Kelly Munson
DNOWAbout Kelly Munson
Kelly Munson, age 40, is DNOW’s Chief Administrative and Information Officer (CAIO) and a Named Executive Officer; she has 16 years with DNOW and its predecessor, progressing through organizational development and HR leadership roles before becoming CAIO in March 2020 . DNOW’s 2024 operating results: revenue $2.373 billion (up 2% YoY), EBITDA $176 million (7.4% margin), and free cash flow $289 million, reflecting strong cash generation and disciplined capital allocation in a softer market . Over the 2019–2024 measurement window used in the pay-versus-performance disclosure, cumulative value of a $100 investment in DNOW rose to $116 versus $102 for the PHLX Oil Service Sector Index, while EBITDA excluding other costs was $176 million in 2024 . Say-on-pay support was 95% in 2024, indicating broad shareholder alignment with the compensation program design .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| DNOW | Chief Administrative and Information Officer | 2020–Present | Executive leadership over administrative and information functions; NEO with compensation design input and oversight support to the Comp Committee process . |
| DNOW | Director – HR & Organizational Development | 2018–2020 | Led global HR/OD, HRIS, and recruiting; talent and leadership development . |
| DNOW | Director – Organizational Development | 2014–2018 | Employee training, talent management, leadership development . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Energy Workforce & Technology Council | Advisory Board member; HR Committee member | Current | Industry leadership and HR-focused governance exposure . |
| Energy Workforce & Technology Council | Emerging Leaders (past) | Past | Early-career leadership forum participation . |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary ($) | $313,269 | $378,750 | $391,181 |
| Target annual bonus (% of base) | — | — | 80% |
| Actual annual bonus ($) | $447,874 | $412,512 | $384,990 |
Notes:
- Participation level (target bonus) for 2024 was 80% of base salary for Munson .
- No material perquisites (none ≥$10,000) were provided in 2024 .
- Deferred compensation: $99,928 executive contributions and $2,347 registrant contributions to the Supplemental Plan in 2024; aggregate year-end balance $169,525 .
Performance Compensation
2024 Annual Incentive Plan (Company-level metrics and results)
| Metric (weight) | Entry | Target | Maximum | Actual 2024 | Result vs target | Weighted payout |
|---|---|---|---|---|---|---|
| EBITDA % (70%) | 5.5% | 7.9% | 8.7% | 7.417% | 89.932% | 62.953% |
| Working Capital as % of revenue (30%) | 20% | 18% | 16% | 14.9%* | 200% | 60% |
| Total payout ratio | 122.953% |
*Lower working capital is better; the actual achievement excludes acquisition impact in the quarter of acquisition for the quarterly computation .
Resulting 2024 bonus for Munson: base $391,400; target 80%; payout 122.953% of target; award $384,990 .
Long-Term Incentives (structure and 2024 grants)
- Design: 50% time-based restricted stock (3-year cliff vest), 50% performance share awards (PSUs, 3-year performance period; metrics: 50% relative TSR vs peer group, 25% EBITDA %, 25% ROCE) .
- 2024–2026 PSU performance grids: TSR 25th/50th/75th percentile = 50%/100%/200% payout; EBITDA % 5.5%/7.9%/8.7% = 50%/100%/200%; ROCE 10%/15%/17% = 50%/100%/200% .
| Grant date | Instrument | Target shares | Vest/Performance |
|---|---|---|---|
| Feb 21, 2024 | RSU | 21,138 | Vests 100% on Feb 21, 2027 (time-based) . |
| Feb 21, 2024 | PSU (target) | 21,138 | 3-year period; payout based on TSR/EBITDA/ROCE grids; vests at end of period . |
Realized performance: 2022–2024 PSU cycle (paid 2025)
| Cycle | Target PSUs (2022 grant) | TSR percentile | EBITDA % | ROCE % | Payout factor by sub-metric | Shares paid (gross) |
|---|---|---|---|---|---|---|
| 2022–2024 | 25,988 | 38.40% (entry+) | 7.85% (max) | 18.56% (max) | TSR 76.8%; EBITDA 200%; ROCE 200% | 35,967 |
Note: Gross shares before tax withholding; indicates strong operational performance (EBITDA/ROCE) while TSR was below median of peer group .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 143,081 common shares; less than 1% of class . |
| Options exercisable within 60 days | 52,549 . |
| Stock ownership guidelines | Executives: 3x base salary; compliance “all executive officers are in compliance, or are on track” as of filing . |
| Hedging/pledging | Prohibited for executives and directors; no short sales, no puts/calls on DNOW; no pledging or margin holdings . |
Vested vs. unvested (as of Dec 31, 2024):
- Unvested RSUs: 25,988 (2022, vests 2/22/2025; $338,104 MV), 19,231 (2023, vests 2/20/2026; $250,195 MV), 21,138 (2024, vests 2/21/2027; $275,005 MV) .
- Unvested PSUs (target): 25,988 (2022; $338,104 MV), 19,231 (2023; $250,195 MV), 21,138 (2024; $275,005 MV). PSU payout ultimately depends on performance; values shown at target as disclosed .
Option holdings (as of Dec 31, 2024):
| Options (exercisable) | Strike | Expiration |
|---|---|---|
| 10,000 | $9.90 | Feb 20, 2025 |
| 3,965 | $15.30 | Feb 19, 2026 |
| 20,985 | $9.53 | Feb 21, 2027 |
| 27,599 | $10.26 | Feb 23, 2028 |
Insider trading policies and windows:
- DNOW enforces insider trading blackouts and prohibits hedging/pledging; certain key employees are restricted during quarterly blackout periods .
Potential vesting calendar (supply overhang considerations):
- 2022 RSU/PSU vest Feb 2025; 2023 RSU/PSU vest Feb 2026; 2024 RSU/PSU vest Feb 2027. Note that some shares are withheld for taxes at vest; no pledging allowed .
Employment Terms
| Term | Detail |
|---|---|
| Employment agreement | Dated March 6, 2020; one-year term with automatic annual renewal; participation in incentive plans and benefits . |
| Severance (without cause or for Good Reason) | 1.5x current base salary; continued medical/welfare benefits and retirement plan matching contributions; outplacement up to 15% of salary; time-based RSUs vest 100%; PSUs vest at target (100%) . |
| Non-compete/Non-solicit | One-year post-termination non-compete and non-solicit provisions . |
| Change-in-control | Double-trigger: full vesting of unvested options, RSUs, and performance awards upon CIC and qualifying change in responsibilities . |
| Clawbacks | Company-wide clawback policy compliant with SEC Rule 10D-1 and NYSE; LTIP authorizes recoupment for misconduct, restatements, and covenant breaches; expanded whistleblower protections . |
| Tax gross-ups | No excise tax gross-up provisions . |
Potential payments upon termination (as of Dec 31, 2024; illustrative):
| Component | Amount ($) |
|---|---|
| Base salary multiple | $587,100 |
| Continuing medical benefits | $41,400 |
| Retirement contribution/matching | $46,491 |
| Unvested restricted stock (value) | $863,305 |
| Unvested performance awards (target value) | $863,305 |
| Outplacement services (≤15% salary) | $58,710 |
| Total | $2,460,311 |
Compensation Structure Analysis
- Pay mix and rigor: For 2024, a high share of compensation was at risk (company cites ~73% average for non-CEO NEOs); annual bonus metrics weighted 70% to EBITDA and 30% to Working Capital with hard entry gates, capped at 200% . 2024 payouts reflected above-entry EBITDA and maximum Working Capital performance (122.953% overall), demonstrating formulaic pay-for-performance .
- LTI design shift: Stock options eliminated starting 2022; program emphasizes RSUs and PSUs with three-year vesting and multiple metrics (TSR/EBITDA/ROCE); 2024 LTIP approved by shareholders with modernized terms through 2034 .
- Increased targets: 2024 EBITDA entry and target levels were raised ≥10% for both AIP and PSUs; ROCE entry/target also raised, signaling higher performance hurdles .
- Governance safeguards: Robust clawbacks, no pledging/hedging, stock ownership guidelines (3x salary for executives), and annual shareholder engagement; 2024 say-on-pay approval ~95% .
Investment Implications
- Alignment and retention: Munson’s pay is meaningfully performance-based with long-dated vesting (three-year cliff), ownership guidelines, and strict anti-pledging rules—factors that support alignment and retention with relatively modest severance (1.5x salary) versus market norms for CAIO-level roles .
- Execution signals: 2022–2024 PSU cycle paid above target on EBITDA and ROCE (both at 200%) but TSR ranked at the 38.4th percentile, highlighting strong operational delivery but relative share performance below median peers—continued focus on TSR drivers may be a key priority for incentive realization .
- Supply/demand setup: Concentrated vesting events in February each year (2025, 2026, 2027) and multiple tranches of legacy options (some near expirations) can create episodic selling/withholding flows; however, hedging/pledging prohibitions reduce structural selling pressure and stock is subject to blackout policies .
- Pay-for-performance durability: 2024 AIP payout (122.953% of target) reflected maximum Working Capital performance and near-target EBITDA, consistent with DNOW’s free cash flow strength and capital returns; elevated 2025 AIP/PSU structures remain tied to EBITDA, Working Capital, ROCE, and rTSR, maintaining strong linkage to value creation .
Overall: Compensation design, ownership rules, and clawbacks support investor alignment; operational metrics have been strong, but TSR underperformance versus peers in the recent PSU cycle warrants monitoring to assess sustained value creation and compensation outcomes .