Michael Quenzer
LENNOX INTERNATIONALAbout Michael Quenzer
Executive Vice President and Chief Financial Officer of Lennox International since January 1, 2024; age 47; joined Lennox in 2004. Education: B.S. in Finance (Coastal Carolina University), MBA and M.S. in Accounting (University of Texas at Dallas) . Company performance under the current leadership framework: 2024 revenue up 7% to approximately $5.3B; net income up 37% to $807M; GAAP diluted EPS $22.54; operating cash flow up 28%; one-year TSR 37%, three-year TSR 95%, five-year TSR 166% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Lennox International | Executive Vice President & Chief Financial Officer | 2024–present | Corporate CFO overseeing finance, controls, investor relations |
| Lennox International | VP, Financial Planning & Analysis and Investor Relations | 2023 | Led FP&A and IR; supported enterprise planning and external communications |
| Lennox International (Commercial Segment) | Chief Financial Officer | 2016–2022 | Segment CFO; supported margin improvement and commercial turnaround initiatives |
| Lennox International | Director/VP roles in FP&A and Operations Finance | 2008–2016 | Finance leadership across segments and corporate operations |
| Lennox International | Sr. Treasury Analyst/Consultant | 2003–2005 | Treasury and corporate finance support |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Morningstar Center Inc. | Variable Annuity Manager | 2000–2002 | Product analytics and investment operations (pre-Lennox) |
Fixed Compensation
| Metric (2024) | Value | Notes |
|---|---|---|
| Base Salary ($) | $550,000 | Promoted to CFO effective Jan 1, 2024 |
| STI Target (% of Salary) | 75% | Target dollar $412,500 |
| STI Payout (% of Target) | 217% | Resulting payout $896,033 |
| Stock Awards (Grant-date FV, $) | $776,931 | RSUs/PSUs under 2019 plan |
| Option/SAR Awards (Grant-date FV, $) | $197,488 | SARs; 7-year term, FMV strike |
| Perquisites & Other ($) | $83,876 | Includes $30,000 stipend; $385 term life premium; $53,191 retirement contributions |
| Nonqualified DC Plan—Company Contribution ($) | $32,491 | Supplemental Restoration Plan |
| Nonqualified DC Plan—Year-end Balance ($) | $33,348 | Immediate vesting; invested in broad-based funds |
Performance Compensation
2024 Short-Term Incentive (STI) – Company Metrics (applies to CFO)
| Metric | Weight | Threshold | Target | Maximum | Actual 2024 | Payout Driver |
|---|---|---|---|---|---|---|
| Core Net Income ($000) | 50% | $545,600 | $682,000 | $795,700 | $808,396 | Above max → strong earnings |
| Free Cash Flow ($000) | 30% | $367,500 | $525,000 | $700,000 | $784,190 | Above max → robust FCF |
| Core Revenue ($000) | 20% | $4,500,000 | $5,000,000 | $5,500,000 | $5,344,437 | Above target → solid topline |
| STI Outcome (CFO) | — | — | 100% of target | 225% cap | 217% of target | No individual modifier used |
Long-Term Incentive (PSUs) – 2022–2024 Results
| Metric | Weight | Threshold | Target | Maximum | Actual | Payout |
|---|---|---|---|---|---|---|
| ROIC (3-yr weighted avg) | 50% | 20% | 30% | 40% | 48.4% | 200% of target |
| Core Net Income CAGR | 50% | 6% | 12% | 20% | 20.1% | 200% of target |
Long-Term Incentive (PSUs) – 2024–2026 Design
| Metric | Weight | Measurement | Target Definition | Payout Range |
|---|---|---|---|---|
| ROIC | 50% | 3-yr weighted avg | ~3× estimated cost of capital for target | 50%–200% |
| Core Net Income CAGR | 50% | 3 years | High single-digit CAGR for target | 50%–200% |
Equity Ownership & Alignment
| Item | Value | Policy/Status |
|---|---|---|
| Stock Ownership Guideline (CFO) | 3× base salary | Must retain net shares until met |
| Total Shares + Unvested RSUs Counted | 2,460 | Counts toward guideline |
| Ownership as Multiple of Salary | 2.4× | Below 3×; has 5 years to comply (became NEO in 2024) |
| Hedging/Pledging | Prohibited | Applies to directors, NEOs, employees |
| Clawback | Financial restatement recovery for prior 3 years | Policy disclosed |
Outstanding Equity Awards at 12/31/2024 (Vesting)
| Award Type | 2025 | 2026 | 2027 |
|---|---|---|---|
| RSUs (shares) | 246 vest on 12/9/2025 | — | 682 vest on 2/5/2027 |
| PSUs (unearned shares) | 820 vest 12/31/2025 (assumption used for table presentation) | 2,274 vest 12/31/2026 (assumption used for table presentation) | — |
Outstanding SARs (as of 12/31/2024)
| Grant Date | Exercisable (#) | Unexercisable (#) | Strike ($/sh) | Expiration |
|---|---|---|---|---|
| 12/11/2020 | 635 | — | 278.00 | 12/11/2027 |
| 12/10/2021 | 556 | — | 328.65 | 12/10/2028 |
| 12/09/2022 | 421 | 211 | 259.56 | 12/09/2029 |
| 02/05/2024 | — | 1,467 | 418.69 | 02/05/2031 |
| Reference Price | — | — | NYSE $609.30 close (12/31/2024) | — |
Exercises and Vesting Activity (2024)
| Activity | Quantity | Value Realized ($) |
|---|---|---|
| SARs exercised (CFO) | 1,841 | $707,481 |
| RSUs vested (CFO) | 192 | $122,817 |
| PSUs vested (CFO) | 638 | $363,494 |
Employment Terms
| Provision | Details |
|---|---|
| Employment agreement | Auto-renews annually unless notice ≥30 days before Jan 1; includes 24-month non-compete and non-solicit post-termination |
| Severance—Normal | Greater of remaining term base salary or 3 months’ base; accrued vacation; unvested equity forfeited; vested SARs 90-day exercise |
| Severance—Enhanced | One year base salary if <3 years of service; two years base salary if ≥3 years; lump sum equal to STI payments from prior 12/24 months; 10% base salary in lieu of outplacement and perqs; COBRA up to 18+6 months; vested SARs 90-day exercise; unvested equity forfeited |
| Change-in-Control (double-trigger) | If terminated without cause or for good reason within 6 months before or 2 years after CIC: 2× base + 2× target bonus for NEOs; prorated bonus; COBRA up to 24 months; immediate vesting of RSUs/PSUs/SARs (PSUs at greater of target or actual); 90-day SAR exercise window |
| Good Reason (CIC Plan) | Material reduction in authority/pay/LTI; relocation >50 miles; successor non-adoption; failure to re-elect if a director |
| Clawback; Hedging/Pledging | Clawback for restatements (3-year lookback); hedging and pledging prohibited |
| Excise tax gross-ups | None; explicitly eliminated under CIC plan redesign |
Compensation Peer Group and Say-on-Pay
- Peer group: AOS, AYI, DOV, FBIN, FLS, HUBB, IEX, MAS, OC, PNR, ROK, RRX, SNA, TKR, XYL .
- Target pay positioning: median (50th percentile); majority of NEO pay at risk .
- Say-on-Pay: 97% approval at 2024 Annual Meeting; no material changes required by vote feedback .
Expertise & Qualifications
- Education: B.S. Finance; MBA; M.S. Accounting .
- Tenure: CFO since 2024; joined Lennox in 2004 .
- Roles: FP&A, Investor Relations, Segment CFO (Commercial) .
Investment Implications
- Strong pay-for-performance alignment: 2024 STI paid at ~217% on broad beats of earnings, FCF, and revenue targets; PSUs paid 200% for 2022–2024 on ROIC and core net income CAGR outperformance . This ties CFO incentives to profitability, returns, and cash generation.
- Retention appears robust: significant unvested RSUs (682 vesting in 2027) and PSUs (2,274 vesting in 2026), plus unexercisable SARs through 2031; double-trigger CIC vesting and 24-month restrictive covenants reduce near-term voluntary departure risk .
- Ownership alignment in progress: current 2.4× salary ownership vs 3× guideline, with five-year compliance window; hedging/pledging prohibited—limits misalignment/financing risk .
- Limited shareholder-unfriendly features: no excise tax gross-ups; no SAR repricing; clawback policy in place—mitigates governance red flags .
- Watch SAR exercise cadence: 2024 SAR exercises occurred ($707k value realized), which can signal liquidity/mix optimization rather than directional selling; monitor future Form 4s for pattern changes .