Mark D. Morelli
VontierAbout Mark D. Morelli
Mark D. Morelli is President & Chief Executive Officer of Vontier, serving since January 2020 and a director since October 2020 . He is 61 years old . External board role: director at Xylem Inc. since February 2022; he chairs Xylem’s Leadership Development & Compensation Committee and sits on its Audit Committee . Pay-versus-performance disclosures show Vontier’s TSR value rising from $99.70 in 2020 to $110.24 in 2024 alongside Net Income of $342.0MM in 2020 to $422.2MM in 2024 and Adjusted Operating Profit of $579.0MM in 2020 to $638.7MM in 2024 . 2024 CEO pay ratio: 233:1 ($9,943,569 vs. $42,731) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Columbus McKinnon Corporation | President & CEO | Feb 2017 – Jan 2020 | Led operational transformation and growth initiatives |
| Brooks Automation, Inc. | President & COO | Jan 2012 – Mar 2016 | Drove operations and portfolio execution |
| Energy Conversion Devices | CEO | Prior to Brooks; ceased serving >1 year before ECD’s voluntary Chapter 11 filing | Alternative energy leadership; company filed Chapter 11 within one year after his tenure ended |
| United Technologies Corporation | Various roles (product management, marketing, strategy, general management) | Jun 1993 – Sep 2007 | Progressive general management across global industrial businesses |
| U.S. Army | Officer & helicopter pilot | Early career | Leadership foundation |
External Roles
| Organization | Role | Years | Committees / Notes |
|---|---|---|---|
| Xylem Inc. (NYSE: XYL) | Director | Since Feb 2022 | Chair, Leadership Development & Compensation; Member, Audit |
Fixed Compensation
| Year | Base Salary ($) | Target Annual Incentive (% of Base) | Target Annual Incentive ($) | Corporate Financial Factor (CFF) | Personal Performance Factor (PPF) | Actual ICP Payout ($) |
|---|---|---|---|---|---|---|
| 2024 | 1,112,400 | 150% | 1,668,600 | 74% | 1.0 | 1,234,764 |
Summary Compensation (multi-year):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 1,037,500 | 1,072,500 | 1,112,857 |
| Stock Awards ($) | 4,197,627 | 5,953,567 | 6,923,752 |
| Option Awards ($) | — | — | 476,100 |
| Non-Equity Incentive ($) | 945,000 | 2,106,000 | 1,234,764 |
| All Other Compensation ($) | 178,300 | 192,856 | 196,096 |
| Total ($) | 6,358,427 | 9,324,923 | 9,943,569 |
Perquisites (2024):
| Item | Amount ($) |
|---|---|
| Company 401(k) Contributions | 24,096 |
| EDIP Contributions | 162,000 |
| Tax/Financial Planning & Executive Physical | 10,000 |
Performance Compensation
Annual ICP design and outcome:
| Component | Metric/Design | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| ICP (cash) | Corporate Financial Factor | 74% factor | Applied to target | 1,234,764 | Cash (annual) |
| ICP (modifier) | Personal Performance Factor | 0–150% scale | 1.0 | No adjustment | N/A |
Long-term equity mix and metrics:
| Award Type | Mix/Value | Metrics | Modifier | Vesting |
|---|---|---|---|---|
| PSUs (2024 grant) | $3,175,000 target (54% of LTIP) | 50% Total Adjusted Operating Profit Margin Expansion; 50% 3-Year Core Revenue Growth | rTSR vs S&P 500 ±15% | Earned over 3 years |
| RSUs (2024 grant) | $2,675,000 (46% of LTIP) | Time-based | N/A | Multi-year vesting |
| Stock Options (initial 2024 grant) | 30,000 options; $476,100 grant-date fair value; Black-Scholes $15.87 | Value realized only via stock price appreciation | N/A | 50% vest at 1st anniversary; 25% at 2nd/3rd anniversaries |
Option eligibility program (2025 contingent grant):
| EPS Threshold (2024 performance) | Eligible Options |
|---|---|
| < $3.00 | 0% of target |
| $3.00 ≤ $3.10 | 75% of target |
| > $3.10 | 100% of target |
| Outcome | EPS below threshold; no 1Q25 grant |
Historic PSU outcome:
| PSU Cohort | Metric | rTSR | Earned |
|---|---|---|---|
| 2022 PSU awards | 3-year EPS (2022–2024) | 61st percentile | 0% (EPS below threshold) |
Equity Ownership & Alignment
Beneficial ownership and outstanding awards:
| Item | Detail |
|---|---|
| Beneficially owned common shares | 848,739 |
| Options (exercisable) | 422,673 at $31.46; exp. 2/20/2030 |
| Options (unexercisable) | 57,641 (2020 grant) at $31.46 exp. 2/20/2030; 30,000 (2024 grant) at $41.10 exp. 2/19/2034 |
| Unvested RSUs | 195,614; market value $7,134,043 at $36.47 |
| Unearned PSUs (target) | 197,320; market/payout value $7,196,260 at $36.47 |
Policies and guidelines:
- Pledging prohibited for executives and directors .
- Hedging prohibited (short sales, derivative transactions) except awards under the stock plan .
- Clawback/recoupment policy compliant with NYSE/SEC; mandatory recoupment for restatements and discretionary in certain scenarios .
- Ownership guidelines: CEO must hold 5x base salary; all NEOs compliant as of 12/31/2024 or within allowed time .
Vesting and potential selling pressure:
- 2024 options vest schedule: 50% on 2/19/2025, 25% on 2/19/2026, 25% on 2/19/2027, creating periodic liquidity events .
- 2020 options include tranches vesting 20% annually over five years and a separate 33.3% over three years structure .
Employment Terms
Executive Letter Agreement:
- Agreement entered Dec 6, 2019; effective Jan 13, 2020 .
- Eligible for EDIP participation and standard employee benefits; $10,000 annual cash stipend for financial services/counseling; Executive Physical program participation .
Severance and Change-in-Control (CIC) Plan (amended Aug 21, 2024):
- Without CIC (termination without cause): CEO receives 2x base salary; pro-rata annual cash bonus based on actual performance; pro-rata vesting of equity granted ≥6 months before termination (performance awards based on actual performance); 24 months health benefits .
- With CIC (within 24 months; termination without cause or good reason): CEO receives 2.5x (base salary + target bonus); pro-rata annual bonus at target; full vesting of all unvested equity awards at target; 30 months health benefits .
Estimated values (as of 12/31/2024):
| Scenario | Severance Payment | Annual Incentive | Benefits Continuation | Accelerated Options Value | Accelerated PSUs Value | Accelerated RSUs Value | Outplacement | Forfeiture | Accelerated EDIP | Total |
|---|---|---|---|---|---|---|---|---|---|---|
| Termination without cause | 2,224,800 | 1,234,764 | 45,254 | 279,162 | 7,224,191 | 7,122,518 | 10,500 | — | — | 18,141,189 |
| Retirement | — | 1,234,764 | — | 283,972 | 3,542,728 | 5,367,983 | — | — | — | 10,429,447 |
| Death | — | 1,668,600 | — | 288,771 | 3,743,408 | 5,639,538 | — | — | 178,708 | 11,519,025 |
| CIC termination | 6,952,500 | 1,668,600 | 56,567 | 288,781 | 7,224,191 | 7,134,043 | 10,500 | (883,097) | 178,708 | 22,630,793 |
Clawback/recoupment: mandatory for restatements; board may require reimbursement for misconduct causing restatement; recoups gains from equity awards within 12 months post original filing .
Board Governance
- Director since October 2020; committee memberships: none .
- Morelli is a member of the Board but receives no additional director compensation .
- Committee composition features independent directors; Compensation and Management Development Committee chaired by Christopher J. Klein; Audit Committee chaired by Andrew D. Miller; Nominating & Governance chaired by Gloria R. Boyland .
- Director compensation program uses annual retainers and equity grants with options/RSUs for non-employee directors; chair and committee retainers disclosed .
Dual-role implications:
- Combined CEO and director role with no committee membership concentrates executive authority but avoids CEO/Chair duality; independent committee leadership provides governance counterbalance .
Performance & Track Record
Pay-versus-performance and operating trends:
| Year | TSR ($100 initial) | Peer Group TSR | Net Income ($MM) | Adjusted Operating Profit ($MM) | CEO “Comp Actually Paid” ($) |
|---|---|---|---|---|---|
| 2020 | 99.70 | 110.78 | 342.0 | 579.0 | 10,693,129 |
| 2021 | 91.94 | 134.17 | 413.0 | 684.8 | 5,819,382 |
| 2022 | 58.08 | 126.82 | 401.3 | 716.2 | (110,112) |
| 2023 | 104.16 | 149.82 | 376.9 | 664.3 | 18,677,596 |
| 2024 | 110.24 | 175.99 | 422.2 | 638.7 | 6,179,460 |
Strategic execution highlights (2024):
- Progress on Connected Mobility strategy; robust demand in convenience retail/fueling; headwinds in repair solutions and car wash; ongoing cost optimization and balanced capital allocation with share repurchases .
Say-on-Pay & Shareholder Engagement
- Annual advisory vote on NEO compensation; Board and Compensation Committee consider outcomes when making compensation decisions; next say-on-pay in 2026 .
Compensation Structure Analysis
- Increased emphasis on performance-based equity for CEO (54% PSUs) in 2024 aligns with long-term value creation; introduction of performance-based stock options heightens at-risk pay .
- EPS-based contingent stock option program enforces rigorous annual performance gating; no 1Q25 grant due to EPS below threshold .
- 2022 PSU cohort paid 0% despite 61st percentile rTSR, demonstrating hurdle integrity and payout discipline .
Risk Indicators & Red Flags
- PSU miss (EPS below threshold) is a performance risk signal; reinforces pay-for-performance integrity but may affect retention if repeated .
- Prior CEO role at Energy Conversion Devices, which filed Chapter 11 within one year after his tenure ended, is a historical context consideration .
- Pledging and hedging prohibited; strong clawback policy mitigates misconduct risk .
- CEO pay ratio 233:1 indicates high pay leverage; evaluation should consider performance outcomes and equity mix .
Equity Ownership & Alignment Details
| Element | Policy / Status |
|---|---|
| Stock ownership guideline | CEO: 5.0x base salary; compliant as of 12/31/2024 (or within time allowed) |
| Hedging/Pledging | Prohibited (short sales; derivatives; pledging) |
| Director comp for CEO | None (no additional compensation for board service) |
| Equity plan overhang | 4,056,386 securities to be issued on exercise; 10,580,820 available for future issuance |
Employment Contracts & Economics (Severance/CIC Specifics)
- Without CIC: 2x base salary; pro-rata bonus based on actual; pro-rata equity vesting; 24 months health; release required .
- With CIC: 2.5x (salary + target bonus); pro-rata bonus at target; full equity vesting at target; 30 months health; release required .
- Specific values (as of 12/31/2024) detailed above (Total up to $22.6MM under CIC termination) .
Investment Implications
- Alignment: 2024 pay mix increases performance-based equity and introduces options; strong ownership, anti-hedging/pledging, and clawback policies are investor-friendly .
- Performance sensitivity: EPS gating eliminated 2025 options; 2022 PSU zero payout despite solid rTSR highlights earnings dependence—watch EPS trajectory for future payouts and retention risk .
- Liquidity/overhang: Significant unvested RSUs/PSUs and option tranches vesting through 2027 suggest periodic selling windows; monitor Form 4 activity and trading plans around vest dates .
- Downside/CIC protection: Rich CIC terms (2.5x salary+target bonus plus full equity vesting) could create acquisition-related dilution; however, change-in-control is double-trigger and standard for peers .
- Governance: CEO-director (not Chair) with independent committees and no director pay reduces dual-role conflict; continued say-on-pay feedback loop supports discipline .