8-K: Latham Group Appoints Sean Gadd as New CEO

Latham Group, Inc. announces a planned CEO transition, appointing Sean Gadd, formerly of James Hardie, to succeed retiring Scott Rajeski, effective January 5, 2026.

Summary

• Latham Group, Inc. (SWIM) is implementing a planned transition for its President and Chief Executive Officer role.
• Scott Rajeski will retire as President and CEO of Latham Pool Products, Inc. and resign as a Class II director of Latham Group, Inc. effective January 4, 2026.
• Sean Gadd has been hired as the successor President and Chief Executive Officer of Latham Pool and appointed as a Class II director of the Company, effective January 5, 2026.
• Mr. Rajeski will serve as a non-employee consulting special advisor for approximately six months to assist with the transition.
• Mr. Gadd, age 52, previously served as President of North America for James Hardie Building Products, Inc. since 2022, with 21 years of experience in engineering, manufacturing, and commercial leadership.
• Mr. Gadd's compensation includes a $750,000 annual base salary, eligibility for a 100% target annual cash bonus, a new hire equity award of $2.75 million in Stock Appreciation Rights (SARs), and annual equity awards targeting $2 million to $3 million starting in March 2027.
• Mr. Gadd will also receive up to $50,000 annually for Albany, NY area housing rental reimbursement, up to $15,000 for financial planning, and a one-time relocation package up to $50,000.
• Mr. Rajeski will be eligible for his 2025 annual cash bonus, 100% COBRA subsidy for 12 months, continued vesting of certain equity awards until July 5, 2026, and a consulting fee of $41,667 per month for six months.

Sentiment

Score: 8

Explanation: The sentiment is highly positive due to a well-managed, planned CEO transition with a successor who brings directly relevant and extensive industry experience from a major building products company. The new CEO's background aligns perfectly with Latham's strategic growth initiatives, and the outgoing CEO's contributions are acknowledged, with a smooth transition plan in place. This indicates strong corporate governance and strategic foresight.

Positives

• The CEO transition is planned and orderly, ensuring continuity with Mr. Rajeski serving as a special advisor for six months.
• Sean Gadd brings extensive experience (21 years) from James Hardie, a building products company, with a strong track record in driving strategic growth, P&L responsibility, material conversion, and market penetration.
• Mr. Gadd's experience is directly comparable to Latham's strategic initiatives, such as material conversion (fiberglass from concrete pools) and expansion in 'Sand State' markets.
• The appointment of a seasoned executive with relevant industry experience is expected to accelerate market share gains and product adoption.

Negatives

• The departure of a long-serving CEO (Scott Rajeski, 8+ years as CEO) always introduces an element of change and potential uncertainty, even if planned.
• The new CEO's compensation package includes significant equity awards and relocation benefits, which could be viewed as substantial.

Risks

• Unfavorable economic conditions and their impact on consumer spending.
• Adverse weather conditions affecting sales and causing variability in reporting periods.
• Natural disasters, geopolitical events, war, terrorism, public health issues, or other catastrophic events.
• Competitive risks within the industry.
• Challenges in attracting, developing, and retaining highly qualified personnel.
• Inflationary impacts on costs and consumer demand.
• Difficulties in sourcing raw materials and components for manufacturing.
• Inability to collect accounts receivables from customers.
• Failure to keep pace with technological developments and standards, including generative artificial intelligence.
• Consequences of industry consolidation on the customer base and pricing.
• Interruption of production capability at manufacturing facilities due to accidents, fires, calamities, or regulatory actions.
• Product quality issues, warranty claims, or safety concerns, including those arising from builder installation failures.
• Delays in or system disruptions caused by the implementation of the enterprise resource planning (ERP) system.
• Cyber-security breaches and data leaks, and dependence on information technology systems.
• Non-compliance with government regulations.
• Challenges in obtaining transportation services.
• Inability to protect intellectual property and defend against third-party infringement claims.
• International business risks.
• Challenges in securing financing and managing substantial indebtedness.

Future Outlook

The company anticipates that Sean Gadd's leadership, leveraging his experience in material conversion and strategic growth from James Hardie, will enable Latham to accelerate market share gains and further the adoption of fiberglass pools, particularly in key 'Sand State' markets. The company expects to continue its strategic direction and significant business transactions under the new CEO's guidance.

Management Comments

• James E. Cline, Chairman: "Sean is known as a strong leader and brand-builder and has an impressive track record of driving growth at James Hardie. We are thrilled that he has accepted the CEO role at Latham, and the Board believes Sean will be able to leverage his robust commercial experience, sector knowledge, and branding expertise to accelerate our ability to continue to gain share and further the conversion to fiberglass from concrete pools."
• Sean Gadd: "I am pleased to be joining Latham and am looking forward to building on its achievements to date. This is an excellent opportunity for me to utilize my experience in the building products category to drive further market penetration and adoption of Latham's top-quality products and greater recognition for its superior service standards."
• James E. Cline, Chairman (on Scott Rajeski): "On behalf of the Board of Directors, I want to express our deep appreciation for the contributions that Scott Rajeski has made to Latham during his long tenure at the company, first as Chief Financial Officer and, since 2017, as President and Chief Executive Officer. Under his leadership and that of his executive and operating teams, the company went public in April of 2021 and has experienced substantial growth, demonstrated resilience within a difficult industry environment, and built a strong financial position."
• Scott Rajeski: "It has been a privilege to serve as the President & CEO of Latham alongside the talented executive and operating teams that we have at the company. Together, we have advanced the awareness and adoption of fiberglass pools and autocovers, while implementing production and related efficiencies that have streamlined our operations. I am proud to be retiring as CEO of Latham with the company in a strong financial position and in very capable hands. Throughout my conversations with Sean, I have been very impressed with his leadership capabilities and background, and I am confident that he will bring a unique skillset that will allow Latham to continue to outperform the industry, gain further traction in the important Sand States, and remain an acquirer of choice."

Industry Context

Latham Group, Inc. operates as the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand. The appointment of Sean Gadd, with his extensive background in the building products category at James Hardie, suggests a strategic focus on accelerating the industry trend of converting from concrete to fiberglass pools. His experience in driving material conversion and market penetration aligns with Latham's stated initiatives, particularly in high-growth 'Sand State' markets, indicating a move to capitalize on evolving consumer preferences and expand market share against competitors.

Comparison to Industry Standards

• Sean Gadd's 21-year career at James Hardie Building Products, Inc., a major player in the building materials sector (NYSE/ASX: JHX), including his role as President of North America with full P&L responsibility, demonstrates a leadership profile comparable to top executives in large, publicly traded building products companies.
• His specific experience in 'material conversion' at James Hardie is directly relevant to Latham's strategic goal of increasing the adoption of fiberglass pools over traditional concrete pools, a key differentiator in the residential pool market.
• The focus on 'Sand State initiatives' reflects a common strategy in the building and home improvement industries to target regions with favorable demographics and construction activity, similar to how other building material companies prioritize growth markets.

Management Changes

Corporate Governance

Stakeholder Impact

• **Shareholders:** Expected positive impact due to a planned and orderly CEO transition, bringing in an executive with highly relevant experience to drive strategic growth and market share. The continuity provided by the outgoing CEO's advisory role mitigates immediate risks.
• **Employees:** A new CEO may bring changes in corporate strategy, culture, or operational focus. The filing mentions the new CEO's experience in 'material conversion and Sand State initiatives,' which could imply shifts in production or market focus.
• **Customers:** The new CEO's stated goal to 'drive further market penetration and adoption of Latham's top-quality products and greater recognition for its superior service standards' suggests a continued or enhanced focus on product quality, innovation, and customer experience.
• **Suppliers:** Potential impact from changes in material sourcing strategies or production efficiencies, given the new CEO's background in manufacturing and material conversion.
• **Creditors:** The company's 'strong financial position' mentioned by the Chairman, coupled with a strategic leadership appointment, suggests continued stability, which is favorable for creditors.

Next Steps

• Scott Rajeski will continue in his current roles until January 4, 2026.
• Scott Rajeski will serve as a non-employee consulting special advisor for approximately six months starting January 5, 2026.
• Sean Gadd will commence his role as President and CEO and Class II director on January 5, 2026.
• Sean Gadd's new hire equity award (SARs) will be granted on January 5, 2026, with vesting over three years.
• Sean Gadd's initial annual equity award is expected to be granted around March 2027.
• The Compensation Committee will determine the 2026 MIB performance targets in December 2025.

Key Dates

Recommendation

The planned CEO transition is a positive development, bringing in a highly experienced executive whose background aligns well with Latham's strategic objectives. This change is likely to be viewed favorably by the market, suggesting stability and a clear path for future growth. However, the immediate impact on financial performance is yet to be seen, and the company operates in a competitive and economically sensitive environment, as highlighted by the risks. While the leadership change is a strong positive, a 'hold' recommendation is prudent until the new CEO's strategic execution and its tangible financial results begin to materialize, allowing investors to assess the impact on the company's trajectory.

Keywords

CEO transition, executive appointment, corporate governance, Latham Group, SWIM, swimming pools, fiberglass pools, building products, Scott Rajeski, Sean Gadd, SEC filing, 8-K, management change, succession planning