Karl Liepitz
About Karl Liepitz
Karl A. Liepitz, 46, is Knife River’s Vice President, Chief Legal Officer and Secretary, appointed May 31, 2023; he previously served at MDU Resources from 2003 across legal roles including VP, General Counsel and Secretary (2021–2023) . Company performance during his tenure: 2024 revenue $2.899B, net income $201.7M, Adjusted EBITDA $463.0M (margin 16.0%), up from 2023 revenue $2.830B, net income $182.9M, Adjusted EBITDA $432.4M (margin 15.3%) . Knife River’s pay-for-performance links include annual Adjusted EBITDA and safety (TRIR/LTIR), and long-term PSAs tied equally to relative TSR and Adjusted EBITDA margin growth .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| MDU Resources Group, Inc. | Vice President, General Counsel & Secretary | Feb 2021–May 2023 | Led corporate legal function at the parent during spin-off preparations . |
| MDU Resources Group, Inc. | Assistant General Counsel & Assistant Secretary | Jan 2017–Feb 2021 | Supported legal, compliance and governance for diversified energy/construction services . |
| MDU Resources Group, Inc. | Senior Attorney & Assistant Secretary | Jan 2016–Jan 2017 | Advanced legal responsibilities; corporate secretary support . |
| MDU Resources Group, Inc. | Legal positions of increasing responsibility | Aug 2003–2016 | Progressive legal leadership within the enterprise . |
External Roles
- Not disclosed in proxy filings for Karl A. Liepitz .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 440,000 | 470,000 | 475,000 |
| Target Annual Cash Incentive (% of Salary) | 75% | 75% | 75% |
| All Other Compensation ($) | 100,604 | 82,428 | 82,736 |
| Change in Pension Value ($) | — | 8,525 | (5,070) |
Notes:
- 2023 offer letter set CLO base salary $470,000, target bonus 75%, LTI 170% of salary; no change at Separation for Karl .
- All Other Compensation includes 401(k) contributions $34,500 (company match and retirement), company DCP credit $47,500, life insurance premium $736 in 2024 .
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Weighting | Threshold | Target | Maximum | Actual | Payout % | Weighted Payout % |
|---|---|---|---|---|---|---|---|
| Adjusted EBITDA | 90% | $325.5M → 50% | $434.0M → 100% | $477.4M → 200% | $469.5M | 181.8% | 163.6% |
| TRIR | 5% | 2.40 → 50% | 2.10 → 100% | 1.84 → 200% | 1.89 | 180.8% | 9.0% |
| LTIR | 5% | 0.91 → 50% | 0.55 → 100% | 0.26 → 200% | 0.39 | 155.2% | 7.8% |
| Total | 100% | — | — | — | — | — | 180.4% |
| 2024 Target Bonus ($) | 2024 Actual ($) |
|---|---|
| 356,250 | 642,742 |
Vesting/Payment:
- Annual incentive pays after committee approval (Feb 2025 for 2024 awards) .
Long-Term Incentives (Grants on Feb 22, 2024)
| Award Type | 2024 Target Shares | Grant-Date Fair Value ($) | Performance Period / Vesting | Performance Metrics | Payout Range |
|---|---|---|---|---|---|
| Performance Share Awards (PSAs) | 8,075 | 694,315 | 3-year (2024–2026); earned based on goals; settled Feb 2027 | 50% Relative TSR vs 36-company peer set; 50% Adjusted EBITDA margin growth | 0–200% of target; TSR: 25th→50%, 50th→100%, 75th+→200%; Margin growth: 33%–200% |
| Restricted Stock Units (RSUs) | 4,348 | 313,665 | Time-based; vest Dec 31, 2026; settle Jan 2027 | Retention (time-vesting) | n/a |
- Company does not use stock options for executive compensation .
Outstanding and Vested Equity (as of Dec 31, 2024)
| Category | Shares | Value Basis |
|---|---|---|
| Unvested RSUs (Total) | 26,233 | Year-end price $101.64 applies to market values |
| RSUs by Grant Year | 2023: 21,885; 2024: 4,348 | 2023 RSUs vest Dec 31, 2025; 2024 RSUs vest Dec 31, 2026 |
| Unearned PSAs at Target | 8,075 | PSA market value shown at target using $101.64 |
| Shares Acquired on Vesting in 2024 | 17,993 RSUs; $1,828,809 value | Value at $101.64 on vest date |
Equity Ownership & Alignment
| Ownership Metric | Value |
|---|---|
| Beneficially Owned Shares (Feb 28, 2025) | 21,242; <1% of class; includes 401(k) holdings |
| Shares Outstanding (Record Date for 2025 Meeting) | 56,652,361 |
| Executive Stock Ownership Guideline | 3× base salary for NEOs (6× for CEO) |
| Karl’s Actual Holdings as Multiple of Salary | 10.2× (as of Dec 31, 2024); in compliance; deadline 06/01/2028 |
| Stock Retention Requirement | Must hold net vested shares until guideline met |
| Hedging/Pledging Policies | Executives/directors prohibited from hedging or pledging; margin accounts restricted |
Insider selling pressure: Vesting events on Dec 31, 2025 (2013-vintage RSUs) and Dec 31, 2026 (RSUs and PSAs) may create supply; outstanding counts above quantify potential settlement volumes .
Employment Terms
| Term | Details |
|---|---|
| Employment Agreement | No executive employment agreements entitling continued employment or specific payments upon termination |
| Change-in-Control Severance Plan (Aug 2024) | Double trigger; on qualifying termination within 2 years of CIC: (i) prorated target annual bonus; (ii) cash equal to multiple of base salary + target bonus; (iii) COBRA premium multiple; multiples: CEO 3×; CLO 2×; requires release; 1-year non-compete & non-solicit; 2-year non-disparagement; perpetual confidentiality; 280G cutback if beneficial |
| Equity CIC Treatment | For 2024 awards, PSAs and RSUs vest at target on CIC (with or without termination); starting with 2025 awards, vesting requires double trigger (qualifying termination after CIC) |
| Clawback (Rule 10D‑1) | Incentive compensation recovery policy effective Oct 2, 2023; applies to current/former executive officers on material restatements regardless of misconduct |
| Tax gross-ups | None on executive compensation |
| Deferred Compensation (DCP) | Company credit $47,500 (2024) to Karl; aggregate balance $282,159; 2024 aggregate earnings $37,810 |
| Pension/SERP | Vested term participant in MDU Resources pension plan; PV of accumulated benefit $32,079; 6 years credited service; no SISP participation |
Potential Payments (as of Dec 31, 2024)
| Scenario | PSAs ($) | RSUs ($) | CIC Cash ($) | Disability ($) | Total ($) |
|---|---|---|---|---|---|
| Voluntary/Not for Cause | — | 1,630,238 | — | — | 1,630,238 |
| Death | — | 1,630,238 | — | — | 2,315,189 |
| Disability | — | 1,630,238 | — | 684,951 | 2,315,189 |
| CIC with Termination | 820,743 | 2,666,322 | 1,828,663 | — | 5,315,728 |
| CIC w/o Termination | 820,743 | 2,666,322 | — | — | 3,487,065 |
Compensation Structure Analysis
- Year-over-year mix: 2024 kept Karl’s base salary relatively flat (+1% vs 2023) while increasing performance-based components via PSAs (65% of LTI), reinforcing pay-for-performance alignment .
- Shift to PSUs/RSUs: LTI moved from 100% RSUs in 2023 to 65% PSAs/35% RSUs in 2024, increasing performance risk and alignment to TSR and margin expansion .
- Governance enhancements: Adoption of double-trigger CIC and clawback policy in 2023–2024; no stock options, no tax gross-ups; prohibited hedging/pledging .
- Say-on-pay support: 96% approval at 2024 annual meeting indicates investor endorsement of pay design .
Equity Ownership & Alignment Table (Detailed)
| Item | Metric |
|---|---|
| Beneficial ownership | 21,242 shares; <1% of class |
| Unvested RSUs | 26,233 total (2023: 21,885; 2024: 4,348); market value basis $101.64 |
| Unearned PSAs | 8,075 at target; market value basis $101.64 |
| Ownership guideline | 3× salary required; Karl at 10.2× as of 12/31/2024; compliance by 06/01/2028 |
| Anti-hedging/pledging | Prohibited; margin account exclusions required |
Performance & Track Record
- Company TSR context: $100 invested in KNF grew to $290.23 by 2024 versus peer group $117.14 (S&P 400 Materials index proxy), reflecting strong shareholder returns since listing in June 2023 .
- Operational momentum: 2024 Adjusted EBITDA margin rose to 16.0% from 15.3% in 2023; annual incentive paid at 180.4% based on EBITDA and safety outperformance .
Compensation Peer Group (Benchmarking)
- Peer dataset used for CEO, CFO, and CLO benchmarking comprised 17 U.S. peers with median revenues ~$2.2B (e.g., Allegion, Arcosa, Dycom, Granite, Martin Marietta, Summit, Vulcan, etc.) with target positioning near 50th percentile .
Investment Implications
- Alignment: High ownership (10.2× salary) and performance-heavy LTI (65% PSAs) support long-term value creation and reduce misalignment risk .
- Retention and supply dynamics: Significant scheduled vesting on Dec 31, 2025 (RSUs) and Dec 31, 2026 (RSUs/PSAs) could create near-term selling pressure; monitor Form 4s around these dates for liquidity events .
- Governance risk mitigants: Double-trigger CIC from 2025 awards, robust clawback, no options, and anti-hedging/pledging policies lower headline risk and curtail windfall outcomes .
- Pay-for-performance credibility: 2024 bonus paid at 180.4% on tangible EBITDA and safety outperformance, while PSAs hinge on multi-year TSR and margin expansion—clear operational and market tests .
- Shareholder sentiment: Strong say-on-pay approval (96%) reduces governance overhang; continued disclosure around EDGE margin goals and PSA outcomes will be key for investor confidence .