Graco CEO Patrick McHale retiring, planning adventures tied to his youth

Patrick McHale will retire as chief executive of Graco in June and plans on going on some adventures tied to his youth.

Ever since he was a kid growing up in Minneapolis, McHale has read adventure books and dreamed of following the routes written about by Mark Twain and others.

McHale turns 60 in March and said he's still fit, healthy and ready to pursue those adventures.

"I've got this bucket list of things to do," he said. "I'm going to go for it. It's not anything anymore complicated than that."

McHale has led Graco since 2007. Mark Sheahan, 56 and the company's chief financial officer, will take over as CEO in June. McHale will remain as a consultant until September but will resign his board seat. He said keeping a seat would not be his style, or the company's.

"We don't have any appetite for having ex-management on the board," McHale said. "I would have done that regardless, but even if I wouldn't have wanted to do that, that's the way it would have played out."

Sheahan joined Graco in 1995 and advanced to general manager of the Applied Fluid Technologies Division and then to CFO. Sheahan has a bachelor's degree in business from University of Minnesota's Carlson School of Management and a law degree from William Mitchell College of Law.

McHale, who grew up a mile from the Riverside plant and headquarters of Graco, graduated from Edison High School and the University of Minnesota. He joined Graco in 1989 as a 28-year-old night-shift machinist supervisor and then rose in the ranks until he became CEO 13 years ago.

McHale was popular with investors. Graco's stock has had a total return of more than 580% since June 2007 when he was named CEO, compared with 157% for the S&P 500 index over the same time.

Company revenue has nearly doubled under McHale, and the company has added 1,400 new jobs. The company now employs about 3,700.

Mitau thanked McHale for his service.

"Pat's contributions to Graco have been immense. His relentless drive for operational excellence, product innovation and superior customer service has propelled the company to ever higher levels of performance," Mitau said.

"I hope the company does better when I'm gone than when I was here," he said.

McHale is quick to credit his success at the helm to the hard work of the employees and the culture of Graco. "That's the big deal at Graco. I inherited that at Graco, and I didn't screw it up," he said.

McHale said he has enjoyed every minute of his career at Graco. But he admits that managing through the last year under COVID-19 restrictions has not been as fun. He has complained publicly that the one-size-fits-all restrictions did not fit Graco factories.

The work-from-home mandates haven't fit his style either. Throughout the last year, he has substituted his regular visits with employees at different factories with weekly video presentations. But it's not the same as in-person visits.

McHale knows the names of almost all the employees and the jobs they do. He made it a point, at least pre-pandemic, to visit every Graco facility — including those in Europe, Asia and South America — at least once a year. McHale has been known to send handwritten notes of recognition to the home addresses of his workers so their families can see the appreciation of their work as well.

"Our employees rose to the challenge and got the job done," Sheahan said. "I can't overemphasize how proud I am of what they did during a pretty uncertain time."

Graco's contractor business took off during the pandemic. A still hot housing market and an increased focus on home improvements had contractors and homeowners rushing to the home improvement stores for Graco's paint sprayers and other equipment.

While the industrial processing businesses lagged, Graco was able to shift some of those manufacturing employees to the contractor segment. That helped meet customer and supplier demands and kept employees on the job.

Justin Miller, vice president and investment manager at St. Paul-based Mairs & Power, said there is always a risk to a company during a CEO transition, but he believes the strength of the Graco culture will minimize those risks.

He also appreciates McHale's straight-talking, no-nonsense personality.

The focus of Mairs & Power has always been on growth over the long term, and the firm has been a Graco shareholder because it matches that philosophy.

"We are always looking for companies that think long term like we do. [McHale] exemplified that as well as anybody did from a Minnesota CEO standpoint," Miller said. "Anytime their markets were on their back or they were struggling with some sort of issue, they were never a company to say, 'We are going to cut costs to maximize profitability.' They would double down on spending more money to make long-term investments."

Sheahan said his objective as CEO will be to maintain that long-term focus by concentrating on the four principals that have sustained Graco for years: investing heavily in new products, looking for new market opportunities, expanding distribution, and strategic acquisitions.

"Those things are not going to change," Sheahan said. "Our goals are going to remain the same, too."