John Hill
ClearfieldAbout John Hill
John P. Hill is Clearfield’s Chief Operating Officer (age 59), appointed October 30, 2008, following prior roles in sales, product management, and engineering; he attended Macalester College and the University of Minnesota . Recent company performance context for incentive alignment: fiscal 2024 net sales were $166.7M, down 38% year-over-year, and adjusted EBITDA was -$9.10M, resulting in zero bonus plan payout and forfeiture of PSUs tied to EBITDA . Company cumulative total shareholder return (value of $100 initial investment) measured $518.78 in 2022, $143.43 in 2023, and $193.16 in 2024; net sales were $270.9M (2022), $268.7M (2023), and $166.7M (2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Clearfield, Inc. | VP of Sales | 2003–2004 | Commercial leadership in early growth phase |
| Clearfield, Inc. | VP of Product Management & Development | 2004–2007 | Product development leadership; later cited as named inventor on Clearfield products |
| Clearfield, Inc. | VP of Engineering & Product Management | 2007 | Engineering and product portfolio oversight |
| Clearfield, Inc. | Chief Operating Officer | 2008–present | Expanded operating scope vs typical COO; peer-level compensation with CEO by policy |
External Roles
No external directorships or outside roles disclosed for John Hill in the proxy .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 374,415 | 425,000 | 425,000 |
| Annual Bonus Paid ($) | — (none disclosed) | — (none disclosed) | 140,250 discretionary bonus |
| Non-Equity Incentive Plan Compensation ($) | 954,757 | — (none disclosed) | 0 (no payout under 2024 plan) |
| Target Bonus % (program) | 60%/100%/200% (min/target/max) under FY23 plan | 60%/100%/200% (min/target/max) under FY23 plan | 60% target; 200% max under FY24 plan |
Notes:
- FY24 base salaries were held flat: Hill $425,000 .
- FY24 bonus plan metrics (net sales 75%, gross profit 25%) did not meet targets; committee approved discretionary bonuses recognizing operational initiatives (FieldShield U.S. build-out; inventory reduction) .
Performance Compensation
Annual Cash Incentive (FY2024)
| Metric | Weighting | Target | Maximum | Actual | Payout Result |
|---|---|---|---|---|---|
| Net Sales (GAAP, consolidated) | 75% | $207,000k | $258,750k | $166,705k | 0% payout (below target) |
| Gross Profit (GAAP, consolidated) | 25% | $49,000k | $61,500k | $28,889k | 0% payout (below target) |
- Design: Hill’s opportunity = 60% of salary at target and 200% at max; payouts subject to clawback .
Long-Term Equity Awards (granted 11/16/2023 for FY2024 performance)
| Award Type | Grant Date | Shares/Units | Grant Date Fair Value ($) | Vesting | Performance Metric | FY2024 Outcome |
|---|---|---|---|---|---|---|
| Restricted Stock | 11/16/2023 | 19,098 | 499,986 | 1/3 each on 1st, 2nd, 3rd anniversaries, service-based | — | Vests per schedule |
| Performance Stock Units (PSUs) | 11/16/2023 | 19,098 | 499,986 | Cliff at 1-year anniversary, service-based | Adjusted EBITDA target $7.84M | Adjusted EBITDA -$9.10M; PSUs forfeited, no shares issued |
Options and Vesting
| Grant | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Expiration | Vesting Schedule |
|---|---|---|---|---|---|
| 11/13/2020 | 16,000 | 8,000 | 12.43 | 11/13/2025 | 1/5 annually over 5 years |
| 11/16/2021 | 17,776 | — | 23.74 | 11/16/2025 | 1/3 annually over 3 years |
| 11/16/2022 | 5,865 | 2,932 | 66.48 | 11/16/2026 | 1/3 annually over 3 years |
- FY2024 realized: Hill had no option exercises; 9,161 shares from prior restricted stock vested, with $288,285 value realized .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 256,722 shares; 1.8% of outstanding |
| Options exercisable within 60 days | 50,573 shares (included in beneficial ownership disclosure footnote) |
| Unvested Time-Based RS (at 9/30/2024) | 6,667 shares (2023 RS; $259,733 value at $38.96); 19,098 shares (2024 RS; $744,058 value at $38.96) |
| Unearned PSUs (at 9/30/2024) | 19,098 units; $744,058 not earned due to EBITDA miss |
| Stock Ownership Guidelines | COO required to hold 4x annual base salary; compliance measured annually; in-the-money options excluded |
| Compliance Status | All executives and directors with ≥5 years service exceed guidelines (includes Hill) |
| Hedging/Pledging Policy | Prohibited: no margin purchases, pledging, hedging (collars/forwards), short sales, or trading in publicly traded options on Clearfield |
Employment Terms
| Provision | Summary |
|---|---|
| Role & Agreement | COO employment agreement dated 12/16/2008; auto-renews annually unless 60-day notice; includes non-compete, non-solicit, confidentiality, inventions assignment |
| Base & Bonus terms (contract) | Base salary adjustable but not below initial $170,000; target annual bonus 40% of base; max 150% under agreement (programs may differ) |
| Severance (no cause / good reason / non-renewal) | Cash $1,534,043; Accelerated equity $212,240; Benefits $30,345; Total $1,776,628 (as of 9/30/2024, using $26.18 share price for acceleration calc) |
| Change-in-Control (no termination) | Cash $425,000; Accelerated equity $1,982,024; Total $2,407,024 |
| Change-in-Control + qualifying termination | Cash $1,959,043; Accelerated equity $1,982,024; Benefits $30,345; Total $3,971,412 |
| Equity acceleration mechanics | 2007 Plan: single-trigger full acceleration at CIC; 2022 Plan: double-trigger if plan assumed; single-trigger if not assumed |
| 280G Tax Gross-Up | Participant in legacy 280G excise tax gross-up plan (only CEO and COO eligible); reimburses Section 4999 excise taxes on CIC payments; plan cannot be expanded |
| Clawback | SEC/Nasdaq-compliant mandatory recoupment of erroneously awarded incentive compensation; discretionary recoupment for errors/detrimental conduct; applies to cash incentives and equity |
| Insurance | Company-paid premiums for term life insurance; Hill’s personal policy $2,000,000 benefit to estate; separate $2,000,000 company-owned policy payable to Clearfield |
| Related Party | Company paid non-executive employee Andre Hill (Hill’s son; CEO’s son-in-law) $159,718 in FY2024, mostly commissions |
Investment Implications
- Pay-for-performance discipline but with legacy gross-up risk: FY2024 bonus plan paid 0% due to misses on net sales and gross profit, and FY2024 PSUs were forfeited on negative adjusted EBITDA, reinforcing at-risk design; however, the 280G gross-up and single-trigger acceleration under the 2007 plan are shareholder-unfriendly features that can magnify CIC payouts .
- Retention vs selling pressure: Hill holds 256,722 shares and has 50,573 options currently exercisable within 60 days; no option exercises in FY2024 but 9,161 RS vested, adding potential supply; insider trading policy prohibits hedging/pledging, and stock ownership guidelines indicate he exceeds required holdings, supporting alignment and reducing leverage risk .
- Contract economics: Severance equals 2x salary plus average bonus via agreement mechanics and substantial equity acceleration on CIC, with total CIC+termination value illustrated at ~$3.97M; this reduces near-term departure risk but creates potential overhang in a strategic transaction .
- Governance and pay trends: Committee added PSUs in FY2024, maintained equity grant values, and granted discretionary bonuses for operational initiatives (U.S. FieldShield build-out, inventory management) despite financial underperformance; say-on-pay support was 94% in 2024, suggesting investor acceptance of program changes .