Gregg Sengstack
FRANKLIN ELECTRIC COAbout Gregg C. Sengstack
Gregg C. Sengstack (age 66) is Executive Chairperson of Franklin Electric, Chair of the Board since 2015, and served as CEO from 2014–2024; he joined Franklin in 1988 and has been a director since 2014 . He holds a B.A. in math and economics from Bucknell University and an MBA from the University of Chicago . The Board has determined he is not independent given his current executive role; Jennifer L. Sherman serves as Lead Independent Director . In 2024, the Board met five times and each director attended ≥80% of aggregate Board and committee meetings; independent directors met in executive session five times .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Franklin Electric | Executive Chairperson; Chair of the Board | 2024–present; Chair since 2015 | Board leader; not listed on standing committees |
| Franklin Electric | Chief Executive Officer | 2014–2024 | Led strategy and operations; succeeded by Joseph A. Ruzynski in 2024 |
| Franklin Electric | President & COO | 2011–2014 | Senior operating leadership |
| Franklin Electric | SVP & President, Franklin Energy Systems and International Water Group | 2005–2011 | Segment leadership |
| Franklin Electric | Chief Financial Officer | 1999–2005 | Financial leadership |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Woodward, Inc. | Director | Not disclosed | Public company directorship; committees not disclosed in FELE proxy |
| Allegion plc | Director | Not disclosed | Public company directorship; committees not disclosed in FELE proxy |
Board Governance
- Independence: Not independent (Executive Chairperson); all other current directors except the CEO are independent under NASDAQ and Company standards .
- Board leadership: Executive Chairperson model with a Lead Independent Director (Jennifer L. Sherman) who sets agendas with the Chair, leads executive sessions, and acts as liaison for independent directors .
- Committees: Three standing committees—Audit (Peterson, Maskara, VerHage, Villavarayan), Compensation (Maskara, Grizzle, Sherman, Villavarayan), and Corporate Governance (Grizzle, Peterson, VerHage, Wathen). Sengstack is not listed as serving on any committee .
- Attendance and engagement: Board held five meetings in 2024; each director attended ≥80% of applicable meetings; all directors attended the 2024 annual meeting; independent directors held five executive sessions .
Fixed Compensation
| Component | 2024 Amount/Terms |
|---|---|
| Base salary | $950,000 |
| Pension—present value (as of 12/31/2024) | Basic Retirement $94,946; Cash Balance $688,452; Pension Restoration Plan $13,245,185 |
| Perquisites/other | Company 401(k) contribution $43,125; Medicare tax reimbursement $35,079; life insurance $110; personal use of aircraft $17,720; retirement gift $53,179; other items detailed in proxy (total “All Other Compensation” $149,213) |
| Director fees | None—employees receive no additional compensation for Board service |
Performance Compensation
| Program | Key Terms | 2024 Metrics/Outcomes |
|---|---|---|
| Annual cash incentive | Target bonus 115% of salary ($1,092,500); payout range 0–200% of target; EPS and consolidated working capital ratio (WC) 50%/50%; no discretionary adjustment applied | Actual payout 90.6% of target ($989,805) |
| 2024 performance goals (corporate) | Threshold 80% of target; linear interpolation to max 200% | WC threshold/target/max 36.6%/30.5%/27.5%; actual 29.9% (102.0% attainment) |
| EPS threshold/target/max $3.54/$4.43/$4.87 (adjusted for restructuring and CEO transition items as disclosed) | Actual EPS (adjusted) $3.92; 88.5% attainment | |
| Long-term incentives (mix) | 50% PSUs, 25% stock options, 25% time-based RSUs/RSUs; grants timed post-earnings; options 10-year term, 33%/yr vest over 3 years; RSUs vest at 3 years; PSUs vest after 3-year period based on performance | |
| 2024 grants to Sengstack | 11,436 RSUs; 22,873 PSUs; 31,575 options at $98.37 (exp. 2/22/2034) | |
| PSU performance metric | 3-year (2024–2026) cumulative change in consolidated normalized EBITDA vs. S&P Small Cap 600 Industrials; payout: 0% (<75%), 50% (75%), 100% (100%), 200% (≥125%) | |
| PSU cycle payout (granted 2022) | For 2022–2024 cycle, company achieved 96.6% of target normalized EBITDA; estimated payout 93.2% of target |
Performance Metric Table (Annual Bonus)
| Metric | Threshold | Target | Maximum | Actual | % of Target Attained |
|---|---|---|---|---|---|
| Working Capital Ratio | 36.6% | 30.5% | 27.5% | 29.9% | 102.0% |
| Adjusted EPS ($) | 3.54 | 4.43 | 4.87 | 3.92 | 88.5% |
Other Directorships & Interlocks
- Public company boards: Woodward, Inc.; Allegion plc .
- Potential interlocks: FELE’s 2024 compensation peer group includes Woodward, Inc., where Sengstack serves as a director—this can raise benchmarking optics, though the Compensation Committee uses an independent consultant (Meridian) and approved a 23-company peer group in late 2023 . No related-party transactions were identified for 2024; the Audit Committee reported none requiring disclosure .
Expertise & Qualifications
- Education: B.A., Bucknell University; MBA, University of Chicago .
- Domain expertise: 35+ years at Franklin across finance, operations, and general management; deep knowledge of FELE’s markets and history .
Equity Ownership
| Ownership Detail | Amount/Notes |
|---|---|
| Total beneficial ownership | 955,576 shares (2.09% of shares outstanding) |
| Included in total | Options exercisable within 60 days: 497,937; shares owned by trusts/foundation: 340,932; estimated release of 2024 PSUs: 17,774 |
| Not included | Unvested RSUs: 22,505 |
| Outstanding awards (12/31/2024) | RSUs unvested: 36,808 (multi-year tranches); PSUs target unvested: 64,081; multiple legacy option tranches; 2024 options: 31,575 at $98.37 expiring 2/22/2034 |
| Ownership guidelines | Non-employee directors: 5x retainer; executives and directors met or are within grace period; anti-hedging and anti-pledging policies in place |
Insider Transactions (2024)
| Transaction | Shares | Realized Value ($) |
|---|---|---|
| Options exercised | 64,952 | $5,257,864 |
| Stock vested (incl. PSU vesting) | 31,720 | $3,130,581 |
Employment & Contracts
- Employment agreement (effective originally 2000; amended incl. 2013): Auto-renewing 3-year term; non-renewal severance equals 12 months salary + target bonus, pro-rata current-year bonus, 12 months health benefits (COBRA differential), pension accrual equivalency for 12 months; immediate vesting of options and pro-rata vesting of RSUs/PSUs (actual performance) .
- Termination without cause/for good reason (pre-CIC): 18 months salary, 1.5x target bonus, 18 months benefits and COBRA payments, pension accrual equivalency for 18 months; option vesting immediate; RSUs/PSUs pro-rata based on actual performance .
- Change in control (double trigger, within two years): 36 months salary, 3x target bonus, pro-rata current-year bonus, 36 months benefits and COBRA payments, pension accrual equivalency for 36 months; vesting/cash-out of options; RSUs/PSUs vest at target; “best-net” 280G approach (no excise tax gross-up) .
- Restrictive covenants: Non-solicit and non-compete for 24 months post-termination; additional confidentiality and non-compete agreement (18-month industry-specific restriction) .
- Clawback: Dodd-Frank compliant recoupment policy adopted Oct 2023 (3-year look-back) .
Director Compensation (Non-Employee Directors context)
| Element | 2024 Structure |
|---|---|
| Cash retainers | Board retainer $85,000; Audit Chair $22,500/member $12,500; Comp Chair $25,000/member $6,000; Governance Chair $15,000/member $6,000; Lead Independent Director $22,500 |
| Equity | 1,368 shares per non-employee director on 5/2/2024; immediate vest; grant-date value $135,000 |
| Deferrals | Cash/equity can be deferred into stock units or interest-bearing accounts (Wells Fargo Stable Return rate) |
| Note on Sengstack | As an employee director, he receives no additional director compensation |
Compensation Structure Analysis
- Mix and at-risk pay: For 2024, performance-based compensation remained the majority of target pay; LTI design predominantly performance-based (50% PSUs, 25% options) .
- Year-over-year changes (Sengstack): Base salary flat at $950,000; non-equity incentive rose to $989,805 from $781,342 in 2023; grant-date fair value of equity awards modestly higher vs. 2023 (time-based $1,124,959 vs. $1,050,005; PSUs $2,250,017 vs. $2,100,011; options $1,125,017 vs. $1,050,001) .
- Peer benchmarking: 2024 peer group reset to 23 companies (adds include Helios, Kadant, Pentair, Vontier, Zurn; removals include Toro, Gorman-Rupp, etc.); target market position: base at 50th percentile; bonus and LTI at 65th percentile .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval: 94.3% support (May 3, 2024 annual meeting) .
Risk Indicators & Related-Party
- Related-party transactions: None in 2024 requiring disclosure; Audit Committee oversees related-person transactions .
- Hedging/pledging: Prohibited for executives and directors .
- Pay clawback: Adopted per SEC rules (Oct 2023) .
- 280G excise taxes: No gross-up; best-net approach under employment agreement .
Governance Assessment
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Strengths:
- Significant ownership (2.09%) aligns interests; long tenure provides deep institutional knowledge .
- Robust LTI performance linkage (relative normalized EBITDA vs. S&P 600 Industrials) and balanced mix of PSUs/options/RSUs .
- Independent Lead Director with clear duties; frequent executive sessions (five in 2024); all directors met attendance thresholds .
- No 2024 related-party transactions; anti-hedging/pledging and clawback policy in place .
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Watch items / RED FLAGS:
- Not independent as Executive Chairperson; continued executive role on Board can limit perceived independence, though mitigated by Lead Independent Director .
- Large legacy defined benefit (Pension Restoration Plan) present value ($13.25M) and ongoing accruals may be viewed as shareholder-unfriendly vs. pure performance-based pay .
- Personal aircraft use and a $53,179 retirement gift included in 2024 “All Other Compensation” could raise optics concerns on perquisites .
- Peer benchmarking includes Woodward, Inc., where Sengstack is a director—creates potential benchmarking interlock optics despite use of independent consultant .
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Overall: Governance structures (independent committees, Lead Director, clawback, anti-pledging) and strong say-on-pay support offset the non-independence of the Chair. Compensation remains performance-oriented with clear metrics and risk controls; monitor peer benchmarking interlocks and perquisite optics going forward .