PSUs
RSUS The annual RSUs granted to the NEOs in 2024, other than Mr. Townsend, cliff vest on the first anniversary of the grant date. As discussed above in connection with the 2024 Annual PSUs, given the constraints on the number of shares available for grant under the Company’s Amended and Restated 2019 Stock Incentive Plan, the Compensation Committee elected to reduce the size of the RSU awards made to the NEOs and shorten the vesting period to one year. If the 2025 Incentive Award Plan is approved by stockholders at the 2025 Annual Meeting, RSUs granted to NEOs in 2025 will again vest over a three-year period with one-third of the award vesting on the first anniversary of the grant date and one-sixth of the RSUs vesting every six months thereafter, subject to the NEO’s continued employment with the Company. The RSUs granted to Mr. Townsend in connection with his appointment as CFO will vest over a three-year period with one-third of the award vesting on the first anniversary of the grant date and one-sixth of the RSUs vesting every six months thereafter, subject to his continued employment with the Company. TOWNSEND SIGN-ON AWARDS In connection with his appointment as Executive Vice President and Chief Financial Officer of Ribbon effective November 1, 2024, in addition to the 2024 Annual PSUs and RSUs discussed above, Mr. Townsend was awarded Performance Share Units (the “Townsend Sign-On PSUs”) that are subject to vesting based on both (i) a continued service requirement and (ii) achievement of specified volume-weighted average trading prices of the Company’s common stock for 60 consecutive days (each a “Target VWAP”). Once the Target VWAP for a tranche is achieved, the shares subject to that tranche will vest upon the continued service requirement for the tranche being met, regardless if the stock price falls below the Target VWAP. In addition, if the Target VWAP for a tranche is not met prior to the continued service date for such tranche, then the PSUs for that tranche will be forfeited. In the event that a Change in Control (as defined in the Executive Severance Agreement with Mr. Townsend described below), the PSUs subject to a vesting tranche will be eligible to vest following the Change in Control subject only to the continued service requirement, but only to the extent that (i) the Target VWAP condition for such vesting tranche has been satisfied prior to the date of such Change in Control or (ii) the fair market value per share of the Company’s common stock as of the consummation of such Change in Control, as determined by the Company’s Board of Directors in its sole discretion, equals or exceeds the applicable Target VWAP condition for such vesting tranche in connection with such Change in Control, without regard to the 60 consecutive calendar day average requirement and any portion of the PSUs that remain unvested such accelerated vesting will be automatically forfeited for no consideration as of the consummation of such Change in Control.
Performance Goals for Annual PSUs
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Performance Goals for Annual PSUs
| Performance Tranche | Continued Service Period | Target VWAP ($) | Number of PSUs Eligible to Vest (#) | | First Vesting Tranche | October 15, 2025 | 4.00 | 93,750 | | Second Vesting Tranche | October 15, 2026 | 4.50 | 83,333 | | Third Vesting Tranche | October 15, 2027 | 5.00 | 75,000 | | Fourth Vesting Tranche | October 15, 2028 | 6.00 | 62,500 | | Maximum Aggregate Number of Shares Eligible to Be Received: | | | 314,583 |
Performance Goals for Annual PSUs
As of April 14, 2025, the Target VWAP for the first vesting tranche has not yet been met. Benefits and Other Compensation We have various broad-based employee benefit plans. We do not typically offer perquisites or employee benefits to executive officers that are not also made available to employees on a broad basis. Our executive officers generally are eligible for the same benefits that are available to all employees, which include group health, dental and vision insurance, life and disability insurance, discretionary 401(k) matching contributions and paid holidays. We offer a 401(k) plan, which allows our employees to invest in a wide array of funds. Except for certain post-termination benefits in connection with severance, we do not provide pension arrangements or post-retirement health coverage for our NEOs. We have entered into indemnification agreements with our executive officers and directors. Severance and Separation Arrangements We are party to agreements with each of our NEOs, which generally provide that, upon a termination of the NEO’s employment by the Company without “cause” (as defined in the applicable NEO’s employment agreement), due to a resignation by the NEO for “good reason” (as defined in the applicable NEO’s employment agreement) or due to death or disability of the NEO, the NEO is entitled to certain severance payments and benefits. We believe the entry into such severance arrangements by Ribbon (or our predecessors) is generally consistent with market practice and allows our executives to remain focused on the Company’s objectives in times of potential uncertainty. For further discussion regarding the severance and separation agreements and arrangements, see “Severance and Change in Control Benefits” below. Compensation Policies and Practices
Timing of Stock Options and Other Equity Awards
Timing of Stock Options and Other Equity Awards Although we do not have a formal policy regarding the timing of awards of stock options, SARs and/or similar option-like instruments grants to our NEOs, we do not make these awards or any other form of equity compensation in anticipation of the release of material, non-public information. Similarly, we do not time the release of material, non-public information based on stock option, SARs or other equity award grant dates for the purpose of affecting the value of any NEO award. In 2024, none of our NEOs were granted any options to purchase shares of our common stock, SARs or similar option-like instruments. Tax and Accounting Considerations
Executive Compensation Tables
| Name & Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation(2) ($) | All Other Compensation(3) ($) | Total ($) | | Bruce McClelland, President and Chief Executive Officer | 2024 | 750,000 | — | 3,141,452 | — | 525,000 | 36,550 | 4,453,002 | | | 2023 | 750,000 | — | 1,915,427 | — | — | 32,697 | 2,698,394 | | | 2022 | 750,000 | — | 749,998 | — | — | 34,506 | 1,534,506 | | John Townsend, Executive Vice President and Chief Financial Officer | 2024 | 105,479(4) | — | 2,571,058 | — | 81,164 | 4,066 | 2,680,603 | | Sam Bucci, Executive Vice President and Chief Operating Officer | 2024 | 458,850(5) | — | 698,099 | | 240,896 | 18,270 | 1,416,115 | | | 2022 | 435,754 | — | 1,344,641 | — | 48,400 | 14,306 | 1,843,101 | | | 2023 | 461,234 | 106,110 | 1,388,119 | — | — | 5,744 | 1,944,397 | | Patrick Macken, Executive Vice President, Chief Legal Officer and Corporate Secretary | 2024 | 478,500 | 100,000 | 593,381 | — | 251,213 | 36,863 | 1,459,957 | | | 2023 | 435,000 | — | 1,030,750 | — | 49,000 | 36,580 | 1,551,330 | | | 2022 | 400,000 | — | 1,136,522 | — | — | 34,860 | 1,571,382 | | Dan Redington, Executive Vice President, Global Sales | 2024 | 430,000 | | 558,478 | | 225,750 | 36,831 | 1,251,059 | | | 2023 | 405,000 | — | 800,289 | — | 45,600 | 36,550 | 1,287,439 | | Miguel Lopez, Former Executive Vice President, Chief Legal Officer and Corporate Secretary | 2024 | 437,260(4) | 100,000 | — | — | — | 16,269 | 553,529 | | | 2023 | 525,000 | — | 1,443,344 | — | — | 17,191 | 1,985,535 | | | 2022 | 525,000 | — | 1,439,403 | — | — | 24,521 | 1,998,924 |
Equity Award Acceleration
| Name | Potential Payments | Termination Without Cause or for Good Reason(1) ($) | Termination Upon Death or Disability ($) | Change in Control ($) | Termination Without Cause or for Good Reason following a Change in Control ($) | | Bruce McClelland | Cash Severance | 2,025,000 | — | — | 3,750,000 | | | Stock Awards(2) | 1,824,760 | — | 615,496 | 1,084,639 | | | Health Benefits | 28,485 | — | — | 56,970 | | | Total | 3,878,245 | — | 615,496 | 4,891,609 | | John Townsend | Cash Severance | 580,137 | — | — | 882,988 | | | Stock Awards(2) | — | — | 320,000 | 959,999 | | | Health Benefits | 10,500 | — | — | 21,000 | | | Total | 590,638 | — | 320,000 | 1,863,987 | | Sam Bucci | Cash Severance | 699,746 | — | — | 1,139,363 | | | Stock Awards(2) | 1,021,842 | — | 399,031 | 1,629,984 | | | Health Benefits | 7,964 | — | — | 7,964 | | | Total | 1,729,552 | — | 399,031 | 2,777,311 | | Patrick Macken | Cash Severance | 729,713 | — | — | 1,088,588 | | | Stock Awards(2) | 963,032 | — | 322,883 | 1,406,650 | | | Health Benefits | 28,515 | — | — | 28,515 | | | Total | 1,721,260 | — | 322,883 | 2,523,753 | | Dan Redington | Cash Severance | 655,750 | — | — | 978,250 | | | Stock Awards(2) | 464,872 | — | 382,193 | 790,165 | | | Health Benefits | 28,485 | — | — | 28,485 | | | Total | 1,149,107 | — | 382,193 | 1,796,900 |
CEO Pay Ratio
CEO Pay Ratio To determine the median annual compensation for all employees other than the CEO, a median employee was identified from the worldwide population (including full-time, part-time, seasonal and temporary employees, but excluding interns). This determination was done as of November 30, 2024. No employees were excluded from the employee population due to data privacy issues. To determine the median employee, we utilized the “regular earnings” of the applicable employees, which represents cash compensation excluding bonus, commissions and other similar incentive
CEO Pay Ratio
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CEO Pay Ratio
compensation. The Company did not utilize any cost of living or other material adjustments. In connection with our analysis, we utilized the foreign currency exchange rate used for our internal financial accounting purposes. Based on the foregoing, the median employee was determined to be a Software Engineering Architect working on a full-time basis in India. For 2024, the annual total compensation for the median employee was $68,453 and the annual total compensation for our CEO was $4,453,002, which reflects the total compensation paid to Mr. McClelland, the Chief Executive Officer for 2024. Based on the calculation of the annual total compensation for both the CEO and the median employee (as described above), the ratio of CEO pay to the median employee pay is approximately 65:1 The pay ratio provided is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio may not be comparable to the pay ratio reported by other companies or our pay ratio in any future year.
CEO Pay Ratio
| Employee | 2024 Annual Total Compensation ($) | Pay Ratio Estimate | | Mr. McClelland, our Chief Executive Officer | $4,453,002 | 65:1 | | Our median employee (excluding our CEO and certain non-U.S. employees) | $68,453 | |
CEO Pay Ratio
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Pay Versus Performance Disclosures
Pay Versus Performance Disclosures As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation — Compensation Discussion and Analysis.”
Pay Versus Performance Disclosures
| Year(1) | Summary Compensation Table Total for PEO #1 | Compensation Actually Paid to PEO #1(2) | Summary Compensation Table Total for PEO #2 | Compensation Actually Paid to PEO #2(2) | Summary Compensation Table Total for PEO #3 | Compensation Actually Paid to PEO #3(2) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs(3) | Value of Initial Fixed $100 Investment Based On: | | Net (Loss) Income (in thousands) | Revenue (in millions) | | | | | | | | | | | Total Shareholder Return(4) | Peer Group Total Shareholder Return(5) | | | | 2024 | $4,453,002 | $5,064,828 | — | — | — | — | $1,472,252 | $1,413,665 | $134.19 | $103.21 | $(54,235) | $834 | | 2023 | $2,698,394 | $1,944,504 | — | — | — | — | $1,666,851 | $1,040,387 | $93.55 | $90.96 | $(66,206) | $826 | | 2022 | $1,534,506 | $(6,504,331) | — | — | — | — | $1,759,789 | $352,253 | $90.00 | $82.21 | $(98,083) | $820 | | 2021 | $781,423 | $2,879,477 | — | — | — | — | $1,667,845 | $1,461,408 | $195.16 | $112.44 | $(177,185) | $845 | | 2020 | $4,922,249 | $23,030,777 | $1,684,310 | $3,389,048 | $1,706,056 | $1,734,278 | $1,807,140 | $2,487,383 | $211.61 | $110.08 | $88,591 | $844 |
Pay Versus Performance Disclosures
(1) The Principal Executive Officer(s) (“PEO”) and other named executive officers (“Other NEOs”) for each applicable year are: 2024 — PEO #1: Bruce McClelland. Other NEOs: John Townsend; Sam Bucci; Patrick Macken; Dan Redington and Miguel Lopez. 2023 — PEO #1: Bruce McClelland. Other NEOs: Mick Lopez; Sam Bucci; Patrick Macken and Dan Redington. 2022 — PEO #1: Bruce McClelland. Other NEOs: Mick Lopez; Sam Bucci; Patrick Macken and Tony Scarfo. 2021 — PEO #1: Bruce McClelland. Other NEOs: Mick Lopez; Sam Bucci; Patrick Macken and Steve McCaffery. 2020 — PEO #1: Bruce McClelland. PEO #2: Steven Bruny (served as Co-CEO until March 2020 but continued to serve as an NEO for remainder of 2020). PEO #3: Kevin Riley (served as Co-CEO until March 2020 but continued to serve as an NEO for remainder of 2020). Other NEOs: Mick Lopez; Sam Bucci; Patrick Macken, Tony Scarfo, Daryl Raiford and Justin Ferguson. The following tables detail the applicable adjustments made, per SEC rules, to the amounts reflected in the total column of the “Summary Compensation Table” to determine “Compensation Actually Paid” for each PEO noted.
Pay Versus Performance Disclosures
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Pay Versus Performance Disclosures
| | 2024 | 2023 | 2022 | 2021 | 2020 | | | | | PEO #1 | PEO #1 | PEO #1 | PEO #1 | PEO #1 | PEO #2 | PEO #3 | | Summary Compensation Table — Total Compensation | $4,453,002 | $2,698,394 | $1,534,506 | $781,423 | $4,922,249 | $1,684,310 | $1,706,056 | | Deduct Grant Date Fair Value of Stock Awards Granted in Fiscal Year | $3,141,452 | $1,915,427 | $749,998 | — | $3,631,842 | $869,978 | $379,000 | | Add Fair Value at Fiscal Year End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | $3,796,248 | $2,036,865 | $672,828 | — | $21,740,370 | $1,936,265 | — | | Add Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | $344,204 | $(202,500) | $(7,961,667) | $(3,579,167) | — | $519,811 | — | | Add Fair Value at Vesting of Stock Awards Granted in Fiscal Year that Vested During Fiscal Year | — | — | — | — | — | — | $491,142 | | Add Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions were Satisfied During Fiscal Year | $(36,804) | — | — | $5,677,221 | — | $118,640 | $70,394 | | Deduct Fair Value as of Prior Fiscal Year End of Stock Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year | $350,369 | $672,828 | — | — | — | — | $154,314 | | Compensation Actually Paid | $5,064,828 | $1,944,504 | $(6,504,331) | $2,879,477 | $23,030,777 | $3,389,048 | $1,734,278 |
Pay Versus Performance Disclosures
(3) The following tables detail the applicable adjustments made, per SEC rules, to the amounts reflected in the total column of the “Summary Compensation Table” for the Other NEOs as a group to determine the “Compensation Actually Paid for the Other NEOs as a group.
Pay Versus Performance Disclosures
| | 2024 | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table — Total Compensation | $1,472,252 | $1,666,851 | $1,759,789 | $1,667,845 | $1,807,140 | | Deduct Grant Date Fair Value of Stock Awards Granted in Fiscal Year | $884,203 | $1,154,753 | $1,264,365 | $1,145,961 | $941,679 | | Add Fair Value at Fiscal Year End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | $1,638,074 | $1,214,357 | $1,101,631 | $816,603 | $1,423,498 | | Add Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | $(181,847) | 46,199 | $(869,989) | $(84,956) | $164,422 | | Add Fair Value at Vesting of Stock Awards Granted in Fiscal Year that Vested During Fiscal Year | — | — | — | — | $46,644 | | Add Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions were Satisfied During Fiscal Year | $(155,977) | $173,781 | $(256,703) | $207,877 | $37,349 | | Deduct Fair Value as of Prior Fiscal Year End of Stock Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year | $474,633 | $906,048 | $(118,110) | — | $(49,991) | | Compensation Actually Paid | $1,413,665 | $1,040,387 | $352,253 | $1,461,408 | $2,487,383 |
Pay Versus Performance Disclosures
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Pay Versus Performance Disclosures
Represents the Company’s common stock cumulative TSR on a fixed investment of $100 over the fiscal year starting from the market close on the last trading day of fiscal 2019 through the end of each applicable fiscal year in the table, assuming reinvestment of any dividends. (5) Represents the cumulative TSR of the Nasdaq Telecommunications Index, the Company’s peer group for this Pay Versus Performance disclosure, on a fixed investment of $100 over the fiscal year starting from the market close on the last trading day of fiscal 2019 through the end of each applicable fiscal year in the table. This is the same peer group the Company uses for its disclosure under Item 201(e) of Regulation S-K. Financial Performance Measures As described in greater detail in “Executive Compensation — Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows (the performance measures included in this table are not ranked by relative importance):
Pay Versus Performance Disclosures
| ■ Revenue | ■ Net Income | | ■ Relative TSR (the Company’s TSR as compared to a peer group established by the Compensation Committee) | ■ Adjusted EBITDA |
Pay Versus Performance Disclosures
Analysis The graph below provides a comparison between the compensation actually paid to each of our PEOs and our average compensation actually paid to our Other NEOs against the Company TSR and the peer group TSR.
Pay Versus Performance Disclosures
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Pay Versus Performance Disclosures
The graph below demonstrates the correlation between compensation actually paid to each of our PEOs and average compensation actually paid to our Other NEOs against the Company’s net income for the years ended December 31, 2024, 2023, 2022, 2021 and 2020. As demonstrated in the graph below, the amount of compensation actually paid to the PEOs and the average amount of compensation actually paid to the Other NEOs (as a group). While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that revenue is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the company’s NEOs, for the periods presented, to Company performance.
Pay Versus Performance Disclosures
| Summary Information | Corporate Governance and Board Matters | Audit Matters | Executive Officers | Executive Compensation | Stock Information | Additional Information | Appendix |
Pay Versus Performance Disclosures
| 4 | Proposal 4 — Approval of an Amendment to Our Restated Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock from 240 Million to 390 Million |
Pay Versus Performance Disclosures
Our Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), currently authorizes the issuance of 240,000,000 shares of our common stock, par value $0.0001 per share (the “Common Stock”). On March 31, 2025, our Board adopted a resolution to amend the Certificate of Incorporation, subject to stockholder approval, by increasing the number of authorized shares of our Common Stock by 150 million shares to 390 million shares (the “Share Increase Amendment”). The additional 150 million shares of Common Stock authorized for issuance pursuant to the proposed Share Increase Amendment would be part of the existing class of Common Stock, and if and when issued, would have the same rights and privileges as the shares of Common Stock presently issued and outstanding. The holders of Common Stock are not entitled to preemptive rights or cumulative voting. The Share Increase Amendment will not affect the number of authorized shares of the preferred stock of the Company, par value $0.01 per share (the “Preferred Stock”), which is 10,000,000 shares. Currently, there are no shares of Preferred Stock issued and outstanding. The form of the proposed Share Increase Amendment to our Certificate of Incorporation, which would be filed with the Secretary of the State of Delaware (the “Delaware Secretary of State”) if the Share Increase Amendment is approved by our stockholders is attached to this proxy statement as Exhibit B (the “Certificate Amendment”). The form of the proposed Share Increase Amendment is subject to revision to include such changes as may be required by the Delaware Secretary of State and as our Board deems necessary and advisable to effect the proposed Share Increase Amendment to our Certificate of Incorporation. The following table illustrates the effect the proposed Share Increase Amendment would have on the number of shares of Common Stock available for issuance, if approved by our stockholders:
Pay Versus Performance Disclosures
| | As of March 31, 2025 | Upon Effectiveness of Amendment | | Total Authorized Shares of Common Stock | 240,000,000 | 390,000,000 | | Outstanding shares of Common Stock | 175,933,338 | 175,933,338 | | Shares of Common Stock authorized for future issuance under the Company’s equity plans | 2,180,307(1) | 16,180,307(2) | | Shares of Common Stock subject to outstanding equity awards under the Company’s equity plans | 6,997,186(3) | 6,997,186(3) | | Shares of Common Stock subject to outstanding warrants | 4,681,432 | 4,681,432 | | Total | 188,501,726 | 202,501,726 | | Shares of Common Stock Available for Issuance | 51,498,274 | 187,498,274 |
Pay Versus Performance Disclosures
(1) Does not include shares of Common Stock that would be authorized for future issuance under the Ribbon Communications, Inc. 2025 Incentive Award Plan, as proposed for approval under Proposal 5. (2) Includes the 14,000,000 shares of Common Stock that would be authorized for future issuance under the Ribbon Communications, Inc. 2025 Incentive Award Plan, as proposed for approval under Proposal 5. Assumes outstanding equity awards vest at maximum.
Pay Versus Performance Disclosures
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What happens if an incumbent director nominee fails to receive more “FOR” votes than “AGAINST” votes?
What happens if an incumbent director nominee fails to receive more “FOR” votes than “AGAINST” votes? Our Corporate Governance Guidelines require that as a condition to being nominated by the Board for re-election as a director, each incumbent director must deliver to the Board an irrevocable resignation from the Board that will become effective if, and only if, both: (i) in the case of an uncontested election, such nominee does not receive more votes “FOR” his or her election than votes “AGAINST” such election, and (ii) the Board accepts such resignation. The Board will decide (based on the recommendation of a committee of the Board) whether to accept the director’s resignation within 90 days after the election results are certified. An incumbent director who does not receive the required vote in an uncontested election will continue to serve as a director while the Nominating, Sustainability and Corporate Governance Committee and the Board decide whether to accept or reject such director’s resignation. If the Board accepts such resignation, the Board may fill the remaining vacancy or may decrease the size of the Board in accordance with our by-laws. Our Corporate Governance Guidelines are posted on our website at www.ribboncommunications.com.