Scott Welch
PATRICK INDUSTRIESAbout M. Scott Welch
M. Scott Welch (age 65) has served as President and CEO of Welch Packaging Group since 1985 and has been a director of Patrick Industries since 2015. He is designated an independent director and is an Audit Committee financial expert, bringing 43+ years of packaging industry experience in sales, marketing, acquisitions, organizational development, strategic planning, finance and capital allocation . Welch also serves as a director of Lakeland Financial Corporation (member of the compensation committee since 2012; Lead Independent Director 2012–2019) and is a trustee of DePauw University .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Welch Packaging Group | President & CEO | 1985–present | Grew large independent corrugated packaging company; M&A and capital allocation expertise |
| Northern Box; Performance Packaging; Elkhart Container | Early career roles | Pre-1985 | Operational and industry foundations |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Lakeland Financial Corporation | Director | 1998–present | Compensation Committee member since 2012; Lead Independent Director 2012–2019 |
| DePauw University | Trustee | 2005–present | Governance and institutional oversight |
Board Governance
- Committee assignments: Audit Committee member; Corporate Governance and Nominations Committee member .
- Audit Committee financial expert designation (along with Cerulli and Kitson) and meets NASDAQ/SEC independence standards .
- Independence: Board designated Welch as independent; seven of nine directors were independent in 2024 .
- Attendance and engagement: Board met nine times in 2024; each director attended at least 75% of Board and committee meetings; all directors attended the May 16, 2024 Annual Meeting .
- Board leadership: Lead Independent Director role (John A. Forbes) conducts executive sessions at each regular Board meeting; CEO is Board Chair since May 2024 .
- Committee activity: Audit Committee met eight times; Compensation Committee five; Corporate Governance and Nominations Committee four in 2024 .
Fixed Compensation
| Component | Amount | Notes |
|---|---|---|
| Annual cash retainer (Non-Chairman director) | $90,000 | Applies to all non-employee directors |
| Committee chair fees | Audit $20,000; Compensation $15,000; Corporate Governance & Nominations $15,000 (raised from $10,000 1H24) | Welch is not a chair |
| Lead Independent Director retainer | $25,000 | Not applicable to Welch |
| FY2024 director compensation (Welch) | Fees earned: $102,500; Other comp (dividends): $3,108; Total: $245,658 | See equity grant below |
| Meeting fees | None disclosed | Company reimburses travel and related expenses |
Retainer schedule (FY2024):
| Retainer Type | Jan–Jun 2024 | Jul–Dec 2024 |
|---|---|---|
| Chairman of the Board | $400,000 (paid to non-employee chair) | $— (CEO became Chair in May 2024) |
| Non-Chairman Members | $90,000 | $90,000 |
| Audit Chair | $20,000 | $20,000 |
| Compensation Chair | $15,000 | $15,000 |
| Corp Gov & Nominations Chair | $10,000 | $15,000 |
| Lead Independent Director | $25,000 | $25,000 |
Performance Compensation
| Equity Grant | Grant Date | Shares | Grant Date Fair Value | Vesting | Notes |
|---|---|---|---|---|---|
| Annual restricted stock (Welch) | May 16, 2024 | 1,868 | $140,050 | One-year vest on continued service; earlier on certain events | Dividends paid on unvested shares; time-based only (no PSUs/options) for directors |
- Directors received annual restricted stock grants of $140,000 that vest after one year or earlier upon certain events; dividends are paid on unvested director shares .
- Company does not have director stock ownership guidelines (red flag for alignment) .
Other Directorships & Interlocks
| External Board | Overlap/Interlock | Governance Note |
|---|---|---|
| Lakeland Financial Corporation | Welch is director; Blake W. Augsburger (new PATK nominee) also a director at Lakeland | Potential information flow/network overlap; monitor for any banking relationships between Lakeland and PATK (not disclosed in proxy) |
Expertise & Qualifications
- Audit Committee financial expert; financial sophistication recognized by NASDAQ listing standards .
- 43+ years in packaging industry; deep experience in sales, marketing, acquisitions, organizational development, strategic planning, finance and capital allocation .
- Governance roles at Lakeland (Comp Committee; prior Lead Independent Director) and DePauw trustee reinforce oversight credentials .
Equity Ownership
| Holder | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| M. Scott Welch | 169,008 | * (<1%) | Includes 136,000 held by spouse and 2,961 in entities controlled by adult children in which Welch has an equity interest |
- Directors and officers as a group: 1,466,526 shares (4.4%) .
- Section 16(a) compliance: Company is unaware of noncompliance or late filings for FY2024 (positive signal) .
- Hedging policy: Company permits hedging by employees and directors (red flag for alignment) .
- Director ownership guidelines: None (red flag) .
Related Party Transactions (Conflict Risk)
- Purchases from Welch Packaging Group (affiliated with director Welch): ~$1.0 million of corrugated packaging materials in 2024 .
- Procedure: No formal related-party policy; transactions presented to Audit Committee for approval; the Board approved both Welch Packaging and Cleveland’s Century Foam transactions (red flag: policy gap) .
Compensation Committee Analysis Signals (Context)
- Compensation Committee uses Willis Towers Watson; independence assessed with no conflicts found .
- No compensation committee interlocks; no members were Company officers in 2024 .
- Say-on-pay support: ~95% approval at May 16, 2024 meeting for FY2023 NEO pay (investor support signal) .
Governance Assessment
-
Positives:
- Independent director with Audit Committee financial expert designation and service on key oversight committees (Audit; Corporate Governance & Nominations) .
- Strong attendance culture (Board nine meetings; minimum 75% attendance; full Annual Meeting attendance) and regular executive sessions led by the Lead Independent Director .
- Section 16 compliance; robust committee activity cadence (Audit 8x; CG&N 4x) .
-
Red flags and monitoring items:
- Related-party transaction: ~$1.0M purchases from Welch Packaging Group while Welch sits on PATK’s Audit and Governance committees; Board approval via procedure but absence of formal policy elevates conflict risk .
- No director stock ownership guidelines; dividends paid on unvested director shares; equity grants are time-based only (weaker alignment and performance linkage for directors) .
- Hedging permitted for directors and employees (potential misalignment with long-term shareholder value) .
- Interlock: Welch and PATK nominee Augsburger both serve at Lakeland Financial; monitor for any banking or services exposure (none disclosed) .
-
Overall implication:
- Welch brings valuable operating and financial oversight expertise and is active on core governance committees, supporting Board effectiveness .
- However, the ongoing related-party spend with his privately-owned company, absence of formal RPT policy, lack of director ownership guidelines, and permissive hedging policy create notable governance optics risks that investors should monitor and engage on .