Raymond Chang
DNOWAbout Raymond Chang
Raymond Chang is Vice President, General Counsel and Secretary of DNOW, serving in this role since February 2014; he is 54 years old and has 24 years with DNOW, including predecessor service at NOV and its legal department . Prior to DNOW, he was NOV’s Vice President, Assistant General Counsel and Assistant Secretary (2009–2014), having joined NOV’s legal team in 2001 following earlier practice at Baker & McKenzie (1997–2001) . Company performance under the executive team in 2024 included revenue of $2.373 billion, EBITDA of $176 million, and free cash flow of $289 million, while DNOW’s cumulative TSR (fixed $100 since 12/31/2019) stood at $116 at year-end 2024; shareholder say‑on‑pay support was ~95% in 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| DNOW | Vice President, General Counsel and Secretary | 2014–Present | Senior legal and corporate secretary oversight; supports governance and compensation disclosures |
| National Oilwell Varco (NOV) | Vice President, Assistant General Counsel and Assistant Secretary | 2009–2014 | Senior legal leadership pre-spin; continuity into DNOW’s spin-off |
| National Oilwell Varco (NOV) | Various positions in legal department | 2001–2009 | Progression through NOV legal roles, building industry-specific legal expertise |
| Baker & McKenzie | Associate | 1997–2001 | Foundational legal practice and training |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $439,462 | $457,262 | $471,064 |
| Bonus ($) | $0 | $50,000 (special bonus for litigation management) | $0 |
| All Other Compensation ($) | $12,200 | $13,200 | $13,800 |
| Total ($) | $1,831,616 | $1,794,480 | $1,860,885 |
Performance Compensation
| Component | Metric | Weighting | Target | Actual | Payout Basis | Payout / Result |
|---|---|---|---|---|---|---|
| Annual Incentive (2024) | EBITDA % | 70% | 7.9% | 7.417% | 89.932% of target; weighted payout 62.953% | Included in bonus tier payout |
| Annual Incentive (2024) | Working Capital % of Revenue | 30% | 18% | 14.9% (lower is better) | 200% of target; weighted payout 60% | Included in bonus tier payout |
| Annual Incentive (2024) | Bonus Tier Payout Ratio | — | — | — | Weighted sum of metrics | 122.953% |
| Annual Incentive (2024) | Target Incentive Opportunity | — | 80% of salary | — | Company plan | 80% |
| Annual Incentive (2024) | Award Amount | — | — | — | Cash | $463,609 |
| Performance Share Awards (2024–2026) | TSR vs designated peer group | 50% | 50th percentile (100% payout) | — | 25th/75th percentile = 50%/200% payout band | Structure disclosed |
| Performance Share Awards (2024–2026) | EBITDA % (3-year avg) | 25% | 7.9% target | — | Entry/Target/Max: 5.5%/7.9%/8.7% | Structure disclosed |
| Performance Share Awards (2024–2026) | ROCE (3-year avg) | 25% | 15% target | — | Entry/Target/Max: 10%/15%/17% | Structure disclosed |
| Performance Share Awards (2022–2024) | TSR percentile | 50% | Entry 25th / Target 50th / Max 75th | 38.40th percentile | 76.8% payout | Certified Feb 2025 |
| Performance Share Awards (2022–2024) | EBITDA % | 25% | Entry 2.75% / Target 4.75% / Max 6.75% | 7.85% | 200% payout | Certified Feb 2025 |
| Performance Share Awards (2022–2024) | ROCE % | 25% | Entry 4% / Target 5% / Max 6% | 18.56% | 200% payout | Certified Feb 2025 |
| Performance Share Awards (2022 grant, paid 2025) | Target shares → Payout shares | — | 36,383 | 50,354 | Gross shares before withholding | Chang payout |
2024 Grants (Plan-Based)
| Grant Type | Grant Date | Shares | Grant-Date Fair Value |
|---|---|---|---|
| Restricted Stock (RS) | 2/21/2024 | 32,667 | $912,412 |
| Performance Share Awards (PSA) – Target | 2/21/2024 | 28,824 | Included in $912,412 |
| Non-Equity Incentive Plan | 2/21/2024 | Threshold $188,531 / Target $377,062 / Max $754,124 | — |
Vesting Schedules
| Award | Shares | Vesting |
|---|---|---|
| 2022 RS Award | 36,383 | 100% on Feb 22, 2025 |
| 2022 PSA (target) | 36,383 | Earned based on 2022–2024 metrics; paid Feb 2025 |
| 2023 RS Award | 26,923 | 100% on Feb 20, 2026 |
| 2023 PSA (target) | 26,923 | 3-year performance period; vests at 3 years |
| 2024 RS Award | 32,667 | 100% on Feb 21, 2027 |
| 2024 PSA (target) | 28,824 | 3-year performance period; vests at 3 years |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 319,944 common shares; options exercisable within 60 days: 97,016; percent of class: <1% (based on 108,823,368 shares outstanding as of March 24, 2025) |
| Stock Ownership Guidelines | Executives: 3× base salary; CEO: 6×; Directors: 5× annual retainer; all executives/directors in compliance or on track |
| Hedging/Pledging | DNOW prohibits pledging or hedging of shares by executive officers and directors |
| Options Outstanding (Exercisable) | 20,778 @ $15.30 expiring 2/19/26; 43,621 @ $9.53 expiring 2/21/27; 32,617 @ $10.26 expiring 2/23/28 |
| 2024 Option Exercises | 93,284 shares; value realized $336,755 (avg exercise price $13.51 vs $9.90 base) |
| 2024 Stock Vested | 58,063 shares; value realized $771,657 (vesting price $13.29 on Feb 23, 2024) |
| Unvested RS and PSAs | RS: 36,383 (2022), 26,923 (2023), 32,667 (2024); PSAs (target): 36,383 (2022), 26,923 (2023), 28,824 (2024) |
Employment Terms
| Provision | Terms |
|---|---|
| Contract term | One-year term, auto-renews annually |
| Base salary multiple (severance) | 2.5× current base salary for Chang upon involuntary termination without cause or for Good Reason |
| Good Reason (definition) | Material diminution in duties/authority/responsibilities, or Company’s failure to comply with agreement |
| Non-compete / Non-solicit | 1 year (Johnson/Chang/Munson/Surratt); 2 years for CEO |
| Benefits post-termination | Option to participate in welfare/medical plans at employee rates; outplacement services up to 15% of base salary |
| Change-in-control | Double trigger: full vesting of unvested options, RS, and PSAs upon CoC and change in holder’s responsibilities |
| Tax gross-ups | No excise tax gross-up provisions (Section 4999) |
| Potential payments (as of 12/31/24) | Base salary: $1,178,320; medical: $301,053; retirement contributions/match: $59,485; unvested RS: $1,248,609; unvested PSAs: $1,198,611; outplacement: $70,699; total: $4,056,777 (stock valued at $13.01) |
Compensation Structure Notes
- DNOW’s annual incentive plan is 70% weighted to EBITDA and 30% to Working Capital; 2024 achieved above-entry EBITDA and maximum Working Capital, driving a 122.953% bonus tier payout for NEOs including Chang .
- Long-term incentives since 2022 are split 50% RS and 50% PSAs; option grants were eliminated beginning in 2022 to reduce volatility in pay outcomes .
- Benchmarking targets are set around the 50th percentile (market median), and 2024 awards were at or near median versus the designated peer group; independent consultant Zayla Partners reviewed rigor and market alignment in Nov 2024 .
Governance, Clawbacks, and Related Party Controls
- Robust clawback policies covering restatements and serious misconduct; independent Compensation Committee oversees executive pay and policy .
- Conflicts-of-interest code for directors/executives prohibits personal loans and requires disclosure to Audit Committee; Section 16(a) reporting deemed fully compliant for 2024 .
- 2024 say‑on‑pay approval ~95%, with enhancements including increased metric rigor and peer group refresh .
Performance & Track Record Highlights
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue ($B) | — | — | $2.373 |
| EBITDA ($MM) | $175 | $184 | $176 |
| Free Cash Flow ($MM) | — | — | $289 |
| TSR (value of $100 investment) | $113 | $101 | $116 |
Note: EBITDA and FCF are non-GAAP measures as defined and reconciled in DNOW’s Form 10‑K .
Investment Implications
- Compensation alignment: High proportion of at-risk pay linked to EBITDA, Working Capital, TSR/ROCE; 2024 metrics were tightened and payouts reflect above-entry performance, supporting pay-for-performance alignment while avoiding outsized guaranteed compensation .
- Retention and change-in-control: 2.5× salary severance, one-year non-compete, and double-trigger acceleration provide retention incentives without shareholder-unfriendly gross-ups; however, acceleration in a CoC can concentrate vesting/selling pressure around event dates .
- Insider selling pressure: 2024 option exercises (93,284 shares) and annual vesting events (e.g., 2022 RS vest Feb 2025; 2023/2024 three-year cycles) create predictable liquidity windows; monitor vest dates around Feb 20–23 annually for potential Form 4 activity .
- Alignment and risk flags: Ownership guidelines (3× salary) with no pledging/hedging reduce misalignment risk; continued emphasis on EBITDA across short/long-term plans could overweight near-term profitability vs growth, but inclusion of TSR and ROCE balances incentives; say‑on‑pay support (~95%) indicates shareholder acceptance of the framework .