Joseph M. Hogan
ALIGN TECHNOLOGYAbout Joseph M. Hogan
Joseph M. Hogan is President & CEO of Align Technology and a director since 2015; age 67, with a B.S. in Business & Economics (Geneva College) and an MBA (Robert Morris University) . Under his tenure, FY2024 revenue reached $4.0B with GAAP operating margin of 15.2% (21.8% non-GAAP) and the CEO’s 2022 MSUs vested at 72.4% of target on relative TSR underperformance versus the Nasdaq Composite over 2022–2024 . Indexed TSR declined from end-2021 to end-2022/2023/2024 ($657.18 → $210.90/$274.00/$208.51), which drove below-target MSU outcomes and lower realizable pay versus reported TDC .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Align Technology | President & CEO | 2015–Present | Oversaw significant financial and operating performance; bridge between board and management . |
| ABB | CEO | Prior to 2015 | Drove ~25% revenue increase during five-year tenure . |
| GE Healthcare (GE) | CEO and senior roles | Prior to ABB | Doubled revenue from $7B to $16B; geographic and portfolio expansion . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| avateramedical N.V. | Supervisory Board member | 2019–2021 | Board experience in medical devices . |
Fixed Compensation
Multi-year CEO compensation structure and outcomes:
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 1,290,385 | 1,354,769 | 1,396,904 |
| Stock Awards – Grant Date Fair Value ($) | 17,375,927 | 26,230,870 | 23,848,513 |
| Non-Equity Incentive (Cash Bonus) ($) | — | 1,346,200 | 2,058,000 |
| All Other Compensation ($) | 17,732 | 20,572 | 17,762 |
| Total Compensation ($) | 18,684,044 | 28,952,411 | 27,321,179 |
Additional fixed elements:
- 2024 base salary set at $1,400,000 (+3.0% vs 2023) used for bonus target calculations .
- Target bonus percentage: 150% of base salary (unchanged) .
Performance Compensation
Cash Incentive Plan (2024 design and outcomes)
| Metric | Weighting | Target Range (2024) | Actual (2024) | Payout Impact |
|---|---|---|---|---|
| Net Revenue | 60% | $4,040–$4,140M | $3,999M | 96.6% component multiplier |
| Operating Income (adjusted per plan) | 40% | $665–$709M | $681M (after +$73M adjustments) | 100% component multiplier |
| Company Multiplier | — | — | — | 98.0% (aggregate) |
Individual payout parameter:
| Item | Value |
|---|---|
| CEO Target Incentive Award | $2,100,000 |
| Company Multiplier | 98% |
| Individual Performance Factor | 100% (target) |
| Actual Cash Bonus Payout | $2,058,000 (98% of target) |
Plan governance and mechanics:
- Target bonus opportunity capped at 240% of target; 0–240% payout range .
- Metrics and weights: Net Revenue 60%, Operating Income 40%; adjustments permitted for non-GAAP, extraordinary items; in 2024 the committee excluded $37M restructuring and $36M settlements in operating income .
Equity Awards (2024 grants and vesting)
| Award Type | Grant Date | Shares/Target (#) | Grant-Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| RSU | 2024-02-20 | 13,588 | 4,260,246 | 25% annually over 4 years (Feb 20 2025–2028) |
| MSU (TSR-based) | 2024-02-20 | 31,707 target | 19,588,268 | 3-year cliff; 0–250% earned based on relative TSR vs Nasdaq Composite; ≤100% if absolute TSR < 0 |
Historical vesting realization:
- 2022 MSUs vested at 72.4% of target in Feb 2025 on relative TSR underperformance .
- 2024 stock awards vested during FY2024: 20,964 shares valued at $6,572,843 (gross settlement; net shares post-tax withheld) .
Outstanding equity at FY2024 year-end (market price $208.51):
| Category | Quantity/Value |
|---|---|
| Unvested RSUs (various grants) | 1,412; 3,730; 11,017; 13,588 shares |
| Unearned MSUs (performance awards) | 14,921; 34,277; 31,707 shares (payout depends on TSR) |
Program mix and pay calibration:
- At-risk compensation dominated CEO TDC; CEO’s long-term incentive target reduced from $12.5M (2024) to $11.5M (2025) to align with stockholder expectations .
- CEO cumulative 3-year realizable TDC 77% of cumulative target and 49% of reported TDC; 2024 realizable TDC $12.9M vs reported $27.32M .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial Ownership (Outstanding Shares) | 234,136 shares; less than 1% of outstanding |
| Shares Underlying RSUs/MSUs vesting by May 23, 2025 | Not applicable for CEO in table; non-employee director awards separately disclosed |
| Stock Ownership Guidelines | CEO: 6× base salary; all executives/directors in compliance as of Dec 31, 2024 |
| CEO Open-Market Purchases | ~$7M in personal stock purchases since last sale in 2021 |
| Options Outstanding | Company no longer grants options; none outstanding or vested/unvested |
| Hedging/Pledging | Prohibited for employees and directors; no margin accounts for company stock |
Insider selling pressure context:
- RSUs vest annually each Feb 20 (25% tranches), which can create scheduled liquidity events; company prohibits hedging/pledging and manages insider trading via policy .
Employment Terms
Employment agreement date: April 17, 2015; target bonus 150% of base salary per agreement .
Change-of-control economics and severance (as of 12/31/2024):
| Scenario | Severance Payment ($) | RSU Acceleration ($) | MSU Acceleration ($) | Health & Welfare ($) | Total ($) |
|---|---|---|---|---|---|
| Involuntary or Good Reason (Unrelated to CoC) | 8,050,000 | — | — | 31,983 | 8,081,983 |
| Involuntary or Good Reason (Related to CoC) | 8,050,000 | 6,202,547 | 42,173,754 | 31,983 | 56,458,284 |
| Change of Control Only | — | 2,157,314 | 23,311,901 | — | 25,469,215 |
Key provisions:
- Cash severance: 2× salary + prorated current-year target bonus + greater of 150% of current-year target bonus or prior-year actual bonus (lump sum) .
- Equity: Double-trigger acceleration within 18 months post-CoC; CoC-only RSU add’l 12 months service credit; MSUs pro-rated to months elapsed and adjusted by Performance Multiplier based on TSR to CoC price .
- COBRA premiums paid up to 18 months if terminated without cause or resigns for good reason .
- Conditions: General release; 1-year non-solicit; confidentiality obligations .
- Clawback policy in place per SEC/Nasdaq rules .
Board Governance
- Board service: Director since 2015; not independent (only CEO on board is non-independent) .
- Dual-role implications: Roles of CEO and Board Chair are separated; Chair is independent, which mitigates CEO-chair concentration risk .
- Committee roles: Hogan does not serve on committees; all committees composed of independent directors (Audit; Compensation & Human Capital; Nominating & Governance; Technology) .
- Attendance: Board held six meetings in 2024; each director attended at least 75% of board/committee meetings; independent directors held four executive sessions .
Director compensation context:
- Non-employee directors receive cash retainers and RSUs (e.g., $50K board retainer; committee and chair fees; $300K RSUs; Chair $100K cash retainer and $400K RSUs). CEO compensation is disclosed separately and executives do not receive director fees .
Performance & Track Record
| Metric/Highlight | Details |
|---|---|
| FY2024 Revenue | $4.0B; Clear Aligner $3.2B; Systems & Services $768.9M; record shipments and practitioner adoption . |
| Operating Margin | 15.2% GAAP; 21.8% non-GAAP for FY2024 . |
| Strategic Milestones | 510(k) clearance for Invisalign Palatal Expander; Cubicure acquisition for direct 3D printing; launch of iTero Lumina scanner; DSO partnerships (Heartland Dental, Smile Doctors) . |
| TSR & Equity Outcomes | 2022 MSUs vested at 72.4% of target; indexed TSR modeled off end-2021 baseline; realizable pay below reported due to stock performance . |
Compensation Committee Analysis
- Committee members: George J. Morrow (Chair), Anne M. Myong, Andrea L. Saia, Kevin T. Conroy; solely independent; retains independent consultant; no interlocks/insider participation .
- Say-on-Pay: ~84% approval in 2024; committee considered feedback and reduced CEO LTI target in 2024 and further in 2025 .
- Policies: Clawback policy; prohibition on hedging/pledging; burn-rate discipline; no option grants/repricings .
Equity Compensation Structure Diagnostics
- Mix shifts: Predominance of MSUs (market stock units) maintains strong linkage to TSR; RSUs provide retention and ownership accumulation .
- Calibration: Cash bonus plan near-target payout despite macro headwinds; committee applied explicit non-GAAP adjustments to operating income to align payouts with core performance .
- Long-term alignment: CEO open-market purchases (~$7M since 2021) and ownership guideline compliance strengthen alignment; prohibition on hedging/pledging reduces misalignment risk .
Employment & Contracts
| Term | Provision |
|---|---|
| Employment start | CEO since 2015; agreement dated April 17, 2015 . |
| Non-compete | Not disclosed; non-solicit 1 year post-termination . |
| Auto-renewal | Not disclosed. |
| Garden leave/consulting | Not disclosed. |
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval ~84%; sustained pay-for-performance program with adjustments reflecting investor feedback (e.g., lower CEO LTI target; charter proposals for simple majority votes) .
Investment Implications
- Alignment: High proportion of at-risk and TSR-linked equity (MSUs) plus strict hedging/pledging prohibitions and strong ownership guidelines support long-term alignment; CEO’s personal stock purchases bolster confidence signals .
- Retention/Trigger Risk: Double-trigger CoC with full equity vesting post-termination could create substantial payout leverage ($56.46M modeled as of 12/31/24), but otherwise severance is standard (2× salary plus bonus components) and non-solicit mitigates transition risk .
- Near-term selling pressure: RSU annual vest dates (Feb 20) and 2022 MSU settlement in Feb 2025 can create mechanical liquidity windows; however, insider trading controls and no pledging reduce adverse signaling .
- Pay-for-performance: 2024 cash bonus near-target (98%) with explicit non-GAAP adjustments; MSUs paid below target (72.4%), aligning pay with relative stock performance; continued reduction in CEO LTI target moderates dilution and cost .