Karen Kalita

About Karen Kalita

Senior Vice President and General Counsel of Cabot Corporation (CBT) since June 3, 2019, with responsibility for legal, compliance, governance and complex litigation oversight . During her tenure, Cabot delivered strong shareholder value creation and operating performance: cumulative TSR rose from 143 (FY2021) to 339 (FY2024) on an initial $100 basis, adjusted EBIT reached $633M in FY2024, and the company achieved a 12% adjusted EPS CAGR over FY2022–FY2024 and $1.2B cumulative discretionary FCF, at the top end of its Investor Day targets .

Past Roles

External Roles

(Not disclosed in the reviewed filings.)

Fixed Compensation

Notes:

• FY24 corporate STI metrics paid at 138.4% of target; Ms. Kalita’s individual performance modifier was 130%, resulting in a 136% total payout vs. target .

Performance Compensation

Annual Incentive (STI) – Design and FY2024 Results

• Metrics and weights: Adjusted EBIT 60%; Net Working Capital (NWC) Days 20%; Discretionary Free Cash Flow (DFCF) 20% .
• FY2024 performance and payout factors:

• Ms. Kalita STI: Target $373,536; payout based on 138.4% corporate and 130% individual modifier = 136% of target ($507,613) .

Long-Term Incentives (LTI) – Structure and Grant

• Mix: 35% Performance-based RSUs (PSUs), 35% Stock Options, 30% Time-based RSUs (TSUs) (grant-date value basis) .
• PSU metrics: Adjusted EPS (65%) and Adjusted RONA (35%); targets set for each of three one-year tranches at grant; three-year overall vesting .
• Options: 10-year term; vest 30%/30%/40% over three years; exercise price = close on grant date .
• TSUs: Cliff vest at 3 years; dividend equivalents paid during vesting .
• Retirement vesting provisions added effective FY2024 grants; pro-rata vesting upon retirement with extended exercisability for options and performance-based vesting for PSUs .

FY2024 LTI grant (Nov 10, 2023):

PSU tranche achievement based on FY2024 performance (applies to different grant cohorts):

Vesting and realized value (FY2024):

Timing considerations: Annual equity grants occur in November; options vest over three anniversaries and TSUs cliff vest at 3 years, concentrating vesting/settlement generally around November each year .

Equity Ownership & Alignment

• Beneficial ownership: 49,680 shares as of Jan 15, 2025; includes 23,318 shares acquirable within 60 days via options and 587 shares held in the 401(k) plan .
• Outstanding awards as of Sep 30, 2024:

• Ownership guidelines: Executives reporting to the CEO must hold equity equal to 3x base salary; all MEC members subject for 5+ years had met guidelines at filing .
• Hedging/pledging: Prohibited for directors and LTI participants; no short sales, derivatives, margin or pledging allowed .

Related indicators:

• No related-party transactions >$120,000 involving executive officers reported since the beginning of FY2024 .
• Recoupment (clawback) policy compliant with Dodd‑Frank; recovery of incentive comp required upon certain restatements; discretionary clawback for cause-related events also in place .

Employment Terms

• No individual employment agreement disclosed; covered by Senior Management Severance Protection Plan .
• Change-in-control economics (double-trigger within 2 years post-CIC): 2x (salary + greater of target bonus or highest last-3-year bonus), 2 years of health/welfare benefits, pro‑rated bonus, and outplacement up to 15% of base salary; equity generally follows double-trigger vesting treatment .
• Estimated CIC termination values as of Sep 30, 2024:

• Death/Disability: Unvested options/TSUs vest; PSUs vest for tranches earned to date; death benefit plan equal to 3x base salary up to $3,000,000 for U.S.-based NEOs .

Compensation Structure Analysis

• Pay-for-performance alignment: For FY2024, 56% (avg) of non-CEO NEO total direct compensation was performance-based; short-term component tied 70% to objective corporate metrics and 30% to individual performance; LTI program 70% performance-oriented (PSUs and options) .
• Performance rigor: STI and PSU targets set to support strategic goals including 8–12% adjusted EPS CAGR and strong capital efficiency (RONA), cash flow (DFCF), and working capital management (NWC days) .
• Governance safeguards: Caps on STI/LTI payouts; stock ownership guidelines; Dodd‑Frank clawback; no single-trigger vesting; no hedging/pledging; no option repricing without shareholder approval .

Compensation Peer Group and Say‑on‑Pay

• Peer group used for benchmarking includes 19 specialty/diversified chemical names (e.g., Albemarle, Celanese, Huntsman, Orion S.A., RPM, Stepan; FY2025 adds Eastman) .
• Say‑on‑pay support: 98% approval in 2024; 2025 advisory vote also passed with substantial support (46.4M for vs. 0.75M against) .

Investment Implications

• Insider selling pressure: Equity grants and vesting cadence in November and multi‑year schedules (options 30/30/40; TSUs 3‑year cliff; PSUs three annual tranches) can concentrate exercisability/settlements around November; Ms. Kalita realized $1.54M from option exercises and $1.17M from vested stock in FY2024, indicating liquidity events around vest dates .
• Alignment and retention: Meaningful in-the-money and unvested equity, ownership guidelines (3x salary) met, strict anti-hedging/pledging, and double-trigger CIC with 2x multiple suggest balanced retention incentives and reduced misalignment risk .
• Pay-performance linkage: Company’s outperformance on adjusted EPS CAGR and robust DFCF over FY2022–FY2024 supported above-target PSU tranche outcomes (181.5%/123.5%/185.6% for FY2024 tranches), reinforcing variable pay tied to value creation .