James C. Kerr
About James C. Kerr
James C. Kerr, 62, serves as Executive Vice President and Chief Financial Officer of The Gorman-Rupp Company (GRC). He became CFO on January 1, 2017, was named Vice President and CFO on March 1, 2018, and has served as EVP & CFO since January 1, 2021; he joined GRC as Vice President of Finance on July 18, 2016 after senior finance roles at Jo‑Ann Stores . Company performance context for 2024 includes total shareholder return (TSR) of 112.01 on a $100 base (peer group 169.14), net income of $40.115 million, and operating income of $91.443 million; management identifies operating income, adjusted operating income, and average operating working capital to sales as the most important pay-performance measures . As principal financial officer, Kerr provides Sarbanes‑Oxley certifications alongside the CEO in GRC’s 2024 Form 10‑K, underscoring stewardship over disclosure controls and internal control over financial reporting .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Gorman-Rupp Company | Executive Vice President & Chief Financial Officer | 2021–present | Principal financial officer, SOX certifier (Section 302/906) |
| The Gorman-Rupp Company | Vice President & Chief Financial Officer | 2018–2020 | Senior leadership of finance |
| The Gorman-Rupp Company | Chief Financial Officer | 2017–2018 | CFO appointment effective Jan 1, 2017 |
| The Gorman-Rupp Company | Vice President of Finance | 2016 (Jul 18–Dec 31) | Finance leadership transition into GRC |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Jo‑Ann Stores | Executive Vice President & Chief Financial Officer | 2006–2015 | Senior finance leadership at national retailer |
| Jo‑Ann Stores | Vice President, Controller | 1998–2006 | Corporate controllership |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 351,667 | 366,833 | 381,533 |
| All Other Compensation ($) | 32,407 (incl. Company plan contributions) | 32,031 (incl. Company plan contributions) | 35,970 (incl. $29,392 Company 401(k) contribution) |
Notes:
- GRC states “No Employment Contracts” for officers; base salaries are reviewed annually against peers and responsibilities .
Performance Compensation
Annual Cash Incentive (Profit Sharing)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Profit Sharing (Bonus) ($) | 257,000 | 371,151 | 397,789 |
| Basis/Mechanics | Annual operating income drives executive profit-sharing pool | Annual operating income drives executive profit-sharing pool | Annual operating income drives executive profit-sharing pool |
Equity Awards Granted (2024 detail)
| Grant Date | Instrument | Threshold (#) | Target (#) | Max (#) | RSUs (#) | Grant Date Fair Value ($) |
|---|---|---|---|---|---|---|
| 2/22/2024 | PSUs (Adjusted Op Income growth & Avg Operating WC/Sales) | 2,822 | 5,644 | 8,466 | — | 295,000 |
| 2/22/2024 | RSUs (Service-based) | — | — | — | 2,477 | included above (total grant value $295,000) |
- RSUs vest in equal annual installments over three years based on continued service .
- PSUs have a two-year performance period (2024–2025) and three-year vest (vests 12/31/2026), with payout range 0%–150% based on goals; grantees have no voting/dividend rights until determination/payment .
Performance Metrics and Weighting
| Plan Year | Metric | Weighting | Target/Payout Structure |
|---|---|---|---|
| 2024 PSUs | Adjusted Operating Income Growth | 67% | 0%–150% payout; threshold 50%, target 100%, max 150% |
| 2024 PSUs | Average Operating Working Capital to Sales | 33% | 0%–150% payout; threshold 50%, target 100%, max 150% |
Recent Outcomes and Vesting Milestones
- 2023 PSU cycle (performance period 2023–2024) was determined at 150% of target; for Kerr, 10,222 shares will be awarded if he remains in service through 12/31/2025 vesting date .
- 2022 PSU grants vested on 12/31/2024 at maximum; Kerr’s award reflected maximum achievement .
- 2024 stock awards vested for Kerr: 1,616 shares acquired on vesting in 2024 (RSUs/PSUs), value realized $58,727 .
Equity Value Mix (Summary Compensation Table – Stock Awards $)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock Awards ($, grant-date fair value) | 255,000 | 275,000 | 295,000 |
Equity Ownership & Alignment
Beneficial Ownership
| Item | Value |
|---|---|
| Common shares beneficially owned | 30,100 shares (includes 6,876 shares issuable within 60 days) |
| Percent of outstanding shares | <1% (Company outstanding 26,227,540 as of 12/31/2024) |
| Hedging/short sales/derivatives | Prohibited for directors/officers; may not engage in hedging, short sales, or derivatives on Company stock |
| Margin/pledging | Holding in margin accounts and pledging Company securities as collateral are prohibited |
| Officer ownership guidelines | Executives must hold 1x–3x base salary in Company stock; sales generally restricted until minimum met |
Unvested and Outstanding Equity (as of 12/31/2024)
| Grant Date | Instrument | Unvested RSUs (#) | Market Value RSUs ($) | Unearned PSUs (#) | PSUs Market/Payout Value ($) | Notes |
|---|---|---|---|---|---|---|
| 2/22/2024 | RSUs / PSUs | 2,477 | 93,928 (at $37.92) | 2,822 | 107,010 (threshold basis) | 2024 PSUs vest 12/31/2026; 2024 performance period ends 12/31/2025 |
| 2/22/2023 | RSUs / PSUs | 1,864 | 70,683 | 10,222 | 387,618 (max basis; Committee determined max) | 2023 PSUs vest 12/31/2025 at 150% if in service |
| 2/24/2022 | RSUs / PSUs | 686 | 26,013 | 7,395 | 280,418 (max basis) | 2022 PSUs vested 12/31/2024 at max |
Employment Terms
- Employment agreements: GRC discloses “No Employment Contracts” for officers .
- Change of Control and termination: Equity awards “may vest to a certain extent” upon Change of Control or death/disability/retirement per the plan . Estimated post-employment value of Kerr’s unvested equity (12/31/2024 snapshot): $850,015 on change in control followed by a qualifying termination; $687,348 on death/disability; $610,171 on retirement (performance assumptions per disclosure) .
- Clawback: Board-approved clawback policy requires return of awards/pretax proceeds in certain circumstances, including restatements that would have affected PSU earnouts .
- Insider trading: Open-window trading, blackout periods, and preclearance apply; hedging/pledging/margin use is prohibited .
- Stock ownership policy: Executives must hold 1x–3x base salary in stock; most sales restricted until compliance .
Compensation Structure vs. Performance
- Philosophy and peer positioning: The Compensation Committee targets total compensation “commensurate with at least the 25th percentile” of similar capital goods manufacturers and annually reviews a 14‑company peer set (e.g., Franklin Electric, Mueller Water Products, Kadant, Tennant, Standex, Helios) .
- Mix and at-risk pay: Annual cash incentives are driven by operating income (profit sharing), while long-term equity emphasizes PSUs over RSUs to increase performance linkage .
- PSU metrics and outcomes: 2023–2024 PSUs paid at 150% based on exceeding maximum targets for adjusted operating income growth and average operating working capital to sales, reinforcing pay-for-performance .
- Say‑on‑pay: 2024 advisory vote outcome was favorable; Board considered the result in pay decisions .
Multi‑Year Compensation (cash vs equity)
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 351,667 | 366,833 | 381,533 |
| Profit Sharing ($) | 257,000 | 371,151 | 397,789 |
| Stock Awards ($) | 255,000 | 275,000 | 295,000 |
| Total ($) | 896,074 | 1,045,015 | 1,110,292 |
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited (reduces misalignment risk) .
- Related party transactions: None required to be reported under Item 404 for 2024 .
- Clawback policy in place .
- Governance support: Favorable say‑on‑pay in 2024 .
Equity Ownership & Insider Selling Pressure (Vesting Cadence)
- 2024 realized vesting: 1,616 shares, $58,727 value for Kerr .
- Year‑end 2024: 2022 PSUs vested (7,395 units at max) on 12/31/2024 .
- Upcoming 2025: 2023 PSUs determined at 150% (10,222 shares) contingent on service through 12/31/2025; potential settlement could add supply in open trading windows .
- Policy mitigants: Ownership guidelines and hedging/pledging prohibitions limit misalignment and leverage-based selling .
Compensation Peer Group (2024 review)
Alamo Group, Ampco‑Pittsburgh, Badger Meter, DMC Global, Franklin Electric, Helios Technologies, Kadant, L.B. Foster, Lindsay Corporation, Mueller Water Products, NN Inc., Standex International, Tennant Company, Twin Disc (median revenue ~$769M; GRC ~37th percentile by revenue) .
Say‑on‑Pay & Shareholder Feedback
- Advisory approval in 2024 was favorable; Committee incorporated feedback into ongoing design and base salary adjustments .
Expertise & Qualifications
- Senior finance executive with multi‑decade controller/CFO background, including EVP & CFO at Jo‑Ann Stores and principal financial officer duties at GRC with SOX certifications .
Investment Implications
- Alignment: High at‑risk mix via PSUs with earnings/working capital metrics, favorable say‑on‑pay, stock ownership requirements, and anti‑hedging/pledging rules support alignment with shareholders .
- Retention and overhang: Material unvested equity, including 2023 PSUs at 150% (10,222 shares) vesting 12/31/2025, indicates meaningful retention hooks but also potential supply around vest/settlement windows; 2022 PSUs (7,395) vested 12/31/2024 and 2024 RSUs continue to roll, creating periodic liquidity events .
- Pay-for-performance credibility: Outperformance on 2023–2024 PSU metrics (max) alongside 2024 operating income of $91.443M and net income of $40.115M supports line‑of‑sight metrics; however, relative TSR trailed peer group in 2024 (112.01 vs. 169.14), a watch‑item for future metric balance and investor perception .
- Governance risk: No related party transactions, presence of clawback, and favorable shareholder votes limit governance overhang .