CommScope Holding Company Inc
For the period ended May 9, 2024. Filed Mar 25, 2024.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
May 9, 2024 · Filed Mar 25, 2024
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 |
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 astockholder of record or a beneficial owner who has alegal proxy to vote the sharesand hasregistered 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 |
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 aone-year term. In addition, eight of our current directors are standing forre-election at the Annual Meeting, each for aone-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 | NominatingandCorporateGovernance | OtherPublicCompanyBoards | |
| 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 itssay-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 |
Financial Performance Highlights(1) (page 45)
| 2023 Selected Financial Performance Highlights(1) | |||||
|---|---|---|---|---|---|
| Net Sales · Loss fromContinuingOperations · Non-GAAPAdjustedEBITDA (2) · CoreAdjustedEBITDA (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 ofnon-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 ourpay-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 |
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 |
| 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 |
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 & Inclusion TM 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 |
| • | 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 |
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 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.