Thierry P. Merlot
HEXCEL CORP /DE/About Thierry P. Merlot
Thierry P. Merlot is President, Aerospace, Europe, Middle East, Africa and Asia Pacific & Industrial at Hexcel; he has been an executive officer since 2016 and is 65 years old. He previously led Hexcel’s EMEA/AP aerospace businesses and has deep composites and aerospace operations experience from Dassault Aviation and Ciba‑Geigy; he is paid in euros and participates under French benefits structures . Company performance context for FY2024: sales $1,903M (+6.4% YoY), GAAP diluted EPS $1.59, adjusted diluted EPS $2.03, and free cash flow $202.9M; MICP was driven by Free Cash Flow and Adjusted EBIT, yielding a 127.6% weighted average payout for 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Hexcel | President, Aerospace, EMEA/AP & Industrial | May 2020–present | Leads regional aerospace and industrial growth and execution across EMEA/AP; senior executive accountability |
| Hexcel | President, Aerospace, EMEA/AP | May 2016–May 2020 | Oversaw regional aerospace operations and commercial execution |
| Hexcel | VP & GM — Aerospace, EMEA/AP | 2010–May 2016 | Managed EMEA/AP aerospace businesses and customer relationships |
| Ciba‑Geigy (Composites) | Sales & Marketing (Europe & APAC) | 1988–1996 | Commercial roles in composites prior to Hexcel/Ciba‑Geigy merger |
| Dassault Aviation | R&D Process Engineer & Quality Manager (Composites) | 1983–1988 | Technical composites engineering and quality management |
External Roles
No external board or public company directorships disclosed for Mr. Merlot in the proxy’s executive officer biographies .
Fixed Compensation
- Base salary is paid in euros; 2024 salary recognized in USD was $485,009; perquisites include a $7,729 automobile allowance and $83,588 statutory pension contributions in 2024 under French practice .
Multi-year compensation (USD):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 432,227 | 465,728 | 485,009 |
| Stock Awards ($) | 378,493 | 431,932 | 491,026 |
| Option Awards ($) | 227,054 | 143,970 | 163,677 |
| Non‑Equity Incentive ($) | 302,645 | 435,921 | 433,211 |
| All Other Compensation ($) | 85,226 | 100,377 | 119,460 |
| Total ($) | 1,425,645 | 1,577,928 | 1,692,383 |
Time-based equity granted in the 2024 annual cycle:
| Award Type | Grant Date | Shares/Units | Vesting Schedule | Dividends |
|---|---|---|---|---|
| RSUs | Annual cycle (2024) | 2,451 | French tax treatment: 2/3 on 2nd anniversary; 1/3 on 3rd anniversary | No dividend equivalents for French RSUs |
| Non‑Qualified Stock Options (NQOs) | Jan 29, 2024 (annual cycle timing) | 6,744 | 1/3 each at 12, 24, 36 months from grant; exercise price = grant date close | N/A |
Performance Compensation
Structure and 2024 outcomes:
| Metric | Weight | Target | Actual | Payout | Vesting/Payment |
|---|---|---|---|---|---|
| MICP – Free Cash Flow | 50% | $288.5M | $332.9M | 176.9% of metric target | Cash payout; pays annually |
| MICP – Adjusted EBIT | 50% | $260.3M | $237.7M | 78.3% of metric target | Cash payout; pays annually |
| MICP – Weighted Average | — | — | — | 127.6% overall | Mr. Merlot’s actual MICP award: $433,211 (target $339,506; individual goals paid at target) |
Long-term performance shares (PSAs) – 2024 grant design:
| PSA Metric | Weight | Threshold | Target | Max | Measurement & Vesting |
|---|---|---|---|---|---|
| ROIC % | 50% | Not disclosed during cycle (confidential) | Set at grant; challenging targets | Set at grant | 3-year performance (2024–2026); vests after certification following period end |
| Relative EPS Growth vs S&P MidCap 400 | 50% | 40th percentile = 50% payout | 55th percentile = 100% payout | 75th percentile = 200% payout | 3-year performance (2024–2026); vests after certification following period end |
PSA share targets granted in 2024 (at target performance):
| Executive | PSA Target Shares (2024 cycle) |
|---|---|
| Thierry P. Merlot | 4,903 |
Prior cycle realized outcomes (PSAs granted in 2022; vested Jan 2025):
| Component | Weight | Outcome |
|---|---|---|
| ROIC % | 25% | Payout 70.7% (ROIC 9.3%) |
| Relative EPS Growth vs S&P MidCap 400 | 25% | Payout 200% (exceeded 75% of S&P MidCap 400 constituents) |
| Incremental Adjusted EBIT Leverage (2022/2023/2024) | 50% | Weighted payout 14.3% (2024 leverage 17.7% → 0%) |
| Weighted Average Payout | — | 82.0% of target shares |
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Total beneficial ownership (incl. certain RSUs/NQOs counted per SEC rules) | 123,572 shares; includes 68,764 shares underlying RSUs/NQOs counted as beneficial per SEC methodology |
| Ownership as % of shares outstanding | <1% (“*” in proxy indicates less than 1%) |
| Pledged shares | None; proxy notes no pledging by directors or current executive officers |
| Stock ownership guidelines | Other Executive Officers: 2x base salary target dollar value; retain 50% of net shares until met; all NEOs/directors satisfied or complying as of Dec 31, 2024 |
| Hedging/pledging policy | Prohibits hedging, short sales, and pledging; requires pre‑clearance and 10b5‑1 plan compliance; blackout restrictions apply |
Employment Terms
- Employment and role: Executive officer since 2016; current role (President, Aerospace, EMEA/AP & Industrial) since May 2020 .
- Retirement and non‑compete (French CLA): Retirement indemnity of 4 months’ salary; 6‑month notice period (3 months if under age 65); payment related to non‑compete obligations unless waived by Hexcel; pension funded via company and employee contributions per French regulations .
- Change-of-control: Equity awards include single‑trigger vesting on change in control; severance arrangements generally use double‑trigger for US NEOs (change in control plus qualifying termination); Merlot’s benefits governed by French frameworks; no excise tax gross‑ups for newly hired/promoted executives .
- Clawbacks: Mandatory recovery on accounting restatement (3‑year lookback), plus discretionary clawback for material errors, misconduct, or risk management failures; equity grants include additional clawback for violating confidentiality/non‑compete/non‑solicit obligations .
- Perquisites: Automobile allowance $7,729 and statutory pension contributions $83,588 (2024) under French practice; RSUs/PSAs for French nationals do not accrue dividend equivalents .
Compensation Structure Analysis
- 2024 target mix shift: Target MICP increased to 70% of salary and equity opportunity increased to 135% of salary for Mr. Merlot, reinforcing at‑risk pay; RSUs use French vesting (back‑loaded), supporting retention .
- Performance metric rigor: MICP targets set above 2023 actuals for both Free Cash Flow and Adjusted EBIT; outcome demonstrated strong FCF (above max) but below‑target Adjusted EBIT, yielding 127.6% weighted payout .
- Peer benchmarking and positioning: Compensation targeted near market median using a defined peer group (AAR, ITT, Moog, Spirit AeroSystems, Triumph Group, Woodward, etc.) and survey data; the committee assessed independence of Semler Brossy and market competitiveness .
- Governance features: No option repricing without shareholder approval; robust ownership guidelines; no tax gross‑ups under severance/change‑in‑control policy; mandatory/discretionary clawbacks .
Investment Implications
- Pay-for-performance alignment: Variable pay linked to FCF and Adjusted EBIT delivered a 127.6% payout, consistent with strong cash generation vs. softer EBIT performance; long-term PSAs tie outcomes to ROIC and relative EPS vs. S&P MidCap 400, emphasizing capital efficiency and shareholder‑relative value creation .
- Retention risk: French RSU back‑loaded vesting (two‑thirds at year 2) and sizeable underlying RSU/NQO holdings (68,764 shares counted under SEC beneficial ownership) support retention; no pledging permitted, reducing misalignment risk .
- Change‑in‑control dynamics: Single‑trigger equity vesting would accelerate awards in a transaction, a potential overhang for dilution timing but also aligns executives to pursue value‑accretive deals; double‑trigger severance generally applies to US executives; Merlot’s French regime may differ, limiting predictability of severance economics .
- Governance and shareholder sentiment: Strong say‑on‑pay support (~94% in 2024), robust clawbacks, and prohibited hedging/pledging indicate disciplined compensation governance, lowering headline risk around executive pay .