Robert D. Fatovic
RYDER SYSTEMAbout Robert D. Fatovic
Executive Vice President, Chief Legal Officer, and Corporate Secretary of Ryder System, Inc. since 2012; previously EVP, General Counsel & Secretary (2004–2012), SVP U.S. Supply Chain Operations – Hi-Tech & Consumer (2002–2004), and VP & Deputy General Counsel (2000–2002). Age 59. Company performance under current leadership includes three-year TSR of 106%, total revenue $12.6B (+7% YoY), operating revenue $10.3B (+8% YoY), comparable EBITDA $2.8B, net earnings $489M (+21% YoY), and year-end stock price rising from $115.06 (2023) to $156.86 (2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Ryder System, Inc. | EVP, General Counsel & Secretary | 2004–2012 | Enterprise legal leadership, governance and compliance |
| Ryder System, Inc. | SVP, U.S. Supply Chain Operations – Hi-Tech & Consumer | 2002–2004 | Led supply chain operations in key verticals |
| Ryder System, Inc. | VP & Deputy General Counsel | 2000–2002 | Legal leadership supporting enterprise risk management |
Fixed Compensation
| Item | 2024 |
|---|---|
| Base Salary ($) | $590,001 |
| Target Bonus (% of salary) | 100% |
| Actual Annual Cash Incentive (AIP) Paid ($) | $471,233 |
| Perquisites (annual car allowance) | $9,600 |
| Perquisites (community/business/social allowance) | $6,800 |
Multi-Year Compensation (Pay Mix and Trend)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $551,000 | $568,000 | $590,001 |
| Stock Awards ($) | $1,230,113 | $1,647,854 | $1,326,301 |
| Non-Equity Incentive ($) | $1,019,350 | $540,963 | $471,233 |
| Change in Pension/Deferred ($) | — | $69,751 | — |
| All Other Compensation ($) | $103,332 | $117,387 | $93,661 |
| Total ($) | $2,903,795 | $2,943,955 | $2,481,196 |
Performance Compensation
| AIP Metric (2024) | Weight | Target | Actual | Payout (% of Target) | Vesting/Payout Mechanics |
|---|---|---|---|---|---|
| RSI Comparable EBITDA (non-GAAP, $mm) | 60% | $2,926 | $2,776 | 74% | Annual cash, 0–200% scale |
| RSI Operating Revenue (non-GAAP, $mm) | 20% | $10,776 | $10,266 | 76% | Annual cash, 0–200% scale |
| CEO/Corporate Strategic Objectives | 20% | Successful | Successful | 100% | Requires EBITDA threshold; qualitative score 0–200% |
| Weighted AIP Earned | — | — | — | 80% | Committee may use discretion; none used in 2024 |
Long-Term Incentive Plan (LTIP) Structure
- 2024 grants: 60% PBRSRs (ROE three-year avg, strategic revenue CAGR, free cash flow three-year avg; each 33.3% of PBRSR; TSR modifier ±15%, capped at 200%); 40% TVRSRs vest ratably over three years; dividend equivalents accrue and pay upon vest .
- 2022–2024 PBRSR results: ROE 200%, Strategic revenue growth 200%, Free cash flow 197%; TSR modifier to 200% overall payout .
Equity Ownership & Alignment
| Ownership Detail | Value |
|---|---|
| Total Beneficial Ownership (shares) | 174,973 |
| Percent of Class | <1% (based on 42,019,486 shares outstanding) |
| Shares Acquirable Within 60 Days (options/RSUs) | 101,562 |
| Shares held via trust/spouse | 2,500 |
| 401(k)/Deferred Plan shares | 1,941 |
| Stock Ownership Guidelines | 3x annual base salary; each NEO currently meets |
| Hedging/Pledging | Prohibited for executives/directors |
Equity Grants and Outstanding Awards
| Grant/Outstanding | Date | Type | Shares/Units | Fair Value or Market Value |
|---|---|---|---|---|
| 2024 LTIP PBRSRs (target) | 02/09/2024 | PBRSR | 6,659 | $806,405 |
| 2024 LTIP PBRSRs (max) | 02/09/2024 | PBRSR | 13,318 | $1,612,810 |
| 2024 LTIP TVRSRs | 02/09/2024 | TVRSR | 4,439 | $519,896 |
| 2023 TVRSRs (unvested at 12/31/24) | 02/10/2023 | TVRSR | 4,424 | $693,949 (at $156.86) |
| 2023 PBRSRs (unearned at 12/31/24) | 02/10/2023 | PBRSR | 19,910 | $3,123,083 (max basis at $156.86) |
| 2022 TVRSRs (vested 02/11/2025) | 02/11/2022 | TVRSR | 2,174 | $341,014 (at $156.86) |
| Options (exercisable) | Various | Stock Options | 13,045 @ $55.32 exp 02/09/2026; 21,640 @ $76.49 exp 02/09/2027; 16,048 @ $74.72 exp 02/21/2028; 14,481 @ $57.92 exp 02/08/2029; all fully vested by 12/31/24 | |
| 2024 Option Exercises and Stock Vested | 2024 | Options/RSRs | 29,835 options exercised; 26,008 shares vested | $1,996,342 value realized on exercises; $3,827,352 on vesting |
Employment Terms
| Provision | Key Terms |
|---|---|
| Severance (without Cause) | 18 months salary continuation; pro-rata AIP based on actual performance; additional payment = 1.5x average AIP over prior 3 years |
| Change-of-Control (Qualifying Termination, double trigger) | Lump sum 2x base salary; pro-rata target AIP; additional AIP = 2x target; immediate vesting/payment of deferred comp; double-trigger equity vesting per plan; “best payments” 280G cutback if beneficial |
| Restrictive Covenants | Non-compete and non-solicit for longer of 12 months or severance period; confidentiality and non-disparagement indefinite; release required |
| Clawbacks | SEC-compliant executive recoupment for restatements; separate non-exec recoupment for misconduct; applies to prior 3 fiscal years; severance repayment right if later-found Cause |
| Tax Gross-ups | None for change-of-control equity awards; perquisites fully taxable with no gross-up |
| Deferred Compensation (2024) | Executive contributions $237,518; employer contributions $43,228; earnings $829,699; aggregate balance $6,067,553; immediate lump-sum payout upon change of control |
| Pension | Pension plans frozen; not accruing benefits (based on age/tenure) |
Estimated Termination/CoC Economics (as of 12/31/24; stock at $156.86)
| Scenario | Cash Severance | Equity (accelerated intrinsic) | Welfare/Other | Total |
|---|---|---|---|---|
| Involuntary Termination without Cause | $2,546,789 | — | $135,429 (welfare + outplacement) | $2,682,218 |
| CoC with Qualifying Termination | $2,831,233 | $6,269,068 | $157,239 (welfare + outplacement) | $9,257,540 |
Compensation Structure Analysis
- Cash vs equity mix shifted lower in 2024: non-equity incentive declined to $471k and stock awards to $1.33M, with total compensation down to $2.48M from $2.94M in 2023, consistent with AIP payout at 80% of target and continued emphasis on performance-based equity .
- AIP heavily weighted to Comparable EBITDA (60%) and Operating Revenue (20%), plus strategic objectives (20%), driving pay-for-performance linkage to profitability and growth; discretion was not used in 2024 payouts .
- LTIP employs three-year ROE, strategic revenue CAGR, and free cash flow with TSR modifier; the completed 2022–2024 cycle paid at 200%, evidencing strong multi-year performance alignment .
Investment Implications
- Alignment: Strong pay-for-performance design (AIP 60% EBITDA; LTIP ROE/FCF/revenue with TSR cap) and robust clawback, ownership, and anti-hedging/pledging policies reduce agency risk; Fatovic meets 3x salary ownership guideline .
- Retention: Material unvested PBRSRs/TVRSRs and option overhang, plus severance protection (2x salary and AIP multiples on CoC) suggest low near-term attrition risk; double-trigger equity mitigates windfall risk .
- Selling pressure: 2024 exercises (29,835 shares; $2.0M value realized) and significant vesting events could create periodic liquidity, but hedging/pledging prohibitions and ownership requirements constrain aggressive selling .
- Governance/Shareholder sentiment: Say-on-Pay received over 95% support in 2024, indicating investor acceptance of the compensation framework; independent consultant FW Cook advises the Committee .
- Performance backdrop: Company delivered 106% three-year TSR, revenue and earnings growth, and ROE resilience, supporting incentive realizations; continued focus on asset-light businesses may sustain ROE/FCF metrics embedded in LTIP .