Jon Skelly
About Jon Skelly
Jonathan Skelly (age 47) is President, Residential and Commercial at The AZEK Company. He joined AZEK in January 2018 after senior roles in corporate development and strategy at W.W. Grainger, The Home Depot, and Hughes Supply, and has led AZEK’s Residential segment before his current role . AZEK’s FY2024 results provide context for his pay-for-performance framework: net sales were $1.44B (+5% YoY) with Adjusted EBITDA $379.3M (+34% YoY) and net income $153.4M (+146% YoY); cash from operations was $224.5M and free cash flow $147.3M . Company TSR over one- and two-year periods outperformed the fiscal 2024 compensation peer group, the S&P Composite 1500 Building Products Index, and the Russell 3000 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| W.W. Grainger, Inc. | Vice President, Corporate Development | 2010–2017 | Led global and domestic M&A and corporate development; responsible for all corporate development initiatives |
| The Home Depot Inc. | Director, Strategic Business Development | Prior to 2010 | Led strategic business development initiatives |
| Hughes Supply, Inc. | Director, Mergers & Acquisitions | Prior to 2010 | Led M&A activities |
| The AZEK Company | Senior Vice President, Customer Experience; President, Residential Segment | 2018–2024 | Drove segment growth, integration of acquisitions, customer experience |
| The AZEK Company | President, Residential and Commercial | 2024–present | Leads Residential and Commercial businesses with above-target FY2024 performance |
External Roles
None disclosed in AZEK’s proxy or 8-K filings .
Fixed Compensation
| Metric | FY2023 | FY2024 |
|---|---|---|
| Base Salary ($) | $450,000 | $550,000 (promoted to President, Residential and Commercial) |
| Target Annual Incentive (% of Base) | 75% | 75% |
| Target Annual Incentive ($) | $337,500 | $412,500 |
| Actual Annual Incentive Paid ($) | $322,420 | $587,606 (142.4% of target) |
Notes: FY2024 bonus derived from performance scores and corporate results; FY2024 All Other Compensation line totaled $29,101, including a 401(k) match of $11,904; AZEK provides tax/financial counseling services to NEOs ($15,000 per NEO) .
Performance Compensation
Annual Incentive Plan (AIP) Structure and FY2024 Outcome
| Component | Weight | Threshold | Target | Max | FY2024 Actual | Payout Factor |
|---|---|---|---|---|---|---|
| Adjusted EBITDA ($MM) | 50% | $288.2 | $327.5 | $381.9 | $379.3 | 171.2% |
| Net Sales ($MM) | 25% | $1,201.2 | $1,365.0 | $1,624.4 | $1,441.4 | 108.0% |
| Individual Objectives | 15% | — | — | 130% (max) | 4.5/5 score | 122.5% |
| FULL-CIRCLE Objectives | 10% | — | — | — | 4/5 team score | — |
| AIP Result (Company factor) | — | — | — | — | — | 150.1% company factor; 142.4% total for Skelly |
Individual highlights: Above-target FY2024 financial performance; updated AZEK’s three-year strategic plan; accelerated integration and net sales contributions from StruXure and Ultralox; drove retail and key account growth; talent development .
Long-Term Incentive (LTI) – FY2024 Grants and Design
| Instrument | Grant Date | Value ($) | Units/Strike | Vesting | Performance Metrics |
|---|---|---|---|---|---|
| PSUs | 12/15/2023 | $525,000 | Target 13,762; Threshold 6,881; Max 27,524 | Cliff vest after 3-year period (FY2024–FY2026), subject to performance | Net Sales 40%, Adjusted EBITDA 40%, Adjusted ROIC 20% |
| RSUs | 12/15/2023 | $262,500 | 6,881 units | 1/3 annually over 3 years | Service-based |
| Stock Options | 12/15/2023 | $262,500 | 15,333 options @ $38.15; expire 12/15/2033 | 1/3 annually over 3 years | Stock price appreciation |
Historical PSU payout: The FY2022–FY2024 PSU cycle paid 53.8% of target (after adjusting targets for the Vycom divestiture), resulting in Skelly’s aggregate vesting of 3,775 shares across two awards; AZEK adjusted PSU targets to remove Vycom’s expected contribution .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 382,375 shares (includes 201,866 options exercisable within 60 days); <1% outstanding |
| Options – Exercisable (select lines) | 164,807 @ $23.00 (IPO grant); 7,972 @ $34.27; 4,036 @ $41.21; 1,662 @ $17.39 |
| Options – Unexercisable (select lines) | 2,018 @ $41.21; 832 @ $17.39; 16,261 @ $20.18; 15,333 @ $38.15 |
| RSUs – Unvested (select lines) | 3,422 ($160,150 mkt value); 1,522 ($71,230); 7,268 ($340,142); 6,881 ($322,031) at $46.80/share |
| PSUs – Unearned (max basis) | 43,608 ($2,040,854 mkt value; FY2023 grants); 27,524 ($1,288,123; FY2024 grants) at $46.80/share |
| 2024 Vesting/Exercises | Options exercised: 19,022 ($345,154 value); Stock awards vested: 51,049 ($2,185,831) |
| Hedging/Pledging | Prohibited for all employees and directors; no margin accounts; derivatives trading prohibited |
| Stock Ownership Guidelines | CEO direct reports must hold 2x base salary; retain 50% of net shares until met; all executives currently meet/are in compliance |
Employment Terms
| Term | Provision |
|---|---|
| Employment Start | Joined AZEK January 2018 |
| Non-Compete/Non-Solicit | 2 years post-termination; confidentiality and IP assignment covenants apply |
| Severance (pre-Dec 2024 table values at 9/30/2024) | Termination without cause: Cash $550,000; Benefits $30,555; Equity acceleration/continuation $1,851,605; Total $2,432,160 |
| Change-in-Control (CIC) – pre-plan table | Qualifying termination in connection with CIC: Cash $550,000; Benefits $30,555; Equity acceleration $3,310,734; Total $3,891,289 |
| LTI Treatment (general NEO terms) | RSUs/options: pro-rata vesting on death/disability; continue vest if scheduled within 12 months for term without cause; immediate vest on term within 24 months of CIC; PSUs: pro-rata or target vesting depending on scenario per NEO terms |
| Executive Severance Plan (adopted Dec 2024) | Qualifying termination: 1.0x base + target bonus; benefits continuation 12 months; prior-year bonus and pro-rata current-year bonus; CIC within 24 months: 2.0x base + target bonus lump sum; benefits 18 months; prior-year and pro-rata bonuses |
Compensation Structure Analysis
- Increased at-risk pay and PSU tilt: FY2024 LTI mix was 50% PSUs/25% RSUs/25% options; for FY2025, AZEK increased PSU weighting to 55% and reduced options to 20%, directly raising performance sensitivity and decreasing guaranteed equity value .
- Metric rigor and alignment: AIP tied to Adjusted EBITDA (50%) and net sales (25%) with straight-line interpolation; FY2024 outperformance delivered a 150.1% company factor, while individual and FULL-CIRCLE components introduced qualitative strategic execution and ESG goals .
- PSU metric evolution: AZEK replaced RONTA with Adjusted ROIC in PSUs (20% weight), increasing capital allocation discipline; weighting rebalanced to reduce ST/LT duplication (net sales, EBITDA) .
- Clawback policy and enforcement: Dodd-Frank compliant; FY2024 restatement recovery applied to CEO and CFO only; no recovery from other executives, including Skelly .
Risk Indicators & Red Flags
- Insider selling pressure: Significant FY2024 vesting (51,049 shares) and scheduled RSU/option vesting plus substantial PSUs that can vest in FY2025–FY2026 create potential selling windows as awards settle; hedging/pledging prohibitions mitigate alignment concerns .
- Leadership transition: CFO resignation effective Jan 24, 2025 with internal successor appointed; typical execution risk during transition, though succession was planned .
- Governance protections: Double-trigger CIC vesting, robust ownership and anti-hedging policies, and independent compensation consultant engagement mitigate compensation risk .
Equity Ownership & Alignment
| Measure | Value |
|---|---|
| Beneficial Ownership (%) | <1% of 143,555,522 shares outstanding |
| Shares Pledged | None; pledging prohibited |
| Ownership Guideline | 2x base salary for CEO direct reports; currently in compliance via retention |
Employment Contracts, Severance & CIC Economics
| Scenario | Cash | Benefits | Equity Acceleration/Continuation | Total |
|---|---|---|---|---|
| Death/Disability | — | — | $1,704,593 | $1,704,593 |
| Termination without cause | $550,000 | $30,555 | $1,851,605 | $2,432,160 |
| Qualifying term in connection with CIC | $550,000 | $30,555 | $3,310,734 | $3,891,289 |
Executive Severance Plan (Dec 2024): supersedes prior agreements—1.0x base + target bonus (non-CIC); 2.0x base + target bonus lump sum (within 24 months CIC), plus benefits and pro-rata bonuses; applies subject to release and covenants .
Say-on-Pay & Shareholder Feedback
- FY2023 Say-on-Pay approval was ~79%; AZEK engaged shareholders and adjusted the program by increasing PSU weight, elevating Adjusted ROIC, and refining the peer group to remove outsized peers .
Expertise & Qualifications
- 20+ years in sales, customer service, strategy, M&A, and integration; leadership in corporate development; segment leadership at AZEK .
Work History & Career Trajectory
- Progressed from director-level roles in M&A/strategy at Hughes Supply and The Home Depot to VP Corporate Development at Grainger; joined AZEK in 2018, advanced to President, Residential segment, then to President, Residential & Commercial in FY2024 .
Performance Compensation Detail – FY2024 LTI Mix and Counts
| Instrument | Value ($) | Units/Strike | Notes |
|---|---|---|---|
| PSUs | $525,000 | Target 13,762 (6,881 threshold; 27,524 max) | Cliff vest FY2026; Net Sales 40%, EBITDA 40%, ROIC 20% |
| RSUs | $262,500 | 6,881 | 1/3 annual vest |
| Options | $262,500 | 15,333 @ $38.15; Expire 12/15/2033 | 1/3 annual vest |
Investment Implications
- Pay-for-performance alignment is strong: Skelly’s FY2024 AIP paid 142.4% of target driven by EBITDA and net sales outperformance, and FY2025 design increases PSU weighting and ROIC focus—tightening linkage to long-term value creation and capital efficiency .
- Retention risk appears contained by robust equity overhang and severance protections: significant unvested RSUs/options and multi-year PSUs encourage tenure; double-trigger CIC and the Dec 2024 executive severance plan further stabilize retention economics .
- Trading signal watchpoints: sizable vesting streams (RSUs/options) and PSU cliffs through FY2026 may create episodic selling pressure as awards settle; anti-hedging/pledging policies reduce misalignment risk .
- Execution context: FY2024 operational momentum (integration of acquisitions, retail and key accounts growth) under Skelly’s leadership supports continued performance, while CFO succession in January 2025 introduces normal transition risk to monitor near term .