Timothy McGrath
About Timothy McGrath
Timothy McGrath, age 66, has served as CNXN’s Chief Executive Officer since August 2011 and President since May 2010; he joined the Company’s executive management team in 2005 . Under pay-versus-performance disclosures, CNXN’s 2024 net income was $87.1 million with SG&A at 10.54% of billings, and the CEO’s compensation actually paid tracked rising total shareholder return (TSR) from a $100 base to 146.02 in 2024, reflecting improving performance over 2023–2024 . CNXN’s insider trading policy prohibits hedging and pledging (with limited exceptions), supporting alignment with shareholders .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| CNXN | President | Since May 2010 | Led overall operations prior to CEO transition |
| CNXN | Chief Executive Officer | Since Aug 2011 | Principal executive, accountable for performance and strategy |
External Roles
No external public company directorships or roles disclosed for McGrath in the 2024 10-K or 2025 Proxy .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 1,176,539 | 1,265,000 | 1,265,000 |
| Target Bonus (% of Salary) | 100% (employment agreement) | 100% | 100% |
| Cash Bonus ($) | — | — | 7,590 |
| Non-Equity Incentive Payout ($) | 1,437,040 | 632,500 | 1,214,400 |
| All Other Compensation ($) | 9,150 | 18,364 | 19,463 |
| CEO Pay Ratio | — | — | 61:1 (2024) |
Notes:
- Base salary increased to $1,265,000 effective October 1, 2022 .
- Perquisites for executives did not exceed $10,000 in 2024 .
Performance Compensation
2024 Cash Performance Award Structure and Outcomes
| Metric | Target | Actual | Payout vs Target |
|---|---|---|---|
| Consolidated Net Income ($) | 90.0 million | 87.1 million | 96% |
| SG&A as % of Billings | 10.14% | 10.54% | 96% |
| CEO Non-Equity Award Threshold/Target/Max ($) | 632,500 / 1,265,000 / 2,150,500 | — | — |
| CEO Payout ($) | — | — | 1,214,400 (96% of salary) |
Design:
- Target bonus equals 100% of base salary for CEO; payouts scale from 90% to 170% of salary based on performance .
Equity Awards Granted (2024)
| Grant Date | Instrument | Shares/Units | Grant Date Fair Value ($) |
|---|---|---|---|
| 3/14/2024 | RSU | 40,000 | 2,569,200 |
Plan features:
- RSUs are the primary equity instrument; as of March 17, 2025, no options outstanding under the 2020 Plan .
- Minimum 1-year vesting applies to awards, with limited exceptions; clawback agreement applies to participants .
Equity Ownership & Alignment
| Ownership Measure | Value |
|---|---|
| Beneficial Ownership (shares) | 303,392 |
| Beneficial Ownership (% of outstanding) | 1.2% |
| Unvested RSUs (as of 12/31/2024) | 135,000 units |
| Unvested RSU Market Value (12/31/2024, $69.27/sh) | $9,351,450 |
| Shares Acquired on Vesting in 2024 | 50,000 shares; value realized $3,549,350 |
| Stock Ownership Guidelines for Executives | None |
| Hedging/Pledging Policy | Hedging prohibited; pledging prohibited except limited approval cases |
Outstanding RSUs and Vesting Schedules (as of 12/31/2024)
| Award | Units | Vesting Detail | Market Value ($) |
|---|---|---|---|
| Oct 2014 RSUs | 8,000 | Vest 9/1/2025 | 554,160 |
| Mar 2016 RSUs | 22,000 | 7,000 on 9/1/2025; 10,000 on 9/1/2026; 5,000 on 9/1/2027 | 1,523,940 |
| Feb 2018 RSUs | 30,000 | 10,000 per year over 6 years; first vested 4/1/2022 | 2,078,100 |
| Oct 2019 RSUs | 10,000 | 5,000 per year over 7 years; first vested 10/29/2020 | 692,700 |
| Dec 2021 RSUs | 5,000 | 5,000 per year over 4 years; first vested 12/17/2022 | 346,350 |
| Nov 2022 RSUs | 20,000 | 10,000 per year over 4 years; first vested 11/21/2023 | 1,385,400 |
| Mar 2024 RSUs | 40,000 | 10,000 per year over 4 years; first vested 3/14/2025 | 2,770,800 |
| Market value based on $69.27 closing price on 12/31/2024 . |
Employment Terms
| Term | Detail |
|---|---|
| Employment Agreement | Initial salary $500,000 (May 2008); salary adjusted to $1,265,000 as of Oct 2022 |
| Annual Cash Performance Award | Target 100% of base salary; goals set by Board |
| Equity Eligibility | Annual equity incentive grants under stock plans |
| Severance (without cause) | 24 months of severance; prorated target cash performance award for year of termination; COBRA continuation cost coverage for 24 months in specified circumstances |
| Change-of-Control (CoC) Treatment | If terminated without cause or for good reason within 12 months of CoC: full-year target cash performance award; 75% of unvested equity accelerates at CoC; remaining vests on earlier of one year post-closing (with continued employment) or qualified termination; RSUs paid at greater of CoC price or value at one-year mark |
| CoC Estimated Payout (as of 12/31/2024) | $10,825,388 total; includes $2,530,000 salary (24 months), $7,013,588 accelerated RSUs, $1,265,000 target bonus, $16,800 COBRA |
| Restrictive Covenants | Non-compete and non-solicit for 24 months post-termination |
| Clawback Policy | Overseen by Compensation Committee; participants bound by clawback under plan terms |
Trigger structure:
- Partial single-trigger acceleration (75% at CoC), remainder effectively double-trigger/continued service requirement .
Performance & Track Record (Pay Versus Performance Metrics)
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| CEO Summary Compensation ($) | 1,388,550 | 3,209,550 | 4,787,929 | 1,915,864 | 5,075,653 |
| CEO Compensation Actually Paid ($) | 480,650 | 2,339,350 | 5,547,279 | 5,357,164 | 5,661,803 |
| TSR (Value of $100) | 95.22 | 89.27 | 97.66 | 140.87 | 146.02 |
| Net Income ($) | 55,765,000 | 69,906,000 | 89,219,000 | 83,271,000 | 87,095,000 |
| SG&A % of Billings | 10.97% | 10.34% | 10.46% | 11.03% | 10.54% |
Governance context:
- Controlled company status with Chair Patricia Gallup owning ~53.3% of common stock ; Compensation Committee chaired by Barbara Duckett with Jack Ferguson as member; committee oversees clawbacks and incentive plans .
- 2022 Say-on-Pay received majority approval; considered in setting 2025 compensation .
Compensation Structure Analysis
- Mix of pay is balanced between base, annual cash tied to net income and SG&A efficiency, and multi-year RSU grants that vest over 4–7 years; limited use of options and no executive ownership guidelines (reduces mandated “skin-in-the-game” but RSU overhang is meaningful) .
- CoC provisions include partial single-trigger acceleration, which can elevate exit payouts and create retention pressure in M&A scenarios; restrictive covenants and 24-month severance mitigate abrupt departure risk .
- Clawback oversight and strict hedging/pledging prohibitions support alignment and reduce risk of misaligned financial engineering .
Investment Implications
- Near-term vesting cadence: 10,000 RSUs vested on 3/14/2025 with additional tranches on 9/1/2025 and annually thereafter, implying mechanical supply potential if dispositions occur; 135,000 unvested RSUs as of year-end 2024 had a $9.35 million mark-to-market, creating ongoing vest-related liquidity considerations .
- Incentive design ties annual cash to profitability and expense leverage, with recent achievement at ~96% of targets; TSR and net income trends improved in 2023–2024, aligning realized pay with performance .
- CoC economics are sizable ($10.83 million estimate) with partial single-trigger acceleration; in strategic review or M&A scenarios, payout dynamics and restrictive covenants should be modeled into transaction analyses and retention planning .
- Absence of executive stock ownership guidelines and controlled company status may affect external governance perceptions; however, prohibitions on hedging and pledging, and active clawback administration, are positive alignment signals .