Kenneth D. Naylor
TOOTSIE ROLL INDUSTRIESAbout Kenneth D. Naylor
Kenneth D. Naylor is Vice President, Marketing and Sales at Tootsie Roll Industries, appointed to his current role on January 1, 2020 after serving as Vice President, U.S.A. Sales . He is age 65 per the company’s FY2024 10-K executive roster . Over his tenure since 2020, Company net earnings rose from $58.974 million in 2020 to $97.819 million in 2024 and sales grew from $467.427 million to $715.530 million; cumulative Company TSR (base=$100) measured in the proxy’s pay-vs-performance framework moved from 91 (2020) to 116 (2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Tootsie Roll Industries | Vice President, U.S.A. Sales | Prior to Jan 1, 2020 (within past five years) | Led domestic sales; promoted to VP, Marketing and Sales effective Jan 1, 2020 |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| No external directorships or roles disclosed in SEC filings | — | — | — |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $654,000 | $681,800 | $712,000 |
| Target Bonus % | Not disclosed | Not disclosed | Not disclosed |
| Actual Annual Bonus (MIP) ($) | $203,000 | $246,000 | $261,000 |
Notes:
- Bonuses are discretionary under the Management Incentive Plan (MIP) with no preset targets; the Compensation Committee applies qualitative and financial criteria .
Performance Compensation
| Metric | Weighting | Target | Actual (FY2024) | Payout (FY2024) | Vesting |
|---|---|---|---|---|---|
| Net earnings & EPS | Discretionary (no fixed % weight) | No predetermined numeric target | Net earnings (excl. non-recurring charge) $97.837m; EPS $1.37; net product sales $715.530m; net earnings margin 13.7% | MIP bonus $261,000 to Naylor | Cash paid (no vesting) |
| Increase in core brand sales & total sales | Discretionary | No predetermined numeric target | Sales $715.530m | Reflected in MIP | Cash paid |
| Cost savings & operational improvements | Discretionary | No predetermined numeric target | Committee-assessed | Reflected in MIP | Cash paid |
| Acquisition execution/integration | Discretionary | No predetermined numeric target | Committee-assessed | Reflected in MIP | Cash paid |
| Career Achievement Plan (CAP) award | Discretionary fixed-dollar deferred award | No predetermined numeric target | Award $175,000 (company contribution) | Included in “All Other Compensation” | Vests 20% annually over 5 years; accelerated on death/disability/retirement after 65; change-in-control immediate lump sum; forfeiture for cause/non-compete breach |
| Excess Benefit Plan (EBP) | Restoration of retirement benefits due to tax limits | Not applicable | Company contribution $84,594; aggregate earnings $192,898 | Included in “All Other Compensation” | Fully vested; distributions generally upon separation; 6-month delay post-separation |
Multi-Year Compensation Detail
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Total Compensation ($) | $1,113,265 | $1,219,936 | $1,286,888 |
| Salary ($) | $654,000 | $681,800 | $712,000 |
| Bonus (MIP) ($) | $203,000 | $246,000 | $261,000 |
| All Other Compensation ($) | $256,265 | $292,136 | $313,888 |
Breakdown of “All Other Compensation” (Company contributions/awards):
| Plan | 2022 | 2023 | 2024 |
|---|---|---|---|
| EBP Company Contribution ($) | $72,163 | $76,827 | $84,594 |
| CAP Company Contribution ($) | $136,000 | $165,000 | $175,000 |
| Tax-qualified defined contribution ($) | $33,711 | $38,000 (per NEO level stated) | $38,000 |
| Automobile/perqs (if any) | Included in “All Other Compensation” buckets; no separate dollar disclosure for Naylor | Included | Included |
Equity Ownership & Alignment
- Beneficial ownership: No direct or indirect holdings reported for Kenneth D. Naylor as of March 5, 2025; less than 1% of outstanding shares .
- Anti-hedging policy: Executives prohibited from hedging Company stock via derivatives .
- Insider trading policy: Adopted and filed as an exhibit; compliance emphasized .
- Stock ownership guidelines and pledging: No stock ownership guidelines disclosed; no pledging disclosure specific to executives in proxy .
Ownership snapshot (as of Mar 5, 2025):
| Holder | Common Stock (Direct) | Common Stock (Indirect) | Class B Common (Direct) | Class B Common (Indirect) |
|---|---|---|---|---|
| Kenneth D. Naylor | — | — | — | — |
Nonqualified Deferred Compensation (Balances and Activity)
| Plan | Company Contributions (2022) | Company Contributions (2023) | Company Contributions (2024) | Aggregate Earnings FY2024 | Withdrawals/Distributions FY2024 | Balance at 12/31/2024 |
|---|---|---|---|---|---|---|
| EBP | $72,163 | $76,827 | $84,594 | $192,898 | $3,000 | $1,042,180 |
| CAP | $136,000 | $165,000 | $175,000 | $194,837 | $6,500 | $1,349,824 |
| SSP (if elected) | Not disclosed for Naylor in 2024 | Not disclosed | Not disclosed | Not disclosed | Not disclosed | Not disclosed |
Vesting and payout mechanics (CAP/EBP/SSP):
- CAP: Annual awards vest 20% per year over five years until age 65; accelerated vesting on death, disability, or retirement after age 65; change-in-control triggers immediate lump-sum; distributions subject to non-compete/non-solicit; forfeiture for cause; post-2017 awards payable lump-sum or up to 10 installments under §409A .
- EBP & SSP: Unfunded; balances track selected investment returns; fully vested; post-2004 balances generally paid upon separation; six-month delay applies to NEOs; pre-2005 distribution rules vary per plan documents .
Employment Terms
| Term | Provision |
|---|---|
| Employment agreement | None; no employment or severance agreements for named executive officers |
| Change-in-control | Naylor has no CIC agreement; CIC severance applies only to Ember and Bowen (3x salary+bonus, pro-rata bonus, benefits continuation, tax gross-up) |
| Non-compete / non-solicit | Required to receive CAP distributions; one-year post-termination period; forfeiture if breached |
| Clawback | Company adopted Dodd-Frank/NYSE-compliant clawback policy effective Dec 1, 2023 |
| Anti-hedging | Executives prohibited from hedging Company equity |
| Insider trading compliance | All required Section 16 reports timely for FY2024 |
Pay vs Performance Context (Company-level; Naylor is one of four NEOs)
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| TSR (base=$100) | 91 | 115 | 141 | 114 | 116 |
| Peer Group TSR (base=$100) | 105 | 119 | 130 | 120 | 111 |
| Net Earnings ($000s) | $58,974 | $65,308 | $75,892 | $91,886 | $97,819 |
| Sales ($000s) | $467,427 | $566,043 | $681,440 | $763,252 | $715,530 |
| Net earnings as % of sales | 12.6% | 11.5% | 11.1% | 12.0% | 13.7% |
Compensation governance signals:
- 2023 say-on-pay approval 96.4%; Board maintained compensation approach .
- Controlled company status (Gordon family >50% voting power); compensation decisions split between Compensation Committee (MIP) and full Board .
Compensation Structure Analysis
- Shift from equity to cash/deferred cash: Company does not grant stock options, RSUs, or PSUs to executives; alignment relies on cash incentives (MIP) and deferred cash (CAP/EBP) with vesting and non-compete conditions .
- At-risk vs fixed mix: Higher weighting on base salary than typical, but meaningful at-risk through MIP and CAP; CAP vesting and non-compete provide retention hooks .
- Performance metrics: MIP emphasizes net earnings, EPS, sales growth, margin, operational improvements, and M&A execution; no disclosed weights/targets; committee uses discretion tied to outcomes (e.g., 2024 net earnings, EPS, margin) .
- Red flags: Company-level CIC agreements include tax gross-ups for two executives (not Naylor); controlled company governance reduces formal committee charters; no equity ownership requirements disclosed .
Risk Indicators & Red Flags
- Tax gross-ups present in CIC agreements for Ember and Bowen; not applicable to Naylor .
- No equity-based compensation and no reported share ownership for Naylor—reduced dilution and selling pressure, but weaker stock-alignment signal .
- Controlled company status; combined Chair/CEO; no lead independent director .
- Anti-hedging policy in place; insider trading compliance reported timely .
- No related person transactions in 2024; policy in place for review .
Investment Implications
- Alignment: Naylor’s incentives are tied to net earnings, EPS, sales growth, and margin via discretionary MIP and five-year vesting CAP; retention risk mitigated by CAP vesting and non-compete but equity alignment is structurally weak given no equity grants and no reported share ownership .
- Selling pressure: Minimal—no stock awards and no personal holdings disclosed; CAP/EBP are cash/deferred cash vehicles with plan-driven distributions, not market-driven sales .
- Change-in-control: No CIC protection for Naylor; in a transaction, his economics rely on CAP change-in-control payout mechanics but no salary/bonus multiples, lowering “golden parachute” risk and potential transaction resistance .
- Execution track record: Company-level net earnings and margins improved over the period of Naylor’s tenure, and TSR outperformed the peer benchmark in 2024 on a cumulative basis, supporting pay-for-performance despite discretionary metrics .