Lorenzo Simonelli
Baker HughesAbout Lorenzo Simonelli
Lorenzo Simonelli has served as Chairman of the Board since October 2017 and as President & CEO since July 2017, after senior leadership roles at GE Oil & Gas (President & CEO, 2013–2017) and GE Transportation (President & CEO, 2008–2013) and earlier finance and leadership positions at GE from 1994–2008 . Age 51 as of May 20, 2025, he leads Baker Hughes’ transformation and delivered 2024 revenue of $27.8B, adjusted EBITDA of $4.591B, EBITDA margin of 16.5%, free cash flow of ~$2.26B, and orders of $28.2B; Baker Hughes highlighted TSR of +23% (1-year), +84% (3-year), +86% (5-year) in its pay-versus-performance discussion .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Baker Hughes Company | Chairman of the Board | Oct 2017–present | Combined Chair/CEO leadership; board oversight during transformation |
| Baker Hughes Company | President & CEO | Jul 2017–present | Strategy reset, margin expansion, record 2024 financial results |
| GE Oil & Gas | SVP, GE; President & CEO | Oct 2013–Jul 2017 | Led global O&G operations pre-merger |
| GE Transportation | President & CEO | Jul 2008–Oct 2013 | Led industrial business operations |
| General Electric | Finance and leadership roles | 1994–2008 | Progressive leadership across GE |
External Roles
| Organization | Role | Years |
|---|---|---|
| Iveco Group N.V. | Director | 2021–present |
| CNH Industrial N.V. | Director | 2019–2021 |
| C3.ai, Inc. | Director | 2020–2021 |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 1,570,000 | 1,620,000 | 1,685,000 |
| Target Bonus % of Salary | — | 170% | — |
| Target Bonus ($) | — | — | 2,864,500 |
| 2024 Perquisites & Other ($) | Amount |
|---|---|
| Life Insurance Premiums | 4,788 |
| Company Contributions to Retirement & Savings Plans | 495,054 |
| Financial & Tax Planning | 15,592 |
| Dividend Equivalents on RSUs | 892,317 |
| Immigration & tax preparation services | 3,550 |
| Other | 3,298 |
| Total “All Other Compensation” | 1,414,598 |
| Summary Compensation ($) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary | 1,542,308 | 1,589,230 | 1,645,000 |
| Stock Awards (RSUs/PSUs fair value) | 12,056,262 | 12,083,545 | 12,425,422 |
| Non-Equity Incentive Plan Compensation | 1,632,800 | 6,328,847 | 4,583,200 |
| Change in Pension Value & Nonqualified Earnings | — | 992,907 | (171,000) |
| All Other Compensation | 860,218 | 686,207 | 1,414,598 |
| Total | 16,091,588 | 21,680,736 | 19,897,221 |
Performance Compensation
| Annual Incentive Plan (AIP) – 2024 | Weight | Threshold | Target | Maximum | Result | Payout Multiple | Weighted Payout |
|---|---|---|---|---|---|---|---|
| Revenue ($) | 10% | 26B | 27.5B | 29.5B | 27.8B | 116% | 12% |
| Adjusted EBITDA ($) | 25% | 4.0B | 4.3B | 4.7B | 4.6B | 173% | 43% |
| Adjusted EBITDA Margin (%) | 10% | 14.5 | 15.6 | 17.0 | 16.5 | 163% | 16% |
| Free Cash Flow ($) | 25% | 1.75B | 2.05B | 2.50B | 2.26B | 146% | 37% |
| Financial Metrics Subtotal | 70% | — | — | — | — | 154% | 108% |
| Strategic Blueprint Priorities | 30% | — | — | — | Assessments Met/Exceeded | 107% | 32% |
| Total Corporate Funding | — | — | — | — | — | — | 140% |
| CEO Final Payout | — | — | — | — | — | — | 160% (recognition of leadership) |
| CEO Actual Bonus ($) | — | — | — | — | — | — | 4,583,200 |
| 2024 LTI Grants (Grant date: Feb 1, 2024) | Units | Fair Value ($) | Vesting |
|---|---|---|---|
| PSUs (target) | 251,484 | 7,625,431 | 3-year performance; FCF conversion & ROIC with TSR modifier |
| PSUs (maximum) | 565,839 | — | 225% of target potential |
| RSUs | 167,656 | 4,799,991 | 1/3 per year over 3 years |
| PSU Design – 2024 Cycle | Weight | Targets | Payout |
|---|---|---|---|
| Relative FCF Conversion vs OSX + TechnipFMC | 50% | ≥75th/50th/25th percentile | 150%/100%/50%/0% |
| Absolute ROIC | 50% | ≥15%/12.5%/10% | 150%/100%/50%/0% |
| Relative TSR Modifier | ± up to 50% | vs OSX + TechnipFMC + S&P 500 Industrials median | Modifier applied to core results |
| 2022 PSU Payout (vested Jan 2025) | Weight | Result | Percentile | Payout Multiple | Weighted Payout |
|---|---|---|---|---|---|
| Relative FCF Conversion | 50% | 47.8% | 87% | 150% | 75.00% |
| ROIC – 3Y Absolute Change | 25% | 17% | 73% | 146.8% | 36.70% |
| ROIC – 3Y Cumulative Average | 25% | 8.9% | 27% | 53.4% | 13.35% |
| Weighted Payout (pre-TSR) | — | — | — | — | 125.05% |
| TSR Modifier | — | +85% cumulative TSR | 67% | 1.334x | — |
| Final Total PSU Payout | — | — | — | — | 166.82% |
Equity Ownership & Alignment
| Beneficial Ownership (as of Mar 24, 2025) | Shares |
|---|---|
| Shares Owned | 840,943 |
| Options/RSUs Exercisable or Vesting by May 23, 2025 | 927,727 |
| Total Beneficial Ownership | 1,768,670 (<1% of class) |
| Shares Outstanding | 990,349,581 |
| Outstanding Awards (Dec 31, 2024) | Detail |
|---|---|
| Stock Options (exercisable; legacy grants) | 374,687 @ $35.70 exp. 8/1/2027; 199,822 @ $35.55 exp. 1/22/2028; 353,218 @ $22.98 exp. 1/23/2029 |
| RSUs Outstanding | 52,512 (1/25/2022) MV $2,154,042; 101,714 (1/24/2023) MV $4,172,308; 167,656 (2/1/2024) MV $6,877,249 |
| PSUs Outstanding (targets) | 394,196 (2022 PSU; paid at 166.82%) ; 228,855 scheduled vest Jan 2026; 251,484 scheduled vest Jan 2027 |
| 2024 Stock Vested | 425,888 shares; value realized $13,129,561 |
- Stock ownership guidelines: CEO must hold ≥6× base salary; all NEOs in compliance in 2024 .
- Hedging/pledging: prohibited for directors and executive officers per Insider Trading Policy and Governance Principles .
Employment Terms
- Executive Severance Plan (non-CIC): 12 months base salary and up to 12 months outplacement; Simonelli specifically eligible for additional six months base salary and 1.5× the greater of last annual bonus or 3-year average bonus; pro-rata vesting for RSUs/options/PSUs held ≥1 year; continued health benefits generally for 3 months .
- Executive Change-in-Control Plan (double-trigger): cash severance equal to 2.5× highest base salary and 2.5× target bonus; pro-rated bonus for year of termination; immediate lapse of RSU service restrictions; PSUs fixed at target or greater of actual-to-date in qualifying covered transactions; 2.5-year continuation of health coverage; excise tax “cut-back” (no gross-up) .
- Clawback: adopted Oct 2023; recoup incentive-based compensation upon accounting restatements and may recoup for misconduct causing material inaccuracies .
- Indemnification: directors and executive officers party to indemnification agreements to fullest extent permitted under Delaware law .
Board Governance
- Board service history: Director since 2017; Chairman since Oct 2017; CEO since Jul 2017 .
- Committee roles: Not applicable—management director; not on Audit, Finance, Governance & Corporate Responsibility, or Human Capital & Compensation Committees .
- Independence: Not independent; 90% of director nominees are independent .
- Combined CEO/Chairman: Board determined combined role with empowered Lead Independent Director is in shareholders’ best interests; LID duties include agenda review, leading independent sessions, calling additional board meetings, liaison role, and chairman evaluation; LID transitions to John G. Rice effective May 1, 2025 (previously W. Geoffrey Beattie) .
- Board meetings and attendance: Board held 6 meetings in FY2024; each director attended >80% of Board and committee meetings; all directors present at 2024 Annual Meeting .
- Director compensation: CEO/Chairman receives no additional director pay; non-employee director program set at $120,000 cash + $175,000 RSUs in 2024, and $125,000 cash + $180,000 RSUs effective 2025 (with committee retainers) .
Compensation Peer Group (Benchmarking)
- Reference Group (compensation): 26 companies spanning general industry, capital intensive, and global O&G peers; Baker Hughes’ executive compensation aligned near median of this group .
- Performance Peer Group (PSU comparisons): Oilfield service names from the OSX index, TechnipFMC, and S&P 500 Industrials median for TSR modifier; FCF conversion measured vs OSX + TechnipFMC .
Say-on-Pay & Shareholder Feedback
| Year | Say-on-Pay Approval (%) |
|---|---|
| 2023 | 87.9% |
| 2024 | 95.2% |
Performance & Track Record
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Revenue ($) | 25,506M | 27,829M |
| Adjusted EBITDA ($) | 3,763M | 4,591M |
| Free Cash Flow ($) | 2,045M | 2,257M |
| Orders ($) | 30,522M | 28,240M |
| Adjusted Diluted EPS ($) | 1.60 | 2.35 |
- Baker Hughes highlighted 2024 achievements: adjusted EBITDA margin up 170 bps to 16.5%, record adjusted EPS and FCF; $28.2B orders; $27.8B revenue; $2.26B free cash flow .
Equity Ownership & Alignment Policies
- Executive stock ownership guidelines: CEO 6× base salary; five years to comply; hold 75% of net shares until compliant; must hold at least 30% in a long position; 2024 compliance confirmed for NEOs .
- Insider policy: no hedging/pledging; derivative transactions prohibited .
Employment & Deferred Compensation
| Nonqualified Deferred Compensation – SRP (2024) | Executive Contributions ($) | Registrant Contributions ($) | Aggregate Earnings ($) | Balance ($) |
|---|---|---|---|---|
| Lorenzo Simonelli | — | 464,004 | 360,716 | 2,636,090 |
Risk Indicators & Red Flags
- Hedging/pledging prohibited (alignment positive) .
- Double-trigger CIC; no excise tax gross-up (shareholder-friendly) .
- Company currently does not grant new stock options; no backdating/repricing (risk mitigation) .
- High say-on-pay approvals (95.2% in 2024) suggest shareholder support for pay design .
- Dual Chair/CEO mitigated by empowered Lead Independent Director with explicit duties .
Investment Implications
- Alignment: Very high at-risk pay mix (~90% of CEO target compensation), heavy PSU weighting (60%) tied to FCF conversion, ROIC and TSR, with above-target outcomes in the 2022 cycle (166.82% payout), and 2024 AIP driven by EBITDA and FCF—favorable for owners when performance persists .
- Retention and potential selling pressure: Large ongoing RSU/PSU vesting cadence (multi-year stagger) and legacy options could create periodic Form 4 activity; pledging/hedging prohibitions and ownership requirements reduce misalignment risk; monitor upcoming PSU vest dates (Jan 2026/Jan 2027) for potential sales tied to tax and diversification .
- Downside protection/transition risk: Double-trigger CIC with 2.5× salary and bonus and accelerated equity mitigates leadership transition risk but implies meaningful potential cash outlay under change-of-control scenarios; non-CIC severance terms for the CEO add incremental protection .
- Governance: Combined Chair/CEO structure requires strong independent oversight; the Lead Independent Director role and committee independence help mitigate dual-role concerns; high say-on-pay support indicates investors currently accept the framework .