Aaron Jagdfeld
GENERAC HOLDINGSAbout Aaron Jagdfeld
Aaron P. Jagdfeld, age 53, is Chairman (since 2016), President and CEO (since 2008) of Generac. He joined Generac in 1994 in finance, served as CFO (2002–2006) and President (2007), and previously worked in Deloitte’s audit practice; he holds a BBA in Accounting from the University of Wisconsin–Whitewater . Under his leadership, Generac returned to net sales growth in 2024, expanded gross margin ~500 bps, and grew Adjusted EBITDA ~24% with margins to 18.4%; cash from operations reached a record $741M and free cash flow $605M, with share repurchases of ~1.05M shares ($153M) and year-end leverage at ~1.7x Adjusted EBITDA .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Generac | Finance Department | 1994–2001 | Built finance foundation prior to senior roles |
| Generac | Chief Financial Officer | 2002–2006 | Strengthened financial controls and scalability for growth |
| Generac | President | 2007 | Led sales, marketing, engineering, product development |
| Generac | President & CEO | 2008–present | Navigated IPO, acquisitions, international expansion, and multi-year growth |
| Generac | Chairman | 2016–present | Combined CEO/Chairman leadership with Lead Independent Director oversight |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| The Hillman Group | Director | Current | Hardware solutions board experience; external perspective to Generac |
Fixed Compensation
Multi-year summary compensation for the CEO:
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | 1,039,178 | 1,050,000 | 1,050,000 |
| Stock awards ($) | 3,829,669 | 3,996,222 | 4,687,703 |
| Option awards ($) | 1,920,529 | 2,004,001 | 1,562,539 |
| Non‑equity incentive ($) | — | — | 1,963,553 |
| All other compensation ($) | 18,300 | 34,742 | 34,171 |
| Total ($) | 6,807,676 | 7,084,966 | 9,297,966 |
- Base salary increased to $1,100,000 effective March 2025 .
- Perquisites: none; 401(k) employer contributions included in “All other compensation” .
Performance Compensation
Annual Performance Bonus (AIP) – CEO
| Component | Weight | Threshold | Target | Maximum | 2024 Actual | Weighted payout |
|---|---|---|---|---|---|---|
| Adjusted EBITDA | 75% | $595.4M | $744.3M | $893.2M | $789.1M | 97.5% |
| PWC as % of Net Sales | 25% | 35.2% | 32.2% | 29.2% | 30.5% | 39.5% |
| Overall payout | — | — | — | — | — | 137% |
- CEO AIP structure: threshold 65% of salary, target 130%, max 260%; modifier range −100% to +15% (CEO +5% applied in 2024) .
- 2024 AIP payment to CEO: $1,963,553 .
Long-Term Equity Incentives (LTIP) – 2024 Grant Mix and Values
| Instrument | Vesting | 2024 Grant value ($) |
|---|---|---|
| Performance Shares (PSUs) | 3-year performance (2024–2026); payout 0–200% based on revenue growth, EBITDA margin, FCF conversion | 3,125,098 |
| Restricted Stock (RS) | 3 equal annual installments after grant | 1,562,605 |
| Stock Options | 25% per year over 4 years | 1,562,539 |
| Total LTIP | — | 6,250,242 |
- 2024 structural change: increased PSU weight from 33% to 50% to strengthen pay-for-performance alignment .
Grants of Plan‑Based Awards (Share Counts and Option Terms, 2024)
| Award | Threshold (#) | Target (#) | Maximum (#) | Exercise/Base ($/sh) | Closing price ($/sh) | Grant date FV ($) |
|---|---|---|---|---|---|---|
| PSUs (3/1/24) | 13,896 | 27,791 | 55,582 | — | — | 3,125,098 |
| RS (3/1/24) | — | 13,896 | — | — | — | 1,562,605 |
| Options (3/1/24) | — | 26,352 | — | 112.45 | 114.18 | 1,562,539 |
Performance Share Results (2022–2024 Cycle)
| Metric | Weight | Threshold | Target | Maximum | Actual | Final vesting |
|---|---|---|---|---|---|---|
| Revenue CAGR | 33% | 12.0% | 16.0% | 20.0% | 4.4% | 0.0% |
| Adjusted EBITDA Margin % | 33% | 20.8% | 22.8% | 24.8% | 18.7% | 0.0% |
| FCF Conversion % | 33% | 75.0% | 85.0% | 95.0% | 70.6% | 0.0% |
Equity Ownership & Alignment
| Ownership metric | Value |
|---|---|
| Total beneficial ownership (shares) | 1,047,728 (1.7% of outstanding) |
| Options exercisable within 60 days | 474,762 |
| Hedging/Pledging | Prohibited for executives; no hedging or pledging allowed |
| Stock ownership guideline (CEO) | 6.0x annual base pay; all NEOs met or are building toward guidelines |
Outstanding awards as of 12/31/2024 (selected CEO positions):
- Unexercised options (exercisable/unexercisable): 2016–2020 fully vested; 2021 10,192/3,398, 2022 7,566/7,567, 2023 8,387/25,164, 2024 —/26,352; exercise prices: $335.91 (2021), $315.88 (2022), $119.54 (2023), $112.45 (2024) with respective expirations 3/1/31–3/1/34 .
- Unvested RS: 2022 2,020 shares ($313,201), 2023 11,143 ($1,727,722), 2024 13,896 ($2,154,575) .
- Unearned PSUs (at threshold placeholder): 2022 cycle 3,031 ($469,957), 2023 cycle 8,358 ($1,295,830), 2024 cycle 13,896 ($2,154,497) .
- 2024 insider option exercises: 100,797 shares exercised; value realized $10,427,867; stock vested 11,559 shares; value realized $1,299,810 .
Ownership alignment policies:
- Clawbacks: SEC/NYSE-compliant restatement clawback plus misconduct recoupment; applies to all Section 16 officers and relevant executives .
- Trading policy: prohibitions on short-selling, derivatives, and hedging; pledging/margin accounts prohibited .
Employment Terms
| Term | Key provision |
|---|---|
| Employment agreement | Initial term 3 years as of Nov 5, 2018; auto-renews annually (most recent renewal Nov 5, 2024); term extends 24 months upon Change in Control |
| Severance (without Cause or for Good Reason) | 24 months base salary continuation; payments equal to 200% of target annual bonus paid over 24 months; continued medical/dental/life benefits for 24 months; full COBRA thereafter; RS/stock options vest on termination; subject to release and restrictive covenants |
| Severance valuation (as of 12/31/2024) | Salary $2,100,000; Bonus $2,730,000; Benefits $27,380; Accelerated equity $10,315,685; Total $15,173,065 |
| Cause/Good Reason definitions | Detailed definitions covering performance failure, misconduct, felony indictment, material policy violations, and salary/bonus reduction >5%, material duty reductions, benefits changes, relocation >50 miles; includes cure periods |
| Restrictive covenants | Confidentiality, non-compete and non-solicit during employment and 24 months post-termination |
Change-in-control policy and structure:
- No “single-trigger” severance; Company policy explicitly disallows single-trigger CIC severance provisions .
- Broader CIC policy (executives other than CEO): double-trigger; 2x base salary + target bonus lump sum; 24 months benefits; unvested awards vest; PSUs settle at target upon qualifying termination around CIC; release and covenants required .
Board Governance
- Board roles: Only management director; Chairman since 2016; Lead Independent Director (Bennett Morgan) provides counterbalance with defined authority; all other directors independent under NYSE standards .
- Committee memberships: Audit, Human Capital & Compensation, and Nominating & Governance committees are fully independent; CEO is not a member of any committee .
- Board meeting attendance: 5 meetings in 2024; all incumbent directors attended ≥75% of Board and committee meetings; all attended the 2024 annual meeting .
- CEO/Chairman dual role implications: Board affirms combined role with strong Lead Director oversight, executive sessions of independent directors, and independent committee chairs .
Compensation Peer Group and Say‑on‑Pay
- Peer group used for 2024 decisions includes AOS, AYI, AME, DOV, ENS, ENPH, FSLR, HUBB, IDEX, IR, LII, NDSN, RRX, REZI, ROK, RUN, SEDG, SNA, SWKS, XYL; targeted median for total cash and LTIP values with upside for outstanding performance; no changes to peer group in 2024 .
- Say‑on‑pay approval: 93% support at 2024 annual meeting; annual say‑on‑pay cadence .
Compensation Structure Analysis
- Increased PSU weighting to 50% in 2024 enhances alignment with long‑term performance and shareholder value .
- 2024 AIP strictly formulaic; Committee made no adjustments to targets or payouts; CEO received a modest +5% individual modifier reflecting defined goals .
- 2022–2024 PSU cycle paid 0% due to below-threshold performance across revenue CAGR, EBITDA margin, and FCF conversion, demonstrating downside risk in equity awards .
- No tax gross‑ups; no dividends on unearned performance awards; hedging/pledging prohibited; single‑trigger CIC severance disallowed .
Risk Indicators & Red Flags
- Large option exercise value realized in 2024 ($10.43M) may indicate periodic liquidity events and potential selling pressure around vesting windows .
- Combined CEO/Chair role mitigated by a Lead Independent Director and independent committees; ongoing monitoring warranted given governance best‑practice debates .
- Robust clawback and misconduct policies reduce risk of misaligned pay outcomes in restatement or misconduct scenarios .
Equity Ownership & Alignment — Detail
| Item | Detail |
|---|---|
| Stock ownership guideline | CEO 6x salary; retention ratios applied until compliance; NEOs in compliance or progressing |
| Insider policy | No short sales, options, collars, or hedging; no pledging/margin accounts |
| Upcoming vesting (indicative) | RS from 3/1/24: 13,896 shares vest over 3 years (~4,632/yr) ; Options from 3/1/24: 26,352 vest over 4 years (~6,588/yr) at $112.45 strike ; PSUs 2024–2026 target 27,791 shares, vesting in 2027 subject to performance |
Investment Implications
- Pay-for-performance is credible: 0% PSU payout for 2022–2024 and a move to 50% PSU mix in 2024 tighten alignment with long‑term value creation .
- Near-term supply overhang possible: scheduled RS/option vesting and a history of meaningful option exercises ($10.43M value realized in 2024) could create episodic selling pressure around open windows .
- Governance mitigants: lead independent director structure, independent committees, strong clawbacks, and strict insider policies offset combined CEO/Chair concerns; high say‑on‑pay support (93%) suggests investor comfort with design and outcomes .
- Retention economics are robust but shareholder‑friendly: severance equals 24 months salary plus 200% of target bonus; no single‑trigger CIC; restrictive covenants span 24 months post‑termination—supporting continuity while limiting windfalls .