Mark Smith
Chief Financial Officer at CMI
Executive
About Mark Smith
Mark A. Smith is Vice President and Chief Financial Officer of Cummins Inc., serving in the role since 2019; he is 57 years old as of January 31, 2025 . Under his financial leadership in 2024, Cummins delivered record sales of $34.1B and record adjusted EBITDA of $5.4B, with Smith personally credited for leading the tax‑free Atmus Filtration share exchange (reducing shares outstanding by ~5.6M), repatriating >$1B of cash, and maintaining A credit ratings with Moody’s and S&P . Cummins reported that in 2024 it ranked first among its peer group in TSR and its 1-, 3-, and 5‑year returns outpaced the S&P 500 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Cummins Inc. | Vice President – Chief Financial Officer | 2019–present | Led Atmus separation (tax‑free exchange; ~$1.3B gain; ~5.6M share reduction), repatriated >$1B cash, maintained A credit ratings |
External Roles
- None disclosed in company filings for Mark A. Smith .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary ($) | 735,000 | 805,000 | 862,750 |
| Target annual bonus ($) | — | — | 877,000 (target set for 2024) |
| Actual annual bonus paid ($) | — | — | 1,466,675 (paid March 2025 for 2024) |
Notes:
- Target annual bonus % was not disclosed; 2024 target bonus was stated in dollars .
- The actual 2024 annual bonus payout factor for the corporate plan was 170% of target, applied uniformly to participants in the Cummins plan .
Performance Compensation
Annual Bonus Plan (2024)
| Metric | Weighting | Target | Actual | Payout factor |
|---|---|---|---|---|
| EBITDA ($MM) | 70% | 4,436 | 5,266 | 200% component |
| Operating Cash Flow ($MM) | 30% | 3,385 | 3,419 | 100% component |
| Final payout factor | — | — | — | 170% (weighted outcome) |
Long‑Term Incentive Plans (Performance Cash and Performance Shares)
| Plan cycle | Metrics and weights | Targets | Actuals | Payout |
|---|---|---|---|---|
| 2022–2024 (companywide) | ROIC 80%, EBITDA 20% | ROIC 15%; Cumulative EBITDA $12,875MM | ROIC 17.66%; Cumulative EBITDA $14,384MM | 150% of target (paid March 2025) |
| 2024–2026 (companywide) | ROIC 80%, EBITDA 20% over 3 years | Targets set at grant; payout 0–200% | In‑flight | In‑flight |
Mark Smith’s 2024 realized incentive components:
- Annual bonus: $1,466,675 (= $862,750 × 170%) .
- Performance cash (2022–2024): $1,012,500 (= $675,000 × 150%) .
- Performance shares (2022–2024): 10,365 shares earned (= 6,910 × 150%), valued $3,613,239 at $348.60/share .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 74,472 shares; less than 1% of outstanding shares |
| Stock ownership guidelines | CLT/NEOs (ex‑CEO) must hold 3× base salary; officers have 5 years to comply; all NEOs are in compliance or within allowed time |
| Hedging/pledging | Officers and directors are prohibited from pledging, short sales or hedging involving CMI stock |
| Unvested RSUs | 3,942 matching RSUs from 2024 Deposit Share Program; cliff vest on May 31, 2028, subject to service and holding requirements |
| Performance share targets outstanding | 17,660 (2023–2025 cycle) and 23,100 (2024–2026 cycle) target units; 0–200% payout potential; settle March 2026 and March 2027, respectively |
| Stock options outstanding (exercisable) | 970 @ $114.13 exp. 6/1/2026; 4,380 @ $149.72 exp. 4/3/2027; 6,080 @ $160.10 exp. 4/3/2028; 21,580 @ $163.43 exp. 4/4/2029; 21,310 @ $142.12 exp. 4/6/2030 |
| 2024 option exercises | 7,220 shares; value realized $1,043,652 |
| Deposit Share Program (alignment) | Smith deposited 3,942 newly acquired shares and received a 1:1 matching RSU grant that vests in 4 years |
Potential near‑term selling/withholding pressure:
- Performance share payouts scheduled for March 2026 and March 2027 may trigger tax‑related share withholding/sales; Deposit Share Program RSUs cliff‑vest May 31, 2028 .
Employment Terms
- Contracts: Cummins has no separate employment contracts with executive officers; compensation programs are set by the Talent Management & Compensation Committee (TMCC) with an independent consultant (Farient) .
- Non‑compete/confidentiality: Each NEO agrees to confidentiality and a 12‑month non‑compete after employment .
- Clawback: Incentive compensation is subject to robust clawback provisions beyond legal minimums .
Severance (non‑change‑in‑control) – Illustrative 12/31/2024 scenario for Mark A. Smith
| Component | Amount |
|---|---|
| Severance | $877,000 |
| Annual bonus (2024 earned) | $1,466,675 |
| Welfare benefits | $31,416 |
| Financial counseling | $13,745 |
| Total (illustrative) | $2,394,146 |
Change‑of‑Control (Double Trigger) Policy and Illustrative Economics
- Policy: Double‑trigger vesting; for NEOs (other than CEO), severance equals two years’ base salary plus two annual bonus payments (at 1.0 factor), continued benefits for two years; no excise tax gross‑ups (best‑net cutback applies) .
- Illustrative 12/31/2024 aggregate change‑in‑control amounts for Smith: $18,664,388 (includes severance, unvested equity at target, retirement and welfare benefits) .
Multi‑Year Compensation Summary (NEO SCT values)
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 735,000 | 805,000 | 862,750 |
| Stock awards | 1,255,754 | 1,953,902 | 4,164,137 |
| Non‑equity incentive plan comp (annual bonus + perf. cash) | 1,251,600 | 2,268,500 | 2,479,175 |
| Change in pension value & NQDC earnings | 0 | 1,549,446 | 1,500,437 |
| All other compensation | 29,814 | 32,099 | 34,057 |
| Total compensation | 3,272,168 | 6,608,947 | 9,040,556 |
Perquisites detail (2024 “All Other Compensation”): financial counseling $13,745; life insurance $7,737; company RSP contribution $12,575; no personal aircraft use .
Compensation Structure and Metrics
- Design: Heavy “pay at risk”; CEO at 89% and other NEOs at 80.5% of target TDC tied to performance (ex‑special awards) .
- Annual plan metrics: EBITDA (70%) and Operating Cash Flow (30%), set against AOP; 2024 payout 170% .
- Long‑term plan metrics: ROIC (80%) and EBITDA (20%) over three years; 2022–2024 paid at 150% .
- Deposit Share Program: One‑for‑one RSU match on newly acquired shares with 4‑year cliff vest to reinforce retention and alignment .
- Peer benchmarking: Custom peer group includes CAT, DE, ETN, ITW, PCAR, PH, ET AL; target to median market positioning .
- Governance safeguards: No option repricing; no hedging/pledging; clawbacks; independent TMCC and consultant .
- Say‑on‑pay: 94.0% approval in 2024 .
Pension, Deferred Compensation, and Benefits
- 2024 change in pension value/NQDC earnings for Smith: $1,500,437 (qualified and non‑qualified plans; no above‑market NQDC earnings for Smith) .
- Present value of accumulated pension benefits at 12/31/2024: Qualified plan $450,298; Excess Benefit Plan $554,588; Supplemental Life Insurance & Deferred Income Plan $7,793,000 .
- NQDC activity (2024): No executive or company contributions; aggregate balance $0 for Smith .
Equity Grant Details (2024)
| Award | Grant date | Smith target/units | Vesting/notes |
|---|---|---|---|
| Performance shares (2024–2026) | Apr 3, 2024 | 11,550 target (0–200% earnout) | Earnout over 3 years; settle March 2027 |
| Matching RSUs (Deposit Share Program) | May 31, 2024 | 3,942 units | Cliff vest on 4th anniversary if holding and service conditions met |
| Performance shares (2023–2025) | Apr 2023 | 17,660 target | Settle March 2026 |
Risk Indicators & Red Flags
- Anti‑pledging/anti‑hedging policy for officers; robust clawback; no option repricing; no CIC tax gross‑ups (best‑net cutback) .
- Trading policy and insider controls disclosed; policy filed as exhibit to 10‑K .
- Strong say‑on‑pay support (94.0%), mitigating governance risk .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay approval: 94.0%; no material changes made in response; continued shareholder engagement noted .
Compensation Committee and Consultant
- TMCC members independent; Farient Advisors LLC engaged as independent compensation consultant .
Investment Implications
- Alignment: Smith’s pay is tightly linked to EBITDA, cash flow, and ROIC, with high at‑risk mix and multi‑year vesting; his 2024 Deposit Share match and meaningful ownership (74,472 shares) reinforce long‑term alignment; pledging/hedging prohibitions and clawbacks further reduce agency risk .
- Retention and supply overhang: Upcoming 2023–2025 and 2024–2026 performance share settlements (Mar 2026/2027) and Deposit Share RSU vest (May 31, 2028) could create episodic selling/withholding pressure; however, ownership guidelines restrict sales below required levels .
- Strategic execution: Smith’s record includes executing the Atmus separation, liquidity optimization (> $1B repatriation), and preserving A credit ratings amid cyclical softness—factors supportive of capital discipline and downside protection .
- Governance: Double‑trigger CIC terms without tax gross‑ups, strong say‑on‑pay support, and independent oversight reduce governance risk; pay targeting median peers limits pay inflation risk .