Albert H. Nahmad
WATSCOAbout Albert H. Nahmad
Albert H. Nahmad (age 84) is Chairman & Chief Executive Officer of Watsco, Inc., roles he has held since 1972, and is described by the company as its “visionary founder” and long‑time leader overseeing decades of expansion and value creation . Under his leadership, Watsco’s market capitalization grew from $22 million in 1989 to $19.5 billion at year‑end 2024, with a 19% compounded annual TSR since 1989 and multi-decade TSR outperformance versus the S&P 500 across 10–30 year horizons . For 2024, Watsco delivered record sales of $7.62B, operating income of $782M (10.3% margin), EPS of $13.30, record operating cash flow of $773M, ended debt‑free with over $700M of cash and short‑term investments, and posted a 1‑year TSR of 13% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Watsco, Inc. | Chairman & CEO | 1972–present | Built the largest HVAC/R distributor in North America; market cap from $22M (1989) to $19.5B (2024); 19% TSR CAGR since 1989; scaled to >130,000 customers and 690 locations . |
| Watsco, Inc. (Board) | Chair, Strategy Committee | Current | Leads oversight of strategic initiatives and growth opportunities; committee met once in 2024 |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No external public-company directorships or committee roles for Mr. Nahmad are disclosed in the latest proxy biography section . |
Fixed Compensation
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Base Salary | $600,000 | $600,000 | Unchanged YoY . |
| Cash Bonus (Target/Actual) | Not eligible for short‑term cash incentive awards | Not eligible for short‑term cash incentive awards | Program design excludes annual cash bonus . |
| All Other Compensation | $458,336 | $327,431 | Includes $296,382 for personal aircraft use in 2024; up to 90 hours permitted per employment agreement . |
Performance Compensation
- Long-term incentive is restricted Class B common stock with unusually long cliff vesting at retirement-age or later; CEO awards vest between 2026 (age 86) and 2032 (age 92) .
- Annual award amount is formulaic and based on two objective metrics: Diluted EPS growth and year‑end common stock price growth; if neither increases, no award is granted .
| Metric | Threshold | Step‑Up(s) | Actual 2024 | Payout Mechanics | 2024 Result | Vesting |
|---|---|---|---|---|---|---|
| Diluted EPS (GAAP) | No award if 2024 EPS ≤ $13.67 (2023 EPS) | $43,500 per $0.01 if EPS < $14.35 (+5%); $65,000 per $0.01 if ≥ $14.35 | $13.30 | No payout from EPS component because EPS declined YoY | $0 from EPS component | Cliff-vest 10/15/2032 for 2024 CEO award |
| Common Stock Price | No award if 12/31/24 price ≤ $428.47 (12/31/23 close) | $1,200 per $0.01 if price < $514.16 (+20%); $1,800 per $0.01 if ≥ $514.16 | $473.89 (12/31/24) | Value per penny increase applied to YoY change | Contributed to ~$5.45M gross award value | Cliff-vest 10/15/2032 |
| 2024 CEO Equity Award Summary | Detail |
|---|---|
| Grant Type | Restricted Class B common stock |
| Grant Value / Shares | ~$5.45M; 11,597 shares; plus $390 cash in lieu of fractional share |
| Grant/Measurement Date | Based on 12/31/24 metric outcomes |
| Vesting | Cliff on 10/15/2032; forfeiture if employment ends before vest (death/long‑term disability and change-in-control exceptions) |
Multi‑year CEO compensation context:
| Year | Salary ($) | Restricted Stock Awards ($) | All Other ($) | Total ($) |
|---|---|---|---|---|
| 2022 | 600,000 | 9,999,901 | 493,941 | 11,093,941 |
| 2023 | 600,000 | 9,999,807 | 458,336 | 11,058,336 |
| 2024 | 600,000 | 5,450,010 | 327,431 | 6,377,831 |
Equity Ownership & Alignment
| Ownership and Alignment Item | Detail |
|---|---|
| Beneficial Ownership | 67 common shares; 4,275,152 Class B shares (76.2% of Class B); combined voting power 47.0% as of 4/4/2025 . |
| Holding Structure (Class B) | Includes 206,976 shares via Colón Boy L.P.; 2,534,201 via family trusts; 31,584 in grandchildren custodial accts; 440,000 via Albert Henry Capital L.P.; 902,006 via My Pal Al, L.P.; 160,385 via The Albert H. Nahmad Declaration of Trust (all controlled) . |
| Unvested Restricted Stock (12/31/24) | 1,480,794 unvested restricted shares; market value $792,224,790 at 12/31/24 prices (excludes 11,597 shares earned for 2024, issued in 2025) . |
| Vesting Horizon | Weighted average 13.6 years since grant; 2.8 years remaining; 16.4‑year full holding period across CEO’s awards (as of record date) . |
| Dividends & Voting | Restricted shares receive cash dividends and full voting rights during restriction period . |
| Hedging & Pledging | Prohibited for directors and NEOs . |
| Ownership Guidelines | NEOs must hold ≥5x base salary; all directors/NEOs were in compliance as of 12/31/24 . |
| Change‑in‑Control Acceleration | Awards accelerate upon change in control (and upon death/disability); estimated CEO value at 12/31/24: $798,429,185; unrecognized SBP exp. $44,588,619 . |
Employment Terms
| Term | Summary |
|---|---|
| Employment Agreement | CEO has an employment agreement amended annually within first 90 days to set performance factors; 2024 amended & restated amendment filed 11/15/2024 . |
| 2024 Incentive Structure | Restricted Class B shares; cliff-vest 10/15/2032; employment for entire year required (unless Comp Committee determines otherwise); maximum annual grant value increased to $20M in 2024 (from $10M) . |
| Severance | No company‑wide severance agreements; only termination provisions in CEO Employment Agreement; no defined benefit pension or SERP . |
| Change‑in‑Control | Accelerated vesting of restricted stock; see values above . |
| Clawback | Executive Clawback Policy covers incentive/equity comp upon material restatement or fraud/criminal misconduct . |
| Insider Trading | Insider Trading Policy governs transactions; filed with 2024 Form 10‑K . |
| Perquisites | Limited personal use of corporate aircraft (up to 90 hours in 2024); 2024 incremental variable operating cost $296,382 . |
Board Governance (Service, Committees, Dual‑Role Implications)
- Board/role: Class B Director (term expiring 2027) and Chairman & CEO; chairs the Strategy Committee .
- Dual‑role oversight: The Board explicitly endorses combined Chairman & CEO structure given long‑term TSR outperformance; mitigations include a Lead Independent Director (J. Michael Custer) with defined responsibilities (agenda input, executive sessions, shareholder outreach, board effectiveness and evaluation) .
- Controlled company: As a group, the Chairman & CEO, President, and Director Valerie Schimel controlled 53.6% of combined voting power at the record date; despite controlled status, the Board maintains a majority of independent directors and fully independent Compensation and Nominating & Governance Committees .
- Committee membership: CEO chairs Strategy Committee; not on Audit, Compensation, or Nominating & Governance Committees (all independent) .
- Attendance: In 2024, the Board held four meetings and eight unanimous written consents; all directors attended 100% of their Board/committee meetings; executive sessions of independent directors are held at least annually .
- Director pay: Management directors receive no Board compensation; director equity is primarily in options with two‑year vest and five‑year term; no tax gross‑ups for directors .
- Say‑on‑pay: 2024 advisory vote—49% of Common shareholders and 91% of combined votes cast were in favor .
Compensation Structure Analysis
- Cash vs equity mix: CEO’s compensation is predominantly long‑dated restricted stock (no annual cash bonus); in 2024, equity grant date value declined to $5.45M from ~$10.0M in 2022–2023, driving total comp down to $6.38M from ~$11.1M the prior two years .
- Metric design: 100% of CEO’s variable pay is tied to objective EPS and stock‑price growth; 2024 EPS declined, so the EPS component paid $0, while stock‑price growth funded the award; cliff vesting to 2032 increases retention duration and pay at risk .
- Governance features: Clawback policy; prohibition on hedging/pledging; no option repricing; no SERP; and no severance agreements except CEO contract provisions—overall shareholder‑friendly .
- Peer benchmarking: Compensation Committee uses Pearl Meyer and compares to “Industry” and “30‑Year High Performance” peers and S&P 500; CEO 2024 salary at 2nd percentile of S&P 500; 2024 CEO total direct comp ranked 19th percentile vs Industry peers and 33rd percentile vs High‑Performance peers .
Peer percentile context:
| Metric | 2023 | 2024 |
|---|---|---|
| CEO Salary vs S&P 500 | 2nd percentile | 2nd percentile |
| CEO Total Direct Comp vs Industry Group | 66th percentile | 19th percentile |
| CEO Total Direct Comp vs 30‑Year High Performance Group | 61st percentile | 33rd percentile |
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay support: 49% of Common shareholders and 91% of combined votes cast in favor (resolution passes on combined vote but shows limited support among Common shareholders) .
- Engagement: Management and directors met with ~500 institutions and attended 16 investor conferences in 2024; the company engages proxy advisors regarding its unique restricted stock philosophy .
Related Party Transactions
- The Audit Committee pre‑approved and disclosed use of Greenberg Traurig, P.A. (where director Cesar Alvarez is Senior Chairman) for compliance‑related legal services ($279,000 in 2024); Alvarez had no material interest; GT revenue >$2B .
Risk Indicators & Red Flags
- Dual‑class/controlled company structure raises governance concentration risk, partially mitigated by independent committees and a Lead Independent Director .
- Family succession: President (son) and Director (daughter) on Board as part of generational continuity plan—benefits stability but may raise independence/perception risks .
- Hedging/pledging prohibited for directors/NEOs—reduces alignment risks from collateralized shares; clawback policy in place .
- No SERP and no option repricing—limits shareholder‑unfriendly practices .
- Change‑in‑control accelerates equity; the CEO’s theoretical accelerated value was ~$798.4M at 12/31/24—material, but reflects long‑dated, unvested awards .
Compensation Committee Analysis
- Committee members: Denise Dickins (Chair), Ana Lopez‑Blazquez, Gary L. Tapella; independent and with financial expertise .
- Independent consultant: Pearl Meyer; independence assessed annually .
- Annual risk assessment of pay programs; emphasis on long vesting to curb risk‑taking .
Investment Implications
- Alignment and retention: Extraordinary long‑dated restricted equity, dividend participation, and substantial voting control align CEO incentives with multi‑decade value creation and reduce near‑term selling pressure; vesting windows (2026–2032) suggest limited forced liquidity before 2032 absent change‑in‑control .
- Governance trade‑offs: Combined Chair/CEO and family control can constrain independent influence; however, formal Lead Independent Director powers and independent committees provide counterweights; investors should monitor the low Common shareholder say‑on‑pay support (49%) as a potential pressure point for governance changes .
- Pay‑for‑performance mechanics: Equity grant value directly tied to EPS and stock‑price growth, with no cash bonus; in 2024, EPS underperformance zeroed that component while stock‑price gains funded the award; this structure can amplify near‑term trading sensitivity around year‑end prints given the formulaic design .
- Change‑in‑control optionality: Significant acceleration value reflects accumulated, long‑dated unvested equity; while not a near‑term catalyst, it is relevant for M&A downside/upside protection analysis and potential dilution scenarios .
- Execution track record: Multi‑decade TSR outperformance, cash generation, and disciplined capital structure are supportive of long‑term comp design and family stewardship, but the controlled company profile and dynastic succession merit an elevated governance discount in valuation frameworks .