Kevin Wheeler

About Kevin Wheeler

Kevin J. Wheeler, age 65, is Chairman and Chief Executive Officer of A. O. Smith, serving as CEO since 2018 and Chairman since 2020; he joined the company in 1994 and became a director in 2017 . He has deep international and operational experience across North America, Europe, India, and China, and serves on the board of Graco Inc. (Governance and Compensation committees) . Pay-versus-performance disclosures show five-year cumulative TSR of $157 on a $100 base in 2024 (company), with Net Income of $534 million and EBIT of $708 million for 2024, contextualizing compensation against results . The board employs a combined Chair/CEO structure with independent oversight, a rotating Presiding Director, and fully independent Audit, Personnel & Compensation, and Nominating & Governance Committees .

Past Roles

Organization	Role	Years	Strategic Impact
A. O. Smith	Chairman	Since 2020	Completes planned leadership succession; unified leadership with independent committee oversight .
A. O. Smith	President & CEO	Since 2018	Led global water heating operations; strengthened product and market execution .
A. O. Smith	President & COO	2017–2018	Transition leadership; operational oversight across businesses .
A. O. Smith	SVP; President & GM, North America, India, Europe Water Heating & Export	2013–2017	Managed largest operating unit; expanded international footprint .
A. O. Smith	Managing Director, Europe; VP–International	Prior to 2013	Led European/Middle East operations; oversight of all European and Asian operations including China .
A. O. Smith	Regional Sales Manager (entry)	1994	Foundation in sales; progression through roles of increasing responsibility .

External Roles

Organization	Role	Years	Strategic Impact
Graco Inc.	Director; Governance Committee; Management Organization & Compensation Committee	Current	External governance and compensation insights; cross-industry perspective .

Fixed Compensation

Component	2024	2025 (Effective Jan 1)	Notes
Base Salary	$1,120,000	$1,159,000	PCC targeted ~105% of projected market median in 2025 .
Perquisite Allowance	$40,000	$40,000 (grandfathered)	Executives since 2016 not eligible; Wheeler grandfathered .
Retirement/Savings Contributions	$131,060 (company 401(k) + nonqualified)	N/A	Defined contribution restoration plan; 3% above IRC limit .
Life Insurance (Active)	$3,360,000 death benefit	N/A	Post-retirement benefit $1,120,000 .

Performance Compensation

Annual Incentive (2024)

Metric	Weighting	Target	Actual Achievement	Payout (CEO)	Vesting
Corporate EBIT	80%	$799.1M	68.1% of target	$966,000	Cash, annual .
Corporate Net Sales	20%	$4.0258B	72.7% of target	Included in above	Cash, annual .
Overall Corporate Bonus Achievement	—	—	69.0%	$966,000	—

CEO target bonus = 125% of base salary (100% vs market median); CEO target percent calibration via WTW .

Long-Term Incentives (2024 grants)

Award Type	Metric	Target/Grant Detail	Est. Status/Payout	Vesting/Timing
Restricted Stock Units (RSUs)	Average ROE threshold (≥5%)	33,015 units; $2,674,875 grant-date fair value	Time-based with performance threshold	Vests 2/12/2027 .
Performance Stock	Strategic ESG: Water savings (16M gal target; 20M gal max = 150%)	9,905 target shares; $802,503 grant-date fair value	Estimated 150.0% of shares through Dec 2024	3-year period; 12/31/2026 vest based on performance .
Performance Cash Units	ROIC vs Cost of Capital; 30.8% target; 36.5% = 200%	Target $1,872,500; Max $3,745,000	Est. 195.6% of target through Dec 2024	3-year period (2024–2026) .

Options (Outstanding; none granted in 2024)

Detail	Shares	Strike	Status	Expiration
Option lot (multi-year grants)	See cumulative exercisable counts	Various ($31.670–$74.265)	Mix of exercisable and one upcoming tranche	Various (2026–2032) .
Upcoming exercisable	28,753	$74.265	Becomes exercisable 2/7/2025	2/7/2032 .

Equity Ownership & Alignment

Holding Type	Amount	Percent of Common Stock	Notes
Common Stock (direct/indirect)	89,871	<1% (*)	Asterisk denotes less than 1% .
Restricted Stock Units	89,500	N/A	Unvested RSUs; dividend equivalents credited .
Options (Exercisable)	475,717	N/A	See vest/exercise schedule .
Ownership Guidelines	5x salary	Compliance	Including granted but unvested RSUs, Wheeler is in compliance .
Hedging/Pledging	Prohibited	—	Applies to directors and officers .

Note: Outstanding equity award detail shows RSU vest dates and performance stock target tranches; market value at 12/31/2024 computed at $68.21 per share in company table .

Employment Terms

Provision	Terms
Employment Agreement	None; serves at Board’s pleasure .
Severance (Qualifying Termination)	CEO: 24 months continuation pay (salary + target bonus), pro rata actual bonus, medical continuation, outplacement (max 25% of base); equity pro rata vesting treatment .
Change-in-Control + Qualifying Termination	CEO: Lump sum 24 months (salary + target bonus) plus 12 months (salary + target bonus) for noncompete; pro rata target bonus; equity: options/RSUs fully vest; performance awards paid at target pro rata; modified excise tax gross-up (cap or gross-up depending safe harbor vs >110%) .
Noncompete/Non-solicit/Confidentiality	Required to receive severance; noncompete consideration embedded in lump sums post-CIC .
Clawback	Company-wide recoupment for material restatements; discretionary clawback for materially adverse conduct or compliance violations (global application) .
Hedging/Pledging	Strict prohibition for directors/officers/employees .
Deferred Compensation	Aggregate balance $3,736,887 at 12/31/2024; registrant contributions $221,713 in 2024; earnings $386,548 .
Executive Life Insurance	Active: $3,360,000; post-retirement: $1,120,000 .

Board Governance

Role and independence: Wheeler is a management director by virtue of his executive role . Committees are fully independent; Wheeler is not listed as a member of Audit, Personnel & Compensation, or Nominating & Governance Committees .
Combined Chair/CEO structure: Company maintains a single leader structure, balanced by independent Presiding Director and nonmanagement executive sessions; strong committee oversight across audit, compensation, and governance; controlled company status acknowledged but NYSE exemptions not used .
Attendance: Board held five regular meetings in 2024; all directors attended all meetings of the Board and committees on which they served with the sole exception of one director conflicting with part of one meeting; nonmanagement directors met in executive session five times .
Director compensation: Management directors receive no board compensation .
Controlled company context: Smith Family Voting Trust effectively controls election of Class A directors; board asserts continued use of independent committees and nonuse of controlled-company exemptions .

Director Compensation (Wheeler-specific)

As an employee director, Wheeler receives no compensation for board service .

Say-on-Pay & Shareholder Feedback

2024 say-on-pay approval: Approximately 97% of votes cast approved executive compensation; PCC considered this in setting 2025 programs with few changes .

Compensation Benchmarking & Committee Practices

Consultant: Willis Towers Watson (WTW) advises PCC; independence reviewed by NGC; no conflicts identified .
Benchmarking: Broad-based database; regression to $3.75B revenue for 2024 and against $3.85B for 2025; target total comp at market median; typical range 80–120% of median .
Most important performance measures linking pay and performance: EBIT; also ROIC, Net Sales, ROE, and PEBIT for units .

Performance & Track Record

Year	Company TSR ($100 initial)	Net Income ($mm)	EBIT ($mm)
2020	$117	$345	$451
2021	$187	$487	$630
2022	$127	$236	$233
2023	$186	$557	$746
2024	$157	$534	$708

Context: Company’s TSR and earnings metrics provide backdrop for incentive outcomes; 2024 annual bonus achievement was 69.0% amid under-target EBIT and net sales attainment .

Risk Indicators & Red Flags

Excise tax “modified gross-up” post-CIC (potential shareholder-unfriendly feature, albeit capped if below 110% of safe harbor): estimated Wheeler excise-tax gross-up of $7,659,676 in modeled scenario; total CIC+QT package $26,809,656 .
Combined Chair/CEO role: mitigated by independent oversight and rotating Presiding Director .
Controlled company status: acknowledged; independence maintained in committees; does not utilize controlled-company exemptions .
Clawback policy: robust, company-wide application beyond SEC/NYSE requirements .
Hedging/pledging: strictly prohibited .
Related party transactions: None material; independence reaffirmed annually .

Equity Event Calendar (Potential Selling Pressure Signals)

Date	Event	Shares/Units	Instrument	Notes
2/7/2025	RSU vest	20,440	RSUs	Time-based with ROE threshold .
2/7/2025	Option tranche becomes exercisable	28,753	Stock options	$74.265 strike; expires 2/7/2032 .
4/1/2025	—	—	—	No Wheeler-specific vest on this date (O’Brien tranche vests) .
2/13/2026	RSU vest	36,045	RSUs	—
12/31/2025	Performance Stock (target)	10,815 (target units vested at target)	Perf. stock	ESG water savings; actual payout depends on goal .
12/31/2026	Performance Stock (target)	9,905 (target units vested at target)	Perf. stock	ESG water savings .
2/12/2027	RSU vest	33,015	RSUs	—

Note: Actual sales depend on Form 4 activity and personal decisions; company policy prohibits hedging/pledging .

Compensation Structure Analysis

Mix: 2024 CEO total target compensation ~14% salary, 18% annual incentive, 68% long-term incentives .
Equity tilt: ~44% of CEO total target compensation in equity-based awards (RSUs + performance stock) .
Metrics and rigor: Annual plan balances profitability (EBIT 80%) and growth (Net Sales 20%); long-term plan emphasizes ROIC and strategic ESG (water savings), with ROE threshold on RSUs .
Changes vs prior year: 2025 program maintains structure; continues ESG-based performance stock goal (landfill diversion target) .

Equity Ownership & Beneficial Ownership Table (Wheeler)

Security	Amount	Notes
Common Stock	89,871	Direct/indirect holdings.
Restricted Stock Units	89,500	Unvested RSUs credited in nonqualified plan.
Options Exercisable within 60 days	475,717	Multiple tranches across grants.
Percent of Common Stock	<1% (*)	Asterisk indicates less than one percent.

Board Service History, Committee Roles, Dual-Role Implications

Board service: Director since 2017; management director; no committee memberships listed .
Dual role implications: Combined Chair/CEO provides unified leadership; company highlights independent committee structures, rotating Presiding Director, and frequent executive sessions to mitigate independence concerns; despite controlled-company status, it does not rely on NYSE exemptions (maintains majority independent board and fully independent committees) .

Investment Implications

Pay-for-performance alignment: Incentives emphasize EBIT and ROIC, with ESG-linked performance stock and ROE thresholds for RSUs—supporting long-term value creation; 2024 annual payout at 69% reflects under-target operational metrics . Upcoming RSU vests and an options tranche becoming exercisable in early 2025 create potential, albeit policy-constrained, selling windows; monitor Form 4 filings around vest dates for near-term supply signals . Severance/CIC economics are sizeable, including a modified excise-tax gross-up—flagging potential overhang in change-of-control scenarios but mitigated by strong clawback and independence structures . Five-year TSR and earnings cadence show variability (TSR $157; EBIT $708mm in 2024), framing incentive outcomes; watch 2025 landfill diversion ESG metric and 2024–2026 ROIC trajectory, both tracking above target to date .