Todd Adams
Zurn Elkay Water SolutionsAbout Todd Adams
Todd A. Adams is Chairman of the Board and Chief Executive Officer of Zurn Elkay Water Solutions; he joined the company in 2004 and previously served in roles including President and Chief Financial Officer. He is 54, has been a director since 2009 and Chairman since 2020; he also serves on Badger Meter’s board and Audit & Compliance Committee . Under his leadership, ZWS delivered 2024 adjusted EBITDA of $390.4M (+15% YoY), net income of $160.2M (+42% YoY), and cumulative TSR value of $322 from a $100 base, alongside $272M free cash flow, $150M buybacks, a 13% dividend increase, and the company’s lowest net leverage .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Zurn Elkay Water Solutions | Various roles including President and CFO | 2004–present | In-depth knowledge of Zurn Elkay and manufacturing industry; proven leadership |
External Roles
| Organization | Role | Years | Committee/Notes |
|---|---|---|---|
| Badger Meter, Inc. | Director | Current | Audit & Compliance Committee member |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $1,005,000 | $1,005,000 | $1,005,000 |
| Target Bonus (% of salary) | — | — | 125% |
| Actual Annual Incentive (MICP) ($) | $314,063 | $1,695,938 | $1,852,969 |
| Perquisites & Other ($) | $100,991 | $97,405 | $107,874 |
Perquisites detail (2024):
- 401(k) match: $11,500; Deferred Compensation match: $40,200; Auto allowance/expenses: $10,542; Estate/financial planning: $30,007; Club dues: $15,625 .
Performance Compensation
2024 Annual Cash Incentive (MICP) Structure and Outcomes
| Metric | Weight | Target Definition | Actual Performance | Payout Factor |
|---|---|---|---|---|
| Adjusted EBITDA | 50% | Consolidated adjusted EBITDA (with specified adjustments) | Above target | 113% |
| Free Cash Flow | 50% | CFO from operations less capex (with adjustments) | Above target | 123% |
| Corporate Financial Factor | — | Weighted average | — | 118% |
| CEO Personal Performance Multiplier | — | AIPs (growth, performance, organizational capabilities) | On/above target | 125% |
Long-Term Incentives (Equity)
| Award | Metric | Weight | Vesting | Earnout Range |
|---|---|---|---|---|
| PSUs (2024 grants) | Free Cash Flow Conversion | 40% | 100% cliff after 1/1/2024–12/31/2026 period | 0%–200% based on performance |
| PSUs (2024 grants) | ROIC | 40% | 100% cliff after 2024–2026 | 0%–200% |
| PSUs (2024 grants) | Sales Growth | 20% | 100% cliff after 2024–2026 | 0%–200% |
| CEO LTI Form | 100% PSUs (no TSR multiplier for CEO) | — | Annual grants; performance-based only | 2024 Stock Awards grant-date value $7,499,990 |
Award history payout examples:
- October 2021 PSUs (FCF conversion/ROIC) vested at 200% of target in 2024 .
- 2022 PSUs for selected executives vested at 200% of target in 2024 (CEO not applicable for TSR multiplier) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 2,278,777 shares; 1.4% of outstanding |
| Vested vs Unvested (illustrative) | Unvested PSUs at target: 279,570 (2023 grant), 242,326 (2024 grant) |
| 2024 Option Exercises | 624,278 options exercised; $16,397,688 value realized |
| 2024 Stock Vesting Realized Value | 327,988 shares; $11,787,889 value realized |
| Ownership Guidelines | CEO must hold 6x base salary; all executives met guidelines as of record date |
| Hedging/Pledging | Prohibited for directors/officers; anti-hedging and anti-pledging policies in force |
| Deferred Compensation | 2024 contributions: $100,500 (executive) and $40,200 (company); aggregate balance $3,713,048 |
Notes: Ownership % calculated per SEC beneficial ownership; no pledging disclosed and policy prohibits pledging .
Employment Terms
| Term | CEO Agreement Details |
|---|---|
| Agreement Date/Term | Letter agreement dated May 17, 2024; extends through May 17, 2028; auto-renews for 1-year terms unless notice 90 days prior |
| Severance (no CIC) | 2x current base salary + target bonus over 24 months; pro-rated current year bonus; continued medical contributions for 24 months |
| Change-in-Control (double trigger) | 2x salary + target bonus over 18 months; medical contributions for 24 months; equity vests at greater of target or actual performance through termination/change-in-control |
| Equity Vesting/CIC | Double-trigger only for awards; Committee cannot reprice without shareholder approval |
| Non-Compete | 2 years post-termination; geographic scope tied to ZWS operations |
| Non-Solicit | 2 years for Adams (customers/employees restrictions) |
| Good Reason | Material reduction in salary/target bonus; material negative change in duties; relocation >50 miles; failure to re-elect to board for Adams |
| Clawback | SEC/NYSE-compliant clawback; mandatory recovery for restatements; discretionary recoupment for misconduct over prior 3 years |
| Tax Gross-Ups | None for excise/golden parachute; limited to relocation/expatriate tax equalization per policy |
Board Governance
- Role and independence: CEO is the only non-independent director; Adams has served as director since 2009 and Chairman since 2020 .
- Lead Independent Director: Mark S. Bartlett; presides over executive sessions; agenda oversight; shareholder liaison .
- Committees: All independent (Audit; Compensation; Nominating & Corporate Governance; Sustainability); Adams is not a member of board committees .
- Attendance: Board held 4 meetings in 2024; all directors attended at least 75% of board and committee meetings; all attended 2024 annual meeting .
Dual-role implications:
- Combined Chair/CEO mitigated by a strong Lead Independent Director, fully independent committees, annual board/committee evaluations, and regular executive sessions .
Director Compensation (for reference)
- Non-employee director compensation does not apply to the CEO; employee directors receive no additional board fees .
Performance & Track Record
| Metric (Fiscal) | FY 2020 | Transition Period (Apr–Dec 2020) | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|
| Adjusted EBITDA ($M) | 460.2 | 307.5 | 195.8 | 264.6 | 339.5 | 390.4 |
| Net Income ($M) | 165.7 | 118.2 | 120.9 | 61.7 | 112.7 | 160.2 |
| Company TSR (Value of $100) | 90 | 159 | 305 | 179 | 251 | 322 |
Additional 2024 highlights: $272M FCF, $150M buybacks, 13% dividend increase, lowest net leverage .
Compensation Structure Analysis
- Pay mix: Approximately 90% of CEO target direct compensation is performance-based (MICP + PSUs); peer CEOs generally have lower performance-based LTI proportions .
- LTI design shift: Increased emphasis on PSUs in recent years; in 2024, 100% of NEO LTI was PSUs, aligning payouts to multi-year FCF conversion, ROIC, and sales growth with 0–200% earnout ranges .
- 2024 CEO grants and payouts:
- Stock Awards (grant-date fair value): $7,499,990 .
- Annual MICP payout: $1,852,969; 118% corporate factor and 125% personal factor .
- CEO Summary Compensation (trend):
Year Salary ($) Stock Awards ($) Non-Equity Incentive ($) Total ($) 2022 $1,005,000 — $314,063 $1,420,254 2023 $1,005,000 $6,500,003 $1,695,938 $9,905,918 2024 $1,005,000 $7,499,990 $1,852,969 $11,189,617
Governance guardrails: no repricing of underwater options; no single-trigger equity vesting; clawback policy; anti-hedging/pledging .
Say‑on‑Pay & Shareholder Feedback
- 2025 Say‑on‑Pay support: 70.7% “FOR” .
- Outreach: Invited holders representing ~65% of shares; met with holders representing ~47% of outstanding shares; board determined current practices aligned with investor sentiment .
Compensation Peer Group
- 2024 peer group includes A.O. Smith, Advanced Drainage Systems, Badger Meter, ESCO, Franklin Electric, Graco, Helios, Itron, Kadant, Lindsay, Mueller Water, Nordson, Pentair, Watts Water .
- Target LTI positioning: above median, closer to 75th percentile .
Risk Indicators & Red Flags
- Insider selling pressure: Significant 2024 option exercises and value realization ($16.4M); monitor Form 4 activity for ongoing sales and net share accumulation vs. dispositions .
- Say‑on‑Pay outcome: 70.7% suggests some investor concerns; ongoing outreach and 100% performance-based LTI are mitigating factors .
- Alignment protections: Double-trigger CIC; clawback; anti-pledging/hedging .
Investment Implications
- Strong pay-for-performance alignment: 100% PSUs for CEO tied to FCF conversion, ROIC, and sales growth with robust clawback and anti-hedging/pledging policies support long-term value orientation .
- Retention risk appears contained: Multi-year term to 2028 with auto-renewal, double-trigger CIC, and non-compete/non-solicit provisions reduce near-term turnover risk .
- Monitor governance signals: Sub-75% say‑on‑pay support, sizable 2024 equity realizations, and continued board oversight via lead independent director and independent committees warrant attention during grant/payout cycles and any equity plan amendments .