Michael D. Hsu
KIMBERLY CLARKAbout Michael D. Hsu
Michael D. Hsu (age 60) is Chairman of the Board (since 2020) and Chief Executive Officer (since 2019) of Kimberly‑Clark; he has served as a director since 2017 and currently holds one outside public directorship at McDonald’s (since May 2024; previously served on Texas Instruments’ board through April 2023) . He joined KMB in 2012 after senior roles at Kraft Foods and H.J. Heinz; he holds a B.S. from Carnegie Mellon University and an MBA from the University of Chicago . Under his leadership, 2024 results included net sales of $20.1B (organic +3.2%), adjusted EPS of $7.30 (vs. $6.57 in 2023), and adjusted free cash flow of $2.7B; gross margin expanded to 35.8% and operating profit rose to $3.2B, while the company returned $2.6B to shareholders and marked its 53rd consecutive annual dividend increase . KMB’s pay program targets pay‑for‑performance with annual incentives tied to organic sales growth and adjusted EPS, and PRSUs tied 50/50 to three‑year organic sales growth (ex‑Argentina) and cumulative modified free cash flow (MFCF) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Kimberly‑Clark | Chairman of the Board | 2020–present | Combined Chair/CEO leadership overseeing strategy and transformation (Powering Care) . |
| Kimberly‑Clark | Chief Executive Officer | 2019–present | Drove margin expansion, MFCF, organic growth; led 2024 transformation and segment realignment . |
| Kimberly‑Clark | President & COO | 2017–2019 | Ran day‑to‑day operations across business units, innovation, marketing, supply chain . |
| Kimberly‑Clark | Group President, K‑C North America | 2013–2016 | Led North America consumer business and global nonwovens strategy . |
| Kraft Foods | EVP & Chief Commercial Officer | Jan–Jul 2012 | Enterprise commercial leadership pre‑Mondelez split . |
| Kraft Foods | President, Sales, Customer Marketing & Logistics | 2010–2012 | Commercial execution leadership . |
| Kraft Foods | President, Grocery Business Unit | 2008–2010 | P&L leadership for grocery . |
| H.J. Heinz | President & COO, Foodservice | (prior to 2008; years not disclosed) | General management for Foodservice . |
| Booz Allen & Hamilton | Consultant → Partner (consumer practice) | (prior; years not disclosed) | Strategy consulting foundation . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| McDonald’s Corporation | Director | 2024–present | Joined May 2024 . |
| Texas Instruments Incorporated | Director | –Apr 2023 | Served through April 2023 . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary earned ($) | 1,416,250 | 1,471,250 | 1,496,250 |
| 2024 Base salary rate ($) | — | — | 1,500,000 |
Performance Compensation
- Annual incentive design (CEO): corporate key financial goals (organic sales growth and adjusted EPS, equally weighted within Element 1), plus additional corporate non‑financial strategic goals (market share; inclusion, equity & diversity) in Element 2; CEO’s target equals 175% of base salary .
Annual Incentive – Performance and Payout (2024)
| Measure | Threshold | Target | Max | Actual | Payout |
|---|---|---|---|---|---|
| Organic sales growth | 0.6% | 4.0% | 8.5% | 3.2% | 82% |
| Adjusted EPS | $6.58 | $6.95 | $7.45 | $7.36 (comp calc; $7.30 10‑K) | 183% |
| Element 1 blended | — | — | — | — | 133% |
| Strategic goals (Element 2) | — | — | — | Market share 110%; I/E/D 100% | 107% |
| CEO payout | — | 175% of salary target | 200% cap | 125% of target; $3,275,424 |
Long‑Term Incentive (granted 2024; target values)
| Component | Weight | 2024 Target Value ($) | Vesting |
|---|---|---|---|
| PRSUs | 60% | 6,600,000 | Cliff vest on 3rd anniversary; payout 0–200% on 3‑yr metrics (avg annual organic sales growth ex‑Argentina; cumulative MFCF; 50/50) . |
| Time‑vested RSUs | 40% | 4,400,000 | 30%/30%/40% over three years starting first anniversary . |
| Total LTI target | 100% | 11,000,000 | — |
PRSU Outcomes and Trajectory
| Award Cohort | Performance Window | Metrics/Targets | Actual | Payout |
|---|---|---|---|---|
| 2022–2024 PRSUs | 1/1/2022–12/31/2024 | Avg annual organic sales growth; Cumulative MFCF (50/50) | 5.0% growth; $7.4B MFCF | 200% |
| Distribution dates | — | — | Hsu shares distributed Feb 28, 2025 | — |
| On‑pace as of 2/12/2025 | 2023 grant | — | ~160% on pace | — |
| On‑pace as of 2/12/2025 | 2024 grant | — | ~105% on pace | — |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership (12/31/2024) | 1,152,713 shares; includes holdings as described in proxy . |
| RSUs/PRSUs outstanding (unvested, target) | Time‑vested RSUs: 55,050; PRSUs (target): 160,537 . |
| Shares acquirable within 60 days (likely options/RSUs) | 739,776 shares . |
| Stock ownership guideline | CEO: 6× base salary; others: 3×; compliance reviewed in 2024—NEOs met or within five years . |
| Hedging/pledging | Prohibited; no short sales, derivatives, margin accounts or pledges . |
| Trading controls | Blackout from first day of last month of each quarter until first trading day after quarterly call; pre‑clearance and 10b5‑1 plan guidance . |
| Pledged shares | None of the executives or directors have pledged KMB shares as of proxy date . |
Employment Terms
- No employment contract: The Board retains a combined Chair/CEO structure; Mr. Hsu serves in the combined role “at the pleasure of the Board” without an employment contract .
- Clawbacks: Robust dual policies covering restatements and misconduct; Dodd‑Frank “no fault” recovery adopted consistent with SEC/NYSE rules .
- Severance/change‑in‑control: Double‑trigger Executive Severance Program provides 2× (salary + target bonus) plus equity/value make‑whole and benefits; COBRA premiums for 24 months; option vesting/exercise provisions; no 280G excise tax gross‑ups (payments cut back if beneficial) .
Potential Payments (as of 12/31/2024; Hsu)
| Scenario | Cash Payment ($) | Equity with Accelerated Vesting ($) | Additional Retirement Benefits ($) | Continued Benefits & Other ($) | Total ($) |
|---|---|---|---|---|---|
| Qualified Termination of Employment (double‑trigger) | 11,525,424 | 33,579,813 | 742,500 | 32,976 | 45,880,713 |
| Involuntary Termination (Severance Pay Plan) | 10,875,000 | — | — | 17,693 | 10,892,693 |
| Death | 5,275,424 | 27,660,790 | — | — | 32,936,214 |
| Disability | 3,275,424 | 27,660,790 | — | — | 30,936,214 |
| Retirement | 3,275,424 | 49,287,253 | — | — | 52,562,677 |
Perquisites and other benefits include executive security and limited personal aircraft use for the CEO (incremental cost included in “All Other Compensation”), executive financial counseling, executive health screening, and enhanced long‑term disability coverage; tax gross‑ups eliminated except certain relocation benefits .
Board Governance (Board service, committees, independence, and dual‑role implications)
- Board service: Director since 2017; Chairman since 2020; CEO since 2019 . Member, Executive Committee . He is not an independent director; all other directors (12/13) are independent .
- Combined Chair/CEO structure: The Board believes the combined role provides effective leadership with robust counterbalances via a proactive Independent Lead Director and majority independent Board .
- Lead Independent Director: Sherilyn S. McCoy (since May 2024) with extensive responsibilities (exec sessions, agendas, evaluations, CEO performance review co‑lead, direct conduit for shareholders) .
- Board activity: Seven Board meetings in 2024; all directors attended >75% of meetings of Board/committees served .
- Committees: Audit; Management Development & Compensation (MDCC); Nominating & Corporate Governance (NCG); Executive; NCG maintains a standing Sustainability Subcommittee .
- Director compensation: Inside directors (including CEO) receive no additional compensation for Board service .
- Compensation governance: Independent consultant (Semler Brossy) to the MDCC; Mercer advises management; the MDCC found no consultant conflicts . No MDCC interlocks or insider participation .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay support: ~90% approval; MDCC continued the pay‑for‑performance approach for 2025 in light of strong support .
- Investor engagement: In 2024, outreach to holders of ~51% of shares; engaged with holders of ~18% on governance, compensation, and sustainability topics .
Compensation Structure Analysis
- Mix and risk: Substantial majority of CEO pay is at‑risk and equity‑based; no option repricing without shareholder approval; no dividends on RSUs until earned; robust clawbacks; anti‑hedging/pledging .
- Annual incentive rigor: 2024 Element 1 paid at 133% (organic sales growth under target; adjusted EPS above target), Element 2 at 107%; CEO earned 125% of target, evidencing balanced calibration .
- Long‑term rigor and outcomes: 2022–2024 PRSUs paid at 200% driven by 5.0% average annual organic sales growth and $7.4B cumulative MFCF; 2023/2024 cycles tracking at ~160%/~105% respectively as of Feb 12, 2025 .
- Target changes: CEO 2024 LTI target increased 1.9% to align pay with market; no stock options granted in 2024, indicating ongoing emphasis on RSUs/PRSUs .
Performance & Track Record (business outcomes)
| Metric (FY 2024) | Result |
|---|---|
| Net sales | $20.1B (–1.8% reported; +3.2% organic) |
| Gross margin | 35.8% (adjusted 36.5%, +200 bps) |
| Operating profit | $3.2B (vs. $2.3B in 2023); adjusted operating profit $3.2B (vs. $3.0B) |
| Diluted EPS | $7.55 (adjusted $7.30 vs. $6.57 in 2023) |
| Cash from operations | $3.2B |
| Adjusted free cash flow | $2.7B |
| Capital returns | $2.6B via dividends and buybacks; 2025 dividend +3.3%, 53rd consecutive annual increase |
| Five‑year TSR context | Proxy includes five‑year TSR comparison vs S&P 500 and peers (chart) . |
Equity Ownership & Insider Selling Pressure Considerations
- Settlement events: 2022–2024 PRSUs paid on Feb 28, 2025 for Hsu, creating a known potential liquidity event; anti‑hedging/pledging and trading blackout/pre‑clearance mitigate disorderly selling risk .
- Ownership alignment: CEO guideline of 6× salary; NEOs compliant or within five‑year window; none of executives/directors have pledged KMB stock .
Compensation Peer Group (used for benchmarking)
Peer companies include: 3M, Campbell Soup, Clorox, Coca‑Cola, Colgate‑Palmolive, Conagra, General Mills, Hershey, Honeywell, J.M. Smucker, Kellanova, Kenvue, Kraft Heinz, Mondelēz, Newell Brands, Nike, PepsiCo, Procter & Gamble, V.F. Corp. (Kenvue replaced J&J; Kellogg rebranded Kellanova) .
Expertise & Qualifications
- Domain: Consumer packaged goods leadership, marketing, digital, international operations; NYSE financial literacy; recognized for strategic transformation leadership .
- Education: Carnegie Mellon (BS), University of Chicago (MBA) .
Investment Implications
- Alignment and performance: CEO pay is tightly linked to EPS, organic growth and multi‑year MFCF, with 2024 annual bonus at 125% of target and 2022–2024 PRSUs maxing out at 200%—a strong pay‑for‑performance signal aligned with improved margins, EPS, and cash generation .
- Retention and change‑in‑control risk: Double‑trigger CIC terms (2× cash, equity and benefits) and ongoing PRSU cycles tracking at >100% support retention; no excise tax gross‑ups is shareholder‑friendly .
- Trading/pledging risks: Strict anti‑hedging/pledging and blackout/pre‑clearance reduce adverse trading signals; no pledges outstanding .
- Governance checks on combined Chair/CEO: A robust Lead Independent Director role, majority‑independent board, and regular executive sessions mitigate combined role concerns .