What Hack? Top SolarWinds Executives Made $65 Million Last Year

Despite mounting costs associated with last year’s massive hack, SolarWinds paid more than $65 million last year to its top six executives in 2020. That’s according to the company’s latest filing with the U.S. Securities and Exchange Commission.

In the aftermath of the massive hack, the SolarWinds is incurring up to $25 million in additional expenses related to security initiatives and other increases. And SolarWinds expects more costs from additional investigations and litigation.

The hack has heavily impacted the federal government and cybersecurity industry. The federal government blames Russian hackers, which led to new sanctions against the country last week.

SolarWinds’ stock price plummeted when news of the hack broke in mid-December.

Kevin Thompson stepped down as SolarWinds president and CEO in December. His 2020 compensation totaled nearly $25.5 million, which includes $24 million in stock awards and an $875,000 bonus.

Bart Kalsu, SolarWinds’ chief financial officer, got nearly $7.8 million in 2020 compensation, including more than $6.9 million in stock awards. David Gardiner, chief revenue officer, received almost $8.8 million in compensation, of which roughly $7.9 million is stock awards.

In all, the top six executives received more than $65 million, of which more than $59.5 million comes from company stock.

No Adjustments Made Due to Hack

In its SEC filing, SolarWinds said it didn’t make any adjustments to 2020 compensation due to the cyberattack. However, it may impact future decisions about executive compensation.

“For us to compete successfully and grow our business, we must recruit, develop and retain talented, qualified senior executives to manage and lead our company to achieve the corporate objectives that will promote the short-term and long-term growth of our business, and thereby increase stockholder value,” it said. “Consequently, we believe that the compensation paid to our executive officers should be closely aligned with our corporate performance on both a short-term and long-term basis, and that such compensation should assist us in motivating and retaining the key executive officers critical to our long-term success.”

SolarWinds’ Bart Kalsu

During its fourth-quarter earnings call, Kalsu detailed the additional costs from the hack.

“The $20 million-$25 million is the cost that we expect to incur throughout all of 2021,” he said. “And that’s a combination of both security initiatives that (president and CEO) Sudhakar Ramakrishna talked about, as well as just some general increases in some of our expenses, such as we expect our insurance cost to go up in 2021. And then there are other charges — some of our professional fees will go up as a result of the cyberattack as well.”

N-able, the planned spinoff of SolarWinds MSP business, is also a financial victim of the massive hack. Customers have and may in the future defer buying or choose to cancel or not renew their agreements or subscriptions with N-able, it said.

It expects to incur “significant” costs and expenses related to the hack from investigations and related initiatives. Moreover, N-able will incur costs associated with addressing the damage to its reputation, and MSP partner and employee relations.