Phil Gallagher
AVNETAbout Phil Gallagher
Phil Gallagher, age 64, is Avnet’s CEO and a Director since November 2020; he previously served as Interim CEO (Jul–Nov 2020) and has held senior roles across sales, marketing, and operations since 1982, with a stint at TTI as President, Americas Sales & Marketing (2016–2017) before rejoining Avnet in 2017 . Board leadership is separated (independent Chair), and Gallagher is a non‑independent director; employee directors receive no additional board pay . Performance context: Company TSR (value of $100 investment) rose to $229.61 in FY2025, broadly tracking CAP trends; FY2025 sales were $22.2008B vs $23.7571B in FY2024, while adjusted OI$ fell to $624.0M from $900.0M; FY2025 PSU tranches paid 0% reflecting stricter hurdles . EBITDA declined over FY2023–FY2025 per S&P Global data (see Performance & Track Record table; values marked with an asterisk; Values retrieved from S&P Global).
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Avnet | CEO; Interim CEO; President, Electronic Components; Global President, Core Distribution | 2017–present; 2020; 2018–; 2017–2018 | Led core distribution and electronic components; executive operations oversight; elevated from interim to CEO |
| Avnet Technology Solutions | Global President | 2009–2014 | Oversaw Technology Solutions portfolio and global operations |
| TTI | President, Americas Sales & Marketing | 2016–2017 | Led regional sales/marketing at top components distributor |
| Avnet (earlier career) | Leadership roles in sales, marketing, operations | 1982–2014 | 38-year Avnet veteran; deep domain/operational experience |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Women in Electronics | Advisory council member | Current | Industry engagement and talent/community leadership |
| Greater Phoenix Leadership (GPL) | Member | Current | CEO network advancing regional priority issues |
Fixed Compensation
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Base Salary ($) | 1,150,000 | 1,200,000 | 1,200,000 |
| Director Fees (employee director) | $0 | $0 | $0 |
Notes:
- CEO target annual cash incentive set at 150% of base salary ($1.8M target) .
- Long‑term equity is the largest component of total compensation (RSUs and PSUs split 50/50 in FY2025) .
Performance Compensation
Annual Cash Incentive – Design and FY2025 Outcomes
| Component | Weight | Target | Actual FY2025 | Payout vs Target |
|---|---|---|---|---|
| Adjusted Operating Income $ (OI$) | 40% | $871.4M | Below target | 32% of target earned on financial bucket |
| Return on Working Capital (ROWC) | 40% | 13.47% | Below target | Included in 32% of target financial outcome |
| Relative Market Share (vs core competitor) | 20% | +50 bps | Not disclosed | Included in 32% of target financial outcome |
| Non‑Financial (Talent, Leadership, Engagement) | 20% | Individual goals | Achieved | 200% of target for non‑financial bucket |
| Total Annual Cash Incentive ($) | — | $1,800,000 | $1,296,000 | 72% of target |
Long‑Term Incentives (LTIP) – Grants and Vesting
| Grant Type | FY2025 Target Mix | Grant Date | Shares/Units Granted | Grant Date Fair Value ($) | Vesting |
|---|---|---|---|---|---|
| RSUs | 50% | 8/15/2024 | 70,996 | 3,697,836 | 25% on first business day of January following grant, then on 1st, 2nd, 3rd anniversaries (4 tranches over ~3y4m) |
| PSUs | 50% | 8/15/2024 | 70,997 target | 3,611,321 (target) | 3 one‑year tranches (FY2025/26/27); earned PSUs bank and vest collectively at end of FY2027; rTSR modifier ±10% |
PSU metrics and hurdles:
- ROIC > WACC: Threshold ≥0%; Target 1.5%; Max ≥3.0% (50% weight)
- Relative Adjusted EPS Growth vs FY2025 peer set (50% weight)
- rTSR modifier ±10%
FY2025 PSU earning:
- PSUs earned for FY2025 tranches (and FY2024 second tranche, FY2023 third tranche) were 0% of target, evidencing stringent performance screens .
Equity Ownership & Alignment
| Ownership Detail (as of 9/2/2025) | Amount |
|---|---|
| Common Stock owned | 406,440 (includes 139,709 via Gallagher Family Trust) |
| Stock Options exercisable within 60 days | 466,188 |
| RSUs earned but not yet vested | 187,167 |
| PSUs earned but not yet vested | 9,742 |
| Total beneficial ownership (Common + options exercisable) | 872,628; <1% of shares outstanding |
| Stock ownership guideline | CEO 5× base salary; all NEOs in compliance as of 6/28/2025 |
| Anti‑hedging/pledging policy | Hedging prohibited; pledging/margin accounts prohibited without pre‑approval; no exceptions approved in last fiscal year |
Option and award profile (select):
- Options: 191,048 @ $29.38 (11/17/2020), 145,689 + 48,563 (exercisable/unexercisable) @ $39.62 (8/23/2021), plus older grants (e.g., 25,068 @ $36.80; 23,920 @ $48.62; 31,900 @ $39.72) .
- Unvested RSUs/PSUs at 6/28/2025: RSUs 53,247 (2024 grant), 34,994 (2023 grant), 18,466 (2022 grant); PSUs 47,331 (2024 grant), 33,070 (2023 grant) .
Vesting and realized awards in FY2025:
- Shares acquired on vesting: 115,363; value realized $6,059,162 (RSUs: 69,487 shares/$3,632,780; PSUs: 45,876 shares/$2,426,382) .
- Option exercises: none for Gallagher in FY2025 .
Employment Terms
Severance and Change‑of‑Control Economics (Potential Payments, as of 6/28/2025)
| Scenario | Cash Severance ($) | RSU Settlement ($) | PSU Settlement ($) | Options (unvested) ($) | Welfare/Life Insurance ($) | Pension/Nonqualified ($) |
|---|---|---|---|---|---|---|
| Company termination without cause | 3,000,000 | 2,815,204 | 4,157,296 | 633,261 | — / — | 222,140 / — |
| Change of control | 8,970,000 | 5,619,191 | 6,649,747 | 633,261 | 105,828 / — | 222,140 / — |
| Death | — | 5,619,191 | 2,928,844 | — | — / 500,000 | 222,140 / 4,992,000 (SERP death benefit) |
| Disability | — | 2,815,204 | — | 633,261 | — / — | 222,140 / — |
| Retirement | — | 2,815,204 | 4,157,296 | 633,261 | — / — | 222,140 / — |
Key terms and policies:
- Change‑of‑control agreements for NEOs; no excise tax gross‑ups; designed to retain executives and align with shareholder interests .
- Executive Severance Plan: CEO eligible; plan provides 2× base salary for CEO plus healthcare continuation and year‑of‑termination incentive; others may have employment agreements providing base + target bonus; see Potential Payments table footnote (severance assumes target annual incentive) .
- Clawback (recoupment) policy covers restatements and misconduct; no reimbursement/indemnification for recouped compensation .
Performance & Track Record
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Sales ($ millions) | 26,536.9 | 23,757.1 | 22,200.8 |
| Adjusted OI$ ($ millions) | 1,220.9 | 900.0 | 624.0 |
| Diluted EPS ($) | 5.43 (FY2024); 2.75 (FY2025) | — | — |
| Company TSR (value of $100 investment) | $208.95 | $218.81 | $229.61 |
| EBITDA ($ millions) | 1,285.8* | 998.8* | 705.6* |
Notes:
- FY2025 business performance declined YoY (sales, gross profit dollars, operating income), driving reduced annual cash payouts and zero PSU earning across relevant tranches .
- EBITDA values marked with an asterisk are Values retrieved from S&P Global.
Board Governance
- Director service: Gallagher has been a Director since 2020; status “Not Independent” (employee director) .
- Committee roles: Employee directors do not serve on standing committees; non‑employee directors populate Audit, Compensation & Leadership Development, Corporate Governance, Technology & Risk, and Executive committees .
- Board leadership: Independent Chair (Rodney C. Adkins); CEO and Chair roles separated; lead independent oversight and regular executive sessions of independent directors .
- Board meeting attendance: Directors standing for reelection attended at least 92% of board and committee meetings in FY2025; all directors attended the 2024 annual meeting .
- Director compensation: Employee director receives no additional remuneration; non‑employee directors receive cash retainer ($100k) and equity ($180k), with additional chair/member retainers by committee .
Director Compensation (Employee Director)
| Component | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Board retainer (cash) | $0 | $0 | $0 |
| Board equity | $0 | $0 | $0 |
Compensation Committee Analysis
- Governance practices: Multiple metrics, capped awards, stock ownership guidelines, clawback, option strike at fair market value; independent committee and consultant (Meridian), assessed for conflicts .
- Benchmarking peer group (FY2025): Arrow, Celestica, CDW, Flex, Genuine Parts, Hewlett Packard Enterprise, Insight Enterprises, Jabil, Sanmina, TD SYNNEX, TE Connectivity, W.W. Grainger, WESCO, Western Digital; committee may adjust peers (e.g., replaced Seagate with HPE) .
- Say‑on‑pay: 97.83% approval in Nov 2024, with continued shareholder outreach; no material program changes resulting from 2025 engagement .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited; no exceptions in last fiscal year .
- Clawback: Robust recovery framework for restatements and misconduct; no indemnification .
- Tax gross‑ups: Not provided in change‑of‑control agreements .
- Related party transactions: Governance policies and Audit Committee oversight; no material related party issues disclosed in proxy .
Investment Implications
- Alignment: FY2025 annual incentive paid at 72% of target despite revenue/adjusted OI$ declines, reflecting weighting toward non‑financial leadership/talent objectives and partial financial attainment; PSUs earned 0% for applicable tranches, reinforcing downside protection and rigorous long‑term thresholds .
- Retention vs selling pressure: Significant scheduled RSU vesting and option holdings through 2030–2031 could create periodic liquidity events; mitigants include CEO 5× salary ownership guideline and mandatory holding of 50% net shares until guideline met .
- Change‑of‑control and severance: Cash severance equals base + target bonus upon termination without cause ($3.0M); larger CIC cash component ($8.97M) plus equity settlement and welfare/pension indicates meaningful protection that may support deal neutrality, with no tax gross‑ups (shareholder‑friendly) .
- Governance: Independent Chair structure and no board pay for the CEO bolster oversight; strong say‑on‑pay support (97.83%) reduces near‑term governance overhang .