Lei Schlitz

About Lei Schlitz

Lei Zhang Schlitz, 58, is Vice President and President, Global Products & Solutions (formerly Global Products) at Johnson Controls, a role she has held since November 2022 (title expanded April 1, 2025) . She previously held senior leadership roles at Illinois Tool Works (EVP Automotive OEM; EVP Food Equipment), Siemens Energy & Automation, and GE, and currently serves on the Board of Directors of Archer Daniels Midland Company . During her tenure, JCI delivered FY2024 sales of $27.4B (+4% organic), adjusted EPS of $3.71, and a record $13.1B backlog; annual incentives paid at 96% of target and 2022–2024 PSUs paid at 84.3% of target, reflecting below-target performance on EBIT, revenue growth, pre-tax earnings growth and TSR .

Past Roles

External Roles

Fixed Compensation

Multi-year summary compensation (USD):

All other compensation (FY2024) detail:

• Retirement plan contributions: $53,349; Company vehicle: $15,000; Financial planning: $7,292

Performance Compensation

FY2024 annual and long-term incentive design:

• Annual Incentive Performance Program (AIPP) metrics: EBIT growth, revenue growth, free cash flow conversion; Strategic Initiative Modifier tied to YOY organic service revenue growth (>12% = +15%; <7.5% = −15%; actual 8.2% → 0%) .
• AIPP payout for Schlitz: Target opportunity 90% of salary; Financial & Strategic payout 96%; Business Unit modifier 100%; Individual modifier 100%; Total payout factor 96% → $669,600 .
• PSUs (FY2024–2026): three equally weighted metrics—cumulative pre-tax earnings, recurring revenue, relative TSR vs S&P 500 Industrials; cliff vest at 3 years .
• Share Options: 10-year term; 50% vest at 2 years and 50% at 3 years; strike = closing price at grant; retirement-eligible vesting rules apply .
• RSUs: vest in equal annual installments over 3 years .

Detailed incentive table (FY2024):

FY2024 long-term target grant mix for Schlitz:

Retention grant (one-time):

• RSUs: $2,750,000, vest 100% after 2 years; accelerated pro-rata if involuntary not-for-cause, full if death/disability; forfeiture for retirement/voluntary/for-cause .

Equity Ownership & Alignment

Ownership and outstanding awards (as of Jan 7, 2025 / Sep 30, 2024):

Insider exercises/vesting (FY2024):

• Options exercised: none; RSU/PSU vesting realized value: $797,970 .

Policies and guidelines:

• Executive share ownership guideline: 3× base salary (CEO 6×); no detail disclosed on individual compliance status .
• Anti-hedging and anti-pledging policy for Section 16 officers; pledging generally prohibited with narrow pre-approved exceptions; pre-clearance and blackout trading rules enforced .

Employment Terms

Severance and change-in-control economics (policy applies to NEOs):

Key definitions/policies:

• No single-trigger equity acceleration on CoC (double-trigger required) .
• “Cause” for Schlitz hiring equity award includes felony/moral turpitude, fraud/embezzlement, gross misconduct, willful failure to follow directives, and material policy violations; “Good Reason” includes role diminution, relocation >50 miles, reduced comp/targets, failure to assume obligations post-CoC .

Role update:

• As of April 1, 2025, leadership expanded to Global Products & Solutions under JCI’s reorganization into regional segments supported by two global functions .

Performance & Track Record

Company performance during FY2024 and prior cycle:

Execution signals:

• FY2024 incentives below target on long-term PSUs due to below-target EBIT/revenue/pre-tax earnings growth and TSR; AIPP near target reflecting steady operational outcomes .

Compensation Structure Analysis

• Mix and emphasis: Majority of total target pay remains variable and at-risk (AIPP + equity), aligned with pay-for-performance philosophy .
• Shift in instruments: Balanced LTIP mix (50% PSUs, 25% options, 25% RSUs) maintained; one-time retention RSUs added for continuity through portfolio simplification and CEO succession planning .
• Governance protections: Clawback policy exceeds regulatory minimums; explicit equity grant policy to prevent market timing; prohibitions on hedging/pledging; double-trigger CoC vesting .

Risk Indicators & Red Flags

• Hedging/pledging: Prohibited for Section 16 officers, with limited pre-approved exceptions; strong pre-clearance/blackout controls—low alignment risk .
• Tax gross-ups: None on change-in-control benefits (shareholder-friendly) .
• Option repricing: Not permitted without shareholder approval .
• Say-on-pay: Annual vote conducted; detailed historical approval rates not disclosed in cited materials .

Equity Ownership & Vesting Schedule Highlights

Employment Terms (Policies)

• Ownership Guidelines: 3× salary for NEOs .
• Insider Trading: Pre-clearance, quarterly blackouts, special blackouts for repurchases/M&A; Rule 10b5-1 plans allowed under approval .
• No defined benefit pension for NEOs in FY2024 .

Investment Implications

• Alignment: Schlitz’s pay is tightly linked to operational and long-term metrics (EBIT, revenue, FCF conversion; pre-tax earnings, recurring revenue, TSR), with double-trigger CoC and robust clawbacks—strong shareholder alignment .
• Retention risk: A sizeable two-year retention RSU ($2.75M) targeted to ensure leadership continuity amid portfolio changes; near-term vesting (2026) reduces attrition risk through succession period .
• Selling pressure: FY2024 shows RSU/PSU vesting ($797,970 realized) and significant scheduled RSU vestings over 2025–2027; no FY2024 option exercises—supply from vesting is predictable rather than opportunistic .
• Performance execution: Company delivered growth in sales, adjusted EPS, and backlog; however, long-term PSU payout below target underscores mixed execution vs multi-year goals—watch for improvement in cumulative earnings and TSR in the 2024–2026 PSU cycle .
• Governance quality: No tax gross-ups, anti-hedging/pledging, clawbacks exceeding SEC/NYSE rules, equity grant discipline—low governance risk and high pay discipline .