Mark Costa
EASTMAN CHEMICALAbout Mark Costa
Mark J. Costa is Chief Executive Officer and Chair of the Board of Eastman Chemical Company, serving as CEO since 2014 and Board Chair since 2014; he has been a director since 2013 and previously led corporate strategy and multiple businesses after joining Eastman in 2006, following a senior partner role at Monitor Group . He is 59 years old per the 2025 proxy and also serves on the board of International Flavors & Fragrances Inc. . Company performance under his leadership includes 2024 sales revenue of $9.382 billion, adjusted EBIT of $1.298 billion, adjusted EPS of $7.89, and operating cash flow of $1.287 billion; innovation-driven new business generation reached about $590 million and the Kingsport methanolysis facility began operations, supporting circular growth . Long-term incentive payouts for 2022–2024 PSAs were 135% of target, driven by TSR ranking in the 3rd quintile and average ROIC of 10% versus an 8.50% target, evidencing multiyear performance alignment .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Eastman Chemical Company | CEO; Board Chair | CEO since 2014; Chair since 2014 | Led innovation-driven strategy, circular economy initiatives, and portfolio management; drove commercialization and operating excellence |
| Eastman Chemical Company | President | 2013–2014 | Oversaw enterprise operations and growth trajectory ahead of CEO appointment |
| Eastman Chemical Company | EVP roles (Polymers, Specialty Products) & Chief Marketing Officer | 2008–2012 | Led business groups and marketing; integrated supply chain and innovation initiatives |
| Eastman Chemical Company | SVP Corporate Strategy & Marketing | 2006–2008 | Built corporate strategy and marketing capabilities post-joining Eastman |
| Monitor Group | Senior Partner | 1988–2006 | Led corporate transformations, portfolio strategies, and capability-building programs across industries |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| International Flavors & Fragrances Inc. | Director | Current | Public company board service alongside EMN; supports cross-industry insights |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 1,331,575 | 1,360,810 | 1,397,355 |
| Actual Annual Incentive Paid ($) | 0 | 1,597,050 | 2,226,000 |
| Target Bonus % of Base (UPP) | — | — | 150% |
Performance Compensation
2024 Annual Incentive (UPP)
| Metric | Weighting | Target | Actual | Payout Factor | Notes/Vesting |
|---|---|---|---|---|---|
| Adjusted EBIT | 40% | $1.25B | $1.298B | 125% | Annual cash award per UPP |
| Modified Operating Cash Flow | 40% | $1.35B | $1.287B | 88% | Annual cash award per UPP |
| Strategic & Operational Goals (Safety, Innovation New Business, Inclusion) | 20% | Various (e.g., $550M new business; OSHA incident reductions) | New business $589M; safety targets partially exceeded; inclusion mixed | 102% | Annual cash award per UPP |
| Total Corporate Payout | — | — | — | 106% | CEO payout approved at formula result (no individual adjustment) |
Long-Term Incentive Program (granted 2024; performance 2024–2026)
| Component | Mix | Key Metric(s) | Vesting/Terms | Grant Detail (CEO) |
|---|---|---|---|---|
| Performance Share Awards (PSAs) | 60% | rTSR 60% and ROIC 40% with continuous formulas (no modifier) | 3-year performance; paid in stock; targets approved (ROIC targets not disclosed) | Threshold 7,879; Target 65,659; Max 164,148 shares; grant date 1/1/2024; fair value $7,194,417 |
| Stock Options | 20% | N/A; options are time-based | 1/3 each year over 3 years; 10-year term; exercise price $86.15; change-in-control accelerates under double trigger | 108,139 options; grant date 2/27/2024; fair value $2,288,221 |
| RSUs | 20% | N/A; time-based | 3-year cliff vest; payout in shares; dividend equivalents paid at vest | 21,887 units; grant date 2/27/2024; fair value $1,885,565 |
| Recent PSA Payouts (2018–2024 cycles) | — | TSR quintile and ROIC matrix (older design) | Vary by cycle | 2022–2024 paid at 135% of target; TSR 3rd quintile (50%); avg ROIC 10% vs 8.5% target |
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Total Beneficial Ownership | 1,582,784 shares; includes 1,133,121 shares via options exercisable within 60 days; ~1.3% of outstanding |
| Unvested RSUs (12/31/2024) | 21,877 units; market value $1,998,721 |
| Unearned PSAs Outstanding (12/31/2024) | 242,020 units; payout value assumption $22,101,269 at 12/31/2024 price |
| Stock Ownership Guidelines | CEO 5x base pay; executives 2.5x; directors 5x retainer |
| Guideline Compliance | All directors and NEOs met or are on-schedule; CEO-owned shares and units counted for guideline include 449,663 |
| Hedging/Pledging | Prohibited for directors/executives/employees |
Employment Terms
| Provision | Key Terms |
|---|---|
| Change-in-Control Agreements | CEO severance = 3x (base salary + target annual bonus); 18 months health/welfare continuation; accelerated vesting of unvested retirement plan benefits; 2-year employment period post-CIC; lump sums for accrued obligations; no tax gross-ups |
| Equity under CIC (Omnibus Plans) | 100% vesting of unvested awards under double trigger or if stock ceases to be publicly traded; PSAs paid at target if CIC in first half of performance period, or based on actual through last quarter if CIC in second half; pro rata vesting rules apply |
| Clawback Policies | Dodd-Frank compliant restatement clawback; separate “Detrimental Conduct” clawback adopted Dec 2024 |
| Tax Gross-Ups | Not provided on executive perquisites; policy states no gross-ups and no option repricing |
| Perquisites (2024) | CEO perqs: corporate aircraft non-business use $299,174; home security $98,482; umbrella insurance $8,034; supplemental disability $32,650; financial counseling $0 |
| Aircraft Use Policy | CEO uses corporate aircraft for business and personal travel for security/productivity; time-sharing agreement with reimbursement of incremental costs for certain personal flights |
| Deferred Compensation | Company contributions to EDCP for CEO $132,131; aggregate EDCP balance $1,516,881 (no above-market earnings) |
| Pension Benefits (Present Value at 12/31/2024) | ERAP $368,740; ERIP/URIP $4,231,832; discount rates 5.64%/5.60% used |
Board Governance
- Dual role: Costa is both CEO and Board Chair; Board requires an independent Lead Director when roles are combined; Brett D. Begemann serves as Lead Director with defined authorities (executive sessions, agendas, liaison duties) .
- Independence: All non-employee directors are independent; CEO is not independent; committees (Audit, Compensation, Nominating & Corporate Governance, Environmental/Safety & Sustainability, Finance) are 100% independent .
- Attendance: The Board held six meetings in 2024; nominees averaged 100% attendance for Board and committee meetings; executive sessions held at each Board meeting .
- Shareholder sentiment: Say-on-Pay support was ~75.4% in 2024 vs. ~91.8% in 2023; Compensation Committee responded with changes to annual and long-term programs and peer group disclosures .
- Governance proposal: 2025 proxy included a shareholder proposal for an independent Chair; the Board recommended voting against to preserve leadership flexibility, citing strong Lead Director counterbalance .
Insider Transactions and Vesting Activity
| 2024 Activity | Shares/Units | Value Realized ($) |
|---|---|---|
| Options Exercised | 210,400 | 7,000,093 |
| Stock Awards Vested (PSAs/RSUs) | 81,525 | 8,435,391 |
Note: Value realized reflects award settlement and/or exercise economics; net shares retained vs. sold is not disclosed in the proxy .
Company Performance Context (Tenure Snapshot)
| Metric | FY 2014 | FY 2024 |
|---|---|---|
| Revenues ($) | 9,527,000,000 | 9,382,000,000 |
| EBITDA ($) | 1,759,000,000* | 1,892,000,000* |
- Values retrieved from S&P Global.
Compensation Peer Group and Say-on-Pay
- Peer Group realignment: In 2024, EMN refocused peers on specialty chemicals/advanced materials and circular economy; added Albemarle, Axalta, Corteva, Huntsman (added in July 2024); retained IFF and others; removed Danaher, Goodyear, Mosaic, Rockwell; Eaton removed, Huntsman added for 2025 compensation decisions .
- Say-on-Pay results: 2023 approval ~91.8%; 2024 approval ~75.4%; Board engaged investors (~35% of shares outstanding) and implemented changes including UPP structure, LTI mix (adding RSUs), rTSR/ROIC discrete formulas, and enhanced disclosures; also adopted a separate detrimental conduct clawback .
Equity Award Detail (Grant Mechanics and Vesting)
| Award | Grant Date | Quantity | Price/Value | Vesting |
|---|---|---|---|---|
| 2024 PSAs (CEO) | 1/1/2024 | Target 65,659; Thresh 7,879; Max 164,148 | $7,194,417 fair value | 3-year performance; rTSR 60% / ROIC 40% |
| 2024 RSUs (CEO) | 2/27/2024 | 21,887 | $1,885,565 fair value | Vest on 2/28/2027 (3-year); dividend equivalents paid in cash at vest |
| 2024 Options (CEO) | 2/27/2024 | 108,139 | $86.15 exercise price; $2,288,221 fair value | 1/3 per year; expire 2/26/2034; double-trigger CIC acceleration |
Compensation Structure Analysis (Signals)
- Increased resilience: 2024 LTI added RSUs (20%) alongside PSAs (60%) and options (20%), reducing reliance on market cyclicality and enhancing retention .
- Strong pay-at-risk: 2024 target mix implies ~90% of CEO total target compensation at-risk; no option repricing or tax gross-ups; robust clawbacks adopted; double-trigger CIC vesting enforced .
- UPP changes tied to strategic goals: Financial metrics weighted 80% (Adjusted EBIT/Modified OCF) and strategic goals 20% (safety, innovation new business, inclusion), aligning annual incentives with operational execution and culture .
Risk Indicators & Red Flags
- Dual-role governance: CEO also serves as Chair; mitigated by empowered Lead Independent Director and independent committees; shareholder proposal sought separation, reflecting some governance preference risk .
- Say-on-Pay softness: 2024 support at ~75.4% signals investor scrutiny; program changes were implemented in response .
- Pledging/hedging: Prohibited across directors/executives/employees, reducing alignment risk .
- Clawback breadth: Dodd-Frank restatement clawback plus separate detrimental conduct policy (Dec 2024) enhances recourse .
Employment & Contracts (Retention Risk)
| Factor | Observation |
|---|---|
| Contract/Term | CIC agreements in place; Company may terminate CIC agreements with ~2 years’ notice; 2-year employment period post-CIC |
| Severance Economics | CEO 3x salary+target bonus; health/welfare continuation; accelerated unvested retirement benefits; potential total payments ~$31.85M under CIC scenario as of 12/31/2024 (cash severance + equity at target + benefits) |
| Non-Compete / Non-Solicit | Not specifically disclosed in proxy; Omnibus plan and CIC terms detailed; per policy, clawbacks and double-trigger vesting constrain behavior |
| Post-Termination Equity/Benefits | Detailed omnibus plan treatment; options/awards have post-termination windows and forfeiture rules by cause/resignation/retirement |
Investment Implications
- Alignment and retention: High at-risk pay with multiyear PSAs tied to rTSR and ROIC, plus RSUs and options with 3-year vesting, support retention and long-horizon alignment; ownership guidelines at 5x salary and prohibition on pledging/hedging further align incentives .
- Near-term selling pressure: 2024 shows significant option exercises and PSA vesting value realized by Costa; while net share retention is not disclosed, tax-liquidity needs around vest dates can create periodic supply; monitor Form 4s around February/March grants/vesting cycles .
- Governance watchpoints: Combined CEO/Chair role remains a point of investor focus (proposal to split Chair/CEO in 2025); the presence of a strong Lead Independent Director and independent committees mitigates, but governance premium may hinge on continued responsiveness and performance .
- Performance linkage: 2024 UPP paid 106% driven by Adjusted EBIT beat and strategic execution; 2022–2024 PSAs paid 135% on TSR/ROIC, reinforcing pay-for-performance; continuation of innovation-led growth (methanolysis) and cash generation is key to sustaining compensation support and valuation .