Albert Chao
WESTLAKEAbout Albert Chao
Albert Y. Chao (age 75) is Executive Chairman of Westlake Corporation, serving as CEO from 2004 to 2024 and director since June 2003; he holds a bachelor’s degree from Brandeis University and an MBA from Columbia University . In 2024, Westlake’s TSR was 50.0%, EVA rate-of-return was 7.5%, SG&A was ~$878 million, and net income was $647 million, which drove incentive outcomes under Westlake’s plans . Westlake is a controlled company with TTWF LP owning 72.3% of common stock; the board separates Executive Chairman, Senior Chairman, and CEO roles, with Albert Chao non‑independent due to management status and family ties .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Mobil Oil Corporation | Controller’s Group | — | Financial/process experience prior to Westlake founding |
| Hercules Incorporated | Technical Department | — | Technical/operations foundation in chemicals |
| Gulf Oil Corporation | Plastics Group | — | Plastics market expertise |
| China General Plastics Group | Assistant to Chairman | — | Strategic insight and Asia market exposure |
| Plastics fabrication business in Singapore | Deputy Managing Director | — | International operations leadership |
| Westlake Corporation | Assisted founding (1985) | — | Co‑founding family leadership in global expansion |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Westlake Chemical Partners GP LLC | Executive Chairman since July 2024; Director since March 2014; President & CEO March 2014–July 2024 | 2014–present | Governance/oversight of MLP general partner; strategic alignment with Westlake |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 1,207,396 | 1,252,965 | 1,172,923 |
| Metric | 2024 | 2025 |
|---|---|---|
| AIP Target Bonus % of Salary | 105% (reduced from 135% upon transition) | 105% |
| Base Salary ($, set Feb 2025) | — | 1,060,000 |
| LTI Target (% of Salary) | 550% | 400% (reduced beginning 2025) |
Notes:
- Base salary decreased to $1,019,000 effective July 15, 2024 upon transition to Executive Chairman; subsequently increased to $1,060,000 in Feb 2025 .
Performance Compensation
| AIP Metric (2024) | Threshold/Target | Actual | Result/Payout |
|---|---|---|---|
| TSR vs 2024 Peer Group | Authorize if within top two‑thirds | 50.0% TSR; within top two‑thirds | Threshold met (AIP gating satisfied) |
| EVA Rate of Return | ≥ 33% of WACC | 7.5% (vs 8.75% capital charge benchmark) | Corporate EVA bonus multiple ≈ 0.86x |
| SG&A ($) | ≤ $953.6 million | ~$878 million | Threshold met |
| Final AIP Payout – Albert Chao | Target multiple × banking × individual performance | — | 167% of target bonus (paid typically in March) |
| 2024 LTI Grants (Feb 16, 2024 unless noted) | Grant Detail | Vesting | Grant Date Fair Value ($) |
|---|---|---|---|
| RSUs | 16,010 units | 100% on Feb 16, 2027 | 2,313,205 |
| Stock Options | 44,324 options @ $144.485 | Ratable: Feb 16, 2025/2026/2027 | 2,313,270 |
| PSUs (Target) | 16,058 target units; payout based on greater of Relative TSR or EVA multiple | Performance period 2024–2026; settle by Mar 15, 2027 | 2,944,877 |
| PSU Program Design | Threshold | Target | Maximum |
|---|---|---|---|
| Relative TSR Percentile | ≥ 33rd | ≥ 50th | ≥ 75th |
| EVA Bonus Multiple | ≥ 0.5x | ≥ 1.0x | ≥ 2.0x |
| Payout Rate | 25% of target | 100% of target | 200% of target |
| Historical PSU Outcome | Metric | Result | Payout |
|---|---|---|---|
| 2022 Grant (Jan 1, 2022–Dec 31, 2024) | Relative TSR rank | 71.4% | 185.6% of target (vested Feb 18, 2025) |
| QIP (Quarterly Incentive Plan, 2024) | Target Achievement | EVA Rate of Return | Payout to Albert Chao |
|---|---|---|---|
| General employees & NEOs (8% target of quarterly eligible earnings) | 82.7% | 7.5% (above 5.25% target) | $77,073 |
Equity Ownership & Alignment
| Beneficial Ownership (as of Mar 10, 2025) | Shares | % of Class | Pledged |
|---|---|---|---|
| Albert Y. Chao | 1,140,193 | <1% | None |
| Stock Ownership Policy | Requirement | Hedging/Pledging | Status |
|---|---|---|---|
| Executives/directors must retain 100% of vested shares (net of taxes) until holdings equal 6x salary for Albert Chao; anti‑hedging and prior notice for any pledging | 6x base salary for Albert Chao | Hedging/shorting/puts/calls prohibited; none currently pledge | None of directors or executives currently pledge |
| 2024 Outstanding Awards (Albert Chao) | Type | Units | Key Dates/Terms | FMV at 12/31/2024 ($) |
|---|---|---|---|---|
| RSUs (vested Feb 18, 2025) | RSU | 17,972 | Vested Feb 18, 2025 | 2,060,490 |
| RSUs (vest Feb 17, 2026) | RSU | 16,555 | Vest Feb 17, 2026 | 1,898,031 |
| RSUs (vest Feb 16, 2027) | RSU | 16,010 | Vest Feb 16, 2027 | 1,835,547 |
| PSUs – 2022 grant (earned 185.6%) | PSU (earned) | 33,456 | Earned/vested Feb 18, 2025 | 3,835,730 |
| PSUs – 2023 grant (in progress) | PSU (unearned) | 16,605 (assumed at target) | Performance period to 12/31/2025; vest Feb 2026 | 1,903,763 |
| PSUs – 2024 grant (in progress) | PSU (unearned) | 16,058 (assumed at target) | Performance period to 12/31/2026; vest Feb 2027 | 1,841,050 |
| 2024 Options | Stock Options | 44,324 | Exercise price $144.485; vest ratably 2025–2027; expire 2/16/2034 | — (unvested) |
| Cumulative Prior Options (various) | Stock Options | Multiple lines | Exercise prices $44.42–$122.65; expirations 2026–2033 | — |
| 2024 Realized Activity | Event | Units | Value |
|---|---|---|---|
| Shares acquired on vesting (RSUs/PSUs) | Vesting | 59,548 | $8,603,793 |
| Options exercised | Exercise | 45,298 | $3,556,936 |
Employment Terms
| Category | Key Terms |
|---|---|
| Employment Agreements | No employment agreements for NEOs; offer letters outline principal terms |
| Termination Benefits | Death: unvested options/RSUs/PSUs vest (PSUs at target); Normal Retirement: prorated vesting; Termination without Cause: limited prorated option vesting; AIP Final Award paid in specified cases |
| Change-in-Control (CIC) | If awards not assumed/replaced: vest/pay at CIC (performance awards at achieved levels); if assumed/replaced: double‑trigger prorated vesting within 24 months upon termination without Cause or for Good Reason; definitions of CIC, Cause, Good Reason specified |
| Potential Payments (as of 12/31/2024) | Death | Normal Retirement | CIC Non‑Assumption | Involuntary Termination Post‑CIC Assumption |
|---|---|---|---|---|
| Albert Chao – AIP Final Award ($) | 3,221,406 | 3,221,406 | 3,221,406 | 3,221,406 |
| Stock Option Acceleration ($) | 126,201 | 120,557 | 126,201 | 120,557 |
| RSU Acceleration ($) | 5,794,067 | 3,685,539 | 5,794,067 | 3,685,539 |
| PSU Acceleration ($) | 5,811,494 (target) | 5,386,523 (prorated) | 7,580,573 | 5,386,523 (prorated) |
| Total ($) | 14,953,168 | 12,414,025 | 16,722,247 | 12,414,025 |
| 280G/4999 Mitigation | Parachute cap to mitigate excise tax exposure |
Board Governance
- Roles and tenure: Executive Chairman since July 2024; CEO 2004–2024; director since June 2003; nominee for Class III with term to 2028 .
- Independence and controlled company: TTWF LP controls 72.3% of shares; Albert Chao is non‑independent; Westlake utilizes certain NYSE controlled company exemptions .
- Committees: Corporate Risk & Sustainability Committee includes all board members (Albert serves); Audit, Compensation, and Nominating committees are composed of independent directors .
- Executive sessions: Non‑management directors meet regularly; independent directors meet at least annually; presiding director rotates .
- Attendance: Board held 12 meetings in 2024; all directors attended ≥75% of meetings; almost all attended the 2024 annual meeting .
- Director compensation: Management directors (Albert, James, John) receive no additional compensation for board service; independent director retainers and RSUs disclosed (policy), but not applicable to Albert .
Compensation Peer Group
Peer group used for 2024 compensation decisions includes chemicals and building products companies such as Dow, DuPont, Celanese, Eastman, Huntsman, LyondellBasell, PPG, Sherwin‑Williams, Builders FirstSource, Masco, Owens Corning, RPM, and others; the Committee seeks Westlake’s median ranking in the group with Willis Towers Watson support .
Say‑on‑Pay & Shareholder Feedback
- 2023 say‑on‑pay received >96% approval; Committee did not change approach based on votes; frequency every three years supported by shareholders .
Related Party / Consultant Use
- The Compensation Committee engaged Willis Towers Watson (WTW) for 2024 executive compensation advice ($162k), plus ~$2.1 million for other services; Committee assessed no conflict of interest (Feb 2025) .
- Committee interlocks: Company buys/leases products from Air Liquide (Mr. Graff until July 2024); ~$45 million paid and ~$12 million sold to Air Liquide in 2024 .
Performance & Track Record
- Leadership transition: On July 15, 2024, Albert Chao transitioned to Executive Chairman and Jean‑Marc Gilson became CEO as part of a long‑planned succession; Albert remains actively engaged .
- Five‑year cumulative TSR: Westlake 75.43% vs S&P 500 Chemicals 46.15% over five years, reflecting value creation under long‑term leadership .
- Pay vs performance context: Compensation is strongly correlated with TSR, with EVA moderating payouts via banking to smooth cyclicality .
Risk Indicators & Red Flags
- Controlled company with concentrated family ownership may raise independence concerns; however, key committees are independent .
- Anti‑hedging/pledging policy in place; none currently pledge—reduces alignment risk .
- CIC provisions are double‑trigger for assumed awards, limiting windfalls absent termination; 280G mitigation reduces gross‑up risk exposure .
Fixed Compensation – Additional Detail
| Component | 2024 ($) | 2023 ($) | 2022 ($) |
|---|---|---|---|
| Stock Awards (RSUs/PSUs grant date fair value) | 5,258,082 | 4,819,447 | 4,610,575 |
| Option Awards (grant date fair value) | 2,313,270 | 2,030,507 | 1,943,071 |
| Non‑Equity Incentive (AIP + QIP) | 1,864,073 | 3,553,139 | 4,169,146 |
| All Other Compensation | 315,533 (incl. dividends) | 315,428 | 312,152 |
Performance Compensation – PSU/Vesting Cadence
| Grant Year | Instrument | Target Units | Vested/Earned | Vest/Settlement |
|---|---|---|---|---|
| 2022 | PSUs | — | 185.6% payout based on TSR rank 71.4% | Vested Feb 18, 2025; settled by Mar 15, 2025 |
| 2023 | PSUs | — | In progress (assumed at target in disclosure) | Vest Feb 2026 if performance met |
| 2024 | PSUs | 16,058 | In progress (greater of TSR vs EVA multiple) | Vest Feb 2027 if performance met |
Investment Implications
- Alignment: Large long‑tenured insider ownership (1.14 million shares), strict retention and anti‑hedging/pledging policy, and performance‑based pay (AIP gated by TSR/EVA/SG&A; PSUs tied to TSR/EVA) support shareholder alignment; upcoming RSU/PSU vestings (2026–2027) and regular option vesting are non‑cash initially but can create periodic selling pressure upon settlement/exercise depending on tax/liquidity needs .
- Pay mix transition: Post‑CEO transition, base and LTI targets were reduced (AIP target 105%, LTI 400% vs 550%), moderating compensation leverage while maintaining strategic influence as Executive Chairman—likely lowers incentive‑driven volatility in realized pay while retaining at‑risk components .
- Retention/CIC: No employment agreement and banking of AIP can smooth cycles; CIC protections are primarily double‑trigger for assumed awards, which lowers windfall risk but still provide meaningful prorated vesting—termination scenario values for Albert are sizable (e.g., $16.7M under CIC non‑assumption) .
- Governance risk: Controlled company status and family ties present independence considerations; however, independent committees and separated Chairman/CEO roles, plus regular executive sessions, mitigate some concerns; sustained TSR outperformance suggests disciplined capital allocation despite cyclicality .