J. Kent Masters
ALBEMARLEAbout J. Kent Masters
J. Kent Masters, Jr. serves as Albemarle’s Chairman and CEO (since 2020) and joined the Board in 2015 after serving as Lead Independent Director from 2018 to April 2020; he is 64 years old . Under his tenure, Albemarle’s multi-year performance reflects severe lithium price cyclicality: value of a $100 ALB investment moved from $205 (2020) to $328 (2021), $306 (2022), $206 (2023), and $125 (2024), while net income and adjusted EBITDA progressed from $446.6MM and $819.0MM (2020) to $199.9MM and $871.0MM (2021), $2,474MM and $3,403MM (2022), $1,573MM and $2,779MM (2023), and $(1,316)MM and $1,140MM (2024) . Prior to Albemarle, Masters was CEO of Foster Wheeler AG from 2011–2014 (acquired by Amec plc to form Amec Foster Wheeler) and previously served on Rockwood Holdings’ board, adding deep global industrial, capital project, and lithium industry experience .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Foster Wheeler AG | Chief Executive Officer | 2011–2014 | Led global engineering, construction and power equipment supplier; tenure ended with acquisition by Amec plc forming Amec Foster Wheeler plc |
| Albemarle (Board) | Lead Independent Director | 2018–Apr 2020 | Oversaw independent Board processes prior to appointment as Chair/CEO |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Rockwood Holdings, Inc. | Director | Not disclosed | Prior lithium industry board service enhances sector-specific governance and strategic insight |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $1,139,346 | $1,334,038 | $1,400,000; no 2024 increase per Committee decision |
| Target Bonus % (AIP) | 150% (CEO target program) | 150% (CEO target program) | 150% (CEO target program) |
| Director Fees | Employee Director; receives no director compensation | Employee Director; receives no director compensation | Employee Director; receives no director compensation |
Notes:
- CEO target bonus percent defined in Employment Agreement; Committee maintained CEO’s target pay in 2024 .
Performance Compensation
Annual Incentive Program (AIP) Design and 2024 Outcomes
| Component | Weighting | Target Definition | 2024 Actual | Payout Mechanics |
|---|---|---|---|---|
| Adjusted EBITDA (Enterprise) | 45% | Annual operating plan; lithium price modifier (2/3 of price delta vs ~$20/kg) | Achieved 98% of target | Threshold 50%, Target 100%, Superior 200% of component; linear interpolation |
| Adjusted Cash Flow from Operations (Enterprise) | 30% | Focus on debt reduction and growth | Achieved 104% of target | Threshold 50%, Target 100%, Superior 200% of component; linear interpolation |
| Stewardship (Safety/Environment) | 10% | OSHA recordable rate, process safety severity, Level 2 environmental incidents | Not disclosed by metric | No payout below target; Target 10%, Superior 20% |
| Individual Performance | 15% | CEO goals aligned to value creation, capital discipline, customer partnership, culture, stewardship, cash optimization | CEO individual modifier set at 15% | 0–30% range; Committee discretion |
| 2024 AIP Payout Calculation (CEO) | Value |
|---|---|
| Eligible Earnings | $1,400,000 |
| Target Bonus % | 150% → Target Amount $2,100,000 |
| Company Payout + Individual Modifier | 89.9% + 15.0% |
| Actual Bonus Paid | $2,201,850 |
| Committee Negative Discretion Applied | Reduced enterprise payout from 141.5% to 107.5% to reflect capitalized inefficiency costs |
2025 program changes: replace adjusted CFO with Operating Cash Flow Conversion Rate; maintain lithium price modifier with widened ranges and cap if absolute EBITDA is sub-threshold .
Long-Term Incentive Program (LTIP) Mix, Grants, and Vesting
| LTIP Mix (2024) | Allocation |
|---|---|
| PSUs (rTSR + Adjusted ROIC) | 50% |
| RSUs | 25% |
| Stock Options | 25% |
| 2024 CEO LTIP Grants (granted 2/22/2024) | Units/Value | Key Terms |
|---|---|---|
| Stock Options | 51,335 at $118.18 strike; Grant-date fair value $2,500,015 | Vest on 3rd anniversary (2027); expire 10 years (2/21/2034). For Masters, non-forfeitable on earlier of 12/31/2025 or successor CEO appointment; exercisable at 3rd anniversary |
| RSUs | 21,155; Grant-date fair value $2,405,535 | Vest on earlier of 12/31/2025 or successor CEO appointment (for Masters); otherwise 3rd anniversary in 2027 |
| PSUs (rTSR) | Threshold 6,347; Target 21,155; Superior 42,310; Grant-date fair value $3,069,802 | 3-year performance; percent earned: 30%/100%/200%; cap at 100% if absolute TSR negative; vest after Committee certification in 2027 |
| PSUs (Adjusted ROIC) | Threshold 6,347; Target 21,155; Superior 42,310; Grant-date fair value $2,405,535 | 3-year performance; percent earned: 30%/100%/200%; vest after Committee certification in 2027 |
PSU performance for prior cycle (2022–2024): rTSR paid 0% of target; adjusted ROIC paid 200% of target (22.0% vs 12.25% target) . 2025 LTIP: Committee plans to replace adjusted ROIC with a cost management metric amid capital project reduction, potentially revisiting ROIC later . Equity grant governance prohibits option repricing without shareholder approval .
2024 Option Exercises and Stock Vested (CEO)
| Item | Shares | Value |
|---|---|---|
| Options Exercised | — | $0 |
| Stock Awards Vested (RSUs/PSUs) | 17,930 | $2,105,036 |
Equity Ownership & Alignment
| Ownership (as of Mar 12, 2025) | Amount | Notes |
|---|---|---|
| Beneficially Owned Shares | 137,096 | Less than 1% of class; includes 53,617 shares acquirable within 60 days |
| Executive Ownership Guideline | 6x base salary for CEO | All NEOs were in compliance (subject to five-year phase-in) |
| Holding Requirement | Retain at least 50% of net shares vesting annually until guideline met; unvested equity counts at 60%, options excluded | |
| Anti-Hedging/Pledging | Prohibits hedging, short-selling, margin, pledging/hypothecation of ALB stock |
Outstanding Equity (Fiscal Year-End 2024, CEO highlights)
| Grant | Unexercisable Options (#) | Strike | Expiry | RSUs Unvested (#) | RSU Market Value ($) | PSUs Unvested (#) | PSU Market/Payout Value ($) |
|---|---|---|---|---|---|---|---|
| 2/22/2024 | 51,335 | $118.18 | 2/21/2034 | 21,155 | $1,821,022 | 6,347 each for rTSR and ROIC tranches | $546,350 each |
| 2/24/2023 | 25,340 | $249.52 | 2/23/2033 | 10,020 | $862,522 | 3,006 and 10,020 | $258,756 and $862,522 |
| 2/25/2022 | 25,794 | $191.95 | 2/24/2032 | — | — | 2,540 and 16,932 | $218,643 and $1,457,507 |
| 2/26/2021 | 27,823 (exercisable) | $157.21 | 2/25/2031 | — | — | — | — |
Employment Terms
| Contract and Covenants | Terms |
|---|---|
| 2023 Employment Agreement (extension) | Effective through Dec 31, 2025 (or successor CEO appointment); base salary $1,400,000; AIP eligibility at 150% target and 200% max; LTIP grants through 2025; RSUs/options vest earlier of Dec 31, 2025 or successor CEO; PSUs remain outstanding and vest based on actual performance at end of period; perpetual confidentiality; three-year post-employment non-compete and non-solicit (employees/customers) |
| Severance (outside CIC) | If terminated without Cause or resigns for Good Reason: cash equal to 2x (base + target AIP), pro-rata AIP based on actual performance, two years COBRA, two years financial counseling up to $12,500/year, relocation reimbursement; death/disability benefits per programs |
| Change in Control (CIC) | Double-trigger within two years after CIC: cash equal to 3x (base + target bonus), pro-rated AIP based on actual performance, accelerated vesting of pension and deferred comp, two years COBRA, two years financial counseling ($12,500/year), two years outplacement (up to $25,000), relocation reimbursement; excise tax cutback (no gross-ups) |
| Equity Treatment on Termination | Outside CIC: RSUs/options prorated 1/36th per month of service; PSUs prorated based on service, earned based on performance; CIC + termination: full acceleration; PSUs vest at target; CIC + continue employment: varying conversion/acceleration terms depending on listing status |
Estimated Payments (as if termination on Dec 31, 2024; stock price $86.08)
| Scenario | Severance ($) | AIP ($) | PSUs ($) | RSUs ($) | Options ($) | Benefits ($) | Total ($) |
|---|---|---|---|---|---|---|---|
| Involuntary Without Cause (outside CIC) | $7,000,000 | $2,201,850 | $0 | $2,683,544 | $0 | $439,881 | $12,325,275 |
| Change in Control (double-trigger) | $10,500,000 | $2,201,850 | $5,367,088 | $2,683,544 | $0 | $464,881 | $21,217,363 |
Definitions of “Cause” and “Good Reason” follow standard corporate practice; detailed triggers are enumerated (e.g., willful failure to perform, policy breaches; compensation/role changes; relocation >35 miles, etc.) .
Board Governance
- Board Service History and Roles:
- Director since 2015; Chair since 2020; served as Lead Independent Director 2018–April 2020 .
- Combined Chair/CEO structure supported by Board; Lead Independent Director (James J. O’Brien) holds defined authority for agendas, executive sessions, evaluations, and advisor retention, mitigating independence risks .
- Independence and Committees:
- Board is 9 of 10 independent directors; all standing committees are 100% independent .
- Masters is not independent and does not receive separate director compensation; non-employee directors’ chair/committee fee and equity retainer structure detailed separately (CEO excluded) .
- Board Attendance:
- Each director attended at least 86% of Board and applicable committee meetings in 2024 .
- Say-on-Pay:
- 2024 Say-on-Pay support: ~85.9% approval for 2023 program .
Compensation Structure Analysis
- Alignment and Mix:
- Approximately 90% of CEO 2024 target compensation was variable and performance-based, with LTIP split into PSUs (50%), options (25%), RSUs (25%) .
- Metric Calibration and Discretion:
- Committee applied a lithium price modifier and widened thresholds to avoid windfall/penalty from exogenous price swings; exercised negative discretion to reduce enterprise AIP payout by 34 percentage points to reflect capitalized inefficiency costs .
- Peer Benchmarking:
- Pay and performance benchmarking utilizes a peer group; TSR comparisons reference S&P 1500 Specialty Chemicals index components in pay-versus-performance disclosures; Committee reviewed peer constructs multiple times in 2024 and retained the 2024 peer group for 2025 given lack of superior alternative .
Performance & Track Record
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| ALB TSR – Value of Initial $100 | $205 | $328 | $306 | $206 | $125 |
| Peer Group TSR – Value of Initial $100 | $116 | $149 | $112 | $128 | $126 |
| Net Income ($MM) | $446.6 | $199.9 | $2,474 | $1,573 | $(1,316) |
| Adjusted EBITDA ($MM) | $819.0 | $871.0 | $3,403 | $2,779 | $1,140 |
Director Compensation (for governance context; CEO excluded)
- Annual retainer: $120,000 cash; $170,000 equity; additional chair fees: LID/Non-Exec Chair $50,000; Audit Chair $25,000; Comp Chair $20,000; Nominating Chair $15,000; Sustainability Chair $15,000; Capital Investment Chair $15,000 .
- Deferred compensation plan available; CEO does not receive director compensation .
Clawbacks, Hedging/Pledging, and Deferred Compensation
- Clawbacks: Section 10D policy mandates recovery of incentive-based compensation upon accounting restatements; broader recoupment and forfeiture policy allows recovery for misconduct within three years, covering time- and performance-based awards .
- Anti-hedging/pledging: Executives prohibited from hedging, short-selling, margin accounts, and pledging ALB stock .
- Executive Deferred Compensation Plan (EDCP): Company contributes up to 11% (6% Savings Plan match + 5% DCPB); CEO aggregate EDCP balance $1,449,608 with 2024 registrant contributions of $331,486 .
Equity Ownership & Beneficial Ownership (detail)
| Holder | Shares Beneficially Owned | % of Class | Phantom Shares |
|---|---|---|---|
| J. Kent Masters | 137,096 (incl. 53,617 acquirable within 60 days) | <1% (based on 117,650,568 shares outstanding) | — |
Risk Indicators & Red Flags
- No excise tax gross-ups; CIC uses cutback (shareholder-friendly) .
- No single-trigger accelerated vesting for CIC; committees fully independent; robust anti-hedging/pledging policies .
- Committee exercised negative discretion in AIP payouts to correct for capitalized inefficiency costs; demonstrates discipline .
- 2022–2024 PSUs exhibited asymmetry: rTSR paid 0% at trough; adjusted ROIC paid 200%, showing value discipline during investment cycle .
Compensation Peer Group, Say-on-Pay & Shareholder Feedback
- TSR benchmarking references S&P 1500 Specialty Chemicals components in pay-versus-performance disclosure .
- The Committee reviewed peer alternatives (including ETFs, S&P indices) and retained the same peer group for 2025 due to lack of clear improvement; benchmarking adjusted to ~$8B market cap to reflect revenue compression amid low lithium prices .
- Say-on-Pay approval ~85.9% in 2024 for prior year program; ongoing outreach to large shareholders .
Investment Implications
- High pay-for-performance linkage and rigorous clawback/anti-pledging reduce governance risk; variable mix at ~90% for CEO aligns with shareholders, but PSU outcomes remain sensitive to commodity cycles (rTSR cap if absolute TSR negative) .
- Near-term vesting milestones (CEO RSUs/options become non-forfeitable by 12/31/2025 or successor appointment; options non-exercisable until 2027) imply limited immediate selling pressure from options but potential RSU liquidity in 2025; 2024 vesting of 17,930 shares realized $2.1MM value .
- CIC and severance economics (3x under CIC; 2x outside CIC) and three-year non-compete/non-solicit suggest manageable retention risk but material payout magnitude in a transaction; no gross-ups mitigate shareholder concerns .
- Performance metric evolution (shift to cash conversion rate and cost management for 2025) targets structural cash discipline and cost efficiency through cycle—favorable for FCF and multiple stability if executed .
Sourcing: Albemarle DEF 14A (Proxy Statement) dated March 27, 2025: .