Norman Taffe
GENERAC HOLDINGSAbout Norman Taffe
Norman Taffe is President, Energy Technology at Generac (GNRC) since August 2022, leading the Company’s energy technology businesses after senior roles at SunPower and Cypress Semiconductor; he holds a B.S. in Electrical Engineering (University of Michigan) and an Executive MBA (Harvard Business School) . Company performance in 2024 exceeded annual bonus targets, with Adjusted EBITDA of $789.1M vs. a $744.3M target and Primary Working Capital (PWC) of 30.5% vs. a 32.2% target, driving a 137% AIP payout for enterprise-wide roles; the year featured record cash flow ($741M CFO; $605M FCF), 500 bps gross margin expansion, and leverage reduced to 1.7x via $278M debt repayment .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| SunPower Corporation | EVP, North America Residential; EVP – Products; VP Power Plant Products & Solutions | 2013–2021 | Led residential P&L and product portfolios; expansion and execution in solar markets |
| Cypress Semiconductor | Various engineering and marketing roles; EVP – Consumer & Computation Devices | 1989–2012 | Leadership across engineering/marketing; oversight of consumer/computation devices businesses |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $152,534 | $426,956 | $446,799 |
| Target AIP (% of Salary) | Not disclosed | 75% | 80% (raised Feb 2024) |
| 2024 Annual Bonus Details | Value |
|---|---|
| AIP Target ($) | $360,000 |
| Financial Achievement (%) | 68.4% |
| Individual Performance Modifier | 0% |
| Actual AIP Paid ($) | $246,175 |
Performance Compensation
Annual Incentive Plan (AIP) Structure and 2024 Results
| Metric | Weight | Threshold | Target | Maximum | Actual 2024 | Weighted Payout |
|---|---|---|---|---|---|---|
| Adjusted EBITDA (Consolidated) | 75% | $595.4M | $744.3M | $893.2M | $789.1M | 97.5% |
| PWC as % of Net Sales (Consolidated) | 25% | 35.2% | 32.2% | 29.2% | 30.5% | 39.5% |
| Overall Payout (Consolidated) | — | — | — | — | — | 137% |
| Taffe’s 2024 AIP Components (by metric) | Weight | Result vs. Target |
|---|---|---|
| Energy Technology Adjusted EBITDA | 50% | Below Target |
| Energy Technology PWC | 25% | Below Threshold |
| Consolidated Adjusted EBITDA | 25% | Above Target |
Notes:
- CEO/CFO AIP is 100% consolidated performance; business unit presidents have 75% tied to their business group metrics and 25% consolidated .
- Individual performance modifier ranges from –100% to +15% .
Long-Term Incentive Program (LTIP) Design and 2024 Grants
- Mix increased to 50% Performance Shares (PS), 25% Restricted Stock (RS), 25% Stock Options in 2024 (from one-third each in 2023) .
- PS metrics over three years: Revenue growth, EBITDA margin, Free Cash Flow conversion; vesting 0–200% at the 3rd anniversary .
| 2024 LTIP Grant (Grant date: Mar 1, 2024) | Stock Options ($) | Restricted Stock ($) | Performance Shares ($) | Total ($) |
|---|---|---|---|---|
| Norman Taffe | $216,782 | $216,804 | $2,433,643 (incl. $2,000,000 supplemental PS) | $2,867,229 |
Performance Share history:
- 2022–2024 PS cycle: 0% vesting; actual results fell below thresholds (Revenue CAGR 4.4%; Adjusted EBITDA margin 18.7%; FCF Conversion 70.6%) .
Vesting schedules:
- RS: equal installments over 3 years; Options: 25% per year over 4 years; PS: earn/vest on 3rd anniversary based on targets .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership (Apr 17, 2025) | 18,205 shares; less than 0.1% of outstanding |
| Options exercisable within 60 days | 2,994 shares (included in beneficial ownership per SEC rules) |
| Options outstanding (12/31/2024) | 1,040 exercisable; 3,120 unexercisable at $119.54 (exp. 03/01/33); 3,656 unexercisable at $112.45 (exp. 03/01/34) |
| Unvested RS (12/31/2024) | 742 (Sep 1, 2022); 1,381 (Mar 1, 2023); 1,928 (Mar 1, 2024) |
| Unearned PS/RS with performance features (12/31/2024) | 3,338 (Sep 1, 2022 perf RS); 1,036 (Mar 1, 2023 perf RS); 10,821 (Mar 1, 2024 perf RS) |
| Ownership guidelines | Top Executives: 3x base salary; retention ratios until met; all NEOs either met or are building compliance |
| Hedging/Pledging | Prohibited for executive officers (hedging, short-selling, pledging/margin accounts) |
| Clawbacks | SEC/NYSE-compliant restatement recoupment and misconduct clawback policies expanded in 2023; applies to Section 16 officers and certain execs |
| 2024 vesting activity | 1,433 shares vested; value realized $193,039; no option exercises disclosed for Taffe in 2024 |
Employment Terms
| Provision | Norman Taffe |
|---|---|
| Employment agreement | No individual employment agreement disclosed (CEO only); subject to Company policies |
| Noncompete/NDA | Executed nondisclosure and noncompete agreements (terms not specified) |
| Change-in-control (CIC) structure | Double-trigger; no single-trigger severance |
| CIC severance multiple | Lump sum = 2x base salary + 2x target annual bonus; 24 months of continued benefits |
| CIC accelerated vesting | RS, Options, PS vest upon qualifying termination; PS earned at target |
| CIC illustrative payout (as of 12/31/2024) | Salary $900,000; Bonus $720,000; Benefits $24,697; Accelerated equity $4,214,265; Total $5,858,962 |
Compensation Structure Analysis
- Increased at-risk equity via 50% PS weighting in 2024 enhances pay-for-performance alignment; Taffe received an additional $2,000,000 PS tied to Energy Technology performance to drive strategic execution .
- AIP target increased to 80% of salary in 2024; Taffe’s 2024 AIP payout was $246,175 on 68.4% achievement and a 0% individual modifier, reflecting mixed business unit performance vs. consolidated outperformance .
- 2022–2024 PS cycle paid 0%, indicating challenging long-term targets and tighter linkage to multi-year value creation .
- No tax gross-ups; hedging and pledging prohibited; robust clawbacks reduce governance risk .
Investment Implications
- Alignment: Larger performance share mix and supplemental ET-linked PS create strong incentives for multi-year revenue, margin, and FCF conversion execution; ownership guidelines and anti-hedge/pledge policies reinforce alignment despite small personal stake (<0.1%) .
- Retention/pressure: Significant unvested RS/PS and unexercisable options with scheduled vesting through 2026 suggest retention hooks; 2024 AIP underperformance in ET vs. consolidated targets highlights execution risk within his segment .
- Change-of-control economics: Double-trigger and 2x salary+bonus with target PS vesting provide meaningful protection; plan design avoids single-trigger windfalls and includes clawbacks, mitigating shareholder-unfriendly risk .
- Governance backdrop: High say-on-pay support (>93% in 2024) and independent consultant oversight indicate compensation processes viewed favorably by investors, reducing headline risk around pay practices .