Sean Keohane
CABOTAbout Sean Keohane
Sean D. Keohane (age 57) is President, Chief Executive Officer and Director of Cabot Corporation (since 2016), and has served on Cabot’s Board since 2016; prior roles include EVP/President of Reinforcement Materials (2014–2016) and SVP/President of Performance Chemicals (2012–2014), after joining Cabot in 2002; earlier he held general management roles at Pratt & Whitney (United Technologies) . Cabot’s shareholder value creation during his tenure is reflected in the Pay vs. Performance table: a $100 investment in Cabot grew to $339 in 2024 versus $156 for the peer group; 2024 results included diluted EPS $6.72, adjusted EPS $7.06, income before tax $529M, total segment EBIT $701M, operating cash flow $692M and DFCF $479M, with robust TSR over the period .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cabot Corporation | President, CEO and Director | 2016–present | Led “Creating for Tomorrow” strategy; 2024 outcomes included adj. EPS $7.06, total segment EBIT $701M, DFCF $479M; progressed capacity expansion (Cilegon, Indonesia) and secured U.S. DOE grant for battery materials . |
| Cabot Corporation | EVP, President – Reinforcement Materials | 2014–2016 | Drove segment leadership in reinforcing carbons . |
| Cabot Corporation | SVP, President – Performance Chemicals | 2012–2014 | Advanced specialty product portfolio . |
| Cabot Corporation | VP & GM – Performance Chemicals; VP | 2008–2012; 2005 | Built business positioning across chemicals end-markets . |
| Pratt & Whitney (UTC) | General management positions | pre-2002 | Industrial/operations leadership experience . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| The Chemours Company | Director (public company) | 2018–present | Board service at global performance chemicals company . |
| American Chemistry Council | Director | 2016–present | Industry trade association leadership engagement . |
Fixed Compensation
| Metric (CEO) | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Base Salary ($) | 1,035,000 | 1,083,750 | 1,100,000 |
| STI Target (%) | — | — | 125% of base (raised from 120%) |
| STI Target ($) | — | — | 1,375,000 |
| Actual STI Paid ($) | 1,838,657 | 1,045,704 | 1,951,043 (142% of target) |
| All Other Compensation ($) | 308,354 | 235,251 | 324,558 |
Notes:
- 2024 base salary increase: 0.0% .
- Directors who are Cabot employees (including the CEO) do not receive additional director compensation .
Performance Compensation
Annual Incentive (STI) Design and FY2024 Outcome
- Structure: 70% corporate financial metrics; 30% individual performance; payout range 0–200% of target .
- FY2024 corporate metrics: Adjusted EBIT, Net Working Capital (NWC) days, Discretionary Free Cash Flow (DFCF); Committee did not exercise discretion .
- CEO payout: 138.4% for corporate component; 150% for individual; overall 142% of target, paying $1,951,043 .
| Component | Weighting | Target | Actual/Payout | Notes |
|---|---|---|---|---|
| Corporate Metrics (Adj. EBIT, NWC days, DFCF) | 70% | 100% | 138.4% | Pre-set threshold/target/max; straight-line interpolation |
| Individual Performance | 30% | 100% | 150% | Committee judgment within framework |
| Total STI Payout | — | 100% | 142% of target | Resulting bonus $1,951,043 |
Long-Term Incentive (LTI) Design and FY2024 Grants
- Mix at grant-date value: 35% PSUs, 35% stock options, 30% time-based RSUs (TSUs); 70% of target LTI is performance-based (PSUs + options) .
- FY2024 CEO grants (11/10/2023): 29,166 PSUs ($2,169,950), 79,139 options (exercise $74.40; grant-date fair value $2,170,625), 25,000 TSUs ($1,860,000); total LTI grant value $6.2M .
| Award Type | Grant Date | Target/Count | Key Terms | Grant-Date Value ($) |
|---|---|---|---|---|
| PSUs | 11/10/2023 | 29,166 target | Three 1-year performance tranches (Adj. EPS 65%, Adj. RONA 35%), 0–200% payout, vests at 3 years | 2,169,950 |
| Stock Options | 11/10/2023 | 79,139 | Exercise price $74.40; 10-year term; time-vest | 2,170,625 |
| TSUs | 11/10/2023 | 25,000 | Time-based, retention-focused, generally three-year vest | 1,860,000 |
PSU Performance Achievements (Selected)
| PSU Cohort | Performance Year | Metric (Weight) | Target | Actual | Payout % |
|---|---|---|---|---|---|
| FY2022 grant (vested 11/2024) | FY2024 (Year 3) | Adjusted EPS (65%) | $6.39 | $7.06 | 171.6% |
| Adjusted RONA (35%) | 17.0% | 20.6% | 200.0% | ||
| Composite | — | — | — | 181.5% | |
| FY2023 grant (vests 11/2025) | FY2023 (Year 2) | Composite | — | — | 123.5% |
| FY2024 grant (vests 11/2026) | FY2023 (Year 1) | Composite | — | — | 185.6% |
Multi‑Year CEO Compensation (Summary Compensation Table)
| Year | Salary ($) | Stock Awards ($) | Option Awards ($) | Non‑Equity Incentive ($) | Change in Pension/Deferred ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|---|
| 2022 | 1,035,000 | 3,087,436 | 1,662,485 | 1,838,657 | 16,097 | 308,354 | 7,948,029 |
| 2023 | 1,083,750 | 3,509,911 | 1,890,051 | 1,045,704 | 26,843 | 235,251 | 7,791,510 |
| 2024 | 1,100,000 | 4,029,950 | 2,170,625 | 1,951,043 | 23,978 | 324,558 | 9,600,154 |
Additional realizations (FY2024):
- Options exercised: 43,474 shares; value realized $2,292,081 .
- Stock vested (TSUs/PSUs): 115,937 shares; value realized $8,897,817 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 1,114,434 shares; 2.02% of class (based on 54,221,416 shares outstanding as of 1/15/2025) . |
| Options exercisable within 60 days | 834,194 shares underlying options . |
| Ownership Guidelines | CEO required ownership = 5x base salary; all executives subject ≥5 years have satisfied guidelines . |
| Hedging/Pledging | Prohibited for directors and LTI participants; no pledging or margin accounts permitted . |
| Deferred/Retirement Plans | Supplemental 401(k) Plan balance $4,708,097; Deferred Compensation Plan balance $3,139,286 as of FY2024; no 2024 elective deferrals by CEO . |
| Pension/SERP | Supplemental Cash Balance Plan frozen; U.S.-based NEOs fully vested in account balances as of 9/30/2024 . |
Selected outstanding awards (as of 9/30/2024):
- Unexercised options (exercisable/unexercisable): e.g., 11/12/2021 grant 62,538/41,693 at $58.27 (exp. 11/11/2031); 11/11/2022 grant 21,575/50,342 at $73.84 (exp. 11/10/2032); 11/10/2023 grant —/79,139 at $74.40 (exp. 11/9/2033) .
- Unvested TSUs: 24,455 (2021 award; $2,733,335), 21,939 (2022; $2,452,122), 25,000 (2023; $2,794,250) market values based on $111.77 on 9/30/2024 .
- PSU status: unearned/earned tranches shown; e.g., 2023 PSU line shows 18,044 units and 38,888 unearned units with corresponding market values .
Employment Terms
| Topic | Terms |
|---|---|
| Employment Agreement | No employment contract (U.S. NEOs other than Mr. Zhu serve without employment agreements) . |
| Severance Plan (CIC) | Lump sum = 3x (base + “bonus,” where bonus is greater of target or highest last 3 years); 3 years continued benefits; pro‑rated bonus; outplacement up to 15% of base; “better‑of” excise tax provision; double‑trigger equity vesting policy . |
| Potential Payments (CIC scenario as of 9/30/2024) | Severance Pay $11,031,556; Accelerated Unvested Equity $26,523,322; Benefits/Perqs $260,479; Total $37,815,357 . |
| Death/Disability (Illustrative) | Accelerated equity $23,396,444; plus $3,000,000 benefits for death; $0 benefits for disability . |
| Retirement Eligibility | CEO eligible for early retirement under U.S. plans; retirement vesting provisions added at start of FY2024 (pro‑rata equity vesting), but no NEO met age/service requirements as of 9/30/2024 . |
| Clawback | Awards subject to Cabot’s incentive compensation recoupment policies; the 2025 LTIP includes clawback/recoupment provisions . |
Board Governance
- Role and Independence: CEO and Director since 2016; member of the Board’s Executive Committee; not independent (all other standing committee members are independent) .
- Chair/CEO Structure: Non‑Executive Chair (Michael M. Morrow) since Oct 1, 2023, providing separation of board leadership from management; if roles are combined in the future, a Lead Independent Director would be appointed under guidelines .
- Board Activity: Board met seven times during fiscal 2024; oversight conducted via Audit, Compensation, Governance & Nominating, and SHE&S committees (independent membership) .
- Director Compensation: Employee directors do not receive director fees; non‑employee directors received $95,000 cash retainer and $155,000 equity retainer in 2024 with committee chair retainers as specified .
Director Compensation (context for dual role)
- Employee directors (including Keohane) are not paid additional board retainers; equity received is via executive LTI, not director plans .
Compensation Peer Group (Benchmarking)
- FY2024 peer group (19 companies): Albemarle; Ashland Global; Avient; Axalta; Celanese; Chemours; Element Solutions; FMC; H.B. Fuller; Huntsman; Innospec; Minerals Technologies; NewMarket; Olin; Orion; RPM; Stepan; Trinseo; Tronox; Eastman Chemical was added for FY2025 review .
- Targeting strategy: total direct compensation targeted to a range around the market 50th percentile; phased adjustments for internal promotions over ~3 years .
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑Pay approval: 98% support at the 2024 Annual Meeting; Committee concluded programs effectively align pay with performance; continued engagement with shareholders .
Performance & Track Record
| Year | Cabot TSR (Value of $100) | Peer Group TSR (Value of $100) | Net Income ($M) | Adjusted EBIT ($M) |
|---|---|---|---|---|
| 2021 | 143 | 136 | 250 | 492 |
| 2022 | 186 | 117 | 209 | 583 |
| 2023 | 206 | 135 | 445 | 553 |
| 2024 | 339 | 156 | 380 | 633 |
Selected FY2024 achievements under Keohane’s leadership:
- Delivered diluted EPS $6.72 and adjusted EPS $7.06; total segment EBIT $701M; CFO $692M; DFCF $479M .
- Advanced key capacity projects (Cilegon, Indonesia) and secured U.S. DOE grant for battery-grade CNTs and conductive dispersions .
- Strengthened investor outreach and sustainability performance against 2025 goals .
Compensation Structure Analysis
- Mix and At‑Risk Pay: In FY2024, 66% of CEO total direct compensation opportunity was performance‑based (STI + PSUs + options) .
- Shift/Trends: 2024 saw higher equity grant values (stock awards $4.03M; options $2.17M) and a higher STI payout (142% of target) versus 2023 (lower STI) consistent with stronger performance metrics .
- Instruments: Balanced use of PSUs (EPS/RONA), options (price appreciation), and TSUs (retention) with multi‑year vesting; no option repricing without shareholder approval .
- Risk Controls: Caps on incentives, diversified metrics (income statement, balance sheet, cash flow), recoupment policies, and stock ownership guidelines .
Risk Indicators & Red Flags
- Hedging/Pledging: Prohibited (reduces misalignment/credit risk) .
- Change‑in‑Control: Double‑trigger equity vesting policy; no excise tax gross‑ups in severance plan; “better‑of” cutback applied .
- Option Repricing: Prohibited without shareholder approval .
- Related Party Transactions/Investigations: Not disclosed in the proxy; none noted in extracted sections (skip).
- Say‑on‑Pay: Strong support (98%) indicates low external concern on pay practices .
Board Service History, Committees, and Dual‑Role Implications
- Board tenure: Director since 2016; Executive Committee member .
- Independence: Not independent (as CEO); all standing board committees are fully independent .
- Governance structure: Non‑Executive Chair model in place since 10/1/2023, mitigating CEO/Chair concentration risks; if combined in future, a Lead Independent Director is required by guidelines .
- Attendance: Board met seven times in FY2024; committee operations and oversight robust per governance disclosures .
Investment Implications
- Alignment: Significant skin‑in‑the‑game (2.02% ownership; 834k options exercisable within 60 days; strong compliance with 5x‑salary ownership guideline), hedging/pledging bans, and pay design tied to EPS/RONA and cash flow suggest incentives aligned with TSR, margin, and capital efficiency .
- Potential Selling Pressure: 2024 realizations (43,474 options exercised; 115,937 shares vested) indicate meaningful liquidity events; continued vesting of sizable TSUs/PSUs and option overhang (e.g., 79,139 2023 options; 50,342 2022 unexercisable) can create episodic supply, though structured vesting mitigates cliff effects .
- Retention/Transition Risk: Robust double‑trigger CIC economics ($37.8M modeled total) and multi‑year vesting support retention; no CEO employment contract reduces rigidity; CEO eligible for early retirement, with newly introduced retirement vesting mechanics designed to smooth transitions .
- Pay Governance: Strong say‑on‑pay backing (98%), independent consultant (Meridian) and median‑oriented benchmarking reduce pay‑inflation and governance risk .
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