Steve Herron
Builders FirstSourceAbout Steve Herron
Steve J. Herron (age 66) is Chief Operating Officer of Builders FirstSource (appointed March 2023), with ~40 years in building products and senior roles at Home Depot, HD Supply Holdings (oversaw LBM division), Williams Brothers Lumber, and ProBuild (SVP Southeastern US operations) . Company performance tied to NEO incentives in 2024 included Adjusted EBITDA of $2.33B vs a $2.8B target, ROIC of 20.7% vs 25.3% target, and Working Capital as % of Sales at 9.0% vs ≤9.5% target . BLDR’s 2022 PSU cycle (performance period ended Dec 31, 2024) paid 184.8% of target driven by ROIC outperformance and top-quartile 3-year TSR of 66.8% vs the Dow Jones U.S. Construction & Materials Index .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Builders FirstSource | Chief Operating Officer | Mar 2023–present | Corporate operations leadership; compensation aligned to overall company performance |
| Builders FirstSource | President – East Division | Jan 2021–Feb 2023 | Led East Division operations; divisional leadership prior to COO role |
| Builders FirstSource | SVP (Region 5) | Aug 2015–Dec 2020 | Regional P&L and operations leadership post ProBuild acquisition |
| ProBuild Holdings LLC | SVP, Southeastern U.S. Operations | Pre-2015 | Ran Southeastern operations until BLDR acquired ProBuild |
| HD Supply Holdings | Senior Vice President (LBM division) | Prior to ProBuild | Oversaw lumber and building materials division |
| Home Depot; Williams Brothers Lumber | Senior management roles | Prior periods | Senior management experience in building products retail/distribution |
External Roles
- No public-company directorships or external board roles disclosed in the proxy for Herron .
Fixed Compensation
| Year | Base Salary ($) | Target Bonus % | Target Bonus ($) | Actual Bonus Paid ($) | Total Compensation ($) |
|---|---|---|---|---|---|
| 2024 | 668,750 | 125% | 824,731 | 603,029 | 2,818,830 |
| 2023 | 595,763 | — | — | 1,193,036 | 3,731,654 |
Performance Compensation
2024 Corporate Annual Incentive Plan (Cash)
| Metric | Weight | Threshold | Target | Maximum | Actual Achievement | Payout (% of Total Target) |
|---|---|---|---|---|---|---|
| Corporate Adjusted EBITDA | 70% | $2.24B | $2.80B | ≥$3.36B | $2.33B | 28.7% for Herron |
| Working Capital as % of Sales | 15% | 10.2% | 9.5% | ≤6.8% | 9.0% | 19.2% |
| Safety (RIR) | 5% | 1.54 | 1.39 | 1.24 | 1.39 | 5.1% for Herron |
| Safety Training (companywide) | 5% | 85% | 90% | 100% | 99.9% trained | 10.0% |
| RIC Training (companywide) | 5% | 85% | 90% | 100% | 99.9% trained | 10.0% |
| Total | 100% | — | — | — | — | 73.0% for Herron |
- Herron’s actual bonus payout equaled 73% of target, or $603,029 .
Long-Term Incentive Program (Equity)
2024 LTIP Grants
| Award Type | Grant Date | Units (Target) | Grant-Date Fair Value ($) | Vesting Terms / Performance Metrics |
|---|---|---|---|---|
| RSU | 3/15/2024 | 3,837 | 750,095 | Time-vest in equal annual installments over three years (Mar 15, 2025/2026/2027) |
| PSU | 3/15/2024 | 3,836 | 778,094 | Vests at 3rd anniversary based on annual ROIC (2024–2026) and 3-year average ROIC; TSR modifier ±10% vs Dow Jones U.S. Construction & Materials Index |
2022 PSU Payout Results (Performance period ended 12/31/2024)
| Tranche | Target ROIC | Actual ROIC | Weighted Payout (%) |
|---|---|---|---|
| 2022 ROIC | 25.7% | 44.3% | 50% |
| 2023 ROIC | 19.9% | 27.9% | 50% |
| 2024 ROIC | 21.9% | 20.7% | 18% |
| 3-year Average ROIC | 22.5% | 31.0% | 50% |
| Total ROIC Payout | — | — | 168% |
| TSR Modifier | Top quartile; 66.8% 3-yr TSR | — | +16.8% → Total 184.8% |
- Key 2024 plan design: 50% RSUs (time-based) and 50% PSUs (ROIC with TSR modifier), consistent with prior years .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (3/28/2025) | 76,957 shares; <1% of outstanding |
| Stock Ownership Guidelines | Executive officers required to hold ≥3x annual base salary; unvested RSUs count; retain 50% of net shares until compliant |
| Compliance Status (Oct 2024 review) | All directors and executive officers in compliance or within grace period |
| Anti-Hedging/Pledging | Hedging and pledging prohibited without prior written approval of General Counsel |
| Options | No option exercises by NEOs in 2024 |
| Shares Acquired on Vesting (2024) | 26,438 shares vested; value realized $4,983,062 |
2024 Outstanding Equity Awards at Year-End (Steve Herron)
| Grant | Unvested Units (#) | Market/Payout Value ($) |
|---|---|---|
| 2022 RSU (vests: Feb 17, 2023/2024/2025) | 1,931 | 275,998 |
| 2022 PSU (vested 2/17/2025 per performance) | 10,703 | 1,529,780 |
| 2023 RSU | 4,192 | 599,163 |
| 2023 PSU | 6,286 | 898,458 |
| 2023 RSU (appointment awards) | 792 | 113,201 |
| 2023 PSU (appointment awards) | 1,187 | 169,658 |
| 2024 RSU (vests: Mar 15, 2025/2026/2027) | 3,837 | 548,422 |
| 2024 PSU (performance to Mar 15, 2027) | 3,836 | 548,279 |
Note: Values based on closing price $142.93 as of 12/31/2024 .
Employment Terms
- Severance Plan: Herron is a Tier II Participant under BLDR’s Executive & Key Employee Severance Plan (adopted Feb 2023), replacing prior individual employment agreements .
- Regular Severance (no CIC): Pro rata annual bonus (based on actual results), 1.5x base salary + 1.5x target annual bonus, and 18 months of health benefits; pro rata vesting of time-based RSUs and PSUs based on actual performance .
- Change-in-Control Severance: Pro rata target annual bonus, 2.0x base salary + 2.0x target annual bonus, and 24 months of health benefits for Tier II; eligibility requires termination by company without cause or by executive for good reason within 3 months prior to or 24 months after a CIC (double trigger) .
- Equity Treatment: Award agreements provide for acceleration of unvested RSUs and PSUs upon change in control; death or disability accelerates all unvested RSUs and PSUs vest as if continuously employed through vest date .
- Restrictive Covenants: Non-compete, customer non-solicit, and employee non-recruitment covenants apply for 18 months post-termination for Tier II .
- Clawback: Dodd-Frank-compliant clawback policy for recovering excess amounts upon restatement .
- Tax Gross-ups: None provided .
Estimated Payments (if termination occurred on 12/31/2024)
| Scenario | Cash Severance ($) | Health/Welfare ($) | Equity Acceleration ($) | Total ($) |
|---|---|---|---|---|
| Without Cause / Good Reason (no CIC) | 2,860,060 | 30,733 | 3,305,142 | 6,174,158 |
| Change in Control | 3,612,404 | 11,942 | 4,682,959 | 8,307,305 |
| Death or Disability | — | — | 4,682,959 | 4,682,959 |
Compensation Peer Group (Benchmarking)
| Peer Group Companies (primary set for 2024) |
|---|
| Ball Corporation; Owens Corning; Beacon Roofing Supply, Inc.; PPG Industries, Inc.; Carrier Global Corporation; PulteGroup, Inc.; Fortune Brands Home & Security, Inc.; Stanley Black & Decker, Inc.; Genuine Parts Company; The Sherwin-Williams Company; Johnson Controls; Trane Technologies plc; LKQ Corporation; W.W. Grainger, Inc.; Lennar Corporation; WESCO International, Inc.; Masco Corporation; Whirlpool Corporation; Mohawk Industries, Inc. |
- Target positioning: Executive TDC targets set ~median of market, with adjustments for performance, tenure, retention, internal alignment; survey support by Meridian .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval: nearly 95% support; committee concluded practices remain appropriate and aligned; plan consistent with 2023 .
Vesting Schedules and Potential Selling Pressure
- RSUs vesting cadence: 2024 RSUs vest on Mar 15, 2025/2026/2027 in equal tranches; 2022 RSUs vested Feb 17, 2023/2024/2025 .
- PSU timing: 2024 PSU vests Mar 15, 2027 subject to ROIC/TSR performance; 2022 PSU vested Feb 17, 2025 at 184.8% of target .
- Insider selling watchpoints: Herron acquired 26,438 shares upon vesting in 2024; the company’s insider trading policy restricts hedging/pledging without approval. Monitor Form 4 filings and any 10b5‑1 plans for potential disposals post-vesting .
Expertise & Qualifications
- Career depth: ~40 years building products industry, senior management at Home Depot, HD Supply, Williams Brothers Lumber, ProBuild; BLDR regional/divisional leadership since 2015 .
- Current scope: Corporate operations oversight as COO; compensation aligned to company-level performance (EBITDA, WC %, Safety, Training) .
Investment Implications
- Alignment: High equity-linked pay (RSUs/PSUs 2024 grant-date value $1.53M) with rigorous ROIC targets and TSR modifier supports pay-for-performance and stockholder alignment; executive ownership guidelines and anti-hedging/pledging policies further align interests .
- Retention risk: Tier II severance with 1.5x salary+bonus (regular) and 2.0x (CIC), plus 18-month non-compete, lowers near-term attrition risk; equity acceleration and sizable estimated payouts under CIC could influence executive retention and transaction incentives .
- Performance gating: 2024 bonuses at 73% of target reflect shortfall vs EBITDA/ROIC targets, while PSU design emphasizes sustained ROIC and relative TSR—potential for variable realized compensation if macro housing cycle shifts .
- Supply overhang watch: Significant vesting events (Feb 2025 PSU payout; ongoing RSU tranches) can create potential selling pressure if dispositions occur; track Form 4s and plan adoptions to gauge flow .
- Governance quality: Strong shareholder support (~95% say-on-pay), clawback policy, double-trigger CIC severance design, and no tax gross‑ups indicate disciplined compensation governance, reducing headline risk .