Sundaram Nagarajan
NORDSONAbout Sundaram Nagarajan
Sundaram “Naga” Nagarajan (age 62) has served as Nordson’s President & CEO since August 2019 and is the only management director on the Board; he previously spent 23 years at Illinois Tool Works culminating as EVP of the Automotive OEM segment (2015–2019) . Under his tenure, Nordson reported FY2024 record sales of $2.7B, record EBITDA of $849M, operating profit of $674M, and a 10‑year TSR of 259% as highlighted in the proxy summary; Say‑on‑Pay support in 2024 was 94.8% . He also serves on the Executive Committee of the Board and sits on the board of Wesco International; the Board maintains an independent Chair structure .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Illinois Tool Works (ITW) | EVP, Automotive OEM Segment | 2015–2019 | Led a global OEM segment within a F200 industrial; brings global manufacturing, strategy, and M&A experience . |
| Illinois Tool Works (ITW) | Various executive/managerial roles | Not disclosed | 23‑year ITW career indicates deep operational and commercial experience across businesses . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Wesco International (NYSE: WCC) | Director | Current | Related‑party transactions with Nordson were immaterial ordinary course (<1% of revenues) . |
| Sonoco Products (NYSE: SON) | Director | 2015–2022 | Former public company directorship . |
Fixed Compensation
| Element | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 900,000 | 975,000 | 1,010,000 |
| Target Annual Bonus (% of salary) | — | — | 120% |
| Perquisites ($) | 61,402 | 109,219 | 13,956 (financial planning $5,000; airline club $6,451; physical $2,505) |
| Pension – PV of Accrued Benefit ($) | Salaried Plan: —; Excess: — | Salaried Plan: —; Excess: — | Salaried Plan: 227,275; Excess: 1,702,388 |
| Deferred Comp – Year‑end Balance ($) | — | — | 9,420,071 (2024 executive contributions $2,964,112) |
Notes:
- 2024 CEO target mix included PSUs, stock options, and RSUs detailed below; total target pay is predominantly at‑risk .
Performance Compensation
Annual Cash Incentive (FY2024 outcomes)
| Metric (weight) | Threshold | Target | Actual (reported) | Achievement vs Target | Notes/Payout Linkage |
|---|---|---|---|---|---|
| Corporate Organic Revenue (40%) | $2,390M | $2,655M | $2,544M | 68.7% | Corporate metric for CEO weighting . |
| Corporate Base Business Operating Profit (60%) | $592M | $697M | $696M | 99.2% | Corporate metric for CEO weighting . |
| CEO Combined Factor | — | — | — | 76.4% | Company factor 43.5% and segment factor 32.9% . |
| CEO Actual Bonus ($) | — | $1,212,000 target | — | 76.4% | Paid $925,721; no discretionary adjustments . |
Plan design overview: 50% corporate (40% Organic Revenue/60% Base Business Op Profit) and 50% aggregate segments for CEO; payout range 0–200% with straight‑line interpolation .
Long‑Term Incentives and Results
- LTI mix for 2024 awards: 50% PSUs; 30% stock options; 20% RSUs (shift increased PSUs from 40% to 50%) .
- PSU metrics and weights: Adjusted EPS growth (40%), ROIC (30%), EBITDA margin (30%); three‑year performance with annual certification and average payout .
| PSU Performance Cycle | EPS Growth (40%) Result | ROIC (30%) Result | EBITDA Margin (30%) Result | Total Payout |
|---|---|---|---|---|
| 2022–2024 | 200% (2022), — (2023), — (2024); overall component reflects annual averaging | 200% (2022), 155% (2023), 103% (2024) | 174% (2022), 146% (2023), 153% (2024) | 120% overall; CEO received 9,112 shares on 7,600 target |
2024 grant details (performance period 2024–2026):
- CEO PSUs: threshold 3,245; target 12,980; max 25,960; metrics thresholds/targets: EPS growth 0/7/14%, ROIC 9/13/17%, EBITDA margin 26/30/34% .
- CEO Stock Options: 21,471 options granted at $238.80, 10‑year term, vest 25% annually over 4 years .
- CEO RSUs: 5,192 units granted 12/1/2023; vest over 3 years (pro‑rata) .
Equity Ownership & Alignment
Beneficial Ownership and Guidelines
- Beneficial ownership: 169,596 Nordson shares; less than 1% of outstanding shares (57,087,783) .
- CEO share ownership guideline: 5× base salary; CEO’s current ownership market value $10,089,033 vs requirement $5,250,000 (as of 1/3/2025 at $207.56/share) .
- Anti‑hedging/pledging: Directors and executive officers are prohibited from hedging or pledging Nordson shares .
Vested vs Unvested/Outstanding Awards (as of 10/31/2024)
| Instrument | Status/Grant | Quantity | Key Terms |
|---|---|---|---|
| PSUs (2022–2024) | Payout certified | 9,112 shares delivered to CEO (120% of 7,600 target) | Settled in unrestricted shares. |
| PSUs (2023–2025) | Target/threshold outstanding | 2,213 target units shown; payout after FY2025 certification | Three‑year averaging; payout contingent . |
| PSUs (2024–2026) | Threshold shown | 3,245 threshold units shown; target 12,980 | Metrics per table above. |
| RSUs (unvested) | 12/1/2023 grant | 5,192 units ($1,287,045 MV at $247.89) | Vests over 3 years; dividends accrue . |
| RSUs (unvested) | 12/1/2022 grant | 2,951 units ($731,523 MV) | Vests over 3 years . |
| RSUs (unvested) | 11/22/2021 grant | 1,267 units ($314,077 MV) | Vests over 3 years . |
| Stock Options | Exercisable | 41,800 (@$165.21 exp 11/25/2029); 26,325 (@$201.50 exp 11/23/2030); 15,500 (@$267.51 exp 11/22/2031); 6,395 (@$240.01 exp 12/1/2032) | 10‑year life; standard vesting . |
| Stock Options | Unexercisable | 8,775 (@$201.50 exp 11/23/2030); 15,500 (@$267.51 exp 11/22/2031); 19,187 (@$240.01 exp 12/1/2032); 21,471 (@$238.80 exp 12/1/2033) | Continue vesting per schedule . |
| 2024 Vests/Exercises | Stock/PSUs vested value | 13,221 shares vested; value realized $2,887,426 (no option exercises) | Reflects PSUs/RSUs vesting . |
Additional alignment:
- Equity grants are made on a consistent schedule (generally first day of month after Compensation Committee meeting); no timing around MNPI; CEO has delegated authority only for non‑executive awards .
- Directors and executives prohibited from hedging/pledging; robust clawback policy covering restatements and misconduct .
Employment Terms
Severance and Change‑in‑Control (CIC)
- CIC agreements use double‑trigger; benefits upon qualifying termination within 24 months post‑CIC include: cash lump sum 2× (base salary + target bonus), pro‑rated annual bonus, up to 24 months benefits continuation, outplacement (up to $50k), and for eligible executives 2 additional years age/service credit under pension plans; no excise tax gross‑ups for agreements after 11/1/2015 .
- Equity treatment at CIC: awards that are not assumed/continued vest immediately at change‑in‑control (single‑trigger); if assumed/continued, vest on qualifying termination within 2 years (double‑trigger) .
- CEO stand‑alone severance (non‑CIC): if terminated without cause or resigns for good reason, CEO receives 2× (base salary + target bonus), pro‑rated annual bonus, pro‑rated PSU payout based on actual performance, continued option vesting on schedule, full vesting of RSUs, and 24 months benefits; no tax gross‑up .
Estimated values as of 10/31/2024:
| Scenario | Estimated Value ($) |
|---|---|
| Death/Disability | 6,437,166 |
| Early Retirement (55) | 5,214,428 |
| Involuntary Termination / Good Reason (non‑CIC) | 10,308,609 |
| Qualifying Termination after CIC | 12,119,338 |
Clawback and other policies:
- Clawback applies to cash and equity based on restatements (big R/little r) within 3 years; Board may also recoup for Code violations or willful misconduct .
- Anti‑hedging/pledging; equity repricing prohibited without shareholder approval .
Board Governance (director service, committees, independence)
- Board service: Director since 2019; member of the Executive Committee; not independent due to CEO role .
- Leadership structure: Independent Chair separate from CEO; independent director executive sessions held regularly .
- Meetings/attendance: 7 Board and 17 committee meetings in FY2024; no directors attended fewer than 75% .
- Other public board: Wesco International; Nordson’s related‑party review found transactions immaterial (<1% of revenues) .
Say‑on‑Pay, Peer Group, and Committee Practices
- Say‑on‑Pay support: 94.78% in 2024; prior years 95.06% (2023), 93.99% (2022) .
- Compensation Committee uses independent consultant (Exequity), targets market‑competitive pay around peer median, and emphasizes pay‑for‑performance with capped payouts; no single‑trigger cash CIC severance; no excessive perquisites .
- 2024 peer group includes mid‑cap industrial/tech peers such as AMETEK, IDEX, Entegris, Keysight, Lincoln Electric, Teradyne, Teleflex, and others (no changes from 2023) .
Performance Compensation – Detailed Tables
CEO 2024 Target Award Design (granted December 1, 2023)
| Component | Units/Shares | Grant Date Value ($) | Key Terms |
|---|---|---|---|
| PSUs (2024–2026) | Target 12,980 (3,245/12,980/25,960 thr/tgt/max) | 2,979,948 | EPS growth 40%, ROIC 30%, EBITDA margin 30%; 3‑year average . |
| Stock Options | 21,471 | 1,740,010 | $238.80 strike; 10‑year term; 25%/yr vesting . |
| RSUs | 5,192 | 1,239,850 | 3‑year vest; dividends accrue . |
CEO Summary Compensation (SCT) – 3 Years
| Metric ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 900,000 | 975,000 | 1,009,731 |
| Stock Awards (RSUs+PSUs) | 2,997,098 | 3,186,853 | 4,219,798 |
| Option Awards | 2,475,660 | 2,012,792 | 1,740,010 |
| Non‑Equity Incentive (Annual Bonus) | 1,670,400 | 331,012 | 925,721 |
| Change in Pension Value | 327,553 | 443,516 | 559,095 |
| All Other Compensation | 61,402 | 109,219 | 111,921 |
| Total | 8,432,113 | 7,058,392 | 8,566,276 |
Related Party Transactions and Interlocks
- Nordson buys from and sells to Wesco, where Mr. Nagarajan serves as a director; transactions were ordinary course and immaterial (<1% of either party’s revenues), and all directors (except CEO) are independent under Nasdaq and company standards .
- No compensation committee interlocks or insider participation matters to report .
Risk Indicators & Red Flags
- Positive: Double‑trigger CIC, no CIC tax gross‑ups post‑2015, anti‑hedging/pledging, no option repricing, robust clawback, high Say‑on‑Pay support, and strong ownership vs guideline (5× salary met) .
- Watch items: Significant scheduled vesting/option expiries could create periodic trading windows; monitor Form 4 filings around fiscal year‑end PSU certifications and annual grant vest dates; related‑party ties via Wesco monitored and immaterial to date .
Investment Implications
- Pay‑for‑performance structure is tight: 88% of CEO target pay at‑risk with PSU metrics tied to EPS growth, ROIC, and EBITDA margin; 2022–2024 PSU paid at 120%, consistent with record profitability and strong long‑term TSR, aligning incentives with shareholder value .
- Retention risk appears contained: CEO exceeds ownership guidelines, has sizable unvested equity across PSUs/RSUs and ongoing option vesting, and stands to receive meaningful non‑CIC severance only if terminated without cause/for good reason, reducing flight risk while preserving shareholder protections .
- Governance mitigates dual‑role concerns: Independent Chair, fully independent key committees, regular executive sessions, and strong investor support (94.8% Say‑on‑Pay) offset independence issues inherent in CEO‑director status .
- Trading signals: Expect routine share deliveries from PSU/RSU vesting and option vesting; anti‑pledge/hedge limits leverage risk; track upcoming award schedules and any related‑party developments with Wesco, though current transactions are de minimis .