Luis Machado

About Luis Machado

Luis F. Machado (age 62) serves as Vice President, General Counsel and Corporate Secretary of TopBuild Corp. (BLD), a role he has held since August 2020, following senior legal leadership roles at CTS Corporation and L Brands, Inc. . During the 2021–2023 LTI performance cycle, TopBuild achieved 93.66% total shareholder return (TSR), with EPS performance at 200% of target and TSR at 100% of target, underscoring strong value creation over that period . His compensation is structured with a significant at‑risk component tied to profitability (Adjusted Operating Income and margin), growth (Net Sales), working capital efficiency, safety, and multi‑year PRSUs linked to EPS and relative TSR .

Past Roles

External Roles

No current public company board roles disclosed in company filings reviewed .

Fixed Compensation

Multi‑year compensation (as reported in Summary Compensation Table):

Perquisites: All other compensation primarily includes 401(k) match and incremental company portion of an executive physical; execs otherwise participate in broad‑based benefit programs .

Performance Compensation

Annual incentive plan (AIP) design (2024):

• Metrics and weights: Adjusted Operating Income as % of Sales (30%), Adjusted Operating Income (30%), Net Sales (20%), Working Capital as % of Sales (10%), Safety incident rate minimum (10%) .
• Individual target and payout ranges (2024): Threshold $77,188; Target $308,750; Maximum $617,500 for Machado .
• Actual AIP paid (2024): $309,990, approximately 100.4% of target based on disclosed target and payout (computed from $309,990 actual vs $308,750 target ).

Long‑term incentives (LTI) design:

• Structure: 60% PRSUs (performance‑based), 40% RSUs (time‑based) .
• PRSU metrics: 3‑year performance on Adjusted EPS (50% weight) and relative TSR (50% weight) .
• 2021–2023 PRSU results: EPS paid at 200% (target EPS $30.44, result exceeded target by 32.1%); TSR paid at 100% (second quartile vs peers); Machado earned 1,328 shares on EPS component (from 664 target) and 664 on TSR component (from 664 target); total value realized $806,720 on Feb 22, 2024 .
• 2024 grants to Machado: PRSU target 1,096 shares (threshold 274; max 2,192) with grant date fair value $486,279; RSUs 730 shares with grant date fair value $280,094; RSUs vest in 3 equal annual installments beginning first anniversary of grant date .

Equity Ownership & Alignment

Beneficial ownership:

Outstanding equity and options (12/31/2024):

Vesting and realized value (2024):

Ownership guidelines and policies:

• Stock ownership guideline for General Counsel: 2x base salary; 5 years to comply; executives may sell shares only to cover taxes until compliant; all NEOs have satisfied or are on track within the window .
• Clawback policy for incentive compensation; prohibition on insider hedging; annual equity grants to align with shareholders .

Employment Terms

Severance plan (as amended Oct 28, 2024) and restrictive covenants:

• Eligibility requires signing non‑compete, non‑solicitation, confidentiality, and release of claims; non‑compete applies during employment and one year thereafter via award agreements/plan terms .
• Non‑CIC qualifying termination (as of 12/31/2024): multiple 1x; salary continuation $475,000; bonus continuation at target $308,750; pro‑rata bonus $308,750; medical $8,412; total $1,100,912 for Machado .
• CIC double‑trigger (qualifying termination two months prior to or within 24 months after change in control): multiple 2x; salary continuation $950,000; bonus continuation $617,500; pro‑rata bonus $308,750; medical $16,825; value of unvested equity $2,089,885; 280G cutback adjustment ($833,791); total company severance expense $3,149,169 for Machado .
• Equity upon CIC termination: unvested stock options and RSUs vest 100%; PRSUs vest at target; subject to plan terms .

Compensation Structure Analysis

• Mix shifts and risk profile: LTI delivered entirely in RSUs/PRSUs (options phased out in 2022), reducing leverage versus options while maintaining performance alignment via PRSUs; 60% PRSU weighting increases multi‑year at‑risk pay tied to EPS and relative TSR .
• AIP performance rigor: Heavily weighted to profitability and margin (60% combined), with working capital and safety reinforcing operational discipline; maximum payout capped at 200% of target .
• Realized pay alignment: 2024 AIP payout near target ($309,990 vs $308,750 target), indicating outcomes calibrated to performance; 2021–2023 PRSU cycle paid above target (overall 150% blend of EPS 200% and TSR 100%), consistent with strong underlying results and TSR .

Compensation Peer Group (Benchmarking)

• Peer set used in 2023 included: Beacon Roofing Supply, Installed Building Products, Comfort Systems USA, Dycom, Pool Corp, Simpson Manufacturing, Watsco, Louisiana‑Pacific, UFP Industries, KB Home, among others; program targeted median (90–110% band) with greater emphasis on total compensation .

Say‑on‑Pay & Shareholder Feedback

• 2024 say‑on‑pay approval ~97%, indicating strong investor support for program design and outcomes; no program changes made directly due to the vote .

Investment Implications

• Pay‑for‑performance alignment: High at‑risk mix with multi‑year PRSUs tied to EPS and TSR, plus profitability‑focused AIP, suggests incentives aligned with value creation; 2021–2023 PRSU payout above target supports execution track record .
• Vesting and potential selling pressure: 2,796 shares vested for Machado in 2024 with $1.13M value realized; unvested RSUs and PRSUs create scheduled supply, though ownership guidelines restrict discretionary sales until compliance .
• Retention and CIC economics: Non‑CIC severance of ~$1.10M and CIC double‑trigger of ~$3.15M (with 280G cutback) provide retention while limiting parachute inflation—cutback is shareholder‑friendly .
• Ownership alignment: Beneficial ownership increased year‑over‑year (5,085 to 7,050 shares) but remains <0.1% of shares outstanding; alignment is supported more by ongoing LTI and ownership guidelines than by outright stake size .