Steven Hedlund
LINCOLN ELECTRIC HOLDINGSAbout Steven B. Hedlund
Chair, President and CEO of Lincoln Electric since January 1, 2024; appointed Chair effective January 1, 2025; age 58; 15+ years at the company across COO, Americas & International Welding, International Welding, Global Automation, and Strategy roles; earlier senior roles at Fortune Brands and as a principal at Booz Allen & Hamilton . Under his leadership transition period, Lincoln’s 5-year TSR proxy series shows $100 invested valued at $210.73 in 2024 vs $163.54 for the peer index, with 2024 GAAP net income of $466M and ROIC for compensation purposes of 18.8% (company’s pay-versus-performance disclosure) . The Board combined the Chair/CEO roles with a Lead Independent Director structure to mitigate independence concerns and ensure independent committee leadership and executive sessions .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Lincoln Electric | Chief Operating Officer | May 2022 – Dec 2023 | Led global operations through CEO transition, margin and productivity focus . |
| Lincoln Electric | President, Americas and International Welding | Oct 2020 – May 2022 | Integrated regional P&Ls, execution on growth and margin initiatives . |
| Lincoln Electric | President, International Welding | Jun 2017 – Oct 2020 | Drove international growth, operational excellence initiatives . |
| Lincoln Electric | President, Global Automation; VP, Strategy & Business Development | n/a | Advanced automation strategy and capital allocation for growth . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Fortune Brands, Inc. | Various executive leadership roles | n/a | Pre-LECO executive roles . |
| Booz Allen & Hamilton | Principal | n/a | Management consulting experience . |
| Public company boards | None | — | No other public company directorships . |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $564,584 | $798,833 | $1,010,000 |
Notes:
- 2024 base salary set at $1,010,000 (effective Aug 1, 2023) in connection with CEO transition .
Performance Compensation
Annual Bonus (EMIP) – Actuals
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| EMIP Paid ($) | $1,317,851 | $1,890,704 | $975,357 |
- 2024 CEO EMIP target was $1,464,500 (set Aug 2023) (~145% of $1,010,000 base salary; calculation shown for context) .
- Short-term plan metrics emphasize Adjusted Revenue, EBITB (adjusted operating income proxy), AOWC/Sales, and an individual performance modifier (with 2025 updating weights to 60% Adjusted EBITB, 20% AOWC/Sales, and adding 20% strategic goals) .
2024 Long-Term Incentive Grants (Grant date: Feb 20, 2024)
| Component | Shares/Options | Strike/Terms | Grant Date Fair Value ($) |
|---|---|---|---|
| Stock Options | 24,108 | $246.99; 3-year ratable vest; 10-year term | $1,595,709 |
| RSUs | 6,693 | 3-year cliff vest | $1,653,104 |
| PSUs (target) | 6,693 | 3-year cycle; 50% Adj. Net Income growth, 50% 3-yr avg ROIC vs peers; 0–200% payout | $1,653,104 |
Vesting and payout mechanics:
- Options: generally vest in 3 equal annual installments; 10-year term .
- RSUs: vest in full after 3 years; dividend equivalents paid in cash at distribution .
- PSUs: 3-year performance; financial metrics/curves disclosed; vesting treatment under retirement, death/disability, CIC outlined below .
Performance Share Outcomes (2022–2024 cycle; paid Mar 2025)
| Item | Hedlund |
|---|---|
| Target PSUs (2022–2024) | 2,660 |
| Actual Payout % | 169.2% (Adj. NI growth: 47.7%; 3-yr avg ROIC at 100th percentile vs peers) |
| Shares Earned | 4,500 |
2024 Option Exercises and Stock Vested
| Item | Shares | Value Realized ($) |
|---|---|---|
| Options Exercised | — | — |
| RSUs/PSUs Vested | 6,181 | $1,805,237 |
Equity Ownership & Alignment
- Beneficial ownership (12/31/2024): 112,609 shares; less than 1% of class .
- Within 60-day rights (as of 12/31/2024): 78,282 options exercisable; 2,660 RSUs vesting within 60 days .
- CEO stock ownership guideline: 5x base salary; all NEOs were in compliance as of 12/31/2024 .
- Anti-hedging and anti-pledging: derivatives, short sales, margin purchases, and future pledging prohibited; no pledges outstanding for any directors or executive officers .
| Ownership Detail (12/31/2024) | Amount |
|---|---|
| Beneficially Owned Shares | 112,609 |
| % of Class | <1% |
| RSUs Vesting within 60 Days | 2,660 |
| Options Exercisable within 60 Days | 78,282 |
Employment Terms
- No individual employment agreement; LECO discloses “No employment agreements” generally, with compensation governed by plans and change-in-control (CIC) agreements .
- Clawback policy (SEC/Nasdaq compliant) plus a supplemental recovery policy; recoupment of excess incentive-based pay on restatement without fault requirement; 3-year recovery period; limited impracticability exceptions .
- CIC agreements: Double-trigger required; severance period through the second anniversary; restrictive covenants and release required .
- CEO CIC cash severance multiple: 3x base pay plus bonus (others: 2x); outplacement up to $100,000 for CEO; 280G cutback applies (no gross-ups) .
- Equity treatment on termination/CIC/death/disability/retirement per plan matrices (options/RSUs/PSUs acceleration rules) .
Estimated Payouts (as of 12/31/2024)
| Scenario | Total ($) | Key Components |
|---|---|---|
| CIC (Replacement Awards; Qualified Termination) | $11,989,379 | Severance $7,842,831; RSUs $3,637,507; PSUs $1,773,466; Options $326,017; Outplacement $100,000; 280G cutback $(1,690,442) . |
| Death/Disability | $5,736,990 | RSUs $3,637,507; PSUs $1,773,466; Options $326,017 . |
| Normal Retirement (acceleration values) | $5,736,990 | RSUs $3,637,507; PSUs $1,773,466; Options $326,017 . |
Board Governance
- Role: Director since 2024; Chair since 2025; not independent (employee director); no committee assignments .
- Lead Independent Director model in place (Curtis E. Espeland); all four board committees comprised of independent directors; independent directors meet in executive session at every regular meeting .
- Board attendance: each director attended at least 75% of 2024 board and committee meetings; board held five meetings in 2024 .
- Dual-role implications: Board explicitly cited benefits of unified Chair/CEO leadership coupled with strong LID responsibilities (agenda approval, executive sessions, CEO evaluation, and investor communication), mitigating independence concerns .
Director Compensation
- As an employee director, Hedlund receives no additional compensation for board service .
- For context (non-employee directors): cash retainer $95,000; Lead Independent Director +$35,000; committee chair retainers $30,000 (Audit), $20,000 (Compensation, Finance, Nominating); annual RSU grant approx. $155,000 (one-year vest); no meeting fees except beyond thresholds .
Compensation Structure Analysis
- Pay mix and philosophy: Base salary targeted at ~45th percentile; target total cash (base + EMIP) at ~65th percentile; LTI targeted at ~50th percentile; CEO target pay ~86% at risk in 2024 .
- 2025 STIP design tweaks: reduced total financial weight to 80% (with 60% Adjusted EBITB, 20% AOWC/Sales) and added 20% team strategic goals, moving Revenue to LTI focus .
- Peer group process: independent advisor (Meridian), peer refresh for 2025 added Dover, Fortive, Ingersoll Rand; removed Terex and Toro to better align with industrial tech/automation adjacency .
- Say-on-pay support: 97% approval at 2024 Annual Meeting; historically strong support .
Performance & Track Record (Company context)
| Year | Company TSR ($100 base) | Peer Group TSR ($100 base) | Net Income ($M) | ROIC for Compensation Purposes |
|---|---|---|---|---|
| 2020 | 122.93 | 113.66 | 206 | 13.7% |
| 2021 | 149.83 | 141.80 | 276 | 21.5% |
| 2022 | 157.95 | 123.28 | 472 | 28.1% |
| 2023 | 241.00 | 143.54 | 545 | 22.6% |
| 2024 | 210.73 | 163.54 | 466 | 18.8% |
Risk Indicators & Policies
- Clawback policy (SEC/Nasdaq-compliant) and supplemental recovery policy; 3-year lookback on restatements; no indemnification for recovered amounts; limited impracticability carve-outs .
- Anti-hedging/pledging policy; no pledges by directors or executives; robust insider trading controls .
- Related-party transactions: policy requires Audit Committee review; none required approval in 2024 .
- Double-trigger CIC; no tax gross-ups; strong stock ownership guidelines; independent compensation committee and advisor .
Equity Overhang & Vesting/Selling Dynamics
- Upcoming vesting from 2024 RSUs (6,693) and PSU cycles (2023–2025, 2024–2026) plus option tranches can create event-driven liquidity windows; however, officers must meet ownership guidelines before selling and are subject to no-hedge/pledge and trading window constraints .
- Hedlund realized $1.81M on 2024 stock vesting; no 2024 option exercises (for context, he exercised 21,115 options in 2023 for $2.39M) .
Investment Implications
- Pay-for-performance alignment is strong: equal-weighted LTI across options/RSUs/PSUs tied to ROIC and net income growth, with high at-risk pay (CEO 86% target at risk) and robust clawback/ownership/anti-hedging controls—supportive of shareholder alignment .
- Retention risk appears contained: market-competitive positioning (cash at ~65th percentile; LTI at ~50th), plus meaningful unvested equity and double-trigger CIC (3x CEO multiple) incentivize continuity through multi-year cycles .
- Dual-role (Chair/CEO) governance risk is mitigated by an empowered Lead Independent Director and fully independent committees; continued investor engagement and high say-on-pay support (97%) reduce governance discount risk .
- Near-term insider selling pressure should be limited by ownership compliance and policies, though PSU/RSU settlements and scheduled option vests create periodic liquidity events; monitor Form 4s around vest/exercise windows for signals .