Prakash Bedapudi
LENNOX INTERNATIONALAbout Prakash Bedapudi
Prakash Bedapudi is Executive Vice President and Chief Technology Officer at Lennox International (LII), a role he has held since 2008; he is 58 years old . Under LII’s pay-for-performance architecture, executive incentives tie to annual core net income, free cash flow, and core revenue, and three-year ROIC and core net income growth; in 2024 LII delivered revenue up 7%, net income up 37%, operating cash flow up 28%, and one-, three-, five-year TSR of 37%, 95%, and 166% respectively .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Lennox International | EVP, Chief Technology Officer | 2008–present | Led product technology roadmap with emphasis on electrification and heat pump convergence; drove dealer training and go-to-market enablement for new efficiency technologies |
Fixed Compensation
Not disclosed for Bedapudi in recent proxies. LII’s named executive officers (NEOs) are reported separately and did not include the CTO in 2023–2024 . Company practice targets base salaries at market median with annual adjustments (e.g., 2024 NEO average +3.5%) .
Performance Compensation
Bedapudi’s individual targets/payouts are not disclosed; LII’s executive programs use the following structures and outcomes for 2024:
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Short-Term Incentive (STI) metrics and results (company-level for NEOs) :
- Core Net Income (50% weight): Target $682.0mm; Actual $808.4mm
- Free Cash Flow (30% weight): Target $525.0mm; Actual $784.2mm
- Core Revenue (20% weight): Target $5,000.0mm; Actual $5,344.4mm
- Company payout factor: ~217% of target (for NEOs measured 100% on company metrics)
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Long-Term Incentive (LTI) metrics (2024 grant for 2024–2026 period) :
- ROIC (50%): three-year weighted average; threshold requires exceeding cost of capital; target ≈ 3× cost of capital
- Company Core Net Income CAGR (50%): target requires high single-digit CAGR
- Payout curve: 50% at threshold, 100% at target, 200% at maximum
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PSU vesting outcome for prior cycle (2022–2024): ROIC 48.4% and Core Net Income CAGR 20.1% → 200% of target earned .
2024 STI Program – Metrics and Results
| Metric | Weight | Threshold | Target | Maximum | Performance | Payout Context |
|---|---|---|---|---|---|---|
| Company Core Net Income ($000) | 50% | 545,600 | 682,000 | 795,700 | 808,396 | Company payout ≈217% of target for NEOs |
| Company Free Cash Flow ($000) | 30% | 367,500 | 525,000 | 700,000 | 784,190 | Company payout ≈217% of target for NEOs |
| Company Core Revenue ($000) | 20% | 4,500,000 | 5,000,000 | 5,500,000 | 5,344,437 | Company payout ≈217% of target for NEOs |
2024 PSU Program – Structure (2024–2026)
| Metric | Weight | Measurement | Target Definition | Payout Range |
|---|---|---|---|---|
| ROIC | 50% | 3-yr weighted avg (20% lowest year; 40% each other year) | Target ≈ 3× cost of capital | 50%–200% of target award |
| Company Core Net Income CAGR | 50% | 3-year CAGR | Target = high single-digit CAGR | 50%–200% of target award |
Equity Ownership & Alignment
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Corporate policies:
- Anti-hedging and anti-pledging: Hedging and pledging of company stock are prohibited .
- Stock ownership guidelines: CEO 6× salary; executive vice presidents 3× salary .
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Insider holdings and recent transactions:
- Shares owned: 16,162 as of Nov 5, 2024 (per GuruFocus, compiled from Form 4s) .
- Transaction summary (last 18 months): Net sale of 9,773 shares (no open market buys) .
- Dispositions and grants in 2024:
- Sold 3,434 shares on Aug 19, 2024 at $578; ownership reported at 21,536 post-transaction (news referencing SEC filing) .
- Sold ~5,370 shares on Aug 29, 2024 at $584 (Form 4 synopsis) .
- Form 4 filing Nov 6, 2024 (transaction Nov 5, 2024) indicating sale; see company SEC site .
- Form 4 filed Aug 20, 2024 includes 10b5-1 checkbox disclosure for plan-based trading .
| Date | Action | Shares | Price | Post-Transaction Holdings | Source |
|---|---|---|---|---|---|
| 2024-08-19 | Sale | 3,434 | $578 | 21,536 | |
| 2024-08-29 | Sale | 5,370 | $584 | 16,162 | |
| 2024-11-05 | Sale | N/A | $618 | N/A | |
| 2024-08-20 | 10b5-1 plan disclosure (Form 4) | — | — | — | |
| 2024-03-15/18 | Grants (reported on Form 4) | 2,083 and other entries | Various | 21,536 (pre-Aug) |
Note: GuruFocus holdings table shows 16,162 shares at $471.50 on Nov 5, 2024 .
Employment Terms
- Executive employment agreements: Company provides employment agreements to NEOs with auto-renewal each Jan 1 unless notice; post-employment non-compete and non-solicit for 24 months; CTO’s specific agreement terms are not disclosed .
- Change-in-Control (CIC) plan: Double-trigger vesting; no excise tax gross-ups; severance = CEO 3× base + 3× target bonus; other NEOs 2× base + 2× target bonus; COBRA premiums 36 months for CEO and 24 months for other NEOs; immediate vesting of SARs/RSUs/PSUs at ≥ target or actual for PSUs upon qualifying termination .
Company Performance Context
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenue ($USD) | $4,718.4mm | $4,981.9mm | $5,341.3mm |
| EBITDA ($USD) | $729.0mm* | $915.0mm* | $1,129.1mm* |
Values with asterisks retrieved from S&P Global.*
Governance, Policies, and Peer Benchmarking
- Clawback: Recovery of excess incentive comp tied to financial reporting measures for three prior fiscal years in event of restatement .
- Stock ownership guidelines: CEO 6× salary; EVPs 3× salary .
- Hedging/Pledging: Prohibited for directors, NEOs, and all employees .
- Compensation peer group used for benchmarking (unchanged in 2024–2025) includes AOS, AYI, DOV, FLS, FBIN, HUBB, IEX, MAS, OC, PNR, RRX, ROK, SNA, TKR, XYL .
Investment Implications
- Alignment: LII’s architecture ties executive pay to cash flow, earnings (core net income), and ROIC—metrics that drove above-target payouts in 2024 amid record EPS and FCF . Anti-hedging/pledging and ownership guidelines (3× salary for EVPs) strengthen alignment .
- Insider selling pressure: Bedapudi executed multiple sales in 2024 (Aug and Nov), with net disposals over 18 months (~9,773 shares) and reported use of a 10b5-1 plan; holdings stood at ~16,162 shares as of Nov 2024 . While plan-based, the absence of insider purchases and broader insider sell trend warrants monitoring .
- Retention risk: CTO is a long-tenured executive (since 2008) central to electrification and heat pump strategy; company-wide employment and CIC terms (non-compete, double-trigger, no gross-ups) and equity mix support retention, but rising share prices may encourage diversification via sales .
- Execution signals: Bedapudi’s transcript remarks emphasize electrification, HVAC–water-heater system convergence, and dealer training—key secular growth vectors supportive of LII’s margin/ROIC focus .
Note: CTO-specific compensation dollars, vesting schedules, and ownership guideline compliance status are not disclosed in recent proxies; tables above reflect company programs and insider filings where available .