Harry A. Kemp
LEARAbout Harry A. Kemp
Harry A. Kemp (age 49) is Senior Vice President, Chief Administrative Officer and General Counsel of Lear Corporation. He was promoted to his current role effective October 1, 2022 (Proxy), with the 10-K noting he has held the CAO & GC position since January 2023; he previously served as Senior Vice President, General Counsel and Corporate Secretary (appointed August 2019) after a series of divisional and corporate counsel roles since joining Lear in 2009 . Company performance under the current compensation framework includes 2024 net sales of $23.306 billion, Core Operating Earnings of $1,096.1 million, and Free Cash Flow of $561.4 million; E‑Systems margins improved by 50 bps in 2024, and the cumulative TSR value (base 100 at 12/31/2019) stood at 75 at year-end 2024 versus 72 for the peer group .
Past Roles
| Organization | Role | Years | Strategic impact / scope |
|---|---|---|---|
| Lear Corporation | SVP, Chief Administrative Officer & General Counsel | 2022/2023–present (Oct 1, 2022 per proxy; Jan 2023 per 10-K) | Enterprise CAO/GC leadership; corporate governance, human capital and administrative oversight . |
| Lear Corporation | SVP, General Counsel & Corporate Secretary | Aug 2019–Jan 2023 | Corporate legal leadership; board and disclosure governance . |
| Lear Corporation | VP & Corporate Counsel | Jan 2019–Aug 2019 | Corporate legal . |
| Lear Corporation | VP & Divisional Counsel – Seating | Sep 2016–Jan 2019 | Business-unit counsel for Seating . |
| Lear Corporation | VP & Divisional Counsel – E-Systems | Dec 2009–Sep 2016 | Business-unit counsel for E-Systems . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Bodman PLC | Partner | 2003–2009 | Private practice leadership (automotive/commercial focus) . |
| McKinsey & Company | Engagement Manager | 2000–2003 | Strategy/operations consulting experience . |
Fixed Compensation
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Base salary (rate) | $700,000 | $750,000 (effective Sep 1, 2024) | 7.1% increase to align closer to market median . |
| Target annual bonus (% salary) | 90% | 90% | No change Y/Y . |
| Perquisites/other | $181,464 | $213,263 | Includes company retirement plan contributions ($188,082), security services ($21,468), exec physical ($1,850), life insurance items ($1,863) . |
| Total reported compensation | $4,100,131 | $3,666,422 | Year-over-year change reflects lower AIP payout and stock awards . |
Performance Compensation
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Annual Incentive Plan (AIP) design and results (2024):
- Metrics and weighting: 50% Adjusted Operating Income; 50% Free Cash Flow; Strategic Scorecard modifier ±10% .
- Targets: AOI target $1,215M; FCF target $630M .
- Actual (for AIP purposes): AOI $1,101M (82% of target); FCF $561M (78% of target); scorecard +9%; overall payout 89% of target .
- Kemp’s AIP payout: Target $675,000; Payout 89% = $600,750 .
-
Long-Term Incentive (LTI) program (awarded 2024):
- LTI target for Kemp: 255% of 2024 base salary rate used for grant sizing ($700,000) → $1,785,000 target mix (70% PSUs, 30% RSUs), plus separate “Career Shares” .
- 2024 grants (grant-date fair value): Performance Shares $1,350,351; RSUs $535,399; Career Share RSUs $249,992 .
- 2024–2026 PSU performance metrics: 50% Adjusted Pretax Income, 25% Adjusted ROIC Improvement, 25% Relative TSR (capped at 100% if absolute TSR is negative) .
- 2022–2024 PSU cycle payout: 112% of target; Kemp earned 5,844 shares .
2024 Grants Detail (Kemp)
| Award type | Grant date | Target/Units | Vesting/performance | Grant-date fair value |
|---|---|---|---|---|
| Performance Shares | Jan 2, 2024 | 8,812 target shares | 3-year (2024–2026), 0–200% on APTI, ROIC improvement, Relative TSR | $1,350,351 |
| RSUs | Jan 2, 2024 | 3,776 units | Cliff vest on Jan 4, 2027 | $535,399 |
| Career Share RSUs | Nov 20, 2024 | 2,672 units | Long-hold; generally deferred to age 62 or later of vest/age; forfeiture and change-in-control rules apply | $249,992 |
AIP Metrics and Results (2024)
| Metric | Weight | Threshold | Target | Max | Actual | Result % of Target |
|---|---|---|---|---|---|---|
| Adjusted Operating Income | 50% | $911M | $1,215M | $1,458M | $1,101M | 82% |
| Free Cash Flow | 50% | $473M | $630M | $788M | $561M | 78% |
| Financial payout | — | — | — | — | — | 80% |
| Strategic Scorecard | ±10% | — | — | — | — | +9% |
| Final payout | — | — | — | — | — | 89% |
Equity Ownership & Alignment
- Beneficial ownership: 15,277 shares directly/indirectly; less than 1% of outstanding (53,540,555 shares outstanding as of Mar 18, 2025) .
- RSUs and PSUs outstanding (12/31/2024):
- Unvested RSUs: 14,763 units; market value $1,466,228 including accrued dividend equivalents/interest ($68,172) at $94.70/share .
- Unearned PSUs: 28,664 at target/max per table; market value $2,874,320 including accrued dividend equivalents/interest ($159,839) at $94.70/share .
- Stock options: None outstanding for Kemp .
- Upcoming vesting schedule (time-based awards):
- RSUs: 745 (Jan 4, 2025), 4,254 (Jan 4, 2026), 3,776 (Jan 4, 2027) .
- Career Shares: 1,364 (Nov 14, 2025), 1,952 (Nov 13, 2026), 2,672 (Nov 20, 2027) .
- Ownership policy/compliance:
- Robust executive stock ownership guidelines (multiple of salary; 50% net-hold until met). As of Dec 31, 2024, Kemp had not yet met the guideline and is retaining at least 50% of net shares from vestings until in compliance .
- Hedging/pledging:
- Hedging and pledging transactions are prohibited for officers and directors .
Implication for selling pressure: Near-term vesting events (listed above) could create taxable events and potential discretionary sales; however, hedging/pledging are prohibited and there are no options outstanding (removing forced exercise pressure) .
Employment Terms
- Severance economics (as of a hypothetical 12/31/2024 termination):
- Without change of control (good reason/without cause): Cash severance $2,850,000; welfare benefits PV $33,946; accelerated equity value $2,169,250; total $5,053,196 .
- With change of control (double trigger within 24 months): Cash severance $2,850,000; welfare benefits PV $33,946; accelerated equity value $3,334,670; total $6,218,616 .
- Death or disability: Accelerated equity value $2,424,347 .
- Change-in-control/vesting mechanics:
- Double-trigger equity acceleration (if awards are assumed); unvested PSUs vest at target; time-based awards pro‑rated or fully accelerated depending on terms; no excise tax gross‑ups (cut-back provision applies) .
- Non-compete and non-solicitation:
- Non-compete/non-solicit during employment and 1 year post-employment (extended to 2 years for certain terminations); severance requires a release and compliance with post-termination obligations .
- Career Shares distribution/forfeiture:
- Forfeited if voluntarily leaving before qualifying retirement or for violation of restrictive covenants; distribution generally delayed until age 62 or later of vesting/age; special rules for death, disability, or qualifying termination in CIC window .
- Clawbacks:
- SEC-mandated recoupment policy for restatements; separate “Improper Conduct” policy enabling recovery of incentive cash/equity, severance and more for misconduct within a 3-year lookback .
Compensation Structure Analysis
- Pay-for-performance alignment:
- 2024 AIP paid at 89% of target on below-target AOI and FCF vs elevated targets; 2022–2024 PSUs paid at 112% on three-year APTI and Relative TSR outcomes .
- Mix shifts/retention features:
- Heavy performance share mix (70% of LTI for non-CEO NEOs) vs industrial peers; Career Shares require long holding/distribution to promote retention and alignment .
- Metric rigor:
- 2024 AIP targets set materially above 2023 targets (AOI +26%, FCF +39%); 2024–2026 PSU APTI target ~32% higher vs prior cycle; ROIC improvement reintroduced with rising targets .
- Governance safeguards:
- No single-trigger CIC equity or severance; no option repricing; hedging/pledging prohibited; robust ownership guidelines and clawbacks .
Compensation Peer Group and Say‑on‑Pay
- Comparator group used for benchmarking includes 20 diversified industrial/auto names (e.g., APTV, ETN, ITW, MGA, TEL, TXT, PH, DE) .
- Say‑on‑Pay support: 90.2% approval in 2024; five‑year average 91.8% .
Performance & Track Record (Company context during Kemp’s tenure window)
- 2024 results: Net sales $23.306B; net income $506.6M (2.2% margin); Core Operating Earnings $1,096.1M; Free Cash Flow $561.4M .
- Strategic/operational notes: E‑Systems margin expanded by 50 bps in 2024; strong business wins and continued innovation initiatives (e.g., automation via WIP acquisition, thermal comfort systems) .
- Stock performance: Cumulative TSR value at $75 at 12/31/2024 vs $94 at 12/31/2022 on a 2019=100 base; peer group at $72 in 2024 .
Director/Board Governance (not a director; for context only)
- Governance policies highlight independence, separate Chair/CEO, and committee structures; strong governance practices cited broadly (no personal hedging/pledging; ownership guidelines; clawbacks) .
Equity Ownership & Upcoming Vesting Calendar (Detail)
| Category | Amount |
|---|---|
| Beneficial ownership (common shares) | 15,277 shares; <1% |
| RSUs unvested (12/31/2024) | 14,763 units; $1,466,228 value incl. dividends/interest |
| PSUs unearned (12/31/2024) | 28,664 units; $2,874,320 value incl. dividends/interest |
| Options outstanding | None |
| Upcoming time-vest RSUs | 745 (1/4/2025); 4,254 (1/4/2026); 3,776 (1/4/2027) |
| Career Shares pending vest | 1,364 (11/14/2025); 1,952 (11/13/2026); 2,672 (11/20/2027) |
| Ownership guideline status | Not yet met; 50% net-hold in place |
| Hedging/pledging | Prohibited |
Deferred Compensation & Retirement
- SRRP (nonqualified deferral): $43,000 executive contributions in 2024; aggregate year-end balance $1,607,182 .
- Vested Career Shares (deferred): Included in nonqualified deferral schedule; $117,126 employer line reflects value of vested Career Shares credited in 2024; aggregate vested Career Shares account $632,444 at 12/31/2024 .
- Not a participant in the qualified pension/SERP defined benefit plans (frozen) .
Risk Indicators & Red Flags
- Clawbacks in place (two policies); no hedging/pledging; no excise tax gross‑ups; no repricing of options; double-trigger CIC .
- Related-party transactions disclosed only with respect to CEO’s family; none specific to Kemp .
- Section 16 reporting: One late Form 4 in 2024 noted for a director (not Kemp) due to administrative error .
Investment Implications
- Alignment: High share of at‑risk and performance‑based pay (AIP on AOI/FCF; PSUs on APTI/ROIC/Relative TSR), strict ownership/holding and anti‑hedging/pledging policies — favorable for shareholder alignment .
- Retention risk: Meaningful unvested RSUs/Career Shares and 2024–2026 PSUs (with multi-year performance) support retention; severance is competitive with double-trigger CIC, no gross-ups .
- Near-term supply technicals: RSU/Career Share vestings in 2025–2027 may create periodic tax-withholding sales, but absence of options reduces forced selling risk; policy prohibits hedging/pledging .
- Pay outcomes vs performance: 2024 AIP at 89% (below target) and 2022–2024 PSUs at 112% show balanced pay-for-performance; 2024 targets were set meaningfully higher, indicating rigor .
- Governance quality: Independent comp consultant (Pay Governance), strong say‑on‑pay support (90.2%), and robust safeguards reduce compensation/governance risk .