DEF 14A of Fastenal Co, Feb 26, 2025

DEF 14A of Fastenal Co

Filed Feb 26, 2025 · FY20240000815556-25-000070

Open on EDGAR

  1. TABLE OF CONTENTS

    | General information about the meeting and voting | 2 | | Proposal #1 – Election of directors | 4 | | Corporate governance and director compensation | 8 | | Proposal #2 – Ratification of appointment of independent registered public accounting firm | 18 | | Audit and related matters | 18 | | Proposal #3 – An advisory vote on a non-binding resolution to approve the compensation of our named executive officers disclosed in this proxy statement | 20 | | Executive compensation | 20 | | Security ownership of principal shareholders and management | 41 | | Additional matters | 43 | | Householding | 43 | | Deadlines for receipt of shareholder proposals and nominations for the 2026 annual meeting | 44 |

  2. PROPOSAL #1—ELECTION OF DIRECTORS

    PROPOSAL #1—ELECTION OF DIRECTORS

  3. CORPORATE GOVERNANCE AND DIRECTOR COMPENSATION

    CORPORATE GOVERNANCE AND DIRECTOR COMPENSATION

  4. Compensation of Our Directors

    Compensation of Our Directors Our compensation committee makes recommendations regarding director compensation to the full board and the board makes the final decision regarding director compensation after consideration of such recommendations. All of our directors, including our chief executive officer, reviewed and approved director compensation for 2024. In January 2024, the committee chairs received an annual cash retainer of $20,000. Each of our non-employee directors, other than the board chair, received an annual cash retainer of $100,000 and the board chair received an annual cash retainer of $120,000. The Fastenal Company Non-Employee Director Stock Option Plan permits all non-employee directors to elect up to 100% of such annual cash retainer to be paid in stock options. As set forth in the table below, certain non-employee directors made this election for 2024. Mr. Florness, an employee director, received an annual cash retainer of $50,000. The annual cash retainer of $20,000 for committee chairs is paid in the form of a lump sum at the beginning of the year. All other annual cash retainers are paid quarterly. Annual stock option grants are made at the beginning of the year. All non-employee directors, other than the board chair, received stock options valued at $50,000 and the board chair received stock options valued at $80,000. Each of our non-employee directors was also entitled to be reimbursed for reasonable expenses incurred by such non-employee director in the performance of his or her services as a director or committee member, including reasonable expenses of attendance at board and committee meetings. The following table sets forth information with respect to the 2024 compensation paid to each of our directors, in their capacity as directors, other than any of our directors who are named executive officers (as defined below in 'Proposal #3 – An Advisory Vote on a Non-binding Resolution to Approve the Compensation of our Named Executive Officers Disclosed in this Proxy Statement'). The compensation of our named executive officers, in their capacity as directors and executive officers of Fastenal, is set out in the Summary Compensation Table under 'Executive Compensation-Summary of Compensation' later in this proxy statement.

  5. Compensation of Our Directors

    | Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | Scott A. Satterlee | 120,000 | — | 80,000 | — | — | 200,000 | | Michael J. Ancius | 20,000 | — | 150,000 | — | — | 170,000 | | Stephen L. Eastman | 120,000 | — | 50,000 | — | — | 170,000 | | Rita J. Heise | 20,000 | — | 150,000 | — | — | 170,000 | | Hsenghung Sam Hsu | 80,000 | — | 70,000 | — | — | 150,000 | | Daniel L. Johnson | 100,000 | — | 50,000 | — | — | 150,000 | | Nicholas J. Lundquist | 100,000 | — | 50,000 | — | — | 150,000 | | Sarah N. Nielsen | 70,000 | — | 80,000 | — | — | 150,000 | | Irene A. Quarshie | 75,000 | — | 75,000 | — | — | 150,000 | | Reyne K. Wisecup | 100,000 | — | 50,000 | — | — | 150,000 |

  6. Compensation of Our Directors

    (1)Mr. Ancius, Ms. Heise, Mr. Hsu, Ms. Nielsen, and Ms. Quarshie elected to receive all or a portion of their annual cash retainer as stock option awards pursuant to the Fastenal Company Non-Employee Director Stock Option Plan. (2)The amounts reported in this option awards column represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (FASB) ASC Topic 718 of option awards that our non-employee directors elected to receive during the fiscal year pursuant to the Fastenal Company Non-Employee Director Stock Option Plan in lieu of annual cash retainer payments. The number of shares subject to each option award was determined by dividing (i) the portion of the annual retainer amount that each director would have otherwise received in cash on the grant date of the option by (ii) the Black-Scholes value as of the grant date of each share subject to the option award and rounding down to the nearest whole number. We calculated the grant date fair value in accordance with generally accepted accounting principles utilizing the assumptions set forth in the notes to our consolidated financial statements included in our 2024 annual report on Form 10-K. As of December 31, 2024, our non-employee directors held outstanding (and unexercised) stock option awards under the Fastenal Company Non-Employee Director Stock Option Plan as follows: Mr. Satterlee - 53,190; Mr. Ancius - 34,487; Mr. Eastman - 17,473; Ms. Heise - 59,686; Mr. Hsu - 37,163; Mr. Johnson - 11,106; Mr. Lundquist - 0; Ms. Nielsen - 17,299; Ms. Quarshie - 4,725; and Ms. Wisecup - 3,150. Effective January 2025, the board reduced the annual retainer paid to Mr. Lundquist, who retired, effective January 16, 2025, to $37,500 (or approximately 25% of a full year's retainer and stock option awards paid in cash). All other elements of director compensation remain unchanged for 2025 from those in effect during 2024.

  7. Mitigation of Compensation-Related Risk

    Mitigation of Compensation-Related Risk Fastenal's compensation committee, in concert with management, has examined the compensation policies, plans, and practices to determine if they create incentives or encourage behavior that is reasonably likely to have a material adverse effect on Fastenal. In conducting this examination, the compensation committee and management have reviewed the compensation plans and programs, including incentive bonus and equity award plans, and evaluated the impact of such plans and programs in terms of business risk and the mitigating controls in place to manage those risks. Such controls include: •Approval by our board of directors and the compensation committee of significant compensation plans and programs; •Oversight by the compensation committee of compensation plans and programs for executive management employees, including approval of incentive plan goals, review of actual performance against goals, and approval of award payouts; •Regular scrutiny of performance and compliance with policies and procedures by senior executive managers responsible for specific business areas; •Ongoing monitoring of specific asset areas by regional finance managers, and by internal audit and finance department personnel; •The design of our executive cash incentive arrangements, which (i) by focusing on quarterly growth in profits, provides executives with the immediate feedback necessary to take prompt action to correct unacceptable financial results and the motivation to take such action, and (ii) by using actual profits in current periods, rather than projected profits, as the basis for setting the minimum performance targets in future periods, reduces the incentive to manipulate results, as any overstated profits, giving rise to increased bonuses, in one year would result in overstated minimum targets, giving rise to reduced bonuses, in the next year; and •Longer than typical vesting periods for equity-based compensation that encourage long-term perspectives among employees. Because of the controls in place, we have concluded that there are minimal unmitigated risks created by our compensation policies, plans, and practices that create incentives or encourage behavior that are reasonably likely to have a material adverse effect on Fastenal.

  8. How Employees are Compensated

    How Employees are Compensated Approximately 71% of our employees interface directly with customers on a daily basis. Our goal with respect to compensation of these employees is simple: a significant portion of their pay should be based on how well they have grown their piece of the business and served our customers. Typical pay arrangements provide a base amount paid periodically during the month, along with a major opportunity to earn bonus amounts, paid monthly, based on growth in sales, gross profit achieved, pre-tax profit, the opening of new accounts, increase in sales to active accounts, prudent management of inventory levels, and collections of accounts receivable. We believe our combination and mix of base and bonus pay motivates our people to high levels of individual and company success, as the goals and objectives have been repeatedly demonstrated to be achievable with superior effort. Of the remaining approximately 29% of our employees, many are similarly compensated for their contribution to attaining predetermined departmental or project and cost containment goals, most focused on either customer service or better execution of company-wide activities. In these cases, the incentives are paid as soon as possible upon attainment of the goal. Again, the goals and objectives are clearly communicated and the resources for success are provided. Because we believe the growth in our stock value should be the reward for achieving long-term success consistent with being an owner, we have a stock option plan. Since certain of our foreign employees are unable to receive stock options due to legal restrictions, we also have a stock appreciation rights plan for those foreign employees. Stock appreciation rights granted under that plan are settled in cash. All employees are eligible to receive stock option grants or stock appreciation rights. However, in order to ensure that such grants are sufficiently meaningful so as to incentivize performance, they have traditionally been awarded to employees who have achieved the level of District Manager or equivalent within our organization. We believe our combination of short- and long-term rewards and incentives has proven successful as reflected in our historic performance and acceptable levels of employee retention and turnover.

  9. Change in Control Arrangements

    Change in Control Arrangements We have no employment, severance, or change in control agreements with any of our executive officers. Our stock option plan provides that if we are not the surviving or acquiring corporation in the event of a merger or similar transaction, then the vesting and exercisability of outstanding stock options will be accelerated only if the surviving or acquiring corporation does not assume or replace the outstanding options. The vesting and exercisability of outstanding options will also be accelerated in the event of a dissolution or liquidation of Fastenal. The change in control provisions in our stock option plan are designed to ensure maximum flexibility for Fastenal in the event of a merger or similar transaction, in that we can provide for the continuation of options if that is more attractive to potential acquiring companies or can provide for acceleration of vesting of options if we believe doing so would facilitate retention of critical employees during acquisition discussions, would better motivate management to obtain the highest price possible by aligning their interests more closely with those of our shareholders, or would otherwise benefit our shareholders and be fair to our employees.

  10. Elements of Executive Compensation

    | Compensation Component | Form of Compensation | | Purpose | | Base Salary | Cash | • | Compensate each named executive officer relative to individual responsibilities, experience, and performance. | | | | • | Provide regular cash flow not contingent on short-term variations in Fastenal's performance. | | Quarterly Incentives | Cash | • | Align compensation with our quarterly corporate financial performance. | | | | • | Reward achievement of short-term profit growth. | | | | • | Provide executives with a meaningful total cash compensation opportunity (base salary + quarterly bonuses). | | Long-term Incentives | Stock Options | • | Encourage long-term retention. | | | | • | Create a long-term performance focus. | | | | • | Align compensation with our long-term returns to shareholders. | | | | • | Provide executive ownership opportunities. | | Other Compensation | Benefits | • | Provide competitive retirement and health and welfare benefit plans generally available to all of our employees, including executive officers. |

  11. Quarterly Incentives

    Quarterly Incentives Our executive officers are eligible for cash incentives through individual bonus arrangements based on improvements in the overall financial performance of Fastenal and/or their respective areas of responsibility. The bonus arrangements provide our executive officers with the opportunity to earn a cash bonus for each quarter during a year when we increase our income above a predetermined minimum target. The primary cash bonuses for all of our named executive officers are based on Fastenal's growth in pre-tax income and/or the officer's area of responsibility. The compensation committee selected pre-tax income as the appropriate metric for calculating cash bonuses for those officers because of the committee's belief that the focus of the named executive officers should be on profitability, which is the primary driver of shareholder value. The cash bonus for our chief financial officer also includes a component based on growth in company-wide net income because his responsibilities allow him to affect our entire financial position, including our tax position. The compensation committee believes that no named executive officer should earn a cash bonus under this program for a quarter unless financial performance has improved and therefore sets minimum targets for each quarter that are equal to the income achieved for the same quarter in the prior year. The compensation committee requires growth in income before any bonuses can be earned due to its belief that growth is achievable with superior effort and will generate the cash necessary to expand Fastenal's operations in accordance with our business plans and increase shareholder value. The payout percentage used to calculate the amount of each named executive officer's primary quarterly cash bonus reflects the officer's track record in his or her current position (i.e., newly promoted executives historically have had to prove themselves in their new positions before earning higher payout percentages) and relative ability to impact profitability. Cash bonus payments to our named executive officers are tied directly to our financial performance so that they increase only if and to the extent Fastenal's profitability grows; therefore, we do not believe it is necessary for payouts under our primary executive cash incentive program to be capped. We believe the current design of our executive bonus arrangements, along with our other controls, adequately mitigates risk and the use of multiple metrics would not be in furtherance of our goal of keeping our compensation programs simple, understandable, and transparent, and would risk keeping our executives focused on things other than profitability, thereby depriving them of the clear feedback and motivation necessary to improve our bottom line. Therefore, we do not base these cash incentives on multiple metrics. Our named executive officers are each eligible for a supplemental bonus program. The supplemental bonus program, known as the ROA (Return on Assets) Plan, is intended to encourage better management of accounts receivable, inventory, and vehicles and provides cash incentive amounts on a quarterly basis for asset management improvement over the same quarter in the prior fiscal year and is described in more detail below. 2024 Incentive Program The bonus arrangements for our named executive officers for 2024 were approved by our compensation committee at its last meeting in 2023. Consistent with prior years, the bonuses for 2024 were based on Fastenal's growth in pre-tax income or net income and/or the officer's area of responsibility. The bonuses for each quarter were determined by applying a payout percentage to the amount by which pre-tax income or net income exceeded 100% of pre-tax income or net income for the same quarter in 2023. The compensation committee determined that the payout percentages for each of the named executive officers for 2024 would remain unchanged from those in effect at the end of 2023, except that Mr. Drazkowski's payout percentage increased in recognition of his job scope and responsibilities, and Mr. Miller's payout percentage decreased in recognition of the geographic area under his leadership (United States) increasing beginning July 2024. Additionally, Mr. Watts' payout percentage increased when he transitioned to the position of president/chief sales officer in August 2024. The specific bonus opportunities for our named executive officers are summarized in the table below. Each named executive officer's cash bonus for each quarter during 2024 was determined by applying the payout percentage listed opposite his or her name below to the amount by which Fastenal's pre-tax income or net income and/or the officer's area of responsibility for that quarter exceeded 100% of such income in the same quarter of 2023 (the 'minimum target').

  12. Quarterly Incentives

    | Name | Income Type | Payout Percentage | | Mr. Florness | Company-wide pre-tax income | 1.75% | | Mr. Lewis | Company-wide pre-tax income / Company-wide net income | 0.50% / 0.35% | | Mr. Watts (1) | Company-wide pre-tax income | 1.25% | | Mr. Miller (2) | Pre-tax income / Company-wide pre-tax income | 0.75% / 0.15% | | Mr. Drazkowski | Company-wide pre-tax income | 0.60% |

  13. Quarterly Incentives

    (1)Prior to August 2024, the bonuses for Mr. Watts were based on growth in company-wide pre-tax income with the payout percentage applied to that growth of 1.00%. (2)Prior to July 2024, the bonuses for Mr. Miller were based on growth in pre-tax income for the geographic areas under his leadership (Eastern United States) with the payout percentage applied to that growth of 1.00%, as well as growth in company-wide pre-tax income, with the payout percentage applied to that growth of 0.25%. Mr. Miller's payout percentage on pre-tax income and company-wide pre-tax income decreased beginning July 2024 as a result of the geographic area under his leadership (United States) increasing. The following table sets out, for each quarter in 2024, our actual and minimum target pre-tax income and net income on a company-wide basis for that quarter, in each case rounded to the nearest thousand. (As indicated above, the 'minimum target' amount in 2024 was 100% of such income in the same quarter of 2023.)

  14. Quarterly Incentives

    | Improvement Amount Exceeded | Bonus Payout | | 150 basis points | $15,000 | | 100 basis points (but less than 150 basis points) | $10,000 | | 50 basis points (but less than 100 basis points) | $5,000 |

  15. Quarterly Incentives

    | 2024 | Improvement Amount Exceeded | Bonus Payout | | First quarter | 150 basis points | $15,000 | | Second quarter | 150 basis points | 15,000 | | Third quarter | 50 basis points | 5,000 | | Fourth quarter | — | — | | Total | | $35,000 |

  16. Long-term Incentives

    Long-term Incentives We tie a portion of our employee compensation to the market price of Fastenal's common stock by granting stock options pursuant to the Fastenal Company Stock Option Plan, as amended and restated (the 'stock option plan'). The equity-based incentives that can be granted under that plan are limited to stock options in an effort to further our goal of keeping our compensation system simple and easy to understand, and because stock options deliver value to our employees only if our shareholders realize appreciation in the value of their shares held over the same period. Due to legal restrictions, we are unable to grant options under our stock option plan to certain of our foreign employees. As a result, those employees (none of whom are executive officers) are instead eligible to receive stock appreciation rights under a separate plan. The stock appreciation rights have been designed to mirror the economic rewards of our stock options in all material respects. All of those stock appreciation rights are settled in cash. All of our employees are eligible to receive equity-based grants. When making grants, including to named executive officers, we consider an employee's contribution to Fastenal, including the employee's responsibility for sales and profits, responsibility for managing others, possession of special skills, and length of service. We regularly assess the effectiveness of further expanding the number of persons receiving equity-based grants. Any expansion will be based on a determination that further employee ownership will result in a deepened employee commitment and likely improvement to overall shareholder value. During 2024, our compensation committee granted stock options to our employees under our stock option plan for a total of 764,195 shares of our common stock with an exercise price of $64.00 per share. The exercise price of our stock options is determined by rounding the closing stock price on the effective date of the grant up to the nearest dollar. Of these grants, options to purchase an aggregate of 143,787 shares were awarded to our named executive officers. Stock option grants were made in 2024 to all of our named executive officers. Our stock option grants have been made at levels designed to provide recipients with an attractive capital accumulation opportunity should income and shareholder values grow at acceptable rates and to facilitate retention of critical employees. Of the 29,468,203 total shares subject to stock options granted by Fastenal under our stock option plan since April 2007, options covering an aggregate of 3,832,315 shares are either held by, or have been exercised by, our current executive officers. The stock options granted to executive officers vest and become exercisable over a period of five or eight years from the date of grant, with such staggered vesting designed to ensure continuity of leadership. At its last meeting in 2024, the compensation committee granted to our employees, effective January 2, 2025, options to purchase a total of 639,304 shares of our common stock at an exercise price of $72.00 per share. Of those grants, options to purchase an aggregate of 141,700 shares were awarded to our named executive officers. We have stock ownership guidelines for our non-employee directors and executive officers, which require each to hold minimum levels of investment in Fastenal. The stock ownership guidelines are further described below.

  17. Market Competitiveness Review

    Market Competitiveness Review In making executive compensation decisions, both with respect to total compensation and individual elements of compensation, our compensation committee annually reviews executive compensation data based on external reports for a peer group of companies in order to stay informed of practices and executive pay levels in the marketplace. However, it does not establish specific compensation parameters based on such data, nor does it set the levels of compensation for our executive officers, or individual elements of that compensation, by applying any specific mathematical calculation to peer group compensation data. 2024 Compensation Review 2024 Peer Group. As part of the decision-making process with respect to 2024 executive compensation, our compensation committee reviewed the executive compensation data of a peer group consisting of the following ten companies (the 2024 peer group):

  18. Market Competitiveness Review

    The companies included in our 2024 peer group are similar to our business in terms of the end markets they serve and/or their operating characteristics (e.g., using similar methods of sourcing, distributing, and selling) and they are reasonably expected to be competing for a similar pool of potential employees. The median sales of the 2024 peer group was greater than Fastenal's and the median market capitalization of the 2024 peer group as of December 31, 2023 was less than Fastenal's. Benchmarking for 2024. In comparing Fastenal's executive compensation levels to those of its 2024 peer group, the compensation committee looked at base salary, cash incentives, other compensation (which includes stock options, other types of equity compensation, pensions, and perquisites), and total compensation. In December 2023, when the committee made decisions with respect to 2024 executive compensation, the most recent year for which executive compensation data for the 2024 peer group was available was 2022. Based on the latest available data, the compensation committee determined that (i) the base salaries of Fastenal's named executive officers for 2024 were lower than the median base salary of the named executive officers of the 2024 peer group, (ii) due to weaker financial results in comparison to prior years and our pay for performance philosophy, the cash incentive pay of Fastenal's named executive officers for 2024 was lower than the median cash incentive pay of the named executive officers of the 2024 peer group, and (iii) the total compensation of Fastenal's named executive officers for 2024 was lower than the median total compensation of the named executive officers of the 2024 peer group. The total compensation of Fastenal's named executive officers for 2024 was lower than the median total compensation of the 2024 peer group due to the lower base salary, lower cash incentive pay, and lower grant date fair value of the equity compensation awarded to Fastenal's executives. In making compensation decisions for the named executive officers, the compensation committee does not focus on the grant date fair value of equity awards. Rather the committee makes its own internal judgments regarding the value of those awards and has concluded that the opportunity at Fastenal for the creation of long-term stock value, driven by achieving consistent outstanding growth over an extended period of time, is significant. We have historically achieved strong growth and the expectation of the committee in granting option awards is that, with superior efforts from our executives and other employees, outstanding growth can continue in the future. Accordingly, the committee believes the aggregate annual compensation paid to our named executive officers can reasonably be expected to result in significant wealth creation. 2025 Compensation Review 2025 Peer Group. As part of the decision-making process with respect to 2025 executive compensation, our compensation committee reviewed executive compensation data of a peer group consisting of the following ten companies (the 2025 peer group):

  19. Market Competitiveness Review

    Benchmarking for 2025. In December 2024, when the compensation committee made decisions with respect to 2025 executive compensation, the most recent year for which executive compensation data for the 2025 peer group was available was 2023. Based on the committee's review of all factors, including the latest available 2025 peer group compensation data, the committee believes the aggregate annual compensation to be paid to our named executive officers for 2025 can reasonably be expected to result in significant overall incentives for strong performance, and the committee believes our 2025 compensation programs for our named executive officers will be fair, competitive, and sufficient to motivate them to achieve personal success and success for Fastenal and its shareholders.

  20. Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

    Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information Equity awards granted to our executive officers, including our named executive officers, in fiscal 2024 were granted under our stock option plan, which authorizes the issuance of stock option awards to eligible employees. Equity awards for all executive officers are approved by our board of directors upon a recommendation by our compensation committee. The exercise price of stock options is rounded up to the nearest dollar from the closing stock price on the date of the grant and is above the fair market value of our common stock on the date of the grant. Equity awards are granted on the first trading day of the fiscal year and are consistent with our annual compensation cycle. The dates for these grants are typically predetermined a year or more in advance on a fairly consistent cadence year-over-year and align with the Fastenal blackout period. As a result, in all cases, the timing of grants of equity awards occurs independent of the release of any material nonpublic information, and we do not backdate grants of awards and do not have any program, plan, or practice to select equity award grant dates for executive officers in coordination with the release of material nonpublic information for the purpose of affecting the value of executive compensation.

  21. SUMMARY COMPENSATION TABLE

    SUMMARY COMPENSATION TABLE

  22. SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) | Total ($) | | Daniel L. Florness | 2024 | 750,000(4) | — | — | 867,883 | 75,250 | 2,754 | 1,695,887 | | Chief Executive Officer | 2023 | 750,000(4) | — | — | 847,284 | 1,515,000 | 3,223 | 3,115,507 | | | 2022 | 750,000(4) | — | — | 617,802 | 4,068,500 | 3,308 | 5,439,610 | | Holden Lewis | 2024 | 430,000 | — | — | 293,214 | 64,700 | 2,754 | 790,668 | | Senior Executive Vice President and | 2023 | 430,000 | — | — | 286,259 | 728,350 | 3,223 | 1,447,832 | | Chief Financial Officer | 2022 | 430,000 | — | — | 142,313 | 1,624,000 | 3,308 | 2,199,621 | | Jeffery M. Watts | 2024 | 516,090(5) | — | — | 495,938 | 60,746(5) | — | 1,072,774 | | President and | 2023 | 451,503(5) | — | — | 268,713 | 749,716(5) | — | 1,469,932 | | Chief Sales Officer | 2022 | 358,631(5) | — | — | 163,271 | 1,167,365(5) | — | 1,689,267 | | Charles S. Miller | 2024 | 450,000 | — | — | 334,746 | 60,173 | 2,754 | 847,673 | | Senior Executive Vice | 2023 | 430,008 | — | — | 312,288 | 852,813 | 3,223 | 1,598,332 | | President - Sales | 2022 | 430,008 | — | — | 189,742 | 1,665,442 | 3,308 | 2,288,500 | | William J. Drazkowski | 2024 | 390,000 | — | — | 290,119 | 48,800 | 2,754 | 731,673 | | Executive Vice | 2023 | 370,000 | — | — | 268,713 | 486,580 | 3,223 | 1,128,516 | | President - Sales | 2022 | 370,000 | — | — | 163,271 | 1,527,888 | 3,308 | 2,064,467 |

  23. SUMMARY COMPENSATION TABLE

    (1)This column sets out the grant date fair value of all option grants made during each respective year, without regard to subsequent forfeitures of those grants. We calculated this value in accordance with generally accepted accounting principles utilizing the assumptions set forth in 'Note 5' to our consolidated financial statements included in our 2024 annual report on Form 10-K. (2)This column sets out cash bonuses earned (rather than paid) in the respective year, which include any bonuses earned pursuant to the ROA Plan. (3)This column sets out our annual profit-based matching contribution under our 401(k) plan. (4)This amount includes $50,000 paid to Mr. Florness in 2024, 2023, and 2022 in his capacity as one of our directors. See 'Corporate Governance and Director Compensation-Compensation of Our Directors' earlier in this document. (5)Mr. Watts' base salary and cash bonuses in 2024, 2023, 2022 were paid in Canadian dollars. These amounts were converted into United States dollars using the exchange rate in effect at the time each payment occurred. The exchange rates used (expressed as the amount of United States dollars purchasable with one Canadian dollar) ranged from 0.6951 to 0.7473, and averaged 0.7272 in 2024, ranged from 0.7204 to 0.7580, and averaged 0.7424 in 2023, and ranged from 0.7197 to 0.7995, and averaged 0.7660 in 2022.

  24. Grant of Plan-Based Awards

    Grant of Plan-Based Awards Set out in the following table is information with respect to awards, if any, for 2024 to our named executive officers under our cash incentive and stock option plan.

  25. GRANT OF PLAN-BASED AWARDS

    GRANT OF PLAN-BASED AWARDS

  26. GRANT OF PLAN-BASED AWARDS

    | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) (4) | Exercise or Base Price of Option Awards ($ / Sh) (5) | Grant Date Fair Value of Stock and Option Awards ($) (6) | | Name | Grant Date | Threshold ($) (2) | Target ($) (3) | Maximum ($) (2) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Daniel L. Florness | 1/2/2024 | — | 1,515,000 | — | — | — | — | — | 54,687 | 64.00 | 867,883 | | Holden Lewis | 1/2/2024 | — | 728,350 | — | — | — | — | — | 18,476 | 64.00 | 293,214 | | Jeffery M. Watts | 1/2/2024 | — | 990,250 | — | — | — | — | — | 31,250 | 64.00 | 495,938 | | Charles S. Miller | 1/2/2024 | — | 792,768 | — | — | — | — | — | 21,093 | 64.00 | 334,746 | | William J. Drazkowski | 1/2/2024 | — | 572,000 | — | — | — | — | — | 18,281 | 64.00 | 290,119 |

  27. GRANT OF PLAN-BASED AWARDS

    (1)The awards under the cash bonus arrangements for each of the named executive officers were payable at the end of each fiscal quarter based on financial results for that fiscal quarter, and none of those awards could result in future payouts. The cash bonus formulas for each of the named executive officers are described above in 'Compensation Discussion and Analysis-Quarterly Incentives-2024 Incentive Program', which include any bonuses earned pursuant to the ROA plan. The actual amounts earned during 2024 under these cash bonus arrangements by the named executive officers are reported in the 'Summary Compensation Table' column captioned 'Non-Equity Incentive Plan Compensation'. (2)There were no thresholds or maximum payouts under the 2024 cash bonus arrangements. (3)The target payouts were calculated by applying the payout percentages for the named executive officers in effect at the end of each quarter of 2024 to the amount by which pre-tax and net income in the same quarter of 2023 exceed 100% of pre-tax and net income in the same quarter of 2022. (4)This column sets out the number of shares subject to options granted during 2024. The options will vest and become exercisable over a period of five years, with 20% of such options vesting and becoming exercisable each year following the grant date. The options will terminate, to the extent not previously exercised, approximately ten years after the grant date. (5)The exercise price of our stock options is determined by rounding the closing stock price on the effective date of the grant up to the nearest dollar. (6)This column sets out the grant date fair value of all options granted during 2024. We calculated this value in accordance with generally accepted accounting principles utilizing the assumptions set forth in the notes to our consolidated financial statements included in our 2024 annual report on Form 10-K.

  28. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

  29. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | | Option Awards | | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | Exercisable | Unexercisable | | | | | | | | | | Daniel L. Florness | 50,000 | — | — | 27.50 | 1/2/2018 | 12/31/2027(1) | — | — | — | — | | | 92,306 | — | — | 26.00 | 1/2/2019 | 12/31/2028(1) | — | — | — | — | | | 56,842 | 14,210 | — | 38.00 | 1/2/2020 | 12/31/2029(1) | — | — | — | — | | | 33,750 | 22,500 | — | 48.00 | 1/4/2021 | 12/31/2030(1) | — | — | — | — | | | 18,064 | 27,097 | — | 62.00 | 1/3/2022 | 12/31/2031(1) | — | — | — | — | | | 14,583 | 58,333 | — | 48.00 | 1/3/2023 | 12/31/2032(2) | — | — | — | — | | | — | 54,687 | — | 64.00 | 1/2/2024 | 12/31/2033(2) | — | — | — | — | | Holden Lewis | 23,076 | — | — | 26.00 | 1/2/2019 | 12/31/2028(1) | — | — | — | — | | | 12,632 | 3,157 | — | 38.00 | 1/2/2020 | 12/31/2029(1) | — | — | — | — | | | 7,500 | 5,000 | — | 48.00 | 1/4/2021 | 12/31/2030(1) | — | — | — | — | | | 4,161 | 6,242 | — | 62.00 | 1/3/2022 | 12/31/2031(1) | — | — | — | — | | | 4,927 | 19,708 | — | 48.00 | 1/3/2023 | 12/31/2032(2) | — | — | — | — | | | — | 18,476 | — | 64.00 | 1/2/2024 | 12/31/2033(2) | — | — | — | — | | Jeffery M. Watts | 16,362 | — | — | 27.50 | 1/2/2018 | 12/31/2027(1) | — | — | — | — | | | 17,306 | — | — | 26.00 | 1/2/2019 | 12/31/2028(1) | — | — | — | — | | | 14,737 | 3,684 | — | 38.00 | 1/2/2020 | 12/31/2029(1) | — | — | — | — | | | 8,749 | 5,834 | — | 48.00 | 1/4/2021 | 12/31/2030(1) | — | — | — | — | | | 4,774 | 7,161 | — | 62.00 | 1/3/2022 | 12/31/2031(1) | — | — | — | — | | | 4,625 | 18,500 | — | 48.00 | 1/3/2023 | 12/31/2032(2) | — | — | — | — | | | — | 31,250 | — | 64.00 | 1/2/2024 | 12/31/2033(2) | — | — | — | — | | Charles S. Miller | — | 4,526 | — | 38.00 | 1/2/2020 | 12/31/2029(1) | — | — | — | — | | | 5,374 | 7,167 | — | 48.00 | 1/4/2021 | 12/31/2030(1) | — | — | — | — | | | 5,548 | 8,322 | — | 62.00 | 1/3/2022 | 12/31/2031(1) | — | — | — | — | | | 5,375 | 21,500 | — | 48.00 | 1/3/2023 | 12/31/2032(2) | — | — | — | — | | | — | 21,093 | — | 64.00 | 1/2/2024 | 12/31/2033(2) | — | — | — | — | | William J. Drazkowski | 14,737 | 3,684 | — | 38.00 | 1/2/2020 | 12/31/2029(1) | — | — | — | — | | | 8,749 | 5,834 | — | 48.00 | 1/4/2021 | 12/31/2030(1) | — | — | — | — | | | 4,774 | 7,161 | — | 62.00 | 1/3/2022 | 12/31/2031(1) | — | — | — | — | | | 4,625 | 18,500 | — | 48.00 | 1/3/2023 | 12/31/2032(2) | — | — | — | — | | | — | 18,281 | — | 64.00 | 1/2/2024 | 12/31/2033(2) | — | — | — | — |

  30. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    (1)This option has a vesting period of five years with the following vesting schedule: 40% vested and exercisable two years following the grant date and the remainder exercisable in proportional increments of 20% each year thereafter. (2)This option has a vesting period of five years with the following vesting schedule: 20% vested and exercisable one year following the grant date and the remainder exercisable in proportional increments of 20% each year thereafter.

  31. Option Exercises

    Option Exercises Set out in the following table is information regarding options to purchase Fastenal stock, if any, that have been exercised by our named executive officers during 2024.

  32. OPTION EXERCISES AND STOCK VESTED

    OPTION EXERCISES AND STOCK VESTED

  33. OPTION EXERCISES AND STOCK VESTED

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Daniel L. Florness | 127,562 | 6,164,820 | — | — | | Holden Lewis | 71,064 | 3,958,998 | — | — | | Jeffery M. Watts | 19,420 | 916,469 | — | — | | Charles S. Miller | 58,146 | 2,571,744 | — | — | | William J. Drazkowski | 45,636 | 2,340,327 | — | — |

  34. Pension Benefits

    Pension Benefits SEC regulations state that we must disclose information in this proxy statement, in a tabular format, regarding any plans that provide for retirement payments or benefits other than defined contribution plans. We have never had any such benefit plan and do not anticipate creating any such plan in the future. As a result, we have omitted this table.

  35. Non-Qualified Deferred Compensation

    Non-Qualified Deferred Compensation SEC regulations state that we must disclose information in this proxy statement, in a tabular format, regarding defined contribution or other plans that provide for deferral of compensation on a basis that is not tax-qualified. We have never had any such benefit plan and do not anticipate creating such a plan in the future. As a result, we have omitted this table.

  36. Potential Payments upon Termination or Change-in-Control

    Potential Payments upon Termination or Change-in-Control SEC regulations state that we must disclose information in this proxy statement regarding agreements, plans, or arrangements that provide for payments or benefits to our executive officers in connection with any termination of employment or change in control of Fastenal. We are not parties to any such agreement, plan, or arrangement other than our stock option plan, which provides that, if Fastenal is not the surviving or acquiring corporation in the event of a merger or similar transaction, then the vesting and exercisability of outstanding stock options will be accelerated only if the surviving or acquiring corporation does not assume or replace the outstanding options. The vesting and exercisability of outstanding options will also be accelerated in the event of the dissolution or liquidation of Fastenal. If any such transaction or event had occurred on December 31, 2024 and the price per share of our common stock payable in connection with such transaction or event equaled the closing sales price of a share of our common stock on the Nasdaq Stock Market on such date (which was $71.91 per share), and if the vesting and exercisability of all options had been accelerated in connection with such transaction or event, then each of our named executive officers would have received the following payments in respect of their options (assuming full exercise of the same):

  37. Potential Payments upon Termination or Change-in-Control

    | Name | Option Grant Date | Options Outstanding (#) | Option Exercise Price ($) | Payment Value ($) | | Daniel L. Florness | 1/2/2018 | 50,000 | 27.50 | 2,220,500 | | | 1/2/2019 | 92,306 | 26.00 | 4,237,768 | | | 1/2/2020 | 71,052 | 38.00 | 2,409,373 | | | 1/4/2021 | 56,250 | 48.00 | 1,344,938 | | | 1/3/2022 | 45,161 | 62.00 | 447,546 | | | 1/3/2023 | 72,916 | 48.00 | 1,743,422 | | | 1/2/2024 | 54,687 | 64.00 | 432,574 | | Holden Lewis | 1/2/2019 | 23,076 | 26.00 | 1,059,419 | | | 1/2/2020 | 15,789 | 38.00 | 535,405 | | | 1/4/2021 | 12,500 | 48.00 | 298,875 | | | 1/3/2022 | 10,403 | 62.00 | 103,094 | | | 1/3/2023 | 24,635 | 48.00 | 589,023 | | | 1/2/2024 | 18,476 | 64.00 | 146,145 | | Jeffery M. Watts | 1/2/2018 | 16,362 | 27.50 | 726,636 | | | 1/2/2019 | 17,306 | 26.00 | 794,518 | | | 1/2/2020 | 18,421 | 38.00 | 624,656 | | | 1/4/2021 | 14,583 | 48.00 | 348,680 | | | 1/3/2022 | 11,935 | 62.00 | 118,276 | | | 1/3/2023 | 23,125 | 48.00 | 552,919 | | | 1/2/2024 | 31,250 | 64.00 | 247,188 | | Charles S. Miller | 1/2/2020 | 4,526 | 38.00 | 153,477 | | | 1/4/2021 | 12,541 | 48.00 | 299,855 | | | 1/3/2022 | 13,870 | 62.00 | 137,452 | | | 1/3/2023 | 26,875 | 48.00 | 642,581 | | | 1/2/2024 | 21,093 | 64.00 | 166,846 | | William J. Drazkowski | 1/2/2020 | 18,421 | 38.00 | 624,656 | | | 1/4/2021 | 14,583 | 48.00 | 348,680 | | | 1/3/2022 | 11,935 | 62.00 | 118,276 | | | 1/3/2023 | 23,125 | 48.00 | 552,919 | | | 1/2/2024 | 18,281 | 64.00 | 144,603 |

  38. CEO Pay Ratio

    CEO Pay Ratio We are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Daniel L. Florness, our chief executive officer (our CEO): For 2024, our last completed fiscal year: •the total compensation amount for the median employee identified in 2023 was $48,037 for 2024; and •the annual total compensation of our CEO, as reported in the Summary Compensation Table included in this proxy statement, was $1,695,887. Based on this information for 2024, we reasonably estimate that the ratio of our CEO's annual total compensation to the annual total compensation of our median employee was 35:1. Our pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K. We determined our median employee's total compensation, including any perquisites and other benefits, in the same manner that we determine the total compensation of our named executive officers for purposes of the Summary Compensation Table disclosed above. The total compensation amount for our median employee for 2024 was determined to be $48,037. This total compensation amount was then compared to the total compensation of our CEO disclosed above in the Summary Compensation Table, of $1,695,887. The elements included in the CEO's total compensation are fully discussed above in the footnotes to the Summary Compensation Table. The methodology that we used to identify the median of the annual total compensation of all our employees in 2023, and the material assumptions, adjustments, and estimates that we used for the identification of our median employee were as follows: We determined that, as of October 31, 2023, our employee population consisted of 23,231 individuals (including full-time and part-time employees, other than the CEO, who were employed on October 31, 2023, including employees on leave) working at Fastenal together with our consolidated subsidiaries. Of these individuals, 18,554 were located in the U.S. and U.S. territories, and 4,677 were located in 26 other countries around the world. The scale of our operations in many of these foreign countries is smaller, and in aggregate we employed less than 5% of our total workforce in 22 of these 26 countries, primarily as sales staff in our international branches or Onsite locations. Given the limited scale of this portion of our international operations, we chose to exclude all 952 of our employees in these countries as follows:

  39. CEO Pay Ratio

    | Country | Employees (#) | Country | Employees (#) | Country | Employees (#) | Country | Employees (#) | | Austria | 10 | Germany | 55 | Panama | 21 | Switzerland | 4 | | Belgium | 13 | Hungary | 14 | Poland | 39 | Taiwan | 32 | | Brazil | 86 | Ireland | 17 | Romania | 36 | Thailand | 20 | | Chile | 17 | Italy | 82 | Singapore | 22 | United Kingdom | 148 | | Czech Republic | 93 | Malaysia | 128 | Spain | 19 | | | | France | 54 | Netherlands | 38 | Sweden | 4 | | |

  40. CEO Pay Ratio

    In total, we excluded 4.10% of our workforce from the identification of the 'median employee', as permitted by SEC rules. Our employee population, after taking into consideration the permitted adjustments described above, consisted of 22,279 members. In making this determination, we annualized the compensation of all employees included in the sample who were hired in 2023 but did not work for us or our consolidated subsidiaries for the entire twelve month period described below. Our adjusted employee population consisted of 18,554 employees in the U.S. and U.S. territories and 3,725 employees located in Canada, China, Mexico, and India. We identified our median employee based on the total cash compensation paid during the twelve month period ended October 31, 2023. For purposes of determining the total cash compensation paid, we included: the amount of base salary (or, in the case of hourly workers, base wages including overtime pay) the employee received during the twelve months ended October 31, 2023, and the amount of any cash incentives paid to the employee in such period (which include sales commissions as well as cash incentives that are generally paid for performance during the prior month or quarter), as reflected in our payroll records. For purposes of identifying the median employee, we applied the same exchange rates we used for financial statement conversion purposes at October 31, 2023, which are U.S. dollars to Canadian dollars 1.3865 CAD; U.S. dollars to Chinese Yuan 7.3168 CNY; U.S. dollars to Dominican Peso 56.2314 DOP; U.S. dollars to Indian Rupee 83.2674 INR; and U.S. dollars to Mexican Peso 18.0231 MXN.

  41. Pay Versus Performance Table

    Pay Versus Performance Table The following table sets forth additional compensation information of our principal executive officer (PEO) and our other named executive officers (NEOs) (averaged) along with total shareholder return, net income, and company-wide pre-tax income performance results for our fiscal years ending in 2024, 2023, 2022, 2021, and 2020:

  42. Pay Versus Performance Table

    | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Fiscal Year | Summary Compensation Table Total for PEO (1) (2) ($) | Compensation Actually Paid to PEO (1) (2) ($) | Average Summary Compensation Table Total for Other NEOs (1) (2) ($) | Average Compensation Actually Paid to Other NEOs (1) (2) ($) | FAST Total Shareholder Return (3) ($) | Peer Group Total Shareholder Return (3) (4) | Net Income ($ in millions) | Company-Wide Pre-Tax Income (5) ($ in millions) | | 2024 | 1,695,887 | 2,280,298 | 860,697 | 1,055,881 | 222 | 247 | 1,150.6 | 1,508.1 | | 2023 | 3,115,507 | 5,360,613 | 1,449,743 | 1,757,205 | 196 | 218 | 1,155.0 | 1,522.0 | | 2022 | 5,439,610 | 3,307,940 | 2,408,942 | 1,793,142 | 138 | 147 | 1,086.9 | 1,440.0 | | 2021 | 2,423,614 | 5,572,876 | 1,358,039 | 2,295,107 | 183 | 169 | 925.0 | 1,207.8 | | 2020 | 2,539,150 | 5,321,725 | 1,316,849 | 2,067,665 | 137 | 126 | 859.1 | 1,132.7 |

  43. Pay Versus Performance Table

    (1) Our PEO and Other NEOs for each reported fiscal year were:

  44. Pay Versus Performance Table

    | Fiscal Year | PEO | Other NEOs | | 2024 | Daniel L. Florness | Holden Lewis, Jeffery M. Watts, Charles S. Miller, and William J. Drazkowski | | 2023 | Daniel L. Florness | Holden Lewis, Charles S. Miller, Jeffery M. Watts, John L. Soderberg, and Terry M. Owen | | 2022 | Daniel L. Florness | Holden Lewis, Terry M. Owen, Charles S. Miller, and Reyne K. Wisecup | | 2021 | Daniel L. Florness | Holden Lewis, Jeffery M. Watts, Terry M. Owen, and William J. Drazkowski | | 2020 | Daniel L. Florness | Holden Lewis, Terry M. Owen, Jeffery M. Watts, and Reyne K. Wisecup |

  45. Pay Versus Performance Table

    (2) SEC rules require certain adjustments be made to the Summary Compensation Table (SCT) totals to determine compensation actually paid (CAP) as reported in the Pay Versus Performance Table. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. The PEO and NEOs do not participate in a defined benefit plan, so no adjustment for pension benefits is included in the table below. The following table details these adjustments from the SCT total compensation to determine CAP in 2024:

  46. Pay Versus Performance Table

    | Adjustments | PEO ($) | Average of Other NEOs ($) | | Total Compensation from SCT | 1,695,887 | 860,697 | | Adjustments for Stock and Option Awards | | | | Subtract SCT amounts of stock and option awards | (867,883) | (353,504) | | Add fair value as of the year-end of awards granted during 2024 that are outstanding and unvested at the end of 2024 | 1,039,690 | 423,484 | | Plus (Minus) change in fair value of awards between the end of 2023 and the end of 2024 for awards granted in any prior fiscal year that are outstanding and unvested at the end of 2024 | 534,079 | 158,594 | | Add vesting date fair value of awards granted and vesting during 2024 | — | — | | Plus (Minus) change in fair value from the end of 2023 to the vesting date of awards granted in any prior fiscal year which met all vesting conditions during 2024 | (121,475) | (33,390) | | Subtract fair value at end of 2023 for awards granted in any prior fiscal year that fail to meet the applicable vesting conditions during 2024 | — | — | | Add dividends or other income paid on stock or option awards in 2024 prior to vesting if not otherwise included in the SCT for the covered year | — | — | | Compensation Actually Paid (as calculated) | 2,280,298 | 1,055,881 |

  47. Pay Versus Performance Table

    (3) Total shareholder return is calculated based on a fixed investment of one hundred dollars measured from the market close on December 31, 2019 (the last trading day of fiscal 2019) through and including the end of each fiscal year reported in the table. (4) Our peer group used for the TSR calculation is the Dow Jones US Industrial Suppliers Index, which is the industry index used to show our performance in our Form 10-K. (5) Our company-selected measure, which is the measure we believe represents the most important financial performance not otherwise presented in the table above that we use to link CAP to our NEOs for fiscal 2024 to Fastenal's performance, is company-wide pre-tax income. The 'income before income taxes' line item in our consolidated statements of income is equal to 'company-wide pre-tax income' and is calculated in conformity with U.S. GAAP.