Joseph Nassab
LENNOX INTERNATIONALAbout Joseph Nassab
Joseph Nassab (age 58) is Executive Vice President & President, Building Climate Solutions (BCS) at Lennox International and has served in this role since 2022; prior roles include Vice President & General Manager of Allied Air from 2010–2022 . Under his segment leadership, BCS net sales rose from $1,511M in 2023 to $1,764M in 2024, with segment profit increasing from $341M to $397M, reflecting strong execution against end‑market conditions . Companywide, Lennox delivered 2024 revenue up 7% to ~$5.3B, GAAP EPS up 36% to $22.54, free cash flow up 61% to ~$785M, and TSR of 37% (three‑year 95%; five‑year 166%), reinforcing pay‑for‑performance alignment used in Nassab’s incentive frameworks .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Lennox – Allied Air | VP & General Manager | 2010–2022 | Not disclosed |
Fixed Compensation
| Metric | 2023 |
|---|---|
| Base Salary as of Jan 1 | $520,000 |
| Increase Effective Apr 1 | 2.9% |
| Base Salary as of Apr 1 | $535,000 |
| Base Salary Earned (FY) | $531,250 |
| STI Target (% of Base) | 75% |
| STI Target ($) | $398,438 |
| STI Payout (% of Target) | 219% |
| STI Payout ($) | $873,893 |
| Perquisites – Cash Stipend | $30,000 |
| Perquisites – Company Equipment & Installation | $103,734 |
| Term Life Insurance Premium | $100 |
| Retirement Contributions (qualified + nonqualified) | $51,160 |
Performance Compensation
2023 Short‑Term Incentive (STI) – Metrics and Results
| Metric | Weight | Threshold | Target | Maximum | Actual Performance | Payout Basis |
|---|---|---|---|---|---|---|
| Company Core Net Income | 50% | $414,412K | $518,015K | $595,717K | $641,812K | Company factor 214% |
| Company Free Cash Flow | 30% | $210,000K | $300,000K | $400,000K | $488,243K | Company factor 214% |
| Company Core Revenue | 20% | $4,145,528K | $4,606,142K | $4,836,449K | $4,732,013K | Company factor 214% |
| BCS Segment Profit | 50% | $150,708K | $179,359K | $200,618K | $340,174K | Segment factor 225% |
| BCS Segment Controllable Cash Flow | 30% | $42,600K | $60,857K | $79,114K | $226,058K | Segment factor 225% |
| BCS Segment Revenue | 20% | $1,227,636K | $1,364,040K | $1,432,242K | $1,510,792K | Segment factor 225% |
| Resulting STI Payout for Nassab | — | — | — | — | — | Blended 219% (50% Segment/50% Company) |
Notes:
- No individual performance modifier or discretionary adjustments were applied for 2023 NEOs .
Long‑Term Incentive (LTI) Grants to Nassab
| Grant | Date | Type | Target Value ($) | Instruments (Count) | Key Terms |
|---|---|---|---|---|---|
| Annual LTI (2024 cycle) | Feb 5, 2024 | PSUs | $600,000 | 1,365 PSUs | 3‑year performance (2024–2026); metrics: ROIC (50%), Company Core Net Income CAGR (50%); payout 50–200% of target |
| RSUs | $360,000 | 819 RSUs | Time‑based; vest after 3 years; no dividends during vesting | ||
| SARs | $240,000 | 1,760 SARs | Vest 1/3 annually; 7‑year term; exercise price set at FMV (avg high/low) on grant; Company practice confirms exercise price methodology | ||
| PSU Performance (2021–2023 grant vesting Dec 31, 2023) | Dec 31, 2023 | PSU Payout | — | — | ROIC 50.9% and Core Net Income CAGR 18.2% drove ~189% payout |
Equity Ownership & Alignment
| Ownership Item | Detail |
|---|---|
| Beneficial Ownership (Mar 15, 2024) | Common Stock Held: 3,880; Acquirable within 60 days (vested SARs): 7,711; Total Beneficial: 11,591 shares; <1% of class |
| Stock Ownership Guidelines (as of Dec 31, 2023) | Requirement: 3× base salary; Shares+Unvested RSUs counted: 6,989; Achieved: 4.2× base salary (met) |
| Unvested RSUs (Dec 31, 2023) | 3,761 units |
| Outstanding PSUs (Dec 31, 2023) | 4,830 units (performance assumptions and vesting dates as disclosed) |
| SARs – Selected Outstanding Positions (Dec 31, 2023) | Grants include 2017–2022; example strikes/terms: 2022 grant 953 exercisable/1,906 unexercisable @ $259.56 exp. 12/9/2029; 2021 grant 648 exercisable/325 unexercisable @ $328.65 exp. 12/10/2028 |
| Anti‑Hedging/Pledging | Company policy prohibits hedging and pledging of company stock |
| Clawback Policy | Applies to executive officers for restatements; recovery of excess incentive compensation over prior 3 fiscal years |
Upcoming vest/milestones (as of disclosures):
- RSU vest dates for outstanding awards include 12/10/2024, 5/4/2025, 12/9/2025 per award schedules .
- 2024 PSU cycle performance period runs 1/1/2024–12/31/2026 .
Employment Terms
Employment Agreements & Covenants
- Auto‑renew annually unless notice is given ≥30 days before Jan 1; includes post‑employment non‑compete and non‑solicit provisions generally for 24 months after termination .
- Change‑in‑Control (CIC) Severance Plan adopted in 2022: double‑trigger equity vesting, eliminates excise tax gross‑ups; CEO at 3× base and bonus; other NEOs at 2× base and bonus; prorated bonus and COBRA (24 months for NEOs), outplacement costs, accrual for unused vacation .
Illustrative Potential Payments (as of Dec 29, 2023 valuation)
| Scenario | Cash Severance (Base) | Bonus Severance | Prorated Target Bonus | Health/Other | Long‑Term Equity Accelerated Vesting | Unused Vacation | Total |
|---|---|---|---|---|---|---|---|
| Enhanced Severance (Not for Cause) | $1,070,000 | $730,525 | — | $102,779 (outplacement+perqs+COBRA) | — | $51,442 | $2,008,246 |
| Change in Control (Double‑Trigger) | $1,070,000 | $802,500 | $401,250 | $55,254 (outplacement+COBRA) | $3,160,768 | $51,442 | $5,541,214 |
Notes:
- Upon CIC termination, all outstanding SARs/RSUs/PSUs vest immediately; PSU performance deemed satisfied at greater of target or actual; SARs exercisable for 90 days post‑termination if within one year of CIC .
- Retirement eligibility impacts prorated vesting for RSUs/PSUs per plan terms .
Performance & Track Record
| Segment | 2023 | 2024 |
|---|---|---|
| BCS Net Sales ($M) | $1,511 | $1,764 |
| BCS Segment Profit ($M) | $341 | $397 |
Company highlights (for broader context in pay metrics):
- 2024: Revenue ~$5.3B; GAAP EPS $22.54; Operating profit margin 19.4%; Operating cash flow $945.7M; Free cash flow $784.6M; TSR 37% (3‑yr 95%; 5‑yr 166%) .
- 2023: Revenue ~$5.0B; Adjusted segment margin 17.9%; GAAP EPS $16.54; Adjusted EPS $17.96; Operating cash flow $736.2M; FCF $488.1M; TSR 90% .
Compensation Structure Signals
- Design: Target median market positioning; majority at‑risk pay; mix includes PSUs (50%), RSUs (30%), SARs (20%); metrics centered on ROIC and Core Net Income growth for LTI, and Core Net Income, FCF, Revenue for STI .
- Governance: No excise tax gross‑ups; no hedging/pledging; clawback policy in place; double‑trigger CIC vesting; minimum vesting ≥1 year for ≥95% of awards .
- Shareholder feedback: Say‑on‑pay approval ~97% in 2024; program remained consistent, reinforcing investor support .
Investment Implications
- Alignment and retention: High at‑risk equity mix, multi‑year PSUs tied to ROIC and Core Net Income CAGR, and strict anti‑hedging/pledging policies support shareholder alignment; Nassab met stock ownership guidelines (4.2× vs 3× requirement) as of 2023, reducing misalignment risk .
- Operating leverage in BCS: Segment profit expanded materially in 2023 and 2024 alongside net sales growth, which, together with STI overachievement (219% payout in 2023), signals effective execution and operating discipline within Nassab’s span of control .
- Event risk economics: CIC benefits at 2× base+bonus and immediate equity vesting (double‑trigger) can create incremental selling pressure around corporate events due to accelerated equity; however, absence of gross‑ups and strong clawback/ownership rules mitigate governance red flags .
- Watch items: Large outstanding equity (PSUs/RSUs/SARs) with scheduled vesting may introduce periodic supply; monitor Form 4 activity for potential insider sales around vest dates and after SAR exercises, and segment performance vs STI/LTI targets to anticipate incentive outcomes and quarter‑specific trading signals .