Scott Baxter
About Scott Baxter
Scott H. Baxter (age 60) is President, Chief Executive Officer, and Chairman of Kontoor Brands (KTB). He has led Kontoor since being named CEO in August 2018 and became Chairman in August 2021; he sits on the Strategy & Finance Committee and is not an independent director . Education: BA, University of Toledo; MBA, Northwestern University (Kellogg) . Under his tenure, Kontoor delivered FY2024 GAAP EPS of $4.36 (Adj. EPS $4.89), operating cash flow of $368M, expanded gross margin by 280 bps to 44.5%, and >40% TSR in 2024; FY2023 TSR was 63% with $357M operating cash flow; FY2022 revenue grew 6% and EPS rose 30% YoY to $4.31 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Kontoor Brands | President & CEO; Chairman; Director; Strategy & Finance Committee member | CEO since Aug 2018; Chairman since Aug 2021 | Led spin-off era value creation; drove gross margin expansion, cash flow, and shareholder returns |
| V.F. Corporation (VF) | Group President, Americas West; Group President, Outdoor & Action Sports, Americas; VP & Group President, Jeanswear, Imagewear & South America | 2007–2018 at VF | Oversaw major brands (The North Face, Vans); deep apparel P&L and global operating experience |
| The Home Depot | Senior Vice President, Services Division | Not disclosed | Large-scale retail services leadership |
| Edward Don & Company | Executive Vice President | Not disclosed | Operations and commercial leadership |
| Nestlé; PepsiCo | Series of leadership roles | Not disclosed | CPG sales/marketing foundations |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Lowe’s Companies, Inc. | Director | Current | Public company board experience in home improvement retail |
| Topgolf Callaway Brands Corp. | Director | Former | Prior public company board service |
| Piedmont Triad Partnership; Greensboro Chamber of Commerce; Wyndham Championship (Honorary Chair 2020, 2021) | Director/Community roles | Various | Regional economic and community leadership |
Fixed Compensation
| Component | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Base Salary | $1,200,000 | $1,250,000 | $1,287,500 (effective Apr 1, 2024) |
| Target Bonus (% of Salary) | 150% | 150% | 155% |
| Actual AIP Payout Factor | 87% | 83% | 169.5% (incl. strategic modifier) |
| Actual AIP ($) | $1,566,000 | $1,556,250 | $3,382,584 |
Performance Compensation
Annual Incentive Plan (AIP) – FY2024 Design and Results
| Metric (Weight) | Threshold | Target | Maximum | Actual Result | Payout Basis |
|---|---|---|---|---|---|
| GAAP Revenue (20%) | $2,375,000k | $2,607,000k | $2,775,000k | $2,607,578k | Achieved target |
| Gross Margin % (40%) | 43.2% | 44.2% | 44.7% | 45.1% | Above max |
| Operating Income (40%) | $300,000k | $371,000k | $425,000k | $380,628k | Above target |
| Pre-Modifier AIP Factor | 149.5% | ||||
| Strategic Modifier (Project Jeanius + Supply Chain) | +20% of target → capped total 169.5% |
Notes: 2024 increased Gross Margin weight to 40% (from 30%); Revenue reduced to 20%; Operating Income at 40% .
Long-Term Incentives (LTI) – Target Mix and 2024 Grants
| Award Type | Weight | Metrics/Vesting | FY2024 CEO Target Grant Value |
|---|---|---|---|
| PRSUs | 60% | 3-year cumulative Adjusted EPS (60%) + Revenue (40%), with rTSR modifier ±25% (cap 225%); cliff at 3 years | $4,350,000 |
| RSUs | 40% | 3-year ratable vesting; dividend equivalents accrue and pay only on vest | $2,900,000 |
| Total LTI Target | 100% | $7,250,000 |
PRSU Outcomes
| PRSU Cycle | Financial Goal Result | rTSR Modifier | Final Payout |
|---|---|---|---|
| FY2021–FY2023 | Weighted financial goals 87.7% of target; rTSR at 76th percentile → +25% | +25% | 112.7% of target |
| FY2022–FY2024 | Financial goals 31.3% of target; rTSR at 94th percentile → +25% | +25% | 56.3% of target |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (2/13/2025) | 615,776 shares (1.1% of outstanding) including 184,403 options exercisable within 60 days and 102,996 RSUs vesting within 60 days; includes 380 shares held by son (shared voting) |
| Outstanding Equity (12/28/2024) | Unvested RSUs: 19,920 (2022 grant), 36,988 (2023), 49,021 (2024); Unearned PRSUs (target): 78,446 (2023 cycle), 72,092 (2024 cycle); VF-era options outstanding/exercisable: 184,403 @ $22.04, exp. 2/21/2027 |
| Ownership Guidelines | CEO required to hold ≥6x base salary; all current NEOs compliant with retention/ownership requirements as of 12/30/2023 |
| Hedging/Pledging | Prohibited for directors and executives; also no margin accounts |
| Insider Trading Policy | Comprehensive policy governing transactions by insiders |
| Director Pay | Baxter receives no additional compensation for Board service |
Employment Terms
- Change-in-Control: Double-trigger protection (i.e., severance/accelerated vesting only upon qualifying termination following a change in control); no excise tax gross-ups; awards accelerate per plan terms, with continued benefits for defined periods; legal fee reimbursement to enforce rights .
- Retirement Treatment (as of 12/28/2024): Eligible for retirement; options continue to vest/exercise for 36 months; RSUs continue to vest per schedule (subject to ≥1-year post-grant condition); PRSUs settle based on actual performance (no proration for regular retirement). Estimated value if retired 12/28/2024: RSUs $4,847,994; PRSUs (at target) $10,787,645; total $15,635,639 .
- Perquisites: Executive physicals and financial counseling with tax gross-up caps; CEO permitted personal aircraft use up to $150,000 aggregate incremental cost annually (positioned relative to peer data and Greensboro HQ logistics) .
- Contracts: No fixed-term employment agreements for executive officers .
Board Governance (Baxter as Director/Chair)
- Structure: Combined Chair & CEO with a strong Lead Independent Director role (Robert Shearer) to ensure independent oversight (agenda approval, executive sessions, shareholder engagement liaison) .
- Independence: 7 of 8 directors independent; Baxter is not independent .
- Committees: Baxter serves on Strategy & Finance Committee; all standing committees (Audit; Nominating & Governance; Talent & Compensation) are fully independent .
- Meetings/Attendance: Board met 5 times in 2024; all directors attended >85% of combined Board/committee meetings; executive sessions of non-management directors held regularly (4x in 2024) .
Compensation Structure Analysis (pay-for-performance levers)
- Cash vs Equity Mix: CEO’s at-risk pay dominates (88% at-risk in 2024 targets); long-term equity is 69% of TDC with 60% performance-based PRSUs—clear linkage to multi-year EPS and revenue plus rTSR modifier .
- Annual Plan Tightening: 2024 AIP increased Gross Margin weight (40%) recognizing profitability quality while maintaining Operating Income at 40%—supports margin expansion focus; strategic modifier (+20%) tied to transformation (Project Jeanius) and supply chain efficiency .
- LTI Rigor: 2022–2024 PRSU payout at 56.3% (below target), demonstrating downside when multi-year EPS/OCF targets are not met despite strong rTSR; prior 2021–2023 cycle at 112.7% shows balanced outcomes across cycles .
- Governance Safeguards: No excise tax gross-ups; robust clawback policy aligned with SEC/NYSE; anti-hedging/pledging; independent comp consultants (CAP, then FW Cook) .
Director/Shareholder Feedback & Say-on-Pay
- Say-on-Pay approvals: 2022 >97%; 2023 >96%; 2024 >95%—strong sustained support .
- Shareholder engagement: Ongoing outreach; Board adopted governance enhancements (e.g., removal of supermajority voting in 2024) .
Equity Vesting Schedules and Potential Selling Pressure
- Scheduled RSU vesting: CEO has tranches vesting annually from 2025–2027 from 2022–2024 grants (19,920; 36,988; 49,021 RSUs, respectively), which could create periodic liquidity events; PRSUs for 2023–2025 and 2024–2026 cycles will settle in 2026 and 2027 based on performance (target quantities: 78,446 and 72,092) .
- Policy mitigants: Prohibitions on hedging/pledging and robust ownership guidelines reduce misalignment risks; no evidence in proxy of pledged shares by Baxter .
Ownership, Pledging, and Alignment
| Aspect | Status |
|---|---|
| Total beneficial ownership | 615,776 shares (1.1% of outstanding); includes 184,403 vested options; 102,996 near-term vesting RSUs |
| Ownership guideline (6x salary) | Policy in place; NEOs in compliance as of 12/30/2023 |
| Pledging/Hedging | Prohibited by policy |
Peer Group and Benchmarking
- Peer group used for 2024 decisions included apparel/footwear and retail comparables; in July 2024, G-III and Ralph Lauren were removed; Abercrombie & Fitch and American Eagle were added to maintain size/strategy alignment .
- Target TDC positioned around market median; significant at-risk weighting for CEO .
Performance & Track Record (selected highlights)
| Metric | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
| Revenue growth | +6% to $2.63B | -1% YoY (const-currency -1%) | Flat vs 2023; DTC growth offset wholesale declines |
| Diluted EPS (GAAP) | $4.31 | $4.06 | $4.36 |
| Operating Cash Flow | Not disclosed in proxy summary | $357M | $368M |
| TSR | Not disclosed | 63% (CY2023) | >40% (CY2024) |
Risk Indicators & Red Flags
- Combined Chair/CEO: mitigated by Lead Independent Director with robust authority and frequent executive sessions .
- Clawback policy updated to SEC/NYSE standards; no hedging/pledging; no excise tax gross-ups .
- Related-party transactions: None involving Baxter disclosed; a related employment relationship noted for another NEO’s spouse (arms-length) .
Employment Terms (Severance/CoC) – Key Economic Mechanics
- Double-trigger CoC protections with equity acceleration per plan; continued benefits and legal-fee coverage after qualifying termination; no employment agreements .
- Retirement-friendly equity treatment for long-service executives; significant unvested equity value preserved upon regular retirement (see values above) .
Investment Implications
- Strong pay-for-performance design: 2024 cash bonus overachievement (169.5%) was driven by tangible profitability improvements (45.1% GM, OpInc above target) and strategic execution; downside is preserved in LTI (56.3% PRSU payout for 2022–2024), indicating balanced calibration .
- Alignment and retention: High at-risk mix, multi-year PRSU metrics, and stringent ownership/anti-hedging policies support alignment; regular RSU/PRSU vesting could create periodic insider selling windows, but pledging is prohibited and guidelines are robust .
- Governance: Combined Chair/CEO raises standard governance scrutiny, but presence of a seasoned Lead Independent Director, fully independent key committees, and strong say-on-pay support reduce governance discount risk .