Tod Carpenter
DONALDSON CoAbout Tod Carpenter
Tod E. Carpenter, age 66, has served as Donaldson Company’s President and CEO since 2015 and Chairman since 2017; he joined the company in 1996 and has been a director since 2014. He holds a Bachelor’s Degree in Manufacturing Technology from Indiana State University and an MBA from Long Beach State University, and brings deep global leadership experience across product, regional, and operations roles . Under his leadership, fiscal 2025 delivered sales of approximately $3.7 billion, record adjusted operating margin of 15.7%, and record adjusted EPS of $3.68; incentive programs link pay to Company net sales, adjusted EPS, and return on investment (ROI) with clearly defined targets and weightings . The proxy includes five-year TSR comparisons and pay-versus-performance analyses, with Diluted EPS – Incentive highlighted as the primary company-selected measure for linking compensation actually paid to performance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Donaldson Company, Inc. | Chief Operating Officer | 2014–2015 | Led enterprise operations; transitioned into CEO role |
| Donaldson Company, Inc. | SVP, Engine Products | 2011–2014 | Drove growth and product innovation in Engine Products |
| Donaldson Company, Inc. | VP, Europe and Middle East | 2008–2011 | Strengthened EMEA customer relationships and regional growth |
| Donaldson Company, Inc. | VP, Global Industrial Filtration Systems | 2006–2008 | Advanced proprietary filtration offerings globally |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Donaldson Company, Inc. | Director (Chairman since 2017) | Director since 2014 | Board leadership with majority independent board and Lead Independent Director in place |
| AMETEK, Inc. | Director | Not disclosed | Public company board experience; cross-industry perspective |
| Taylor Corporation | Director | Not disclosed | Private company board; governance experience |
Fixed Compensation
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Base Salary ($) | 1,063,846 | 1,070,000 | 1,095,385 |
| Fiscal Base Salary Schedule ($) | $1,070,000 (FY24) | $1,100,000 (FY25) | — |
| All Other Compensation ($) | 182,888 | 92,455 | 94,525 |
| Director Compensation (cash/equity/options) | Not applicable (employee director) | Not applicable | Not applicable |
Performance Compensation
Annual Incentive Design and Outcomes (FY 2025)
| Performance Measure | Weighting | Threshold | Target | Maximum | Actual | Actual as % of Target |
|---|---|---|---|---|---|---|
| Company Net Sales | 30% | $3.188B | $3.751B | $4.313B | $3.691B | 98.41% |
| Company Diluted EPS – Incentive | 50% | $3.10 | $3.65 | $4.20 | $3.68 | 100.82% |
| Company ROI – Incentive | 20% | 16.9% | 19.9% | 22.9% | 19.8% | 99.50% |
| CEO Target Bonus % of Salary | Target Award ($) | Actual Payout ($) |
|---|---|---|
| 120% | $1,320,000 | $1,325,544 |
Design notes:
- Payout range 0–200% of target with interpolation; threshold pays 40% of target .
- FY25 returned to ROI metric after two years using working capital days; exclusions applied for impairment, restructuring, gains/losses and business development charges per HR Committee approval .
Long-Term Incentives (Mix, Awards, and PSU Performance)
- Mix: 50% PSUs and 50% non-qualified stock options; annual LTI values determined with WTW market data .
- CEO FY2025 Grants: PSUs $2,853,630 and Stock Options $2,849,945 grant-date fair values .
- Options granted 10/1/2024 at $73.17 exercise price; vest in three equal annual installments over three years; 10-year term .
- RSUs: Generally cliff vest after three years commencing in fiscal 2025; no RSUs granted to Officers in FY2025 .
| PSU Cycle | Target | Actual | Payout Achievement |
|---|---|---|---|
| FY2023–FY2025 Net Sales – Incentive ($) | $10,836,949 | $10,708,018 | 80.3% |
| FY2023–FY2025 ROI – Incentive (%) | 20.5% | 18.3% | Threshold mechanics applied; overall payout below target |
| CEO PSU Shares | Target Shares | Actual Share Payout |
|---|---|---|
| FY2023–FY2025 | 45,200 | 36,296 |
Multi-Year Summary Compensation (CEO)
| Year | Salary ($) | Stock Awards – PSUs ($) | Option Awards ($) | Non-Equity Incentive ($) | Pension/Deferred Change ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|---|
| 2023 | 1,063,846 | 2,300,228 | 2,299,764 | 1,281,073 | 53,808 | 182,888 | 7,181,607 |
| 2024 | 1,070,000 | 2,547,482 | 2,549,106 | 1,512,680 | 69,745 | 92,455 | 7,841,468 |
| 2025 | 1,095,385 | 2,853,630 | 2,849,945 | 1,325,544 | 78,442 | 94,525 | 8,297,471 |
All Other Compensation (FY2025) details:
- Retirement contributions $87,261; life insurance $4,191; executive physical $3,073; total $94,525 .
Equity Ownership & Alignment
| Ownership Metric | Value |
|---|---|
| Total Beneficial Ownership | 1,563,923 shares |
| Ownership % of Common Stock | 1.3% |
| Deferred Stock Units Included | — |
| RSUs and Exercisable Options Included (within 60 days) | 1,260,768 |
| Stock Ownership Guidelines (CEO) | 10x base salary (above market norm 5x) |
| Compliance Status | All NEOs ≥5 years met stock ownership requirement as of FY2025 |
| Hedging/Pledging | Prohibited for directors, officers, employees |
| Pledges on CEO Shares | Shares “are not subject to any pledge” per beneficial ownership table |
Outstanding CEO Equity Awards (FY2025 year-end snapshots):
| Award Type | Grant Date | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Expiration |
|---|---|---|---|---|---|
| Stock Options | 12/17/2015 | 100,500 | — | 28.00 | 12/17/2025 |
| Stock Options | 12/16/2016 | 166,500 | — | 42.72 | 12/16/2026 |
| Stock Options | 9/24/2020 | 187,000 | — | 46.06 | 9/24/2030 |
| Stock Options | 9/22/2022 | 98,934 | 49,466 | 50.89 | 9/22/2032 |
| Stock Options | 9/21/2023 | 44,934 | 89,866 | 59.66 | 9/21/2033 |
| Stock Options | 10/01/2024 | — | 131,700 | 73.17 | 10/01/2034 |
| PSUs (Unearned) | 8/1/2023–7/31/2026 | 42,700; MV $3,073,119 | — | — | — |
| PSUs (Unearned) | 8/1/2024–7/31/2027 | 39,000; MV $2,806,830 | — | — | — |
Non-Qualified Deferred Compensation (FY2025):
| Name | Executive Contributions ($) | Registrant Contributions ($) | Aggregate Earnings ($) | Aggregate Balance ($) |
|---|---|---|---|---|
| Tod E. Carpenter | — | 67,373 | 135,638 | 3,024,879 |
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment Agreements | None; no formal employment or severance agreements outside change in control . |
| CIC Plan – Trigger | Double-trigger; equity accelerates upon change in control; additional cash/pension/benefits upon qualifying termination . |
| CIC Plan – CEO Multiple | 3x base salary + target annual incentive . |
| CIC Benefits | 36 months benefits continuation; outplacement up to 3 years; excise tax cutback as needed . |
| Equity on CIC | Unvested options and RSUs vest; PSUs vest and pay at target . |
| Potential Payments (Estimates at 7/31/2025) | Change in Control (equity acceleration only): $8,028,943; Qualifying Termination Following CIC: $8,387,111 including cash severance $7,260,000, pension $1,029,851, benefits $52,260, outplacement $45,000 . |
| Severance (non-CIC, illustrative) | Broad-based severance framework example: cash severance $1,870,000; benefits continuation $3,580 . |
| Clawback Policies | Mandatory recovery for restatements; supplemental recovery for misconduct for VP+ roles . |
Board Governance
| Attribute | Details |
|---|---|
| Board Role | Chairman + President + CEO; Committee memberships: None . |
| Director Independence | Majority independent board; all committee members independent; Independent Lead Director in place . |
| Anti-Hedging/Pledging | Prohibited for directors, officers, employees . |
| Director Commitments Policy | Limits on total public boards; additional constraints for sitting CEOs; review for conflicts . |
| Say-on-Pay Support | Nearly 95% of votes cast in favor at 2024 meeting; annual say-on-pay going forward . |
| HR Committee | Ajita G. Rajendra (Chair), Christopher M. Hilger, Douglas A. Milroy, Richard M. Olson; independent consultant WTW engaged . |
Compensation Structure Analysis
- Pay Mix: Significant variable/performance-based pay; long-term incentives split 50% PSUs/50% options; CEO’s FY2025 LTI grant-date fair value totals ~$5.70M .
- Metric Design: Annual plan weights net sales (30%), Diluted EPS – Incentive (50%), ROI (20%); PSU cycles use net sales growth and ROI equally weighted; payout ranges 0–200% .
- Policy Enhancements: RSUs shifted to three-year cliff vest in FY2025 to enhance retention; strong stock ownership requirements (CEO 10x salary) and clawback policies mitigate risk .
- Discretion and Adjustments: FY2025 annual incentive excluded certain non-operational charges per HR Committee approval to align with original plan assumptions .
Director Compensation (for context; not applicable to CEO Carpenter)
| Component | Typical FY2025 Non-Employee Director Levels |
|---|---|
| Annual RSU Grant | 1,300 RSUs |
| Annual Options Grant | 3,900 options (Jan 2, 2025); closing price as exercise price |
| Cash Fees | Vary by role; examples shown per director in proxy |
Equity Ownership & Alignment Signals
- CEO beneficial ownership of 1,563,923 shares (1.3% of common) including 1,260,768 RSUs/exercisable options within 60 days; no pledging noted, with corporate prohibition on hedging/pledging .
- Significant option positions with near-term expiry (e.g., 100,500 options at $28 expiring 12/17/2025) may create exercise and potential selling events; monitor Form 4s around expirations for trading pressure signals .
Investment Implications
- Alignment and Retention: Strong ownership guidelines (CEO 10x salary), high long-term equity exposure (PSUs/options), and robust clawback policies support pay-for-performance alignment and retention; RSU cliff vesting enhances stickiness for any future grants .
- Incentive Quality: Clear, audited metrics with balanced growth and capital efficiency (EPS, net sales, ROI) reduce risk of gaming and tie directly to shareholder value creation; FY2025 payouts were near target on EPS and ROI, modestly below on sales, with PSU cycle paying below target—indicative of discipline .
- Change-in-Control Economics: CEO would receive 3x salary+target bonus plus pension top-up and benefits upon qualifying termination following CIC; equity accelerates at target—important in M&A scenarios; excise tax cutback provision limits gross-up risk .
- Governance Mitigants to Dual Role: CEO also serves as Chairman; mitigated by majority independent board, independent Lead Director, and independent committees; say-on-pay approval ~95% in 2024 suggests investor support for comp design and governance balance .
- Trading Watchouts: Significant legacy option tranches and continuing annual option grants can create periodic exercise/sale flows; track upcoming expirations and PSU vestings for potential insider selling pressure signals .