Harry A. Lawton III
TRACTOR SUPPLY CO /DE/About Harry A. Lawton III
President, Chief Executive Officer and Director of Tractor Supply Company since January 2020; age 50 . Under Lawton, TSCO delivered record FY2024 sales of $14.9B and over $1B in earnings for the third straight year, supported by 80 new stores, scaled omnichannel to >$1.1B, and launched the Life Out Here 2030 strategy . Over the past five years, management cites ~40% revenue growth and five consecutive years of record revenue and profit; Sealed the Allivet acquisition and executed a 5-for-1 stock split in 2024 . TSCO’s five-year TSR grew to $319 per $100 invested by year-end 2024, and net income in 2024 was $1.101B with $2.04 EPS (split-adjusted) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Macy’s, Inc. | President | 2017–2019 | Responsible for all aspects of the Macy’s brand; large-scale retail operations leadership . |
| eBay, Inc. | SVP, North America | 2015–2017 | Led merchandising, marketing, operations for NA marketplace . |
| The Home Depot, Inc. | SVP Merchandising; Head of Online | 2005–2015 | E-commerce and merchandising leadership; scaled Home Depot’s online business . |
External Roles
| Organization | Role | Years | Committees / Notes |
|---|---|---|---|
| Sealed Air Corporation | Independent Director | 2019–present | Compensation Committee member . |
| Buffalo Wild Wings, Inc. | Director (former) | 2016–2018 | Former public company board experience . |
Fixed Compensation (FY2024)
| Component | Amount | Notes |
|---|---|---|
| Base Salary | $1,300,000 | 4.0% increase vs. 2023; $1,294,231 earned in FY2024 due to timing . |
| Target Annual Bonus (CIP) | 150% of base salary | CEO target $1,950,000 . |
| Actual Annual Bonus Paid | $1,689,691 | Based on 86.4% payout on net income metric and strategic initiative outcomes . |
Performance Compensation (Design and Outcomes)
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Annual CIP metrics and FY2024 results: | Metric (Weight) | Threshold | Target Range | Overachieve | Max | Actual | Payout Impact | |---|---|---|---|---|---|---| | Net Income (75%) | $969M (25%) | $1,129–$1,152B (100%) | $1,254B (150%) | $1,311B (200%) | $1,101.240B | 96% of target midpoint → 86.4% payout on this component . | | Strategic Initiatives (25%) | Four initiatives equally weighted | – | – | – | Weighted result 21.8% of total plan from SIs | Service 96% (6.0%); Neighbor’s Club 134.7% (8.4%); Digital 119.2% (7.4%); Garden Center 0% (0%) . |
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Long-Term Incentives (granted 2/5/2024; target value $8.75M): 25% Options, 25% RSUs, 50% PSUs; options/RSUs vest ratably over 3 years; PSUs cliff-vest after 3 years based on FY2026 net sales and EPS growth, with a ±25% relative TSR modifier vs S&P 500 cohort .
- CEO LTI grants (2/5/2024): Options 186,930 @ $46.59; RSUs 48,940; PSUs target 93,150; total grant-date fair values: Options $2.187M; RSUs $2.187M; PSUs $4.375M .
- Prior PSU cycle (granted 2022; performance measured in FY2024): Achieved 30% of target (Net Sales $14.883B vs $15.65B target; EPS $2.04 vs $2.23 target; TSR modifier neutral at 68.41st percentile); CEO earned 23,317 shares from this grant .
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Pay mix and risk mitigation:
- ~89% of CEO 2024 target compensation was variable (at-risk) .
- Policies: no hedging/pledging; clawback compliant; no option repricing; no excise tax gross-ups; double-trigger CIC; no SERP .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 440,951 common shares; 986,595 option/RSU/PSU shares counted as within 60 days; total counted 1,427,546; <1% of shares outstanding . |
| Shares Outstanding (Record Date) | 531,615,387 (for reference) . |
| Ownership Guidelines | CEO required to hold 6x base salary; executives compliant or within initial compliance period . |
| Anti-Hedging/Pledging | Hedging and pledging prohibited for directors/officers; no margin accounts . |
| 2024 Vesting/Exercises | 260,735 shares vested from stock awards; no option exercises reported for CEO in 2024 . |
| Upcoming Vesting Pressure | 2024 grants vest over three years; approx. 62,310 options and 16,313 RSUs per year from 2024 grant schedule ( plus prior-year tranches), subject to sell-to-cover taxes; PSUs cliff-vest in 2027 based on FY2026 performance . |
- Selected outstanding CEO option and stock awards at FY2024 year-end: | Grant | Exercisable | Unexercisable | Exercise Price | Expiration | RSUs Unvested | PSUs (Target/Unearned) | |---|---:|---:|---:|---|---:|---:| | Options 2/5/2020 | 296,650 | — | $18.22 | 2/5/2030 | — | — . | | Options 2/3/2021 | 336,065 | — | $28.64 | 2/3/2031 | — | — . | | Options 2/9/2022 | 116,850 | 58,430 | $44.39 | 2/9/2032 | RSUs 13,660 | PSUs 77,725 (market value shown in proxy) . | | Options 2/8/2023 | 58,145 | 116,290 | $46.55 | 2/8/2033 | RSUs 31,525 | PSUs 89,355 (target) . | | Options 2/5/2024 | — | 186,930 | $46.59 | 2/5/2034 | RSUs 48,940 | PSUs 93,150 (target) . |
Note: RSUs vest ratably over 3 years; 2023/2024 PSUs are subject to a relative TSR modifier at vest .
Employment Terms
| Term | Key Provisions |
|---|---|
| Employment Agreement | Only TSCO executive with an employment agreement; term through Feb 9, 2026; auto-renews annually unless non-extension notice . |
| Severance (No-Cause / Good Reason) | Lump sum 2x base salary; 2x target bonus multiplied by the average bonus percentage of other execs over prior 3 years; 2 years of estimated benefits; 24-month non-compete; acceleration of next 12 months of options/RSUs; PSUs prorated based on actual performance . |
| Change-in-Control (Double Trigger) | 2x (salary + higher of target/current-year target bonus), 2 years benefits, up to $40,000 outplacement; options/RSUs vest; PSUs settled at target (or as specified); 24-month non-compete post-CIC termination; no excise tax gross-up (best-net cutback if applicable) . |
| Clawback | 3-year lookback for incentive-based comp upon financial restatement; covers metrics including TSR/stock price . |
| Hedging/Pledging | Prohibited (short sales, options, derivatives, collars; no margin/pledge) . |
Board Governance and Director Service
- Board role: President, CEO and Director since 2020; not independent; serves on no Board committees .
- Board leadership: Independent Chair (Edna K. Morris) since 2023; TSCO separates Chair/CEO roles; 8 of 9 nominees are independent .
- Board/committee attendance: In FY2024, each incumbent director attended at least 91% of combined Board and committee meetings; all directors attended the 2024 Annual Meeting .
- Director pay: Employee-directors (including CEO) receive no additional pay for Board service; non-employee director retainers and RSUs disclosed separately .
Compensation Governance, Peer Group, and Say-on-Pay
- Philosophy and benchmarking: Target total pay near market 50th percentile; independent consultant (Pearl Meyer) supports peer analysis; 2024 peer group includes Best Buy, Dollar General, AutoZone, O’Reilly, Ulta, Ross, Burlington, BJ’s, Dollar Tree, Advance Auto Parts, Casey’s, Dick’s, Bath & Body Works .
- 2024 Say-on-Pay: 93.0% approval; no design changes made in response .
- Key “Do/Do Not” practices: Double-trigger CIC; no tax gross-ups; no hedging/pledging; no option repricing; no SERP; minimum vesting; robust ownership/holding; clawback policy .
Performance & Track Record Highlights (during Lawton’s tenure)
- FY2024 operational results: Record sales ($14.9B) and >$1B earnings; 80 new TSCO stores, 11 new Petsense; >550 garden centers; omnichannel sales >$1.1B; Neighbor’s Club ~80% of sales; opened largest DC (Maumelle, AR) .
- Strategy: Launched Life Out Here 2030 (localization, final mile, retail media, exclusive brands, pet/animal Rx); acquired Allivet .
- Capital actions: 5-for-1 stock split (Dec 2024) .
- Pay-versus-performance context: Five-year TSR value $319 per $100 invested; FY2024 net income $1.101B; EPS $2.04 (split-adjusted) .
Director Compensation (as a Director)
- As an employee-director, Lawton receives no additional Board retainers or director RSUs; director compensation program applies only to non-employee directors .
Compensation Structure Analysis (signals)
- High at-risk pay (≈89% variable) aligns outcomes with performance; 50% of LTI in PSUs with EPS and sales goals plus relative TSR modifier increases alignment and reduces windfalls .
- Cyclical rigor: 2022 PSUs paid at 30% of target, indicating performance hurdles have bite; reduces “pay for pulse” risk .
- 2024 CIP calibration: Introduced target range and adjusted payout curve (threshold to 85% of target; max to 115%), balancing macro uncertainty with performance stretch .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; no excise tax gross-ups; no single-trigger CIC; no repricing; no SERP; robust clawback—low governance risk indicators .
- Related-party transactions: None requiring disclosure since prior year .
- Say-on-pay support robust (93%) .
Equity Vesting and Potential Selling Pressure
- 2024 vesting: 260,735 shares from stock awards vested for Lawton; no options exercised in 2024; future tranches from 2022–2024 RSUs/options will vest ratably; PSUs cliff-vest in 2027 subject to FY2026 results; sell-to-cover likely at vest .
- Anti-pledging and ownership guidelines temper incremental selling risk; CEO guideline 6x base salary, with executives compliant or within ramp period .
Employment & Contracts (Retention/Transition)
- Retention hooks: Significant unvested equity with multi-year vesting; 24-month non-compete enhances retention leverage .
- Exit economics: Without cause/good reason—2x base + formula bonus + benefits; CIC double trigger—2x salary+bonus, benefits, equity vest to target; no tax gross-up .
Investment Implications
- Pay-for-performance alignment is strong: high at-risk mix; PSU rigor evidenced by 30% payout on 2022 grant; robust anti-hedging/pledging and clawback frameworks—favorable for long-term holders .
- Retention risk appears contained: auto-renewing contract to 2026, 24-month non-compete, meaningful unvested equity; CIC protections are standard double-trigger with no gross-ups—balanced shareholder posture .
- Near-term trading dynamics: Multi-year RSU/option vesting schedules imply periodic sell-to-cover flow; 2024 saw large stock vesting and no CEO option exercises, suggesting limited discretionary selling pressure; future PSU outcomes (FY2026) create potential catalyst tied to execution on growth and EPS .
- Governance mitigants: Independent Chair, 8/9 independent directors, and strong say-on-pay (93%) reduce governance discount risk .