Michael Gadd
About Michael Gadd
Senior Vice President, General Counsel and Corporate Secretary of Clearwater Paper (CLW). He has been a named executive officer in the company’s proxies since at least 2020 and is eligible for retirement under the company’s legacy pension plan, indicating long tenure with Clearwater/its predecessor Potlatch (credited service frozen as of 12/31/2011) . Pay-for-performance is primarily tied to Adjusted EBITDA for annual bonuses, and to multi-year Free Cash Flow (FCF) and ROIC with a relative TSR modifier for performance shares; in 2024, company Adjusted EBITDA attainment was 72.4% of target, while strategic objectives paid at 200% (his AIP paid $356,300 vs. $342,500 target), and the 2022–2024 performance share cycle paid at 175% of target .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Clearwater Paper | Senior Vice President, General Counsel and Corporate Secretary | 2020–2025 (NEO in 2020–2024 proxies; Corporate Secretary on proxy filings) | Corporate governance, SEC compliance, executive officer role |
Fixed Compensation
- 2024 base salary and target incentives:
- Base salary: $528,000; AIP target: $342,500; LTIP target: $528,000 .
- 2024 actual cash bonus (AIP) paid in 2025: $356,300 .
Multi-year compensation (Summary Compensation Table):
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $497,692 | $512,116 | $525,500 |
| Stock Awards (RSUs/PSUs grant-date fair value) | $480,226 | $547,862 | $619,707 |
| Option Awards | $0 | $0 | $0 |
| Non-Equity Incentive Plan Compensation (AIP) | $564,400 | $447,300 | $356,300 |
| Change in Pension Value/Deferred Comp Earnings | $0 | $18,396 | $8,205 |
| All Other Compensation | $71,808 | $82,892 | $76,225 |
| Total | $1,614,126 | $1,608,566 | $1,585,937 |
Performance Compensation
Annual Incentive Plan (AIP) – 2024
| Metric | Weighting | Target/Scale | Actual/Attainment | Payout factor | Payout timing |
|---|---|---|---|---|---|
| Company Adjusted EBITDA ($) | 75% | Threshold/Target/Max; 0%/100%/200% of target | $212.6M vs $225.0M target; Approved 72.4% of target | 72.4% | Paid March 2025 |
| Strategic Objectives | 25% | 0%–200% of target | Committee determined 200% based on Augusta acquisition, CPD divestiture, debt paydown | 200% | Paid March 2025 |
| Individual AIP | — | Target: $342,500 | Actual: $356,300 | — | Paid March 2025 |
Long-Term Incentives (LTIP)
- Award structure: PSUs based on 3-year FCF and ROIC with a relative TSR modifier; time-based RSUs .
- 2024 grants to Gadd (grant date: 2/26/2024):
- PSUs target: 9,463; grant-date fair value $380,129 .
- RSUs: 6,308; grant-date fair value $239,578 .
- 2023 grants outstanding:
- PSUs target: 8,306 ; RSUs: 5,538 .
- 2022–2024 PSU payout: 175% of target; Gadd settled 16,816 PSUs; combined with 5,559 RSUs vested in 2024; value realized on vesting $677,339; shares withheld for taxes 5,898 ($180,901) .
- Vesting schedules (current outstanding):
- RSUs (2024 grant): 33%/33%/34% on or about 3/15/2025, 3/15/2026, 3/15/2027 .
- RSUs (2023 grant): 50%/50% on or about 3/15/2025 and 3/15/2026 .
- RSUs (2022 grant): 100% on or about 3/15/2025 .
- PSUs: 2023–2025 and 2024–2026 performance periods; payout 0%–200% based on FCF/ROIC, modified by relative TSR; shown at target in outstanding table .
Equity Ownership & Alignment
- Beneficial ownership (as of 2/28/2025): 111,701 shares; includes 28 shares in 401(k), 28,728 shares underlying vested options, and 6,088 RSUs vesting within 60 days; <1% of outstanding .
- Outstanding equity at FY-end 2024 (Gadd):
- Unvested RSUs: 6,406 (2022), 5,538 (2023), 6,308 (2024); corresponding market values reported using $29.77 closing price on 12/31/2024: $190,707; $164,866; $187,789 .
- PSUs unearned (at target): 8,306 (2023–2025), 9,463 (2024–2026); market values $247,270; $281,714 .
- Stock options (exercisable; strike; expiry): 6,315 @ $61.75 exp. 2/26/2025; 11,328 @ $38.75 exp. 2/25/2026; 7,587 @ $56.75 exp. 2/27/2027; 9,813 @ $37.45 exp. 3/5/2028 .
- Note: With CLW at $29.77 on 12/31/2024, these options were out-of-the-money as of that date .
- Ownership guidelines: Senior Vice President requirement = 2x base salary; executives must meet within 5 years; company states NEOs have met or are on track; unearned PSUs and unexercised options do not count .
- Hedging/pledging: Prohibited (no short sales, margin, pledges, or derivatives in company stock) per Insider Trading Policy .
- Clawback: Dodd-Frank-compliant clawback policy plus plan-level restatement and reputational harm clawbacks; equity plan includes double-trigger CoC vesting provisions .
Employment Terms
- Severance (non-Change-of-Control): If terminated without cause/for good reason:
- Cash severance: $528,000 (12 months base pay); pro-rata AIP at target $342,500; COBRA/life insurance continuation; total illustrative value $909,686 (no equity acceleration) .
- Change-of-Control (double trigger required):
- Cash severance: $2,178,000 (2.5×(base + base×target bonus%)); pro-rata AIP at target $342,500; equity acceleration valued at $621,866 (RSUs accelerated per plan rules; PSUs prorated at target); benefits continuation; total $3,240,330 .
- No excise tax gross-ups; payments cut or paid in full to maximize after-tax benefit .
- Death/Disability/Retirement (as of 12/31/2024):
- Eligible for retirement; illustrative value of equity acceleration $606,207; pro-rata AIP $342,500; benefits continuation $97,964; total $3,224,671 (includes pension-related provisions per plan terms) .
- Other plan features: Annual Incentive Plan provides guaranteed pro-rata target bonus upon qualifying CoC events; a benefits protection trust is in place post-CoC to fund obligations .
Pensions & Deferred Compensation
- Pension (present value at 12/31/2024): Retirement Plan $160,637; Supplemental Plan $122,980; credited service 5.84 years (service frozen as of 12/31/2011; part of benefit payable to an alternate payee) .
- Nonqualified deferred compensation (2024): Company supplemental 401(k) contribution $56,969; aggregate balance $333,183; aggregate earnings $7,493 in 2024 .
Related-Party Transactions and Policies
- 2024: No related party transactions requiring disclosure or Audit Committee approval .
- Independent compensation governance: Independent Compensation Committee; independent consultant (Semler Brossy); caps on incentive payouts; no repricing without shareholder approval .
Key Upcoming Vesting/Expiration Events (Selling Pressure Watch)
- RSU vest dates: March 15, 2025/2026/2027 per schedules, with tax withholding likely (historically, 5,898 shares withheld for 2024 vesting) .
- Option expirations: 2/26/2025 (6,315 @ $61.75); 2/25/2026; 2/27/2027; 3/5/2028; options were OTM at $29.77 as of 12/31/2024, limiting near-term exercise-driven sales unless price appreciates .
Investment Implications
- Pay-for-performance alignment: AIP tied 75% to Adjusted EBITDA and 25% to strategic objectives; LTIP driven by 3-year FCF/ROIC with TSR modifier. 2024 AIP paid just above target due to 200% strategic score offsetting sub-target EBITDA, and 2022–2024 PSUs paid at 175%—indicating management delivery on multi-year value drivers despite a softer 2024 EBITDA outcome .
- Selling pressure: Near-term RSU vesting on March 15 each year implies routine sell-to-cover tax transactions; legacy options appear out-of-the-money at year-end 2024 levels, reducing option-exercise selling pressure unless stock appreciates materially .
- Retention and change-in-control: Standard severance (12 months base) but substantial CoC economics (2.5× multiple on base+target bonus and equity acceleration, double trigger), which should mitigate CoC-related flight risk while aligning incentives to shareholder outcomes; no tax gross-ups .
- Alignment safeguards: Robust ownership guidelines (2× salary for SVPs), anti-hedging/pledging prohibitions, and clawbacks reinforce alignment and reduce agency risk .