Neil A. Schrimsher
APPLIED INDUSTRIAL TECHNOLOGIESAbout Neil A. Schrimsher
Neil A. Schrimsher, age 61, is President & Chief Executive Officer of Applied Industrial Technologies (AIT) since 2011 and a director since 2011; he was also elected President in 2013. Prior to AIT, he was Executive Vice President at Cooper Industries plc leading the Electrical Products Group across global operations, distribution, strategy and M&A. AIT’s FY2025 performance set records in net sales ($4.6B), net income ($393.0M) and cash from operations ($492.4M); adjusted EBITDA used for incentives was $562.1M. Over five years, the Company’s TSR grew an initial $100 to $394, and say‑on‑pay approval was 96% in 2025, evidencing alignment between performance and pay.
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Cooper Industries plc | Executive Vice President; led Electrical Products Group | — | Led worldwide operations, distribution management, strategy, manufacturing, engineering, supply chain, sourcing, and growth initiatives |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Patterson Companies, Inc. | Director | Until April 2025 | Public company board service concluded April 2025 |
| Ralliant Corporation (NYSE: RAL) | Director | — | Current/Recent public company directorship |
Fixed Compensation
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Base Salary ($) | 950,000 | 990,000 | 801,403 (reflects temporary H1 FY25 reduction) |
| Target Annual Bonus (% of salary) | — | 110% | 110% |
| Actual Annual Incentive Paid ($) | 1,654,026 | 1,106,860 | 1,173,724 |
| All Other Compensation ($) and components | 267,733 | 270,747 | 204,075 |
| KERP credit ($) | — | 251,514 | 187,334 |
| 401(k) match ($) | — | 9,977 | 7,073 |
| Life insurance ($) | — | 1,101 | 1,110 |
| Perqs/other ($) | — | 8,155 | 8,558 |
| Total Compensation ($) | 6,361,505 | 6,276,998 | 6,517,480 |
Performance Compensation
Management Incentive Plan (Annual Cash)
| Metric | Weight | FY2025 Target | FY2025 Actual (Adjusted) | FY2025 Payout as % of prorated target |
|---|---|---|---|---|
| Net Income | 60% | $385.4M | $389.8M (ex Hydradyne) | 105.8% |
| Avg. Working Capital / Sales | 20% | 25.9% | 25.6% | 111.5% |
| Individual Performance | 20% | Committee discretion | $239,580 for CEO | — |
| Total Annual Incentive Paid | — | — | $1,173,724 | — |
FY2024 targets and results for reference:
| Metric | Weight | FY2024 Target | FY2024 Actual (Adjusted) | FY2024 Payout as % of prorated target |
|---|---|---|---|---|
| Net Income | 60% | $381.4M | $382.7M | 101.7% |
| Avg. Working Capital / Sales | 20% | 25.8% | 25.9% | 98.1% |
| Individual Performance | 20% | Committee discretion | $228,690 for CEO | — |
| Total Annual Incentive Paid | — | — | $1,106,860 | — |
Long‑Term Incentives (Equity)
Structure and grant mix:
- Performance Shares (PSUs): 55% of CEO long‑term target; metrics 75% EBITDA, 25% ROA; goals set annually across the 3‑year program; payouts range 0–200%; banked yearly and delivered at the end of the cycle.
- Stock‑settled SARs: 22.5% of CEO long‑term target; 10‑year term; vest 25% annually over 4 years; base price is grant‑date close.
- RSUs: 22.5% of CEO long‑term target; 3‑year cliff vest; accrue dividend equivalents paid at vesting.
FY2025 CEO grants:
| Instrument | Grant date | Quantity | Terms |
|---|---|---|---|
| RSUs | 08/13/2024 | 4,645 | Vest Aug 13, 2027; dividend equivalents at vest |
| SARs | 08/13/2024 | 15,210 | Strike $197.43; vest 25% p.a. 2025–2028; expire 08/13/2034 |
| PSUs (2025–2027) | 08/13/2024 | Target 11,620 (thr. 5,810, max 23,240) | 75% EBITDA / 25% ROA; bank annually 2025–2027 |
PSU results banked in FY2025:
| PSU Program | FY2025 banked award as % of target |
|---|---|
| 2025–2027 | 101.4% |
| 2024–2026 | 70.2% |
| 2023–2025 | 109.2% (avg for full 3‑yr program 140%) |
Equity Ownership & Alignment
| Item | Value | Date/Notes |
|---|---|---|
| Beneficial ownership (shares) | 259,461 | As of Aug 25, 2025; includes 150,070 vested options/SARs; 0.7% of class; no additional equity vests within 60 days |
| RSUs unvested (units; value) | 7,600; $1,766,620 | Based on 6/30/2025 close; vest Aug 9, 2025 already vested; remaining cliff dates per award schedules |
| PSUs unearned (units; value) | 27,128; $6,305,904 (2023–2025) | Performance period ended 6/30/2025; certified Aug 12, 2025 |
| PSUs unearned (units; value) | 12,913; $3,001,627 (2024–2026) | Performance period ends 6/30/2026 |
| PSUs unearned (units; value) | 11,674; $2,713,621 (2025–2027) | Performance period ends 6/30/2027 |
| Ownership guideline | 5x base salary (CEO) | Executive stock ownership guideline |
| Owned value vs guideline | $34,711,972 vs $4,950,000 | As of 6/30/2025; exceeds guideline |
| Hedging/pledging | Prohibited | No hedging, short sales, buying on margin or pledging company stock |
Ownership policy requires retention of net shares until guidelines are met; “owned” shares include direct, RSP, and RSUs; excludes SARs and PSUs.
Employment Terms
| Provision | Key terms |
|---|---|
| Executive Severance Agreement (CEO) | If terminated “without cause” or for “good cause” within one year of agreement effective date, severance equals base salary + target annual incentive through the second anniversary of the agreement effective date; auto‑renews annually; not payable if change‑in‑control payments are made. |
| Change‑in‑Control (CIC) Agreement | Double trigger: severance if termination by company without cause or by executive for good reason within two years post CIC; CEO multiple 3x base + target bonus (includes prorated target bonus in year of termination); continued benefits for 3 years; cashout for vested/unexercised SARs based on higher of market mean or highest price paid in CIC; outplacement; no excise tax gross‑up (payments cut to avoid excise tax). |
| Non‑compete & confidentiality | Non‑compete for 3 years post termination under CIC agreement; confidentiality of trade secrets/information required. |
| Equity acceleration on CIC termination | Unvested SARs become exercisable; RSUs vest in full; PSUs payable at target on a pro‑rata basis tied to timing of separation. |
| Clawbacks | Recoupment for competition/acts inimical within 12 months; and for restatements within 36 months where misconduct led to materially inaccurate metrics; Dodd‑Frank/NYSE‑compliant mandatory recovery policy adopted. |
| Insider trading policy | Prohibits short sales, derivatives, hedging, margin purchases and pledging; case‑by‑case review of exchange funds. |
| Retiree health benefit | Closed to new execs since 2013; among active officers, only Mr. Schrimsher remains eligible (COBRA continuation 18 months; Medicare supplement at 65). |
Illustrative CIC payout sensitivity (as of 6/30/2025, using $232.45 close):
- CEO total under termination without cause/for good reason following CIC: $43,916,564 (includes severance, equity, benefits).
Board Governance
- Board independence: all directors are independent except the CEO; the Chairman (Peter C. Wallace) is independent; non‑management directors meet in regular executive sessions.
- Committees: CEO is a member of the Executive Committee; Audit, Corporate Governance & Sustainability, and Executive Organization & Compensation Committees are composed solely of independent directors.
- Meetings/attendance: Board held six meetings in FY2025, and each director attended at least 75% of Board and committee meetings; directors are expected to attend the annual shareholder meeting.
- Director compensation and ownership: CEO receives no additional compensation for director service; non‑employee directors have robust ownership guidelines (5x annual retainer) and were generally in compliance as of June 30, 2025.
Dual‑role implications: AIT separates Chair and CEO roles, with a Lead Independent Chair, mitigating typical CEO‑Chair concentration risks while preserving management insight via CEO’s board service.
Director Compensation (for Neil as a director)
- No additional compensation for board service beyond executive pay; director fees apply only to non‑employee directors.
Compensation Peer Group (Benchmarking)
- AIT targets market median (50th percentile) compensation among a distribution‑industry peer group; FY2025 peer companies included AAR Corp., APi Group, Beacon Roofing Supply, BlueLinx, Boise Cascade, Fastenal, GMS, MRC Global, MSC Industrial, NOW Inc., Owens & Minor, Patterson Companies, Pool, Rush Enterprises, ScanSource, SiteOne Landscape Supply, UniFirst, Watsco; FY2024 peer group similar (Univar removed later due to going private; Avient sold distribution business).
Say‑on‑Pay & Shareholder Feedback
| Year | Approval |
|---|---|
| 2024 | 97% of shares cast voted in favor |
| 2025 | 96% of shares cast voted in favor |
Nonqualified Deferred Compensation
| Plan | Exec contributions (FY2025) | Company credits (FY2025) | FY2025 earnings | Balance at FY2025 end |
|---|---|---|---|---|
| KERP (CEO credit rate set at 10%) | $0 | $187,334 | $408,181 | $4,158,411 |
| Supplemental Defined Contribution Plan | $414,833 | $0 | $952,341 | $8,406,835 |
Performance & Track Record
- FY2025: record net sales ($4.6B), net income ($393.0M), cash provided by operating activities ($492.4M) driven by internal growth, increased M&A activity, and disciplined cost control; cash returned to shareholders was $216.5M.
- FY2024: record net sales ($4.5B) and net income ($385.8M); TSR +35% for the year (+120% over three years).
- Incentive outcomes: Annual MIP for NEOs averaged 106.2% of target in FY2025; PSU achievements across programs averaged 93.6% of target; the completed 2023–2025 PSU program paid at an average 140%.
Financial Context
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Revenues ($) | 4,412,794,000* | 4,479,406,000* | 4,563,424,000* |
| EBITDA ($) | 525,936,000* | 548,063,000* | 560,472,000* |
| Net Income ($) | 346,739,000* | 385,762,000* | 392,988,000* |
| *Values retrieved from S&P Global. |
Risk Indicators & Red Flags
- Hedging/pledging prohibited; no option/SAR repricing; equity grants struck at fair market value; clawback policy adopted per Dodd‑Frank/NYSE standards.
- CIC protections are double‑trigger without excise tax gross‑up; large CIC payout sensitivity warrants monitoring in event‑driven scenarios.
- Related party transactions disclosed involve another executive (facility leases), not the CEO.
Compensation Structure Analysis
- Mix and leverage: CEO’s pay heavily “at risk” with 84% tied to performance in FY2025; long‑term incentives entirely equity‑based with majority in PSUs linked to EBITDA/ROA.
- Target rigor: MIP metrics use Net Income and Avg Working Capital/Sales with 0–200% slope and straight‑line interpolation; PSU goals set annually, limiting over/under‑performance carryover and increasing difficulty of maximum awards across a 3‑year cycle.
- Governance guardrails: Double‑trigger CIC, robust ownership/retention, clawbacks, and prohibition on hedging/pledging support shareholder alignment.
Investment Implications
- Alignment and retention: Schrimsher’s ownership far exceeds the CEO guideline ($34.7M vs $4.95M), with significant unearned PSUs and unvested RSUs/SARs that anchor retention and align incentives to EBITDA/ROA and stock price appreciation; hedging/pledging is prohibited, reducing misalignment risk. Near‑term vesting events occur annually in August for SARs and on defined cliff dates for RSUs/PSUs, creating periodic supply potential but moderated by retention/ownership policies.
- Event risk and payouts: The CEO’s CIC payout magnitude ($43.9M under a termination following CIC) underscores potential valuation sensitivity in strategic transactions; however, double‑trigger and no excise gross‑up features are shareholder‑friendly relative to market norms.
- Performance linkage: Incentive design emphasizes hard financials (Net Income, working capital efficiency, EBITDA, ROA), with recent payouts near target and multi‑year PSU outcomes strong (140% for 2023–2025), suggesting execution discipline; monitor future goal calibration and M&A adjustments (e.g., Hydradyne exclusion) for consistency.
Overall, compensation architecture, ownership, and governance practices support pay‑for‑performance and long‑term value creation, with manageable selling pressure around scheduled vesting dates and limited misalignment risk given strict insider policies.