Charles Lauber

About Charles Lauber

Charles T. (“Chuck”) Lauber is Executive Vice President and Chief Financial Officer of A. O. Smith, appointed May 1, 2019, after joining the company in December 1999 and holding senior finance, strategy, and corporate development roles across business units and corporate functions . He holds a B.S. in Accounting (University of Wisconsin–Whitewater) and an MBA from Northwestern’s Kellogg School of Management . Compensation design ties his incentives to company-wide metrics including EBIT, net sales, ROIC, and return on equity with SEC/NYSE-conforming clawbacks and strict anti-hedging/pledging policies, aligning pay with long-term performance .

Past Roles

Organization	Role	Years	Strategic Impact
A. O. Smith	Executive Vice President & CFO	May 2019–Present	Leads all financial functions; supports modernization and ESG; long-tenured finance, strategy, and M&A leadership .
A. O. Smith	SVP – Strategy & Planning; then SVP – Strategy & Corporate Development	Jan–Mar 2013	Drove corporate strategy and development initiatives .
A. O. Smith (Water Products)	SVP & Group CFO	2006	Group-level finance leadership across the division .
A. O. Smith (Electrical Products)	VP – Global Finance	2004	Global finance leadership for the business unit .
A. O. Smith (Electrical Products)	VP & Controller	2001	Business unit controllership and accounting leadership .
A. O. Smith	Corporate Director of Tax & Audit	Dec 1999	Corporate tax and audit oversight at entry to AOS .
Ernst & Young (EY)	Audit and management roles	1984–1999	Senior manager; broad audit and management experience prior to AOS .

External Roles

Organization	Role	Years	Notes
H.B. Fuller Company	Independent Director	Nov 29, 2022–Present	Elected to board; expected to contribute M&A/finance expertise .
National Association of Manufacturers (NAM)	Director	Not disclosed–Present	Serves on the board per company leadership bio .

Fixed Compensation

Year	Base Salary ($)	Perquisite Allowance ($)	Retirement & Deferred Contributions ($)	Dividends on Deferred RSUs ($)
2025 (effective Jan 1)	673,800	—	—	—
2024	651,000	35,000	60,538	29,453
2023	626,000	35,000	49,510	24,615

Notes:

PCC set 2025 increases; Lauber’s base moved to $673,800, ~108% of projected market median .
2024 base salary ~104% of market median; PCC targets 80–120% median .

Performance Compensation

Annual Incentive, Performance Cash, and Performance Stock

Year	Target Bonus % of Salary	Annual Bonus Paid ($)	Performance Cash/Units Paid ($)	Payout %	Vesting/Performance Basis
2024	—	360,000	473,000	115.9% (perf. cash 2022–2024)	Annual bonus vs objectives; perf. cash tied to ROIC over 3 years .
2023	75%	753,000	617,000 (perf. units 2021–2023)	136.3% corrected payout (perf. units)	Annual bonus vs objectives; perf. units multi-year .
2022	—	49,000	—	—	—

Design details:

Long-term mix: RSUs 50%, performance cash 35%, performance stock 15%, all with financial or strategic metrics .
RSUs: time-based 3-year vesting with minimum average ROE threshold; 2023 minimum ROE threshold 5% .
Performance cash (2023 grant): ROIC vs Cost of Capital over 3 years; threshold set at 125% of S&P 500 Industrials median, target at 30.8%, max at 36.0% with 0–200% payout range .
Performance stock: ESG metric; 2024 grant uses a water usage goal; 2025 sets landfill diversion target (100% at 525,000 lbs diverted; 150% at 787,500 lbs) over 2025–2027 .

Equity Grants (RSUs and Performance Stock)

Year	RSUs Granted (#)	RSUs Grant Date FV ($)	Performance Stock Target (#)	Performance Stock FV ($)
2024	8,485	687,455	2,545	206,196
2023	—	635,144	2,835 (target)	190,342

Stock Options (Outstanding and Key Terms)

Exercise Price ($)	Expiration	Exercisable Shares (#)
31.670	02/08/2026	2,933
50.160	02/13/2027	7,590
61.760	02/12/2028	7,775
49.420	02/11/2029	12,190
52.680	05/01/2029	8,985
42.390	02/10/2030	36,850
60.820	02/08/2031	25,910
74.265	02/07/2032	15,004

Upcoming: Lauber has right to exercise 7,501 shares at $74.265 on Feb 7, 2025 . No stock options granted in 2023 or 2024 .

Vesting Schedules (Upcoming)

Award Type	Vest Date	Shares
RSU	Feb 7, 2025	5,330
RSU	Feb 13, 2026	9,460
RSU	Feb 12, 2027	8,485
Performance Stock (2024–2026)	Dec 31, 2026 (subject to ESG metric)	2,544 (current unearned units)
Performance Stock (2023–2025)	Dec 31, 2025 (subject to ESG metric)	4,253 (current unearned units)

Equity Ownership & Alignment

Metric	Value
Beneficial ownership – Common shares	36,260
RSUs (unvested, counted in compliance)	23,275
Options exercisable within 60 days	117,236
Ownership as % of Common Stock	<1% (“*”)
Stock ownership guideline (CFO)	3x salary
Compliance with guideline	In compliance (company states all NEOs except O’Brien in 2025; all NEOs compliant in 2024)
Hedging/pledging policy	Prohibited for all directors, officers and employees
Clawback policy	SEC/NYSE-compliant recoupment; expanded global application approved Oct 9, 2023

Employment Terms

Item	Provision
Employment agreement	No individual employment agreements for NEOs
Severance plan	Senior Leadership Severance Plan; cash severance (multiple of annual cash compensation), medical continuation, outplacement; accelerated vesting in certain cases; requires non-compete, non-solicit, confidentiality; benefits contingent on release
Hedging & pledging	Prohibited
Change-in-control economics (Dec 31, 2023)	Severance $2,253,600; pro rata bonus $500,800; stock options $309,360; RSUs $1,711,454; performance units $795,000; performance stock $77,164; outplacement $9,288; excise tax gross-up $0; payments reduced by $1,169,399 via modified gross-up; total $4,487,267
Qualifying termination (non-CIC) economics (Dec 31, 2023)	Severance $1,690,200; pro rata bonus $753,000; stock options $309,377; RSUs $1,711,454; performance units $1,038,000; performance stock $77,164; medical $6,966; outplacement $156,500; total $5,742,661

Compensation Structure Analysis

Market positioning: Lauber’s 2024 long-term incentive target value $1,375,000 at ~103% of market median; 2023 LTI target $1,270,000 at ~95% of median; design emphasizes performance-based equity and cash .
Mix shift: AOS eliminated stock options in 2023 and added performance stock; long-term awards now RSUs 50%, performance cash 35%, performance stock 15%—increasing at-risk, performance-tied pay .
Clawback and risk controls: Robust recoupment policy and anti-hedging/pledging reduce misalignment and risk-taking .
Correction of prior payout: 2025 proxy corrects 2023 performance units payout from 164.9% to 136.3% (reductions applied by executive), signaling stronger governance controls .

Performance & Track Record

Tenure and leadership: CFO since 2019; previously senior roles in finance, strategy, corporate development; credited with modernizing operations and ESG and driving M&A/global expansion per company and external sources .
Performance metric linkage: Incentives tied to EBIT, net sales, ROIC, ROE; 2022–2024 performance cash paid at 115.9% of target, indicating above-target ROIC performance vs Cost of Capital .

Risk Indicators & Red Flags

Hedging/pledging: Prohibited—reduces misalignment risk .
Option repricing: No options granted in 2023–2024; no repricing indicated .
Clawbacks: SEC/NYSE-compliant policy with expanded scope adopted Oct 9, 2023—mitigates restatement and conduct risk .
Data correction: 2023 performance units payout corrected in 2025 proxy, showing oversight; not indicative of executive misconduct .

Equity Vesting & Potential Selling Pressure

Date	Event	Shares	Note
Feb 7, 2025	RSU vest	5,330	Near-term vest; potential liquidity event.
Feb 7, 2025	Option exercise right	7,501 at $74.265	Exercise right becomes available; may drive activity.
Feb 13, 2026	RSU vest	9,460	Scheduled vesting.
Feb 12, 2027	RSU vest	8,485	Scheduled vesting.

Equity Ownership Detail (as of Dec 31, 2024)

Common Shares	RSUs	Options Exercisable (60 days)	% of Common
36,260	23,275	117,236	<1% (“*”)

Say-on-Pay & Peer Group

Benchmarking: PCC uses WTW market data; 2024 base salaries ~112% of projected median in aggregate (105% excluding Shafer); long-term incentives targeted to market .
Peer group composition and say-on-pay vote percentages not disclosed in the cited excerpts; PCC notes consideration of stockholder vote within CD&A framework .

Expertise & Qualifications

Education: B.S. Accounting (UW–Whitewater), MBA (Kellogg School of Management) .
Domain expertise: Finance, treasury, controllership, investor relations, strategy, corporate development, M&A; ESG involvement per external coverage .

Investment Implications

Strong pay-for-performance alignment: Mix emphasizes performance cash and performance stock linked to ROIC and ESG, with clawbacks and anti-hedging/pledging—supportive of disciplined capital allocation and risk control .
Ownership and compliance: Material option overhang (117k exercisable within 60 days) and RSU pipeline with scheduled vesting; Lauber meets 3x salary ownership guideline, reducing misalignment risk .
Near-term trading signals: Feb 7, 2025 RSU vest (5,330) and option exercise right (7,501 at $74.265) create potential selling/exercise events; monitor Form 4 filings for execution and any 10b5-1 plan activity .
Change-in-control economics: Defined severance and accelerated vesting under the plan; absence of excise tax gross-ups and presence of modified gross-up reduction reduce shareholder-unfriendly optics .
Governance credibility: 2025 proxy’s correction of prior payout percentages indicates robust oversight and willingness to adjust, reducing reputational risk .