Louis Pinkham
REGAL REXNORDAbout Louis Pinkham
Louis V. Pinkham, age 53, has served as Regal Rexnord’s CEO and director since April 2019. He holds a B.S. in Engineering (Duke), an M.S. in Engineering Management (Northwestern McCormick), and an MBA (Northwestern Kellogg) . During his tenure, the company reported enterprise value growth to ~$15B from ~$4.5B and a nearly 100% total shareholder return, while repositioning the portfolio toward automation and motion control . In 2024, Regal Rexnord reported adjusted gross margin of 37.8% (+210 bps YoY), adjusted EBITDA margin of 22.1%, free cash flow of $512M, and $938M of gross debt reduction; 2024 sales were ~$6.03B .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Regal Rexnord | Chief Executive Officer; Director | 2019–present | Led multi-year transformation; portfolio repositioning toward automation/motion control; EV and TSR gains . |
| Crane Co. | Senior Vice President | 2016–2019 | Senior leadership at diversified industrial; prior roles 2012–2016 . |
| Eaton Corporation | SVP & GM, Critical Power Solutions, Electrical Group; previous roles | 2000–2012 | Global P&L, supply chain, commercial leadership in electrical/power businesses . |
| ITT Sherotec | Engineering & Quality Manager | n/a | Early engineering/quality leadership . |
| Molecular Biosystems, Inc. | Process Design Engineer | n/a | Early career engineering role . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Jacobs Solutions Inc. | Director; Lead Independent Director | Since Dec 2023 | Public company board; current Lead Independent Director . |
| University of Chicago Medical Center | Board of Trustees | n/a | Non-profit governance . |
| Manufacturers Alliance for Productivity and Innovation (MAPI) | Board of Trustees | n/a | Industry association governance . |
Fixed Compensation
Multi-year CEO compensation (Summary Compensation Table):
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $1,078,945 | $1,119,493 | $1,200,000 |
| Stock Awards (RSUs/PSUs grant-date fair value) | $4,465,248 | $7,048,379 | $7,208,599 |
| Option/SAR Awards (grant-date fair value) | $1,381,238 | $1,643,723 | $1,795,127 |
| Non-Equity Incentive Plan Compensation (Annual Bonus) | $1,516,365 | $1,760,822 | $1,414,260 |
| All Other Compensation | $203,203 | $233,072 | $311,819 |
| Total | $8,644,999 | $11,805,489 | $11,929,805 |
2024 annual incentive (ICP) targets (corporate weighting emphasized for CEO):
- Target bonus: 135% of base salary; target amount $1,620,000 .
- ICP structure: CEO/Corporate NEOs weighted 90% on total Company financial performance and 10% on policy deployment; payouts capped at 200% of target .
Perquisites and deferred compensation (2024):
- Perquisites: company car $4,537, club dues $9,610 (Board-requested membership), life insurance $1,872, 401(k) contribution $13,800, SRP contribution $282,000 .
- Supplemental Retirement Plan (SRP): executive contribution $299,250; company contribution $282,000; year-end balance $1,590,317 .
Performance Compensation
Long-term incentive (LTI) design and 2024 grants:
- Mix: 50% PSUs (3-year cliff), 25% RSUs (ratable over 3 years), 25% SARs (ratable over 3 years) .
- PSU metric: Relative TSR vs the S&P 900 Industrials Sub-Index; PSU payouts capped at 200% .
2024 CEO plan-based awards (grant date 2/23/2024 unless noted):
| Award Type | Metric/Terms | Target/Granted | Max/Strike | Grant-Date Fair Value |
|---|---|---|---|---|
| PSUs | 3-year relative TSR (2024–2026), cliff vest | 21,309 sh | 42,618 sh | $5,413,551 |
| RSUs | Time-based; vest 1/3 annually | 10,655 sh | — | $1,795,048 |
| SARs | Time-based; vest 1/3 annually | 28,560 sh | $168.47 strike | $1,795,127 |
| Annual ICP | Cash; 0–200% payout | Target $1,620,000 | Max $3,240,000 | Paid $1,414,260 for 2024 |
ICP target-setting: set near median vs peer group; CEO targets unchanged in 2024; corporate NEOs weighted 90% company/10% policy deployment; segment NEOs 40% company/60% segment; payouts 0–200% of target .
Equity Ownership & Alignment
Beneficial ownership and outstanding equity (as of March 10, 2025 and 12/31/2024):
- Beneficial ownership: 249,379 shares; RSUs 33,177; options/SARs exercisable within 60 days: 143,636; each director/NEO holds <1% of shares outstanding .
- Outstanding unvested RSUs: 20,979; market value $3,254,427 (12/31/2024) .
- Outstanding unearned PSUs: 43,131; market/payout value $6,690,942 (12/31/2024) .
- Stock ownership guidelines: CEO 6x base salary; all currently-serving NEOs are in compliance; sales restricted until guideline met .
- Hedging/pledging: Company prohibits hedging and pledging; no directors or executives have hedged or pledged company shares .
- Clawback: “No-fault” Dodd-Frank policy plus supplemental recovery for misconduct, policy violations, reputational damage, or overpayment; applies to cash and equity .
Insider selling pressure considerations:
- 2024 grants vest over 2025–2027 (RSUs/SARs) and cliff at 2026 year-end for PSUs; sizable unvested awards (20,979 RSUs; 43,131 PSUs) represent potential future supply upon vesting, subject to performance for PSUs .
- During the advisor period through March 31, 2026, equity continues vesting; after the Termination Date, all unvested equity forfeits; vested options/SARs are exercisable for up to 180 days post-termination, creating a defined exercise/sale window .
Employment Terms
- Employment agreement: Appointed CEO April 1, 2019; agreement provides for base salary ($950,000 initially; $1,200,000 in 2024), target bonus (110% initially; 135% in 2024), eligibility for annual equity, relocation, and standard benefits; confidentiality and restrictive covenants apply .
- Executive Severance Policy (effective Nov 3, 2023): replaced legacy severance; internally consistent, peer-competitive; double-trigger for CIC; extends participation to CEO and other NEOs .
Potential payments on termination or CIC (CEO-specific, as of 12/31/2024):
| Scenario | Key Components | Amount |
|---|---|---|
| Involuntary termination (without CIC) | Termination payment; current-year ICP; accrued vacation | Total $7,146,568; termination payment $5,640,000; current-year ICP $1,414,260; vacation $92,308 . |
| CIC without termination | Accelerated RSUs/SARs/PSUs | Total $12,233,604; RSUs $3,201,666; SARs $21,706; PSUs $9,010,232 . |
| Involuntary or Good Reason termination in connection with CIC (double-trigger) | Termination payment; accelerated equity; ICP; benefits; services | Total $23,291,039; termination payment $9,389,841; accelerated RSUs $3,201,666; SARs $21,706; PSUs $9,010,232; ICP $1,414,260; benefits $26,026; legal $15,000; outplacement $120,000; vacation $92,308 . |
CEO transition (October 2025 8‑K and Transition Agreement):
- CEO succession process initiated; Pinkham to remain CEO until successor is appointed, then serve as advisor through March 31, 2026 and resign from the Board at successor appointment .
- Separation treated as qualifying termination under Severance Policy: lump-sum $6,000,000 (2x salary + target bonus), full 2025 bonus based on performance, up to 24 months medical benefits continuation (COBRA), continued vesting while advisor; all unvested equity forfeits at Termination Date; vested options/SARs exercisable up to 180 days post-termination; non-compete, non-solicit, non-disparagement, non-disclosure covenants apply .
Board Governance
- Board service: Director since 2019; no committee assignments .
- Governance structure: Chairman is independent (Rakesh Sachdev); all committees (Audit, Compensation & HR, Corporate Governance) are fully independent; CEO is the only non-independent director, mitigating dual-role concerns .
- Compensation & HR Committee: Members are Michael F. Hilton (Chair), Michael P. Doss, and Rakesh Sachdev; the committee uses an independent advisor (Meridian) and oversees pay risk mitigations (caps, multiyear vesting, clawback) .
- Director compensation: CEO receives no additional pay for Board service; non-employee director fees include $110,000 cash retainer, $170,000 for Chairman, chair fees ($25k Audit; $20k Comp; $15k Governance), and ~$170,000 annual equity grant; director stock ownership guideline is 5x cash retainer; hedging/pledging prohibited .
- Say-on-pay: 98% approval in 2024, indicating strong shareholder support for NEO pay design .
Performance & Track Record
- Strategic and shareholder outcomes (tenure-to-date): EV increased to ~$15B from ~$4.5B; TSR nearly 100% with reinvested dividends; Board credits leadership through transformation and integrations .
- 2024 operating performance: Adjusted gross margin 37.8% (+210 bps), adjusted EBITDA margin 22.1%, FCF $512M; deleveraging with $938M gross debt reduction; completion of Industrial Systems divestiture to finalize portfolio transformation .
- Scale: 2024 sales ~$6.03B; diversified across industrial end markets with secular growth exposure .
Compensation Structure Analysis
- Strong at-risk tilt: CEO LTI is 75% equity (50% PSUs with relative TSR, 25% RSUs; plus 25% SARs), with 3-year vesting/performance periods and 200% caps on ICP and PSU payouts, aligning with long-term TSR and discouraging excessive risk .
- Benchmarking and discipline: Targets set near peer-median with no guaranteed bonuses; no option repricings or cash buyouts; no tax gross-ups; double-trigger CIC; robust clawback beyond Dodd-Frank .
- 2024 mix and outcomes: 2024 bonus paid below 2023 ($1.41M vs $1.76M) amid higher equity grant values and higher SARs valuation, showing sensitivity to annual performance .
Director Compensation (Pinkham)
- As CEO director, Pinkham receives no additional director compensation .
Equity Ownership & Alignment (Detail Table)
| Item | Value |
|---|---|
| Beneficial ownership (3/10/2025) | 249,379 shares; <1% of outstanding . |
| RSUs outstanding (beneficial ownership table) | 33,177 . |
| Options/SARs exercisable within 60 days | 143,636 . |
| Unvested RSUs (12/31/2024) | 20,979; $3,254,427 market value . |
| Unearned PSUs (12/31/2024) | 43,131; $6,690,942 market/payout value . |
| Hedging/pledging | Prohibited; none by directors/NEOs . |
| CEO stock ownership guideline | 6x base salary; compliance affirmed . |
Employment Terms (Detail)
| Provision | Terms |
|---|---|
| Base salary (2024) | $1,200,000 . |
| Target bonus (2024) | 135% of salary ($1,620,000) . |
| LTI cadence | Annual grants; typical timing in first half; no use of MNPI for timing . |
| Severance (policy) | Without CIC: e.g., termination payment $5,640,000; With CIC (double-trigger): termination payment $9,389,841; equity accelerations; other benefits per table . |
| Transition Agreement (2025) | Advisor through 3/31/2026; $6,000,000 lump sum (2x salary+target), 2025 bonus, up to 24 months benefits, vesting continues while advisor; unvested awards forfeit at termination; 180-day option/SAR exercise window; restrictive covenants . |
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay received >98% support, and the company retained key pay-for-performance elements in response to strong approval .
Risk Indicators & Red Flags
- No hedging/pledging; no tax gross-ups; no option repricing; strong clawback framework; committees entirely independent .
- CEO transition disclosed as part of an orderly succession; departure not due to dispute or disagreement with company operations/policies; Board-led search with independent directors .
Investment Implications
- Alignment: The heavy weighting to multi-year PSUs tied to relative TSR plus strict ownership, hedging/pledging prohibitions, and robust clawbacks indicate strong alignment with long-term shareholders and mitigate risk of short-termism .
- Near-term flow dynamics: While serving as advisor, equity continues vesting; unvested awards are forfeited at termination (reducing forced selling), but the 180-day post-termination option/SAR exercise window could concentrate potential exercises/sales into a defined period post-3/31/2026 .
- Retention and transition risk: Defined severance economics ($6M cash under the Transition Agreement, full 2025 bonus) and restrictive covenants support a smooth transition; double-trigger CIC protections limit windfalls absent both CIC and termination .
- Performance track record: EV and TSR gains during tenure, alongside margin expansion, deleveraging, and portfolio transformation, suggest credible execution; continuity of strategy under successor will be key to sustaining mix and margin improvements .