Sanjay Chowbey

About Sanjay Chowbey

Sanjay Chowbey is President and CEO of Kennametal and a director since 2024; he has served as CEO and director since June 1, 2024 and is age 57, with prior leadership roles across industrials including Flowserve, Danaher and ArvinMeritor, and an MBA from Northwestern (Kellogg), an MS in Mechanical Engineering from Tennessee Tech, and a BS in Mechanical Engineering from B.I.T. Sindri, India . Kennametal’s FY2025 performance used in incentive evaluations: sales ~$2.0B (flat YoY), EBITDA $285M (14.5% margin), Adjusted EBITDA $299M (15.2% margin), ROIC 6.2% (Adjusted ROIC 6.8%), and Primary Working Capital as % of Sales 31.9% . The Board structure is separated (independent Chairman), with executive sessions at each regular meeting and all non-employee directors deemed independent; Chowbey is a non-independent director by virtue of his CEO role .

Past Roles

External Roles

Fixed Compensation

Multi-year compensation (Summary Compensation Table):

2025 AIP target and actual:

Perquisites and benefits detail (2025):

Notes:

• Executives are eligible for an executive physical stipend up to $15,000; personal benefits are disclosed in footnotes and otherwise executives receive standard employee benefits .
• No pension plan participation; no preferential/above-market deferred comp earnings for NEOs .

Performance Compensation

Annual Incentive Plan (AIP) mechanics and metrics (FY2025):

• Financial metrics set for two half-year periods to align with cyclicality: Corporate and Segment Revenue, Corporate Adjusted EBITDA, Primary Working Capital as % of Sales (PWCPS), Segment Adjusted EBIT; ESG modifier applied based on 4 goals (culture and safety) with ±10% effect on total AIP payout; payout curve ranges from 0% to 200% of target with specific thresholds (e.g., Revenue threshold 92%, Corporate EBITDA threshold 75%, PWCPS threshold 110% inverted) .
• For FY2025, corporate NEOs earned 63.2% of target; Chowbey’s AIP earned was $643,060 (69.5% of base salary) .

Long-Term Incentives (LTI):

• Kennametal grants only RSUs and PSUs; no stock options or SARs. Annual grants typically in July/August and are not timed to material non-public information. Most RSUs vest one-third per year over three years .
• PSU metrics include Adjusted ROIC and three-year average Adjusted EBITDA Margin; FY2025 PSU tranches tied to FY2025 Adjusted ROIC and FY2025–FY2027 Adjusted EBITDA Margin with max payout 200% .
• FY2025 target LTI value for Chowbey: $3,850,000 (416% of salary); FY2026 target LTI value: $4,000,000; FY2026 LTI rebalanced to 50% Adjusted ROIC and 50% 3-year Adjusted EBITDA Margin .

Stock vested and tax withholding (FY2025):

Equity Ownership & Alignment

Ownership guidelines and policies:

• CEO stock ownership guideline: 5x base salary; employees have five years to comply; RSUs (vested/unvested) and deferred stock credits count, PSUs do not; strict insider trading windows and pre-clearance .
• Hedging and pledging prohibited for directors and executive officers without prior General Counsel approval; any pledging exception requires demonstrable capacity to repay without resorting to pledged stock .

Beneficial and internal ownership (as of Aug 15, 2025):

Employment Terms

• Agreements: Executive employment agreements in place; no fixed term; compensation determined by the Compensation & Human Capital Committee (CHC) per salary band and annual decisions .
• Start date/tenure: Serving as President & CEO and director since June 1, 2024 .
• Change-in-control vesting: Company plan requires double trigger for accelerated vesting (change-in-control plus qualifying termination) .
• Clawback and governance: Company maintains recoupment, insider trading, and anti-hedging/pledging policies; compensation programs assessed for risk and deemed not to encourage inappropriate risk-taking .
• Severance and CIC economics (as of June 30, 2025; stock price $22.96):
  • Non-CIC involuntary termination (not for cause): Severance $1,850,000 .
  • Death/Disability: Unvested RSUs $1,727,648; unvested PSUs $2,458,809; total $4,186,458 .
  • CIC termination by Company not for cause or by executive for good reason: Severance $3,885,000; unvested RSUs $1,727,648; unvested PSUs $2,458,809; health & welfare continuation $39,618; total $8,111,075 .
• Tax gross-ups: Not disclosed; Section 162(m) deductibility considered but not determinative in pay design .
• Deferred compensation: Company contributions in Thrift Plus and Restoration Plans disclosed; no preferential/above-market earnings .

Board Governance

• Board service history: Director since 2024; non-independent; currently the only employee director; employee directors do not receive additional director compensation and may not serve on Board committees .
• Committee roles: None (committees comprise independent directors only) .
• Independence and structure: Independent Chairman; CEO and Chairman roles separated; independent directors meet in executive session at each regular meeting; all non-employee directors determined independent by Nominating/Corporate Governance Committee .
• Attendance: In FY2025, each director attended at least 75% of Board/committee meetings .
• Director compensation context (non-employee): Annual cash retainer $85,000; chair retainers $10,000–$18,000; annual equity ~$145,000; director equity award limit $500,000; overall non-employee director comp cap $850,000; directors must hold equity equal to 5x annual retainer within 5 years .

Compensation Structure Analysis

• Mix shift: Significant increase in equity grant value in FY2025 as CEO ($3.05M stock awards) versus prior years aligned with promotion and LTI strategy; no stock options granted, emphasizing RSUs/PSUs which reduce risk vs options .
• AIP rigor and adjustments: FY2025 metrics balanced across revenue, EBITDA, PWCPS, and ESG modifier; FY2026 removes ESG modifier and adds nonfinancial component, and rebalances segment metrics to prioritize top-line and profitability; LTI metrics rebalanced 50/50 ROIC vs 3-year Adjusted EBITDA Margin in FY2026 .
• Peer group calibration: FY2025 peer group refined to better match Kennametal’s scale, removing larger companies and adding peers with revenues/market caps closer to Kennametal .
• Consultant independence: Pay Governance engaged as independent advisor; scope includes benchmarking, performance goal rigor diagnostics, pay-for-performance alignment reviews .

Equity Compensation & Vesting Schedules

Insider selling pressure context:

• 2025 vesting delivered 25,449 shares with 6,195 surrendered for tax withholding; trading windows require pre-clearance and occur post-earnings for ~1.5 months, mitigating opportunistic selling risk; hedging and pledging prohibited barring approved exceptions .

Employment & Contracts

Say-on-Pay & Shareholder Feedback

• Annual Say-on-Pay frequency affirmed; Board recommends voting FOR the advisory approval of NEO compensation; future votes expected annually with next vote in 2026 .

Investment Implications

• Alignment: Chowbey’s pay mix is heavily equity-based with PSUs tied to ROIC and multi-year margin, supporting long-term value creation; RSU vesting cadence provides retention but may lead to periodic share delivery and tax-withholding surrenders rather than opportunistic selling due to trading policy constraints .
• Rigor and reset: FY2026 compensation program increases focus on EBITDA margin and segment growth, removing ESG AIP modifier—an emphasis on financial outcomes could enhance pay-performance linkage; monitoring PSU goal rigor and payout outcomes is key for assessing alignment and future dilution .
• Retention/CIC risk: CIC economics (~$8.1M under double trigger) and severance ($1.85M) are meaningful but standard in market; governance mitigants include independent Chairman and committee-only independent members, limiting dual-role concerns related to CEO/director status .
• Ownership: CEO guideline at 5x salary over 5 years with anti-hedging/pledging rules reduces misalignment risk; Chowbey’s beneficial ownership is under 1% individually, consistent with peer norms for mid-cap industrial CEOs, with significant unvested RSUs/PSUs driving ongoing alignment and retention .