Stanley Black & Decker, Inc DEF 14A, filed Mar 10, 2023

Stanley Black & Decker, Inc. (SWK)

DEF 14A 2023-03-10

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Added on June 12, 2026

About this DEF 14A

Stanley Black & Decker, Inc filed this DEF 14A on March 10, 2023.

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Stanley Black & Decker, Inc.
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	Page
OUR 2022 HIGHLIGHTS	iii
2023 Proxy Summary	viii
GENERAL INFORMATION	1
ITEM 1—ELECTION OF DIRECTORS	1
Information Concerning Nominees for Election as Directors	2
BOARD OF DIRECTORS	9
Nomination Process	9
Shareholder Nominations and Recommendations of Candidates	9
Proxy Access	9
Qualifications of Directors and Nominees	9
Director Nominee Tenure and Age and Board Refreshment	11
CORPORATE GOVERNANCE	12
Board Leadership Structure	12
Stock Ownership Policy for Non-Employee Directors and Executive Officers	12
Meetings	12
Director Independence	12
Executive Sessions of the Board	16
Communicating with the Board	16
Code of Business Ethics	16
Talent Development and Succession Planning	16
Board and Committee Self-Evaluation	16
Retirement Policy	16
Service on Other Public Company Boards	16
Director Continuing Education	17
RISK OVERSIGHT	17
ESG Risk Oversight	17
Cybersecurity Risk Oversight	17
RELATED PERSON TRANSACTIONS	17
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) COMMITMENTS	18
Environment	18
Social	19
ESG-Related Governance	19
Reporting	20
HUMAN CAPITAL MANAGEMENT	20
DIRECTOR COMPENSATION	23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS	25
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS	26
DELINQUENT SECTION 16(a) REPORTS	27
AUDIT COMMITTEE REPORT	27
COMPENSATION AND TALENT DEVELOPMENT COMMITTEE REPORT	27
COMPENSATION DISCUSSION & ANALYSIS	28
EXECUTIVE SUMMARY	29
COMPENSATION DESIGN	34
2022 EXECUTIVE COMPENSATION PROGRAM	37
COMPENSATION GOVERNANCE	46
ADDITIONAL INFORMATION	50
2022 EXECUTIVE COMPENSATION	52
SUMMARY COMPENSATION TABLE	52
GRANTS OF PLAN-BASED AWARDS TABLE–2022 GRANTS	55
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END	57

OPTION EXERCISES AND STOCK VESTED DURING 2022 FISCAL YEAR	60
PENSION BENEFITS IN FISCAL YEAR 2022	61
NON-QUALIFIED DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS IN FISCAL YEAR 2022	62
EXECUTIVE OFFICER AGREEMENTS	63
TERMINATION AND CHANGE IN CONTROL PROVISIONS	64
CEO PAY RATIO	74
PAY VERSUS PERFORMANCE	75
ITEM 2—ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS	81
ITEM 3—ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION	82
ITEM 4—APPROVAL OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM	82
ITEM 5—SHAREHOLDER RATIFICATION OF TERMINATION PAY	83
VOTING INFORMATION	86
APPENDIX A – RECONCILIATION OF GAAP TO NON-GAAP MEASURES USED IN THIS PROXY STATEMENT	91
APPENDIX B – EXECUTIVE SEVERANCE POLICY	94

	●	Continuing to advance innovation, electrification and global market penetration to achieve organic sales growth of 2 to 3 times the market;
	●	Streamlining and simplifying the organization, as well as shifting resources to prioritize investments that we believe have a positive and more direct impact on our customers;
	●	Accelerating the operations and supply chain transformation to improve fill rates and better match the needs of our customers while improving adjusted gross margins back to historical 35%+ levels; and
	●	Prioritizing cash flow generation and inventory optimization.

	●	Organic revenue growth at 2 to 3 times the market;
	●	35%+ adjusted gross margins;
	●	Free cash flow equal to, or exceeding, net income; and
	●	Cash Flow Return On Investment (“CFROI”) between 12 to 15%.

	Very truly yours,

	Donald Allan, Jr. President & Chief Executive Officer

	●	Initiated a Global Cost Reduction Program designed to drive long-term growth, improve profitability and generate strong cash flow, which is expected to accelerate organic growth and deliver approximately $2 billion of cost savings by 2025, driving adjusted gross margins* to 35%+.
	●	Realized total revenue of $16.9 billion, up 11% versus the prior year, led by strategic outdoor acquisitions, Industrial segment volume growth and price, which was partially offset by lower consumer and do-it-yourself (“DIY”) volumes.
	●	GAAP diluted earnings per share (“EPS”) from continuing operations was $1.06 in 2022 compared to $9.33 in 2021. Both periods include acquisition-related and other charges. Excluding these amounts, adjusted diluted EPS* (“Adjusted EPS”) from continuing operations was $4.62 in 2022 versus $10.18 in 2021, which reflects the challenging macroeconomic environment and the strategic choice to prioritize free cash flow generation via planned production curtailments and the destocking of high-cost inventory.
	●	In the second half of 2022, generated $200 million of pre-tax savings from our Global Cost Reduction Program and realized $775 million of inventory reduction.
	●	Successfully divested our CSS and MAS businesses (collectively, the “Security business”) and Oil & Gas business, further focusing the portfolio on our core businesses.
	●	Completed $2.3 billion of share repurchases in the first half of 2022 and increased the quarterly dividend to $0.80 from $0.79 in July 2022.

	Time and Date:	9:30 a.m. EDT, April 21, 2023

	Place:	John F. Lundgren Center for Learning and Development 1000 Stanley Drive New Britain, Connecticut 06053

	Record Date:	February 27, 2023

	Voting:	Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. Voting in advance of the meeting • Over the internet at www.proxyvote.com; • By telephone at 1-800-454-8683; or • By mail—sign, date and return the proxy card or voting instruction form mailed to you.

	●	Election of directors
	●	Approve, on an advisory basis, the compensation of the Company’s named executive officers
	●	Recommend, on an advisory basis, the frequency with which the Company should conduct future advisory votes on named executive officer compensation
	●	Approve selection of Ernst & Young LLP (“Ernst & Young”) as the registered independent public accounting firm for fiscal year 2023
	●	If properly presented, consider and vote on a shareholder proposal regarding shareholder ratification of termination pay
	●	Transact other business that may properly come before the meeting or any adjournment or postponement thereof

Proposal No.	Matter	Board Vote Recommendation	Page Reference (for more detail)
1	Election of directors	FOR EACH NOMINEE	1
2	Approve, on an advisory basis, the compensation of the Company’s named executive officers	FOR	81
3	Recommend, on an advisory basis, the frequency of future advisory votes on named executive officer compensation	FOR EVERY YEAR	82
4	Approve the selection of Ernst & Young as the Company’s registered independent public accounting firm for the 2023 fiscal year	FOR	82
5	If properly presented, consider and vote on a shareholder proposal regarding shareholder ratification of termination pay	AGAINST	83

	●	Our executive compensation philosophy is to provide performance-based and competitive compensation that rewards executives for actions that create long-term shareholder value and allows us to attract, motivate and retain high-caliber executives.
	●	Our pay for performance alignment is strong, with pay opportunity generally targeted at the market median. A majority of annual and long-term compensation is performance-based, being directly linked to both absolute and relative Company performance against preset goals.
	●	Our 2022 compensation program reflects this philosophy, as performance results under the Company’s 2022 Management Incentive Compensation Plan (“MICP”) were below threshold for all financial measures resulting in a 0% bonus payout for named executive officers and our performance results under the 2020-2022 Long-Term Incentive Plan Performance Units (“LTIP PSUs”) were below target payout at 63.8% of target. The Compensation and Talent Development Committee (the “Compensation Committee”) applied no positive discretion in determining performance and payouts under the 2022 MICP and the 2020-2022 LTIP PSUs for our named executive officers.
	●	In each of the last three years, we received strong shareholder support for our named executive officer compensation with the three-year average of approximately 92.6% of Say on Pay votes cast in support of our executive compensation (89.0% of votes cast in 2022, 93.7% of votes cast in 2021, and 95.2% of votes cast in 2020).
	●	Our compensation programs follow best practices, including: no tax gross-ups in severance arrangements and change in control agreements, no tax gross-ups on perquisites, double trigger vesting provisions requiring a change in control and qualifying termination of employment, a comprehensive recoupment (“clawback”) policy relating to equity and cash incentive compensation for all executive officers, robust stock ownership guidelines for directors and executive officers and a policy against hedging or pledging of Company stock.

	●	integrity and demonstrated high ethical standards;
	●	experience with business administration processes and principles and risk management;
	●	ability to express opinions, raise difficult questions, and make informed, independent judgments;
	●	knowledge, experience, and skills in one or more specialty areas (such as accounting or finance, legal, regulatory or governmental affairs, human capital management, product development, manufacturing, technology, digitization and cybersecurity, global operations, real estate or corporate strategy, among others);
	●	ability to devote sufficient time to prepare for and attend Board meetings;
	●	willingness and ability to work with other members of the Board in an open and constructive manner;
	●	ability to communicate clearly and persuasively; and
	●	diversity with respect to other characteristics, which may include, gender, age, ethnicity, race, nationality, skills and experience.


Skills and Experience
Active Executive experience provides current insight into the best practices and challenges of leading a complex organization.	ü	–	–	ü	ü	ü	ü	ü	ü	ü
CEO experience provides insight into leading a complex organization like ours with transparency and integrity.	ü	ü	–	ü	ü	ü	–	–	–	–
Public Company/Corporate Governance furthers our goals of transparency, protection of shareholder interests and implementation of best practices in corporate governance.	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü
Corporate Social Responsibility experience is important in managing risk and furthering long-term value creation for shareholders by operating in a sustainable and responsible manner.	–	ü	ü	–	ü	ü	–	ü	ü	ü
Digital experience is relevant to understanding and evaluating the Company’s efforts in areas such as eCommerce and data and analytics.	–	ü	–	–	–	ü	ü	ü	ü	ü
Finance/Capital Allocation experience enables effective monitoring of the Company’s financial reporting and control environment; assessment of its financial performance; oversight of mergers and acquisitions: and ensuring appropriate shareholder return.	ü	ü	ü	–	ü	ü	ü	–	ü	ü
Legal/Regulatory/Government Affairs experience enhances understanding of legal matters and public policy issues.	–	–	–	ü	ü	ü	–	–	ü	ü
Human Capital experience is relevant to effective review of our efforts to recruit, retain and develop top talent.	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü
Product Development experience provides insight into ideation, research and development, and commercialization of products and services.	–	–	ü	ü	–	ü	–	ü	ü	–
Manufacturing/Logistics/Supply Chain experience enhances the Board’s ability to oversee cost-effective, technology-driven manufacturing and logistics processes.	ü	–	ü	ü	–	–	ü	ü	ü	ü
Global Operations experience facilitates assessment of the Company’s complex, international operations.	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü
M&A and Corporate Strategy experience provides insight into assessing M&A opportunities for a strategic fit, strong value creation potential and clear execution capacity.	ü	ü	ü	ü	ü	ü	–	ü	ü	ü
Risk Management experience is important to the identification and mitigation of significant risks.	ü	ü	ü	ü	ü	ü	–	ü	ü	–
Innovation/Technology/Cybersecurity experience enhances the Board’s ability to appraise our progress in executing the strategy of becoming known as one of the world’s leading innovators.	–	ü	ü	ü	ü	ü	ü		ü	ü
Sales/Marketing/Brand Management experience provides insights into the sales and marketing process and increasing the perceived value of our brands in the marketplace.	–	–	ü	ü	–	ü	ü	ü	ü	ü

Climate-Related Risk experience strengthens the Board’s oversight of environmental policies, ESG initiatives and reporting.	–	–	–	–	ü	ü	–	ü	–	–
Diversity, Equity and Inclusion experience strengthens the Board’s oversight of diversity, equity and inclusion efforts, corporate citizenship, social responsibility and workplace culture.	ü	ü	ü	ü	ü	ü	ü	ü	ü	ü

Committee		Number of Meetings
Executive⁽¹⁾		0
Audit		6
Corporate Governance		6
Finance and Pension		4
Compensation and Talent Development		5

	Sincerely,

	Andrea J. Ayers Chair of the Board


	Janet M. Link
	Secretary

	●	Supporting the long-term viability of the skilled trades that the Company serves and which are integral to thriving economic communities by focusing philanthropic efforts on growing these trades;
	●	Driving responsible product innovation by considering sustainability throughout all aspects of the product lifecycle, including material procurement from supply chain partners, product design, manufacturing, distribution and transportation, product use, product service, and end-of-life; and
	●	Improving the sustainability of its operations by reducing carbon emissions, waste to landfill, and water use in water-stressed and scarce areas.

	●	a cash retainer of $125,000;
	●	a grant of fully vested Restricted Stock Units (“RSUs”) pursuant to the Company’s 2020 Restricted Stock Unit Deferral Plan for Non-Employee Directors (the “Restricted Stock Unit Deferral Plan”), as described below, with a grant date fair value of $160,000; and
	●	an allowance of up to $10,000 per year for Company products.

	●	Chair of the Board: quarterly grants of fully-vested RSUs pursuant to the Company’s Restricted Stock Unit Deferral Plan, each with a grant date fair value of $50,000;
	●	Audit Committee Chair: annual fee of $25,000;
	●	Compensation Committee Chair: annual fee of $20,000; and
	●	Corporate Governance Committee and the Finance and Pension Committee Chairs: annual fee of $15,000.

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
Andrea J. Ayers	127,575	310,020	—	—	—	12,316	449,911
George W. Buckley	31,250	50,000	—	—	—	13,691	94,941
Patrick D. Campbell	150,000	160,020	—	—	—	10,361	320,381
Carlos M. Cardoso	135,802	160,020	—	—	—	39,988	335,810
Robert B. Coutts	125,000	160,020	—	—	—	38,060	323,080
Debra A. Crew	142,356	160,020	—	—	—	31,405	333,781
Michael D. Hankin	140,000	160,020	—	—	—	17,453	317,473
Robert J. Manning	45,976	—	—	—	—	—	45,976
Adrian V. Mitchell	108,476	160,020	—	—	—	2,724	271,220
Jane M. Palmieri	125,000	160,020	—	—	—	12,664	297,684
Mojdeh Poul	125,000	160,020	—	—	—	9,579	294,599
Irving Tan	129,198	160,020	—	—	—	9,988	299,206

Name	Aggregate RSU Awards Accumulated (#)	Dividend Equivalents Credited on Accumulated RSUs (#)
Andrea J. Ayers	9,852	174
Patrick D. Campbell	19,040	158
Carlos M. Cardoso	21,040	158
Robert B. Coutts	21,040	158
Debra A. Crew	10,382	158
Michael D. Hankin	7,515	158
Robert J. Manning	0	0
Adrian V. Mitchell	1,120	31
Jane M. Palmieri	1,886	67
Mojdeh Poul	1,886	67
Irving Tan	3,311	158

(1) Title of class	(2) Name and address of beneficial owner	(3) Amount and nature of beneficial ownership		(4) Percent of class
Common Stock $2.50 par value	T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202	12,938,311	(5,941,266 sole voting power; 0 shared voting power; 12,938,311 sole dispositive power; 0 shared dispositive power)	8.5%

Common Stock $2.50 par value	State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111	10,915,259	(0 sole voting power; 10,110,669 shared voting power; 0 sole dispositive power; 10,910,544 shared dispositive power)	7.1%

Common Stock $2.50 par value	The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355	17,889,032	0 sole voting power; 204,605 shared voting power; 17,262,289 sole dispositive power; 626,743 shared dispositive power)	11.7%

Common Stock $2.50 par value	BlackRock, Inc. 55 East 52nd Street New York, NY 10055	10,348,165	(9,257,538 sole voting power; 0 shared voting power; 10,348,165 sole dispositive power; 10,348,165 shared dispositive power)	6.8%

Name	Shares of Common Stock Owned		Percent of Class Owned
Donald Allan, Jr.	307,525	(1)(2)(4)	*
Andrea J. Ayers	24,444	(3)(7)	*
Patrick D. Campbell	22,651	(3)	*
Carlos M. Cardoso	15,883	(3)	*
Robert B. Coutts	20,404	(3)	*
Debra A. Crew	10,436	(3)	*
Michael D. Hankin	9,174	(3)(8)	*
Janet M. Link	59,444	(1)	*
James M. Loree	719,832	(1)(5)	*
Robert J. Manning	30,000	(6)	*
Adrian V. Mitchell	1,168	(3)	*
Jane M. Palmieri	1,870	(3)	*
Mojdeh Poul	1,870	(3)	*
Robert H. Raff	60,840	(1)(2)	*
Corbin B. Walburger	31,023	(1)(2)	*
John H. Wyatt	140,994	(1)(2)	*
Irving Tan	2,531	(3)	*
Directors, nominees and current executive officers as a group (19 persons)	770,091	(1)–(8)	*

	Audit Committee

	Patrick D. Campbell (Chair) Michael D. Hankin Adrian V. Mitchell Mojdeh Poul Irving Tan

	Compensation and Talent Development Committee

	Debra A. Crew (Chair) Andrea J. Ayers Patrick D. Campbell Robert B. Coutts Robert J. Manning

Our Current Named Executive Officers

Donald Allan, Jr.(1)	Corbin B. Walburger(2)	Janet M. Link	Robert H. Raff(3)	John H. Wyatt(4)
President & Chief Executive Officer (“CEO”)	Interim Chief Financial Officer (“CFO”) & Vice President, Business Development	Senior Vice President, General Counsel & Secretary	Interim Co-President & Chief Commercial Officer, Tools & Outdoor	Interim Co-President & Senior Vice President, Tools & Outdoor
Our Former Named Executive Officer
James M. Loree was our former Chief Executive Officer in 2022 until his departure on June 30, 2022.

	●	Initiated a Global Cost Reduction Program designed to drive long-term growth, improve profitability and generate strong cash flow, which is expected to accelerate organic growth and deliver approximately $2 billion of cost savings by 2025, driving adjusted gross margins* to 35%+.
	●	Realized total revenue of $16.9 billion, up 11% versus the prior year, led by strategic outdoor acquisitions, Industrial segment volume growth and price, which was partially offset by lower consumer and DIY volumes.
	●	GAAP diluted EPS from continuing operations was $1.06 in 2022 compared to $9.33 in 2021. Both periods include acquisition-related and other charges. Excluding these amounts, Adjusted EPS* from continuing operations was $4.62 in 2022 versus $10.18 in 2021, which reflects the challenging macroeconomic environment and the strategic choice to prioritize free cash flow generation via planned production curtailments and the destocking of high-cost inventory.
	●	In the second half of 2022, generated $200 million of pre-tax savings from our Global Cost Reduction Program and realized $775 million of inventory reduction.
	●	Successfully divested our Security and Oil & Gas businesses, further focusing the portfolio on our core businesses.
	●	Completed $2.3 billion of share repurchases in the first half of 2022 and increased the quarterly dividend to $0.80 from $0.79 in July 2022.

Executive	Resulting Compensation Updates
Effective July 1, 2022, in connection with CEO succession planning:
Donald Allan, Jr. promoted to President and CEO	● annual base salary increased to $1,250,000; ● target bonus opportunity for 2022 increased to 150% of 2022 salary; and ● promotional long-term incentive awards with an aggregate grant date value of $3.6 million on July 5, 2022 (consisting of 50% LTIP PSUs, 25% time-based restricted stock units (“RSUs”) and 25% stock options). These grants represent a “top up” to Mr. Allan’s other grants made during 2022 in connection with his appointment as President and CEO in July 2022. See the description of Mr. Allan’s letter agreement with the Company on page 63 for further information.
Corbin B. Walburger appointed Interim CFO, in addition to his role as Vice President, Business Development	● a one-time RSU grant with an aggregate grant date fair value of $1.0 million; and ● a monthly cash stipend of $72,500 in addition to his base salary while he serves in this role
Effective July 27, 2022, in connection with the announced integration of the Tools & Outdoor businesses:
John H. Wyatt and Robert H. Raff appointed as Interim Co-Presidents of Tools & Outdoor, in addition to Mr. Raff’s role as Chief Commercial Officer, Tools & Outdoor	No compensation changes for Mr. Wyatt.
	For Mr. Raff: ● a one-time RSU grant with an aggregate grant value of $1.0 million; and ● a monthly cash stipend of $45,000 in addition to his base salary while he serves in this role

Compensation Practice	Rationale and Impact	Pay for Performance	Align with Shareholders	Competitive Pay	Balanced Pay Mix
Emphasize performance-based incentives	● 87% of CEO target pay is variable and tied to performance against preset goals or share price ● No guaranteed cash bonuses	ü	ü	ü	ü
Focus on long-term Company performance	● Performance Units comprise at least 50% of long-term incentive compensation for our CEO ● No dividend equivalents paid out unless the underlying award is earned or vests	ü	ü	ü	ü
Provide competitive total compensation opportunity	Executive total compensation opportunity is generally targeted at the 50th percentile benchmark of our Compensation Peer Group		ü	ü	ü
Require executives to be shareholders	Robust stock ownership guidelines further align executives’ interests with those of our shareholders	ü	ü
Minimize compensation risk	Compensation program risk assessed annually to ensure that structure does not incentivize excessive risk-taking by executives	ü	ü		ü
Protect shareholder interests	● Clawback Policy ● Anti-hedging and anti-pledging policies ● No repricing or cash buyouts of options without shareholder approval ● Double-trigger vesting for severance and equity awards in the event of a change in control ● No excise tax gross-ups under change in control agreements and no tax gross-ups on perquisites	ü	ü

ü	Our executive compensation program is designed to incentivize and reward executives for taking actions that create sustainable shareholder value.
	87% of CEO target compensation is variable and tied to performance against preset goals or share price performance.
	Our executive compensation is aligned with Company performance, as evidenced by the 0% payout under the 2022 MICP and 63.8% below target payout under the 2020-2022 LTIP PSUs.
	Our annual incentive compensation plan, the MICP, is 100% based on short-term Company performance against objective preset goals.
	50% of long-term incentives for our CEO are contingent on financial and relative TSR performance over a 3-year performance period, and 25% are stock options which generate value only once stock price gains are achieved.
	Total executive pay opportunities are generally targeted at the 50th percentile benchmark of our Compensation Peer Group.
	Robust policies minimize compensation risk and strengthen the alignment of executives’ interests with those of our shareholders.
	Regular engagement ensures that shareholder feedback serves as a key input to Board and committee discussions and decisions.

Pay for Performance	A majority of annual and long-term compensation is performance-based, being directly linked to both absolute and relative Company performance against preset goals. Annual incentive goals align with our earnings guidance while our three-year performance plan goals are linked to our strategic framework, long-term financial objectives and relative total shareholder return.
Competitive Pay	To attract and retain high caliber executive talent, total target compensation, and the individual components thereof, for our named executive officers, are generally aligned at the median of our Compensation Peer Group and published surveys (as described on pages 47–48). While focusing on the market median, the Compensation Committee retains the flexibility to set individual total compensation opportunities based on its assessment of performance, experience, service in current position, responsibilities, and/or retention risk.
Alignment with Shareholder Interests	Our compensation program is designed to ensure that executives’ interests are aligned with the long-term interests of our shareholders through stock-based compensation, stock ownership requirements, and performance metrics that drive sustainable shareholder value creation.
Balanced Pay Mix	The mix of compensation among base salary, annual incentive compensation and long-term incentive compensation is designed to balance our executives’ focus between both short and long-term objectives as prioritized by the Board.

Key Compensation Elements and Rationale	At Risk?	Key Features	2022 Commentary
Base Salary Reward the skill and expertise that our executive officers contribute daily		● Focused on median market levels ● Individual salaries reflect individual performance, experience, length of service, responsibilities, location, and retention risk	Changes to base salaries of our named executive officers inclusive of promotions and interim job responsibilities (see “2022 Executive Transitions” above) were generally in line with the market median.
Annual Incentive Compensation under MICP Balance complementary short-term goals of profitability and operational stability Encourage executives to maximize profitability, growth and efficiency	✓	● Target awards generally set as a percentage of base salary in effect at the beginning of the performance period ● Metrics and weights established by the Compensation Committee at the beginning of the performance period ● Payouts earned between 0% and 200% of target depending on performance against preset goals ● No payout for a particular MICP metric if threshold performance is not achieved ● Payouts for executives with responsibility for specific business units are based on both corporate and business unit performance metrics	2022 MICP Metrics: ● Adjusted EPS* (weighted at 40%) ● Cash flow multiple* (operating cash flow less capital expenditures, divided by net earnings) (weighted at 20%) ● Organic sales growth* (sales growth excluding foreign exchange and acquisition/divestiture impacts) (weighted at 20%) ● Adjusted gross margin rate* (weighted at 20%) See page 38 for a discussion of these calculations. * See Appendix A for an explanation and reconciliation of GAAP to Non-GAAP measures used in this Proxy Statement.
LTIP PSUs Incentivize executives to achieve sustainable performance results and maximize growth and efficiency Align payouts with financial performance and the creation of long-term shareholder value	✓	● PSUs are earned or forfeited based on performance over a three-year performance period against pre-established goals ● Program design recognizes that stock returns typically take longer to develop than earnings and that TSR, while an important assessment of long-term performance, is less directly influenced by our management team	2022-2024 LTIP PSU Metrics: ● CFROI* (weighted at 40%) ● Adjusted EPS* (weighted at 35%) ● Relative TSR (measured based on three-year cumulative return against LTIP Peer Group as defined on page 39 (“TSR”)) (weighted at 25%) See page 43 for a discussion of these calculations. * See Appendix A for an explanation and reconciliation of GAAP to Non-GAAP measures used in this Proxy Statement.

Officer	2022 Base Salary ($)	2021 Base Salary ($)	Effective Date
Donald Allan, Jr.⁽¹⁾	$1,250,000	$870,000	7/1/2022
Corbin B. Walburger⁽²⁾⁽⁴⁾	$420,000	$420,000	12/1/2021
Janet M. Link⁽³⁾	$660,000	$600,000	5/1/2022
Robert H. Raff⁽²⁾⁽³⁾	$468,650	$455,000	1/1/2022
John H. Wyatt⁽⁴⁾	$682,500	$682,500	12/1/2021
James M. Loree	$1,304,000	$1,304,000	1/1/2021

	Officer	Target Bonus (% of Base Salary)
	Donald Allan, Jr.⁽¹⁾	150%
	Corbin B. Walburger	50%
	Janet M. Link	75%
	Robert H. Raff	50%
	John H. Wyatt	75%
	James M. Loree	160%

	Threshold	Target	Maximum	2022 Actual Result
Adjusted EPS*	$11.33	$12.25	$13.17	$4.62
Cash Flow Multiple*	110%	125%	140%	<0%
Adjusted Gross Margin Rate*	31.7%	32.0%	32.5%	26.0%
Organic Sales Growth*	6.0%	7.5%	9.0%	(2.8)%

	Weighting of Measures								Potential Bonus Payouts ($)			Weighted Avg.
	*Corporate*				*Division*							Actual Payout
	Adjusted EPS	Cash Flow	Organic Sales	Adjusted Gross Margin Rate	Operating Margin	Working Capital	Organic Sales	Adjusted Gross Margin Rate	Threshold	Target	Maximum	Based on All Measures (% of target)	Payout ($)
Donald Allan, Jr.	40%	20%	20%	20%	—%	—%	—%	—%	$795,000	$1,590,000	$3,180,000	—%	$—
Corbin B. Walburger	40%	20%	20%	20%	—%	—%	—%	—%	$105,000	$210,000	$420,000	—%	$—
Janet M. Link	40%	20%	20%	20%	—%	—%	—%	—%	$225,000	$450,000	$900,000	—%	$—
John H. Wyatt	10%	5%	5%	5%	20%	15%	20%	20%	$255,938	$511,875	$1,023,750	—%	$—
Robert H. Raff	10%	5%	5%	5%	20%	15%	20%	20%	$117,163	$234,325	$468,650	—%	$—
James M. Loree⁽¹⁾	40%	20%	20%	20%	—%	—%	—%	—%	$1,043,200	$2,086,400	$4,172,800	—%	$—