Kenneth Young
Babcock & Wilcox EnterprisesAbout Kenneth Young
Kenneth M. Young, 61, is Chairman and Chief Executive Officer of Babcock & Wilcox (B&W). He has served as CEO since November 2018 and as Chairman since September 2020; he has been a director since 2020. He holds a B.S. in Computer Science (Graceland University) and an MBA (University of Southern Illinois). In 2024, B&W reported $717.3M of revenue (flat YoY), Adjusted EBITDA of $68.9M (+13% YoY), net loss from continuing operations of $73.0M, bookings of $889.6M (+39%), and year-end backlog of $540.1M (+47%). Total shareholder return (value of $100) was $44.99 in 2024 versus $222.00 for the TSR peer group. Adjusted EBITDA is a core pay metric across annual and long-term incentive plans.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Babcock & Wilcox | CEO; Chairman | CEO since Nov 2018; Chairman since Sep 2020 | Led portfolio and backlog growth; EBITDA used as pay metric to drive earnings; significant bookings/backlog expansion in 2024. |
| B. Riley Financial, Inc. | President | Jul 2018 – Aug 2024 | Executive leadership at major shareholder and financing partner. |
| B. Riley Principal Investments | CEO | Oct 2016 – Aug 2024 | Investment leadership experience; tie to major holder. |
| LCC (Lightbridge Communications Corp.) | Executive leadership roles | Prior to B. Riley | Led global telecom services company operations. |
| Liberty Media subsidiaries | C-level positions | Prior | Media/communications operating experience. |
| AT&T group (Cingular, SBC, Southwestern Bell, AT&T) | Executive management roles | 16-year tenure | Large-scale telecom operating and P&L background. |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Public company boards (various) | Director | Served on boards of nine public companies (various years) | Broad governance network; potential information flow benefits. |
Board governance at BW: Young is not “independent” due to his executive role; committees (Audit & Finance, Compensation, Governance, Related Party Transactions) are composed entirely of independent directors. Alan B. Howe serves as Lead Independent Director and Governance Committee chair; Joseph A. Tato chairs Compensation. Executive sessions are chaired by the Lead Independent Director. Five of seven directors are independent, with CEO the only executive director.
Fixed Compensation
| Element | 2022 | 2023 | 2024 | Notes |
|---|---|---|---|---|
| Base Salary ($) | 750,000 | 750,000 | 766,666 (paid largely via third-party arrangements until Dec 2024) | Annual base salary set at $800,000 effective Dec 1, 2024 under employment agreement; Board may increase, not decrease. |
| Target Bonus ($) | — | — | 750,000 target under AIP (100% of base) | AIP metric = Adjusted EBITDA only; payout 0% in 2024. |
| Total Compensation ($) | 3,172,778 | 1,083,333 | 2,882,638 | 2024 includes salary, bonus, and stock awards; no AIP payout. |
Additional salary context:
- Annual base salary approved as of Dec 31, 2024: $800,000 (6% increase from $750,000 in 2023).
Performance Compensation
Annual Cash Incentive (AIP) – 2024
| Metric | Threshold | Target | Max | Actual | Payout | Young Target |
|---|---|---|---|---|---|---|
| Adjusted EBITDA ($M) | 101 | 110 | 112 | 68.9 | 0% | $750,000 |
- Design: Single metric (Adjusted EBITDA) to emphasize earnings growth; 25%/100%/120% of target payout at threshold/target/max; straight-line interpolation; 0% below threshold.
Long-Term Incentive – Cash Plan (established 2024)
| Feature | Young Details |
|---|---|
| Total LTI Cash Opportunity | $1,500,000 |
| Performance Period/Weighting | 2024 (50%) and 2025 (50%) Adjusted EBITDA |
| 2024 Goal | Adjusted EBITDA $100M; actual 2024 Adjusted EBITDA $68.9M (excl. discontinued ops) |
| Vesting/Retention | Earned only if employed through Dec 31, 2026, except Committee may pay up to half of the year’s portion after year-end. |
| 2025 Adjustments | Committee adjusted 2025 target to reflect 2024 business unit dispositions. |
| Payment Action (Mar 2025) | Committee approved payment of the half of the 2024 portion for retention and performance considerations. Based on plan structure, this implies 25% of total opportunity (i.e., $375,000) if applied pro rata to Young. |
Equity Incentives: In 2024, the Compensation Committee favored time-based RSUs over options for efficiency and retention; RSUs vest ratably over three years. 2024 grants were effective Aug 5, 2024.
2024 Equity Grants (RSUs)
| Grant Date | Type | Shares | Grant-Date FV ($) | Vesting |
|---|---|---|---|---|
| Aug 5, 2024 | RSU | 125,000 | 143,750 | Time-based, ratable over 3 years. |
Pay-for-Performance Linkage and Policies
- Adjusted EBITDA and stock price are principal performance measures used to link pay and value realization; AIP and LTI cash tie to Adjusted EBITDA; PSUs (2022 awards) tied to stock price.
- Compensation program includes clawback provisions; no excise tax gross-ups; no single-trigger CIC vesting.
- Hedging and pledging of company stock are prohibited.
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 1,638,079 shares (1.66% of outstanding) as of Mar 1, 2025; includes 241,745 shares held by the Kenneth B. Young Revocable Trust. Calculated vs 98,404,024 shares outstanding. |
| Stock Ownership Guidelines | CEO required to hold 5x base salary; if not met, must retain at least half of net shares acquired from equity grants. |
| Hedging/Pledging | Prohibited for directors, officers, employees. |
Outstanding Equity (Dec 31, 2024)
| Type | Grant Date | Shares/Units Outstanding | Exercise Price | Expiration | Notes |
|---|---|---|---|---|---|
| Stock Appreciation Rights (SARs) | 12/18/2018 | 843,500 | $20.00 | 12/18/2028 | As reported in outstanding awards table. |
| RSU | 07/28/2022 | 50,000 | — | — | Time-based; see Company RSU vesting practice. |
| RSU | 08/05/2024 | 125,000 | — | — | Time-based; ratable over 3 years. |
| PSU | 07/28/2022 | 150,000 | — | — | Subject to stock-price performance conditions. |
Insider selling pressure: Upcoming RSU vesting (three-year ratable schedule) and any PSU conversions may create periodic liquidity windows; pledging/hedging is prohibited, reducing alignment risk.
Employment Terms
| Term | Key Economics/Conditions |
|---|---|
| Agreement Effective | Employment Agreement signed Nov 8, 2024, effective Dec 1, 2024; initial 5-year term through Dec 1, 2029; auto one-year renewals; Company to nominate him for re-election while term is active (subject to law and willingness). |
| Base Salary | $800,000; may be increased, not decreased, by Board/committee. |
| Target Bonus | 100% of base salary; performance criteria set by Board/committee. |
| Equity Awards | At Board/committee discretion. |
| Benefits/Perqs | Standard plans; reimbursement for airfare to Akron and hotel while at HQ. |
| Severance (Non‑CIC) | 2x (base + target bonus) paid over 2 years; prior-year earned bonus plus pro-rata target for year of termination; 24 months COBRA; 1 year acceleration for service-based vesting scheduled within 12 months; SERP/Restoration full vesting; performance awards receive 1 additional year of service for performance measurement (service condition credited). Release required. |
| Severance (CIC, Double Trigger) | 3x (base + target bonus) paid over 3 years; 36 months COBRA; full acceleration for service-based awards; performance awards’ service condition deemed satisfied with performance measured per award terms; no excise tax gross-up; 280G cutback if beneficial after-tax. |
| Clawback | Incentive awards subject to clawback consistent with policy. |
| Third-Party Arrangements (History) | Until Sep 20, 2024, BW paid B. Riley affiliate $62,500/month for CEO services; Company paid a $1,000,000 retention bonus to BRPI LLC in 2022 vesting over 36 months (remaining $250,002 transferred to OpenSky upon termination of BRPI agreement). From Sep 20–Nov 30, 2024, OpenSky (wholly owned by Young) received $66,666.66/month plus an $800,000 signing bonus (pro‑rata repayable if cause/voluntary termination within 3 years). Total 2024 payments to OpenSky: $1,300,000. Employment Agreement terminated OpenSky agreement as of Dec 1, 2024. |
Compensation Structure Analysis
- Mix shift and discretion: 2024 AIP paid 0% due to EBITDA miss, but the Committee approved paying half of the 2024 portion of the LTI cash opportunity in March 2025, citing overall performance, business unit dispositions, and retention needs—introduces discretion despite financial shortfall.
- Equity design: 2024 pivot to time-based RSUs (vs. options) to enhance retention and deliver equivalent value with fewer shares—reduces performance risk for the executive relative to options, but maintains stock-price linkage.
- Governance safeguards: No single-trigger CIC vesting; no excise tax gross-ups; clawback in place; hedging/pledging prohibited.
Performance & Track Record
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| B&W TSR ($100 initial) | 96.30 | 247.46 | 158.30 | 40.05 | 44.99 |
| Peer Group TSR ($100) | 105.89 | 121.40 | 128.46 | 163.00 | 222.00 |
| Net Income ($M) | (10.3) | 32.0 | (14.2) | (75.8) | (72.9) |
| Adjusted EBITDA ($M) | 45.70 | 70.60 | 72.40 | 79.10 | 68.90 |
Additional 2024 operating context:
- Revenue $717.3M; operating income $25.1M; bookings $889.6M (+39% YoY); backlog $540.1M (+47% YoY).
Board Governance (Service History, Committees, Dual-Role Implications)
- Service/roles: Director since 2020; Chairman since 2020; CEO since 2018; not independent due to employment.
- Committee structure: Four standing committees (Audit & Finance, Compensation, Governance, Related Party Transactions), all independent. Compensation Chair: Joseph A. Tato; Governance Chair and Lead Independent Director: Alan B. Howe.
- Dual-role mitigation: Lead Independent Director presides over executive sessions, approves agendas/schedules, liaises between independent directors and Chair/CEO.
Equity Ownership & Director/Shareholder Alignment Policies
- Stock ownership guidelines: CEO 5x salary; other NEOs 3x; directors 5x annual base retainer. Holding requirements apply until met.
- 2024 say-on-pay: 96.3% approval—strong shareholder support.
Related Party Transactions (Governance Red Flags to Monitor)
- B. Riley (major holder at ~29.29%) had consulting arrangement tied to CEO services through Sep 2024; retention bonus and payment flows to BRPI LLC and OpenSky (wholly owned by Young) during 2024; total OpenSky payments of $1.3M in 2024; Employment Agreement ended OpenSky arrangement Dec 1, 2024. Monitor for continued independence and related-party oversight.
Director Compensation (Context for Dual Roles)
- All committees are independent; non-employee directors receive equity (unvested RSUs outstanding as of Dec 31, 2024). As an employee director, Young’s compensation is through his executive package, not standard director retainers.
Risks, Red Flags, and Signals
- Retention risk vs. discretion: AIP pay at 0% yet partial LTI cash paid for 2024 portion—retention positive but raises pay-for-performance scrutiny.
- Dual role (CEO/Chair): Concentration of power mitigated by an active Lead Independent Director and fully independent committees.
- Alignment safeguards: Clawbacks; no hedging/pledging; no single-trigger; no excise tax gross-ups.
- Ownership concentration: B. Riley at ~29.29%—monitor influence; board maintains independence standards.
Investment Implications
- Pay-for-performance: 2024 AIP at 0% reflects EBITDA miss; however, discretionary partial payment under LTI cash for 2024 portion underscores retention priorities during portfolio reshaping—watch if 2025 targets (post-dispositions) are appropriately rigorous.
- Insider supply: Three-year ratable RSU vesting (2024 grant of 125,000 units) and potential PSU conversions create periodic vesting-related supply; hedging/pledging bans reduce adverse alignment risks.
- Governance: CEO/Chair dual role is balanced by an empowered Lead Independent Director and independent committees; say-on-pay support (96.3%) signals current investor acceptance of the program’s structure.
- Ownership alignment: 1.66% beneficial ownership and CEO 5x salary guideline indicate meaningful skin-in-the-game expectations; enforcement via holding requirements if below guidelines.
- Related party oversight: Historical B. Riley/OpenSky arrangements concluded with the Employment Agreement; continued vigilance on related-party transactions remains prudent given large shareholder ownership.