Shahbaz Malik

About Shahbaz Malik

M. Shahbaz “Boz” Malik is Senior Vice President, Building Adhesives Solutions at H.B. Fuller, a role retitled in December 2024 after leading the Construction Adhesives segment since December 2019 (age 57 as of January 23, 2025) . Under his leadership, the Construction Adhesives segment delivered FY2024 revenue of $563 million (+17% YoY) and Adjusted EBITDA of $75 million (+35% YoY), contributing to company results of $3.57 billion net revenue and $594 million Adjusted EBITDA with a record 16.6% Adjusted EBITDA margin . Company total shareholder return (value of initial $100) measured $149.59 in FY2024; pay-for-performance is reinforced by Malik’s 2024 STIP payout at 148% of target, driven by outperformance in his segment metrics .

Past Roles

Fixed Compensation

Performance Compensation

FY2024 Short‑Term Incentive Plan (STIP) – Malik (Construction/Building Adhesives leader)

Notes

• Company STIP metrics are Adjusted EPS, Adjusted Net Revenue, Adjusted EBITDA, and Adjusted EBITDA Margin; for segment leaders, segment-specific revenue/EBITDA/margin apply alongside company EPS .
• Compensation Committee applied downward discretion (~2%) to exclude certain insurance proceeds from STIP calculations .

Long‑Term Incentives (LTIP) – Plan Design and FY2024 Grants

• LTIP mix for NEOs: 50% non‑qualified stock options (NQSOs), 25% RSUs (time-vest), 25% PSUs (3‑year ROIC, 0–200% payout, cliff) .
• Approximate FY2024 LTIP grant value for Malik: $570,000; his long‑term incentive target “remained at $475,000” (award sizing uses market median and individual contributions) .

Vesting/retirement/CIC mechanics:

• Options vest 33/33/34; immediate exercisability on retirement (age 55 + 10 years’ service), death, disability, or CIC (double trigger) .
• RSUs vest 33/33/34; immediate vesting on death, disability, or CIC (double trigger) .
• PSUs vest on 3‑year ROIC performance; on death/disability/CIC termination during the performance period, vest at target (double trigger for CIC) .

Equity Ownership & Alignment

Beneficial Ownership (as of Jan 29, 2025 unless noted)

Unvested Equity at FY2024 Year‑End (11/29/2024 close price $76.89)

2024 Exercises/Vesting (realized)

Employment Terms

Severance (non‑CIC)

• If terminated without cause or resigns for good reason (material pay cut, material diminution of duties, or 50+ mile relocation), benefits include:
  • Cash severance = 1× (base salary + target bonus) paid over 12 months; medical/dental continuation 12 months; outplacement up to $20,000; 2‑year non‑compete and non‑solicit (where permitted) .

Change‑in‑Control (CIC) – Double Trigger

• If, within 24 months post‑CIC, terminated without cause or for good reason: pro‑rated target STIP; cash severance = 3× (highest base salary around CIC + target bonus) lump sum; medical/dental for 3 years; outplacement up to $25,000 .
• Equity: unvested options/RSUs vest; PSUs vest at target upon qualifying termination during performance period; double trigger applies .
• Taxes: For agreements entered mid‑FY2018 and later (includes Malik), no excise tax gross‑up; “best‑of‑net” applies (cut to avoid 280G or pay and exec bears tax, whichever yields higher after‑tax benefit) .

Estimated Payouts (as of 11/30/2024 scenario)

Compensation Structure Analysis

• Mix emphasizes at‑risk pay: STIP driven by EPS and segment net revenue/EBITDA/margin; LTIP balanced across options/RSUs/PSUs with three‑year ROIC performance .
• 2024 STIP design added Adjusted EBITDA Margin metric to align with portfolio management approach; Committee applied downward discretion to exclude insurance proceeds (~2%), signaling discipline in payouts .
• Ownership alignment: 2× salary ownership guideline; hedging/pledging prohibited; clawback policy for restatements or misconduct .
• Governance: Double‑trigger equity vesting on CIC; no option repricing; no 280G gross‑ups for post‑2018 CIC agreements (applies to Malik) .

Compensation Peer Group & Market Positioning

• H.B. Fuller references a 19‑company peer set (e.g., Albemarle, Ashland, Avery Dennison, Celanese, FMC, Graco, Hexcel, IFF, Nordson, Olin, RPM, Chemours, Cabot, Axalta, Avient, Sensient, Donaldson, Trinseo, Aptar) and aims to align target total direct compensation with the market median (50th percentile) .

Say‑on‑Pay & Shareholder Feedback

• FY2024 Say‑on‑Pay received 97% approval; the Committee continues to evaluate and engage to ensure pay supports long‑term value creation .

Investment Implications

• Strong segment execution: Malik’s segment outperformance (revenue +17%, EBITDA +35%) translated into a 148% STIP payout, evidencing tight alignment between operating results and cash incentives .
• Forward incentives and retention: A sizable 2024 LTIP (~$570k) with three‑year ROIC PSUs and time‑vest RSUs/options creates multi‑year retention and alignment; upcoming vesting and in‑the‑money legacy options can create periodic selling/exercise windows but pledging/hedging is prohibited, reducing misalignment risk .
• Downside protection and change risk: Non‑CIC severance (1× salary+bonus) and CIC (3× cash plus benefits) provide meaningful protection; double‑trigger vesting and best‑of‑net tax treatment are shareholder‑friendly relative to historic gross‑ups, though CIC cash multiples represent potential transaction costs .
• Governance support: High Say‑on‑Pay (97%) and clawback policy reduce pay‑risk; policy prohibiting option repricing and pledging further supports alignment .