Michael Hartshorn
About Michael Hartshorn
Group President and Chief Operating Officer of Ross Stores since 2019 and a Board member since 2021; age 57. He joined Ross in 2000 and progressed through finance, treasury, and CFO roles before becoming COO, with prior seven years in financial roles at The May Department Stores Company, giving him deep operational and financial expertise in off‑price retail . Company performance context: over the last 10 years, Ross achieved average annual total shareholder return of 14% and average annual ROE of 40%, returning $8.4 billion via share repurchases; executive pay programs emphasize at‑risk compensation tied to adjusted pre‑tax earnings, aligning incentives with profitability discipline .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Ross Stores | Group President & COO | 2019–present | Oversees operations, execution discipline, and continuity across off-price merchandising and supply chain . |
| Ross Stores | Group EVP, Finance & Legal; CFO | 2019 | Bridges finance, legal, and enterprise risk during leadership transition . |
| Ross Stores | EVP & CFO | 2018–2019 | Drove financial management and capital allocation . |
| Ross Stores | Group SVP & CFO | 2015–2018 | Strengthened financial controls and reporting . |
| Ross Stores | SVP & CFO | 2014–2015 | Led corporate finance and budgeting . |
| Ross Stores | SVP & Deputy CFO | 2012–2014 | Supported CFO succession and process improvement . |
| Ross Stores | VP/Group VP Finance & Treasurer | 2006–2012 | Managed liquidity, treasury, and financial planning . |
| Ross Stores | Director & Assistant Controller | 2000–2006 | Built internal controls; stepped into IT/supply chain management roles (2002–2006) supporting operational efficiency . |
| The May Department Stores Company | Various financial roles | ~1993–2000 | Foundation in retail finance underpinning later CFO/COO responsibilities . |
External Roles
No external public company directorships or other outside roles disclosed for Hartshorn .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $1,146,250 | $1,167,500 | $1,196,250 |
| Target Annual Cash Incentive ($) | — | — | $1,500,000 (125% of salary) |
| Actual Annual Cash Incentive Paid ($) | — | $2,925,000 | $2,383,500 (158.9% of target) |
| Perquisites ($) | $106,343 | $116,629 | $121,474 (estate planning $1,400; commute $828; executive health $102,957; umbrella liability $2,451; company match $13,838) |
- Employment agreement extended to March 31, 2029 with annual base salary not less than $1,285,000, subject to annual increases .
Performance Compensation
| Component | Metric | Weighting | FY 2024 Target | FY 2024 Actual | Payout/Conversion | Vesting |
|---|---|---|---|---|---|---|
| Annual Cash Incentive | Adjusted pre-tax earnings | 100% | $2,711,082,807 = 100% payout reference grid | Achieved above target | 158.9% of target bonus ($2,383,500) | N/A (cash) |
| Performance Shares (granted 3/13/2024) | Adjusted pre-tax earnings (1-year performance period FY 2024) | 100% | Target 17,677 shares | Issuable 25,438 shares (143.9% of target) | Shares settle then time-vest | 30% on 3/21/2025; 30% on 3/20/2026; 40% on 3/19/2027 |
| Restricted Stock (granted 3/13/2024; FV $1,600,045) | Time-based | — | 10,878 shares | Granted | Full-value shares | 100% cliff on 3/23/2029 |
Grant detail (FY 2024):
- Performance shares grant date fair value: $2,600,110; threshold 11,791; target 17,677; max 35,354; earned 25,438 shares for FY 2024 performance .
- Restricted stock: 10,878 shares granted 3/13/2024, cliff vesting 3/23/2029; FV $1,600,045 .
Plan mechanics and guardrails:
- Annual incentive grid ranges from 50% payout at 80% of target to 200% at 120% of target; linear interpolation; payout certified formulaically without discretionary overrides .
- Clawback policy adopted Nov 2023 for executive officers to recover excess incentive comp upon material restatement (covers cash bonuses and performance shares; excludes salary/restricted stock); additional misconduct-based recoupment policy for senior executives below officer level .
Equity Ownership & Alignment
| Ownership Item | Value/Status |
|---|---|
| Beneficial ownership (common shares) | 128,533 shares; includes 127,429 unvested under 2017 Equity Incentive Plan; <1% of shares outstanding . |
| Unvested/vesting cadence at FY-end | 36,059 vested 3/21/2025; 37,579 vest 3/20/2026; 28,239 vest 3/19/2027; 14,674 vest 3/17/2028; 10,878 vest 3/23/2029 . |
| Market value of unvested shares (as of 1/31/2025 at $150.56) | $19,185,710 . |
| Stock options | None outstanding; NEOs did not have stock options outstanding . |
| Ownership guidelines | Executives must hold 3x base salary; five years to meet; counts include unvested restricted stock . |
| Compliance status | All current executive officers met or are on track to meet guidelines as of 2/1/2025 . |
| Hedging/pledging | Prohibited for directors/officers/designated employees; short sales, derivatives, collars, exchange funds (hedge) banned; pledging and margin accounts prohibited; Rule 10b5‑1 plans permitted . |
Interpretation for selling pressure:
- Multi-year vesting tranches through 2029 can create periodic supply; 2025–2027 tranches are largest, implying potential scheduled sales via 10b5‑1 plans around vest dates, subject to trading window and tax liquidity needs .
Employment Terms
| Term | Key Provision |
|---|---|
| Agreement term | Extended to March 31, 2029 . |
| Base salary floor | Not less than $1,285,000; subject to annual review . |
| Annual bonus target | 125% of salary; formulaic based on adjusted pre-tax earnings . |
| CIC vesting | Double‑trigger for equity; acceleration upon termination without cause or for good reason within the CIC window . |
| Severance – Without Cause/Good Reason/Disability | Cash $7,336,438; equity acceleration $13,665,336; health/welfare $247,387; total $21,249,161 (as of 1/31/2025 assumption) . |
| Severance – Termination following CIC | Cash $8,073,000; equity $18,017,214; estate/financial planning $38,910; health/welfare $247,387; total $26,376,511 . |
| CIC multiple | 2.99x sum of current base salary and target annual cash incentive bonus for CIC-related termination . |
| Non-compete | Not specifically disclosed; agreements include confidentiality/trade secret protections and post‑termination recruiting restrictions (non‑solicit) . |
| Deferred compensation | No NQDC contributions/balance in FY 2024 . |
Board Governance
- Board service: Director since 2021; dual role as executive officer (COO) and director; executives do not receive separate board compensation .
- Independence and committees: He is not listed among independent directors and does not serve on standing committees (Audit, Compensation, Nominating & Corporate Governance), which are comprised of independent members .
- Attendance and structure: Board held seven meetings in FY 2024; no incumbent attended fewer than 75% of meetings; the Board separates Chair (Executive Chairman Michael Balmuth) and CEO roles, with a Lead Independent Director (Bjorklund) facilitating independent oversight .
Director Compensation
- As an executive director, Hartshorn received no separate cash or equity compensation for board service in FY 2024 (compensation reflected in NEO tables) .
Compensation Peer Group and Governance
- Peer group used for benchmarking includes off‑price and broader retail names (e.g., TJX, Burlington, Ulta, Bath & Body Works, Williams‑Sonoma, Kohl’s, Macy’s, Dollar General/Tree, DICK’S, Tractor Supply, PVH, VF, Gap, Foot Locker, Best Buy, Nordstrom) with annual review of composition and long‑term performance focus .
- Independent consultant: Exequity, LLP advised the Compensation Committee; independence assessed per Nasdaq standards .
- Say‑on‑Pay support: 76.3% approval at prior annual meeting; majority of NEO pay is at‑risk and performance‑linked .
Compensation Structure Analysis
- Mix and risk: In FY 2024, Hartshorn’s base salary was ~15% of total comp ($1.196m of $7.901m), with the balance primarily in performance shares, restricted stock, and formulaic annual incentive, reflecting high at‑risk pay .
- Equity emphasis: Company utilizes full‑value equity (restricted stock, performance shares) with extended vesting horizons (many tranches through 2029); no stock options outstanding for NEOs, reducing repricing risk and sharpening link to absolute share price performance .
- Metrics discipline: Singular focus on adjusted pre‑tax earnings for both annual incentive and performance shares reinforces cost control and profit execution; FY 2024 payout certified at 158.9% (cash) and 143.9% (shares) on above‑target results, with excluded non‑recurring real estate gain to preserve integrity of metric .
Risk Indicators & Red Flags
- Hedging/pledging banned for insiders; Rule 10b5‑1 plans permitted, mitigating alignment concerns while enabling planned liquidity around vest dates .
- Clawback policy implemented (Nov 2023) for material restatements covering executive incentive compensation; additional misconduct recovery policy for senior executives below officer level .
- CIC economics: Double‑trigger and 2.99x cash multiple are market‑standard but imply meaningful cost in a transaction scenario (total $26.4m potential for Hartshorn) .
- Governance stability: Independent committees, separated Chair/CEO, Lead Independent Director, and strong attendance reduce independence concerns related to Hartshorn’s dual role .
Investment Implications
- Alignment: High proportion of at‑risk, performance‑based pay and long‑dated equity vesting align Hartshorn’s incentives with profitable growth and long‑term TSR; hedging/pledging prohibitions strengthen alignment quality .
- Supply dynamics: Significant vesting tranches in 2025–2027 with additional cliff in 2029 create periodic potential selling pressure; expect structured 10b5‑1 plan activity around vest dates and open windows .
- Retention and continuity: Multi‑year contract through 2029, extended vesting schedules, and substantial unvested equity reduce near‑term retention risk; severance/CIC protections are robust, supporting leadership stability through the CEO transition .
- Performance signal: The one‑metric (adjusted pre‑tax earnings) design and above‑target FY 2024 payouts indicate strong recent execution; continued emphasis on profitability is a lever for cash generation and TSR, consistent with the Company’s 10‑year TSR/ROE record .