W.W. Grainger, Inc 10-Q for FY2025 Q1
W.W. Grainger, Inc. (GWW)
10-Q
2025-05-01
For: 2025-03-31
View Original
Added on
April 08, 2026
About this 10-Q
W.W. Grainger, Inc filed this 10-Q on May 1, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4.31B
- up 1.7% from $4.24B a year earlier
- Net income
- $479M
- up 0.2% from net income of $478M a year earlier
- Diluted EPS
- $9.86
- up 2.5% from $9.62 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended March 31, 2025
OR
For the transition period from ______ to _______
Commission file number 1-5684
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
Registrant’s telephone number, including area code: (847 ) 535-1000
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
There were 48,039,213 shares of the Company’s Common Stock outstanding as of April 24, 2025.
1
| TABLE OF CONTENTS | ||||||||
| Page | ||||||||
| PART I - FINANCIAL INFORMATION | ||||||||
| Item 1: | Financial Statements (Unaudited) | |||||||
Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2025 and 2024 | ||||||||
Condensed Consolidated Statements of Comprehensive Earnings for the Three Months Ended March 31, 2025 and 2024 | ||||||||
Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 | ||||||||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 | ||||||||
Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended March 31, 2025 and 2024 | ||||||||
| Notes to Condensed Consolidated Financial Statements | ||||||||
| Item 2: | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | |||||||
| Item 4: | Controls and Procedures | |||||||
| PART II - OTHER INFORMATION | ||||||||
| Item 1: | Legal Proceedings | |||||||
| Item 1A: | Risk Factors | |||||||
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
| Item 5: | Other Information | |||||||
| Item 6: | Exhibits | |||||||
| Signatures | ||||||||
2
PART I – FINANCIAL INFORMATION
Item 1: Financial Statements
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In millions of dollars and shares, except for per share amounts)
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net sales | $ | $ | |||||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Operating earnings | |||||||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense – net | |||||||||||||||||||||||
| Other – net | ( | ( | |||||||||||||||||||||
| Total other expense – net | |||||||||||||||||||||||
Earnings before income taxes | |||||||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
| Less net earnings attributable to noncontrolling interest | |||||||||||||||||||||||
| Net earnings attributable to W.W. Grainger, Inc. | $ | $ | |||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
3
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In millions of dollars)
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net earnings | $ | ||||||||||||||||||||||
| Other comprehensive earnings (losses): | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
Postretirement benefit plan losses – net of tax expense of $ | ( | ( | |||||||||||||||||||||
| Total other comprehensive earnings (losses) | ( | ||||||||||||||||||||||
| Comprehensive earnings – net of tax | |||||||||||||||||||||||
| Less comprehensive earnings (losses) attributable to noncontrolling interest | |||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
| Total comprehensive earnings (losses) attributable to noncontrolling interest | ( | ||||||||||||||||||||||
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
4
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars, except for share and per share amounts)
| As of | |||||||||||
| Assets | (Unaudited) March 31, 2025 | December 31, 2024 | |||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable (less allowance for credit losses of $ | |||||||||||
| Inventories – net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, buildings and equipment – net | |||||||||||
| Goodwill | |||||||||||
| Intangibles – net | |||||||||||
| Operating lease right-of-use | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Current maturities | $ | $ | |||||||||
| Trade accounts payable | |||||||||||
| Accrued compensation and benefits | |||||||||||
| Operating lease liability | |||||||||||
| Accrued expenses | |||||||||||
| Income taxes payable | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term operating lease liability | |||||||||||
| Deferred income taxes and tax uncertainties | |||||||||||
| Other non-current liabilities | |||||||||||
| Shareholders' equity | |||||||||||
Cumulative preferred stock – $ | |||||||||||
Common Stock – $ | |||||||||||
| Additional contributed capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive losses | ( | ( | |||||||||
Treasury stock, at cost – shares, respectively | ( | ( | |||||||||
| Total W.W. Grainger, Inc. shareholders’ equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total shareholders' equity | |||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these financial statements.
5
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
(Unaudited)
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net earnings | $ | $ | ||||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||
| Provision for credit losses | ||||||||||||||
| Deferred income taxes and tax uncertainties | ( | ( | ||||||||||||
| Depreciation and amortization | ||||||||||||||
| Non-cash lease expense | ||||||||||||||
| Stock-based compensation | ||||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||
| Accounts receivable | ( | ( | ||||||||||||
| Inventories | ||||||||||||||
| Prepaid expenses and other assets | ( | ( | ||||||||||||
| Trade accounts payable | ||||||||||||||
| Operating lease liabilities | ( | ( | ||||||||||||
| Accrued liabilities | ( | ( | ||||||||||||
| Income taxes – net | ||||||||||||||
| Other non-current liabilities | ( | ( | ||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Proceeds from sale of assets | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds from debt | ||||||||||||||
| Payments of debt | ( | ( | ||||||||||||
| Proceeds from stock options exercised | ||||||||||||||
| Payments for employee taxes withheld from stock awards | ( | ( | ||||||||||||
| Purchases of treasury stock | ( | ( | ||||||||||||
| Cash dividends paid | ( | ( | ||||||||||||
| Other – net | ( | |||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Exchange rate effect on cash and cash equivalents | ( | |||||||||||||
| Net change in cash and cash equivalents | ( | |||||||||||||
| Cash and cash equivalents at beginning of year | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
The accompanying notes are an integral part of these financial statements.
6
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In millions of dollars, except for per share amounts)
(Unaudited)
| Common Stock | Additional Contributed Capital | Retained Earnings | Accumulated Other Comprehensive Earnings (Losses) | Treasury Stock | Noncontrolling Interest | Total | |||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||
| Purchases of treasury stock | — | — | — | — | ( | — | ( | ||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||
| Other comprehensive earnings (losses) | — | — | — | ( | — | ( | ( | ||||||||||||||||
Cash dividends paid ($ | — | — | ( | — | — | ( | ( | ||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
7
W.W. Grainger, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In millions of dollars, except for per share amounts)
(Unaudited)
| Common Stock | Additional Contributed Capital | Retained Earnings | Accumulated Other Comprehensive Earnings (Losses) | Treasury Stock | Noncontrolling Interest | Total | |||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||
| Purchases of treasury stock | — | — | — | — | ( | — | ( | ||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||
| Other comprehensive earnings (losses) | — | — | — | — | |||||||||||||||||||
Cash dividends paid ($ | — | — | ( | — | — | ( | ( | ||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
8
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries.
Basis of Presentation
The Company's Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and therefore do not include all information and disclosures normally included in the annual Consolidated Financial Statements. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimated amounts. In the opinion of the Company’s management, the Condensed Consolidated Financial Statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.
The Condensed Consolidated Balance Sheet at December 31, 2024, has been derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.
The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 20, 2025 (2024 Form 10-K).
There were no material changes to the Company’s significant accounting policies from those disclosed in Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company's 2024 Form 10-K.
9
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 2 - REVENUE
Grainger serves a large number of customers in diverse industries, which are subject to different economic and market-specific factors. The Company's revenue is primarily comprised of MRO product sales and related activities.
The Company's presentation of revenue by reportable segment and customer industry most reasonably depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic and market-specific factors. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms.
The following table presents the Company's percentage of revenue by reportable segment and customer industry:
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
2025 | 2024 | |||||||||||||||||||||||||||||||||||||
Customer Industry(1) | High-Touch Solutions N.A. | Endless Assortment | Total Company(2) | High-Touch Solutions N.A. | Endless Assortment | Total Company(2) | ||||||||||||||||||||||||||||||||
| Manufacturing | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Government | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Wholesale | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Commercial Services | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Contractors | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Healthcare | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Retail | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Transportation | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Utilities | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Warehousing | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
Other(3) | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Total net sales | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
| Percent of total company revenue | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
(1) Customer industry results for the three months ended March 31, 2025 and 2024 primarily use the North American Industry Classification System (NAICS). As customers' businesses evolve, industry classifications may change. When these changes occur, Grainger does not recast the customer classification for prior periods as the industry used in the prior period was appropriate at the point-in-time. As a result, year-over-year changes may be impacted. | ||||||||||||||||||||||||||||||||||||||
(2) Total Company includes other businesses, which includes the Cromwell business. Other businesses account for approximately | ||||||||||||||||||||||||||||||||||||||
(3) Other primarily includes revenue from industries and customers that are not material individually, including hospitality, restaurants, property management and natural resources. | ||||||||||||||||||||||||||||||||||||||
Total accrued sales incentives are recorded in Accrued expenses and were approximately $106 million and $109 million as of March 31, 2025 and December 31, 2024, respectively.
The Company had no material unsatisfied performance obligations, contract assets or liabilities as of March 31, 2025 and December 31, 2024.
10
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 3 - PROPERTY, BUILDINGS AND EQUIPMENT
Property, buildings and equipment consisted of the following (in millions of dollars):
| As of | |||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||
| Land and land improvements | $ | $ | |||||||||
| Building, structures and improvements | |||||||||||
| Furniture, fixtures, machinery and equipment | |||||||||||
| Property, buildings and equipment | $ | $ | |||||||||
| Less accumulated depreciation | |||||||||||
| Property, buildings and equipment – net | $ | $ | |||||||||
NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS
The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators during the three months ended March 31, 2025. As such, quantitative assessments were not required.
The balances and changes in the carrying amount of goodwill by segment are as follows (in millions of dollars):
| High-Touch Solutions N.A. | Endless Assortment | Total | ||||||||||||||||||||||||
Balance at January 1, 2024 | $ | $ | $ | |||||||||||||||||||||||
| Translation | ( | ( | ( | |||||||||||||||||||||||
Balance at December 31, 2024 | ||||||||||||||||||||||||||
| Translation | ||||||||||||||||||||||||||
Balance at March 31, 2025 | $ | $ | $ | |||||||||||||||||||||||
The Company's cumulative goodwill impairments as of March 31, 2025 were $137 million. No
The balances and changes in intangible assets – net are as follows (in millions of dollars):
| As of | |||||||||||||||||||||||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Weighted average life | Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||||||||||||||||||||||||
| Customer lists and relationships | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Trademarks, trade names and other | |||||||||||||||||||||||||||||||||||||||||
| Non-amortized trade names and other | Indefinite | ||||||||||||||||||||||||||||||||||||||||
| Capitalized software | |||||||||||||||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
11
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 5 - DEBT
Total debt, including long-term and current maturities, consisted of the following (in millions of dollars):
| As of | |||||||||||||||||||||||
March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Debt issuance costs – net of amortization and other | ( | ( | ( | ( | |||||||||||||||||||
| Long-term debt | |||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||
| Current maturities | |||||||||||||||||||||||
| Total debt | $ | $ | $ | $ | |||||||||||||||||||
(1) On February 18, 2025, Grainger repaid in full the principal amount of $ | |||||||||||||||||||||||
Senior Notes
Between 2015 and 2024, Grainger issued $2.8
The Company incurred debt issuance costs related to its Senior Notes, representing underwriting fees and other expenses. These costs were recorded as a contra-liability in Long-term debt and are being amortized over the term of the Senior Notes using the straight-line method to Interest expense – net. The cumulative unamortized costs were $22
Fair Value
NOTE 6 - SEGMENT INFORMATION
Grainger's two reportable segments are High-Touch Solutions N.A. (HTSNA) and Endless Assortment (EA). These reportable segments align with Grainger's go-to-market strategies and bifurcated business models of high-touch solutions and endless assortment that generate sales primarily through the distribution of MRO products. The remaining businesses are classified as Other to reconcile to consolidated results. These businesses individually and in the aggregate do not meet the criteria of a reportable segment.
The operating and reportable segments reflect the way the chief operating decision maker (CODM) evaluates the business. All expenses directly attributable to each reportable segment are included in the operating results for each segment. The CODM is not regularly provided and does not evaluate the segments using total asset or capital expenditure information and it is therefore not disclosed. For further discussion on the CODM, see Note 12 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data in the Company’s 2024 Form 10-K.
12
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following is a summary of segment results (in millions of dollars):
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| High-Touch Solutions N.A. | Endless Assortment | Total | High-Touch Solutions N.A. | Endless Assortment | Total | ||||||||||||||||||||||||||||||
Net sales(1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Reconciliation of net sales | |||||||||||||||||||||||||||||||||||
| Other net sales | |||||||||||||||||||||||||||||||||||
| Total company net sales | $ | $ | |||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||||||||||||||
Other segment items(2) | |||||||||||||||||||||||||||||||||||
| Segment operating earnings | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Reconciliation of operating earnings | |||||||||||||||||||||||||||||||||||
| Other operating earnings | |||||||||||||||||||||||||||||||||||
| Total company operating earnings | $ | $ | |||||||||||||||||||||||||||||||||
(1) Intersegment sales are recorded at values based on market prices, which creates intercompany profit sales that are eliminated within each segment to present only the impact of net sales to external customers. | |||||||||||||||||||||||||||||||||||
(2) Other segment items for HTSNA and EA consist of selling, general and administrative expenses primarily comprised of payroll and benefits, marketing expense, depreciation, amortization and non-cash lease expense, corporate overhead expenses allocated to each segment based upon benefits received, occupancy and other miscellaneous expenses. Intersegment expenses including fees and certain incurred costs for shared services are also included within the amounts shown above. | |||||||||||||||||||||||||||||||||||
Depreciation, amortization and non-cash lease expense presented below is related to long-lived assets, capitalized software and right-of-use assets. Long-lived assets consist of property, buildings and equipment.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Depreciation, amortization and non-cash lease expense: | |||||||||||||||||||||||
| High-Touch Solutions N.A. | $ | $ | |||||||||||||||||||||
| Endless Assortment | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
Following is revenue by geographic location (in millions of dollars):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
Revenue by geographic location(1): | |||||||||||||||||||||||
| United States | $ | $ | |||||||||||||||||||||
| Japan | |||||||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Other foreign countries | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
(1) Revenue presented above is attributed to the destination country where the customer is located. | |||||||||||||||||||||||
13
W.W. Grainger, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The Company is a broad line distributor of MRO products. Products are regularly added and removed from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked. For further information regarding the Company's sales by segment and customer industry, see Note 2.
NOTE 7 - CONTINGENCIES AND LEGAL MATTERS
From time to time the Company is involved in various legal and administrative proceedings, including claims related to: product liability, safety or compliance; privacy and cybersecurity matters; negligence; contract disputes; environmental issues; unclaimed property; wage and hour laws; intellectual property; advertising and marketing; consumer protection; pricing (including disaster or emergency declaration pricing statutes); employment practices; regulatory compliance, including trade and export matters; anti-bribery and corruption; and other matters and actions brought by team members, consumers, competitors, suppliers, customers, governmental entities and other third parties.
The Company remains in litigation involving KMCO, LLC (KMCO) as previously disclosed. The Company continues to contest the remaining KMCO-related lawsuits and cannot reasonably predict the timing, outcome or any estimate of possible loss or range of losses on the remaining KMCO lawsuits.
NOTE 8 - SUBSEQUENT EVENTS
On April 30, 2025, the Company’s Board of Directors declared a quarterly dividend of $2.26 per share, payable June 1, 2025, to shareholders of record on May 12, 2025.
14
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of W.W. Grainger, Inc. (Grainger or Company) as it is viewed by management of the Company. The following discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2024 included in the Company's 2024 Form 10-K and the Condensed Consolidated Financial Statements and accompanying notes included in Part I, Item 1: Financial Statements of this Form 10-Q.
Percentage figures included in this section have not been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in the Company's Condensed Consolidated Financial Statements or in the associated text.
Overview
Grainger is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America, Japan and the U.K. Grainger uses a combination of its high-touch solutions and endless assortment businesses to serve its customers worldwide, which rely on Grainger for products and services that enable them to run safe, sustainable and productive operations.
Strategic Priorities
For a discussion of the Company’s strategic priorities for 2025, see Part 1, Item 1: Business and Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2024 Form 10-K.
Recent Events
Macroeconomic Conditions
The global economy continues to experience elevated levels of volatility and uncertainty, including within the commodity, labor, and transportation markets, driven by a combination of geopolitical developments and macroeconomic factors. Recent imposition of new and expanded tariffs have further contributed to disruptions in global capital markets and global supply chains. These developments may impact the Company’s operations, financial condition, and results of operations.
The Company is actively monitoring economic conditions in the U.S. and internationally, including the potential ramifications of evolving trade policies, changes in interest rates, foreign currency exchange rate fluctuations, inflationary pressures, and the risk of a global or regional economic recession. In response to these factors, the Company has implemented various strategies designed to mitigate certain adverse effects of changing inflationary conditions and supply chain challenges, while continuing to maintain market price competitiveness.
Historically, the Company's broad and diverse customer base and the generally nondiscretionary nature of its products have provided a degree of resilience during periods of economic contraction in the industrial MRO market. However, the ultimate impact of ongoing macroeconomic conditions, including recent tariff-related developments, remains uncertain and cannot be predicted at this time.
For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors in the Company’s 2024 Form 10-K.
15
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations –Three Months Ended March 31, 2025
In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. For further information regarding the Company's non-GAAP measures including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."
The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings for the three months ended March 31, 2025 and 2024 (in millions of dollars except per share amounts):
Three Months Ended March 31, | |||||||||||||||||||||||||||||
| % Change | % of Net Sales | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
Net sales(1) | $ | 4,306 | $ | 4,235 | 1.7 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||
| Cost of goods sold | 2,596 | 2,567 | 1.1 | 60.3 | 60.6 | ||||||||||||||||||||||||
| Gross profit | 1,710 | 1,668 | 2.5 | 39.7 | 39.4 | ||||||||||||||||||||||||
| Selling, general and administrative expenses | 1,038 | 999 | 3.9 | 24.1 | 23.6 | ||||||||||||||||||||||||
| Operating earnings | 672 | 669 | 0.4 | 15.6 | 15.8 | ||||||||||||||||||||||||
| Other expense – net | 15 | 14 | 7.1 | 0.4 | 0.4 | ||||||||||||||||||||||||
| Income tax provision | 157 | 158 | (0.6) | 3.6 | 3.7 | ||||||||||||||||||||||||
| Net earnings | 500 | 497 | 0.6 | 11.6 | 11.7 | ||||||||||||||||||||||||
| Noncontrolling interest | 21 | 19 | 10.5 | 0.5 | 0.4 | ||||||||||||||||||||||||
| Net earnings attributable to W.W. Grainger, Inc. | $ | 479 | $ | 478 | 0.2 | 11.1 | % | 11.3 | % | ||||||||||||||||||||
| Diluted earnings per share | $ | 9.86 | $ | 9.62 | 2.5 | % | |||||||||||||||||||||||
(1) For further information regarding the Company's disaggregated revenue, see Note 2 of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1: Financial Statements of this Form 10-Q. | |||||||||||||||||||||||||||||
The following table is included as an aid to understanding the changes of Grainger's total net sales, daily net sales and daily, constant currency net sales from the prior period for the three months ended March 31, 2025 and 2024 (in millions of dollars):
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | % Change(1) | 2024 | % Change(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 4,306 | 1.7 | % | $ | 4,235 | 3.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Daily net sales(2) | $ | 69.4 | 3.3 | % | $ | 66.2 | 3.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Daily, constant currency net sales(2) | $ | 70.1 | 4.4 | % | $ | 66.8 | 4.4 | % | ||||||||||||||||||||||||||||||||||||||||||
(1) Calculated on the basis of prior year net sales for the three months ended March 31, 2025 and 2024. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Daily net sales are adjusted for the difference in U.S. selling days relative to the prior year period. Daily, constant currency net sales are also adjusted to exclude the impact on net sales due to year-over-year foreign currency exchange rate fluctuations. There were 63 and 64 sales days in the three months ended March 31, 2025 and 2024, respectively. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures." | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales of $4,306 million for the three months ended March 31, 2025 increased $71 million, or 2%, and on a daily, constant currency basis, net sales increased 4% compared to the same period in 2024. Both High-Touch Solutions N.A. and the Endless Assortment segment contributed to daily, constant currency sales growth in the first quarter of 2025. For further discussion on the Company's net sales, see the Segment Analysis section below.
16
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Gross profit of $1,710 million for the three months ended March 31, 2025 increased $42 million, or 3%, and gross profit margin of 39.7% increased 30 basis points compared to the same period in 2024. For further discussion on the Company's gross profit, see the Segment Analysis section below.
Selling, general and administrative (SG&A) expenses of $1,038 million for the three months ended March 31, 2025 increased $39 million, or 4%, compared to the same period in 2024. The increase was primarily due to higher marketing expense in the first quarter of 2025.
Operating earnings of $672 million for the three months ended March 31, 2025 increased $3 million compared to the same period in 2024.
Income tax expense of $157 million and $158 million represents effective tax rates of 23.9% and 24.2% for the three months ended March 31, 2025 and 2024, respectively. The decrease in the effective tax rate was primarily due to tax planning benefits offset by lower benefits from stock compensation in the period.
Diluted earnings per share was $9.86 for the three months ended March 31, 2025, an increase of 3% compared to $9.62 for the same period in 2024.
Segment Analysis
In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. For further information regarding the Company's non-GAAP measures including reconciliations to the most directly comparable GAAP measure, see below "Non-GAAP Measures." For further segment information, see Note 6 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1: Financial Statements of this Form 10-Q.
High-Touch Solutions N.A.
The following table shows reported segment results (in millions of dollars):
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
| Net sales | $ | 3,397 | $ | 3,405 | (0.2) | % | |||||||||||
| Gross profit | $ | 1,439 | $ | 1,423 | 1.1 | % | |||||||||||
| Selling, general and administrative expenses | $ | 839 | $ | 813 | 3.2 | % | |||||||||||
| Operating earnings | $ | 600 | $ | 610 | (1.6) | % | |||||||||||
Net sales of $3,397 million for the three months ended March 31, 2025 were flat, and on a daily, constant currency basis, net sales increased 2% compared to the same period in 2024. The increase was primarily due to volume.
Gross profit of $1,439 million for the three months ended March 31, 2025 increased $16 million, or 1%. Gross profit margin of 42.4% increased 60 basis points compared to the same period in 2024. The increase was primarily from the supplier funding benefit related to the annual Grainger Sales Meeting. The benefit is offset in SG&A.
SG&A of $839 million for the three months ended March 31, 2025 increased $26 million, or 3%, compared to the same period in 2024. The increase was primarily due to higher payroll and benefit and marketing expenses.
Operating earnings of $600 million for the three months ended March 31, 2025 decreased $10 million, or 2%, compared to the same period in 2024.
17
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Endless Assortment
The following table shows reported segment results (in millions of dollars):
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
| Net sales | $ | 828 | $ | 751 | 10.3 | % | |||||||||||
| Gross profit | $ | 245 | $ | 220 | 11.4 | % | |||||||||||
| Selling, general and administrative expenses | $ | 173 | $ | 161 | 7.5 | % | |||||||||||
| Operating earnings | $ | 72 | $ | 59 | 22.0 | % | |||||||||||
Net sales of $828 million for the three months ended March 31, 2025 increased $77 million, or 10%, and on a daily, constant currency basis increased 15% compared to the same period in 2024. The increase was due to repeat business for the segment and enterprise customer growth at MonotaRO. Sales growth was partially offset by unfavorable currency exchange of 3% due to changes in the exchange rate between the U.S. dollar and the Japanese yen.
Gross profit of $245 million for the three months ended March 31, 2025 increased $25 million, or 11%, and gross profit margin of 29.6% increased 30 basis points compared to the same period in 2024.
SG&A of $173 million for the three months ended March 31, 2025 increased $12 million, or 8%, compared to the same period in 2024. The increase was primarily due to higher marketing expenses.
Operating earnings of $72 million for the three months ended March 31, 2025 increased $13 million, or 22%, compared to the same period in 2024.
18
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Non-GAAP Measures
Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. Non-GAAP measures exclude certain items affecting comparability that can affect the year-over-year assessment of operating results and other one-time items that do not directly reflect ongoing operating results.
The Company adjusts its reported net sales to daily, constant currency net sales when there are differences in the number of U.S. selling days relative to the prior year period and also excludes the impact due to changes in foreign currency exchange rate fluctuations.
The Company believes its non-GAAP measures provide meaningful information to assist investors in understanding financial results and assessing future performance as they provide a better baseline for analyzing the ongoing performance of its businesses by excluding items that may not be indicative of core operating results. Grainger’s non-GAAP financial measures should be considered in addition to, and not as a replacement for or as a superior measure to, its most directly comparable GAAP measures and may not be comparable to similarly titled measures reported by other companies.
The following tables provide reconciliations of reported net sales growth from the prior year period in accordance with GAAP to the Company's non-GAAP measures daily net sales and daily, constant currency net sales for the three months ended March 31, 2025 and 2024 (in millions of dollars):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||
| High-Touch Solutions N.A. | Endless Assortment | Total Company(1) | ||||||||||||||||||||||||||||||||||||||||||
| 2025 | % Change(2) | 2025 | % Change(2) | 2025 | % Change(2) | |||||||||||||||||||||||||||||||||||||||
| Reported net sales | $ | 3,397 | (0.2) | % | $ | 828 | 10.3 | % | $ | 4,306 | 1.7 | % | ||||||||||||||||||||||||||||||||
Daily impact(3) | 0.9 | 1.5 | 0.2 | 1.7 | 1.1 | 1.6 | ||||||||||||||||||||||||||||||||||||||
| Daily net sales | 54.8 | 1.3 | 13.4 | 12.0 | 69.4 | 3.3 | ||||||||||||||||||||||||||||||||||||||
Foreign currency exchange(4) | 0.3 | 0.6 | 0.3 | 3.3 | 0.7 | 1.1 | ||||||||||||||||||||||||||||||||||||||
| Daily, constant currency net sales | $ | 55.1 | 1.9 | % | $ | 13.7 | 15.3 | % | $ | 70.1 | 4.4 | % | ||||||||||||||||||||||||||||||||
| 2024 | % Change(2) | 2024 | % Change(2) | 2024 | % Change(2) | |||||||||||||||||||||||||||||||||||||||
| Reported net sales | $ | 3,405 | 3.4 | % | $ | 751 | 3.7 | % | $ | 4,235 | 3.5 | % | ||||||||||||||||||||||||||||||||
| Daily net sales | 53.2 | 3.4 | 11.7 | 3.7 | 66.2 | 3.5 | ||||||||||||||||||||||||||||||||||||||
Foreign currency exchange(4) | (0.1) | (0.2) | 0.7 | 6.3 | 0.6 | 0.9 | ||||||||||||||||||||||||||||||||||||||
| Daily, constant currency net sales | $ | 53.1 | 3.2 | % | $ | 12.4 | 10.0 | % | $ | 66.8 | 4.4 | % | ||||||||||||||||||||||||||||||||
(1) Total Company includes Other. Grainger's businesses reported in Other do not meet the criteria of a reportable segment. | ||||||||||||||||||||||||||||||||||||||||||||
(2) Compared to net sales in the prior year period. | ||||||||||||||||||||||||||||||||||||||||||||
(3) Excludes the impact on net sales due to the difference in U.S. selling days relative to the prior year period on a daily basis. There were 63 and 64 sales days in the three months ended March 31, 2025 and 2024, respectively. | ||||||||||||||||||||||||||||||||||||||||||||
(4) Excludes the impact on net sales due to year-over-year foreign currency exchange rate fluctuations on a daily basis. | ||||||||||||||||||||||||||||||||||||||||||||
19
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Grainger believes its current balances of cash and cash equivalents, marketable securities and availability under its revolving credit facility will be sufficient to meet its liquidity needs for the next twelve months. The Company expects to continue to invest in its business and return excess cash to shareholders through cash dividends and share repurchases, which it plans to fund through cash flows generated from operations. Grainger also maintains access to capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity.
Cash and Cash Equivalents
As of March 31, 2025 and December 31, 2024, Grainger had cash and cash equivalents of $666 million and $1,036 million, respectively. The Company had approximately $1.9 billion in available liquidity as of March 31, 2025.
Cash Flows
The following table shows the Company's cash flow activity for the periods presented (in millions of dollars):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Total cash provided by (used in): | |||||||||||
| Operating activities | $ | 646 | $ | 661 | |||||||
| Investing activities | (125) | (118) | |||||||||
| Financing activities | (898) | (391) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 7 | (8) | |||||||||
| Increase (decrease) in cash and cash equivalents | $ | (370) | $ | 144 | |||||||
Net cash provided by operating activities was $646 million and $661 million for the three months ended March 31, 2025 and 2024, respectively. The decrease was driven by unfavorable changes in working capital primarily due to inventory management and timing of cash payments compared to the prior year period.
Net cash used in investing activities was $125 million and $118 million for the three months ended March 31, 2025 and 2024, respectively. The increase was due to capital expenditures driven by continued U.S. supply chain investments in the first quarter of 2025.
Net cash used in financing activities was $898 million and $391 million for the three months ended March 31, 2025 and 2024, respectively. The increase in cash used in financing activities was primarily due to the repayment of the 1.85% Senior Notes in the amount of $500 million.
Working Capital
Working capital as of March 31, 2025 was $3,198 million, a decrease of $84 million compared to $3,282 million as of December 31, 2024. As of March 31, 2025 and December 31, 2024, the ratio of current assets to current liabilities was 2.7 and 2.9, respectively.
Debt
Grainger maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. Grainger has various sources of financing available.
Total debt as a percent of total capitalization was 37.2% and 42.9% as of March 31, 2025 and December 31, 2024, respectively.
Grainger receives ratings from two independent credit rating agencies: Moody's Investor Service (Moody's) and Standard & Poor's (S&P). Both credit rating agencies currently rate the Company's corporate credit at investment grade.
20
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table summarizes the Company's credit ratings as of March 31, 2025:
| Corporate | Senior Unsecured | Short-term | |||||||||||||||
| Moody's | A2 | A2 | P1 | ||||||||||||||
| S&P | A+ | A+ | A1 | ||||||||||||||
Commitments and Other Contractual Obligations
There were no material changes to the Company’s commitments and other contractual obligations from those disclosed in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2024 Form 10-K.
Critical Accounting Estimates
The preparation of Grainger’s Condensed Consolidated Financial Statements and accompanying notes are in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make assumptions and estimates that affect the reported amounts. The Company considers an accounting policy to be a critical estimate if: (1) it involves assumptions that are uncertain when judgment was applied, and (2) changes in the estimate assumptions, or selection of a different estimate methodology, could have a significant impact on Grainger’s consolidated financial position and results. While the Company believes the assumptions and estimates used are reasonable, the Company’s management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances.
Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8: Financial Statements of the Company's 2024 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s Condensed Consolidated Financial Statements.
There were no material changes to the Company's critical accounting estimates from those disclosed in Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2024 Form 10-K.
21
W.W. Grainger, Inc. and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
From time to time in this Quarterly Report on Form 10-Q as well as in other written reports, communications and verbal statements, Grainger makes forward-looking statements that are not historical in nature but concern forecasts of future results, business plans, analyses, prospects, strategies, objectives and other matters that may be deemed to be “forward-looking statements” under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project,” “will,” or “would,” and similar terms and phrases, including references to assumptions.
Grainger cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to risks and uncertainties, many of which are beyond Grainger's control, which could cause Grainger's results to differ materially from those that are presented. Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; a major loss of customers; loss or disruption of sources of supply; changes in customer or product mix; increased competitive pricing pressures; changes in third-party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies, including with respect to Grainger's eCommerce platforms and artificial intelligence; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in Grainger's gross profit margin; Grainger's responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters; the impact of any government shutdown; disruption or breaches of information technology or data security systems involving Grainger or third parties on which Grainger depends; general industry, economic, market or political conditions; general global economic conditions including existing, new, or increased tariffs, trade issues and changes in trade policies, inflation, and interest rates; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of Grainger's common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; effects of outbreaks of pandemic disease or viral contagions, global conflicts, natural or human induced disasters, extreme weather, and other catastrophes or conditions; effects of climate change; failure to execute on our efforts and programs related to environmental, social and governance matters; competition for, or failure to attract, retain, train, motivate and develop executives and key team members; loss of key members of management or key team members; loss of operational flexibility and potential for work stoppages or slowdowns if team members unionize or join a collective bargaining arrangement; changes in effective tax rates; changes in credit ratings or outlook; Grainger's incurrence of indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments and other factors identified under Part I, Item 1A: Risk Factors and elsewhere in Grainger's latest Form 10-K, as updated from time to time in Grainger's Quarterly Form 10-Q.
The preceding list is not intended to be an exhaustive list of all of the factors that could impact Grainger's forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on Grainger's forward looking-statements and Grainger undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
22
W.W. Grainger, Inc. and Subsidiaries
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Grainger’s primary market risk exposures include changes in foreign currency exchange and interest rates.
There were no material changes to the Company’s market risk from those described in Part II, Item 7A: Quantitative and Qualitative Disclosures About Market Risk in the Company's 2024 Form 10-K.
Item 4: Controls and Procedures
Disclosure Controls and Procedures
The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Grainger's disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that Grainger’s disclosure controls and procedures were effective as of the end of the period covered by this report in (i) ensuring that information required to be disclosed by Grainger in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There were no changes in Grainger's internal control over financial reporting for the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, Grainger’s internal control over financial reporting.
23
PART II – OTHER INFORMATION
Item 1: Legal Proceedings
For an update to the description of the Company’s legal proceedings, see Note 7 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1: Financial Information of this Form 10-Q.
Item 1A: Risk Factors
There have been no material changes from the risk factors previously disclosed in Part 1, Item 1A: Risk Factors in the Company's 2024 Form 10-K.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities – First Quarter 2025
| Period | Total Number of Shares Purchased (A)(B) | Average Price Paid per Share (C) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (D) | Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs | |||||||||||||||||||||||||
| Jan. 1 – Jan. 31 | 78,216 | $1,095.30 | 78,045 | 4,103,056 | |||||||||||||||||||||||||
| Feb. 1 – Feb. 28 | 95,222 | $1,028.21 | 95,222 | 4,007,834 | |||||||||||||||||||||||||
| Mar. 1 – Mar. 31 | 103,728 | $983.86 | 103,536 | 3,904,298 | |||||||||||||||||||||||||
| Total | 277,166 | 276,803 | |||||||||||||||||||||||||||
A.There were no shares withheld to satisfy tax withholding obligations.
B.The difference of 363 shares between the Total Number of Shares Purchased and the Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs represents shares purchased by the administrator and record keeper of the W.W. Grainger, Inc. Retirement Savings Plan for the benefit of the employees who participate in the plan.
C.Average price paid per share excludes excise tax and commissions of $0.02 per share paid.
D.Purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors and announced April 24, 2024 (2024 Program). The 2024 Program authorized the Company to repurchase an aggregate amount of up to five million shares in the open market, through privately negotiated transactions and block transactions, pursuant to a trading plan or otherwise with no expiration date.
Item 5: Other Information
None of the Company's directors or officers adopted terminated
On April 30, 2025, the Company and Susan Slavik Williams, a member of the Company’s Board of Directors (the “Board”) and a beneficial owner of approximately 5.7% of the Company’s outstanding shares, entered into a letter agreement (the “Agreement”), pursuant to which Ms. Slavik Williams will, among other items, annually have the right to nominate up to one director nominee, which may only be Ms. Slavik Williams or a Family Member (as defined in the Agreement), for inclusion in the Board’s recommended slate of nominees for the ensuing annual meeting of shareholders. This summary of the Agreement is qualified in its entirety by reference to the Agreement, which is attached hereto as Exhibit 10.4 and incorporated herein by reference.
24
W.W. Grainger, Inc. and Subsidiaries
Item 6: Exhibits
| EXHIBIT NO. | DESCRIPTION | |||||||
| 2025 Form of W.W. Grainger, Inc. 2022 Incentive Plan Restricted Stock Unit Award Agreement between W.W. Grainger, Inc. and certain of its executive officers.* | ||||||||
| 2025 Form of W.W. Grainger, Inc. 2022 Incentive Plan Performance Stock Unit Award Agreement between W.W. Grainger, Inc. and certain of its executive officers.* | ||||||||
| Summary Description of the Company Management Incentive Program.* | ||||||||
| Letter of Understanding between W.W. Grainger, Inc. and Susan Slavik Williams.** | ||||||||
| Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.** | ||||||||
| Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.** | ||||||||
| Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*** | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.** | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document.** | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.** | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.** | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document.** | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.** | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).** | |||||||
(*) Management contract or compensatory plan or arrangement. | ||||||||
(**) Filed herewith. | ||||||||
(***) Furnished herewith. | ||||||||
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| W.W. GRAINGER, INC. | |||||||||||
| Date: | May 1, 2025 | By: | /s/ Deidra C. Merriwether | ||||||||
| Deidra C. Merriwether | |||||||||||
| Senior Vice President | |||||||||||
| and Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
| Date: | May 1, 2025 | By: | /s/ Laurie R. Thomson | ||||||||
| Laurie R. Thomson | |||||||||||
| Vice President and Controller | |||||||||||
| (Principal Accounting Officer) | |||||||||||
26
Exhibit 10.1
W.W. GRAINGER, INC.
2022 Incentive Plan
Restricted Stock Unit Award Agreement
This Restricted Stock Unit Award Agreement (this "Award Agreement"), dated as of April 1, 2025 (the "Grant Date"), is entered into between W.W. Grainger, Inc., an Illinois corporation (the "Company"), and you (the "Participant") as an Employee of the Company or a Subsidiary (collectively, the "Employer").
In consideration of the Participant's agreement to enter into a Confidentiality, Invention Assignment, Non-Competition and Non-Solicitation Agreement with the Company concurrently with this Award Agreement on the Grant Date (the "Competition Agreement"), the Company desires to grant the Participant an award of restricted stock units (the "RSUs"), providing for the issuance of shares of the Company's common stock ("Shares") pursuant to the W.W. Grainger, Inc. 2022 Incentive Plan (as may be amended from time to time, the "Plan") and the Participant agrees to enter into the Competition Agreement and accept such RSUs on the terms and conditions set forth in this Award Agreement, the Plan and the Competition Agreement.
Capitalized terms used but not defined in this Award Agreement have the meanings specified in the Plan (unless otherwise amended by Appendix A).
In consideration of the mutual provisions set forth in this Award Agreement and in the Competition Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Grants
1.01 Grant. Subject to the terms and conditions of this Award Agreement, the Plan and the Competition Agreement (the terms of which are hereby incorporated herein by reference) and effective on the Grant Date, the Company hereby grants to the Participant the number of RSUs as specified in the April 1, 2025 award grant notice posted to the Participant's electronic investment account maintained with Morgan Stanley Smith Barney LLC, the stock plan service provider engaged by the Company in connection with the administration of the Plan (the "Stock Plan Administrator"). Each RSU represents a contractual right to receive one (1) Share upon the satisfaction of the terms and conditions of this Award Agreement.
ARTICLE II
Provisions Relating to RSUs
2.01 Vesting of RSUs. If the Participant remains continuously employed by the Employer (or any other Subsidiary or Affiliate) until the vesting date(s) specified in the grant notice ("RSU Vesting Date"), the RSUs shall become vested on each such date and the Participant shall be entitled to receive the underlying Shares as provided herein. The RSUs shall not vest before an applicable RSU Vesting Date unless otherwise provided or permitted by the Plan or this Award Agreement, and any RSUs that do not vest shall be forfeited in full and the Participant shall have no further rights with respect to such RSUs. Each RSU that becomes vested as provided herein shall be settled in accordance with Section 2.05.
2.02 Effect of Termination of Employment. Except as otherwise stated in the Plan, if the Participant's employment or service is terminated prior to an RSU Vesting Date for any reason whatsoever other than the Participant's death, Disability or Retirement, the Participant shall cease vesting in the RSUs as of the Participant's Termination Date (defined below) and the RSUs shall be forfeited in their entirety. If the Participant is a resident of, or employed in, the United States, "Termination Date" shall mean the effective date of termination of the Participant's employment. If the Participant is a resident of, or employed outside of, the United States, "Termination Date" shall mean the earliest of (i) the date on which notice of termination is provided to the Participant, (ii) the last day of the Participant's active service with the Employer or (iii) the last day on which the Participant is an employee of the Employer, as determined in each case without including any required advanced notice period and irrespective of the status of the termination under local labor or employment laws.
2.03 Effect of Death or Disability of the Participant. If the Participant's employment or service is terminated prior to an RSU Vesting Date due to the Participant's death or Disability, the RSUs immediately shall fully vest. For purposes of this Award Agreement, "Disability" shall have the same meaning as defined in the Plan, subject to modification as may be required to conform to the laws, rules and regulations (“Laws”) of the Participant's country of residence (and country of employment, if different). For the sake of clarity, the date of the Participant’s death or Disability shall be an RSU Vesting Date. The RSUs that become vested as provided herein shall be settled in accordance with Section 2.05.
2.04 Effect of Retirement of the Participant. If the Participant's employment or service is terminated prior to an RSU Vesting Date due to the Participant's Retirement, the RSUs shall continue to vest and shall be settled in accordance with Sections 2.01 and 2.05. For purposes of this Award Agreement, "Retirement" shall mean the Participant's retirement of employment with the Company and its Subsidiaries on or after the Participant's (i) completion of at least 25 years of service with the Company and its Subsidiaries, (ii) completion of at least 20 years of service with the Company and its Subsidiaries and attainment of age 55, or (iii) completion of at least five (5) years of service with the Company and its Subsidiaries and attainment of age 60. Further, if the Participant is employed in a country other than Canada, Mexico or the United States, the provisions of this Section 2.04 shall be inapplicable.
2.05 Settlement. Upon an RSU Vesting Date, the Company shall, as soon as practicable (but in no event later than 60 days following the applicable RSU Vesting Date), settle the RSUs by registering Shares in the Participant's name and delivering such Shares to the Participant's electronic stock plan account maintained by the Stock Plan Administrator. At the discretion of the Committee, and subject to such policies and procedures as it may adopt from time to time, the Participant's RSUs may be settled in the form of: (i) cash, to the extent settlement in Shares (a) is prohibited under applicable Laws, (b) would require the Participant, the Company or the Employer to obtain the approval of any governmental and/or regulatory body in the Participant's country of residence (and country of employment, if different), or (c) is administratively burdensome or (ii) Shares, but the Company may require the Participant to immediately sell such Shares if necessary to comply with applicable Laws (in which case, the Participant hereby expressly authorizes the Company to issue sales instructions in relation to such Shares on the Participant's behalf).
2.06 Dividend Equivalents. Prior to an RSU Vesting Date, the Participant shall be entitled to receive cash dividend payments equal to any cash dividends and other distributions paid with respect to a number of Shares underlying the RSUs held by the Participant and such dividend equivalents shall be payable to the Participant within 30 days of the date on which the Company pays the cash dividend or other distributions to holders of Shares generally. If the Company declares any dividends payable in Shares (rather than in cash), the Participant shall be entitled to additional RSUs equal to the Fair Market Value (as determined by the Committee) of such Share dividends; provided, such additional RSUs shall be subject to the same vesting, forfeiture and transferability requirements and restrictions that apply to the original RSUs with respect to which they relate, including the vesting provisions of Section 2.01 and the settlement provisions of Section 2.05.
ARTICLE III
Recoupment
3.01 Recoupment in Event of Misconduct. If the Company determines that the Participant has committed or engaged in misconduct against the Company or has engaged in any criminal conduct, including embezzlement, fraud or theft, that involves or is related to the Company, or any other conduct that violates Company policy, causes or is discovered to have caused, any loss, damage, injury or other endangerment to the Company's property or reputation, and such Participant has received or is entitled to receive performance stock units, performance restricted stock units, stock options, restricted stock units or cash incentive compensation (collectively, "Incentive Compensation"), then the Company shall have the right to cancel the Incentive Compensation, require the return of Shares acquired under the Plan, recapture any gain realized upon the sale of Shares acquired under the Plan or take any other action it deems appropriate under the circumstances with respect to recouping the Incentive Compensation. The Company shall have sole discretion in determining whether the
Participant's conduct was in compliance with applicable Law or Company policy and the extent to which the Company will seek recovery of the Incentive Compensation notwithstanding any other remedies available to the Company. If the Participant engages in misconduct or is believed to have engaged in misconduct, including but not limited to any violation of any of Participant's obligations under the Competition Agreement, the Company shall be entitled to take the actions outlined above for recouping the Incentive Compensation, as the Company deems appropriate under the circumstances.
3.02 Recoupment in Event of Materially Inaccurate Financial Results. If the Company has publicly filed inaccurate financial results (the "Subject Financials"), whether or not they result in a restatement, the Company may recover any Incentive Compensation (a) that was paid or settled to the Participant during the period covered by the Subject Financials as set forth herein, or (b) as otherwise may be required by any applicable Laws or listing standard adopted by the New York Stock Exchange. If the payment or settlement of Incentive Compensation would have been lower had the achievement of applicable financial performance goals been calculated based on restated financial results with respect to the Subject Financials, the Company may, if it determines it appropriate in its sole discretion, recover the portion of the paid or settled Incentive Compensation in excess of the payment or settlement that would have been made based on restated financial results or as otherwise may be required by any applicable Laws or listing standard adopted by the New York Stock Exchange. The Company will not seek to recover Incentive Compensation received or settled more than three (3) years after the date of the initial filing that contained the Subject Financials or any longer period as may be required by any applicable Law or listing standard adopted by the New York Stock Exchange.
3.03 Recoupment in Event of Error. If the Participant receives any amount in excess of what the Participant should have received under the terms of this Award Agreement for any reason (including, without limitation, by reason of a mistake in calculations or administrative error), all as determined by the Committee, then the Company shall have the right to cancel the Incentive Compensation, require the return of Shares acquired under the Plan, recapture any gain realized upon the sale of Shares acquired under the Plan or take any other action it deems appropriate under the circumstances with respect to recouping the Incentive Compensation.
3.04 Implementation. For purposes of this Article III, the Participant expressly authorizes the Company to issue instructions, on behalf of the Participant, to the Stock Plan Administrator (and/or any other brokerage firm/third party service provider engaged by the Company to hold Shares and other amounts acquired under the Plan) to re-convey, transfer or otherwise return to the Company any Incentive Compensation (whether paid in the form of cash or Shares) subject to recoupment hereunder. The Participant acknowledges and agrees that the Company's rights hereunder shall not be affected in any way by any subsequent change in the Participant’s status, including retirement or termination of employment (including due to death or Disability). The
Participant expressly agrees to indemnify and hold the Company and the Employer harmless from any loss, cost, damage, or expense (including attorneys' fees) that the Company or the Employer may incur as a result of the Participant’s actions or in the Company and the Employer’s efforts to recover such previously made payments or value pursuant to this Article III.
3.05 Forfeiture. To the extent any of the events set forth in this Article III occur before the Participant receives any Incentive Compensation due hereunder, any such Incentive Compensation shall be forfeited as determined by the Company in its sole discretion.
3.06 Recoupment Policy. Notwithstanding anything in this Award Agreement to the contrary, the Participant acknowledges and agrees that this Award Agreement and the award described herein (and any settlement thereof) are subject to the terms and conditions of the Company’s clawback policy or policies (if any) as may be in effect from time to time, including specifically to implement Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the Shares at any point may be traded) (the “Compensation Recovery Policy”), and that applicable terms of this Award Agreement shall be deemed superseded by and subject to the terms and conditions of the Compensation Recovery Policy from and after the effective date thereof. By accepting this award under the Plan and pursuant to this Award Agreement, the Participant consents to be bound by the terms of the Compensation Recovery Policy, to the extent applicable to the Participant, and agrees and acknowledges to fully cooperate with and assist the Company in connection with any of the Participant’s obligations to the Company pursuant to the Compensation Recovery Policy, and agrees that the Company may enforce its rights under the Compensation Recovery Policy through any and all reasonable means permitted under applicable law as it deems necessary or desirable under the Compensation Recovery Policy, in each case from and after the effective dates thereof. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company from the Participant of any such amounts, including from the Participant’s accounts or from any other compensation, to the extent permissible under Section 409A of the Internal Revenue Code.
ARTICLE IV
Tax
4.01 Tax-Related Items. Regardless of any action the Company or the Employer takes with respect to any or all income tax (including U.S. federal, state and local taxes or non-U.S. taxes), social insurance, contributions, levies, payroll tax, payment on account or other tax-related withholding ("Tax-Related Items"), the Participant acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant's responsibility and that the Company and the Employer (i) make no representations or undertakings regarding the treatment
of any Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the vesting of the RSUs, the acquisition of the Shares, the removal of any restrictions on the Shares, the subsequent sale of any Shares acquired pursuant to the RSUs and the receipt of any dividends or dividend equivalents and (ii) do not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant's liability for Tax-Related Items.
4.02 Tax Withholding Obligations. Prior to the delivery of Shares (or cash) upon the vesting of the RSUs, if the Participant's country of residence (and country of employment, if different) requires withholding of Tax-Related Items, the Company shall withhold a sufficient number of whole Shares otherwise issuable upon the vesting of the RSUs that have an aggregate Fair Market Value sufficient to pay the Tax-Related Items required to be withheld with respect to the Shares or the cash equivalent. The Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, including maximum applicable rates. The cash equivalent of the Shares withheld will be used to settle the obligation to withhold the Tax-Related Items. In the event that the withholding of Shares is prohibited under applicable Law or otherwise may trigger adverse consequences to the Company or the Employer, the Company and the Employer may withhold the Tax-Related Items required to be withheld with respect to the Shares in cash from the Participant's regular salary and/or wages or any other amounts payable to the Participant, or may require the Participant to personally make payment of the Tax-Related Items required to be withheld. In the event the withholding requirements are not satisfied through the withholding of Shares by the Company or through the withholding of cash from the Participant's regular salary and/or wages or other amounts payable to the Participant, no Shares will be issued to the Participant (or the Participant's estate) upon vesting of the RSUs unless and until satisfactory arrangements (as determined by the Committee) have been made by the Participant with respect to the payment of any Tax-Related Items that the Company or the Employer determines, in its sole discretion, must be withheld or collected with respect to such RSUs. If the obligation for the Participant's Tax-Related Items is satisfied by withholding a number of Shares as described herein, the Participant shall be deemed to have been issued the full number of Shares issuable upon vesting, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of the vesting or any other aspect of the RSU.
The Participant will pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or otherwise account for as a result of the Participant's participation in the Plan or the Participant's acquisition of Shares that cannot be satisfied by the means described in this Article IV. The Company may refuse to deliver any Shares due upon vesting of the RSUs if the Participant fails to comply with the Participant's obligations in connection with the Tax-Related Items as described herein. If the Participant is subject to taxation in more than one jurisdiction, the Participant acknowledges that the Company, the Employer or one or more of their respective Subsidiaries may be required to withhold or account for Tax-
Related Items in more than one jurisdiction. The Participant hereby consents to any action reasonably taken by the Company and the Employer to meet the Participant's obligation for Tax-Related Items. By accepting this grant of RSUs, the Participant expressly consents to the withholding of Shares and/or withholding from the Participant's regular salary and/or wages or other amounts payable to the Participant as provided for hereunder. All other Tax-Related Items related to the RSUs, and any Shares delivered in payment thereof are the Participant's sole responsibility.
ARTICLE V
International Arrangements
5.01 Exchange Controls. As a condition to this RSU award, the Participant agrees to comply with any applicable foreign exchange Laws and hereby consents to any necessary, appropriate or advisable actions taken by the Company, the Employer or any of their respective Subsidiaries as may be required to comply with any applicable Laws of the Participant's country of residence (and country of employment, if different).
5.02 Foreign Asset and Account Reporting Requirements. The Participant acknowledges that there may be certain foreign asset and/or account reporting requirements, which may affect the Participant's ability to acquire or hold Shares acquired under the Plan or cash received from participating in the Plan (including from any dividends or dividend equivalent payments) in a brokerage or bank account outside the Participant's country of residence (and country of employment, if different). The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant's country of residence (and country of employment, if different). The Participant acknowledges and agrees that it is the Participant's personal responsibility to be compliant with such Laws.
5.03 Non-U.S. Addendum. Notwithstanding any provisions of this Award Agreement to the contrary, the RSUs shall be subject to any special terms and conditions for the Participant's country of residence (and country of employment, if different) set forth in the addendum to this Award Agreement, attached hereto as Appendix A ("Non-U.S. Addendum"). If the Participant transfers residence and/or employment to another country reflected in the Non-U.S. Addendum at the time of transfer, the special terms and conditions for such country will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such special terms and conditions is necessary or advisable in order to comply with local Laws or to facilitate the operation and administration of the RSUs and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant's transfer). In all circumstances, the Non-U.S. Addendum shall constitute part of this Award Agreement.
5.04 Controlling Language. If the Participant is in a country where English is not an official language, the Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of this Award Agreement or
has had the ability to consult with an advisor who is sufficiently proficient in the English language. The Participant acknowledges and agrees that it is the Participant's express intent that this Award Agreement, the Plan, the Competition Agreement and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the RSUs be drawn up in English. If the Participant has received this Award Agreement, the Plan, the Competition Agreement or any other documents related to the RSUs translated into a language other than English and the meaning of any translated version is different than the English version, the English version will control unless otherwise provided in the non-English version of the agreement.
ARTICLE VI
Miscellaneous
6.01 Restriction on Transferability. Except to the extent expressly provided in the Plan or this Award Agreement, the RSUs may not be sold, transferred, pledged, assigned, or otherwise alienated at any time other than by will or by the laws of descent and distribution. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the foregoing, the Committee may permit, in its sole discretion, the Participant to transfer the RSUs to a member of the Participant’s immediate family or trust, a partnership or other entity for the benefit of the Participant or the members of the Participant's immediate family; provided, however, that the Participant retains beneficial ownership of any such RSUs. For purposes hereof, “immediate family” has the meaning ascribed thereto in Rule 16(a)-1 of the Exchange Act, and “beneficial owner” has the meaning ascribed thereto in Rule 13d-3 of the Exchange Act.
6.02 Rights as Shareholder. The Participant shall not have voting or any other rights as a shareholder of the Company with respect to the Shares issuable upon the vesting of RSUs until the date of issuance of such Shares. Upon settlement of the RSUs, the Participant will obtain, with respect to the Shares received in such settlement, full voting and other rights as a shareholder of the Company.
6.03 Administration. The Committee shall have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participant, the Company, and all other Persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Award Agreement.
6.04 No Employment Rights. This Award Agreement and the Participant's participation in the Plan are not and shall not be interpreted to: (i) form an employment contract or relationship with the Company, the Employer or any of their respective Subsidiaries; (ii) confer upon the Participant any right to continue in the employ of the Company, the Employer or any of their respective Subsidiaries; or (iii) interfere with the
ability of the Company, the Employer or any of their respective Subsidiaries to terminate the Participant's employment at any time.
6.05 Nature of Grant. In accepting the grant hereunder, the Participant acknowledges and agrees that: (i) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time; (ii) the Participant has read the Plan and any RSUs granted under it shall be subject to all of the terms and conditions of the Plan, including but not limited to the power of the Committee to interpret and determine the terms and provisions of the Plan and this Award Agreement and to make all determinations necessary or advisable for the administration of the Plan, all of which interpretations and determinations shall be final and binding; (iii) the RSU does not create any contractual or other right to receive future grants of RSUs, benefits in lieu of RSUs, or any other Plan benefits in the future; (iv) nothing contained in this Award Agreement is intended to create or enlarge any other contractual obligations between the Company or the Employer and the Participant; (v) any grant under the Plan, including any grant of RSUs, is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long service option, pension, or retirement benefits or similar payments; (vi) the Participant is voluntarily participating in the Plan; (vii) the future value of the Shares underlying the RSUs granted hereunder is unknown and cannot be predicted with certainty; (viii) none of the Company, the Employer or any of their respective Subsidiaries shall be liable for any change in value of the RSUs, the amount realized upon settlement of the RSUs or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the RSUs, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate, and (ix) the RSUs and the underlying Shares are not granted to the Participant for prior services rendered to the Company, the Employer or any Subsidiaries. Without limiting the generality of the foregoing, the Committee shall have the discretion to adjust the terms and conditions of any award of RSUs to correct for any windfalls or shortfalls in such RSUs which, in the Committee's determination, arise from factors beyond the Participant's control.
6.06 Compliance with Law. The Company shall not be required to issue or deliver any Shares pursuant to this Award Agreement pending compliance with all applicable Laws (including any registration requirements or tax withholding requirements) and compliance with the Laws and practices of any stock exchange or quotation system upon which the Shares are listed or quoted. If the Participant resides or is employed outside of the United States, the Participant agrees, as a condition of the grant of the RSUs, to repatriate all payments attributable to the Shares and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of Shares acquired pursuant to the RSUs) if required by and in accordance with local Laws in the Participant’s country of residence (and country of employment, if different). In addition, the Participant also agrees to take any and all actions, and consent to any and all actions taken by the Company, its Subsidiaries and the Employer, as may be required to allow the Company, its Subsidiaries and the Employer to comply with local
Laws in the Participant’s country of residence (and country of employment, if different). Finally, the Participant agrees to take any and all actions as may be required to comply with the Participant’s personal legal and tax obligations under local Laws in the Participant’s country of residence (and country of employment, if different).
6.07 Amendment. This Award Agreement may be amended by a writing which specifically states that it is amending this Award Agreement executed by (i) the Company and the Participant, (ii) the Company (at the discretion of the Committee), so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment having a material adverse effect on the rights of the Participant hereunder may be made without the Participant's written consent or (iii) the Company (at the discretion of the Committee) in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable Laws or any future Laws or judicial decisions.
6.08 Notices. Any notice to be given under the terms of this Award Agreement to the Company shall be addressed to the Company in care of its Corporate Secretary. Any notice to be given to the Participant shall be addressed to the Participant at the address listed in the Employer's records or to the Participant's electronic investment account held at the Stock Plan Administrator. By a notice given pursuant to this Section 6.08, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.
6.09 Severability. If all or any part of this Award Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Award Agreement or the Plan not declared to be unlawful or invalid. Any provision of this Award Agreement (or part of such provision) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such provision (or part of such provision) to the fullest extent possible while remaining lawful and valid.
6.10 Construction. The RSUs are being issued pursuant to Article 8 (Restricted Stock and Restricted Stock Units) of the Plan. The RSUs are subject to the terms of the Plan. The Participant acknowledges receipt of the Plan booklet which contains the entire Plan, and the Participant represents and warrants that the Participant has read the Plan. Additional copies of the Plan are available upon request during normal business hours at the principal executive offices of the Company. To the extent that any provision of this Award Agreement violates or is inconsistent with an express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Award Agreement shall be of no force or effect. The words "including," "includes," or "include" are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as "without limitation" or "but not limited to" are used in each instance.
6.11 Waiver of Right to Jury Trial. EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE RSUS, THE PLAN OR THIS AWARD AGREEMENT.
6.12 Waiver; No Third Party Beneficiaries. A waiver by the Company of a breach of any provision of this Award Agreement by the Participant shall not operate or be construed as a waiver of any other provision of this Award Agreement, or of any subsequent breach by the Participant. This Award Agreement shall not be construed to create any third party beneficiary rights.
6.13 Data Privacy. The Company is located at 100 Grainger Parkway, Lake Forest, Illinois 60045, United States of America, and grants RSUs under the Plan to employees of the Company and its Subsidiaries in its sole discretion. In conjunction with the Company's grant of the RSUs under the Plan and its ongoing administration of such awards, the Company is providing the following information about its data collection, processing and transfer practices. In accepting the grant of the RSU, the Participant expressly and explicitly consents to the personal data activities as described herein.
i.Data Collection, Processing and Usage. The Company and the Employer will collect, process and use certain personal information about the Participant, specifically, the Participant’s name, home address, email address and telephone number, date of birth, social security or insurance number, passport number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan. The Company's legal basis for the collection, processing and use of the Participant's Data is the Participant's consent. The Participant's Data also may be disclosed to certain securities or other regulatory authorities where the Company’s securities are listed or traded, or regulatory filings are made. The Company's legal basis for such disclosure of the Participant's Data is to comply with applicable laws, rules and regulations.
ii.Stock Plan Administration Service Providers. The Company and the Employer transfer the Participant's Data to the Stock Plan Administrator based in the United States of America, which assists the Company with the implementation, administration and management of the Plan. In the future, the Company may select a different Stock Plan Administrator and share the Participant's Data with another company that serves in a similar manner. The Stock Plan Administrator will open an account for the Participant to receive and trade Shares acquired under the Plan. The Participant will be asked to agree to separate terms and data processing practices with the Stock Plan Administrator, which is a condition of the Participant's ability to participate in the Plan.
iii.International Data Transfers. The Company and the Stock Plan Administrator are based in the United States of America. The Participant should note
that the Participant's country of residence may have enacted data privacy laws that are different from the United States of America. The Company's legal basis for the transfer of the Participant's Data to the United States of America is the Participant’s consent.
iv.Voluntariness and Consequences of Consent, Denial or Withdrawal. The Participant's participation in the Plan and the Participant's grant of consent hereunder is purely voluntary. The Participant may deny or withdraw the Participant's consent at any time. If the Participant does not consent, or if the Participant later withdraws the Participant's consent, the Participant may be unable to participate in the Plan. This would not affect the Participant's existing employment or salary; instead, the Participant merely may forfeit the opportunities associated with participation in the Plan.
v.Data Retention. The Participant understands that the Participant's Data will be held only as long as is necessary to implement, administer and manage the Participant's RSU and participation in the Plan; provided that the Company may hold the Participant’s Data for longer periods of time consistent with its retention policies and practices with respect to employee data.
vi.Data Subject Rights. The Participant understands that the Participant may have the right under applicable law to (i) access or copy the Participant's Data that the Company possesses, (ii) rectify incorrect Data concerning the Participant, (iii) delete the Participant's Data, (iv) restrict processing of the Participant's Data, (vi) lodge complaints with the competent supervisory authorities in the Participant’s country of residence. To receive clarification regarding these rights or to exercise these rights, the Participant understands that the Participant can contact the Participant's local human resources representative.
6.14 Private Placement. The grant of the RSUs is not intended to be a public offering of securities in the Participant's country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filing with the local securities authorities (unless otherwise required under local Laws).
6.15 No Advice Regarding Grant. The Company and the Employer are not providing any tax, legal or financial advice, nor is the Company or the Employer making any recommendations regarding the RSUs, the Participant's participation in the Plan or the Participant's acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with the Participant's own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the Plan or this Award Agreement.
6.16 Securities Law Restrictions. The Participant acknowledges that, depending on the Participant's country of residence (and country of employment, if different) or where the Shares are listed, the Participant shall be subject to insider trading restrictions and/or market abuse Laws, which may affect the Participant's ability to acquire, sell or
otherwise dispose of Shares, rights to Shares (e.g., RSUs) or rights linked to the value of Shares during such times as the Participant is considered to have "inside information" regarding the Company or its business (as defined by the local Laws in the Participant's country of residence and/or employment). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Participant placed before the Participant possessed inside information. Furthermore, the Participant could be prohibited from (i) disclosing the inside information to any third party (other than on a "need to know" basis) and (ii) "tipping" third parties (including other employees of the Company and its Subsidiaries) or causing them otherwise to buy or sell securities. Any restrictions under these Laws are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading or other policy. The Participant solely is responsible for ensuring compliance with any applicable restrictions and should consult with the Participant's personal legal advisor on this matter.
6.17 EU Age Discrimination Rules. If the Participant is a local national of and employed in the United Kingdom or a country that is a member of the European Union, the grant of the RSUs and the terms and conditions governing the RSUs are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the "Age Discrimination Rules"). To the extent that a court or tribunal of competent jurisdiction determines that any provision of this Award Agreement is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local Laws.
6.18 Whistleblower Protection. Nothing in this Award Agreement, the Competition Agreement or otherwise (i) limits the Participant’s right to any monetary award offered by a government-administered whistleblower award program for providing information directly to a government agency (including the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, The Sarbanes-Oxley Act of 2002 or any comparable legislation in non-U.S. jurisdictions) or (ii) prevents the Participant from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations, and for purpose of clarity the Participant is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act or to any comparable government agencies pursuant to applicable legislation in non-U.S. jurisdictions).
6.19 Electronic Delivery. The Company may, in its sole discretion, deliver any documents related to the RSUs granted to the Participant under the Plan by electronic means. The Participant hereby expressly consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic
system established and maintained by the Company or a third party designated by the Company.
6.20 Governing Law; Jurisdiction. This Award Agreement shall be exclusively governed by, and construed in accordance with, the Laws of the State of Illinois without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or of any other jurisdiction) that would cause the application of the laws of a jurisdiction other than the State of Illinois. All disputes and controversies arising between the parties are to be submitted for determination exclusively to the federal or state courts of the State of Illinois and by accepting the grant of RSUs, the Participant expressly consents to the jurisdiction of such courts. Notwithstanding the foregoing, the Company may at its option seek interim and permanent injunctive relief before any competent court, tribunal or judicial forum, which in the absence of the foregoing provision, would have jurisdiction to grant the relief sought.
6.21 Entire Agreement. The Plan, this Award Agreement (including any applicable addendum) and the Competition Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede, in their entirety, all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed by a duly authorized officer and the Participant acknowledges and agrees that by clicking on the “Accept” box below this Award Agreement in the section "Your New Grant" on the screen titled "View Grant," Participant expressly agrees to be bound by the terms and conditions of this Award Agreement, and agrees that Participant's electronic signature or electronic acceptance of this Award Agreement constitutes the sole and exclusive means of executing this Award Agreement.
| W.W. GRAINGER, INC. | ||
| /s/ D.G. Macpherson | ||
| Name: D.G. Macpherson | ||
| Title: Chairman & Chief Executive Officer | ||
Appendix A
W.W. GRAINGER, INC.
2022 Incentive Plan
Non-U.S. Addendum to Restricted Stock Unit Award Agreement
In addition to the terms of the W.W. Grainger, Inc. 2022 Incentive Plan (as may be amended from time to time, the "Plan") and the Restricted Stock Unit Award Agreement (the "Award Agreement"), the RSUs are subject to the additional terms and conditions as set forth in this Appendix A, which is part of the Award Agreement (this "Non-U.S. Addendum"), to the extent the Participant resides or is employed in one of the countries addressed herein. This Non-U.S. Addendum also includes information about certain other issues of which a Participant should be aware with respect to the Participant’s participation in the Plan.
The Non-U.S. Addendum is based upon the securities, tax, exchange control and other laws in effect in the respective countries as of February 1, 2025. All capitalized terms contained in this Non-U.S. Addendum shall have the same meaning as set forth in the Plan and the Award Agreement unless otherwise defined. By accepting the RSUs, the Participant agrees to be bound by the terms and conditions contained in the paragraphs below in addition to the terms of the Plan, the Award Agreement, and the terms of any other document that may apply to the Participant and the Participant’s RSUs.
If the Participant transfers residence or employment to a country identified in this Non-U.S. Addendum, the additional terms and conditions for such country as reflected in this Non-U.S. Addendum will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the RSUs and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer). However, if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working, transferred employment after the RSUs were granted to the Participant, or is considered a resident of another country for local law purposes, the information contained herein may not apply.
Finally, the information contained herein is general in nature and may not apply to a Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to a Participant’s situation.
COUNTRIES COVERED BY THIS APPENDIX A: Canada, Mexico, Panama, and the United Kingdom.
| European Union ("EU") / European Economic Area ("EEA") / United Kingdom | ||
The following provision replaces Section 6.13 to the extent the Participant is employed in the EU, EEA or the United Kingdom:
6.13 Data Privacy. The Company is located at 100 Grainger Parkway, Lake Forest, Illinois 60045, United States of America, and grants RSUs under the Plan to employees of the Company and its Subsidiaries in its sole discretion. In conjunction with the Company's grant of the RSUs under the Plan and its ongoing administration of such awards, the Company is providing the following information about its data collection, processing and transfer practices, which the Participant should carefully review.
i. Data Collection, Processing and Usage. The Company and the Employer will collect, process and use certain personal information about the Participant, specifically, the Participant’s name, home address, email address and telephone number, date of birth, social security or insurance number, passport number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. The Company collects, process and uses the Participant's Data pursuant to the Company's legitimate interest of administering the Participant's RSUs and generally managing the Plan, and to satisfy its contractual obligations under the Award Agreement. The Participant's Data also may be disclosed to certain securities or other regulatory authorities where the Company’s securities are listed or traded or regulatory filings are made. The Company's legal basis for such disclosure of the Participant's Data is to comply with applicable laws, rules and regulations.
ii. Stock Plan Administration Service Providers. The Company and the Employer transfer the Participant's Data to the Stock Plan Administrator based in the United States of America, which assists the Company with the implementation, administration and management of the Plan. In the future, the Company may select a different Stock Plan Administrator and share the Participant's Data with another company that serves in a similar manner. The Stock Plan Administrator will open an account for the Participant to receive and trade Shares acquired under the Plan. The Participant will be asked to agree to separate terms and data processing practices with the Stock Plan Administrator, which is a condition of the Participant's ability to participate in the Plan.
iii. International Data Transfers. The Company and the Stock Plan Administrator are based in the United States of America. The Participant should note that the Participant's country of residence may have enacted data privacy laws that are
different from the United States of America. The Company's legal basis for the transfer of the Participant's Data to the United States of America is to satisfy its contractual obligations under the Award Agreement.
iv. Data Retention. The Participant understands that the Participant's Data will be held only as long as is necessary to implement, administer and manage the Participant's RSU and participation in the Plan. When the Company no longer needs the Data, the Company will remove it from its systems. If the Company retains the Participant's Data longer, it would be to satisfy the Company's legal or regulatory obligations and the Company's legal basis would be for compliance with applicable laws, rules and regulations.
v. Data Subject Rights. The Participant understands that the Participant may have the right under applicable law to (i) access or copy the Participant's Data that the Company possesses, (ii) rectify incorrect Data concerning the Participant, (iii) delete the Participant's Data, (iv) restrict processing of the Participant's Data, (vi) lodge complaints with the competent supervisory authorities in the Participant’s country of residence. To receive clarification regarding these rights or to exercise these rights, the Participant understands that the Participant can contact the Participant's local human resources representative.
| Canada | ||
Terms and Conditions
1.Withholding Taxes. Notwithstanding any provision in the Award Agreement to the contrary, if the Participant is a resident of Canada or otherwise subject to taxation in Canada on employment income, the Participant is prohibited from surrendering shares of Stock that he or she already owns or from attesting to the ownership of shares to satisfy any tax withholding obligations in connection with the RSUs.
2.RSUs Payable in Shares Only. Notwithstanding any provision in the Award Agreement or the Plan to the contrary, vested RSUs shall be payable in Shares only (and shall not be settled in cash).
3.Termination of Employment. For purposes of Section 2.02 of the Award Agreement, a “Termination Date” shall mean the date that is the earlier of (i) the date the Participant tenders notice of termination of employment from the Company or the Employer, or (ii) the date the Participant ceases to render actual services for the Company or the Employer, without regard to any notice period or period of pay in lieu of such notice required under local law (including, but not limited to, civil and/or common law, except as otherwise may be required to comply with minimum standards legislation (“MSL”), if applicable). Subject to compliance with MSL, the Company shall have sole discretion to determine when
the Participant is no longer actively employed for purposes of vesting of the RSUs and participation in the Plan. The Participant shall have no entitlement to damages or other compensation arising from, or related to, not receiving any awards which would have vested after the Termination Date, and the Participant hereby waives any claim for such damages or other compensation; it being understood that nothing herein is intended to limit any statutory termination entitlements, and such statutory entitlements shall, if required, apply despite anything herein to the contrary.
4.Acknowledgement. By accepting the RSUs subject to the Award Agreement through the Stock Plan Administrator’s web portal (or its successor), the Participant declares that the Participant expressly agrees with the provisions regarding termination of employment described in the Plan, the Award Agreement (including, but not limited to, Sections 2.02, 2.03, and 2.04 thereof) and the special terms and conditions set forth in this Appendix A.
5.Recoupment. If the Participant’s employment is subject to the laws of the province of Ontario, the consequences in Section 3.01 of the Agreement shall apply to the Participant, but also shall be modified if and only as necessary to comply with MSL. For clarity, it is understood that where such Participant is not exempt from Ontario’s statutory prohibition against non-competition covenants, the Participant need not comply with such portion of the Competition Agreement or other similar agreement or covenant which amounts to a prohibited non-competition covenant, and the lack of compliance shall not constitute misconduct by the Participant nor be subject to injunctive relief. However, the Participant shall remain subject to the cancellation and recoupment of Incentive Compensation as a mutually agreed upon financial consequence of the Participant engaging in competition.
Notifications
1.Additional Restrictions on Resale. In addition to the restrictions on resale and transfer noted in Plan materials, securities purchased under the Plan may be subject to certain restrictions on resale imposed by Canadian provincial securities laws. You are encouraged to seek legal advice prior to any resale of such securities. In general, participants resident in Canada may resell their securities in transactions carried out on exchanges outside of Canada and, in particular, you are generally permitted to sell shares acquired pursuant to the Plan through the designated broker appointed under the Plan, if any, provided that the Company is a “foreign issuer” that is not a reporting issuer in any jurisdiction of Canada and the sale of the shares acquired pursuant to the Plan takes place: (i) through an exchange, or a market, outside of Canada, on the distribution date; or (ii) to a person or company outside of Canada. For purposes hereof, a foreign issuer is an issuer that: (a) is not incorporated or existing pursuant to the laws of Canada or any jurisdiction of Canada; (b) does not have its head office in
Canada; and (c) does not have a majority of its executive officers or directors ordinarily resident in Canada.
2.Foreign Asset Reporting Information. Any foreign property (including Shares and RSUs acquired under the Plan) must be reported to the Canada Revenue Agency on form T1135 (Foreign Income Verification Statement) if the total cost of the Participant’s foreign property exceeds C$100,000 at any time in the year. The RSUs must be reported - generally at a nil cost - if the C$100,000 cost threshold is exceeded because of other foreign property held. If Shares are acquired, their cost generally is the adjusted cost base ("ACB") of the Shares. The ACB would normally equal the fair market value of the Shares at the time of vesting, but if the Participant owns other Shares, this ACB may have to be averaged with the ACB of the other Shares. The form must be filed by April 30 of the following year. The Participant should consult with the Participant's personal tax advisor to determine the Participant’s reporting requirements.
| Mexico | ||
Terms and Conditions
Plan Document Acknowledgement
By accepting the RSUs, the Participant acknowledges that the Participant has received a copy of the Plan, has reviewed the Plan and the Award Agreement in their entirety, and fully understands and accepts all provisions of the Plan and the Award Agreement. In addition, by accepting the RSUs, the Participant acknowledges that the Participant has read and specifically and expressly approves the terms and conditions in Section 6.05 of the Award Agreement (“Nature of Grant”), in which the following is clearly described and established: (i) participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) neither the Company, the Employer nor any Subsidiary is responsible for any decrease in the value of the Shares underlying the RSUs.
Acuse de recibo del documento del Plan
Al aceptar las RSU, el Participante reconoce que ha recibido una copia del Plan, ha revisado el Plan y el Acuerdo en su totalidad, y comprende y acepta completamente todas las disposiciones del Plan y el Acuerdo. Además, al aceptar las RSU, el Participante reconoce que el Participante ha leído y aprueba específica y expresamente los términos y condiciones de la Sección 6.05 del Acuerdo ("Naturaleza de la Subvención"), en la que se describe y establece claramente lo siguiente: ( i) la participación en el Plan no constituye un derecho adquirido; (ii) el Plan y la participación en el Plan son ofrecidos por la Compañía
de forma totalmente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) ni la Compañía, el Empleador ni ninguna Subsidiaria son responsables de ninguna disminución en el valor de las Acciones subyacentes a las RSU.
Commercial Relationship
The Participant expressly recognizes that participation in the Plan and the Company’s grant of the RSUs does not constitute an employment relationship between the Participant and the Company. The Participant has been granted RSUs as a consequence of the commercial relationship between the Company and the Employer, and the Employer is the Participant’s sole employer. Based on the foregoing, (a) the Participant expressly recognizes that the Plan and the benefits derived from participation in the Plan do not establish any rights between the Participant and the Company or the Employer, (b) the Plan and the benefits derived from participation in the Plan are not part of the employment conditions and/or benefits provided by the Employer, and (c) any modifications or amendments to the Plan by the Company, or a termination of the Plan by the Company, shall not constitute a change or impairment of the terms and conditions of the Participant’s employment with the Employer.
Relación Comercial
El Participante reconoce expresamente que la participación en el Plan y el otorgamiento de las RSU por parte de la Compañía no constituye una relación laboral entre el Participante y la Compañía. Al Participante se le han otorgado RSU como consecuencia de la relación comercial entre la Compañía y el Empleador, y el Empleador es el único empleador del Participante. Con base en lo anterior, (a) el Participante reconoce expresamente que el Plan y los beneficios derivados de la participación en el Plan no establecen ningún derecho entre el Participante y la Compañía o el Empleador, (b) el Plan y los beneficios derivados de la participación en el Plan no son parte de las condiciones de empleo y/o beneficios proporcionados por el Empleador, y (c) cualquier modificación o enmienda al Plan por parte de la Compañía, o una terminación del Plan por la Compañía, no constituirá un cambio o deterioro de los términos y condiciones del empleo del Participante con el Empleador.
Extraordinary Item of Compensation
The Participant expressly acknowledges and agrees that participation in the Plan is a result of the discretionary and unilateral decision of the Company, as well as the Participant’s free and voluntary decision to participate in the Plan in accord with the terms and conditions of the Plan, the Award Agreement, the Competition Agreement and this Addendum. As such, the Participant acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Participant’s participation in the Plan at any time and without any liability. The value of the RSUs are an extraordinary item of compensation outside the scope of the employment contract, if any. The RSUs
are not a part of the Participant’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Employer.
Partida Extraordinaria de Compensación
El Participante reconoce y acepta expresamente que la participación en el Plan es el resultado de la decisión discrecional y unilateral de la Compañía, así como la decisión libre y voluntaria del Participante de participar en el Plan de acuerdo con los términos y condiciones del Plan, la Acuerdo, el Acuerdo de Competencia y este Addendum. Como tal, el Participante reconoce y acepta que la Compañía puede, a su exclusivo criterio, modificar y/o interrumpir la participación del Participante en el Plan en cualquier momento y sin responsabilidad alguna. El valor de las RSUs constituye una retribución extraordinaria fuera del ámbito del contrato de trabajo, si lo hubiere. Las RSU no forman parte de la compensación regular o esperada del Participante a los fines de calcular cualquier indemnización, renuncia, despido, pago por terminación del servicio, bonificaciones, premios por servicio prolongado, pensión o beneficios de jubilación o cualquier pago similar, que son exclusivos obligaciones del Empleador.
Notifications
There are no country-specific notifications.
| Panama | ||
Terms and Conditions
There are no country-specific terms and conditions.
Notifications
There are no country-specific notifications.
| United Kingdom | ||
Terms and Conditions
Income Tax and Social Insurance Contribution Withholding. The following provision shall supplement Article IV of the Award Agreement:
Without limitation to Article IV of the Award Agreement, the Participant agrees that the Participant is liable for all Tax-Related Items (including, without limitation, United Kingdom income tax and primary class 1 (employee’s) national insurance contributions for which the Participant’s employer is liable to account) and hereby covenants to pay all such Tax-Related Items as and when requested by the Company or the Employer or by His Majesty’s Revenue and Customs ("HMRC") (or any other tax authority or any other relevant authority). As a condition of the issuance of Shares upon settlement of the RSUs, the Participant agrees that the Company will deduct from the total shares to be issued as a result of the Vesting of the RSUs a sufficient number of Shares to satisfy the required statutory withholding amount and national insurance or other contributions related to such vesting (the “Withholding Tax Obligation”), which may exceed the minimum statutory tax withholding amount permissible only if it would not cause adverse accounting or tax consequences for the Company or a Subsidiary, in which case the Participant will be taken to have foregone the right to be issued the number of Shares so withheld in order to make good the Withholding Tax Obligation. The Participant also agrees to indemnify and hold harmless the Company and the Employer against any taxes that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on the Participant’s behalf or on account of the Participant.
It is a further condition of delivery of any Shares upon vesting of the RSUs that the Participant will, if required to do so by the Company, enter into a joint election under section 431(1) of the Income Tax (Earnings and Pensions) Act 2003 of the United Kingdom (“ITEPA”), the effect of which is that the Shares will be treated as if they were not restricted securities and that sections 425 to 430 of ITEPA will not apply to those shares.
Exclusion of Claim. The Participant acknowledges and agrees that the Participant will have no entitlement to compensation or damages, insofar as such entitlement arises or may arise from the Participant’s ceasing to have rights under or to be entitled to vest in the RSUs as a result of such termination (whether the termination is in breach of contract or otherwise), or from the loss or diminution in value of the RSUs. Upon the grant of the RSUs, the Participant shall be deemed to have irrevocably waived any such entitlement.
Whistleblower Protection. Section 6.18 of the Award Agreement is hereby amended in its entirety to read as follows:
“Notwithstanding anything in this Award Agreement or Competition Agreement to the contrary, nothing in this Award Agreement prevents the Participant, in accordance with applicable law, from (i) making a protected disclosure under section 43A of the Employment Rights Act 1996; (ii) making a disclosure to a regulator regarding any misconduct, wrongdoing or serious breach of regulatory requirements, or reporting a criminal offence to any law enforcement agency; (iii) co-operating with any law enforcement agency
regarding a criminal investigation or prosecution; or (iv) otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations.”
Notifications
There are no country-specific notifications.
* * * * *
Exhibit 10.2
W.W. GRAINGER, INC.
2022 Incentive Plan
Performance Stock Unit Award Agreement
This Performance Stock Unit Award Agreement (this "Award Agreement"), dated as of April 1, 2025 (the "Grant Date"), is entered into between W.W. Grainger, Inc., an Illinois corporation (the "Company"), and you (the "Participant") as an Employee of the Company or a Subsidiary (collectively, the "Employer").
In consideration of the Participant's agreement to enter into a Confidentiality, Invention Assignment, Non-Competition and Non-Solicitation Agreement with the Company concurrently with this Award Agreement on the Grant Date (the "Competition Agreement"), the Company desires to grant the Participant an award of performance stock units (the "PSUs"), providing for the issuance of shares of the Company's common stock ("Shares") pursuant to the W.W. Grainger, Inc. 2022 Incentive Plan (as may be amended from time to time, the "Plan") subject to the Company's attainment of certain long-term performance goals and the Participant agrees to enter into the Competition Agreement and accept such PSUs on the terms and conditions set forth in this Award Agreement, the Plan and the Competition Agreement. Capitalized terms used but not defined in this Award Agreement have the meanings specified in the Plan (unless otherwise amended by Appendix A).
In consideration of the mutual provisions set forth in this Award Agreement and in the Competition Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Grants
1.01 Grant. Subject to the terms and conditions of this Award Agreement, the Plan and the Competition Agreement (the terms of which are hereby incorporated herein by reference) and effective on the Grant Date, the Company hereby grants to the Participant the number of PSUs (the "Target PSUs") as specified in the April 1, 2025 award grant notice posted to the Participant's electronic investment account maintained with Morgan Stanley Smith Barney LLC, the stock plan service provider engaged by the Company in connection with the administration of the Plan (the "Stock Plan Administrator"). Each PSU represents a contractual right to receive one (1) Share upon the satisfaction of the terms and conditions of this Award Agreement. The actual number of PSUs that may become vested and settled pursuant to this Award Agreement will depend on the Company's achievement of the performance metrics defined and reflected in Exhibit I to this Award Agreement (the "Performance Metrics") during the period of January 1, 2025 through December 31, 2027 (the "Measurement Period"), as shall be determined and certified by the Committee in its sole discretion. The Committee’s determination and certification shall be final and conclusive, and until the
Committee has made such determination and certification, none of the Performance Metrics will be considered to have been satisfied. The Target PSUs will be equally apportioned to each Performance Metric (and reflected in Exhibit I of this Award Agreement).
ARTICLE II
Provisions Relating to PSUs
2.01 Vesting of PSUs. Subject to the terms and conditions set forth in the Plan and this Award Agreement, the Target PSUs shall vest as determined pursuant to the terms of Exhibit I, which is incorporated by reference herein and made a part of this Award Agreement; provided that (except as otherwise set forth in this Article II) the Target PSUs shall not vest unless the Participant remains continuously employed by the Employer (or any other Subsidiary or Affiliate) from the Grant Date through the third anniversary of the Grant Date (the "PSU Vesting Date"). Any PSUs that do not vest shall be forfeited, and the Participant shall have no further rights with respect to such PSUs. Each PSU that becomes vested as provided herein shall be settled in accordance with Section 2.06.
2.02 Effect of Termination of Employment. Except as otherwise stated in the Plan, if the Participant's employment or service is terminated prior to the PSU Vesting Date for any reason whatsoever other than the Participant's involuntary termination without Cause or for the Participant's death, Disability or Retirement (defined below), the Target PSUs shall be forfeited in their entirety as of the Participant's Termination Date. If the Participant is a resident of, or employed in, the United States, "Termination Date" shall mean the effective date of termination of the Participant's employment. If the Participant is a resident of, or employed outside of, the United States, "Termination Date" shall mean the earliest of (i) the date on which notice of termination is provided to the Participant, (ii) the last day of the Participant's active service with the Employer or (iii) the last day on which the Participant is an employee of the Employer, as determined in each case without including any required advanced notice period and irrespective of the status of the termination under local labor or employment laws. For purposes of this Award Agreement, "Cause" shall have the same meaning as defined in the Plan, subject to modification as may be required to conform to the laws, rules and regulations ("Laws") of the Participant's country of residence (and country of employment, if different).
2.03 Effect of Involuntary Termination without Cause. If the Participant's employment or service is involuntarily terminated prior to the PSU Vesting Date for reasons other than Cause, the Participant will become vested in a pro-rata portion of the Target PSUs based upon the Company's achievement of the Performance Metrics. For purposes of the foregoing, the pro-ration shall be determined based upon a fraction, the numerator of which will be the number of full calendar months from the Grant Date to the Participant's Termination Date, and the denominator shall equal the number of full calendar months in the Measurement Period. Each actual PSU that becomes vested as provided herein shall be settled in accordance with Section 2.06.
2.04 Effect of Termination due to Death or Disability. If the Participant's employment or service is terminated prior to the PSU Vesting Date due to the Participant’s death or Disability, the Participant immediately will become vested in the number of PSUs equal to the Target PSUs. For purposes of this Award Agreement, "Disability" shall have the same meaning as defined in the Plan, subject to modification as may be required to conform to the Laws of the Participant's country of residence (and country of employment, if different). For the sake of clarity, the date of the Participant's death or Disability shall be a PSU Vesting Date. Upon such PSU Vesting Date, the Company shall, as soon as practicable (but in no event later than 60 days following the applicable PSU Vesting Date), settle the vested PSUs by registering Shares in the Participant's name and delivering such Shares to the Participant's electronic stock plan account maintained by the Stock Plan Administrator; provided that such settlement shall remain subject to the Committee’s discretion, and the policies and procedures as it may adopt from time to time, as set forth in Section 2.06.
2.05 Effect of Retirement of the Participant. If the Participant's employment or service is terminated prior to the PSU Vesting Date due to the Participant's Retirement, the PSUs shall continue to vest and shall be settled in accordance with Sections 2.01 and 2.06. For purposes of this Award Agreement, "Retirement" shall mean the Participant's retirement of employment with the Company and its Subsidiaries on or after the Participant's (i) completion of at least 25 years of service with the Company and its Subsidiaries, (ii) completion of at least 20 years of service with the Company and its Subsidiaries and attainment of age 55, or (iii) completion of at least five (5) years of service with the Company and its Subsidiaries and attainment of age 60.
2.06 Settlement of Vested PSUs. Following the date on which the Committee certifies the Company's achievement of the Performance Metrics and determines the actual number of PSUs that vest pursuant to the achievement of the Performance Metrics, the Company shall, as soon as practicable (but in no event later than 60 days following the PSU Vesting Date), settle the vested PSUs by registering Shares in the Participant's name and delivering such Shares to the Participant's electronic stock plan account maintained by the Stock Plan Administrator. At the discretion of the Committee, and subject to such policies and procedures as it may adopt from time to time, the Participant's PSU may be settled in the form of: (i) cash, to the extent settlement in Shares (a) is prohibited under applicable Laws, (b) would require the Participant, the Company or the Employer to obtain the approval of any governmental and/or regulatory body in the Participant's country of residence (and country of employment, if different), or (c) is administratively burdensome or (ii) Shares, but the Company may require the Participant to immediately sell such Shares if necessary to comply with applicable Laws (in which case, the Participant hereby expressly authorizes the Company to issue sales instructions in relation to such Shares on the Participant's behalf).
2.07 Dividend Equivalents. No dividend equivalents will be paid on the Shares underlying the PSUs.
ARTICLE III
Recoupment
3.01 Recoupment in Event of Misconduct. If the Company determines that the Participant has committed or engaged in misconduct against the Company or has engaged in any criminal conduct, including embezzlement, fraud or theft, that involves or is related to the Company, or any other conduct that violates Company policy, causes or is discovered to have caused, any loss, damage, injury or other endangerment to the Company's property or reputation, and such Participant has received or is entitled to receive performance stock units, performance restricted stock units, stock options, restricted stock units or cash incentive compensation (collectively, "Incentive Compensation"), then the Company shall have the right to cancel the Incentive Compensation, require the return of Shares acquired under the Plan, recapture any gain realized upon the sale of Shares acquired under the Plan or take any other action it deems appropriate under the circumstances with respect to recouping the Incentive Compensation. The Company shall have sole discretion in determining whether the Participant's conduct was in compliance with applicable Law or Company policy and the extent to which the Company will seek recovery of the Incentive Compensation notwithstanding any other remedies available to the Company. If the Participant engages in misconduct or is believed to have engaged in misconduct, including but not limited to any violation of any of Participant's obligations under the Competition Agreement, the Company shall be entitled to take the actions outlined above for recouping the Incentive Compensation, as the Company deems appropriate under the circumstances.
3.02 Recoupment in Event of Materially Inaccurate Financial Results. If the Company has publicly filed inaccurate financial results (the "Subject Financials"), whether or not they result in a restatement, the Company may recover any Incentive Compensation (a) that was paid or settled to the Participant during the period covered by the Subject Financials as set forth herein, or (b) as otherwise may be required by any applicable Laws or listing standard adopted by the New York Stock Exchange. If the payment or settlement of Incentive Compensation would have been lower had the achievement of applicable financial performance goals been calculated based on restated financial results with respect to the Subject Financials, the Company may, if it determines it appropriate in its sole discretion, recover the portion of the paid or settled Incentive Compensation in excess of the payment or settlement that would have been made based on restated financial results or as otherwise may be required by any applicable Laws or listing standard adopted by the New York Stock Exchange. The Company will not seek to recover Incentive Compensation received or settled more than three (3) years after the date of the initial filing that contained the Subject Financials or any longer period as may be required by any applicable Law or listing standard adopted by the New York Stock Exchange.
3.03 Recoupment in Event of Error. If the Participant receives any amount in excess of what the Participant should have received under the terms of this Award Agreement for any reason (including, without limitation, by reason of a mistake in calculations or administrative error), all as determined by the Committee, then the Company shall have the right to cancel the Incentive Compensation, require the return of Shares acquired under the Plan, recapture any gain realized upon the sale of Shares acquired under the Plan or take any other action it deems appropriate under the circumstances with respect to recouping the Incentive Compensation.
3.04 Implementation. For purposes of this Article III, the Participant expressly authorizes the Company to issue instructions, on behalf of the Participant, to the Stock Plan Administrator (and/or any other brokerage firm/third party service provider engaged by the Company to hold Shares and other amounts acquired under the Plan) to re-convey, transfer or otherwise return to the Company any Incentive Compensation (whether paid in the form of cash or Shares) subject to recoupment hereunder. The Participant acknowledges and agrees that the Company's rights hereunder shall not be affected in any way by any subsequent change in the Participant's status, including retirement or termination of employment (including due to death or Disability). The Participant expressly agrees to indemnify and hold the Company and the Employer harmless from any loss, cost, damage, or expense (including attorneys’ fees) that the Company or the Employer may incur as a result of the Participant's actions or in the Company and the Employer’s efforts to recover such previously made payments or value pursuant to this Article III.
3.05 Forfeiture. To the extent any of the events set forth in this Article III occur before the Participant receives any Incentive Compensation due hereunder, any such Incentive Compensation shall be forfeited as determined by the Company in its sole discretion.
3.06 Recoupment Policy. Notwithstanding anything in this Award Agreement to the contrary, the Participant acknowledges and agrees that this Award Agreement and the award described herein (and any settlement thereof) are subject to the terms and conditions of the Company’s clawback policy or policies (if any) as may be in effect from time to time, including specifically to implement Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any applicable rules or regulations promulgated thereunder (including applicable rules and regulations of any national securities exchange on which the Shares at any point may be traded) (the “Compensation Recovery Policy”), and that applicable terms of this Award Agreement shall be deemed superseded by and subject to the terms and conditions of the Compensation Recovery Policy from and after the effective date thereof. By accepting this award under the Plan and pursuant to this Award Agreement, the Participant consents to be bound by the terms of the Compensation Recovery Policy, to the extent applicable to the Participant, and agrees and acknowledges to fully cooperate with and assist the Company in connection with any of the Participant’s obligations to the Company pursuant to the Compensation Recovery Policy, and agrees that the Company may enforce its rights under the Compensation Recovery Policy through any and all reasonable means permitted under applicable law as it deems necessary or desirable under the Compensation Recovery Policy, in each case from and after the effective dates thereof. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to facilitate the recovery or recoupment by the Company from the Participant of any such amounts, including from the Participant’s accounts or from any other compensation, to the extent permissible under Section 409A of the Internal Revenue Code.
ARTICLE IV
Tax
4.01 Tax-Related Items. Regardless of any action the Company or the Employer takes with respect to any or all income tax (including U.S. federal, state and local taxes or non-U.S. taxes), social insurance, contributions, levies, payroll tax, payment on account or other tax-related withholding ("Tax-Related Items"), the Participant acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant's responsibility and that the Company and the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the PSU, including the grant of the PSU, the vesting of the PSU, the acquisition of the Shares, the removal of any restrictions on the Shares, the subsequent sale of any Shares acquired pursuant to the PSU and the receipt of any dividends and (ii) do not commit to structure the terms of the grant or any aspect of the PSU to reduce or eliminate the Participant's liability for Tax-Related Items.
4.02 Tax Withholding Obligations. Prior to the delivery of Shares (or cash) upon the vesting of the PSU, if the Participant's country of residence (and country of employment, if different) requires withholding of Tax-Related Items, the Company shall withhold a sufficient number of whole Shares otherwise issuable upon the vesting of the PSU that have an aggregate Fair Market Value sufficient to pay the Tax-Related Items required to be withheld with respect to the Shares or the cash equivalent. The Company may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, including maximum applicable rates. The cash equivalent of the Shares withheld will be used to settle the obligation to withhold the Tax-Related Items. In the event that the withholding of Shares is prohibited under applicable Law or otherwise may trigger adverse consequences to the Company or the Employer, the Company and the Employer may withhold the Tax-Related Items required to be withheld with respect to the Shares in cash from the Participant's regular salary and/or wages or any other amounts payable to the Participant, or may require the Participant to personally make payment of the Tax-Related Items required to be withheld. In the event the withholding requirements are not satisfied through the withholding of Shares by the Company or through the withholding of cash from the Participant's regular salary and/or wages or other amounts payable to the Participant, no Shares will be issued to the Participant (or the Participant's estate) upon vesting of the PSU unless and until satisfactory arrangements (as determined by the Committee) have been made by the Participant with respect to the payment of any Tax-Related Items that the Company or the Employer determines, in its sole discretion, must be withheld or collected with respect to such PSUs. If the obligation for the Participant's Tax-Related Items is satisfied by withholding a number of Shares as described herein, the Participant shall be deemed to have been issued the full number of Shares issuable upon vesting, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of the vesting or any other aspect of the PSU.
The Participant will pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or otherwise account for as a result of the Participant's participation in the Plan or the Participant's acquisition of Shares that cannot be satisfied by the means described in this Article IV. The Company may refuse to deliver any Shares due upon vesting of the PSU if the Participant fails to comply with the Participant's obligations in connection with the Tax-
Related Items as described herein. If the Participant is subject to taxation in more than one jurisdiction, the Participant acknowledges that the Company, the Employer or one or more of their respective Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Participant hereby consents to any action reasonably taken by the Company and the Employer to meet the Participant's obligation for Tax-Related Items. By accepting this grant of the PSU, the Participant expressly consents to the withholding of Shares and/or withholding from the Participant's regular salary and/or wages or other amounts payable to the Participant as provided for hereunder. All other Tax-Related Items related to the PSU and any Shares delivered in payment thereof are the Participant's sole responsibility.
ARTICLE V
International Arrangements
5.01 Exchange Controls. As a condition to this PSU award, the Participant agrees to comply with any applicable foreign exchange Laws and hereby consents to any necessary, appropriate or advisable actions taken by the Company, the Employer or any of their respective Subsidiaries as may be required to comply with any applicable Laws of the Participant's country of residence (and country of employment, if different).
5.02 Foreign Asset and Account Reporting Requirements. The Participant acknowledges that there may be certain foreign asset and/or account reporting requirements, which may affect the Participant's ability to acquire or hold Shares acquired under the Plan or cash received from participating in the Plan (including from any dividends or dividend equivalent payments) in a brokerage or bank account outside the Participant's country of residence (and country of employment, if different). The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant's country of residence (and country of employment, if different). The Participant acknowledges and agrees that it is the Participant's personal responsibility to be compliant with such Laws.
5.03 Non-U.S. Addendum. Notwithstanding any provisions of this Award Agreement to the contrary, the PSUs shall be subject to any special terms and conditions for the Participant's country of residence (and country of employment, if different) set forth in the addendum to this Award Agreement, attached hereto as Appendix A ("Non-U.S. Addendum"). If the Participant transfers residence and/or employment to another country reflected in the Non-U.S. Addendum at the time of transfer, the special terms and conditions for such country will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such special terms and conditions is necessary or advisable in order to comply with local Laws or to facilitate the operation and administration of the PSUs and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant's transfer). In all circumstances, the Non-U.S. Addendum shall constitute part of this Award Agreement.
5.04 Controlling Language. If the Participant is in a country where English is not an official language, the Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of this Award Agreement or
has had the ability to consult with an advisor who is sufficiently proficient in the English language. The Participant acknowledges and agrees that it is the Participant's express intent that this Award Agreement, the Plan, the Competition Agreement and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the PSUs be drawn up in English. If the Participant has received this Award Agreement, the Plan, the Competition Agreement or any other documents related to the PSUs translated into a language other than English and the meaning of any translated version is different than the English version, the English version will control unless otherwise provided in the non-English version of the agreement.
ARTICLE VI
Miscellaneous
6.01 Restriction on Transferability. Except to the extent expressly provided in the Plan or this Award Agreement, the PSUs may not be sold, transferred, pledged, assigned, or otherwise alienated at any time other than by will or by the laws of descent and distribution. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the foregoing, the Committee may permit, in its sole discretion, the Participant to transfer the PSUs to a member of the Participant’s immediate family or trust, a partnership or other entity for the benefit of the Participant or the members of the Participant's immediate family; provided, however, that the Participant retains beneficial ownership of any such PSUs. For purposes hereof, “immediate family” has the meaning ascribed thereto in Rule 16(a)-1 of the Exchange Act, and “beneficial owner” has the meaning ascribed thereto in Rule 13d-3 of the Exchange Act.
6.02 Rights as Shareholder. The Participant shall not have voting or any other rights as a shareholder of the Company with respect to the Shares issuable upon the vesting of PSUs until the date of issuance of such Shares. Upon settlement of the PSU, the Participant will obtain, with respect to the Shares received in such settlement, full voting and other rights as a shareholder of the Company.
6.03 Administration. The Committee shall have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participant, the Company, and all other Persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Award Agreement.
6.04 No Employment Rights. This Award Agreement and the Participant's participation in the Plan are not and shall not be interpreted to: (i) form an employment contract or relationship with the Company, the Employer or any of their respective Subsidiaries; (ii) confer upon the Participant any right to continue in the employ of the Company, the Employer or any of their respective Subsidiaries; or (iii) interfere with the ability of the Company, the Employer or any of their respective Subsidiaries to terminate the Participant's employment at any time.
6.05 Nature of Grant. In accepting the grant hereunder, the Participant acknowledges and agrees that: (i) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time; (ii) the Participant has read the Plan and any PSUs granted under it shall be subject to all of the terms and conditions of the Plan, including but not limited to the power of the Committee to interpret and determine the terms and provisions of the Plan and this Award Agreement and to make all determinations necessary or advisable for the administration of the Plan, all of which interpretations and determinations shall be final and binding; (iii) the PSU does not create any contractual or other right to receive future grants of PSUs, benefits in lieu of PSUs, or any other Plan benefits in the future; (iv) nothing contained in this Award Agreement is intended to create or enlarge any other contractual obligations between the Company or the Employer and the Participant; (v) any grant under the Plan, including any grant of PSUs, is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long service option, pension, or retirement benefits or similar payments; (vi) the Participant is voluntarily participating in the Plan; (vii) the future value of the Shares underlying the PSUs granted hereunder is unknown and cannot be predicted with certainty; (viii) none of the Company, the Employer or any of their respective Subsidiaries shall be liable for any change in value of the PSUs, the amount realized upon settlement of the PSUs or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the PSUs, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate, and (ix) the PSUs and the underlying Shares are not granted to the Participant for prior services rendered to the Company, the Employer or any Subsidiaries. Without limiting the generality of the foregoing, the Committee shall have the discretion to adjust the terms and conditions of any award of PSUs to correct for any windfalls or shortfalls in such PSUs which, in the Committee's determination, arise from factors beyond the Participant's control.
6.06 Compliance with Law. The Company shall not be required to issue or deliver any Shares pursuant to this Award Agreement pending compliance with all applicable Laws (including any registration requirements or tax withholding requirements) and compliance with the Laws and practices of any stock exchange or quotation system upon which the Shares are listed or quoted. If the Participant resides or is employed outside of the United States, the Participant agrees, as a condition of the grant of the PSUs, to repatriate all payments attributable to the Shares and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of Shares acquired pursuant to the PSUs) if required by and in accordance with local Laws in the Participant's country of residence (and country of employment, if different). In addition, the Participant also agrees to take any and all actions, and consent to any and all actions taken by the Company, its Subsidiaries and the Employer, as may be required to allow the Company, its Subsidiaries and the Employer to comply with local Laws in the Participant's country of residence (and country of employment, if different). Finally, the Participant agrees to take any and all actions as may be required to comply with the Participant's personal legal and tax obligations under local Laws in the Participant's country of residence (and country of employment, if different).
6.07 Amendment. This Award Agreement may be amended by a writing which specifically states that it is amending this Award Agreement executed by (i) the Company and the Participant, (ii) the Company (at the discretion of the Committee), so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment having a material adverse effect on the rights of the Participant hereunder may be made without the Participant's written consent or (iii) the Company (at the discretion of the Committee) in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable Laws or any future Laws or judicial decisions.
6.08 Notices. Any notice to be given under the terms of this Award Agreement to the Company shall be addressed to the Company in care of its Corporate Secretary. Any notice to be given to the Participant shall be addressed to the Participant at the address listed in the Employer’s records or to the Participant's electronic investment account held at the Stock Plan Administrator. By a notice given pursuant to this Section 6.08, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.
6.09 Severability. If all or any part of this Award Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Award Agreement or the Plan not declared to be unlawful or invalid. Any provision of this Award Agreement (or part of such provision) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such provision (or part of such provision) to the fullest extent possible while remaining lawful and valid.
6.10 Construction. The PSUs are being issued pursuant to Article 9 (Performance Shares/Performance Units) of the Plan. The PSUs are subject to the terms of the Plan. The Participant acknowledges receipt of the Plan booklet which contains the entire Plan, and the Participant represents and warrants that the Participant has read the Plan. Additional copies of the Plan are available upon request during normal business hours at the principal executive offices of the Company. To the extent that any provision of this Award Agreement violates or is inconsistent with an express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Award Agreement shall be of no force or effect. The words "including," "includes," or "include" are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as "without limitation" or "but not limited to" are used in each instance.
6.11 Waiver of Right to Jury Trial. EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE PSUs, THE PLAN OR THIS AWARD AGREEMENT.
6.12 Waiver; No Third Party Beneficiaries. A waiver by the Company of a breach of any provision of this Award Agreement by the Participant shall not operate or be construed as a waiver of any other provision of this Award Agreement, or of any
subsequent breach by the Participant. This Award Agreement shall not be construed to create any third party beneficiary rights.
6.13 Data Privacy. The Company is located at 100 Grainger Parkway, Lake Forest, Illinois 60045, United States of America, and grants PSUs under the Plan to employees of the Company and its Subsidiaries in its sole discretion. In conjunction with the Company's grant of the PSUs under the Plan and its ongoing administration of such awards, the Company is providing the following information about its data collection, processing and transfer practices. In accepting the grant of the PSU, the Participant expressly and explicitly consents to the personal data activities as described herein.
i.Data Collection, Processing and Usage. The Company and the Employer will collect, process and use certain personal information about the Participant, specifically, the Participant's name, home address, email address and telephone number, date of birth, social security or insurance number, passport number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all PSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant's favor ("Data"), for the purpose of implementing, administering and managing the Plan. The Company's legal basis for the collection, processing and use of the Participant's Data is the Participant's consent. The Participant's Data also may be disclosed to certain securities or other regulatory authorities where the Company's securities are listed or traded, or regulatory filings are made. The Company's legal basis for such disclosure of the Participant's Data is to comply with applicable laws, rules and regulations.
ii.Stock Plan Administration Service Providers. The Company and the Employer transfer the Participant's Data to the Stock Plan Administrator based in the United States of America, which assists the Company with the implementation, administration and management of the Plan. In the future, the Company may select a different Stock Plan Administrator and share the Participant's Data with another company that serves in a similar manner. The Stock Plan Administrator will open an account for the Participant to receive and trade Shares acquired under the Plan. The Participant will be asked to agree to separate terms and data processing practices with the Stock Plan Administrator, which is a condition of the Participant's ability to participate in the Plan.
iii.International Data Transfers. The Company and the Stock Plan Administrator are based in the United States of America. The Participant should note that the Participant's country of residence may have enacted data privacy laws that are different from the United States of America. The Company's legal basis for the transfer of the Participant's Data to the United States of America is the Participant’s consent.
iv.Voluntariness and Consequences of Consent, Denial or Withdrawal. The Participant's participation in the Plan and the Participant's grant of consent hereunder is purely voluntary. The Participant may deny or withdraw the Participant's consent at any time. If the Participant does not consent, or if the Participant later withdraws the Participant's consent, the Participant may be unable to participate in the Plan. This
would not affect the Participant's existing employment or salary; instead, the Participant merely may forfeit the opportunities associated with participation in the Plan.
v.Data Retention. The Participant understands that the Participant's Data will be held only as long as is necessary to implement, administer and manage the Participant's PSU and participation in the Plan; provided that the Company may hold the Participant's Data for longer periods of time consistent with its retention policies and practices with respect to employee data.
vi.Data Subject Rights. The Participant understands that the Participant may have the right under applicable law to (i) access or copy the Participant's Data that the Company possesses, (ii) rectify incorrect Data concerning the Participant, (iii) delete the Participant's Data, (iv) restrict processing of the Participant's Data, (vi) lodge complaints with the competent supervisory authorities in the Participant's country of residence. To receive clarification regarding these rights or to exercise these rights, the Participant understands that the Participant can contact the Participant's local human resources representative.
6.14 Private Placement. The grant of the PSUs is not intended to be a public offering of securities in the Participant's country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filing with the local securities authorities (unless otherwise required under local Laws).
6.15 No Advice Regarding Grant. The Company and the Employer are not providing any tax, legal or financial advice, nor is the Company or the Employer making any recommendations regarding the PSU, the Participant's participation in the Plan or the Participant's acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with the Participant's own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the Plan or this Award Agreement.
6.16 Securities Law Restrictions. The Participant acknowledges that, depending on the Participant's country of residence (and country of employment, if different) or where the Shares are listed, the Participant shall be subject to insider trading restrictions and/or market abuse Laws, which may affect the Participant's ability to acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., PSUs) or rights linked to the value of Shares during such times as the Participant is considered to have "inside information" regarding the Company or its business (as defined by the local Laws in the Participant's country of residence and/or employment). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Participant placed before the Participant possessed inside information. Furthermore, the Participant could be prohibited from (i) disclosing the inside information to any third party (other than on a "need to know" basis) and (ii) "tipping" third parties (including other employees of the Company and its Subsidiaries) or causing them otherwise to buy or sell securities. Any restrictions under these Laws are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading or other policy. The
Participant solely is responsible for ensuring compliance with any applicable restrictions and should consult with the Participant's personal legal advisor on this matter.
6.17 EU Age Discrimination Rules. If the Participant is a local national of and employed in the United Kingdom or a country that is a member of the European Union, the grant of the PSUs and the terms and conditions governing the PSUs are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the "Age Discrimination Rules"). To the extent that a court or tribunal of competent jurisdiction determines that any provision of this Award Agreement is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local Laws.
6.18 Whistleblower Protection. Nothing in this Award Agreement, the Competition Agreement or otherwise (i) limits the Participant’s right to any monetary award offered by a government-administered whistleblower award program for providing information directly to a government agency (including the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, The Sarbanes-Oxley Act of 2002 or any comparable legislation in non-U.S. jurisdictions) or (ii) prevents the Participant from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations, and for purpose of clarity the Participant is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act or to any comparable government agencies pursuant to applicable legislation in non-U.S. jurisdictions).
6.19 Electronic Delivery. The Company may, in its sole discretion, deliver any documents related to the PSUs granted to the Participant under the Plan by electronic means. The Participant hereby expressly consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.
6.20 Governing Law; Jurisdiction. This Award Agreement shall be exclusively governed by, and construed in accordance with, the Laws of the State of Illinois without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or of any other jurisdiction) that would cause the application of the laws of a jurisdiction other than the State of Illinois. All disputes and controversies arising between the parties are to be submitted for determination exclusively to the federal or state courts of the State of Illinois and by accepting the grant of PSUs, the Participant expressly consents to the jurisdiction of such courts. Notwithstanding the foregoing, the Company may at its option seek interim and permanent injunctive relief before any competent court, tribunal or judicial forum, which in the absence of the foregoing provision, would have jurisdiction to grant the relief sought.
6.21 Entire Agreement. The Plan, this Award Agreement (including any applicable addendum) and the Competition Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede, in their entirety, all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed by a duly authorized officer and the Participant acknowledges and agrees that by clicking on the “Accept” box below this Award Agreement in the section "Your New Grant" on the screen titled "View Grant," Participant expressly agrees to be bound by the terms and conditions of this Award Agreement, and agrees that Participant's electronic signature or electronic acceptance of this Award Agreement constitutes the sole and exclusive means of executing this Award Agreement.
| W.W. GRAINGER, INC. | ||
| /s/ D.G. Macpherson | ||
| Name: D.G. Macpherson | ||
| Title: Chairman & Chief Executive Officer | ||
EXHIBIT I
Performance Metrics for April 1, 2025 Grant Date
Measurement Period: January 1, 2025 to December 31, 2027
The actual number of the Target PSUs that vest and which shall be settled pursuant to Section 2.06 of this Award Agreement shall be determined based upon the achievement of the following three (3) Performance Metrics, each of which shall be equally weighted (each 1/3) and which shall be determined and certified by the Committee in its sole discretion.
For purposes of the foregoing, the aggregate payout percentage shall be computed as the aggregate of (A) the U.S. Share Gain Payout Percentage multiplied by 1/3 (B) the Endless Assortment Business Daily Sales Growth Payout Percentage multiplied by 1/3, and (C) the Total Company Adjusted Operating Margin Payout Percentage multiplied by 1/3.
| A. Performance Metric – U.S. Share Gain | ||||||||||||||
| Targets for Performance Metric | |||||
Target | U.S. Share Gain Payout Percentage | ||||
Less than 0 basis points | 0% | ||||
| 0 basis points to 250 basis points | 0% to 80% | ||||
| 250 basis points to 350 basis points | 80% to 100% | ||||
| 350 basis points to 500 basis points | 100% | ||||
| 500 basis points to 600 basis points | 100% to 120% | ||||
| 600 basis points to 850 basis points | 120% to 200% | ||||
| Greater than 850 basis points | 200% (maximum) | ||||
| B. Performance Metric - Endless Assortment Daily Sales Growth | ||||||||||||||
| Targets for Performance Metric | |||||
Target | Endless Assortment Daily Sales Growth Payout Percentage | ||||
Less than 1.5% | 0% | ||||
| 1.5% to 6.5% | 0% to 80% | ||||
| 6.5% to 11.5% | 80% to 100% | ||||
| 11.5% to 16.5% | 100% | ||||
| 16.5% to 21.5% | 100% to 120% | ||||
| 21.5% to 26.5% | 120% to 200% | ||||
| Greater than 26.5% | 200% (maximum) | ||||
| C. Performance Metric – Total Company Adjusted Operating Margin | ||||||||||||||
| Targets for Performance Metric | |||||
Target | Total Company Adjusted Operating Margin Payout Percentage | ||||
Less than -15 basis points | 0% | ||||
| -15 basis points to -5 basis points | 0% to 80% | ||||
| -5 basis points to 5 basis points | 80% to 100% | ||||
| 5 basis points to 15 basis points | 100% | ||||
| 15 basis points to 25 basis points | 100% to 120% | ||||
| 25 basis points to 35 basis points | 120% to 200% | ||||
| Greater than 35 basis points | 200% (maximum) | ||||
Appendix A
W.W. GRAINGER, INC.
2022 Incentive Plan
Non-U.S. Addendum to Performance Stock Unit Award Agreement
In addition to the terms of the W.W. Grainger, Inc. 2022 Incentive Plan (as may be amended from time to time, the "Plan") and the Performance Stock Unit Award Agreement (the "Award Agreement"), the PSUs are subject to the additional terms and conditions as set forth in this Appendix A, which is part of the Award Agreement (this "Non-U.S. Addendum"), to the extent the Participant resides or is employed in one of the countries addressed herein. This Non-U.S. Addendum also includes information about certain other issues of which a Participant should be aware with respect to the Participant’s participation in the Plan.
The Non-U.S. Addendum is based upon the securities, tax, exchange control and other laws in effect in the respective countries as of February 1, 2025. All capitalized terms contained in this Non-U.S. Addendum shall have the same meaning as set forth in the Plan and the Award Agreement unless otherwise defined. By accepting the PSUs, the Participant agrees to be bound by the terms and conditions contained in the paragraphs below in addition to the terms of the Plan, the Award Agreement, and the terms of any other document that may apply to the Participant and the Participant’s PSUs.
If the Participant transfers residence or employment to a country identified in this Non-U.S. Addendum, the additional terms and conditions for such country as reflected in this Non-U.S. Addendum will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the PSUs and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer). However, if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working, transferred employment after the PSUs were granted to the Participant, or is considered a resident of another country for local law purposes, the information contained herein may not apply.
Finally, the information contained herein is general in nature and may not apply to a Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to a Participant’s situation.
COUNTRY COVERED BY THIS APPENDIX A: Canada
Canada | ||
Terms and Conditions
1.Withholding Taxes. Notwithstanding any provision in the Award Agreement to the contrary, if the Participant is a resident of Canada or otherwise subject to taxation in Canada on employment income, the Participant is prohibited from surrendering shares of Stock that he or she already owns or from attesting to the ownership of shares to satisfy any tax withholding obligations in connection with the PSUs.
2.PSUs Payable in Shares Only. Notwithstanding any provision in the Award Agreement or the Plan to the contrary, vested PSUs shall be payable in Shares only (and shall not be settled in cash).
3.Termination of Employment. For purposes of Section 2.02 of the Award Agreement, a “Termination Date” shall mean the date that is the earlier of (i) the date the Participant tenders notice of termination of employment from the Company or the Employer, or (ii) the date the Participant ceases to render actual services for the Company or the Employer, without regard to any notice period or period of pay in lieu of such notice required under local law (including, but not limited to, civil and/or common law, except as otherwise may be required to comply with minimum standards legislation (“MSL”), if applicable). Subject to compliance with MSL, the Company shall have sole discretion to determine when the Participant is no longer actively employed for purposes of vesting of the PSUs and participation in the Plan. The Participant shall have no entitlement to damages or other compensation arising from, or related to, not receiving any awards which would have vested after the Termination Date, and the Participant hereby waives any claim for such damages or other compensation; it being understood that nothing herein is intended to limit any statutory termination entitlements, and such statutory entitlements shall, if required, apply despite anything herein to the contrary.
4.Alternative Vesting of Performance Stock Units. For purposes of Sections 2.02 and 2.03 of the Award Agreement, and only where the Participant’s employment is subject to the laws of the province of Ontario, such Participant shall be entitled to the pro-rata portion of the Target PSUs based upon the Company's achievement of the Performance Metrics, as set out in Section 2.03, in circumstances where Cause is asserted for involuntary termination but the grounds do not meet the threshold necessary to disqualify the Participant from statutory notice pursuant to MSL. This clarification on Cause shall also prevail over any corresponding definition and treatment of a “for Cause” termination that may be set out in the Participant’s employment agreement or any related agreements where required to comply with MSL, if applicable.
5.Acknowledgement. By accepting the PSUs subject to the Award Agreement through the Stock Plan Administrator’s web portal (or its successor), the
Participant declares that the Participant expressly agrees with the provisions regarding termination of employment described in the Plan, the Award Agreement (including, but not limited to, Sections 2.02, 2.03, 2.04 and 2.05 thereof) and the special terms and conditions set forth in this Appendix A.
6.Recoupment. If the Participant’s employment is subject to the laws of the province of Ontario, the consequences in Section 3.01 of the Agreement shall apply to the Participant, but also shall be modified if and only as necessary to comply with MSL. For clarity, it is understood that where such Participant is not exempt from Ontario’s statutory prohibition against non-competition covenants, the Participant need not comply with such portion of the Competition Agreement or other similar agreement or covenant which amounts to a prohibited non-competition covenant, and the lack of compliance shall not constitute misconduct by the Participant nor be subject to injunctive relief. However, the Participant shall remain subject to the cancellation and recoupment of Incentive Compensation as a mutually agreed upon financial consequence of the Participant engaging in competition.
Notifications
1.Additional Restrictions on Resale. In addition to the restrictions on resale and transfer noted in Plan materials, securities purchased under the Plan may be subject to certain restrictions on resale imposed by Canadian provincial securities laws. You are encouraged to seek legal advice prior to any resale of such securities. In general, participants resident in Canada may resell their securities in transactions carried out on exchanges outside of Canada and, in particular, you are generally permitted to sell shares acquired pursuant to the Plan through the designated broker appointed under the Plan, if any, provided that the Company is a “foreign issuer” that is not a reporting issuer in any jurisdiction of Canada and the sale of the shares acquired pursuant to the Plan takes place: (i) through an exchange, or a market, outside of Canada, on the distribution date; or (ii) to a person or company outside of Canada. For purposes hereof, a foreign issuer is an issuer that: (a) is not incorporated or existing pursuant to the laws of Canada or any jurisdiction of Canada; (b) does not have its head office in Canada; and (c) does not have a majority of its executive officers or directors ordinarily resident in Canada.
2.Foreign Asset Reporting Information. Any foreign property (including Shares and PSUs acquired under the Plan) must be reported to the Canada Revenue Agency on form T1135 (Foreign Income Verification Statement) if the total cost of the Participant’s foreign property exceeds C$100,000 at any time in the year. The PSUs must be reported - generally at a nil cost - if the C$100,000 cost threshold is exceeded because of other foreign property held. If Shares are acquired, their cost generally is the adjusted cost base ("ACB") of the Shares. The ACB would normally equal the fair market value of the Shares at the time of vesting, but if the Participant owns other Shares, this ACB may have to be averaged with the ACB of the other Shares. The form must be filed by April 30 of the following year. The
Participant should consult with the Participant's personal tax advisor to determine the Participant’s reporting requirements.
Exhibit 10.3
SUMMARY DESCRIPTION OF THE
COMPANY MANAGEMENT INCENTIVE PROGRAM
I.Introduction
The Company Management Incentive Program (“CMIP”) is designed to provide an incentive cash compensation opportunity to the CEO of W.W. Grainger, Inc. (the “Company”), their U.S. direct reports, along with members of the U.S. Grainger Leadership Team (individually, a participant, and collectively, the participants) based upon: two key financial factors that drive improvements in shareholder value: adjusted return on invested capital (“ROIC”); and year-over-year adjusted daily sales growth (“Sales Growth”) as defined below.
II.Objectives
The CMIP is designed to:
•Encourage decision-making focused on growing the business profitably and efficiently, thus leading to improvements in shareholder value;
•Influence participants to make decisions consistent with shareholders’ interests;
•Align participant actions with relevant Company objectives; and
•Attract and retain the talent required to achieve the Company’s objectives.
III.Eligibility
Eligibility for participation in the CMIP is limited to the Company’s CEO, the CEO’s direct reports, and members of the Grainger Leadership Team (“GLT”). Criteria for selection as a participant are external market practice, impact of the role and internal practice. Participation in the CMIP is subject to the eligibility provisions in Section B of the attached Terms and Conditions.
IV.Performance Measures
The Company is focused on simultaneously achieving the following goals:
1.Produce a favorable rate of ROIC; and
2.Grow the business by driving sales growth.
The 2025 CMIP will be based on the Company’s achievement of ROIC and Sales Growth targets, and will be equal to a percentage of each participant’s target award (“% Payout”) as follows:
% Payout = (ROIC component + Sales Growth component)
The maximum award that may be paid to a participant is capped at 200% of such participant’s target incentive.
ROIC Component
ROIC is generally defined as total Company adjusted operating earnings divided by the Company’s average net working assets (a five-point average year-to-date):
ROIC = Adjusted Operating Earnings/Net Working Assets
The ROIC component will range from 0% to 100% of a participant’s total target incentive award.
Sales Growth Component
Sales Growth is defined as total Company year-over-year daily sales growth performance (total Company net sales on a consolidated basis for the period divided by the U.S. selling days for the period).
Sales Growth = [(Total Company Daily Sales, Current Year/Total Company Daily Sales, Prior Year)]-1
The Sales Growth component will range from 0% to 100% of a participant’s total target incentive.
Payout amounts between these scales for both Sales Growth and ROIC will be interpolated as necessary. For the total payout, MIP Sales & ROIC contributions are calculated, summed, and then rounded to the nearest percent for the final MIP payout.
The calculations of ROIC and Sales Growth will be modified for the Company’s planned foreign exchange rates used when setting initial targets. In addition, the calculations of ROIC and Sales Growth will generally exclude the effect of any mergers, acquisitions or divestitures with a closing date that occurs during the same fiscal year. In other words, the impact of any merger, acquisition or divestiture on sales growth, operating earnings and net working assets will generally be excluded when calculating the Company’s achievement of the performance measures. The calculations of ROIC and Sales Growth may also be adjusted from time to time to exclude other items that the Company believes may not be indicative of core operating results. In any such case, reconciliations of any non-GAAP financial measures to the most directly comparable GAAP financial measures will be provided as required or appropriate in the Company’s disclosures relating to the compensation paid to its named executive officers.
The Compensation Committee of the Board (the “CCOB”) reviews and recommends for approval by the Board of Directors of the Company (the “Board”) any payouts under the CMIP, including in respect of the exercise of any discretion to modify the payout formula. Any CMIP payouts to the CEO are approved by the Board’s independent directors in executive session without management present.
V.Target Incentive Award
Also known as the target incentive, the target awards for each participant are stated as a percentage of the participant’s base salary (“Target Incentive %”) (alternatively the target awards may be stated as a target value expressed as a fixed dollar amount). Target awards follow competitive market practice and internal considerations.
VI.Determination of Payment Amounts
The following process is used to determine the payment amount for each participant.
•Step 1: The Company’s finance function (“Finance”) determines the performance results for the ROIC component and the resultant performance to goal and computes the appropriate percentage of the target incentive earned.
•Step 2: Finance determines the performance results for the Sales Growth component and the resultant performance to goal and computes the appropriate percentage of target incentive earned.
•Step 3: Finance calculates the CMIP payout amount, as follows:
◦Total % Payout = ROIC Component + Sales Growth Component
•Step 4: The Company’s Corporate Compensation function (“Corporate Compensation”) calculates each participant’s incentive award earned as follows:
◦Incentive Earned = Base Salary (as of December 31 of the applicable plan year) x Target Incentive % x Total % Payout
Participants holding incentive-eligible jobs for part of the year will earn an adjusted award based on the eligibility provisions of the CMIP Terms and Conditions.
•Step 5: Management assists the CCOB by making recommendations, and the CCOB reviews and recommends for Board approval the final incentive amounts for each participant. Any CMIP payout to the CEO is approved by the Board’s independent directors in executive session without management present.
•Step 6: Corporate Compensation is responsible for setting communication standards for the final incentive amounts earned by each participant and the payment dates.
TERMS AND CONDITIONS OF THE
COMPANY MANAGEMENT INCENTIVE PROGRAM (CMIP)
Capitalized terms used but not defined herein have the meaning ascribed thereto in Section H. below.
A.Program Year
The CMIP covers the period from January 1, 2025 to December 31, 2025.
B.Eligibility Provisions
Specific eligibility provisions are developed and reviewed annually. Eligibility provisions for Participants who work eligible days are outlined below. “Eligible days” refers to continued employment inclusive of leaves of absences, during which the participant is in an incentive eligible job and continues to receive pay directly from the Company or its subsidiaries. For purposes of the following provisions, pro-rata calculations are based on the number of eligible days in each month during the applicable program year.
1.Full-Year Participation – Participants who were in incentive-eligible jobs and worked all eligible days during the plan year will be eligible to receive a full award under the CMIP, except as noted below.
2.First-Year Participation (internal promotion or external hire) – Participants who are placed into an incentive eligible job on or before October 31 will be eligible to receive a pro-rata award based on the number of eligible days in the eligible job during the applicable program year. Participants placed in an eligible job on or after November 1 are not eligible to participate in the CMIP for that year (except as approved by the CCOB).
3.Changes in Target CMIP Percentage – Participants who have their Target CMIP Percentage change during the year due to promotion, demotion or reclassification of their job will receive an award pro-rated based on the number of eligible days at each Target CMIP Percentage level and Participant’s Base Salary as of December 31st unless as otherwise specified below.
4.Transfer to Another Incentive Program – A Participant who changes jobs during the year such that the former and current jobs participate in different incentive programs will receive an award pro-rated based on the
number of eligible days at each Target CMIP Percentage level for each eligible job.
5.Transfer to a Non-Incentive Eligible Job – A Participant in an incentive-eligible job who transfers to a non-incentive-eligible job will receive a pro-rata award for the number of eligible days based on the applicable Target CMIP Percentage level while in an eligible job. Payment will be made on the next incentive payment date.
6.Job Elimination or Downgrade – In the sole discretion of Management, if a Participant’s job is eliminated for business reasons or is downgraded and the Participant’s new job is non-incentive eligible, a pro-rata award for the current year will be made on the next incentive payment date, regardless of the effective date of the job elimination or downgrade. In the event the Participant does not continue Employment, any award for the current year will be made on the next incentive payment date. The salary used in the calculations will be the Participant’s Base Salary as of the Participant’s last day of Employment.
7.Voluntary Resignation – If a Participant resigns and their last day worked is before the scheduled CMIP payment date for a given year, no award will be paid. The Participant will not receive any incentive payment despite formerly being in an incentive-eligible job.
8.Death, Retirement or Long-term Disability – If a Participant dies, retires following attainment of the Normal Retirement Date or suffers a long-term disability which prevents their continued performance of their duties at the Company or is on an approved unpaid leave of absence, a pro-rata award will be made for the current year to the Participant or the Participant’s estate on the next incentive payment date. The salary used in the calculations will be the Base Salary as of their last day worked.
9.Pro-rata Calculation – Participation in CMIP will be calculated based on the number of days in the applicable program year. For example, assume a participant begins eligibility on February 1. The proration is based on number of eligible days in each eligible month. The proration is calculated based on number of eligible days divided by total days in the year (e.g. 334/365 or approximately 91.5%). The proration will be adjusted as appropriate to reflect leap years.
10.Good Standing – Eligible Employees must be in good standing, as determined in the sole discretion of the CCOB, to be eligible for participation in the CMIP. A Participant who is on a performance improvement program will not be deemed to be in good standing.
C.Termination of Employment; Engaging in Misconduct; Excess Payments; Restatement of Inaccurate Financial Results; Indemnification; Conflicts
1.If (a) the Participant’s Employment is terminated by the Employer for whatever reason (other than by reason of job elimination), (b) the Employer does not renew an employment contract (if applicable) with a Participant or (c) the Participant Engaged in Misconduct, or is believed to have Engaged in Misconduct, all awards will be forfeited.
2.If a Participant Engaged in Misconduct or is believed to have Engaged in Misconduct, the Company shall be entitled to recover from the Participant, and Participant shall re-pay any cash sum received pursuant to the CMIP, in whole or in part, for any period of time, as the Company deems appropriate under the circumstances. Further, if the Participant (or former Participant) receives any amount in excess of what the Participant (or former Participant) should have received under the terms of the CMIP for any reason (including, without limitation, by reason of a mistake in calculations or administrative error or as otherwise may be required by the Recoupment Policy, any applicable Laws or listing standard adopted by the New York Stock Exchange), all as required by or, in its discretion, determined by Management, then the Company shall have the right to cancel the award, require the repayment of any excess cash distribution acquired pursuant to, or received in connection with, the CMIP or take any other action it deems appropriate under the circumstances to recoup any such excess payment for the period the Company determines appropriate.
3.The Company shall have the discretion to recover awards that were paid or settled to the Participant at a time when they were an employee of the Employer in the following instances:
a.If the payment or settlement of awards would have been lower had the achievement of applicable financial performance goals been calculated based on any restated financial results, if the Participant Engaged in Misconduct; and/or
b.In the case of inaccurate financial results, whether or not they
result in a restatement, and whether or not the Participant has Engaged in Misconduct; and/or
c.As set forth in the Recoupment Policy; and/or
d.For any reason (including, without limitation, by reason of a mistake in calculations or administrative error), all as determined by Management in its discretion.
Except in circumstances where a Participant has Engaged in Misconduct or for a longer period of time if required by the Recoupment Policy, applicable Law or a listing standard adopted by the New York Stock Exchange, awards received or settled more than three years after the date of the initial filing with the U.S. Securities & Exchange Commission that contained the incorrect financial results shall not be subject to recovery under this Section C.3.
4.The rights and obligations of each Participant under the terms and conditions of the Participant’s Employment shall be unaffected by the Participant’s participation in the CMIP or any right the Participant may have with the Company to participate in the CMIP. A Participant who participates in the CMIP waives any and all rights to compensation or damages in consequence of the termination of the Participant’s Employment for any reason insofar as those rights arise or may arise from the Participant’s forfeiture of an award under the CMIP as a result of such termination or from the loss or diminution in value of rights or entitlements the Participant may have under the CMIP. If necessary, a Participant’s terms of Employment shall be varied accordingly.
5.The exercise of the Company of its rights under this Section C shall not constitute the recovery of liquidated damages, nor shall the exercise of such rights be deemed its exclusive remedy, but shall be in addition to all other rights available at law or in equity. By participating in the CMIP, the Participant expressly agrees to indemnify and hold the Company and the Participant’s Employer harmless from any loss, cost, damage or expense (including attorneys' fees) that the Company or the Employer may incur as a result of the Participant’s actions or in the Company’s and/or the Employer’s efforts to recover such previously made payments or value pursuant to this Section C.
6.In the event of any conflict between these Terms and Conditions and the terms and conditions of any equity award agreement, including any Restricted Stock Unit Agreement, Performance Share Award Agreement or Stock Option Award Agreement, or any Unfair Competition Agreement, in each case, to which the Employer and the Participant are parties, the terms and conditions that carry the greater obligation on the part of the Participant shall control and be determinative in all respects.
7.Notwithstanding anything to the contrary under these Terms and Conditions, the Company may cancel, recoup, rescind, or otherwise recover any award or compensation made under the CMIP if such recovery is pursuant to a claw-back or recoupment policy adopted by the Company from time to time, including the Recoupment Policy, or as
otherwise permitted or required by applicable law or listing standard adopted by the New York Stock Exchange.
D.Oversight of CMIP and Administration
The CCOB and the Board of Directors of the Company (the “Board”) are responsible for the oversight of the CMIP.
Management assists the CCOB by making recommendations, and the CCOB reviews, in conjunction with its independent compensation consultant, and recommends for Board approval any changes to CMIP design and the final incentive amounts payable to each Participant. Any CMIP design changes, payouts or other actions impacting the CEO’s compensation are approved by the Board’s independent directors in executive session without management present.
The administration of the CMIP, including the calculation of payments, is the responsibility of the Company.
E.Payment
Payment under the CMIP will be made annually on or before March 15 for the prior year’s results unless country-specific regulations require otherwise. Payment will be made by the Employer in local currency or equivalent, less applicable withholding taxes and other amounts required to be withheld.
Notwithstanding anything herein to the contrary, payment of all or part of awards under the CMIP that are subject to or otherwise result in disallowance as deductions for employee remuneration under Section 162(m) of the Internal Revenue Code of 1986, as amended, shall be deferred as and to the extent provided by the Board or the CCOB.
F.Right of Continued Employment
Participation in the CMIP is not a guarantee of continuing Employment or of continued participation in the CMIP in any subsequent year.
G.Amendment or Termination of CMIP
The CCOB may from time to time recommend that the Company amend, change or terminate the CMIP to the Board for approval. Any amendment, change or termination related to the CEO’s CMIP is subject to review by the CCOB and approval by the Board’s independent directors in executive session without management present.
For Participants other than the CEO, the Company also reserves the right, subject to the review and approval of the CCOB and the Board, to amend these Terms and Conditions or the CMIP at any time and from time to time, with or without prior notice; provided, that
no amendment shall, without the consent of the Participant, operate to affect adversely any previously earned payment.
H.Definitions
Base Salary is defined as the locally relevant rate of pay used to determine a CMIP award.
CCOB is the Compensation Committee of the Board.
CMIP is the Company Management Incentive Program, as governed by these Terms and Conditions.
Company is W.W. Grainger, Inc.
Eligible Employee is the Company’s CEO and each employee of the Company or its subsidiaries that directly reports to the Company’s CEO, subject to the CEO’s discretion.
Eligible Days refers to the days during which a participant is continuously employed, including periods of approved leave of absence, provided that the participant is in an incentive-eligible job and continues to receive pay directly from the Company or its subsidiaries.
Employer is the Company or the local subsidiary of the Company that employs the Participant.
Employment is a Participant’s employment with the Employer in accordance with the terms and conditions of their employment contract, if any, in business units where applicable.
Engaged in Misconduct means a Participant:
(i)has breached any contract or agreement with the Employer;
(ii)has made any unauthorized disclosure of any of the trade secrets or confidential information of Employer;
(iii)has committed an act of embezzlement, fraud or theft with respect to the property of Employer;
(iv)has engaged in conduct which violates the company’s Business Conduct Guidelines, employee handbook, or any anti-corruption or bribery law (whether involving government officials or otherwise);
(v)has deliberately disregarded the rules of the Employer in such a manner as to cause any loss, damage or injury to, or otherwise endanger the property, reputation or employees of the Employer;
(vi)induced any employee, supplier, customer, agent or contractor of Employer or any other individual to take any action described in (i)-(v) above;
(vii)intends to take any action described in (i)-(vi) above; or
(viii)has taken any other action that Management in its discretion determines to be detrimental.
Management means the CEO of the Company and the CEO’s direct reports or their respective duly authorized designees.
Normal Retirement Date refers to the date upon which a participant attains any of the following: age 60, age 55 and 20 years of service; or 25 years of service.
Participant is each Eligible Employee who has been designated by the CCOB to participate in the CMIP.
Recoupment Policy is the W.W. Grainger, Inc. Financial Statement Executive Compensation Recoupment Policy (the “Recoupment Policy”).
Target CMIP Percentage is the target percentage determined by the Board of a Participant’s Base Salary used to calculate such Participant’s incentive award before any performance criteria increase or decrease the award.
Termination Date is the date a Participant ceases Employment howsoever caused.
Terms and Conditions are these Terms and Conditions as amended from time to time.
*******************************************
Exhibit 10.4
Susan Slavik Williams
4450 MacArthur Blvd., Second Floor
Newport Beach, California 92660
April 30, 2025
Dear Ms. Slavik Williams,
On behalf of W.W. Grainger, Inc., “we” or the “Company,” we would like to acknowledge and express our sincere appreciation for your and the entire Slavik family’s enduring and valued contributions to the Company. In light of our collective commitment to the highest standards of corporate governance and in honor of the longstanding relationship between the Company and the Slavik family, this letter memorializes our relationship moving forward.
From and after the date of this letter until the earliest of (i) the date that is five years after the date of this letter, the “Initial Term,” or, if extended in accordance with the terms of this letter, the expiration of the Renewal Term (defined below), (ii) such time as you cease to be a “beneficial owner” (as such term has the meaning ascribed in Section 13(d) of the Securities Exchange Act of 1934) with sole voting and sole dispositive power (or, shared voting or dispositive power, so long as each individual with whom voting or dispositive power is shared is a Family Member (as defined below) or a trust for the benefit of such Family Member) of at least 5% of the total number of issued and outstanding shares of common stock of the Company, or (iii) your death (the occurrence of subclauses (i), (ii) or (iii), each a “Termination Event”), we hereby agree that you shall have the right to nominate for election to the Board up to one director nominee for inclusion in the Board’s recommended slate of nominees at the Company’s annual meeting of shareholders. The candidate you submit for nomination to serve on the Board of Directors of the Company, the “Nominee,” may only include yourself, your spouse or your immediate or extended family (each, a “Family Member”). You will provide the name of such Nominee to the Corporate Secretary by the due date specified for shareholder nominations of director candidates found within the Company’s definitive proxy statement for the year immediately prior to the year in which such Nominee would stand for election. The Company’s Board Affairs and Nominating Committee, the “BANC,” must consent to the Nominee, who must at least meet: (A) the specific written criteria applicable to all nominees to the Board as established by the Board; and (B) the criteria for independence adopted by the Board and as required by the New York Stock Exchange, the “NYSE,” and the U.S. Securities and Exchange Commission, the “SEC,” in each case of subclauses (A) and (B) in effect on the date you provide such written notice to the Company of your Nominee.
The BANC shall make its determination as to whether to consent to such Nominee and recommend to the Board (which it shall undertake reasonably and in good faith in the exercise of the BANC’s fiduciary duties under applicable law) within 45 days
after the date you provide the name of the Nominee to the Corporate Secretary, the “Review Period,” which shall be accompanied by, for any candidate other than you, a fully completed copy of the Company’s standard director and officer questionnaire and customary director onboarding documentation (including an authorization form to conduct a background check and consent to be named as a director in the Company’s proxy statement). If any Nominee that you previously nominated dies or is unwilling or unable to serve as such or is otherwise removed or resigns from office, then you will have the right to provide an alternate person for nomination to the Board, who will also require consent from the BANC in accordance with the procedures described above. Upon receiving consent from the BANC, such successor Nominee will be considered a “Nominee” for all purposes of this letter.
With respect to any Nominee to which the BANC consents, the Company agrees (i) to take all reasonable actions within its power to the extent permitted by applicable law to include such Nominee as a nominee to the Board on the slate of nominees for election to the Board included in the Company’s annual meeting proxy statement, (ii) to recommend the election of such Nominee to the shareholders of the Company, (iii) to use its commercially reasonable efforts (which will include the solicitation of proxies) to obtain the election of such Nominee as a director of the Company, and (iv) to cause all common stock represented by proxies granted to it (or any of the individuals named on its proxy card) to be voted in favor of the election of such Nominee as a director of the Company at each applicable annual meeting to the extent permitted pursuant to such proxies.
The Company’s obligations pursuant to the prior paragraph are subject to you providing, or causing any Nominee: (i) to provide any information that is required to be disclosed in any filing or report under the listing standards of the NYSE and applicable law, including the federal securities laws, or regulatory guidance or requests, (ii) to provide any information that is required in connection with determining the independence status of the Nominee under the listing standards of the NYSE or the SEC and applicable law or regulatory guidance or requests, (iii) to provide such Nominee’s written consent to being named in a proxy statement as a Nominee and to serving as director if elected, and (iv) with respect to any Nominee who is not then-serving on the Board, to provide all information regarding the Nominee that the BANC may otherwise reasonably request (which may include up to five interviews of such person conducted by the BANC or members thereof, and any members of management invited by the BANC, prior to any consent given by the BANC). The Company agrees that the informational requirements in subclauses (i) and (ii) may be fulfilled by providing a fully completed copy of the Company’s standard director and officer questionnaire. The Company shall use its commercially reasonable efforts to conduct any interview(s) contemplated by this paragraph as promptly as practicable but in any case, assuming reasonable availability of the candidate, within the Review Period.
Notwithstanding anything in this letter to the contrary, the Board is not obligated to nominate for election to the Board or recommend to the shareholders the election of
any Nominee (i) who fails to submit to the Company on a timely basis the Company’s standard director and officer questionnaire, (ii) who fails to meet such background and reputational requirements as reasonably required by the Board and consistent with the requirements for other members of the Board, including adherence with the Company’s Business Conduct Guidelines, or (iii) the nomination of whom the Board or the BANC determines in good faith, after consultation with legal counsel, would constitute a breach of its fiduciary duties or applicable law or violate the Company’s organizational documents. If the Board makes any such determination, the Company will promptly notify you of the occurrence of such event within the Review Period and permit you to provide an alternate person for nomination to the Board (an “Alternate Nominee”), who will also require consent from the BANC in accordance with the procedures described above, and the Company will use commercially reasonable efforts to perform its obligations under this letter with respect to such alternate person. For the avoidance of doubt, provided the Company has complied with the time periods specified in this agreement, the Company shall not be obligated to postpone, reschedule or delay any meeting of the Company’s shareholders should an alternate Nominee be presented for nomination to the Board.
Immediately following the Nominee’s election or appointment to the Board, as applicable, the Board will take such action necessary to (i) appoint the Nominee to the BANC, and (ii) appoint the Nominee to the Board’s Audit Committee or Compensation Committee, provided the Nominee meets all criteria for committee membership set forth in the applicable charter for such committee.
This agreement set forth in this letter will terminate automatically upon the occurrence of a Termination Event and will be of no further force and effect; provided, however, that no Termination Event shall shorten the term of any incumbent director. Upon the expiration of the Initial Term, this letter will automatically renew for one additional term of five years, the “Renewal Term,” measured from the expiration of the Initial Term, unless you or the Company provide written notice of non-renewal (a “Non-Renewal Notice”) at least one year prior to the expiration of the Initial Term. If you or the Company provide a Non-Renewal Notice at least one year prior to the expiration of the Initial Term, then the agreement set forth in this letter will terminate as of the end of the Initial Term and will be of no further force and effect except as otherwise set forth herein. Upon 60 days’ written notice, you may also terminate the agreement set forth in this letter if the BANC and/or the Board withhold(s) consent to your Nominee or your Alternate Nominee.
The terms of the agreement set forth in this letter will be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or any other jurisdiction) to the extent such rules or provisions would cause the application of the laws of any jurisdiction other than the State of Illinois. Any action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this letter must be brought in a United States District Court located in
the State of Illinois or any Illinois state court. Each of the Company and you agree that irreparable damage would occur if any provision of this agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of the agreement or to enforce specifically the performance of the terms and provisions hereof. Each of the Company and you consents to the exclusive jurisdiction and venue of such courts (and of the appropriate appellate courts therefrom) in any such action, suit or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such, action, suit or proceeding in any such court or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
No modification, amendment or waiver of any provision of this letter will be effective against you or the Company unless such modification is approved in writing by you and the Company. The failure of either you or the Company to enforce any of the provisions of this letter will in no way be construed as a waiver of such provisions and will not affect the right of either you or the Company, as applicable, thereafter to enforce each and every provision of the agreement set forth in this letter in accordance with its terms. Your rights and obligations under this letter do not attach to any of your shares of common stock of the Company. Neither you nor the Company may assign the agreement set forth in this letter or any rights or obligations hereunder and any assignment will be null and void; provided, however, that in the event you are unable to submit a nominee pursuant to this agreement due to a physical or mental incapacity, then the holder of your General Durable Power of Attorney shall be permitted to submit a nominee, either for an initial nomination or a nomination to complete a term, in accordance with this agreement on your behalf. You agree that you will not nominate any other candidates for the Board, pursuant to the nomination procedures of the By-Laws or otherwise, other than as provided in this letter. Nothing in this letter, express or implied, is intended or will be construed to confer upon, or give to, any person or entity (including any heirs or successors) other than you and the Company any remedy or claim under or by reason of this letter or any terms, covenants or conditions hereof, and all of the terms, covenants, conditions, and agreements set forth in this letter will be for the sole and exclusive benefit of you and the Company. In the event that any one or more of the provisions contained in this letter should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. You and the Company will endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
By counter-signing this letter, you agree that it represents the complete agreement between you and the Company as to all matters covered hereby, and supersedes any prior agreements or understandings between you and the Company.
Sincerely,
| W.W. Grainger, Inc. | ||
| /s/ D.G. Macpherson | ||
| Name: D.G. Macpherson | ||
| Title: Chairman of the Board and Chief Executive Officer | ||
Acknowledged and agreed as of the date of this letter:
| Susan Slavik Williams | ||
| /s/ Susan Slavik Williams | ||
CERTIFICATION
Exhibit 31.1
I, D.G. Macpherson, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of W.W. Grainger, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 1, 2025
| By: | /s/ D.G. Macpherson | ||||
| Name: | D.G. Macpherson | ||||
| Title: | Chairman and Chief Executive Officer | ||||
CERTIFICATION
Exhibit 31.2
I, Deidra C. Merriwether, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of W.W. Grainger, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 1, 2025
| By: | /s/ Deidra C. Merriwether | ||||
| Name: | Deidra C. Merriwether | ||||
| Title: | Senior Vice President and Chief Financial Officer | ||||
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of W.W. Grainger, Inc. (“Grainger”) for the quarterly period ended March 31, 2025, (the “Report”), D.G. Macpherson, as Chairman and Chief Executive Officer of Grainger, and Deidra C. Merriwether, as Senior Vice President and Chief Financial Officer of Grainger, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Grainger.
| /s/ D.G. Macpherson | ||
| D.G. Macpherson | ||
| Chairman and Chief Executive Officer | ||
| May 1, 2025 | ||
| /s/ Deidra C. Merriwether | ||
| Deidra C. Merriwether | ||
| Senior Vice President and Chief Financial Officer | ||
| May 1, 2025 | ||