Richard W. Heo
About Richard W. Heo
Richard W. Heo, 54, is President and Chief Executive Officer of Gulf Island Fabrication, Inc. since November 2019 and was appointed Chair of the Board effective November 30, 2024, combining CEO and Chair roles with a Lead Independent Director structure in place . He brings senior leadership experience from McDermott International and CB&I (including EVP Fabrication Services and President of Engineered Products) and prior executive roles at KBR . Under his tenure the company’s pay-versus-performance shows improved 2024 outcomes with net income of $14.7 million and Company TSR value of $170 on a $100 baseline, up from $108 in 2023; the compensation actually paid (CAP) to the CEO rose accordingly, consistent with equity-driven pay design . Annual and long-term incentives are explicitly tied to Adjusted Cash Flow and safety metrics (TRIR/LTIR), with 2024 performance RSUs gated by break-even Adjusted Cash Flow and then subject to three-year service vesting .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| McDermott International, Inc. | SVP North, Central and South America | 2018–2019 | Regional leadership across EPC operations |
| Chicago Bridge & Iron N.V. (CB&I) | EVP Fabrication Services | 2017–2018 | Led global fabrication services portfolio |
| Chicago Bridge & Iron N.V. (CB&I) | President, Engineered Products | 2014–2017 | Ran Engineered Products business unit |
| KBR, Inc. | Senior leadership positions | 2009–2014 | Various senior roles in EPC operations |
External Roles
| Organization | Role | Years |
|---|---|---|
| None disclosed | — | — |
| Note: The proxy provides external public board listings for other directors, but none are disclosed for Mr. Heo beyond his GIFI directorship . |
Fixed Compensation
| Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Base Salary ($) | $415,000 | $487,000 | $487,000 | $487,000 |
| Annual Cash Incentive (AIP) – Cash Payout ($) | — | — | $688,000 | $1,151,980 |
2024 AIP detail:
| Item | Value |
|---|---|
| Participant Interest | 55.1% |
| Safety Bonus Earned | $228,383 |
| Management Amount Earned | $923,597 |
| Cash Incentive Payout | $1,151,980 |
Notes:
- No changes to executive base salaries since April 1, 2022 .
- CEO did not receive any separate director compensation for board service .
Performance Compensation
AIP performance metrics (2024):
| Metric | Weighting | Threshold | Target | Actual | Payout |
|---|---|---|---|---|---|
| TRIR | 50% of Safety Bonus | 0.95 | 0.63 | 0.27 | 100% of Safety Bonus |
| LTIR | 50% of Safety Bonus | 0.23 | 0.15 | 0.00 | 100% of Safety Bonus |
| Adjusted Cash Flow gate for LTI RSUs | Gate only | Break-even | — | Achieved (Actual Adjusted Cash Flow $14.874m) | LTI earned; vests over 3 years |
2024 LTI awards (Performance RSUs):
| Grant Date | Metric | Target Value ($) | Units Granted | Vesting |
|---|---|---|---|---|
| April 1, 2024 | Break-even Adjusted Cash Flow, then time-based | $356,556 | 47,540 RSUs | 33% on each of April 1, 2025, 2026, 2027 |
Program design and payout math:
- “Preferred Shareholder Return” (PSR Amount) at 12% of risk-adjusted equity sets minimum return before management payout .
- AIP Management Amount = 32% of Excess Cash Flow up to plan plus 20% above plan; 2024 Payout Amount after safety and LTI set-asides was $1.676m across executives, with CEO share by Participant Interest .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial ownership (shares) | 799,271 |
| Ownership (% of outstanding) | 4.9% (based on 16,377,229 outstanding) |
| RSUs vesting within 60 days (as of Apr 1, 2025) | 79,700 |
| CEO stock ownership guideline | 2.0x base salary |
| Compliance with guideline | Exceeds target ownership level (as of Dec 31, 2024) |
| Hedging/Pledging | Prohibited for directors/executives |
Outstanding equity awards at FY-end (Heo):
| Grant Date | Unvested Units | Market Value ($) | Vesting Schedule |
|---|---|---|---|
| 4/1/2022 | 71,666 | $488,045 (at $6.81) | 100% on April 1, 2025 |
| 5/1/2023 | 159,399 | $1,085,507 (at $6.81) | 50% on May 1, 2025 and 50% on May 1, 2026 |
| 4/1/2024 | 47,540 | $323,747 (at $6.81) | 33% on April 1, 2025, 2026, 2027 |
Additional alignment and governance:
- Company does not grant stock options currently (RSUs only) .
- Anti-hedging and anti-pledging plus formal insider trading policy in place .
- Director/executive ownership guidelines must be met within 5 years; executives currently meet/exceed .
Employment Terms
| Provision | Term |
|---|---|
| Employment agreements | None for executive officers |
| Change-of-Control (CoC) term | Double trigger; termination within 24 months post-CoC |
| CoC severance multiple (CEO) | 2.5x base salary + target annual bonus |
| Pro-rata bonus | Greater of 3-year average bonuses or target, pro-rated by days |
| Welfare benefits | Lump-sum equal to 18 months COBRA premiums |
| Equity treatment at CoC | Performance RSUs convert to time-based at target at CoC; vest accelerates on qualifying termination within 12 months |
| 2025 amendment (Mar 3, 2025) | Revised “good reason,” defined “target bonus,” included equity acceleration in payments to align with award agreements |
| Tax gross-ups | None; cut-back or pay-more approach under 280G |
| Clawback | Stand-alone Dodd-Frank compliant clawback adopted in 2023; equity agreements include recovery provisions |
| 401(k) | Executives participate on same terms as employees |
Potential payments on CoC termination (illustrative, as of Dec 31, 2024):
| Component | Amount ($) |
|---|---|
| Pro-Rata Bonus | $602,185 |
| Severance Payment | $2,435,000 |
| RSUs Accelerated (Unvested) | $1,897,299 |
| Welfare Benefits | $41,232 |
| Total | $4,975,716 |
Board Governance
- Board service history: Director since 2019; appointed Chair effective Nov 30, 2024; non-independent director .
- Committee roles: CEO/Chair does not serve on any Board committees; all committees are 100% independent .
- Lead Independent Director: Robert M. Averick appointed Nov 30, 2024, with defined oversight responsibilities (approves agendas/info, presides in executive sessions, liaises with CEO, available to significant shareholders) .
- Board attendance: All incumbent directors attended 100% of Board and committee meetings in 2024; Board met six times in 2024 .
- Executive sessions: Independent directors meet in executive session at each regular Board meeting .
- Anti-hedging/pledging: Directors/executives prohibited from hedging or pledging Company stock .
Director compensation (context): Non-employee directors receive blended cash/equity fees; CEO as employee director receives no director compensation .
Performance & Track Record
| Year | Company TSR (Value of $100) | Net Income ($000s) |
|---|---|---|
| 2022 | $128 | $(3,352) |
| 2023 | $108 | $(24,402) |
| 2024 | $170 | $14,741 |
Additional 2024 accomplishments include improved Fabrication gross margins, monetization of under-utilized assets, strong liquidity ($67.3 million year-end cash/investments), and expansion of offshore cleaning/environmental services . AIP design explicitly linked pay to cash flow and safety, with 2024 payouts near target reflecting operational performance .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay approval: >98% approval at 2024 annual meeting; Board recommends FOR in 2025; program emphasizes pay-for-performance, clawbacks, ownership guidelines .
- Shareholder engagement focuses on end markets, labor, strategy, capital allocation, and legal resolution updates .
Compensation Structure Analysis
- Shift to performance-based RSUs: 100% of 2024 LTI in performance RSUs gated on Adjusted Cash Flow, then three-year service vesting—reduces windfalls and strengthens multi-year retention linkage .
- No automatic salary increases and no tax gross-ups; clawback policy active—shareholder-friendly features .
- CEO cash incentive rose to $1.15 million in 2024 under AIP; CAP increased with TSR and profitability—demonstrates alignment but raises near-term vesting overhang considerations given sizable unvested RSU tranches .
Risk Indicators & Red Flags
- Combined CEO/Chair role: Board concluded combined roles optimal; mitigated by Lead Independent Director and independent committees .
- Hedging/pledging: Prohibited (reduces misalignment risk) .
- Related party transactions: None reportable since Jan 1, 2024 .
- Options repricing: Not applicable—Company currently does not grant stock options .
Equity Ownership & Director Alignment Policies
- Executive and director ownership guidelines in place; CEO 2.0x salary guideline; executives exceeded targets as of Dec 31, 2024 .
- Independent committees, majority independent Board, majority voting, Lead Independent Director structure .
Investment Implications
- Strong pay-performance alignment: AIP ties payouts to Adjusted Cash Flow and safety, with 2024 execution delivering CEO cash payout and LTI gate achievement; this supports confidence in operational execution and cash discipline as share repurchases and liquidity improve .
- Retention vs. selling pressure: Large RSU tranches vesting on April 1, 2025; May 1, 2025 and 2026; and annually through April 2027 create predictable vesting windows that can generate supply overhang; however, anti-hedging/pledging and ownership guidelines support alignment and discourage leveraged selling .
- Governance risk balanced: Dual CEO/Chair role elevates independence concerns but is mitigated by a robust Lead Independent Director mandate and fully independent committees; say-on-pay support >98% indicates low governance friction with investors .
- Change-of-control economics: 2.5x cash multiple plus equity acceleration under double trigger can be attractive in M&A scenarios, potentially influencing negotiations and management retention through closing and integration .
- Ownership alignment: CEO’s 4.9% beneficial stake is material for a company of GIFI’s size, aligning incentives with equity value creation as the firm targets diversified end markets and margin improvement .