Francisco Melo
Avery DennisonAbout Francisco Melo
Francisco Melo is President, Solutions Group (Solutions) at Avery Dennison, elevated to this Business NEO role effective April 2023 after serving as SVP/GM of Avery Dennison Smartrac through March 2023 . In 2024, he delivered high single-digit sales growth in Solutions while improving margins and driving Intelligent Labels growth; he launched multiple initiatives including OPTICA end-to-end supply chain solutions and opened the largest RFID manufacturing site . 2024 AIP financial outcomes for Solutions were mixed: adjusted sales growth and adjusted net income missed thresholds, while adjusted free cash flow and adjusted EPS exceeded targets, resulting in a 44% weighted financial modifier for Melo’s AIP .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Avery Dennison Solutions Group | President | Apr 2023–present | Delivered high single-digit sales growth; expanded Intelligent Labels; launched OPTICA; optimized manufacturing network |
| Avery Dennison Smartrac | SVP/GM | Jan–Mar 2023 | Leadership of RFID/Smartrac through Q1 2023; transitioned to Solutions Group presidency in April 2023 |
External Roles
- No public company directorships or external roles disclosed in the proxy materials for Melo. Skip if not disclosed.
Fixed Compensation
| Metric (USD) | 2023 | 2024 |
|---|---|---|
| Base Salary | $518,219 | $517,539 |
| Target AIP Opportunity (% of base) | 60% (prorated due to role change) | 60% |
| Actual AIP Award Paid | $0 (financial modifier 0%) | $136,630 |
| Perquisites & Benefits Total | $21,169 | $40,959 |
Performance Compensation
AIP (Annual Incentive Plan) – 2024 Detail (Solutions)
| Metric | Weight | Target | Actual | Modifier | Weighted Contribution |
|---|---|---|---|---|---|
| Solutions Adjusted Sales Growth | 20% | $2,853M | $2,763M | 0% | 0% |
| Solutions Adjusted Net Income | 45% | $229.3M | $180.9M | 0% | 0% |
| Solutions Adjusted Free Cash Flow | 20% | $179M | $193M | 135% | 27% |
| Adjusted EPS (Company) | 15% | $9.25 | $9.35 | 111% | 17% |
| Weighted Financial Modifier | — | — | — | — | 44% |
Note: AIP awards are capped at 200%; individual modifiers generally capped at 100%. Melo’s 2024 individual modifier was 100% .
LTI Grants
| Metric | 2023 | 2024 |
|---|---|---|
| PUs (# units) | 2,401 | 2,178 |
| PUs Grant Date Fair Value ($) | $426,661 | $475,410 |
| MSUs (# units) | 2,311 | 1,796 |
| MSUs Grant Date Fair Value ($) | $445,020 | $466,511 |
PUs structure: For Business NEOs (including Melo), 75% tied to business cumulative EVA and 25% to company relative TSR over a 3-year period; TSR payouts capped at 100% if absolute TSR is negative . MSUs vest in 1-, 2-, 3-, and 4-year tranches solely on absolute TSR, with payout scale: 85% at -15% TSR, 100% at 10%, and 200% at 75% TSR .
LTI Performance Outcomes
| Performance Period | Component | Target/Thresholds | Actual | Payout |
|---|---|---|---|---|
| 2022–2024 | Relative TSR (peer group) | Median (50th percentile) = 100%; cap at 100% if absolute TSR negative | 56th percentile; absolute TSR negative | 100% for TSR component |
| 2022–2024 | EVA (Solutions) | Threshold required; 75% weight for Business NEOs | Below threshold (no payout) | 0% for EVA component |
| 2022–2024 | Aggregate PU payout (Business NEOs) | 0–200% of target | Mixed components | 25% of target |
| MSU Tranche Outcomes | 2021 (4th tranche) | — | Absolute TSR 28% | 128% of target |
| MSU Tranche Outcomes | 2022 (3rd tranche) | — | Absolute TSR -4% | 92% of target |
| MSU Tranche Outcomes | 2023 (2nd tranche) | — | Absolute TSR 4% | 96% of target |
| MSU Tranche Outcomes | 2024 (1st tranche) | — | Absolute TSR -3% | 93% of target |
Equity Ownership & Alignment
Beneficial Ownership (Record Date: Feb 24, 2025)
| Holder | Common Stock | Rights Exercisable/Vesting ≤60 Days | Total Beneficially Owned | % of Class |
|---|---|---|---|---|
| Francisco Melo | 15,230 | 2,120 | 17,350 | <1% |
- Pledging/Hedging: Officers are prohibited from hedging/pledging; no shares pledged by any such person; all executive officers complied in 2024 .
- Trading windows & preclearance: Limited windows with mandatory preclearance; retention of net shares until minimum ownership met .
- Stock ownership policy compliance (YE 2024): Minimum requirement for Level 2 NEOs equals 3x base salary; Melo’s minimum requirement shown at $1,552,617 with ownership 17,544 units; requirement achieved; multiple achieved 2x (as reported) .
Employment Terms
Termination Benefits (As of end of FY 2024)
| Benefit | Death | Qualifying Disability | Qualifying Retirement | Involuntary Termination Not for Cause | Involuntary Termination within 24 Months of Change of Control |
|---|---|---|---|---|---|
| Severance Payment | — | — | — | $828,062 | $1,656,124 |
| Medical/Dental Payment | — | — | — | $769 | $1,538 |
| Outplacement | — | — | — | $25,000 | $25,000 |
| Unvested PUs | $4,273,035 | $4,273,035 | — | — | $6,077,185 |
| Unvested MSUs | $441,673 | $441,673 | — | — | $900,420 |
| Total | $4,714,708 | $4,714,708 | — | $853,831 | $8,660,267 |
| Excise Tax Elimination (Cutback) | — | — | — | — | $(1,613,878) |
Plan mechanics:
- Executive Severance Plan: Lump-sum equal to annual base salary + target AIP for year of termination + cash value of 12 months of employer/employee medical/dental premiums; outplacement services up to $25,000; no tax gross-ups .
- Change-of-Control (Double Trigger) Key Executive Plan: Enhanced severance benefits only upon termination without cause or for good reason within 24 months post-CoC; CEO multiple 3x; Level 2 NEOs (including Melo) multiple 2x; no excise tax gross-ups; cutback or full-pay election to avoid/accept excise tax .
- No employment contracts unless required by home-country market practice; clawback policies for incentive compensation upon restatements or misconduct; hedging/pledging prohibited .
Compensation Structure Analysis
- Cash vs equity mix: Melo’s 2024 TDC was primarily at-risk with stock awards (PUs and MSUs totaling $941,921) and a smaller cash component; AIP payout reflected a 44% financial modifier given mixed business performance .
- Shift in incentives: Melo’s LTI remains fully performance-based (no options; PUs tied to EVA/TSR; MSUs tied to absolute TSR), consistent with pay-for-performance design; TSR caps when absolute TSR is negative limit windfalls .
- Performance metric rigor: Solutions EVA targets for 2022–2024 did not meet threshold leading to 0% EVA payout; TSR at 56th percentile but capped at 100% due to negative absolute TSR; overall PUs paid at 25% of target for Business NEOs, signaling tight linkage to real value creation .
- Governance safeguards: No excise tax gross-ups; clawbacks; double-trigger equity vesting; prohibited hedging/pledging; limited trading windows reduce opportunistic selling risk .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval: 94% at the 2024 Annual Meeting, indicating strong shareholder support for the compensation program; Committee emphasizes alignment and responsiveness to investor feedback .
Equity Ownership & Alignment
- Beneficial ownership is modest (<1% of shares outstanding), but Melo meets and exceeds the company’s stock ownership policy minimum; officers must retain net shares until minimum achieved and certify ongoing compliance before trading; no pledging allowed .
Investment Implications
- Alignment and retention: Strong governance (clawbacks, no hedging/pledging, double-trigger CoC) and stock ownership compliance indicate solid alignment and moderate retention incentives; CoC multiple at 2x for Level 2 NEOs balances retention with shareholder protections .
- Execution risk and signal: Solutions EVA shortfalls in 2022–2024 and a 44% AIP financial modifier in 2024 indicate continued execution focus is required; however, initiatives in Intelligent Labels and operational optimization highlight strategic momentum under Melo’s leadership .
- Selling pressure: With MSU tranches vesting annually and ongoing performance-based vesting, near-term selling pressure is moderated by trading window restrictions and ownership policy certification; no pledging reduces forced-selling risk .
- Pay-for-performance: PU payouts at 25% for Business NEOs and below-target MSU payouts in recent tranches reflect disciplined performance gating, limiting windfalls during weaker macro phases—an investor-friendly structure that should align realized pay with TSR and EVA outcomes .