Michael O’Grady
NORTHERN TRUSTAbout Michael O’Grady
Michael G. O’Grady is Chairman (since 2019) and Chief Executive Officer (since 2018) of Northern Trust Corporation (NTRS) and chairs the Board’s Executive Committee; he previously served as President (since 2017), President of Corporate & Institutional Services (2014–2016), and CFO (2011–2014) after a decade at Bank of America Merrill Lynch as Managing Director (2000–2011) . He is 59 and has been a director since 2017; he also serves on Abbott Laboratories’ board (since 2023) . Under his leadership in 2024: total revenue reached a record $8.3B (up 22%, with a noted Visa exchange gain), trust/investment/servicing fees rose 8% to $4.7B, pre‑tax margin improved to 32.1% (from 21.6%), ROE was 17.4% (above a 10–15% target), and diluted EPS was $9.77 (from $5.08) . Pay-versus-performance disclosures show 2024 compensation actually paid to the CEO and company TSR progression alongside Adjusted ROE (13.7%) and net income ($2,031M) with a $100 initial investment valued at $113.12 vs KBW Banks at $132.60 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Northern Trust Corporation | Chairman of the Board | 2019–Present | Unified board leadership; leads strategy execution as combined Chair/CEO |
| Northern Trust Corporation | Chief Executive Officer | 2018–Present | Drove “One Northern Trust” strategy; improved ROE and margins in 2024 |
| Northern Trust Corporation | President | 2017–Present | Enterprise leadership across businesses |
| Northern Trust Corporation | President, Corporate & Institutional Services | 2014–2016 | Led institutional franchise |
| Northern Trust Corporation | Chief Financial Officer | 2011–2014 | Financial leadership, capital, and reporting |
| Bank of America Merrill Lynch | Managing Director, Investment Banking | 2000–2011 | Capital markets and advisory experience |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Abbott Laboratories | Director | 2023–Present | Current public company directorship |
Fixed Compensation
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary | $987,500 | $1,000,000 | $1,000,000 |
Performance Compensation
- CEO 2024 incentive structure: 80% corporate performance and 20% individual performance; corporate achieved 88% of target; individual 95%; combined outcome 89% of target . At the CEO’s request, the Committee applied negative discretion, setting incentive at $8.2M (vs $9.345M calculated), holding total direct compensation at $9.2M (same as 2023) .
| Component | Weighting / Structure | Target/Actual | Payout/Outcome | Vesting |
|---|---|---|---|---|
| Corporate performance | 80% | 88% achievement | 70% weighted payout | N/A (drives award sizing) |
| Individual performance | 20% | 95% achievement | 19% weighted payout | N/A (drives award sizing) |
| Short‑term cash incentive | ≤25% of incentive | 2024 actual: $2,050,000 | Included in $8.2M total incentive | Cash paid; annual |
| Performance Stock Units (PSUs) | 65% of LTI | 2024 grant value: $3,997,500 | Earned on 3‑yr absolute/relative ROE | 3‑year performance period |
| Restricted Stock Units (RSUs) | 35% of LTI | 2024 grant value: $2,152,500 | Time-based | Vest 25% per year over 4 years |
PSU design and payout calibration:
- Metric: 50% three‑year average absolute ROE; 50% three‑year average ROE vs peer group (large U.S. financials) with a 0–150% payout scale; absolute ROE target 11–12% for 2025 grants .
- Realization: PSUs granted in 2022 paid at 129.8% of target based on adjusted three‑year average ROE of 13.6% and relative ROE at the 83.7th percentile; O’Grady received 63,107 shares on Feb 18, 2025 .
Multi‑year CEO compensation (Summary Compensation Table):
| Component (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock awards (grant-date fair value) | $8,500,158 | $8,500,150 | $7,700,038 |
| Non‑equity incentive (cash) | $1,000,000 | $500,000 | $2,050,000 |
| Change in pension value | $289,639 | $138,719 | $137,067 |
| All other compensation | $39,342 | $35,891 | $42,681 |
| Total | $10,816,639 | $10,174,760 | $10,929,786 |
Say‑on‑Pay support (context): 95% approval in 2024 for 2023 NEO compensation .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 439,051 shares (340,174 shares + 98,877 options) (<1% of class) as of 12/31/24 |
| Options outstanding (exercisable) | 23,739 @ $70.21 exp 2/17/25; 34,489 @ $58.25 exp 2/16/26; 40,649 @ $88.06 exp 2/21/27 |
| Unvested RSUs (and value) | 73,590 units; $7,542,975 at $102.50 (12/31/24) |
| PSU unearned (max and value) | Max 255,096 units; $26,147,340 at $102.50 (12/31/24) |
| 2022 PSU distribution | 63,107 shares delivered 2/18/25 |
| Scheduled RSU vesting | 27,846 (3/1/2025); 21,966 (3/1/2026); 15,686 (3/1/2027); 8,092 (3/1/2028) |
| Stock ownership guideline | CEO = 8x base salary; all NEOs met/exceeded guidelines as of 12/31/24 |
| Hedging/pledging policy | Prohibits short selling, margining, pledging, and hedging of NTRS shares |
Implications for supply/pressure:
- Near‑term equity deliveries include annual RSU tranches each March and periodic PSU settlements (e.g., 2/18/25), which can create potential selling windows; actual sales are subject to policy and individual decisions (no hedging/pledging allowed) .
Employment Terms
| Topic | Terms |
|---|---|
| Severance plan (non‑CIC) | U.S. plan for involuntary terminations: lump sum based on tenure; COBRA subsidy; full vesting under retirement plans; special pro‑rata NPIP payment for H2 notices (policy caps apply under 409A) |
| Change‑in‑control (CIC) plan | Double‑trigger: benefits upon qualifying termination within 2 years post‑CIC. CEO multiple: 3x (salary + 3‑yr average cash incentive) plus pro‑rata bonus and 36 months of welfare benefits; cutback (no excise tax gross‑ups) |
| CEO CIC payout illustration | If terminated in connection with CIC on 12/31/24: $34,970,944 total (Cash severance $7,000,000; Pro‑rata bonus $1,333,333; Welfare $65,346; RSUs $8,167,273; PSUs $18,404,992; based on $102.50 share price) |
| Death/Disability/Retirement | RSUs and PSUs fully vest or continue to vest per award terms; total equity value illustration $26,572,265 as of 12/31/24 |
| Clawback | Rule 10D‑1 recoupment policy covering incentive‑based compensation for accounting restatements; broader forfeiture/recoupment for misconduct and “significant risk outcomes” |
Board Governance
- Role and independence: O’Grady is combined Chair/CEO and not independent under NASDAQ; the Board uses a robust Lead Director model (Jay L. Henderson) with authority over agendas, executive sessions, and stockholder engagement .
- Committees: All standing committees are composed solely of independent directors except the Executive Committee (which O’Grady chairs) .
- Attendance and oversight: In 2024, the Board met 17 times; all incumbents attended ≥75% of Board/committee meetings; independent directors met in 14 executive sessions .
- Securities policy: Prohibits short selling, margining, pledging, and hedging of company stock .
Board service history and committee roles for O’Grady:
- Director since 2017; Chairman since 2019; Executive Committee Chair; no other committee memberships (executive-only) .
- Dual‑role implications: Combined Chair/CEO structure mitigated via a strong Lead Director and fully independent committees (except Executive) to enhance oversight and independence .
Compensation Committee Analysis and Peer Benchmarking
- Governance practices include high at‑risk pay mix, 65% PSUs in LTI, clawbacks, ownership guidelines, and no option repricing or excise tax gross‑ups .
- Independent consultant: Meridian Compensation Partners advises the Committee; no conflicts identified .
- Compensation peer group includes BNY Mellon, State Street, PNC, U.S. Bancorp, Schwab, BlackRock, Truist, Fifth Third, Franklin Resources, KeyCorp, M&T, T. Rowe Price .
Performance & Track Record
| Measure | 2023 | 2024 |
|---|---|---|
| Total revenue | $6.8B | $8.3B (record; includes Visa exchange gain) |
| Trust/investment/servicing fees | $4.4B | $4.7B |
| Pre‑tax margin | 21.6% | 32.1% |
| ROE (GAAP) | 10.0% | 17.4% |
| Diluted EPS | $5.08 | $9.77 |
| Pay‑vs‑Performance: Adjusted ROE | 12.1% | 13.7% |
| TSR ($100 initial investment) | $90.05 (Corp) vs $96.65 (KBW) | $113.12 (Corp) vs $132.60 (KBW) |
Strategic execution in 2024 under “One Northern Trust”:
- Optimized growth across Wealth Management, Asset Servicing, and Asset Management; productivity initiatives and AI/automation; strengthened resiliency and risk management; CET1 12.4% at year-end 2024 .
Director Compensation (context for dual role)
- Non‑employee director compensation is disclosed separately; O’Grady, as an employee director/CEO, is compensated under the executive program (see Performance Compensation above) .
Compensation Structure Diagnostics (signals)
- Mix shifts and at‑risk profile: CEO incentive ≥75% equity; LTI = 65% PSUs (3‑year ROE absolute/relative), 35% RSUs (4‑year vest) — aligns pay with sustained returns and peer‑relative performance .
- Target‑based CEO framework: 2024 set at $10.5M with 150% cap; negative discretion applied to maintain employee alignment — a governance positive .
- Clawbacks and risk: Comprehensive clawback and risk‑sensitive design (deferred equity, multi‑year metrics, capped payouts) reduce risk‑taking incentives .
- Say‑on‑Pay: 95% approval indicates strong shareholder support .
Risk Indicators & Red Flags
- Pledging/hedging prohibited (reduces alignment risk) .
- No excise tax gross‑ups; CIC cutback/best‑net approach (shareholder‑friendly) .
- Combined Chair/CEO mitigated by strong Lead Director and independent committees (oversight remains a focal point) .
Employment Economics – Change‑in‑Control
| Scenario (12/31/24) | Amount (USD) |
|---|---|
| CIC + qualifying termination total | $34,970,944 (cash severance $7,000,000; pro‑rata bonus $1,333,333; welfare $65,346; RSUs $8,167,273; PSUs $18,404,992) |
| Death/Disability/Retirement total (equity effects) | $26,572,265 |
Investment Implications
- Alignment and performance sensitivity: High equity mix and ROE‑based PSUs tie realizable pay to sustained profitability and peer‑relative results; 2022 PSUs paid 129.8% on strong 3‑yr ROE, signaling upside leverage when returns outperform .
- Retention and overhang: Meaningful unvested PSUs/RSUs (and options through 2027) create retention hooks but also future share supply on vesting/settlement dates (e.g., RSU tranche 3/1 annually; PSU settlement like 2/18/25); monitor Form 4 filings around these windows for selling pressure .
- Governance quality: No hedging/pledging, robust clawbacks, strong Say‑on‑Pay support, and independent committee oversight mitigate governance risk despite combined Chair/CEO structure .
- Change‑in‑control math: Double‑trigger CIC terms with 3x cash multiple and accelerated equity could be sizable ($35M illustration), implying potential cost in strategic transactions but standard relative to peers; absence of tax gross‑ups limits shareholder friction .
Net: Compensation design is performance‑weighted with clear ROE linkages, ownership requirements, and risk controls. For trading, watch scheduled RSU vest dates and PSU settlement events; for governance, the Lead Director model and strong shareholder support offset combined Chair/CEO concerns .