Fred J. (Jule) Smith, III
About Fred J. (Jule) Smith, III
Fred J. (Jule) Smith, III, 55, is President and Chief Executive Officer of Construction Partners, Inc. (NASDAQ: ROAD) since April 2021 and has served on the Board since November 2021; he holds an MBA and BA from Wake Forest University . Under his tenure, incentive designs emphasize Adjusted EBITDA and multi‑year revenue growth/EBITDA margin PSUs with a TSR modifier; in FY2024 ROAD delivered ~$220.6M Adjusted EBITDA vs a ~$209.1M target (100% payout on that metric), and the FY2022–FY2024 PSU cycle paid below target on ROCE but achieved 26.1% revenue CAGR vs 18% target with a 92nd percentile TSR vs Russell 2000 (upward 15% modifier) . Smith’s 2025 base salary rose 19% to $875,000 (from $735,000 in 2024), and he received FY2024 annual incentive of $735,000 plus significant discretionary and transaction-related awards tied to acquisitions, reflecting acquisitive growth against “ROAD Map 2027” priorities .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Construction Partners, Inc. | Chief Operating Officer | Oct 2020 – Mar 2021 | Transitioned into CEO role; operational leadership ahead of acquisitive expansion . |
| Construction Partners, Inc. | Senior Vice President | 2017 – 2020 | Corporate leadership prior to COO/CEO . |
| FSC II, LLC (ROAD’s NC subsidiary) | President | 2009 – 2020 | Led platform operations in North Carolina . |
| Fred Smith Construction, Inc. | Chief Operating Officer | 2005 – 2009 | Operational leadership in heavy civil contracting . |
| U.S. Navy | Supply Corps (various roles) | Prior to private sector | Logistics/finance discipline . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| U.S. Navy | Supply Corps officer | n/a | Early career service (prior to industry roles) . |
Fixed Compensation
| Metric | 2023 | 2024 | 2025 | Notes |
|---|---|---|---|---|
| Base Salary ($) | 605,769 | 707,308 | 875,000 (annual rate) | 2025 rate +19% y/y; salaries implemented at calendar-year start . |
| Target Annual Cash Incentive (% of salary) | 100% | 100% | 100% (program design; 2025 rate not separately stated) | CEO target unchanged in design . |
Performance Compensation
Annual incentive structure and FY2024 outcome
| Component | Weight | Target/Design | FY2024 actual | Payout |
|---|---|---|---|---|
| Adjusted EBITDA (consolidated) | 50% | 0–120% payout curve vs internal target | Target ~$209.1M; Actual ~$220.6M | 100% of target |
| Individual/Additional Co. goals (CEO) | 50% | Revenue, EBITDA, overhead reduction, working capital | Committee assessment | 100% of target |
| Total Annual Incentive Paid ($) | — | Target = 100% salary | $735,000 | 100% aggregate |
Long-term incentives and FY2024/FY2022 cycles
| Grant/Plan | Metric/Terms | Smith Award | Vesting/Outcome |
|---|---|---|---|
| LTIP-A (time-based restricted stock) FY2024 | Time-based; 4 equal annual installments (9/30/2024–2027) | 7,352 shs | 25% each 9/30/2024, 2025, 2026, 2027 . |
| LTIP-B (PSUs) FY2024–FY2026 cycle | 50% Revenue CAGR vs target; 50% Avg Adj. EBITDA margin vs target; 75%–150% payout per metric; TSR vs Russell 2000 +/-15% (up only if positive TSR) | 14,700 target PSUs | Earn-out at end of FY2026 per plan . |
| LTIP-B FY2022–FY2024 cycle (payout) | Targets: Revenue CAGR 18.0%, ROCE 13.0% | Target 14,375; Earned 12,398 | Actuals: Revenue CAGR 26.1% (150%); ROCE 11.0% (0%); TSR 92nd percentile → +15% modifier . |
| Stock bonus (fully vested) | Recognized for FY2024 performance | 3,594 shs ($344,665 at $95.90) | Granted 12/17/2024 . |
| Transaction Bonus Awards (equity) | Lone Star acquisition; vest later of close and stock at ≥$88 by 4th anniversary; vested 11/6/2024 | 10,000 Class A; 11,000 Class B | Vested in full 11/6/2024 . |
| Discretionary and transaction cash bonuses | FY2024 discretionary; post‑year‑end discretionary; Lone Star transaction cash | $550,000 during FY2024; $65,000 after y/e; $500,000 transaction cash | Committee recognition of acquisitive growth . |
Summary Compensation (CEO)
| Year | Salary ($) | Bonus ($) | Stock Awards ($) | Non‑Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2024 | 707,308 | 959,665 | 964,775 | 735,000 | 74,438 | 3,441,186 |
| 2023 | 605,769 | 370,281 | 793,024 | 615,000 | 62,318 | 2,446,392 |
| 2022 | 571,396 | 250,000 | 1,179,480 | 287,500 | 74,251 | 2,362,627 |
Perquisites (select FY2024)
- Health insurance $18,673; 401(k) match $28,134; vehicle allowance $25,974 (in “Other”) .
Equity Ownership & Alignment
| Category | Detail |
|---|---|
| Total beneficial ownership (as of 1/20/2025) | 104,778 Class A; 515,866 Class B; 3.9% total voting power; 5.9% of Class B . |
| Included interests | 134,582 Class B held by Tar Frog (Smith co‑manager) included in totals; 61,674 restricted Class A included . |
| Pledging | 381,284 Class B shares pledged as collateral for personal financings; pre‑approved under company policy . |
| Vested vs unvested (9/30/2024) | Unvested restricted: 61,674 shs; unearned PSUs (threshold): 22,954 shs . |
| Upcoming vesting (restricted) | 55,876 on 9/30/2025; 3,960 on 9/30/2026; 1,838 on 9/30/2027 . |
| Option holdings | No stock options outstanding . |
| Hedging/derivatives policy | Directors/officers prohibited from puts, calls, derivatives, short sales; limited exceptions; as of 9/30/2023 no such instruments held . |
Ownership vesting schedule (restricted stock)
| Date | Shares |
|---|---|
| 9/30/2025 | 55,876 |
| 9/30/2026 | 3,960 |
| 9/30/2027 | 1,838 |
Employment Terms
| Term | Provision |
|---|---|
| Agreement term | CEO agreement effective April 1, 2020; expires April 1, 2025 and will not auto‑renew (changed from prior auto‑renew) . |
| Severance (no cause/good reason) | 1.5x average of last two years’ base+cash bonus, paid over 18 months; 18 months health premiums; up to $10,000 outplacement; equity per plan . |
| Potential payout example (as of 9/30/2024) | Cash severance $2,024,960; insurance $8,051; outplacement $10,000; accelerated equity at target $6,441,074; total $8,484,085 (assumes committee acceleration) . |
| Restrictive covenants | Non‑compete and related covenants during employment and (if elected by company) for 18 months post‑termination . |
| Right of first refusal | Company/assignee has right of first refusal on transfers of Class B during term and 18 months post‑termination . |
| Clawback | Dodd‑Frank compliant recoupment policy for incentive comp upon restatement; applies to current/former executive officers . |
Board Governance (service, committees, independence)
- Board service: Director since November 2021; CEO and director, not compensated separately for Board service .
- Committee roles: Smith is not listed as a member of the Audit, Compensation, or Nominating & Corporate Governance Committees (committee membership shows other directors) .
- Leadership structure: Executive Chairman (Ned N. Fleming, III) separate from CEO; Board met six times in FY2024; all directors ≥75% attendance .
- Controlled company: SunTx Group controls majority voting; ROAD avails Nasdaq “controlled company” exemptions—Compensation and Nominating committees need not be fully independent; Audit Committee remains fully independent .
- Independent directors: McKay, Shaffer, Skelly independent; Audit Committee of all independents (Skelly Chair; McKay, Shaffer; McKay, Skelly = financial experts) .
- Executive sessions: Non‑management directors meet regularly in executive session .
Director Compensation (Smith as director)
- The CEO receives no additional compensation for Board service; non‑employee directors previously received multi‑year restricted stock retainers (not applicable to Smith) .
Compensation & Incentive Plan Architecture (pay-for-performance levers)
- Annual incentive: 50% on consolidated Adjusted EBITDA vs target; 50% on individual/enterprise goals (for CEO: revenue, EBITDA, overhead, working capital) .
- LTIP-B PSUs: 3‑year cycle; 50% revenue CAGR vs target and 50% average Adjusted EBITDA margin vs target, each with 75%–150% payout; TSR vs Russell 2000 +/-15% modifier (up only if positive TSR) .
- LTIP-A: Time-based restricted stock/RSUs, 4‑year ratable vesting to promote retention .
- Consultant: Compensation Committee engages independent adviser (Dana Krieg) on design and governance; no conflicts identified .
- No peer group benchmarking; committee relies on market knowledge and internal relationships .
Say‑on‑Pay & Shareholder Feedback
- Prior support: 97.2% approval at 2022 Annual Meeting (triennial frequency) .
- Upcoming cadence: Advisory vote scheduled again at the 2025 Annual Meeting; next triennial vote anticipated in 2028 .
Risk Indicators & Red Flags
- Pledging: Smith has pledged 381,284 Class B shares (pre‑approved); pledging can create forced‑sale risk during market stress .
- Committee independence: As a controlled company, Compensation and Nominating committees are not composed entirely of independent directors (only one independent on Compensation Committee) .
- Discretionary and transaction bonuses: Significant discretionary and transaction-related cash/equity awards atop formulaic incentives (e.g., $550k discretionary, $500k transaction cash, plus transaction equity) warrant monitoring for pay‑for‑performance rigor in acquisitive periods .
- Employment agreement expiry: Agreements expire April 1, 2025 without auto‑renewal; introduces retention and negotiation risk .
Expertise & Qualifications
- Education: MBA and BA, Wake Forest University .
- Domain: Long‑tenured operator in heavy civil/infrastructure; led ROAD and subsidiary operations; Navy Supply Corps background .
- Board skills matrix: Leadership, finance/accounting, heavy industry, risk management recognized by Board .
Performance & Track Record (selected indicators from incentive disclosures)
| Period | Indicator | Target | Actual | Result |
|---|---|---|---|---|
| FY2024 | Adjusted EBITDA (annual bonus metric) | ~$209.1M | ~$220.6M | 100% payout on metric |
| FY2022–FY2024 PSUs | Revenue CAGR | 18.0% | 26.1% | 150% on revenue metric |
| FY2022–FY2024 PSUs | ROCE | 13.0% | 11.0% | 0% on ROCE metric |
| FY2022–FY2024 PSUs | TSR vs Russell 2000 | Median baseline | 92nd percentile | +15% modifier |
Compensation Committee Analysis
- Members: Fleming (Chair), Matteson, Shaffer; only Shaffer independent under Nasdaq .
- Roles: Sets executive salaries, incentives, equity plans; approves employment agreements, severance/CoC provisions; oversees risk related to comp; can retain advisers .
- Consultant: Independent adviser engaged; no conflicts found .
Equity Ownership Detail (CEO)
| Class | Shares | % of Class | Voting power % |
|---|---|---|---|
| Class A | 104,778 | <1% | — |
| Class B | 515,866 | 5.9% | — |
| Total voting power | — | — | 3.9% |
Restricted and PSU positions (as of 9/30/2024)
| Instrument | Unvested/Unearned | Market/Payout Value Basis |
|---|---|---|
| Restricted stock/RSUs | 61,674 shs | $69.80/share (9/30/2024 close) |
| Unearned PSUs (threshold) | 22,954 shs | Plan‑based; TSR modifier may apply |
Employment Contracts, Severance & CoC Economics
- Severance multiple: 1.5x average of prior two fiscal years’ base+bonus; paid over 18 months; includes 18 months health premiums and $10k outplacement; equity vesting per plan and Compensation Committee discretion (may accelerate on CoC) .
- Example payout (as of 9/30/2024): $8.48M total with equity at target, illustrating equity’s weight in exit economics .
External Directorships & Interlocks
- Other public company boards: None disclosed for Smith .
- Related party transactions: None disclosed specific to Smith beyond ownership footnotes (Tar Frog co‑manager; not a transaction) .
Investment Implications
- Alignment: High equity mix (PSUs + restricted) and stringent 3‑year PSU metrics (Revenue CAGR and EBITDA margin with TSR modifier) align pay with growth and profitability; FY2024 payouts reflect meeting internal EBITDA targets and strong multi‑year revenue growth .
- Retention risk: Employment agreement expiration on April 1, 2025 without auto‑renewal elevates negotiation/retention risk; significant unvested equity and ongoing PSU cycles are offsetting retention levers .
- Governance risk: Controlled‑company structure with limited committee independence and sizable pledging (381k Class B) are governance red flags that could influence perceived risk and potential share overhang in stress scenarios .
- M&A incentives: Material discretionary/transaction bonuses and equity tied to acquisitions (e.g., Lone Star) signal management focus on consolidation; investors should monitor ROI/ROIC and integration outcomes to validate pay-for-performance .
- Shareholder stance: Prior strong say‑on‑pay support (97.2% in 2022) and a 2025 advisory vote provide near‑term gauge of investor sentiment amid rising CEO pay and acquisition-linked awards .