James Chao
WESTLAKEAbout James Chao
James Y. Chao (age 77) is Senior Chairman of the Board since July 2024, a director since June 2003, and previously served as Chairman (2004–2024) and Vice Chairman (1996–2004). He holds a B.S. from MIT and an MBA from Columbia University, and has deep operational and financial experience in the global chemicals and plastics industries . Under his long tenure, Westlake’s cumulative TSR over the past five years was 75.43%, outperforming the S&P 500 Chemicals peer at 46.15% ; for 2024, TSR was 50.0% and AIP thresholds on TSR, EVA rate of return (7.5% vs WACC threshold) and SG&A ($878m) were met . EVA is central to pay design (AIP banking approach and PSU greater-of EVA vs Relative TSR), with compensation actually paid more correlated to TSR due to long-term equity emphasis .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Westlake Corporation | Chairman of the Board; Vice Chairman | Chairman: 2004–Jul 2024; Vice Chairman: 1996–2004 | Leadership continuity; family control perspective; strategic oversight of chemicals & building products platforms |
| Titan Chemicals Corp. Bhd. | Executive Chairman; Managing Director | Executive Chairman until Nov 2010; prior Managing Director | Regional leadership and growth in Asian petrochemicals; operational and governance experience |
| China General Plastics Group | Special Assistant to the Chairman | — | Strategic advisory exposure within Asian plastics industry |
| Mattel Incorporated; Developmental Bank of Singapore; Singapore Gulf Plastics Pte. Ltd.; Gulf Oil Corporation | Various financial, managerial and technical positions | — | Cross-functional finance and operations background across industrial and consumer sectors |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Westlake Chemical Partners GP LLC | Senior Chairman of the Board; Director | Senior Chairman since Jul 2024; Director since formation Mar 2014; Chairman Jul 2014–Jul 2024 | Governance of MLP GP; family control continuity across corporate structure |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 900,154 | 981,385 | 1,012,077 |
| AIP Target Bonus % of Base | 105% (policy) | 105% (policy) | 105% (policy) |
| QIP Target % of Base | 8% (policy) | 8% (policy) | 8% (policy) |
| 2025 Base Salary (effective Feb 2025) | — | — | Decreased to $530,000 due to transition to Senior Chairman |
| 2024 Cash Incentives | Amount ($) |
|---|---|
| AIP Actual (2024) | 1,787,000 |
| QIP Actual (2024) | 66,922 |
Performance Compensation
| Award Type | Grant Date | Units/Notional | Grant-Date Fair Value ($) | Vesting | Performance Metrics |
|---|---|---|---|---|---|
| RSU | 2/16/2024 | 9,118 units | 1,317,414 | Vests 2/16/2027; dividend equivalents | Time-based |
| Stock Options | 2/16/2024 | 25,242 options | 1,317,380 | 3 equal tranches on 2/16/2025, 2/16/2026, 2/16/2027; exercise price $144.485 | Time-based vesting |
| PSU (2024–2026 cycle) | 2/16/2024 | Threshold 2,286; Target 9,145; Max 18,290 units | 1,677,102 | 3-year performance, settles post-Committee determination | Greater-of Relative TSR (33rd/50th/75th percentile for 25%/100%/200%) or EVA bonus multiple (≥0.5x/1x/2x for 25%/100%/200%) |
| AIP Threshold Metrics (2024) | Target | Actual | Result |
|---|---|---|---|
| TSR vs Peer Group | Top two-thirds | 50.0% | Met |
| EVA Rate of Return | ≥33% of WACC | 7.5% | Met (threshold authorization) |
| SG&A | ≤$953.6m | ~$878m | Met |
| EVA Bonus Multiple (Corporate) | Scale-based | 0.86x | Drives AIP payout after threshold |
| Prior PSU Cycle Outcome | Performance Period | Payout | Basis |
|---|---|---|---|
| PSU granted Feb 2022 | 1/1/2022–12/31/2024 | 185.6% of target | Relative TSR rank 71.4% (above target) |
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial Ownership (as of Mar 10, 2025) | 113,139 shares; <1% of class; none pledged |
| Ownership Policy | Retain 100% of vested RS/RSU/PSU (net of taxes) until value equals 6x base salary for James Y. Chao; anti-hedging; notice required prior to pledging; no current pledging |
| 2024 Stock Vested | 32,388 shares; $4,679,580 value |
| 2024 Outstanding Equity (12/31/2024) | Exercisable Options (#) | Unexercisable Options (#) | Exercise Price ($) | Unvested RSUs (#) | FMV of RSUs ($) | Unvested PSUs (#) | FMV of PSUs ($) |
|---|---|---|---|---|---|---|---|
| Grant 2/18/2032 | 9,177 | 9,456 | 108.118 | 8,796 | 1,008,461 | 16,375 (earned & vested Feb 2025) | 1,877,394 |
| Grant 2/17/2033 | 9,353 | 18,991 | 122.650 | 10,382 | 1,190,296 | 10,414 (2023 PSUs est. at target) | 1,193,965 |
| Grant 2/16/2034 | — | 25,242 | 144.485 | 9,118 | 1,045,379 | 9,145 (2024 PSUs est. at target) | 1,048,474 |
| Price Context (12/31/2024) | — | — | $114.65 close | — | — | — | — |
Employment Terms
- Clawback: Dodd-Frank-compliant policy adopted Nov 2023; requires recovery of incentive compensation for restatements over prior 3 fiscal years .
- Retirement Eligibility: All NEOs other than Ederington and Gilson are retirement-eligible; Normal Retirement triggers prorated vesting and continued eligibility for prorated PSUs based on actual achievement .
- AIP/QIP Design: AIP target bonus % for James Chao is 105% of base; QIP target 8% of base; Committee uses EVA banking and individual performance modifiers (80%–120%) .
- Change-in-Control Provisions:
- If awards not assumed/replaced: immediate vesting; performance awards vest at actual level as of CIC (single-trigger via non-assumption) .
- If awards assumed/replaced: no acceleration unless terminated without Cause or for Good Reason within 24 months (double-trigger); pro rata vesting based on days employed .
- Definitions of Change in Control, Cause, and Good Reason provided; CIC includes 50%+ acquisition or asset sale, board turnover, liquidation, merger, etc. .
| Scenario (as of 12/31/2024) | Total Value ($) |
|---|---|
| Death | 9,781,310 |
| Disability | 3,221,406 |
| Normal Retirement | 8,132,772 |
| Termination without Cause | 3,221,406 |
| CIC – Non-Assumption Event | 10,647,203 |
| Involuntary Termination Post-CIC Assumption Event | 8,132,772 |
Board Governance
- Service History: Director since June 2003; Senior Chairman since July 2024; previously Chairman (2004–2024) and Vice Chairman (1996–2004) .
- Committee Roles: Member of Corporate Risk and Sustainability Committee (committee includes all directors) .
- Controlled Company: TTWF LP and TTWFGP LLC own 72.3% of shares; Westlake is a NYSE “controlled company” utilizing certain exemptions from independent committee requirements .
- Independence: Independent directors are enumerated (Lubel, Cregg, Graff, McCollum, Northcutt, Sheets); James Chao is not listed among independent directors, reflecting family-control context .
- Executive Sessions: Non-management directors and independent directors hold regular executive sessions with rotating presiders; reflects independent oversight mechanisms within controlled-company framework .
- Related Party Oversight: Compensation Committee is fully independent; interlocks disclosed (Air Liquide relationship via former executive director Graff with transactional amounts) .
Director Compensation
- Director fee schedules and specific retainer amounts for James Chao are not separately disclosed; insiders typically receive compensation via executive programs rather than standard director retainers (not specified in the proxy). Skip if not disclosed.
Compensation Structure Analysis
- Mix and Trends (James Chao):
- 2024: Salary $1,012,077; Stock awards $2,994,516; Option awards $1,317,380; Non-equity incentives $1,853,922; All other $183,287; Total $7,361,182 .
- 2023: Salary $981,385; Stock $3,022,488; Options $1,273,402; Non-equity $2,177,419; All other $192,881; Total $7,647,575 .
- 2022: Salary $900,154; Stock $2,256,629; Options $951,034; Non-equity $2,551,458; All other $223,645; Total $6,882,920 .
- Shift Toward Equity/Performance: PSU design pays greater-of EVA vs Relative TSR; options and RSUs granted annually; PSU payout for 2022 cycle at 185.6% indicates strong TSR alignment .
- Policy Safeguards: Clawback (Nov 2023), anti-hedging, retention/ownership requirements (6x salary) reduce misalignment risk .
Equity Ownership & Compensation (Multi-Year)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 900,154 | 981,385 | 1,012,077 |
| Stock Awards ($) | 2,256,629 | 3,022,488 | 2,994,516 |
| Option Awards ($) | 951,034 | 1,273,402 | 1,317,380 |
| Non-Equity Incentive ($) | 2,551,458 | 2,177,419 | 1,853,922 |
| All Other ($) | 223,645 | 192,881 | 183,287 |
| Total ($) | 6,882,920 | 7,647,575 | 7,361,182 |
| Beneficial Ownership (shares) | — | — | 113,139 |
Board Service History and Dual-Role Implications
- Dual Role: Senior Chairman and executive officer status may raise independence optics; mitigated by fully independent Audit, Compensation, and Nominating & Governance committees, while Corporate Risk & Sustainability includes all directors including family members .
- Controlled Company Status: Exemptions from some NYSE independence requirements are utilized due to 72.3% ownership by TTWF LP/TTWFGP LLC; governance disclosures emphasize independent sessions and rotating presiders to balance oversight .
Performance & Track Record Context
| Performance Indicator | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Income ($mm) | 373 | 2,070 | 2,297 | 522 | 647 |
| EVA ($mm) | (329) | 1,594 | 1,545 | 18 | (168) |
| Cumulative TSR (Company) | Base=$100 | $142.78 | $152.53 | $211.07 | $175.43 |
| Cumulative TSR (Peer Group) | Base=$100 | $148.63 | $131.89 | $146.45 | $146.15 |
Employment & Contracts (Specific Provisions)
- AIP/Omnibus Mechanics: Single-trigger upon non-assumption; double-trigger upon assumption with termination without Cause/for Good Reason within 24 months; performance awards settle at achieved level at CIC or pro rata upon qualifying termination .
- Definitions: CIC includes asset sale, board turnover, liquidation, 50%+ stake acquisition, reorganization/merger; “Cause” includes felony, refusal/failure, unethical conduct; “Good Reason” includes adverse role change, material pay cuts, 50+ mile relocation .
Risk Indicators & Red Flags
- Pledging/Hedging: Prohibited; none currently pledged for any directors or executive officers .
- Controlled Company: Concentrated ownership could reduce external checks; independent committees and sessions disclosed to mitigate .
- Option Grant Timing Disclosure: Grants near filing/earnings announcements with transparent MNPI timing table; cumulative price change disclosed (-2.48%), reducing backdating risk optics .
Compensation Committee Analysis
- Composition: All independent directors; chaired by R. Bruce Northcutt; five meetings in 2024; charter publicly available .
- Oversight: CD&A reviewed; clawback administered by Committee; external advisors utilized per CD&A framework (details not specified in cited chunks) .
- Interlocks: Air Liquide transactional relationship disclosed (payments ~$45mm; sales ~$12mm) tied to former executive of Air Liquide (Graff) through 2024; transparency provided .
Investment Implications
- Pay-for-Performance Alignment: High equity mix (options, RSUs, PSUs) and PSU “greater-of” metric design link payouts to TSR/EVA; 2022 PSU cycle at 185.6% shows tangible upside alignment when TSR outperforms .
- Selling Pressure & Supply: Significant vesting (32,388 shares in 2024) and multi-year RSU/PSU schedules could introduce episodic supply upon vesting; however, ownership policy requires retention toward 6x salary, moderating near-term sales .
- Retention & Transition Risk: Retirement eligibility with favorable Normal Retirement treatment and reduced 2025 base ($530k) suggest diminished cash comp reliance; double-trigger CIC protections support continuity while limiting windfall acceleration .
- Governance & Independence: Controlled company status and family roles create independence optics; independent committees, executive sessions, and anti-hedging/clawback policies provide structural safeguards for investors .