Frank C. Sullivan
RPM INTERNATIONAL INC/DE/About Frank C. Sullivan
Frank C. Sullivan, age 64, is Chair, President and Chief Executive Officer of RPM International Inc. and has served on RPM’s board since 1995; he became CEO in 2002, Chair in 2008, and President in 2018. He holds a B.A. from the University of North Carolina, where he was a Morehead Scholar . Under his tenure, RPM delivered FY2025 net sales of $7.37B (+0.5% YoY), record net income of $688.7M (+17.0%), and record diluted EPS of $5.35 (+17.3%), while cash from operations reached $768.2M; Adjusted EBIT margin expanded 260 bps under MAP 2025 initiatives . Pay-versus-performance disclosure shows the value of a $100 investment in RPM at $167 for FY2025 (vs peer group at $158), with Adjusted EBIT margin at 13.2% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Harris Bank / First Union National Bank | Commercial lending & corporate finance | 1983–1987 | Built finance foundation prior to joining RPM |
| RPM AGR Company JV | Regional Sales Manager | 1987–1989 | Front-line commercial experience |
| RPM International | Director, Corporate Development | 1989 | Led corporate development (M&A) |
| RPM International | Vice President | 1991 | Senior leadership progression |
| RPM International | Chief Financial Officer | 1993 | Finance leadership; capital allocation |
| RPM International | Executive Vice President | 1995 | Broader operating responsibility |
| RPM International | President | 1999 | Business unit oversight |
| RPM International | Chief Operating Officer | 2001 | Operations leadership |
| RPM International | Chief Executive Officer | 2002–present | Strategy, performance, capital deployment |
| RPM International | Chair of the Board | 2008–present | Board leadership; governance |
| RPM International | President | 2018–present | Combined CEO/President roles |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Timken Company (NYSE: TKR) | Director; Compensation and Nominating & Corporate Governance Committees | Since 2003 | Cross-industry governance; compensation oversight |
| American Coatings Association | Board member | — | Industry leadership, policy influence |
| Cleveland Clinic | Board member | — | Community and governance engagement |
| Rock and Roll Hall of Fame & Museum | Board member | — | Civic leadership |
| Greater Cleveland Partnership; Ohio Business Roundtable | Board member | — | Regional business advocacy |
Fixed Compensation
| Component | FY2025 | Notes |
|---|---|---|
| Base Salary | $1,100,000 | Increased 3.3% vs FY2024 ($1,065,000) |
| FY2026 Minimum Salary (per employment agreement) | $1,135,000 effective June 1, 2025 | Auto-renews annually unless notice given |
| Perquisites & Other | $269,469 total: 401(k) match $14,000; auto allowance $25,523; life insurance premiums $212,196; charitable match $2,000; financial consulting $15,750 | Insurance premium increases reflect age-related costs |
| Pension (qualified plan) – Present Value | $1,347,451 | RPM Retirement Plan; see assumptions – |
Performance Compensation
| Metric/Instrument | Design | Weighting/Targets | Actual/Payout | Vesting |
|---|---|---|---|---|
| Annual Cash Incentive (FY2025) | Award pool = 1.5% of pre-tax income; CEO target 125% salary (max 200%) | Gross margin improvement (threshold 12.5% of target; target 50%; max 62.5%); Sales growth up to 50%; Initiatives/individual goals up to 25%; SG&A up to 25%; Committee discretion up to 25% | Gross margin increased to 41.5% from 41.2% → payout 25% of target; Sales growth 0.5% → 50%; Initiatives 20%; SG&A 25%; Discretion 15%; CEO award $1,513,000 | Paid July 2025 |
| PERS (Performance Earned Restricted Stock) FY2025 | Single-year PERS; CEO target shares 11,700; max 14,625 | EBIT margin 50%: Threshold 13.5%, Target 14.0%, Max 15.0%; Working Capital Ratio 50%: Threshold 23.6%, Target 22.0%, Max 20.9% | EBIT margin result 13.2% → 0%; Working capital 22.1% → 96.9%; Total vested 48.4%; CEO PERS awarded 5,670 shares | PERS vest schedule from prior grants: 10,400 on 7/19/2026; 11,140 on 7/18/2027 |
| PSUs (3-year) 2023–2025 performance | Adjusted EBIT margin (50%) and 3yr CAGR revenue (50%); thresholds and targets set | EBIT margin threshold 15.0%; revenue growth threshold 4.0% | Results: EBIT margin 13.2%; revenue CAGR 3.2% → 0% vested; 100% forfeited | PSU cycles granted annually; FY2024 grants run 2024–2027 |
| SARs (Stock Appreciation Rights) | CEO grant 85,100 SARs on 7/18/2024 at $114.26; vest in 4 equal installments starting 7/18/2025 | Value realized only if stock price exceeds grant price | FY2025 SAR exercises: 210,000; value realized $12,033,000 | Multiple outstanding series with staged vesting |
Equity Ownership & Alignment
| Item | Detail | Alignment Implication |
|---|---|---|
| Beneficial Ownership (May 31, 2025) | 1,287,769 shares; 1.0% of outstanding | Material skin-in-the-game |
| Ownership Breakdown | 1,012,356 direct; 254,667 via exercisable SARs; 15,600 in trust; approx. 5,146 via 401(k) | Mix of direct and derivative exposure |
| SARs Outstanding (CEO) | Exercisable 681,500; Unexercisable 329,600; exercise prices spanning $62.17–$114.26; expirations 2029–2034 | Significant option-like leverage; staged vesting |
| Unvested PERS (CEO) | Prior grants scheduled: 10,400 vest 7/19/2026; 11,140 vest 7/18/2027 | Known near-term vesting dates (potential selling for taxes) |
| Unvested PSUs (CEO) | Maximum unearned PSUs shown across cycles: 255,800; 2022–2025 cycle vested at 0% | Long-term pay tightly tied to multi-year performance |
| Ownership Guidelines | CEO required to hold 7x base salary; executives met or within grace period as of 5/31/2025 | Strong alignment policy |
| Hedging/Pledging | Company policy prohibits hedging and pledging for directors/officers/employees | Reduces misalignment risk |
Employment Terms
| Term | CEO Provision | Notes |
|---|---|---|
| Contract & Term | Annual base salary not less than $1,135,000 effective 6/1/2025; auto-renewing one-year terms to 5/31/2026 unless two-month prior notice | Standard auto-renewal |
| Severance (no CiC; involuntary termination) | Lump sum = prior year incentive (if unpaid) + 3x (greater of current or highest base salary in prior 3 years + highest annual incentive in prior 5 years); plus 3 years health/welfare; estate/financial planning; executive life insurance; SERP cash value and vesting; accelerated SERP restricted stock | Meaningful safety net; promotes retention |
| CiC + termination (double trigger) | Same cash multiple (3x); 3 years health/welfare; planning; life insurance grossed up; SERP benefits; accelerated PSUs/PERS/SARs; outplacement; legal fee support; excise tax gross-up for CEO | Robust change-in-control protection; tax gross-up red flag |
| CiC-only acceleration (single-trigger vesting on certain awards) | Accelerated PSUs/PERS/SARs and SERP RS for CEO under specific award agreements; total estimated CiC-only acceleration value $23,759,106 | Legacy award terms may allow single-trigger vesting; governance consideration |
| Restrictive Covenants | Non-compete and non-solicit for 2 years post-employment; confidentiality during and after employment | Protects franchise; limits mobility |
| Clawbacks | Board-adopted clawback since 2012; NYSE-compliant Incentive-Based Compensation Clawback Policy adopted Oct 2023 | Misconduct/restatement recovery mechanism |
| Estimated Payout Scenarios (CEO) | Retirement: $9,001,799; Involuntary no CiC: $8,983,339; CiC + termination: $32,027,487; CiC-only: $23,759,106 | High CiC sensitivity; potential deal overhang |
Board Governance
- Board service: Director since 1995; currently Chair and CEO; serves on Executive Committee .
- Independence: Board determined Mr. Sullivan is not independent due to his management role; 11 of 12 directors are independent; all Audit, Compensation, and Governance & Nominating members are independent .
- Dual-role implications: RPM combines Chair and CEO; the Board argues unified leadership aids strategic execution while a Lead Independent Director provides oversight; independent directors meet in executive session three times per year (Jan/Apr/Jul); Lead Independent Director is Robert A. Livingston .
- Attendance: Four board meetings in FY2025; no director attended fewer than 75% of board and committee meetings; all directors attended the 2024 Annual Meeting .
- Director compensation: Mr. Sullivan receives no additional compensation for director service .
Compensation Structure Analysis
- Mix and benchmarking: CEO salary and target total cash are below market median; long-term incentives are above market; overall target total direct compensation is above the 50th percentile with a significant performance-based equity component .
- Pay-for-performance: For FY2025, 58% of named executive officer pay was variable and performance-tied; Say-on-Pay support was 93% in 2024 .
- Equity plan design: Performance-based equity (single-year PERS and three-year PSUs) tied to EBIT margin, working capital ratio, revenue growth; SARs used as option-like long-term incentives; 2014 and 2024 Omnibus Plans include double-trigger vesting and prohibit option repricing without shareholder approval .
- Governance policies: Hedging and pledging prohibited; stock ownership guidelines for directors and executives; compensation-related risk assessment indicates programs are not reasonably likely to have a material adverse effect .
Equity Vesting Schedules and Insider Selling Pressure
- Known near-term vesting: CEO PERS from prior grants vest 10,400 shares on 7/19/2026 and 11,140 shares on 7/18/2027 .
- FY2025 insider monetization: CEO exercised 210,000 SARs (value realized $12,033,000) and vested 41,560 shares of stock (value $4,710,740) . SARs exercises, while not necessarily open-market sales, can elevate selling pressure due to tax obligations and diversification.
- Upcoming SARs vesting cadence: Multiple series vest in staged installments through 2028, increasing optionality to realize gains if shares appreciate .
Related Party Transactions and Red Flags
- Related parties: Brother (Thomas C. Sullivan, Jr.) employed as VP – Corporate Development, total salary+bonus $615,000; son (Frank C. Sullivan III) is President – Day-Glo, salary+bonus $300,000; compensation stated as commensurate with peers .
- Tax gross-ups: Change-in-control excise tax gross-up applies to CEO (and some other executives), a shareholder-unfriendly feature; newer agreements use “best-net alternative” for select executives .
- Option/SAR repricing: Prohibited without shareholder approval .
- Hedging/pledging: Prohibited .
- Delinquent filings: Company reports officers and directors complied with Section 16(a) filing requirements for FY2025 .
Compensation Peer Group and Targets
- Peer group used in benchmarking: Albemarle, Avient, Axalta, Cabot, Carlisle, Celanese, Eastman, H.B. Fuller, Huntsman, Masco, Olin, PPG, Chemours, Scotts Miracle-Gro, Sherwin-Williams, Westlake .
- TSR comparisons: Pay-versus-performance shows RPM’s FY2025 $100 investment at $167 vs peer group at $158; RPM’s net income and Adjusted EBIT margin used as performance measures .
Say-on-Pay & Shareholder Feedback
- FY2024 result: 93% support on Say-on-Pay, with ongoing stockholder engagement and feedback considered in program design .
Expertise & Qualifications
- Education: B.A., University of North Carolina (Morehead Scholar) .
- Finance/operations: Extensive career progression (CFO, COO, CEO) and corporate development experience .
- Board roles: Longstanding TKR director with compensation and governance committee experience .
Work History & Career Trajectory
| Organization | Role | Time at Company | Notes |
|---|---|---|---|
| RPM International | Multiple roles culminating in CEO | Since 1987 | Deep institutional knowledge and succession continuity |
Compensation Committee Analysis
- Composition: Independent directors; chaired by Robert A. Livingston .
- Process: Uses Willis Towers Watson for benchmarking; reviews pay mix against comparative framework; maintains clawbacks and ownership guidelines to mitigate risk .
Investment Implications
- Alignment: High insider ownership (1.0%) and stringent ownership guidelines support alignment; hedging/pledging prohibited .
- Retention and deal sensitivity: Robust severance and CiC protections (including excise tax gross-up for CEO) reduce retention risk but raise potential transaction costs; CiC acceleration values are substantial ($23.8M CiC-only; $32.0M CiC + termination) .
- Performance linkage: FY2025 incentives paid despite modest sales growth due to balanced scorecard; PSUs from 2023–2025 paid 0%, evidencing discipline on multi-year targets . Equity-heavy mix and SARs provide leverage to TSR and margins, but can introduce selling cadence around vestings/exercises .
- Governance: Combined Chair/CEO with strong independent oversight and regular executive sessions; no director compensation for CEO role; related party employment disclosed and monitored by policy .
Key catalysts to monitor: EBIT margin trajectory vs PERS/PSU targets, working capital ratio improvements, SAR vesting/exercise activity (tax-driven selling), MAP 2025 carryover benefits into FY2026, and any updates to excise tax gross-up provisions.