David K. Wells
APPLIED INDUSTRIAL TECHNOLOGIESAbout David K. Wells
David K. Wells is Vice President – Chief Financial Officer & Treasurer of Applied Industrial Technologies (AIT), and assumed the role of principal accounting officer effective June 28, 2023 . Over the last three fiscal years, AIT reported record performance, with net sales of $4.41B in FY2023, $4.5B in FY2024, and $4.6B in FY2025; net income of $346.7M, $385.8M, and $393.0M respectively; and Adjusted EBITDA of $524.4M, $553.3M, and $550.9M (adjusted for certain items) . Total shareholder return (TSR) rose 48.43% in FY2023 and 35% in FY2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Applied Industrial Technologies | Vice President – Chief Financial Officer & Treasurer | Not disclosed | Executive leadership of finance functions; named NEO in FY2023–FY2025 |
| Applied Industrial Technologies | Principal Accounting Officer | Effective June 28, 2023 | Consolidated responsibility for accounting oversight |
External Roles
No external directorships or positions for David K. Wells were disclosed in the proxies reviewed. Skip.
Fixed Compensation
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Base Salary ($) | 490,000 | 505,000 | 463,970 (salary reductions in 1H FY2025) |
| Target Bonus % of Salary | 70% | 70% | 70% |
| Target Bonus $ | 343,000 | 353,500 | 353,500 |
| Actual Annual Incentive (MIP) ($) | 536,040 | 355,762 | 373,932 |
Performance Compensation
| Metric | Weighting | FY2023 Target | FY2023 Actual/Payout | FY2024 Target | FY2024 Actual/Payout | FY2025 Target | FY2025 Actual/Payout |
|---|---|---|---|---|---|---|---|
| MIP Net Income | 60% | $285.5M | $343.0M; 200% of component | $381.4M | $382.7M adj; 101.7% | $385.4M | $389.8M adj; 105.8% |
| MIP Avg. Working Capital % Sales | 20% | 25.4% | 26.6%; 71.4% | 25.8% | 25.9%; 98.1% | 25.9% | 25.6%; 111.5% |
| MIP Individual Performance | 20% | Committee discretionary | Wells component $75,460 | Wells component $70,700 | Wells component $70,700 | ||
| PSUs EBITDA | 75% | See goals | Banked 161.6% (2023 program year) | Banked 93.1% (2024 program year) | Banked 95.7% (2025 program year) | ||
| PSUs ROA | 25% | See goals | Banked 169.0% (2023 program year) | Banked 102.9% (2024 program year) | Banked 118.2% (2025 program year) | ||
| PSUs Overall Banked | — | 163.4% (2023–2025 cycle, 2023 year) | — | 95.6% (2024–2026 cycle, 2024 year) | 101.4% (2025–2027 cycle, 2025 year) |
Equity Grants and Vesting
| Grant Detail | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| RSUs Granted (#) | 1,700 (8/9/2022) | 1,284 (8/8/2023) | 1,032 (8/13/2024) |
| PSUs Target (#) | 3,500 (2023–2025) | 2,650 (2024–2026) | 2,113 (2025–2027) |
| PSUs Max (#) | 7,000 | 5,300 | 4,226 |
| SARs Granted (#) | 4,700 @ $103.92 (8/9/2022) | 4,029 @ $142.92 (8/8/2023) | 3,380 @ $197.43 (8/13/2024) |
| SAR Vesting/Term | 25%/yr over 4 yrs; 10-year term; stock-settled | Same | Same |
| RSU Vest Dates | 8/11/2024 (vested 900) | 8/9/2025 (vest 1,700) | 8/8/2026 (vest 1,284); 8/13/2027 (vest 1,032) |
Equity Ownership & Alignment
| Ownership Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Beneficial Shares | 85,638 | 93,358 | 99,116 |
| Vested Options/SARs Included in Beneficial Totals (#) | 64,750 | 70,083 | 74,285 |
| “Owned” Stock Value vs. Guideline ($) | Not shown | $4,547,360 vs $1,515,000 guideline | $6,343,793 vs $1,515,000 guideline |
| Hedging/Pledging Status | Prohibited by company policy | Prohibited | Prohibited |
- RSU/SAR vesting acceleration and retirement rules are disclosed (double-trigger for CIC; retirement age/service conditions), with detailed vesting mechanics across award types .
Employment Terms
- Change-in-Control Agreement: Double-trigger; severance equals 1.5× base salary + target annual incentive; continued benefits for 1.5 years; outplacement; no excise tax gross-ups; 3-year non-compete obligation post-termination for CIC severance recipients .
- Estimated CIC Payments (as of 6/30/2025, stock price $232.45): Total $16,587,439 comprised of base $757,500, MIP $530,250, PSUs $1,644,351, SARs $12,674,277, RSUs $933,519, health benefits $22,541, outplacement $25,000 .
- Clawbacks: Robust recoupment policies including Sarbanes-Oxley 304, Dodd-Frank 954, NYSE 10D-compliant policy covering cash and equity compensation upon restatements or misconduct .
- Nonqualified Plans: Participation in Key Executive Restoration Plan (KERP) and Supplemental Defined Contribution Plan; FY2025 KERP company credit $42,896; aggregate KERP balance $397,156; Supplemental DC aggregate balance $252,698 .
Vesting Schedules and Insider Selling Pressure
| Activity | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| SARs Exercised (Shares / $) | 0 / $0 | 0 / $0 | 0 / $0 |
| Shares Vested (RSUs/PSUs) (Shares / $) | 6,480 / $693,373 | 2,400 / $366,240 | 8,261 / $1,920,269 |
- Wells has not exercised SARs in FY2023–FY2025, with equity value realization driven by RSU/PSU vesting; significant in-the-money SAR value implies potential future selling pressure upon vesting/exercise, especially under CIC scenarios .
Compensation Structure vs. Performance Metrics
- Mix and Targets: Long-term equity at 50% of target LTI for NEOs via PSUs (55% for CEO), with remaining LTI split equally between SARs and RSUs; annual incentives tied 60% to net income and 20% to working capital efficiency, with 0–200% payouts and straight-line interpolation .
- PSU Metrics: 75% EBITDA, 25% ROA; annual goals set at cycle inception; banked outcomes for 2023–2025 noted above; completed 2023–2025 program averaged 140% of target across NEOs .
- FY2025 MIP Outcome: Wells’ total MIP payout $373,932; company goals achieved at 107.2% on combined basis; individual performance component $70,700 .
Compensation Peer Group & Say-on-Pay
- Peer Group: FY2025 compensation benchmarking against 18 distribution companies (e.g., Fastenal, Pool, MSC Industrial, Watsco, Patterson, NOW, etc.), targeting market median pay levels .
- Say-on-Pay Approval: 96% support in 2024; 96% in 2025; program changes minimal given strong shareholder support .
Equity Ownership & Pledging
- Ownership Guidelines: 3× base salary for executive officers; Wells exceeds guideline materially ($6.34M “owned” value vs. $1.515M guideline in FY2025), reinforcing alignment; net share retention required until guidelines met .
- Pledging/Hedging: Prohibited for insiders; no disclosures of pledging by Wells .
Employment Contracts, Severance & Change-of-Control Economics
| Provision | Summary | Source |
|---|---|---|
| CIC Severance Multiple | 1.5× base + target bonus; benefits continuation; outplacement; no gross-up | |
| Equity Treatment under CIC | Unvested SARs exercisable; RSUs vest; PSUs paid pro rata at target; plan terms apply | |
| Non-Compete | 3-year non-compete obligation for CIC severance recipients | |
| Clawback | SOX/Dodd-Frank/NYSE 10D recovery across cash/equity |
Performance & Track Record
- Company Results During CFO Tenure: FY2023–FY2025 records in sales and net income; cash returned to shareholders $54.2M (FY2023), $129.3M (FY2024), and $216.5M (FY2025) via dividends and buybacks .
- TSR: +48.43% in FY2023; +35% in FY2024; supports PSU outcomes and pay-for-performance linkage .
- Insider Filings: Wells designated as principal accounting officer in 2023, consolidating finance/accounting oversight .
Investment Implications
- Alignment: Wells significantly exceeds stock ownership guidelines and is subject to net share retention and prohibitions on hedging/pledging, indicating strong alignment with shareholders .
- Incentive Design: Emphasis on EBITDA and ROA in PSUs and net income/working capital in MIP aligns with quality of earnings and cash efficiency; FY2025 payouts near target suggest disciplined goal-setting and balanced performance .
- Selling Pressure: Large unexercised, in-the-money SARs imply potential liquidity events upon vesting/exercise or corporate events; however, absence of SAR exercises in FY2023–FY2025 mitigates near-term selling pressure .
- Retention Risk: Multi-year cliff vesting for RSUs and PSU banking over three-year cycles, plus CIC protections, reduce near-term attrition risk; double-trigger CIC terms avoid single-trigger windfalls .
- Governance: Strong say-on-pay outcomes (96%–97%), independent consultant, and robust clawbacks lower governance risk; no excise tax gross-ups and prohibition on repricing are shareholder-friendly .