Lee S. Hillman
About Lee S. Hillman
Independent director of Distribution Solutions Group (DSGR), age 69, first appointed to the board in 2004. He is the Lead Independent Director (since 2022), Audit Committee Chair, and served as Compensation Committee Chair through 2024; the Board has designated him as an “audit committee financial expert” and independent under Nasdaq rules . Hillman holds a B.S. in Finance and Accounting from Wharton and an MBA from Chicago Booth; he is a Certified Public Accountant and previously was an audit partner at Ernst & Young .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Performance Health Systems, LLC | Chief Executive Officer and Board Member | Since 2012 (predecessor since 2009) | CEO/operator experience |
| Power Plate International | Executive Chairman & CEO | Feb 2006–May 2009 | Global turnaround leadership |
| Power Plate North America | CEO | 2004–2006 | U.S. operations leadership |
| Bally Total Fitness Corporation | CEO; Executive Chairman of Board | CEO 1996–2002; Exec Chair 2000–2002 | Led world’s largest fitness club business at the time |
| Bally Entertainment Corporation | CFO | 1991–1996 | Finance leadership in entertainment/manufacturing |
| Ernst & Young | Audit Partner | Prior to 1991 | Public accounting, audit expertise |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Franklin BSP Capital Corporation (FBCC) | Director | Current | Audit Committee Chair |
| Franklin BSP Multifamily Trust, Inc. | Director | Current | Audit Committee Chair |
| Franklin BSP Private Credit Fund | Director | Current | Audit Committee Chair |
| Franklin BSP Real Estate Debt BDC | Director | Current | Audit Committee Chair |
| RCN Corporation | Chairman of the Board | Prior service (dates not specified) | Board leadership |
| HealthSouth Corporation | Director | Prior service | Governance oversight |
| Wyndham International | Director | Prior service | Governance oversight |
| Bally Total Fitness Corporation | Executive Chairman of the Board | Prior service | Board leadership aligned with CEO tenure |
| HC2 Holdings, Inc. | Director | Prior service | Governance oversight |
| Professional Diversity Network | Director | Prior service | Governance oversight |
| Holmes Place, Plc. | Director | Prior service | Governance oversight |
| Adelphia Recovery Trust | Trustee | Prior service | Special situations/claims oversight |
Board Governance
- Roles: Lead Independent Director (created in 2017, held by Hillman since 2022), Audit Committee Chair, Compensation Committee Chair through 2024, member of Nominating & Corporate Governance Committee .
- Independence: Board determined Hillman is independent under Nasdaq rules and serves as the Audit Committee financial expert .
- Attendance and engagement: In 2024, the Board held 16 meetings and independent directors met in 16 executive sessions; the chart shows Hillman attended 16 Board meetings and participated in 8 Audit and 5 Compensation meetings (he was chair of both in 2024); all directors attended the May 23, 2024 Annual Meeting .
- Risk oversight: Audit Committee oversees ERM, internal controls, legal/regulatory compliance, related-party approvals; Compensation Committee monitors risk incentives in pay programs .
- Governance policies: Clawback policy aligned with Rule 10D‑1; Anti‑Hedging policy prohibits directors from hedging Company stock . Section 16(a) compliance was complete for 2024 .
| Committee | Hillman’s Role | 2024 Meetings Held | Attendance/Notes |
|---|---|---|---|
| Board of Directors | Director; Lead Independent Director | 16 | Attended 16 |
| Audit | Chair | 8 | Attended 8; designated financial expert and independent |
| Compensation | Chair (through 2024) | 5 | Attended 5 |
| Nominating & Corporate Governance | Member | 3 | Member confirmed; meetings held 3 |
Fixed Compensation
| Component (2024) | Dollar Amount |
|---|---|
| Fees Earned or Paid in Cash | $470,000 |
| Annual RSU Grant (Grant Date Fair Value) | $125,000 |
| Total | $595,000 |
Director fee framework (for context, not individual allocation):
- Annual cash retainer: $75,000 .
- Additional cash retainers: Lead Independent Director $50,000; Audit Chair $25,000; Compensation Chair $20,000; Nominating & Corporate Governance Chair $10,000; Committee member retainers: Audit $10,000; Compensation $7,500; Nominating $5,000 .
- Special Committee payment for 2021 merger work: Hillman $300,000 (one-time); no meeting fees paid in 2024 for Special Committee beyond reimbursed expenses .
Performance Compensation
Directors receive time-based RSUs; no performance metrics disclosed for director equity awards.
- Annual RSU grant: $125,000 grant-date fair value; cliff-vests one year after grant .
- Unvested RSUs at 12/31/2024: 3,465 units for each non-employee director (except King and Wallace, who waived 2024 RSUs) .
| Equity Award Detail | Units | Fair Value / Price | Vesting |
|---|---|---|---|
| 2024 RSU grant | 3,465 (unvested at 12/31/2024) | $125,000 grant-date FV | Cliff vest at 1-year anniversary |
Other Directorships & Interlocks
| Company | Type | Role | Interlock/Notes |
|---|---|---|---|
| Franklin BSP Capital Corporation | External | Director; Audit Committee Chair | Current service |
| Franklin BSP Multifamily Trust, Inc. | External | Director; Audit Committee Chair | Current service |
| Franklin BSP Private Credit Fund | External | Director; Audit Committee Chair | Current service |
| Franklin BSP Real Estate Debt BDC | External | Director; Audit Committee Chair | Current service |
| RCN Corporation | External | Chairman of the Board | Prior service |
| Bally Total Fitness Corporation | External | Executive Chairman | Prior service |
| HealthSouth; Wyndham; HC2; PDN; Holmes Place Plc.; Adelphia Recovery Trust | External | Director/Trustee | Prior service |
Context on control and potential influence:
- LKCM and J. Bryan King beneficially own a majority of DSG shares and can exercise significant control over director elections and matters submitted to stockholder vote . LKCM affiliates held controlling interests in TestEquity and Gexpro Services prior to 2022 mergers; certain DSG directors/executives had roles/interests in those entities, with related-party approvals governed by the Audit Committee process .
Expertise & Qualifications
- CPA with deep accounting/finance background; designated audit committee financial expert .
- Senior operating roles as CEO/CFO across multiple companies; restructuring and governance experience .
- Board leadership across public and private companies; extensive audit chair experience at multiple Franklin BSP vehicles .
Equity Ownership
| Holder | Shares Beneficially Owned | % of Outstanding | Notes |
|---|---|---|---|
| Lee S. Hillman | 102,631 | 0.2% | Address of beneficial owner as listed; total shares outstanding 46,570,343 |
| Unvested RSUs (12/31/2024) | 3,465 | — | RSUs scheduled to vest one year post grant |
Policies impacting alignment:
- Anti‑Hedging policy prohibits directors from hedging Company stock .
- Clawback policy applicable to executive incentive compensation per Rule 10D‑1 (director equity awards not specified under clawback) .
Governance Assessment
-
Strengths:
- Lead Independent Director role with robust responsibilities (agenda setting, executive sessions, succession guidance); enhances independent oversight even with combined Chair/CEO structure .
- Hillman’s audit expertise and designation as financial expert bolster financial reporting oversight; Audit Committee charter updated in 2024 and active ERM oversight, cybersecurity briefings, and internal audit reporting .
- Documented related‑party transaction review process centralized in Audit Committee, with majority independent approval required .
- Full Section 16 compliance and strong Say‑on‑Pay support (99.96% in 2024) signal orderly governance and shareholder satisfaction with pay practices .
-
Pay and alignment:
- 2024 director compensation mix: $470k cash + $125k RSUs; equity grants are time‑based RSUs with one‑year vesting; Hillman’s cash higher due to $300k one‑time Special Committee payment related to 2021 merger work .
- Beneficial ownership of 102,631 shares (0.2%) provides some skin‑in‑the‑game; additional unvested RSUs (3,465) at year‑end .
- Anti‑hedging policy supports alignment; no tax gross‑ups on CIC for executives, and broader compensation governance practices to mitigate risk .
-
Risks / RED FLAGS:
- Control concentration: LKCM and J. Bryan King’s majority ownership enables significant control over board elections and proposals, which can reduce minority shareholder influence; continued vigilance on independence and related‑party oversight is warranted .
- One‑time Special Committee cash payment ($300k) elevates director cash compensation in 2024; while disclosed as non‑contingent and tied to merger efforts, such large special payments warrant scrutiny versus standard director pay frameworks .
- Combined Chair/CEO role persists; mitigated by active Lead Independent Director structure and frequent independent executive sessions (16 in 2024) .
-
Engagement/attendance:
- Hillman attended 16 Board meetings and chaired/completed Audit (8) and Compensation (5) meetings in 2024; all directors attended the 2024 Annual Meeting .
-
Committee quality:
- Compensation Committee uses independent consultant FGMK, with no conflicts; strong say‑on‑pay outcomes and no SERP, no single‑trigger parachutes, no gross‑ups, and perquisites constraints indicate disciplined pay governance .
Overall, Hillman’s deep audit and operating credentials, leadership as Lead Independent Director, and committee chair roles contribute positively to board effectiveness. The primary governance sensitivity is the controlling shareholder dynamic; the Audit Committee’s related‑party oversight and independent director structures are critical safeguards .