Brian D. Paliotti
NEWMARKETAbout Brian D. Paliotti
Brian D. Paliotti (age 48) is President of Afton Chemical Corporation (Afton), NewMarket’s largest operating subsidiary. He has served as Afton’s President since January 1, 2023, after previously serving as NewMarket’s CFO (2015–2022) and other finance leadership roles since joining in 2008 . Company performance under the current NEO team in 2024 included net income growth to $462 million (from $389 million in 2023), petroleum additives operating profit rising to $592 million (from $514 million), and successful integration of AMPAC in specialty materials . NewMarket’s five-year pay-versus-performance table shows 2024 TSR index value of 121.16 vs 126.04 for the peer index, alongside net income of $462 million and operating profit (for bonus plan) of ~$599 million .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| NewMarket Corporation | President, Afton Chemical | 2023–present | Led Afton to “very strong operating results” in 2024; drove safe, efficient operations, delivery of key R&D projects, and growth in profitable new business . |
| NewMarket Corporation | Vice President & CFO | 2015–2022 | Oversaw finance and capital allocation; earlier roles included VP, Finance (2013), Senior Financial Officer (2011), Financial Officer for Afton (2008) . |
Fixed Compensation
Multi-year reported compensation (Summary Compensation Table):
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $504,667 | $560,000 | $590,000 |
| Non-Equity Incentive Plan Compensation (annual bonus) | $425,000 | $525,000 | $600,000 |
| Stock Awards (grant-date fair value) | $204,924 | $252,473 | $332,848 |
| Change in Pension Value | $0 | $170,398 | $70,032 |
| All Other Compensation | $25,233 | $28,429 | $30,500 |
| Total | $1,159,824 | $1,536,300 | $1,623,379 |
Additional fixed/benefits detail:
- 2024 “All Other Compensation” includes Savings Plan $17,250, Excess Benefit Plan $12,250, and $1,000 HSA contribution .
- Pension present value (12/31/2024): Pension Plan $354,341; Excess Benefit Plan (pension component) $453,776; credited service 17 years .
Performance Compensation
Annual cash bonus (Executive Bonus Plan) – structure and 2024 outcome:
- Metric and formula: Initial maximum bonus equals a set percentage of annual operating profit, up to $2,000,000; for 2024, Paliotti’s percentage was 0.20% (initial max $1,198,000 on ~$599 million operating profit). Final payout set with negative discretion considering company and individual performance .
- 2024 results and payout: Operating profit basis ~$599 million (GAAP OP $590m plus $9m bonus expense addback); final bonus paid to Paliotti was $600,000 (about 50% of the initial maximum) .
| Plan | Metric | Weighting | Target | Actual (2024) | Payout | Notes |
|---|---|---|---|---|---|---|
| Executive Bonus Plan | Operating Profit (for initial max) | Not expressed as % weighting | N/A (formulaic %) | ~$599m (OP metric) | $600,000 | Initial max for Paliotti 0.20% of OP (capped $2m); Committee applied negative discretion . |
Long-term equity (Performance Stock) – awards and vesting:
- Design: Five-year performance period; 100% EPS-based at period end; 80% of EPS target pays 50% of shares; 100% EPS target pays 100%; linear interpolation; no >100% payout .
- 2024 grant to Paliotti: 3/5/2024 award; threshold 263 shares, target 526 shares (grant-date fair value $332,848) .
- Outstanding unearned performance stock at 12/31/2024 (market price $528.35) across grant cycles :
| Grant Year | Shares (Unearned) | Vest Based On EPS As Of | Market/Payout Value at 12/31/2024 |
|---|---|---|---|
| 2020 | 500 | 12/31/2024 | $264,175 |
| 2021 | 535 | 12/31/2025 | $282,667 |
| 2022 | 653 | 12/31/2026 | $345,013 |
| 2023 | 735 | 12/31/2027 | $388,337 |
| 2024 | 526 | 12/31/2028 | $277,912 |
Notes on vesting risk and schedule:
- 2024 grants vest based on 2028 EPS; 2023 grants on 2027 EPS; similar for 2021–2026, 2022–2026 .
Equity Ownership & Alignment
- Beneficial ownership: 6,076 shares of NewMarket common stock (less than 1% of shares outstanding) as of February 24, 2025 .
- No stock options/SARs outstanding for NEOs at 12/31/2024; equity is performance stock and legacy restricted stock in select cases .
- Stock ownership guidelines: CEO 3x salary; other NEOs 1x salary. Current NEOs are in compliance (five years allowed for new NEOs) .
- Nonqualified deferred compensation (Savings Plan component) aggregate balance for Paliotti at 12/31/2024: $98,480 .
- Anti-hedging policy in place for directors and executive officers; company policy prohibits collars, swaps, and derivative transactions involving company securities .
- Pledging: No explicit pledging disclosure; company policy excerpt addresses hedging, not pledging .
Insider selling pressure (forward-looking indicators):
- Multiple performance stock cycles could vest in future years (subject to performance): 2025 (2019/2020 cycles), 2026, 2027, 2028; market-value at 12/31/2024 indicates potential supply upon vest (see table above) .
Employment Terms
- Employment agreements/severance: The company has no employment, severance, or change-in-control agreements with NEOs (including Paliotti) .
- Change-in-control treatment (2023 Incentive Plan): For awards granted after 2023, if not assumed/substituted in a change in control, vesting occurs at actual (or target if not determinable). If assumed/substituted, vest on involuntary termination without cause or for good reason within 12 months (double-trigger) .
- Death/Disability/Retirement: Performance stock vests pro rata on death/disability (time proration, still subject to performance for retirement). For Paliotti, illustrative values as of 12/31/2024: death or disability pro rata vest value ~$908,203; change-in-control plus involuntary termination vest value for 2024 PS ~$277,912 (assumes target where applicable) .
- Clawback: Policy amended in 2023 to comply with SEC and exchange standards; recovery of erroneously awarded incentive-based compensation following a restatement .
Compensation Structure Analysis
- 2024 base salary increased 5.4% for Paliotti effective January 1, 2024, aligning with market and peers .
- Annual bonus funding formula tied to operating profit (line-of-sight operating metric); final NEO payouts below initial formulaic maxima (Paliotti ~$0.6m vs ~$1.198m initial max) .
- Long-term incentives are 100% performance stock tied to five-year EPS achievement; threshold at ~80% of EPS target pays 50% of shares; no options are used (lower leverage vs options) .
- Governance signals: Very strong Say-on-Pay support (98.3% approval in 2024) and again strong support in 2025 (For: 7,844,440; Against: 59,536; Abstain: 11,546) . Compensation peer group includes 14 specialty chemical peers (e.g., Ashland, Cabot, FMC, RPM, Valvoline) .
Performance & Track Record (context for incentives)
- 2024 company results: Net income $462 million ($48.22/share) vs $389 million ($40.44/share) in 2023; petroleum additives OP $592 million vs $514 million; specialty materials sales $141 million, OP $17 million (reflects AMPAC inventory accounting effects) .
- Capital allocation 2024: Dividends $96 million; capex $57 million; buybacks $32 million; net $373 million revolver repayments since AMPAC acquisition .
- TSR context: 2024 pay-versus-performance table shows company TSR index 121.16 vs peer index 126.04; operating profit used in pay program: ~$599 million .
- Paliotti’s leadership impact at Afton: committee cited strong operating results, safe and efficient operations, delivery on key R&D projects, and profitable new business growth in 2024 .
Investment Implications
- Pay-for-performance alignment: Annual cash incentives scale with operating profit and are subject to negative discretion; long-term equity vests only if multi-year EPS goals are met, promoting sustained earnings growth and capital discipline .
- Retention and overhang: Multi-year performance stock cycles (2025–2028) represent meaningful at-risk compensation and likely support retention; potential insider selling pressure may surface around vesting dates if performance goals are met (see unearned shares/value) .
- Governance/Shareholder friendliness: No individual employment or change-in-control contracts; double-trigger CIC equity vesting for assumed awards; robust clawback and anti-hedging policies; strong recent Say-on-Pay outcomes decrease governance risk premium .
- Alignment and skin-in-the-game: Direct ownership (6,076 shares) plus sizeable unvested performance stock; NEO ownership guidelines in compliance enhance alignment, though absolute direct ownership stake remains under 1% .
- Execution risk: EPS-centric long-term plan concentrates risk on earning power; business performance drivers include petroleum additives margin management and successful specialty materials integration and capacity expansions (AMPAC) to support EPS targets .