Daniel L. Florness
FASTENALAbout Daniel L. Florness
- Age 61; CEO of Fastenal (August 2024–present), previously President & CEO (January 2016–July 2024). Joined Fastenal in 1996; CFO (1996–2002) and EVP/CFO (2002–2015) with earlier oversight of product development/procurement, manufacturing, and national accounts . Director since 2016; attended 100% of board meetings in 2023 and 2024 .
- Board governance: Employee director (not independent). Board Chair is independent and roles of Chair and CEO are separated, mitigating dual‑role concerns; all board committees are composed solely of independent directors .
- External roles: Director at H.B. Fuller; trustee at Emplify Health (f/k/a Bellin Gundersen Health System) .
- Performance context (5-year snapshot): Revenue and net income grew modestly from FY2020–FY2024; FAST’s total shareholder return (TSR) rose from 137 to 222 on a $100 base (2019 baseline) vs peer index 126→247, aligning pay and performance through a heavily at‑risk incentive mix .
Revenue, Net Income, and EBITDA (FY 2020 → FY 2024)
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Revenues ($) | 5,647,300,000* | 6,010,900,000* | 6,980,600,000* | 7,346,700,000* | 7,546,000,000* |
| Net Income ($) | 859,100,000* | 925,000,000* | 1,086,900,000* | 1,155,000,000* | 1,150,600,000* |
| EBITDA ($) | 1,304,200,000* | 1,388,100,000* | 1,630,200,000* | 1,706,000,000* | 1,685,400,000* |
| Note: Values retrieved from S&P Global.* |
FAST TSR vs Peer Index (value of $100 investment; 2019 base → fiscal year-end)
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| FAST TSR ($) | 137 | 183 | 138 | 196 | 222 |
| Peer Index TSR ($) | 126 | 169 | 147 | 218 | 247 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Fastenal | Chief Executive Officer | 2016–present (Aug 2024 title change) | Led strategy and operations; sustained profit focus via simple, transparent incentives . |
| Fastenal | President & CEO | 2016–Jul 2024 | Aligned culture and pay with growth-in-profit metrics . |
| Fastenal | EVP & CFO | 2002–2015 | Expanded remit to product dev./procurement, manufacturing, and national accounts . |
| Fastenal | CFO | 1996–2002 | Built finance, internal controls, regulatory compliance foundation . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| H.B. Fuller | Director | — | Public company in adhesives; board service disclosed . |
| Emplify Health (f/k/a Bellin Gundersen) | Trustee | — | Regional health system; board of trustees service disclosed . |
Fixed Compensation
Multi-year CEO cash pay and outcomes
| Year | Base Salary ($) | Target Cash Incentive ($) | Actual Cash Incentive ($) |
|---|---|---|---|
| 2022 | 750,000 | — | 4,068,500 |
| 2023 | 750,000 | 4,068,500 | 1,515,000 |
| 2024 | 750,000 | 1,515,000 | 75,250 |
| Other: As an employee director, he also receives a $50,000 annual director retainer . |
Compensation structure highlights
- Base salary set below market median; emphasis on at‑risk pay .
- No perquisites; retirement/health benefits same as all U.S. employees .
Performance Compensation
Short-term incentives (STIP)
- Metric: Company-wide pre-tax income growth vs prior-year quarter; CEO payout rate 1.75% of the amount by which pre-tax income exceeds prior-year quarter (“minimum target”) .
- 2024 targets by quarter and results disclosed; aggregate target for the year used in proxy planning was $1,515,000; actual payout was $75,250 given mixed quarterly performance .
STIP summary (CEO)
| Metric | Weighting | Payout Rate | Target ($) | Actual ($) | Vesting |
|---|---|---|---|---|---|
| Pre-tax income growth YoY (quarterly) | 100% | 1.75% of excess over prior-year quarter | 1,515,000 (2024) | 75,250 (2024) | Quarterly cash; no deferral . |
Supplemental asset efficiency (ROA Plan) paid $35,000 across 2024 (company-wide) .
Long-term incentives (LTIP – stock options; no RSUs/PSUs)
- Options only; broad-based; no repricing; 5–8 year vesting; exercise price rounded up from grant date close .
- Change-in-control: acceleration only if not assumed/replaced (double-trigger style), and on dissolution/liquidation .
CEO option grants
| Grant Date | Securities (#) | Exercise Price ($/sh) | Vesting | Grant-Date Fair Value ($) |
|---|---|---|---|---|
| 1/2/2024 | 54,687 | 64.00 | 20% annually over 5 years | 867,883 |
| 1/3/2023 | 72,916 | 48.00 | 20% annually over 5 years | 847,284 |
| 1/3/2022 | 45,161 | 62.00 | 40% at 2 years; then 20% yearly | 617,802 |
Option exercises (liquidity/pressure signal)
- 2024: 127,562 shares exercised; value realized $6,164,820 .
Equity Ownership & Alignment
Beneficial ownership (as of Feb 1, 2025)
| Component | Shares/Options |
|---|---|
| Shares held jointly with spouse | 282,518 |
| Wife’s shares | 10,000 |
| 401(k) attributable shares | ~11,306 |
| Options immediately exercisable | 325,557 |
| Total beneficial ownership | 629,381 (<1% of 573,434,554 shares outstanding) |
Outstanding equity (12/31/2024)
- Unexercised options: granular schedule by grant with exercisable/unexercisable blocks disclosed (multiple vintages from 2018–2024) .
- Hypothetical in-the-money value of all options if accelerated at $71.91 (12/31/2024): approximately $12,836,121 (sum of grant-level values shown) .
Policies and alignment
- Stock ownership guidelines: CEO required to reach 1.0x base salary (5 years) and 2.0x (10 years); all Section 16 officers currently in compliance .
- Anti‑hedging policy: Hedging prohibited for directors and Section 16 officers .
- Pledging: No specific pledging disclosure identified in the proxy; trading policy governs insider transactions .
Employment Terms
- No employment, severance, or change‑of‑control agreements with executives .
- Equity treatment on change‑in‑control: Options accelerate only if not assumed or replaced; also accelerate on dissolution/liquidation .
- Clawback: Compensation forfeiture, recovery, and true‑up policy adopted October 11, 2023 per Nasdaq Rule 10D; provides for recovery on restatements and “true‑up” on underpayments .
- No perquisites and no non‑qualified deferred compensation plans .
Board Service, Committees, and Governance Implications
- Board tenure: Director since 2016; attended 100% of board meetings in 2023 and 2024 .
- Committee roles: As CEO/employee director, no committee assignments (audit/compensation/nom-gov are independent-only) .
- Independence: Not independent; mitigated by an independent Chair (Scott Satterlee) and separated Chair/CEO roles; lead independent director not applicable given Chair independence .
Compensation Governance, Peer Group, and Shareholder Feedback
- Peer groups used for 2024 and 2025 decisions (unchanged): AIT, DCI, GPC, IEX, MSM, NDSN, ORLY, TSCO, WCC, GWW .
- No outside compensation consultant; program emphasizes below‑median salary and above‑median variable pay .
- Say‑on‑Pay: 2025 vote – For 438,459,188; Against 28,537,462; Abstain 1,601,891 (adopted; ~94% support of votes cast) . 2024 support referenced at ~93% .
Risk Indicators & Red Flags
- Related party transactions: None reportable in 2024 .
- Equity practices: No option repricing; grants on a pre‑set cadence; exercise price rounded up to nearest dollar; no backdating .
- Hedging prohibited; ownership guidelines in force .
- Leadership transition: CFO resignation effective April 16, 2025 disclosed; continuity planning is overseen by the Compensation Committee .
Investment Implications
- Pay-for-performance linkage is tight: CEO STIP pays only on quarterly pre‑tax income growth; 2024’s modest profit dynamics produced a sharp decline in cash bonus ($75k vs $1.5m in 2023), signaling discipline and limited discretionary overlays .
- Retention risk appears contained: Multi‑vintage option portfolio with 5–8 year vesting, robust ownership guidelines, and no CIC cash benefits encourage long‑term alignment; anti‑hedging/recoupment further strengthen governance .
- Insider liquidity: 2024 option exercises ($6.2m realized) warrant monitoring around vesting dates, but broad‑based option usage and continuing holdings support alignment; review Form 4s for net selling vs tax/cover transactions .
- Board structure mitigates dual‑role concerns: Independent Chair, independent-only committees, and strong meeting attendance support effective oversight of an insider CEO .
- Performance backdrop: Revenues and net income remained resilient through 2024; TSR improved to 222 on a 5‑year base while peer index reached 247, suggesting continued shareholder value creation with room to close relative performance gaps through execution on profit growth levers .