Richard M. Olson
TOROAbout Richard M. Olson
Richard M. Olson is Chairman of the Board, President and CEO of The Toro Company (TTC). He joined Toro in 1986, became President in September 2015, CEO in November 2016, and Chairman in November 2017; he has served on the board since 2016 and is age 61 . He holds a BS in Industrial Technology from Iowa State University and an MBA from the University of Minnesota’s Carlson School of Management . Under his leadership, FY2024 net sales were $4.58B and adjusted diluted EPS was $4.17, reflecting execution across Professional and Residential segments and ongoing investment in R&D ($173.1M) . Total shareholder return (TSR) based on a $100 investment as of Oct 31, 2020 was $103 in FY2024 versus $171 for the S&P Industrial Machinery peer group; adjusted diluted EPS was $4.17 in FY2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Toro Company | Chairman (since Nov 2017); CEO (since Nov 2016); President (since Sep 2015); COO (Sep 2015–Oct 2016) | 2015–present | Unified strategy and operational oversight; advanced alternative power, smart-connected, and autonomous solutions . |
| The Toro Company | Group VP, International, Micro-Irrigation, Distributor Development | 2014–2015 | Expanded global reach and channel development . |
| The Toro Company | VP, International | 2013–2014 | Led international growth initiatives . |
| The Toro Company (Exmark) | VP; General Manager | 2010–2013 | Drove product leadership in landscape contractor segment . |
| The Toro Company | Multiple operations/engineering leadership roles (manufacturing, plant operations) | 1986–2010 | Built deep global operations and supply chain expertise . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Donaldson Company, Inc. | Director | Current | Public company board experience; governance and industrial expertise . |
| Outdoor Power Equipment Institute; The Toro Company Foundation | Board roles | Historical/current | Industry advocacy; community engagement . |
Fixed Compensation
| Component | FY2024 | Notes |
|---|---|---|
| Base Salary ($) | 1,190,000 | 3.9% increase effective March 1, 2024 . |
| CEO Target Bonus (% of Base) | 130% | No change vs prior year; market-aligned target TCC . |
| Perquisites ($) | 15,974 | Auto lease, financial planning, executive physical, product use; modest program . |
| Retirement/Nonqualified Contributions ($) | 113,156 | Retirement Plan ($20,544) + Supplemental Benefit Plan ($92,612) . |
Performance Compensation
| Metric | Weighting | Target/Goal Framework | FY2024 Actual | Payout Impact | Vesting/Timing |
|---|---|---|---|---|---|
| Annual Cash Incentive: Adjusted Diluted EPS | 50% | Threshold 3.58; Target 4.48; Max 4.93 | 4.17 (between threshold and target) | Contributed to 39.6% corporate payout | Paid after year-end (Dec 2024 certification) . |
| Annual Cash Incentive: Corporate Revenue Growth | 25% | Threshold 2.1%; Target 5.1%; Max 8.1% | 0.7% (below threshold) | Reduced payout | Paid after year-end . |
| Annual Cash Incentive: Working Capital % of Sales | 25% | Threshold 24.75%; Target 22.50%; Max 20.25% | 25.90% (below threshold) | Reduced payout | Paid after year-end . |
| FY2024 Annual Cash Incentive Payout ($) | — | — | 604,994 | 39.6% of target; ~52% of FY base salary earnings . | Paid/recognized after year-end . |
| Long-term Incentive: Stock Options | 50% of LTI value | Time-vest; performance realized via stock appreciation | Grant: 101,300 options at $99.60 (12/26/2023) | — | Vest in equal tranches on 12/26/2024, 12/26/2025, 12/26/2026; 10-year term . |
| Long-term Incentive: Performance Shares (FY2024–FY2026) | ROIC 60%; Corporate Revenue 40% | Targets over 3-year period; specific goals confidential | In progress | — | Payout Dec 2026 if goals achieved; target grant 32,200 (max 64,400) . |
| Long-term Incentive: Performance Shares (FY2022–FY2024) | Net income+after-tax interest 50%; Cumulative revenue 30%; Working capital % of sales 20% | Threshold/Target/Max set in FY2022 | Between threshold and target for NI and revenue; below threshold for WC% | 55.3% of target payout | Paid Dec 18, 2024; Olson received 13,990 shares valued $1,139,346 . |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 206,496 shares; less than 1% of outstanding . |
| Options Held | 1,098,955 (right to acquire within applicable periods); detailed option lots across 2015–2023 grants with varying strikes . |
| Unexercisable Options at FY2024 YE | 36,367 (12/16/2021); 72,800 (12/22/2022); 101,300 (12/26/2023); vest per schedule . |
| Performance Share Awards In-Progress | F23–F25: 12,840; F24–F26: 12,880; mark-to-market values disclosed . |
| Insider Transactions Signals | FY2024: exercised 20,000 options (value realized $1,276,300) and received PSU payout 13,990 shares ($1,139,346); indicates supply from vesting windows and potential tax liquidity needs . |
| Stock Ownership Guidelines | CEO multiple increased to 6x base salary with holding requirement until guideline met (effective Jan 16, 2024) . |
| Hedging/Pledging | Prohibited for directors and officers (shorts, options, collars, pledging/margin) per Insider Trading Policy . |
Employment Terms
- No individual employment or severance agreements; executives subject to standard confidentiality, invention and non-compete agreement .
- Change-in-Control (CIC) policy:
- Double-trigger severance: CEO receives 3x base salary + 3x target annual cash incentive upon qualifying termination within 3 years post-CIC; plus pro-rated target bonus, 3 years welfare coverage, and outplacement; no 280G tax gross-ups .
- Equity: Single-trigger acceleration of options and certain awards upon CIC; PSUs/annual incentives settle at greater of target or actual to date (plan-specific provisions); if awards are not assumed, cash-out mechanics apply .
- Estimated CIC benefits (as if as of Oct 31, 2024): Cash severance $8,211,000; welfare $71,169; outplacement $30,000; immediate PSU payout value $2,586,064 (plan-specific settlement basis) .
Board Governance
- Board service: Director since 2016; Chairman since 2017; no committee memberships; up for a proposed two-year term ending 2027 as part of class rebalancing .
- Dual-role implications: Combined Chair/CEO structure offset by a Lead Independent Director (Gary L. Ellis) with defined duties (agenda setting, executive sessions, CEO performance/comp feedback, board self-evaluation); Board affirms independence of non-employee directors and reviews leadership structure regularly .
- Executive sessions: Regular independent director sessions at each meeting; six Board meetings in FY2024 with ≥75% attendance by each incumbent director .
- Director compensation: Employee directors (Olson) receive no additional director pay; non-employee director program includes cash retainers, annual stock and option awards; changes effective FY2025 increased stock award and certain chair retainers .
Director Compensation
| Component | FY2024 Non-Employee Director Levels | Notes |
|---|---|---|
| Annual Stock Award | $85,000 (increased to $95,000 effective Nov 1, 2024) | Fully vested at grant; shares based on 3-month average price . |
| Annual Option Award | $55,000 | 10-year term; 3-year equal vest . |
| Board Retainer | $95,000 | Committee/Chair/Lead Director additional retainers per role . |
| Employee Director Pay | N/A for Olson | Employee directors do not receive director compensation . |
Compensation Structure Analysis
- Pay mix and alignment: CEO target total direct compensation heavily performance-based with at-risk LTI and annual incentives; FY2024 annual corporate payout at 39.6% of target reflects tightened goals and asset efficiency focus (working capital) .
- Metric evolution: Shift to ROIC and revenue for PSUs (FY2024–FY2026), replacing net income and working capital metrics—raises bar on capital efficiency over pure earnings growth .
- Clawbacks: Robust clawback covering Dodd-Frank restatement scenarios and discretionary recoupment for egregious conduct; equity plan clawbacks extend one year post-termination .
- Governance practices: No tax gross-ups; no guaranteed salary increases or bonuses; minimum vesting; annual say-on-pay—91% support in 2024 .
Performance & Track Record
- Financials context (annual): | Metric | FY2022 | FY2023 | FY2024 | |---|---|---|---| | Revenues ($USD) | 4,514,700,000 | 4,553,200,000 | 4,583,800,000 | | EBITDA ($USD) | 684,700,000* | 701,800,000* | 661,900,000* |
Values retrieved from S&P Global.*
- FY2024 company highlights: Net sales $4.58B; adjusted EPS $4.17; continued strategic priorities in profitable growth, productivity and operational excellence, and people; R&D investment $173.1M; dividend increased and announced $0.38 per share for FY2025 .
- PvP linkage: CAP shows sensitivity to stock price; TSR $103 vs peer $171 for FY2024 window; adjusted diluted EPS is a key company-selected metric .
Say-on-Pay & Shareholder Feedback
- FY2024 say-on-pay approval: 91% of votes cast in favor; compensation program maintained without structural changes .
Equity Ownership Details
| Holder | Shares | Options (exercisable/unexercisable) | Units (Deferred Plans) | % of Class |
|---|---|---|---|---|
| Richard M. Olson | 206,496 | 1,098,955 options; detailed tranches and strikes per “Outstanding Equity Awards” | 167,518 units (Officers Deferred Plan) | <1% . |
Additional ownership detail by instrument type and vesting schedules in FY2024 disclosed in the proxy .
Employment & Contracts
| Term | Provision |
|---|---|
| Employment Agreement | None; at-will with standard confidentiality, invention, and non-compete . |
| CIC Severance | 3x base + 3x target bonus; pro-rated target bonus; 3 years welfare; outplacement; no gross-ups; double-trigger . |
| Equity Acceleration at CIC | Options and certain awards accelerate; PSUs settle at greater of target or actual to date under plan rules; single-trigger for equity . |
| Non-Compete/Non-Solicit | Standard company agreements apply . |
| Deferred Compensation | Participation in Deferred Plan and Supplemental Benefit Plan; aggregate balances and FY2024 earnings disclosed . |
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited for executives and directors; reduces misalignment risk .
- Clawbacks: Enhanced beyond NYSE rules; deters misconduct .
- Single-trigger equity vesting at CIC: Can be shareholder-sensitive; balanced by double-trigger cash severance and absence of tax gross-ups .
- Related party transactions: Governance guidelines and N&G Committee oversight; no material conflicts disclosed .
- Insider sales pressure: Option exercise activity and PSU vesting create periodic sell windows; 2024 option exercise by Olson and PSU payouts indicate potential liquidity needs around vesting dates .
Competency & Qualifications
- Education: BS, Iowa State University; MBA, University of Minnesota (Carlson) .
- Technical/operational: Deep manufacturing, engineering, supply chain, and product development leadership; international operations; channel development .
- Board qualifications: CEO experience; strategic planning; M&A oversight; sustainability alignment .
Compensation Committee Analysis
- Committee composition: Independent directors; chaired by James C. O’Rourke; uses Willis Towers Watson as independent consultant; robust market benchmarking around 50th percentile targeting .
- Process: Annual approval of goals/targets; certification of results; risk assessment of pay programs; stock ownership and holding requirements enhanced .
Investment Implications
- Alignment: CEO pay is predominantly at-risk with LTI tied to ROIC and revenue and annual incentives keyed to EPS, growth, and working capital—favorable for long-term value if capital efficiency improves .
- Near-term selling pressure: Scheduled vesting of 2021–2023 option tranches and PSU payouts suggests periodic insider supply; monitor 12/26 annual vest dates and performance payout windows for liquidity events .
- Retention/CIC: Strong retention via three-year protection post-CIC and substantial severance; equity single-trigger at CIC could catalyze event-driven settlement—watch M&A chatter and governance responses .
- Governance: Combined Chair/CEO mitigated by active Lead Independent Director and policy framework; say-on-pay support (91%) indicates investor acceptance of program design .
Key data supports a disciplined, performance-oriented pay design with enhanced ownership requirements and strong clawbacks. Execution risk centers on delivering ROIC and revenue against tightened working-capital discipline while managing periodic insider-related supply around vesting windows.