Michael Lucareli
MODINE MANUFACTURINGAbout Michael Lucareli
Michael B. Lucareli (age 56 as of March 31, 2025) is Executive Vice President and Chief Financial Officer of Modine Manufacturing Company (MOD). He has served as CFO since July 2010 and as EVP & CFO since May 2021, providing continuity through Modine’s multi-year transformation . Under his finance leadership, FY2025 was a record year: sales $2.6B (+7%), net earnings $186M (+14%), adjusted EBITDA $392M (+25%), operating cash flow $213M, and free cash flow $129M, with MIP metrics hitting near-maximum payout levels (Adjusted EBITDA margin 15.2% vs 12.5% target; Adjusted EBITDA growth 24.8% vs 10% target) . Modine’s TSR has significantly outperformed the S&P 600 Industrials over the latest year and four-year period, aligning pay actually paid with performance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Modine Manufacturing Company | EVP & CFO | May 2021 – Present | Finance leadership through record FY2025 performance and strengthened pay-for-performance architecture . |
| Modine Manufacturing Company | VP Finance & CFO | Jul 2010 – May 2021 | Long-tenured CFO stewardship across cycles; interim CEO in 2020 per pay-vs-performance disclosure . |
External Roles
- Not disclosed in FY2025 10-K executive officer section for Lucareli .
Fixed Compensation
| Item | FY2025 Amount | Notes |
|---|---|---|
| Approved base salary (effective Jul 2024) | $680,500 | CFO salary set by HCC based on performance, tenure, market . |
| MIP target (as % of base) | 85% | Corporate plan; metrics: Adj. EBITDA Margin (50%), Adj. EBITDA Growth (50%) . |
| MIP payout (cash) | $1,413,632 | Aggregate performance 249% of target based on FY25 actuals . |
| LTIP target award value (as % of base) | 220% | Mix 80% PS, 20% RSU; target dollars $1,497,100 . |
| Stock awards (grant-date fair value) | $2,177,613 | FY2025 PS/RSU fair value under ASC 718 . |
| LTIP performance cash earned (FY2023–25) | $909,562 | Paid at 200% of target; metrics CF ROI and Avg. Adj. EBITDA Growth . |
| Pension – PV of accumulated benefit | $172,475 | 6.6 yrs credited service; plan frozen; termination/optional lump-sum path approved . |
| Deferred comp – Executive contributions | $462,656 | FY2025 deferrals . |
| Deferred comp – Company contributions | $13,961 | Safe harbor overflow match to DC plan . |
| Deferred comp – Ending balance | $1,637,179 | As of FY2025 . |
Performance Compensation
Annual MIP – Corporate (FY2025)
| Metric | Weight | Threshold | Target | Maximum | Actual | Payout as % of Target |
|---|---|---|---|---|---|---|
| Adjusted EBITDA Margin | 50% | 9.5% | 12.5% | ≥15.0% | 15.2% | 249% |
| Adjusted EBITDA Growth | 50% | 5.5% | 10.0% | ≥25.0% | 24.8% | 249% |
- MIP design pays 25%–250% of target; FY2025 payout for Lucareli at 249% delivered $1.41M .
LTIP Structure (FY2025 grants; Performance Period FY2025–FY2027)
| Component | Weight | Vesting | Metric(s) | Threshold | Target | Maximum |
|---|---|---|---|---|---|---|
| Performance Shares (PS) | 80% | Vests at end of period upon HCC certification | Cash Flow ROI (50%), Avg. Annual Adj. EBITDA Growth (50%) | CF ROI 8.0%; EBITDA growth 4.0% | CF ROI 12.0%; EBITDA growth 13.0% | CF ROI ≥17.0%; EBITDA growth ≥22.0% |
| Restricted Stock Units (RSU) | 20% | 3-year ratable (1/3 each year) | Retention | — | — | — |
FY2025 Equity Granted (share counts)
| Grant type (5/16/2024) | Shares | Notes |
|---|---|---|
| RSUs | 2,885 | 3-year ratable vesting . |
| PS – Threshold | 2,886 | Earned based on 3-year CF ROI and EBITDA growth . |
| PS – Target | 11,542 | As above . |
| PS – Maximum | 28,855 | Cap at 250% of target . |
| Special Retention Grant (performance-based RSU) | 6,558 | Value ≈ 100% of salary; cliff vest 3 years, contingent on FY2026 12‑month trailing gross margin goal . |
LTIP (FY2023–FY2025) Performance Cash Outcome
| Metric | Weight | Threshold | Target | Maximum | Actual | Payout |
|---|---|---|---|---|---|---|
| Cash Flow ROI | 50% | 7.0% | 10.5% | ≥14.0% | 14.0% | 100% of metric |
| Avg. Annual Adj. EBITDA Growth | 50% | 2.0% | 7.0% | ≥12.0% | 38.3% | 100% of metric |
| Total payout | — | — | — | — | — | 200% of target; Lucareli received $909,562 |
Equity Ownership & Alignment
Beneficial Ownership (as of June 23, 2025)
| Component | Shares/Units | Notes |
|---|---|---|
| Direct ownership | 117,868 | Common shares . |
| Options exercisable (≤60 days) | 94,802 | See option table . |
| Held in 401(k) Plan | 971 | RSUs do not count; disclosure shows 971 . |
| Total beneficial ownership | 213,641 | Less than 1% of class . |
Outstanding Equity Awards (FY2025 year-end)
| Category | Count | Terms / Valuation |
|---|---|---|
| RSUs (unvested) | 23,387 | Market value $1,794,952 at $76.75 close on 3/31/2025 . |
| PS (unearned) | 109,287 | Payout value $8,387,777 at $76.75 close; depends on certified performance . |
Stock Options Detail (Lucareli)
| Exercisable | Unexercisable | Exercise Price | Expiration |
|---|---|---|---|
| 14,443 | — | $17.90 | 5/30/2028 |
| 11,996 | — | $13.26 | 5/29/2029 |
| 19,595 | — | $6.62 | 10/2/2030 |
| 14,667 | 4,891 | $17.79 | 6/4/2031 |
| 19,276 | 9,934 | $12.28 | 6/6/2032 |
- Insider Trading Policy prohibits hedging, short sales, standing/limit orders, and pledging of company stock; pre-clearance and blackout windows apply . Officers must hold 3x base salary in stock value; NEOs with ≥5 years are in compliance .
Employment Terms
Severance Plan
| Scenario | Cash | Continued Benefits | Equity | Pension | Notes |
|---|---|---|---|---|---|
| Involuntary termination (without cause) | $680,500 | $23,881 | $0 | $172,475 | One-year salary in installments; one year COBRA; equity forfeiture per plan . |
Change-in-Control (CIC) Protections
| Trigger | Cash | Equity Acceleration | Pension | Continued Benefits | Notes |
|---|---|---|---|---|---|
| CIC termination (double-trigger or specified window) | $3,064,169 | $5,867,104 | $172,475 | $114,284 | 2x greater of (base+target) or five-year average; pro‑rata target bonus; two-year welfare coverage; supplemental DC benefit . |
- Clawbacks: Incentive Compensation Recoupment Policy (misconduct) and Executive Officer Compensation Recovery Policy (SEC/NYSE-compliant restatement clawback, three-year lookback) .
- Tax gross-up: Legacy Section 280G excise tax gross-up applies to Lucareli’s pre-2009 change-in-control agreement; newer Severance Plan provides no excise gross-ups .
Performance & Track Record
- FY2025 performance: sales $2.6B (+7%), net earnings $186M (+14%), adjusted EBITDA $392M (+25%); Climate Solutions adj. EBITDA $303M (21% margin), Data Center Cooling sales +119% to $644M; Performance Technologies adj. EBITDA margin improved 200bps to 13.5% .
- Say-on-Pay: 94%+ approval at 2024 Annual Meeting, indicating strong shareholder support .
- MIP/PS metrics explicitly tied to cash flow ROI, EBITDA margin/growth—management states strong alignment to TSR; TSR significantly outperformed S&P 600 Industrials over 4 years and latest year .
- CFO certifications (SOX 302/906) executed by Lucareli on FY2025 10‑K .
Compensation Peer Group & Governance
- Peer group includes HVAC/industrial names (e.g., AAON, A.O. Smith, Lennox, SPX, Hubbell, Regal Rexnord); CEO/CFO pay targeted to median of peers and a broad manufacturing survey .
- Independent compensation consultants: Farient (early FY2025) and Meridian (late FY2025); benchmarked pay levels and program design; no issuer-provided services .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; blackout windows enforced .
- Legacy 280G excise tax gross-up for Lucareli’s CIC agreement is shareholder-unfriendly by modern standards .
- No related-party transactions disclosed involving Lucareli; broad conflicts policy and annual questionnaires in place .
Performance Compensation – Detailed Design Signals
| Feature | FY2025 Change | Implication |
|---|---|---|
| MIP payout curve | Threshold raised to 25%; Max raised to 250% | Higher upside for exceptional results; stronger differentiation for performance . |
| LTIP PS metrics | CF ROI and Avg. Adj. EBITDA Growth retained; higher targets | Emphasis on capital efficiency and durable earnings growth . |
| Special retention RSUs | 100% of salary; contingent gross margin goal; 3-year cliff | Retains critical talent; introduces near-term vesting supply in FY2027 if performance met . |
Investment Implications
- Pay-for-performance alignment is strong: cash and equity tied to EBITDA margin/growth and CF ROI, with FY2025 metrics producing near-maximum MIP payouts and robust LTIP outcomes—indicative of management confidence in continued execution .
- Ownership and vesting pipeline suggests potential supply: unvested RSUs (23,387) and sizable unearned PS (109,287) plus retention grant (6,558) could create selling pressure upon vesting, though hedging/pledging is prohibited and officer ownership guidelines (3x salary) support alignment .
- Retention risk appears contained: competitive cash/equity mix, strong CIC protections (2x multiple with benefits), and significant in-flight performance equity reduce departure probability; legacy 280G gross-up is a governance drawback to monitor in any potential strategic transaction .
- With TSR outperformance versus the sector and record CF/EBITDA trends, the compensation framework is currently reinforcing value creation; watch FY2026 gross margin attainment for retention grant vesting and ongoing adherence to CF ROI/EBITDA targets to signal sustained execution .