David B. Smith, Jr.
ILLINOIS TOOL WORKSAbout David B. Smith, Jr.
Independent director at ITW since 2009 (age 58), Smith chairs the Finance Committee and serves on the Audit and Executive Committees, bringing deep regulatory and governance expertise from senior roles at the SEC and the Mutual Fund Directors Forum . He attended 100% of Board and committee meetings in 2024 and attended the Annual Meeting, underscoring strong engagement . The Board determined he is independent under NYSE standards; relationships reviewed (including Northern Trust) were deemed not material .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Mutual Fund Directors Forum | Executive Vice President for Policy and Legal Affairs and General Counsel | 2005–present | Leads policy/legal for independent fund directors; governance and regulatory expertise |
| U.S. Securities and Exchange Commission | Associate Director, Division of Investment Management (prior roles 1996–2001) | 2001–2005 (SEC service 1996–2005) | Oversight of investment management regulation; regulatory and compliance background |
External Roles
| Organization | Role | Tenure | Committees/Positions |
|---|---|---|---|
| Northern Trust Corporation | Director | Current | Member, Audit and Executive Committees; Chair, Capital Governance Committee |
Board Governance
| Attribute | Detail |
|---|---|
| Independence | Independent (Board concluded all relationships, including Northern Trust banking relationship, are not material) |
| Committees | Finance (Chair); Audit (Member); Executive (Member) |
| Attendance (2024) | 100% of Board and committee meetings; attended Annual Meeting |
| Director since | 2009 |
Fixed Compensation (Non‑Employee Director)
| Component (FY2024) | Amount/Detail |
|---|---|
| Annual cash retainer | $140,000 |
| Committee chair fee | Finance Chair: $15,000 |
| Cash fees earned | $155,000; Smith elected to convert 100% into 614 ITW shares |
| Annual equity grant | 758 shares; grant-date fair value $184,891 |
| All other compensation | $15,000 (charitable match) |
| Total compensation | $354,891 |
| Director equity mechanics | Annual stock grants vest immediately “to avoid entrenchment” |
| Deferral option | Directors may defer cash/equity; deferred cash credited at 120% long-term AFR; stock credited as units with dividend equivalents until payout |
Performance Compensation
Directors do not receive performance‑based equity; non‑employee director equity grants are fixed‑value stock with immediate vesting (no performance metrics) .
| Performance Metric | Weight/Target | Notes |
|---|---|---|
| Not applicable for directors | — | Annual director stock grants are not performance‑conditioned |
Other Directorships & Interlocks
- Current public company board: Northern Trust Corporation; committees: Audit, Executive; Capital Governance Chair .
- Interlock/related relationship: ITW maintains a commercial banking relationship with Northern Trust; the Board reviewed and determined this relationship is not material and does not impair Smith’s independence .
Expertise & Qualifications
- Regulatory and legal: Former Associate Director, SEC Division of Investment Management; extensive legal and policy leadership at the Mutual Fund Directors Forum .
- Financial governance: Service on Northern Trust’s Audit and Executive Committees; Chair of Capital Governance Committee .
- Board leadership: Finance Committee Chair at ITW; prior SEC and industry roles support risk oversight and capital allocation governance .
Equity Ownership
| Holding | Amount/Detail | Notes |
|---|---|---|
| Beneficial ownership (common) | 393,228 shares | <1% of outstanding shares |
| Ownership breakdown | 94,000 shares jointly with spouse; 15,517 in children’s trusts (disclaimed); 255,900 in a trust with shared voting/investment power | |
| Phantom stock units | 1,425 units (cash‑settled, no voting rights; not counted in % of class) | |
| Ownership guidelines | Non‑employee directors must hold 5x annual cash retainer; all directors with ≥5 years in role meet/exceed guidelines | |
| Hedging/pledging | Directors prohibited from hedging or pledging ITW stock; pledged shares excluded from guideline compliance |
Governance Assessment
- Strengths
- Finance Committee Chair with audit committee service; strong regulatory background (SEC, MFDF) enhances risk, capital allocation, and compliance oversight .
- Independence affirmed despite third‑party relationships (Northern Trust); Board deemed immaterial .
- High engagement: 100% attendance and Annual Meeting participation .
- Alignment: Converted 100% of 2024 cash fees into ITW shares; receives annual equity; complies with robust ownership guidelines; subject to anti‑hedging/anti‑pledging and clawback regime .
- Watch items / potential conflicts
- Interlock: Concurrent Northern Trust directorship while ITW has a banking relationship with Northern Trust; monitored by Board and determined not material (continue to monitor) .
- Ownership concentration (board‑level context): Briar Hall Management LLC (Smith family) beneficially owns 8.8% of ITW; not attributed to Mr. Smith’s reported holdings and separate from his <1% beneficial ownership .
- Compensation structure quality
- Retainer‑only cash with fixed‑value stock grant and modest chair retainers; no meeting fees; immediate vesting to avoid entrenchment; optional deferral features—generally shareholder‑friendly .
- Shareholder signals
- Say‑on‑pay approvals of ~93–94% over recent years reflect broad shareholder support for compensation governance .
RED FLAGS: None identified specific to Mr. Smith. The Northern Trust relationship presents a potential appearance-of-conflict but has been reviewed and deemed immaterial by the Board .