Akamai announces new executive compensation plans

Akamai Technologies Inc . (NASDAQ:AKAM) has unveiled its 2025 executive compensation strategy, which includes a mix of stock-based bonuses and restricted stock units (RSUs). The SEC filing dated February 25, 2025, details the Talent, Leadership & Compensation Committee’s adoption of new bonus and equity compensation programs for its top executives.

The bonus program for 2025 is tied to the achievement of specific corporate performance objectives, with payouts being made in Akamai common stock instead of cash. With current revenue of $4 billion and a healthy gross profit margin of 59%, the compensation plan is structured to reward executives when the company meets or exceeds certain revenue and adjusted operating income targets. Moreover, the bonuses are subject to a modifier that adjusts the payout based on the company’s performance against environmental, social, and governance (ESG) objectives. Discover more detailed financial metrics and 8 additional key insights with InvestingPro’s comprehensive analysis.

For CEO F. Thomson Leighton, who has agreed to a base salary of $1.00, the target bonus is set at $1,500,000, with a maximum potential of $3,300,000. Other executives, including CFO Edward McGowan, EVP Paul Joseph, COO Adam Karon, and EVP Mani Sundaram, have their bonuses structured as a percentage of their respective base salaries, with targets and maximums outlined in the filing.

In addition to the bonus program, Akamai’s Committee approved grants of RSUs under the 2013 Stock Incentive Plan. These RSUs are divided into three categories: those with annual vesting, those based on corporate performance, and those based on stock performance. The RSUs will be granted on March 3, 2025, with vesting contingent on the company’s performance over a multi-year period, including fiscal years 2025, 2026, and 2027.

The corporate performance-based RSUs are tied to revenue and non-GAAP earnings per share targets, while the stock performance-based RSUs depend on the total shareholder return of Akamai’s stock relative to the S&P 500 Index over the designated performance period.

This announcement aligns executive compensation with shareholder interests and underscores Akamai’s commitment to corporate performance and sustainability. With a return on equity of 11% and a solid Financial Health Score rated as ’FAIR’ by InvestingPro, the company’s approach to executive pay reflects a broader trend in the industry towards performance-based compensation and the integration of ESG goals into business strategies. The information is based on a press release statement filed with the SEC. For a deeper understanding of Akamai’s financial position and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Akamai Technologies has introduced a Managed Container Service to enhance its cloud computing offerings. This service aims to improve application performance by allowing businesses to run workloads closer to users and data sources, leveraging Akamai’s extensive global network. In terms of financial guidance, Akamai’s first-quarter and full-year 2025 projections did not meet consensus expectations, according to Citi analyst Fatima Boolani. The analyst also noted increased capital expenditures and strategic shifts, including a potential repositioning of the Compute business.

Citi has revised Akamai’s stock price target to $95, maintaining a Neutral rating. Similarly, Craig-Hallum downgraded the stock from Buy to Hold, citing concerns over business loss from TikTok and a slowdown in the security segment. Craig-Hallum set a new price target of $90 and noted the company’s restructuring efforts aimed at acquiring new customers. Meanwhile, Scotiabank (TSX:BNS) reduced its price target to $107, maintaining a Sector Outperform rating, and highlighted strong sales in the Security segment.

BofA Securities also adjusted its stance, downgrading Akamai from Buy to Neutral with a revised price target of $100, citing limited near-term growth catalysts. The company is transitioning from slower-growing segments to more dynamic markets like API security and Cloud Infrastructure Services. Despite these challenges, analysts have pointed out areas of strong performance within Akamai, such as growth initiatives in the compute segment, which continue to see strong adoption.

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