David Cherechinsky
DNOWAbout David Cherechinsky
David Cherechinsky is President and CEO of DNOW and has served as a director since June 2020. He is 61 and a CPA with 36 years at DNOW and its predecessor NOV, including CFO (2018–2020), Corporate Controller and Chief Accounting Officer (2014–2018), and finance leadership roles at NOV dating back to 1989 . Under his tenure, DNOW delivered 2024 revenue of $2.373 billion, EBITDA of $176 million (7.4% margin), and free cash flow of $289 million, while remaining debt-free and completing an $80 million buyback and authorizing a new $160 million program in January 2025 . Pay-versus-performance disclosures show DNOW’s cumulative TSR value of a fixed $100 investment at 116 in 2024 (vs. 101 in 2023), and EBITDA excluding other costs of $176 million in 2024, reflecting improved shareholder returns and operating performance through the current cycle .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| DNOW | President & CEO | 2020–present | Led capital allocation including buybacks and acquisitions (Whitco Supply, Trojan Rentals); maintained debt-free balance sheet and drove FCF . |
| DNOW | Senior Vice President & CFO | 2018–2020 | Executive financial leadership prior to CEO appointment . |
| DNOW | VP, Corporate Controller & Chief Accounting Officer | 2014–2018 | Corporate accounting leadership post-spin . |
| NOV | VP—Finance (Distribution business group; Distribution & Transmission segment) | 2003–2014 | Finance leadership until DNOW’s spin-off . |
| NOV | Internal auditor, credit management, business analyst | 1989–2003 | Early career finance and audit roles; CPA . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| None disclosed | — | — | DNOW proxy indicates “Other Boards: 0” for Cherechinsky . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary ($) | $797,116 | $947,116 | $977,952 |
| Target bonus (% of base) | 100% | 100% | 110% |
| Actual annual incentive ($) | $1,421,822 | $1,289,099 | $1,323,404 |
| Stock awards grant-date fair value ($) | $3,232,886 | $3,331,165 | $3,765,881 |
Notes:
- CEO pay mix is heavily at-risk: ~84% for 2024, aligned with pay-for-performance design .
- No significant perquisites and no tax gross-ups; perquisites did not exceed $10,000 in 2024 .
Performance Compensation
Annual Incentive Plan (Cash)
| Year | Metric | Weight | Entry | Target | Max | Actual | Payout vs Target | Weighted payout |
|---|---|---|---|---|---|---|---|---|
| 2024 | EBITDA % | 70% | 5.5% | 7.9% | 8.7% | 7.417% | 89.932% | 62.953% |
| 2024 | Working capital (% of revenue) | 30% | 20% | 18% | 16% | 14.9%* | 200% | 60.0% |
| 2024 | Total bonus tier payout ratio | — | — | — | — | — | — | 122.953% |
| 2023 | EBITDA % | 70% | 4.75% | 7% | 9% | 7.9% | — | — |
| 2023 | Working capital (% of revenue) | 30% | 20% | 17% | 14% | 16.7% | — | — |
*Working capital computation excludes acquisition impact in acquisition quarter .
CEO participation level for 2024: 110% of base salary, resulting in $1,323,404 annual incentive award .
Long-Term Incentive Plan (Equity)
Grant structure: 50% time-based restricted stock (3-year cliff vest), 50% performance share awards (3-year performance period; vest on 3rd anniversary) .
2024–2026 performance share metrics:
| Metric | Entry | Target | Max | Payout scale |
|---|---|---|---|---|
| Relative TSR vs designated peer group (50%) | 25th percentile | 50th percentile | 75th percentile+ | 50%–200% |
| EBITDA % (25%) | 5.5% | 7.9% | 8.7% | 50%–200% |
| ROCE (EBITDA numerator) (25%) | 10% | 15% | 17% | 50%–200% |
2022–2024 performance share payout certified in Feb 2025:
| Metric | Result | Payout % |
|---|---|---|
| TSR percentile | 38.40% | 76.8% |
| EBITDA % | 7.85% | 200% |
| ROCE % | 18.56% | 200% |
CEO 2022 grant vs payout (vested 2025):
| Target shares (2022 grant) | Shares paid out (2025) |
|---|---|
| 155,925 | 215,799 |
2024 grants (Feb 21, 2024):
| Award | Shares/Value | Vesting |
|---|---|---|
| Restricted stock | 125,865 shares; grant-date FV $3,765,881 | 100% on Feb 21, 2027 |
| Performance awards (target) | 125,865 shares | Vest in 3 years subject to metrics |
Program design highlights: 70/30 annual weighting toward EBITDA/Working Capital; performance shares split 50% rTSR, 25% EBITDA, 25% ROCE; payout caps at 200%; metrics made more challenging in 2024 per shareholder feedback; stock options eliminated in 2022 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 958,238 common shares; 283,735 options exercisable within 60 days; 1.1% of class as of March 24, 2025 . |
| Outstanding options (sample) | 27,593 @ $15.30 exp 2/19/26; 57,929 @ $9.53 exp 2/21/27; 198,213 @ $10.26 exp 2/23/28 . |
| Unvested restricted stock | 155,925 (2022), 115,385 (2023), 125,865 (2024) . |
| Unvested performance awards (at target) | 155,925 (2022), 115,385 (2023), 125,865 (2024) . |
| 2024 equity vested | 352,844 shares; value realized $4,689,297 . |
| 2024 option exercise | 123,881 shares; value realized $454,643; exercised at avg $13.57 vs $9.90 strike . |
| Ownership guidelines | CEO: 6x base salary; executives: 3x; directors: 5x annual retainer; all executives/directors compliant or on-track . |
| Hedging/pledging | Prohibited; no margin pledging; blackout trading windows enforced; insider trading policy filed . |
Insider selling pressure context:
- Significant equity vesting occurs on 3-year cycles; 2022 awards vested Feb 22, 2025 (restricted stock) with performance share payouts certified in Feb 2025, potentially adding tradable supply around vesting dates .
- Hedging/pledging bans and blackout windows reduce opportunistic selling risk .
Employment Terms
| Provision | CEO terms |
|---|---|
| Agreement date/term | Employment agreement updated June 1, 2020; one-year term auto-renewal . |
| Severance (not for cause or Good Reason resignation) | 3x base salary; continued medical benefits; 401(k)/Supplemental Plan match value; outplacement services up to 15% of salary; restricted stock vests 100%; performance share awards vest at target (100%) . |
| Non-compete / non-solicit | Non-compete 2 years (CEO); non-solicit provisions included . |
| Change-in-control | Double-trigger acceleration for unvested equity upon CoC and change in responsibilities . |
| Tax gross-ups | None for excise taxes under IRC §4999 . |
| Clawbacks | Robust recoupment policy compliant with SEC Rule 10D-1 and NYSE; clawbacks triggered by restatements, misconduct, and specified covenant breaches . |
CEO termination benefits (as of 12/31/2024):
| Component | Amount ($) |
|---|---|
| Base salary multiple | $2,935,500 |
| Continuing medical benefits | $41,400 |
| Retirement contributions/matching | $138,022 |
| Value of unvested restricted stock | $5,167,247 (at $13.01/share) |
| Value of unvested performance awards | $5,167,247 (assumed at target) |
| Outplacement | $146,775 |
| Total | $13,596,191 |
Board Governance
- Board service: Director since 2020; employee director; not independent; no committee memberships .
- Board leadership: Independent Chairman (Richard Alario) serves as lead; quarterly executive sessions of non-employee directors; majority independent board (7 of 8 nominees) .
- Attendance: Each incumbent director attended at least 75% of board/committee meetings in 2024; all directors attended the 2024 annual meeting .
- Governance protections: Declassified board; majority voting; clawbacks; stock ownership requirements; audit committee financial expertise .
Committee structure (2024 meetings): Audit (8), Compensation (3), ESG & Nominating (3); employee directors are not committee members .
Performance & Track Record
| Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Cumulative TSR value of fixed $100 investment | 70 | 113 | 115 | 116 |
| Net income (loss) | $5M | $128M | $135M | $81M |
| EBITDA excluding other costs | $45M | $175M | $184M | $176M |
| Revenue | — | — | — | $2.373B |
Strategic actions under Cherechinsky include completing an $80 million buyback (Aug 2022–Dec 2024), authorizing a $160 million buyback (Jan 24, 2025), and acquiring Whitco Supply and Trojan Rentals to expand midstream/process solutions—while maintaining zero debt and strong liquidity ($556 million at year-end 2024) .
Compensation Peer Group
- Designated peers reviewed annually; positioned around market 50th percentile for total direct compensation .
- 2025 peer group includes Applied Industrial Technologies, BlueLinx, DXP Enterprises, Flowserve, Global Industrial, GMS, H&E Equipment, Kennametal, Kirby, Liberty Energy, MRC Global, MSC Industrial, Oceaneering, ProPetro, RPC, Select Water Solutions .
- 2024 enhancements: raised EBITDA and ROCE “entry/target” metrics; peer group refreshed (added BlueLinx, removed Kaman) .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval: ~95% .
- Compensation committee responses: heightened EBITDA/ROCE rigor, balanced cash/equity mix, elimination of options in favor of RSUs/PSUs, robust clawbacks, ownership guidelines .
Equity Ownership & Director Compensation (board role)
- As an employee director, Cherechinsky receives no director fees; non-employee directors receive cash retainers and annual restricted stock grants (e.g., 8,711 shares; Chairman 13,311) vesting one year .
Employment & Contracts – Additional Terms
- Blackout trading windows and insider trading policy in place; prohibition on hedging/pledging reduces alignment risks .
- Retirement/health benefits generally same as employees; 401(k) match of $1.00 per $1.00 up to 4% after one year .
- Deferred compensation: CEO aggregate balance $17,899; 2024 earnings $880 .
Investment Implications
- Pay-for-performance alignment is strong: 84% at-risk CEO pay, performance shares tied to rTSR/EBITDA/ROCE, capped payouts, and elevated metric rigor in 2024—supportive of long-term execution incentives .
- Insider supply dynamics: sizable three-year vesting cadence (e.g., 2022 RS vest Feb 2025; performance payouts certified) and option exercises in 2024 can create episodic selling pressure, but hedging/pledging bans and blackout windows mitigate adverse signals .
- Retention and risk: robust severance (3x salary), double-trigger CoC equity acceleration, and 2-year non-compete strengthen retention but raise change-in-control costs; no tax gross-ups and strong clawbacks are governance positives .
- Governance: independent chair and declassified board reduce dual-role concerns from CEO/director status; high say-on-pay support indicates shareholder alignment and low compensation friction risk .
- Execution track record: organic margin discipline, cash generation, and strategic acquisitions under a debt-free policy plus expanded buybacks provide multiple levers for shareholder value creation; monitoring EBITDA margin stability and working capital velocity remains key given cyclical end-markets .