Michael McKenney
About Michael McKenney
Michael J. McKenney, age 63, serves as Executive Vice President and Chief Financial Officer of Kadant Inc.; he became an executive officer in 2002 and has been CFO since 2015 (SVP & CFO 2015–2018; EVP & CFO since March 2018). His prior experience includes finance leadership roles at Albany International and Coopers & Lybrand, and internal roles as Kadant’s controller and chief accounting officer, indicating deep accounting and operational finance expertise; he co-signed Sarbanes-Oxley CEO/CFO certifications for KAI’s FY2024 10-K, underscoring responsibility for controls and reporting integrity . During 2024, Kadant delivered revenue of $1.05B (+10% YoY), Adjusted EBITDA of $230M (+14%), Adjusted Diluted EPS of $10.28 (+2%), and one-year TSR of 25% (three-year TSR 15%), metrics that drive the company’s pay-for-performance framework .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Kadant Inc. | EVP & CFO | 2018–present | Overall finance leadership; SOX certifications; capital allocation |
| Kadant Inc. | SVP & CFO | 2015–2018 | Elevated to senior leadership; led consolidated finance |
| Kadant Inc. | VP Finance & Chief Accounting Officer | 2002–2015 | Led accounting policy, controls, and reporting |
| Kadant Inc. | Corporate Controller | 1997–2007 | Built reporting and control infrastructure |
| Kadant AES (division acquired from Albany International) | Controller | 1993–1997 | Division-level finance leadership post acquisition |
| Albany International; Coopers & Lybrand LLP | Various finance roles | Pre-1993 | External finance and audit training ground |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Albany International | Finance roles | Pre-1993 | Manufacturing/industrial finance experience |
| Coopers & Lybrand LLP | Finance/audit roles | Pre-1993 | Audit discipline; external reporting rigor |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $491,000 | $505,100 | $536,100 |
| Non-Equity Incentive Plan Compensation ($) | $668,000 | $563,800 | $555,900 |
| All Other Compensation ($) | $18,078 | $19,380 | $20,130 |
| Total ($) | $1,848,631 | $2,053,029 | $2,212,556 |
Notes:
- Annual salary increases averaged 6.1% across NEOs in 2024; specific increases determined by the compensation committee based on market benchmarks .
Performance Compensation
Annual Cash Incentive Plan – Structure and 2024 Outcomes
| Metric | Weighting | Target | Actual (2024) | Payout Factor | Vesting/Payment |
|---|---|---|---|---|---|
| Adjusted Diluted EPS growth vs 2-year avg | 50% | 10% growth | 6.11% | 0.90 | Paid in cash Feb 2025 |
| Adjusted Return on Average Stockholders’ Equity | 50% | 8% ROAE | 14.80% | 2.50 (max) | Paid in cash Feb 2025 |
| Weighted Bonus Factor | — | — | — | 1.70 | Applied to reference bonus |
Program design uses linear scales with caps; no individual discretionary component; metrics adjusted for specified non-recurring items to reflect continuing operations .
Long-Term Incentive – 2024 Equity Grants
| Award Type | Grant Date | Shares Granted | Grant Date Fair Value ($) | Performance Metric | Vesting Schedule |
|---|---|---|---|---|---|
| Performance-based RSUs | 3/6/2024 | 2,799 | $888,403 | Adjusted EBITDA target (objective) | Once earned, 1/3 on each March 10 for 3 years; accel. upon death, disability, CoC |
| Time-based RSUs | 3/6/2024 | 668 | $212,023 | Retention (no explicit perf. metric) | 1/3 on each March 10 for 3 years; accel. upon death, disability, CoC |
Vesting activity in 2024: 4,373 shares vested with $1,429,971 value realized (at $327 closing price on 3/8/2024) .
Equity Ownership & Alignment
| Ownership Element | Amount | As-of/Notes |
|---|---|---|
| Beneficial Ownership (common shares) | 14,731 | March 1, 2025; <1% of class |
| RSUs vesting/distributable within 60 days | 3,792 | Included in beneficial ownership footnote |
| Unvested RSUs outstanding (count) | 7,595 | FY2024 year-end |
| Unvested RSUs market value ($) | $2,664,326 | Valued at $350.80 close on 12/27/2024 |
| Shares acquired on vesting in 2024 | 4,373 | Value realized $1,429,971 |
| Pledging/Hedging | Prohibited for directors/officers | Insider trading policy |
| Stock Ownership Guidelines | ≥1x base salary for execs; 50% of vested RSUs retained until compliant | All executive officers were in compliance as of 3/1/2025 |
Implications:
- Upcoming March 10 tranches each year create predictable vest dates; guidelines requiring retention of 50% of vested shares and prohibitions on pledging/hedging dampen forced-selling pressure .
Employment Terms
| Agreement | Trigger Structure | Severance Multiple | Equity Acceleration | Benefits Continuation | Outplacement | Tax Gross-Up / Cutback |
|---|---|---|---|---|---|---|
| Prior Executive Retention Agreement (since 2001) | Double-trigger (CoC + termination for good reason/without cause within 24 months) | 2x sum of highest annual salary + bonus (or reference bonus if higher) | Immediate vesting of all unvested equity upon CoC | Health/welfare and 401(k) matching for 2 years | $20,000 | Includes 280G excise tax gross-up (legacy) |
| Estimated CoC Economics (12/28/2024 scenario) | CoC + termination | Lump sum: $2,408,200 | RSU acceleration value: $2,664,326 | $83,705 | $20,000 | — |
Notes:
- KAI adopted “Current Retention Agreements” post-2016 for other officers without gross-ups and with cutbacks; McKenney’s legacy “Prior Retention Agreement” retains gross-up provision—potential shareholder-unfriendly red flag if triggered .
Investment Implications
- Pay-for-performance alignment: Annual bonus tied equally to Adjusted EPS growth and ROAE, with 2024 producing a 1.70 weighted factor; performance-based RSUs rely on Adjusted EBITDA and then time vest, reinforcing multi-year value creation .
- Retention risk: Meaningful unvested RSUs (7,595 shares; $2.66M MV) vest in thirds each March, supporting retention; guidelines require holding 50% of vested shares until compliance, limiting near-term sell pressure .
- Trading signals: Regular March 10 vest dates and above-target 2024 outcomes created 2025 vest tranches; monitor Form 4s near vest dates, though pledging/hedging is prohibited and executives are in guideline compliance, decreasing forced sales .
- Governance and CoC economics: Legacy 280G excise tax gross-up in McKenney’s prior agreement is a governance red flag if CoC occurs; estimated CoC severance would be ~$2.41M cash plus accelerated equity worth ~$2.66M, plus benefits/outplacement .
- Shareholder sentiment: Strong 2024 say-on-pay approval (~93%) indicates investor support for KAI’s compensation framework; continued focus on EPS/ROAE and EBITDA suggests durable linkage to shareholder returns .
Additional context: 2024 performance highlights (revenue +10%, Adjusted EBITDA +14%, one-year TSR 25%) underpin above-target bonuses and earned PSUs, consistent with KAI’s disclosed pay-versus-performance narrative .