Ric Phillips
About Ric Phillips
Ric D. Phillips is Chief Executive Officer and a Director of Kimball Electronics (KE). He was appointed CEO and Director effective March 1, 2023; he is 55 and holds a B.S. in Finance (Indiana University) and an M.M. from Northwestern’s Kellogg School of Management . FY2025 performance under his tenure included net sales of $1,486.7M (third-highest in company history), operating income of $45.5M (3.1% margin; adjusted operating income $61.3M or 4.1% margin), record cash from operations of $183.9M, and $147.3M of debt reduction; KE repurchased $12M of stock in FY2025 . Over the 5-year window shown in Pay vs Performance, KE TSR translated to $142.02 on a $100 base vs $247.82 for the Russell 2000 Electronic Components peer group in 2025; FY2025 net income was $16.98M and operating margin 3.1% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Elkay Manufacturing Company | President & CEO; Director | 2019–2022 | Led a global manufacturer/distributor of plumbing products and interiors; executive leadership in highly regulated product manufacturing . |
| Essendant, Inc. (United Stationers) | President, CEO; Director | 2017–2019 (with prior roles 2013–2017) | Oversaw Fortune 500 distributor; growth and transformation experience . |
| McKinsey & Company | Partner; co-led Pharmaceuticals & Medical Products operations practice | Elected Partner 2005 | Strategy/operations leadership in medical/healthcare sectors; relevant to KE medical CMO strategy . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Greenheck Group | Independent Director | Current | HVAC leader; outside public board experience aligns with KE end markets . |
| Follett Corporation | Independent Director | Prior | Prior independent director experience . |
Fixed Compensation
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Base Salary (paid) | $271,346 | $850,000 | $873,654 |
| Approved Base Salary (rate) | — | — | $875,000 (effective FY2025) |
| Target Annual Bonus (% of salary) | Not disclosed for FY23 | 100% | 100% |
| Actual Annual Bonus Paid | $339,183 | $943,500 | $178,225 |
Notes:
- FY2025 CEO annual cash incentive earned was 20.4% of target after ESG modifier, consistent with $178,225 paid on ~$874K base .
Performance Compensation
Annual (Short-Term) Incentive Plan – FY2025 Design and Outcome
| Metric | Weight | Threshold | Target | Maximum | FY2025 Outcome |
|---|---|---|---|---|---|
| Adjusted Operating Margin vs Board Plan | 60% | 4.1% OI → 25% payout | 4.6% OI → 100% | 5.0% OI → 200% | Below target; overall CEO payout 20.4% of target including ESG modifier . |
| Revenue Growth vs Peers (Russell 2000 Electronic Components) | 20% | 35th percentile → 35% | Median → 100% | 75th percentile → 200% | Included in overall 20.4% payout . |
| Revenue Growth vs Board Plan | 20% | (8%) → 25% | (3%) → 100% | 2% → 200% | Included in overall 20.4% payout . |
| ESG Scorecard Modifier | ±5% | <12 pts: −5% | 15 pts: +3% | 20+ pts: +5% | 14 pts → +2% (Above Threshold) . |
CEO payout curve (as % of base): Threshold 27%, Target 100%, Max 200% (ex-ESG) . FY2025 CEO earned 20.4% of target after ESG (+2%) .
Long-Term Incentives – Structure and Grants
| Component | Weight | Metrics | Vesting | FY2025 Grants/Attainment |
|---|---|---|---|---|
| Performance Share Units (PSUs) | 60% of LTI | 70% Economic Profit vs Board Plan; 30% 3-yr rTSR vs Russell 2000 Electronic Components | 3-year cliff (FY2025–FY2027), vests post-certification | CEO target PSUs granted: 85,940 (FY2025–FY2027) . |
| Restricted Shares | 40% of LTI | Service-based | 1/3 annually over 3 years (starting 1 year after grant) | CEO RS granted: 54,183 (8/29/2024 grant) . |
| FY2023–FY2025 PSU Payout | — | Profitability Attainment vs goal; Growth Attainment vs EMS industry revenue CAGR | Cliff vested after FY2025 | Total attainment 99% (49.0% profitability + 50.0% growth) . |
CEO FY2025 total LTI grant opportunity: 311% of base salary ($2,719,998), comprising 85,940 target PSUs (valued at 30-day VWAP $18.99 on 11/21/2024) and 54,183 RS (valued at $18.49 on 8/29/2024) .
Equity Ownership & Alignment
| Item | Amount | Notes |
|---|---|---|
| Beneficial Ownership (as of 9/15/2025) | 77,811 shares | Less than 1% of outstanding; KE outstanding shares: 24,387,270 . |
| Unvested Restricted Shares (6/30/2025) | 74,348 ($1,429,713) | Valued at $19.23 (6/30/2025 close) . |
| Unearned PSUs (target-state shown) (6/30/2025) | 275,990 ($5,307,288) | Cliff vesting; value at $19.23 . |
| Options | None outstanding; KE has not granted options since 2014 . | |
| Shares acquired on vesting in FY2025 | 13,918 shares; value $257,599 | 6,305 shares withheld for taxes . |
| Hedging/Pledging | Prohibited; none reported by NEOs . | |
| Stock Ownership Guidelines | CEO must hold ≥6x base salary; must retain 100% of net shares until compliant . |
Vesting cadence/supply:
- RS grants vest 1/3 annually; FY2025 tranche vested Aug 29, 2025; remaining RS tranches scheduled for Aug 29, 2026 and Aug 29, 2027, subject to service .
- PSU grants for FY2025–FY2027 are cliff-vesting after FY2027 certification; FY2023–FY2025 PSUs paid at 99% .
- CEO sign‑on restricted equity (awarded Jan 4, 2023) vests over three years; a tranche vested Jan 4, 2025 .
Insider selling pressure indicators:
- Withholding-for-taxes reduced delivered shares (e.g., 6,305 shares withheld for CEO in FY2025), a routine source of flow; no pledging/hedging allowed, which mitigates forced-selling risk .
Employment Terms
| Topic | Details |
|---|---|
| Start Date/Role | CEO and Director effective March 1, 2023 . |
| Employment | At-will; participates in KE Executive Severance & Change-in-Control Plan (offer letter referenced in 8-K Item 5.02) . |
| Severance Plan | Double-trigger CIC; no excise tax gross-ups; benefits funded from general assets; participants subject to 12-month non-compete and non-solicit (plus confidentiality/IP assignment) . |
| CEO Severance Economics (as of 6/30/2025) | Change-in-control + Qualifying Termination: $5,325,282 cash and $7,113,927 accelerated equity (total $12,439,209). Qualifying Termination (non-CIC): $1,814,202 cash and $4,242,092 equity (total $6,056,294). Equity valued at $19.23/share; amounts reflect plan terms and target/actual assumptions in the proxy . |
| Clawback | Robust “no fault” 3-year restatement clawback; also misconduct-based recovery; equity awards not repriced; minimum one-year vesting; dividends not paid on unvested awards . |
| Insider Trading Policy | Trading restrictions; hedging/pledging prohibited . |
| Perquisites (FY2025) | CEO perqs $23,836: club memberships $11,240; personal security $10,000; commuting $2,596 . |
| Retirement/Deferred Comp | SERP available to restore 401(k) limits; CEO had no SERP balances in FY2025 disclosures . |
Board Governance and Service
- Board role: Director (Class III; election in 2026). KE separates the CEO and Chair roles. Independent Chair (Robert J. Phillippy) leads the Board; all committee chairs are independent (Audit: Vadaketh; TCC: Van Deursen; NESG: Holcomb) .
- Committees: Only independent non-management directors serve on committees; as CEO, Phillips is not a committee member .
- Independence: Phillips is not independent (as CEO). Board majority independent; independent directors meet in executive session after each Board meeting .
- Attendance: Board met 7 times in FY2025; all directors met ≥75% attendance .
- Director pay: Employee directors (incl. CEO) receive no additional director compensation .
Dual-role implications: Separation of Chair/CEO with independent committee leadership reduces concentration of power and enhances oversight of CEO performance and pay .
Compensation Detail (Multi-Year)
| Component | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Salary | $271,346 | $850,000 | $873,654 |
| Stock Awards (grant-date value) | $3,655,447 | $2,734,840 | $2,883,070 |
| Non-Equity Incentive (Cash) | $339,183 | $943,500 | $178,225 |
| All Other Compensation | $27,799 | $26,244 | $47,652 |
| Total Compensation | $4,293,775 | $4,554,584 | $3,982,601 |
Pay mix/alignment:
- At target, CEO pay is ~81% variable (19% short-term; 62% long-term). NEOs average ~71% variable (17% short-term; 54% long-term) .
- Say‑on‑Pay: 97% support in 2024; 5‑year average 98% .
Compensation Peer Group and Governance
- FY2025 peer group included BHE, CTS, PLXS, SANM, TTMI, VSH, FN, etc. (full list in proxy) . The TCC Committee uses Aon as independent consultant; does not benchmark to a fixed percentile but targets at least the 25th percentile for total target direct compensation, with judgment overlay .
- Program design prohibits single-trigger CIC acceleration, hedging/pledging, and options repricing; maintains caps on incentives and requires minimum 1‑year vesting .
Performance & Track Record Highlights
- FY2025 highlights: $1,486.7M net sales; adjusted operating income $61.3M (4.1% margin); record $183.9M cash from operations; $147.3M debt reduction; $12M buybacks. Actions included AT&M divestiture and closure of Tampa facility to rationalize footprint; medical CMO expansion with new 300k sq ft Indianapolis facility .
- Pay vs Performance context: 2025 TSR index $142.02 vs peer $247.82; operating margin 3.1%; net income $16.98M .
Investment Implications
- Pay-for-performance alignment: High variable mix with explicit operating margin, revenue growth (absolute and relative), rTSR, and multi-year Economic Profit targets aligns incentives with profitable growth and capital discipline; FY2025 below-target STIP (20.4% of target) and FY23–25 PSU payout at 99% show pay outcomes responsive to performance .
- Retention risk and equity overhang: Significant unvested RS (74k) and unearned PSUs (276k) for the CEO represent meaningful retention hooks; PSU cliff and annual RS tranches create predictable supply around vest dates, but hedging/pledging bans and tax-withholding mechanics moderate trading pressure .
- Governance: Independent Chair and fully independent committees (incl. TCC) with strong clawback/no gross‑ups/double‑trigger CIC terms mitigate governance risk and “golden parachute” concerns; CEO pay ratio is 301:1, typical of global manufacturing footprints with large non‑U.S. workforces .
- Execution watchlist: Management’s strategic pivot toward medical CMO and footprint optimization is underway; investors should monitor adjusted operating margin trajectory vs plan (core STIP driver), three‑year Economic Profit realization (PSU driver), and relative TSR versus the Russell 2000 Electronic Components cohort to gauge future equity vesting leverage .
Sources
- KE 2025 DEF 14A (Proxy Statement), September 25, 2025: CEO letter, governance, CD&A, SCT, grants, vesting, ownership, policies .
- KE 8-K Item 5.02 (CEO appointment/offer letter summary): at‑will employment; participation in severance/CIC plan; independent Chair designation .