D. James Umpleby III
CATERPILLARAbout D. James Umpleby III
D. James “Jim” Umpleby III is Executive Chairman of Caterpillar Inc. (effective May 1, 2025), having served as CEO (2017–2025) and Chairman (2018–2025). He is 67 and has been a Caterpillar director since 2017; he also serves on the board of Chevron Corporation . Under his tenure, Caterpillar delivered record 2024 adjusted profit per share of $21.90, a 20.7% adjusted operating margin, $9.4B ME&T free cash flow, and five-year cumulative TSR of $274 vs $176 for S&P 500 Industrials (base 100 on 12/31/2019), while returning $10.3B to shareholders in 2024 via buybacks and dividends .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Caterpillar Inc. | Executive Chairman | 2025–present | Supports CEO transition; facilitates board oversight and stakeholder transitions . |
| Caterpillar Inc. | Chairman of the Board | 2018–2025 | Unified leadership; annually elected chair; moved to Exec Chairman effective May 1, 2025 . |
| Caterpillar Inc. | Chief Executive Officer | 2017–2025 | Led profitable growth, record adj. EPS and margin; strong FCF and TSR outperformance . |
| Caterpillar Inc. | Group President, Energy & Transportation | 2013–2016 | Senior operating leadership of major segment . |
| Solar Turbines (Caterpillar subsidiary) | Vice President & President | 2010–2012 | Led subsidiary operations . |
| Caterpillar subsidiary | Joined company | 1980 | Nearly 45-year company tenure; deep institutional knowledge . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Chevron Corporation | Director | Current | Energy industry exposure; additional public board network . |
Fixed Compensation
| Metric ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 1,687,500 | 1,752,500 | 1,811,250 |
| All Other Compensation (incl. retirement contributions, perqs) | 805,349 | 1,343,949 | 881,234 |
- Base salary was increased from $1.77M to $1.825M effective 2024; CEO base salaries are targeted near peer median .
- Perquisites are limited (executive physicals, financial planning/tax services, home/security, limited personal use of company aircraft/ground transportation) .
- 2024 perqs detail: personal aircraft usage $85,207; ground transportation $2,149; personal security $5,402; company 401(k) and SDCP contributions $36,333 and $733,874, respectively .
Performance Compensation
Annual Incentive (AIP) structure and payout (2024)
- Design: Financial measures are Enterprise Operating Profit, OPACC (enterprise/segment), and Services Revenues; strategic modifiers: Services Growth and ESG Strategy (each ±10%, combined ±20%) .
- Weighting emphasis: Largest portion (50%–66%) on Enterprise Operating Profit and OPACC; remainder on Services Revenues .
- Target opportunity: Increased to 185% of salary for 2024 (from 175%) to align with peer median .
- 2024 results and payout:
- Performance factor: 1.16; Services Growth adj +7%; ESG adj +5% (total +12%); AIP payment: $4,363,800 .
- CEO “actual” annual incentive equaled ~1.30x target (proxy narrative), with target value illustrative total: salary $1,825,000; target AIP $3,350,952; LTI target $14,602,848 .
| 2024 AIP Inputs | Value |
|---|---|
| Base salary used (daily-weighted) | $1,811,325 |
| Target opportunity | 185% |
| Performance factor | 1.16 |
| Modifiers | Services +7%, ESG +5% (total +12%) |
| AIP payment | $4,363,800 |
Long-Term Incentive (LTI) design and 2024 grants
- Mix (2024): 50% PRSUs, 25% time-based RSUs, 25% stock options (changed in 2024 from 50% PRSUs / 50% options) .
- PRSU metrics and leverage: 50% three-year average ROIC; 50% rTSR vs S&P Capital Goods; vesting leverage threshold/target/max of 50%/100%/200%; three-year performance cycle .
- RSUs and options vest 1/3 annually starting first anniversary; options expire in 10 years .
- CEO 2024 grant sizing set near 60th percentile of peer group median value; other NEOs approx. 50th percentile .
| 2024 Grant (3/4/2024) | Shares/Units | Key Terms | Grant Date Fair Value ($) |
|---|---|---|---|
| PRSUs (target) | 24,361 (thr 12,181; max 48,722) | 3-yr performance; 50% ROIC / 50% rTSR | 9,954,879 |
| RSUs | 12,181 | Time-based; vest 1/3 annually | 4,125,096 |
| Stock options | 39,561 @ $338.65 strike; 10-yr term | Vest 1/3 annually | 4,125,037 |
- Recent PRSU result: 2022–2024 PRSUs earned at 100% based on three-year average adjusted ROE of 53.9% vs 18% goal; CHRC applied standard exclusions (restructuring, OPEB MTM, certain tax effects, goodwill impairment) in assessing performance .
Equity Ownership & Alignment
Beneficial ownership and guideline compliance
| As of Jan 1, 2025 | Shares |
|---|---|
| Common stock beneficially owned | 550,036 |
| Shares underlying options/RSUs/SARs exercisable within 60 days | 192,797 |
| Total | 742,833 |
| Ownership as % of outstanding | <1% (each person <1%) |
- Stock ownership guidelines: CEO 6x base salary; NEOs must attain within five years; unvested RSUs/PRSUs/options excluded; as of the proxy, all NEOs met target or are within the accumulation period .
- Anti-hedging/pledging: Hedging and pledging of company stock prohibited; none of the shares held by the group were pledged .
Vesting overhang and realized equity
| 2024 Realizations | Amount |
|---|---|
| Options exercised | 87,053 shares; $18,831,305 value realized |
| Stock awards vested (PRSUs) | 42,136 shares; $13,205,212 value realized |
| Unvested/Outstanding at 12/31/2024 | Amount |
|---|---|
| Unvested RSUs | 12,320 units; $4,469,203 market value |
| Unearned PRSUs | 49,278 units; $17,876,087 market value |
| Options outstanding (selected) | e.g., 155,411 (2021, $219.76), 43,526 unexercised (2022, $196.70), 37,386/74,770 ex/unex (2023, $253.98), 39,561 unexercisable (2024, $338.65) |
Employment Terms
Agreements, clawback, and plan policies
- No individual severance or change-in-control (CIC) agreements; severance considered case-by-case; no CIC cash severance beyond plan provisions; CIC benefits are double-trigger (CIC plus qualifying termination) with accelerated equity and prorated target AIP .
- Clawback: SEC-compliant no-fault restatement policy (3-year lookback) plus misconduct-based recoupment under governance guidelines .
- Insider trading/awards: Fixed grant calendar (first Monday in March); no option backdating/repricing; strict blackout timing .
- No tax gross-ups on CIC benefits; robust ownership requirements; no repricing of options .
Potential payments upon termination (as of 12/31/2024)
| Scenario | Stock Options ($) | PRSUs/RSUs ($) | AIP ($) | Total ($) |
|---|---|---|---|---|
| Voluntary Separation (qualified Long-Service Separation) | 16,315,225 | 39,029,349 | 4,363,800 | 59,708,374 |
| Termination for Cause | — | — | — | — |
| Termination Following CIC (double-trigger) | 16,315,225 | 39,029,349 | 3,350,952 (target, prorated) | 58,695,526 |
- Under Long‑Service Separation (age 55+ and 5+ years), outstanding options continue vesting per schedule and remain exercisable; RSUs generally continue vesting (except 1/12/24 grants); PRSUs remain outstanding subject to performance .
- Under CIC double-trigger, all unvested equity vests; PRSUs at target if granted in 2024+; options remain exercisable for normal term; AIP prorated at target .
Retirement, pension, and deferred compensation
| Pension plan | Years of credited service | Present value of accumulated benefit |
|---|---|---|
| Solar RP (qualified) | 25 | $2,125,634 |
| Solar MRO (non-qualified SERP) | 25 | $27,761,637 |
| Nonqualified deferred comp (12/31/2024) | Balance ($) | 2024 contributions/earnings ($) |
|---|---|---|
| SDCP | 18,228,965 balance; Exec contrib 432,009; Company contrib 733,874; Earnings 3,316,210 | |
| DEIP | 8,132,957 balance; Earnings 1,327,342 | |
| SEIP | 76,746 balance; Earnings 10,471 |
Board Governance (including dual-role implications)
- Role transition: Umpleby moved from combined CEO+Chairman to Executive Chairman on May 1, 2025; Joseph E. Creed became CEO .
- Independent oversight: The board uses a Presiding Director (Debra L. Reed‑Klages) to lead executive sessions, set agendas with management, and serve as liaison between independent directors and the Executive Chairman/CEO—mitigating potential independence concerns from an executive chair structure .
- Committee roles: As Executive Chairman (management director), Umpleby serves on no board committees; independent directors chair key committees .
- Board practices: Annual director elections; majority voting in uncontested elections; mandatory director retirement age 74; robust governance framework including anti-hedging/pledging and clawback policies .
Director Compensation (for board service)
- Umpleby received no separate director compensation while serving as Chairman/CEO .
- Non-employee director structure (for context): $150,000 cash retainer, $170,000 RSUs (1-yr vesting), with additional committee chair stipends; 5x cash retainer stock ownership guideline for directors .
Compensation Peer Group and Shareholder Feedback
- 2024 compensation peer group includes diversified industrial and large-cap peers (e.g., Deere, Honeywell, RTX, GE, PACCAR, Cummins, Ford, GM (added Aug 2023)) .
- Benchmarking targets size-adjusted medians; CEO 2024 LTI grant set around the 60th percentile of peer median values; other NEOs approx. 50th percentile .
- Say-on-pay support: 93% approval in 2024 (also 93% in 2023; 94% in 2022); outreach with holders of ~45% of outstanding shares in 2024 .
Equity Ownership & Alignment (Summary table)
| Topic | Policy/Status |
|---|---|
| CEO ownership guideline | 6x base salary; five years to comply; unvested equity/options excluded . |
| Compliance status | All NEOs met target or are within the five-year accumulation period . |
| Hedging/Pledging | Prohibited for directors/officers/employees . |
| Insider award timing | Fixed March schedule; no backdating/repricing; blackout safeguards . |
Performance & Track Record
- 2024 performance: Adj. profit per share $21.90; adj. operating margin 20.7%; services revenue $24B; ME&T FCF $9.4B; $10.3B capital returned; five‑year cumulative TSR $274 vs $176 for S&P 500 Industrials .
- “Pay vs Performance” disclosures show CEO “compensation actually paid” moving largely with TSR and ROE over 2020–2024 .
Risk Indicators & Red Flags
- No individual CIC agreements; double-trigger equity vesting; no CIC tax gross-ups; no option repricing—mitigates governance risk .
- CHRC discretion to adjust PRSU metrics (e.g., ROE/ROIC/rTSR) for special items introduces some judgment—monitors alignment rigor .
- Anti-hedging/pledging policy and strong ownership guidelines support alignment .
- Large nonqualified SERP (Solar MRO) present value ~$27.8M; accruals frozen after 2019 for “Sunset” participants; still a meaningful personal retirement asset .
Investment Implications
- Alignment and incentives: Approximately 91% of CEO’s 2024 target comp was variable/at‑risk; LTI design shifts performance leverage into PRSU outcomes tied to ROIC and relative TSR—clear shareholder alignment and visibility into long-term value levers .
- Retention and transition: Umpleby’s move to Executive Chairman with no individual severance agreement and double-trigger CIC provisions limits windfall risk; long‑service separation provisions and large deferred comp/pension balances reduce near-term retention concerns but represent meaningful personal wealth tied to CAT performance and equity vesting .
- Trading signals: Meaningful 2024 option exercises (87,053 shares; $18.8M) and PRSU vesting realizations ($13.2M) suggest recurring liquidity windows around March grant anniversaries and PRSU performance-period ends—monitor Form 4s for cadence and size .
- Governance: Transition from combined CEO/Chairman to Executive Chairman plus a strong Presiding Director structure supports independent oversight, tempering dual-role concerns; sustained high say‑on‑pay support (93%) indicates investor approval of pay design and outcomes .
- Performance backdrop: Record profitability metrics, robust FCF and TSR outperformance under Umpleby’s tenure underpin pay outcomes and reinforce pay-for-performance credibility—supportive for investor confidence in ongoing strategy execution under new CEO with Umpleby as Executive Chairman .