DEF 14A of Generac Holdings Inc.
Filed Apr 29, 2024 · FY20230001104659-24-053993
Nominees for Election
Nominees for Election
Class III Directors
Class III Directors
Class III Directors
| ROBERT D. DIXON | | | Age: 64 Director Since: 2012 | EXPERIENCE & QUALIFICATIONS • 2014-2016: Chairman and CEO of Natural Systems Utilities LLC, a distributed water infrastructure company • 2012-2014: Chief Executive Officer of Seven Seas Water Corporation, an international services corporation • 1983-2011: Held various leadership roles at Air Products and Chemicals, Inc., including Senior Vice President & General Manager Other Board Service • Former Director of Valicor Environmental Services, a private equity-owned company that is one of the largest providers of nonhazardous wastewater treatment services in North America. Mr. Dixon brings to Generac over 30 years of global management, operations and finance experience. Mr. Dixon has significant prior experience working in the energy industry, including specifically within the industrial gas sector on various clean energy initiatives. Mr. Dixon also brings vast international experience to Generac, having managed international operations for the majority of his career, including spending several years working overseas in Asia. Mr. Dixon earned a Bachelor of Business Administration from Miami University and a Master of Business Administration from Pennsylvania State University. He also attended the Advanced Management Program at INSEAD in Fontainebleau, France. |
Class III Directors
| | 6 | 2024 Proxy Statement |
Class III Directors
| WILLIAM D. JENKINS, JR. | | | Age: 58 Director Since: 2017 | EXPERIENCE & QUALIFICATIONS • 2021-Current: President of Palo Alto Networks, a public cybersecurity firm • 2012-2021: President & Chief Executive Officer of Barracuda Networks, a private network technology company • 1998-2012: Held various positions at EMC Corporation, an information infrastructure company, including President of the Backup Recovery Systems division Other Board Service • Former Director of Skydeck Acquisition Corporation, a special purpose acquisition company focused on media, technology, communications, and digital health companies • Former Director of Barracuda Networks • Former Director of Sumo Logic, a public cloud-based machine data analytics company • Former Lead Director for Apigee Corporation (acquired by Google, Inc.) • Former Director for Nimble Storage, Inc. (acquired by Hewlett Packard Enterprise Company) Mr. Jenkins brings to Generac over 10 years of cybersecurity and technology experience, including currently serving as the President of a leading global cybersecurity company. Mr. Jenkins holds a Bachelor of Science in General Engineering from the University of Illinois and a Master of Business Administration from Harvard Business School. |
Class III Directors
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Class III Directors
| DAVID A. RAMON | | | Age: 68 Director Since: 2010 | EXPERIENCE & QUALIFICATIONS • 2019-Current: Investment Partner in Gratitude Railroad, an ESG alternative investment capital firm • 1998-Current: Founder and Managing Partner of Vaduz Partners, a private investment firm • 2014-2018: Chairman and Chief Executive Officer of Diversified Maintenance, a specialized facility services company • 2000-2007: President and Chief Executive Officer of USA.NET, Inc. • 1997-1998: President, Coleman Outdoor Recreation Group • 1994-1997: Held various senior management positions, including President and Chief Operating Officer of New World Television, Inc. • 1982-1994: Executive Vice President and Chief Financial Officer of Gillett Holdings, Inc. • Prior to 1982: Arthur Young & Company Other Board Service • Current Director of Sagent-CTAM Holdings, Inc., a leading network solutions provider • Former Director of Diversified Maintenance • Former Director of New World Communications Group, Inc. • Former Director of USA.NET, Inc. Mr. Ramon brings to Generac more than 30 years of broad management, operations, and investment experience with established consumer product markets, emerging companies in cloud computing and software services, and in enterprises that deliver positive social and environmental impact. Mr. Ramon also brings significant leadership and financial experience, having served as Chief Executive Officer, Chief Operating Officer, President or Chief Financial Officer for a number of privately held and public companies. Mr. Ramon’s work as a founder and managing partner of a private investment firm gives him significant and valuable capital markets experience. Mr. Ramon earned a Bachelor of Business Administration in Accounting from the University of Wisconsin. |
Class III Directors
| | 8 | 2024 Proxy Statement |
Class III Directors
| KATHRYN V. ROEDEL | | | Age: 63 Director Since: 2016 | EXPERIENCE & QUALIFICATIONS • • 2005-2016: Held various leadership roles at Sleep Number Corporation (formerly Select Comfort Corporation), a manufacturer of mattresses and sleep-related products, including ◦ Executive Vice President and Chief Services and Fulfillment Officer ◦ Executive Vice President, Product and Service, and ◦ Senior Vice President, Global Supply Chain. • 1983-2005: Held various leadership roles at GE, including ◦ General Manager, Global Supply Chain Strategy, GE Healthcare, ◦ General Manager, Global Quality and Six Sigma, GE Healthcare, ◦ Vice President Technical Operations and Director/Vice President of Quality Programs for GE Clinical Services, a division of GE Healthcare, and ◦ Various roles in Sourcing, Engineering, and Manufacturing at GE Information Services and GE Healthcare. Other Board Service • Current Lead Director of Columbus McKinnon Corporation, a public company that designs and manufactures precision material handling systems • Former Director of The Jones Family of Companies, a private, family-owned manufacturer serving the mattress and janitorial industries Ms. Roedel brings to Generac extensive leadership experience across B2B and B2C sophisticated technology products and services and consumer/ retail businesses. Ms. Roedel has held several senior level management positions, giving her significant experience in strategic growth and development and human resources/talent management. Ms. Roedel has over 30 years of expertise that includes extensive risk management, regulatory compliance, operations, and supply chain experience. Ms. Roedel graduated with a Bachelor of Science in Mechanical Engineering from Michigan State University. |
Class III Directors
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Other Members of the Board of Directors
Other Members of the Board of Directors Including the nominees, the Board of Directors currently consists of eleven directors, each of whom, other than the nominees, is described below. The terms of the Class I Directors expire at the 2025 Annual Meeting of Stockholders, subject to the election and qualification of their respective successors. The terms of the Class II Directors expire at the 2026 Annual Meeting of Stockholders, subject to the election and qualification of their respective successors.
Class I Directors
Class I Directors
Class I Directors
| JOHN D. BOWLIN | | | Age: 73 Director Since: 2006 | EXPERIENCE & QUALIFICATIONS • 2008-2011: Consultant to CCMP Capital Advisors, LLC, a private equity investment firm • 1985-2003: Held various leadership positions with Philip Morris Companies, Inc. and Miller Brewing Company, including ◦ President, Oscar Mayer Food Corporation, ◦ President and Chief Operating Officer, Miller Brewing Company, ◦ President and Chief Operating Officer, Kraft Foods North America, ◦ President and Chief Executive Officer, Kraft International, Inc., and ◦ President and Chief Executive Officer, Miller Brewing Company. Other Board Service • Current Director of Cerity Partners, a leading, national registered financial advisory firm • Former Director of the Schwan Food Company, Quiznos, and ChupaChups • Former Director and Non-Executive Chairman of ◦ Vitamin Shoppe, Inc., ◦ Spectrum Brands, and ◦ Pliant Corporation. Mr. Bowlin brings to Generac extensive leadership skills and operational experience having served in several executive positions, including as Chairman, Chief Executive Officer and Chief Operating Officer for a number of privately held companies and divisions of public companies. With over 30 years in leadership roles in the consumer products industry, Mr. Bowlin’s background also provides Generac with significant strategic growth and development expertise. Mr. Bowlin holds a Bachelor of Business Administration from Georgetown University and a Master of Business Administration from Columbia University. |
Class I Directors
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Class I Directors
| AARON P. JAGDFELD | | | Age: 52 Director Since: 2006 Chairman Since: 2016 | EXPERIENCE & QUALIFICATIONS • 2008-Current: President and Chief Executive Officer of Generac • 2007: President of Generac, responsible for sales, marketing, engineering, and product development • 2002-2006: Chief Financial Officer, Generac • 1994-2001: Finance Department, Generac • Prior to 1994: Audit Practice, Deloitte & Touche, LLP Other Board Service • Current Director of The Hillman Group, a public company providing complete hardware solutions As the Chief Executive Officer and the only management representative on the Board, Mr. Jagdfeld provides valuable insight to the Board regarding the day-to-day business issues facing the Company. Since joining the Company, he has navigated a number of achievements, including our initial public offering, the significant increase in sales, numerous acquisitions, and our international expansion. Mr. Jagdfeld has extensive finance and operational experience and has high-level leadership experience in several prior positions. Mr. Jagdfeld holds a Bachelor of Business Administration in Accounting from the University of Wisconsin-Whitewater. |
Class I Directors
| ANDREW G. LAMPEREUR | | | Age: 61 Director Since: 2014 | EXPERIENCE & QUALIFICATIONS • 2000-2017: Executive Vice President and Chief Financial Officer, Actuant Corporation, a global diversified company that designs and manufactures industrial products and systems • 1999-2000: Applied Power (Actuant) Business Development Leader • 1998-1999: Vice President and General Manager-Distribution, Gardner Bender (Actuant subsidiary) • 1996-1998: Vice President Finance, Gardner Bender • 1993-1996: Corporate Controller, Actuant Corporation • Prior to 1993: Held various financial positions with Fruehauf Trailer Corporation, Terex Corporation, and Price Waterhouse Other Board Service • Former Director of Jason Industries, Inc. • Former Director of Robbins & Myers Mr. Lampereur brings extensive financial experience to Generac. Mr. Lampereur has over 26 years of senior-level financial experience in a variety of businesses complementary to Generac, including as a chief financial officer and director of a public company. Mr. Lampereur graduated with a Bachelor of Business Administration in Accounting from St. Norbert College. |
Class I Directors
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Class I Directors
| NAM T. NGUYEN | | | Age: 48 Director Since: 2022 | EXPERIENCE & QUALIFICATIONS • 2020-Current: Chief Operating Officer, Generate Capital, a leading sustainable infrastructure company • 2013-2020: Executive Vice President, SunPower Corp., a solar power products company • Prior to 2013: Vice President of Global Business Development at First Solar and held various positions in investment banking, working in New York, Singapore and Los Angeles Ms. Nguyen brings to Generac over 20 years of experience as an executive leader in renewable energy and sustainable infrastructure. Ms. Nguyen specializes in P&L management, international market expansion, business development, sales strategy and operations, and financing. Working in the domestic and international solar sector, Ms. Nguyen has led startup and expansion projects, specifically driving revenue and scaling businesses in new markets. Ms. Nguyen’s background with solar power and renewable energy markets provides Generac with valuable expertise and strategic insight within key areas of Generac’s business. Ms. Nguyen also brings significant international experience, having worked in Latin America and Singapore. Ms. Nguyen graduated with a Bachelor of Arts in Economics from Columbia University and a Master of Business Administration from Harvard University. |
Class I Directors
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Class II Directors
Class II Directors
Class II Directors
| MARCIA J. AVEDON, PH.D. | | | Age: 62 Director Since: 2019 | EXPERIENCE & QUALIFICATIONS • 2022-Current: Founder and CEO, Avedon Advisory, LLC • 2020-2022: Executive Vice President, Chief Human Resources, Marketing, & Communications Officer for Trane Technologies, a climate control innovation company focusing on heating and cooling in buildings, homes, and transportation (previously Ingersoll-Rand, plc) • 2007-2020: Senior Vice President of Human Resources, Communications, and Corporate Affairs for Ingersoll-Rand, plc, leading global human resources, public affairs, corporate social responsibility, communications, and strategic marketing • 2002-2006: Chief Human Resources Officer at Merck, a global pharmaceutical company • 1995-2002: Held increasingly responsible leadership positions in Human Resources and Communications for Honeywell International, a global diversified company • Prior to 1995: Held positions in Human Resources at Anheuser-Busch Companies and as a consultant with Booz, Allen & Hamilton Other Board Service • Current Director of Acuity Brands, Inc., a publicly traded industrial technology company • Current Director of Cornerstone Building Brands, a private manufacturer of exterior building products • Former Director of GCP Applied Technologies, a global manufacturer of construction products • Former Director of Lincoln National Corporation, a Fortune 500 financial services company Ms. Avedon brings to Generac extensive expertise on global human resources and human capital topics. Ms. Avedon has over 30 years of experience leading organizational transformation, talent and succession management, culture change, corporate social responsibility, and communications. Ms. Avedon earned a Bachelor of Arts in Psychology from the University of North Carolina at Wilmington, and a Master’s Degree and Ph.D. in Industrial and Organizational Psychology from George Washington University. |
Class II Directors
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Class II Directors
| BENNETT J. MORGAN | | | Age: 60 Director Since: 2013 | EXPERIENCE & QUALIFICATIONS • 2005-2016: President and Chief Operating Officer, Polaris Industries Inc., a manufacturer of power sports vehicles (“Polaris”) • 2004-2005: Vice President and General Manager, ATV Division, Polaris • 2001-2004: General Manager, ATV Division, Polaris • 1997-2001: General Manager, PGA Division, Polaris • 1987-1997: Held various marketing, product development, and operations positions at Polaris Industries Mr. Morgan brings to Generac extensive leadership skills. Having served in senior roles as President and Chief Operating Officer for a public company, Mr. Morgan has over 25 years of expertise in international consumer durables products, dealer distribution, product development, and innovation. Serving in these leadership roles provides Mr. Morgan with in-depth knowledge of strategic growth and development and company oversight, including talent development, product development, engineering, and manufacturing operations. Mr. Morgan earned his Bachelor of Science in Economics from St. John’s University and Master of Business Administration from the Carlson School of Management at the University of Minnesota. |
Class II Directors
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Class II Directors
| DOMINICK P. ZARCONE | | | Age: 65 Director Since: 2017 | EXPERIENCE & QUALIFICATIONS • 2017-Current: President and Chief Executive Officer of LKQ Corporation1, a global distributor of vehicle parts and accessories • 2015-2017: Chief Financial Officer, LKQ Corporation • 2011-2015: Managing Director and Chief Financial Officer of Baird Financial Group, a capital markets and wealth management company, and certain of its affiliates • 2011-2015: Treasurer of Baird Funds, Inc., a family of fixed income and equity mutual funds managed by Robert W. Baird & Co. Incorporated, a registered broker/dealer • 1995-2011: Managing Director of the Investment Banking department of Robert W. Baird & Co. Incorporated • 1986-1995: Held various positions with investment banking company Kidder, Peabody & Co., Incorporated, most recently as Senior Vice President of Investment Banking Other Board Service • Current Director of LKQ Corporation Mr. Zarcone brings to Generac extensive management and leadership experience, serving in senior leadership roles as Chief Executive Officer and Chief Financial Officer of a public corporation. Mr. Zarcone has also held senior leadership roles as Managing Director and Chief Financial Officer of privately held companies. Mr. Zarcone has over 35 years of expertise in investment banking, wealth management, and capital markets bringing significant financial expertise to Generac. Mr. Zarcone earned his Bachelor of Science in Finance from the University of Illinois at Urbana-Champaign and Master of Business Administration from the University of Chicago Graduate School of Business. |
Class II Directors
1 Dominick Zarcone will be retiring from LKQ Corporation as of June 30, 2024.
Class II Directors
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Criteria for Director Nominees
Criteria for Director Nominees In selecting director candidates, the Nominating and Corporate Governance Committee considers whether the candidates possess the required skill sets and fulfill the qualification requirements of directors approved by the Board of Directors, including integrity, objectivity, sound judgment, leadership and diversity in all aspects of that term, including differences of perspective, professional experience, education, skills, and other individual qualities, such as gender, race, ethnicity, and sexual orientation. Annually, the Nominating and Corporate Governance Committee assesses the composition of the Board of Directors, including the Committee’s effectiveness in balancing the above considerations. Other than the foregoing, there are no minimum criteria for director nominees, although the Nominating and Corporate Governance Committee may consider such other factors as it may deem are in the best interests of the Company and its stockholders. The Nominating and Corporate Governance Committee does not assign specific weights to, and a potential or incumbent director will not necessarily satisfy all, the foregoing criteria, and in evaluating a candidate does not distinguish on the basis of whether the candidate was recommended by a stockholder. Notwithstanding the foregoing, in furtherance of the Committee’s commitment to increasing diversity within the Board of Directors, the Committee and the Board have determined that a focused effort to identify director candidates from underrepresented minority groups will be an important consideration and priority in selecting and nominating director candidates for election as future openings become available on the Board of Directors. Accordingly, the Company’s Corporate Governance Guidelines and Principles include a requirement that any search firm engaged to fill such openings include qualified women, racially or ethnically diverse candidates, and/or other candidates from underrepresented minority groups in all prospective director candidate pools.
Process for Identifying and Evaluating Director Nominees
Process for Identifying and Evaluating Director Nominees The Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the Board of Directors with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for renomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective on the Board. If any member of the Board of Directors does not wish to continue in service or if the Nominating and Corporate Governance Committee decides not to renominate a member for reelection, the Nominating and Corporate Governance Committee identifies the desired skills and experience of a new nominee based on the criteria listed above. Current members of the Nominating and Corporate Governance Committee and Board of Directors are polled for suggestions as to individuals meeting the criteria set by the Nominating and Corporate Governance Committee. Executive search firms may also be retained to identify qualified individuals. Stockholders who wish to recommend a candidate for consideration by the Nominating and Corporate Governance Committee may do so by sending the candidate’s name and supporting information to Mr. Robert Dixon, Nominating and Corporate Governance Committee,
Process for Identifying and Evaluating Director Nominees
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Process for Identifying and Evaluating Director Nominees
c/o Raj Kanuru, Executive Vice President, General Counsel, & Corporate Secretary, Generac Power Systems, Inc., S45 W29290 Highway 59, Waukesha, Wisconsin 53189. Our Bylaws contain provisions that address the processes by which a stockholder may nominate an individual to stand for election to the Board of Directors. See “NOMINATIONS AND PROPOSALS BY STOCKHOLDERS” below for additional information.
Generac’s Executive Compensation Practices
| WHAT WE DO: | | | | | Pay for Performance | Over 70% of executive officer pay, on average is based on the achievement of specific annual and long term strategic and financial goals. | | | Stock Ownership Guidelines | Stock ownership guidelines have been established for executive officers and directors. | | | Compensation Risk Assessment | A compensation risk assessment is performed on a regular basis. The Company completes the assessment to identify and evaluate material risks associated with our compensation programs. This assessment helps ensure our executive compensation arrangements do not incentivize excessive risk-taking that could harm the company or its stakeholders. | | | Independent Compensation Consultant | An independent consultant is retained by the Human Capital and Compensation Committee. | | | Clawback Policies | We updated our clawback policy in 2023 to align with SEC and NYSE rules, which requires that, in the event of an accounting restatement of the Company’s financial statements as a result of the Company’s material noncompliance with any financial reporting requirement under federal securities, all executive officers are required to return any excess incentive-based compensation received during the applicable look-back period based on a financial reporting measure. The Company also continues to maintain its misconduct policy, under which the CEO, CFO and other key members of executive management are required to reimburse or forfeit any excess incentive compensation received in certain instances of an executive officer’s gross negligence or misconduct, including a failure to manage and monitor risks that result in significant harm to the Company. | | | ESG in Incentive Plan | Our short-term incentive plan includes individual executive officer ESG goals related to the development of certain ESG initiatives and qualitative metrics to measure success over time. |
Generac’s Executive Compensation Practices
| WHAT WE DO NOT DO: | | | | | Hedging of Company Stock | It is against Company policy to trade in puts or calls in Company securities, sell Company securities short, or otherwise hedge ownership of Company securities. | | | Pledging of Company Stock | Executive officers may not pledge Company securities or hold Company securities in margin accounts. | | | Tax Gross Ups | Executive officers do not receive tax gross ups either directly or indirectly. | | | Dividends on Unearned Performance Awards | Executive officers do not receive dividends on unearned performance awards. | | | “Single Trigger” Change in Control Severance Provisions | Executive officers do not have severance arrangements that trigger solely by virtue of a change in control. |
Recent Executive Compensation Program Changes and Events
| | Peer Group | | Removed three companies and added one new company for a total of 20 companies. | | Better aligned peer group to Generac’s key business attributes, business model and end products. |
Recent Executive Compensation Program Changes and Events
| | Pay for Performance | | Replaced individual performance goals under the 2023 Annual Performance Bonus Plan with an individual performance modifier, and for 2024, increased the weighting in performance share grants under the Long-Term Equity Incentive Program from 33% to 50%. | | Reflects the Company’s philosophy of linking executive pay with the long- term success of the Company. |
Philosophy and Objectives
| Pay Element | Form | Purpose | | Base Salary | Cash (Fixed) | Reflects position responsibilities, competitive market rates, strategic importance of the position, and individual experience. | | Annual Performance Bonus Plan (Short- Term Incentive) | Cash (Variable) | Rewards achievement of Generac’s annual financial goals and other qualitative and quantitative performance objectives as determined by the Committee. | | Long-Term Incentives | Equity (Variable) | Rewards strong performance with incentive awards that focus our executive team on creating stockholder value over the long-term. Performance share weighting supports our pay for performance philosophy. |
HOW COMPENSATION DECISIONS ARE MADE
The Committee, composed solely of independent directors, is responsible for making executive compensation decisions for the NEOs. The Committee works closely with its independent compensation consultant and management to examine pay and performance matters throughout the year. Each year, the CEO and CFO establish a long-range plan and annual budget that is approved by the Board of Directors. The long-range plan and annual budget establishes financial targets and other performance-related goals, which gives the Committee a basis for approving financial targets under the incentive plans for the year. The Committee also reviews the basis for establishing goals and objectives related to the compensation of the named executive officers. During this review, the Committee considers the balance between short-term cash compensation and long-term incentives and evaluates alignment of pay for performance in light of established goals and objectives. The Committee also considers profitable growth of the business and financial performance. The Committee sets the CEO compensation based on that evaluation using market and peer group data to determine appropriate total direct compensation levels (consisting of base salary and annual and long-term incentives). The Committee also reviews and
HOW COMPENSATION DECISIONS ARE MADE
| The Role of the Independent Consultant |
HOW COMPENSATION DECISIONS ARE MADE
In 2023, Pay Governance (commencing in October) and Willis Towers Watson (prior to October) provided advice to the Committee regarding base pay, peer group, benchmarking of unique job scopes, and annual and long-term incentive design, along with a variety of other compensation-related topics and trends. The Committee has assessed the independence of Pay Governance and Willis Towers Watson pursuant to the SEC rules and concluded that no conflict of interest exists that would prevent Pay Governance or Willis Towers Watson from independently advising the Committee.
HOW COMPENSATION DECISIONS ARE MADE
Attracting and incentivizing high caliber executive talent is a critical part of our compensation philosophy and leadership strategy. Therefore, integral to our approach for setting compensation levels is ensuring we have a competitive pay framework. In support of this objective, our independent compensation consultant annually provides the Committee with compensation data with respect to similarly sized manufacturing and technology companies in the identified peer group and amongst similarly sized general industry and technology companies from a published survey perspective. In 2023, the Committee considered both peer group proxy and general industry and technology company survey data sources in determining competitive total direct compensation benchmarks for our CEO, CFO and for the EVPs of our product groups. Published general industry and technology company market survey data was considered in determining market total direct compensation benchmarks for all other executives that directly report to the CEO. The Committee has generally targeted the market median for total cash compensation of our named executive officers, with the opportunity to meet or exceed market median if the Company achieves outstanding financial performance in a particular year. The Committee has targeted long-term incentive grant values at or above market median, which may result in total direct compensation at or above the market median with outstanding financial performance. Peer group composition is also reviewed annually. In October 2023, the Committee engaged Pay Governance to evaluate the peer group to ensure alignment with the Company’s energy technology strategy and recent growth. As part of the review, the Committee considered the following criteria for inclusion in the peer group: company type, geographic span, location, size and scope of the business model, and other factors including recent merger, acquisition,
Annual Performance Bonus Plan
Annual Performance Bonus Plan Under the Annual Performance Bonus Plan, the Committee approved the financial targets of the 2023 Annual Incentive Plan (“AIP”). Consistent with prior years, the target annual incentive is calculated as a percentage of base salary and is paid in cash. In February 2023, the Committee approved the AIP award opportunities, as a percent of salary, that were unchanged from prior year.
Annual Performance Bonus Plan
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Annual Performance Bonus Plan
The Threshold, Target, and Maximum annual incentive opportunities for each NEO for 2023 are as follows:
Annual Performance Bonus Plan
| Named Executive Officer | Below Threshold as a % of Base Salary | Threshold Bonus as a % of Base Salary | Target Bonus as a % of Base Salary | Maximum Bonus as a % of Base Salary(1) | Individual Performance Modifier(2) | | Aaron Jagdfeld | 0% | 65.0% | 130% | 260% | -100% to +15% | | York Ragen | 0% | 37.5% | 75% | 150% | -100% to +15% | | Norman Taffe | 0% | 37.5% | 75% | 150% | -100% to +15% | | Erik Wilde | 0% | 37.5% | 75% | 150% | -100% to +15% | | Kyle Raabe | 0% | 37.5% | 75% | 150% | -100% to +15% |
Annual Performance Bonus Plan
(1) Maximum does not reflect adjustment for the Individual Performance Modifier (2) Pursuant to the Individual Performance Modifier, the Committee may use negative discretion to reduce the amount of any payout calculated in accordance with the financial measures to zero or use discretion to increase the payout by up to 15% in recognition of individual achievements. For 2023, the financial metrics used to determine payouts under the AIP did not change from 2022 as the Committee felt the plan effectively connected the CEO, our executives, and our employees to our strategy and appropriate financial metrics for managing the business. The two financial metrics used include: Adjusted EBITDA (excluding the impact of acquisitions that occurred during the performance period and before deduction for noncontrolling interests) which constituted 75% of the target AIP opportunity, and Primary Working Capital (“PWC”) as a percentage of net sales, which constitute 25% of the target AIP opportunity. In 2023 the Committee approved a plan design change to replace the previously used Individual performance goals (“IPG”), as a third metric, with an annual individual Performance Modifier. Under the plan, the actual payout is subject to an individual performance modifier based on NEO performance rating assessment against goals established related to the Company’s long-term strategy. The individual performance modifier is applied after the Company financial performance results are calculated and may result in a reduction in payout up to 100% or an increase in payout up to 15%. Under the AIP, the Threshold payout level remained at 50% for the financial metrics of Adjusted EBITDA and PWC. The CEO and CFO had 100% of their cash incentive tied to the Company’s consolidated financial performance. Messrs. Wilde and Raabe had 75% of their cash incentive tied to specific product group performance, and Mr. Taffe had 100% of his cash incentive tied to specific product group performance, as described further below. We consider the product group target performance levels to be competitively sensitive information that is not otherwise disclosed; however, the Committee intended to use the same general level of rigor in setting the product group performance goals as was used in setting the performance goals for consolidated financial performance.
2023 Annual Performance Bonus Plan Results — Consolidated
2023 Annual Performance Bonus Plan Results — Consolidated The 2023 consolidated financial targets for Adjusted EBITDA and PWC were $770.2 million and 32.4%, respectively. Achievement of the above-stated consolidated financial targets would result in a 100%-of-Target payout for the two components in the AIP, assuming no Performance Modifier was used to
2023 Annual Performance Bonus Plan Results — Consolidated
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2023 Annual Performance Bonus Plan Results — Consolidated
recognize individual performance. Under the consolidated AIP, the consolidated Adjusted EBITDA (excluding the impact of acquisitions that occurred during the performance period and before deduction for noncontrolling interests) was $638.7 million, which was below Threshold for the Adjusted EBITDA portion, subject to adjustments for each NEO’s performance against certain defined and measurable goals established at the commencement of the year and developed to achieve specific initiatives related to the Company’s long-term strategy. The consolidated PWC, excluding the impact of acquisitions, was 36.7%, which also fell below Threshold for the PWC portion. As a result, there was no AIP payment for 2023 for those solely with enterprise-wide responsibilities, including Messrs. Jagdfeld and Ragen.
2023 Annual Performance Bonus Plan Results — Consolidated
| Annual Performance Bonus Metrics — Consolidated | 2023 Financial Thresholds | 2023 Financial Targets | 2023 Achievement | Overall Payout % | | Adjusted EBITDA (75%)* | $654.6 million | $770.2 million | $638.7 million | 0% | | PWC as % of Net Sales (25%) | 34.4% | 32.4% | 36.7% | 0% |
2023 Annual Performance Bonus Plan Results — Consolidated
* Adjusted EBITDA under the AIP excludes the impact of acquisitions that occurred during the performance period and is calculated before deduction for noncontrolling interests. For the three other NEOs, AIP payouts were determined as follows:
2023 Annual Performance Bonus Plan Results — Consolidated
| NEO | Metrics | Results | | Norman Taffe | Energy Technology Revenue — 75% Energy Technology Adjusted EBITDA — 25% | Below Threshold Above Threshold | | Erik Wilde | Industrial NAM Adjusted EBITDA — 50% Industrial NAM PWC — 25% Consolidated Adjusted EBITDA — 25% | At Maximum Above Target Below Threshold | | Kyle Raabe | Consumer Power Adjusted EBITDA — 50% Consumer Power PWC — 25% Consolidated Adjusted EBITDA — 25% | At Threshold Above Target Below Threshold |
2023 Annual Performance Bonus Plan Results — Consolidated
The Committee maintains its discretion to adjust the annual performance bonuses, regardless of the outcome under incentive bonus formulas. For 2023, the Committee made no adjustments or modifications to the financial targets or payouts. The Committee then considered individual performance, including certain ESG-related business goals. No performance modifiers were applied to the payout for any NEO, other than Kyle Raabe whose AIP payout based on performance to goals for growth and profitability was decreased by 5%.
2023 Annual Performance Bonus Plan Results — Consolidated
| Named Executive Officers (NEOs) | AIP Target | 2023 AIP Achievement* | Individual Performance Modifier | 2023 AIP Payment | | Aaron Jagdfeld | $1,365,000 | 0.0% | 0% | $0 | | York Ragen | $393,750 | 0.0% | 0% | $0 | | Norman Taffe | $325,125 | 15.4% | 0% | $50,160 | | Erik Wilde | $327,600 | 140.2% | 0% | $459,427 | | Kyle Raabe | $300,000 | 55.1% | -5% | $165,317 |
2023 Annual Performance Bonus Plan Results — Consolidated
Achievement percentages are based on achievement of financial targets and exclusive of the individual performance modifier.
2023 Annual Performance Bonus Plan Results — Consolidated
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Long-Term Incentives
Long-Term Incentives Generac believes that equity awards and other forms of long-term incentive compensation are a critical component of a competitive, comprehensive executive compensation program, and thus as a component of annual compensation for NEOs. Our long-term incentive program (“LTIP”) is designed to reward our executives for their contribution to the Company’s long-term growth and performance, and to better align the interests of our named executive officers with those of our stockholders. In addition, our long-term awards are used to attract and retain critical employee talent by providing a competitive market-based opportunity. For the grants made in 2023, the Company granted to the named executive officers a combination of stock options, restricted stock, and performance share awards, which are performance-based restricted stock units as follows: • Thirty-three percent (33.3%) of the award was granted in the form of performance shares which are performance-based restricted stock units. Named executive officers may earn from 0% to 200% of their target performance share awards based on the achievement of specified revenue growth, EBITDA margin, and Free Cash Flow Conversion goals. Each performance share has a value equal to a share of common stock and the number of shares that can be earned is contingent upon Company performance, over a three-year performance period, against goals approved by the Committee. • Thirty-three percent (33.3%) of the award was granted in the form of restricted stock, with those shares vesting equally over the three anniversaries immediately following the date of grant. • Thirty-three percent (33.4%) of the award was granted in the form of stock options, with those options vesting equally over the four anniversaries immediately following the date of grant.
2023 Long-Term Equity Incentive Mix
2023 Long-Term Equity Incentive Mix In February 2024, the Committee approved an increase in the weighting of performance shares for long-term incentive awards made in 2024. The mix for NEO’s will be 50% performance shares, 25% restricted shares and 25% stock options.
2023 Long-Term Equity Incentive Mix
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2023 Long-Term Equity Incentive Mix
For 2023, the LTIP awards granted to the NEOs were as follows:
2023 Long-Term Equity Awards
2023 Long-Term Equity Awards
2023 Long-Term Equity Awards
| Executive | Value of Stock Options(1) | Value of Time - Vested Restricted Stock(2) | Value of Performance Shares(3) | Total Value of 2023 Long - Term Incentive Grants | | Aaron Jagdfeld | $2,004,001 | $1,998,111 | $1,998,111 | $6,000,223 | | York Ragen | $438,418 | $437,158 | $437,158 | $1,312,734 | | Norman Taffe(4) | 248,477 | $1,247,729 | $247,687 | $1,743,892 | | Erik Wilde | $245,490 | $244,818 | $244,818 | $735,126 | | Kyle Raabe | $267,232 | $266,455 | $266,455 | $800,141 |
2023 Long-Term Equity Awards
(1) Represents value of time-vested stock options at March 2023 grant date. (2) Represents value of time-vested restricted stock at March 2023 grant date. (3) Represents value of performance shares at March 2023 grant date. (4) In August 2023, the Committee approved a supplemental equity award to be granted to Mr. Taffe effective September 1, 2023. The equity award included restricted stock valued at $1,000,000 that vests in equal installments on the first three anniversaries of the grant date.
Supplemental Equity Awards
Supplemental Equity Awards As noted above, the Committee approved a supplemental equity award to Mr. Taffe effective September 1, 2023 in the form of restricted stock valued at $1,000,000 that vests in equal installments on the first three anniversaries of the grant dates. The supplemental award was intended to recognize Mr. Taffe for his expanded role following changes in ecobee leadership. In addition, effective March 1, 2024, the Committee granted supplemental performance shares to Mr. Taffe valued at $2,000,000, at target achievement level, with a three-year performance period ending December 31, 2026. Other than the use of financial metrics tied to the Company’s Energy Technology business for measuring target achievement and share payout, the awards have the same vesting terms and conditions as the performance shares received by other executives in 2024. The Committee granted the supplemental performance shares to incentivize Mr. Taffe to execute the Company’s strategic plan and lead the Company’s Energy Technology business to more resilient, efficient, and sustainable energy solutions.
2021-2023 Performance Share Results
2021-2023 Performance Share Results The named executive officers held performance shares granted in 2021 that vested based on results during the three-year performance period covering 2021 to 2023. This grant was intended to encourage revenue growth measured in compound annual growth rate (“CAGR”), Adjusted EBITDA margin percentages, and Free Cash Flow (“FCF”) Conversion percentages for 2021 to 2023. Specifically, if revenue growth (CAGR), average Adjusted EBITDA margin percentages, and FCF Conversion percentages during the period were achieved within a defined target range on a performance matrix, the named executive officers would earn from 50% to 200% of their target performance share awards. The revenue growth (CAGR), Adjusted EBITDA margin, and FCF Conversion targets were set at a level, given business conditions at the time the awards were granted, that were designed to be challenging but achievable with strong management performance. After the conclusion of the three-year period, the performance share targets were measured against actual financial results for Generac, excluding any businesses acquired
2021-2023 Performance Share Results
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2021-2023 Performance Share Results
during the three-year period. For the three-year period from 2021 to 2023, the Committee determined and approved a final payout equal to 46.7% of target, out of a maximum of 200%. The Minimum, Target, and Maximum financial performance metrics and the actual results for the 2021 to 2023 performance awards are reflected below:
2021-2023 Performance Share Results
| Performance Measure | Weight | Minimum | Target | Maximum | Actual 2021-2023 Cycle Results | Final Vesting | | Revenue Growth (CAGR) | 33% | 9.0% | 12.0% | 15.0% | 13.2% | | | Adjusted EBITDA Margin % | 33% | 22.3% | 23.8% | 25.3% | 20.0% | 46.7% | | FCF Conversion % | 33% | 85.0% | 90.0% | 95% | 43.9% | |
2023 Summary Compensation Table
2023 Summary Compensation Table The following table shows compensation information for 2021, 2022 and 2023 for our named executive officers.
2023 Summary Compensation Table
| Name and principal position | Year | Salary ($) | Bonus ($) | Stock awards ($)(1) | Option awards ($)(1) | Non-equity incentive plan compensation ($)(2) | All other compensation ($)(3) | Total ($) | | Aaron Jagdfeld Chairman, President and Chief Executive Officer | 2023 | 1,050,000 | — | 3,996,222 | 2,004,001 | — | 34,742 | 7,084,966 | | | 2022 | 1,039,178 | — | 3,829,669 | 1,920,529 | — | 18,300 | 6,807,676 | | | 2021 | 989,178 | — | 3,330,212 | 1,670,075 | 1,497,563 | 32,785 | 7,519,812 | | York Ragen Chief Financial Officer | 2023 | 525,000 | — | 874,316 | 438,418 | — | 19,846 | 1,857,580 | | | 2022 | 515,616 | — | 874,342 | 438,474 | — | 12,200 | 1,840,632 | | | 2021 | 469,658 | — | 632,854 | 317,302 | 423,902 | 44,485 | 1,888,200 | | Norman Taffe President Energy Technology | 2023 | 426,956 | — | 1,495,415 | 248,477 | 50,160 | 10,106 | 2,231,115 | | | 2022 | 152,534 | — | 2,000,413 | — | — | 2,942 | 2,155,889 | | | 2021 | — | — | — | — | — | — | — | | Erik Wilde EVP, Industrial Americas | 2023 | 423,866 | — | 489,636 | 245,490 | 459,427 | 12,250 | 1,630,669 | | | 2022 | 414,877 | — | 489,606 | 245,571 | 109,778 | 8,840 | 1,268,671 | | | 2021 | 391,816 | — | 460,869 | 230,910 | 305,507 | 20,769 | 1,409,872 | | Kyle Raabe President Consumer Power | 2023 | 400,000 | — | 532,909 | 267,232 | 165,317 | — | 1,365,458 | | | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — |
2023 Summary Compensation Table
(1) The amounts reported for 2023 represent the aggregate grant date fair value for awards of restricted stock, stock options, and performance shares and are computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Subtopic 718. See Note 17 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the relevant assumptions used in calculating these amounts. All amounts represent potential future income calculated for financial reporting purposes; actual amounts recognized by the named executive officers may be materially different depending on, among other things, the Company’s stock price performance and the period of service of the executive. The Stock Award amounts are composed in equal measure of restricted stock and performance shares, with the performance share portion assuming target performance by the Company during the relevant performance period. Assuming achievement of maximum performance during the relevant performance period for the performance shares, the Stock Award amounts provided would increase by a multiplier of 2.0 (or, in the case of Mr. Taffe, his Stock Award amount, less the $1,000,000 supplemental award, would increase by a multiplier of 2.0) (2) The non-equity incentive plan compensation column reflects cash incentive awards earned pursuant to our Annual Performance Bonus Plan as previously described. These awards are earned during the year reflected and paid in the following year. All other compensation represents the employer matching contributions and employer nonelective contributions of the defined contribution plan.
2023 Summary Compensation Table
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Grants of Plan-Based Awards in 2023
Grants of Plan-Based Awards in 2023 The following table indicates potential cash incentive compensation under our Annual Performance Bonus Plan based on 2023 performance and equity awards granted in 2023.
Grants of Plan-Based Awards in 2023
| | | | Possible payouts under non-equity incentive plan awards(1) | | | Possible payouts under equity incentive plan awards(2) | | | All other stock awards: number of shares of stock or units (#)(3) | All other option awards: number of securities underlying options (#)(4) | Exercise or base price of option awards ($/sh)(5) | Closing market price on date of grant ($/sh) | Grant date fair value of stock and option awards ($) | | Name | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | | Aaron Jagdfeld | — | — | 682,500 | 1,365,000 | 2,730,000 | | | | | | | | | | | 3/1/23 | 2/23/23 | — | — | — | 8,358 | 16,715 | 33,430 | — | — | — | | 1,998,111 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | 16,715 | — | — | — | 1,998,111 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | — | 33,551 | 119.54 | 118.24 | 2,004,001 | | York Ragen | — | — | 196,875 | 393,750 | 787,500 | | | | | | | | | | | 3/1/23 | 2/23/23 | — | — | — | 1,829 | 3,657 | 7,314 | — | — | — | | 437,158 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | 3,657 | — | — | — | 437,158 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | — | 7,340 | 119.54 | 118.24 | 438,418 | | Norman Taffe | — | — | 162,563 | 325,125 | 650,250 | | | | | | | | | | | 3/1/23 | 2/23/23 | — | — | — | 1,036 | 2,072 | 4,144 | — | — | — | — | 247,687 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | 2,072 | — | — | — | 247,687 | | | 9/1/23 | 8/7/23 | — | — | — | — | — | — | 8,364 | — | — | — | 1,000,042 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | — | 4,160 | 119.54 | 118.24 | 248,477 | | Erik Wilde | — | — | 163,800 | 327,600 | 655,200 | | | | | | | | | | | 3/1/23 | 2/23/23 | — | — | — | 1,024 | 2,048 | 4,096 | — | — | — | — | 248,818 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | 2,048 | — | — | — | 244.818 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | — | 4,110 | 119.54 | 118.24 | 245,490 | | Kyle Rabbe | — | — | 150,000 | 300,000 | 600,000 | | | | | | | | | | | 3/1/23 | 2/23/23 | — | — | — | 1,115 | 2,229 | 4,458 | — | — | — | — | 266,455 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | 2,229 | — | — | — | 266,455 | | | 3/1/23 | 2/23/23 | — | — | — | — | — | — | — | 4,474 | 119.54 | 118.24 | 267,232 |
Grants of Plan-Based Awards in 2023
(1) Under the Annual Performance Bonus Plan, the Committee approved the 2023 AIP. For additional information regarding the AIP, please see the Compensation Discussion and Analysis above. (2) Represents an award of performance shares that vests between 50% to 200% of target on the third anniversary of the grant date if certain Company performance goals relating to the 2023-2025 performance period are met. (3) Represents an award of restricted stock, vesting in equal installments on each anniversary of the date of grant over three years. (4) Represents an award of stock options, vesting 25% on each anniversary of the date of grant over four years. The grant date fair values were computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Subtopic 718. See Note 17 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the relevant assumptions used in calculating these amounts.
Grants of Plan-Based Awards in 2023
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2023 Outstanding Equity Awards at Fiscal Year-End
2023 Outstanding Equity Awards at Fiscal Year-End The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2023:
2023 Outstanding Equity Awards at Fiscal Year-End
| | Option awards | | | | Stock awards | | | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | | Aaron Jagdfeld | 47,156 | —(1) | 57.63 | 02/28/24 | — | — | — | — | | | 53,641 | —(2) | 49.70 | 02/13/25 | — | — | — | — | | | 109,052 | —(3) | 33.23 | 02/18/26 | — | — | — | — | | | 95,069 | —(4) | 40.12 | 03/01/27 | — | — | — | — | | | 94,044 | —(5) | 43.88 | 03/01/28 | — | — | — | — | | | 90,533 | —(6) | 52.07 | 03/01/29 | — | — | — | — | | | 28,321 | 9,441(7) | 102.42 | 03/01/30 | — | — | — | — | | | 6,795 | 6,795(8) | 335.91 | 03/01/31 | 1,651(11) | 213,375 | 4,957(12) | 640,643 | | | 3,783 | 11,350(9) | 315.88 | 03/01/32 | 4,041(13) | 522,259 | 6,062(14) | 783,453 | | | — | 33,551(10) | 119.54 | 03/01/33 | 16,715(15) | 2,160,247 | 16,715(16) | 2,160,247 | | York Ragen | 29,081 | —(3) | 33.23 | 02/18/26 | — | — | — | — | | | 24,362 | —(4) | 40.12 | 03/01/27 | — | — | — | — | | | 23,791 | —(5) | 43.88 | 03/01/28 | — | — | — | — | | | 22,634 | —(6) | 52.07 | 03/01/29 | — | — | — | — | | | 6,372 | 2,125(7) | 102.42 | 03/01/30 | — | — | — | — | | | 1,291 | 1,291(8) | 335.91 | 03/01/31 | 314(11) | 40,581 | 942(12) | 121,744 | | | 863 | 2,592(9) | 315.88 | 03/01/32 | 922(13) | 119,159 | 1,384(14) | 178,868 | | | — | 7,340(10) | 119.54 | 03/01/33 | 3,657(15) | 472,631 | 3,657(16) | 472,631 | | Norman Taffe | — | 4,160(10) | 119.54 | 03/01/33 | 2,072(15) | 267,785 | 2,072(16) | 267,785 | | | — | — | — | — | 1,484(17) | 191,792 | 6,676(18) | 862,806 | | | — | — | — | — | 8,364(19) | 1,080,963 | — | — | | Erik Wilde | 4,384 | —(5) | 43.88 | 03/01/28 | — | — | — | — | | | 8,375 | —(6) | 52.07 | 03/01/29 | — | — | — | — | | | 3,156 | 1,578(7) | 102.42 | 03/01/30 | — | — | — | — | | | 939 | 940(8) | 335.91 | 03/01/31 | 228(11) | 29,467 | 686(12) | 88,659 | | | 483 | 1,452(9) | 315.88 | 03/01/32 | 516(13) | 66,688 | 775(14) | 100,161 | | | — | 4,110(10) | 119.54 | 03/01/23 | 2,048(15) | 264,684 | 2,048(16) | 264,684 | | Kyle Raabe | 797 | 266(7) | 102.42 | 03/01/30 | — | — | — | — | | | 693 | 694(8) | 335.91 | 03/01/31 | 168(11) | 21,712 | 506(12) | 65,395 | | | 460 | 1,383(9) | 315.88 | 03/01/32 | 492(13) | 63,586 | 738(14) | 95,379 | | | — | 4,474(10) | 119.54 | 03/01/33 | 2,229(15) | 288,076 | 2,229(16) | 288,076 |
2023 Outstanding Equity Awards at Fiscal Year-End
(1) These options were granted on February 28, 2014, and have fully vested. (2) These options were granted on February 13, 2015, and have fully vested. (3) These options were granted on February 18, 2016, and have fully vested. (4) These options were granted on March 1, 2017, and have fully vested. (5) These options were granted on March 1, 2018, and have fully vested. (6) These options were granted on March 1, 2019, and have fully vested. (7) These options were granted on March 1, 2020, and have fully vested
2023 Outstanding Equity Awards at Fiscal Year-End
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2023 Outstanding Equity Awards at Fiscal Year-End
(10) These options were granted on March 1, 2023, and vest 25% on each anniversary of the date of grant over four years. (11) Represents an award of restricted stock granted March 1, 2021, and vests in equal installments on each anniversary of the date of grant over three years. (12) Represents an award of restricted stock with performance features granted March 1, 2021, which vests from 50% to 200% on the third anniversary of the grant date based on meeting certain Company performance goals relating to 2021-2023 fiscal years. (13) Represents an award of restricted stock granted March 1, 2022, and vests in equal installments on each anniversary of the date of grant over three years. (14) Represents an award of restricted stock with performance features granted March 1, 2022, which vests from 50% to 200% on the third anniversary of the grant date based on meeting certain Company performance goals relating to 2022-2024 fiscal years. (15) Represents an award of restricted stock granted March 1, 2023, and vests in equal installments on each anniversary of the date of grant over three years. (16) Represents an award of restricted stock with performance features granted March 1, 2023, which vests from 50% to 200% on the third anniversary of the grant date based on meeting certain Company performance goals relating to 2023-2025 fiscal years. (17) Represents an award of restricted stock granted September 1, 2022, and vests in equal installments on each anniversary of the date of grant over three years. (18) Represents an award of restricted stock with performance features granted September 1, 2022, which vests from 50% to 200% on March 1, 2026 based on meeting certain Company performance goals relating to 2023-2025 fiscal years. Represents an award of restricted stock granted September 1, 2023, and vests in equal installments on each anniversary of the date of grant over three years.
2023 Outstanding Equity Awards at Fiscal Year-End
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Option Exercises and Stock Vested in 2023
Option Exercises and Stock Vested in 2023 The following table sets forth information regarding option exercises and the vesting of stock awards during 2023 for our NEOs:
Option Exercises and Stock Vested in 2023
| | Option Exercises and Stock Vested in 2023 | | | | | | Option awards | | Stock awards | | | Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#)(1) | Value realized on vesting ($) | | Aaron Jagdfeld | 69,501 | 6,218,206 | 25,334 | 3,028,393 | | York Ragen | 41,462 | 2,912,063 | 5,650 | 675,394 | | Norman Taffe | — | — | 742 | 88,715 | | Erik Wilde | — | — | 4,108 | 491,065 | | Kyle Raabe | — | — | 1,025 | 122,527 |
Option Exercises and Stock Vested in 2023
(1) The actual shares received after withholding shares using the net share settlement method to cover the tax liability resulting from the vesting of such shares were 13,716, 3,048, 492, 2,265, and 535 for Mr. Jagdfeld, Mr. Ragen, Mr. Taffe, Mr. Wilde, and Mr. Raabe, respectively.
Pay Ratio Disclosure
Pay Ratio Disclosure In accordance with Item 402(u) of Regulation S-K, passed as part of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010, we determined the ratio of the annual total compensation of Mr. Jagdfeld relative to the annual total compensation of our median employee. Also, in accordance with the SEC rules, we identified a new median employee in 2023 using a multi-step process that is permitted under the SEC rules. We used payroll data to examine the annualized base salaries for all individuals who were employed as of November 30, 2023. The total number of employees was 8,345, which included all full-time, part-time, and seasonal employees. After examining annual cash compensation paid to each employee, other than our CEO, we selected the median employee. For purposes of reporting annual total compensation and the 2023 ratio of annual total compensation of the CEO to the median employee, both the CEO and median employee’s annual total compensation were calculated consistent with the disclosure requirement of executive compensation under the Summary Compensation Table. Consistent with prior years and to present a holistic view of total compensation, we elected to
Pay Ratio Disclosure
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Pay Ratio Disclosure
include the value of health and welfare benefits in the annual total compensation of both our CEO and our median employee. The results of the 2023 ratio calculation are as follows: Annual total compensation of our median employee: $70,609 • Annual Total Compensation of CEO: $7,099,106 • Ratio of CEO annual total compensation to median employee compensation: 101:1
Pay Versus Performance
Pay Versus Performance Pay Versus Performance Table As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. The table below reflects Compensation Actually Paid to the Company’s “CEO” and average Compensation Actually Paid to Non-CEO NEOs during 2019 through 2023. In addition, the table compares the Company’s Total Shareholder Return (“TSR”) against peer group TSR using S&P 500 Industrials (sector comparison). For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis” above.
Pay Versus Performance
| | Summary Compensation Table Total for CEO ($)(1) | Compensation Actually Paid to CEO ($)(1) | Average Summary Compensation Table Total for Non-CEO NEOs ($)(1) | Average Compensation Actually Paid to Non-CEO NEOs ($) | Value of Initial Fixed $100 Investment Based On(2): | | Net Income ($ millions)(4) | Adjusted EBITDA ($ millions) (4)(5) | | Year | | | | | Generac TSR ($) | S&P 500 Industrials (Sector) TSR ($)(3) | | | | 2023 | 7,084,966 | 9,840,895 | 1,771,205 | 2,107,955 | 259.87 | 194.31 | 217.1 | 637.9 | | 2022 | 6,807,676 | (19,884,139) | 1,613,648 | (2,501,201) | 202.43 | 164.49 | 408.9 | 825.4 | | 2021 | 7,519,812 | 45,045,143 | 2,178,594 | 10,308,753 | 707.81 | 174.02 | 556.6 | 861.4 | | 2020 | 6,961,596 | 50,563,134 | 1,748,639 | 11,189,642 | 457.44 | 143.68 | 347.2 | 583.8 | | 2019 | 6,050,937 | 28,371,014 | 1,597,189 | 6,346,729 | 202.37 | 129.37 | 252.3 | 454.1 |
Pay Versus Performance
(1) Amounts represent Summary Compensation Table (“SCT”) total compensation and compensation “actually paid” (“CAP”) to our primary executive officer (our CEO), and the average SCT compensation and CAP to our remaining NEOs for the relevant fiscal year. Our NEOs include the individuals indicated in the table below for each fiscal year:
Pay Versus Performance
| Year | CEO | Non-CEO NEOs | | 2023 | Aaron P Jagdfeld | Kyle Raabe, York Ragen, Norm Taffe, and Erik Wilde | | 2022 | Aaron P Jagdfeld | Patrick Forsythe, York Ragen, Norm Taffe, and Erik Wilde | | 2021 | Aaron P Jagdfeld | Patrick Forsythe, Russell Minick, York Ragen, and Erik Wilde | | 2020 | Aaron P Jagdfeld | Patrick Forsythe, Russell Minick, York Ragen, and Erik Wilde | | 2019 | Aaron P Jagdfeld | Patrick Forsythe, Russell Minick, York Ragen, and Erik Wilde |
Pay Versus Performance
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Pay Versus Performance
CAP represents the “Total” compensation reported in the SCT for the applicable fiscal year, adjusted as set forth below. None of our NEOs participate in a pension plan; therefore, no adjustments from the SCT total related to pension value are needed.
Pay Versus Performance
| | 2023 | | | | | Adjustments | CEO | | Average non- CEO NEOs | | | Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY | -$ | 6,000,223 | -$ | 1,147,973 | | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | | 6,469,857 | | 1,240,012 | | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date | | 0 | | 0 | | Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | | 307,999 | | 33,250 | | Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | | 1,978,296 | | 211,461 | | Deduction of ASC 718 Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End | | 0 | | 0 | | Increase based on Dividends or Other Earnings Paid during Applicable FY prior to Vesting Date | | 0 | | 0 | | Increase based on Incremental Fair Value of Options/SARs Modified during Applicable FY | | 0 | | 0 | | Increase for Service Cost and, if applicable, Prior Service Cost for Pension Plans | | 0 | | 0 | | TOTAL ADJUSTMENTS | | 2,755,929 | | 336,750 |
Pay Versus Performance
(2) Our peer group is the S&P 500 Industrials (Sector) Index, which is the industry index used to show our performance in our Form 10-K. (3) TSR is calculated based on a fixed investment of one hundred dollars measured from the market close on December 31, 2018 through and including the end of each fiscal year reported in the table. (4) Net income and Adjusted EBITDA as reported in the Pay Versus Performance Table are before adjusting for non-controlling interests. Our company-selected measure, which is the measure we believe represents the most important financial performance measure not otherwise presented in the table above that we use to link CAP for fiscal 2023 to performance, is Adjusted EBITDA, which is a Non-GAAP measure that excludes the impact of acquisitions. A reconciliation of Adjusted EBITDA to net income can be found in Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Pay Versus Performance
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Pay Versus Performance Tabular List
Pay Versus Performance Tabular List We believe the following performance measures represent the most important financial performance measures used by us to link compensation actually paid to our NEOs for the fiscal year ended December 31, 2023:
Pay Versus Performance Tabular List
| Financial Performance Measures Linked to the Compensation of Named Executive Officers | | Adjusted EBITDA | | Primary Working Capital (“PWC”) as a Percent of Net Sales | | Annual Revenue Growth Rate (“CAGR”) | | Adjusted EBITDA Margin Percentage | | Free Cash Flow (“FCF”) |
Pay Versus Performance Tabular List
The Compensation Discussion and Analysis provides a further description of how these metrics are defined and used in the Company’s executive compensation program.
Pay Versus Performance Tabular List
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Delinquent Section 16(a) Reports
| Name | Fees earned ($) | Stock awards ($)(1)(2) | Total ($) | | Marcia Avedon | — | 245,135 | 245,135 | | John Bowlin | — | 225,187 | 225,187 | | Robert Dixon | 105,000 | 135,038 | 240,038 | | William Jenkins | 90,000 | 135,165 | 225,165 | | Andrew Lampereur | — | 250,261 | 250,261 | | Bennett Morgan | — | 255,279 | 255,279 | | David Ramon | 90,000 | 135,038 | 225,038 | | Kathryn Roedel | 90,000 | 135,038 | 225,038 | | Dominick Zarcone | — | 225,187 | 225,187 | | Nam Nguyen | — | 225,187 | 225,187 |
Non-Employee Director Pay
Non-Employee Director Pay Non-employee directors receive an annual cash retainer of $90,000 and an annual equity grant valued at $135,000. The additional annual retainer paid to the Chair of the Audit Committee is
Non-Employee Director Pay
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Non-Employee Director Pay
$25,000, the additional annual retainer paid to the Chair of the Human Capital and Compensation Committee is $20,000, the additional annual retainer paid to the Chair of the Nominating and Corporate Governance Committee is $15,000, and the additional annual retainer paid to the Lead Director is $30,000. The annual equity grant is made in the form of fully vested shares of our common stock; however, any director who has met the minimum stock ownership requirement may elect to receive the value of the annual equity grant in cash. Our non-employee directors are reimbursed for out-of-pocket expenses incurred in connection with rendering board services. No changes were made to the non-employee Director Pay in 2023 as shown in the table below.
Non-Employee Director Pay
| | 2023 Annual Retainers | | Board Compensation | | | Annual Retainer | $90,000 | | Annual Equity Retainer | $135,000 | | Additional Board Leadership Retainers | | | Lead Director | $30,000 | | Audit Committee Chair | $25,000 | | Human Capital and Compensation Committee Chair | $20,000 | | Nominating and Corporate Governance Committee Chair | $15,000 |
Non-Employee Director Pay
In December 2023, the Committee reviewed a competitive assessment of its non-employee director compensation program with the assistance of Pay Governance. Based on that market assessment, in February 2024, the Committee approved an increase to the Annual Equity Retainer for 2024. The increase aligns the Equity Retainer to median by adjusting it from $135,000 to $155,0000.