Michael Rutz
About Michael Rutz
Michael P. Rutz serves as President of Sterigenics and is a Named Executive Officer (NEO) of Sotera Health (SHC). He entered into his employment agreement on May 21, 2020, with initial base salary set at $430,000; as of April 2024 his annualized base salary was $500,000 . SHC delivered its 19th consecutive year of revenue growth in 2024: consolidated revenue +4.9% (constant currency +5.4%), Sterigenics segment revenue +4.6% (constant currency +4.9%), with Sterigenics completing a facility expansion and continuing EO emissions control enhancements across U.S. facilities . Rutz’s annual bonus is tied to company and Sterigenics financial goals plus individual performance, aligning incentives to EBITDA-based metrics and segment income .
Fixed Compensation
Multi‑year compensation summary (amounts reflect reported compensation for each year):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $445,385 | $464,615 | $491,923 |
| Bonus ($) | — | $300,000 | $700,000 |
| Stock Awards ($) | $499,989 | $499,996 | $499,999 |
| Option Awards ($) | $497,220 | $499,424 | $500,905 |
| Non‑Equity Incentive Plan Compensation ($) | $253,201 | $249,498 | $270,804 |
| All Other Compensation ($) | $17,146 | $16,706 | $17,878 |
| Total ($) | $1,712,941 | $2,030,239 | $2,481,509 |
Base salary rate progression:
| Metric | 2023 | 2024 | % Change |
|---|---|---|---|
| Base Salary (Annualized Rate) ($) | $470,000 | $500,000 | 6.38% |
Notes:
- 2024 “Bonus” represents vesting of a one‑time $1,000,000 cash incentive granted Nov 7, 2022 (10% vesting at 6 months; 20% at 12 months; 30% at 18 months; 40% at 24 months; fully vested and paid by Dec 31, 2024) .
Performance Compensation
Annual Incentive Plan (AIP) structure and metrics (2024):
| Component | Weighting (of total award) | Threshold | Target | Maximum | Notes |
|---|---|---|---|---|---|
| Company Adjusted EBITDA | 20% (25% of 80% financial) | $511.5M | $568.6M | $636.8M | AIP payout linked to company performance; overall company AIP payout was 94% of target in 2024 |
| Sterigenics Segment Income (excl. Corporate allocation) | 60% (75% of 80% financial) | $385.0M | $428.1M | $479.4M | Segment EBITDA-style income basis |
| Individual Performance | 20% | — | — | — | Individual performance assessed; Rutz received 100% of individual target |
2024 AIP payout outcome for Rutz:
| Metric | 2024 |
|---|---|
| AIP Payout (% of base salary) | 55% |
| AIP Payout ($) | $270,804 |
Equity awards (2024 annual grants):
| Type | Grant Date | Shares (#) | Exercise Price ($/sh) | Vesting |
|---|---|---|---|---|
| Stock Options | Mar 4, 2024 | 68,063 | $14.59 | Equal annual installments over 3 years; 10‑year term |
| RSUs | Mar 4, 2024 | 34,270 | — | Equal annual installments over 3 years beginning on first anniversary of Mar 2, 2024 |
Equity Ownership & Alignment
Beneficial ownership:
| Item | Value |
|---|---|
| Shares Beneficially Owned (#) | 730,177 |
| % of Shares Outstanding | <1% (outstanding shares: 283,855,074 as of Mar 28, 2025) |
Outstanding equity awards (as of Dec 31, 2024):
| Award | Exercisable (#) | Unexercisable (#) | Exercise Price ($/sh) | Expiration | Unvested Shares/Units (#) | Market Value ($) |
|---|---|---|---|---|---|---|
| Options (IPO 2020) | 111,801 | — | $23.00 | 11/20/2030 | — | — |
| Options (Mar 2, 2022) | 42,570 | 21,287 | $20.03 | 3/2/2032 | — | — |
| Options (Mar 6, 2023) | 17,959 | 35,920 | $17.59 | 3/6/2033 | — | — |
| Options (Mar 4, 2024) | — | 68,063 | $14.59 | 3/4/2034 | — | — |
| RSUs (2022 cycle) | — | — | — | — | 8,322 | $113,845 |
| RSUs (2023 cycle) | — | — | — | — | 18,950 | $259,236 |
| RSUs (2024 cycle) | — | — | — | — | 34,270 | $468,813 |
| Restricted Stock (Topco distribution) | — | — | — | — | 41,861 | $572,659 |
Vesting schedules and near‑term dates:
- 2022 options/RSUs: vest Mar 2, 2023/2024/2025
- 2023 options/RSUs: vest Mar 2, 2024/2025/2026
- 2024 options/RSUs: vest Mar 2, 2025/2026/2027
- Restricted stock (Topco): daily pro‑rata vesting through May 13, 2025
Ownership policy and restrictions:
- Stock ownership guidelines: 2× salary for NEOs; Rutz was in compliance as of Mar 31, 2024
- Hedging and pledging prohibited (pledging only with advance approval); margin accounts disallowed
Employment Terms
Key terms from the Rutz Employment Agreement:
- Employment start: May 21, 2020; eligible annual bonus at target 60% of base salary
- Severance (without “cause” or resignation for “good reason”): 12 months base salary continuation and up to 12 months health coverage differential reimbursement (subject to reemployment conditions)
- Non‑compete and non‑solicit: effective during employment and for 12 months post‑termination; confidentiality and non‑disparagement indefinite
- Change‑in‑control (CIC) cash bonus: one‑time $1,500,000, contingent on continued employment through CIC
- Equity treatment upon CIC: if unvested awards not assumed/substituted, they vest at CIC; if assumed/substituted and executive is terminated without cause or (for Rutz) resigns for good reason within 12 months post‑CIC, all unvested equity vests in full
- Option exercise periods post‑termination follow standard NEO provisions (generally 90 days; 12 months for death/disability; retirement provisions as defined)
- Definitions of “cause” and “good reason” explicitly set out (including material reductions, relocation >50 miles, etc.)
Estimated post‑employment payments (assuming Dec 31, 2024 trigger; closing stock price $13.68):
| Scenario | Cash Severance ($) | COBRA ($) | CIC Bonus ($) | Accelerated Equity Value ($) |
|---|---|---|---|---|
| Termination without “cause” or resignation for “good reason” | $500,000 | $16,978 | — | — |
| Death or Disability | — | — | — | $1,258,259 |
| Termination in connection with Change in Control (double trigger) | $500,000 | $16,978 | $1,500,000 | $1,414,539 |
Performance & Track Record
- Sterigenics segment grew revenue by 4.6% in 2024 (4.9% constant currency), completed a facility expansion, and advanced EO emissions control enhancements across U.S. facilities, underscoring operational execution and regulatory commitment in Sterigenics’ footprint .
- Company‑wide AIP payout for 2024 calibrated at 94% of target for overall company performance, evidencing pay‑for‑performance discipline when targets are narrowly missed .
Compensation Structure Analysis
- Mix of cash vs equity: 2024 compensation shows a balanced mix—salary $491,923; annual equity grants of RSUs ($499,999) and options ($500,905); non‑equity incentive $270,804; plus vesting of the 2022 retention cash incentive ($700,000), reinforcing retention during a volatile period .
- Shift in long‑term incentives: For 2025, SHC adjusted LTI design to emphasize PSUs tied to three‑year goals and RSUs with stock‑price incentives; NEOs received no options in 2025—reflecting shareholder feedback and increasing performance‑contingent equity .
- AIP metric design: Rutz’s AIP weighting heavily emphasizes Sterigenics segment income (60% of total), aligning his cash incentives with business‑unit EBITDA outcomes; the remaining 20% company EBITDA and 20% individual performance embed both corporate and leadership behaviors .
- Grant timing and governance: Equity grants are generally made in early March following full‑year results, with option exercise prices set at the closing price on grant date; company policies avoid granting while in possession of MNPI and prohibit option repricing .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited by policy; pledging only with advance approval—no pledging by Rutz disclosed .
- Tax gross‑ups: Company states no tax gross‑ups (other than customary relocation) .
- Option repricing: Explicitly not permitted .
- Clawback: Policy disclosed (details referenced in proxy) .
- Insider selling pressure: Near‑term vesting events (Mar 2, 2025/2026/2027 for RSUs/options; daily restricted stock vesting through May 13, 2025) can create supply; vesting values depend on market conditions and award schedules .
Equity Ownership & Alignment
- Ownership guidelines: NEOs must hold stock valued at 2× salary; Rutz compliant as of Mar 31, 2024 .
- Beneficial ownership: 730,177 shares (<1% of outstanding) .
- Unvested exposure: Significant unvested RSUs and option tranches scheduled through 2027, maintaining retention hooks and alignment with future performance .
Employment Terms (Detailed)
- Non‑compete/non‑solicit: 12 months post‑termination; confidentiality and non‑disparagement indefinite .
- CIC equity acceleration: Full acceleration if not assumed; double‑trigger acceleration if assumed and terminated or resigns for good reason within 12 months post‑CIC .
- Severance economics: 12 months base salary and health coverage continuation for qualifying terminations; additional $1.5M CIC cash bonus for Rutz .
- Option exercise windows: Defined windows post‑separation consistent with NEO equity agreements .
Investment Implications
- Strong alignment: AIP weighting ties 80% of Rutz’s bonus to Sterigenics and company EBITDA metrics, with equity vesting over multi‑year schedules—supportive of pay‑for‑performance and unit‑level execution .
- Retention value: Ongoing vesting of RSUs/options and daily restricted stock through May 2025, plus severance protections and a $1.5M CIC bonus, reduce immediate retention risk but imply potential selling pressure around vest dates and windows .
- Governance improvements: 2025 LTI program shift toward PSUs and performance‑tied RSUs responds to shareholder feedback and may enhance long‑term value alignment; elimination of options for 2025 reduces risk‑free equity value accrual .
- Downside/transaction scenarios: Double‑trigger CIC equity vesting and guaranteed CIC cash bonus are meaningful; investors should factor potential dilution and executive liquidity in a transaction context .
Overall, Rutz’s incentives are closely tethered to Sterigenics segment performance and multi‑year equity vesting, suggesting alignment with operational execution and shareholder value creation, while standard severance/CIC provisions provide retention stability without evident shareholder‑unfriendly features (e.g., gross‑ups or option repricing) .