Matthew McGrew
DANAHER CORP /DE/About Matthew R. McGrew
Executive Vice President and Chief Financial Officer of Danaher; named executive officer in the 2025 Proxy. Danaher’s 2024 performance backdrop: $23.9B sales, $4.9B operating profit, $6.7B operating cash flow; long-term CAGRs since 2019 of 5.9% sales, 8.3% operating profit, 12.8% operating cash flow . PSU cycle for 2022–2024 paid 0% (29th percentile relative TSR; absolute TSR -4.28%), indicating outcome-based alignment in a challenged period . Say‑on‑pay support in 2024 was 93%, signaling broad investor endorsement of the pay program design .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 878,460 | 966,310 | 990,470 |
| Target Bonus % of Salary | 125% | 125% | 125% |
| Actual Annual Bonus ($) | 1,783,270 | 1,350,418 | 1,411,420 |
| All Other Compensation ($) | 189,912 | 246,087 | 296,306 |
Notes on perquisites and benefits (2024): includes $50,000 personal aircraft use (capped; reimbursement over cap required), $69,540 tickets for entertainment events, plus tax/pro services and parking .
Performance Compensation
2024 Annual Cash Incentive – Structure, Targets, Outcomes
- Weighting: Company score 60% + Personal score 40% of composite payout .
- McGrew target, threshold, max opportunity set in February 2024 .
| Component | Threshold | Target | Maximum | Actual/Outcome |
|---|---|---|---|---|
| Target Bonus Framework ($) | 619,044 | 1,238,088 | 2,476,176 | 2024 bonus paid $1,411,420 |
| Company Metric: Adjusted EPS | $7.15 | $7.60 | $7.95 | Actual $7.51; payout 90.0%; weighted 54% |
| Company Metric: Free Cash Flow Ratio | 75% | 90% | 105% | Actual 97.2%; payout 147.8%; weighted 29% |
| Company Metric: Core Revenue Growth | (3.5)% | (2.0)% | (0.5)% | Actual (1.5)% ; payout 133.3%; weighted 27% |
| Company Payout % (weighted sum) | — | — | — | 110% |
Program mechanics and governance: multiple metrics; Committee discretion on personal component; no overlapping metrics with LTI; rigorous clawbacks; anti‑hedging; ownership requirements .
2024 Long‑Term Incentive – Grants, Vesting, Performance Conditions
| Award Type | Grant Date | Shares/Units | Grant‑Date Fair Value ($) | Exercise Price | Expiration | Vesting / Performance |
|---|---|---|---|---|---|---|
| Stock Options | Mar 1, 2024 | 20,937 | 2,269,152 | $255.87 | Mar 1, 2034 | 50% vest on 3rd and 4th anniversaries (Mar 1, 2027; Mar 1, 2028) per plan (footnote 3) |
| Performance Stock Units (PSUs) | Mar 1, 2024 | Threshold 2,199; Target 8,794; Max 17,588 | 2,500,046 | — | — | 3‑yr relative TSR vs S&P 500 with ROIC ±10% modifier; cap at 100% if absolute TSR negative; 2‑yr post‑vest holding; settled at 5‑year mark |
Additional context: 2022‑2024 PSU cycle paid 0% (29th percentile TSR; absolute TSR −4.28%) .
Equity Ownership & Alignment
| Ownership Detail (as of Mar 1, 2025 / Dec 31, 2024 where noted) | Amount |
|---|---|
| Total Beneficial Ownership (shares) | 201,118 (includes items below) |
| Of which: Options to acquire (exercisable/unexercisable aggregate) | 173,919 |
| Of which: Deferred compensation account shares | 2,875 |
| Of which: 401(k) shares | 10,174 |
| Ownership as % of shares outstanding | <1% (company table denotes “*”) |
| Shares outstanding (record date for 2025 meeting) | 715,450,283 |
| Pledging status | No NEO has pledged any Danaher shares; pledging prohibited |
| Anti‑hedging | Hedging and short sales prohibited |
| Stock ownership guideline | EVP: 3x base salary; unvested RSUs count; options excluded |
| Compliance with guidelines | Each NEO in compliance as of 12/31/24 |
Outstanding unexercisable options and unearned PSUs (12/31/24):
| Instrument | Grant | Quantity | Exercise Price | Expiration / Value |
|---|---|---|---|---|
| Stock Options (unexercisable) | 2024 grant | 20,937 | $255.87 | 3/1/2034 |
| Stock Options (unexercisable) | 2023 grant | 29,007 | $221.29 | 2/24/2033 |
| Stock Options (unexercisable) | 2022 grant | 25,170 | $241.22 | 2/24/2032 |
| Stock Options (unexercisable) | 2021 grant | 27,840 | $198.09 | 2/24/2031 |
| PSUs (unearned; target/threshold basis shown by plan) | 2024 grant | 2,199 units; payout value $507,040 | — | Value at 12/31/24 incl. dividends |
| PSUs (unearned; target basis) | 2023 grant | 5,367 units; payout value $1,243,427 | — | Value at 12/31/24 incl. dividends |
Insider liquidity indicators (2024):
- Options exercised: 41,346 shares; value realized $8,337,253 .
- PSUs vested (from prior cycles; still under holding policy until end of 2025): 5,911 shares; value realized $1,506,123 .
Deferred compensation and company contributions (2024):
- EDIP registrant contribution: $130,452; aggregate EDIP balance $1,184,863 .
- No DCP salary/bonus deferrals reported for McGrew in 2024 .
Employment Terms
| Term | Detail |
|---|---|
| Proprietary Interest Agreement | Restrictive covenants protecting confidential information; non‑disparagement; non‑compete/non‑solicit for specified periods (terms similar across NEOs; durations vary) . |
| Senior Leader Severance Pay Plan | If terminated without cause: severance equals 3 months base + 1 month per year of service up to 12 months; benefits continuation during severance period; no change‑in‑control provision . |
| Estimated payments if terminated without cause (12/31/24 assumption) | Cash $990,470; benefits continuation $21,479; total $1,011,949 . |
| Death benefits (12/31/24 assumption) | Option/RSU/PSU acceleration intrinsic value $5,156,603 total (options $2,824,869; RSU/PSU $2,331,734) + accelerated EDIP $592,431 . |
| Equity plan – Vesting mechanics | Options generally time‑vest (e.g., 2024 grant 50% at 3rd/4th anniversaries) ; PSUs: 3‑yr relative TSR vs S&P 500 with ±10% ROIC modifier; cap at 100% if absolute TSR negative; post‑vest 2‑yr holding . |
| Change‑of‑Control treatment | Omnibus Plan allows Administrator discretion to assume, substitute or terminate awards; no automatic single‑trigger cash severance; Senior Leader Plan has no change‑in‑control provision . |
| Clawbacks | NYSE‑compliant “no‑fault” restatement‑based clawback; 2025 misconduct‑based clawback allows recovery up to 100% of specified compensation upon policy‑defined misconduct . |
| Anti‑hedging / pledging | Hedging prohibited; pledging prohibited for executives; no NEO pledged shares . |
Compensation Structure Diagnostics
| Feature | Design / Practice | Implication |
|---|---|---|
| Cash vs equity mix | Significant LTI weighting (options + PSUs); annual cash is second‑largest component . | High at‑risk pay; stronger long‑term alignment. |
| Equity mix | 50% options (4‑yr vest), 50% PSUs (3‑yr TSR + ROIC modifier, 2‑yr hold) . | Upside tied to TSR; ROIC discipline; retention via holding. |
| Short‑term metrics | Adjusted EPS (heaviest), Free Cash Flow Ratio, Core Revenue Growth; 2024 Company Payout 110% . | Balanced growth/quality; 2024 above‑target company factor. |
| Discretion | Committee discretion on personal component (0–200%) . | Allows qualitative assessment and risk control. |
| Clawbacks and policies | Robust restatement/misconduct clawbacks; ownership rules; anti‑hedging/pledging . | Strong governance and recovery framework. |
| Shareholder feedback | 93% 2024 say‑on‑pay approval . | Market support for design. |
Risk Indicators & Red Flags
- PSU payout for 2022–2024 = 0% (negative absolute TSR cap applied), demonstrating performance discipline rather than leniency .
- No tax gross‑ups in executive program (other than broad policies such as relocation) .
- No NEO share pledging; hedging prohibited .
- Related‑party/pledging issues relate to founders (Rales) with legacy exemptions and audit oversight; not applicable to McGrew .
Compensation Peer Group and Benchmarking
- Peer companies used for 2024 decisions: ABT, ABBV, A, AMGN, BDX, BSX, BMY, LLY, GILD, IQV, JNJ, MDT, MRK, SYK, TMO .
- Danaher’s positioning vs peer size metrics at 9/1/2024: revenue $23,568M (31st percentile); market cap $200,790M (65th); net income $4,056M (58th); assets $78,555M (52nd); employees 62,000 (54th) .
Additional Quantitative Reference – Multi‑Year Compensation (Summary Table)
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 878,460 | 966,310 | 990,470 |
| Stock Awards (mostly PSUs) | 2,197,854 | 2,555,306 | 2,500,046 |
| Option Awards | 2,133,848 | 2,377,957 | 2,269,152 |
| Non‑Equity Incentive Plan Compensation | 1,783,270 | 1,350,418 | 1,411,420 |
| All Other Compensation | 189,912 | 246,087 | 296,306 |
| Total | 7,183,344 | 7,496,078 | 7,467,394 |
Investment Implications
- Alignment and performance sensitivity: The LTI structure (options + PSUs with 2‑year post‑vest hold) and 0% payout for the 2022–2024 PSU cycle suggest high elasticity of realized pay to TSR and ROIC, supporting investor alignment even in downcycles .
- Retention vs selling pressure: Significant unexercisable option overhang across 2021–2024 grants and unearned PSUs provide multi‑year retention hooks; 2024 realized option exercise ($8.34M) provided liquidity but remaining unvested/unearned inventory remains substantial .
- Governance quality lowers risk: Robust clawbacks, anti‑hedging/pledging, and stock ownership compliance reduce agency risk; no single‑trigger cash severance or special change‑in‑control multipliers under the senior severance plan .
- Pay‑for‑performance credibility: 2024 company score of 110% was driven by strong cash conversion (97.2% Free Cash Flow Ratio) despite Core Revenue decline, while PSU cap limited payout in negative TSR period—indicating balanced calibration between growth, quality, and returns .
- External signaling: Strong 2024 say‑on‑pay support (93%) and blue‑chip healthcare peer set imply limited structural compensation controversy risk near term .