Robert Aarnes
RESIDEO TECHNOLOGIESAbout Robert Aarnes
Robert Aarnes, 55, serves as President, ADI Global Distribution and has been a Resideo executive officer since 2018. He holds a B.A. in political science from the United States Naval Academy and an MBA in management from San Diego State University, and since 2024 he has served on the Board of Directors of MSC Industrial Supply (NYSE: MSM) . Company performance relevant to his incentive alignment: 2024 net revenue was $6.8B (+8% YoY), gross margin was 28.1% (up 90 bps), and cash from operations reached $444M with free cash flow conversion well over 200% of net income . Over the 2019–2024 window, a fixed $100 investment in Resideo grew to $193 versus $138 for the S&P 600, underscoring TSR-linked PSU relevance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Honeywell ADI Global Distribution | President | Jan 2017–Oct 2018 (pre-Resideo spin) | Led global wholesale distribution; progressed from ADI North America VP/GM and VP of Operations to President . |
| Honeywell ADI North America | VP & GM | Nov 2014–Jan 2017 | Operational and commercial leadership for North America . |
| Honeywell ADI North America | VP of Operations | Jan 2013–Nov 2014 | Operational efficiency and execution . |
| GUNNAR Optiks, LLC | President & CEO | Sep 2008–Nov 2012 | Led digital eyewear developer and manufacturer . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| MSC Industrial Supply (NYSE: MSM) | Director | Since 2024 | Public company board service . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 589,784 | 616,884 | 638,638 |
Performance Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Non-Equity Incentive Plan Compensation ($) | 579,057 | 624,900 | 711,289 |
| Stock Awards ($) | 2,753,100 | 2,829,023 | 7,914,367 |
| Changes in Pension Value ($) | 91,869 | 82,242 | 83,990 |
| All Other Compensation ($) | 22,706 | 26,222 | 32,071 |
| Total Compensation ($) | 4,036,516 | 4,179,271 | 9,380,356 |
| Annual Bonus Design (company-wide for NEOs) | 2023 | 2024 |
|---|---|---|
| Metrics & Weighting | Net Revenue (20%), Operating Income Margin (50%), Cash Flow from Operations (30%) | Net Revenue (Constant Currency) (50%), Operating Income Margin (50%); CFO metric removed to focus on growth/margin |
| Bonus Target % (Aarnes) | 100% of base salary | 100% of base salary |
| Financial Performance Payout % (Aarnes) | 100% weighted result (50% ADI, 50% Total Company) | 110.5% |
| Actual Bonus ($) (Aarnes) | $624,900 | $711,289 |
| 2023 Annual Incentive – Total Company Performance | Threshold | Target Range | Maximum | Actual | Payout % | Weighted Payout % |
|---|---|---|---|---|---|---|
| Net Revenue ($M) (20%) | 5,586 | 6,374–6,769 | 7,557 | 6,270 | 93% | 19% |
| Operating Income Margin (50%) | 8.66% | 10.5%–11.14% | 12.98% | 9.5% | 74% | 37% |
| Cash Flow from Ops ($M) (30%) | 170 | 215–237 | 283 | 464 | 200% (capped) | 60% |
| Total Company Weighted Result | — | — | — | — | — | 116% |
| 2023 Annual Incentive – ADI Segment Performance | Threshold | Target Range | Maximum | Actual | Payout % | Weighted Payout % |
|---|---|---|---|---|---|---|
| Net Revenue ($M) (20%) | 3,194 | 3,645–3,871 | 4,322 | 3,562 | 91% | 18% |
| Operating Income Margin (50%) | 7.26% | 8.81%–9.35% | 10.90% | 7.9% | 72% | 36% |
| Cash Flow from Ops ($M) (30%) | 221 | 279–309 | 368 | 279 | 100% | 30% |
| ADI Weighted Result | — | — | — | — | — | 84% |
| Aarnes Weighted Total (50% ADI / 50% Company) | — | — | — | — | — | 100% |
| 2024 LTI Grants to Aarnes | Grant Date | Shares (#) | Grant-Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| Annual RSUs | 02/05/2024 | 64,667 | $1,080,101 | 1/3 annually over 3 years |
| PSUs (Target) | 02/05/2024 | 64,667 | $1,473,761 | rTSR vs S&P 600, 3-year period (2024–2026); 25th/55th/75th percentiles → 50%/100%/200% payout; cap above target if absolute TSR negative |
| Special RSUs (Retention) | 02/15/2024 | 248,632 | $5,350,506 | 50% vesting at 3rd and 4th anniversaries; no retirement vesting |
| 2023 LTI Targets (Policy) | PSU Target Value ($) | RSU Target Value ($) |
|---|---|---|
| Aarnes | 1,100,000 | 1,100,000 |
Equity Ownership & Alignment
| Beneficial Ownership (as of 04/08/2025) | Shares Owned | Rights to Acquire (Options/RSUs within 60 days) | Total | % of Class |
|---|---|---|---|---|
| Robert Aarnes | 92,015 | 154,989 | 247,004 | * (less than 1%) |
| Outstanding Equity at FY 2024 (12/31/2024) | Grant Date | Type | Not Vested (#) | Market Value ($) |
|---|---|---|---|---|
| 12/14/2020 | RSU | 50,000 | 50,000 | 1,152,500 |
| 02/09/2022 | RSU | 15,052 | 15,052 | 346,949 |
| 02/14/2023 | RSU | 38,535 | 38,535 | 888,232 |
| 02/14/2023 | PSU (target tracking) | 57,803 | 57,803 | 1,332,359 |
| 02/05/2024 | RSU | 64,667 | 64,667 | 1,490,574 |
| 02/05/2024 | PSU (target tracking) | 64,667 | 64,667 | 1,490,574 |
| 02/15/2024 | Special RSU | 248,632 | 248,632 | 5,730,968 |
| Stock Options (Exercisable) | 02/20/2020 | Option | 154,989 (exercisable) | Strike $10.27; Exp. 02/19/2027 |
| 2024 Option Exercises & Stock Vested | Options Exercised (#) | Value Realized ($) | Shares Vested (#) | Value Realized ($) |
|---|---|---|---|---|
| Aarnes | 98,829 | 598,550 | 73,866 | 1,509,765 |
- Executive stock ownership guidelines require 3x base salary for executive officers; five-year compliance period; hedging, margin accounts, and pledging are prohibited . As of 12/31/2023, all executive officers met the minimum stock ownership requirement except Tom Surran, indicating Aarnes is in compliance .
Employment Terms
| Scenario (as of 12/31/2024 valuation) | Cash Severance ($) | Annual Incentive ($) | Outstanding Equity ($) | Benefits ($) | Total ($) |
|---|---|---|---|---|---|
| Termination by Company Without Cause (non-CIC) | 965,550 | — | — | 26,222 | 991,772 |
| Death | — | — | 13,472,979 | — | 13,472,979 |
| Disability | — | — | 13,472,979 | — | 13,472,979 |
| Change-in-Control (no termination) | — | — | — | — | — |
| Change-in-Control with Termination (double-trigger) | 1,287,400 | 1,287,400 | 13,472,979 | 34,963 | 16,082,741 |
- Severance Plan terms: non-CIC involuntary termination provides 18 months base salary; CIC termination provides 24 months base salary plus 2x target annual incentive; severance exceeding 2.99x base+bonus requires advisory shareholder ratification per policy adopted after 2023 shareholder feedback .
- Double-trigger required for CIC severance; clawback policy aligned with NYSE standards mandates recovery of excess incentive compensation upon accounting restatement, covering current/former Section 16 officers .
- Non-compete and IP agreements required where permitted by law; hedging and pledging prohibited .
| Pension Benefits (FY 2024) | Plan | Early Retirement Eligible | Credited Service (Years) | Present Value ($) |
|---|---|---|---|---|
| Robert Aarnes | RPP (Qualified) | Yes | 12.0 | 112,019 |
| SPP (Non-Qualified) | — | 12.0 | 333,554 | |
| Total | — | — | 445,573 |
Compensation Structure Notes
- PSU design links to relative TSR vs S&P 600 with threshold/target/maximum at 25th/55th/75th percentiles and linear interpolation; for 2025 PSU awards, rTSR awards include a cap above target if absolute TSR is negative, and half of PSU awards tie to average ROIC, reflecting shareholder feedback .
- 2021 PSUs paid 0% (ranked 16th percentile in S&P 400 Industrials), evidencing performance gating .
- Peer group updates for 2024 decisions added CommScope, Generac, Jeld-Wen and removed BlackBerry, Netgear to better align with size/profile; FW Cook serves as independent compensation consultant .
Governance & Shareholder Feedback
| Item | 2023 | 2024 |
|---|---|---|
| Say-on-Pay Support (%) | ~94% | ~80.5% |
| Governance Engagement Scope | Reached out to top holders (~70% of shares) | Reached out to 40 holders (~81% of shares); met with ~30% |
| Key Responses | Adopted executive cash severance cap policy (≤2.99x base+bonus unless shareholder ratified) | PSU mix adjusted; added ROIC metric; rTSR cap with negative absolute TSR |
- Insider reporting: a Form 4 covering forfeitures for tax withholding upon RSU vesting was filed for executives in Feb 2024, including Aarnes (administrative timing noted in 2023 delinquent report disclosure) .
Investment Implications
- Pay-for-performance alignment: Aarnes’ annual bonus and PSU structures are tightly tied to revenue growth, operating margin, and rTSR; 2023 weighted payout (50% ADI/50% Company) came in at 100%, while 2024 payout rose to 110.5%, reflecting integration and growth execution, particularly post-Snap One .
- Retention profile: A distinct $5M special RSU grant in February 2024 with back-loaded vesting (years 3 and 4) and no retirement vesting indicates the Compensation Committee’s strong retention intent; combined with ongoing annual RSUs/PSUs, near- to medium-term voluntary departure risk is mitigated .
- Insider supply dynamics: 2024 saw 98,829 options exercised ($598,550 realized) and 73,866 shares vest ($1.51M value), suggesting periodic selling pressure around tax withholding and liquidity events, though hedging/pledging prohibitions and ownership guideline compliance support alignment .
- Change-in-control economics: Double-trigger severance with 24 months base and 2x bonus plus equity acceleration represents meaningful protection; the 2.99x cap policy reduces shareholder risk of outsized cash payouts, balancing retention and governance .
- Overall: Incentive design (PSUs tied to rTSR and ROIC, AIP tied to growth/margins), strong ownership alignment, and explicit retention awards point to management confidence in strategy execution; monitor vesting/option exercise calendars for flow and track PSU performance vs S&P 600 to gauge prospective equity realization .