Andy Nemeth
PATRICK INDUSTRIESAbout Andy Nemeth
Andy L. Nemeth, age 56, is Chairman of the Board (since May 2024) and Chief Executive Officer (since January 2020) of Patrick Industries, and has served as a director since 2006; prior roles include President (2016–2021) and EVP Finance/CFO (2004–2015) . Company performance during his leadership shows EBITDA of $247M (2020), $457M (2021), $627M (2022), $405M (2023), and $425M (2024) and net income of $97M, $225M, $328M, $143M, and $138M respectively . On pay-versus-performance, $100 invested at 12/31/2019 returned $262 for Patrick vs $114 for the peer group by 2024, reflecting outperformance through the period . Strategic actions in 2024 included acquisitions (Sportech, RecPro) and a debt refinancing to lower fixed-rate costs and extend maturities .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Patrick Industries | Chairman of the Board | May 2024–present | Combined Chair/CEO structure with lead independent director to enhance independent oversight . |
| Patrick Industries | Chief Executive Officer | Jan 2020–present | Led strategic diversification and acquisitions; EBITDA at $425M in 2024; TSR outperformed peer group since 2019 base . |
| Patrick Industries | President | Jan 2016–Jul 2021 | Executive leadership across operations/strategy . |
| Patrick Industries | EVP Finance & CFO | May 2004–Dec 2015 | Corporate management, acquisitions, capital allocation, banking/finance relations . |
| Patrick Industries | Secretary-Treasurer | 2002–2015 | Senior financial stewardship . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| — | None disclosed in proxy for Nemeth | — | — . |
Fixed Compensation
Multi-year compensation (as disclosed in Summary Compensation Table):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | $832,692 | $817,308 | $850,000 |
| Bonus ($) | — | — | — |
| Stock Awards ($) | $3,516,100 | $4,200,020 | $3,564,636 |
| Non-Equity Incentive Plan ($) | $3,374,820 | $1,632,600 | $1,884,600 |
| Change in Pension/Deferred ($) | $58,449 | $69,223 | $72,338 |
| All Other Compensation ($) | $28,400 | $29,400 | $28,800 |
| Total ($) | $7,810,461 | $6,748,551 | $6,400,374 |
Additional base salary context: base rate was $850,000 in 2023 and unchanged in 2024 .
Performance Compensation
Short-Term Incentive Plan (STIP) Design and FY 2024 Outcome
| Component | Weighting | Target | Actual | Payout Basis | FY 2024 Payout |
|---|---|---|---|---|---|
| Adjusted Net Income (net of 2024 acquisitions) | 70% | $153.4M | $150.2M (98% of target) | Payout scale: 50% at 75%; 100% at 100%; 200% at 115% | CEO $1,884,600 (105% of $1.8M target) |
| Individual Strategic Objectives | 30% | Rating 3.5 target | Not individually disclosed | Payout scale: 50% at rating 2.5; 100% at 3.5; 200% at 5.0 | Included in total payout above |
Long-Term Incentive Plan (LTIP) Structure and FY 2024 Grants
| Element | Metric | Design | Target Award | Time-Based Shares | Performance-Contingent Shares | Vesting |
|---|---|---|---|---|---|---|
| 2024 LTIP | 3-year cumulative EBITDA (2024–2026) | 80% performance variable; 20% time-based fixed | $3,400,000 | 10,737 | 42,948 (threshold 21,474; stretch 64,422; max 85,896) | Time-based: cliff at 3 years; Performance: pays 50%/100%/150%/200% at 80%/100%/110%/120% of plan |
Payout schedules: threshold 80% (50%), target 100% (100%), stretch 110% (150%), max 120% (200%) for performance shares; time-based shares vest 100% regardless of performance after 3 years .
Equity Ownership & Alignment
Beneficial Ownership and Guidelines
| Item | Value |
|---|---|
| Shares beneficially owned (Nemeth) | 355,641 (1.1% of shares outstanding) |
| Executive stock ownership guideline (CEO) | 4x base salary; required share value $3,400,000; all NEOs exceeded requirements as of 12/31/2024 |
Hedging policy: Employees and directors are permitted to engage in hedging transactions; no prohibition disclosed (potential alignment risk) . Pledging of shares: not disclosed in proxy.
Unvested Equity Detail (as of 12/31/2024)
| Grant Date | Unvested Time-Based Shares (#) | Market Value ($) | Unvested Performance Shares (#) | Market/Payout Value ($) |
|---|---|---|---|---|
| 1/26/2022 | 11,688 | $971,039 | 46,755 | $3,884,405 |
| 1/25/2023 | 13,236 | $1,099,647 | 79,412 (updated to expected 100% payout) | $6,597,549 |
| 1/24/2024 | 10,737 | $892,030 | 42,948 | $3,568,120 |
Market value based on $83.08 closing price on 12/31/2024 . Vesting events near-term: 1/26/2025 (2022 time-based), 1/25/2026 (2023 time-based), 1/24/2027 (2024 time-based); performance tranches expected to settle upon completion of respective three-year EBITDA measurement periods, which may create periodic supply and potential selling pressure when awards vest .
Recent Vesting/Exercises (FY 2024)
| Item | Shares | Value |
|---|---|---|
| Nemeth shares vested in 2024 | 108,000 | $6,851,120 |
| Options/SARs outstanding (Nemeth) | None outstanding at 12/31/2024 | — |
Employment Terms
Employment Agreement and Severance
| Provision | Terms |
|---|---|
| Severance (termination without cause) | 12 months base salary plus annual non-equity incentive compensation (pro-rated if terminated mid-year) |
| Non-compete | 2 years post-termination, subject to exceptions |
| Change-of-control equity | Single-trigger: all unvested time-based shares fully vest; performance shares fully vest at target EBITDA as of the effective date |
| Options/SARs on termination without cause | Unvested options/SARs fully vest and become exercisable |
| Clawback | Incentive Compensation Recovery Policy implemented in 2023 per SEC/NASDAQ |
| Executive Retirement Plan (Nemeth only) | 40% of highest annual base wages (last three years) paid over 10 years in 260 bi-weekly payments; aggregate balance $544,214 at 12/31/2024; earnings in FY 2024 $72,338 |
Estimated Benefits (Hypothetical termination at 12/31/2024)
| Scenario | Base Salary ($) | Accelerated LTIP ($) | Annual STIP ($) | Total ($) |
|---|---|---|---|---|
| Termination without cause | $850,000 | $17,012,790 | $1,884,600 | $19,747,390 |
| Change of control | $850,000 | $17,012,790 | $1,884,600 | $19,747,390 |
| Death or disability | — | $17,012,790 | $1,884,600 | $18,897,390 |
Board Governance & Director Service
- Board leadership: Nemeth appointed Chair in May 2024; Lead Independent Director role established (John A. Forbes) to provide counterbalance via independent oversight, executive sessions at each regular Board meeting, and prioritization of Board processes .
- Independence and committees: Nemeth is an employee director; does not serve on committees; seven of nine directors were independent in 2024; Board held nine meetings; directors attended at least 75% of Board/committee meetings .
- Director compensation: When Nemeth became Chair, he did not receive the Chairman retainer due to employee status (retainer only applies to non-employee chair); non-employee directors received $140,000 annual restricted stock grants (one-year vest) and retainers as disclosed .
- Say-on-Pay: 95% of shares voted approved NEO compensation at the May 16, 2024 meeting; Board recommends annual frequency for Say-on-Pay .
Performance Compensation Details (Metrics, Weighting, Targets, Payouts, Vesting)
| Incentive Type | Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|---|
| STIP (Cash) | Adjusted Net Income (Company) | 70% | $153.4M | $150.2M | 50% at 75%, 100% at 100%, 200% at 115% (Company component) | Annual cash; no vesting |
| STIP (Cash) | Individual Objectives | 30% | Rating 3.5 | Not disclosed | 50% at 2.5, 100% at 3.5, 200% at 5.0 | Annual cash; no vesting |
| LTIP (Equity) | 3-year cumulative EBITDA | 80% variable (performance shares) | Payout 50%/100%/150%/200% at 80%/100%/110%/120% of plan | In progress (2024–2026) | Nemeth target: 42,948 perf. shares (threshold 21,474; stretch 64,422; max 85,896) | Vests at end of performance period; dividends escrowed until vest |
| LTIP (Equity) | Service (time-based shares) | 20% fixed | Nemeth time-based 10,737 shares | N/A | 100% at 3-year cliff | Cliff vest at 3 years |
Peer group used for compensation benchmarking includes American Woodmark, Apogee, Brunswick, Cavco, EnPro, Hyster-Yale, LCI Industries, Modine, Mueller, Polaris, Thor, UFP Industries, Wabash, Winnebago; Willis Towers Watson advises the Compensation Committee; independence assessed with no conflicts .
Related Party Transactions (Governance Risk Review)
- 2024 purchases: ~$1.0M corrugated packaging from Welch Packaging (CEO/director M. Scott Welch) and ~$0.4M foam materials from Century Foam (owned by director Todd M. Cleveland); transactions were approved using Board/Audit Committee procedures; company has no formal policy but utilizes established review/approval processes .
Equity Ownership & Trading Signals
- Upcoming vesting over 2025–2027 and settlement of performance shares can create share supply; Nemeth had 108,000 shares vest in 2024; monitoring Form 4 filings around vest dates may indicate selling pressure and liquidity needs .
- Hedging permitted by policy could weaken alignment signals if used; no disclosure of any actual hedging or pledging by Nemeth .
Employment Terms (Additional)
| Item | Details |
|---|---|
| Insider trading windows | Mandatory blackout from 14 days before quarter-end until after first full trading day post-release |
| Benefits/perquisites | Car allowance, HSA contributions, health club reimbursement; participates in same health/welfare and 401(k) as general employees |
| CEO Pay Ratio | 136:1 (CEO $6,400,374 vs median employee $47,141 in 2024) |
Investment Implications
- Pay-for-performance alignment is robust: lower base, high variable mix; STIP keyed to adjusted net income and LTIP to multi-year EBITDA, with clear upside/downside; strong say-on-pay support (95%) reduces governance overhang .
- Governance watchpoints: single-trigger equity acceleration on change-of-control and permitted hedging introduce alignment and takeover-defense concerns; combined Chair/CEO mitigated by an active Lead Independent Director who leads executive sessions each regular meeting .
- Trading signals: significant unvested equity scheduled to vest (time-based tails in Jan 2025/2026/2027; performance tranches at end of measurement periods) plus historically large vestings (108,000 shares in 2024) warrant monitoring for discretionary sales around vest/blackout windows .
- Retention risk appears moderate: 12-month severance plus continued vesting of performance shares on certain terminations, ownership guideline exceeded, and exclusive participation in an executive retirement plan provide meaningful retention benefits, though no double-trigger severance multiples are disclosed .