DEF: Gallagher Reports Record 2025, Fuels Growth with AssuredPartners

Sentiment:

Definitive Proxy Statement 23 March 2026 4:34 PM

📋All filings for Arthur J Gallagher & CO

Arthur J. Gallagher & Co. announces an outstanding 2025 with significant revenue and EBITDAC growth, driven by the historic AssuredPartners acquisition, and sets a positive outlook for 2026.

Capital raiseDoug Howell, CFO, received a special recognition bonus in early 2026 for his leadership role in the AssuredPartners acquisition, which included the 'completion of debt and common stock offerings to finance the transaction'.

Better than expectedAdjusted revenue grew by 20.7% to $13.7 billion, and adjusted EBITDAC grew by 25.7% to $4.8 billion, indicating strong financial performance.Organic revenue growth of 6% in both core segments demonstrates healthy underlying business expansion.The successful completion and integration progress of AssuredPartners, the largest acquisition in company and industry history, significantly enhances market position and future growth prospects.Adjusted EBITDAC margin increased by 150 basis points to 34.8%, reflecting improved efficiency and profitability.

Summary

Arthur J. Gallagher & Co. reported an outstanding year in 2025, with core brokerage and risk management segments achieving 20.7% adjusted revenue growth to $13.7 billion and 25.7% adjusted EBITDAC growth to $4.8 billion.
The company achieved 6% organic revenue growth in both its brokerage and risk management segments.
A total of 33 acquisitions were completed in 2025, representing $3.6 billion in estimated total acquired annualized revenue, including the historic AssuredPartners acquisition, the largest in the company's and industry's history.
Significant progress has been made on the integration of AssuredPartners, positioning the company to provide more value to clients and drive additional organic growth.
Sherry Barrat is retiring from the Board of Directors after nearly 13 years of service, reducing the Board to 9 members effective at the 2026 Annual Meeting.
The company engaged with stockholders representing over 50% of shares outstanding on corporate governance, Board and management succession, executive compensation, and sustainability matters.
The 2025 total compensation for CEO Pat Gallagher was $20,745,060, with a CEO to median employee pay ratio of 346 to 1.
Audit fees for Ernst & Young LLP increased to $11,826,000 in 2025 from $9,461,000 in 2024, primarily due to the AssuredPartners acquisition.

Sentiment

Score: 9

Explanation: StockSavvy.ai views this as a highly positive filing, reflecting exceptional financial performance, strategic growth through a landmark acquisition, and a strong outlook, all underpinned by robust corporate governance and a commitment to shareholder value.

Positives

Outstanding financial performance in 2025 with 20.7% adjusted revenue growth ($13.7 billion) and 25.7% adjusted EBITDAC growth ($4.8 billion) in core segments.
Strong organic revenue growth of 6% in both brokerage and risk management segments.
Successful execution of acquisition strategy, completing 33 acquisitions totaling $3.6 billion in estimated acquired annualized revenue.
Completion of AssuredPartners, the largest acquisition in company and industry history, positioning for increased client value and organic growth.
Significant progress on the integration of AssuredPartners.
Adjusted EBITDAC margin increased by 150 basis points to 34.8%, reflecting efficiency gains and interest income.
Returned $674 million to stockholders as dividends while maintaining significant liquidity and debt covenants.
Strong M&A pipeline and substantial free cash flow expected to continue acquisition strategy in 2026.
High stockholder approval (91.2%) for the 2025 say-on-pay proposal.
All executive officers are in compliance with rigorous stock ownership guidelines.

Risks

Forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially.
Factors that could cause future performance to differ are discussed in the 2025 Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and other SEC filings.
The Board retains overall responsibility for risk oversight, with primary delegation to the Risk and Compliance Committee, which reviews major risk exposures and management's mitigation activities.
The company's process for identifying and assessing risks, including emerging risks, is regularly reviewed.
The business continuity and crisis management framework, including incident response plans, is reviewed.
The ethics and compliance program, including Global Standards of Business Conduct and significant legal and regulatory compliance matters, is reviewed.
Specific risks under oversight include compliance, data privacy, cybersecurity, artificial intelligence (AI), and sustainability matters.
Compensation policies and practices are reviewed to avoid incentives that promote excessive risk-taking.

Future Outlook

The company enters 2026 with excellent momentum, with teams actively integrating the AssuredPartners acquisition and leveraging new product offerings and data/analytics capabilities to create additional client value. The M&A pipeline remains strong, and with substantial free cash flow, the company expects to continue executing its acquisition strategy, positioning it for another outstanding year in 2026.

Management Comments

"We had another outstanding year in 2025." J. Patrick Gallagher, Jr.
"On a combined basis, our core brokerage and risk management segments produced total adjusted revenue growth of 20.7% (to $13.7 billion) and adjusted EBITDAC growth of 25.7% (to $4.8 billion)." J. Patrick Gallagher, Jr.
"We achieved organic revenue growth of 6% in both segments." J. Patrick Gallagher, Jr.
"We also executed on our acquisition strategy completing 33 acquisitions representing $3.6 billion in estimated total acquired annualized revenue. This includes AssuredPartners, the largest acquisition in our history and the largest acquisition in the history of the insurance brokerage industry, which we completed during the third quarter." J. Patrick Gallagher, Jr.
"We have made great progress on the integration of AssuredPartners and the acquisition positions us to provide even more value to clients and drive additional organic growth." J. Patrick Gallagher, Jr.
"For nearly a century, we have proudly built a reputation of trust and integrity with our clients and colleagues. Now, more than ever, I believe that this culture and history of integrity is a true competitive advantage and a key differentiator when recruiting and retaining talent, attracting acquisition partners, retaining our valued clients and winning new business." J. Patrick Gallagher, Jr.
"We enter 2026 with excellent momentum. Our teams are working hard to integrate the AssuredPartners acquisition. It is exciting to watch new colleagues from AssuredPartners and other acquisitions leverage our product offerings and data and analytics capabilities to create additional value for clients. Our M&A pipeline remains strong and, with substantial free cash flow, we expect to continue executing on our acquisition strategy. We are well positioned to have another outstanding year in 2026." J. Patrick Gallagher, Jr.

Industry Context

StockSavvy.ai notes that Arthur J. Gallagher & Co.'s aggressive acquisition strategy, culminating in the historic AssuredPartners deal, positions it as a consolidator in the fragmented insurance brokerage industry. The strong organic growth of 6% in both segments, coupled with significant adjusted revenue and EBITDAC growth, indicates robust performance that likely outpaces many industry peers, especially given the scale of integration challenges typically associated with such large acquisitions. The focus on leveraging data and analytics capabilities post-acquisition aligns with broader industry trends towards digital transformation and enhanced client value propositions.

Comparison to Industry Standards

The AssuredPartners acquisition was the largest in Arthur J. Gallagher & Co.'s history and the largest in the history of the insurance brokerage industry, indicating a significant competitive move relative to peers such as Aon plc, Marsh & McLennan Companies, Inc., and Willis Towers Watson plc.
Executive compensation target long-term incentives were below the 50th percentile for Pat Gallagher and other named executive officers compared to a Proxy Comparison Group (including Aon plc, Brown & Brown, Inc., Marsh & McLennan Companies, Inc., and Willis Towers Watson plc), leading to approved increases.
Target short-term incentives were approximately at the 50th percentile for Pat Gallagher and significantly below for other named executive officers compared to the Proxy Comparison Group, also leading to approved increases.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director, Chair of Compensation Committee	Sherry Barrat		May 12, 2026	Retirement after nearly 13 years of service.
Board Size	10 members	9 members	May 12, 2026	Reduction due to director retirement.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Leadership Structure	Pat Gallagher serves as Chairman and CEO, with 8 independent Board members and David Johnson as Independent Lead Director since 2016, ensuring effective allocation of authority and oversight.	Ongoing	Enhances communication between management and Board while maintaining strong independent oversight.
Director Retirement Policy	Directors aged 78+ may be nominated for reelection if the Board deems their continued service appropriate, as exemplified by John Coldman's reelection due to his extensive industry knowledge.	Ongoing	Promotes regular Board refreshment while retaining valuable institutional knowledge and expertise.
Board Composition and Diversity	Board nominees reflect diversity in professional background, experiences, viewpoints, gender, race/ethnicity, tenure, nationality, and age. The Nominating/Governance Committee actively seeks qualified diverse candidates.	Ongoing	Strengthens Board deliberations and decision-making through a broader range of perspectives.
AI Governance and Oversight	Established a management-level AI Governance Committee co-chaired by the CISO and Chief Privacy Officer to oversee AI matters. Primary oversight of AI risks delegated to the Risk and Compliance Committee, with annual review by the full Board.	Ongoing	Ensures structured oversight of emerging AI-related risks and strategic opportunities.
Compensation Committee Chair	Deborah Caplan was appointed Chair of the Compensation Committee.	May 13, 2025	New leadership for the Compensation Committee, continuing its oversight responsibilities.
Incentive Compensation Recovery Policy	Adopted an Incentive Compensation Recovery Policy (clawback policy) as required by NYSE, to recover erroneously awarded incentive compensation to Section 16 Officers in the event of a qualifying accounting restatement.	Ongoing	Enhances accountability and aligns executive compensation with accurate financial reporting.
Pension Plan Termination	The Board approved a resolution to terminate the Arthur J. Gallagher & Co. Employees Pension Plan in fiscal year 2025, with benefits frozen since July 1, 2005. Named executive officers elected lump sum payments.	Fiscal Year 2025	Concludes a legacy defined benefit plan, potentially impacting employee benefits and company's long-term liabilities.

Legal Proceedings

The General Counsel's performance review included successful management of the company's legal and reputational risks, including litigation, mergers and acquisitions, and regulatory compliance issues.
The Risk and Compliance Committee reviews significant legal and regulatory compliance matters.

Related Party Transactions

Tom Gallagher (President, brother of CEO): Michael Gallagher (son, branch manager, $1,137,321 total compensation); Kevin Gallagher (son, strategic planning leader, $530,537 total compensation).
Patrick Gallagher (COO, son of CEO): Jennifer Gallagher (sister of CEO, head of specialty sales unit, $1,046,177 total compensation); Shannon Gallagher (daughter of CEO, marketing partnership development manager, $649,558 total compensation); Sean Gallagher (son of CEO, regional manager, $1,809,612 total compensation); Brendan Gallagher (son of CEO, regional manager, $1,885,726 total compensation).
Jonathan Hudson (son of Scott Hudson, President of risk management segment): Producer in brokerage segment, $467,144 total compensation.
Norah Shipman (daughter of David Johnson, director): Account executive in brokerage segment, $145,475 total compensation.
John Bickhart (son-in-law of Doug Howell, CFO): Business systems analyst lead, $421,723 total compensation.
Mike Pesch (CEO, Global Brokerage Americas): Derek Van der Voort (brother-in-law, branch manager, $600,643 total compensation); Wes Van der Voort (brother-in-law, branch manager, $891,541 total compensation).
All related party compensation was commensurate with that of other employees with equivalent qualifications and responsibilities and holding similar positions.

Stakeholder Impact

Shareholders: Positive impact due to strong financial performance, strategic growth through acquisitions, commitment to stockholder engagement, return of $674 million in dividends, and a positive outlook for 2026.
Employees: Impacted by the integration of new colleagues from acquisitions, ongoing talent development initiatives, and the termination of the Arthur J. Gallagher & Co. Employees Pension Plan.
Customers: Expected to benefit from increased value propositions and enhanced product offerings resulting from the AssuredPartners acquisition and leveraging data and analytics capabilities.
Acquisition Partners: The company's culture and integrity are highlighted as key differentiators in attracting future acquisition partners.
Regulatory Authorities: The company demonstrates active engagement in navigating complex regulatory environments and managing legal and regulatory compliance risks.

Next Steps

Conduct the 2026 Annual Meeting of Stockholders on May 12, 2026, virtually.
Stockholders will vote on the election of 9 director nominees.
Stockholders will ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2026.
Stockholders will approve, on an advisory basis, the compensation of the named executive officers.
Continue the integration of the AssuredPartners acquisition.
Continue executing on the acquisition strategy, leveraging a strong M&A pipeline and substantial free cash flow.
Pat Gallagher will propose performance objectives for the company and himself at the beginning of each year, subject to Committee and Board review and approval.
The Board will review the company's AI strategy at least annually.

Key Dates

Date	Description
March 14, 2022	Stock options granted on this date began vesting.
March 12, 2023	Stock options granted on this date began vesting.
March 16, 2024	Stock options granted on this date began vesting.
March 15, 2025	PSUs granted in 2022 (based on 2022-2024 performance) vested. RSUs awarded on March 12, 2020 vested.
May 13, 2025	Deborah Caplan appointed Chair of Compensation Committee. Non-management directors granted 690 restricted stock units (RSUs).
October 2025	Company chartered one flight for Ms. Barrat and her husband for non-business related travel.
December 31, 2025	Fiscal year end. Total employee population approximately 71,911.
Early 2026	Special recognition bonuses awarded to Doug Howell, Tom Gallagher, Patrick Gallagher, and Walt Bay for AssuredPartners acquisition contributions.
March 1, 2026	General grant date for annual equity awards.
March 16, 2026	Record date for stockholders entitled to notice of and to vote at the Annual Meeting.
March 23, 2026	Date of Proxy Statement.
April 2026	2025 annual cash incentive awards expected to be paid. 2025 special recognition bonuses expected to be paid.
May 7, 2026	Deadline for voting shares held in the Arthur J. Gallagher & Co. Employees 401(k) Savings and Thrift Plan.
May 11, 2026	Deadline for telephone and Internet voting for record holders.
May 12, 2026	2026 Annual Meeting of Stockholders (virtual, 9:00 AM CDT).
July 2026	Doug Howell elected lump-sum distributions of deferred RSUs.
November 23, 2026	Deadline for stockholder proposals under Rule 14a-8 for 2027 Annual Meeting. Deadline for proxy access director nominations for 2027 Annual Meeting.
January 12, 2027	Earliest date for stockholder proposals for 2027 Annual Meeting (not for inclusion in proxy statement).
February 11, 2027	Latest date for stockholder proposals for 2027 Annual Meeting (not for inclusion in proxy statement).
March 1, 2027	PSUs granted in 2024 (based on 2024-2026 performance) will vest.
May 12, 2027	Expected date of 2027 Annual Meeting.
March 1, 2028	PSUs granted in 2025 (based on 2025-2027 performance) will vest.
March 1, 2029	Stock options granted in 2025 will have fully vested.

Recommendation

strong buy

The filing details exceptional financial performance in 2025, marked by robust adjusted revenue and EBITDAC growth, and strong organic expansion. The successful integration of the historic AssuredPartners acquisition significantly enhances market position and future growth potential. A strong M&A pipeline, substantial free cash flow, and a positive outlook for 2026 suggest continued upward trajectory. These factors, combined with sound corporate governance and a commitment to shareholder returns, make Arthur J. Gallagher & Co. a compelling investment.

Keywords

Insurance brokerage, Risk management, Acquisitions, AssuredPartners, Executive compensation, Corporate governance, SEC filing, Proxy statement, Financial performance, EBITDAC, Revenue growth, Shareholder return, M&A, Cybersecurity, AI governance

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