Robert E. Smith
GENERAL DYNAMICSAbout Robert E. Smith
Executive Vice President, Marine Systems at General Dynamics. Tenure in role: 6 years (NEO list) with 35 years of total company service credited for pension purposes . 2024 Marine Systems performance: orders $8.3B (book-to-bill 0.6x), revenue $14.3B (+15.1% YoY, >11% above goal), operating earnings $935M (+7% YoY, below goal due to Electric Boat supply chain), and cash generation >13% above goal . Incentives are tied to: annual EPS (25%), FCF (25%), operating margin (20%), and strategic/operational goals (30%); long-term PSUs pay on 3-year average ROIC with an rTSR modifier; stock options and restricted stock round out LTI .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| General Dynamics | EVP, Marine Systems | 6 years | Oversight of Electric Boat, Bath Iron Works, and NASSCO; record segment revenue; delivered 6 ships in 2024 (2 Virginia-class subs, 1 DDG-51 destroyer, 1 ESB, 2 T-AO oilers); advanced Columbia-class infrastructure and hiring |
External Roles
- Not disclosed in the proxy documents reviewed.
Fixed Compensation
| Year | Base Salary ($) | All Other Compensation ($) | Change in Pension Value & Nonqualified DC Earnings ($) |
|---|---|---|---|
| 2024 | 893,750 | 69,178 | — |
| 2023 | 875,000 | 79,645 | 90,211 |
| 2022 | 856,250 | 76,478 | — |
Performance Compensation
Annual Incentive (AIP) structure and metrics
- Weighting: EPS 25%, FCF 25%, Operating Margin 20%, Strategic/Operational 30% .
- 2024 payout calibration and results summarized below (company-wide) .
| Year | Base Salary ($) | Target Incentive (%) | Target ($) | Overall Achievement (%) | AIP Payout ($) |
|---|---|---|---|---|---|
| 2024 | 900,000 | 110% | 990,000 | 106.1% | 1,050,000 |
| 2023 | 875,000 | 110% | 962,500 | 133.3% | 1,283,000 |
Long-Term Incentive (LTI) program and grants
- Mix: PSUs 50% (3-year average ROIC with rTSR modifier; 3-year cliff), Stock Options 30% (10-year term; 50% vest year 2, 50% year 3), Restricted Stock 20% (3-year cliff); no option repricing; shares must be held until ownership guidelines met .
| LTI Grant Value to Smith | 2023 ($) | 2024 ($) |
|---|---|---|
| Committee-awarded annual LTI | 3,700,000 | 4,000,000 |
| Grant-date Fair Values (SCT) | 2022 ($) | 2023 ($) | 2024 ($) |
|---|---|---|---|
| Stock Awards (RSUs/PSUs) | 2,684,139 | 2,684,494 | 3,039,314 |
| Option Awards | 1,138,848 | 1,110,082 | 1,199,743 |
Performance realization context
- 2021–2023 PSU cycle paid at 160% of target (120% for ROIC at 12.3% vs 11.3% target, multiplied by rTSR modifier 133.3%) .
Equity Ownership & Alignment
Beneficial ownership (as of March 12, 2025)
| Name | Shares Owned | Options Exercisable within 60 Days | Total Common Stock | % of Class |
|---|---|---|---|---|
| Robert E. Smith | 84,168 | 119,940 | 204,108 | <1% |
2024 equity activity (liquidity/pressure indicators)
| 2024 Activity | Shares | Value ($) |
|---|---|---|
| Options exercised | 60,430 | 6,473,737 |
| Stock awards vested | 20,667 | 5,675,536 |
Outstanding equity and scheduled vesting (12/31/2024)
- Unvested restricted stock/units: 9,430 ($2,484,711) .
- Unearned PSUs (at target basis used for disclosure): 24,474 ($6,448,704) .
- Restricted stock release schedule (first NYSE business day after 3rd anniversary of grant): 3,265 on 3/3/2025; 3,250 on 3/9/2026; 2,915 on 3/8/2027 .
- PSUs timing: 11,826 released on 3/5/2025; may release 16,870 in Q1 2026 and 14,782 in Q1 2027 subject to performance/Committee determination .
Stock options (selected tranches)
| Grant (shares) | Exercise Price ($) | Expiration | Vesting/Exercisability |
|---|---|---|---|
| 19,860 | 274.51 | 03/05/2034 | 9,930 on 3/6/2026; 9,930 on 3/6/2027 |
| 23,380 | 227.58 | 03/07/2033 | 11,690 on 3/8/2025; 11,690 on 3/8/2026 |
| 14,710 | 232.90 | 03/01/2032 | 14,710 on 3/2/2025 |
| 34,390 | 168.56 | 03/02/2031 | Previously vested |
| 35,010 | 165.47 | 03/03/2030 | Previously vested |
| 9,340 | 189.00 | 09/02/2029 | Previously vested |
Ownership policy, hedging/pledging, and holding rules
- Executives (other than CEO) must hold 8–10x base salary; PSUs, unvested restricted stock and options (vested or not) do not count. Shares received from option exercises/vesting must be retained until guideline met .
- Hedging and pledging of company securities by directors and executive officers are prohibited; margin accounts not permitted .
Employment Terms
- No individual employment agreements; no excise tax gross-ups; no cash severance above 2.99x salary+annual incentive without shareholder approval (policy adopted Feb 2024) .
- Change-in-control agreements are double-trigger (CIC plus qualifying termination within 24 months) .
Potential payments (assuming 12/31/2024 event)
| Scenario | Component | Robert E. Smith ($) |
|---|---|---|
| Termination without cause or Retirement | Stock Options (continued vest per retirement) | 1,289,555 |
| Restricted Stock (immediate release) | 2,484,711 | |
| PSUs (prorated if earned) | 2,130,317 | |
| Retiree Life Insurance Benefit | 222,483 | |
| Retiree Medical & Dental | 66,582 | |
| Change in Control with Qualifying Termination (double-trigger) | Annual Incentive | 1,401,000 |
| Severance (2.99x salary+bonus) | 6,879,990 | |
| Benefits (life/medical/dental/LTD) | 49,950 | |
| Outplacement | 10,000 | |
| Financial Counseling/Tax Planning | 30,000 | |
| Supplemental Retirement Benefit (DC equivalents) | 102,892 | |
| PSUs (CIC vesting assumption per plan) | 2,039,676 | |
| Total | 10,513,508 |
- Retirement eligibility: Smith is eligible; upon retirement, unvested stock options continue to vest, restricted stock releases immediately, and PSUs prorate and release (if earned) after scheduled dates per award terms .
Pension and deferred compensation
| Plan/Item | Value/Amount |
|---|---|
| Salaried Retirement Plan — Present Value (12/31/2024) | 608,450 |
| Supplemental Retirement Plan — Present Value (12/31/2024) | 453,951 |
| Nonqualified Deferred Comp — 2024 exec contribution | 17,500 |
| Nonqualified Deferred Comp — 2024 company contribution | 17,500 |
| Nonqualified Deferred Comp — 2024 earnings | 9,057 |
| Nonqualified Deferred Comp — Aggregate balance (12/31/2024) | 321,651 |
Performance Compensation (detail)
| Metric | Weighting | Targeting/Notes |
|---|---|---|
| EPS | 25% | Challenging targets; dilution from program timing (e.g., G700 in 2023 at Aerospace) led to below-target EPS outcomes in 2023 company-wide |
| Free Cash Flow | 25% | Emphasized cash discipline; 2023 well above target; 2024 overall AIP ~106% reflects mixed results |
| Operating Margin | 20% | Focus on profitability; 2023 below target at company level; Marine Systems 2024 op earnings up YoY but below goal |
| Strategic/Operational | 30% | Individual leadership, program execution, human capital, ESG; Smith scored 180% for 2023 and 185% for 2024 strategic/operational components |
Compensation Structure Analysis
- Equity-heavy and at-risk pay: Other NEOs averaged ~87% at-risk compensation; 50% of LTI in PSUs with objective ROIC and rTSR metrics reinforces pay-for-performance .
- No employment contracts; robust clawback; anti-hedging/anti-pledging; no excise tax gross-ups; double-trigger CIC; severance capped at 2.99x without shareholder approval — all shareholder-friendly features .
- Shareholder support: Say-on-pay received 96.2% approval in 2023, with ongoing shareholder engagement cited by the Committee .
Investment Implications
- Alignment: High ownership requirements (8–10x salary) and strict retention/anti-hedging/pledging policies mitigate misalignment risk; PSUs tied to multi-year ROIC with rTSR modifier support value creation focus .
- Retention: Meaningful unvested equity through 2027 (restricted and PSU schedules) plus unexercisable options create multi-year retention hooks; however, retirement eligibility grants favorable treatment (continued option vesting, immediate restricted release, prorated PSUs), modestly reducing “stickiness” versus non-eligible peers .
- Near-term selling/flow-on effects: 2024 saw material option exercises (60,430 shares) and vesting (20,667 shares). Additional releases are scheduled in March 2025 (restricted and PSUs) and through 2027, which can create periodic liquidity windows; holding requirements apply until ownership multiples are met .
- Performance execution risk: Marine Systems delivered strong revenue and cash but missed certain margin goals due to supply chain constraints; AIP paid near target in 2024 (106.1%), signaling balanced performance with room for operating margin improvement .