Daniel Sessa
LENNOX INTERNATIONALAbout Daniel Sessa
Executive Vice President and Chief Human Resources Officer at Lennox International since June 2007; age 60; BA in Law & Society (SUNY Binghamton) and JD (Hofstra University) . In 2024, LII delivered record results (revenue $5,341.3M; net income $806.9M), with 1-year TSR 37%, 3-year TSR 95%, driving above-target incentive payouts (STI 217%, PSUs 200%) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| United Technologies Corp. | Senior HR & legal leadership roles (incl. VP HR, Otis Americas; Director HR, Pratt & Whitney; Director Employee Benefits & HR Systems) | 1996–2007 | Led HR for major UTC businesses; enterprise benefits/HR systems responsibility |
| Lennox International | EVP, CHRO | 2007–present | Human capital strategy, succession planning oversight via Comp & HR Committee |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Not disclosed | — | — | No current external public-company directorships disclosed for Sessa in LII’s 10-K or DEF 14A executive officer listings . |
Fixed Compensation
Multi-year NEO compensation (USD):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $551,250 | $566,250 | $585,000 |
| Stock Awards (RSUs/PSUs grant-date fair value) | $881,746 | — | $932,830 |
| Option/SAR Awards (grant-date fair value) | $223,373 | — | $236,931 |
| Non-Equity Incentive (STI) | $304,703 | $907,387 | $953,053 |
| Change in Pension Value/Deferred Comp Earnings | — | $253,146 | $867,150 |
| All Other Compensation (perqs, insurance, retirement) | $48,324 | $49,800 | $50,768 |
| Total | $2,009,396 | $1,776,583 | $3,625,732 |
Perquisites and other compensation detail (2024):
- Cash stipend $30,000; term life premium $68; retirement contributions $20,700; total $50,768 .
Base salary and STI target:
- Base salary as of 4/1/2024: $590,000; base earned in 2024 $585,000 .
- STI target 75% of base; payout approved at 217% of target → $953,053 (paid 3/14/2025) .
Performance Compensation
2024 Short-Term Incentive (Company-wide metrics for Sessa)
| Metric | Weight | Threshold | Target | Maximum | Actual Performance | Result |
|---|---|---|---|---|---|---|
| Core Net Income ($000s) | 50% | $545,600 | $682,000 | $795,700 | $808,396 | Above max |
| Free Cash Flow ($000s) | 30% | $367,500 | $525,000 | $700,000 | $784,190 | Above max |
| Core Revenue ($000s) | 20% | $4,500,000 | $5,000,000 | $5,500,000 | $5,344,437 | Above target |
| STI Payout | — | — | — | Cap 225% | Company factor ~217% | Sessa payout 217% of target → $953,053 |
Goal setting: 2024 targets increased vs 2023 (core net income +6.4%, FCF +7.5%, core revenue +5.6%) .
Long-Term Incentive 2024 Grant Mix and Counts
| Component | Target Value (USD) | Units Granted | Vesting/Term |
|---|---|---|---|
| PSUs | $600,000 | 1,365 | 3-year perf period (2024–2026); ROIC (50%) and Core Net Income CAGR (50%); 50/100/200% payout curve |
| RSUs | $360,000 | 819 | Time-based, vest ~3 years (grant 2/5/2024 → vest 2/5/2027); no dividends during vesting |
| SARs | $240,000 | 1,760 | Vest 1/3 annually; 7-year term; exercise price $418.69; grant 2/5/2024; expire 2/5/2031 |
PSU Results (Dec 2021 grant; performance period 2022–2024)
| Metric | Weight | Threshold | Target | Maximum | Actual | Payout |
|---|---|---|---|---|---|---|
| ROIC | 50% | 20% | 30% | 40% | 48.4% | 200% |
| Core Net Income CAGR | 50% | 6% | 12% | 20% | 20.1% | 200% |
Compensation Philosophy, Governance, and Peer Benchmarking
- Pay mix emphasizes at-risk equity; LTI 50% PSUs, 30% RSUs, 20% SARs .
- Peer group (15 industrials incl. AOS, AYI, DOV, MAS, OC, ROK, HUBB, IEX, PNR, RRX, SNA, TKR, XYL, FBIN, XYL) used for market benchmarking; NEOs targeted at the 50th percentile of market .
- Governance safeguards: clawback for restatements (3-year lookback), anti-hedging/pledging, no excise tax gross-ups, double-trigger CIC, no option/SAR repricing .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 31,610 shares held; 14,344 shares acquirable within 60 days; total 45,954 (less than 1% of class) |
| Shares outstanding basis | 35,468,304 shares (as of Mar 15, 2025) |
| Approx. ownership % | ~0.13% (45,954 ÷ 35,468,304) based on figures above |
| Stock ownership guideline | 3x base salary requirement; Sessa at 28.8x with 31,634 shares/RSUs counted; in compliance |
| Hedging/pledging | Prohibited by Insider Trading Policy (applies to NEOs) |
| Vested vs unvested (12/31/2024) | RSUs unvested: 2,167; PSUs unearned: 7,224 |
| Scheduled vesting | RSUs: 12/9/2025 (1,348) and 2/5/2027 (819); PSUs: 12/31/2025 (4,494) and 12/31/2026 (2,730), subject to performance |
| SARs | Exercisable: 5,058 (12/13/2019, $257.08), 3,334 (12/11/2020, $278.00), 3,059 (12/10/2021, $328.65), 2,307 (12/9/2022, $259.56); Unexercisable: 1,760 (2/5/2024, $418.69; expire 2/5/2031) |
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment agreement | Auto-renews annually each Jan 1 unless notice; includes 24-month non-compete and non-solicitation post-termination . |
| Severance (involuntary, not-for-cause; enhanced) | With release: two years base salary, lump-sum of STI paid in prior 24 months, 10% base salary in lieu of outplacement, 10% base salary in lieu of perqs, COBRA premiums up to 18 months + equivalent up to 6 months; death benefit 6 months base . |
| Change-in-control (CIC) plan | Double-trigger; no tax gross-ups; upon qualifying termination: 2x base salary and 2x target bonus (CEO 3x); prorated target bonus; immediate vesting of all equity (PSUs at ≥ target or actual); healthcare coverage for 24 months for NEOs . |
| Sessa estimated payouts (as of 12/31/2024) | CIC: Base severance $1,180,000; bonus severance $885,000; prorated bonus $442,500; outplacement $5,975; healthcare $36,565; accrued vacation $56,731; equity acceleration $4,260,219; total $6,866,990 . |
| Retirement eligibility (LTI treatment) | Not retirement-eligible as of 12/31/2024; retirement treatment defined by age/service thresholds . |
Retirement & Deferred Compensation
| Plan | 2024 Status |
|---|---|
| Supplemental Retirement Plan (closed DB SERP) | Present value $5,732,318; credited service 15.0 years . |
| Consolidated Pension Plan (frozen DB) | Present value $35,644; credited service 1.7 years . |
| Profit Sharing Restoration (frozen NQ DC) | Aggregate balance $27,983; aggregate earnings $1,722 in 2024 . |
Say‑on‑Pay & Shareholder Feedback
- 2024 Say‑on‑Pay approval ~97%; considered strong support; no policy changes driven by the vote .
Compensation Committee & Peer Group
- Committee chaired by Shane D. Wall; independent consultant Meridian (transitioned from Pearl Meyer in 2024); reviews STI/LTI designs, peer benchmarking, dilution and expense impacts .
- Compensation peer group (15 companies) and market targeting at the 50th percentile .
Performance & Track Record Context
- 2024: net sales +7% to $5,341.3M; operating margin 19.4%; net income $806.9M; operating cash flow $945.7M; FCF $784.6M .
- TSR: 1-year 37%, 3-year 95%, 5-year 166% .
Investment Implications
- Pay-for-performance alignment is strong: Company exceeded targets across earnings, cash flow, and revenue, producing 217% STI payouts and maximum PSU results, with LTI tied to ROIC and core net income CAGR—metrics that correlate with value creation .
- Retention risk appears contained: Ownership at 28.8x salary (well above 3x guideline), anti-hedging/pledging protections, and market-standard severance with double-trigger CIC; not retirement-eligible as of YE2024 .
- Potential near-term supply from equity vesting: Scheduled RSU and potential PSU vestings in late 2025/2026 could create tax-related sales, but policy alignment and guideline compliance support sustained alignment; monitor Section 16 filings around vesting dates .
- Governance quality high: No repricing, no excise tax gross-ups, clawback in place, robust peer benchmarking and independent committee oversight—reducing compensation-related red flags .