Elias Sabo
Compass DiversifiedAbout Elias Sabo
Elias J. Sabo is Chief Executive Officer of Compass Diversified (CODI) and has served as a director since May 2018; he is age 54 as of April 1, 2025 and a graduate of Rensselaer Polytechnic Institute . He is a founding partner and managing member of CODI’s external Manager and sits on its Investment Committee, directing financing and strategic vision, with prior roles at CIBC Oppenheimer, Boundary Partners, and Colony Capital; he previously chaired Fox Factory Holding Corp. (2007–2017) . Under his leadership, CODI delivered 2024 net sales of approximately $2.2B (+11.9% YoY), adjusted EBITDA of $424.8M (+30%+ YoY), and adjusted earnings of $161.6M (+59.7% YoY); adjusted EBITDA margin expanded to 19.3% (+200 bps) . CODI’s dividend-adjusted shareholder return in 2023 was 29.38%, outperforming the Russell 2000 by 1,429 bps .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Fox Factory Holding Corp. | Chair of the Board | 2007–2017 | Oversaw growth and governance of former CODI subsidiary; public company leadership experience |
| CIBC Oppenheimer | Healthcare investment banker | 1996–1998 | Transaction execution and industry financing expertise |
| Colony Capital | Acquisition department | 1992–1996 | Acquisitions, diligence, and portfolio building experience |
| Boundary Partners | Role not specified | Prior to 1998 | Investment experience contributing to CODI’s buy-build-grow model |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Compass Group Management LLC (CODI’s external Manager) | Managing member; Investment Committee member | 1998–present | Leads external management; sets investment principles and financing strategy for CODI |
Board Governance and Service
- Board service: Appointed director by the Allocation Member since 2018; does not stand for shareholder election .
- Independence: Board maintains a majority of independent directors; all standing committees (Audit, Compensation, Nominating/Governance) are comprised solely of independent directors .
- Committee roles: Sabo is CEO and an appointed director; not listed on standing committees .
- Board leadership: Independent Chair (Larry Enterline) since 2022; CEO and Chair roles are separated .
- Attendance: Board met 14 times in 2024; each director attended over 75% of Board and committee meetings; eight of nine attended the 2024 AGM .
- Director compensation: Sabo receives $0 for Board service and is only reimbursed for reasonable expenses .
Fixed Compensation
CODI is externally managed; the Company does not compensate the CEO directly. Sabo’s compensation related to CODI services is estimated by the Manager and Allocation Member and is predominately variable.
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Company salary to CEO | — | — | CEO is seconded by Manager; Company pays no CEO salary or bonus |
| Manager-estimated pay tied to CEO services | $4.5M | $5.5M | Estimated portion of management fee distributions associated with CEO services |
| Fixed vs variable (Manager component) | 10.5% fixed; 89.5% variable | 8.7% fixed; 91.3% variable | Mix is predominantly variable |
| Director fees | $0 | $0 | CEO receives no director compensation |
Additional context:
- Management fee scale: In 2024 CODI incurred ~$67.9M; in 2024/2025 mgmt fee structure was amended to a sliding scale with IRR hurdle for incentive fees, designed to reduce long-term cost and enhance alignment (prior fees: $74.8M in 2024; $67.9M in 2023) .
Performance Compensation
The variable pay sources tied to CODI’s performance and capital base are: (1) Manager distributions funded by CODI’s management fees, and (2) Allocation Member profit allocation distributions from subsidiary Holding or Sale Events. CODI also added an incentive management fee in 2025 with a 12% three-year IRR hurdle.
| Metric | Weighting | Target | Actual/Payout | Vesting/Timing |
|---|---|---|---|---|
| Incentive Management Fee (Manager) | N/A (structural) | Paid only if three-year annualized IRR on equity >12% and adjusted net assets >$3.5B | 0.25% of adjusted net assets exceeding $3.5B; subject to Compensation Committee approval; only payable in the $3.5–$10B band | Paid following calculation and approval; distributions to Manager employees only |
| Base Management Fee (Manager) | N/A (structural) | Sliding scale based on adjusted net assets | 2.0% ≤ $3.5B; 1.25% on the amount between $3.5–$10B (in addition to initial threshold fee); 1.5% at ≥$10B | Quarterly, prior to shareholder distributions |
| Profit Allocation Payments (Allocation Member) | N/A (structural) | Subsidiary contribution-based profit exceeding 7% hurdle; tiered at 8.75% | If hurdle met: 100% of amount between 7%–8.75% and 20% above 8.75%; Audit Committee approves calculations | At Holding Events (5-year anniversaries) or Sale Events |
Sabo’s participation:
- Manager component: Estimated $5.5M (2024) and $4.5M (2023) related to CEO services; predominantly variable .
- Allocation Member distributions: Estimated $10.2M (2024) and $2.99M (2023) to Sabo; 100% variable .
Equity Ownership & Alignment
| Item | As of Mar 26, 2024 | As of Apr 1, 2025 | Notes |
|---|---|---|---|
| Beneficial ownership (shares) | 1,007,375 | 1,007,375 | Includes 331,826 shares owned by Manager; Sabo is managing and controlling member; disclaims beneficial ownership except to extent of pecuniary interest |
| Ownership % of CODI common | <1% | <1% | As disclosed |
| Pledging/margin accounts | None | None | Insider Trading Policy prohibits pledging or margin accounts; executive officers/directors do not pledge CODI securities |
| Hedging | Prohibited | Prohibited | Short sales, options, and derivative hedging transactions prohibited |
Director ownership guidelines apply to non-management directors (5x annual cash retainer; 50% had met requirement by April 1, 2025); oversight moved to Compensation Committee in 2025 .
Employment Terms
- Structure: CEO is seconded from CODI’s external Manager; CODI pays no CEO compensation and does not reimburse the Manager for CEO compensation .
- Board rights: After consultation, CODI’s Board can request the Manager to replace any seconded individual, including the CEO, per the Management Services Agreement and LLC Agreement .
- Clawback policy: Adopted in 2023; provides for recoupment of erroneously awarded executive compensation following a restatement, consistent with SEC and NYSE rules .
- Insider trading/hedging/pledging: Robust prohibitions on short-term trading, derivatives, hedging, margin, and pledging; none of the executive officers or directors hold pledged shares .
- Change-in-control/severance: CEO terms not disclosed (Company does not compensate CEO); CFO provisions disclosed separately (included for context in proxy) .
Compensation & Incentives Summary (CEO-related)
| Metric | 2023 | 2024 | Notes |
|---|---|---|---|
| Manager-estimated CEO compensation related to CODI services | $4.5M | $5.5M | 6.6% of mgmt fee in 2023; 7.35% in 2024 |
| Fixed vs variable (Manager portion) | 10.5% fixed; 89.5% variable | 8.7% fixed; 91.3% variable | High variable pay |
| Allocation Member distributions to Sabo | $2.99M | $10.2M | 100% variable; tied to Holding/Sale Event profit allocations |
| CODI management fees incurred | $67.9M | $74.8M | Prior structure amended Jan 2025 to sliding scale + IRR hurdle |
Performance & Track Record
- Strategic portfolio moves: 2024 acquisitions of The Honey Pot Company; Altor Solutions acquired Lifoam; divestitures of Ergobaby and Crosman segment to optimize focus . 2023 Sale Event of Marucci generated a pre-tax gain of $241.4M; private placement raised ~$75.2M at $21.18 per share .
- Operating momentum: Double-digit revenue growth and >30% adjusted EBITDA growth in 2024; margin expansion and accelerated Q4 performance .
- Shareholder outcomes: 2023 dividend-adjusted return of 29.38%, outperforming the Russell 2000 by 1,429 bps .
Related Party Transactions (Governance Risk/Alignment)
- Management Services Agreement (MSA): Seventh Amended and Restated MSA (Jan 15, 2025) instituted sliding base fee, new incentive management fee with a 12% three-year IRR hurdle, eliminated integration services fees, and excluded excess cash from fee calculations—changes intended to reduce long-term shareholder costs and heighten Board oversight via the Compensation Committee .
- Profit Allocation (LLC Agreement): Allocation Member (Sostratus LLC) can elect profit allocation at Holding/Sale Events based on contribution-based profit with a 7% hurdle and tiered payout; Audit Committee approves calculations. Manager employees (including Sabo) collectively owned ~54% of the Allocation Member at Dec 31, 2024 (62% in 2023), entitling distributions when profit allocations occur .
- Integration services: Fees historically charged to new subsidiaries (e.g., Honey Pot $3.5M, PrimaLoft $4.8M) were eliminated starting in 2025 under MSA amendments, addressing perceived conflicts and reducing costs .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay support: 84.60% approval in 2024; >80% support over the past three years . CODI regularly engages shareholders on compensation and management structure .
Investment Implications
- Alignment positives: The 2025 MSA re-design adds a sliding base fee and a 12% IRR hurdle to incentive fees, eliminating integration fees and excluding excess cash from fee calculations; this strengthens pay-for-performance alignment and lowers long-term costs, with Compensation Committee oversight of incentive fee payments . Anti-hedging and anti-pledging policies reduce forced-selling risk and improve alignment .
- Structural considerations: Sabo’s compensation is highly variable (≈90%+ of Manager-related pay), with additional variable distributions from profit allocations (Holding/Sale Events). This can incentivize value realization through strategic sales when hurdles are exceeded; Audit and Compensation Committees provide governance checks on calculations and approvals .
- Governance risk mitigants: Independent Chair; committees are fully independent; Nominating/Governance reviews related party transactions; Audit Committee validates profit allocation math—these mitigate dual-role concerns from the CEO also serving as an appointed director and Manager’s managing member .
- Performance tailwinds: Strong 2024 operating metrics (sales, EBITDA, margins) and proven capital recycling (Marucci sale) support confidence in value creation under Sabo’s leadership; high Say-on-Pay support suggests shareholder acceptance of CODI’s external management architecture and compensation framework .
Overall, Sabo’s incentives are designed to scale with CODI’s adjusted net assets and multi-year IRR on equity, with oversight safeguards. Investors should monitor future Holding/Sale Events, incentive fee approvals, and continued margin/EBITDA progression to assess sustainability of pay-for-performance alignment and the potential timing of value realization .