Steven Rales

About Steven Rales

Steven M. Rales is Danaher’s co‑founder, Chairman of the Board since 1984, and a continuing executive officer; he previously served as CEO from 1984–1990. He is 73 years old and has been a director since 1983, holding a substantial beneficial ownership stake of approximately 6.1% (43,489,945 shares), which the Board highlights as aligning him closely with shareholder interests . Danaher’s 2024 performance under his long‑term stewardship included $23.9B sales, $4.9B operating profit, and $6.7B operating cash flow, with 2019–2024 CAGRs of 5.9% for sales, 8.3% for operating profit, and 12.8% for operating cash flow . The company also presents long‑term TSR outperformance vs. benchmarks over 25 years and shows a 2024 TSR index of 173 vs. 147 for the S&P 500 Health Care Index in pay‑versus‑performance disclosure .

Past Roles

External Roles

Fixed Compensation

In 2024, Steven and Mitchell Rales paid Danaher approximately $219,000 for benefits/services personnel; aircraft cost‑sharing arrangements with entities they control (Joust III for Steven) reduced Danaher’s fixed aviation costs via shared management; Joust entities paid ~$4.9M for their share, and net incremental value of aircraft interchange to Joust entities was ~$135,000 .

Performance Compensation

In 2024, Steven and Mitchell Rales received no cash incentive compensation and no equity compensation .

Equity Ownership & Alignment

• Anti‑pledging policy: Directors and executive officers are prohibited from pledging Danaher stock except for shares pledged prior to 2013; Steven and Mitchell Rales’ legacy pledges are exempt and do not count toward ownership requirements .
• Audit Committee oversight: Quarterly reviews conclude pledge arrangements do not pose undue risk given: maximum secured indebtedness capped at ≤25% of the market value of pledged shares; more than 15% reduction in aggregate pledged shares since 2013; and that unwinding pledged shares equal to indebtedness outstanding would have required one day or less at year‑end 2022–2024 .
• Stock ownership guidelines: Executives must hold significant multiples of salary (CEO 6x, EVP 3x, SVP 2x); unexercised options and unvested PSUs do not count; pledged shares do not count; directors are subject to 5x cash retainer guidelines (all directors in compliance) .

Employment Terms

• Senior Leader Severance Pay Plan: As an executive officer, Steven Rales is eligible for severance if terminated without cause—minimum 3 months of base salary plus 1 month per year of service up to 12 months, paid over the severance period; benefits continuation at active‑employee rates for the severance period; no change‑in‑control provision .
• Clawbacks: Rigorous restatement‑based, no‑fault clawback covering incentive‑based compensation over the prior three completed fiscal years; supplemental misconduct‑based clawback (adopted Feb 20, 2025) enables recovery up to 100% of cash incentives, option gains, and stock‑based awards that vested during recovery periods if misconduct causes serious financial/reputational harm .
• Indemnification and D&O insurance: Broad indemnification under charter/bylaws and individual indemnification agreements; D&O insurance in place .

Board Governance

Dual‑role implications: Steven’s non‑independence is offset by the separation of Chair/CEO roles and an empowered Lead Independent Director; the Board asserts his ownership and tenure bolster oversight and risk management effectiveness .

Related Party Transactions

• Aviation management and interchange arrangements: FJ900 (Danaher subsidiary) manages aircraft for entities controlled by Steven (Joust III) and Mitchell; shared fixed expenses reduce costs for all parties; Joust entities paid ~$4.9M for 2024 shared expenses; aircraft interchange net incremental value to Joust was ~$135,000 in 2024 .
• Services and reimbursements: Steven and Mitchell Rales paid Danaher ~$219,000 for benefits/services personnel in 2024 .
• Venture funds: Danaher Funds’ GP raised a New Fund in 2024; Danaher amended agreements to protect economics; Steven and Mitchell Rales intended to invest in the New Fund .
• Stadium suite: Danaher licensed a Washington Commanders suite (~$530,000); Mitchell Rales is >10% owner (disclosed for completeness; not specific to Steven) .

Compensation Structure Analysis

• Cash vs. equity mix: Steven Rales receives fixed salary and perquisites; no annual incentive or equity grants—his alignment is principally through large beneficial ownership and legacy pledges .
• Governance practices: No tax gross‑ups (except broad policies like relocation), no single‑trigger CIC benefits, minimum vesting on equity awards, anti‑hedging, stringent clawbacks; independent compensation consultant (FW Cook) supports program design .
• Say‑on‑pay: 93% approval in 2024 for NEO compensation indicates broad shareholder support for pay‑for‑performance framework .

Equity Ownership & Alignment (Additional Detail)

• Pledging risk governance: Audit Committee quarterly monitoring with explicit metrics (≤25% loan‑to‑value, days to unwind, pledged share trend); shareholders representing >25% of outstanding shares engaged since 2021; majority supported Audit Committee members in 2024 .
• Insider trading policy: Prohibits short sales, derivatives, and hedging by directors/executives (except awards under equity plans) .

Performance & Track Record

• 2024 operations: $23.9B sales, $4.9B operating profit, $6.7B operating cash flow; capital allocation included ~$1.6B R&D, ~$1.4B capex, and >$0.5B acquisitions; ~$6.7B returned via buybacks/dividends .
• Pay‑versus‑performance context: 2024 CAP–TSR relationships and TSR indices provided (Danaher TSR index 173, peer healthcare index 147) .

Investment Implications

• Ownership alignment is strong: Steven’s 6.1% stake ties his economics directly to TSR and long‑term value creation; however, legacy pledging is a governance overhang and potential forced‑selling catalyst in extreme drawdowns—mitigated by Audit Committee oversight, ≤25% LTV cap, and one‑day unwind capacity at recent trading volumes .
• Compensation signals: With no variable pay, his incentives are driven by enterprise value and strategic capital allocation rather than annual targets—reducing insider selling pressure from vesting or option exercises, but placing monitoring emphasis on changes in pledged share levels or line‑of‑credit terms .
• Governance quality: Separation of Chair/CEO and a robust Lead Independent Director framework counterbalance non‑independence concerns; committee coverage and high attendance support board effectiveness .
• Related‑party cost sharing appears economically rational and disclosed; continue surveillance for changes in aviation, funds governance, or other transactions that could introduce new conflicts or cash leakage .
• Shareholder sentiment: Strong say‑on‑pay support and established clawbacks lower headline governance risk; focus near‑term on execution in life sciences/diagnostics cycle, core revenue growth re‑acceleration, and ROIC trends feeding PSU metrics for the broader management team .