Michael Smith
Executive Vice President at MKC
Executive
About Michael R. Smith
Michael R. Smith, age 60, served as Executive Vice President & Chief Financial Officer from September 1, 2016 to November 30, 2024, then as Executive Vice President to assist transition through his retirement on February 28, 2025 . Under Smith’s finance leadership, McCormick’s sales grew over 50% since he became CFO, supported by successful acquisitions (Frank’s RedHot, French’s, Cholula, FONA) and execution of CCI initiatives . Company performance context in 2024: net sales +1%, operating income +10%, EPS +16%, cash from operations $922 million; 10-year annual stockholder return of 10% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| McCormick & Company, Inc. | Executive Vice President & CFO | 2016–2024 | Drove >50% sales growth; led acquisitions (Frank’s, French’s, Cholula, FONA); strengthened global finance org and CCI execution . |
| McCormick & Company, Inc. | Executive Vice President | Dec 1, 2024–Feb 28, 2025 | Transition support; remaining options vest under retirement provisions at retirement . |
| McCormick & Company, Inc. | Senior Vice President, Corporate Finance | 2015–2016 | Pre-CFO finance leadership . |
External Roles
No external directorships or related-party transactions disclosed for Smith; company reports no director/executive material related party transactions since the beginning of fiscal 2024 .
Fixed Compensation
| Component | FY2024 Detail | Source |
|---|---|---|
| Base Salary | $800,000 (effective April 1, 2024) | |
| Target Annual Incentive | 100% of salary | |
| Actual Annual Incentive (Paid for FY2024 performance) | 112% of salary | |
| Stock Awards (LTIP PSUs grant-date fair value) | $1,350,044 (FY2024–FY2026 cycle) | |
| Option Awards (grant-date fair value) | $2,350,013 (plus special $1,000,006 award on 12/1/2023) | |
| All Other Compensation (Total) | $254,189 | |
| • Auto Allowance | $22,846 | |
| • Executive Benefit Allowance | $17,654 | |
| • Financial Counseling | $16,481 | |
| • Excess Liability Premium | $1,069 | |
| • 401(k) Employer Match | $17,250 | |
| • Company Deferred Comp Contributions | $123,017 | |
| • Profit Sharing | $55,872 |
Performance Compensation
| Metric | Weighting | FY2024 Target | FY2024 Actual | Payout Factor | Vesting/Payment |
|---|---|---|---|---|---|
| Adjusted EPS Growth | 70% | +8.58% | +10.44% | 129% of target for this component | Cash paid in FY2024 annual incentive |
| Global McCormick Profit (Adj. Op Inc with WC and FX adjustments) | 21% | Confidential targets | Not disclosed | Incorporated in overall payout | Cash paid in FY2024 annual incentive |
| Global Sales Volume Growth | 4.5% | Confidential targets | Not disclosed | Incorporated in overall payout | Cash paid in FY2024 annual incentive |
| Global Net Sales | 4.5% | Confidential targets | Not disclosed | Incorporated in overall payout | Cash paid in FY2024 annual incentive |
| FY2022–FY2024 LTIP PSUs | 50% of LTIP mix | Cumulative Net Sales (primary) with Relative TSR modifier | Earned at 155% of target (no TSR modifier) | 155% | Shares delivered; value shown in vesting table |
| Stock Options | 50% of LTIP mix; time-vested | N/A | N/A | N/A | Generally vest one-third annually; underwater at record date for grants since Mar 2021 |
Equity Ownership & Alignment
| Item | Detail | Source |
|---|---|---|
| Total Beneficial Ownership (Common / Non-Voting) | 574,345 Common; 233 Non‑Voting; 477,247 shares acquirable within 60 days; ownership equals 3.6% of Common | |
| Stock Ownership Guidelines | EVP multiple: 3.0x base pay; Smith in compliance as of record date | |
| Hedging/Pledging | Directors and officers may not pledge or hedge Company stock |
Outstanding Options (selected recent grants):
| Grant Date | Exercisable (#) | Unexercisable (#) | Strike ($) | Expiration | Notes |
|---|---|---|---|---|---|
| 3/27/2024 | — | 71,962 | 76.03 | 3/27/2034 | Vests ratably; vesting accelerates under retirement provisions at 2/28/2025 |
| 12/1/2023 (special retention) | 22,002 | 44,005 | 65.99 | 12/1/2033 | Award approved 11/28/2023, issued 12/1/2023 |
| 3/29/2023 | 20,672 | 41,344 | 81.79 | 3/29/2033 | Remaining vests on 3/29/2025–2026 |
| 3/30/2022 | 34,628 | 17,315 | 97.26 | 3/30/2032 | Remaining vests on 3/30/2025 |
| 11/30/2020 (VCAP) | — | 78,056 (performance-price options) | 93.49 | 11/30/2030 | Price hurdles $149.58/$168.28/$186.98; none achieved through FY2024 |
Outstanding PSUs (unearned):
| Cycle | Unearned Shares (#) | Valuation basis | Source |
|---|---|---|---|
| FY2024–FY2026 | 41,476 | Maximum shown per SEC rules when FY2024 sales exceeded target and TSR modifier at/below target | |
| FY2023–FY2025 | 28,348 | Maximum shown per SEC rules when FY2023–2024 cumulative sales exceeded target and TSR modifier at/below target |
Vesting/Exercises in FY2024:
| Security | Shares Vested/Exercised | Value Realized |
|---|---|---|
| PSUs (FY2022–FY2024) | 20,764 | $1,628,105 based on $78.41 close on 11/29/2024 |
| Stock Options | — | — (no option exercises disclosed for Smith in FY2024) |
Employment Terms
- Retirement and Transition: Smith stepped down as CFO effective December 1, 2024; continued as EVP through retirement on February 28, 2025 . Remaining outstanding options vest under retirement provisions at retirement .
- Employment Agreements: The company does not maintain executive employment agreements (except where legally required) .
- Severance Plan (Executives):
- Multiples: Without CIC → 1.0x (base+target incentive) for executives; With CIC (double-trigger) → 2.0x (base+target incentive) .
- Equity/PSUs: Without CIC → pro‑rata vesting at actual performance; With CIC → full vesting of all open cycles at target (double-trigger) .
- Options: Without CIC → immediate vesting of options that would vest during severance period; With CIC → full vesting (double-trigger) .
- Annual Incentive: Pro‑rata at target in both scenarios .
- Covenants: Non‑compete/non‑solicit 12–24 months (12 months typical for executives) .
- Tax Gross‑Ups: None; benefits reduced if excise tax would result in a greater after-tax benefit .
- Clawbacks: Mandatory recovery for restatements (Exchange Act §10D/NYSE); additional forfeiture/recoupment for misconduct and covenant breaches under 2022 Plan .
Potential Payments (Illustrative, assuming triggering event on 11/30/2024):
| Element | Without CIC | With CIC | Source |
|---|---|---|---|
| Cash Severance (Base + Target Incentive) | $2,400,000 | $4,000,000 | |
| LTPP FY2023–2025 | $800,000 (pro‑rata at target, subject to performance) | $1,200,000 (full at target) | |
| LTPP FY2024–2026 | $450,000 (pro‑rata at target, subject to performance) | $1,350,000 (full at target) | |
| Accelerated Stock Options (in‑the‑money) | $717,812 (retirement/without cause) | $717,812 (death/disability/CIC) | |
| Pension Plan Present Value | $1,349,420 (ret/term/CIC) | $1,349,420 | |
| SERP Present Value | $1,611,704 (ret/term) | $1,589,538 (CIC) |
Deferred Compensation, Pension, and SERP
| Plan | FY2024 Contributions (Exec/Company) | FY2024 Earnings | Aggregate Balance (11/30/2024) |
|---|---|---|---|
| Non‑Qualified Deferred Compensation (NQRSP/DCP) | $186,240 exec; $123,017 company | $796,084 | $4,026,942 |
| Pension Plan (Present Value at 11/30/2024) | Credited service 26 yrs 6 mos; PV $1,304,881 | — | $1,304,881 |
| SERP (Present Value at 11/30/2024) | Credited service 24 yrs 8 mos; PV $1,558,458 | — | $1,558,458 |
Compensation Structure Analysis
- Mix & Pay-for-Performance: Majority at‑risk via annual incentive and long‑term PSUs/options; CHCC confirmed risk safeguards (multiple measures, caps, discretion, stock ownership guidelines, clawbacks) .
- Program Changes: Addition of explicit sales volume growth metric in FY2024 annual incentive to reinforce volume-led growth .
- Options Underwater: “As of the Record Date, stock options granted since March 2021 remain underwater,” reducing near-term in-the-money exercise pressure .
- Say‑on‑Pay Support: ~96% approval at 2024 Annual Meeting; CHCC made no direct changes due to vote outcome .
Risk Indicators & Red Flags
- Hedging/Pledging: Prohibited for directors and officers (alignment positive) .
- Clawbacks: Robust dual policy framework (restatement and misconduct/covenants) .
- Tax Gross‑Ups: Not provided for personal benefits or airplane use; perquisites fully taxable to the executive .
- Related Party Transactions: None material for directors/executives reported since start of FY2024 .
- Transition Risk: Retirement on Feb 28, 2025; option vesting accelerates at retirement, creating a concentrated vesting event that can coincide with insider selling windows post‑separation .
Equity Ownership & Alignment Details
| Ownership as % of Voting Common | 3.6% |
|---|---|
| Compliance with Executive Ownership Guidelines | In compliance (EVP 3x base pay multiple) |
Investment Implications
- Alignment and retention: Strong ownership, prohibition on pledging/hedging, and robust clawbacks support alignment; however, Smith’s retirement and accelerated vesting of options at 2/28/2025 create near‑term vesting-related supply risk if post‑retirement sales occur during open windows .
- Pay-for-performance levers: Annual incentive heavily weighted to EPS (70%) delivered above target in 2024, while PSUs paid 155% on cumulative sales—management incentives are tied to fundamentals that drive value, but with options underwater since 2021, near-term option exercise pressure is limited .
- Change‑of‑control economics: Double‑trigger CIC terms provide 2.0x cash severance (base+target), full vesting of open cycles at target, and full option vesting—helpful for retaining key talent during strategic events, but also a potential expense consideration in M&A scenarios .
- Track record: Smith’s tenure coincided with >50% sales growth and transformative acquisitions; 2024 showed margin expansion and cash generation, reinforcing the link between compensation outcomes and execution .