Tom Kersting
About Tom Kersting
Thomas J. “Tom” Kersting (age 62) is Chief Executive Officer of South Dakota Soybean Processors, LLC (SDSYA) and has served as CEO since March 28, 2011; prior roles at the company include Commercial Manager (1998–2011) and Procurement Manager (1996–1998). He previously spent eight years at CHS, Inc. in marketing and risk management, is a former director of the National Oilseed Processors Association, and holds a B.S. in Agricultural Business Administration (operations management) from the University of Minnesota . SDSYA’s pay-versus-performance disclosure shows net income fell to $20.32 million in 2024 from $70.45 million in 2023 (down $50.1 million), while the company’s Total Member/Shareholder Return (TSR) value on a $100 base was $197.80 in 2024 (per 2022–2024 base period) . The board states net income is the most important financial performance measure used to link executive pay to company outcomes .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| South Dakota Soybean Processors (SDSYA) | Chief Executive Officer | 2011–Present | Overall leadership; responsible for entire operation |
| South Dakota Soybean Processors (SDSYA) | Commercial Manager | 1998–2011 | Led commercial activities; long-tenured operator before CEO role |
| South Dakota Soybean Processors (SDSYA) | Procurement Manager | 1996–1998 | Managed procurement for processing/refining operations |
| CHS, Inc. | Marketing and risk management roles | 8 years (dates not disclosed) | Commodity marketing and risk expertise; licensed commodity broker |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| National Oilseed Processors Association | Director (former) | Not disclosed | Industry leadership and policy/standards influence |
Fixed Compensation
| Component | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Base salary ($) | 385,000 | 385,000 | 400,000 | 400,000 |
| All other compensation ($) | 9,465 | 9,915 | 10,665 | 11,115 |
- CEO employment agreement (effective Jan 1, 2023) sets base salary at $400,000 for each of the five years ending 2023–2027 .
- Perquisites: Company states CEO receives no perquisites; standard employee benefits include 401(k) match, life/disability insurance, medical/dental coverage .
Performance Compensation
Annual Bonus (Profit-Sharing)
- Plan design: Bonus pool equals 4.7% × (Net Income − $2 million), funded only if the Company is profitable; payouts consider role scope and formula-based evaluation by CEO and board .
- Key metric: Consolidated net income (excluding extraordinary items) .
| Metric | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Net income used for bonus pool ($) | 29.43 million | 71.06 million | 76.91 million | 20.5 million |
| CEO bonus paid ($) | 192,043 | 483,388 | 524,363 | 129,665 |
- Observations: CEO bonus moved directionally with profitability; 2024 bonus declined sharply alongside lower net income .
Deferred Compensation Plan
- Design: Long-term deferred compensation determined annually; target and metrics set each year; awards vest ratably over 8 years at 12.5% per year; held in a Company-owned “Rabbi Trust” with investment direction by the executive; payouts occur at or after separation per initial award terms .
| Element | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| CEO deferred compensation award ($) | 96,250 | 96,250 | 120,000 | 100,000 |
| Vesting schedule | 12.5% per year over 8 years | 12.5% per year over 8 years | 12.5% per year over 8 years | 12.5% per year over 8 years |
- Stock/option awards: The company discloses “Stock Awards: None” for executive officers; no option awards disclosed .
Pay vs. Performance (Company-Reported)
- Most important financial performance measure for executive pay linkage: Net income .
| Year set | PEO “Summary Comp Table Total” ($) | PEO “Compensation Actually Paid” ($) | TSR: $100 Initial Value | Net income ($) |
|---|---|---|---|---|
| 2022–2024 base period (2025 proxy) | 2022: 974,553; 2023: 1,055,028; 2024: 640,780 | 2022: 868,388; 2023: 924,363; 2024: 529,665 | 2022: 197.80; 2023: 198.02; 2024: 197.80 | 2022: 67,464,101; 2023: 70,449,578; 2024: 20,319,817 |
| 2020–2023 base period (2024 proxy) | 2021: 682,758; 2022: 974,553; 2023: 1,055,028 | 2021: 577,043; 2022: 868,388; 2023: 924,363 | 2021: 130.37; 2022: 257.88; 2023: 276.38 | 2021: 28,007,915; 2022: 67,464,101; 2023: 70,449,578 |
- Commentary (per company disclosure): Net income decreased by $50.1 million from 2023 to 2024 (and by $47.1 million from 2022 to 2024); compensation actually paid tracks lower than reported totals due to deferred compensation treatment .
Equity Ownership & Alignment
- Beneficial ownership (as of May 1, 2025): Tom Kersting beneficially owns 5,000 capital units, represented as units owned by his wife; individual ownership percentage is below 1.5% (disclosed as “*”) .
- Units outstanding and member count (for context): 30,411,500 Class A units outstanding; 2,234 Class A members of record (one-member-one-vote governance) .
- Pledging: No pledging or hedging by Kersting disclosed in the beneficial ownership section .
| Holder | Capital units | Ownership % | Notes |
|---|---|---|---|
| Tom Kersting (CEO) | 5,000 | ~0.016% (=5,000 / 30,411,500) | Held by spouse; no pledging disclosed |
- Stock ownership guidelines: Not disclosed in proxy .
Employment Terms
| Term | Detail |
|---|---|
| Agreement | Employment agreement dated Jan 1, 2023; continues until terminated |
| Base salary | $400,000 per year for 2023–2027 |
| Termination (without cause) | Payment equal to the greater of remaining term (capped at 60 months) or 52 weeks of base salary; 2024 “without cause” estimate for CEO: ~$1,706,000 over 60 months (includes salary, deferred compensation, and healthcare benefits) |
| Termination (voluntary or for cause) | No further salary or benefits |
| Non-compete | North America; during term and for two years after termination |
| Non-solicit | One year after termination |
| Confidentiality | Restricts disclosure; also interference restrictions noted |
| Change-in-control | Agreement “contains benefits relating to termination and change in control” (terms referenced but not itemized beyond above framework) |
| Prior-year illustrative estimate | As of 12/31/2023: CEO estimated ~$2,034,000 over 60 months if dismissed without cause (salary, deferred comp, health) |
Governance, Committees, and Say‑on‑Pay
- Board/management separation: CEO and other executives do not serve on the board; board chair is not an executive .
- Compensation oversight: Governance Committee serves the compensation committee function and sets NEO compensation; the company cites member support in 2022 Say‑on‑Pay (vote held every three years) .
- 2025 Say-on-Pay: Advisory vote proposed; approval threshold is FOR > AGAINST; one-member-one-vote structure with 2,234 votes possible as of May 1, 2025 .
Performance & Track Record
| Indicator | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Net income ($) | 28,007,915 | 67,464,101 | 70,449,578 | 20,319,817 |
| TSR value on $100 (company method) | 130.37 (2020 base) | 257.88 (2020 base) | 276.38 (2020 base) | 197.80 (2021 base) |
- Company states net income is the key performance measure for incentive linkage; 2024 net income decline aligns with lower CEO bonus .
Compensation Structure Analysis
- Cash-centric pay mix: No equity awards or options disclosed; total compensation driven by base, annual cash bonus tied to Company profitability, and deferred cash awards vesting over eight years .
- Pay-for-performance linkage: Annual bonus pool strictly tied to net income above threshold; CEO bonus fell from $524,363 (2023) to $129,665 (2024) as profitability declined .
- Retention incentives: Deferred compensation vests 12.5% per year over eight years (Rabbi Trust), creating long-dated retention hooks .
- Clawback/tax gross-ups: No clawback policy or tax gross-ups disclosed in provided materials; CEO receives no perquisites per disclosure .
Investment Implications
- Alignment: With no equity grants and a small disclosed personal unit holding (~0.016%), the CEO’s direct ownership alignment is modest; incentives are tied primarily to profitability and long-term deferred cash vesting .
- Retention risk: Low near-term attrition risk given the 8-year vesting on deferred comp and a two-year non‑compete (North America) post-termination; termination without cause implies potentially meaningful multi‑year cash obligations (~$1.706 million estimate as of 12/31/2024) .
- Trading signals: Limited structural insider‑selling pressure given absence of equity/option vesting; watch for annual profitability inflections (net income) that directly drive bonus outcomes and could indicate changes in management incentive realizations .
- Governance: Board/management separation and member-approved say‑on‑pay framework support oversight; however, lack of equity-based pay may constrain long-term ownership alignment compared to peers that utilize RSUs/PSUs .
Overall, Kersting’s compensation emphasizes cash performance and long-dated deferred awards rather than equity, reducing forced selling but also limiting direct equity alignment; monitoring net income trajectory and deferred comp awards is key for assessing incentive realization and potential retention dynamics .