Form of Performance Shares Agreement (and Notice Letter) under the ADTRAN, Inc. 2020 Employee Stock Incentive Plan

EX-10.3 4 adtn-ex103_38.htm EX-10.3 adtn-ex103_38.htm

Exhibit 10.3




This Performance Shares Agreement (this “Agreement”) sets forth the specified terms of ADTRAN, Inc.’s grant of the number of Restricted Stock Units (“Performance Shares”) as it set forth in the Morgan Stanley StockPlan Connect (the “Portal”) to the applicable grantee named in the Portal (the “Participant”) pursuant to the ADTRAN, Inc. 2020 Employee Stock Incentive Plan (the “Plan”) as of the date of grant set forth in the Portal (the “Date of Grant”).  All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan.


Performance Period:  The period beginning on January 1, _____ and ending on December 31, ____ (the “Performance Period”).


Vesting and Delivery of Performance Shares:  Performance Shares shall become vested and earned pursuant to this Agreement at the target level of Adjusted EBIT (as defined below) during the Performance Period. The Adjusted EBIT target in ____ of $________ is required to achieve the target award. If the Adjusted EBIT targets are achieved per the table below at the end of the Performance Period, then the number of Performance Shares that shall become vested and earned pursuant to this Agreement shall be determined pursuant to the table below:


% of Target Achieved

Adjusted EBIT

% of Target Bonus


Less than $________


>__% but <___%

At least $________but less than $________


>__% but < __%

At least $________but less than $________


>__% but < __%

At least $________ but less than $________



$________or more



If the target of $________is achieved at end of ____, award achievement will lock-in as a minimum level for the award payment with the vesting schedule unchanged.


One share of the Company’s Common Stock shall be delivered to the Participant for every “Earned and Vested Performance Share.”  The Company will issue shares of Common Stock to the Participant as soon as administratively practicable following the date the Performance Shares have been determined to have been vested and earned (which shall be as soon as practicable following the release of the Company’s Form 10-K for the last year of the Performance Period), and in any case no later than March 15 ____; provided, however, if any law or regulation requires the Company to take any action (including, but not limited to, the filing of a registration statement under the 1933 Act and causing such registration statement to become effective) with respect to such shares of Common Stock before the delivery thereof, then the date of delivery of the shares shall be extended for the period necessary to take such action, to the maximum extent permitted by Section 409A of the Code.  Except as specifically set forth herein, the Performance Shares shall be forfeited in the event the Participant incurs a Separation from Service for any reason prior to the end of the Performance Period.






For purposes of this Agreement, “Adjusted EBIT” is synonymous with the Company’s non-GAAP operating income.  Using the Company’s audited financial results, it is the calculated earnings before interest and taxes adjusted for restructuring expenses; acquisition-related expenses, amortizations, and adjustments; stock-based compensation expense; amortization of actuarial pension losses, the impact of equity market changes on deferred compensation expenses; non-operating income; and any other non-GAAP exclusions adopted by the Company.

Dividend Credits:  The Participant shall receive dividend credits upon the Company’s payment of cash dividends for its Common Stock during the Performance Period as follows:

(1) The Participant shall receive dividend credits on the unvested portion of the original number of Performance Shares awarded on the Date of Grant (“Original Performance Shares”), with the amount of such dividend credits credited to the Participant in the form of additional unvested Performance Shares, as calculated pursuant to the Plan.  

(2) The Participant’s Performance Shares attributable to any dividend credits will be vested and earned in accordance with the schedule of the Original Performance Shares (as described above).  

Designation of Beneficiary:  The Participant hereby designates the following individual as the beneficiary of this Agreement:

Participant Name:__________________________________

Beneficiary Name:__________________________________



To complete this beneficiary designation, this agreement should be printed, the information above should then be completed, and the Agreement should then be forwarded to _____ or sent to ________.  The Participant may modify this designation of beneficiary only in accordance with the terms and provisions of the Plan.  If no beneficiary is designated, then except as may be provided in the Plan, any benefits due hereunder following the death of the Participant will be paid to the Participant’s estate.

The Performance Shares granted above are subject to all restrictions, terms and conditions set forth in the ADTRAN, Inc. 2020 Employee Stock Incentive Plan.  In the event of any inconsistency between this Agreement and the Plan, the provisions of the Plan shall govern.  The Participant has received a copy of the Plan’s prospectus, including a copy of the Plan.  The Participant agrees to the terms of this Performance Shares Agreement, which may be amended only upon a written agreement signed by the parties hereto.

If there are any questions regarding the Performance Shares, please refer to the Plan or contact _________at ____________.


[Name of Officer]

[Title of Officer















Dear <<Name>>,


Congratulations and thank you for your consistent and dedicated effort to support the company’s goals. You have been identified as someone who can make a difference in our company’s future and as a result you have been selected to participate in a special equity overlay compensation plan approved by the ADTRAN Board of Directors. The number of employees participating in this plan is limited to a small group who will be key in achieving the objectives of the strategic plan.


The Board of Directors met on ______ and approved this overlay performance equity grant tied to the three-year strategic plan published in _____. The overlay equity plan is a one-time grant of Restricted Stock Units (“Performance Shares”) pursuant to the ADTRAN, Inc. 2020 Employee Stock Incentive Plan (the “Plan”) and the performance measure is a targeted growth rate of a company financial metric.


In your position, you are able to directly impact the company’s ability to meet the financial target and will be asked to provide leadership and individual effort as we strive to meet this goal. You have been awarded <<number of units>> performance stock units under this program. We are confident you will help ADTRAN achieve significant growth over the next two years.


You will receive additional information in the coming days regarding the plan targets and directions to accept your award. If you have any questions, please contact _____ at __________or __________.





[Name of Officer]

[Title of Officer]