R. Jeffrey Bailly
About R. Jeffrey Bailly
R. Jeffrey Bailly, age 63, has served as Chief Executive Officer of UFP Technologies since January 1, 1995 and Chairman since October 2006; he joined the company in 1988 and is a certified public accountant who began his career at Coopers & Lybrand (1984–1988) . Under his tenure, cumulative TSR (based on a $100 investment at 12/31/2020) reached $492.67 in 2024, while net income was $58,981,545 and Adjusted Operating Income was $85,574,421 for 2024, with compensation actually paid to the PEO tracking performance metrics used by the Compensation Committee . The company’s pay-for-performance framework emphasizes Adjusted Operating Income, net sales, and ROIC as key performance measures in linking pay to outcomes .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| UFP Technologies | Chief Executive Officer; Chairman | CEO: 1995–present; Chair: 2006–present | Board and executive leadership; experience in operations, accounting, finance, M&A, and executive leadership in manufacturing cited as board qualifications . |
| UFP Technologies | President | 1995–2024 | Executive leadership across growth phases; role concluded in 2024 as President . |
| UFP Technologies | Vice President of Operations | 1994–1995 | Operations leadership . |
| UFP Technologies | General Manager, Northeast Operations | 1992–1994 | Regional operations leadership . |
| UFP Technologies | Division Manager | 1989–1992 | Division leadership . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Coopers & Lybrand | Employee (CPA) | 1984–1988 | Accounting background . |
| World Presidents’ Organization | Member | n/a | Professional affiliation . |
Fixed Compensation
| Element | 2024 | 2025 (effective Jan 1) | Notes |
|---|---|---|---|
| Base salary | $705,000 | $789,000 | 2025 increase approved Feb 11, 2025 . |
| Annual stock grant (per employment agreement) | $400,000 (1,582 shares at $252.85 on 12/20/2024) | Continues per agreement | Annual stock grant made in last weeks of fiscal year if employed on issue date . |
| Perquisites/other | $136,450 (includes life insurance premiums of $77,160; plus marina fees, tax prep; car allowance/other typical perqs) | n/a | Perqs disclosed; no tax gross‑ups policy . |
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Target | Actual | Payout mechanics | Actual payout |
|---|---|---|---|---|
| Adjusted Operating Income | $66,309,000 | $75,856,022 | CEO target bonus = 100% of base ($705,000): $425,000 tied to financial metric and $280,000 tied to individual goals; financial portion scales by 10% of the amount by which actual AOI exceeds target; zero payout if AOI <80% of target; total bonus capped at 2x salary | $1,410,000 (cap) |
Long‑Term Equity Incentives (2024 grants; performance year 2024)
| Award type | Grant mechanics | Shares granted at each level | Performance result | Vesting |
|---|---|---|---|---|
| RSUs (time‑based “Threshold”) and performance RSUs (“Target” and “Exceptional”) | Fixed dollar value approach; grant date fair value for Bailly $2,660,000 across levels; separate annual $400,000 stock grant per employment agreement on 12/20/2024 | Threshold: 5,175; Target: 5,175; Exceptional: 5,175 | Target achieved; 96% of Exceptional achieved based on AOI of $75,856,022 vs $66,309,000 and 115% hurdle; thus Threshold + Target + 96% of Exceptional earned | One‑third vests on 3/1/2025, 3/1/2026, 3/1/2027 (continued employment; special acceleration for CEO on without‑cause/Good Reason; all NEOs accelerate on change in control for earned awards) |
Multi‑Year Summary Compensation (CEO)
| Year | Salary ($) | Stock Awards ($) | Non‑Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|
| 2024 | 705,000 | 3,025,077 (includes $400,000 stock grant) | 1,410,000 | 136,450 | 5,276,527 |
| 2023 | 680,000 | 2,761,000 | 1,360,000 | 130,107 | 4,931,107 |
| 2022 | 650,000 | 1,980,200 | 944,800 | 125,557 | 4,300,557 |
Additional details:
- 2024 vesting realized for CEO: 20,752 shares vested on 3/1/2024 (value realized $4,499,034 at $216.80/share) .
- 2022 discretionary bonus of $300,000 plus fully exercisable options (7,935 sh, $111.54 strike, 5‑year term) granted in 2023 as part of 2022 bonus .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 159,931 shares; 2.07% of outstanding (based on 7,706,825 shares) . |
| Options outstanding | 3,967 exercisable; 3,968 unexercisable; strike $111.54; expiration 2/14/2028 . |
| Unvested RSUs (12/31/2024) | 36,504 units; market value at $244.51 close = disclosed aggregate value $8,925,593 (includes detail by vesting tranche) . |
| Upcoming vesting (CEO) | 12,161 RSUs vest 3/1/2026; 5,105 RSUs vest 3/1/2027; 19,238 vested 3/1/2025 . |
| Anti‑pledging/hedging | Company prohibits hedging and pledging; also prohibits holding in margin accounts . |
| Ownership guidelines | CEO guideline: 3x base salary; assessment window five years from appointment . |
| Deferred compensation | CEO contributed $100,000 in 2024; 12/31/2024 balance $988,994; 2024 earnings $132,918 . |
Notes on selling pressure:
- Significant annual vesting occurs on March 1 each year (2025–2027), which can create periodic supply; company policies restrict trading windows and prohibit hedging/pledging .
- CEO options with $111.54 strike are in‑the‑money relative to 12/31/2024 close of $244.51, which may influence exercise timing before 2/14/2028 expiration .
Employment Terms
| Term | Key provisions |
|---|---|
| Agreement | Employment agreement dated Oct 8, 2007 (as amended) . |
| Base and annual stock grant | Minimum salary (superseded by current salary approvals) and Annual Stock Grant Award of $400,000 in shares issued on or before Dec 31 each year if employed on issue date . |
| Non‑compete | 18 months post‑termination (any reason) . |
| Severance (CEO) | If terminated without Cause, resigns for Good Reason, or voluntary termination within 6 months post‑Change in Control: lump sum = 3x average annual compensation (base + Annual Stock Grant Award + bonus) over prior two years; capped to avoid golden parachute excise tax; up to 36 months continued health insurance; as of 12/31/2024, estimated lump sum $7,432,500 and health benefits $58,551 . |
| Equity acceleration | On Change in Control or termination without Cause/for Good Reason: immediate issuance of next Annual Stock Grant and vesting of earned but unvested stock rights; as of 12/31/2024, estimated vested equity value $6,446,262 at $244.51 . |
| Clawback | Policy adopted consistent with SEC/Nasdaq rules . |
| No gross‑ups | Company states no tax gross‑ups provided . |
Performance & Track Record
| Year | Total Shareholder Return (start $100) | Net income ($) | Adjusted Operating Income ($) |
|---|---|---|---|
| 2020 | 93.93 | 13,368,880 | 16,731,467 |
| 2021 | 141.62 | 15,885,720 | 21,633,199 |
| 2022 | 237.60 | 41,789,243 | 44,463,769 |
| 2023 | 346.70 | 44,923,806 | 61,336,342 |
| 2024 | 492.67 | 58,981,545 | 85,574,421 |
- Performance measures considered most important in linking pay to outcomes: Adjusted Operating Income, net sales, and ROIC .
- CEO pay ratio for 2024: 909:1; if excluding Costa Rica and Dominican Republic employees, 122:1 (methodology disclosed) .
Board Governance
- Roles and tenure: CEO and Chairman (dual role) since 2006; director since 1995 .
- Independence and structure: Six of seven directors deemed independent under Nasdaq; Lead Independent Director (Daniel C. Croteau) provides independent oversight, including presiding executive sessions and agenda coordination .
- Committee roles: Bailly serves on no board committees; Audit chaired by Cynthia Feldmann; Compensation chaired by Joseph Hassett; Nominating chaired by Daniel Croteau .
- Meetings/attendance: Board met four times in 2024; each director attended at least 75% of Board and committees served .
- Governance policies: Declassified board (2020); no rights plan renewal; anti‑hedging/pledging; no option repricing/buyouts; stock ownership guidelines; clawback .
- Say‑on‑pay: Over 90% approval at 2024 meeting; 2025 frequency recommendation: triennial advisory vote .
Director Service and Compensation (Bailly as Director)
- Bailly is an employee director; non‑employee director compensation does not apply to him; director committee retainers and equity grants apply to non‑employee directors only .
- Beneficial ownership as director: 159,931 shares (2.07%) .
Compensation Structure Analysis
- Cash vs equity mix: CEO total compensation driven by performance-based bonus and significant equity grants; 2024 total $5.28M with $1.41M bonus and $3.03M stock awards (includes fixed $400k stock grant), indicating high at‑risk pay .
- Shift in instruments: Program uses a mix of time‑based and performance-based RSUs; options used sparingly (not repriced), with 2023 grant tied to 2022 bonus .
- Targets and rigor: 2024 AOI target $66.3M achieved at $75.86M; Exceptional level defined at 115% of target with 96% achieved—payouts capped and formulaic .
- Governance hygiene: No tax gross‑ups; anti‑hedging/pledging; clawback adopted; independent Compensation Committee and consultants .
Related Party Transactions
- In 2024, the company paid Mr. Bailly’s brother, John Bailly, approximately $210,986 in compensation for services as Director, Corporate Estimating; related-party transactions are reviewed under a written policy by the Audit Committee .
Equity Ownership & Alignment (Detail)
| Category | Amount |
|---|---|
| Shares beneficially owned | 159,931 (2.07% of 7,706,825) |
| Options exercisable (within 60 days of 4/11/2025) | 7,766 included in director footnote; CEO outstanding options: 3,967 exercisable, 3,968 unexercisable at $111.54 expiring 2/14/2028 |
| Unvested RSUs at 12/31/2024 | 36,504; market value presented using $244.51 close |
| Upcoming vesting tranches | 12,161 on 3/1/2026; 5,105 on 3/1/2027 (19,238 vested 3/1/2025) |
| Ownership policy | CEO guideline 3x base salary; five‑year compliance window; anti-hedging and anti-pledging policies in force |
Compensation Peer Group and Consultants
- 2022 market study by Aon used 12 companies including Accuray, AngioDynamics, Anika Therapeutics, Atrion, Avanos, Artivion (CryoLife), Cutera, DMC Global, Integer, Lantheus, OraSure, Orthofix .
- 2024 update by Pearl Meyer used 19 companies across MedTech and life sciences instrumentation (e.g., Avanos, AtriCure, Integra/Integer, Glaukos, STAAR Surgical, Orthofix, Haemonetics, Sotera, 10x Genomics, Inari, TransMedics, CONMED, Novanta, Azenta, iRhythm, OSI Systems, Alphatec) .
Say‑on‑Pay & Shareholder Feedback
- Over 90% approval of executive compensation in 2024, which the company considered supportive of decisions and policies .
- Frequency vote recommendation (2025 proxy): triennial say‑on‑pay vote, aligning with multi‑year pay design .
Board Service History, Committees, and Dual‑Role Implications
- Service: Director since 1995; Chairman since 2006; CEO since 1995 .
- Committees: Bailly serves on none; independent directors chair Audit (Feldmann), Compensation (Hassett), and Nominating (Croteau) .
- Dual role implications: The Board defends combined CEO/Chair as providing clear leadership; independence addressed via a majority‑independent board and a Lead Independent Director (Croteau) who presides over executive sessions and coordinates agendas .
- Attendance: Board met four times in 2024; each director met at least 75% attendance .
Risk Indicators & Red Flags
- CEO pay ratio 909:1 (global workforce mix cited); excluding CR/DR employees would be 122:1 .
- Related‑party pay to CEO’s brother ($210,986) monitored under policy .
- No option repricing or buyouts; no tax gross‑ups; anti‑hedging/pledging; clawback adopted .
- Form 4 trading behavior not detailed in proxy; vesting cadence around March 1 creates periodic liquidity events .
Investment Implications
- Alignment: Strong linkage of CEO variable pay to Adjusted Operating Income and multi‑year RSU vesting; significant skin‑in‑the‑game via 2.07% ownership and large unvested RSUs, combined with anti‑pledging/hedging policies, supports shareholder alignment .
- Retention and change‑in‑control: Robust CIC/severance (3x average comp plus equity acceleration and 36‑month health) reduces retention risk but creates potential sale pressure upon CIC and elevates parachute costs; no gross‑up mitigates shareholder unfriendly optics .
- Governance: CEO/Chair dual role is tempered by a Lead Independent Director and majority‑independent board; say‑on‑pay support (>90%) suggests investor acceptance of pay design .
- Trading signals: Annual RSU vesting on March 1 and in‑the‑money options expiring in 2028 define likely windows for potential insider liquidity, though policy constraints and window periods apply .
- Performance momentum: TSR and profitability metrics (net income, Adjusted Operating Income) improved meaningfully 2020–2024, aligning with higher compensation actually paid under the PVP framework; continued achievement against AOI targets is the key lever for incentive outcomes .