Patrick Murphy
TransDigm GroupAbout Patrick Murphy
Patrick Murphy is TransDigm’s Co‑Chief Operating Officer, appointed August 5, 2025, after serving as Executive Vice President since October 2019 and President of HarcoSemco from December 2014 to September 2019; prior to joining TransDigm he held Vice President/General Manager roles at Danaher in industrial manufacturing and high‑technology businesses . He is 53 years old and is now under a term through September 30, 2030 per his amended and restated employment agreement . TransDigm’s FY 2024 performance during his senior leadership tenure included net sales of $7,940 million (+21% YoY), EBITDA As Defined of $4,173 million (+23% YoY), and an approximately 73% increase in share price including dividends; EBITDA As Defined margin reached 52.6% . He also led the successful renegotiation of an OEM contract concluded in December, effective January 1, cited by the CEO on the Q1 FY 2025 call .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| TransDigm Group Incorporated | Co‑Chief Operating Officer | Aug 2025–present | Senior operating leadership; appointed alongside the existing Co‑COO . |
| TransDigm Group Incorporated | Executive Vice President | Oct 2019–Aug 2025 | Led key OEM contract renegotiation; broad operational oversight . |
| HarcoSemco (TransDigm subsidiary) | President | Dec 2014–Sep 2019 | Operating unit leadership within TransDigm . |
Fixed Compensation
| Component | Amount/Term | Notes |
|---|---|---|
| Annual Base Salary | $775,000 | Effective August 1, 2025; reviewed annually and may be increased but not decreased . |
| Target Annual Cash Incentive | 100% of base salary | Effective from August 5, 2025; fiscal 2025 target prorated with 65% target prior to August 5, 2025 . |
Performance Compensation
Annual Cash Incentive (Structure and FY 2024 calibration)
| Metric | Weighting | Target | Actual (FY 2024) | Payout Factor |
|---|---|---|---|---|
| Pro Forma EBITDA As Defined ($) | 50% | $4,076 million | $4,266 million | Contributed to composite 113.9% payout . |
| Pro Forma EBITDA As Defined Margin (%) | 50% | 51.0% | 51.9% | Contributed to composite 113.9% payout . |
| Composite Payout | — | 100% | 113.9% | No upward discretion used . |
Notes:
- Targets are set annually; payouts vary linearly between threshold (70%) and maximum (130%) with equal weighting across the two metrics .
- The Compensation Committee did not exercise positive discretion on 2024 annual incentives .
Performance‑Based Stock Options (Program mechanics)
| Feature | Detail |
|---|---|
| Vesting metric | Annual Operating Performance per Diluted Share (AOP), reflecting EBITDA, net debt, diluted shares, and a fixed market multiple; adjusted for special dividends/repurchases . |
| Vesting thresholds | Minimum vesting requires 10% cumulative AOP growth; full vesting at 17.5% growth per period; linear in between . |
| Carry‑forward/back | Limited ability to carry forward/back excess AOP up to $100 per year to offset shortfalls; encourages long‑term focus . |
| Change‑of‑control | Starting with FY 2024 grants, unvested NEO options vest on a double trigger (no replacement award or termination without cause/for good reason within two years); prior grants had single‑trigger vesting . |
| Grant timing & exercise price | Options granted under shareholder‑approved plans at fair market value; routine grant windows, avoiding material non‑public information timing . |
| Dividend treatment | Option holders (other than directors/CEO) receive dividend equivalent payments upon vesting to keep whole against special dividends; directors/CEO receive strike price reductions for special dividends . |
Equity Ownership & Alignment
| Security | Amount | Date Exercisable | Expiration | Exercise Price | Ownership Form |
|---|---|---|---|---|---|
| Common Stock | 1,055 | — | — | — | Direct . |
| Stock Option (Common Stock) | 2,900 | 09/30/2020 | 11/10/2026 | $269.42 | Direct . |
| Stock Option (Common Stock) | 1,750 | 09/30/2022 | 11/05/2028 | $347.17 | Direct . |
| Stock Option (Common Stock) | 32,800 | 09/30/2020 | 11/15/2029 | $559.78 | Direct . |
| Stock Option (Common Stock) | 21,900 | 09/30/2022 | 11/12/2031 | $643.00 | Direct . |
Alignment policies:
- Prohibitions on hedging, pledging, short sales for all officers; robust stock ownership guidelines (CEO 6x salary; other NEOs 3x salary, half held in stock), with exercise restrictions until compliant .
- Stock Retention Guidelines in option agreements require maintaining a specified equity value (half in stock for NEOs) or risk forfeiture of unvested options .
Employment Terms
| Term | Provision |
|---|---|
| Contract Term | Continues through September 30, 2030 unless earlier terminated . |
| Position/Duties | Co‑Chief Operating Officer of the Company and TransDigm Inc., customary responsibilities as assigned by the CEO . |
| Severance – Without Cause / Good Reason / Disability | 1.25x base salary + 1.25x (greater of prior year bonus or current‑year target) + 18× monthly COBRA cost differential; paid in substantially equal installments over 12 months, subject to release; 409A timing rules apply . |
| Non‑compete | For the Payment Period if severance is paid; otherwise 24 months following voluntary resignation without Good Reason or termination for Cause . |
| Non‑solicit | Two years post termination . |
| Arbitration, Indemnification, D&O | Mandatory arbitration in Cleveland, OH; indemnification to fullest extent under Delaware law; advancement of legal fees; D&O insurance maintained . |
| Clawback | Subject to Company’s NYSE/SEC‑compliant clawback policy implementing Exchange Act §10D . |
| Change‑of‑control (equity) | Double trigger for FY 2024+ NEO options as described above . |
| No tax gross‑ups | Company’s executive compensation policies state no tax gross‑ups, including under 280G/409A . |
Performance & Track Record
- Led conclusion of a key OEM contract renegotiation (effective January 1 following December close), as acknowledged by the CEO in Q1 FY 2025 .
- Senior leadership tenure coincided with FY 2024 record results: net sales $7,940 million (+21%), EBITDA As Defined $4,173 million (+23%), EBITDA As Defined margin 52.6%, strong operating cash flow ($2.0 billion), and 73% share price increase including special dividend; continued acquisitive growth ($2.3 billion of acquisitions) .
Compensation Context & Governance (Company program)
- Executive pay mix heavily at‑risk; options require both vesting (AOP growth) and share price appreciation; CEO and NEOs >93% performance‑based on average .
- Annual incentive metrics and FY 2024 payout calibration detailed above; no upward discretion used .
- Peer group refreshed in FY 2024 (including Ametek, Aptiv, Eaton, Howmet, Ingersoll Rand, Motorola Solutions, RBC Bearings, Teledyne, etc.) to better reflect size/EV; used for competitiveness benchmarking .
- Say‑on‑Pay approval improved to 68.8% with expanded shareholder engagement and policy changes (no discretionary equity awards; modified “Rule of 70” retirement vesting) .
Investment Implications
- Alignment and retention: Murphy’s compensation is dominantly performance‑based with stringent AOP‑linked vesting and share‑price dependence; ownership/retention guidelines and anti‑hedging/pledging policies further align him with long‑term TSR creation and reduce near‑term selling pressure .
- Change‑of‑control and severance: Double‑trigger vesting for FY 2024+ NEO option grants mitigates windfall risk while providing protection in bona fide transitions; severance economics (1.25x salary and bonus plus COBRA differential) are moderate vs. typical A&D peers, supporting retention without excessive shareholder risk .
- Execution risk: The AOP framework embeds operating discipline (EBITDA growth, capital structure, cash generation, M&A performance), but requires sustained high growth (10–17.5% CAGR thresholds); failure to meet AOP can defer vesting and compensation realization, sharpening performance accountability .
- Signal value: CEO recognition of Murphy’s OEM contract negotiation underscores operational credibility; paired with TransDigm’s FY 2024 outperformance and acquisitive momentum, this supports confidence in operational execution under the Co‑COO model .