Nicholas Farrell

About Nicholas Farrell

Senior Vice President, General Counsel, and Secretary of Hillenbrand. Joined the Company in 2011, named Vice President, Associate General Counsel and Assistant Secretary in 2014, and has served as General Counsel and Secretary since 2015; previously served as Chief Compliance Officer (2016–2023). Age 45 per the FY2024 Form 10-K; he also serves as Chair of the Board of Trustees of Cure SMA (international non-profit) . In FY2024, Hillenbrand generated Adjusted EBITDA of $515.8 million and Net Income of $211.0 million; three-year relative TSR awards from the FY2022 grant cycle paid at 0% while shareholder value PSUs paid at 81% of target, illustrating a tight pay-for-performance link in the LTIC program .

Past Roles

External Roles

Fixed Compensation

Notes:

• Salary actually paid in FY2024 was $560,531 (basis used for STIC calculation) .

Performance Compensation

Short-Term (STIC) – FY2024 design and results

Farrell-specific FY2024 STIC calculation:

• Target STIC = $392,372 (70% of salary paid)
• Company Performance Factor = 53.3%
• Individual Performance Factor = 110%
• Total STIC paid = $230,047

Program notes:

• STIC metrics widened at threshold for Adjusted EBITDA (80% achievement now pays 33 1/3% vs 85% paid 50% previously), and for FY2025 Revenue/Order Intake threshold will also be 80% for 33 1/3% payout; CCC weight increased to 30% for FY2025, reflecting a focus on cash generation .

Long-Term (LTIC) – FY2024 grant

Vesting outcomes for prior cycle (granted FY2022, vested 9/30/2024):

• Shareholder Value PSUs paid at 81% of target; Relative TSR PSUs paid at 0% (7th percentile) .

Non-recurring retention grant (FY2022):

• Time-based RSUs ~ $1.8 million grant-date value to Farrell, vesting one-third on 6/29/2023, 6/29/2024, 6/29/2025; rationale was retention through portfolio reshaping and CEO transition .

Equity Ownership & Alignment

Beneficial ownership and breakdown (as of 12/13/2024)

Outstanding awards (9/30/2024):

• Stock options (exercisable): 9,953 @ $36.08 (exp. 12/7/2026); 9,009 @ $45.78 (exp. 12/7/2027); 11,486 @ $41.32 (exp. 12/6/2028); 22,621 @ $31.94 (exp. 12/6/2029) .
• Unvested/Unearned RSUs: 26,399 time-based RSUs; 10,814 shareholder value PSUs (target); 14,827 relative TSR PSUs (target) .

Stock ownership policy and compliance:

• Senior Vice Presidents must hold 2x base salary in stock/RSU equivalents (excludes PSUs and unexercised options); all NEOs are at or above required levels .
• Anti-hedging and anti-pledging policy prohibits hedging, short sales, and pledging/margin; no pledging of executive or director shares; all trades must be pre-cleared .

Upcoming vesting/supply over next 12–13 months (potential selling pressure):

• 1/3 of 2023 and 2024 time-based RSUs each on 12/7/2025 and 12/7/2026 (6,299 grant in 2023; 6,299 in 2024) .
• Final 1/3 of 44,362 retention RSUs on 6/29/2025 .
• Performance cycles end 9/30/2025 (FY2023 grants) and 9/30/2026 (FY2024 grants); payout contingent on performance .

Employment Terms

Employment agreement and severance

• U.S. NEO agreements are at-will; if terminated without cause or resigns for good reason: base salary continuation for 12 months (CEO 24 months), continued health coverage during salary continuation, and outplacement; non-compete and non-solicit typically 1–2 years post-termination .
• Post-termination treatment: pro-rata STIC and LTIC (for death, disability, retirement, involuntary without cause, or good reason), with forfeiture in other cases; time-based RSUs vest pro-rata or fully on death/disability subject to service conditions .

Potential payments for Farrell (as of 9/30/2024):

Change-in-control (CIC)

• Double-trigger only; no tax gross-up; immediate vesting of equity at greater of target or actual (post-2/11/2021 grants use greater of target/actual) upon qualified termination within two years post-CIC .
• CIC benefits (Farrell) upon qualified termination (as of 9/30/2024): 2x base salary + 2x target STIC, pro-rata current-year STIC (greater of target/actual), 24 months health benefits, and accelerated equity vesting .

CIC amounts (Farrell, as of 9/30/2024):

M&A context: On Oct. 15–16, 2025, Hillenbrand announced an agreement to be acquired by an affiliate of Lone Star Funds for $32.00 per share; Farrell executed the related DEFA14A/8-K on behalf of the Company and is listed as the Company contact in the merger agreement. A definitive proxy for the transaction will detail participant interests (including executive compensation and potential CIC benefits) .

Compensation Structure Analysis

• Mix shift and at-risk emphasis: For NEOs (including Farrell), compensation is benchmarked to peer 50th percentile with significant at-risk pay via STIC and LTIC; CEO at-risk ~85% with similar philosophy for other NEOs .
• STIC design changes lower threshold “cliffs” (more forgiving curves) and increase cash-focus (CCC up-weight in FY2025), which can modestly increase payout probability at sub-target performance—worth monitoring for pay-for-performance rigor .
• Clawback: SEC/NYSE-compliant policy adopted in 2023 for restatements within three completed fiscal years .
• Anti-hedging/pledging: Strict prohibitions and preclearance reduce misalignment risk .

Performance & Track Record

• FY2024 STIC Company Performance Factor was 53.3%, leading to below-target cash incentive outcomes (Farrell IPF 110% partially offset the low CPF) .
• FY2022–FY2024 LTIC outcomes included shareholder value PSUs vesting at 81% and relative TSR PSUs at 0%, reinforcing alignment with multi-year value creation and market-relative results .
• Say-on-pay support has exceeded 94% for each of the past eleven years, indicating ongoing shareholder endorsement of program design .

Risk Indicators & Red Flags

• Hedging/pledging prohibited; no pledging of executive shares disclosed—mitigates alignment risks .
• No CIC tax gross-ups; double-trigger required—shareholder-friendly CIC design .
• Option repricing prohibited without shareholder approval; other equity plan guardrails in place .
• Program design change (wider STIC thresholds) can increase payout probability below target—monitor calibration vs peers .

Vesting Schedules (Selected, as of 9/30/2024)

Equity Ownership & Alignment (Policies)

• NEO stock ownership guidelines: CEO 5x salary; SVPs 2x salary; certain other officers 1x; compliance required within five years (or three after promotion). All current NEOs meet or exceed the requirement .
• Anti-hedging/anti-pledging: No hedging, no short sales, no margin/pledging; trades require legal preclearance .

Compensation Peer Group (Benchmarking)

The Compensation Committee benchmarks to a peer group around the 50th percentile; peer set reviewed annually and expanded in FY2024 to add Columbus McKinnon. Representative peers include Dover, Fortive, IDEX, ITT, Nordson, Regal Rexnord, Timken, Woodward, among others .

Say-on-Pay & Shareholder Feedback

Say-on-pay support has exceeded 94% each of the past eleven years; the Committee engages shareholders and Pay Governance as its independent consultant to refine plan design (e.g., STIC curve, CCC weighting) .

Investment Implications

• Alignment signals are strong: strict anti-hedging/pledging, ownership requirements met, no CIC gross-ups, and zero payout on underperforming TSR cycles demonstrate pay discipline .
• Retention risk appears mitigated near term by ongoing unvested time-based RSUs (including a material retention grant vesting in June 2025) and significant unearned PSUs; however, the pending Lone Star take-private introduces CIC uncertainty—Farrell would be eligible for double-trigger benefits if terminated in connection with a CIC .
• Potential selling pressure windows: June 29, 2025 (retention RSU vest), December 7, 2025, and future PSU settlements (subject to performance), which could add modest supply depending on trading plans .
• Program adjustments (wider STIC thresholds, higher CCC weight) should be monitored for payout rigor versus peers; 2024 outcomes (53.3% CPF; 0% TSR PSU) indicate the plan is currently performance-sensitive .