Richard McPhail
HOME DEPOTAbout Richard McPhail
Richard V. McPhail is Executive Vice President and Chief Financial Officer of The Home Depot, serving as CFO since September 2019 and with the company since 2005; he is 54 years old per the company’s FY2024 10-K executive roster . Under his finance leadership, Home Depot delivered a five‑year total shareholder return of 103.8% and FY2024 sales of $159.5B (53‑week year) amid a challenging macro backdrop . Prior roles include senior finance leadership at Home Depot and earlier positions at Marconi Corporation, Wachovia Securities, and Arthur Andersen .
Company performance (context for pay-for-performance):
| Metric | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|---|
| Revenues ($) | 132.11B | 151.16B | 157.40B | 152.67B | 159.51B |
| EBITDA ($) | 20.80B* | 25.90B* | 27.01B* | 24.94B* | 25.29B* |
*Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic Impact / Scope |
|---|---|---|---|
| The Home Depot | EVP & CFO | Sep 2019–present | Oversees corporate finance incl. reporting, planning, treasury, tax; stewarded capital allocation and integration work during SRS acquisition period . |
| The Home Depot | SVP, Finance Control & Administration | 2017–2019 | Led FP&A, enterprise reporting, treasury, tax, international finance . |
| The Home Depot | SVP, Finance (U.S. Retail; Strategy; Biz Dev) | 2014–2017 | Drove U.S. Retail finance and strategic/financial planning . |
| The Home Depot | SVP, Global FP&A, Strategy, New Biz Dev | 2013–2014 | Global planning and strategy leadership . |
| The Home Depot | Strategy & Business Development roles | 2005–2013 | Increasing responsibility in finance/strategy . |
| Marconi Corporation plc (London) | EVP, Corporate Finance | Pre‑2005 | Corporate finance leadership at global telecoms firm . |
| Wachovia Securities; Arthur Andersen | Various | Pre‑Marconi | Investment banking and audit/consulting foundation . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Marconi Corporation plc | EVP, Corporate Finance | Pre‑2005 | International corporate finance leadership . |
Fixed Compensation
| Component | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary (paid, $) | 872,154 | 903,692 | 959,223 (53‑week year) |
| Stated Base Salary Rate (as of Apr 2024) | — | — | $950,000 |
| Target Annual Bonus (% of salary) | 100% | 100% | 100% |
| Annual Bonus Paid ($) | 934,310 | 745,190 | 930,841 |
Notes:
- FY2024 MIP payout was 98% of target for all NEOs, reflecting below‑target Sales/Operating Profit, above‑target Inventory Turns, and achieved Pro sales strategic goal .
Performance Compensation
Annual MIP (Management Incentive Plan) – FY2024 design and outcome
| Metric | Weight | Threshold | Target | Maximum | Actual (definition basis) | Payout vs Target |
|---|---|---|---|---|---|---|
| Sales ($B) | 40% | 139.39 | 154.88 | 170.37 | 153.37 (adjusted); actual unadjusted 159.51 | 98% (company‑wide) |
| Operating Profit ($B) | 40% | 19.62 | 21.80 | 23.98 | 21.42 (adjusted); actual unadjusted 21.53 | 98% |
| Inventory Turns | 10% | 4.10 | 4.55 | 5.01 | 4.71 (adjusted); actual unadjusted 4.67 | 98% |
| Pro Strategic Goal | 10% | n/a | Increase managed account sales | n/a | Achieved | 98% |
- Operating profit threshold must be met for any payout .
- Adjustments include FX, qualifying M&A, certain non‑recurring/structural items; Pro goal measured on a 52‑week basis, others on 53‑weeks for FY2024 .
Long‑Term Incentives (annual grant made Mar 20, 2024)
Mix: 50% Performance Shares; 30% Performance‑Based Restricted Stock; 20% Stock Options .
- Performance Shares (FY2024–2026): equally weighted three‑year average ROIC and Operating Profit; payout 50–200% with 85% threshold/115% max . Initial year tracking between target and maximum per proxy summary .
- FY2022–2024 Performance Shares earned at 25.6% of target; McPhail earned 1,190 shares (incl. reinvested dividends) .
- Performance‑Based Restricted Stock: forfeited if FY2024 Operating Profit < 90% of target; condition met; vests 50% at 30 months and 50% at 60 months from grant .
- Stock Options: exercise price $384.41; vest 25% on each of the 2nd–5th anniversaries; in‑the‑money by $27.57/share at FY2024 year‑end .
FY2024 Grants to McPhail (selected terms)
| Award | Quantity/Terms | Key Details |
|---|---|---|
| Performance Shares (2024–2026) | Target 4,162; 50–200% payout curve | ROIC/Op Profit goals with 85–115% band; dividend equivalents accrue . |
| Perf‑Based Restricted Stock | 2,497 shares | Vests 30/60 months; non‑forfeitable upon meeting performance and upon retirement eligibility; remains non‑transferable until vest . |
| Stock Options | 6,684 options @ $384.41 | 10‑year term; 25% annual vesting Y2–Y5 . |
Realizations (FY2024)
- Options exercised: 15,296 shares; Value realized on option exercises: $3,986,473; Stock awards vested: 10,601 shares; Value realized on vesting: $3,993,321 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 95,230 shares beneficially owned as of Mar 7, 2025; plus 3,897 deferred shares/units (not counted in % of class); <1% of class . |
| Options Exercisable (within 60 days of 3/7/25) | 52,588 shares included in beneficial ownership . |
| Outstanding Awards (FY2024 year‑end) | Unexercised options: 3/25/2020: 8,412 ex./2,805 unex.; 11/19/2020: 3,720 ex./1,240 unex.; 3/24/2021: 3,947 ex./3,947 unex.; 3/23/2022: 2,004 ex./6,013 unex.; 3/22/2023: —/8,917 unex.; 3/20/2024: —/6,684 unex.; Unvested RS: 1,651 (3/25/2020), 461 (11/19/2020), 1,153 (3/24/2021), 1,301 (3/23/2022), 3,104 (3/22/2023), 2,497 (3/20/2024); Unearned PSUs: 1,190 (earned FY2022–2024), 5,400 (FY2023–2025 target assumption), 8,474 (FY2024–2026 max assumption with accrued dividends per SEC rules) . |
| Anti‑Hedging / Anti‑Pledging | Hedging prohibited for all associates/officers/directors; pledging prohibited for Section 16 officers and directors . |
| Ownership Guidelines | CFO guideline: 4× base salary; McPhail at ~19×; all NEOs in compliance as of Mar 7, 2025 . |
| Share Pledging | None; policy prohibits and table confirms no pledges by directors/execs . |
Employment Terms
- Nature of Agreement: At‑will employment via offer letter; no fixed term .
- Severance: No severance entitlements upon termination; post‑termination covenants include 24–36 month non‑compete and non‑solicit; confidentiality applies post‑employment .
- Change‑in‑Control: No CIC agreements; “double‑trigger” equity acceleration (termination without cause within 12 months post‑CIC) for awards after May 2022 and standard since FY2013; prior single‑trigger grants now vested; no tax gross‑up (excise tax borne by executive) .
- Clawback: Mandatory recoupment for restatements per NYSE Rule 10D‑1; discretionary recoupment for knowing/intentional misconduct causing financial or reputational harm (covers bonus, equity, other incentive comp) .
- Perquisites/Benefits: Limited perqs; participates in death‑benefit‑only program ($400,000) for eligible pre‑2009 executives; broad‑based benefits and ESPP available .
- Nonqualified Plans: THD Restoration Plan (company matching above qualified limits) – 2024 company contribution $115,923; aggregate balance $1,605,685 as of FY2024; Deferred Compensation Plan for Officers available (no company contributions) .
Insider Trading, Vesting Schedules, and Selling Pressure
- Reported Form 4 sales (recent):
- Feb 21, 2024: two open‑market sales of 4,400 and 4,396 shares (Form 4 index) .
- Nov 13, 2024: sale of 6,500 shares (aggregated by third‑party tracker) .
- Aug 20, 2025: sale of 3,369 shares at ~$403.66 (tracker lists Form 4 link) .
- Execution windows align with annual LTI grant/vesting and 10b5‑1 plans are common for executives (company does not disclose individual plan adoptions in proxy; do not infer).
- FY2024 realized equity activity illustrates liquidity needs around vesting: McPhail exercised 15,296 options ($3.99M realized) and had 10,601 shares vest ($3.99M realized), which can create periodic selling pressure as taxes/liquidity are managed .
Compensation Structure Diagnostics (Pay-for-Performance)
- Cash vs Equity: For non‑CEO NEOs, ~61% of target comp is equity; ~82% of total target pay is variable (company wide NEO average), with 100% of MIP and 80% of annual equity tied to performance conditions .
- Metric Rigor/Adjustments: MIP uses Sales, Operating Profit, Inventory Turns, and a Pro sales strategic goal with pre‑set bands and adjustments for FX and qualified M&A; threshold/maximum remain at 90%/110% for FY2024, preserving symmetry and limiting discretion .
- LTI Risks/Alignment: Five‑year vesting for restricted stock and options (longer than many peers), performance shares tied to multi‑year ROIC and Operating Profit; no option repricing without shareholder approval .
- Governance: No tax gross‑ups; no severance/CIC agreements; robust clawback; anti‑hedge/anti‑pledge; strong ownership guidelines (McPhail 19× vs 4× requirement) .
Say‑on‑Pay, Peer Group, and Consultations
- Say‑on‑Pay Support: ~93% approval at 2024 annual meeting; board continued the structure given strong support .
- Compensation Peer Groups: CEO benchmarking uses Fortune 50 (ex certain financials/founder‑CEOs) and top‑10 retailers by market cap; retail peers include Amazon, Costco, Lowe’s, Target, Walmart, Kroger, AutoZone, O’Reilly, TJX, Ross .
- Consultant: Pay Governance serves as independent advisor to LDC Committee; policy prohibits company consulting and caps affiliate payments; independence affirmed .
Risk Indicators & Red Flags (Governance)
- No related‑party transactions requiring disclosure since FY2024 .
- No executive pledging; hedging prohibited .
- No individual CIC agreements; double‑trigger only under equity plan; no severance guarantees .
- Clawback extends beyond restatements to intentional misconduct causing significant reputational harm (positive governance feature) .
Performance & Track Record (Context During Tenure)
| Metric | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|---|
| Revenues ($) | 132.11B | 151.16B | 157.40B | 152.67B | 159.51B |
| EBITDA ($) | 20.80B* | 25.90B* | 27.01B* | 24.94B* | 25.29B* |
- Five‑year TSR: 103.8% .
- FY2024 (53 weeks): sales +4.5% to $159.5B; operating income $21.5B; ROIC 31.3%; $8.9B dividends; paused buybacks post‑March 2024 ahead of SRS acquisition .
- SRS Distribution acquisition completed June 2024, expected to accelerate Pro growth; MIP added a Pro sales goal in FY2024 to align with strategy .
*Values retrieved from S&P Global.
Investment Implications
- Alignment: McPhail’s 19× salary ownership, anti‑hedge/pledge, and no severance/CIC contracts tightly align incentives with long‑term shareholders; LTI weighting and multi‑year ROIC/Operating Profit metrics reinforce capital discipline .
- Vesting/Sale Pressure: Annual March grants vest on long schedules (30/60‑month RS; Y2–Y5 options), and historical Form 4s show episodic sales around vest/exercise windows—watch for February/March and mid‑year liquidity events that may create technical selling .
- Pay‑for‑Performance: FY2024 MIP paid at 98% of target (balanced scorecard, modest under/over‑performance dispersion), and FY2022–2024 PSUs paid at 25.6%—a clear link between lower multi‑year ROIC vs. targets and realized equity value; this down‑shifts realized comp in softer periods, supporting governance quality .
- Strategy/Execution Risk: Integration and margin profile of SRS are near‑term variables (management cites a 15 bps FY2025 headwind annualized at ~40 bps), but the Pro growth engine is expected to accelerate share gains—investors should monitor margin normalization, Pro managed account growth, and PSU trajectory (FY2024–2026) for compensation/valuation signals .
Sources
- 2025 DEF 14A Proxy (April 7, 2025): executive compensation program, MIP/PSU mechanics, payouts, ownership, clawback, severance/CIC, and say‑on‑pay .
- 2024 DEF 14A Proxy (April 1, 2024): prior year MIP results and PSU payouts .
- 2023 DEF 14A Proxy (April 3, 2023): historical MIP/comp data .
- HD 10‑K and 10‑Q executive rosters/certifications: McPhail biography and roles .
- Insider transactions (Form 4): Feb 21, 2024 sales (SEC index) ; Aug 20, 2025 sale (trackers with SEC links) .