Richard Lek
Johnson Controls InternationalAbout Richard Lek
Richard Lek, 59, is Vice President and President, Building Solutions EMEA at Johnson Controls. He has led the EMEA segment since November 2024 (previously EMEALA) and was designated the EMEA segment leader when JCI reorganized reporting into Americas, EMEA, and APAC effective April 1, 2025. Lek joined JCI in 2002 and has held senior operating roles across Europe, the Middle East, Africa, and Asia Pacific. Company performance context during his recent tenure includes FY2024 sales of $27.4B (4% organic), backlog of $13.1B (+7% YoY), and adjusted EPS of $3.71; fiscal 2022–2024 PSU relative TSR ranked at the 28th percentile versus S&P 500 Industrials (payout 55% for that metric), evidencing below-target stock performance despite recurring revenue outperformance in the PSU program.
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Johnson Controls | VP & President, Building Solutions, EMEA | Nov 2024–present | Leads EMEA field and commercial operations post-segmentation shift to 3 regional segments (Americas, EMEA, APAC). |
| Johnson Controls | VP & GM, Continental Europe | Mar 2023–Nov 2024 | Drove business growth with double-digit return on sales and operational efficiency improvements (as cited by JCI). |
| Johnson Controls | COO & Business Transformation Leader, Asia Pacific | Aug 2021–Mar 2023 | Regional transformation leadership across APAC. |
| Johnson Controls | VP, Business Transformation, Global Products | Aug 2019–Mar 2023 | Global product transformation initiatives. |
| Johnson Controls | VP, Business Transformation, EMEA/LA | Jan 2018–Aug 2019 | EMEA/Latin America transformation roles. |
| Johnson Controls | Various VP/GM roles, Middle East & Africa | Prior to 2018 | Regional P&L and growth leadership. |
External Roles
- Not disclosed in reviewed company filings.
Fixed Compensation
- Specific base salary and target bonus for Richard Lek are not disclosed (he was not a Named Executive Officer in FY2024). JCI’s program sets base salary by scope, performance, and market positioning.
- Perquisites: executive officers receive a cash perquisite allowance equal to 5% of base salary annually; allowable items include financial/tax planning and executive physicals. For NEOs (other than CEO), personal aircraft use is capped at $10,000/year (CEO limit $200,000 incremental cost).
Performance Compensation
Annual Incentive Performance Program (AIPP) – Design
| Metric/Modifier | Weighting | Target construct | Notes |
|---|---|---|---|
| EBIT Growth | 1/3 | Company-defined adjusted EBIT growth | Aligns organic EBIT execution with peers. |
| Revenue Growth | 1/3 | FX- and M&A-adjusted revenue growth | Aligns organic sales execution and share gains. |
| Free Cash Flow Conversion | 1/3 | FCF / Net Income (both adjusted; exclusions defined) | Focus on cash generation and capex discipline. |
| Strategic Initiative Modifier | ±15% | YOY Organic Service Revenue Growth | >12% = +15%; <7.5% = -15%; otherwise 0%. |
| Business Unit Modifier | Variable | BU financial/diversity/sustainability | Allocates pool by BU results when used. |
| Individual Modifier | +10% / -25% | Leadership vs. culture and values | Judgment-based overlay. |
Fiscal 2024 AIPP outcome (company level, context):
| Financial performance | Threshold | Target | Max | Actual | Unweighted payout | Weighted payout |
|---|---|---|---|---|---|---|
| EBIT Growth | 7.0% | 12.6% | 19.0% | 8.8% | 66% | 96% |
| Revenue Growth | 3.0% | 5.5% | 8.0% | 3.6% | 62% | |
| FCF Conversion | 80% | 90% | 100% | 96% | 160% |
- Strategic modifier was 0% for FY2024 (8.2% organic service revenue growth was within the no-modifier band).
Long-Term Incentives (standard structure)
| Instrument | Target mix | Vesting | Performance metrics |
|---|---|---|---|
| PSUs | 50% | Cliff vest after 3-year period | Pre-tax Earnings Growth (1/3), Recurring Revenue (1/3), Relative TSR vs. S&P 500 Industrials (1/3); 0–200% payout, TSR thresholds: 25th/50th/75th percentiles. |
| Stock Options | 25% | 50% after 2 years; 50% after 3 years | Stock price appreciation; no repricing without shareholder approval. |
| RSUs | 25% | Ratable over 3 years | Time-based; dividends not paid until vest. |
Fiscal 2022–2024 PSU results (company level, context):
| Metric | Weight | Threshold | Target | Max | Actual | Metric payout | Weighted contribution |
|---|---|---|---|---|---|---|---|
| Pre-Tax Earnings Growth ($mm) | 1/3 | $818 | $1,000 | $1,435 | $888 | 69% | 23.1% |
| Recurring Revenue ($mm) | 1/3 | $208 | $535 | $881 | $634 | 129% | 42.9% |
| Relative TSR vs S&P 500 Industrials | 1/3 | ≥25th pct | 50th pct | ≥75th pct | 28th pct | 55% | 18.4% |
| Final PSU Payout | 84.3% |
Equity Ownership & Alignment
- Anti-hedging and anti-pledging: comprehensive prohibitions under JCI’s Insider Trading Policy.
- Share ownership guidelines: CEO 6x base salary; other NEOs 3x base salary (proxy discloses NEO standards; broader officer application not specified).
- Clawback policy: mandatory recoupment for restatements; discretionary recoupment for misconduct with potential material reputational harm and certain culpable-individual circumstances.
- No dividends on unvested RSUs/PSUs until vest; standard equity grant policy to avoid market timing.
Employment Terms
- Employment agreements: none for executive officers except where legally required; no guaranteed compensation/increases.
- Executive Severance & Change-in-Control (CIC) Policy (double-trigger):
- Triggers: involuntary termination without cause or resignation for good reason within 60 days prior to or two years following a CIC (double-trigger); stand-alone severance for involuntary termination not in connection with CIC.
- Cash severance basis: base salary + target annual bonus; multiples disclosed for CEO and other NEOs (CEO: 3x CIC / 2x non-CIC; Other NEOs: 2x CIC / 1.5x non-CIC).
- Benefits continuation aligned with multiples (36 months CEO CIC; 24 months Other NEOs CIC; shorter non-CIC).
- Equity: pro-rated vesting upon qualifying termination; under the 2021 plan, Committee may provide for full vesting/cash settlement at CIC or full vesting on qualifying termination post-assumption; PSUs at target or trend as applicable.
- Bonus: prorated target bonus for year of termination upon CIC qualifying termination.
- Restrictive covenants: two-year non-solicitation; 1.5-year non-compete; indefinite confidentiality and non-disparagement.
- No excise tax gross-ups; no single-trigger acceleration.
- Definitions of “Cause” and “Good Reason” summarized in proxy; include misconduct, felony, willful failure to follow directives (Cause) and adverse changes in role, location, or compensation (Good Reason).
Performance & Track Record
- Leadership track record: JCI credited Lek with delivering double-digit return on sales and operational efficiency gains in Continental Europe; EMEALA profitability improved in the two years preceding his appointment.
- Company performance context: FY2024 organic revenue growth 4%, backlog +7% to a record $13.1B, strong margin expansion and cash generation; yet AIPP financial factor was 96% of target and the FY2022–2024 PSU cycle paid at 84.3% of target, reflecting below-target EBIT/Revenue growth and below-median TSR.
Risk Indicators & Red Flags
- Positive governance features: double-trigger CIC; no CIC tax gross-ups; anti-hedging/anti-pledging; equity grant timing policy; clawback exceeding regulatory requirements; no repricing of options without shareholder approval.
- Cybersecurity: Board and committee-level oversight enhanced with third-party advisor; incident in Sept 2023 with Board-engaged response and remediation oversight.
Compensation Committee & Shareholder Considerations
- Independent Compensation and Talent Development Committee, advised by Farient Advisors; annual say-on-pay and shareholder engagement; pay-for-performance alignment regularly assessed.
- FY2024 annual incentive payouts for NEOs averaged 96% of target; PSU program design includes relative TSR to align with shareholder outcomes.
Investment Implications
- Alignment: Incentives emphasize EBIT growth, revenue growth, cash conversion, recurring revenue, and relative TSR; clawback, anti-pledging, and no single-trigger acceleration strengthen alignment and governance.
- Retention/transition risk: Double-trigger CIC with meaningful severance and post-termination non-compete/non-solicit reduce flight risk; absence of guaranteed compensation or employment contracts preserves flexibility but may elevate market risk for non-NEOs if external demand rises.
- Execution lens: Lek’s operational background and cited profitability improvements in EMEALA, plus his leadership role in the April 2025 regional realignment, position him as a key operator for Europe; however, below-median relative TSR outcomes in the last PSU cycle highlight a continued focus on translating backlog and recurring revenue growth into superior shareholder returns.