John Rich

About John Rich

John N. Rich (age 56) serves as Senior Vice President and Chief Technology Officer (CTO) at PACCAR. He has been CTO since March 2021 and was elevated to Senior Vice President in January 2024 after roughly 30 years at Ford in leadership roles including Director of Autonomous Vehicles & Technology, COO of AV LLC, and Executive Director of Global Strategy . Company performance context for his tenure: 2024 net sales and revenues were $33.66B, net income $4.16B, and after-tax return on revenues 12.4%; PACCAR delivered an 11% total shareholder return (TSR) in 2024 . Rich will maintain global technology responsibilities and assume responsibilities for Peterbilt Motors Company effective January 5, 2026, expanding his operating scope .

PACCAR performance track record (context):

Past Roles

Fixed Compensation

• Structure and market alignment: Executive salaries are benchmarked principally to a Mercer market study and peer data; midpoints were revised to market median effective January 1, 2025 after the committee found structure midpoints ~3% below median . Base salary ranges are set around these midpoints, with actual pay reflecting responsibility, experience, tenure, and performance; the committee reviews salaries every 12–24 months .
• Mix: PACCAR emphasizes at‑risk pay; incentive-based compensation represents ~67% of NEO target total compensation (indicative of design for senior executives, including the CTO’s level), with a focus on long-term equity and cash performance plans .

Performance Compensation

Program design (applies to executive officers, including CTO; individual weights for non-NEOs are not separately disclosed):

• Annual Incentive Cash (IC)

  • Primary metric: Company net income; management sets target/threshold/maximum annually; 2024 target $3.7B (threshold $2.8B; max $4.9B); actual net income $4.16B; payout curve ranges from 0% to 200% of target based on performance .
  • Goal weighting: Majority of senior executives’ IC tied to company net income with remaining tied to business unit/leadership goals (specific weights disclosed for NEOs only) .

• Long‑Term Incentive Plan (LTIP) – Cash (3-year performance cycle)

  • Metrics and weights: Equally weighted three-year Change in Net Income, Return on Sales (ROS), Return on Capital (ROC), and Total Shareholder Return (TSR) vs. a defined Peer Group; balance of award linked to business unit and leadership objectives (specific NEO weights shown; executive officers participate on the same program architecture) .
  • Funding: LTIP cash cycles are subject to a pool limit (e.g., 1% of cumulative net income for the 2024–2026 cycle) with individual caps; committee retains downward discretion .

• Equity-based LTIP – Stock Options and Performance-Based Restricted Stock/RSUs

  • Stock options: Granted once per year on a predetermined date after Q4 earnings and before 10‑K; options vest in full after a 3-year cliff (e.g., 2024 grants vest Jan 1, 2027) and have a 10-year term; exercise price is grant-date close; vesting may accelerate on change in control .
  • Restricted stock/RSUs: Earned against an annual performance goal (2024 goal: at least 5% after‑tax return on revenue); if achieved, grants are sized using average closing price over the first five trading days of the following year; vest 25% after year one (first day of the next month), and then 25% each Jan 1 thereafter (four tranches total); fully vest on change in control .
  • 2024 goal result: Committee determined the 2024 performance goal was achieved; equity grants for 2024 performance were issued Feb 3, 2025 consistent with plan mechanics .

Vesting schedule reference

Grant timing safeguards

• The committee does not grant stock options within four business days before or one business day after the release of material results; annual grants occur after the prior year’s earnings release and before the 10‑K filing to mitigate opportunistic timing risk .

Equity Ownership & Alignment

• Stock ownership guidelines: CEO 5x salary; other NEOs 3x salary; other executive officers (including the CTO) 1x salary; executives have three years from the first January after attaining the role to comply; as of January 1, 2025, all executive officers either met the threshold or were within the allowed time to meet it .
• Hedging/pledging: Prohibited for directors and executive officers, including the CTO; aligns with best practices and reduces misalignment risk .
• Clawbacks: PACCAR adopted an incentive compensation recovery policy compliant with Rule 10D‑1 and Nasdaq rules; the Board may also claw back incentive pay in cases of officer fraud that cause or substantially contribute to a restatement .

Employment Terms

• Contracts and severance: PACCAR has no employment agreements, severance agreements, or “golden parachutes” for Named Executive Officers; a broad separation pay plan provides up to six months of base salary for U.S. salaried employees in restructuring/RIF scenarios; executive officers (including CTO) are treated under these company-wide frameworks rather than bespoke contracts .
• Change in control: LTIP cash can pay out at maximum (with pro‑ration for incomplete cycles) and equity vests immediately upon a change in control, consistent with plan documents; the Compensation Committee has discretion to accelerate unvested options upon a change in control .
• Perquisites/tax gross‑ups: No significant perquisites and no excise tax gross‑ups for executive officers .

Compensation Peer Group

Peer set used for benchmarking and relative performance assessments (and 2024 revenues):

Say‑on‑Pay & Shareholder Feedback

• 2024 say‑on‑pay approval: 94% in favor, supporting the overall pay-for-performance approach .
• 2025 vote results: Say‑on‑pay passed (For: 430,942,525; Against: 27,601,495; Abstain: 3,190,670) .
• Golden parachute shareholder proposal: The 2025 proposal to require a shareholder vote on parachutes >2.99x salary+target bonus failed (For: 145,604,574; Against: 311,616,163; Abstain: 4,513,953); the Board opposed, noting there are no NEO employment agreements or golden parachutes and that equity vests as described under plan terms .

Performance & Track Record (CTO scope and company progress)

• Technology strategy and scope: As SVP & CTO, Rich oversees global technology initiatives and is slated to assume responsibilities for Peterbilt in 2026, concentrating accountability for both advanced tech and a major operating division .
• Strategic initiatives under PACCAR’s technology umbrella include zero-emission truck programs (battery electric, hydrogen fuel cell/combustion), connectivity (PACCAR Connect), SuperTruck 3 programs, and a commercial vehicle battery joint venture (Amplify Cell Technologies) with planned $400–$700M investment in 2025; R&D spend was $452.9M in 2024 .

Risk Indicators & Red Flags

• Hedging/pledging risk: Mitigated by policy prohibiting executive hedging and pledging of PACCAR stock .
• Option repricing/buyouts: Prohibited; options are not discounted, backdated, repriced, or retroactively granted; underwater option buyouts are prohibited .
• Clawback readiness: Expanded recoupment policy beyond minimum regulatory requirements .
• Contractual leverage: No executive employment contracts or severance arrangements that could misalign incentives in a downturn .
• CIC acceleration: Equity vests on change in control (single-trigger for RSUs), which could concentrate selling pressure around such events, but this is offset by strict insider trading and grant timing policies .

Investment Implications

• Alignment and retention: The CTO’s pay is primarily at risk and anchored to company net income (annual) and three‑year relative performance (LTIP), supplemented by multi‑year vesting of options/RSUs and a 1x salary ownership guideline; anti‑hedging/pledging and clawbacks further align incentives to long-term value creation .
• Execution leverage: Rich’s remit spans PACCAR’s zero‑emission and connectivity roadmaps and will extend to Peterbilt oversight in 2026—tying his success to commercialization cadence for BEV/hydrogen platforms, charging/battery JV scale-up, and digital fleet solutions, all areas PACCAR is actively investing in (R&D and battery JV) .
• Event risk: Change-in-control provisions accelerate equity and could create technical selling around such events; PACCAR’s policies mitigate opportunistic grant timing and executive hedging, reducing adverse trading signals outside corporate events .