Patrick D. Hallinan
STANLEY BLACK & DECKERAbout Patrick D. Hallinan
Executive Vice President & Chief Financial Officer of Stanley Black & Decker since April 6, 2023; 55 years old at appointment. Prior roles include EVP & CFO at Fortune Brands Innovations (2017–2023), finance/technology leadership roles at Fortune Brands (2005–2017), and principal at Booz Allen Hamilton in the automotive/aerospace/industrial practice (~7 years); BA Economics (Northwestern) and MBA Finance & Accounting with honors (University of Chicago) . Company performance under his tenure included 2024 revenue of $15.4B (-3% YoY), Adjusted EBITDA of ~$1.6B (10.1% margin), $753M Free Cash Flow, and ~$1.1B debt reduction; cumulative TSR (fixed $100, 12/27/19–12/28/24) was $56 vs peer group $186 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Fortune Brands Innovations (NYSE: FBIN) | Executive Vice President & CFO | July 2017–2023 | Led global finance; growth/value creation across consumer brands |
| Fortune Brands divisions | Various finance & technology leadership and GM roles | 2005–2017 | Brand elevation (e.g., Moen), M&A platforms, turnarounds in Security/Cabinets |
| Booz Allen Hamilton | Principal, automotive/aerospace/industrial goods practice | ~7 years (departed before 2005) | Strategy/operations expertise in industrial sectors |
External Roles
| Organization | Role | Start | Notes |
|---|---|---|---|
| HNI Corporation (NYSE: HNI) | Director | September 2022 | Workplace furnishings company |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary as of year-end ($) | $800,000 | $800,000 |
| Target Bonus (% of Base) | 100% | 100% |
| Actual Annual Bonus Paid (Non-Equity Incentive, $) | $1,310,400 | $1,388,800 |
Perquisites and Retirement (2024)
| Component | Amount ($) |
|---|---|
| Company RAP Contributions | $32,200 |
| Supplemental RAP Contributions | $105,924 |
| Life Insurance Premiums | $29,780 |
| Disability Insurance Premiums | $8,827 |
| Relocation & Travel Stipends | $225,000 |
| Personal Use of Aircraft | $19,963 |
| Other | $17,552 |
| Total “All Other Compensation” | $439,246 |
| Deferred Compensation Plan | Executive Contributions ($) | Registrant Contributions ($) | Aggregate Balance at Last FYE ($) |
|---|---|---|---|
| Supplemental RAP (2024) | $0 | $105,924 | $110,445 |
Performance Compensation
Annual Incentive (MICP) – 2024 Design and Results
| Metric | Weight | Threshold | Target | Maximum | 2024 Actual | Resulting Payout (% of target) |
|---|---|---|---|---|---|---|
| Adjusted EPS ($) | 30% | $3.50 | $4.00 | $4.50 | $4.36 | Above target (companywide) |
| Free Cash Flow ($M) | 40% | $550 | $650 | $750 | $753 | Above maximum (companywide) |
| Adjusted Gross Margin Rate (%) | 30% | 29.3 | 29.8 | 30.3 | 30.0 | Above target (companywide) |
| Adj. Gross Margin Modifier (%) | + up to 10% | 30.3 | 30.55 | 30.8 | 30.0 | 0% add-on (below threshold) |
| CFO Total MICP Payout | — | — | — | — | — | 173.6% of target (CFO) |
Notes: The 2024 MICP metrics and definitions (Adjusted EPS, Free Cash Flow, Adjusted Gross Margin Rate, modifier) per proxy .
Long-Term Incentive (LTIP) – PSU Structure and Hallinan’s Grants
| LTIP Cycle | Metric | Weight | 2024 Goal (T/T/M) | 2025 Goal (T/T/M) | 2026 Goal (T/T/M) | Status |
|---|---|---|---|---|---|---|
| 2024–2026 PSUs | CFROI* | 40% | 8% / 9% / 10% | 9% / 10% / 11% | 10% / 11% / 12% | 2024 actual 8.5% (below target) |
| 2024–2026 PSUs | Relative Organic Sales Growth vs Market* | 35% | 0.5x / 1.0x / 1.5x | — | — | In progress |
| 2024–2026 PSUs | Relative TSR (vs S&P 500 Capital Goods) | 25% | 25th/50th/75th percentiles | — | — | In progress |
| 2022–2024 PSUs | CFROI*, Adjusted EPS*, Relative TSR | 40% / 35% / 25% | Multiple annual goals (see proxy) | — | — | Payout 0% (below threshold across metrics) |
| Hallinan’s 2024 Regular LTI Grant (Grant date 3/1/2024) | Shares/Units | Grant Date Fair Value ($) |
|---|---|---|
| Target PSUs | 23,653 | $1,912,463 |
| RSUs | 10,703 | $956,206 |
| Stock Options (ex. price $89.34; expires 3/1/2034) | 37,871 | $956,243 |
*Non-GAAP measures as defined in proxy (see Appendix A) .
Equity Ownership & Alignment
| Ownership Detail (as of Feb 28, 2025) | Amount |
|---|---|
| Beneficial Ownership – Shares | 67,247 |
| % of Shares Outstanding | <1% |
| Options Exercisable by 4/29/2025 | 40,581 |
| RSUs Vesting by 4/29/2025 | 18,606 |
| Outstanding Equity (12/28/2024) | Exercisable Options (#) | Unexercisable Options (#) | Unvested Time-Vesting RSUs (#) | Unearned PSUs (#) |
|---|---|---|---|---|
| 4/12/2023 options (ex. price $78.97; exp. 4/12/2033) | 13,979 | 27,956 | — | — |
| 3/1/2024 options (ex. price $89.34; exp. 3/1/2034) | — | 37,871 | — | — |
| All RSUs not yet vested | — | — | 47,937 | — |
| PSUs unearned (multiple cycles) | — | — | — | 13,404; 9,153 |
Stock ownership/pledging policies and guidelines:
- Hedging and pledging of Company stock prohibited for officers/directors/employees .
- Executive Stock Ownership Guidelines: CFO minimum holding of 5x base salary (RSUs count; unvested performance awards and unexercised options do not) .
- Executive Officer Stock Ownership compliance status not specifically disclosed for CFO in proxy .
RSU Vesting Schedules (Hallinan)
| Grant Date | Remaining Vesting Schedule | Units Not Yet Vested (#) |
|---|---|---|
| April 12, 2023 | 3 equal annual installments (1st, 2nd, 3rd anniversary) | 7,704 |
| April 12, 2023 | 3 equal annual installments (1st, 2nd, 3rd anniversary) | 22,372 |
| March 1, 2024 | 3 equal annual installments (1st, 2nd, 3rd anniversary) | 10,703 |
Employment Terms
- Employment: Appointed CFO effective April 6, 2023; compensation terms on appointment included $800,000 base salary, $350,000 sign-on cash (repayment provisions), $2.65M sign-on RSUs, and annual equity awards of $3.65M in 2023 and 2024 (50% PSUs / 25% options / 25% RSUs) .
- Severance: Executive Separation Pay Policy provides 52 weeks of separation pay for a “job loss event” for NEOs other than CEO .
- Change-in-Control Agreements (for NEOs, including CFO): One-year term with automatic one-year extensions; upon CIC and qualifying termination within 2 years, lump sum equal to 2.5x base salary and 2.5x average annual bonus (3-year lookback), continuation of specified benefits/perquisites for 2.5 years, 2.5 years service credit for defined contribution plans, and up to $50,000 outplacement; subject to 2-year non-compete/non-solicit and other covenants .
- Equity treatment: Double-trigger vesting upon CIC (if not assumed/replaced); options vest; RSUs and performance awards vest at target; MICP pays pro rata at target upon CIC if awards not assumed/replaced; if assumed and later qualifying termination, pro rata payout at target .
- Clawbacks: Mandatory SEC/NYSE-compliant clawback for restatements; discretionary clawback adopted in Feb 2025 for misconduct; covers cash and equity incentives for Section 16 officers .
- Tax Gross-ups: No excise tax gross-ups under CIC agreements or equity plans; no gross-ups on perquisites other than relocation benefits .
Performance & Track Record
| Metric | 2023 | 2024 |
|---|---|---|
| Total Revenue ($B) | — | $15.4 |
| Gross Margin (%) | 26.0 | 29.4 (GAAP); 30.0 (Adj.) |
| Adjusted EPS ($) | $1.45 | $4.36 |
| EBITDA ($B) | ~0.6 (3.9% margin) | ~1.2 (7.5% margin); Adjusted ~$1.6 (10.1% margin) |
| Cash from Operating Activities ($B) | $1.2 | $1.1 |
| Free Cash Flow ($M) | $853 | $753 |
| Debt Reduction ($B) | ~$0.28 | ~$1.1 |
- CFO articulated leverage roadmap: net debt/EBITDA around ~4x exiting 2024, near 3x exiting 2025, 2.5–3x by end of 2026, predominantly via organic cash generation; highlighted $700M+ Infrastructure divestiture proceeds used for debt paydown and potential minor portfolio trims (≤$0.5B) in Tools & Outdoor when markets permit .
- Transformation progress: margin and cash priorities “solidly on track,” early growth signs in DEWALT; industrial portfolio share gains in auto/aerospace .
Governance, Pay Practices, and Shareholder Feedback
- Pay mix emphasizes variable, performance-based compensation: 82% average for NEOs; no guaranteed cash bonuses; strong alignment with shareholder interests .
- 2024 outcomes: MICP above target; 2022–2024 LTIP PSUs paid 0% (rigor in long-term targets); all outstanding options for NEOs generally underwater except recent grants .
- 2025 MICP retains Free Cash Flow (40%), Adjusted Gross Margin Rate (30%), Adjusted EPS (30%), with an Adjusted Gross Margin modifier contingent on Company TSR ≥ median of S&P 500 Capital Goods Index for executives to receive modifier .
- Compensation Peer Group: Median revenue $17.0B; peer list includes Carrier, Emerson, Cummins, Eaton, Johnson Controls, Parker Hannifin, Rockwell, Textron, Owens Corning, PACCAR, Dover, Masco, PPG, Sherwin-Williams, Whirlpool; executive target pay generally set at market median .
- Say‑on‑Pay support: 92.7% approval in 2024; ~90.9% average over last three years .
Risk Indicators & Red Flags
- Hedging/pledging prohibited (alignment-positive) .
- No excise tax gross‑ups; double‑trigger CIC vesting (shareholder‑friendly) .
- Clawbacks in place (mandatory and discretionary) .
- Section 16 compliance: company reported timely filings for 2024 except one late Form 3 for another officer; no adverse disclosures for CFO .
Compensation Structure Analysis
- Year-over-year emphasis maintained on equity and PSUs (50% of LTI) with strict three-year CFROI, relative sales growth, and TSR hurdles; removal of Adjusted EPS from LTIP increases focus on cash flow and growth quality .
- MICP metrics calibrated above prior-year actuals (EPS and margin targets significantly higher vs 2023), with FCF target set at challenging but achievable levels given lower inventory reductions; 2024 actuals exceeded maximum FCF while margin/EPS outperformed targets, producing 173.6% CFO payout without discretionary adjustments .
- Options remain three-year vesting and pay only on share price appreciation; many legacy options underwater, limiting windfall risk .
Investment Implications
- Alignment: CFO holds meaningful unvested RSUs (47,937) and PSUs (22,557 combined), a sizable option overhang (65,827 unexercisable) and is subject to a 5x salary ownership guideline and hedging/pledging prohibitions—strong long-term alignment with cash flow and TSR metrics .
- Retention/Change‑in‑Control: CIC protections are standard industrial-grade (2.5x salary+bonus, benefits continuation) with double‑trigger vesting, reducing flight risk during transformation; base severance is 52 weeks for job loss events .
- Execution: 2024 delivery on FCF and margin, significant debt reduction, and rigorous LTIP (zero payout for 2022–2024) reflect disciplined capital allocation; leverage targets imply continued cash focus and potential selective portfolio actions (≤$0.5B in T&O) .
- Signal watch‑outs: Monitor 2025 MICP modifier dependency on relative TSR, CFROI trajectory toward 9–11–12% ladder, and progress on organic sales growth vs market for PSU vesting; options remain largely out‑of‑the‑money, reducing near‑term selling pressure .