D. Scott Barbour
ADVANCED DRAINAGE SYSTEMSAbout D. Scott Barbour
D. Scott Barbour is President & CEO of Advanced Drainage Systems (ADS) and a director since 2017; he is 63 and holds a B.S. in Mechanical Engineering (SMU) and an MBA (Vanderbilt Owen) . Under his leadership, ADS delivered net sales of $2.9B (+1% YoY) and Adjusted EBITDA of $889M (−4% YoY; 30.6% margin) in FY2025, following FY2024 record profitability ($923M Adjusted EBITDA; 32.1% margin) despite a demand slowdown . Pay-versus-performance shows strong long-term alignment: the value of a $100 investment in ADS was $596 in FY2024 vs $299 for the peer index, and $378 in FY2025 vs $278 peers, illustrating above-peer TSR during his tenure despite market normalization in 2025 . Barbour’s compensation program is predominantly at risk and linked to Net Sales, Adjusted EBITDA, Cash from Operations, and ROIC measurements across annual and multi-year horizons .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Emerson Electric Co. | President & CEO, Network Power; various roles across business units | 1989–2016 | Led large industrial platform; experience in strategy, innovation, operations supporting ADS scale-up |
| Colt Industries | Product Engineer | Early career | Engineering foundation; technical rigor informing product and manufacturing at ADS |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Allison Transmission Holdings (NYSE: ALSN) | Director | Since 2022 | Public company board experience in industrials |
| ADS Board | Director | Since 2017 | Non-independent executive director; CEO is separate from independent Chair |
Fixed Compensation
| Component | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Base Salary ($) | $930,000 | $975,000 | $1,050,000 |
| All Other Compensation ($) | $130,936 | $83,832 | $55,883 |
Perquisites include club dues, optional executive health and financial planning, and pre-approved personal use of company aircraft reimbursed at variable cost; ADS does not provide tax gross-ups for aircraft use .
Performance Compensation
Annual Incentive Plan – Design
- Metrics and weights: Adjusted EBITDA (80%) and Net Sales (20%) for CEO; payout curve 50% at threshold, 100% at target, 200% at max .
- FY2024 targets tightened to business-normalized levels; FY2025 targets reflected weaker macro/demand in core markets .
Annual Incentive – FY2025 Outcomes
| Metric | Weight | Threshold ($000s) | Target ($000s) | Max ($000s) | Actual ($000s) | Payout % of Target |
|---|---|---|---|---|---|---|
| Consolidated Adjusted EBITDA | 80% | 855,000 | 960,000 | 1,075,000 | 889,228 | 66% |
| Consolidated Net Sales | 20% | 2,800,000 | 3,000,000 | 3,200,000 | 2,904,245 | 76% |
| CEO Actual Payout ($) | — | — | — | — | — | $895,913 (68% of target) |
Annual Incentive – FY2024 Outcomes
| Metric | Weight | Threshold ($000s) | Target ($000s) | Max ($000s) | Actual ($000s) | Payout % of Target |
|---|---|---|---|---|---|---|
| Adjusted EBITDA | 80% | 675,000 | 775,000 | 875,000 | 922,947 | 200% |
| Net Sales | 20% | 2,500,000 | 2,700,000 | 2,900,000 | 2,874,473 | 187% |
| CEO Actual Payout ($) | — | — | — | — | — | $2,310,048 (197% of target) |
Long-Term Incentive Program (LTIP)
- Mix: 50% PSUs, 25% time-based RS, 25% stock options; shifting to 60% PSUs from FY2026 with RS and options comprising the remaining 40% .
- PSU performance measures: Three-year cumulative Cash from Operations and average ROIC (equal weight) .
| Three-Year Period | CFO Threshold/Target/Max ($000s) | CFO Actual ($000s) | CFO Payout | ROIC Threshold/Target/Max (%) | ROIC Actual (%) | ROIC Payout | CEO PSU Shares Earned | Dividend Equivalents | Total Shares |
|---|---|---|---|---|---|---|---|---|---|
| FY22–FY24 | 1,400,000 / 1,549,723 / 1,700,000 | 1,700,626 | 200% | 21.0 / 23.4 / 25.5 | 25.4 | 198% | 35,460 | 471 | 35,931 |
| FY23–FY25 | 1,635,819 / 1,834,100 / 1,982,811 | 2,007,238 | 200% | 24.0 / 26.5 / 28.0 | 26.2 | 94% | 31,087 | 442 | 31,529 |
FY2024 and FY2025 Equity Grants
| Grant Type | Grant Date | Quantity | Strike/Terms |
|---|---|---|---|
| Restricted Stock (RS) | 5/22/2023 | 12,762 | 33% annual vesting |
| RSUs (target/threshold/max) | 5/22/2023 | 12,762 / 25,523 / 51,046 | 3-year performance; payout 0–200% |
| Stock Options | 5/22/2023 | 28,047 | $96.51 strike; 33% annual vesting |
| Restricted Stock (RS) | 5/20/2024 | 7,595 | 33% annual vesting |
| RSUs (threshold/target/max) | 5/20/2024 | 7,595 / 15,190 / 30,380 | 3-year performance; payout 0–200% |
| Stock Options | 5/20/2024 | 15,823 | $177.38 strike; 33% annual vesting |
Clawback: Incentive-based compensation subject to recoupment upon restatement per Rule 10D-1 and NYSE rules .
Equity Ownership & Alignment
| Data Point | FY2024 | Notes |
|---|---|---|
| Total beneficial ownership (shares) | 769,467; <1% of shares outstanding | Includes 460,847 options exercisable/vesting within 60 days, KSOP and trusts |
| Executive Stock Ownership Guidelines | In place; 50% net-share retention until guideline achieved (added FY2025) | Majority of covered executives at/above guideline as of 3/31/2025 |
| Hedging/Pledging | Prohibited; no covered persons hold ADS in margin or pledge | Strengthens alignment and reduces risk |
| Option exercises and vesting (FY2025) | 85,938 options exercised; $12.60M value; 46,695 shares vested; $8.22M value | Indicates realized value and potential sale windows |
| Option exercises and vesting (FY2024) | 0 options exercised; 87,048 shares vested; $7.82M value | — |
Outstanding awards (3/31/2025): Notable CEO option tranches include 185,827 @ $19.75; 80,030 @ $25.75; 59,898 @ $41.97; 22,900 @ $105.82; 16,905 exercisable + 8,452 unexercisable @ $99.29; 9,349 exercisable + 18,698 unexercisable @ $96.51; 15,823 unexercisable @ $177.38; RS unvested include 3,524, 8,508, 7,595; RSUs at target include 21,148; 25,523; 15,190; market value reference price $108.65 .
Employment Terms
- Agreement: Executive employment agreement dated Sept 1, 2017; ongoing until terminated; includes perquisites consistent with senior executives .
- Non-compete/Non-solicit: Two years post-termination; confidentiality of indefinite duration .
- Severance: 24 months base salary continuation plus prorated annual bonus for termination without cause or for good reason .
- Change-in-control treatment: Double-trigger acceleration under 2017 plan; options/RS vest and RSUs deemed at 100% of target upon qualifying termination within 24 months; no special CIC cash benefits .
Potential payments (hypothetical as of 3/31/2025):
| Scenario | Severance ($) | Bonus ($) | Accelerated Equity ($) | Total ($) |
|---|---|---|---|---|
| Specified Circumstances (good reason/without cause) | 2,100,000 | 895,913 | 8,853,671 | 13,268,867 |
| Other Terminations (death/disability) | — | — | 9,159,776 | 9,159,776 |
| Change in Control (no separate cash) | — | — | 8,853,671 | 8,853,671 |
Board Governance
- Structure and independence: 10 of 11 directors are independent; Barbour is non-independent; independent Chair (Robert M. Eversole) leads executive sessions .
- Committees: Fully independent Audit, Compensation & Management Development, Nominating & Governance, Sustainability, and Executive committees .
- Attendance: FY2025 Board met six times; all directors met at least 75% attendance; ~90% attended 2024 annual meeting; FY2024 Board met five times; 92% attended 2023 annual meeting .
- Director compensation: CEO-director receives no director fees/equity; non-employee directors receive retainers and RS grants; Chair retainer increased to $95k in FY2025; director equity award increased to $135k; option to take $100k retainer in stock .
Compensation Peer Group and Say-on-Pay
- Peer group: Building products/machinery/construction materials; FY2025 added IDEX, removed Masonite; median revenue ~$3.4B .
- Pay positioning: Target ranges generally between 25th–75th percentile with emphasis on variable pay .
- Say-on-Pay approval: 90% in FY2024; 86% in FY2025 .
Performance & Track Record
- Strategic execution: Opened world-class Engineering & Technology Center; launched EcoStream and nine additional products; acquired Orenco Systems to expand advanced decentralized wastewater treatment leadership .
- Financial resilience: FY2024 record Adjusted EBITDA and margins; FY2025 margin strength amid unfavorable price/cost and mix shift to more profitable segments (Infiltrator, Allied) .
- TSR context: ADS outperformed peers materially in FY2024; remained above peers in FY2025 despite market normalization .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; no margin accounts or pledges reported .
- Clawback policy in place; no discounted option grants; compensation programs reviewed for risk .
- No tax gross-ups for aircraft perquisites .
Equity Ownership & Director Service
- Beneficial ownership detail includes direct, KSOP, trust holdings, and options vesting within 60 days (CEO <1% ownership) .
- Director service history and committee roles are enumerated; Barbour serves as CEO and director with separated Chair role, mitigating dual-role concentration risks .
Investment Implications
- Pay-for-performance alignment remains strong: annual incentives pivot between growth and profitability; LTIP ties to cash generation and ROIC—key drivers of value and capital discipline .
- Near-term selling pressure risk modest: vesting cycles are regular; FY2025 option exercises ($12.6M realized) reflect prior in-the-money grants; hedging/pledging constraints reduce forced selling risk .
- Retention risk contained: 24-month salary continuation for CEO and robust at-risk equity mix suggest balanced retention/incentive structure; double-trigger equity treatment aligns with shareholder-friendly CIC standards .
- Governance quality: Independent Chair, majority-independent board/committees, strong attendance and ownership policies support oversight; consistent investor support on say-on-pay reduces compensation controversy risk .