Walt Bay
Arthur J. Gallagher &About Walt Bay
Walter D. Bay is General Counsel and Secretary of Arthur J. Gallagher & Co. and has 17 years of actual service with the company as of December 31, 2024 . He is over age 61, as noted by DEPP vesting provisions applicable to him in 2024 . In 2024 his contributions included leadership in negotiating the definitive agreement to acquire AssuredPartners, oversight of legal and compliance, management of litigation/regulatory risks, and strategic advisory support to the Board, CEO and executive team . Company performance in 2024 included adjusted revenue growth of 14.3%, adjusted EBITDAC growth of 20.7%, adjusted EBITDAC margin of 33.3%, organic revenue growth of 7.6%, and total shareholder return of 27.3% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Not disclosed in the 2025 Proxy Statement | — | — | — |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Not disclosed in the 2025 Proxy Statement | — | — | — |
Fixed Compensation
Multi-year compensation for Walt Bay (from Summary Compensation Table):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 725,000 | 725,000 | 800,000 |
| Stock Awards ($) | 569,230 | 627,784 | 994,130 |
| Option Awards ($) | 390,735 | 437,155 | 756,982 |
| Non-Equity Incentive ($) | 1,812,500 | 1,812,500 | 2,400,000 |
| All Other Compensation ($) | 598,359 | 870,068 | 690,010 |
| Total ($) | 4,095,825 | 4,472,507 | 5,641,122 |
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Targeting/Policy | 2024 Actual (Company) | Payout Factor | Award to Bay |
|---|---|---|---|---|
| Adjusted Revenue Growth | Payout grid combining adjusted revenue and adjusted EBITDAC growth; NEO targets at 150% of salary | 14.3% | 200% of target | $2,400,000 (200% of $1.2M target) |
| Adjusted EBITDAC Growth | Same grid as above | 20.7% | 200% of target | Included above |
Notes: Committee retains downward discretion; 2024 awards aligned with organic growth and margin .
PSUs and Options
| Grant Year | Instrument | Target Units/Opts | Max Units (200%) | Performance Metric | Measurement Window | Status/Vesting |
|---|---|---|---|---|---|---|
| 2024 | PSUs | 4,082 | 8,164 | 3-year avg growth in adjusted EBITDAC per share | 2024–2026 | Vests Mar 1, 2027 |
| 2024 | Options | 10,884 | — | — | — | Vest 1/3 on Mar 1 in 2027, 2028, 2029 at $243.54 strike |
| 2023 | PSUs | Included in outstanding unearned PSUs (7,090 at max) | 14,180 (implied) | 3-year avg growth in adjusted EBITDAC per share | 2023–2025 | Vests Mar 15, 2026 |
| 2022 | PSUs | Earned units included (7,180 earned) | 200% earned based on 16.1% avg | 3-year avg growth in adjusted EBITDAC per share | 2022–2024 | Vested Mar 15, 2025 |
Upcoming Vesting Schedule (Bay)
| Vest Date | Award Type | Quantity |
|---|---|---|
| Mar 12, 2025 | RSUs | 2,250 |
| Mar 15, 2025 | PSUs (2022 grant) | 7,180 (earned) |
| Mar 15, 2029 | Options (2024 grant tranche 3) | Portion of 10,884 options; 1/3 each year |
| Mar 1, 2027 | PSUs (2024 grant) | Earned units at vest based on 2024–2026 avg |
| Mar 15, 2026 | PSUs (2023 grant) | 7,090 at max pending performance |
Equity Ownership & Alignment
| Ownership Category | Amount | Notes |
|---|---|---|
| Shares of Common Stock | 87,059 | Includes 5,228 notional stock units and 418 shares in 401(k) |
| Stock Options (exercisable + unexercisable) | 53,616 | Various strikes/expirations (see detailed table) |
| RSUs (unvested) | 9,430 | Market value $2,676,706 as of 12/31/2024 |
| PSUs (unearned, at max) | 15,254 | Payout value $4,329,848 at 12/31/2024 price |
| Total Beneficial Ownership | 140,675 | Less than 1% of shares outstanding |
- Stock ownership guidelines for executives: 3× salary for non-CEO/CFO; all executive officers in compliance .
- Hedging and pledging: prohibited; no pledges of common stock by directors or executive officers .
- Clawbacks: NYSE-compliant Incentive Compensation Recovery Policy plus misconduct-based recovery in plans .
Employment Terms
- Change-in-control agreements use a double-trigger: benefits payable only upon termination within 24 months after a change in control; definitions of “Change in Control” and “Termination” detailed in proxy .
- Severance under CIC double-trigger: lump sum equal to two times salary, bonus and annual cash incentive; continued welfare benefits for up to two years; no new excise tax gross-ups in post-2008 agreements .
- Accelerated vesting under CIC requires Board approval for options/RSUs/PSUs (target or pro-rata as applicable) .
Potential incremental payments (Bay; events assumed on 12/31/2024, stock price $283.85):
| Scenario | Severance Pay ($) | Options ($) | RSUs ($) | PSUs ($) | DEPP ($) | Benefits ($) | Total ($) |
|---|---|---|---|---|---|---|---|
| Termination without cause (no CIC) | 523,077 | 5,137,631 | 650,160 | 2,040,197 | 27,418,451 | — | 35,769,516 |
| Change in control (no termination) | — | 6,585,461 | 650,160 | 6,102,081 | 27,418,451 | — | 40,756,153 |
| Termination without cause or resignation for good reason following CIC | 6,400,000 | 6,585,461 | 650,160 | 6,102,081 | 27,418,451 | 55,366 | 47,211,519 |
Deferred Compensation & Perquisites
2024 detail (Bay):
| Category | Amount ($) |
|---|---|
| DEPP Award (Company Contribution) | 450,000 |
| SS&T Plan Match | 113,375 |
| 401(k) Match | 17,250 |
| Corporate Auto & Insurance | 8,664 |
| Financial Advisory Services | 18,445 |
| Private Aircraft (personal use incremental cost) | 33,034 |
| Other (club memberships, cell allowance, event tickets, etc.) | 49,242 |
| Aggregate 2024 “All Other Compensation” | 690,010 |
Deferred plan balances and activity (as of 12/31/2024):
| Plan | Exec Contributions ($) | Company Contributions ($) | Aggregate Earnings ($) | Aggregate Balance ($) |
|---|---|---|---|---|
| DEPP | — | 450,000 | 5,853,976 | 27,418,451 |
| SS&T Plan | 126,875 | 113,375 | 882,709 | 5,131,197 |
Notes: For DEPP, participants over age 61 have one-year minimum vesting on new awards; amounts vest on the earliest of age 62, disability, death, severance per plan, or change in control, subject to continuous employment; Bay is over age 61, so his 2024 award follows the one-year vesting path .
Compensation Structure Notes
- Long-term incentives are split 60% PSUs / 40% options for Bay; PSUs tied to three-year adjusted EBITDAC per share growth with 200% cap; options vest years 3–5 post grant .
- Annual incentive targets were increased for NEOs (excluding CEO) from 125% to 150% of salary, and LTI targets from 150% to 200% of salary to align with market peers; peer group methodology updated for 2025 compensation decisions .
- 2024 say-on-pay approval was 90.3%; the Board engaged with holders of >50% of shares on governance/compensation matters .
Equity Award Detail (Outstanding at 12/31/2024)
| Award Type | Key Terms | Quantity/Value |
|---|---|---|
| Options | 11,405 @ $158.56 exp. 3/15/29; 9,452 @ $177.09 exp. 3/15/30; 10,884 @ $243.54 exp. 3/1/31; tranche vesting as specified | See schedule above |
| RSUs (unvested) | 9,430 units; next vest dates in 2025 per schedule | $2,676,706 market value at $283.85 |
| PSUs (unearned) | 15,254 units at max; 2023 grant vests Mar 15, 2026; 2024 grant vests Mar 1, 2027 | $4,329,848 payout value at $283.85 |
Investment Implications
- Alignment: Heavy at-risk pay via PSUs tied to three-year adjusted EBITDAC per share and options vesting years 3–5, plus stock ownership guidelines and no hedging/pledging, support alignment with long-term TSR and earnings compounding .
- Retention: Large deferred balances (DEPP $27.4M; SS&T $5.1M) and ongoing equity cliffs create retention anchors, though Bay’s age 61+ reduces DEPP vest duration on new grants to one year; overall retention risk appears moderate-to-low absent voluntary departure incentives .
- Near-term selling pressure: RSUs and PSUs vesting in March 2025 and March 2026/2027, plus option tranches in 2027–2029, could create mechanical settlement events; insider trading policy governs timing, and no hedging/pledging is allowed .
- Event risk: Double-trigger CIC protections and sizeable potential payouts if a transaction occurs and employment is terminated (total ~$47.2M) may influence incentives and negotiation posture during M&A processes .
- Pay-for-performance: 2024 awards reflect company outperformance (adjusted revenue +14.3%, adjusted EBITDAC +20.7%, TSR +27.3%), with the annual incentive paid at 200% of target and PSUs earning at max for the 2022 grant based on 16.1% three-year average growth .