Stephen G. Oswald
About Stephen G. Oswald
Stephen G. Oswald, 61, has served as President and CEO of Ducommun since January 2017 and as Chairman since May 2018, bringing prior leadership experience as CEO of Capital Safety (2012–2015) and ~15 years in various leadership roles at United Technologies, including President of Hamilton Sundstrand Industrial division . Under his tenure, DCO achieved record 2024 revenue of ~$786.6M, a 22% stock price increase in 2024, a 24% market cap increase y/y, adjusted EBITDA of $116.6M (14.8% margin), and backlog just over $1B; 3‑year TSR ranked 79th percentile vs Russell 2000 . He is non‑independent (Chairman and CEO) and chairs the Board Innovation Committee; the Board has a Lead Independent Director and prohibits hedging/pledging, with a clawback policy compliant with SEC Rule 10D‑1 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Capital Safety Company | Chief Executive Officer | 2012–2015 | Led a specialty safety equipment maker through growth culminating in sale to 3M; subsequently took time to manage personal investments . |
| United Technologies Corp. (UTC) | Various leadership roles, incl. President, Hamilton Sundstrand Industrial division | ~15 years (approx.) | Broad operating leadership; industrial and aerospace domain expertise leveraged in DCO’s Vision 2027 strategy execution . |
External Roles
- No other public company directorships disclosed for Mr. Oswald in the proxy profile .
Board Governance (service history, committees, dual‑role implications)
- Board service: Director since 2017; current term expires 2026 .
- Committees: Innovation Committee Chair .
- Dual‑role structure: Combined Chair/CEO; Board cites efficiency, clear accountability, and deep business knowledge as rationale; Lead Independent Director (Shirley Drazba) holds expansive authorities (agenda approval, executive sessions, shareholder communications) to mitigate independence concerns .
- Independence: Mr. Oswald is not independent; 9 of 10 current directors were independent under NYSE standards at time of proxy .
- Attendance: All directors attended over 80% of Board and committee meetings in 2024 .
Fixed Compensation
| Item | 2024 | 2023 | Notes |
|---|---|---|---|
| Base Salary | $994,382 | $965,419 | +3% y/y approved by Comp Committee; CEO base around 75th percentile of peer/survey benchmarks . |
| Salary + Annual Cash Incentive as % of Total Comp | 38% | — | 2024 ratio per proxy S-K presentation . |
Perquisites and Other Compensation (2024):
| Component | Amount |
|---|---|
| Automobile allowance | $18,024 |
| Life insurance premiums | $1,283 |
| 401(k) Company contribution | $10,350 |
| Nonqualified Deferred Comp (company credit incl. plan crediting) | $130,816 |
| Total “All Other Compensation” | $160,473 |
Deferred Compensation program (2024 activity and balance):
| Measure | Amount |
|---|---|
| Executive contributions | $339,153 |
| Company contributions | $130,816 |
| Aggregate earnings | $183,324 |
| Aggregate balance at 12/31/2024 | $3,478,126 |
Policy safeguards:
- Clawback: Amended and Restated Clawback Policy applies to all incentive-based compensation (SEC Rule 10D‑1 compliant) .
- Hedging/Pledging: Company policy prohibits hedging or pledging by directors/officers .
- No excise tax gross‑ups for change‑in‑control payments .
Performance Compensation
Annual Cash Incentive (AIP) – 2024 structure and outcomes:
| Metric (weight) | Threshold | Target | Maximum | Actual/As Adjusted | Funding by metric | Earned vs Target |
|---|---|---|---|---|---|---|
| Operating Income (70%) | $60.7M | $66.0M | $71.3M | $74.3M (as adjusted) | 300% | 210% |
| Net Revenues (10%) | $777.1M | $793.0M | $808.8M | $786.6M | 70% | 10% → 7% weighted |
| Cash Flow from Ops (20%) | $33.3M | $37.0M | $40.7M | $43.5M | 300% | 60% weighted |
| Total AIP Funding | — | — | — | — | — | 277% of target |
CEO AIP payout detail:
| Target as % of base | Target $ | Payout % of Target | Total Payout |
|---|---|---|---|
| 100% | $989,926 | 277% | $2,742,000 (rounded convention) |
Long‑Term Incentives (2024 awards):
| Vehicle | Target size | Metric/Curve | Vesting | Notes |
|---|---|---|---|---|
| PSUs (EPS/rTSR) | 48,333 target shares | Annual adjusted diluted EPS for 2024–2026; rTSR modifier vs Russell 2000: 0.75–1.25 (cap requires positive absolute TSR); overall PSU/Cash-LTIP cap 250% . | Cliff at end of 3-year period (FY2026) . | EPS grid: Threshold 2.55/2.55/2.55 (10% each year), Target 2.70/2.86/3.03 (33.3% ea), Max 2.86/3.20/3.58 (66.6% ea) . |
| Cash LTIP – EPS/rTSR | $930,468 target (cash) | Same metrics/modifier as PSUs . | Cliff at FY2026 . | Used to manage dilution under 2024 Plan . |
| RPSUs (Revenue PSUs) | 16,399 target shares | 3‑year revenue goal (FY2026): Threshold $790M (50%), Target $815M (100%), Max $850M (200%) . | Cliff at FY2026 . | CEO also received matching cash revenue LTIP. |
| Cash LTIP – Revenue | $293,832 target (cash) | Same revenue curve as RPSUs . | Cliff at FY2026 . | — |
| RSUs | 13,218 shares; grant date value $749,989 (at $56.74) | Time-based | 1/3 annually over 3 years (2025–2027) . | — |
Recent LTI settlement outcomes:
| Award | Performance Period | Target/Curve | Actual result | Payout |
|---|---|---|---|---|
| 2022 PRSUs (revenue) – CEO | FY2022–FY2024 | Threshold 96% ($746M), Target 100% ($777M), Max 104% ($808M) | 2024 revenue $786.6M | 131.0% → 15,839 shares |
| 2022 PSUs (EPS with rTSR) | 2022–2024 | Annual EPS goals; rTSR vs Russell 2000 | EPS earned 58%, 30%, 59% per year; rTSR at 79th percentile → 1.15x | 169% of target |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 461,206 shares (3.1% of outstanding) . |
| Components | Includes 67,500 vested, exercisable options; 1,822 shares in a charitable trust (shared voting/investment power with spouse); 401 ESPP shares acquired 1/31/2025 . |
| Stock options (legacy) | 32,500 @ $32.90 (exp. 5/14/2028); 35,000 @ $42.25 (exp. 6/17/2029) . |
| Unvested RSUs (12/31/2024) | 10,268 (granted 5/8/2023) and 13,218 (granted 5/14/2024) . |
| Unvested PSUs/RPSUs (select counts) | RPSUs (2024): 16,399 target; PSUs 2023 grants: 55,581 and 54,119; PSUs 2024 grants: 64,283 and 21,810; PRSUs 2023: 11,884 (all subject to final performance/settlement timetables) . |
| Ownership guidelines | CEO required ≥5x base salary; CEO >30x; all NEOs in compliance or within grace period as of 12/31/2024 . |
| Hedging/pledging | Prohibited for executives/directors . |
Insider selling pressure signals:
- Upcoming cliff vest outcomes (2022–2024 cycles settled; 2023–2025 and 2024–2026 cycles pending) and annual RSU tranches (2025–2027) could create mechanical sell-to-cover flows on vest dates; Company prohibits pledging/hedging, and CEO ownership far exceeds guidelines, supporting alignment .
Employment Terms (severance, CIC, restrictive covenants)
Key Executive Severance Agreement (May 9, 2024):
- Double trigger CIC severance for CEO: 2.5x base salary + 2.5x target bonus (lump sum) and 2.5 years of continued benefits upon qualifying termination within 3 months before or 24 months after a change in control; equity awards: options fully exercisable, performance awards vest for earned-to-date periods and at target thereafter, RSUs vest in full .
- Non‑CIC severance (CEO): salary continuation for 2 years, target bonus (1x), and benefits continuation for 2 years upon qualifying termination; no mitigation required; definition of “cause” and good‑reason conditions specified (salary cut ≥5%, material diminution in role, required reporting changes, relocation >50 miles, or material breach), with notice and cure .
- Restrictive covenants: confidentiality and non‑disparagement for 2.5 years post‑termination (CEO) .
- No excise tax gross‑up; 409A six‑month delay provisions where applicable .
Illustrative CIC and non‑CIC payout sizing (as of 12/31/2024, assuming triggering event):
| Scenario | Salary | Bonus | Benefits | Equity (PSUs/RSUs) | Total |
|---|---|---|---|---|---|
| Qualifying Termination in connection with CIC | $2,485,955 | $2,474,815 | $72,633 | $16,787,808 (PSUs $15,292,689; RSUs $1,495,119) | $21,821,211 |
| Qualifying Termination outside CIC period | $1,988,764 | $989,926 | $58,107 | — | $3,036,797 |
Clawback and Trading Policy:
- Clawback applies to all incentive-based comp in case of material restatement or error causing material misstatement (three-year lookback) .
- Insider Trading Policy prohibits hedging and pledging of Company stock .
Performance & Track Record
Key operating and market outcomes under Oswald’s leadership:
- 2024 outcomes: Revenue $786.6M (record), gross margin 25.1% (+350 bps y/y), operating income $52.2M (+80% y/y), adjusted EBITDA $116.6M (14.8% margin, +140 bps), diluted EPS $2.10, adjusted diluted EPS $3.27; backlog just over $1B .
- Shareholder returns: Stock price +22% in 2024; market cap +24% in 2024; 3‑year TSR vs Russell 2000 at 79th percentile (WTW determination) .
- Strategy execution: Increased engineered products mix and aftermarket content, platform content gains (Airbus A220/A320; Boeing 787), defense prime offloading wins (e.g., Raytheon SPY‑6 awards >$50M), footprint consolidation (expected $11–$13M annualized savings), NI doubled y/y to $31.5M .
Say‑on‑Pay and peer calibration:
- Say‑on‑Pay support: ~88.3% in 2024; ~94% two‑year average .
- Peer group benchmarking: Uses aerospace/industrial peers (e.g., AAR, HEICO, Hexcel, Kratos, Mercury Systems, RBC Bearings, Triumph); targets generally 50th–75th percentile of proxy peers and surveys .
Related party / red flags:
- Company reported no related‑party transactions over $120K since start of 2024; hedging/pledging prohibited; no option repricing; no excise tax gross‑ups .
Compensation Mix and Outcomes (multi‑year snapshot)
| Year | Salary ($) | Stock Awards ($) | Non‑Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|
| 2024 | 989,926 | 5,831,071 | 2,742,095 | 160,473 | 9,723,566 |
| 2023 | 959,707 | 5,001,609 | 2,247,436 | 72,191 | 8,280,943 |
| 2022 | 924,128 | 3,914,313 | 1,783,567 | 93,759 | 6,715,767 |
Director Compensation (as a Director)
- Mr. Oswald is an employee director; non‑employee director fee schedules (cash retainer $80,000; equity RSUs $135,000; leadership/chair fees) apply to non‑employee directors only .
Equity Vesting Schedules and Dates (select 2024 grants)
| Grant | Grant date | Amount | Vesting details |
|---|---|---|---|
| RSU | 5/14/2024 | 13,218 sh; $749,989 (at $56.74) | 1/3 on each of the 1st–3rd anniversaries (2025–2027) . |
| PSUs (EPS/rTSR) | 5/14/2024 | 48,333 target sh | Cliff vests after FY2026 based on three annual EPS tests, subject to rTSR modifier (0.75–1.25; positive TSR condition) . |
| RPSUs (Revenue) | 5/14/2024 | 16,399 target sh | Cliff vests after FY2026 based on 2026 revenue target: Threshold $790M (50%), Target $815M (100%), Max $850M (200%) . |
| Cash LTIPs | 5/14/2024 | EPS/rTSR $930,468; Revenue $293,832 | Same metrics/vesting as equity counterparts; settle in cash post‑FY2026 . |
Ownership Guidelines & Pledging
- CEO guideline ≥5x base salary; CEO holds >30x; policy prohibits hedging and pledging; all NEOs compliant or within time to comply as of 12/31/2024 .
Employment Start, Tenure, Contracts
- Start as CEO: January 2017; Chairman since May 2018 .
- Employment agreements: Company does not maintain fixed‑term employment agreements for NEOs; severance governed by Key Executive Severance Agreements (entered May 9, 2024) .
- Non‑compete: Not disclosed in the filed severance agreement excerpts; confidentiality and non‑disparagement apply for 2.5 years (CEO) .
Investment Implications
- Pay-for-performance is tightly linked to operating income, cash flow, revenue, and multi‑year EPS/rTSR and revenue goals; 2024 AIP paid 277% on broad‑based over‑achievement and margin expansion, and 2022 PSU cycles paid 169% with strong relative TSR—both bullish signals of execution and alignment, but note elevated realized pay in rising share price environments .
- Retention risk appears contained: CEO ownership is large (3.1% + >30x guideline), hedging/pledging prohibited, and double‑trigger CIC protection in place; however, meaningful unvested PSU/RPSU and cash LTIP value and RSU tranches imply ongoing vesting‑related supply (sell‑to‑cover), which can create episodic insider‑selling pressure around vest events despite alignment .
- Governance considerations: Combined Chair/CEO offset by an empowered Lead Independent Director and full committee independence (other than Innovation); sustained high Say‑on‑Pay support (88–94%) reduces governance overhang risk, although combined roles can draw scrutiny from some holders .
- Change‑in‑control economics (2.5x/2.5x with equity acceleration) are standard for small/mid‑cap A&D and should not impede strategic alternatives; 2024/2025 performance momentum (record revenue, higher margins, >$1B backlog) supports continued incentive attainment probability into the current PSU cycles .