DEF 14A of Lincoln Electric Holdings Inc
Filed Mar 18, 2024 · FY20230001140361-24-013708
Director Nominees and Board Summary
Director Nominees and Board Summary
Composition of Director Nominees
Composition of Director Nominees
How We Select Director Nominees
How We Select Director Nominees In evaluating Director candidates, including persons nominated by shareholders, the Nominating and Corporate Governance Committee expects that any candidate must have these minimum qualifications:
How We Select Director Nominees
| • Demonstrates character, integrity and judgment • High-level managerial experience or experience dealing with complex business matters • Ability to work effectively with others • Sufficient time to devote to the affairs of Lincoln Electric | • Specialized experience and background that will add to the depth and breadth of the Board • Independence as defined by the Nasdaq listing standards (for non-employee Directors) • Financial literacy |
How We Select Director Nominees
| 20 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
How We Select Director Nominees
We are also committed to having Director candidates that can provide perspective on the industry challenges that we face and our long-term commitment to a pay for performance culture. The Nominating and Corporate Governance Committee’s process for identifying and evaluating nominees for Director includes annually discussing prospective Director specifications, which serve as the baseline to evaluate candidates. When recruiting new Director candidates, we may involve a recognized search firm, and the CEO and/or a member of the Nominating and Corporate Governance Committee (usually, the Chair) will contact the prospective director to gauge his or her interest and availability. The candidate will then meet with several members of the Board, including our Lead Independent Director. At the same time, references for the prospect will be contacted. A background check is generally completed before a final recommendation is made to the Board to elect a candidate to the Board. During 2023, the Nominating and Corporate Governance Committee retained the search firm of Heidrick & Struggles to help identify director prospects, perform candidate outreach, assist in reference and background checks and provide other related services. The Board also used its own network of contacts in its search. For the director search in 2023, the Board targeted candidates who were active senior executives of public companies with diverse leadership experience in managing global businesses and operational excellence. Heidrick & Struggles recommended Ms. Fetch as a director candidate, and the Board determined that Ms. Fetch would provide the Board with executive operational and supply chain experience, among other attributes. A non-employee director recommended Mr. Howze as a director candidate, and the Board determined that Mr. Howze would provide the Board with operational, governance and organizational leadership experience, among other attributes. Both have extensive executive experience at large, global organizations. As an experienced executive officer of the Company, Mr. Hedlund understands the manufacturing industry and provides valuable insight as to our Company’s global operations, people, products, markets, and strategic direction. The Board determined that Ms. Fetch, Mr. Howze and Mr. Hedlund possessed the desired capabilities and management experience, and each was appointed to the Board on July 20, 2023, October 17, 2023 and January 1, 2024, respectively. Shareholders may nominate one or more persons for election as Director of Lincoln Electric. The process for doing so is set forth in the FAQs section of this Proxy Statement. Director candidates recommended by our shareholders will be considered by the Nominating and Corporate Governance Committee in accordance with the criteria outlined above. For this year, the window for such nominations closed on January 20, 2024.
How We Select Director Nominees
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 21 |
Director Nominees’ Skills, Experience and Background
Director Nominees’ Skills, Experience and Background Throughout 2023, the Nominating and Corporate Governance Committee reviewed the skills, qualifications and experience of each Director Nominee to ensure that each can effectively oversee our long-term business strategy. In addition, during 2023 the Nominating and Corporate Governance Committee thoroughly reviewed and refined the identified skills, experience and background desired of our Director Nominees. Through this process, the below skills are listed in order of priority, and have been thoughtfully defined in a manner that results in identifying Directors with more significant experience to help our stakeholders understand where the deeper experience lies. As shown below, our Director Nominees have a mix of skills and experience that we believe are relevant to the Company’s long-term strategy and success.
Director Nominees’ Skills, Experience and Background
| 22 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Board Diversity
Board Diversity The Nominating and Corporate Governance Committee believes that having a diverse Board enhances overall corporate governance. The Nominating and Corporate Governance Committee considers diversity to include differences in race, gender, national origin, as well as professional background and capabilities, knowledge of specific industries, and geographic experience. To complement Board diversity, the Nominating and Corporate Governance Committee instructs any search firm engaged for each director candidate search to include individuals that represent diverse characteristics, whether by race, gender or other diverse qualities.
Nasdaq Board Diversity Matrix
Nasdaq Board Diversity Matrix In accordance with Nasdaq’s Board Diversity Rules, the following Board Diversity Matrix highlights the composition of our Board members as of February 15, 2024, which is based on voluntary self-identification. Each of the categories listed in the table has the meaning provided in Nasdaq Rule 5605(f).
Board Diversity Matrix (As of February 15, 2024)*
Board Diversity Matrix (As of February 15, 2024)*
Board Diversity Matrix (As of February 15, 2024)*
| Total Number of Directors | 13 | | | | | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 4 | 9 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 1 | 1 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 0 | 1 | 0 | 0 | | Hispanic or Latinx | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 3 | 7 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 0 | | | | | Did Not Disclose Demographic Background | 0 | | | |
Board Diversity Matrix (As of February 15, 2024)*
| * Includes information disclosed by all current Directors |
Board Diversity Matrix (As of February 15, 2024)*
| | YOUR BOARD RECOMMENDS A VOTE “FOR” EACH DIRECTOR NOMINEE |
Board Diversity Matrix (As of February 15, 2024)*
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 23 |
Director Nominees
Director Nominees
Director Nominees
| Brian D. Chambers Director since 2022 COMMITTEES: Audit Finance AGE: 57 OTHER PUBLIC COMPANY DIRECTORSHIPS: Owens Corning (NYSE: OC) since 2019 | Career Highlights Mr. Chambers has served as the Chair, President and Chief Executive Officer of Owens Corning, a global building and construction materials company, since 2020, and as President and Chief Executive Officer since 2019. During his over twenty-year tenure with Owens Corning, Mr. Chambers has served in various leadership positions including Chief Operating Officer from 2018 to 2019, and President of the Roofing Division from 2014 to 2018. Mr. Chambers has also held several commercial and operational roles at Saint-Gobain, Honeywell, and BOC Gases. | | | Key Qualifications, Experience and Skills • As a current CEO and Chair of a global, publicly traded company engaged in manufacturing operations, Mr. Chambers provides valuable insights across a range of matters, including risk oversight and management, business strategy development, and brings a global perspective, strategic and innovative mindset, and a focus on sustainability matters. • The Board has determined that Mr. Chambers’ extensive accounting and financial experience qualifies him as an “audit committee financial expert.” • Valuable knowledge of key governance matters, including sustainability matters, gained through executive leadership of various publicly traded companies and as a director of Owens Corning and Lincoln Electric. |
Director Nominees
| Curtis E. Espeland Director since 2012 Lead Independent Director since 2018 COMMITTEES: Audit Finance AGE: 59 OTHER PUBLIC COMPANY DIRECTORSHIPS: Huntsman Corporation (NYSE: HUN) since 2022 | Career Highlights Mr. Espeland is the former Executive Vice President and Chief Financial Officer of Eastman Chemical Company, an advanced materials and specialty additives manufacturer, a position he held from 2014 until his retirement in 2020. Mr. Espeland joined Eastman Chemical Company in 1996 and, during his tenure, he also served as Vice President, Finance and Chief Accounting Officer from 2005 to 2008, and Senior Vice President and Chief Financial Officer from 2008 to 2014. | | | Key Qualifications, Experience and Skills • With broad-based finance, accounting, and executive level experience, ultimately as the Chief Financial Officer of a large publicly traded company, Mr. Espeland brings robust experience related to enterprise risk management, including information technology and cybersecurity, capital allocation, internal controls and financial reporting, and corporate strategy and M&A. • The Board has determined that Mr. Espeland’s extensive accounting and financial experience qualifies him as an “audit committee financial expert.” • Valuable knowledge of key governance matters gained through his various directorships, including as a director of Lincoln Electric. |
Director Nominees
| 24 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Director Nominees
| Bonnie J. Fetch Director since 2023 COMMITTEES: Audit Finance AGE: 53 OTHER PUBLIC COMPANY DIRECTORSHIPS: None | Career Highlights Ms. Fetch serves as President – Distribution Business, for Cummins Inc., a global power technology solution leader, a position she has held since January 2024. Ms. Fetch joined Cummins Inc. in 2018 and during her tenure she has served as VP, Global Supply Chain and Manufacturing from January 2022 to December 2023, VP – Global Distribution SC Services from January 2020 to January 2022, and Executive Director, Global Distribution Business Supply Chain from July 2018 to January 2020. Prior to joining Cummins Inc., Ms. Fetch held numerous leadership roles during her 20 years at Caterpillar, Inc., including Human Resources Director and Chief Learning Officer and several General Manager roles. | | | Key Qualifications, Experience and Skills • As a current senior executive for a publicly traded company engaged in manufacturing operations, Ms. Fetch provides valuable insights relating to advancing operational excellence in global supply chain and operational initiatives in the industrials machinery sectors. • Running multibillion-dollar businesses has provided Ms. Fetch with a depth of experience related to strategic planning, logistics and manufacturing operations, business development, engineering, human resources, and advanced technology like artificial intelligence and machine learning to advance supply chain strategies. • Valuable knowledge of key governance matters, including sustainability matters, gained through executive leadership of various publicly traded companies. |
Director Nominees
| Patrick P. Goris Director since 2018 COMMITTEES: Audit (Chair) Nominating and Corporate Governance AGE: 52 OTHER PUBLIC COMPANY DIRECTORSHIPS: None | Career Highlights Mr. Goris has served as the Senior Vice President and Chief Financial Officer of Carrier Global Corporation, the global leader in intelligent climate and energy solutions since November 2020. Prior to joining Carrier, he served as Senior Vice President and Chief Financial Officer of Rockwell Automation, a global industrial automation and information solutions provider, from February 2017 to November 2020. | | | Key Qualifications, Experience and Skills • As a current Chief Financial Officer of a publicly-traded multinational organization, Mr. Goris has extensive experience in accounting, financial planning and analysis, investor relations, mergers and acquisitions and strategic planning, and his experience with a global industrial automation and information solutions company provides him with broad exposure to digital operations and “smart” manufacturing solutions using data and analytics, which enhances operational intelligence, productivity and risk management in manufacturing processes. • The Board has determined that Mr. Goris’ extensive accounting and financial experience qualifies him as an “audit committee financial expert.” • Valuable knowledge of key governance matters gained as a director of Lincoln Electric. |
Director Nominees
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 25 |
Director Nominees
| Steven B. Hedlund Director since 2024 COMMITTEES: None AGE: 57 OTHER PUBLIC COMPANY DIRECTORSHIPS: None | Career Highlights Mr. Hedlund was named the President and Chief Executive Officer of Lincoln Electric effective January 2024. In his over 15-year career with Lincoln Electric, Mr. Hedlund has served in a variety of operational leadership roles, including the Chief Operating Officer from May 2022 to December 2023, the President, Americas and International Welding from October 2020 to May 2022, the President, International Welding from June 2017 to October 2020, the President, Global Automation and Vice President, Strategy and Business Development. Prior to Lincoln Electric, Mr. Hedlund held various executive leadership roles at Fortune Brands, Inc. and served as principal with the management consulting firm Booz Allen & Hamilton. | | | Key Qualifications, Experience and Skills • Mr. Hedlund’s extensive experience as an executive-level leader of our company brings to the Board knowledge and valuable insight as to our company’s global operations and a thorough understanding of our people, products, markets, and strategic direction. • With his diverse experience within our organization, Mr. Hedlund has an extensive understanding of our strategic, operational, and organizational initiatives to accelerate growth, improve margins and enhance returns on investment. • Valuable knowledge of key governance matters gained through executive leadership at Lincoln Electric. |
Director Nominees
| Michael F. Hilton Director since 2015 COMMITTEES: Compensation and Executive Development (Chair) Nominating and Corporate Governance AGE: 69 OTHER PUBLIC COMPANY DIRECTORSHIPS: Ryder Systems, Inc. (NYSE: R) since 2012 Regal Rexnord Corporation (NYSE: RBC) since 2019 Jeld-Wen (NYSE: JELD) since August 2023 Nordson Corporation (NASDAQ: NDSN) through 2019 | Career Highlights Mr. Hilton is the former President and Chief Executive Officer of Nordson Corporation, a company that engineers, manufactures and markets differentiated products and systems used for precision dispensing of adhesives, coatings, sealants, biomaterials, polymers, plastics and other materials, fluid management, test inspection, UV curing and plasma surface treatment, a position he held from 2010 until his retirement in 2019. During his tenure at Nordson Corporation, Mr. Hilton also served as a director. Mr. Hilton has been a member of the board of directors of Ryder Systems since 2012 and Regal Rexnord Corporation since 2019 and joined the board of directors of Jeld-Wen in August 2023. | | | Key Qualifications, Experience and Skills • With over 30 years of global manufacturing experience, Mr. Hilton brings to the Board an intimate understanding of management leadership, and provides valuable insights relative to strategy development, product line management, new product technology, talent development, distribution and other sales channels, business processes and global markets expertise. • The Board has determined that Mr. Hilton’s extensive accounting and financial experience qualifies him as an “audit committee financial expert.” • Valuable knowledge of key governance matters gained through his various directorships, including as a director of Lincoln Electric. |
Director Nominees
| 26 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Director Nominees
| Marc A. Howze Director since 2023 COMMITTEES: Compensation and Executive Development Finance AGE: 60 OTHER PUBLIC COMPANY DIRECTORSHIPS: Dover Corporation (NYSE: DOV) since November 2023 | Career Highlights Mr. Howze is the former Senior Advisor, Office of the Chairman, at Deere & Company, a global leader in the delivery of agricultural, turf, construction, and forestry equipment, a position he held from 2022 until his retirement in 2023. During his more than two-decade tenure at Deere, Mr. Howze held numerous leadership roles, including Group President, Lifecycle Solutions and Chief Administrative Officer from 2020 to 2022 and Senior Vice President and Chief Administrative Officer from 2016 to 2020. Mr. Howze also served as Vice President of Global Human Resources and Employee Communication, as well as Associate General Counsel and Corporate Secretary for the company. Prior to joining Deere, Mr. Howze served as an officer in the U.S. Army, attaining the rank of major. Mr. Howze has been a member of the board of directors of Nationwide Mutual Insurance Company since 2018 and joined the board of directors of Dover Corporation in November 2023. | | | Key Qualifications, Experience and Skills • As an accomplished, versatile, and highly collaborative senior executive of a global, publicly traded company engaged in manufacturing operations, Mr. Howze provides valuable insights across a range of matters, including corporate governance, strategic planning, and risk management. • Through leading a variety of globally diverse businesses and cross-functional teams, Mr. Howze provides valuable insights on manufacturing, supply management and logistics, and human resources. • Valuable knowledge of key governance matters, gained through executive leadership at Deere and through various directorships. |
Director Nominees
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 27 |
Director Nominees
| Kathryn Jo Lincoln Director since 1995 COMMITTEES: Compensation and Executive Development Nominating and Corporate Governance AGE: 69 OTHER PUBLIC COMPANY DIRECTORSHIPS: None | Career Highlights Ms. Lincoln has served as the Board Chair and Chief Investment Officer of the Lincoln Institute of Land Policy, an independent, global foundation focused on addressing significant policy issues through innovative land use and taxation methods, since 1996. As Chief Investment Officer, Ms. Lincoln manages and directs all aspects of the Institute’s endowment, including strategic asset allocation and policy development, which have contributed to its current $800 million asset base. In her role as Chair, she plays a crucial role in strategic direction and planning, with ongoing involvement in the development of education programs, demonstration projects and impact measurement. Ms. Lincoln is a member of the board of directors of HonorHealth Network and Claremont Lincoln University, and she is also the Co-Chair of the International Center for Land Policy Studies and Training in Taiwan and was appointed as a director for The Hope Effect, a non-profit entity. | | | Key Qualifications, Experience and Skills • With extensive leadership experience and global mindset, Ms. Lincoln brings robust experience related to strategic planning, asset allocation matters and corporate governance, and as a Lincoln family member and long-standing director of the company, Ms. Lincoln has a keen sense of knowledge about Lincoln Electric, its culture, and its founding principles. • As the world focuses increasingly on sustainability and environmental issues, Ms. Lincoln’s knowledge and experience in these areas bring valuable insights to the Board, and she demonstrates a lasting commitment to board and corporate governance excellence, being named as a Board Leadership Fellow of the National Association of Corporate Director, and as one of 2019’s most influential corporate directors by WomenInc. • Valuable knowledge of key governance matters gained through her various directorships, including as a director of Lincoln Electric. |
Director Nominees
| 28 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Director Nominees
| Christopher L. Mapes Director since 2010 Chair since 2013 COMMITTEES: None AGE: 62 OTHER PUBLIC COMPANY DIRECTORSHIPS: The Timken Company (NYSE: TKR) since 2014 A.O. Smith (NYSE: AOS) since 2023 Nordson Corporation (NASDAQ): NDSN since January 2024 | Career Highlights Mr. Mapes is the current Executive Chair of Lincoln Electric, a position he has held since January 2024. Prior to his retirement, Mr. Mapes served as the Chair, President and Chief Executive Officer of Lincoln Electric from December 2013 to December 2023, and as President and Chief Executive Officer from December 2012 to December 2013. From September 2011 to December 2012, Mr. Mapes served as the Chief Operating Officer. From 2004 to August 2011, Mr. Mapes served as an Executive Vice President of A.O. Smith Corporation, a global manufacturer with a water heading and water treatment technologies business, which has residential, commercial, industrial and consumer applications, and the President of its former Electrical Products unit. Mr. Mapes started his career with General Motors and has held various roles in industrial manufacturing for over 35 years. Mr. Mapes has served as a director of The Timken Company since 2014 and A.O. Smith since 2023 and joined the board of directors of Nordson in January 2024. | | | Key Qualifications, Experience and Skills • As the current Chair, and former President and Chief Executive Officer of Lincoln Electric, Mr. Mapes provides valuable insights across a range of matters, including strategic planning, risk management, corporate governance, and organizational culture. • Mr. Mapes has a keen understanding of the manufacturing industry, and the challenges organizations face growing globally. • Valuable knowledge of key governance matters, including sustainability matters, gained as a director of Lincoln Electric, and his various other directorships. |
Director Nominees
| Phillip J. Mason Director since 2013 COMMITTEES: Compensation and Executive Development Finance (Chair) AGE: 73 OTHER PUBLIC COMPANY DIRECTORSHIPS: GCP Applied Technologies (NYSE: GCP) through 2020 | Career Highlights Mr. Mason is the former President of the Europe, Middle East & Africa Sector (EMEA Sector) of Ecolab, Inc., a leading provider of food safety, public health and infection prevention products and services, a position he held from 2010 until his retirement in 2012. Prior to leading Ecolab’s EMEA Sector, Mr. Mason had responsibility for Ecolab’s Asia Pacific and Latin America businesses as President of Ecolab’s International Sector from 2005 to 2010 and as Senior Vice President, Strategic Planning in 2004. In addition, Mr. Mason has public company board experience, previously serving as a director of GCP Applied Technologies from 2016 to May 2020. | | | Key Qualifications, Experience and Skills • With broad executive leadership experience in an international business unit for a large publicly traded company, Mr. Mason brings to the board extensive insight on international business operations, business-to-business and industrial sector matters, strategic planning, and M&A and integration matters. • Leading international business units has provided Mr. Mason with a depth of experience starting, developing, and growing businesses abroad, in both mature and emerging markets. • Valuable knowledge of key governance matters gained through various directorships, including as a director of Lincoln Electric. |
Director Nominees
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 29 |
Director Nominees
| Ben P. Patel Director since 2018 COMMITTEES: Audit Finance Nominating and Corporate Governance AGE: 56 OTHER PUBLIC COMPANY DIRECTORSHIPS: None | Career Highlights Dr. Patel has served as the Chief Innovation and Science Officer at WestRock Company, a global manufacturer of innovative, sustainable, fiber-based packaging solutions for the consumer and corrugated packaging markets since April 2023. In this role, Dr. Patel leads WestRock’s research and development efforts, and helps to drive innovation to enhance current products and develop new sustainable packaging solutions. Prior to joining WestRock, he served as Senior Vice President, Chief Technology Officer of Cooper Tire & Rubber Company, a global manufacturer of specialized passenger car, light truck, medium truck, motorcycle, and racing tires from November 2019 until July 2021, and as Senior Vice President and Chief Technology Officer of Tenneco, Inc., a manufacturer of automotive emission control and ride control products and systems from 2011 until 2019. During his tenure at Tenneco, he held roles leading regional advanced technology development and establishing a global research and development organization. Prior to joining Tenneco, Dr. Patel held numerous positions with increasing responsibility, including senior scientist, at the General Electric Company during his thirteen-year tenure with the organization. | | | Key Qualifications, Experience and Skills • With over 20 years of experience serving with publicly traded, global products and technology companies, Dr. Patel brings to the board broad expertise in material scient, automation and “smart” systems, as well as extensive research and development experience and insights on sustainability matters. • Dr. Patel has been a leader in global innovation and research initiatives, which lends tremendous support to our focus on being an innovation leader in our industry and our advanced manufacturing growth strategy, which helps customers identify value and efficiencies in their welding and cutting operations. • Valuable knowledge of key governance matters gained as a director of Lincoln Electric. |
Director Nominees
| 30 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Director Nominees
| Kellye L. Walker Director since 2020 COMMITTEES: Compensation and Executive Development Nominating and Corporate Governance (Chair) AGE: 57 OTHER PUBLIC COMPANY DIRECTORSHIPS: None | Career Highlights Ms. Walker has served as the Executive Vice President and Chief Legal Officer of Eastman Chemical Company, an advanced materials and specialty additives manufacturer since April 2020. In this role, Ms. Walker has overall leadership and responsibility for Eastman’s legal organization. She also served as Executive Vice President and Chief Legal Officer of Huntington Ingalls Industries, Inc., America’s largest military shipbuilder, from 2015 to 2020. Prior to joining Huntington Ingalls, Ms. Walker served as Senior Vice President, General Counsel and Secretary at American Water Works Company, Inc. Ms. Walker is a member of the board of directors of T. Rowe Price Funds, a position she has held since October 2021. | | | Key Qualifications, Experience and Skills • As a seasoned senior executive with over 25 years of experience with publicly traded companies, Ms. Walker provides valuable insights on increasing organizational value through forward thinking and strategic discipline, focusing on continuous improvement, and has extensive experience in corporate governance, compliance, litigation management, government affairs, strategy development, product stewardship, regulatory affairs, and health, safety, environment, and security matters. • In her executive leadership, Ms. Walker has also served as Chief Administrative Officer, leading human resources, information technology, government affairs and corporate communications functions. • Valuable knowledge of key governance matters gained through executive experience and as a director of Lincoln Electric. |
Retiring Director
Retiring Director
Retiring Director
| Hellene S. Runtagh Director since 2001 COMMITTEES: Compensation and Executive Development Nominating and Corporate Governance AGE: 75 OTHER PUBLIC COMPANY DIRECTORSHIPS: None | Career Highlights Ms. Runtagh is the former President and Chief Executive Officer of the Berwind Group, a diversified pharmaceutical services, industrial manufacturing and real estate company, a position she held in 2001. From 1997 to 2001, Ms. Runtagh was Executive Vice President of Universal Studios, a media and entertainment company. Prior to joining Universal Studios, Ms. Runtagh spent 27 years at General Electric Company, a diversified industrial company, in a variety of leadership positions. In addition, Ms. Runtagh has extensive board experience, previously serving as a director of Harman International Industries from 2008 to 2017, NeuStar, Inc. from 2006 to 2017, and several other publicly traded companies. | | | Key Qualifications, Experience and Skills • With over 30 years of executive level experience with technology focused global companies, Ms. Runtagh provides valuable insights on a range of matters, including marketing and sales, finance, engineering, and manufacturing. • Ms. Runtagh provides valuable insights on corporate governance matters, through her diverse management experience and extensive experience as a director of publicly traded companies. • Valuable knowledge of key governance matters gained as a director of Lincoln Electric and several other publicly traded companies. |
Retiring Director
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 31 |
Corporate Governance
Corporate Governance
Governance Framework
Governance Framework We are committed to effective corporate governance and high ethical standards. We adhere to our ethical commitments in every aspect of our business, including our commitments to each other, in the marketplace and in the global, governmental and political arenas. These commitments are spelled out in our Code of Conduct, which applies to all of our employees (including our CEO and our other NEOs) and Directors. We encourage you to visit our website at www.lincolnelectric.com, where you can find detailed information about our corporate governance programs/policies including:
Governance Framework
| • | Code of Conduct |
Governance Framework
| • | Governance Guidelines |
Governance Framework
| • | Charters for our Board Committees |
Governance Framework
| • | Director Independence Standards |
Corporate Governance Highlights
Corporate Governance Highlights
Board of Directors
Board of Directors
Board of Directors
| • | Our Board held five meetings in 2023 |
Board of Directors
| • | During 2023, each of our Directors attended at least 75% of the total full Board meetings and meetings of committees on which he or she served during the time he or she served as a Director |
Board of Directors
| • | Size of Board: 12 members in 2024 |
Board of Directors
| • | Plurality vote with director resignation policy for failures to receive a majority vote in uncontested director elections |
Board of Directors
| • | Lead Independent Director |
Board of Directors
| • | All Directors are expected to attend the Annual Meeting |
Our Board of Directors
Our Board of Directors Our Board oversees management of the long-term interest of Lincoln Electric and our stakeholders. The Board’s major responsibilities include:
Our Board of Directors
| • | Overseeing the conduct of our business |
Our Board of Directors
| • | Reviewing and approving key financial objectives, strategic and operating plans and other significant actions |
Our Board of Directors
| • | Evaluating CEO and senior management performance and determining executive compensation |
Our Board of Directors
| • | Planning for CEO succession and monitoring management’s succession planning for other key executives |
Our Board of Directors
| • | Establishing an appropriate governance structure, including appropriate Board composition and succession planning |
Our Board of Directors
| • | Overseeing enterprise risk management and cybersecurity |
Our Board of Directors
| • | Overseeing the ethics and compliance program |
Our Board of Directors
| • | Overseeing ESG and D&I matters |
Director Compensation
Director Compensation
2023 Director Compensation Table
2023 Director Compensation Table
2023 Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | Total ($) | | Brian D. Chambers | 85,000(3) | 154,996 | 9(4) | 240,005 | | Curtis E. Espeland | 113,000 | 154,996 | 0 | 267,996 | | Bonnie J. Fetch(2) | 37,880 | 210,446 | 0 | 248,327 | | Patrick P. Goris | 105,000(3) | 154,996 | 3,448(4) | 263,444 | | Michael F. Hilton | 100,000 | 154,996 | 173(4) | 255,169 | | Marc A. Howze(2) | 17,323(3) | 175,139 | 0 | 192,462 | | Kathryn Jo Lincoln | 85,000(3) | 154,996 | 152(4) | 240,148 | | Phillip J. Mason | 100,000 | 154,996 | 0 | 254,996 | | Ben P. Patel | 85,000 | 154,996 | 152(4) | 240,148 | | Hellene S. Runtagh | 92,500 | 154,996 | 0 | 247,496 | | Kellye L. Walker | 92,500 | 154,996 | 0 | 247,496 |
2023 Director Compensation Table
| 1 | On December 7, 2023, 757 RSUs were granted to each then-serving non-employee Director under our 2023 Stock Plan for Non-Employee Directors. For Ms. Fetch, 264 RSUs were also granted to her in July 2023 upon her initial appointment to the Board. For Mr. Howze, 107 RSUs were also granted to him in October 2023 upon his initial appointment to the Board. |
2023 Director Compensation Table
| The Stock Awards column represents the grant date fair value under FASB Accounting Standards Codification (ASC) Topic No. 718 based on a closing price of $204.75 per share on December 7, 2023, and, with respect to the award granted to Ms. Fetch, a closing price of $210.04 per share on July 20, 2023, and for Mr. Howze, a closing price of $188.25 per share on October 17, 2023. Assumptions used in the calculation of these amounts are included in footnote 10 to our audited financial statements for the fiscal year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024. |
2023 Director Compensation Table
| As of December 31, 2023, the number of RSUs held by each non-employee Director was 757, except for Ms. Fetch, who held 1,021 RSUs and Mr. Howze who held 864 RSUs. Each of Messrs. Chambers, Goris, Hilton, Howze, and Patel and Mses. Fetch, Lincoln and Walker elected to defer receipt of the RSUs that were granted in 2023 under our Non- Employee Directors’ Deferred Compensation Plan. |
2023 Director Compensation Table
| 2 | Ms. Fetch was appointed to the Board on July 20, 2023 and Mr. Howze was appointed to the Board on October 17, 2023. |
2023 Director Compensation Table
| 3 | All of Messrs. Chambers’, Goris’, and Howze’s, and Ms. Lincoln’s Board fees were deferred under our Non-Employee Directors’ Deferred Compensation Plan. |
2023 Director Compensation Table
| 4 | The amount shown for 2023 represents above-market non-qualified deferred compensation earnings calculated as the difference in earnings under the Moody’s Corporate Bond Index fund in our Non-Employee Directors’ Deferred Compensation Plan and a hypothetical rate. |
2023 Director Compensation Table
| 48 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Executive Summary
| Align Interests | Incentivize Management | Support Long-Term Strategy | | Align the interests of management (and employees) with long-term interests of our shareholders and other stakeholders | Design compensation elements to incentivize management to deliver above-market financial results | Define performance drivers which support key financial and strategic business objectives | | Good Governance Practices | Retention & Succession Planning | Pay for Performance | | Help ensure we are following good governance practices in the design and operation of our executive compensation program, including consideration of the risks associated with those practices | Reinforce executive retention to enable achievement of annual and long-term business goals through a stable management team | Link incentive-based compensation to the company’s short-term and long-term financial and operational performance |
Key Financial Performance
Key Financial Performance We have a strong track record of delivering increased value to our shareholders and we have typically delivered above-market performance across various financial metrics over many economic cycles. Our long-term strategy seeks to achieve profitable sales growth both organically and through acquisitions by emphasizing value-added solutions and differentiated technologies. We anticipate this strategy will yield improved profit margins and returns and will generate best-in-class financial performance measured against our peer group. In 2023, we achieved record performance across key financial metrics including sales, adjusted operating income margin, adjusted earnings per share, cash flow from operations, and our adjusted return on invested capital. By focusing on employee safety and training, operational excellence, diligent cost management, and a “customer-first” approach, we executed well and advanced towards our 2025 Strategy goals. 2023 Net sales increased 11.4% to a record $4.2 billion. Organic sales increased 4.0% from 2.3% higher volumes and a 1.7% increase in price. We achieved organic growth across all regions and in our three product categories, led by equipment and automation, reflecting strong capital spending to support customers’ growth initiatives and need for increased productivity. Acquisitions contributed 7.4% of sales growth, primarily from our 2022 Fori Automation LLC acquisition. Strong momentum in automation demand from both our legacy automation portfolio and from acquisitions resulted in record automation portfolio sales of $941 million in 2023. Our performance in automation positions us well to exceed our $1 billion automation sales objective ahead of our 2025 target. We also remained focused on innovation to drive long-term growth. In 2023, we launched over 50 new product families, including Velion™, our new DC fast charger for electric vehicles. This innovation among a strong pipeline of product development in our core welding and cutting offerings, resulted in a 57% vitality index mix of our standard equipment sales. Our industry segment teams were also highly engaged with customers to ensure Lincoln Electric has the leading solutions to support their current and planned energy and civil infrastructure investments, as well as platform expansions to support long-term electrification transition in the transportation sector. These efforts have positioned the organization with a strong growth profile within our core portfolio and have developed emerging growth opportunities in close adjacencies such as our additive 3D printing solution and our newly developed Velion™ DC fast charger. Operationally, we continued to optimize business processes in our global automation portfolio and in The Harris Products Group segment. These initiatives, as well as an enterprise-wide focus on diligent cost management, shared services, and continuous improvement programs focused on safety, enhanced productivity, and resource conservation, resulted in a record 17.1% operating income margin with a 20% adjusted operating income incremental margin. This marked the first year that all three reportable segments achieved profit margin performance within their 2025 Strategy target ranges – helping to advance us within our long-term targets. Net income increased 16% to a record $545.2 million in 2023, and 13% to $547.9 million on an adjusted basis. Earnings per share increased 17% to a record $9.37, and 14% to a record $9.41 on an adjusted basis. We achieved a 74% increase in Cash flows from operations to a record $668 million with a 105% cash conversion ratio, reflecting increased profitability and working capital efficiencies as we began to normalize inventory levels. This was demonstrated in the 380-basis point improvement in our average operating working capital to sales performance to 17.1%. This top quartile performance versus our peer group accelerates our progress towards our 2025 target of 15.0%. We also reported record Return on invested capital (ROIC) and Adjusted ROIC at 24.0% and 24.1%, respectively – demonstrating the effectiveness of our 2025 Strategy and our disciplined capital allocation approach.
Financial Measures Used for Compensation Purposes
| Short-Term Metrics: | Long-Term Metrics: | | Adjusted Revenue for Compensation Purposes (Adjusted Revenue(1)), weighted at 25% | Growth of Adjusted Net Income for Compensation Purposes (over a three-year cycle), weighted at 50% | | Adjusted earnings before interest, taxes, and bonus (EBITB), weighted at 50% | Three-year Average Return on Invested Capital (ROIC) for Compensation Purposes indexed to peer performance, weighted at 50% | | Average operating working capital to net sales ratio (AOWC/Sales) for Compensation Purposes, weighted at 25% | |
Short-Term Compensation Program Financial Metric Performance
Short-Term Compensation Program Financial Metric Performance The following charts demonstrate our performance over the last three years in financial metrics incorporated in our short-term compensation program.
Short-Term Compensation Program Financial Metric Performance
| 1 | Excluding special items where applicable. Definitions and reconciliation of non-GAAP results to our most closely comparable GAAP results are included in Appendix A. |
Short-Term Compensation Program Financial Metric Performance
| 2 | See Appendix A for definitions. |
Long-Term Compensation Program Financial Metric Performance
Long-Term Compensation Program Financial Metric Performance The following charts demonstrate our performance over the last three years relative to the financial metrics incorporated into our long-term compensation program: Adjusted Net Income for Compensation Purposes and ROIC for Compensation Purposes. The results for ROIC for Compensation Purposes are compared to our peer group, the S&P 400 Midcap Index (S&P 400), in which we participate, and the S&P 400 Midcap Manufacturing Index. The ROIC for Compensation Purposes percentile rankings show the position of our financial results compared to the particular group, with a 50th percentile ranking indicating median (or market) performance. Percentiles below the 50th indicate below-market performance, while percentiles above the 50th indicate above-market performance. Information is based on the most recently available public information (as accumulated by an independent third party), as of January 2024 when the analysis was performed. In our long-term incentive plan design, ROIC for Compensation Purposes is a relative measure and payout is determined based on our average performance over 3-years as compared to our peers.
Long-Term Compensation Program Financial Metric Performance
| 1 | Excluding certain items as approved by the Compensation and Executive Development Committee where applicable. See discussion and definitions on page A-1 in the Performance Shares Financial Metrics section and in Appendix A. |
Long-Term Compensation Program Financial Metric Performance
| 2 | As of September 30, 2023. |
Long-Term Compensation Program Financial Metric Performance
| 56 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Pay for Performance, Objectives and Process
| • | Annual bonus (EMIP); |
Pay for Performance, Objectives and Process
| • | The value of restricted stock units (RSUs) granted (based on the closing price of our common stock as of the grant date); |
Pay for Performance, Objectives and Process
| • | The value at target of performance shares granted (based on the closing price of our common stock as of the grant date); |
Pay for Performance, Objectives and Process
| • | The value of stock options granted (based on the ISS Black-Scholes pricing model as of the grant date); |
Pay for Performance, Objectives and Process
| • | Actual nonqualified deferred compensation earnings; and |
Role of The Committee
| Compensation-Related Tasks | Organizational Tasks | | Reviews, approves and administers all of our executive compensation plans, including our equity plans | Evaluates the performance of the CEO, including consideration of tone and embodiment of core values, with input from all non-employee Directors | | Establishes performance objectives under our short-term and long-term incentive compensation programs(1) | Reviews the performance capabilities of the other executive officers, including consideration of tone and embodiment of core values, based on input from the CEO | | Determines the attainment of performance objectives and the awards to be made to our executive officers under our short-term and long-term incentive compensation programs(1) | Reviews succession planning for officer positions, including the position of the CEO | | Determines the compensation for our executive officers, including base pay and short-term and long-term incentive compensation opportunities(1) | Reviews proposed organization or responsibility changes at the officer level | | Reviews compensation practices relating to key employees to confirm that these practices remain equitable and competitive | Reviews our practices for the recruitment and development of a diverse talent pool | | Reviews employee benefit plans that relate to executive officers and/ or key employees | Retains the services of independent legal counsel from time to time to provide input on various matters |
WILLIS TOWERS WATSON
| • | Independent executive compensation consultant for the Committee |
WILLIS TOWERS WATSON
| • | Advises on matters including competitive compensation analysis, executive compensation trends and plan design, peer group company configuration, competitive financial performance and financial target setting |
WILLIS TOWERS WATSON
| • | Performs data analysis on competitive compensation, competitive financial performance and financial target setting |
WILLIS TOWERS WATSON
| • | Considering all relevant factors (as required by compensation consultant independence standards set forth in applicable SEC rules and Nasdaq listing standards), we have assessed WTW’s independence, and are not aware of any conflict of interest that has been raised by the work performed by WTW |
Market Comparison Data
Market Comparison Data We collect competitive market compensation data from multiple nationally published surveys and from proxy data for a peer group of companies. Nationally published survey market compensation data is statistically determined (through regression analysis) to approximate our revenue size and aged to approximate more current data. The Company did not select the companies that comprise any of these survey groups. The Company generally blends 50% survey and 50% peer data for benchmarking executive compensation for our NEOs.
Peer Group
Peer Group We use a peer group of publicly traded industrial companies that are headquartered in the U.S. that serve a number of different market segments and that have significant foreign operations. These are companies with which Lincoln Electric competes for talent and shareholder investment. In addition, we only select companies with solid historical financial results (removing companies from the peer group when their financial performance has consistently fallen below a reasonable level) and companies with sales that are within 2.5 times that of Lincoln Electric sales. The Committee conducts an annual review of our peer group, with the assistance of WTW as an independent advisor. In July 2022, the Committee modified its peer group to be used for 2023 compensation matters, by including ESAB Corporation, the industrial business which was spun-off from Colfax Corporation (now Enovis Corporation). For 2023, our peer group consisted of the following 18 publicly traded industrial corporations:
Peer Group
| Ametek Inc. | Flowserve Corporation | Nordson Corporation | The Toro Company | | Carlisle Companies Inc. | Graco Inc. | Regal Rexnord Corporation | Woodward Inc. | | ESAB Corporation | IDEX Corporation | Snap-On, Inc. | Xylem Corporation | | Crane Co. | ITT Inc. | Terex Corporation | | | Donaldson Company, Inc. | Kennametal Inc | The Timken Company | |
Peer Group
In July 2023, the Committee reviewed its peer group and determined no changes were needed for the 2024 compensation planning cycle.
Peer Group
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 63 |
Executive Compensation Structure
| Business Needs | Individual Performance | Pay for Performance Review | | • Independent compensation consultant (WTW) provides information about emerging trends in executive compensation, along with Committee members’ own reading and study | • Individual performance is a significant factor in determining annual changes (up or down) to pay components | • The Committee conducts an annual assessment of our financial performance and pay for performance, in determining whether changes will be made to the existing philosophy or structure and before setting compensation levels for the upcoming year | | • Trends considered in light of our compensation philosophies and various business needs | • Annual bonus (the Executive Management Incentive Plan, or EMIP) includes an individual performance component in determining the percentage of target bonus to be paid (described below) | • The annual assessments are used to evaluate whether executive compensation is properly aligned with our financial performance | | • Business needs that are evaluated can include: talent attraction or retention strategies, growth expectations, strategic programs, cost-containment initiatives, management development needs and our company culture | • Individual performance is generally measured against how well an executive demonstrates proficiency in key leadership competencies, as well as the executive’s achievement against objectives established for him or her at the beginning of the year | | | • No single factor guides whether changes will be made, as the Committee uses a holistic approach, considering a variety of factors | • The Committee reviews the overall performance of each NEO during the year and assigns Individual Performance Factors | |
Executive Compensation Structure
| Prior Year Fourth Quarter | | Current Year First Quarter | | Throughout Current Year | | • Committee reviews our compensation program and philosophy, including determining if our compensation levels are competitive with our peer group and if any changes should be made to the program for the next year | | • Committee determines the individual performance goals of the CEO (with Board approval) and sets the performance goals for each corporate-based (financial) component for the current year | | • Committee meets regularly throughout the year, with management and in executive session | | • Committee determines the principal components of compensation for the NEOs for the next year | | • CEO sets individual performance goals for the current year for each of the other NEOs, which are reviewed by the Committee | | • Ongoing review of Company performance against performance goals | | • Compensation consultant (WTW) provides a competitive market assessment of pay levels for the executive officers, including the NEOs | | • Individual performance goals of CEO and the other NEOs are designed to drive our corporate goals and our 2025 Strategy | | | | | | • Base pay, annual bonus targets and long-term incentive awards are set at a regularly scheduled Committee meeting | | | | | | • Payout amounts for the annual bonus (EMIP) and Performance Shares earned as of the end of the prior year are determined at the first available Committee meeting (normally in February) or a subsequent special meeting (normally in March), once financial results are available | | |
2023 and 2024 Base Pay
For 2023, Mr. Mapes base pay increased 4.0%. Mr. Hedlund received an 8.0% base pay increase, which was to continue to progress compensation within the competitive benchmark for his recently promoted role in 2022. In August 2023, in connection with the announced CEO transition plan, the Committee approved a further increase for Mr. Hedlund in connection with his pending appointment as President and Chief Executive Officer, establishing his new base salary at $1,010,000, which would remain his base salary for 2024. Mr. Bruno and Ms. Ansberry received an 8.0% and 8.2% base pay increase, respectively, which was to progress compensation and remain competitive within the benchmarks for their roles. Ms. Kuhrt’s base compensation increased 3.0% from her base pay received in 2022. The base pay for the NEOs falls within the competitive benchmark and the NEOs remain, on average, slightly below the 45th percentile for base compensation. For 2024, Mr. Mapes base compensation was reduced to $553,800 for his role as Executive Chair. Mr. Hedlund’s base compensation was approved in August 2023 as discussed above. Mr. Bruno and Ms. Ansberry received 7.4% and 7.9% base pay increase, respectively, which was to progress compensation and remain competitive within the benchmarks for their roles. Ms. Kuhrt’s base compensation increased 3.8% from her 2023 compensation. The base pay for the NEOs falls within the competitive benchmark and the NEOs remain, on average, slightly below the 45th percentile for base compensation.
Annual Bonus (EMIP) and Total Cash Compensation
Annual Bonus (EMIP) and Total Cash Compensation The EMIP provides executive officers, including the NEOs, with an opportunity to receive an annual cash bonus. We believe that, given base pay is below market, annual cash bonus opportunities should be above average to balance some of the risk associated with greater variable compensation. However, we also believe that above-market pay should be linked to financial and individual performance. Therefore, we target total cash compensation (base pay and target annual bonus) at the 65th percentile of the market, but use a structure that provides payments of above-average bonuses only where the performance of the consolidated company and the performance of an NEO’s particular segment or business unit, warrant it. We also consider the impact of an officer’s individual performance during the year.
Annual Bonus (EMIP) Formula
Annual Bonus (EMIP) Formula With respect to 2023, the formula to determine each NEOs annual bonus (EMIP Bonus Payout) multiplies an individual’s Target Bonus Amount by the Financial Performance Factor and the Individual Performance Factor. The Financial Performance Factor considers the financial performance of specific financial metrics of the consolidated Company and for operations roles, the segment or business units they support. If the financial performance target is not met on any specific financial metric, the EMIP Bonus Payout will be reduced, with the potential that no bonus will be paid if performance across all metrics is below threshold. If financial performance exceeds expectations on any of the specific financial metrics, the percentage of annual bonus paid can be above the Target Bonus Amount. Once financial performance is calculated, an Individual Performance Factor is considered to determine the final EMIP Bonus Payout. The maximum EMIP Bonus Payout, considering financial and individual performance, will not exceed 200% of an individual’s annual Target Bonus Amount.
2023 Emip Bonus Calculation
2023 Emip Bonus Calculation The Committee has discretion to approve EMIP payments outside of the strict application of this calculation, although no discretion was used for calculation of the 2023 annual bonuses. EMIP payout determinations for the 2023 performance period were made in the first quarter of 2024.
Annual Bonus (EMIP) Financial Metrics
Annual Bonus (EMIP) Financial Metrics A portion of the EMIP Financial Performance Factor is based upon achievement of company consolidated financial performance against budget and another portion may be attributable to segment financial performance against budget, depending upon the individual’s scope of responsibility. By varying the financial metrics used based upon areas of responsibility, it is possible that certain participants will receive a higher percentage of target bonus while others will receive a lower percentage of target where the segment performance for one participant is better than the segment performance for the other. This is a key component of our pay for performance and incentive-based philosophies. In 2023 each of our NEOs’ Financial Performance Factor was based on the Company’s Consolidated results. The Financial Performance factor calculation utilizes the achievement results of three metrics weighted as follows:
Annual Bonus (EMIP) Financial Metrics
| • | 25% Adjusted Revenue for Compensation Purposes (Adjusted Revenue); |
Annual Bonus (EMIP) Financial Metrics
| • | 50% Adjusted EBITB; and |
Annual Bonus (EMIP) Financial Metrics
| • | 25% AOWC/Sales for Compensation Purposes. |
Annual Bonus (EMIP) Financial Metrics
Actual results are measured against budget at budgeted exchange rates and adjusted for the results of businesses acquired during the year. Budgets are set aggressively (based on the local and global economic climate), at the beginning of the year, are reviewed by the Finance Committee and are approved by the full Board. For 2023 a price collar was
Annual Bonus (EMIP) Financial Metrics
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 67 |
Annual Bonus (EMIP) Financial Metrics
embedded in the budgeted goals that restricts the impact of pricing on Adjusted Revenue results. For 2023, Management was responsible for +/-2% on pricing that impacted actual revenue results as compared to pricing in the budget. Each financial metric is calculated and interpolated on a financial payout curve to determine the Financial Performance Factor. The financial payout curves, considering threshold and maximum opportunities, are set at the beginning of the year and are approved by the Committee. The following table illustrates the opportunity for achievement of the Financial Performance Factor based on actual performance against target across each financial metric and the 2023 target amounts set during the budget process.
Annual Bonus (EMIP) Financial Metrics
| | | Achievement of Actual Results vs. Budget | | | 2023 Target (Budget) | | Financial Metric | Weightings | Threshold | Target (Budget) | Maximum | Lincoln Electric Holdings | | Adjusted Revenue | 25% | 93% | 100% | 105% | $4.167 billion | | EBITB | 50% | 80% | 100% | 115% | $857 million | | AOWC to Sales | 25% | 85% | 100% | 110% | 22.3% | | Financial Payout Curves | | 50% | 100% | 200% | |
Annual Bonus (EMIP) Individual Performance Goals
Annual Bonus (EMIP) Individual Performance Goals Individual performance goals are set annually. A significant portion of our executive officers’ individual performance goals is tied to one or more aspects of our 2025 Strategy. The following table highlights the material 2023 individual performance goals for our CEO. The Committee chair, supported by the Lead Independent Director, leads the review and evaluation process to establish the CEO’s performance goals for each year, which were approved by the Board at the beginning of 2023. These 2023 performance goals were cascaded throughout the organization and many are also in the individual performance goals for our other NEOs.
Annual Bonus (EMIP) Individual Performance Goals
| Individual Performance Goals | CEO | | Execution of the 2025 Strategy | | | Human capital management, including D&I, employee engagement and development initiatives | | | Cybersecurity and enterprise risk management | | | Sustainability, including environmental, health and safety metrics | | | Financial and operating targets | | | Operational optimization and expansion, and M&A integration | | | Commence development of new long-term strategy | |
Annual Bonus (EMIP) Individual Performance Goals
In defining the individual performance goals, the Committee considered the goals to be strategically important to the Company and its 2025 Strategy. The goals for 2023 were particularly aimed at operational optimization and M&A integration, employee engagement, D&I, cybersecurity and achieving our EHS and Sustainability metrics. The CEO’s individual performance rating is determined based on an evaluation of performance against the underlying goals with the final rating being approved by the independent Directors of the Board. In assessing the individual performance of our NEOs, the Committee reviews the performance rating recommended by the CEO with respect to each of the other NEOs and recommends revisions, as needed, prior to the Committee approval of such rating.
Annual Bonus (EMIP) Individual Performance Goals
| 68 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
2023 Annual Bonus (EMIP) and Total Cash Compensation
2023 Annual Bonus (EMIP) and Total Cash Compensation The 2023 EMIP annual bonus targets for the NEOs were established and approved by the Committee in February 2023 according to the principles discussed above. As established at the beginning of 2023, Mr. Hedlund, Mr. Bruno and Ms. Ansberry received an 8.6%, 16.1% and 28.7% target bonus increase, respectively, which was to continue to progress target compensation within the competitive benchmark for their roles. In August 2023, in connection with the announced CEO transition plan, the Committee approved a further increase for Mr. Hedlund in connection with his pending appointment as President and Chief Executive Officer, establishing his new target bonus at $1,464,500 effective August 1, 2023, which would remain his target bonus for 2024. Mr. Mapes’ 2023 target bonus increased 4.0% while Ms. Kuhrt’s 2023 target bonus remained flat. The bonus targets fall within the competitive benchmark and the NEOs remain, on average, at the 65th percentile on targeted total cash compensation. In approving the 2023 EMIP payouts, the Committee assessed our Adjusted Revenue for Compensation Purposes performance, EBITB performance and AOWC/Sales for Compensation Purposes performance against budget for consolidated and segments, as applicable. On average, 2023 EMIP payments for the NEOs were 170% above their 2023 target amounts, driven primarily by strong EBITB performance and achievement of individual objectives. The following table illustrates actual results versus budget and the interpolated Financial Performance Factor for each financial metric to arrive at the Weighted Financial Payout Factor that drives actual bonus payouts.
2023 Annual Bonus (EMIP) and Total Cash Compensation
| | Lincoln Electric Holdings | | | | | | Actual vs. Budget | Interpolated Financial Performance Factor | Weighting | Weighted Financial Payout factor | | Adjusted Revenue | 100.1% | 101.2% | 25% | | | Adjusted EBITB | 107.6% | 150.7% | 50% | 135.1% | | AOWC/Sales | 103.8% | 138.0% | 25% | |
2023 Annual Bonus (EMIP) and Total Cash Compensation
Note: The Adjusted EBITB performance results were adjusted for the same types of special items that impact Adjusted Operating Income and Adjusted Net Income as disclosed in Appendix A. The actual bonus payout to the NEO’s considers the impact of individual performance. The Committee assessed the performance of each NEO against their Individual Performance Goals and assigned a rating that impacts the annual bonus calculation as illustrated above. For the current year, individual performance ratings for the annual bonus for officers ranged from 100 to 128.
2023 Annual Bonus (EMIP) and Total Cash Compensation
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 69 |
2023 Annual Bonus (EMIP) and Total Cash Compensation
The following chart illustrates the actual calculated bonus considering both the financial and individual performance. On average, 2023 EMIP payments for the NEOs, excluding Mr. Hedlund, were 2% higher than the 2022 EMIP payments, driven by record financial performance.
2023 Annual Bonus (EMIP) and Total Cash Compensation
| NEO | Target Award Opportunity | Target Award Opportunity as a % of 2023 Base Salary | Maximum Award Opportunity Based on Matrix | Actual Award | Actual Award as a % of Target | | Christopher L. Mapes | $1,606,000 | 145% | $3,212,000 | $2,777,943 | 173% | | Gabriel Bruno | $566,000 | 105% | $1,132,000 | $979,026 | 173% | | Steven B. Hedlund | $1,093,064 | 137% | $2,186,128 | $1,890,704 | 173% | | Jennifer I. Ansberry | $440,000 | 94% | $880,000 | $731,351 | 166% | | Michele R. Kuhrt | $415,000 | 92% | $830,000 | $689,797 | 166% |
2024 Annual Bonus (EMIP) and Total Cash Compensation
2024 Annual Bonus (EMIP) and Total Cash Compensation The 2024 EMIP target award for Mr. Mapes was reduced to $803,000 for his role as Executive Chair. Mr. Hedlund’s 2024 EMIP target award was increased to $1,464,500 in August of 2023 as previously discussed. The 2024 EMIP targets for the remaining NEO’s were approved in the first quarter of 2024 and were established by the Committee in consultation with WTW, based on our compensation philosophies as well as competitive market data as discussed above. On average, the remaining NEO’s target award increased 3.2% for 2024. The bonus targets fall within the competitive benchmark and the NEOs are on average at the 65th percentile on targeted total cash compensation.
Long-Term Incentive Compensation
Long-Term Incentive Compensation We believe that long-term incentive compensation should be provided to focus rewards on factors that deliver long-term sustainability and should be established at the median (or 50th percentile) of the market. We have targeted the median of the market, in keeping with our pay for performance philosophy, because we believe that superior long-term financial growth itself should be the main driver of above-market long-term incentive compensation. For 2023, our long-term incentive compensation program consists of three components: (1) stock options, (2) RSUs and (3) Performance Shares. The value of each is weighted equally. This provides an even balance with respect to the different attributes and timing associated with each type of award. Annual awards of all three components are made to EMIP participants, including the NEOs.
Long-Term Incentive Compensation
| 70 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Long-Term Incentive Compensation
The following is a summary of the three components of our long-term incentive compensation program as in effect for 2023:
Long-Term Incentive Compensation
| | Standard Vesting Provision | Accelerated Vesting Provisions | Total Employees Receiving Grant in 2023 | | Stock Options | • Vest ratably over 3 years | • Full vesting upon death or disability. • Full vesting upon retirement for awards granted since 2021. Pro-rata vesting upon retirement, for awards granted prior to 2021. • Full vesting in the event of a change in control, if (i) replacement awards are not provided or (ii) replacement awards are provided and there is a subsequent qualifying termination. | 17 employees, including NEOs, all EMIP participants and other senior leaders | | Restricted Stock Units (RSUs) | • Vest in full after 3 years | • Full vesting upon death or disability. • Full vesting upon retirement for awards granted since 2021. Pro-rata vesting upon retirement, for awards granted prior to 2021. • Full vesting in the event of a change in control, if (i) replacement awards are not provided or (ii) replacement awards are provided and there is a subsequent qualifying termination. | 586 employees, including NEOs, all EMIP participants, other senior leaders, managers and significant contributors, regardless of their position within Lincoln Electric | | Performance Shares | • Vest based on performance during the applicable 3-year performance period | • Vest at target upon death or disability. • Full vesting upon retirement, based on actual performance for the applicable 3-year performance period, for awards granted since 2021. Pro-rata vesting upon retirement, based on actual performance for the applicable 3-year performance period, for awards granted prior to 2021. • Vest at target in the event of a change in control, if (i) replacement awards are not provided or (ii) replacement awards are provided and there is a subsequent qualifying termination for awards granted since 2020. | 11 employees, including NEOs and all EMIP participants |
Performance Shares
Performance Shares Our long-term incentive compensation program includes grants of Performance Shares, which are designed to offer award opportunities aligned with the long-term performance of Lincoln Electric. Target share amounts are set each year at the beginning of a three-year performance cycle based on a 7-day historical average of the stock price, up to and including the grant date. Because awards are made each year and because each award relates to a three-year performance cycle, three different cycles will be running at any point in time. The percentage of the target shares actually paid at the end of the applicable three-year cycle will be based upon achievement of three-year company performance as interpolated against pre-established performance thresholds. Each plan has performance thresholds with percentage payouts attributable to those thresholds ranging from 0% to 200% of target. The Committee retains discretion to modify payments to any participant, to modify targets and/or to modify the performance thresholds (up or down).
Performance Shares
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 71 |
Performance Shares Financial Metrics
Performance Shares Financial Metrics The Committee annually reviews and approves the performance metrics that are tied to the Performance Shares. For the open performance cycles, the Performance Shares’ two financial metrics are as follows:
Performance Shares Financial Metrics
| Weighting | Performance Metric | Measurement | | | Adjusted Net Income | • Absolute metric based on the growth in Adjusted Net Income for Compensation Purposes over the 3-year performance period versus goals set at the beginning of the performance cycle. • For the 2021 to 2023 performance cycle the target is based on growth above $238,130,000 (which was the Adjusted Net Income for Compensation Purposes for 2020, when the 2021 to 2023 performance cycle was set). • For the 2021 to 2023 performance cycle, to pay 100% of target, Adjusted Net Income for Compensation Purposes over the 3-year cycle must be at or above 140% of $238,130,000 (or $333,382,000). | | | Return on Invested Capital | • Relative metric that is derived based on our 3-year average ROIC for Compensation Purposes relative to our proxy peer group. • For the 2021 to 2023 performance cycle the target is based on achieving the 65th percentile in 3-Year Average ROIC for Compensation Purposes relative to our peers. |
Performance Shares Financial Metrics
From time to time, the Committee has considered and approved certain limited adjustments to reported net income (both positive and negative) in determining achievement of performance against the thresholds. Each adjustment is reviewed in detail before it is made. The types of adjustments the Committee has considered include: rationalization charges, certain asset impairment charges, the gains and losses on certain transactions including the disposal of certain assets and other special items, which generally align with the special items disclosed in the Adjusted Net Income table in Appendix A. To the extent an adjustment relates to restructuring or rationalization charges that are intended to improve organizational efficiency, a corresponding charge (equal to the adjustment) is amortized against future years’ adjusted net income until that adjustment is fully offset against the intended savings (generally this amortization occurs over a three-year period). In 2022, the Committee approved excluding the impact of the acquisition of Fori, which was acquired December 1, 2022, from the 2022 ROIC calculation and related comparisons to our proxy peer group. The acquisition of Fori included the closure of a $400 million senior secured term loan to assist in funding the acquisition.
TIMING FOR SETTING PERFORMANCE METRIC GOALS
| Historical LTIP to Budget (Results for the last five completed Performance Shares cycles) | | | | Results | | Average | 144.4% | | Highest Level | 200.0% | | Lowest Level | 94.1% |
3-Year Growth in Adjusted Net Income for Compensation Purposes
| Performance Level | 3-Year Growth in Adjusted Net Income for Compensation Purposes | | Payout as a % of Target | | Threshold | 10% | | 25% | | | 25% | | 50% | | Target | 40% | | 100% | | | 50% | | 150% | | Maximum | 60% | | 200% | | 2023 Actual | 124.3% | $534,208 | 200.0% |
3-Year Average ROIC for Compensation Purposes Relative to LECO Peer Group
3-Year Average ROIC for Compensation Purposes Relative to LECO Peer Group The potential payout levels as a percentage of target based on actual performance are summarized below (results are interpolated between individual levels):
3-Year Average ROIC for Compensation Purposes Relative to LECO Peer Group
| Performance Level | 3-Year Average ROIC for Compensation Purposes Relative to LECO Peer Group | | Payout as a % of Target | | | %ile Rank in Peer Group | ROIC Result | | | Threshold | 40th %ile | 11.9% | 25% | | | 50th %ile | 12.9% | 50% | | Target | 65th %ile | 15.5% | 100% | | | 70th %ile | 15.6% | 150% | | Maximum | 80th %ile | 17.6% | 200% | | 2023 Actual | 94th %ile | 24.1% | 200% |
3-Year Average ROIC for Compensation Purposes Relative to LECO Peer Group
Lincoln Electric’s three-year average ROIC for Compensation Purposes, as compared to its peer group, was at the 89th percentile, which generated a 100% of target payout for this metric after accounting for the weighting of the financial metric. The following chart shows the target and maximum number of shares of common stock that may be issued for the 2021 to 2023 Performance Shares based on actual performance. Combining the payouts for both metrics, the resulting final payout for the 2021 to 2023 Performance Shares was 200.0% of the target award opportunity.
3-Year Average ROIC for Compensation Purposes Relative to LECO Peer Group
| NEO | Target Award Opportunity (# of shares) | Maximum Award Opportunity Based on Thresholds (# of shares) | Actual Performance Share Payout % | Actual Award (# of shares) | | Christopher L. Mapes | 15,243 | 30,486 | 200.0% | 30,486 | | Gabriel Bruno | 3,271 | 6,542 | 200.0% | 6,542 | | Steven B. Hedlund | 2,606 | 5,212 | 200.0% | 5,212 | | Jennifer I. Ansberry | 1,995 | 3,990 | 200.0% | 3,990 | | Michele R. Kuhrt | 1,378 | 2,756 | 200.0% | 2,756 |
3-Year Average ROIC for Compensation Purposes Relative to LECO Peer Group
| 74 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
2023-2025 PERFORMANCE SHARES
2023-2025 PERFORMANCE SHARES In evaluating 2023 long-term incentive compensation (at the beginning of 2023), the Committee reviewed 2022 compensation versus the competitive benchmarks. The Committee concluded that overall the long-term incentive compensation program for the NEOs remained on average above the 50th percentile target but still within the competitive framework. In order to maintain similar positioning within the competitive framework, the NEO’s received the following increases in annual LTI targets; 12.8% for Mr. Mapes, 10.8% for Mr. Hedlund, 10.8% for Mr. Bruno, 11.7% for Ms. Ansberry and 12.4% for Ms. Kuhrt. All of these awards are subject to our Recovery of Funds Policy, which is discussed below. The Performance Shares financial metrics for the 2023 to 2025 performance cycle remained consistent with prior years: 50% is based on the growth in Adjusted Net Income for Compensation Purposes over the 3-year performance period and 50% is based on our 3-year average ROIC for Compensation Purposes relative to our proxy peer group. Additionally, the performance ranges for the 2023 to 2025 performance cycle align with the ranges outlined above in analysis of the actual Performance Share payout for the 2021 to 2023 Performance Share cycle. For more information about the quantities of the 2023 stock option, RSU and Performance Share awards actually granted to the NEOs, see the 2023 Grants of Plan-Based Awards table and the Outstanding Equity Awards at 2023 Fiscal Year-End table (and their related narrative disclosure) below.
2023 PROMOTION RSU AND STOCK OPTION AWARDS
2023 PROMOTION RSU AND STOCK OPTION AWARDS In August 2023, in connection with the announced CEO transition plan, the Committee approved an award of $500,000 in RSUs that in general will vest in full after three years and $500,000 in stock options that in general vest ratably over 3 years. The grants were designed to compensate Mr. Hedlund for his assumption of additional duties in anticipation of his new position.
2024 Long-Term Incentive Arrangements
2024 Long-Term Incentive Arrangements In August 2023, in conjunction with the announced CEO transition plan, the 2024 EMIP target award for Mr. Mapes was reduced to $5,643,200 for his role as Executive Chair and the 2024 EMIP target award for Mr. Hedlund was increased to $4,787,100 for his role as CEO effective January 1, 2024. In evaluating 2024 long-term incentive compensation (at the beginning of 2024), the Committee reviewed 2023 compensation versus the competitive benchmarks. The Committee concluded that overall the long-term incentive compensation program for the NEOs remained on average above the 50th percentile target but still within the competitive framework. Excluding Mr. Mapes and Mr. Hedlund, the Committee adjusted 2024 long-term incentive compensation opportunities for the NEOs on average 4.2%, placing their LTI targets above the 50th percentile, however still within the competitive framework. Valuation of Equity Awards. We use standard valuation methods to convert long-term incentive compensation values to shares upon the grant date. These methods consider a 7-day historical average of our stock price, up to and including the grant date, for RSUs and Performance Shares and the grant date Black-Scholes valuation for stock options. Normal Cycle and Out-of-Cycle Equity Awards. The Committee has discretion in awarding grants to EMIP participants and does not delegate its authority to management, nor does management select or influence the award dates. Occasionally, the Committee may approve limited, out-of-cycle special awards for specific business purposes or in connection with executive promotions or the hiring of new executive employees. However, the date used for normal cycle awards to all EMIP participants, including the NEOs, is the date of a regularly scheduled Committee meeting, which is fixed well in advance and generally occurs at the same time each year. The Committee has approved delegated authority to the CEO to designate awards through 2024 to certain employees under our equity plan, subject to specific limits established. The CEO can only grant RSU awards and cannot grant awards to any executive officers, Section 16 officers or greater-than-10% beneficial owners of the Company, and such awards must be granted per the agreements and vesting terms already approved by the Committee.
2024 Long-Term Incentive Arrangements
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 75 |
Amended and Restated 2005 Deferred Compensation Plan for Executives (Top Hat Plan)
| • | Up to 80% of base salary and/or annual bonus can be deferred; and |
Amended and Restated 2005 Deferred Compensation Plan for Executives (Top Hat Plan)
| • | Up to 100% of RSUs or Performance Shares can be deferred; |
Amended and Restated 2005 Deferred Compensation Plan for Executives (Top Hat Plan)
| • | RSUs and Performance Shares that are deferred are deemed invested in a Lincoln Electric Stock fund; these deferrals can be reallocated to other investment options on the later of 6 months after the date on which the amounts are allocated to the participant’s account or the date the participant has satisfied his or her stock ownership guidelines; |
Amended and Restated 2005 Deferred Compensation Plan for Executives (Top Hat Plan)
| • | Distributions are permitted in the event of a separation from service, disability, death, change in control or unforeseeable emergency; |
Change in Control Arrangements
Change in Control Arrangements We have entered into change in control agreements with all of our NEOs. The agreements are designed generally to help assure continued management in the event of a change in control of Lincoln Electric. The change in control agreements are operative only if a change in control occurs and payments are made if the officer’s employment is terminated under certain circumstances (or if the officer terminates employment due to certain adverse employment changes). The agreements provide our NEOs with the potential for continued employment
Change in Control Arrangements
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 77 |
Change in Control Arrangements
following a change in control, which helps to retain these executives and provide for management continuity in the event of an actual or threatened change in control of Lincoln Electric. They also help ensure that our executives’ interests remain aligned with shareholders’ interests during a time when their continued employment may be in jeopardy. For a more detailed discussion of our change in control agreements, see Termination and Change in Control Arrangements below. Outside of these change in control agreements, we do not maintain written employment or other severance agreements for U.S.-based employees.
Summary of 2023 Compensation Elements
| | | Purpose | Competitive Target | Financial Metrics Used | When the 2023 Amount Was Set | The Period to Which the Amount Relates | Where Reported in the SCT(1) | | Short-Term | Base Pay | Rewards responsibility, experience and individual performance | Below Market | — | Beginning of 2023 | 2023 | Salary column | | | Annual Bonus (EMIP) | Rewards strong annual financial results and individual performance | Above Market (target total cash compensation) | Adjusted Revenue(2), EBITB(2) and AOWC/Sales(2) | Beginning of 2023 | 2023 Performance | Non-Equity Incentive Plan Compensation column | | Long-Term | Stock Options | Rewards the creation of shareholder value | At Market | — | Beginning of 2023 | 2023 Based Award | Option Awards column | | | RSUs | Rewards the creation of shareholder value and strong long-term financial results | | — | Beginning of 2023 | 2023 Based Award | Stock Awards column | | | Performance Shares | Rewards the creation of long-term growth and the efficient use of capital | | Adjusted Net Income(2) Growth and ROIC(2) | Beginning of 2023 | 2023 through 2025 Performance | Stock Awards column | | Both | Benefits other than Pension | Includes 401(k) contributions, Restoration Plan contributions, insurance and standard expatriate benefits | At Market | — | Various | 2023 | All Other Compensation column | | | Pension Benefits | Includes above-market earnings in the Top Hat Plan | | — | Various | For above-market earnings, shows 2023 amounts | Change in Pension Value and Nonqualified Deferred Compensation Earnings column | | | Perquisites | Meets specific business needs—includes financial planning, annual physical and certain club dues | | — | Various | 2023 | All Other Compensation column |
2023 Summary Compensation Table
2023 Summary Compensation Table This table details total compensation for our NEOs for 2023, 2022 and 2021.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | | Christopher L. Mapes Chair, President and Chief Executive Officer (through December 31, 2023) | 2023 | 1,107,600 | 4,196,532 | 2,068,853 | 2,777,943 | 138,395 | 320,347 | 10,609,670 | | | 2022 | 1,065,000 | 3,672,156 | 1,833,338 | 3,088,500 | 185,377 | 252,107 | 10,096,478 | | | 2021 | 1,030,000 | 3,483,636 | 1,766,662 | 2,569,567 | 157,838 | 206,117 | 9,213,820 | | Gabriel Bruno Executive Vice President, Chief Financial Officer and Treasurer | 2023 | 540,000 | 852,046 | 420,001 | 979,026 | 678 | 197,964 | 2,989,715 | | | 2022 | 500,000 | 759,474 | 379,178 | 975,000 | 643 | 159,464 | 2,773,759 | | | 2021 | 445,000 | 747,554 | 379,164 | 698,528 | 364 | 119,322 | 2,389,932 | | Steven B. Hedlund Executive Vice President, Chief Operating Officer (through December 31, 2023) | 2023 | 798,833 | 1,469,165 | 980,006 | 1,890,704 | — | 194,930 | 5,333,638 | | | 2022 | 564,584 | 962,817 | 340,000 | 1,317,851 | — | 186,452 | 3,371,704 | | | 2021 | 440,000 | 595,576 | 302,086 | 659,373 | — | 225,282 | 2,222,317 | | Jennifer I. Ansberry Executive Vice President, General Counsel and Secretary | 2023 | 468,000 | 524,038 | 258,324 | 731,351 | — | 158,939 | 2,140,652 | | | 2022 | 432,500 | 463,212 | 231,242 | 684,000 | — | 130,901 | 1,941,855 | | | 2021 | 424,000 | 455,938 | 231,257 | 530,871 | — | 114,018 | 1,756,084 | | Michele R. Kuhrt Executive Vice President, Chief Human Resources Officer | 2023 | 451,000 | 380,096 | 187,330 | 689,797 | — | 170,874 | 1,879,097 | | | 2022 | 438,000 | 333,902 | 166,665 | 830,000 | — | 131,282 | 1,899,849 | | | 2021 | 413,000 | 314,928 | 159,669 | 546,773 | — | 109,640 | 1,544,010 |
2023 Summary Compensation Table
| 1 | The amounts reported for 2023 reflect the grant date fair value under FASB ASC Topic 718 for the RSU, Performance Share and stock option awards in 2023. The grant date fair value disclosed for Performance Share awards is based on target performance. Assumptions used in the calculation of these amounts are included in footnote 10 to our audited financial statements for the fiscal year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024. |
2023 Summary Compensation Table
The amounts shown for stock awards for 2023 represent RSU awards as follows: Mr. Mapes $2,098,266, Mr. Hedlund $982,256, Mr. Bruno $426,023, Ms. Ansberry $262,019, and Ms. Kuhrt, $190,048. The amounts shown also include Performance Shares at target as follows: Mr. Mapes $2,098,266, Mr. Hedlund $486,909, Mr. Bruno $426,023, Ms. Ansberry $262,019, and Ms. Kuhrt, $190,048. The maximum Performance Share award amount with respect to each of the NEOs for 2023 is shown in the table below. The amounts reported reflect the grant date fair value under FASB ASC Topic 718 for the Performance Share awards based on maximum performance.
2023 Summary Compensation Table
| Name | Year | Maximum Payout (# of Performance Shares) | Maximum Grant Date Fair Value Payout | | Christopher L. Mapes | 2023 | 23,848 | $4,196,532 | | Gabriel Bruno | 2023 | 4,842 | $852,046 | | Steven B. Hedlund | 2023 | 5,534 | $973,818 | | Jennifer I. Ansberry | 2023 | 2,978 | $524,038 | | Michele R. Kuhrt | 2023 | 2,160 | $380,096 |
2023 Summary Compensation Table
| 2 | The amounts shown for 2023 represent payments under our annual bonus (EMIP). |
2023 Summary Compensation Table
| 82 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
2023 Summary Compensation Table
| 3 | The amounts shown for 2023 represent the difference in earnings under the Moody’s Corporate Bond Index fund in our Top Hat Plan and a hypothetical rate. |
2023 Summary Compensation Table
| 2023 INCREASE IN PENSION VALUE & PREFERENTIAL EARNINGS (TOP HAT PLAN) | | | | | Name | Difference in 2023 Earnings Credited in the Top Hat Plan ($) | Moody’s Corporate Bond Index Earnings ($) | Hypothetical Market Rate ($)* | | Christopher L. Mapes | 138,395 | 1,149,566 | 1,011,171 | | Gabriel Bruno | 678 | 5,610 | 4,932 | | Steven B. Hedlund | — | — | — | | Jennifer I. Ansberry | — | — | — | | Michele R. Kuhrt | — | — | — |
2023 Summary Compensation Table
| * This rate is specified by the SEC rules for proxy disclosure purposes and is based on 120% of the applicable federal long-term rate, compounded monthly for 2023. |
2023 Summary Compensation Table
| 4 | The amounts shown for 2023 are comprised of the following: |
2023 Summary Compensation Table
| 2023 ALL OTHER COMPENSATION | | | | | | | | | | Name | Other Benefits and Perquisites* | | | | | | | | | | Company Retirement Contributions ($)(a) | Travel Insurance Premiums ($) | Financial Planning ($) | Physical Examination ($) | Club Dues ($) | Travel and Other Personal Benefits ($)(b) | Standard Expatriate Benefits ($)(c) | Total All Other Compensation ($) | | Christopher L. Mapes | 251,766 | 454 | 15,052 | 2,051 | 37,236 | 13,788 | — | 320,347 | | Gabriel Bruno | 181,800 | 454 | 12,885 | 2,825 | — | — | — | 197,964 | | Steven B. Hedlund | 127,001 | 454 | 12,733 | — | 35,702 | 913 | 18,127 | 194,930 | | Jennifer I. Ansberry | 138,240 | 454 | 15,750 | 4,495 | — | — | — | 158,939 | | Michele R. Kuhrt | 153,720 | 454 | 12,943 | 3,757 | — | — | — | 170,874 |
2023 Summary Compensation Table
| * The methodology for computing the aggregate incremental cost for the amounts is below: |
2023 Summary Compensation Table
| a | Includes amounts contributed to both the 401(k) Plan and the Restoration Plan |
2023 Summary Compensation Table
| b | Includes the aggregate incremental cost of personal travel expenses attributable to the NEOs. |
2023 Summary Compensation Table
| c | The expatriate benefits shown relate to Mr. Hedlund's previous international assignment and are provided to all U.S. employees who take an international assignment. Amounts are converted to U.S. dollars on a monthly basis based on a month-end conversion price, in local currency, as reported by Bloomberg. The conversion price for Pound Sterling was between £1.24 to $1.00 during the period in 2023 that Mr. Hedlund was receiving tax services associated with his previous expatriate assignment under our standard expatriate package for all employees. |
2023 Summary Compensation Table
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 83 |
2023 Grant of Plan-Based Awards
2023 Grant of Plan-Based Awards The following table provides information relating to plan-based awards granted in 2023 to our NEOs.
2023 Grant of Plan-Based Awards
| Name | Grant Type | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | | | | Threshold [$] | Target [$] | Maximum [$] | Threshold [#] | Target [#] | Maximum [#] | | | | | | Christopher L. Mapes | EMIP | 2/15/2023 | 0 | 1,606,000 | 3,212,000 | | | | | | | | | | Options | 2/15/2023 | | | | | | | | 44,761 | $175.97 | 2,068,853 | | | RSUs | 2/15/2023 | | | | | | | 11,924 | | | 2,098,266 | | | PSUs | 2/15/2023 | | | | 0 | 11,924 | 23,848 | | | | 2,098,266 | | Gabriel Bruno | EMIP | 2/15/2023 | 0 | 566,000 | 1,132,000 | | | | | | | | | | Options | 2/15/2023 | | | | | | | | 9,087 | $175.97 | 420,001 | | | RSUs | 2/15/2023 | | | | | | | 2,421 | | | 426,023 | | | PSUs | 2/15/2023 | | | | 0 | 2,421 | 4,842 | | | | 426,023 | | Steven B. Hedlund | EMIP | 2/15/2023 | 0 | 1,093,064 | 2,186,128 | | | | | | | | | | Options | 2/15/2023 | | | | | | | | 10,385 | $175.97 | 479,995 | | | RSUs | 2/15/2023 | | | | | | | 2,767 | | | 486,909 | | | PSUs | 2/15/2023 | | | | 0 | 2,767 | 5,534 | | | | 486,909 | | | Options | 8/1/2023 | | | | | | | | 9,227 | $200.14 | 500,011 | | | RSUs | 8/1/2023 | | | | | | | 2,475 | | | 495,347 | | Jennifer I. Ansberry | EMIP | 2/15/2023 | 0 | 440,000 | 880,000 | | | | | | | | | | Options | 2/15/2023 | | | | | | | | 5,589 | $175.97 | 258,324 | | | RSUs | 2/15/2023 | | | | | | | 1,489 | | | 262,019 | | | PSUs | 2/15/2023 | | | | 0 | 1,489 | 2,978 | | | | 262,019 | | Michele R. Kuhrt | EMIP | 2/15/2023 | 0 | 415,000 | 830,000 | | | | | | | | | | Options | 2/15/2023 | | | | | | | | 4,053 | $175.97 | 187,330 | | | RSUs | 2/15/2023 | | | | | | | 1,080 | | | 190,048 | | | PSUs | 2/15/2023 | | | | 0 | 1,080 | 2,160 | | | | 190,048 |
2023 Grant of Plan-Based Awards
| 1 | The performance-based amounts shown represent the range of cash payouts (from zero to the maximum amount listed) for 2023 under the EMIP. Payments are based on the achievement of company financial performance and the NEO’s individual performance. Target awards are set by the Committee in the first quarter each year. Actual payment amounts are determined by the Committee in the first quarter of the following year. The targets shown above are pursuant to the Annual Bonus (EMIP) Formula described in the CD&A (which allows for potential payouts of up to 200% of target). |
2023 Grant of Plan-Based Awards
| 2 | These columns show the potential number of shares of our common stock to be paid out to our NEOs under our Performance Shares (PSUs) at threshold, target and maximum performance. The measures and potential payouts are described in more detail in the CD&A. The grant date fair value, based on target performance for PSUs, is included in the “Stock Awards” column of the Summary Compensation Table. The PSUs generally vest based on performance during the applicable performance period. Dividend equivalents are sequestered by us until the shares underlying the PSUs are distributed, at which time the dividend equivalents are paid in cash. The dividend rate for dividend equivalents paid on the PSUs to the NEOs is the same as for all other shareholders (in other words, it is not preferential). Recipients of PSUs who participate in our EMIP bonus program (which includes all of the NEOs) are eligible to elect to defer all or a portion of their PSUs under our Top Hat Plan - see the 2023 Nonqualified Deferred Compensation section for a description of this plan. |
2023 Grant of Plan-Based Awards
| 3 | The RSUs generally vest upon the recipient remaining in continuous employment for three years from the date of grant and are paid out in our common stock. Dividend equivalents are sequestered by us until the shares underlying the RSUs are distributed, at which time the dividend equivalents are paid in cash. The dividend rate for dividend equivalents paid on the RSUs to the NEOs is the same as for all other shareholders (in other words, it is not preferential). Recipients of RSUs who participate in |
2023 Grant of Plan-Based Awards
| 84 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
2023 Grant of Plan-Based Awards
our EMIP bonus program (which includes all of the NEOs) are eligible to elect to defer all or a portion of their RSUs under our Top Hat Plan - see the 2023 Nonqualified Deferred Compensation section for a description of this plan. With respect to the award of RSUs to Mr. Hedlund on August 1, 2023, this represents an additional award approved by the Committee equal in value to $500,000 in connection with his pending appointment as President and Chief Executive Officer.
2023 Grant of Plan-Based Awards
| 4 | The stock options were granted at the closing price of our common shares on the date of the grant. All stock options are non-qualified for tax purposes. We value stock options using the Black-Scholes valuation method. The stock options generally vest over a three-year period (in equal annual increments). All stock options have 10-year terms. With respect to the award of stock options to Mr. Hedlund on August 1, 2023, this represents an additional award approved by the Committee equal in value to $500,000 in connection with his pending appointment as President and Chief Executive Officer. |
2023 Grant of Plan-Based Awards
| 5 | The amounts shown represent the fair value of the RSU awards, the stock option grants and the PSU awards (at target) calculated in accordance with FASB ASC Topic 718 as of the date of the grant. The actual amount, if any, realized upon the exercise of stock options will depend upon the market price of our common shares relative to the exercise price per share of the stock option at the time of exercise. The actual amount realized upon vesting of RSUs will depend upon the market price of our common shares at the time of vesting. The actual number and value of PSUs earned will be based upon our actual performance during the three-year long-term incentive plan cycle and the market price at time of vesting. There is no assurance that the hypothetical full values of the awards reflected in this table will actually be realized. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($/sh) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)(3) | | Christopher L. Mapes | 2/21/2018 | 65,894 | — | 90.70 | 2/21/2028 | — | — | — | — | | | 2/18/2019 | 76,365 | — | 88.44 | 2/18/2029 | — | — | — | — | | | 2/19/2020 | 83,490 | — | 89.63 | 2/19/2030 | — | — | — | — | | | 2/17/2021 | 54,274 | 27,139 | 114.27 | 2/17/2031 | 15,243 | 3,314,743 | — | — | | | 2/16/2022 | 22,352 | 44,705 | 128.03 | 2/16/2032 | 14,341 | 3,118,594 | 28,682 | 6,237,188 | | | 2/15/2023 | — | 44,761 | 175.97 | 2/15/2033 | 11,924 | 2,592,993 | 23,848 | 5,185,986 | | Gabriel Bruno | 4/24/2013 | — | — | — | — | 2,879 | 626,067 | — | — | | | 2/22/2017 | 6,670 | — | 85.30 | 2/22/2027 | — | — | — | — | | | 2/21/2018 | 6,150 | — | 90.70 | 2/21/2028 | — | — | — | — | | | 2/18/2019 | 6,682 | — | 88.44 | 2/18/2029 | — | — | — | — | | | 2/19/2020 | 7,305 | — | 89.63 | 2/19/2030 | — | — | — | | | | 2/17/2021 | 11,648 | 5,825 | 114.27 | 2/17/2031 | 3,271 | 711,312 | — | — | | | 2/16/2022 | 4,623 | 9,246 | 128.03 | 2/16/2032 | 2,966 | 644,986 | 5,932 | 1,289,973 | | | 2/15/2023 | — | 9,087 | 175.97 | 2/15/2033 | 2,421 | 526,471 | 4,842 | 1,052,941 | | Steven B. Hedlund | 4/24/2013 | — | — | — | — | 3,663 | 796,556 | — | — | | | 2/21/2018 | 9,313 | — | 90.70 | 2/21/2028 | — | — | — | — | | | 2/18/2019 | 11,741 | — | 88.44 | 2/18/2029 | — | — | — | — | | | 2/19/2020 | 12,837 | — | 89.63 | 2/19/2030 | — | — | — | — | | | 2/17/2021 | 9,280 | 4,641 | 114.27 | 2/17/2031 | 2,606 | 566,701 | — | — | | | 2/16/2022 | 4,145 | 8,291 | 128.03 | 2/16/2032 | 2,660 | 578,444 | 5,320 | 1,156,887 | | | 5/9/2022 | — | — | — | — | 2,061 | 448,185 | — | — | | | 2/15/2023 | — | 10,385 | 175.97 | 2/15/2033 | 2,767 | 601,712 | 5,534 | 1,203,424 | | | 8/1/2023 | — | 9,227 | 200.14 | 8/1/2033 | 2,475 | 538,214 | — | — | | Jennifer I. Ansberry | 2/19/2020 | 11,124 | — | 89.63 | 2/19/2030 | — | — | — | — | | | 2/17/2021 | 7,104 | 3,553 | 114.27 | 2/17/2031 | 1,995 | 433,833 | — | — | | | 2/16/2022 | 2,819 | 5,639 | 128.03 | 2/16/2032 | 1,809 | 393,385 | 3,618 | 786,770 | | | 2/15/2023 | — | 5,589 | 175.97 | 2/15/2033 | 1,489 | 323,798 | 2,978 | 647,596 | | Michele R. Kuhrt | 2/21/2018 | 3,954 | — | 90.70 | 2/21/2028 | — | — | — | — | | | 2/18/2019 | 5,514 | — | 88.44 | 2/18/2029 | — | — | — | — | | | 2/19/2020 | 7,118 | — | 89.63 | 2/19/2030 | — | — | — | — | | | 2/17/2021 | 4,904 | 2,454 | 114.27 | 2/17/2031 | 1,378 | 299,660 | — | — | | | 2/16/2022 | 2,032 | 4,064 | 128.03 | 2/16/2032 | 1,304 | 283,568 | 2,608 | 567,136 | | | 2/15/2023 | — | 4,053 | 175.97 | 2/15/2023 | 1,080 | 234,857 | 2,160 | 469,714 |
Outstanding Equity Awards at 2023 Fiscal Year-End
| 1 | Stock options generally vest in three equal annual installments, commencing on the first anniversary of the date of the grant. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| 2 | Amounts shown in this column represent RSU awards. The RSU awards generally vest in full three years from the date of grant. The RSU awards granted to Mr. Bruno and Mr. Hedlund in 2013 vests over seven years following each of their attainment of age 55. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| 3 | The amounts shown in these columns represent the value of RSU and Performance Share awards granted pursuant to our 2006 Equity and Performance Incentive Plan, and our 2015 and 2023 Equity and Incentive Compensation Plans. Value is calculated using the close price of our common stock on the last trading day of 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| 86 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Outstanding Equity Awards at 2023 Fiscal Year-End
| 4 | The 2022 and 2023 Performance Shares are shown at maximum payout (200% of the target award) because the target performance level would be exceeded based on performance through December 31, 2023. The payout can range from 0 to 200% of the target and is based upon performance during the three-year cycle ending on December 31 of the second year following the year in which the Performance Shares were granted, as determined by the Committee. Earned Performance Shares are generally settled in shares in the early part of the following year. See the CD&A on how Performance Share payouts are determined. |
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table The following table provides information on stock options exercised, as well as RSUs and Performance Shares that vested during 2023.
2023 Option Exercises and Stock Vested Table
| | Option Awards(1) | | Stock Awards(2) | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Christopher L. Mapes | 157,640 | 20,470,981 | 44,897 | 10,576,643 | | Gabriel Bruno | — | — | 12,406 | 2,724,346 | | Steven B. Hedlund | 21,115 | 2,392,439 | 10,348 | 2,308,526 | | Jennifer I. Ansberry | 8,962 | 981,955 | 5,910 | 1,390,460 | | Michele R. Kuhrt | 7,795 | 812,530 | 5,336 | 1,189,473 |
2023 Option Exercises and Stock Vested Table
| 1 | The number of shares acquired on exercise reflects the gross number of shares acquired, without considering any shares that were withheld to pay the option exercise price and/or to satisfy tax withholding requirements. The value realized on exercise represents the gross number of shares acquired on exercise multiplied by the market price of our common stock on the exercise date, less the per share exercise price. |
2023 Option Exercises and Stock Vested Table
| 2 | The number of shares acquired on vesting reflects the gross number of shares acquired, without considering any shares that were withheld to satisfy tax withholding requirements. The value realized on vesting for RSUs represents the gross number of shares acquired, multiplied by the closing price of our common stock on each applicable vesting date, plus the value of dividend equivalents. The value realized on vesting for Performance Shares represents the gross number of shares acquired, relative to the 2021-2023 performance cycle that was considered earned as of December 31, 2023 but paid out in March 2024, multiplied by the closing price of our common stock on such date, plus the value of dividend equivalents. Amounts are not reduced to reflect any elections by our NEOs to defer receipt of RSUs or Performance Shares award payouts into our Top Hat Plan: Mr. Mapes, 14,411 RSUs and $92,086 in dividend equivalents deferred; and Mr. Bruno, 6,542 Performance Shares and $41,803 in dividend equivalents deferred. For more information about this deferral program, see the CD&A in the “Overview of Benefits” section. |
2023 Nonqualified Deferred Compensation Table
2023 Nonqualified Deferred Compensation Table The following table reflects any NEO contributions and Company contributions for 2023 to our nonqualified deferred compensation plans.
2023 Nonqualified Deferred Compensation Table
| Name | Plan Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($)(2) | | Christopher L. Mapes | Top Hat Plan | — | 2,632,601(3) | 7,044,056(4) | — | 40,943,385 | | | Restoration Plan | — | 231,966 | 254,437 | — | 1,611,334 | | Gabriel Bruno | Top Hat Plan | — | 410,732(5) | 634,413(6) | — | 2,123,927 | | | Restoration Plan | — | 142,200 | 75,134 | — | 627,064 | | Steven B. Hedlund | Top Hat Plan | — | — | 9,051 | — | 61,686 | | | Restoration Plan | — | 107,201 | 66,716 | — | 421,587 | | Jennifer I. Ansberry | Top Hat Plan | — | — | — | — | — | | | Restoration Plan | — | 98,640 | 108,235 | — | 595,789 | | Michele R. Kuhrt | Top Hat Plan | — | — | — | — | — | | | Restoration Plan | — | 114,120 | 59,782 | — | 514,821 |
2023 Nonqualified Deferred Compensation Table
| 1 | Amounts reported with respect to the Restoration Plan are included in compensation for 2023 in the “All Other Compensation” column of the Summary Compensation Table above and are described in its footnotes. |
2023 Nonqualified Deferred Compensation Table
| 2 | The portions of the amount reported that relate to deferral contributions in prior years have all been reported in the Summary Compensation Table in those years to the extent the individual was a NEO for those years. |
2023 Nonqualified Deferred Compensation Table
| 3 | Represents 14,411 RSUs and $92,086 in cash attributable to dividend equivalents that vested during 2023 and were deferred into the Top Hat Plan. |
2023 Nonqualified Deferred Compensation Table
| 4 | Of the amount reported, $138,395 is included as compensation for 2023 in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table and is described in its footnotes. |
2023 Nonqualified Deferred Compensation Table
| 5 | Represents 2,284 Performance Shares and $14,595 in cash attributable to dividend equivalents that vested during 2023 and were deferred into the Top Hat Plan. |
2023 Nonqualified Deferred Compensation Table
| 6 | Of the amount reported, $678 is included as compensation for 2023 in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table and is described in its footnotes. |
2023 Nonqualified Deferred Compensation Table
| 88 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
CEO Pay Ratio
CEO Pay Ratio For 2023, we estimate that the ratio of the annual total compensation of our CEO ($10,609,670 which is the same amount reported for Mr. Mapes in the 2023 Summary Compensation Table) to the annual total compensation of our median employee ($52,942) is 200:1. We note that, due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve a degree of imprecision, and thus this ratio disclosure is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions described below. In accordance with Item 402(u) of Regulation S-K, in calculating our CEO pay ratio for 2023, we determined our median employee based on total cash and equity compensation paid to our active employees as of October 1, 2023 for the period beginning on January 1, 2023. We included all full time, part time, seasonal and temporary employees, whether employed domestically or overseas and whether employed directly or by a consolidated subsidiary. Compensation for employees hired during 2023 was annualized for all employees other than temporary or seasonal employees (and full-time equivalencies were not created). Annual total compensation for the median employee for 2023 was calculated using the same methodology used for our NEOs as set forth in the 2023 Summary Compensation Table. Of the employees that were identified as potential median employees, we selected an employee based in the U.S. that was representative of the largest portion of our workforce. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
CEO Pay Ratio
| 94 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Pay Versus Performance
Pay Versus Performance In accordance with Securities and Exchange Commission rules, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and non-PEO named executive officers (“non-PEO NEOs”) and certain measures of Company performance for the fiscal years listed below. The Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay Versus Performance
| Year | Summary Compensation Table (SCT) Total for PEO(1) ($) | Compensation Actually Paid to PEO(1)(2)(3) ($) | Average SCT Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2)(3) ($) | Value of Initial Fixed $100 Investment Based on:(4) | | Net Income ($ Millions) | ROIC for Compensation Purposes(5) | | | | | | | Company TSR ($) | Peer Group TSR ($) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 10,609,670 | 27,971,976 | 3,085,776 | 5,933,007 | 241.00 | 143.54 | 545 | 22.6% | | 2022 | 10,096,478 | 14,415,143 | 2,496,792 | 3,176,483 | 157.95 | 123.28 | 472 | 28.1% | | 2021 | 9,213,820 | 17,818,888 | 1,978,086 | 3,241,658 | 149.83 | 141.80 | 276 | 21.5% | | 2020 | 7,077,536 | 11,078,312 | 1,936,038 | 1,600,715 | 122.93 | 113.66 | 206 | 13.7% |
Pay Versus Performance
| 1 | Christopher Mapes was our PEO for each year presented. The individuals comprising the non-PEO NEOs for each year presented are listed below. |
Pay Versus Performance
| 2023 | 2022 | 2021 | 2020 | | Gabriel Bruno | Gabriel Bruno | Gabriel Bruno | Gabriel Bruno | | Steven Hedlund | Steven Hedlund | Steven Hedlund | Steven Hedlund | | Jennifer Ansberry | Jennifer Ansberry | Jennifer Ansberry | Jennifer Ansberry | | Michele Kuhrt | Michele Kuhrt | Michele Kuhrt | Michele Kuhrt | | | | | George Blankenship | | | | | Vincent Petrella |
Pay Versus Performance
| 2 | The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and may not necessarily reflect compensation actually earned, realized, or received by the Company’s PEO and non-PEO NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. Please note that, while similar adjustment information was provided in our 2023 proxy statement for years 2020, 2021 and 2022, under applicable SEC guidance, repeating such adjustment information is not required in this Proxy Statement because in our view it is not material to our shareholders’ understanding of the information reported in the table above for 2023 or the related disclosures provided below. |
Pay Versus Performance
| 3 | Compensation Actually Paid for 2023 (the most recent year included in the table above) reflects the exclusions and inclusions of certain amounts for the PEO and the non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table. Amounts in the Exclusion of Change in Pension Value column reflect the amounts attributable to the Change in Pension Value reported in the Summary Compensation Table. |
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO ($) | Exclusion of Change in Pension Value ($) | Exclusion of Stock Awards and Option Awards ($) | Inclusion of Pension Service Cost ($) | Inclusion of Equity Values ($) | Compensation Actually Paid to PEO ($) | | 2023 | 10,609,670 | — | (6,265,385) | — | 23,627,691 | 27,971,976 |
Pay Versus Performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Exclusion of Change in Pension Value ($) | Exclusion of Stock Awards and Option Awards ($) | Inclusion of Pension Service Cost ($) | Inclusion of Equity Values ($) | Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 3,085,776 | — | (1,267,752) | — | 4,114,983 | 5,933,007 |
Pay Versus Performance
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 95 |
Pay Versus Performance
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Pay Versus Performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards Granted in Prior Years for PEO ($) | Vesting Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards Granted in Prior Years that Vested During Year for PEO ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO ($) | Total - Inclusion of Equity Values for PEO ($) | | 2023 | 9,660,547 | 10,846,923 | — | 3,120,221 | — | 23,627,691 |
Pay Versus Performance
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards Granted in Prior Years for Non-PEO NEOs ($) | Average Vesting Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Un- vested Equity Awards Granted in Prior Years that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non- PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 1,849,541 | 1,810,353 | — | 455,089 | — | 4,114,983 |
Pay Versus Performance
| 4 | The Peer Group Total Shareholder Return (“TSR”) set forth in this table utilizes the S&P 400 Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the S&P 400 Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. |
Pay Versus Performance
| 5 | We determined ROIC for Compensation Purposes to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and non-PEO NEOs in 2023. More information on ROIC for Compensation Purposes can be found in Appendix A. This performance measure may not have been the most important financial performance measure for prior years and we may determine a different financial performance measure to be the most important financial performance measure in future years. |
Pay Versus Performance
| 96 | LINCOLN ELECTRIC | 2024 PROXY STATEMENT |
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company and Peer Group Total Shareholder Return (“TSR”)
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company and Peer Group Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our non-PEO NEOs, the Company’s cumulative TSR over the four most recently completed fiscal years, and the cumulative TSR of the S&P 400 Index over the same period assuming initial investment of $100 on December 31, 2019.
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Net Income
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our non-PEO NEOs, and our GAAP Net income during the four most recently completed fiscal years.
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Net Income
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | 97 |
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company ROIC for Compensation Purposes
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company ROIC for Compensation Purposes The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our non-PEO NEOs, and Company ROIC for Compensation Purposes (annual results) during the four most recently completed fiscal years.
Adjusted EBIT
Adjusted EBIT Adjusted EBIT is defined as reported EBIT excluding certain disclosed special items.
Adjusted Effective Tax Rate
Adjusted Effective Tax Rate Adjusted Effective Tax Rate is defined as reported Effective Tax Rate excluding the tax effect of certain disclosed special items.
Adjusted Net Income
Adjusted Net Income Adjusted Net Income is defined as reported Net Income excluding certain disclosed special items.
Adjusted Net Income for Compensation Purposes
Adjusted Net Income for Compensation Purposes Adjusted Net Income for Compensation Purposes is defined as reported Net Income excluding certain disclosed special items and other adjustments as approved by the Compensation and Executive Development Committee.
Adjusted Operating Income
Adjusted Operating Income Adjusted Operating Income is defined as reported Operating Income excluding certain disclosed special items.
ADJUSTED OPERATING INCOME INCREMENTAL MARGIN
ADJUSTED OPERATING INCOME INCREMENTAL MARGIN Adjusted Operating Income Incremental Margin is defined as the change in Adjusted Operating Income between two periods divided by the change in Net sales between the same two periods.
Adjusted Operating Income Margin
Adjusted Operating Income Margin Adjusted Operating Income Margin is defined as Adjusted Operating Income divided by Net sales.
Adjusted Operating Income Margin
| LINCOLN ELECTRIC | 2024 PROXY STATEMENT | A-1 |
Adjusted Return on Invested Capital (Adjusted ROIC)
Adjusted Return on Invested Capital (Adjusted ROIC) Adjusted ROIC is defined as rolling 12 months of Adjusted net income excluding tax-effected interest income and expense divided by invested capital.
Adjusted Revenue for Compensation Purposes (Adjusted Revenue)
Adjusted Revenue for Compensation Purposes (Adjusted Revenue) Adjusted Revenue for Compensation Purposes is defined as Net sales calculated at budgeted exchange rates and adjusted for the results of businesses acquired during the year. Additionally, a price collar may be approved by the Committee to limit the impact of pricing on the metric, resulting in growth of the metric focusing primarily on organic sales volumes. For 2023, a +/- 2% price collar was approved by the Compensation and Executive Development Committee for use when calculating this metric. The price collar limits the impact of either price increases or decreases to 2%. Net sales is a representative measure of Adjusted Revenue for Compensation Purposes.
Average Operating Working Capital to Sales (AOWC/Sales)
Average Operating Working Capital to Sales (AOWC/Sales) Average operating working capital to Net Sales (AOWC/Sales) is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of a period end divided by annualized rolling three months of Net sales.
Average Operating Working Capital to Sales for Compensation Purposes (AOWC/Sales for Compensation Purposes)
Average Operating Working Capital to Sales for Compensation Purposes (AOWC/Sales for Compensation Purposes) Average operating working capital to Net Sales for Compensation Purposes (AOWC/Sales for Compensation Purposes) is defined as the sum of Accounts receivable, Inventories (excluding LIFO inventory reserves) and contract assets less Trade accounts payable and contract liabilities as of a period end divided by annualized rolling three months of Net sales.
Cash Conversion
Cash Conversion Cash Conversion is defined as Free Cash Flow divided by Adjusted Net Income.
EBIT
EBIT EBIT is an amount equal to earnings before interest and tax defined as operating income plus Other income (expense).
EBITB
EBITB EBITB is an amount equal to earnings before interest, tax and bonus, calculated at budgeted exchange rates and adjusted for special items as determined by management. The adjustments for special items include such items as rationalization charges, certain asset impairment charges, the gains and losses on certain transactions including the disposal of assets and the results of businesses acquired during the year. Adjusted Operating Income is a representative measure of EBITB.
Free Cash Flow (FCF)
Free Cash Flow (FCF) Free Cash Flow is defined as Net cash provided by operating activities less Capital expenditures.
Organic Sales
Organic Sales Organic Sales is defined as sales excluding the effects of foreign currency and acquisitions.